M/s. Dream Buildcon Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5392/DEL/2012

• Counselvise Citation: 539220114 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SUDHA KUMARI
• Assessee Lawyers: PRAKASH YADAV
• Keywords: Unexplained cash credit; Search and seizure; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI J.S. REDDY ITA NO. 5392/DEL/2012 ASSTT. YR: 2006-07 M/S DREAM BUILDCON PVT. LTD., VS. DCIT CEN. CIR. 12, 12, RING ROAD, LAJPAT NAGAR-IV, NEW DELHI. NEW DELHI-110024. PAN: AABCD 9084 D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI PRAKASH YADAV ADV. RESPONDENT BY : DR. SUDHA KUMARI CIT (DR) O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER DATED 24-8-2012 RELATING TO A.Y. 2006-07. FOLLOWING GROUNDS ARE RAI SED: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOL DING THE ORDER OF ASSESSMENT FRAMED U/S 153C/143(3) OF THE ACT WITHOUT GRANTING ANY FAIR, MEANINGFUL AND, PROPER OPPORTUNI TY TO THE APPELLANT COMPANY. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) WHILE DISPOSING OF APPEAL EXPARTEE HAS FAILED TO AP PRECIATE THAT APPEAL FILED BY THE APPELLANT COMPANY WAS PART OF A BATCH OF APPEALS IN THE CASE OF RAJDARBAR GROUP OF CASES AND SINCE COUNSEL FOR THE APPELLANT HAD DULY BEEN APPEARING I N OTHER MATTERS OF RAJDARBAR GROUP OF CASES, THERE REMAINED NO OCCASION TO HOLD THAT NONE APPEARED ON BEHALF OF TH E APPELLANT COMPANY IN RESPONSE TO NOTICE U/S 250 OF THE ACT AN D HENCE, DISPOSAL OF APPEAL ON EXPARTEE BASIS WITHOUT GRANTI NG 2 OPPORTUNITY TO THE APPELLANT IS UNJUSTIFIED AND NOT VALID IN LAW. 2 THAT EVEN OTHERWISE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT BOTH THE NOTICE ISSUED U/S 153C OF THE ACT AND, ASSESSMENT FRAMED U/S 153A1143(3) OF THE ACT WERE W ITHOUT SATISFYING THE STATUTORY PRECONDITIONS IN THE ACT A ND AS SUCH, WERE WITHOUT JURISDICTION AND THEREFORE, DESERVE TO BE QUASHED AS SUCH. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT SINCE NO MONEY OR BUL LION OR JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNTS OR DOCUMENTS BELONGING TO THE APPELLANT WE RE SEIZED AS A RESULT OF SEARCH NOTICE ISSUED U/S 153C OF THE ACT WAS ILLEGAL, INVALID AND UNSUSTAINABLE. 3 THAT FURTHER MORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPH OLDING THE ADDITION OF RS. 63,79,5001- REPRESENTING ALLEGED UN EXPLAINED CREDITORS AND BROUGHT TO TAX AS UNEXPLAINED CASH CR EDIT ULS 68 OF THE ACT. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT ADDITION MADE WAS NOT SUPPORTED BY ANY MATERIAL FOUND AS A RESULT OF SEARCH AND AS SUCH ADDITION MADE AND SUSTAINED IS PERSE WITHOUT JURISD ICTION AND HENCE UNSUSTAINABLE. 3.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT SUCH CREDITORS COULD NOT BE BROUGHT TO TAX AS INCOME OF THE APPELLANT ULS 68 OF THE ACT IN LIGHT OF THE FACTS AND EVIDENCE ON RECORD AND STATU TORY PROVISIONS OF LAW. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 2348 OF THE ACT WHICH IS NOT LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPE LLANT COMPANY. 3 2. AT THE HEARING LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 1 & 1.1, HENCE THE SAME ARE REJECTED BEING NOT PRESS ED. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3) ON 30-12-2008 IN WHICH SIMILAR ADDITIONS WERE MADE. THE COMPUTATION IS AS UNDER: DURING THE ASSESSMENT PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE OF THE AE COMPANY SUBMITTED THAT ASS ESSMENT ORDER U/S 143(3) OF THE ACT HAD BEEN PASSED EARLIER BY ITO, WARD 10(4), NEW DELHI. THE COPY OF ASSESSMENT ORDER IS PRODUCED AND PLACED ON RECORD. IN THE ABOVE ASSESSM ENT ORDER, THE ASSESSEES CLAIM OF FILING FEES OF RS. 6,100/- AS REVENUE EXPENDITURE WAS DISALLOWED AS THE SAME WAS INCURRED IN RESPECT OF INCREASE OF AUTHORIZED SHARE CAPITAL OF THE ASSE SSEE COMPANY FROM RS. 2 LACS TO RS. 125 LACS, WHICH IS IN THE NA TURE OF CAPITAL EXPENDITURE. FURTHER, IT WAS OBSERVED THAT FOUR PERSONS WERE SHO WN CREDITORS FOR ASSETS, WHO HAD BEEN PAID DURING THE YEAR, BUT NO OPENING EXPENDITURE PAYABLE HAD BEEN SHOWN IN TH E BALANCE SHEET. THE DETAILS AND AMOUNT MENTIONED AGA INST THE ABOVE FOUR PERSONS ARE AS UNDER: NAME OF PERSON AMOUNT PAID IN F.Y. 2005-06(IN RS.) SH. OM PRAKASH & SH. RAJENDER KUMAR 23,98,875/- SH. PUSHPENDER KUMAR 11,00,000/- SMT. SITA DEVI 28,80,625/- TOTAL 63,79,500/- THE ASSESSEE WAS PROVIDED SEVERAL OPPORTUNITIES TO EXPLAIN THE ABOVE DISCREPANCY AND GENUINENESS OF THE TRANSACTIO NS BY FURNISHING THEIR COMPLETE ADDRESS AND PAN BUT THE A SSESSEE FAILED TO EXPLAIN THE GENUINENESS OF THE ABOVE TRAN SACTIONS. SINCE, THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING THE GENUINENESS OF THE ABOVE TRANSACTIONS, THE AMOUNT O F RS. 63,79,500/- WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY FOR THE YEAR U/S 68 OF THE I.T. ACT, 1961. ACCORDIN GLY, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 63,95,91 0/-. THE ABOVE ADDITIONS/ DISALLOWANCES ARE ALSO RETAILED IN THE CURRENT 4 ASSESSMENT PROCEEDINGS ON THE REASONING GIVEN IN TH E EARLIER ASSESSMENT ORDER DATED 30-12-2008 PASSED U/S 143(3) . AFTER DISCUSSION AND VERIFICATION OF DETAILS, THE I NCOME OF THE ASSESSEE IS COMPUTED AS UNDER: TOTAL INCOME DECLARED RS. 10,308/- ADD: DISALLOWANCE OF EXPENDITURE OF FILING FEES R S. 6,100/- ADD: UNEXPLAINED CREDITOR, AS DISCUSSED ABOVE RS. 63,79,500/- TOTAL INCOME RS. 63,95,908/- 3.1. AGAINST THIS ORDER U/S 143(3), THE ASSESSEE PR EFERRED APPEAL BEFORE THE CIT(A) WHO VIDE ORDER DATED 30-9-2008 DISMISSED THE ASSESSEES APPEAL CONFIRMING THE VERY SAME ADDITIONS. AGAINST THE ORD ER OF CIT(A) THE ASSESSEE FILED APPEAL BEFORE ITAT (ITA NO. 4654/DEL /09). AS THE ASSESSEE GOT NO NOTICE AND FAILED TO MAKE APPEARANCE ON THE DATE OF HEARING, THE SAME WAS DISMISSED ON 9-12-2010 EX PARTE BY APPLYING THE ITAT ORDER IN THE CASE OF CIT VS. MULTIPLAN (INDIA) PVT. LTD. 38 ITD 320 ( DEL.). QUA THIS ORDER THE ASSESSEE MOVED APPLICATION /S 254(2). VIDE ORDER DA TED 2-11-2011 THE EX PARTE ORDER HAS BEEN RECALLED BY ITAT. THUS, THESE PROCEEDINGS WILL SHOW THAT THE VERY SAME ADDITIONS MADE BY ASSESSING OFFI CER IN REGULAR ASSESSMENT ARE NOW PENDING ADJUDICATION BY ITAT. 3.2. THIS 153C ORDER DEMONSTRATES THAT ASSESSING OF FICER HAS NOT RELIED ON ANY INCRIMINATING MATERIAL WHAT SO EVER AND REPEAT ED THE SAME ADDITIONS WHICH WERE MADE IN THE REGULAR ASSESSMENT WHICH AR E PENDING ADJUDICATION ON MERITS BEFORE THE ITAT. 3.3. IN THESE FACTS THIS ASSESSMENT WAS ABATED IN T ERMS OF PROVISO TO SECTION 153A. SEARCH AND SEIZURE OPERATIONS WERE CA RRIED OUT IN RAJDARBAR GROUP OF CASES. CONSEQUENT THERETO NOTICE U/S 153C WAS ISSUED ON THE 5 ASSESSEE ON 2-8-2010. IT IS FURTHER PLEADED THAT NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF THE ASSESSEE AND THE INFORMATIO N RECEIVED BY HIM WAS DEMONSTRATED BY THE ASSESSEE TO BE ALREADY INCORPOR ATED IN THE COMPLETED ASSESSMENT. THE ASSESSING OFFICER HAS DISALLOWED TH E EXPENSES QUA FILING FEE AND CREDITORS WHICH ARE ALREADY PART OF 143(3) PROC EEDINGS. RELIANCE IS PLACED ON THE HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. ANIL BHATIA 211 ITR 453 (DEL); AND ITAT MUMBAI (SP ECIAL BENCH) IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. CIT 137 ITD 287 (MUM)(SB). 3.4. IT IS PLEADED THAT IN THE ABSENCE OF ANY INCRI MINATING MATERIAL, NO ADDITION CAN BE MADE IN SEARCH ASSESSMENT. THE ASSE SSING OFFICER IN THE ENTIRE LENGTH AND BREADTH OF HIS ORDER HAS NOT RELI ED ON ANY INCRIMINATING MATERIAL AND MECHANICALLY REPEATED ONLY THE SAME AD DITIONS WHICH ARE ALREADY MADE DURING THE REGULAR ASSESSMENT AND ARE PENDING ADJUDICATION IN APPEAL BEFORE THE ITAT. THE ADDITIONS WHICH WERE SU BJECT MATTER OF REGULAR ASSESSMENT AND QUA WHICH NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, CANNOT BE MADE IN VIEW OF HONBLE DELHI HIGH COURT JUDGMENT AND ITAT MUMBAI SPECIAL BENCH JUDGMENT (SU PRA). THEREFORE, THE ADDITIONS SHOULD BE DELETED. 4. LD. DR IS HEARD. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE THE ASSESSING OFFICER W HILE FRAMING THE ASSESSMENT U/S 153C AND MAKING THESE ADDITIONS HAS NOT RELIED ON ANY INCRIMINATING MATERIAL. WE FIND MERIT IN THE ARGUME NT OF LD. COUNSEL THAT THE VERY SAME ADDITIONS ARE MADE U/S 143(3) WHICH IS SU BJECT MATTER OF APPEAL PENDING BEFORE ITAT. THEREFORE, THE SAME ADDITIONS CANNOT BE MADE U/S 153C. RESPECTFULLY FOLLOWING THE HONBLE DELHI HIGH COURT JUDGMENT AND 6 ITAT MUMBAI SPECIAL BENCH JUDGMENT (SUPRA), WE DELE TE THE ADDITIONS ON FOLLOWING CONSIDERATIONS: (I) NO ADDITION CAN BE MADE WITHOUT ANY INCRIMINATING E VIDENCE IN AN ASSESSMENT U/S 153C. (II) THE ISSUES WHICH ARE PENDING BEFORE ITAT AND ARE SU BJECT MATTER OF ITS JURISDICTION CANNOT BE ADDED U/S 153C ASSES SMENT IN VIEW OF PROVISO TO SEC. 153A. 6. IN VIEW OF THE FOREGOINGS, WE DELETE THE ADDITIO NS. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 22-11-2013. SD/- SD/- ( J.S. REDDY ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22-11-2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 7