ITO, New Delhi V. Sh. Pramod Kumar Jain, New Delhi

ITSSA 1/DEL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0308 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-08-2014
• Assessment Year: misc
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL BAJPAI
• Keywords: Unexplained investment; Gift; Search and seizure; Block assessment
• Section: 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER IT(SS)A.NO.1/DEL./2013 (BLOCK PERIOD 01.04.1987 TO 11.12.1997) ITO, WARD 29 (2), VS. SHRI PRAMOD KUMAR JAIN, NEW DELHI. 2503, DHARAMPURA, CHAWRI BAZAR, DELHI 110 006. (PAN : AAGPJ4011J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAURAV JAIN, CA REVENUE BY : SHRI SUNIL BAJPAI, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXV, NEW DELHI DATED 15.10.2012 FOR THE B LOCK PERIOD 01.04.1987 TO 11.12.1997. 2. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U /S 154/245D(8)/158BC (C) OF THE INCOME-TAX ACT, 1961 O N 29.03.2011. THE ASSESSEE FILED THE APPEAL BEFORE THE CIT (A). THE MAIN GRIEVANCE WAS THAT THE ASSESSEE HAS BEEN CHARGED INTEREST U/S 220(2) FROM THE DATE OF THE ORIGINAL ASSESSMENT ORDER PASSED U/S 158BC. THE BRIEF FACTS OF THE CASE ARE THAT A IT(SS)A.NO.1/DEL./2013 2 SEARCH AND SEIZURE OPERATION U/S 132 (1) OF THE ACT WAS CARRIED OUT ON 11.12.1997 AND THE BLOCK ASSESSMENT WAS COMPLETED A T THE INCOME OF RS.12,22,326/-. THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT (A) WHO GAVE SOME RELIEF. THE ASSESSEE AS WELL AS REVENUE FURTHER WENT IN APPEAL BEFORE THE ITAT. ITAT IN ASSESSEES APPEAL HAD SET ASIDE THE ORDER OF THE CIT (A) AND RESTORED THE ISSUE TO THE FILE OF THE A SSESSING OFFICER FOR FRESH ADJUDICATION. THE RELEVANT PARA 33.1 READ AS UNDER :- 33.1 AS WE HAVE SET ASIDE SIMILAR FINDINGS AND DIR ECTIONS OF THE LEARNED CIT(A) IN THE CASE OF SHRI ANIL KUMAR JAM, ADOPTING THE VERY SAME COURSE HEREIN ALSO, THE FINDING OF THE LE ARNED CIT(A) ON THE ISSUES IN QUESTION ARE SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO FOR DECISION AFRESH IN THE LIGHT OF OUR OBSERVATIONS IN THE CASE OF ANIL KUMAR JAIN (SUPRA). THE GROUNDS RAISED IN REVENUES APPEAL ARE EITHER D ISMISSED OR SET ASIDE TO THE ASSESSING OFFICER. THE RELEVANT PART OF ITAT ORDER READ AS UNDER :- 57. GROUND NO.1 CHALLENGES THE DELETION OF ADDITIO N OF RS.40,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FDR. THE VERSION OF THE ASSESSEE WAS THAT INVESTMENT IN FDRS HAD BEEN MADE ON ACCOUNT OF INCOME EARNED FROM UNDISCLOSED SALES WHICH HAVE BEEN DULY REFLECTED IN THE P&L A/C SUBMITTED WITH T HE RETURN FOR THE BLOCK PERIOD. AS WE HAVE SET ASIDE THE ISSUES RELAT ING TO THE MAIN ISSUE TO THE FILE OF AO, THIS ASPECT SHALL ALSO BE CONSIDERED BY THE AO. WE ORDER ACCORDINGLY. 58. GROUND NO.2 CHALLENGES THE DELETION OF ADDITION OF RS.1,78,387/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. 58.1. THE LEARNED CIT(A) BAS CONSIDERED THE ISSUE I N PARA 10 AND HAS CONSIDERED THE EXPLANATION OF THE ASSESSEE FOR RECEIVING THE JEWELLERY AND UTENSILS IN THE MARRIAGES AND AS GIFT . HE AHS DELETED THE ADDITION BY OBSERVING AS UNDER: '11. I HAVE CONSIDERED THE FACTS. THERE WAS NO REQU IREMENT FOR THE APPELLANT OR HIS FAMILY MEMBERS TO FILE WEA LTH-TAX IT(SS)A.NO.1/DEL./2013 3 RETURNS GIVING DETAILS OF JEWELLERY. JEWELLERY TO T HE EXTENT OF RS.85800/- WAS SHOWN IN SMT. NEERU JAIN'S INCOME-TA X RETURN AND THIS WAS ACCEPTED BY THE ASSESSING OFFIC ER. IT WOULD BE LOGICAL TO ACCEPT SOME OF THE JEWELLERY IN THE HANDS OF THE APPELLANT HIMSELF AND ALSO IN HIS CHILDREN'S HANDS. SOME OF THIS JEWELLERY MAY BE PRESUMED TO HAVE BEEN RECEIVED AS GIFTS AND THE REST MAY BE PRESUMED TO H AVE BEEN ACQUIRED OUT OF DISCLOSED INCOME. DOING THAT I SEE NO REASON, KEEPING IN VIEW THE APPELLANT'S STATUS, WHY THE ENT IRE JEWELLERY FOUND SHOULD NOT BE ACCEPTED. I DELETE TH E ADDITION OF RS.178387/-.' 58.2. WE HAVE CONSIDERED THE ENTIRE MATERIAL AND DO NOT FIND ANY SCOPE TO INTERFERE IN THE FINDING OF LEARNED CIT(A) . GROUND FAILS. 59. GROUND NO. 3 CHALLENGES THE DELETION OF ADDITIO N OF RS.3,62,550/- ON ACCOUNT OF UNEXPLAINED CASH. GROUN D NO. 4 CHALLENGES THE DELETION OF ADDITION OF RS.2,09,500/ - ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS; AND GROUND NO.5 CHALLENG ES THE DELETION OF ADDITION OF RS.3,75,300/- ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN PROPERTY. ALL THESE THREE ISSUES ARE CO-RELATED WITH THE MAIN ISSUE ON WHICH WE HAVE RESTORED THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION. HENCE, THE GROUNDS TAKEN IN THE APPEA L OF THE REVENUE SHALL ALSO BE CONSIDERED WHILE DECIDING THE ISSUE A FRESH BY THE AO. WE ORDER ACCORDINGLY. THE ASSESSEE HAD ALSO FILED A PETITION BEFORE THE I NCOME-TAX SETTLEMENT COMMISSION. THE INCOME-TAX SETTLEMENT COMMISSION DE TERMINED THE INCOME OF THE ASSESSEE AT RS.9,60,690/- IN ITS ORDER DATED 25.02.2011. THE ASSESSING OFFICER LEVIED THE INTEREST U/S 220 (2) OF THE ACT ON THE SUSTAINED DEMAND OUTSTANDING UP TO THE DATE OF ORDER U/S 245D(4). T HE ASSESSEES CONTENTION IS THAT THE ORDER OF INCOME-TAX SETTLEMENT COMMISSION WAS PASSED IN THE MONTH OF FEBRUARY, 2011 AND A DEMAND NOTICE U/S 156 WAS I SSUED ON 29.03.2011, THEREFORE, THE INTEREST U/S 220 (2) OF THE ACT CAN BE CHARGED ONLY FROM THAT DATE ONLY. IT(SS)A.NO.1/DEL./2013 4 3. THE CIT (A) HAS GRANTED THE RELIEF TO THE ASSESS EE BY HOLDING AS UNDER:- 3. THE ASSESSEE HAS TAKEN AS MANY AS 8 GROUNDS OF APPEAL BUT THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE L EVY OF INTEREST U/S 220(2) FROM THE DATE OF THE ORIGINAL ASSESSMENT ORD ER IS PASSED U/S 158BC, WHICH IS ADJUDICATED ACCORDINGLY. 3.1. THE FACTS EMANATING FROM THE ORDER OF THE AO A ND THE SUBMISSIONS OF THE ASSESSEE IS THAT A SEARCH U/S 13 2(1) WAS CONDUCTED IN THIS CASE ON 11/12/1997 AND THE BLOCK ASSESSMENT WAS MADE AT THE INCOME OF RS 12,22,326/-. THE ASSESSEE HAD PREFERRED THE APPEAL BEFORE THE LD.CIT(A) AND THE ASSESSEE HA D GOT SOME RELIEF. THE ASSESSEE AND THE DEPARTMENT HAD FILED T HE APPEAL AND THE HON'BLE TRIBUNAL HAD SET ASIDE THE ORDER OF THE AO FOR THE FRESH ASSESSMENT. THE AO DID NOT PASS THE FRESH RE-ASSESS MENT ORDER FOLLOWING THE ORDER OF THE HON'BLE TRIBUNAL AND THE AO BEFORE HE COULD PASS THE FRESH RE-ASSESSMENT ORDER THE ASSESS EE FILED PETITION BEFORE THE HON'BLE SETTLEMENT COMMISSION (IN SHORT, SC) AND THE HON'BLE SC IN THE ORDER DATED 25/02/2011 HAS DETERM INED THE TAXABLE INCOME OF RS.9,60,690/-. 3.2. THE AO HAS GIVEN EFFECT TO THE ORDER OF THE HO N'BLE SC AND HAS DETERMINED THE TAXABLE INCOME OF RS 9,60,690/-. THE AO HAS RAISED THE DEMAND OF RS 12,96,754/- WHICH INCLUDED THE INTEREST U/S 220(2) OF RS 8,01,914/-. THE AO HAS ALSO CHARGED TH E INTEREST U/S 220(2) W.E.F. WHEN THE ORIGINAL BLOCK ASSESSMENT WA S MADE AND THE DEMAND WAS RAISED. THE ASSESSEE HAD FILED A PETITIO N U/S 154 BEFORE THE AO WITH A REQUEST THAT THE AO IS NOT JUSTIFIED TO CHARGE THE INTEREST U/S 220(2) FROM THE DATE WHEN THE ORIGINAL BLOCK ASSESSMENT ORDER WAS PASSED. THE AO HAS REJECTED THE PETITION OF THE ASSESSEE AND HAS STATED THAT THE INTEREST U/S 220(2) IS LEVI ABLE FROM THE DATE WHEN THE ORIGINAL BLOCK ASSESSMENT WAS MADE. 3.3. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE AO AND IT IS SUBMITTED THAT THE AO IS NOT JUSTIFIED TO REJECT TH E SECTION 154 PETITION WITHOUT ANY VALID REASONS. IT IS SUBMITTED THAT THE INTEREST U/S 220(2) IS LEVIABLE AS PER THE DEMAND NOTICE WHI CH IS ISSUED AFTER THE FINAL ASSESSMENT AFTER THE ORDER OF THE HON'BLE SC. IT IS SUBMITTED THAT AFTER THE ORIGINAL BLOCK ASSESSMENT WAS SET ASIDE BY THE HON'BLE TRIBUNAL NO ORDER EXISTED AND AS SUCH T HERE WAS NO DEMAND AGAINST THE ASSESSEE. IT IS SUBMITTED THAT T HE DEMAND AGAINST THE ASSESSEE COULD BE VALIDLY RAISED ONLY AFTER THE FINAL ORDER AFTER THE ORDER OF THE HON'BLE SC. THE ASSESSEE RELIED ON THE BOARD'S CIRCULAR NO. 334 [F. NO. 400/3/81-ITCC], DATED 03/04/1982. THE ASSESSEE ALSO RELIED ON THE IT(SS)A.NO.1/DEL./2013 5 VARIOUS CASE LAWS IN SUPPORT OF THE CLAIM LIKE CIT VS CHLORIDE INDIA LTD, 186 ITR 217 [1990] (CAL) AND BIRLA COTTON SPIN NING & WAVING MILLS LTD VS ITO, 211 ITR 610 [1995] (CAL). 3.4. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE S UBMISSION OF THE ASSESSEE THAT THE AO IS NOT JUSTIFIED TO CHARGE THE INTEREST U/S 220(2) FROM THE DATE WHEN THE ORIGINAL BLOCK ASSESSMENT WA S MADE. IT IS APPARENT THAT THE ORIGINAL BLOCK ASSESSMENT ORDER D OES NOT EXIST AFTER THE SAME WAS SET ASIDE BY THE HON'BLE TRIBUNA L AND AS SUCH NO DEMAND WAS ENFORCEABLE. IT IS ALSO APPARENT THAT TH E VALID DEMAND COULD BE RAISED ONLY AFTER THE FRESH ASSESSMENT ORD ER WAS PASSED BY THE AO FOLLOWING THE ORDER OF THE HON'BLE SETTLEMEN T COMMISSION U/S 245D(4). 3.5. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THERE IS CONSIDERABLE MERIT I N THE SUBMISSION OF THE ASSESSEE THAT THE INTEREST U/S 220(2) IS LEV IABLE ONLY AFTER THE FRESH ASSESSMENT ORDER IS PASSED FOLLOWING THE ORDE R OF THE HON'BLE SETTLEMENT COURT AND AS SUCH THE APPEAL OF THE ASSE SSEE IS ALLOWED. 4. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL :- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN IGNORING THE ORDER OF THE HON'BLE ITSC IN WHICH ON PAGE-13, THE HON'BLE ITSC HAS DIRECTED THE AO TO CHARGE INTEREST U/S 220(2) O N SUSTAINED DEMAND OUTSTANDING AS ON VARIOUS DATES AND IS TO BE CHARGED UP TO THE DATE OF ORDER U/S 245(D)( 4) OF THE IT ACT, 196 1. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING THE FACT THAT THE HON'BLE ITAT IN THE O RDER DATED 30.09.2005, HAS NOWHERE MENTIONED THAT THE ORDER OF THE AO IS BEING SET-ASIDE RATHER IT HAS BEEN MENTIONED THAT T HE ORDER OF THE CIT(A) IS BEING SET-ASIDE AND THE ISSUES ARE RESTOR ED BACK TO THE FILE OF THE AO FOR CONSIDERATION AFRESH. 3. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ALL OWING THE APPEAL OF THE ASSESSEE BY OBSERVING THAT INTEREST U /S 220(2) IS LEVIABLE ONLY AFTER THE FRESH ASSESSMENT ORDER IS P ASSED BY IGNORING THE FACT THE LD. CIT(A) HAS NO POWER TO ADJUDICATE ON THE ORDER PASSED BY THE AO U/S 154/245D. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE C IT (A) HAS DECIDED THE ISSUE IN THE RIGHT PERSPECTIVE AS THE ORIGINAL BLOC K ASSESSMENT MADE BY THE IT(SS)A.NO.1/DEL./2013 6 ASSESSING OFFICER DID NOT SURVIVE IN VIEW OF THE DE CISION OF ITAT. NO LEGALLY FORCIBLE DEMAND WAS OUTSTANDING AGAINST THE ASSESSE E IN VIEW OF ITAT ORDER. THE VALID DEMAND HAS BEEN RAISED ONLY AFTER FRESH A SSESSMENT ORDER PASSED WHILE GIVING EFFECT TO THE ORDER OF THE INCOME-TAX SETTLEMENT COMMISSION U/S 245D (4) OF THE ACT. IN VIEW OF THESE FACTS, WE FI ND NO FAULT IN THE ORDER OF THE CIT (A) AND WE SUSTAIN THE SAME. ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF AUGUST, 2014. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 22 ND DAY OF AUGUST , 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.