M/s. IIBS Infonet (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 6509/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6535 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Search and seizure; Principle of natural justice
• Section: 143(3); 133A

Judgement Text

ITA NO.6509/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 6509 /DEL/201 4 A.Y. 20 10 - 11 M/S IIBS INFONET (P) LTD., C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI -110049 (PANAABC13160K) VS. ACIT, CENTRAL CIRCLE - 03, NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADV. & SH. SOMIL AGGARWAL, CA DEPARTMENT BY : SH. T. VASANTHAN, SR. DR DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 0 00 07 77 7- -- -0 00 03 33 3- -- -201 201 201 2016 66 6 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 0 00 08 88 8- -- -0 00 03 33 3- -- -201 201 201 2016 66 6 ORDER ORDER ORDER ORDER PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, NEW DELHI DATED 8.10.2014 PERTAINING TO ASSESSMENT YEAR 2010-11. 2. ASSESSEE HAS RAISED 06 GROUNDS, BUT AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE ONLY ARGUED THE GROUND NO. 2 WHICH IS REPRODUCED AS UNDER:- 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ITA NO.6509/DEL/2014 2 THE ACTION OF THE AO IN MAKING ADDITION OF RS. 70,0 0,000/- BY TREATING IT AS UNDISCLOSED INCOME OF THE ASSESSE E AND THAT TOO WITHOUT PROVIDING ANY ADVERSE MATERIAL ON RECOR D AND WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCE OF T HE CASE AND WITHOUT CROSS EXAMINATION AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME OF RS. 45,465/- ON 30.3.2011. A SEARCH AND SEIZURE OP ERATION WAS CARRIED IN MAHESH MEHTA GROUP OF CASES ON 30.6.2009 AND THE AS SESSEE COMPANY WAS COVERED U/S. 133A OF THE I.T. ACT ON 30.6.2009. D URING THE COURSE OF SURVEY U/S. 133A OF THE I.T. ACT, STATEMENT OF SH. AJAY SINGHAL, S/O SH. ROSHAN LAL, DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED ON 30 .6.2009 WHICH THE ASSESSING OFFICER HAS REPRODUCED IN THIS ASSESSME NT ORDER AT PAGES 1 & 2 VIDE PARA NO. 3. THE AO HAS SPECIFICALLY POINTED OUT T HE ANSWER OF QUESTION NO. 22 IN WHICH SH. AJAY SINGHAL SUBMITTED THAT MY GROUP HAS EARNED UNDISCLOSED INCOME OF RS. 70 LACS DURING THE FINANCIAL YEAR 20 09-10 FROM VARIOUS SOURCES WHICH HE WANTED TO SURRENDER IN THE HANDS OF HIS GROUP COMPANIES, HIMSELF AND HIS IMMEDIATE FAMILY MEMBERS OVER AND ABOVE TH E INCOME FROM ALL THE SOURCES ACCOUNTED FOR TILL DATE AND READY TO PAY T AXES ON THIS UNDISCLOSED INCOME OF RS. 70 LACS SUBJECT TO CONDITION THAT NO PENALTY PROCEEDINGS WILL BE INITIATED. AFTER CONSIDERING THE REPLY FILED BY TH E ASSESSEE AS WELL AS OTHER DOCUMENTARY EVIDENCE IN RESPONSE TO THE NOTICES ISS UED BY THE AO, THE AO MADE THE ADDITION OF RS. 70 LACS TO THE INCOME OF T HE ASSESSEE COMPANY ON THE BASIS OF THE STATEMENT RECORDED U/S. 133A OF THE AC T AND COMPLETED THE ASSESSMENT ON 18.3.2013 U/S. 143(3) OF THE I.T. ACT . ITA NO.6509/DEL/2014 3 4. AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFIC ER, ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 08.10.2014 DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ASSESSMENT ORDER PASSED BY THE AO. 5. AGAINST THE LD. CIT(A)S ORDER DATED 8.10.2014, NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, DR. RAKESH GUPTA, LD. CO UNSEL OF THE ASSESSEE STATED THAT