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

ITA 501/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97565 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 11-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RAKHI VIMAL
• Assessee Lawyers: ABHISHEK ANAND
• Keywords: Search and seizure
• Section: 69C; 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NOS. 501 & 502/DEL/2015 AYRS: 2008- 09 & 2009-10 SMT. RASHMI WADHWA, VS. DCIT, CC-8, C/O M/S RRA TAXINDIA NEW DELHI D-28, SOUTH EXTENSION, PART-I, NEW DELHI 110 049 (PAN: AAGPW6899R) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TARUN KUMAR, ADV. & SH. ABHISHEK ANAND, ADV. RESPONDENT BY : MRS. RAKHI VIMAL, JCIT ORDER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS BOTH DATED 10.12.2014 PASSED BY THE LD.CIT(A)-XXVII, NEW DELHI FOR ASSESSMENT YEARS 2008-09 & 2009-10. SINCE THE ISSUES INVOVLED IN BOTH THE APPE ALS ARE COMMON AND INDENTICAL, WE ARE DISPOSING THESE APPEALS BY PASSING A COMMON ORDER FOR THE SAKE OF BREVITY, BY DEALING WITH ITA NO. 501/DEL/2015 (AY 2008-09). 2. THE BRIEF FACTS OF THE CASE ARE BROUGHT OUT IN T HE LD. CIT(A)S ORDER VIDE PARA NO. 2 WHICH IS EXTRACTED BELOW FOR READY REFERENCE. 2. THE BRIEF FACTS OF THE CASE AS CULLED OUT FRO M THE ASSESSMENT ORDER ARE THAT THE APPELLANT, AN INDIVIDUAL, DERIVED INCOME FROM 'SALA RY' AND 'OTHER SOURCES'. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE I. T. ACT, 196 1 WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT IN NUSSLI (SWI TZERLAND) LTD. GROUP OF CASES ON 19.10.2010 AND SIMULTANEOUSLY THE APPELLANT PREMISE S WERE ALSO SEARCHED. THE CASE OF THE APPELLANT WAS CENTRALIZED U/S 127 OF THE I. T. ACT, 1961 VIDE ORDER F. NO. C.I.T.- ITA NOS. 501&502/DEL/2015 A.YRS. 2008-09 & 2009-10 2 XV/CENTRALIZATION /2012-13/1556 DATED 02.01.2013 AN D THE JURISDICTION OVER THE APPELLANT'S CASE WAS ASSIGNED TO THE PRESENT ASSESS ING OFFICER, CENTRAL CIRCLE-8, NEW DELHI. THEREAFTER, A NOTICE U/S 153A OF THE I. T. A CT, 1961 DATED 8.01 .2013 WAS ISSUED AND -SERVED UPON THE APPELLANT, IN RESPONSE TO WHIC H THE APPELLANT FILED HIS RETURN OF INCOME ON 30.03.2009 DECLARING A TOTAL INCOME OF RS .2,23,051/-. SUBSEQUENTLY, NOTICES US 143(2) AND 142(1) ALONG WITH DETAILED QU ESTIONNAIRE WERE ISSUED AND SERVED UPON THE APPELLANT. IN RESPONSE TO THE SAME, THE AR OF THE APPELLANT ATTENDED THE ASSESSMENT PROCEEDINGS AND FILED THE REQUIRED D ETAILS AND INFORMATION, WHICH WERE EXAMINED AND DISCUSSED BY THE ASSESSING OFFICE R. THEREUPON, THE ASSESSMENT WAS COMPLETED IN TERMS OF ORDER U/S 153A READ WITH SECTION 143(3) DATED 11.03.2013 AT A TOTAL INCOME OF RS.8,23,050/- AS AGAINST THE R ETURNED INCOME OF RS.2,23,051/- WHEREIN THE ASSESSING OFFICER MADE THE FOLLOWING AD DITIONS: 1. ADDITION U/S 69C ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS RS. 3,90,000/- 2. ADDITION U/S 69C ON ACCOUNT OF FOREIGN TRIP EXPENSES RS. 2,10,000/- 3. THE FIRST APPELLATE AUTHOIRTY HAD CONFIRMED THE ORDER OF THE AO. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL ON THE FOL LOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S 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 A SSUMING JURISDICTION AS PER LAW AND WITHOUT SERVING THE VALID NOTICES AS PE R LAW AND WITHOUT RECORDING REQUISITE SATISFACTION AS PER LAW AND WITHOUT OBTAI NING REQUISITE APPROVAL AS PER LAW AND WITHOUT COMPLYING WITH OTHER MANDATORY CONDITIONS UNDER THE ACT ITA NOS. 501&502/DEL/2015 A.YRS. 2008-09 & 2009-10 3 AND WITHOUT SERVING THE MANDATORY NOTICES ULS 143(2 ) AND 142(1) OF INCOME TAX ACT, 1961. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING NOTIONAL ADDITION OF RS.2,10,000/- ON ACCOUNT OF FO REIGN TRAVEL ULS 69C AND THAT TOO BY DISREGARDING THE EVIDENCES/SUBMISSIONS FILED BY THE ASSESSEE AND BY RECORDING INCORRECT FACTS AND FINDINGS AND IN AN Y CASE IMPUGNED ADDITION IS BEYOND THE SCOPE AND JURISDICTION OF THE IMPUGNED A SSESSMENT 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.2,10,000/- ON ACCOUNT OF FOREIGN TRAVEL AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, AND WITH OUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACT S AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GRO UNDS. 4. 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 TH E ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 4. I HAVE HEARD SH. TARUN KUMAR, LD. COUNSEL OF T HE ASSESSEE AND LD. DR, MRS. RAKHI VIMAL ON BEHALF OF THE REVENUE. 5. ADMITTEDLY NO INCIRMINATING MATERIAL WAS FOUND O R SEIZED DURING THE COUSRE OF SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT IN THE CA SE OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE, THAT THE ASSESSMENT FOR BOTH THESE ASSESSMENT YEAR S 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 AFOREM ENTIONED ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: ITA NOS. 501&502/DEL/2015 A.YRS. 2008-09 & 2009-10 4 I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSO N SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREV IOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE 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 TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFORE MENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER 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 A DDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE R ELATED 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 NO S. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T 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 ASS ESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERN ED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECT ION 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 BROUG HT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH 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 REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F 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 COMPL ETED. SINCE NO INCRIMINATING ITA NOS. 501&502/DEL/2015 A.YRS. 2008-09 & 2009-10 5 MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDI TIONS 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 ASSESSMENTS 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 AD DTIONS ARE PURELY BASED ON THE MATERIAL ALREADY AVAIBLAE ON RECORD. HENCE, ALL THE ADDITIO NS IN BOTH THE CASES ARE DELETED AND THE GROUND RAISED BY THE ASSESSEE IN BOTH THE APPEALS A RE ALLOWED. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER,2015. SD/- (J.SUDHAKAR REDDY) ACCOUNTA NT MEMBER DATED: THE 19 TH OCTOBER, 2015 *SR BHATNAGAR* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT(A); 5. DR; 6. GUARD FILE BY ORDER ASSTT. REGISTRAR