Indogreen International, New Delhi V. DCIT, Central Circle, Noida

ITA 926/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4697 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Principle of natural justice
• Section: 143(3); 142(1); 153A; 143(2); 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 926/DEL/2019 : ASSTT. YEAR : 2012-13 INDOGREEN INTERNATIONAL, C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049 VS DCIT, CENTRAL CIRCLE, NOIDA-201301 (APPELLANT) (RESPONDENT) PAN NO. AACFI4218C ASSESSEE BY : SH. NEEL KANTH KHANDELWAL, ADV. REVENUE BY : MS. SUNITA SINGH, CIT DR DATE OF HEARING: 02.09.2020 DATE OF PRONOUNCEMENT: 15.10.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-IV, KANPUR DATED 30.11. 2018. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN ASSUMING JURISDICTION U/S 153A AND FURTHER ERRED IN PASSING THE IMPUGNED ASSESSMENT ORDER. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD . AO IN ASSUMING JURISDICTION AND FRAMING THE IMPUGNED ASSESSMENT ORDER U/S 153A, IS BAD IN LAW AND AGAINS T THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SAM E ITA NO. 926/DEL/2019 INDOGREEN INTERNATIONAL 2 IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITI ON OF RS. 1,50,00,000/- ON ACCOUNT OF UNSECURED LOAN RECEIVED FROM M/S CINDY GOODS & SUPPLY (P) LTD. BY TREATING IT AS ALLEGED INCOME OF ASSESSEE U/S 68 OF THE ACT, MORE SO WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH AND IMPUGNED ADDITION HAS BEEN MADE BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT PROVIDING THE ENTIRE ADVER SE MATERIAL ON RECORD AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD . AO IN MAKING ADDITION OF RS. 1,50,00,000/- ON ACCOUNT OF UNSECURED LOAN U/S 68, IS BAD IN LAW AND AGAINST TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ADDITION MADE IN THE IMPUGNED ASSESSMENT ORDER ARE BEYOND JURISDICTION AND ILLEGAL ALSO FOR THE REASON THAT THESE COULD NOT HAVE BEEN MADE SINCE NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT O F SEARCH. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER PASSED BY LD. AO WITHOUT OBTAINING THE VALID APPROV AL U/S 153D AS PER LAW. 3. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE AC T WAS CONDUCTED ON 26.08.2015 IN THE CASE OF NIMBUS GROUP OF CASES, A WARRANT OF AUTHORIZATION ON THE ASSESSEE AND INCR IMINATING DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND & SEI ZED. ACCORDINGLY, NOTICES U/S 153A OF THE ACT WERE ISSUE D ON 19.12.2017. IN RESPONSE, THE ASSESSEE FILED ITS RET URN DECLARING ITA NO. 926/DEL/2019 INDOGREEN INTERNATIONAL 3 INCOME OF RS. (-) 4,57,98,957/-. LATER ON, NOTICES U/S 143(2) & 142(1) WERE ALSO ISSUED AND THE A.O. COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS.1,50,00,000/- ON ACCOUNT O F UNEXPLAINED UNSECURED LOANS HAVING RECEIVED FROM ON E ENTITY NAMELY, M/S CINDY GOODS & SUPPLY PVT. LTD. THE TOTA L AMOUNT RECEIVED WAS RS.3,50,00,000/- OUT OF WHICH THE AO M ADE ADDITION OF RS.1,50,00,000/- ON THE GROUNDS THAT TH E ASSESSEE COULD PROVE THE SOURCES OF RS.2,00,00,000/- FROM M/ S NIMBUS MULTI COMMODITY BROKERS LTD. 4. BEFORE THE LD. CIT (A), THE ASSESSEE TOOK A PLEA THAT THE ADDITION HAS BEEN MADE DEVOID OF ANY INCRIMINATING MATERIAL DURING THE SEARCH WHICH IS AN ESSENTIAL REQUIREMENT FOR ASSESSMENT U/S 153A. THE LD. CIT (A) HELD THAT A NU MBER OF JUDGMENTS HAVE PASSED BY VARIOUS COURTS CONTRARY TO THE PLEA MADE BY THE ASSESSEE AND HENCE THE ADDITION HAS BEE N CONFIRMED. 5. DURING THE ARGUMENTS BEFORE US, THE ASSESSEE REL IED ON THE FOLLOWING CASE LAWS: CIT VS. KABUL CHAWLA [2016] 380 ITR 573 (DELHI) ALL CARGO GLOBAL LOGISTICS LIMITED VS. DCIT [2022] 28 ITR 106 ACIT, CENTRAL CIRCLE-16, NEW DELHI VS. VINSTA CHAURASIA, ITA NO.5957/DEL/2015 DATED 05.20.2018 ACIT, CENTRAL CIRCLE-4, NEW DELHI VS. M/S MOOLCHAND STEELS PVT. LTD., ITA NO. 2544/DEL/2015 DATED 20.10.2018 6. ON THE OTHER HAND, THE REVENUE RELIED ON THE FOL LOWING CASES LAWS: CIT VS RAJ KUMAR ARORA (2014) 367 ITR 517 (ALL.) ITA NO. 926/DEL/2019 INDOGREEN INTERNATIONAL 4 CIT VS KESARWANI NARDA BHANDAR SAHSON ALLD. ITA NO. 270 OF 2014 (ALL.) CIT VS ST. FRANCIS CLAY DCOR TILES 385 ITR 624 (KE R.) CIT VS ANIL KUMAR BHATIA 352 ITR 493 (DEL.) FILATEX INDIA LTD. VS CIT 49 TAXMANN.COM 465 (DEL.) 7. WE HAVE CONSIDERED THE ISSUE OF VALIDITY OF ADD ITION IN THE ABSENCE OF INCRIMINATING MATERIAL. AS PER THE JUDGM ENT OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF CIT VS. KABUL CHAWLA 61 TAXMAN 412 WHEREIN IT WAS HELD THAT WHERE NO INCRIMINATING MATERIAL WERE FOUND DURING THE SEARCH & SEIZURE OPERATION ADDITIONS MADE U/S 153A ARE NOT LEGALLY V ALID. SIMILAR RATIO HAS BEEN CONFIRMED BY THE HONBLE SUPREME COU RT IN THE CASE OF PR. CIT VS. MEETA GUTGUTIA [2018] 96 TAXMAN N.COM 468 AND ALSO IN THE CASE PR. CIT VS. KURELE PAPER MILLS [2016] 380 ITR 571 (DELHI). 8. THE DATE OF SEARCH IN THE PRESENT CASE WAS ON 26 .08.2015 AND THE ASSESSMENT FOR THE ASSESSMENT YEAR 2012-13 HAS BEEN COMPLETED U/S 143(3) AND THE AMOUNT RECEIVED FROM M /S CINDY GOODS & SUPPLY PVT. LTD. OF RS.3,50,00,000/-, THUS THE ASSESSMENT IN QUESTION HAS TO BE TREATED AS A COMPL ETED ASSESSMENT NOT AS AN ASSESSMENT KEPT IN ABEYANCE WH ICH NECESSITATES THE REQUIREMENT OF INCRIMINATING MATER IAL TO MAKE ANY ADDITION U/S 153A. FURTHER, WE ALSO FIND FROM T HE RECORD THAT THE ADDITION MADE BY THE REVENUE IN THE CASE O F NIMBUS INDIA LTD. PERTAINING TO THE AMOUNT RECEIVED FROM M /S CINDY GOODS & SUPPLY PVT. LTD. HAS BEEN DELETED VIDE ORDE R DATED 10.02.2020 BY THE CO-ORDINATE BENCH OF ITAT IN ITA NOS. 929 & 930/DEL/2019. DURING THE ADJUDICATION PROCESS, THE STATEMENT OF SH. BIPIN KUMAR, DIRECTOR OF M/S CINDY GOODS & S UPPLY PVT. ITA NO. 926/DEL/2019 INDOGREEN INTERNATIONAL 5 LTD. HAS BEEN DULY CONSIDERED WHEREIN HE HAS ADMITT ED TO HAVE INVESTED IN THE NIMBUS INDIA LTD. 9. WE HAVE ALSO GONE THROUGH THE RETURNED INCOME OF M/S CINDY GOODS & SUPPLY PVT. LTD. WHICH STANDS AT RS.7 5,73,804/- FOR THE CURRENT YEAR AND RS.1,40,89,252/- FOR THE E ARLIER YEAR WHICH ALSO GIVES A CREDENCE TO REBUT THE OBSERVATIO N OF LD. CIT (A) THAT M/S CINDY GOODS & SUPPLY PVT. LTD. IS A PA PER COMPANY. 10. HENCE, KEEPING IN VIEW THE FACT THAT NO INCRIMI NATING MATERIALS HAVE BEEN FOUND DURING THE SEARCH WHICH L ED TO THE ADDITION, THE FACT THAT THE LENDER COMPANY CANNOT B E TREATED AS A PAPER COMPANY OWING TO THE RETURNED INCOME MENTIO NED ABOVE, KEEPING IN VIEW THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL REGARDING THE TREATMENT OF AMOUNTS REC EIVED FROM M/S CINDY GOODS & SUPPLY PVT. LTD. IN THE CASE OF N IMBUS INDIA LTD. WHICH WAS ALSO ASSESSED U/S 153A AND SINCE THE SOURCES HAVE BEEN SUBSTANTIATED, WE HEREBY HOLD THAT NO ADD ITION IS WARRANTED IN THE CASE OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/10/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 15/10/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR