Best City Projects India Pvt. Ltd., New Delhi V. ITO, Ward- 4(3), New Delhi

ITA 7652/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6890 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Keywords: Search and seizure; Application of stay
• Section: 153A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRESIDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER S. A.- 646-47/DEL./2018 ITA NO. 7651-52/DEL/2017) A.Y. 2006-07, 2007-08 M/S. BEST CITY PROJECTS INDIA PVT. LTD. VS ITO, WARD-4(3), NEW DELHI S. A.- 648-49/DEL./2018 ITA NO. 7653-54/DEL/2017) A.Y. 2007-08, 2008-09 M/S. BEST CITY REALTORS INDIA PVT. LTD. VS ITO, WARD-4(3), NEW DELHI APPELLANT RESPONDENT ASSESSEE BY SH. VED JAIN, ADV., SH. ASHISH GOYAL, CA, SH. KISLAYA PRASHAD, ADV. REVENUE BY SH. G. JOHNSON, SR. DR ORDER PER BENCH: ALL THESE FOUR APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AND RELATE TO TWO ASSESSMENT YEARS 2006-07 AND 2007 -08 IN THE DATE OF HEARING 09.10.2018 DATE OF PRONOUNCEMENT 07 . 0 1.201 9 2 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) CASE OF BEST CITY PROJECTS INDIA PVT. LTD. AND TWO ASSESSMENT YEARS 2007-08 AND 2008-09 IN THE CASE OF BEST CITY REALTORS INDIA PVT. LTD. 2. THE BRIEF FACTS OF THE CASE/S ARE THAT SEARCH AN D SEIZURE OPERATION WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE BEST GROUP OF CASES ON 15.09.2008. SUBSEQUENTLY, ASSESSM ENT ORDERS U/S 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER C ALLED THE ACT) WERE PASSED. ANOTHER SEARCH AND SEIZURE OPER ATION U/S 132 OF THE ACT WAS CARRIED OUT ON 28.03.2011 AT THE BUS INESS PREMISES OF THE BEST GROUP AND ASSESSMENTS U/S 153C OF THE ACT WERE COMPLETED ON 28.03.2013 IN THE FOLLOWING CASES : SL. NO. NAME OF THE ASSESSEE A.Y. 1 BEST CITY INFRASTRUCTURE INDIA LTD. A.Y. 2005-06 TO A.Y. 2008-09 2 BEST CITY DEVELOPERS INDIA PVT. LTD. A.Y. 2007-08 TO A.Y. 2008-09 3 BEST CITY PROJECTS INDIA P. LTD. A.Y. 2006-07 TO A.Y. 2007-08 4 BEST CITY REALTORS INDIA P. LTD. A.Y. 2007-08 TO A.Y. 2008-09 2.1 AGAINST THE ABOVE ASSESSMENT ORDERS PASSED U/ S 153C OF THE ACT VIDE ORDER/S DATED 28.03.2013, THE ASSES SEE/S FILED APPEALS BEFORE THE LD. CIT (APPEALS)- 31, NEW DELHI AND CHALLENGED THE INITIATION OF PROCEEDINGS BY THE ASS ESSING 3 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) OFFICER (AO) UNDER SECTION 153C OF THE ACT AS WELL AS THE ADDITIONS ON MERITS. 2.2 THE LD. CIT (APPEALS), VIDE ORDER/S DATED 11.03 .2014 CONFIRMED THE INITIATION OF THE PROCEEDINGS UNDER S ECTION 153C AND THUS DECIDED THE LEGAL ISSUE AGAINST OF TH E ASSESSEE IN THE CASES/S OF BEST CITY INFRASTRUCTURE LTD. AND BEST CITY DEVELOPERS INDIA PVT. LTD. SINCE, THERE WAS NO REL IEF FROM THE LD. CIT (A) IN THE CASES OF THESE TWO ASSESSEES, TH EY FURTHER APPEALED BEFORE THE ITAT AND ITAT, VIDE ORDER DATED 08.02.2017, DELETED THE ADDITION MADE BY THE AO AND THE ORDER OF THE ITAT WASSUBSEQUENTLY CONFIRMED BY THE HONBLE DELHI HIGH COURT VIDE ORDER DATED 30.10.2017. 2.3 HOWEVER, IN THE CASE OF THE TWO ASSESSES, NOW I N APPEAL BEFORE US, THE LEARNED CIT (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT SINCE THE RE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH BELONGING TO THE ASSESSEE, THERE COULD NOT BE ANY A DDITION IN THE HANDS OF THE ASSESSEE AND, THUS, THE LEGAL ISSU E WAS DECIDED IN FAVOUR OF THE ASSESSEE. HOWEVER, ON MERI TS THE LEARNED CIT (A) CONFIRMED THE ADDITION IN THE HANDS OF THE ASSESSEE/S. SINCE THE LEGAL ISSUE WAS DECIDED IN FA VOUR OF THE 4 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) ASSESSEE, NO FURTHER APPEAL/S WERE PREFERRED BY THE ASSESSEES NOW IN APPEAL BEFORE US AND NO APPEALS WERE FILED B Y THE REVENUE ALSO. 2.4 THEREAFTER, THE ASSESSEES FILED APPLICATIONS BE FORE THE AO FOR GIVING THE APPEAL EFFECT REQUESTING THE AO T O GIVE EFFECT TO THE ORDER/S OF THE LD. CIT (A). 2.5 HOWEVER, THE AO DISPOSED OF THE SAID APPLICATIO NS VIDE ORDER DATED 27.04.2017 STATING THAT THE ORDER/ S BY THE LD. CIT (A) HAD BEEN PASSED IN THE FAVOUR OF REVENU E AND THUS THE EFFECT TO THE APPLICATION/S OF THE ASSESSE COMP ANIES CANNOT BE GRANTED AND THAT THE DEMAND/S RAISED BY T HE AO REMAINED AS THEY WERE. 2.6 AGGRIEVED, THE CAPTIONED ASSESSEES APPROACHED T HE LD. CIT (A) ONCE AGAIN CHALLENGING THE ACTION OF TH E AO IN DENYING THE GRANT OF APPEAL EFFECT TO THE ASSESSEE/ S. HOWEVER, THE LD. CIT (A) DISMISSED THE APPEALS BY SIMPLY STA TING THAT THE APPEALS FILED BY THE ASSESSEE/S WERE NOT MAINTA INABLE UNDER THE PROVISIONS OF SECTION 246A OF THE ACT. 2.7 NOW THE CAPTIONED ASSESSES ARE BEFORE THE ITAT CHALLENGING THE ACT ON THE LD. CIT (A) IN HOLDING T HAT THE ORDERS OF THE AO DENYING GRANT OF APPEAL EFFECT WER E NOT 5 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) APPEALABLE ORDERS. 3.0 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THAT THE APPEAL EFFECT ORDER IS APPEALABLE UNDER SE CTION 246A OF THE ACT BECAUSE THE ORDER PASSED BY THE ASSESSIN G OFFICER GIVING EFFECT TO THE DECISION OF THE APPELLATE AUTH ORITY IS AS MUCH AN ASSESSMENT ORDER AS THE ONE PASSED BY HIM U /S 143 OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE APPEA L-EFFECT ORDER PASSED BY THE AO IN CONTRAVENTION OF THE ORDE R OF THE LD. CIT (A) IS AN APPEALABLE ORDER AND THE APPEAL L IES BEFORE THE LD. CIT (A). IT WAS SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN HOLDING THAT THE IMPUGNED ORDERS WERE NOT APPEALABLE ORDERS. IT WAS PRAYED THAT THE APPEALS O F THE ASSESSEE/S BE ALLOWED. 4.0 IN RESPONSE, THE LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT APPROPRIATE DIRECTIONS MAY BE ISSUED TO THE LD. CIT (A) TO RECONSIDER THE APPEALS OF THE ASSESS EE. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACTS IN THE APPEALS BEFORE US ARE NOT IN DISPUTE. IT IS UNDISPU TED IN THE CASES OF THE ABOVE TWO ASSESSEES WHO ARE NOW APPEAL BEFORE US THAT THE LD. CIT (A) HAS DECIDED THE APPEALS IN FAVOUR OF 6 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) THE ASSESSEE/S BY HOLDING THAT SINCE THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND SEIZURE WHICH COULD BE SAID TO BE BELONGING TO THE ASSESSEE/S, THERE CANNOT BE ANY ADDITIONS IN THE HANDS OF THE A SSESSEE/S. ON THE OTHER HAND, THE LD. CIT (A) HAS CONFIRMED TH E ADDITIONS ON MERITS. THIS IS CONTRARY TO THE SETTLE D LEGAL POSITION THAT IF THE APPEALS ARE ALLOWED ON THE LEG AL GROUND, THEN ADDITIONS ON MERITS CANNOT BE SUSTAINED. THE L D. CIT (A) HAS, THUS, GIVEN CONTRADICTORY FINDINGS IN THE SAME APPELLATE ORDER. FURTHER, IT IS ALSO SETTLED LAW THAT AN ORDE R GIVING EFFECT TO THE APPELLATE ORDER IS ALSO APPEALABLE U/S 246A OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CALTEX OIL REFINING (INDIA) LTD. VS. CIT REPORTED IN 202 ITR 3 75 (BOMBAY) HAD AN OCCASION TO CONSIDER THIS ISSUE AND IT WAS H ELD BY THE HONBLE BOMBAY HIGH COURT AS UNDER: 'SO FAR AS THE FIRST SUBMISSION, WHICH RELATES TO T HE NATURE OF AN ORDER PASSED BY THE INCOME-TAX OFFICER IN CONSEQ UENCE OF ORDERS OF THE APPELLATE AUTHORITIES WITH A VIEW TO GIVING EFFECT TO THE DIRECTIONS CONTAINED THEREIN, IS CONC ERNED, IT IS DIFFICULT TO HOLD THAT SUCH AN ORDER IS AN ADMINIST RATIVE ORDER. THE POWER OF THE INCOME-TAX OFFICER IS TO MA KE ASSESSMENT UNDER SECTION 143 OR 144 OF THE ACT. IT IS THAT ASSESSMENT WHICH IS THE SUBJECT-MATTER OF APPEAL. T HE 7 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) APPELLATE AUTHORITY, ON AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HAS POWER TO CONFIRM, REDUCE, ENHANCE O R ANNUL THE ASSESSMENT OR TO SET ASIDE THE ASSESSMENT AND R EFER THE CASE BACK TO THE INCOME-TAX OFFICER FOR MAKING A FR ESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY SUCH AUTHORITY (SECTION 251). EVIDENTLY THE EFFECT OF AN APPELLATE ORDER IS THAT THE ORDER EITHER STANDS CONFIRMED, RE DUCED OR ENHANCED OR IT STANDS ANNULLED OR SET ASIDE. IN THE CASE OF CONFIRMATION, REDUCTION OR ENHANCEMENT, THE ORIGINA L ORDER OF ASSESSMENT STANDS MODIFIED TO THE EXTENT OF THE DIR ECTIONS GIVEN BY THE APPELLATE AUTHORITY. IN THE CASE OF AN NULMENT THE ORDER BECOMES NON EST. IN CASE AN ORDER IS SET ASIDE, THE AUTHORITY HAS TO START THE ENTIRE PROCESS AFRESH AN D MAKE A FRESH ORDER OF ASSESSMENT COMPLYING WITH THE DIRECT IONS GIVEN BY THE APPELLATE AUTHORITY. IT IS THUS CLEAR THAT WHAT REMAINS AS A FINAL ORDER AFTER GIVING EFFECT TO THE ORDERS OF THE APPELLATE AUTHORITIES IS AN ORDER OF ASSESSMENT UNDER SECTION 143 OR 144. IT CANNOT BE ANYTHING ELS E.' 5.1 A SIMILAR VIEW WAS TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JOHN TINSON & CO. PVT. LTD. IN ITA 418/2009 WHEREIN THE HONBLE DELHI HIGH COURT H AS REFERRED TO AND APPROVED THE SAID JUDGMENT OF THE H ONBLE BOMBAY HIGH COURT. THEREFORE, RESPECTFULLY PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CALTEX OIL REFINING (INDIA) LTD. VS. CIT (S UPRA), WE HOLD 8 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) THAT THE LD. CIT (A) WAS LEGALLY INCORRECT IN H OLDING THAT THE APPEAL EFFECT ORDER IS NOT APPEALABLE AND, THEREFOR E, HIS ACTION OF DISMISSING THE ASSESSEES APPEALS IN LIMINE CANNOT BE UPHELD. ACCORDINGLY, WE RESTORE ALL THE FOUR APPEAL S TO THE FILE OF THE LD. CIT (A) TO RECONSIDER THE ASSESSEES APP EALS WHICH HAVE BEEN FILED AGAINST THE ORDER OF THE AO GIVING EFFECT TO THE ORDER OF THE LD. CIT (A). THE LD. CIT (A) SHALL RE- ADJUDICATE THE APPEALS AND PASS THE ORDERS IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO PRESENT I TS CASE. 6.0 IN THE RESULT, ALL THE FOUR APPEALS OF THE ASS ESSEE/S ACCORDINGLY STAND ALLOWED FOR STATISTICAL PURPOSES. 7.0 SINCE THE CAPTIONED APPEALS HAVE BEEN HEARD AN D ALLOWED FOR STATISTICAL PURPOSES, THE CAPTIONED STA Y APPLICATIONS BECOME IN FRUCTUOUS AND THEY ARE DISMISSED AS HAVING BECOME IN FRUCTUOUS . 8.0 IN THE FINAL RESULT, ALL THE FOUR APPEALS OF T HE ASSESSEE/S STAND ALLOWED FOR THE STATISTICAL PURPOS ES WHEREAS ALL THE FOUR STAY APPLICATIONS STAND DISMISSED. 9 S.A. 746-49 /DEL/2018 (ITA N O. 7651-54/DEL/2017) ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2019 SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SRIV ASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 07 .01.2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 07.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 07.01.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 07.01.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 07.01.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10.01.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 10.01.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT 10 S.A. 746-4 9/DEL/2018 (ITA N O. 7651-54/DEL/2017) REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER