ACIT, New Delhi V. M/s. Superb Developers (P) Ltd., New Delhi

ITA 52/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3431 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 19-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH K GUPTA
• Assessee Lawyers: S S RANA
• Keywords: Additional evidence; Accommodation entries
• Section: 143(3); 153A; 132; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SH. H.S.SIDHU, JUDICIAL MEMBER AND SH.ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A .NO.-52/DEL/2014 (ASSESSMENT YEAR-2006-07) ACIT, CENTRAL CIRCLE-3, NEW DELHI. ( APPELLANT) VS SUPERB DEVELOPERS (P.) LTD., WZ-183, F.F., LANE NO.4, LAJWANTI GARDEN, NEW DELHI. PAN-AAICS4437L (RESPONDENT) ASSESSEE BY SH.S.S.RANA, CIT DR REVENUE BY SH.SURESH K.GUPTA, ADV. ORDER PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). THE PRESENT APPEAL HAS BEEN FILED BY THE REVEN UE AGAINST THE ORDER DATED 25.10.2013 OF CIT(A)-1, NEW DELHI PERTA INING TO A.Y. 2006- 07. GROUNDS OF APPEAL ARE AS UNDER:- 1. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LA W AND ON FACTS IN DELETING THE ADDITION OF RS.83,00,000/- U/ S 68 OF THE ACT W.R.T PROCUREMENT OF ACCOMMODATION ENTRIES THROUGH SHARE APPLICATION MONEY FROM NON-DESCRIPT COMPANIES. 2. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LA W AND ON FACTS IN DELETING AN ADDITION OF RS.41,500/- MADE B Y THE AO W.R.T. COMMISSION PAID @ 5% FOR PROCUREMENT OF ACCO MMODATION ENTRIES THROUGH SHARE APPLICATION MONEY FROM NON-DE SCRIPT COMPANIES. 3. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN AD MITTING ADDITIONAL EVIDENCE UNDER RULE 46A. 4. (A)THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TEN ABLE IN LAW AND ON FACTS. PAGE 2 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. (B). THE ASSESSEE FILED ORIGINAL RETURN OF INCOME O N 21.03.2007 DECLARING NIL INCOME. LATER, SEARCH U/S 132 OF THE I.T.ACT, 1961 WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND NOTICE U/ S 153A OF THE I.T.ACT, 1961 (IN SHORT ACT) WAS ISSUED ON 13.04. 2010 FOR FURNISHING OF RETURN OF INCOME WITHIN 16 DAYS OF SERVICE OF THE N OTICE. IN RESPONSE TO THE AFORESAID NOTICE THE ASSESSEE FILED A LETTER DA TED 18.04.2011 STATING THEREIN THAT RETURN OF INCOME FILED ORIGINALLY AS P ER PROVISIONS OF SECTION 139 OF THE ACT MAY BE TREATED AS FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE I.T.ACT. ASSESSMENT ORDER DATED 29.12. 2011 WAS PASSED U/S 143(3) R.W.S. 153A OF I.T.ACT WHEREIN THE FOLLO WING ADDITIONS, TOTALING RS.83,41,500/-WERE MADE:- I). ON A/C OF SHARE APPLICATION MONEY RS.83,00,000/ - II). ON A/C OF COMMISSION RS. 41,500/- TOTALING RS.83,41,500/- (B.1). THE AFORESAID ADDITION OF RS.83,00,000/- WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE H AD TAKEN ACCOMMODATION ENTRIES TOWARDS SHARE APPLICATION MON EY. MOREOVER, THE AFORESAID ADDITION OF RS.41,500/- WAS MADE BY THE A O ON THE ACCOUNT OF ESTIMATED COMMISSION PAID BY THE ASSESSEE @ 0.5% OF THE AFORESAID PAGE 3 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. RS.83,00,000/-. THE ASSESSEE FILED APPEAL BEFORE L D.CIT(A), WHO VIDE IMPUGNED APPELLATE ORDER DATED 25.10.2013 DELETED T HE AFORESAID ADDITIONS TOTALING RS.83,41,500/- ON MERITS, HOLDIN G THAT THE ALLEGATIONS OF THE REVENUE REGARDING ACCOMMODATION ENTRIES TAKEN BY THE ASSESSEE HAD NO BASIS AND THAT THE ADDITIONS WE RE ILL-CONCEIVED AND UNFOUNDED. THE REVENUE HAS FILED THIS APPEAL AGAINS T THE AFORESAID ORDER DATED 25.10.2013 OF LD.CIT(A). AT THE TIME O F HEARING BEFORE US, LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE MAT TER IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF JURISDICTIONAL D ELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA 380 ITR 573 (DELHI) AND SOUGHT TO SUPPORT THE ORDER OF THE LD.CIT(A) VIDE APPLICATION UNDER R ULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963, THE RELEVANT PO RTION WHICH IS REPRODUCED BELOW:- THE APPELLANT SEEKS YOUR KIND PERMISSION TO MOVE A PPLICATION UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES 1963 TO SUPPORT THE ORDER UNDER APPEAL. THE LD CIT (A) HAS ALLOWED THE RELIEF TO THE RESPON DENT ASSESSEE ON MERITS DELETING THE ADDITIONS OF RS 83,41,500/- AFT ER CONSIDERING THE FACTS OF THE CASE. THE LD CIT (A), HOWEVER, HAS NOT ALLOWED THE LEGAL SUBMISSION OF THE APPELLANT THAT IN THE ABSENCE OF THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH U/S 132 OF T HE ACT, THE AO IS NOT ENTITLED TO MAKE ADDITION WHERE THE ASSESSMENT OF THE APPELLANT HAD NOT ABATED UNDER SECOND PROVISO TO SECTION 153A OF THE ACT. ACCORDINGLY THE FOLLOWING GROUND IS RAISED FOR CONS IDERATION OF THE HON'BLE BENCH UNDER RULE 27 OF THE APPELLATE TR IBUNAL RULES 1963 PAGE 4 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. 'THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE PROCEEDINGS INITIATE D UNDER SECTION I53A OF I.T. ACT, WHICH IS BAD IN JAW IN TH E ABSENCE MY INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BE ING FOUND DURING THE COURSE OF SEARCH'. THE RESPONDENT ASSESSEE SEEKS TO SUPPORT THE ORDER OF THE LD CIT(A) UNDER ABOVE RULE AS THIS GROUND HAS BEEN DEC IDED BY THE LD CIT (A) AGAINST THE INTO PAGES 6 TO 10 OF THE ORDER OF LD CIT (A) IN APPEAL FOR AY 2006-07 WHICH IS THE ORDER FOLLOWED B Y THE LD CIT(A) IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE APPELLANT RELIED ON VARIOUS AUTHORITIES BEFORE THE FIRST APPELLATE AUTHORITY TO CANVASS THE ABOVE LEGAL PROP OSITION BUT SUBSEQUENT TO THE PASSING OF THE IMPUGNED ORDER OF APPEAL, THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS KABUL C HAWLA 380 ITR 573 (DEL) HAS COME UP WITH THE RULING IN FAVOUR OF THE ASSESSEE AND THEREFORE THE RULING GIVEN IN THE ABOVE CASE HAS TH E BINDING EFFECT ON THE ASSESSEE BEING IN THE JURISDICTION OF THE HON'B LE DELHI HIGH COURT. (B.1.1). LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORTE D THE ORDER OF LD.CIT(A) ON MERITS. LD.CIT (DEPARTMENTAL REPRESENT ATIVE), (IN SHORT CIT DR) WHO APPEARED ON BEHALF OF THE REVENUE SUP PORTED THE ORDER OF THE AO. HE ALSO RELIED ON THE PRECEDENTS IN THE CASES OF E.N.GOPAKUMAR VS CIT [2016] 75 TAXMANN.COM 215 (KER ALA); CIT VS RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 172 (ALLAHABAD)/ [2014] 367 ITR 517 (ALLAHABAD); CIT VS KESARWANI ZARDA BHANDAR SAH SON ALLD. [ITA NO.270 OF 2014] [ALLAHABAD]; CIT VS ST.FRANCIS CLAY DCOR TILES [385 ITR 624]; AND SMT. DAYAWANTI VS CIT [75 TAXMANN.COM 308 ]. THE LD. COUNSEL FOR THE ASSESSEE REPLIED WITH THE SUBMISSION THAT T HE ORDER OF JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAW LA (SUPRA) IS A PAGE 5 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. STRONGER PRECEDENT AS COMPARED TO ORDERS OF NON-JUR ISDICTIONAL HIGH COURTS. FURTHER, HE SUBMITTED THAT THE CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE CASE OF SMT. DAYAWANTI VS CIT (SUPRA) BECAUSE, UNLIKE IN THE CASE OF SMT. DAYAWANTI VS CI T (SUPRA), IN THE INSTANT CASE THERE WAS NO INCRIMINATING MATERIAL OR EVIDENCE (WHETHER BY WAY OF STATEMENT OR DOCUMENT OR ASSET ETC.) AGAI NST THE ASSESSEE UNEARTHED AS A RESULT OF SEARCH U/S 132 OF I.T.ACT RELEVANT FOR ANY OF THE ASSESSMENT YEARS. THE LD.CIT DR DID NOT DISPUTE THE FACT THAT THERE WAS NO INCRIMINATING MATERIAL OR EVIDENCE (WHETHER BY WAY OF STATEMENT OR DOCUMENT OR ASSET ETC.) AGAINST THE ASSESSEE AS A RESULT OF SEARCH U/S 132 OF I.T.ACT RELEVANT FOR ANY OF THE ASSESSME NT YEARS. (C). WE HAVE HEARD BOTH SIDES PATIENTLY. WE HAVE ALSO PERUSED ALL MATERIALS CAREFULLY. WE HAVE CONSIDERED ALL THE PR ECEDENTS BROUGHT TO OUR ATTENTION. ON PERUSAL OF PARAGRAPH 4.1 OF THE IMPUGNED APPELLATE ORDER DATED 25.10.2013 OF LD.CIT(A), WE FIND THAT N O PROCEEDINGS WERE PENDING FOR THIS ASSESSMENT YEAR ON THE DATE OF SEA RCH. FURTHER, IT IS AN UNDISPUTED FACT THAT IN THE INSTANT CASE THERE W AS NO INCRIMINATING MATERIAL OR EVIDENCE (WHETHER BY WAY OF STATEMENT O R DOCUMENT OR ASSET ETC.) AGAINST THE ASSESSEE AS A RESULT OF SEARCH U/ S 132 OF I.T.ACT RELEVANT FOR ANY OF THE ASSESSMENT YEARS. IN THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF HONBLE PAGE 6 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 380 ITR 573 (DELHI) PROVIDES BETTER GUIDANCE THAN THE C ASE OF DAYAWANTI VS CIT (SUPRA). IN THE CASE OF CIT VS KABUL CHAWLA (S UPRA) THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED 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 T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS 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 W ILL 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 TH ERE 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 SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATI ON AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHO UT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MA DE 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 ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF PAGE 7 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. 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 SECTION 153A MERGES INTO ONE. ONLY ONE ASSES SMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FIN DINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y 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 W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. (C.1). IN THE INSTANT CASE, THE ADDITIONS HAVE BEEN MADE BY THE AO DESPITE THE FACT THAT THERE WAS NO INCRIMINATING MA TERIAL (WHETHER BY WAY OF STATEMENT OR DOCUMENT OR ASSET, ETC.) UNEART HED DURING THE COURSE OF SEARCH RELEVANT FOR ANY ASSESSMENT YEAR. ALSO, NO PROCEEDINGS WERE PENDING FOR THIS ASSESSMENT YEAR O N THE DATE OF SEARCH. IN THESE FACTS AND CIRCUMSTANCES, WE ARE O F THE CONSIDERED VIEW THAT THE MATTER IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY PRECEDENT OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF KABUL CHAWLA (SUPRA). RESPECTFULLY FOLLOWING THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAW LA (SUPRA), WE HOLD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL U NEARTHED DURING THE COURSE OF SEARCH, THE AO HAD NO JURISDICTION TO INI TIATE PROCEEDINGS U/S 153A OF THE ACT WHEN NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THIS. PAGE 8 OF 8 I.T.A .NO.-52/DEL/2014 ACIT VS SUPERB DEVELOPERS P.LTD. ASSESSMENT YEAR ON THE DATE OF SEARCH. ACCORDINGLY , WE HOLD THAT THE ASSESSMENT ORDER DATED 29.12.2011 U/S 143(3) R.W.S . 153A OF THE I.T.ACT AND THE ADDITIONS MADE THEREIN WERE WITHOUT JURISDICTION. HENCE, WE ANNUL THE ASSESSMENT ORDER DATED 29.12.20 11 U/S 143(3) R.W.S 153A OF THE ACT. CONSEQUENTLY, THE ADDITIONS MADE IN THE ASSESSMENT ORDER HAVE NO LEGS TO STAND. THUS, WE D ISMISS THE APPEAL OF THE REVENUE ON JURISDICTIONAL ISSUE. WE WISH TO CL ARIFY THAT WE HAVE NOT EXPRESSED ANY OPINION ON THE ISSUE OF MERITS OF THE ADDITION MADE BY THE AO BECAUSE WE HAVE ALREADY DISMISSED THE APPEAL OF THE REVENUE ON JURISDICTIONAL ISSUE AND, AS A RESULT OF WHICH T HE ISSUE OF MERITS OF THE ADDITION DOES NOT REQUIRE ADJUDICATION BEING P URELY ACADEMIC. (D). IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL 2017. SD/- SD/- (H.S.SIDHU) (AN ADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 21 ST APRIL, 2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI