M/s. Sumitra Builders & Developers Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5674/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6483 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Search and seizure
• Section: 40A(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.5674/DEL/2013 A.Y. : 2007-08 M/S SUMITRA BUILDERS & DEVELOPERS PVT. LTD., 910, ANSAL BHAWAN, K.G. MARG, NEW DELHI 110 001 (PAN: AAJCS4693K) VS. DCIT, CENTRAL CIRCLE-14, JHANDEWALAN, NEW DELHI (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. SOMIL AGGARWAL, ADV. DEPARTMENT BY : SH. S.S. RANA, CIT(DR) ORDER PER H.S. SIDHU : JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 26.7.2013 OF THE LD. CIT(A)-XXXIII, NEW DELHI RELEVANT TO ASSESS MENT YEAR 2007-08 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE VALIDITY OF ORDER PASSED BY THE AO U/S. 153A ON 3.7.2012. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN PARTLY ALLOWING THE APPEAL AS HE OUGHT TO HAVE F ULLY ALLOWED THE APPEAL. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT GIVING A FINDING THAT WHEREVER THE CA SH PAYMENTS DID NOT EXCEEDS RS. 20,000/-, NO DISALLOWANCE CAN BE MADE U /S. 40A(3). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT WHEREVER HE LAND IS SHOWN AS WORK IN PROGRESS, TO EXTENT OF DISALLOWANCE U/S. 40A(3), WILL REDUCE. T HIS VIEW IS IN CONFORMITY WITH THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH. IN CASE WHERE LAND IS SHOWN AS INVESTMENT, HOWEVER, SUBSEQUENTLY IT IS CONVERTED INTO STOCK-IN-TRADE, TO THE EXTENT OF DI SALLOWANCE U/S. 40A(3) VALUE OF WORK IN PROGRESS WOULD REDUCE AT TH E TIME OF CONVERSION. 5. THE APPELLANT MAY KINDLY BE ALLOWED TO RAISE ANY AD DITIONAL GROUND IN THE COURSE OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION U/S. 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 23.3.2011 IN THE CASE OF AMTEK GROUP OF CASES. THE ASSESSES M/S SUMITRA BUILDERS AND D EVELOPERS PVT. LTD., 910, ANSWAL BHAWAN, 16, KG MARG, NEW DELHI 110 001 WHI CH WAS ALSO COVERED U/S. 132(1) OF THE INCOME TAX ACT, 1961. SUBSEQUENT LY, THE CASE WAS CENTRALIZED AND ACCORDINGLY, NOTICE U/S. 153A OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 2.12.2011. IN RESPONSE TO THE SAID NOTI CE, RETURN DECLARING AN INCOME OF RS. 3,15,190/- WAS FILED ON 30.1.2012. FURTHER , NOTICE U/S. 143(2) AND 142(1) OF THE I.T. ACT, 1961 WERE ISSUED ALONGWITH A QUESTIONNAIRE DATED 17.2.2012 AND IN RESPONSE THERETO ASSESSEES A.R. A TTENDED THE PROCEEDINGS AND FILED THE NECESSARY DETAILS/INFORMATION AS CALLED F ROM TIME TO TIME. AFTER 3 CONSIDERING THE SAME, AO MADE THE ADDITION OF RS. 7,58,360/- U/S. 40A(3) OF THE I.T. ACT AND COMPLETED THE ASSESSMENT AT AN INC OME OF RS. 10,73,550/- VIDE HIS ORDER DATED NIL PASSED U/S. 153A/143(3) OF THE I.T. ACT, 1961. 3. AGAINST THE AFORESAID ASSESSMENT ORDER, ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATE D 26.7.2013 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 37 HAVING THE COPY OF THE A SSESSMENT ORDER OF M/S MARICHIKA PROPERTIES PVT. LTD. FOR AY 2009-10 DATED 3.7.2012; COPY OF ORDER OF LD. CIT(A) FOR AY 2009-10 DATED 26.7.2013; COPY OF GROUNDS OF APPEAL FILED BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT BEFORE ITAT; COPY OF ORDER PASSED BY THE ITAT, DELHI BENCH IN THE CASE OF M/S MARICHIKA PROPERTIES PVT. LTD., DATED 30.10.2015 AND STATED THAT THE ISSUES I N DISPUTE IN THE PRESENT CASE ARE EXACTLY SIMILAR AND IDENTICAL TO THE CASE OF M/ S MARICHIKA PROPERTIES PVT. LTD. FOR AY 2009-10 BY THE TRIBUNAL ON 30.10.2015 WHEREIN THE VARIOUS DECISIONS OF THE HONBLE HIGH COURT INCLUDING THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. KABUL CHAWLA HAVE BEEN FOLLOWED. HE FURTHER STATED THAT RELATING TO UPHOLDING THE VALID ITY OF THE ORDER OF ASSESSMENT PASSED U/S. 153A IS SQUARELY COVERED IN FAVOR OF TH E ASSESSEE BY THE DECISION 4 DATED 28.8.2015 OF THE HONBLE DELHI HIGH COURT PAS SED IN THE CASE COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA REPORT ED (2016) 380 ITR 573 (DEL.) WHEREIN THE HONBLE HIGH COURT HAS HELD THA T IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW. HE FURTHER STATED THAT THE ADDITIONS HAVE NO RELATION WITH ANY INCRIMINATING M ATERIAL FOUND AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH AND AS SUCH ARE BAD IN LAW BEING BEYOND THE SCOPE OF JURISDICTI ON U/S. 153A OF THE I.T. ACT. 6. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDER OF THE AUTHORITIES BELOW AND STATED THAT THE PROVISION OF SECTION 153A HAS RIGHTLY BEEN APPLIED IN THE CASE OF THE ASSESSEE ON THE MATERIAL AVAILABLE WITH THEM. HENCE, THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE CASES REFERRED BY THE LD. COUNSEL OF THE ASSESSEE IN THE SHAPE OF PAPER BOOK. WE FIND THAT THE ADDITIONS MADE BY THE AO ARE BEYOND T HE SCOPE OF SECTION 153A OF THE INCOME TAX ACT, 1961, BECAUSE NO INCRIMINATING MATERIAL OR EVIDENCE HAD BEEN FOUND DURING THE COURSE OF SEARCH SO AS TO DOU BT THE TRANSACTIONS. IT WAS NOTICED THAT AS ON THE DATE OF SEARCH I.E. 21.1.201 1, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THE YEAR UNDER CONSIDERATION AND T HE AO WAS NOT JUSTIFIED IN DISTURBING THE CONCLUDED ASSESSMENT WITHOUT THERE B EING ANY INCRIMINATING 5 MATERIAL BEING FOUND IN SEARCH. IN FACT, IN THE ENT IRE ASSESSMENT ORDER, THE AO HAS NOT REFERRED TO ANY SEIZED MATERIAL OR OTHER M ATERIAL FOR THE YEAR UNDER CONSIDERATION HAVING BEING FOUND DURING THE COURSE OF SEARCH IN THE CASE OF ASSESSEE, LEAVE ALONE THE QUESTION OF ANY INCRIMIN ATING MATERIAL FOR THE YEAR UNDER APPEAL. THEREFORE, IN OUR CONSIDERED OPINION , THE ACTION OF THE AO IS BASED UPON CONJECTURES AND SURMISES AND HENCE, THE ADDITIONS MADE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THIS ISSUE IN DISPUTE IS NOW NO MORE RES- INTEGRA, IN VIEW OF THE DECISION DATED 28.8.2015 O F THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.) WHEREIN THE HONBLE HIGH COURT O F DELHI HAS HELD HAS 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 ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. 6 II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E 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 SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED 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 INFORMATION AVAIL ABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ITA NOS. 707 , 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONL Y ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATAB LE TO ABATED 7 PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT 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 ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND A NY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE 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 WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005 -06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURIN G THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREAD Y ASSESSED. 7.1 WE ALSO NOTE THAT IN THE CASE OF M/S MARICHIKA PROPERTIES PVT. LTD. FOR AY 2009-10, THE ITAT, DELHI VIDE ITS ORDER DATED 30 .10.2015 HAS QUASHED THE ASSESSMENT BY WHICH THE ISSUE IN DISPUTE IS ALSO CO VERED, BECAUSE THE FACTS AND 8 CIRCUMSTANCES OF THE CASE ARE EXACTLY SIMILAR AND I DENTICAL TO THAT CASE OF M/S MARICHIKA PROPERTIES, AS AFORESAID AND ALSO THE GRO UP ON WHICH THE SEARCH AND SEIZURE OPERATION WAS CARRIED WAS SIMILAR I.E. AMTE K GROUP OF CASES. 8. RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, AS AFORE SAID, WE ALLOW THE APPEAL OF THE ASSESSEE, BECAUSE AO HAS COMPLETED THE ASSESSM ENT AND MADE THE ADDITION IN DISPUTE WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION AND THE ADDITION IN THIS CASE WA S PURELY BASED ON THE MATERIAL ALREADY AVAILABLE ON RECORD. HENCE, THE ADDITION IN THE CASE IS DELETED AND THE GROUND RAISED BY THE ASSESSEE IN THE APPEAL IS ALLO WED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/03/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 03/03/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES