BPTP Resort Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 769/DEL/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9632 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Assessee Lawyers: AJAY BHAGWANI
• Keywords: Search and seizure; Set aside
• Section: 40A(3); 143(3); 153A; 37(1); 153; 153C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI K.N. CHARY, JUDICIAL MEMBE R ITA NO. 769/DEL/2015 [A.Y 2006-07] M/S BPTP RESORT PVT LTD VS. THE A.C.I.T [FORMERLY KNOWN AS M/S REAL VALUE CENTRAL CIRCLE - 23 OVERSEAS PVT LTD, M-11, NEW DELHI MIDDLE CIRCLE, CONNAUGHT CIRCUS NEW DELHI PAN: AAACR 5360 H [APPELLANT] [RESPONDENT] ASSESSEE BY : SHRI AJAY BHAGWANI, CA REVENUE BY : SHRI SATPAL GULATI, CIT-DR DATE OF HEARING : 27.07.2021 DATE OF PRONOUNCEMENT : 27.07.2021 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A) - XXXIII, NEW DELHI DATED 31.10.2014 PERTAI NING TO A.Y 2006-07 . 2 2. THE SUBSTANTIVES GRIEVANCES ARGUED BY THE LD. COUNS EL FOR THE ASSESSEE BEFORE US ARE: I) THE LD. CIT(A) ERRED IN HOLDING THAT WHEREVER TH E DATE OF PDCS ARE EXTENDED, INTEREST IS TO BE TAKEN TO HAVE BEEN PAID @ 15% P.A. IN CASH OUTSIDE THE BOOKS OF ACCOUNT AND I S TO BE TREATED AS UNDISCLOSED INCOME. II) THE LD. CIT(A) ERRED IN SUSTAINING THE DISALLOW ANCE OF RS. 7,24,112/- U/S 40A(3) OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS 'THE ACT'] DESPITE THE FACT THAT NO DEDUCTION IN RESPECT OF THE SAID SUM WAS CLAIMED IN THE COMPUTAT ION OF INCOME FROM BUSINESS. IN ADDITION TO THE AFOREMENTIONED GRIEVANCES, THE L D. COUNSEL FOR THE ASSESSEE ALSO VEHEMENTLY STATED THAT THE MATERIAL S EIZED DURING THE COURSE OF SEARCH ON BPTP GROUP OF CASES ON 15.11.20 07 DID NOT BELONG TO THE ASSESSEE, 3 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT IS A GROUP COMPANY, BPTP LTD, WHICH IS THE FLAGSHIP COMP ANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. SEARCH WA S CONDUCTED ON BPTP LTD ON 07.12.2010 INCLUDING THE ASSESSEE. PUR SUANT TO SEARCH, NOTICE U/S 153A WAS SERVED UPON THE ASSESSEE IN RES PONSE TO WHICH, RETURN OF INCOME WAS FILED ON 30.01.2012. ASSESSME NT WAS COMPLETED BY MAKING FOLLOWING ADDITIONS: I) ON ACCOUNT OF INTEREST ON PDC RS. 35,34,286/- II) DISALLOWANCE U/S 37(1) ON ADDL PAYMENT RS. 24,1 4,681/- III) DISALLOWANCE U/S 40A(3) OF THE ACT RS. 7,24, 112/- 4. ASSESSMENT WAS ASSAILED BEFORE THE LD. CIT(A) AN D THE LD. CIT(A), VIDE ORDER DATED 31.10.2014, GAVE RELIEF AS UNDER: I) ON ACCOUNT OF INTEREST ON PDC RS. 33,65,536/- II) DISALLOWANCE U/S 37(1) ON ADDL PAYMENT RS. 24, 14,681/- 5. THE PRESENT APPEAL RELATES TO THE ADDITION ON AC COUNT OF INTEREST ON PDC RS. 1,68,750/- AND DISALLOWANCE U/S 40A(3) O F THE ACT 7,24,112/-. 4 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THERE WERE TWO SEARCHES ON BPTP GROUP - ONE ON 15.11.2007 AND ANOTHER ON 07.12.2010. IT IS THE SAY OF THE LD. COUNSEL FOR T HE ASSESSEE THAT THERE WAS NO SEARCH ON THE ASSESSEE COMPANY ON 15.11.2007 AND ON SUBSEQUENT SEARCH ON 07.12.2010 ALSO NO INCRIMINATI NG MATERIAL WAS FOUND AND SEIZED WHICH BELONGED TO THE ASSESSEE. 7. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT AS NO INCRIMINATING MATERIAL WAS FOUND AND SEIZED BELONGI NG TO THE ASSESSEE DURING THE COURSE OF SEARCH ON 07.12.2010, NO ADDIT ION SHOULD HAVE BEEN MADE IN THE ASSESSMENT COMPLETED U/S 153A OF T HE ACT. 8. STRONG RELIANCE WAS PLACED ON THE DECISION OF TH E HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF K ABUL CHAWLA 61 TAXMANN.COM 412 AND MEETA GUTGUTIA 395 ITR 526. TH E LD. COUNSEL FOR THE ASSESSEE FURTHER RELIED UPON THE DECISION OF TH IS TRIBUNAL IN THE CASE OF GREEN VALLEY HOUSING AND LAND DEVELOPMENT 1 340/DEL/2015 AND IN THE CASE OF GREEN VALLEY TOWER PVT LTD ITA N O.1354/DEL/2015. 5 9. THE LD. DR FAIRLY CONCEDED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS AND D ECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE IN FAV OUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH PROC EEDINGS. ON IDENTICAL FACTS, THIS TRIBUNAL IN ITA NO. 1340/DEL/ 2015 HAS HELD AS UNDER: 6. THIS ASSESSMENT IS FRAMED U/S 153C/153 A OF THE ACT . THE LAW IS SETTLED THAT THE CONCLUDED ASSESSMENT CAN ONLY B E DISTURBED WHEN THERE IS SOME INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH AND THE SAME IS REFERRED TO WHILE FRAMING AS SESSMENT U/S 153C/153 A OF THE ACT . FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT OF DELHI IN THE CASE OF KABUL CHAWLA 380 ITR 573 [DEL] WHEREIN THE HON'BLE HIGH COURT SUMMARIZED A LEGAL POSITION IN PARA 37 O F THE ORDER WHEREIN IT WAS EXPLICITLY HELD THAT AN ASSESSMENT U /S 153 A OF THE ACT HAS TO BE MADE ONLY ON THE BASIS OF SEIZED MATERIA L. 7. SINCE SIMILAR ADDITIONS HAVE BEEN MADE BY THE AS SESSING OFFICER WHICH WERE MADE WHILE FRAMING ASSESSMENT U/S 143(3) OF THE ACT AND DELETED BY THE TRIBUNAL, THE PRESENT ASSESSMENT BECOMES VOID 6 FOR WANT OF INCRIMINATING MATERIAL. WE, ACCORDINGLY , SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 1.10 LAKHS. 11. SIMILAR VIEW WAS TAKEN BY THIS TRIBUNAL IN ITA NO, 1354/DEL/2015. RELEVANT FINDINGS READ AS UNDER: 3. THE BRIEFLY STATED THE FACTS OF THE CASE ARE TH AT A SEARCH AND SEIZURE OPERATION WAS CARRIED AT THE BUSINESS PREMI SES AS WELL AS THE RESIDENTIAL PREMISES OF M/S. BPTP GROUP OF CASE S ON 07.12.2010. COPY OF A SALE DEED DATED 17.03.2005 WA S FOUND WHICH WAS BETWEEN SH. RAJAN AND THE ASSESSEE FOR A PIECE OF LAND AT KHERI KALAM FARIDA FOR A CONSIDERATION OF RS. 43,00 ,000/-. 4. THE ASSESSING OFFICER WAS OF THE FIRM BELIEVE TH AT SINCE THE IMPOUND PROVISIONS OF SECTION 153C OF THE ACT SQUAR ELY APPLIED AND ACCORDINGLY ISSUED AND SERVED NOTICE U/S. 153A OF T HE ACT. FOLLOWING ADDITIONS WERE MADE A ADDITION ON ACCOUNT OF INTEREST ON PDC ADDITION ON ACCOUNT OF DISALLOWANCE U/S. 40 A(3 ) OF THE ACT. 5. AS MENTIONED ELSEWHERE THE DATE OF SEARCH IS 07. 12.2010 AND ASSESSMENT IN THE CASE OF THE ASSESSEE HAS COMPLIED U/S. 143 (3 ) OF THE ACT VIDE ORDER DATED 30.12.2009. THIS MEANS THAT ON THE DATE OF THE SEARCH ASSESSMENT YEAR 2007-08 STOOD CO NCLUDED AND 7 THEREFORE, IF THE ASSESSING OFFICER WANTED TO ASSES S U/S. 153 C R/W 153 A OF THE ACT. HE COULD ONLY MAKE THE ASSESS MENT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND AT T HE TIME OF THE SEARCH. THE ASSESSING OFFICER CANNOT DISTURB A CONC LUDED ASSESSMENT WITHOUT THERE BEING ANY REFERENCE TO ANY ITA NO.1354 /DEL/2015 3 INCRIMINATING MATERIAL AGAINST THE ASSE SSEE. FOR THIS PROPOSITION WE DRAW SUPPORT FROM THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF K ABUL CHAWLA 380 ITR 573. 6. SINCE NO INCRIMINATING MATERIAL HAS BEEN REFERRE D IN THE ASSESSMENT ORDER FRAMED U/S. 153 C/ 153 A OF THE AC T. THE ENTIRE ASSESSMENT IS AVOIDAB-INITIO. MOREOVER A PERUSAL OF THE ASSESSMENT SO FRAMED SHOW THAT THE ASSESSING OFFICER HAS MADE THE SAME ADDITIONS WHICH WERE MADE IN THE ASSESSMENT FRAMED U/S 143 (3) OF THE ACT VIDE ORDER DATED 30.12.2009. 12. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT TO O UR NOTICE IN FAVOUR OF THE REVENUE, RESPECTFULLY FOLLOWING THE F INDINGS OF THE CO- ORDINATE BENCH, WE HOLD THAT THE ENTIRE ASSESSMENT IS VOID AB INITIO AND, THEREFORE, WE DO NOT FIND ANY REASON TO DWELL INTO THE MERITS OF THE ADDITION. 8 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO. 769/DEL/2015 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IN THE PR ESENCE OF BOTH THE RIVAL REPRESENTATIVE ON 27.07.2021. SD/- SD/- [ K.N. CHARY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH JULY, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 9 DATE OF DICTATION ATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 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 RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER