Sh. Sandeep Wadhwa, New Delhi V. DCIT, New Delhi

ITA 495/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7285 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: DR RAKESH GUPTA; TAR UN KUMAR ADVS
• Keywords: Search and seizure
• Section: 69C; 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM IT A NO . 495/DEL /2015 : ASSTT. YEAR : 2006 - 07 SH. SANDEEP WADHWA, 8194, SECTOR - B, POCKET - XI, VASANT KUNJ, NEW DELHI VS DEPUTY COMMI SSIONER OF INCOME TAX, CENTRAL CIRCLE - 8 , NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A HPW8925D ASSESSEE BY : DR. RAKESH GUPTA & SH. TARUN KUMAR , ADV S . REVENUE BY : SH. O. P. MEENA, CIT DR DATE OF HEARING : 15 .12.2015 DATE OF PRONOUNCE MENT : 21 .01 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11.12.2014 OF LD. CIT(A) - XXVII , NEW DELH I . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IMPUGNED ASSESSMENT ORDER U/S 153A/143( 3) WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT SERVING THE VALID NOTICES AS PER LAW AND WITHOUT RECORDING REQUISITE SATISFACTION AS PER LAW AND WITHOUT OBTAINING REQUISITE APPROVAL AS PER LAW AND WITHOUT COMPLYING WITH OTHER MANDATORY CONDITIONS U NDER THE ACT AND WITHOUT SERVING THE ITA NO . 495/DEL/2015 SANDEEP WADHWA 2 MANDATORY NOTICES U/S 143(2) AND 142(1) OF INCOME TAX ACT, 1961. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING A DDITION OF RS.1,25,000/ - ON ACCOUNT OF FOREIGN TRAVEL U/S 69C OF INCOME TAX ACT, 1961. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.1,25,000/ - ON ACCOUNT OF FOREIGN TRA VEL IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN ANY CASE IMPUGNED ADDITION IS BEYOND THE SCOPE AND JURISDICTION OF THE IMPUGNED ASSESSMENT ORDER. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ADDITIONS/DISALLOWANCES COULD NOT HAV E BEEN MADE IN THE PRESENT APPEAL BECAUSE NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH. 5. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. VIDE GROUND NO.1, THE ASSESSEE CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . FACTS OF THE CASE IN BRIEF ARE THAT A SEA RCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED BY THE ITA NO . 495/DEL/2015 SANDEEP WADHWA 3 INVESTIGATION WING OF THE DEPARTMENT IN NUSSLI (SWITZERLAND) LTD. GROUP OF CASES ON 19.10.2010 AND SIMULTANEOUSLY THE ASSESSEE S PREMISES WERE ALSO SEARCHED. THEREAFTER, A NOTICE U/S 153A OF THE AC T DATED 19.09.2011 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO WHICH THE ASSESSEE FILED THE RETURN OF INCOME ON 18.10.2011 DECLARING A TOTAL INCOME OF RS.2,96,375/ - . HOWEVER, THE ASSESSMENT WAS FRAMED BY THE AO AT AN INCOME OF RS.8,35,780/ - VIDE ORDE R DATED 11.03.2013 PASSED U/S 153A R.W.S. 143(3) OF THE ACT BY MAKING VARIOUS ADDITIONS. 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. HOWEVER, HE CONFIRMED THE ACTION OF THE AO IN MAK ING THE ASSESSMENT WITHIN THE SCOPE OF JURISDICTION U/S 153A OF THE ACT. 6 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE FACTS OF THIS CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF SMT. RASHM I WADHWA VS DCIT, CC - 8, NEW DELHI IN ITA NO. 5184/DEL/2013, WHICH WAS HEARD ON 18.11.2015 , THEREFORE, THE SAME VIEW MAY BE TAKEN FOR THIS APPEAL ALSO. ITA NO . 495/DEL/2015 SANDEEP WADHWA 4 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR ALTHOUGH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD N OT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT THE FACTS OF THE PRESENT CASE ARE IDE NTICAL TO THE FACTS INVOLVED IN THE CASE OF SMT. RASHMI WADHWA VS DCIT (SUPRA) , WHICH WE HAVE ALREADY DISPOSED OFF VIDE OUR ORDER DATED 18.01.2016 IN ITA NO. 5184/DEL/2014 AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY OBSERVING IN PARA S 7 & 8 AS UNDER: 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT A SIMILAR ISSUE HAVING IDENTICAL FACTS WAS A SUBJECT MATTER OF ADJUDICATION IN ITA NO. 501 & 502/DEL/ 2015 FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 RESPECTIVELY IN ASSESSEE S OWN CASE WHEREIN VIDE ORDER DATED 19.10.2015, ITAT DELHI BENCH SMC - 2, NEW DELHI, BY FOLLOWING THE ORDER OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA PASSED IN ITA NOS. 707, 709, 713/2014 ORDER DATED 28.08.2015 DELETED THE ADDITION AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 5 & 6 OF THE ORDER DATED 19.10.2015 WHICH READ AS UNDER: ITA NO . 495/DEL/2015 SANDEEP WADHWA 5 5 . ADMITTEDLY NO INCRIMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT IN TH E CASE OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE, THAT THE ASSESSMENT FOR BOTH THESE ASSESSMENT YEARS HAVE NOT ABATED. UNDER THE CIRCUMSTANCES, I FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESEE AND AGAINST THE REVENUE BY THE DECISION DATED 28.8.2015 OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA PASSED IN ITA NO. 707, 709 AND 713/2014 HELD HAS UNDER: - 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SE CTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN ITA NO . 495/DEL/2015 SANDEEP WADHWA 6 SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHIC H BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX . IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND I N THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATI ON AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELAT ABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCER NED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UN DER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. ITA NO . 495/DEL/2015 SANDEEP WADHWA 7 VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NO T PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 38. THE PRESENT APPEALS CONCERN AYS, 2002 - 03, 2005 - 06 AND 2006 - 07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERI AL W AS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 6. RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HON BLE JURISDICTIONAL HIGH COURT AS AFORESAID, I ALLOW THE APPEAL OF THE ASSESSEE, AS THE ASSESSMENT S IN BOTH THESE CASES PASSED U/S. 153A R.W.S. 143(3) WERE NOT MADE, BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH OF THEREAFTER. THE ADD I TIONS ARE PURELY BAS ED ON THE MATERIAL ALREADY AVAI L ABL E ON RECORD. HENCE, ALL THE ADDITIONS IN BOTH THE CASES ARE DELETED AND THE GROUND RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ALLOWED. 8. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 IN ITA NOS. 501 & 502/DEL/2015 (SUPRA) SO RESPECTFULLY FOLLOWING THE ORDER DATED 19.10.2015, THE IMPUGNED ADDITION IS DELETED. ITA NO . 495/DEL/2015 SANDEEP WADHWA 8 9. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 18.01.2016 IN ITA NO. 5184/DEL/2014 FOR THE ASSESSMENT YEAR 2005 - 06 IN THE CASE OF SMT. RASHMI WADHWA VS DCIT (SUPRA) , WE ALLOW THE APPEAL IN FAVOUR OF THE ASSESSEE AND THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( OR DER PRON OUNCED IN THE COURT ON 21 /01 / 2016 ) SD/ - SD/ - ( BEENA PILLAI ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 /01/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR