ACIT, New Delhi V. M/s. Orchid Infrastructure Developers Pvt. Ltd., Gurgaon

ITA 5772/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7244 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK JAIN CA SHRI ASHU GOEL
• Assessee Lawyers: MINISH GUPTA
• Keywords: Search and seizure; Principle of natural justice; Additional evidence
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E, NEW DELHI BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.5150/DEL/2013 (ASSESSMENT YEAR 2007-08) M/S. ORCHID INFRASTRUCTURE VS. ACIT, CC-II, DEVELOPERS PRIVATE LIMITED, NEW DELHI 1011, SURYA KIRAN BUILDING, 19, K. G. , MARG, NEW DELHI-110 001 GIR / PAN : AAACB0370M I.T.A.NO. 5772/DEL/2013 (ASSESSMENT YEAR 2007-08) ACIT, VS. M/S. ORCHID INFRASTRUCTURE CENTRAL CIRCLE II, DEVELOPERS PVT. LTD NEW DELHI 1011, SURYA KIRAN BUILDG, 19, K G MARG, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK JAIN, CA SHRI ASHU GOEL, CA RESPONDENT BY : SHRI MINISH GUPTA, CIT DR DATE OF HEARING: : 07.09.2016 DATE OF PRONOUNCEMENT: : 09.09.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER D ATED 27.08.2013 PASSED BY LD. CIT(A) III, NEW DELHI FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS OF APPEAL: I.T.A.NO. 5150/DEL/2013 (ASSESSEES APPEAL): 2 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ACTED ARBITRARILY AND ON PRESUMPTION BASIS, CONTRARY TO PRINCIPLES OF NATURAL JUSTICE AN D PROVISION OF LAW AS SUCH THE ACTION AND FINDINGS BASED THEREON STANDS VITIATED AND ORDER IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) WAS NOT CORRECT IN HOLDING THA T ASSESSMENT PROCEEDINGS ARE VALIDLY INITIATED AND FURTHER HOLDING THAT ASSESSMENT ORDER WAS NOT ILLEG AL AND INVALID 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE NOTICE U/S. 153 A IS MISCONCEIVED AND ILLEGAL BEING WITHOUT JURISDICTION, CONTRARY TO FACTS AND PROVISI ON OF LAW AND HENCE THE ASSESSMENT BASED THEREON MUST BE QUASHED AS ERRONEOUS AND VOID. 4. THAT ON THE FACTS AND CIRCUMSTANCES THE LD COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN CONFIRMING THE ACTION OF LD. AO IN DISTURBING TH E COMPLETED ASSESSMENT U / S 143(1) & 143(3) OF THE INCOME TAX ACT'1961 IN THE ABSENCE OF ANY SEIZED MATERIAL PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND MAKING AN ADDITION OF RS.3,42,79,320 WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, CONTRARY TO FACTS AND PROVISION OF LAW AS SUCH THE ACTION OF LD. CIT(A) NEED TO BE UNDONE AND THE ADDITION MADE BY LD AO AND CONFIRMED BY CIT(A) NEEDS TO BE DELETED. 5. THAT ON THE FACTS AND CIRCUMSTANCES THE LD COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN CONFIRMING THE ACTION OF LD. AO IN REJECTING THE METHOD OF VALUATION OF WIP OF PETAL PROJECT CONSISTENTLY FOLLOWED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT IN EARLIER AND SUBSEQUENT ASSESSMENT YEARS AND MAKING ADDITION OF RS.3,42,79,320/- ON THIS ACCOUNT WHICH IS CONTRARY TO PRINCIPLES OF NATURAL JUSTICE, FACTS AND PROVISION OF LAW 3 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 AS SUCH THE ACTION OF LD. CIT(A) NEED TO BE UNDONE AND THE ADDITION MADE BY LD AO AND CONFIRMED BY CIT(A) NEEDS TO BE DELETED. 6. THAT ON THE FACTS AND CIRCUMSTANCES THE LD AO IN REJECTING THE AUDITED BOOKS OF ACCOUNTS MAINTAIN ED IN REGULAR COURSE OF BUSINESS AND DULY ACCEPTED IN EARLIER ASSESSMENT PROCEEDINGS WITHOUT POINTING OUT ANY DEFECTS IN SAME WHICH IS CONTRARY TO PRINCIPLES OF NATURAL JUSTICE, FACTS AND PROVISION OF LAW AS SUCH THE ACTION OF LD. AO NEED TO BE UNDONE AND THE BOOK RESULT SHOULD BE ACCEPTED. I.T.A.NO. 5772/DEL/2013 (REVENUES APPEAL): 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOW ANCE OF RS.~2,69,48,770/- OUT OF INTEREST EXPENSES. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS.2,69,48,770/- AND IGNORING THE FACTS THAT THE ASSESSEE COMPANY FAILED TO PRODUCE THE RELEVANT RECEIPTS OF THE INTEREST PAID BY IT AND COPY OF AGREEMENTS WITH THE DIRECTOR TOWN & COUNTRY PLANNING AND THE ASSESSEE COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS.2,69,48,770/- AND IN IGNORING THE FACTS THAT THE ASSESSEE COMPANY FAILED TO SUBSTANTIATE ITS CLAIM A S TO FOR WHICH PROJECT THE INTEREST / EXPENSES HAVE B EEN BORNE BY IT, WHEN THE COMPANY WAS HAVING 12 OTHER PROJECTS IN HAND. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS.2,69,48,770/- AND IN IGNORING THE FACTS THAT THE LICENCE CERTIFICATE WAS ISSUED IN THE NAME OF M/S VIPUL INFRASTRUCTURE DEVELOPERS LTD. AND ALL THE 4 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 INSTALLMENTS HAVE BEEN PAID BY M/S VIPUL INFRASTRUCTURE DEVELOPERS LTD. AND NOT BY THE ASSESSEE COMPANY. 