J.P.S. REINFORCED PIPES PVT LTD.,NEW DELHI V. DCIT, CC, GHAZIABAD

ITA 1132/DEL/2021

AI Insights

The case involves multiple appeals related to the assessment years 2012-13, 2013-14, and 2014-15 concerning M/s. JPS Reinforced Pipes Pvt. Ltd. The primary legal issue was whether additions could be made to the assessee's income in the absence of incriminating material during the search operations conducted under section 132 of the Income-tax Act, 1961. The Tribunal examined the legality of the additions made by the Assessing Officer under sections 143(3) and 153A of the Act, following a search and seizure operation. The Tribunal found that the additions made were not supported by any incriminating evidence discovered during the search, leading to the decision to allow the assessee's appeals and dismiss the revenue's appeals for the respective assessment years.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34800 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Kabul Chawla, CIT Vs. Raj Kumar Arora, Abhisar Buildwell Pvt Ltd vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Deemed dividend; Search and seizure
• Section: 143(3); 132; 153A; 139(1); 2(22)(e)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ITA Nos.1328, 1329, 1330/Del/2021 (Assessment Years: 2012-13, 2013-14, 2014-15) Dy. CIT, Central Circle, Ghaziabad Vs. M/s. JPS Reinforced Pipes Pvt. Ltd, D-835, 2nd Floor, New Friends Colony, New Delhi (Appellant) (Respondent) PAN: AACCJ1410G ITA No.1132/Del/2021 (Assessment Year: 2012) M/s. JPS Reinforced Pipes Pvt. Ltd, D-835, 2nd Floor, New Friends Colony, New Delhi Vs. Dy. CIT, Central Circle, Ghaziabad (Appellant) (Respondent) PAN: AACCJ1410G Assessee by : Dr. Rakesh Gupta, Adv Shri Somil Agarwal, Adv Revenue by: Shri Dayainder Singh Sidhu, CIT DR Date of Hearing 06/01/2025 Date of pronouncement 22/01/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeals in ITA Nos. 1328, 1329, 1330/Del/2021 for AYs 2012- 13 to 2014-15 arise out of the order of the Commissioner of Income Tax (Appeals)-4, Kanpur [hereinafter referred to as „ld. CIT(A)‟, in short] in dated 12.07.2021 for all the AYs against the order of assessment passed u/s 143(3)/153A of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.12.2018 by the Assessing Officer, DCIT, Central Circle, ITA Nos.1328, 1329, 1330/Del/2021 ITA No.1132/Del/2021 M/s. JPS Reinforced Pipes Pvt. Ltd Page | 2 Ghaziabad (hereinafter referred to as „ld. AO‟). Identical issues are involved in these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 1132/Del/2021 – Asst Year 2012-13 – Assessee Appeal 2. The first ground to be decided in this appeal is as to whether any addition could be made in an unabated assessment as on the date of search in the absence of any incriminating material found during the course of search qua the addition. 3. We have heard the rival submissions and perused the materials available on record. The assessee company is engaged in the business of manufacturing of pipes and related activities. The assessee had filed original return of income u/s 139(1) of the Act. Scrutiny assessment was completed u/s 143(3) of the Act on 27-3-2015 determining total loss of Rs 18,56,897/- as against returned loss of Rs 22,35,572/- after making addition of Rs 3,78,675/- on account of some unverifiable expenditure. A search and seizure operation u/s 132 of the Act was carried out on 3-11- 2016 at the premises of the Assessee Company comprising M/s VVIP and SSG Group of cases. The search warrant was issued in the name of the assessee company and search conducted at the official premises of the assessee at D-835, 2nd floor, New Friends Colony, New Delhi. Accordingly, notice u/s 153A of the Act stood issued to the assessee on 27-7-2018 . The assessee filed its return of income on 16-10-2018 declaring loss of Rs 22,35,572/- in response to notice u/s 153A of the Act. In the search assessment, the ld AO made the following additions:- a) Addition towards deemed dividend in terms of section 2(22)(e) of the Act – Rs 8,32,00,000/- ITA Nos.1328, 1329, 1330/Del/2021 ITA No.1132/Del/2021 M/s. JPS Reinforced Pipes Pvt. Ltd Page | 3 b) Addition towards unverifiable expenditure which was made in the original scrutiny assessment u/s 143(3) of the Act – Rs 3,78,675/- 4. The ld AO observed that in respect of addition on account of deemed dividend, during the course of search, various hard disks were found and seized. After extracting these hard disks, a page containing details of unsecured loan was retrieved which is a trial balance group summary of unsecured loans which was also reproduced in Page 3 of the search assessment order. As far as the other addition of Rs 3,78,675/- is concerned, the same was made based on the original scrutiny assessment order framed u/s 143(3) of the Act on 27-3-2015. 5. Before the ld CITA, the assessee raised a ground that the addition have been made in the search assessment for the year under consideration without the existence of any incriminating material found during the course of search. The assessment year is an unabated assessment as on the date of search as originally the scrutiny assessment was completed u/s 143(3) of the Act and as on the date of search, no proceedings were pending qua the assessment year under consideration. The assessee placed reliance on the decision of the Hon‟ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573 (Del) among others. The ld CIT(A) in page 12 vide para 6.4 of his order practically conceded the fact that the additions were made without any incriminating material and that there is no need for the existence of any incriminating material. In support of such proposition, he placed reliance on the decision of the Hon‟ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora reported in 52 taxmann.com 172 (All HC). Relevant observation of the ld CIT(A) in this regard are reproduced herein:- “6.4. I have considered the various case laws filed by the appellant, though various other courts have given certain findings in favour of the ITA Nos.1328, 1329, 1330/Del/2021 ITA No.1132/Del/2021 M/s. JPS Reinforced Pipes Pvt. Ltd Page | 4 assessee but the Hon'ble Allahabad High Court has ruled against the assessee in the case of CIT Vs Raj Kumar Arora (supra) and thus this ground of the appellant is not tenable and hence dismissed.” 6. From the above, it is very clear that there is no incriminating material for framing the aforesaid two additions in the hands of the assessee. The only search material which was sought to be relied upon by the revenue as found in the search was the hard disk. The said hard disk contained only trial balance which contained the list of parties from whom the assessee had received unsecured loans. These transactions are already reflected in the books of account of the assessee and scrutiny assessment was framed based on the same in earlier order framed on 27.03.2015 u/s 143(3) of the Act. Hence, the hard disk which was seized cannot be construed as any incriminating material available with the revenue for making the addition. Admittedly the year under consideration is a completed/ unabated assessment as on the date of search. Hence, without the existence of any incriminating material found during the course of search qua the impugned additions, in a completed assessment, no addition could be made in the search assessment thereon. This issue is no longer res integra in view of the decision of the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt Ltd reported in 454 ITR 212 (SC). Respectfully following the same, we have no hesitation to delete the addition made in the search for the year under consideration. Since, the additions made by the ld AO are quashed on this technical ground, the adjudication of other grounds raised by the assessee become academic in nature. No opinion is rendered on other grounds raised by the assessee and they are left open. Accordingly, the appeal of the assessee for AY 2012-13 is allowed and appeal of the revenue for AY 2012-13 is dismissed. ITA No. 1329/Del/2021 for AY 2013-14 (Revenue’s appeal) ITA Nos.1328, 1329, 1330/Del/2021 ITA No.1132/Del/2021 M/s. JPS Reinforced Pipes Pvt. Ltd Page | 5 7. The assessee has raised Rule 27 Petition before us challenging the framing of assessment in the absence of any incriminating material. This Rule 27 petition is duly admitted herein and taken up for adjudication. In this case also, the earlier scrutiny assessment was framed u/s 143(3) of the Act on 26.03.2016. Hence, as on the date of search, no proceedings were pending for this assessment year. The ld CIT(A) had made similar observation in para 6.4 of his order in page 10 thereon as was made in AY 2012-13. Hence, the decision rendered by us for AY 2012-13 shall apply mutatis mutandis for this assessment year also. ITA No. 1330/Del/2021 for AY 2014-15 (Revenue’s Appeal) 8. Grounds raised by the revenue and Rule 27 petition filed by the assessee for this assessment year are exactly identical for AY 2013-14 adjudicated hereinabove. Hence, the decision rendered by us for AY 2013-14 shall apply mutatis mutandis for this assessment year also. 9. To sum up, Assessment Year Appeal filed by ITA No. Result 2012-13 Assessee 1132/Del/2021 Allowed 2012-13 Revenue 1328/Del/2021 Dismissed 2013-14 Revenue 1329/Del/2021 Dismissed 2014-15 Revenue 1330/Del/2021 Dismissed Order pronounced in the open court on 22/01/2025. -Sd/- -Sd/- (MADHUMITA ROY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22/01/2025 A K Keot Copy forwarded to ITA Nos.1328, 1329, 1330/Del/2021 ITA No.1132/Del/2021 M/s. JPS Reinforced Pipes Pvt. Ltd Page | 6 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "