ACIT, New Delhi V. S.S. Con Build Pvt. Ltd., New Delhi

ITA 6447/DEL/2015

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2725 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B K DHINGRA
• Keywords: Document seized; Documents seized; Set aside
• Section: 153A; 153; 68; 132

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO. 6447/DEL/2015 ( A.Y 2006-07) (THROUGH VIDEO CONFEREN CING) ACIT CENT. CIRCLE 14, NEW DELHI. (APPELLANT) VS S.S. CON BUILD PVT. LTD., PLOT NO.1, BG-1 & BG-2 PASCHIM PURI NEW DELHI. PAN NO. AAJCS7477F (RESPONDENT) APPELLANT BY MS. SUNITA SINGH, CIT DR RESPONDENT BY SH. B.K. DHINGRA, AR ORDER PER K. NARASIMHA CHARY, JM. CHALLENGING THE ORDER DATED 15/9/2015 IN APPEAL NO . 221/15-16 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-XXVI, NEW DELHI (LD. CIT(A)) IN THE CASE OF SS CON BUILD PV T. LTD (THE ASSESSEE) FOR THE ASSESSMENT YEAR 2006-07, REVENUE FILED THIS APPE AL. 2. BRIEF FACTS OF THE CASE AS COULD BE CULLED OUT F ROM THE RECORD ARE THAT SEARCH OPERATIONS AT THE PREMISES OF THE ASSESSEE W ERE CONDUCTED ON 20/10/2008 AND PURSUANT TO THE NOTICE ISSUED UNDER SECTION 153A OF THE DATE OF HEARING 18.02.2021 DATE OF PRONOUNCEMENT 18 .02.2021 2 ITA NO. 6447/DEL/2015 INCOME TAX ACT, 1961 (FOR SHORT THE ACT), ASSESSE E FILED RETURN OF INCOME DECLARING NIL INCOME, AS AGAINST WHICH ASSESSMENT U NDER SECTION 153A/143 (3) OF THE ACT WAS MADE AT RS. 7,00,55,940/- BY MAKIN G AN ADDITION OF RS. 7 CRORES UNDER SECTION 68 OF THE ACT AND ALSO RS. 55, 940/-TOWARDS UNVERIFIABLE EXPENSES, BY ORDER DATED 31/12/2010. AGGRIEVED BY S UCH ASSESSMENT, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) AFTER ENQUIRY AND ALSO OBTAINING THE REMAND REPORT FROM T HE LEARNED ASSESSING OFFICER, HELD THAT THE CLAIM OF THE ASSESSEE WITH R EGARD TO THE ADDITION OF 7 CRORES WAS UNSUBSTANTIATED BY ORAL AND DOCUMENTARY EVIDENCE AND THEREFORE THE ADDITION UNDER SECTION 68 OF THE ACT WAS TO BE UPHELD. ASSESSEE CARRIED THE MATTER TO THE TRIBUNAL AND ARG UED THAT THE REMAND REPORT OF THE LEARNED ASSESSING OFFICER BASING UPON THE DOCUMENTS SUBMITTED BY THE ASSESSEE WAS FAVOURABLE TO THE ASS ESSEE, BY WAY OF AFFIDAVIT THE PAYMENTS WERE CONFIRMED AND THE LD. C IT(A) IGNORED THE SAME. BY ORDER DATED 31/3/2014, A COORDINATE BENCH OF THI S TRIBUNAL THOUGHT IT FIT TO SET ASIDE THE MATTER TO THE FILE OF THE LEARNED ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH BY KEEPING IN VIEW THE REMAND REPOR T SO FAR AS THE GENUINENESS OF THE CLAIMED CREDIT OF RS. 5 CRORES F ROM SH. VIRENDRA BHATIA AND ALSO VERIFYING THE DOCUMENTS RELATING TO M/S AH HOLDING ETC. 3. PURSUANT TO THE ORDERS OF THE TRIBUNAL, THE LEAR NED ASSESSING OFFICER PROCEEDED WITH THE FRESH ASSESSMENT AND BY ORDER DA TED 11/6/2015 HE REITERATED THE ADDITIONS. AGAIN, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND ARGUED THAT THE LEARNED ASSESSING OFFICE R WAS NOT JUSTIFIED TO ASSUME JURISDICTION UNDER SECTION 153A OF THE ACT I N THE ABSENCE OF ANY 3 ITA NO. 6447/DEL/2015 INCRIMINATING MATERIAL OF WHATSOEVER NATURE THAT WA S SEIZED DURING THE SEARCH PROCEEDINGS. ASSESSEE FURTHER ARGUED THAT TH E ASSESSMENT WITHOUT PROPER APPROVAL OF THE ADDITIONAL CIT AS REQUIRED U NDER SECTION 153D OF THE ACT WAS ALSO BAD. 4. BY WAY OF IMPUGNED ORDER, LD. CIT(A) ACCEPTED BO TH THE CONTENTIONS OF THE ASSESSEE AND ALLOWED THE APPEAL DELETING THE ADDITIONS. AGGRIEVED BY SUCH AN ORDER REVENUE PREFERRED THIS APPEAL CHALLEN GING THE FINDINGS OF THE LD. CIT(A) IN RESPECT OF BOTH THESE ASPECTS. 5. IT IS THE SUBMISSION OF THE LD. DR THAT THE ORDE R OF THE LD. CIT(A) IS UNSUSTAINABLE ON THE GROUND THAT WITHOUT DECIDING T HE SUBSTANTIVE GROUNDS IN RESPECT OF THE ADDITIONS AS MADE ON MERITS AND W ITHOUT ADJUDICATING ALL SUCH GROUNDS RAISED BY THE ASSESSEE, THE LD. CIT(A) DECIDED THE MATTER; THAT THE ASSESSEE DID NOT CHALLENGE THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 153A OF THE ACT IN THE FIRST ROUND OF LITIGATION AN D, THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN ENTERTAINING THE SAME IN THE SECON D ROUND OF LITIGATION THAT TOO WHEN THE REMAND WAS MADE ON THE ARGUMENTS OF TH E ASSESSEE THAT THE DOCUMENTS WERE NOT PROPERLY CONSIDERED BY THE AUTHO RITIES BELOW; THAT THE ORDER OF THE TRIBUNAL SETTING ASIDE THE ISSUE TO TH E FILE OF THE LEARNED ASSESSING OFFICER ON LIMITED ISSUES OF FURTHER VERI FICATION ONLY; THAT THE APPROVAL UNDER SECTION 153D OF THE ACT WAS REQUIRED IN THE CASE OF ORIGINAL ORDER OF ASSESSMENT, AND NOT REQUIRED IN CASE OF GI VING EFFECT TO THE DIRECTIONS OF THE TRIBUNAL AND THAT SINCE THE LEARN ED ASSESSING OFFICER PASSED 4 ITA NO. 6447/DEL/2015 THE ORDER IN SECTION 254 OF THE ACT NO APPROVAL UND ER SECTION 153D OF THE ACT WAS REQUIRED. 6. PER CONTRA, LD. AR SUBMITTED THAT IN THE FIRST R OUND OF LITIGATION ALSO THE ASSESSEE RAISED THE ISSUE RELATING TO THE VALID ITY OF PROCEEDINGS UNDER SECTION 153A OF THE ACT UNEARTHED DURING THE SEARCH AND THEREFORE IS NOT OPEN FOR THE REVENUE TO CHALLENGE THAT ISSUE ON THE GROUNDS AS ARGUED BY THE LD. DR. HE SUBMITTED THAT INASMUCH AS THERE IS NO DENIAL OF THE FACT THAT NO INCRIMINATING MATERIAL WAS SEIZED DURING THE SEA RCH, ANY ADDITION MADE IS NOT SUSTAINABLE AND ON THAT GROUND THE FINDINGS OF THE LD. CIT(A) CANNOT BE DISTURBED. HE FURTHER SUBMITTED THAT OSHO FORGE LTD . V. COMMISSIONER OF INCOME-TAX, CENTRAL LUDHIANA [2018] 93 TAXMANN.COM 3 69 (PUNJAB & HARYANA) AND IN PCIT VS. SUNRISE FINLEASE PVT. LTD IN TAX APPEALS NUMBERS 936 AND 937 OF 2017 ON THE FILE OF THE HONBLE GUJARAT HIGH COURT, THE HONBLE COURTS HELD THAT LACK OF APPROVAL UNDER SECTION 153 D OF THE ACT WOULD INVALIDATE THE ASSESSMENT OR REASSESSMENT, AS THE C ASE MAY BE. 7. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT COULD BE SEEN FROM THE ORDE R DATED 31/3/2014 IN ITA NO. 2590 /DEL/ 2013, APPEAL PREFERRED BY THE ASSESS EE, THE ASSESSEE HAD TAKEN A GROUND, VIDE GROUND NO. 3 THAT THE LEARNED A SSESSING OFFICER WAS NOT JUSTIFIED TO IGNORE THE PLEA THAT THE ASSESSMENT UN DER SECTION 153A OF THE ACT BE RESTRICTED TO ASSESSMENT IN RESPECT OF SEIZE D DOCUMENTS AND IN THE ABSENCE OF ANY SEIZED DOCUMENTS THE ASSESSMENT FRAM ED IN SECTION 153A OF THE ACT IS BAD UNDER LAW AND DESERVES TO BE QUASHED . SUCH A GROUND IS VERY MUCH AVAILABLE BEFORE THE TRIBUNAL IN THE FIRST ROU ND OF LITIGATION. IT IS, 5 ITA NO. 6447/DEL/2015 THEREFORE, NOT OPEN FOR THE REVENUE NOW TO CONTEND THAT THE ASSESSEE HAD TAKEN A GROUND WHICH WAS NOT TAKEN IN THE FIRST ROUND OF LITIGATION. 8. NO COMING TO THE MERITS OF THE CASE, LD. CIT(A) CATEGORICALLY OBSERVED IN HIS ORDER THAT THERE WAS NO INCRIMINATING MATERI AL FOUND DURING THE SEARCH OPERATIONS PERTAINING TO THIS PARTICULAR ASSESSMENT YEAR AND, THEREFORE, THE AO SHOULD NOT HAVE MADE ANY ADDITION UNDER SECTION 153A OF THE ACT. THIS FACT REMAINS UNCHALLENGED. IN THE CASE OF CIT VS. KA BUL CHAWLA, 380 ITR 573 THE HONBLE JURISDICTIONAL HIGH COURT DECLARED THE LAW ON THIS ASPECT, WHICH READS THUS:- 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 AFOREM ENTIONED 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 ISSUED TO THE PER SON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED 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 TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AF OREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. 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 BROUG HT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE 6 ITA NO. 6447/DEL/2015 FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OB VIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 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 BR OUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y 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 REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT. 9. IN VIEW OF THE ADMITTED POSITION OF FACT IN THIS CASE THAT NO INCRIMINATORY MATERIAL WAS FOUND DURING THE SEARCH OPERATIONS PERTAINING TO THIS PARTICULAR ASSESSMENT YEAR, AO COULD NOT HAVE PROCEEDED TO FRAME ASSESSMENT UNDER SECTION 153A OF THE ACT AND ON THI S SCORE WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DECLINE TO INTERFERE WITH THE SAME. 10. IN VIEW OF OUR FINDING ON THE MERITS OF THE CAS E GRANTING RELIEF TO THE ASSESSEE, IN A DISCUSSION ON THE ASPECT OF 153D OF THE ACT IS ACADEMIC. 7 ITA NO. 6447/DEL/2015 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF FEBRUARY 2021 ON CONCLUSION OF THE HEARING IN VIRTUAL MODE. SD/- SD/- (O.P. KANT) (K.NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:18/02/2021 *KAVITA ARORA