ACIT, CENTRAL CIRCLE- 20, NEW DELHI V. ALCHEMIST CAPITAL LTD., CHANDIGARH

ITA 7773/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0154 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Keywords: Search and seizure; Rule 8D
• Section: 14A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 7773/DEL/2017 ASSESSMENT YEAR: 2009-10 ACIT, CENTRAL CIRCLE-205, VS. ALCHEMIST CAPITAL L TD., NEW DELHI. SCO 52-53, SECTOR 9-D, CHANDIGARH. PAN : AABCT5925F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SATPAL GULATI, CIT/DR RESPONDENT BY: NONE DATE OF HEARING: 07/07/2021 DATE OF ORDER : 16/07/2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 17/10/2017 PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-279, NEW DELHI ('LD. CIT(A)') IN THE CASE OF ALCHEMIST CAPITAL LTD (THE ASSESSEE) FOR THE ASSESSMENT YEAR 2009-10, THE REVENUE FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZ URE AND SURVEY OPERATION U/S. 132/133A OF THE INCOME-TAX ACT (THE ACT FOR SHORT) WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTME NT ON 20.06.2014 IN M/S. ALCHEMIST GROUP OF CASES; THAT A NOTICE U/S.15 3A WAS ISSUED; THAT 2 THE ASSESSEE FILED RETURN OF INCOME; THAT DURING TH E ASSESSMENT PROCEEDINGS, LD. ASSESSING OFFICER OBSERVED THAT TH EASSESSEE IS A NON- BANKING FINANCIAL COMPANY AND MAINLY ENGAGED IN THE BUSINESS OF FINANCING BY ADVANCING LOANS; THAT DURING THE YEAR OPENING BALANCE OF PREFERENCE SHARES ISSUED BY COMPANY WAS AT RS.163,0 7,52,640/- AND THE CLOSING BALANCE WAS AT RS.158,89,30,540/-; THAT THE SE PREFERENTIAL SHARES WERE REDEEMABLE AND REDEEMED DURING THE YEAR FOR RS .555.90 CRORES AGAINST THE FACE VALUE OF RS.165.21 CRORES, BUT NO INTEREST WAS CHARGED ON SUCH REDEMPTION OF PREFERENTIAL SHARE.; AND THAT TH E ASSESSING OFFICER, THEREFORE, TAKING INTO ACCOUNT THE ADVANCES RECOVER ABLE AS ON 01.04.2008 AT RS.157,93,39,876/- AND BALANCE AS ON 31.03.2009 AT RS.155,14,81,523/- AS PER BALANCE SHEET, AND TAKING THE AVERAGE OF BOTH THE FIGURES AT RS.156,54,10,699/-, COMPUTED THE REC EIVABLE INTEREST AMOUNT AT RS.3,54,35,130/- FOR THE YEAR. ACCORDING TO THE ASSESSING OFFICER, THE INTEREST RATE CHARGED BY THE ASSESSEE ON THOSE ADVANCES COMES TO 2.26% PER ANNUM WHICH SHOWS THAT THE ASSES SEE HAS DELIBERATELY RECEIVED VERY NOMINAL INTEREST ON ADVA NCES GIVEN TO THE GROUP COMPANIES WHEREAS IT HAS BORNE THE COST OF FU ND RECEIVED AS PREFERENTIAL SHARE @ 7.87% PER ANNUM ON REDEMPTION; THAT THE ASSESSEE HAS DELIBERATELY UNDER-RECOVERED THE INCOME FROM IT S ASSOCIATE COMPANIES TO THE EXTENT OF 5.61% AS AGAINST THE COS T ACCRUED TO THE ASSESSEE COMPANY AT 7.87%, THEREBY THE UNDER-RECOVE RED INTEREST @5.61% ON THE AVERAGE ADVANCE RECOVERABLE FROM THE ASSOCIATE COMPANIES AT RS.1,56,54,10,699/- WHICH COMES TO RS. 8,78,19,540/-. THE ASSESSING OFFICER ADDED SUCH AMOUNT TO THE INCOME O F THE ASSESSEE. ASSESSING OFFICER ALSO MADE ADDITION OFRS.6,95,82,5 94/- AND 3 RS.40,64,627/- ON ACCOUNT OF LOSS ON SHARES/DERIVAT IVES AND ALSO U/S. 14A OF THE ACT READ WITH RULE 8D. 3. ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND ARGUED THAT NO INCRIMINATING MATERIAL WAS RECOVERED AT THE TIME OF SEARCH & SEIZURE OR SURVEY OPERATION AND THEREFORE, NO ADDITION COULD B E MADE QUA THE ASSESSMENT YEAR IN RESPECT OF WHICH SUCH MATERIAL W AS NOT RECOVERED. ASSESSEE FURTHER ARGUED THAT ASSESSMENT OF THIS YEA R WAS COMPLETE, AS THE PERIOD TO ISSUE NOTICE U/S. 143(2) HAD EXPIRED. LD. CIT(A) CONSIDERED ALL THESE FACTS IN THE LIGHT OF THE DECISION IN THE CASE OF CIT VS. KABUL CHAWLA, (2016) 380 ITR 0573 (DEL) AND ALLOWED THE C ONTENTION OF THE ASSESSEE. REVENUE IS, THEREFORE, BEFORE US IN THIS APPEAL. 4. WHEN THE MATTER IS CALLED, THERE IS NO REPRESENT ATION FROM THE ASSESSEE. NOTICE WAS SENT TO THE ADDRESS GIVEN IN F ORM NO. 36. IF THE ASSESSEE IS AVAILABLE IN SUCH ADDRESS, SUCH NOTICE SHOULD HAVE BEEN SERVED ON THE ASSESSEE. IF FOR ANY REASON, THE ASSE SSEE IS NOT AVAILABLE THERE, IT IS FOR THE ASSESSEE TO MAKE ARRANGEMENTS FOR SERVICE OF SUCH NOTICE BY FURNISHING THE ADDRESS WHERE THE ASSESSEE WOULD BE AVAILABLE, OR TO DELIVER IT TO SOME AUTHORISED PERSON, OR BY M AKING REQUEST TO THE POSTAL DEPARTMENT TO DETAIN THE MAIL TILL THE ASSES SEE CLAIMS THE SAME. NON-SERVICE OF NOTICE IS SOLELY ATTRIBUTABLE TO THE CONDUCT OF ASSESSEE. IN THESE CIRCUMSTANCES, WE PROCEED TO DECIDE THE APPEA L BASING ON THE MATERIAL AVAILABLE ON RECORD. 5. LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFI CER. 6. WE HAVE GONE THROUGH THE RECORDS IN THE LIGHT OF SUBMISSIONS MADE BY LD. DR. THERE IS NO DISPUTE OF THE FACT THA T THE SEARCH & SEIZURE OPERATION IN THIS CASE TOOK PLACE ON 20.06.2014, BY WHICH DATE THE TIME 4 PERIOD TO ISSUE NOTICE U/S. 143(2) FOR ASSESSMENT Y EAR 2009-10 STOOD EXPIRED. THERE IS ALSO NO DISPUTE THAT NO INCRIMINA TING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE OPERATION TO BASE ANY ADDITION QUA THIS ASSESSMENT YEAR. 7. IN CIT VS. KABUL CHAWLA (SUPRA), HONBLE DELHI H IGH COURT HELD THAT THE ASSESSMENT CANNOT BE MADE ARBITRARILY WITHOUT A NY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL AND THE ASSESSMENT I N SUCH CASES HAS TO BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND COMPLETED ASSESSMENTS CANNOT BE INTERFER ED WITH ARBITRARILY. IN SUCH CIRCUMSTANCES, THE FINDING OF THE LD. CIT(A ) CANNOT BE INTERFERED WITH. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JULY, 2021. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16/07/2021 AKS