5 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE WITHOUT FOLLOWING RULE 46A AS LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL PVT. LTD. 204 TAXMAN 106. 6 THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2. AT THE OUTSET, LD. A.R. SUBMITTED THAT IN THE AP PEAL FILED BY THE ASSESSEE, GROUND NOS.1, 2 & 7 ARE GENE RAL IN NATURE. GROUNDS NO.2 & 3 ARE LEGAL ISSUES CHALLENG ING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT. THE REVENUE HAS PREFERRED AN APPEAL AGAINST T HE ADDITIONS DELETED BY LD. CIT(A). 2.1 THE LEGAL ISSUES RAISED B THE ASSESSEE IN I.T.A . NO. 5150/DEL/2013 PERTAINS TO THE VALIDITY OF ASSESSMEN T PROCEEDINGS. IT IS NECESSARY TO DEAL WITH THE LEGA L ISSUE FIRST. ACCORDINGLY, WE TAKE UP THE LEGAL ISSUE RAI SED BY THE ASSESSEE IN ITS APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: 3.1 SEARCH AND SEIZURE PROCEEDINGS TOOK PLACE AT SH RI RAM HARI RAM GROUP OF CASES AND THEREBY ASSESSEE WA S ALSO SEARCHED ON 26.02.2009. THE ASSESSEE FILED IT S ORIGINAL RETURN DECLARING ITS INCOME AT RS.12,41,50 ,220/- ON 06 TH NOVEMBER 2007 AND THE ASSESSMENT ORDER U/S 143(3) WAS PASSED ON 30.12.2008. 5 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 4. LD. A.R. SUBMITTED THAT AS SUCH NO ASSESSMENT WA S PENDING FOR THE YEAR UNDER CONSIDERATION, AS ON THE DATE OF SEARCH. HE FURTHER SUBMITTED THAT DURING THE SE ARCH, THE ASSESSING OFFICER COULD NOT FIND ANY INCRIMINAT ING MATERIAL THAT COULD LEAD TO THE ADDITION BEING MADE IN RESPECT OF INTEREST EXPENSES AND DIFFERENCE IN VALU ATION OF W.I.P. HE FURTHER SUBMITTED THAT SINCE NO ASSESSME NT WAS PENDING, THERE WAS NO QUESTION OF ABATEMENT OF PROCEEDINGS FOR ASSESSMENT TO BE CONDUCTED U/S 153A WITHOUT REFERRING TO ANY INCRIMINATING MATERIALS. LD. A.R. RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN 380 ITF R 573. 5. ON THE CONTRARY, LD. D.R. RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE DETAILS AND RECORD PLACED BE FORE US VIS--VIS THE RIVAL CONTENTIONS RAISE BY THE LD. A.R. THE LEGAL DISPUTE RAISED BY THE ASSESSEE IS, AS TO WHE THER ON A COMPLETED ASSESSMENT, CAN THERE BE ADDITION IN SUBSEQUENT ASSESSMENT PROCEEDINGS INITIATED U/S 153 A PURSUANT TO SEARCH, WITHOUT THERE BEING ANY INCRIMI NATING MATERIAL? AS PER THE RATIO LAID DOWN BY HON'BLE DE LHI HIGH COURT IN CASE OF KABUL CHAWLA (SUPRA), ONLY PE NDING ASSESSMENT CAN ABATE AND COMPLETED ASSESSMENT REMAI N UNAFFECTED UNLESS ASSESSING OFFICER HAS ANY SEIZED MATERIAL THAT CAN JUSTIFY THE ADDITION. 6 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 7. IN THIS CASE, RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WAS FILED ON 06.11.2007 HAS ATTAINED FINALITY ON PASSING THE ASSESSMENT ORDER U/S 143(3) ON 30.12.2008. AS IT IS OBSERVED FROM THE RECORDS PLA CED BEFORE US THAT THERE HAS BEEN NO REFERENCE TO ANY INCRIMINATING DOCUMENT IN RESPECT OF THE ADDITION M ADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT AND MADE ADDITION WITHOUT THERE BEING ANY SEIZED MATERIAL / DOCUMENTS. 8. THE LD. D.R. COULD NOT CONTROVERT THE SUBMISSION S MADE BY THE LD. A.R. THAT THERE WAS NO INCRIMINATIN G MATERIAL THAT WAS FOUND OR SEIZED DURING THE SEARCH AND SEIZURE PROCEEDINGS. HENCE, THE ADDITIONS MADE IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER IN ADMITT EDLY NOT BASED ON ANY MATERIAL FOUND OR SEIZED DURING TH E COURSE OF SEARCH. 9. WE ARE, THEREFORE, OF THE OPINION THAT THE CASE O THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF CIT VS KABUL CHAWLA (SUPRA). FOR THE REASONS SET OUT ABOV E, WE UPHOLD HT LEGAL ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION AND HOLD THE IMPUGNED ASSESSMENT AS NULL AND VOID. 10. AS THE ASSESSMENT PROCEEDING HAS BEEN QUASHED A ND SET ASIDE, THE OTHER GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE, STAND INFRUCTUOUS WITHOUT GOING INT O THE MERITS. 7 I.T.A.NO.5150./DEL/2013 I.T.A.NO. 5772/DEL/2013 11. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED ON THE LEGAL ISSUE RAISED AND APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEP., 2016. SD./- SD./- (J. S. REDDY) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 09.09. 2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 9/9/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 9/9 SR. PS/PS 7 FILE SENT TO BENCH CLERK 09/9 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER