Smt. Rashmi Wadhwa, New Delhi V. DCIT, New Delhi

ITA 500/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7262 (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 . 500 /DEL /2015 : ASSTT. YEAR : 2006 - 07 SMT. RASHMI 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 GPW6899R 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 10 .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 . 500 /DEL/2015 RASHMI 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 AND THAT TOO BY DISREGARDING THE EVIDENCES/SUBMISSIONS FILED BY THE ASSESSEE AND BY RECORDING INCORRECT FACTS AND FINDINGS AND IN ANY CASE IMPUGNED ADDITION IS BEYOND THE SCOPE AND JURISDICTION OF THE IMPUGNED ASSESSMENT ORDER. 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 TRAVEL AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONT RARY TO LAW AND FACTS, VOID AB INITIO, AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACTS AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ADDITION S/DISALLOWANCES COULD NOT HAVE 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 HEARI NG AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NO . 500 /DEL/2015 RASHMI WADHWA 3 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 SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED BY THE 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. THE REAFTER, A NOTICE U/S 153A OF THE ACT DATED 18.01.2013 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, RETURN OF INCOME WAS FILED ON 11.12.2006 DECLARING A TOTAL INCOME OF RS. 3,94,428 / - . HOWEVER, THE ASSESSMENT WAS FRAMED BY THE AO HAD AN INCOM E OF RS. 7,97,690 / - 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. ITA NO . 500 /DEL/2015 RASHMI WADHWA 4 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 ASSESSEE S OWN CASE FO R THE ASSESSMENT YEAR 2005 - 06 IN ITA NO. 5184/DEL/2013, WHICH WAS HEARD ON 18.11.2015 , THEREFORE, THE SAME VIEW MAY BE TAKEN FOR THIS APPEAL ALSO. 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR ALTHOUGH SUPPORTED THE ORDER OF THE AUTHORITIES BELOW BUT COULD NOT C ONTROVERT 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 IDENTIC AL TO THE FACTS INVOLVED IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06, 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 ITA NO . 500 /DEL/2015 RASHMI WADHWA 5 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 PA SSED 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: 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 FAVO UR 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 UND ER SECTION 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. ITA NO . 500 /DEL/2015 RASHMI WADHWA 6 II. ASSESSMENTS AND REASSESSMENTS PENDIN G 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 T AKES 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 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 INFO RMATION 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 H AS 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 RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. ITA NO . 500 /DEL/2015 RASHMI WADHWA 7 VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCER NED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMEN T 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 OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED W ITH 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 WER E NOT 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 M ATERIAL 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 ASSES SMENTS 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, AL L THE ADDITIONS IN BOTH THE CASES ITA NO . 500 /DEL/2015 RASHMI WADHWA 8 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. 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 ASSESSEE S OWN CASE, 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 . ( ORDER 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