M/s. ATS Infrastructure Limited, New Delhi V. ACIT, Meerut

ITA 5811/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2174 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Unexplained investment; Depreciation; Search and seizure; Opportunity of being heard; Deemed dividend
• Section: 143(3); 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5811/DEL./2014 (ASSESSMENT YEAR : 2002-03) ITA NO.5812/DEL./2014 (ASSESSMENT YEAR : 2003-04) ITA NO.5813/DEL./2014 (ASSESSMENT YEAR : 2004-05) M/S. ATS INFRASTRUCTURE LTD., VS. ACIT, CENTRAL CI RCLE, K 19, SECTOR 18, MEERUT. NOIDA. (PAN : AADCA0609B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, SENIOR ADVOCATE SHRI ROHIT JAIN, ADVOCATE MS. DEEPASHI RAO, CA REVENUE BY : SMT. APARNA KARAN, CIT DR DATE OF HEARING : 29.08.2018 DATE OF ORDER : 31.08.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS, LAW AND IDENTICAL GROUNDS HAVE BEEN RAISED IN THE AFORESAID APPEALS, THE SAME ARE BEING ITA NOS.5811, 5812& 5813/DEL./2014 2 DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION. 2. THE APPELLANT, M/S. ATS INFRASTRUCTURE LTD. (HER EINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 26.08.2014 PASS ED BY LD. CIT (APPEALS), MEERUT QUA THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 ON THE GROUNDS INTER ALIA THAT :- AY 2002-03 1. BECAUSE THE HON'BLE CIT (APPEALS) FAILED TO APPR ECIATE THAT NO INCRIMINATING DOCUMENT WAS FOUND IN SEARCH IN RESPECT OF AY 2002-03 AND THEREFORE, NO ADDITIONS CAN BE MA DE BY THE LD. AO FOLLOWING THE RATIO OF JUDGMENT IN ALL CARGO LOGISTICS LIMITED VS. DCIT AND OTHER LEADING CASES UNDER SECT ION 153A READ WITH SECTION 143(3) OF THE ACT. THE LD. AO HAD NO JURISDICTION TO PASS THE ORDER UNDER SECTION 153A R EAD WITH SECTION 143(3) OF THE ACT. 2. BECAUSE THE ADDITION OF RS.2,54,789/- ON ACCOUNT OF PRE-PAID PORTION OF INSURANCE IS ILLEGAL AND UNJUST IFIED. THE ASSESSEE HAS ADOPTED THE SAME METHOD OF ACCOUNTING IN ALL THE EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS AND ACCORDINGLY HAS CHARGED THE INSURANCE PAID IN THE YEAR OF PAYME NT. THE LD. CIT (APPEALS) CONFIRMED THE ADDITION WITHOUT APPREC IATING THE FULL FACTS. THE ADDITION OF RS.2,54,789/- IS THEREF ORE, ARBITRARY AND UNWARRANTED. THE SAME DESERVES TO BE DELETED. 3. BECAUSE ON FACTS AND IN LAW AND GROUND TAKEN AND BASIS ADOPTED THE ADDITION OF RS.8,000/- ON ACCOUNT OF GENERATOR SHIFTING CHARGES IS UNJUSTIFIED AND ILLEGAL. THE HO N'BLE CIT (APPEALS) HAS CONFIRMED THE ADDITION WITHOUT APPREC IATING THE FACTS AND THE SAME DESERVES TO BE DELETED IN FULL. 4. BECAUSE ON FACTS AND IN LAW THE ADDITION OF RS. 4,067/- ON ACCOUNT OF NEGATIVE CASH BALANCE IS UNJUSTIFIED AND ILLEGAL. THE HON'BLE CIT (APPEALS) HAS FAILED TO UNDERSTAND THE FACTS. THE ADDITION OF RS.4,067/- THEREFORE, DESERVES TO B E DELETED IN FULL. 5. BECAUSE ON FACTS AND IN LAW AND GROUND TAKEN AND BASIS ADOPTED THE ADDITION OF RS. 50,965/- ON ACCOU NT OF ADDITION ITA NOS.5811, 5812& 5813/DEL./2014 3 IN FIXED ASSETS IS UNJUSTIFIED AND ILLEGAL. THE ASS ESSEE HAS DULY ACCOUNTED FOR ALL THE ADDITIONS IN FIXED ASSETS IN THE BOOKS OF ACCOUNTS AND THE SOURCE OF INVESTMENT HAS BEEN FULL Y SHOWN IN BOOKS AS THE ASSESSEE MAINTAINS THE BOOKS OF ACCOUN TS ON DOUBLE ENTRY SYSTEM. THE LD. CIT (APPEALS) FAILED TO UNDE RSTAND THE FACTS AND LAW RELATING TO UNEXPLAINED INVESTMENT UN DER SECTION 69. THE ADDITION IS NOT MAINTAINABLE UNDER SECTION 69 OF THE ACT AND THE SAME DESERVES TO BE DELETED IN FULL. AY 2003-04 1. BECAUSE THE HONBLE CIT (APPEALS) FAILED TO APPRECIATE THAT NO INCRIMINATING DOCUMENT WAS FOUND IN SEARCH IN RESPECT OF AY 2003-04 AND THEREFORE, NO ADDITION S CAN BE MADE BY THE LD. AO FOLLOWING THE RATIO OF JUDGMENT IN AL L CARGO LOGISTICS LIMITED VS. DCIT AND OTHER LEADING CASES UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. THE LD. A O HAD NO JURISDICTION TO PASS THE ORDER UNDER SECTION 153A R EAD WITH SECTION 143(3) OF THE ACT. 2. BECAUSE ON GROUNDS TAKEN AND BASIS ADOPTED AND O N FACTS AND IN LAW THE DISALLOWANCE OF TRAVELLING EXP ENSES AMOUNTING TO RS.11,50,128/- IS UNCALLED FOR AND UNJ USTIFIED. THE LD. CIT (APPEALS) HAS NOT FULLY UNDERSTOOD THE FACT S AND CONFIRMED THE ADDITION OF RS.11,50,128/- MECHANICAL LY. THE ADDITION OF RS.11,50,128/- IS THEREFORE, ILLEGAL AN D UNJUSTIFIED AND THE SAME DESERVES TO BE DELETED IN FULL. 3. BECAUSE ON FACTS AND IN LAW AND ON GROUND TAKEN AND BASIS ADOPTED THE DISALLOWANCE OF RS. 50,000/- UNDE R THE HEAD BUSINESS PROMOTION EXPENSES IS UNCALLED FOR AND UNJ USTIFIED. THE HON'BLE CIT (APPEALS) HAS NOT FULLY APPRECIATED THE FACTS OF THE CASE AND HAS CONFIRMED THE DISALLOWANCE OF RS.50,00 0/- MADE ON CONJECTURES AND SURMISES. 4. BECAUSE ON FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED THE ADDITION OF RS.59,850/- ON ACCOUN T OF AMOUNT CHARGED TO P&L A/C IN UNCALLED FOR AND UNJUSTIFIED. THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACTS AND HAS CONF IRMED THE DISALLOWANCE MADE ON CONJECTURES AND SURMISES. THE ADDITION OF 59,850/- DESERVES TO BE DELETED IN FULL. 5. BECAUSE NOTWITHSTANDING GROUND 4 ABOVE, THE LD. CIT (A) SHOULD HAVE ALLOWED DEPRECIATION ON THE FIXED A SSETS. 6. BECAUSE THE ADDITION OF RS. 2,55,717/- ON ACCOUN T OF PRE-PAID PORTION OF INSURANCE IS ILLEGAL AND UNJUST IFIED. THE ASSESSEE HAS ADOPTED THE SAME METHOD OF ACCOUNTING IN ALL THE EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS AND ACCORDINGLY HAS CHARGED THE INSURANCE PAID IN THE YEAR OF PAYME NT. THE ITA NOS.5811, 5812& 5813/DEL./2014 4 HON'BLE CIT (APPEALS) CONFIRMED THE ADDITION WITHO UT APPRECIATING THE FULL FACTS AND WITHOUT AFFORDING T HE REASONABLE OPPORTUNITY OF BEING HEARD. THE ADDITION OF RS.2,55 ,717/- IS THEREFORE, ARBITRARY AND UNWARRANTED. THE SAME DESE RVES TO BE DELETED. 7. BECAUSE NOTWITHSTANDING GROUND 6 THE LD. CIT (APPEALS) HAS CONFIRMED THE DISALLOWANCE FOR RS.2,5 4,789/- IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03. THE L D. CIT (APPEALS) OUGHT TO HAVE ALLOWED THE DEDUCTION OF RS .2,54,789/- DURING THE CURRENT YEAR. 8. BECAUSE THE DISALLOWANCE OF LEASE RENT PAYABLE AMOUNTING TO RS.4,17,950/- IS UNJUSTIFIED AND ILLEG AL ON GROUNDS TAKEN AND BASIS ADOPTED AND ON FACTS AND IN LAW. TH E LD. CIT (APPEALS) HAS FAILED TO UNDERSTAND THE FACTS RELATI NG TO LEASE RENT PAYABLE AND HAS CONFIRMED THE ADDITIONS MADE BY LD. AO ON CONJECTURES AND SURMISES. THEREFORE, LEASE RENT OF RS.4,17,950/- DESERVES TO BE DELETED IN FULL. AY 2004-05 1. BECAUSE THE LD. CIT (APPEALS) FAILED TO APPRECIA TE THAT NO INCRIMINATING DOCUMENT WAS FOUND IN SEARCH IN RE SPECT OF AY 2004-05 AND THEREFORE, NO ADDITIONS CAN BE MADE BY THE LD. AO FOLLOWING THE RATIO OF JUDGMENT IN ALL CARGO LOGIST ICS LIMITED VS. DCIT AND OTHER LEADING CASES UNDER SECTION 153A REA D WITH SECTION 143(3) OF THE ACT. THE LD. AO HAD NO JURISD ICTION TO PASS THE ORDER UNDER SECTION 153A READ WITH SECTION 143( 3) OF THE ACT. 2. BECAUSE ON FACTS AND IN LAW THE ADDITION OF RS. 3,810/- ON ACCOUNT OF NEGATIVE CASH BALANCE IS UNJUSTIFIED AND ILLEGAL . THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THE FACTS. THE A DDITION OF RS. 3,810/- THEREFORE, DESERVES TO BE DELETED IN FULL. 3. BECAUSE ON FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED, THE ADDITION OF RS. 3,81,494/- ON AC COUNT OF DIRECTOR TRAVELLING EXPENSES IS UNJUSTIFIED & ILLEG AL. THE LD. CIT (APPEALS) FAILED TO APPRECIATE THE FACTS AND CONFIR MED THE ADDITION MECHANICALLY. THE TRAVELLING EXPENSES WERE INCURRED BY DIRECTOR FOR BUSINESS PURPOSE ONLY. THE ADDITION IS NOT MAINTAINABLE UNDER THE ACT AND THE SAME DESERVES TO BE DELETED IN FULL. 4. BECAUSE ON FACTS AND IN LAW AND GROUND TAKEN AND BASIS ADOPTED THE ADDITION OF RS. 96,135/- ON ACCOU NT OF ADDITION IN FIXED ASSETS IS UNJUSTIFIED AND ILLEGAL. THE ASS ESSEE HAS DULY ACCOUNTED FOR ALL THE ADDITIONS IN FIXED ASSETS IN THE BOOKS OF ACCOUNTS AND THE SOURCE OF INVESTMENT HAS BEEN FULL Y SHOWN IN ITA NOS.5811, 5812& 5813/DEL./2014 5 BOOKS AS THE ASSESSEE MAINTAINS THE BOOKS OF ACCOUN TS ON DOUBLE ENTRY SYSTEM. THE LD. CIT (A) FAILED TO UNDERSTAND THE FACTS AND LAW RELATING TO UNEXPLAINED INVESTMENT UNDER SECTIO N 69. THE ADDITION IS NOT MAINTAINABLE UNDER SECTION 69 OF TH E ACT AND THE SAME DESERVES TO BE DELETED IN FULL. 5. BECAUSE THE LD. CIT (A) HAS WRONGLY HELD THAT TH E ASSESSEE IS NOT ENTITLED TO REVISE THE RETURN AND T HEREFORE, THE ASSESSEE IS NOT ENTITLED TO BE ASSESSED AT THE CORR ECT INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE FACT S OF THE CASES RELIED UPON BY THE IT DEPARTMENT ARE DISTINGUISHABL E AND THEREFORE, THE RATIO OF JUDGMENT IN THE CASES OF CI T V. SURAJ PAL SINGH (1991) 188 ITR 297; KUMAR JAGDISH CHANDRA SIN HA VS. CIT (1996) 220 ITR 67 (SC); INDIAN FARMS FERT. CO-O PERATIVE LTD. V. COMMISSIONER OF INCOME TAX (2008) 170 TAXMA N 139 (DEL) AND NELCO (INDIA) (P.) LTD. VS. CIT (2005) 14 2 TAXMAN 380 (ALL.) IS NOT APPLICABLE TO THE PRESENT CASE. 6. BECAUSE ON FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED, THE ASSESSEE IS ENTITLED TO CLAIM DE DUCTION OF ENTIRE INTEREST ON BORROWED CAPITAL UNDER SECTION 36(1)(II I) OF THE ACT AMOUNTING TO RS.4,62,70,118/-. THE ASSESSEE INADVER TENTLY CLAIMED DEDUCTION OF PART INTEREST OF RS. 2,51,80,1 98/- IN RESPONSE TO THE RETURN U/S -153A. THEREFORE, THE AS SESSEE IS ENTITLED TO FURTHER DEDUCTION OF RS.2,10,89,920/- B EING DIFFERENCE OF 4,62,70,118/- LESS 2,51,80,198/-. THE LD. AO AS WELL AS LD. CIT (APPEALS) HAVE FAILED TO APPRECIATE THAT AS A QUASI JUDICIAL AUTHORITY UNDER THE ACT, THE LD. AO AND/OR LD. CIT (APPEALS) IS REQUIRED TO ASSESS TOTAL INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT, 1961, THEREFORE, THE CLAIM FOR ANY EXPENSES, IF OTHERWISE ALLOWABLE UNDER THE ACT, HAS TO BE CONSIDERED AND ALLOWED TO THE ASSESSEE. 7. BECAUSE THE ASSESSEE MADE THE CLAIM FOR DEDUCTIO N ON ACCOUNT OF INTEREST ON BORROWED CAPITAL U/S 36(1)(I II) AND WELL BEFORE THE DATE OF ASSESSMENT AND ALSO FURNISHED AL L INFORMATION IN RESPECT THEREOF TO THE LD. AO AND REQUESTED THE LD. AO TO PASS SPEAKING ORDER IN RESPECT THEREOF. THE CLAIM FOR D EDUCTION OF INTEREST ON BORROWED CAPITAL OUGHT TO HAVE BEEN ALL OWED. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND IN ALL THE AFORESAID APPEALS AR E : ON THE BASIS OF SEARCH OPERATION CARRIED OUT AT THE PREMISES OF ASS ESSEE ON 15.02.2008, NOTICE UNDER SECTION 153A OF THE INCOME -TAX ACT, 1961 ITA NOS.5811, 5812& 5813/DEL./2014 6 (FOR SHORT THE ACT) DATED 13.03.2009 WAS ISSUED A ND IN RESPONSE THERETO, THE ASSESSEE HAS NOT FILED ANY FRESH RETUR N. IN VIEW OF THE REPLY FILED BY THE ASSESSEE, IT WAS DIRECTED TO GET ITS ACCOUNTS AUDITED U/S 142 (2A) OF THE ACT FOR FINANCIAL YEARS 2001-02 TO 2007-08 RELEVANT TO ASSESSMENT YEARS 2002-03 TO 200 8-09 BY M/S. GUPTA & SHAH, CHARTERED ACCOUNTANTS. THEREAFTER, T HE ASSESSEE HAS REVISED ITS RETURN DECLARING INCOME AT RS.NIL O N 21.01.2010. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, A O PROCEEDED TO HOLD THAT THE ASSESSEE HAS TAKEN LOAN/ADVANCE OF RS .92,20,000/- FROM ITS SISTER CONCERN, ATS PROMOTERS AND BUILDERS P. LTD. WHO HAVE ACCUMULATED PROFIT OF RS.45,33,261/- ONLY AND AS SUCH, THE SAME IS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSE E AS THE DIRECTORS OF THE ASSESSEE COMPANY HAVE MORE THAN 10 % OF THE SHARE HOLDINGS IN THE ATS PROMOTERS AND BUILDERS P. LTD. AND MADE ADDITION THEREOF. AO ALSO MADE ADDITION OF RS .43,836/- DEBITED IN THE P&L ACCOUNT WITHOUT DEDUCTING ANY TD S BEING COVERED U/S 40A (IA); MADE ADDITION OF RS.4,067/- B EING NEGATIVE CASH BALANCE; MADE ADDITION OF RS.2,54,789/- ON ACC OUNT OF INSURANCE PAID DURING THE YEAR AMOUNTING TO RS.5,09 ,162/- AT VARIOUS DATES BUT PREPAID PORTION OF RS.2,54,789/- HAS NOT BEEN ACCOUNTED FOR; MADE ADDITION OF RS.50,965/- ON ACCO UNT OF ADDITION IN FIXED ASSETS DURING THE YEAR; AND MADE ADDITION OF RS.8,000/- ITA NOS.5811, 5812& 5813/DEL./2014 7 CLAIMED ON ACCOUNT OF CRANE SERVICE FOR LABOUR CHAR GES FOR KEEPING GENSET ON THE ROOF FOR AY 2002-03 AND ASSESSED TOTA L INCOME AT RS.48,94,918/-. 3.1 IN AY 2003-04, AO MADE ADDITION OF RS.9,50,000/ - RECEIVED BY THE ASSESSEE FROM THE SISTER CONCERNS BY TREATIN G THE SAME AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. AO ALSO M ADE ADDITION OF RS.11,50,128/- ON ACCOUNT OF TRAVELLING EXPENSES BEING PERSONAL IN NATURE;; MADE ADDITION OF RS.50,000/- ON ACCOUNT OF BUSINESS PROMOTION EXPENSES; MADE ADDITION OF RS.59,850/- ON ACCOUNT OF EXPENSES BEING CAPITAL IN NATURE; MADE ADDITION OF RS.2,55,717/- ON ACCOUNT OF INSURANCE PAID DURING THE YEAR AMOUNTING TO RS.5,53,593/- BUT PREPAID PORTION OF RS.2,55,717/- HAS NOT BEEN ACCOUNTED FOR; MADE ADDITION OF RS.4,17,950/- ON AC COUNT OF LEAST RENT PAYABLE AND ASSESSED TOTAL INCOME AT RS.30,79, 506/-. 3.2 IN AY 2004-05, AO MADE ADDITION OF RS.3,810/- O N ACCOUNT OF NEGATIVE CASH BALANCE; MADE ADDITION OF RS.3,81, 494/- ON ACCOUNT OF TRAVELLING EXPENSES BEING PERSONAL IN NA TURE;; MADE ADDITION OF RS.96,135/- ON ACCOUNT OF DISALLOWANCE U/S 69 OF THE ACT AND ASSESSED TOTAL INCOME AT RS.3,35,78,919/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEALS FOR AYS 2002-03 & 2003-4 AND DISMISSED THE APPEAL FOR AY 2004-05. FE ELING ITA NOS.5811, 5812& 5813/DEL./2014 8 AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEALS. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ASSESSMENT YEARS 2002-03 & 2003-04 6. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER PASSED BY THE LD. CIT (A) CONTENDED THAT NO INCRIMI NATING MATERIAL HAS COME ON RECORD DURING THE SEARCH OPERATION RATH ER ENTIRE ADDITION IS MADE ON THE BASIS OF SPECIAL AUDIT REPO RT RELIED UPON BY THE AO WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW SO FAR AS ADDITIONS IN AYS 2002-03 & 2003-04 ARE CONCERNED. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED UPON THE ORDERS PASSED BY THE AO. 8. BARE PERUSAL OF PARA 5 OF THE IMPUGNED ORDER PAS SED BY THE LD. CIT (A) GOES TO PROVE THAT UNDISPUTEDLY, NO INC RIMINATING MATERIAL HAS COME ON RECORD DURING THE SEARCH AND S EIZURE OPERATION CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 15.02.2008 RATHER THE ADDITIONS MADE BY THE AO AND CONFIRMED B Y LD. CIT (A) ARE BASED UPON THE FRESH APPRECIATION OF FACTS THAT TOO ON THE BASIS OF SPECIAL AUDIT REPORT. ITA NOS.5811, 5812& 5813/DEL./2014 9 9. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER FURTHER CONTENDED INTER ALIA THAT THE ASSESSING OFF ICER HAS NO SEIZED MATERIAL TO REASSESS THE TOTAL INCOME ON THE BASIS OF SEARCH OPERATION CONDUCTED ON 27.03.2012; THAT SINCE ON TH E DATE OF SEARCH, ASSESSMENT ALREADY STOOD COMPLETED AND NO F RESH MATERIAL WAS UNEARTHED TO MAKE REASSESSMENT, THE ASSESSMENT ORDER IS NOT SUSTAINABLE AND RELIED UPON THE JUDGMENT CITED AS CIT VS. KABUL CHAWLA - 380 ITR 173 (DEL.) . 10. ASSESSEE BROUGHT ON RECORD COPY OF COMPUTATION OF INCOME ALONG WITH ACKNOWLEDGEMENT OF RETURN FOR INCOME, CO PY OF SPECIAL AUDIT REPORT FURNISHED U/S 142 (2A) AND REPLY FILED BY THE ASSESSEE TO THE SPECIAL AUDIT REPORT, AVAILABLE IN THE PAPER BOOK CONTAINING PAGES 1 TO 75, FOR THE AYS 2002-03 AND 2003-04. AS SESSEE ALSO BROUGHT ON RECORD COPY OF THE TAX AUDIT REPORT U/S 44AB OF THE ACT, AVAILABLE AT PAGES 23 TO 32 AND PAGES 19 TO 28A OF THE PAPER BOOK FOR AYS 2002-03 AND 2003-04 RESPECTIVELY. SPECIAL AUDIT REPORT AND REPLY FILED BY THE ASSESSEE GO TO PROVE THAT TH E ENTIRE ASSESSMENT MADE U/S 153A/143 (3) FOR AYS 2002-03 & 2003-04 HINGES UPON SPECIAL TAX AUDIT REPORT AND NOT ON ANY INCRIMINATING MATERIAL. 11. IDENTICAL ISSUE HAS COME UP BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CITED AS KABUL CHAWLA (SUPRA) WHEREIN ALL ITA NOS.5811, 5812& 5813/DEL./2014 10 THE EARLIER DECISIONS DELIVERED BY THE HONBLE HIGH COURTS HAVE BEEN CONSIDERED AND LEGAL POSITION DECIDED BY THE H ONBLE JURISDICTIONAL HIGH COURT IS SUMMARIZED FOR READY R EFERENCE AS UNDER :- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT , READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGA L POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED 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. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FO R SUCH AYS WILL HAVE TO BE 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 A Y IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE 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 RELEVANCE OR NEXUS ITA NOS.5811, 5812& 5813/DEL./2014 11 WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, 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 ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE 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 ASSESSMENT. 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 DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 12. IN VIEW OF THE LAW LAID DOWN BY HONBLE JURISDI CTIONAL HIGH COURT IN KABUL CHAWLA (SUPRA) CASE, WE ARE OF THE CONSIDERED VIEW ITA NOS.5811, 5812& 5813/DEL./2014 12 THAT WHEN NO INCRIMINATING MATERIAL HAS COME ON REC ORD DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED AT THE PREMI SES OF THE ASSESSEE RATHER ASSESSMENT HAS BEEN BASED UPON SPEC IAL AUDIT REPORT WHEREAS SUCH FACTS WERE ALREADY BROUGHT ON RECORD B Y THE ASSESSEE BY FILING ORIGINAL RETURN OF INCOME ALONG WITH COMP UTATION, THE ASSESSMENT FRAMED U/S 153A READ WITH SECTION 143 (3 ) IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE THE ASSESSMEN TS FOR AYS 2002-03 & 2003-04 ARE ORDERED TO BE QUASHED. ASSESSMENT YEARS 2004-05 13. SO FAR AS QUESTION OF ASSESSMENT ORDER FRAMED U /S 153A/143(3) BY THE AO IN AY 2004-05 IS CONCERNED, A DMITTEDLY, THE ASSESSEE HAS NOT FILED THE RETURN BEFORE THE DU E DATE OR BEFORE THE DATE MENTIONED IN THE NOTICE. ADMITTEDLY, THE ASSESSEE HAS NOT FILED THE RETURN U/S 153A BEFORE THE DUE DATE GIVEN IN THE NOTICE ISSUED U/S 153A ITSELF AND IN THESE CIRCUMSTANCES, RETURN FILED BY THE ASSESSEE IS TO BE TREATED AS A RETURN FILED U/S 139 (4) OF THE ACT WHICH IS NOT PERMITTED TO BE FILED U/S 139 (5). TH E LD. CIT (A) HAS THRASHED THIS ISSUE IN DETAIL IN PARA 6.2 OF THE IM PUGNED ORDER WHICH IS EXTRACTED AS UNDER FOR READY PERUSAL :- 6.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER PASSED BY DCIT, CENTRAL CIRCLE MEERUT AS WELL AS TH E REMAND REPORT SUBMITTED BY HER, I HAVE ALSO CAREFUL LY GONE THROUGH WRITTEN SUBMISSION MADE BY THE AR OF T HE ITA NOS.5811, 5812& 5813/DEL./2014 13 APPELLANT AS WELL AS THE 'REJOINDER TO THE REMAND, REPORT. IT SEEMS THAT THE ARGUMENTS 'OF THE AR ON THIS ISSU E ARE SELF-DEFEATING. THE AR HAS GIVEN AN ARGUMENT THAT SECTION 153A STARTS WITH A NON-OBSTANTE CLAUSE NOTWITHSTANDING ANYTHING CONTAINED RELATING TO NOR MAL ASSESSMENT PROCEDURE'. THE AR HAS FURTHER ARGUED TH AT SECTIONS 153A, 153B AND153C ARE INTENDED TO BE A COMPLETE CODE FOR POST SEARCH ASSESSMENTS IN THEMSELVES. IF THIS IS SO, THE RETURN FILED IN RESP ONSE TO SECTION 153A CANNOT BE REVISED AS THERE IS NOTHING IN SECTIONS 153A TO 153C WHICH SPEAKS OF REVISION OF RETURN. IF THE ARGUMENT OF THE AR IS ACCEPTED THAN ONE HAS TO UNDERSTAND THAT FOR SEARCH ASSESSMENTS SECTI ONS 153A, 153B AND 153C CONSTITUTE A SET OF SUB CODE WITHIN INCOME TAX ACT AND SINCE IN THIS SUB CODE TH ERE IS NO PROVISION FOR REVISING RETURN THE SAME CANNOT BE DONE. ON ALTERNATE ARGUMENTS ALSO THE SUBMISSION OF THE AR FAILS BECAUSE IF IT IS UNDERSTOOD THAT THE R ETURN FILED UNDER SECTION 153A HAS BEEN EFFECTIVELY FILED EITHER UNDER SECTION 139(1) OR IN RESPONSE TO SECTION 142( 1) THEN THE SAME SHOULD HAVE BEEN FILED EITHER ON OR BEFORE DUE DATE OR ON OR BEFORE THE DATE MENTIONED IN THE NOTICE. FOR A RETURN FILED IN RESPONSE TO NOTIC E UNDER SECTION 153A THE DUE DATE WILL BE WHAT IS MENTIONED IN THE NOTICE ITSELF. IT IS SEEN THAT TH E APPELLANT HAS NOT FILED RETURN ON OR BEFORE THE DUE DATE MENTIONED IN THE NOTICE UNDER SECTION 153A. IN THAT CASE THE RETURN FILED BY THE APPELLANT WILL BE ANAL OGOUS TO A RETURN FILED UNDER SECTION 139(4) WHICH CANNOT BE REVISED UNDER SECTION 139(5). EITHER WAY THE ARGUME NTS PUT FORWARD BY THE AR OF THE APPELLANT FAILS. INCIDENTALLY THE AR OF THE APPELLANT HAS WRITTEN IN HIS SUBMISSION 'BUT EVEN WHERE APPELLANT HAS ALREADY FI LED A RETURN, A FRESH RETURN IN RESPONSE TO NOTICE UNDE R SECTION 153A HAS TO BE FILED, WHICH INCIDENTALLY GI VES HIM AN OPPORTUNITY TO MAKE GOOD OMISSION, IF ANY.' BY THIS UNDERSTANDING THE APPELLANT SHOULD HAVE CLAIME D DEDUCTION UNDER SECTION 36(1)(III) IN ITS RETURN FI LED IN RESPONSE TO NOTICE UNDER SECTION 153A. SINCE THIS W AS NOT DONE THE CHARGE LEVELED BY THE ASSESSING OFFICE R THAT REVISION OF RETURN IS AN AFTERTHOUGHT SEEMS CORRECT . ON THE BASIS OF ABOVE FACTS I HAVE COME TO A CONCLUSIO N THAT THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE REVI SED ITA NOS.5811, 5812& 5813/DEL./2014 14 RETURN FILED BY THE APPELLANT. SINCE THE REVISED RE TURN ITSELF IS CONSIDERED AS NONEST ANY CLAIM MADE THERE IN HAS NO MERIT. THEREFORE DETAILED SUBMISSION MADE BY THE AR OF THE APPELLANT ON THE ADMISSIBILITY OF CLA IM OF INTEREST IS IMMATERIAL AND IRRELEVANT. THE GROUND O F APPEAL NO.4 IS ACCORDINGLY DISMISSED. 14. IN VIEW OF THE ADMITTED FACTS, DISCUSSION MADE IN THE PRECEDING PARA 13 AND THE FACT THAT LD. AR FOR THE ASSESSEE FAIRLY CONCEDED THAT IMPUGNED ORDER PASSED BY THE LD. CIT (A) NEEDS NO INTERFERENCE, THE APPEAL FILED BY THE ASSESSEE IS H EREBY DISMISSED. 15. RESULTANTLY, APPEALS FOR THE AYS 2002-03 & 2003 -04 FILED BY THE ASSESSEE ARE ALLOWED AND APPEAL FOR AY 2004- 05 FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2018. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF AUGUST, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.