ACIT, New Delhi V. M/s Ramji Lal Investments Pvt. Ltd., New Delhi

ITA 6685/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2752 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 29-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Documents seized
• Section: 143(3); 153A; 143(1); 143(2); 153; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6685/DEL./2016 ASSESSMENT YEAR: 2008-09 ACIT, CENTRAL CIRCLE-19, NEW DELHI VS. M/S. RAMJI LAL INVESTMENTS PVT. LTD., D-14/8, MODEL TOWN-II, NEW DELHI. PAN :AAACR0605B (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AGAIN ST ORDER DATED 25/10/2016 PASSED BY THE LEARNER CIT(APPEALS) -28, NEW DELHI [IN SHORT THE LD. CIT(A) FOR ASSESSMENT YEAR 2008-09, RAISING FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN HOLDING THAT NO ADDITIONS COULD HAVE BEEN MADE AS NO INCRIM INATING MATERIAL SUGGESTING EARNING OF ANY UNDISCLOSED INCOME WAS UN EARTHED DURING THE SEARCH OPERATION. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.7,70,00,000/- (ACTUAL AMOUNT AS PER BALANCE SHEET/P&L ACCOUNT IS RS.8,70,00,000/- BUT WRONGLY M ENTIONED IN ASSESSMENT ORDER/APPELLATE ORDER AS RS.7,70,00,000/ -) MADE ON APPELLANT BY SMT. SUSHMA SINGH, CIT(DR) RESPONDENT BY SHRI RAKESH GUPTA, ADV. SHRI SOMIL AGARWAL, ADV. DATE OF HEARING 05.03.2020 DATE OF PRONOUNCEMENT 17.03.2020 2 ITA NO. 6685/DEL./2016 ACCOUNT OF UNEXPLAINED CASH DEPOSITS U/S 68 OF THE ACT, WITHOUT PROPERTY APPRECIATING THE FACTS AND CIRCUMSTANCES O F THE CASE. 3. (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS A ND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THE C ASE OF THE ASSESSEE, A SEARCH AND SEIZURE OPERATION UNDER SECT ION 132 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS CARRI ED OUT BY THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT ON 20/01/2014 ALONG WITH OTHER CASES OF THE SHARP GROUP. CONSEQ UENT TO THE SEARCH PROCEEDING, THE ASSESSING OFFICER ISSUED NOT ICE UNDER SECTION 153A OF THE ACT AND COMPLETED ASSESSMENT ON 31/03/2016 UNDER SECTION 153A READ WITH SECTION 143 (3) OF THE ACT AFTER MAKING ADDITION OF 7,70,00,000/- AS INCOME FROM UNDISCLOSED SOURCES UNDER SECTION 68 OF THE ACT AND ADDITION OF INTEREST ON FDR OF 7,41,764/-. ON FURTHER APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS KABUL CHAWLA, 126 DTR 130, HELD THAT NO AD DITION COULD HAVE BEEN MADE IN THE INSTANT CASE IN VIEW OF NON-ABATED CASE AND NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH, ACCORDINGLY DELETED BOTH THE ADDITIONS. AGG RIEVED WITH THE ADDITIONS DELETED BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUC ED ABOVE. 3. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITION O F UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT ON THE GROU ND THAT 3 ITA NO. 6685/DEL./2016 ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HAD BEE N ALREADY COMPLETED BEFORE THE DATE OF THE SEARCH AND NO INCR IMINATING MATERIAL HAS BEEN FOUND IN THE COURSE OF THE SEARCH AND THIS ISSUE IN DISPUTE WAS SQUARELY COVERED BY THE DECISI ON OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS KABUL CHAWLA. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCE D AS UNDER: 4.1 GROUND NO. 1 TO 1.2 TAKEN BY THE APPELLANT IS THAT THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 143A CAN MAKE ADDITION ONLY ON THE BASIS OF SOME INCRIMINATING MA TERIAL UNEARTHED DURING THE COURSE OF SEARCH AND THAT ROUTINE ADDITI ON ON ACCOUNT OF ISSUES NOT RELATED OR EMIGRATED FROM THE SEARCH PRO CEEDING CANNOT BE MADE IN THE SEARCH ASSESSMENT ORDER PASSED. THE A.O HAS DULY CONSIDERED THE ISSUE AND HAS HELD THAT SECTION 153A DOES NOT RESTRICT THE ASSESSMENT OR REASSESSMENT ONLY TO INC RIMINATING DOCUMENTS SEIZED. 4.2 I HAVE CONSIDERED THE FACT OF THE CASE, FINDING OF THE ASSESSING OFFICER AND THE SUBMISSION OF THE L.D A.R.. IN THIS CASE THE A.O HAS MADE ADDITION OF RS. 7.70 CRORES UNDER SECTION 68 O F THE ACT , WHEREAS IN THE EARLIER ASSESSMENT ORDER PASSED UNDE R SECTION 143(3) OF THE ACT, THE CASH CREDITORS WERE ACCEPTED TO BE GENUINE. FURTHER IT HAS BEEN HELD THAT THE INTEREST INCOME F ROM THE FDR HAS TO BE TREATED AS INCOME FROM OTHER SOURCES WHEREAS IN THE EARLIER ASSESSMENT ORDER THE SAME WAS TREATED AS BUSINESS R ECEIPTS. IT IS SETTLED LEGAL POSITION AFTER THE DECISION OF THE HO NTILE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V KABUL CHAWLA ORDER DATED 28.08.2015 , THAT NO ADDITION CAN BE MADE TO THE IN COME ALREADY ASSESSED IF NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH. EVEN IN THOSE CASES WHERE THE ASSESSMENT HA D BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH, IT WILL BE CONSIDERED THAT THERE WAS NO ASSESSMENT PENDING. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. 4.3 THE ISSUE IN QUESTION WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT ORDER IN CASE OF CIT V KA BUL CHAWLA 61 TAXMANN.COM 412 (DELHI) . ON A CONSPECTUS OF SECTIO N 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIG HT 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 4 ITA NO. 6685/DEL./2016 PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN W HICH THE SEARCH TAKES PLACE. 4. BEFORE US, THE LEARNED DR COULD NOT CONTROVERT THA T NO ASSESSMENT WAS PENDING ON THE DATE OF THE SEARCH AN D NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE CO URSE OF THE SEARCH QUA THE ADDITION MADE. THIS ISSUE IN DISPUTE BEING A SQUARELY COVERED BY THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISP UTE AND ACCORDINGLY WE UPHOLD THE SAME. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE ACCORDINGLY DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2020. SD/- SD/- ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH MARCH, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI