M/s. D Art Furniture Systems Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5750/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5209 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Search and seizure; Reassessment proceedings
• Section: 153A; 143(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B , NEW DELHI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 5750 /DEL/2014 AY: 200 8 - 09 D ART FURNITURE SYSTEMS P.LTD. L - 107, KIRTI NAGAR NEW DELHI 110 015 PAN: AABCD6422H VS . DCIT CENTRAL CIRCLE 8 NEW DELHI 110 055 (APPELLANT) (RESPONDENT) ASSESSEE BY : : SH. ANIL CHOPRA, C.A. DEPARTMENT BY : MS.NIDHI SRIVASTAVA, CIT , D.R. DATE OF HEARING : 04/02/2019 DATE OF PRONOUNCEMENT : 06 /02/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 28/07/14 PASSED BY LD. CIT (A) - 25, NEW DELHI ON FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT HAS ERRED IN LAW AS WELL AS ON FACTS WHILE UPHOLDING THE PROVISIONS OF SECTION 153A AND SUSTAINING ADDITIONS TO THE INCOME OF ASSESSEE COMPANY ARBITRARILY BEYOND THE SCOPE OF THE SECTION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT HAS ERRED IN LAW AS WELL AS ON FACTS WHILE SUSTAINING ADDITIONS OF RS.2,73,753/ - OF MCD CONVERSION CHARGES. ITA 5750/DEL/2014 AY:2008 - 09 D ART FURNITURE SYSTEMS P LTD. 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT HAS ERRED IN LAW AS WELL AS ON FACTS WHILE SUSTAINING ADDITIONS OF RS.31,320/ - ON ACCOUNT OF DISALLOWANCE FOR PERSONAL EXPENSES. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT HAS ERRED IN LAW AS WELL AS ON FACTS SUSTAINING ADDITIONS OF RS.97,761/ - ON ACCOUNT OF COMMISSION PAID TO SPECIFIED PERSONS. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT HAS ERRED IN LAW AS WELL AS ON FACTS SUSTAINING ADDITIONS OF RS.1,84,92,150/ - ON ACCOUNT OF DISALLOWANCE OF UNEXPLAINED PURCHASES. 6. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, MODIFY ANY OF THE GROUNDS MENTIONED ABOVE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SSESSEE DURING YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME ON 29/09/08 DECLARING TOTAL INCOME OF RS. 10, 90, 326/ - . THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE I.T.ACT, 1961 (THE ACT). SUBSEQUENTLY SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE A CT WAS CONDUCTED AT BUSINE SS AND RESIDENTIAL PREMISES OF ASSESSEE ON 19/10/10. FOLLOWING WHICH NOTICE UNDER SECTION 153A OF THE A CT WAS ISSUED FOR FILING RETURN OF INCOME ON BASIS OF INCRIMINATING MATERIALS SEIZED DURING COURSE OF SEARCH. IN RESPONSE TO NOTICE, ASSESSEE FILED RETURN STATING THAT RETURN FILED UNDER SECTION 139(1) OF THE A CT MAY BE TREATED AS RETURN FILED IN PURSU ANCE TO NOTICE UNDER SECTION 153A OF THE A CT. 2.1 . LD. AO ACCORDINGLY ISSUED NOTICE UNDER SECTION 143(2), 142 (1) ALONG WITH QUESTIONNAIRE. IN RESPONSE TO STATUTORY NOTICES REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS AND I NFORMATION. LD. AO COMPLETED ASSESSMENT AT RS.2,03,35,310/ - BY MAKING VARIOUS ADDITIONS. 3. AGGRIEVED BY ADDITIONS MADE BY LD. AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT (A) WHO CONFIRMED ADDITION SO MADE. ITA 5750/DEL/2014 AY:2008 - 09 D ART FURNITURE SYSTEMS P LTD. 3 4. AGGRIEVED BY ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 5. AT THE THRESHOLD, LD.AR SUBMITTED THAT GROUND NO. 1 HAS BEEN RAISED CHALLENGING ADDITIONS MADE BY LD.AO UNDER SECTION 153A OF THE ACT, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL. 5.1. HE SUBMITTED THAT ADDITIONS MADE BY LD. AO ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION THEREFORE ARE NOT SUSTAINABLE IN EYES OF LAW. HE FURTHER SUBMITTED THAT TIME PERIOD FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) HAS ALSO LAPSED , THUS ASSESSMENT HAS ATTAINED FINALITY. IT HAS BEEN ARGUED BY LD.AR THAT, UNDER SUCH CIRCUMSTANCES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL, NO ADDITIONS COULD BE MADE FOR YEAR UNDER CONSIDERATION. HE PLACED RELIANCE UPON DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS KABUL CHAWLA REPORTED IN (2015) 61 TAXMAN.COM 412 . 5.2. LD. CIT , DR THOUGH SUPPORTED ORDERS PASSED BY AUTHORITIES BELOW BUT COULD NOT CONTROVERT AFORE STATED ARGUMENT ADVANCED BY LD.AR . 6. WE HAVE PERUSED RECORDS PLACED BEFORE US IN LIGHT OF ARGUMENTS ADVANCED BY BOTH SIDES. 6.1. LD. AR SUBMITTED THAT ASSESSMENT STOOD COMPLETED AS ON DATE OF SEARCH DUE TO FOLLOWING REASONS: (A) RETURNS FOR YEAR UNDER CONSIDERATION HAS BEEN PROCESSED U/S 143(1); (B) TIME PERIOD TO ISSUE NOTICE U/S 143(2) HAS LAPSED. ITA 5750/DEL/2014 AY:2008 - 09 D ART FURNITURE SYSTEMS P LTD. 4 6.2 . IT HAS BEEN THUS ARGUED THAT ASSESSMENT STANDS CONCLUDED AS ON DATE OF SEARCH. THIS FACT HAS NOT BEEN DENIED EITHER BY LD.AO OR BY LD.CIT,D.R. 6.3. UNDER SUCH CIRCUMSTANCES, ANY ADDITION U/S 153A COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING COURSE OF SEARCH. 6.4. IT IS OBSERVE D THAT LD. AO MADE ADDITIONS BASED UPON AUDITED BALANCE SHEET , FILED DURING ASSESSMENT PROCEEDINGS . HONBLE DELHI HIGH COURT IN CASE OF PRO.CIT VS. RAM AVTAR VERMA, REPORTED IN (2017) 88 TAXMANN.COM 666, HAS HELD AS UNDER: 4. THE REVENUE URGES THAT THE NON - OBSTANTE CLAUSE IN SECTION 153A TOGETHER WITH SECTION 158BD REMOVES THE BARRIER VIS - A - VIS RESTRI CTION UPON SEARCH ASSESSMENTS BEING CONFINED TO 'UNDISCLOSED INCOME'. IN OTHER WORDS, IT IS STATED THAT NONE OF THE PROVISIONS CONFINE THE ENQUIRY OF THE AO TO EVALUATING INCRIMINATING MATERIALS. THIS ASPECT, IN THE OPINION OF THE COURT, WAS EXTENSIVELY DE ALT WITH IN KABUL CHAWLA V. CIT [2016] 380 ITR 573/[2015] 234 TAXMAN 300/61 TAXMANN.COM 412 (DELHI) WHICH HAS, BY NOW, BEEN FOLLOWED CONSISTENTLY IN SEVERAL APPEALS. THE NON - OBSTANTE CLAUSE, IN THE OPINION OF THE COURT, WAS NECESSARY, GIVEN THAT THERE IS A DEPARTURE FROM THE PRE - EXISTING PROVISIONS, WHICH APPLIED FOR THE PREVIOUS YEARS AND HAD A DIFFERENT STRUCTURE WHERE TWO SETS OF ASSESSMENT ORDERS WERE MADE BY THE AO DURING BLOCK PERIODS. WITH THE UNIFICATION OF ASSESSMENT YEARS FOR THE BLOCK PERIOD, I. E. ONLY ONE ASSESSMENT ORDER FOR EACH YEAR IN THE BLOCK PERIOD, IT WAS NECESSARY FOR AN OVERRIDING PROVISION OF THE KIND ACTUALLY ADOPTED IN SECTION 153A. BUT FOR SUCH A NON - OBSTANTE CLAUSE, THE REVENUE COULD POSSIBLY HAVE FACED HURDLES IN REGARD TO UNADOP TED/CURRENT ASSESSMENT YEARS AS WELL AS REASSESSMENT PROCEEDINGS PENDING AT THE TIME OF THE SEARCH IN RESPECT OF WHICH PROCEEDINGS WERE TO BE COMPLETED UNDER SECTIONS 153A/ 153C. HAVING REGARD TO THE ABOVE DIRECTIONS, WE ARE OF THE OPINION THAT THE ITAT DE CISION DOES NOT CALL FOR INTERFERENCE. BOTH APPEALS ARE ACCORDINGLY DISMISSED. ITA 5750/DEL/2014 AY:2008 - 09 D ART FURNITURE SYSTEMS P LTD. 5 6.5. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW GROUND NO.1 RAISED BY ASSESSEE. 7. GROUND NO.2 TO 5, NOW BECOMES ACADEMIC IN NATURE. 8. IN THE RESULT APPEAL FILED BY ASS ESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH FEBRUARY, 2019. SD/ - SD/ - (N.K.BILLAIYA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 06 TH FEBRUARY, 2019 GMV COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA 5750/DEL/2014 AY:2008 - 09 D ART FURNITURE SYSTEMS P LTD. 6 DATE DRAFT DICTATED ON 04.02.2019 DRAFT PLACED BEFORE AUTHOR 05.02.2019 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 06.02.19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.