Real Innerspring Technologies (P) Ltd, New Delhi V. DCIT, New Delhi

ITA 514/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2439 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 31-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Search and seizure
• Section: 153A; 132

Judgement Text

ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F, NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMB ER ITA NO. 514/DEL/2015 AY: 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD., C/O KAPIL GOEL, ADV. F-26/124, SECTOR 7, ROHINI, NEW DELHI. AACCR7126D VS . DCIT CENTRAL CIRCLE 4 NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. DEPARTMENT BY : SMT. SULEKHA VERMA, CIT (DR) DATE OF HEARING : 05/11/2018 DATE OF PRONOUNCEMENT : 14/11/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 30/10/14 PASSED BY LD. CIT (A)-XXXIII, NEW DE LHI FOR ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS OF APPEAL: ADDITION FOR ALLEGED UNEXPLAINED CASH RS. 10,00,000 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT DELETING THE WRONGFUL ADDITION MADE ON ACCOUNT OF ALLEGED UNEXPLAINED CASH AMOUNTI NG TO ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 2 RS. 10,00,000/- IGNORING ASSESSEES REPLY AND EXPLA NATION OFFERED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAINING THE WRONGFUL AD DITION MADE ON ACCOUNT OF ALLEGED UNEXPLAINED CASH AMOUNTI NG TO RS. 10,00,000/- ON THE BASIS OF CONJECTURES AND SUR MISES, ON LEGALLY UNSUSTAINABLE BASIS, WITHOUT OBJECTIVELY CO NSIDERING ASSESSEES CASE AND CITED PRECEDENT. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, MODIFY , RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREI N ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APP EAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 WA S CARRIED OUT ON 21/01/11 IN DS GROUP OF CASES. GROUP IS PRIMARIL Y INVOLVED IN MANUFACTURING AND TRADING OF CHEWING TOBACCO AND PR EMIUM PAN MASALA, BESIDES OTHER BUSINESS. THE GROUP IS ALSO I NVOLVED IN FOOD PRODUCTS, PACKING, HOSPITALITY, RUBBER STEEL A ND EDUCATION BUSINESS. 2.1 ASSESSEE FILED ITS RETURN OF INCOME FOR YEAR UN DER CONSIDERATION ON 30/09/11 DECLARING LOSS OF RS.3,25 ,344/-. IN RESPONSE TO NOTICE, REPRESENTATIVE OF ASSESSEE APPE ARED BEFORE LD. AO. LD. AO OBSERVED THAT ASSESSEE IS ENGAGED IN MAN UFACTURING OF MATTRESS, SPRING UNIT AND BASE ETC. IT HAS BEEN RECORDED BY LD. AO THAT DURING SEARCH AND SEIZURE PROCEEDINGS TOOK PLACE AT B-7- 8, SECTOR 3, NOIDA, OFFICE PREMISES OF ASSESSEE COM PANY AND OTHER GROUP CONCERNS CASH OF RS.73,90,360/- AND RS. 60 LA CS WAS ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 3 FOUND. IT WAS OBSERVED THAT OUT OF THE SEIZED CASH RS. 10 LACS HAS BEEN CLAIMED BY ASSESSEE COMPANY AS BELONGING T O ASSESSEE. 2.2 UPON QUERY BEING RAISED BY LD. AO ASSESSEE SUBM ITTED THAT GENERAL MANAGER OF ASSESSEE, CAME FROM RUDRAPUR UNI T OF COMPANY WITH CASH OF RS. 10 LACS TO HANDED OVER TO NOIDA UNIT. IS IT WAS SUBMITTED BY ASSESSEE THAT SINCE GENERAL MANAGER REACHED VERY LATE, BY THE TIME CASHIER HAD LEFT AND THE SAME WAS HANDED OVER TO SH. SUBASH CHAND GUPTA FOR SAFE CUST ODY. IT WAS SUBMITTED BY ASSESSEE THAT THE AMOUNT IS DULY REFLE CTED IN THE COMPANIES AUDITED FINANCIAL STATEMENT UNDER THE HEA D LOANS AND ADVANCES SUB LEDGER INCOME TAX UNDER PROTEST. ASSES SEE ALSO PRODUCED EXTRACT OF CASH BOOK OF RUDRAPUR UNIT BEFO RE LD. AO IN SUPPORT OF CLAIM AND AFFIDAVIT BY GENERAL MANAGER O F ASSESSEE. 2.3 LD. AO REJECTED SUBMISSIONS OF ASSESSEE AND ADD ED SUM OF RS. 10 LACS TO TOTAL INCOME FROM UNDISCLOSED SOURCE S. AGGRIEVED BY ORDER OF LD. AO ASSESSEE PREFERRED APP EAL BEFORE LD. CIT (A) WHO UPHELD ADDITION. 3. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 4. LD.AR SUBMITTED THAT MATERIAL FOUND DURING SEARC H COULD HAVE BEEN USED FOR FRAMING ASSESSMENT UNDER SECTION 153C OF THE ACT. HE SUBMITTED THAT AUTHORITIES BELOW FAILED TO APPRECIATE FACT THAT ASSESSEE IS AN INDEPENDENT ENTITY. PLACIN G RELIANCE UPON INVENTORY OF CASH DATED 21/01/11 DRAWN BY SEARCH TE AM, LD.AR SUBMITTED THAT ENTIRE CASH HAS BEEN FOUND FROM PREM ISES OF OTHER PERSONS AND DOES NOT CARRY NAME OF ASSESSEE. HE THUS ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 4 ALLEGED THAT PROCEEDINGS INITIATED BY LD.AO UNDER S ECTION 153A IS BAD IN LAW. LD.AR PLACED RELIANCE UPON DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN 380 ITR 573 . 5. ON THE CONTRARY LD.DR SUBMITTED THAT, THERE WERE SIMULTANEOUS SEARCH AT VARIOUS PREMISES, AND ASSESS EE BEING PART OF THE GROUP, IT SHOULD BE CONSTRUED THAT MATE RIAL WAS GATHERED FROM PREMISES OF SEARCHED PERSON. HE ALSO SUBMITTED THAT SEARCH ON DIRECTORS CONSTRUED TO BE SEARCH ON THE COMPANY AND INITIATION OF ASSESSMENT UNDER SECTION 153A IS TO BE HELD VALID. 6. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES AND THE LIGHT OF THE RECORDS PLACED BEFORE US . 7. DURING THE ARGUMENTS, LD.AR SUBMITTED THAT ASSES SEE EXPLAINED CASH BELONGING TO RUDRAPUR UNIT OF ASSESS EE, WHICH IS REFLECTED IN BOOKS OF ACCOUNT. HE SUBMITTED THAT AN AFFIDAVIT OF GENERAL MANAGER WHO CARRIED CASH AND HANDED OVER TO SUBASH CHANDER GUPTA FATHER OF SH. ARCHIT GOYAL, DIRECTOR OF ASSESSEE, SINCE ACCOUNTANT HAD ALREADY LEFT. HE HAS THUS SUBM ITTED THAT UNDER NO SUM CIRCUMSTANCES THE SAID CASH OF RS. 10 LACS COULD BE TREATED AS UNDISCLOSED. 8. IT IS ALSO SUBMITTED BY LD.AR THAT ACTION INITIA TED BY LD.AO UNDER SECTION 153A IS NOT VALID AS ASSESSEE IS NOT ONE OF THE PERSON WHO FORMS PART OF SEARCH UNDER SECTION 132 O F THE ACT. THIS FACT IS VERY MUCH CLEAR FROM INVENTORY OF CAS H FOUND AND SEIZED DATED 21/01/11 SUBMITTED BY LD.AR BEFORE US TODAY. IN ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 5 OUR OPINION THE SEARCH DID NOT RESULT IN ANY INCRIM INATING MATERIAL HAVING FOUND, BELONGING TO ASSESSEE. WE AG REE WITH THE CONTENTION ADVANCED BY LD. AR THAT, AT THE MOST REV ENUE COULD HAVE INITIATED PROCEEDINGS UNDER SECTION 153C. CONS IDERING TOTALITY OF FACTS, WE HOLD ASSESSMENT IN CASE OF AS SESSEE UNDER SECTION 153A TO BE VOID AB INITIO , LIABLE TO BE QUASHED. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE STANDS ALL OWED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/11/2018 SD/- SD/- ( PRASHANT MAHARISHI) (BEENA A PILLAI) ACCOUNTANT MEMBER JU DICIAL MEMBER DT. 14 TH NOVEMBER, 2018 *GMV/*KAVITA ARORA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO. 514/DEL/2015 A.Y. 2011-12 REAL INNERSPRING TECHNOLOGIES (P) LTD. 6 DATE DRAFT DICTATED ON 13.11.18 DRAFT PLACED BEFORE AUTHOR 14.11.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 14.11.18 KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 14.11.18 FILE SENT TO THE BENCH CLERK 14.11.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.