Poonam Chawla, New Delhi V. ACIT, New Delhi

ITA 6208/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8072 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Keywords: Gift; Search and seizure
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6208/DEL/2013 AY: 20 04-05 POONAM CHAWLA, VS ACIT, C/O RAJ KUMAR & ASSOCIATES,CA, CENTRAL CIRCLE-19 , 4435/7, ANSRI ROAD, NEW DELHI . DARYA GANJ, NEW DELHI-110002 (PAN: AAHPC1420F) (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI R.K. GUPTA, CA RESPONDENT BY: SHRI RAM BILASH MEENA, CIT DR DATE OF HEARING: 04. 02.2016 DATE OF PRONOUNCEMENT: 27.04.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 21.08.2013 PASSED BY THE LD. CIT(A)-XXX III, NEW DELHI FOR ASSESSMENT YEAR 2004-05. 2. THE FACTS OF THE CASE ARE THAT THE ORIGINAL RETU RN OF INCOME WAS FILED DECLARING INCOME OF RS. 77,280/-. A SEAR CH AND SEIZURE OPERATION WAS CARRIED OUT IN THE R.H. GROUP INCLUDI NG THE ASSESSEE ON 10.2.2009. STATUTORY NOTICE U/S 153A O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) WAS IS SUED ON 15.10.2009 REQUIRING THE ASSESSEE TO FILE HER RETUR N OF INCOME. IN I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 2 RESPONSE, THE ASSESSEE FILED THE COPY OF THE ORIGIN AL RETURN. DURING THE 153A PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED TWO GIFTS OF RS. 2 LACS E ACH DURING THE YEAR. THE ASSESSEE WAS REQUIRED TO OBTAIN THE CONF IRMATIONS FROM THE DONORS. HOWEVER, SINCE THE CONFIRMATIONS COULD NOT BE OBTAINED, AN ADDITION OF RS. 4 LACS WAS MADE TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE FIRST APPELLATE AUT HORITY, THE ADDITIONS WERE CONFIRMED. NOW, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT, SINCE, THE ASSTT. OF A.Y. 2004 - 05 REMA INED UN - ABATED ON SEARCH AND NO INCRIMINATING MATERIAL WA S FOUND RELATING TO RECEIPT OF GIFTS / AMOUNTS TOTALI NG RS. 4,00,000/-, THEREFORE, THE ISSUE OF RS. 4,00,000/- COULD NOT HAD BEEN THE SUBJECT MATTER OF EXAMINATION U/S. 153 A. CONSEQUENTIALLY, THE ADDITION OF RS. 4,00,000/- IS ILLEGAL AND WITHOUT JURISDICTION. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ADD ITION OF RS. 4,00,000/- FOR GIFTS OF RS. 2,00,000/- EACH RECEIVED FROM JAGDISH RAI CHAWLA AND SH. HARBHAJAN LAL IS ABSOLUTELY WRONG IN LAW AS WELL AS ON MERITS. 3. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMI TTED THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ADDITION OF RS. 4 LACS HAS BEEN MADE ON ACCOUNT OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS . HE DREW OUR ATTENTION TO THE PAPER BOOK FILED BY HIM WHICH CONT AINS I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 3 INTIMATION U/S 143(1) OF THE ACT FOR ASSESSMENT YEA R UNDER CONSIDERATION. IT WAS SUBMITTED THAT NO PROCEEDINGS WERE PENDING FOR AY 2004-05 AS ON THE DATE OF SEARCH I.E . 10.02.2009. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT AS PER THE SECOND PROVISO OF SECTION 153 A ONLY THE ASSESSMENTS WHICH WERE PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 OF THE ACT WILL ABATE AND THE ASSESSMENT PROCEEDINGS WHICH HAVE BEC OME FINAL AS ON THE DATE WILL NOT STAND ABATED. IT WAS FURTHE R SUBMITTED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO SHOW THAT THE GIFTS WERE NOT GENUINE. THE LD. AR SUBMITTED THAT THE ADDITION WAS MADE ON THE BASIS O F A QUERY RAISED DURING THE ASSESSMENT PROCEEDINGS AND NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. LD. AR ALSO DREW OUR ATTENTION TO THE DECISION OF THE H ONBLE HIGH COURT OF DELHI IN CIT CENTRAL-III VS. KABUL CHAWLA IN ITA NOS. 707/2014, 709/2014 AND 713/2014. 4. LD. DR ON THE OTHER HAND SUPPORTED THE ORDE R OF THE AO. 5. WE HAVE CAREFULLY CONSIDERED THE MATERIAL PLA CED BEFORE US AND THE ISSUE INVOLVED. SECTION 153A OF THE ACT PRO VIDES THAT WHERE A SEARCH IS INITIATED U/S 132 OF THE ACT, THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASS ESSMENT YEARS I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 4 IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR R EQUISITION IS MADE. THE FIRST PROVISO STATES THAT THE AO SHALL AS SESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESS MENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECO ND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIAT ION OF THE SEARCH U/S 132 SHALL ABATE. IT IS SEEN THAT IN ASSE SSEES CASE SEARCH ACTION WAS INITIATED AND IT IS ASSESSEES CL AIM THAT THE ADDITION OF RS. 4 LACS WAS NOT TENABLE AS THE REGUL AR RETURN HAD BEEN FILED WHERE THE PARTICULARS RELATING TO THE AD DITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN ACCEPTED U/S 143 (1 ) OF THE ACT AND THAT NO MATERIAL HAS BEEN FOUND DURING THE SEAR CH TO JUSTIFY THE ADDITION. IN OUR CONSIDERED OPINION SECTION 153 A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THI S PARTICULAR ASSESSMENT YEAR. WHILE UNDER THE FIRST PROVISO, THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PROVISO ONLY ASSESSMENTS WHICH ARE PENDING ON THE D ATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMP LETED ASSESSMENTS DO NOT ABATE. THE ASSESSMENTS CAN BE SA ID TO BE PENDING ONLY IF THE AO IS STATUTORILY REQUIRED TO D O SOMETHING I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 5 FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSU ED, THE ASSESSMENT CAN BE SAID TO BE PENDING. HOWEVER THE A SSESSMENT IN RESPECT OF A RETURN PROCESSED U/S 143(1) IS NOT PENDING BECAUSE THE AO IS NOT REQUIRED TO DO ANYTHING FURTH ER ABOUT SUCH A RETURN. THE POWER GIVEN BY THE FIRST PROVISO TO A SSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE I TEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDING S. 6. IT IS SEEN ON FACTS THAT AS THE RETURN FOR THE YEAR HAD BEEN PROCESSED U/S 143 (1) THE ASSESSMENT WAS NOT PENDIN G AND AS NO MATERIAL WAS FOUND DURING THE SEARCH, THE ADDITION HAS NO FEET TO STAND. IT WILL ALSO BE WORTHWHILE TO REPRODUCE PARA 37 OF THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT CENTRAL III VS. KABUL CHAWLA (SUPRA) WHICH LAYS D OWN THE ENTIRE LAW WITH REGARD TO SECTION 153A 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 UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAV E TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 6 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 FOR 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 AY 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 OTHE R 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 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. I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 7 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 FINDING 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. 7. THUS ON THE FACTS OF THE CASE AND RESPECTFUL LY FOLLOWING THE HONBLE HIGH COURT OF DELHI IN CIT CENTRAL III VS . KABUL CHAWLA (SUPRA) WE FIND THAT THE ADDITION OF RS. 4 LACS HA S BEEN WRONGLY ADDED TO THE INCOME OF THE ASSESSEE. 8. IN THE RESULT THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: THE 27 TH OF APRIL, 2016 GS I.T.A. NO. 6208/DEL/2013 ASSESSMENT YEAR 2004-05 8 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR