DCIT, CC-II, Chandigarh V. Smt. Priya Garg, Panchkula

ITA 989/CHANDI/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5026 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-02-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH ABROL
• Keywords: Search and seizure; Block assessment; Reassessment proceedings
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHB, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.989/CHD/2017 ASSESSMENT YEAR: 2009-10 THE DY.CIT VS. SMT. PRIYA GARG, CENTRAL CIRCLE-II H.NO. 89,SECTOR-7 CHANDIGARH PANCHKULA PAN NO. AEBPG8990G (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR REVENUE BY : SH. ASHISH ABROL DATE OF HEARING : 22/02/2018 DATE OF PRONOUNCEMENT : 11/05/2018 ORDER PER ANNAPURNA GUPTA, A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-3, GURGAON DT. 31/03/2017. 2. THE REVENUE IN THE ABOVE APPEAL IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSI NG OFFICER IN ASSESSMENT PROCEEDING CONDUCTED PURSUANT TO SEARCH CARRIED OUT AT THE PREMISES OF THE ASSESSEE FOR THE REASON THAT NO INCRIMINATING MATER IAL WAS FOUND DURING THE COURSE OF SEARCH. 3. BRIEFLY STATED A SEARCH AND SEIZURE OPERATION U NDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 04/10/2012 ON THE ASSESSEE. THEREAFTER ASSESSMENT UNDER SECTION 153 A R.W.S 143(3) OF THE ACT WAS FRAMED DISALLOWING SET OFF CLAIMED BY THE ASSESSEE OF THE SHORT TERM C APITAL LOSS (STCL) ARISING OUT OF SALE OF SHARES AGAINST SHORT TERM CAPITAL GAIN ( STCG) FOR THE YEAR, HOLDING THAT THE TRANSACTION RESULTING IN STCL WAS NOT A G ENUINE TRANSACTION BUT ARRANGED ONE SO AS TO SET OFF OF THE LOSS GENERATED AGAINST THE STCG FOR THE YEAR. ACCORDINGLY DISALLOWANCE OF STCL CLAIMED BY T HE ASSESSEE OF RS. 70 LACS WAS MADE AND THE STCG EARNED DURING THE YEAR AMOUNT ING TO RS. 5,75,000/- WAS BROUGHT TO TAX. 2 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO FOUND THAT AT THE TIME OF SEARCH PROCEEDINGS, ASSESSMENT IN THE I MPUGNED YEAR WAS NOT PENDING AND HAD THEREFORE NOT ABATED. HE FURTHER FO UND THAT NO INCRIMINATING MATERIAL OR EVIDENCE WAS FOUND AND SEIZED DURING TH E COURSE OF SEARCH NOR ANY ADDITION MADE EMANATING OUT OF SEARCH PROCEEDINGS. THEREFORE, RELYING ON VARIOUS JUDICIAL PRONOUNCEMENT, THE LD. CIT(A) HELD THAT THE IMPUGNED ADDITION COULD NOT HAVE BEEN MADE IN THE FACTS OF THE PRESEN T CASE IN THE ORDER PASSED UNDER SECTION 153A OF THE ACT. THE LD. CIT(A) RELIE D UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S MALA BUILDERS PVT. LTD. VS. ACIT IN ITA NO. 433 TO 437/CHD/2014 AND OTHERS CASE S WHEREIN THE TRIBUNAL HAD FURTHER RELIED UPON THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS PVT. LTD. IN ITA NO. 36 OF 2009 AND IN THE CASE OF CIT VS. KABUL CHAWLA 234 TAXMAN 300 (DEL) IN WHICH THE HONBLE HIGH COURT HAD UNANIMOUSLY HELD THAT IN THE ABSENCE OF ANY INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH ACTION AND WHERE THERE IS NO P ENDING ASSESSMENT WHICH COULD BE SAID TO HAVE ABATED ON THE DATE OF SEARCH, NO ADDITION COULD HAVE BEEN MADE. 6. AGGRIEVED BY THE SAME THE REVENUE HAS CAME UP IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL CHALLENGIN G THE DELETION OF ADDITION MADE UNDER SECTION 153A MERELY ON THE BASIS THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH OPERATION. THE GROUNDS RAI SED BY THE REVENUE READ AS UNDER: I) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT(A) WAS RIGHT IN CONCLUDING THAT THERE WAS A DIFFERENCE IN SCOPE OF PROCEEDING UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 FOR AN ABATED ASSE SSMENT AND FOR A COMPLETED ASSESSMENT? II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS RIGHT IN HOLDING THAT NO ADDITION CAN BE MADE U/S 153A IN RESPECT OF COMPLETED ASSESSMENT OF NO INCRIMINATING MATERIAL IS FOUND DU RING SEARCH? III) WHETHER THERE IS ANY RESTRICTION ON THE POWERS OF THE ASSESSING OFFICER UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 TO C ONFINE ONLY TO THE 'INCRIMINATING MATERIAL FOUND DURING THE SEARCH', E VEN THOUGH SUCH WORDS OR CONDITIONS ARE NOT MENTIONED IN THE SECTION PER SE? IV) WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE CIT(A) WAS CORRECT IN INTERPRETING SECTION 153A WHICH STARTED WITH A NON-OBSTINATE CLAUSE STATING THEREIN THAT THE OPERATION OF SECTION 139,1 47, 148, 149, 151 & 153 WAS DEPOSED. MEANING THEREBY THAT IN SEARCH CASES THE A SSESSING OFFICER IS DUTY BOUND TO TAKE UP THE ASSESSMENT U/S 153A AND THAT T HE ABOVE MENTIONED SECTIONS CANNOT BE INVOKED. THEREFORE, EVEN IF INCR IMINATING MATERIAL IS NOT FOUND DURING SEARCH, BUT IF ANT ESCAPED INCOME OR UNDER- ASSESSED INCOME UNDISCLOSED 3 INCOME HAS TO BE ASSESSED FOR SUCH COMPLETED ASSESS MENT, THEN IT HAS TO BE DONE IN THE PROCEEDING U/S 153A IN SEARCH CASES? V) WHETHER ON THE FACTS AND CIRCUMSTANCED OF THE CASE THE CIT(A) WAS RIGHT TO BRING IN SPECIAL PROCEDURE OF BLOCK ASSESSMENT A S LAID IN CHAPTER XIV B INTO THE NEW PROCEDURE OF SEARCH ASSESSMENT U/S 153A INTRODU CED BY FINANCE ACT, 2003, W.E.F 1.06.2003, WHEN CHAPTER XIV B WAS SCRAPPED TO REDUCED LITIGATION AND DISPUTE REGARDING TREATMENT OF A PARTICULAR INCOME AS UNDISCLOSED AND WHETHER IT IS RELATABLE TO MATERIAL FOUND DURING SEARCH (FINAN CE BILL 2003 UNDER HEAD ' ASSESSMENT IN SEARCH CASES- ABOLITION OF THE SPECIA L PROCEDURE IN CHAPTER XIV-B AND INTRODUCTION OF NEW PROVISIONS') VI) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) WAS RIGHT IN IGNORING THE BASIC DIFFERENCE IN SEARCH ASSESSME NT U/S 153A AND CHAPTER XIVB BEING THAT IN SECTION 153A THE 'TOTAL INCOME' HAS T O BE ASSESSED OR REASSESSED IN SIX SEPARATE A.YS., AS OPPOSED TO ASSESSING THE 'UN DISCLOSED INCOME' IN THE SCRAPED CHAPTER XIV B FOR BLOCK PERIOD IN A SINGLE ASSESSMENT? VII) WHETHER ON THE FACTS AND CIRCUMSTANCED OF THE CASE THE CIT(A) WAS RIGHT IN FOLLOWING DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. KABUL CHAWLA (61 TAXMAN.COM 412) WHEN THE HON'BLE HC ITSELF ADMITS IN PARA 37 (IV) THE 'ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD STR ICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN COURSE OF SEARCH ' THERE BY INTE RPRETING THE STATUTE IN THE MANNER WHICH WERE NEVER WORDED OR INTENDED BY THE L EGISLATURE? VIII) WHETHER ON THE FACTS AND CIRCUMSTANCED OF THE CASE THE CIT(A) HAS ERRED IN IGNORING THE PRINCIPLE OF STRICT INTERPRETATION OF STATUES WHEN THE WORDS USED ON THE STATUE I.E. SEC 153(1)(B) OF THE IT ACT, 1961 A RE ASSESS OR REASSESS THE 'TOTAL INCOME' IX) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) RIGHT IN NOT FOLLOWING THE HON'BLE SC JUDGMENT ON INTERPRETATION OF STATUE IN THE CASE OF SMT. TARULATA SHYAM & OTHERS VS. CIT (108 ITR 345), KESH AVJI RAVJI AND CO VD. CIT (183 ITR 1). PADAMSUNDARA RAO (DEED.) & OTHERS VS STATE OF TAMIL NADU 255 ITR 147, PRAKASH NATH KHANNA & OTHERS VS CIT 266 ITR 1, INST ITUTE OF CHARTED ACCOUNTANTS OF INDIA VS. PRICE WATER HOUSE 93 TAXMAN 588? X) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS RIGHT IN NOT FOLLOWING THE HON'BLE HC JUDGMENT ON THE ISSUE OF A DDITIONS IN SEARCH CASE U/S 153A IN THE CASE OF CIT VS. ANIL KUMAR BHATIA 352 I TR 493 (DELHI HC), MADUGULA VENU VS. DIT 49 TAXMAN.COM 200 (DELHI HC), CIT VS. RAJ KUMAR ARORA 367 ITR 51 7 (ALLAHABAD HC), CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT 49 TAXMAN.COM98 (KARNATAKA HC), FILATEX INDIA LTD. VS. CIT 229 TAXMAN 555 (DELHI HC) SUNNY JACOB JEWELLERS AND WEDDING CENTRE, 362 I TR 664 (KERALA HC) AND CIT VS. CONTINENTAL WAREHOUSING CORPORATION 64 TAXMAN.C OM 34(SC)?' XI) WHETHER THE HON'BLE CIT(A) WAS JUSTIFIED IN FOLLOW ING THE DECISION OF THE HON'BLE DELHI HIGH COURT DATED 28.05.2015 IN THE CA SE OF CIT VS KABUL CHAWLA, WHEN THE SAID DECISION WAS DISTINGUISHED IN THE REV ENUE FAVORING JUDGMENT OF THE HON'BLE DELHI HIGH COURT DATED 27.10.2016 IN TH E CASE OF SMT. DAYAWANTI THROUGH SMT. SUNITA GUPTA (L/H) VS CIT.' 7. DURING THE COURSE OF HEARING BEFORE US LD. COUN SEL FOR THE ASSESSEE AT THE OUTSET MENTIONED THAT THE PRESENT APPEAL WAS SQ UARELY COVERED IN ITS FAVOUR BY THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF DCIT VS. M/S SCM FINTRADE PVT. LTD IN ITA NO. 981 & 982/CHD/2017 DT. 05/01/2018 WHEREIN IDENTICAL GROUNDS HAD BEEN RAISED BY THE REVENUE . COPY OF TH E ORDER WAS PLACED BEFORE US.THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE LD. CIT(A) HAD RIGHTLY DELETED THE ADDITION MADE, FOLLOWING THE OR DERS OF THE COORDINATE BENCH 4 IN THE CASE OF M/S MALA BUILDERS(SUPRA) AND THE DEC ISION OF THE HONBLE HIGH COURT IN THE CASE OF KABUL CHAWLA(SUPRA), SINCE CLE ARLY THE ADDITION IN THE IMPUGNED CASE WAS NOT BASED ON ANY INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH. 8. THE LD. DR, WHEN CONFRONTED WITH THE FINDINGS O F THE LD. CIT(A), FAIRLY ADMITTED THAT NO INCRIMINATING MATERIAL WAS FOUND D URING THE SEARCH ACTION AND THE ORIGINAL ASSESSMENT PROCEEDING STOOD COMPLETED ON THE DATE OF SEARCH. BUT AT THE SAME TIME STRESSED THAT THE REVENUE HAS COME UP IN APPEAL CHALLENGING THE DELETION OF DISALLOWANCE MERELY ON THE BASIS TH AT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND FURTHER I NVITING OUR ATTENTION TO GROUND NO. XI TAKEN BY THE REVENUE WHEREIN IT HAS B EEN STATED THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE KABUL C HAWLA(SUPRA) IT HAS BEEN DISTINGUISHED BY THE HONBLE DELHI HIGH COURT IN TH E CASE OF SMT. DAYAWANTI VS. CIT IN ITA NO. 357/2015 & OTHERS DT. 27/10/2016.LD. DR FURTHER ALSO CONCEDED THAT THESE ASPECTS HAD ALREADY BEEN DEALT WITH BY T HE ITAT CHANDIGARH BENCH IN THE CASE OF M/S SCM FINTRADE PVT. LTD. (SUPRA) REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE AS ABOVE. 9. WE HAVE HEARD THE CONTENTION OF BOTH THE PARTIES . WE DO NOT FIND ANY MERIT IN THE PRESENT APPEAL OF THE REVENUE. THE FAC T THAT SEARCH WAS CARRIED OUT ON THE ASSESSEE ON 04/10/2012 AND AT THE TIME O F SEARCH ACTION NO ASSESSMENT OR REASSESSMENT PROCEEDINGS WERE PENDING IS UNDISPUTED. IT IS ALSO NOT DISPUTED THAT NO INCRIMINATING MATERIAL , DOCUM ENT OR RECORD OR ANY OTHER EVIDENCE WERE FOUND OR SEIZED DURING THE COURSE OF SEARCH WHICH RESULTED IN ANY ADDITION IN THE CASE OF THE ASSESSEE.THEREFORE, THE CIT(A) WE HOLD HAS RIGHTLY DELETED THE ADDITION MADE, FOLLOWING THE VARIOUS JU DICIAL PRONOUNCEMENTS IN THIS REGARD. FURTHER, AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE CONTENTION OF THE LD. DR THAT THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA HAS BEEN DISTINGUISHED IN THE CASE OF SMT. DAYAWANTI AND OTHERS (SUPRA),WE FIND, HAS BEEN DEALT WITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S SCM FINTRADE PVT. LTD. (SUPRA).THE ITAT IN THE SAID CASE DISMISSED THIS CONTENTION FOLLOWING THE DECISION OF ITAT CHA NDIGARH BENCH IN CASE OF DCIT VS. M/S BHARATNET TECHNOLOGY LTD. IN ITA NO. 983 & 984/CHD/2017 DT. 13/11/2017, WHEREIN IT WAS OBSERVED THAT THE CASE O F SMT. DAYAWANTI (SUPRA) WAS SUBSEQUENTLY DISCUSSED BY THE HONBLE DELHI HIG H COURT IN THE CASE OF PR. 5 CIT VS. MEETA GUTGUTIA PROP. M/S FERNS N PETALS I N ITA NO. 306/2017 & OTHERS DT. 25/05/2017 HOLDING THAT WHILE IN THE CASE OF SMT. D AYAWANTI (SUPRA) INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION HOWEVER, IN THE CASE OF MEETA GUTGUTIA(SUPRA) NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION AND HENCE ADDITION MADE WAS NOT JUSTIFIED. I N VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT( A) WHILE DEALING THE IMPUGNED ADDITION. 11. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11/05/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR