Income Tax Appellate Tribunal - Delhi
Smt. Sunita Gupta, New Delhi vs Dcit, New Delhi on 17 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
Before Sh. N. K. Saini, AM and Sh. Kuldip Singh, JM
ITA No. 4027/Del/2014 : Asstt. Year : 2005-06
DCIT, Vs Suruchi Saraf,
Central Circle-4, E-1A (E-13), Maharani Bagh,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AEEPG9091H
CO No.120/Del/2017 : Asstt. Year : 2005-06
Suruchi Saraf, Vs DCIT,
E-1A (E-13), Maharani Bagh, Central Circle-4,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AEEPG9091H
ITA No. 4030/Del/2014 : Asstt. Year : 2005-06
DCIT, Vs Swati Saraf,
Central Circle-4, E-1A (E-13), Maharani Bagh,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AFUPG7627Q
CO No.121/Del/2017 : Asstt. Year : 2005-06
Swati Saraf, Vs DCIT,
E-1A (E-13), Maharani Bagh, Central Circle-4,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AFUPG7627Q
ITA No. 4032/Del/2014 : Asstt. Year : 2005-06
DCIT, Vs Sunita Gupta,
Central Circle-4, E-1A (E-13), Maharani Bagh,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAFPD3759C
2 ITA No. 4991/Del/2011
Proform Interiors Pvt. Ltd.
CO No.122/Del/2017 : Asstt. Year : 2005-06
Sunita Gupta, Vs DCIT,
E-1A (E-13), Maharani Bagh, Central Circle-4,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAFPD3759C
Assessee by : Sh. R. S. Singhvi, Adv. &
Sh. Satyajit Goel, Adv.
Revenue by : Sh. Sanjit Singh, CIT DR
Date of Hearing : 16.04.2018 Date of Pronouncement : 17.04.2018
ORDER
Per Bench:
The appeals by the department and the Cross Objections by the assessees are directed against the common orders dated 14.02.2014 of ld. CIT(A)- XXXIII, New Delhi.
2. Common grounds raised by the assessee in these Cross Objection read as under:
"l(i). That on facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the validity of notice u/s 153A even though there was no case of any search u/s 132 or any incriminating material and as such the notice u/s 153A is illegal and without jurisdiction.
(ii). That in absence of search u/s 132 of the Income tax Act, 1961 and non- existence of any incriminating material, the notice u/s 153A and consequential assessment proceedings are against the scheme of the Act.3 ITA No. 4991/Del/2011
Proform Interiors Pvt. Ltd.
(iii) That even otherwise, the assessment being based on material found during search at premises of third party and in absence of recording of any satisfaction in terms of provisions of section 153C, the assessing officer has failed to satisfy the jurisdictional requirement and as such the entire assessment is null and void.
3. That in any case, the Ld. CIT(A) has failed to appreciate that in absence of abatement of regular assessment proceedings, it is not open to assume jurisdiction u/s 153A dehors any incriminating material as the same is impermissible under the law and against the object and spirit of section 153 A of the Act.
4. That orders of lower authorities are illegal and without jurisdiction."
3. During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the issue under consideration is squarely covered in favour of the assessee and against the department vide order dated 30.08.2017 in Cross Objections Nos. 92 to 96/Del/2017 for the assessment year 2005-06 in the case o f different assessees belonging to the same group (copy of the said order was furnished which is placed on record).
4. In his rival submissions, the ld. CIT DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
5. After considering the submissions of both the parties and the material available on the record, it is noticed that an identical issue having similar facts has already been adjudicated by the ITAT Delhi Bench " F", New Delhi in Cross Objections Nos. 92 to 4 ITA No. 4991/Del/2011 Proform Interiors Pvt. Ltd.
96/Del/2017 filed by the assessees belonging to the same group to which present assessees belong for the assessment year 2005-06 wherein relevant findings have been given in paras 10 to 10.3 which reads as under:
"10. We have heard the rival submissions and carefully perused the relevant material placed on record. It is undisputed that the transfer of shares was done in pursuance to a restructuring of the family business and scheme of restructuring was duly approved by the Hon'ble Delhi High Court. The order u/s 394 of the Companies Act 1956 was passed by the Hon'ble Delhi High Court on 7.8.2003. It is also undisputed that the shares transferred were amongst the family members of the family held companies and no shares were sold to the outsiders. It is also undisputed that the buyers/assessees are not at liberty to transfer the shares so acquired to third parties outside the family concern and in case these shares are required to be transferred, the sellers would have a pre-emptive right to buy back the said shares. It is also undisputed that the Memorandum of Understanding as well as the sanction of scheme of merger relates back to the FY 2003-04.
10.1 Further, a perusal of the assessment orders reveal that while making the impugned additions, the Assessing Officer has only mentioned the date of search but has not referred to any incriminating material found during the course of search which could be the foundation of these additions. There is not even a whisper of any incriminating material having been found and relied upon by the department relating to these additions on account of perceived benefits u/s 2(24)(iv) of the Act. There are a plethora of decisions in which the Hon'ble High Courts have held that there can be no valid assessment u/s 153A/153C of the Act in absence of any incriminating material. We find that the reliance of the ld. AR on the judgment of the Hon'ble Delhi High Court 5 ITA No. 4991/Del/2011 Proform Interiors Pvt. Ltd.
in the case of Shri Mahesh Kumar Gupta (supra) is well placed and squarely covers on the issue. In this case, the ITAT had concluded, based upon the material available, that the search and seizure operations had not yielded any fresh material warranting addition u/s 153A of the Act and, therefore, could not clothe the CIT(A) with the authority to add the amount on the basis of a fresh appraisal of the existing material that formed part of the original assessment. Hon'ble Delhi High Court adjudicated the issue in Para 4 and 5 of the said judgment which is being reproduced for a ready reference:-
"4. There is no dispute that the search and seizure proceedings in this case did not result in anything, therefore, material either in the form of books of account or other documents related to the issue of deemed dividend under Section 2(22) of the Act. The amounts paid were in fact originally declared in the assessment returns of the assessee. The CIT, therefore, had opportunity to exercise his powers as it were on the basis of returns as filed originally and validly under Section 263 of the Act.
5. In the circumstances in the absence of any material disclosing that the issue of deemed dividend had been wilfully derived or had been deemed or otherwise withheld from the assessment an addition under Section 153A was warranted - based on the proposition taught by this Court in judgment dated 28.08.2015 in ITA 707/2014 titled: CIT vs Kabul Chawla. Therefore, we concur with the ITAT's opinion in this regard. The search and seizure proceedings in such cases are undoubtedly meant to bring to tax amount that are to be determined on the basis of materials seized in the course of such searches; permitting anything over and above that would virtually amount to letting the Revenue have a third or fourth opinion as it were. Searches - to quote the view of Attorney-General (NSW) vs Quin (1990) HCA 21 in 6 ITA No. 4991/Del/2011 Proform Interiors Pvt. Ltd.
another context are "not the key which unlocks the treasury" of the Revenue's jurisdiction in regard to matters that had attracted attention in the regular course of assessment."
10.2 In the appeals before us, it is not the case of the department that any material disclosing the issue of transfer of shares was withheld from the assessment and was found and seized during the course of search. It is also not the case of the department that any other incriminating material which could point out to such transfer of shares was unearthed during the course of search and was subsequently relied upon by completing the assessment u/s 153A. In such a circumstance, respectfully applying the ratio of the judgment in the case of Pr. CIT Central vs Mahesh Kumar Gupta (supra) as well as of CIT vs Kabul Chawla in I.T.A. 707/2014 of the Hon'ble Delhi High Court, we hold that proceedings u/s 153A were against the scheme of the Act in case of all the assessees. We also hold that the ld. CIT (A) was not justified in upholding the validity of the proceedings u/s 153A. We are of the considered opinion that it was not open for the Assessing Officer to assume jurisdiction u/s 153A de hors any incriminating material. Accordingly, we quash the proceedings u/s 153A in case of all the five assessees and accordingly allow the C.O.s of all the five assessees.
10.3 As the C.O.s of the assessees have been allowed, the departmental appeals challenging the deletion of the impugned additions become in fructuous and the same are dismissed as such."
6. So, respectfully following the aforesaid referred to order dated 30.08.2017, the issue is decided in favour of the assessee and against the depart ment. Accordingly, we do not see any merit in 7 ITA No. 4991/Del/2011 Proform Interiors Pvt. Ltd.
these appeals filed by the depart ment. The Cross Objections of the assessee are allowed.
7. In the result, the appeals of the department are dismissed and Cross Objections of the assessee are allowed.
(Order Pronounced in the Court on 17/04/2018) Sd/- Sd/-
(Kuldip Singh) (N. K. Saini)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 17/04/2018
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR