A.K. Services Private Ltd., New Delhi V. DCIT, New Delhi

ITA 4985/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6759 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-11-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: ASHISH GOEL
• Keywords: Unexplained expenditure; Search and seizure; Question of law; Right to appeal; Documents seized
• Section: 143(3); 133A; 153A; 14A; 133(6); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. SUDHANSHU SRIVASTAVA, JM IT A NO. 4985 /DEL/2013 : ASSTT. YEAR : 2002 - 03 ITA NO. 4986/DEL/2013 : ASSTT. YEAR : 2005 - 06 A. K. SERVICES PVT. LTD., FLAT NO. N, SAGAR APARTMENT, 6, TILAK MARG, NEW DELHI - 110001 VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2 0 , NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCA1591L ITA NO. 5615/DEL/2013 : ASSTT. YEAR : 2002 - 03 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 20, NEW DELHI VS A. K. SERVICES PVT. LTD., FLAT NO. N, SAGAR APARTMENT, 6, TILAK MARG, NEW DELHI - 1100 01 (APPELLANT) (RESPONDENT) PAN NO. AABCA1591L ASSESSEE BY : SH. VED JA I N, ADV. & SH. ASHISH GOEL, CA REVENUE BY : SH. RAVI JAIN , CIT DR DATE OF HEARING : 1 5 .1 1 .201 6 DATE OF PRONOUNCE MENT : 08 .02 .201 7 ORDER PER N. K. SAINI, AM : THE CROSS APPEALS BY THE ASSESSEE AND THE DEPARTMENT FOR THE ASSESSMENT YEAR 2002 - 03 AND THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 12.07.2013 OF THE LD. CI T(A) - XXXI , NEW DELHI. ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 2 2. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. FIRST WE WILL DEAL WITH THE CROSS APPEAL FOR THE ASSESSMENT YEAR 2002 - 03. IN THE ASSESSEE S APPEAL IN ITA NO. 4985/DEL/2013, F OLLOWING GROUNDS HAVE BEEN RAISED : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BO TH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF AN AMOUNT OF RS. 1,09,029/ - MADE BY THE AO INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 4 . I N THE APPEAL OF THE DEPARTMENT IN ITA NO. 5615/DEL/2013, THE GROUNDS RAISED READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,31,55,000/ - MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON SUB BROKERAGE AND THE ASSESSEE COULD NOT SUBSTANTIATE THE SERVICES RENDERED BY SUB BROKERS AND FUNDS MOBILIZED BY THEM FOR THE ASSESSEE. ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 3 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,31,55,000/ - MADE BY THE A.O. AND IGNORING THE FACTS THAT THE THIRD PARTY ENQUIRIES CO NDUCTED BY THE A.O. PROVED THAT NO ACTUAL SERVICES WERE RENDERED AND ASSESSEE HAS NOT DISCHARGED ITS ONUS, AS NO DETAILS WERE FILED TO SUBSTANTIATE THE SERVICES RENDERED BY SUB BROKERS AND FUNDS MOBILIZED BY THEM FOR THE ASSESSEE. 3. THE ORDER OF THE CIT( A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 5 . THE ASSESSEE MOVED AN APPLICATION DATED 10.11.20 16 FOR ADMISSION OF THE ADDITIONAL GROUNDS BY STATING THEREIN AS UNDER: 1. THE APPLICANT HAS FILED THE ABOVE SAID APPEAL AGAINST THE ORDER PASSED BY THE LEARNED CIT(A). 2. IN THE APPEAL FILED BEFORE THE LEARNED CIT(A) THE ASSESSEE HAS CHALLENGED THE VARI OUS ADDITIONS MADE BY THE AO ON THE GROUND THAT THIS ADDITION CANNOT BE MADE IN A PROCEEDING UNDER SECTION 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH, AS WELL AS THIS ADDITION IS UNSUSTAINABLE ON MERITS. 3. THE LEARNED CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND HAS RECORDED ITS FINDINGS ONLY ON MERITS. ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 4 4. IN THE APPEAL FILED BEFORE THE HON'BLE ITAT, THE APPELLANT HAS RAISED 3 GROUNDS OF APPEAL CHALLENGING THE ABOVE ADDITIONS, BOTH ON FACTS AN D LAW. THOUGH THESE GROUNDS COVER UP THE ISSUE THAT THE ADDITIONS MADE ARE UNTENABLE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH, BUT AS A MATTER OF ABUNDANT CAUTION THE APPELLANT IS FILING ADDITIONAL GROUNDS OF APPEAL RAISING SPECIFIC GROUNDS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CONTENTION THAT NO ADDITION CAN BE MADE IN PROCEEDINGS UNDER SECTION 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH. 6. ACCORDINGLY, IT IS PRAYED THAT THE FOLLOWING GROUNDS OF APPEAL MAY BE ADMITTED AS ADDITIONAL GROUNDS OF APPEA L : - ADDITIONAL GROUNDS OF APPEAL 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN R EJECTING THE CONTENTION OF THE ASSESSEE THAT IN A PROCEEDING UNDER SECTION 153A NO ADDITION CAN BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION S MADE BY THE AO AND THE ADDITIONS CONFIRMED BY THE LEARNED CIT(A) ARE UNTENABLE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARCH. 6 . DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE C ONTENTS OF THE AFORESAID APPLICATION AND REQUESTED TO ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 5 ADMIT THE ADDITIONAL GROUNDS. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF NTPC VS CIT (1998) 229 ITR 383. 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR OPPOSED THE AD MISSION OF THE ADDITIONAL GROUNDS. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE PURELY THE LEGAL GROUND S FOR WHICH NO INVESTIGATION IS REQUIRED AND FACTS ARE ALREADY AVAILABLE ON THE RECORD. AS REGARDS TO THE ADMISSION O F THE ADDITIONAL GROUNDS, THE HON BLE SUPREME COURT IN THE CASE OF NTPC VS CIT 229 ITR 383 (SUPRA) HAS HELD AS UNDER: BO TH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS - OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW T HAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) IS TOO NARROW A VIEW TO TAKE OF THE POWERS OF THE TRIBUNAL. IT HAS BEEN FURTHER HELD AS UNDER: UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 6 BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAI SED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 9 . WE, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE AFORESAID REFERRED TO CASE ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. 10 . AT THE FIRST INSTANCE, WE WILL ADJUDICATE THE ADDITIONAL GROUND S AGITATED BY THE ASSESSEE. 11 . FACTS OF THE CASE IN BRIEF ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED U/S 132 OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) AND A SURVEY WAS CONDUCTED U/S 133A OF THE ACT IN THE CASE OF A. K. CAPITAL SERVICES LTD., IT S GROUP COMPANIES , DIRECTORS OF SUCH COMPANIES AND THEIR RELATIVES ON 26.04.2007. THE ASSESSEE HAD EARLIER FILED IT S RETURN OF INC OME ON 31.10.2002 SHOWING INCOME AT RS.59,62,020/ - . I N COMPLIANCE TO THE NOTICE U/S 153A OF THE ACT ISSUED BY THE AO ON 26.05.2009, T HE ASSESSEE VIDE LETTER DATED 25 .06.2009 STATED THAT THE RETURN OF INCOME AS FILED ORIGINALLY MAY BE TREATED AS RETURN FILE D IN COMPLIANCE TO THE NOTICE U/S 153A OF THE ACT. THE AO HOWEVER, FRAMED THE ASSESSMENT AT AN INCOME OF RS.3,03,25,411/ - BY MAKING THE ADDITION OF RS.12,08,391/ - U/S 14A OF ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 7 THE ACT R.W. RULE 8D OF THE INCOM E TAX RULES, 1962 AND DISALLOWING SUB ARRANGER FE E OF RS.2,31,55,000/ - . 12 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED DISALLOWANCE OF RS.1,09,029/ - OUT OF THE DISALLOWANCE OF RS.12,08,391/ - MADE BY THE AO U/S 14A OF THE ACT AND DELETED THE DISALLOWANCE OF RS.2,31,55 ,000/ - BY OBSERVING IN PARAS 4.4 . 2 AND 4.4 . 3 OF THE IMPUGNED ORDER AS UNDER: 4. 4.2 IT IS NOTED THAT, CIT(A) - I HAS CONSIDERED ALL THE POINTS RAISED BY THE PRESENT AO WHICH ARE VERY MUCH PART OF THE ASSESSMENT ORDER ITSELF. HE HAS OBSERVED THAT THE PARTIES INVOLVED HAD CONFIRMED THE FACT OF RENDERING SERVICES AND RECEIPT OF PAYMENTS THROUGH BANKING CHANNELS IN THEIR REPLIES GIVEN TO THE AO U/S 133(6) AND THE DISALLOWANCE MADE BY THE AO WAS NOT BASED ON ANY EVIDENCE BUT ONLY ON THE BASIS OF HIS SUBJECTIVE OPI NION WHICH IS IN THE FORM OF SUSPICION. EVEN THOUGH THIS IS A SEARCH ASSESSMENT COMPLETED U/S 153A R.W.S 143(3), THERE ARE NO INCRIMINATING DOCUMENTS SEIZED DURING ACTION U /S 132 RELATING TO THESE SUB - ARRANGERS WHO HAVE RENDERED SERVICES AS ALREADY NOTED B Y CIT(A), THE COMPANIES INVOLVED, THOUGH LOCATED IN U.P. HAVE OFFICES IN DELHI AS PER THE INVOICES/ LETTER HEADS OF THESE SUB - ARRANGERS WHICH ARE PART OF THE RECORDS. FURTHER, THE AO HAD NOT ASKED ANY SPECIFIC DETAIL WHICH ACCORDING TO HIM COULD HAVE SATIS FIED THAT THE OTHER PARTY RENDERED ACTUAL SERVICES. IT IS NOT TH E CASE OF THE AO THAT THE SUB - AR RANGERS DID NOT CONFIRM HAVING RENDERED THE SERVICES. WHATEVER CALLED FOR HAD BEEN SUBMITTED BY THEM, I CONSIDER THAT IT WAS UPTO THE AO TO SEEK FURTHER SPECIFI C REQUIREMENT FROM THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE SERVICES RENDERED. INSTEAD THE AO HAD ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 8 DIRECTLY PROPOSED DISALLOWANCE OF TH E EXPENSES ON THE GROUND THAT THERE ARE NO EVIDENCES OF PROVIDING ACTUAL SERVICES. HE HAD NOT SPELT OUT WHAT ELSE, IN CLEAR TERMS, WAS REQUIRED TO BE SUBMITTED BY T HE ASSESSEE. THE PARA NO. 6 OF CI T (A) DATED 1/06/ 2010 READS AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AS ALSO THE DOCUMENTARY EVIDENCES FILED IN SUPPORT OF ITS CLAIM, IT IS SEEN FROM THE PERUSAL OF THE ASSESSMENT ORDER THAT THE LEARNED ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION MAINLY ON THE BASIS OF HIS FINDINGS IN THE CASE OF A.K. CAPITAL SERVICES LTD. WHICH IS AN ASSOCIATE CONCERN. IN THAT CASE ALSO THE ASSESSEE HAD EARNED AR RANGER FEE ON BONDS ISSUED OF VARIOUS PARTIES AND HAD PAID SUB ARRANGER FEE TO ITS SUB ARRANGER S FOR MOBILIZATION OF FUNDS. IN FACT TWO OF THE SUB ARRANGERS ARE COMMON PARTIES NAMELY SHAMLI STEELS AND CHAMUNDA PAPERS. IT IS FURTHER SEEN TH AT EVEN IN THIS C ASE THERE IS NO SEIZED MATERIAL ON THE BASIS OF WHICH ANY ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE REGA RDING THE IMPUGNED EXPENSES INCUR RED BY IT. THE A.O. ALSO HAS FA ILED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE EXPENSES HAVE NOT BEEN GENUINELY INCURRED OR THAT THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN RECEIVED BACK BY IT IN ANY FORM. I T IS FURTHER SEEN THAT THE EXPENSES INCURRE D ARC DULY VERIFIABLE FROM THE B ILLS OF THE SUB ARRANGERS WHOSE COMPLETE DETAILS ARE AVAILABLE ON RECORD AN D WHO HAVE ALSO FURNISHED THEIR INCOME TAX PARTICULARS AS ALSO HAVE GIVEN THE DETAILS OF SERVICES RENDERED BY THEM. THESE DETAILS ARE IN CONFORMITY WITH THE DETAILS FILED BY THE ASSESSEE AND THERE IS NO OTHER MATERIAL ON RECORD ON THE BASIS OF WHICH ANY AD VERSE INFERENCE COUL D BE DRAWN AGAINST THE ASSESSEE. IN THE CASE OF AJC CAPITAL SERVICES LTD. THE A.O. HAD MADE VERIFICATION FROM THE ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 9 SUB ARRANGERS DIRECTLY U/S 133(6) WH EREIN THEY HAD CONFIRMED THE FAC T OF RENDERING SERVICES. THE A.O. HOWEVER, HAD STILL D ISBELIEVED THE ASSESSEE AND MADE THE DISALLOWANCE WHICH WAS DELETE D BY THE UNDERSIGNED IN APPEAL N O. 614/09 - 10 VIDE ORDER DATED 23.04.2010 AS WELL AS IN THE CASE OF THAT COMPANY FOR SUBSEQUENT YEARS NAMELY ASSESSMENT YEAR 2003 - 04, 2004 - 05 ETC. IN THE INSTA NT CASE IT IS SEEN THAT THE ACTION OF LEARNED ASSESSING OFFICER IS WHOLLY ARBITRARY AND UNTENABLE IN LAW AS THE DISALLOWANCE IS BASED NOT ON T HE BASIS OF ANY EVIDENCE BUT ONL Y ON THE BASIS OF HIS SUBJECTIVE OPINION WHICH IS IN THE FORM OF SUSPICIOUS. SUCH A DISALLOWANCE CANNOT BE SUSTAINED AND DIRECTED TO BE DELETED ON THE BASIS OF MY OBSERVATION AS ABOVE AS ALSO IN VIEW OF MY FINDINGS IN THE CASE OF A.K. CAPITA SERVICES LTD. THIS GROUND OF APPEAL IS ALLOWED. 4 .4.3 IT IS NOTED THAT CIT(A) - I , HAD TAKEN A V IEW A F TER APPRECIATING THE EVIDENCES BEFORE HIM ON WINCH I CANNOT FIND FAULT . BEING A SEARCH ASSESSMEN T TH E DISALLOWANCES SHOULD HAVE EMANATED FROM THE DOCUMENTS SEIZED DURING THE SEARCH. HOWEVER, THERE IS NO CLARI TY ON THIS ASPECT IN THE ASSESSMENT ORDER. ITAT HAS SET ASIDE THE ORDER MAINLY FOR GIVING OPPORTUNITY OF BEING HEA RD TO THE AO WHO HAD EXPRESSED H IS DESIRE TO BE HEARD BY WAY OF A SPECIFIC REQUEST IN ITNS - 5I IN THIS REGARD. THE AO HAS ACCORDINGLY BEEN HEAR D. NO NEW FACT HAS BEEN POINTED OUT OR BRO UGHT OUT ON THE ISSUE, TH AT WAS NOT CONSIDERED IN THE 1 ST ROUND. THE AO HAS MADE WRITTEN SUBMISSIONS BASED ON THE ASSESSMENT ORDER WHICH WAS CONSIDERED IN DETAILS BY CIT(A) - I. THEREFORE, I DO NOT THINK THAT THERE IS ANY CASE FOR INTERFERING WIT H THE FINDIN GS GIVEN BY CIT(A) - I, WHICH A RE BASED ON LOGICAL REASONING AND APPRECIATION OF THE FACTS ON RECORD. THE AO HAS NOT FOLLOWED UP HIS DOUBTS / SUSPICIONS TO THEIR LOGICAL ENDINGS BY FOLLOWING UP WITH ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 10 HIS LEADS IF ANY. INSTEAD THE ADDITION HAS BEEN MADE ONLY O N THE DOUBTS/ SUSPICIONS W HICH HAS BEEN DELETED IN THE 1 ST ROUND OF APPEAL PROCEEDINGS. T HUS THE DISALLOWANCE OF RS, 2,3L,55,000 / - MADE ON T HE BASIS OF SUBJECTIVE OPINION OF THE AO CANNOT BE SUSTAINED IN A SEARCH ASSE SSMENT U/S 153A R,W.S 143(3) OF THE ACT. THE ADDITION IS THEREFORE DELETED. 13 . NOW THE DEPARTMENT IS IN APPEAL AGAINST THE DELETION OF ADDITION WHILE THE ASSESSEE HAS AGITATED THE SUSTENANCE OF THE ADDITION BY THE LD. CIT(A). DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSEE HAS ALREADY DISCLOSED ALL THE DETAILS IN ITS ORIGINAL RETURN OF INCOME ASSESSED U/S 143(3) OF THE ACT WHICH WAS NOT ABAT ED. THEREFORE, THE ADDITION MADE BY THE AO U/ S 153A R.W.S. 143(3) OF THE ACT , I N THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF SEARCH WAS NOT MAINTAINABLE. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: PARSVNATH DEVELOPERS LTD. VS DCIT IN ITA NO. 5188/DEL/2013 ORDER DATED 31.10.2014 SANJAY AGGARWAL VS DCIT IN ITA NO. 3184/DEL/2013 ORDER DATED 16.06.2014 KUSUM GUPTA VS DCIT IN ITA NO. 4873/DEL/2009 ORDER DATED 28.03.2013 ACIT VS ASHA KATARIA IN ITA NO. 3105/DEL/2011 ORDER DATED 20.05.2013 ACIT VS PRITHVI SOUND PRODUCT S CO. PVT. LTD. IN ITA NO. 3422 - 6/DEL/2011 ORDER DATED 17.04.2014 DCIT VS VRINDAVAN FARMS PVT. LTD. IN ITA NOS. 3359 TO 3361/DEL/2013 ORDER DATED 06.06.2014 ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 11 V K FISCAL SERVICES P. LTD. VS DCIT IN ITA NOS. 5460 TO 5465/DEL/2012 ORDER DATED 27.11.2013 DREAM BUILCON PVT. LTD. VS DCIT IN ITA NO. 5392/DEL/2012 ORDER DATED 22.11.2013 DCIT VS DCM SHRIRAM IND. LTD. IN ITA NOS. 1648 TO 1653/DEL/2013 ORDER DATED 11.10.2013 ACIT VS PACL INDIA LTD. IN ITA NO. 2637/DEL/2010 ORDER DATED 20.06.2013 MGF AUTOMOBILES LTD. VS ACIT IN ITA NO. 4212/DEL/2011 ORDER DATED 28.06.2013 SSP AVIATION LTD. VS DCIT 346 ITR 177 (DEL) JAKSON ENGINEERING LTD. VS ACIT IN ITA NOS. 349 & 350/DEL/2013 ORDER DATED 11.04.2014 CIT(CENTRAL) - III VS KABUL CHAWLA IN ITA NOS. 707, 709 & 713/2014 ORDER D ATED 28.08.2015 TO THE HON BLE DELHI H.C. 1 4 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDER PASSED BY THE AO AND FURTHER SUBMITTED THAT THE ADDITIONS WERE MADE SINCE THE ASSESSEE FAILED TO FURNISH THE REPLY TO THE SATISFACTION OF THE AO. THEREFO RE, THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE RELIEF TO THE ASSESSEE. 15. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT (CENTRAL - III) VS KABUL CHAWLA IN ITA NOS. 707, 709 & 713/2014 ORDER DATED 28.08.2015 (SUPRA) HELD AS UNDER: ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 12 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 DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS F OR 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 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 WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX . IV. ALTHOUGH SECTION 153 A DO ES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T CAN BE ARBITRARY OR MADE WITHOUT ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 13 ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN 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 CA N BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOF AR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER 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 OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY 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 NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 16. IN THE PRESENT CASE, S INCE THE ADDITION WAS MADE BY T HE AO U/S 153A OF THE ACT IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE OF CIT ITA NO S. 4985, 4986 & 5615 /DE L/201 3 A. K. SERVI CES PVT. LTD. 14 VS KABUL CHAWLA (SUPRA) THE ASSESSMENT FRA MED U/S 153A OF THE ACT WAS NOT VALID. ACCORDINGLY, ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED IN ITS FAVOUR AND WE DO NOT SEE MERIT IN THE APPEAL OF THE DEPARTMENT. 17 . IN ITA NO. 4986/DEL/2013 FOR THE ASSESSMENT YEAR 2005 - 06, THE ISSUES INVOL VED ARE SIMILAR AS WERE INVOLVED IN ITA NO. 4985/DEL/2013 FOR THE ASSESSMENT YEAR 2002 - 03. THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS. 18 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE ARE ALLOWED AND THAT OF THE DEPARTMENT IS DISMISSED . (O RDER PRONOUNCED IN THE COURT ON 08 /0 2 /2017 ) SD/ - SD/ - (SUDHANSHU SRIVASTAVA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08 /02 /2017 *SUBODH* COPY FOR WARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR