ITO (E), New Delhi V. Society for Ecological Management of Wastelands and Habitats, New Delhi

ITA 517/DEL/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7056 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-11-2015
• Assessment Year: 1991-1992
• Appeal Filed On: 04-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Search and seizure; Opportunity of being heard; Source of fund; Additional evidence
• Section: 12A; 11; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.517/DEL/2010 (ASSESSMENT YEAR 1991-1992) ITO(E), VS. SOCIETY FOR ECOLOGICAL MGMT. TRUST WARD II, OF WASTELANDS AND DELHI-110 092 HABITATS, B-11, POCKET B, GANGOTRI ENCLAVE, NEW DELHI- 110 019 GIR / PAN : 1108-S (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HEMANT GUPTA, JCIT, DR RESPONDENT BY : SHRI M. S. SEKHON, CA DATE OF HEARING: 23.11.2015 DATE OF PRONOUNCEMENT: 29.01.2016 ORDER PER KULDIP SINGH, JM: THE APPELLANT, ITO(E), TRUST WARD II, DELHI-110 09 2 (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 03.11.2009 PASSED B Y CIT(A), NEW DELHI QUA THE ASSESSMENT YEAR 1991-92 ON THE GROUNDS INTE R ALIA THAT: 1. ON THE FACTS NEW DELHI IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASS ESSEE B DELETING THE ADDITION MADE AT RS.42,49,000/- U/S 68 OF THE A CT WHEN NO SATISFACTORY EXPLANATION WAS PROVIDE REGARDING THE SOURCE OF CASH DEPOSIT ADEQUATE SUFFICIENT OPPORTUNITIES OVER A VE RY LONG PERIOD OF MORE THAN 7 YEARS FROM 1994 TO 2001. 2 I.T.A.NO517/DEL/2010 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE WHEN I T COULD NOT DISCHARGE THE ONUS OF PROVING THE GENUINENESS OF CA SH CREDITS WHICH WERE ADDED U/S 68. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE: THE A SSESSEE BEING A TRUST, REGISTERED U/S 12A OF THE I.T. ACT, 1961 ( FOR SHOR T THE ACT) FILED ITS RETURN OF INCOME ON 31.03.1992, CLAIMING EXEMPTION U/S 11 OF THE ACT AND ASSESSMENT WAS COMPLETED ON 29.03.1994 U/S 143(2) A ND THEREBY DETERMINED THE INCOME AT RS.43,15,200/- BY DENYING EXEMPTION U/S 11 OF THE ACT, WHICH ORDER HAD BEEN SET ASIDE BY LD. CIT( A) VIDE PARA 2 IN APPEAL NO.178/1994-95 DATED 31.01.1995. AGAIN, IN THE FRESH ASSESSMENT, TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.43, 15,200/- BY DENYING THE EXEMPTION U/S 11 AND ASSESSEE AGAIN APPROACHED LD. CIT(A) WHO HAS SET ASIDE THE ORDER WITH THE DIRECTION TO PASS FRESH OR DER AFTER MAKING INQUIRY, VISITING SITE AND EXAMINING THE MEMBERS OF THE SOCI ETY. 3. SHRI M S SEKHON, CA/AR OF THE ASSESSEE APPEARED, FILED DETAILS, BOOKS OF ACCOUNTS IN RESPONSE TO THE NOTICE ISSUED U/S 143(2) OF THE ACT. DURING THE COURSE OF FRESH ASSESSMENT, IN THE LIGHT OF DIRECTIONS ISSUED BY LD. CIT(A), ASSESSEE WAS CALLED UPON TO PRODUCE THE FOLLOWING DETAILS: I) WHETHER ANY ZONE RIGHTS AGREEMENT IS THERE BETWE EN THE MEMBERS, IF YES, PRODUCE THE COPY, II) FURNISH THE CURRENT CORRESPONDENCE ADDRESS FOR THE FOLLOWING PERSONS: A) SH. K. S. BRAR B) SH. ASHOK DHAWAN C) SMT. ANJALI SHARMA III) WHAT HAPPENED TO SUBSTANTIVE ADDITION OF CASH PAYMENT ALLEGED TO HAVE BEEN MADE FOR WHICH ENTRIES WERE FO UND IN LEDGER: 3 I.T.A.NO517/DEL/2010 ARE THESE AMOUNTS ASSESSED AND TAXES PAID, PLEASE F URNISH THE FINAL PICTURE. 4. CONSEQUENTLY ASSESSEE FILED REQUISITE DETAILS VI DE LETTER DATED 06.02.2011. THE ASSESSING OFFICER HOWEVER RECORDED IN THE ASSESSMENT ORDER THAT AS PER THE DIRECTION ISSUED BY LD. CIT(A ) THE PHYSICAL NATURE OF THE LAND AS TO IN WHAT SHAPE IT IS LYING IS IMMATER IAL TO THE PROCEEDINGS AND THE ASSESSEE COULD NOT PRODUCE ANY CONVINCING EVIDE NCE FOR THE AMOUNT OF RS.42,49,000/- IN THE HANDS OF ANIL LAUL ON THE GR OUND OF DISPUTE BETWEEN THE MEMBERS. FROM PERUSAL OF LEDGER SEIZE D DURING SEARCH AND SEIZURE FROM SHRI ANIL LAUL, THEN ACTIVE MEMBER / S ECRETARY OF THE SOCIETY SHOWS THAT THE SAME DOES NOT DISCLOSE ANY PICTURE B ECAUSE THERE WAS NO ADDITION BUT WHEN THE SAID LEDGER WAS COMPARED WITH THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, THE CLEAR PICTURE CAME OU T REGARDING THE TOTAL FINANCIAL TRANSACTIONS OF THE SOCIETY. THE LEDGER IS GIVING COMPLETE PICTURE OF TRANSACTION OF THE SOCIETY FOR THE RELEVANT PERI OD. SINCE THE SOCIETY HAS WILLFULLY CONCEALED CERTAIN TRANSACTIONS AND PREPAR ED REGULAR BOOKS OF ACCOUNTS AND FILED ITS RETURN, THE SAME HAS TO BE A DDED AS INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT AND THE ASSES SING OFFICER THEREBY MADE ADDITION OF RS.42,70,200/-. 5. FEELING AGGRIEVED THE ASSESSEE HAS CARRIED THE M ATTER BEFORE LD. CIT(A), WHO HAS ALLOWED THE APPEAL. FEELING AGGRIE VED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF THE PRESENT A PPEAL. 6. LD. D.R. CHALLENGING THE IMPUGNED ORDER CONTENDE D THAT WHEN THE ASSESSEE HAS FAILED TO PROVE THE SOURCE OF CASH CRE DIT DEPOSITED BY THE MEMBERS OF THE SOCIETY DESPITE AVAILING NUMEROUS OP PORTUNITIES, LD. 4 I.T.A.NO517/DEL/2010 CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE ASSESSING OFFICER AND RELIED UPON THE ORDER PASSED BY THE ASSESSING O FFICER. 7. HOWEVER, TO REPEL THE ARGUMENTS ADDRESSED BY LD. D.R., LD. A.R. FOR THE ASSESSEE CONTENDED INTER ALIA THAT NONE OF THE MEMBERS OF THE SOCIETY HAS ACCEPTED THAT THEY HAD PAID CASH TO THE ASSESSEE SOCIETY AND THERE IS NO CONSTRUCTION ON THE SITE AND THE AREA O F FARM HOUSES DO NOT FORM PART OF THE LAND IN QUESTION THAT AS PER OFFIC E NOTE, IT IS PROVED THAT THE MATTER WAS EARLIER HEARD BY THE ASSESSING OFFIC ER ON 22.03.1994 WHEREIN NOTICE WAS ISSUED ON 25.03.1994 AND AS SUCH , HAS NOT BEEN GIVEN AN OPPORTUNITY OF BEING HEARD. 8. UNDISPUTEDLY, THIS IS A THIRD ROUND OF LITIGATIO N BECAUSE ON EARLIER TWO OCCASIONS, LD. CIT(A) HAS SET ASIDE THE ASSESSM ENT ORDER WITH THE DIRECTION TO GIVE REASONABLE OPPORTUNITY TO THE ASS ESSEE AND THEN FRESH ASSESSMENT WAS MADE. THEN, FRESH ASSESSMENT ORDER DATED 25.03.1997 WAS PASSED AND AN AMOUNT OF RS.42,49,000/- WAS ADDE D U/S 68 OF THE ACT BEING THE CONTRIBUTION MADE BY THE MEMBERS OF THE S OCIETY AS IS EVIDENT FROM THE LEDGER SEIZED FROM SHRI ANIL LAUL. THE AS SESSEE AGAIN APPROACHED LD. CIT(A) WHO HAS SET ASIDE THE ASSESSM ENT AND DIRECTED TO MAKE NECESSARY INQUIRIES BY VISITING THE SITE AND E XAMINING THE MEMBERS OF THE SOCIETY WHO ACTUALLY CONTRIBUTED THE AMOUNT. THEN ON FAILURE OF THE ASSESSEE TO PRODUCE EVIDENCE, MADE AN ADDITION OF R S.42,49,000/- IN THE HANDS OF SHRI ANIL LAUL. THEN, THE ASSESSEES APPE AL BEFORE LD. CIT(A) HAS BEEN ACCEPTED AND NOW, THE REVENUE HAS CHALLENG ED THE IMPUGNED ORDER. 5 I.T.A.NO517/DEL/2010 9. WE HAVE HEARD BOTH THE AUTHORIZED REPRESENTATIVE S OF THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD IN THE LI GHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF AUTHORITIES BELOW. 10. NOW, THE FIRST QUESTION ARISES FOR DETERMINATIO N IS, AS TO WHETHER LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.42,49,000/- U/S 68 OF THE ACT ON FAIL URE OF THE ASSESSEE TO FURNISH ANY EXPLANATION ? UNDISPUTEDLY, EIGHT MEMBERS OF THE SOCIETY NAMELY S/SHRI ANIL LAUL, K. S. BAR, VINEE SAXENA, R OOP SHARMA, MANJIT SINGH, J.P.SRIVASTAVA, ASHOK DHAWAN AND MRS. ANJALI SHARMA HAVE MADE CONTRIBUTION IN CASH TO THE TUNE OF RS.43,37,000/- TO THE ASSESSEE SOCIETY, AS IS EVIDENT FROM THE LEDGER ACCOUNT SEIZED FROM T HE PREMISES OF SHRI ANIL LAUL. 11. WHEN LD. CIT(A) HAD SET ASIDE THE ASSESSMENT OR DER ON 14.01.1999 WITH THE DIRECTION TO MAKE NECESSARY ENQUIRIES BY V ISITING THE SITE AND EXAMINING THE MEMBERS OF THE SOCIETY WHO HAVE ACTUA LLY CONTRIBUTED THE AMOUNT, THE ASSESSEE WAS CALLED UPON TO FURNISH THE FOLLOWING DETAILS: I) WHETHER ANY ZONE RIGHTS AGREEMENT IS THERE BETWE EN THE MEMBERS, IF YES, PRODUCE THE COPY, II) FURNISH THE CURRENT CORRESPONDENCE ADDRESSES FO R THE FOLLOWING PERSONS:- A) SHRI K. S. BRAR, B) SHRI ASHOK DHAWAN C) SMT. ANJALI SHARMA III) WHAT HAPPENED TO SUBSTANTIVE ADDITION OF CASH PAYMENT ALLEGED TO HAVE BEEN MADE FOR WHICH ENTRIES WERE FO UND IN LEDGER: ARE THESE AMOUNT ASSESSED AND TAXES PAID, PLEAS FUR NISH THE FINAL PICTURE?. 6 I.T.A.NO517/DEL/2010 12. FROM LETTER DATED 076.02.2001, FILED BY THE ASS ESSEE, IT HAS BECOME APPARENTLY CLEAR THAT THE ASSESSEE HAS NOT DENIED T HE RECEIPT OF CASH AT RS.43,37,000/- FROM ITS MEMBERS AS THIS FACT HAS SU RFACED FROM THE LEDGER SEIZED FROM SHRI ANIL LAUL, THE ACTING MEMBERS SECR ETARY OF THE SOCIETY DURING THE SEARCH AND SEIZURE. WHEN THE ASSESSING OFFICER HAS COMPARED THE SEIZED LEDGER WITH THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE, IT IS PROVED ON RECORD THAT THE SOCIETY HAS INTENTIONALLY NOT DISCLOSED THE CASH TRANSACTION IN THE REGULAR BOOKS OF ACCOUNTS. 13. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IS, AS TO WHETHER MATERIAL / LEDGER SEIZED FROM SHRI ANIL LAUL DURING SEARCH AND SEIZURE PROCEDURE, CAN BE UTILIZED FOR THE PURPOSE OF ASSES SMENT OF THE ASSESSEE SOCIETY ? THE ASSESSING OFFICER, WITHOUT AFFORDING OPPORTU NITY OF BEING HEARD TO THE MEMBERS, AGAINST WHOM THE ALLEGED AMOU NT OF RS.43,15,200/- HAS BEEN SHOWN, PROCEEDED TO MAKE ADDITION U/S 68 O F THE ACT BY DISALLOWING THE EXEMPTION U/S 11 OF THE ACT. THE A SSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, IS DUTY BOUND TO AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO HAS OTHERWISE PROVIDED TH E COMPLETE DETAILS OF THE MEMBERS AGAINST WHOM THE SAID AMOUNTS HAVE BEEN SHOWN AND WHO ARE THE INCOME TAX PAYERS. MORE SO, ASSESSING OFFI CER HAS NOT PREFERRED TO CONDUCT THE INVESTIGATION BY CALLING THE MEMBERS OF THE SOCIETY DESPITE THE FACT THAT HE HAS CATEGORICALLY MENTIONED AT PAG E 3 OF THE ORDER THAT VIDE LETTER DATED 06.02.2011, THE ASSESSEE HAD SUBMITTED CURRENT ADDRESSES OF THE MEMBERS OF THE SOCIETY EXCEPT MRS. ANJALI SHARM A, SETTLED IN USA. 14. ON THE OTHER HAND, LD. CIT(A) PROCEEDED TO DELE TE THE ADDITION BY HARPING UPON THE JURISDICTIONAL ERROR WITH THE ASSE SSING OFFICER THAT THE 7 I.T.A.NO517/DEL/2010 ASSESSING OFFICER WAS NOT COMPETENT TO INTRODUCE NE W SOURCES OF INCOME INTO THE ASSESSMENT SO AS TO ENHANCE THE ASSESSMENT , PARTICULARLY WHEN THE CASE WAS REMANDED TO HIM. WHEN UNDISPUTEDLY, IN TH E REFRAMED ASSESSMENT ORDER DATED 25.03.1997, ADDITION OF RS.4 2,99,000/- WAS MADE OUT OF WHICH ADDITION OF RS.25,86,000/- WAS MADE ON PROTECTIVE BASIS AND THE ADDITION OF BALANCE AMOUNT OF RS.16,63,000/- WA S MADE ON SUBSTANTIVE BASIS, IT IS SETTLED PRINCIPLE OF LAW THAT ONCE THE ASSESSMENT HAS BEEN SET ASIDE BY THE APPELLATE AUTHORITY, THE POWERS OF THE ASSESSING OFFICER ARE CONFINED TO THE ISSUE REMANDED TO HIM UNLESS HE IS DIRECTED TO MAKE DE NOVO ASSESSMENT. SO, WHEN VIDE ASSESSMENT ORDER DA TED 25.03.1997, ADDITION OF RS.42,49,000/- WAS MADE OUT OF WHICH AD DITION OF RS.25,86,000/- WAS MADE ON PROTECTIVE BASIS AND THE ADDITION OF BALANCE AMOUNT OF RS.16,63,000/- WAS MADE ON SUBSTANTIVE BA SIS, THE ASSESSING OFFICER HAS EXCEEDED HIS POWERS BY OVERTURNING THE PROJECTED AND SUBSTANTIAL ADDITION MADE IN THE EARLIER ASSESSMENT ORDER, BY MAKING ADDITION OF RS.42,70,200/- U/S 68 OF THE ACT. 15. EVEN OTHERWISE, MATERIAL SEIZED DURING SEARCH A ND SEIZURE OPERATION OF ANIL LAUL, CANNOT BE UTILIZED FOR THE PURPOSE OF ASSESSMENT WITHOUT AFFORDING OPPORTUNITY OF BEING HEAD TO THE ASSESSEE SOCIETY / MEMBERS WHICH HAS UNDISPUTEDLY NOT BEEN GIVEN TO THEM. LD. CIT(A) HAS PROCEEDED TO DELETE THE ADDITION WITHOUT ENTERTAINI NG ANY ADDITIONAL EVIDENCE AND WITHOUT CALLING UPON REMAND REPORT FRO M THE ASSESSING OFFICER. SO, WE ARE OF THE CONSIDERED VIEW THAT TH E MATTER IS REQUIRED TO BE RESTORED TO LD. CIT(A) FOR FRESH ADJUDICATION AF TER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQ UENTLY, GROUNDS NO.1 & 2 OF THE APPEAL ARE DETERMINED IN FAVOUR OF THE A PPELLANT. 8 I.T.A.NO517/DEL/2010 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL IS HEREBY ALLOWED FOR STATISTICAL PURPOSES. 17. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JAN., 2016. SD./- SD./- (N. K. SAINI) (KULDIP S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 29.01. 2016/SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 19,20/1 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 20,27/1 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 29/1/16 AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 29/1 SR. P S/PS 6 KEPT FOR PRONOUNCEMENT 29/1 SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER