Refiling) Pr. Commissioner Of Income ... vs M/S Hal Offshore Ltd on 23 September, 2024

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Delhi High Court - Orders

Refiling) Pr. Commissioner Of Income ... vs M/S Hal Offshore Ltd on 23 September, 2024

$~30, 76 to 91
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 384/2023 & CM APPL. 36178/2023 (315 Days Delay in
Refiling)
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2
.....Appellant
Through: Mr. Sanjay Kumar, SSC along
with Ms. Easha Kadian, JSC.
versus

M/S HAL OFFSHORE LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
76
+ ITA 479/2019
THE PR. COMMISSIONER OF INCOME TAX-CENTRAL-3
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Ruchir Bhatia, SSC along
with Mr. Anant Mann, JSC.
versus

DHARAMPAL SATYAPAL LTD .....Respondent
Through: Dr. Rakesh Gupta, Mr. Somil
Agarwal, Mr. Dushyant
Agarwal and Ms. Sonlai
Maurya, Advs.
77
+ ITA 484/2019
THE PR. COMMISSIONER OF INCOME TAX-CENTRAL-3
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.

ITA 384/2023 & other connected matters Page 1 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
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Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Ruchir Bhatia, SSC along
with Mr. Anant Mann, JSC.
versus

DHARAMPAL SATYAPAL LTD .....Respondent
Through: Dr. Rakesh Gupta, Mr. Somil
Agarwal, Mr. Dushyant
Agarwal and Ms. Sonlai
Maurya, Advs.
78
+ ITA 645/2019
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Vipul Agrawal, SSC along
with Mr. Gibran Naushad and
Ms. Sakashi Shairwal, JSCs.
versus

M/S MOON BEVERAGES LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
79
+ ITA 646/2019
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika

ITA 384/2023 & other connected matters Page 2 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:27
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

HINDUSTAN AQUA LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
80
+ ITA 673/2019
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
versus

M/S METBRASS PLASSIM INDIA LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
81
+ ITA 395/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Vipul Agrawal, SSC along
with Mr. Gibran Naushad and
Ms. Sakashi Shairwal, JSCs.

versus

ITA 384/2023 & other connected matters Page 3 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:28
MOON BEVERAGES LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
82
+ ITA 397/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Vipul Agrawal, SSC along
with Mr. Gibran Naushad and
Ms. Sakashi Shairwal, JSCs.
versus

M/S MOON BEVERAGES LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
83
+ ITA 398/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Vipul Agrawal, SSC along
with Mr. Gibran Naushad and
Ms. Sakashi Shairwal, JSCs.
versus

MOON BEVERAGES LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
84
+ ITA 420/2022
PR COMMISSIONER OF INCOME TAX .....Appellant

ITA 384/2023 & other connected matters Page 4 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:29
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

HINDUSTAN AQUA LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
85
+ ITA 421/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

HAL OFFSHORES LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
86
+ ITA 422/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta

ITA 384/2023 & other connected matters Page 5 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:29
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

M/S HAL OFFSHORES LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
87
+ ITA 423/2022
PR COMMISSIONER OF INCOME TAX(CENTRAL) 2
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

M/S HINDUSTAN AQUA LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
88
+ ITA 479/2022
PRINCIPAL COMMISSIONER OF INCOME TAX
.....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.

ITA 384/2023 & other connected matters Page 6 of 14

M/S METBRASS PLASSIM INDIA LTD .....Respondent

Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
89
+ ITA 480/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
versus

METBRASS PLASSIM INDIA LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.
90
+ ITA 491/2022
PR. COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.

versus

FORTUNE INDUSTRIAL RESOURCES LTD. .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.

ITA 384/2023 & other connected matters Page 7 of 14

This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:30
91
+ ITA 497/2022
PR COMMISSIONER OF INCOME TAX .....Appellant
Through: Mr. Debesh Panda, SSC along
with Ms. Zehra Khan, Mr.
Vikramaditya Singh, JSCs, Mr.
Udbhav Gady, Ms. Ananuntta
Shankar and Ms. Yashika
Gupta, Advs.
Mr. Indruj Singh Rai, SSC
along with Mr. Sanjeev Menon,
Mr. Rahul Singh, JSCs and Mr.
Anmol Jagga, Adv.
versus

COMPETENT INFOWAYS PVT LTD .....Respondent
Through: Mr. Gautam Jain and Mr.
Mansih Yadav, Advs.

CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
ORDER

% 23.09.2024 ITA 479/2019 & ITA 484/2019

1. We take note of the order passed in Pr. Commissioner of Income Tax vs. M/s Dharampal Satyapal1, where while dealing with the additions made in respect of bogus purchases, it had ultimately held as follows:-

"9. Insofar as Question K is concerned, the same related to alleged bogus purchases. The allegation of the appellant appears to have been that the purchase of sandalwood oil was not genuine and that the entire transaction was a sham. However, and undisputedly, the books of accounts were never rejected. In view of the aforesaid, we find no justification to interfere with the order impugned insofar as this aspect is concerned. This since no substantial question can be 1 ITA 979/2019 decided on 23 August 2024 ITA 384/2023 & other connected matters Page 8 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:30 said to arise."

2. In view of the aforesaid, Mr. Bhatia, learned counsel submits that since the issue on merits itself has come to be answered in favour of the respondent assessee, the question of law as framed may not survive.

3. He, accordingly, prays that the appeals may be disposed of subject to the question of law being kept open to be addressed in the other surviving appeals forming part of this batch.

4. Ordered accordingly.

ITA 645/2019, ITA 646/2019, ITA 673/2019, ITA 395/2022, ITA 397/2022, ITA 398/2022, ITA 420/2022, ITA 421/2022, ITA 422/2022, ITA 423/2022, ITA 479/2022, ITA 480/2022, ITA 491/2022, ITA 497/2022

5. These set of appeals had come to be formally admitted on 04 April 2024 and when we had framed the following question of law for further consideration:-

"(a) Whether and for the purposes of Section 153A of the Income Tax Act, 1961 ["Act"] a statement referable to Section 132(4) of the Act would constitute incriminating material to sustain a search assessment?"

6. The issue itself arises out of a search assessment under Section 153A of the Income Tax Act, 19612 which had been made in the case of the respondent assessee.

7. Learned counsels appearing in support of the appeals had essentially addressed submissions based on the doubt which was expressed by a Division Bench of the Court while noticing the principles which had been propounded in Commissioner of Income Tax vs. Harjeev Aggarwal3. It was in the aforesaid light that we had 2 Act 3 2016 SCC OnLine Del 1512 ITA 384/2023 & other connected matters Page 9 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:31 proceeded to frame the issue as noticed in our order dated 04 April 2024.

8. However and on going through the order passed by the Income Tax Appellate Tribunal4, we take note of the following recital of facts which appear:-

"9. Ld. counsel for the assessee at the outset strongly objected to the order of the ld. CIT(A) dismissing the appeal of the assessee. So far as ground relating to the validity of assumption of jurisdiction u/s 153A is concerned, he submitted that the addition made by the Assessing Officer and sustained by the ld. CIT(A) is illegal and beyond the scope of provisions of section 153A/143(3) of the I.T. Act. He submitted that on the date of search on 28.03.2015 no incriminating material was found in respect of the addition made by the Assessing Officer and the assessment was not pending. Neither the Assessing Officer nor the ld. CIT(A) has referred to any incriminating material found as a result of search while making/sustaining the addition. He submitted that the sum offered by Mr. Sanjeev Aggarwal in his statement recorded u/s 132(4) amounting to Rs.88.52 crores comprised of two components i.e. pertaining to assessment year 2008-09- Rs.30.78 crores and balance - Rs.57.74 crores. He submitted that Shri Sanjeev Aggarwal has retracted from his statement regarding surrender of income to the extent of 30.78 crores pertaining to assessment year 2008-09 which is evident from pages 30 to 35 of the Paper Book."

9. It is in the aforesaid context that the Tribunal has ultimately come to hold as follows:-

"34. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer on the basis of various enquiries conducted and statement recorded of various persons u/s 132(4) and 131 made addition of Rs.11,85,00,000/- in the hands of the assessee u/s 68 of the I.T. Act on the ground that the assessee failed to substantiate with cogent evidence to his satisfaction regarding the identity and creditworthiness of the investor and the genuineness of the transaction. According to the Assessing Officer, since the assessee could not produce the investor company and since its returned income is meagre considering the huge investment made by it in the shares of the assessee company with huge premium, therefore, 4 Tribunal ITA 384/2023 & other connected matters Page 10 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:31 the provisions of section 68 are clearly attracted. We find, in appeal, ld. CIT(A) upheld the action of the Assessing Officer on merit, the reasons for which have already been reproduced in the preceding paragraph. He has also dismissed the ground raised by the assessee challenging the validity of assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search, the reasons for which have already been reproduced in the preceding paragraphs. Ld. CIT(A) alternatively also held that the addition is sustainable on account of mischief of provisions of section 56(2)(viib) read with Rule 11UA(1)cb, the reasons for which have already been reproduced in the preceding paragraph. It is the submission of the ld. counsel for the assessee that the original return was filed on 12.09.2013 declaring income at Rs.7,42,51,693/- which was assessed u/s 143(1) on 18.04.2014. The notice u/s 143(2) was not issued before the prescribed time limit and, therefore, the assessment on the date of search was not pending. Since the addition made by the Assessing Officer is not based on any incriminating material found during the course of search and addition has been made on the basis of post-search enquiry and on the basis of statements recorded u/s 132(4) of the I.T. Act, therefore, the same cannot constitute incriminating material so as to enable the Assessing Officer to assume jurisdiction u/s 153A of the I.T. Act. It is also the submission of the ld. counsel for the assessee that the investment of Rs.4,34,00,000/- made by the assessee company in M/s Superior Industrial Enterprises Ltd. has not been doubted by the Assessing Officer and the same has been accepted in the order passed u/s 143(3) for the impugned assessment year. Further, the assessment of M/s Superior Industrial Enterprises Ltd. was completed u/s 143(3) on 15.03.2016 by the ITO, Ward-24(4), New Delhi wherein the Assessing Officer after verifying the details filed by the assessee has accepted the investment made by the said company towards purchase of shares in the assessee company."

10. It is thus found on facts that the additions which were made by the Assessing Officer were not based on any incriminating material unearthed in the course of the search and rested solely on the statement that had been recorded under Section 132(4) of the Act.

11. We note that the significance of a solitary statement and whether that would be sufficient to sustain an addition being made absent any incriminating material was one which had directly fallen for our consideration in Principal Commissioner of Income Tax ITA 384/2023 & other connected matters Page 11 of 14 This is a digitally signed order.

12. We had in Pavitra Realcon while answering the aforesaid questions observed as follows:-

"20. However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.

21. In the case of Kailashben Manharlal Chokshi v. CIT1, the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow:--

26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission.We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission.

Hence, there is no reason not to disbelieve the retrac tion made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee.

[Emphasis supplied]

22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal2, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below:--

2024 SCC OnLine Del 4012 ITA 384/2023 & other connected matters Page 12 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:32 "20. In our view, a plain reading of section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation.

[Emphasis supplied]

23. In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. However, these statements do constitute information, and if they relate to the evidence or material found during the search, they can be used in proceedings under the Act, as specified under Section 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment."

13. We find that the Tribunal has on facts found that but for the statement, no other material had been borne in consideration to sustain the additions which were made. This becomes further apparent from a reading of the following observations which appear in para 37 of the order impugned herein:-

"37. We further find from the order of the ld. CIT(A) that there was no surrender of income for the impugned assessment year and the surrender was only for the assessment year 2008-09 which too was retracted within two months. He has also observed that the statement was non descriptive and vague and subject to cross checking of fact to be explained after access to books of accounts. We, therefore, find merit in the submissions of the ld. counsel for the assessee that the addition made by the Assessing Officer u/s 68 of the I.T. Act is not based on any incriminating material and is ITA 384/2023 & other connected matters Page 13 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:32 based on statements recorded during search u/s 132( 4) and post- search enquiries."

14. On an overall conspectus of the above, the Tribunal has ultimately found that the addition which rested solely on a statement recorded under Section 132(4) would not sustain.

15. We, consequently, and on the facts of the present case answer the question in the negative and against the appellants. The appeals fail and shall stand dismissed.

ITA 384/2023

16. As additional questions are proposed in this appeal, let this matter be called for consideration on 22.11.2024.

YASHWANT VARMA, J.

RAVINDER DUDEJA, J.

SEPTEMBER 23, 2024/neha ITA 384/2023 & other connected matters Page 14 of 14 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/09/2024 at 22:50:33

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