ALTHOUGH THE ASSESSEE HAS RAISED 06 GRO UNDS IN THE APPEAL, BUT HE IS ONLY PRESSING THE GROUND NO. 2, AS AFORESAID. AT THE THRESHOLD, HE DREW OUR ATTENTION TOWARDS THE PAPER BOOK FILED BY THE ASSES SEE CONTAINING PAGES 1 TO 101 IN WHICH HE HAS ATTACHED THE WRITTEN SUBMISSIONS FI LED BY THE ASSESSEE BEFORE THE LD. CIT(A) ALONGWITH THE STATEMENT OF SH. AJAY SINGHAL RECORDED U/S. 133A OF THE ACT BY THE DEPARTMENT AND FEW CASE LAWS SUPPORT ED THE AVERMENTS MADE BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS AND REQUEST ED THAT IN VIEW OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. CI T(A SUPPORTED BY THE CASE LAWS, THE ADDITION OF RS. 70 LACS MADE BY THE AO AN D CONFIRMED BY THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS AND DESERVE TO BE CANCELLED. HE FURTHER STATED THAT THE ADDITION IN DISPUTE HAS BEEN MADE ONLY ON THE BASIS OF THE STATEMENT OF SH. AJAY SINGHAL RECORDED U/S. 133A OF THE ACT WHIC H CANNOT BE STAINED BECAUSE SUCH STATEMENT DOES NOT HAVE ANY EVIDENTIARY VALUE AND THE ADDITION MADE ON SUCH STATEMENT RECORDED U/S. 133A OF THE ACT IS NOT SUSTAINABLE, IN VIEW OF THE FOLLOWING CASE LAWS, WHICH WERE MENTIONED IN THE ASSESSEES PAPER BOOK. - CIT VS. S. KHADER KHAN SON 214 CTR 589 (MAD.). - UNITEX PRODUCTS LTD. VS. ITO (2008) 22 SOT (MUM BAI) - CIT VS. P. BALASUBRAMANIAN 354 ITR 116 (MAD.) ITA NO.6509/DEL/2014 4 - ITO VS. RAM PRAKASH ITA NO. 61/AGRA/2013 DATED 18.7.2014. - MAHESH OHRI VS. ACIT 23 ITR (T) 522 - ABHI DEVELOPERS VS. ITO (2007) 12 SOT 444 (AHD.) - RAVINDER KUMAR VS. DCIT (2009) 33 SOT 251 (DEL.) - DCIT VS. PREMSONS 37 DTR 150 (MUMBAI B) - CIT VS. DIGAMBAR KUMAR JINA (HUF) 84 DTR 365 (MP) - ACIT VS. SAFE ENTERPRISES (2011) 128 ITD 459 (MUM ) 6.1 HE ALSO DRAW OUR ATTENTION TOWARDS THE CBDTS LETTER ISSUED VIDE F.NO. 286/2/2003-IT (INV) DATED 10.3.2003 WHEREIN IT IS MENTIONED THAT WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONF ESSION AS TO THE UNDISCLOSED INCOME. LD. COUNSEL OF THE ASSESSEE FURTHER STATED THAT MO REOVER THE ALLEGED STATEMENT OF MR. AJAY SINGHAL CANNOT BE USED TO MAK E IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEE COMPANY UNDER ANY CIRCUMSTAN CES WHICH IS CLEAR FROM THE PLAIN READING OF THE ANSWER TO QUESTION NO. 22 IN W HICH HE HAS NOT SURRENDERED THE IMPUGNED AMOUNT IN THE HANDS OF THE ASSESSEE C OMPANY. HE STATED THAT THE SAID STATEMENT IS QUITE VAGUE. FURTHERMORE, HE STATED THAT SH. AJAY SINGHAL IS NOT THE SOLE AUTHORITY TO STATE ANYTHING ON BEHALF OF THE ASSESSEE COMPANY. HE HOLDS 3.99% SHAREHOLDING. IN VIEW OF THE ABOVE, HE REQUESTED THAT THE ADDITION MADE ON THE BASIS OF STATEMENT RECORDED U/S. 133A I S NOT JUSTIFIED AT ALL AND HENCE, NEEDS TO BE DELETED. ITA NO.6509/DEL/2014 5 7. ON THE CONTRARY, SH. T. VASANTHAN, LD. DEPARTME NTAL REPRESENTATIVE HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND STATED THAT THE SAME MAY BE UPHELD AND THE APPEAL OF THE ASSESSEE MAY BE DISMI SSED ACCORDINGLY. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES, STATEMENT RECORD ED U/S. 133A OF THE ACT AND THE CASE LAWS CITED BY THE LD. COUNSEL OF THE ASSE SSEE, AS AFORESAID AS WELL AS THE CBDTS CIRCULAR DATED 10.3.2003. WE FIND TH AT IN THE PRESENT CASE AN ADDITION OF RS. 70 LACS WAS MADE BY THE AO ON THE BASIS OF STATEMENT OF MR. AJAY SINGHAL AT THE TIME OF SURVEY RECORDED U/S. 13 3A OF THE I.T. ACT. WE FIND CONSIDERABLE COGENCY IN THE LD. COUNSEL OF THE ASSE SSEES SUBMISSIONS THAT ADDITION CANNOT BE MADE ON THE BASIS OF THE STATEME NT RECORDED DURING THE SURVEY UNDER SECTION 133A OF THE ACT, IN VIEW OF T HE VARIOUS JUDICIAL DECISIONS WHEREIN, IT HAS BEEN HELD THAT SUCH STATEMENT DOES NOT HAVE ANY EVIDENTIARY VALUE, ESPECIALLY THE DECISION OF THE HONBLE MADRA S HIGH COURT IN THE CASE CIT VS. S. KHAKDER KHAN SON REPORTED IN {2008) 300 ITR 157 (MADRAS) WHEREIN, IT HAS BEEN HELD THAT ADDITION ON THE BASIS OF STATEMENT RECORDED DURING SURVEY UNDER SECTION 133A-SECT. 133A DOES NOT EMPOWER ANY IT AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS N O EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS FOR ADDITION AND THE DECISION OF THE HONBLE HIGH COURT OF JHAR KHAND DELIVERED IN THE CASE OF CIT, RANCHI VS. RAVINDRA KUMAR JAIN REPORTED IN (20 09) ITA NO.6509/DEL/2014 6 33 SOT 251 (DELHI) WHEREIN, IT HAS BEEN HELD THAT ADDITION MADE BY THE LOWER AUTHORITIES MERELY ON THE BASIS OF STATEMENT RECORD ED DURING SURVEY AND THEREAFTER, WITHOUT BRINGING ANY CORROBORATIVE MATE RIAL ON RECORD IS DEVOID ANY MERITS. WE ALSO FIND FORCE IN THE ASSESSEES COUNSEL CONTEN TION THAT IN VIEW OF THE CBDTS LETTER ISSUED VIDE F.NO. 286/2/2003-IT ( INV.) DATED 10 TH MARCH, 2003 THE ADDITION MADE BY THE AO AND CONFIRMED BY T HE LD. CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW. FOR THE SAKE OF CL ARITY WE ARE REPRODUCING THE CONTENTS OF THE CBDTS LETTER DATED 10.3.2003 AS UN DER:- F.NO. 286/2/2003-IT (INV) GOVERNMENT OF INDIA, MINISTRY OF FINANCE & COMPANY AFFAIRS, DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES, ROOM NO. 254, NORTH BLOCK, NEW DELHI, THE 10 TH MARCH, 2003 TO ALL CHIEF COMMISSIONERS OF INCOME TAX (CADRE CONTRA ) & ALL DIRECTORS GENERAL OF INCOME TAX INV. SIR, SUB:- CONFESSION OF ADDITIONAL INCOME DURING THE C OURSE OF SEARCH & SEIZURE AND SURVEY OPERATION REGARDING INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHER E ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AN D SURVEY ITA NO.6509/DEL/2014 7 OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CRE DIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHIL E FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURI NG THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOUL D BE FOCUS AND CONCENTRATION ON' COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENTS. SIMILA RLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTA IN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CON TRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/M ATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATI ONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT OR DERS YOURS FAITHFULLY, SD/- (S. R. MAHAPATRA] UNDER SECRETARY (INV. II) 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE HONBLE HIGH COURTS, AS AFORE SAID AND IN VIEW OF THE CBDTS LETTER DATED 10.3.2003, AS AFORESAID, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE ON THE BASIS OF THE STATEMEN T IN THE PRESENT CASE RECORDED ITA NO.6509/DEL/2014 8 U/S. 133A IS NOT SUSTAINABLE IN THE EYES OF LAW, HE NCE, WE DELETE THE ADDITION OF RS. 70 LACS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/03/2016. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE 08./03/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES