ACIT, New Delhi V. Sh. Sandeep Wadhwa, New Delhi

ITA 5478/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3772 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAMITA TRIPATHY
• Keywords: Search and seizure; Salary income
• Section: 69C; 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5185/DEL /2014 ASSESSMENT YEAR: 2007-08 SHRI SANDEEP WADHWA, 8194, SECTOR-B, POCKET-XI, VASANT KUNJ, NEW DELHI. (PAN: AAHPW8925D) VS DCIT, CENTRAL CIRCLE-8, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 5478/DEL /2014 ASSESSMENT YEAR: 2007-08 ACIT, CENTRAL CIRCLE-8, NEW DELHI. VS SANDEEP WADHWA, 8194, SECTOR-B, POCKET-XI, VASANT KUNJ, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, SHANTANU JAIN, ADVS. RESPONDENT BY: SMT. PARAMITA TRIPATHY, CIT D R DATE OF HEARING : 13.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER BENCH: THESE ARE CROSS APPEALS PERTAINING TO ASSE SSMENT YEAR 2007 08. ITA NO. 5185/DEL/2014 HAS BEEN PREFERRE D BY THE ASSESSEE AGAINST THE ORDER DATED 16/07/2014 PASSED BY THE LD. ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 2 COMMISSIONER OF INCOME TAX (APPEALS) XXXII, NEW D ELHI WHEREAS ITA NO. 5478/DEL/2014 IS THE DEPARTMENTS C ROSS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM SALARY AND OTHER SO URCES. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF T HE INCOME TAX ACT, 1961 WAS CONDUCTED BY THE INVESTIGATION WI NG OF THE DEPARTMENT IN NUSSLI (SWITZERLAND) LTD GROUP OF CAS ES ON 19/10/2010 AND SIMULTANEOUSLY THE ASSESSEES PREMIS ES WERE ALSO SEARCHED. THE CASE OF THE ASSESSEE WAS CENTRAL ISED UNDER SECTION 127 OF THE INCOME TAX ACT, 1961. THEREAFTER , STATUTORY NOTICE UNDER SECTION 153A OF THE INCOME TAX ACT, 19 61 WAS ISSUED IN RESPONSE TO WHICH THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS. 2,58,627/-. THE ASSESSMENT WAS COMPLETED IN TERMS OF SECTION 153A R EAD WITH SECTION 143 (3) OF THE INCOME TAX ACT, 1961 AT A TO TAL INCOME OF RS. 42,61,130/- AFTER MAKING ADDITION UNDER SECTION 69C ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS AMOUNTING TO RS. 2,12,500/-, ADDITION UNDER SECTION 69C ON ACCOUNT O F FOREIGN TRIPS AMOUNTING TO RS. 2,90,000/- AND ADDITION ON A CCOUNT OF INCOME FROM SHORT-TERM CAPITAL GAINS AMOUNTING TO R S. 35 LAKHS. ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 3 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT (A) CHALLENGING THE ASSUMPTION OF JURISDICTION UNDER SECTION 153A AS WELL AS CHALLENGING THE VARIOUS ADDITIONS O N MERITS. THE LD. CIT (A) REJECTED THE ASSESSEES LEGAL GROUND CH ALLENGING THE ASSUMPTION OF JURISDICTION UNDER SECTION 153A OF TH E INCOME TAX ACT, 1961 BUT DELETED THE ADDITION OF RS. 2,12,500/ - MADE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. HOWEVER, THE ADDITION OF RS. 2,90,000/- ON ACCOUNT OF FOREIGN TOUR EXPENSES WAS CONFIRMED BY THE LD. CIT (A). THE LD. CIT (A) ALSO DELETED THE ADDITION OF RS. 35 LAKHS ON ACCOUNT OF SHORT-TERM C APITAL GAINS. NOW THE DEPARTMENT AS WELL AS THE ASSESSEE ARE IN A PPEAL AGAINST THE ORDER OF THE LD. CIT (A) AND THE RESPECTIVE GRO UNDS RAISED BY BOTH THE PARTIES ARE AS UNDER ITA NO.5185/DEL/2014:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.2,90,000/ - ON ACCOUNT OF FOREIGN TRAVEL U/S 69C OF INCOME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MA KING ADDITION OF RS.2,90,000/- ON ACCOUNT OF FOREIGN TRA VEL IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN ANY CASE IMPUGNED ADDITION IS BEYOND THE SCO PE AND JURISDICTION OF THE IMPUGNED ASSESSMENT ORDER. ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 4 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ADDITIONS/DISALLOWANCES COULD NOT HAVE BEEN MADE IN THE PRESENT APPEAL BECAUSE NO INCRIMINATING MATERIAL HA S BEEN FOUND AS A RESULT OF SEARCH. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MOD IFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJU DICE TO EACH OTHER. ITA NO.5478/DEL/2014:- 1. WHETHER THE CIT (A) IS CORRECT IN LAW AND ON F ACTS OF THE CASE IN DELETING THE ADDITION OF RS.2,12,500/ - MADE BY A.O. ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS U/ S 69C. 2. WHETHER THE CIT (A) IS CORRECT IN LAW AND ON F ACTS OF THE CASE IN DELETING THE ADDITION RS.35,00,000/- MADE BY A.O. ON ACCOUNT OF INCOME FROM SHORT TERM CAPITAL GAIN. 3. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT GROUND NO. 3 OF THE ASSESSEES APPEAL WAS THE LEGAL GROUND AND WAS GERMANE TO THE ENTIRE ISSUE AND IT WAS PRAY ED THAT THIS GROUND MAY BE TAKEN UP FIRST FOR ADJUDICATION. THE LD. CIT DR AGREED TO THE PROPOSAL OF THE LD. AUTHORISED REPRE SENTATIVE. 4. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THIS GROUND CHALLENGES THE JURISDICTION ASSUMED BY THE A SSESSING ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 5 OFFICER AS NO ADDITIONS COULD HAVE BEEN MADE UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 SINCE NO INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH. IT WAS SUBM ITTED THAT THE DATE OF SEARCH IS 19/10/2010 AND THUS THE SEARC H YEAR IS FINANCIAL YEAR 2010 11 AND THE YEAR UNDER CONSIDE RATION WAS ASSESSMENT YEAR 2007 08. OUR ATTENTION WAS DRAWN TO PAGES 1 AND 2 OF THE PAPER BOOK WHICH CONTAIN COPY OF COMPU TATION OF INCOME AND ACKNOWLEDGEMENT OF RETURN SHOWING THAT T HE RETURN OF INCOME WAS FILED ON 31/03/2008 UNDER SECTION 139 (4) OF THE INCOME TAX ACT, 1961 AND, THUS, WHICH HAD ATTAINED FINALITY ON 31/03/2009. IT WAS FURTHER SUBMITTED THAT PERUSAL O F THE ASSESSMENT ORDER WOULD SHOW THAT ALL THE THREE ADDI TIONS WERE MADE IN ABSENCE OF ANY INCRIMINATING MATERIAL HAVIN G BEEN FOUND DURING THE COURSE OF SEARCH UPON THE ASSESSEE. OUR ATTENTION WAS DRAWN TO PAGES 3 AND 4 OF THE PAPER BOOK WHICH IS A SSESSEES REPLY DATED 23/10/2012 FILED BEFORE THE ASSESSING O FFICER POINTING OUT THAT NO INCRIMINATING DOCUMENT OR MATERIAL WAS FOUND OR SEIZED WHICH WAS RELEVANT TO THE YEAR UNDER CONSIDE RATION AND AS SUCH THE ASSESSMENT SHOULD NOT BE DISTURBED. IT WAS ALSO SUBMITTED THAT THIS PLEA WAS ALSO TAKEN BEFORE THE LD. CIT (APPEALS) AND OUR ATTENTION WAS DRAWN TO PAGES 116 TO 120 OF THE ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 6 PAPER BOOK WHEREIN A REQUEST FOR DELETING THE DISALLOWANCES/ADDITIONS IN ABSENCE OF ANY INCRIMINA TING MATERIAL WAS MADE. IT WAS ALSO SUBMITTED THAT THE LD. CIT (A PPEALS) HAD CALLED FOR A REMAND REPORT FROM THE AO WHEREIN THE ASSESSING OFFICER HAD ACCEPTED THAT NO INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH. OUR ATTENTION WA S INVITED TO PAGES 6 TO 9 OF THE IMPUGNED ORDER WHEREIN THE REMA ND REPORT DATED 16/06/2014 HAS BEEN REPRODUCED AND WHEREIN AT PAGE 7 IT HAS BEEN OBSERVED BY THE AO THAT HE WAS FREE TO MAK E ADDITION EVEN IN ABSENCE OF ANY INCRIMINATING MATERIAL. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LD. FIRST APPELLA TE AUTHORITY HAD DECIDED THIS ISSUE AGAINST THE ASSESSEE BY HOLD ING THAT ADDITIONS CAN BE MADE UNDER SECTION 153A OF THE INC OME TAX ACT, 1961 EVEN IN ABSENCE OF INCRIMINATING MATERIAL. IT WAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASES OF C IT VERSUS BEST INFRASTRUCTURE (INDIA) PRIVATE LIMITED IN ITA NO. 1 3/2017, PRINCIPAL CIT VERSUS MEETA GUTGUTIA AND OTHERS REPO RTED IN 99 CCH 24 AND CIT VERSUS KABUL CHAWLA REPORTED IN 380 ITR 573 HAD HELD THAT ANY ADDITIONS MADE UNDER SECTION 153A DE HORS ANY INCRIMINATING MATERIAL WAS CONTRARY TO LAW. IT WAS ALSO SUBMITTED THAT ITAT DELHI BENCH IN ASSESSEES OWN C ASE FOR ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 7 ASSESSMENT YEAR 2006 07 HAD ALLOWED THE ASSESSEE S APPEAL ON IDENTICAL FACTS AND FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS KABUL CHAWLA ( SUPRA) IN ITA NO. 495/DEL/2015 VIDE ORDER DATED 21 ST OF JANUARY 2016. IT WAS SUBMITTED THAT IN VIEW OF THE LEGAL PRECEDENTS AS W ELL AS THE UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ORDER WAS LIABLE TO BE QUASHED. 5. IN HER RIVAL SUBMISSIONS, THE LD. CIT DR, ALTHOU GH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, COUL D NOT CONTROVERT THE AFORESAID CONTENTIONS OF THE LD. AUT HORISED REPRESENTATIVE FOR THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEE N THAT ITAT DELHI HAS ALLOWED THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2006 07 IN ITA NO. 495/DEL/2015 ON IDENTICAL FACTS AND BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VERSUS KABUL CHAWLA (SUPRA). DURING THE COURSE OF ARGUMENTS BEFORE US, THE DEPARTMENT COULD NOT PO INT OUT ANY DISTINGUISHING FACT IN THE YEAR UNDER APPEAL. IT IS ALSO SEEN THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS REITERATE D THE RATIO LAID ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 8 DOWN IN CIT VERSUS KABUL CHAWLA (SUPRA) IN THE CASE S OF PRINCIPAL CIT VERSUS BEST INFRASTRUCTURE (INDIA) PR IVATE LIMITED (SUPRA) AND PRINCIPAL CIT VERSUS MEETA GUTGUTIA AND OTHERS (SUPRA). THEREFORE, ON AN OVERALL CONSIDERATION OF THE FACTS AS WELL AS THE SETTLED JUDICIAL PRECEDENT, WE ALLOW THE LEG AL GROUND TAKEN UP BY THE ASSESSEE AND HOLD THAT THE ASSESSMENT FRA MED UNDER SECTION 153A, IN ABSENCE OF ANY INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH, IS BAD IN LAW AND CANN OT BE SUSTAINED. 6.1 IN VIEW OF OUR FINDINGS IN THE ASSESSEES APPEA L AS AFOREMENTIONED, THE APPEAL FILED BY THE DEPARTMENT BECOMES IN FRUCTUOUS AND THE SAME IS DISMISSED AS SUCH. 7. IN THE FINAL RESULT THE APPEAL OF THE ASSESSEE I S ALLOWED WHEREAS THE APPEAL OF THE DEPARTMENT STANDS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31 ST OCTOBER, 2017 GS ITA NO. 5185/D/2014 & 5478/D/2014 ASSESSMENT YEAR 2007-08 9 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR