Income Tax Appellate Tribunal - Delhi
Arsh Home Private Ltd., Delhi vs Dcit, New Delhi on 28 February, 2018
1 ITA No. 3487/Del/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'A' NEW DELHI
BEFORE SHRI G. D. AGRAWAL, PRESIDENT
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 3487/DEL/2014 ( A.Y 2008-09)
Arsh Home Private Ltd. Vs DCIT
C-126, Central Circle-7
Preet Vihar New Delhi
Delhi
AAFCA3452N
(RESPONDENT)
(APPELLANT)
Appellant by SH. Anil Kumar Jain, AR
Respondent by Smt. Aparna Karan, CIT(DR)
Date of Hearing 05.02.2018
Date of Pronouncement 28.02.2018
ORDER
PER SUCHITRA KAMBLE This appeal has been filed by the assessee against the order dated 23/05/2014 passed by CIT(A)-1, New Delhi.
2. The grounds of appeal are as under:-
1. That on the facts and circumstances of the case and the provision of law the Ld CIT Appeal has failed to appreciate that the initiation of the proceeding u/s 153C of Income Tax Act is illegal and bad in law.
2. That on the facts and circumstances of the case and the provision of law the Ld CIT Appeal has failed to appreciate that the assessment framed is against the statutory provisions of the act and without complying the 2 ITA No. 3487/Del/2014 procedures prescribed under section 153C of the Income Tax Act.
3. That the Ld.CIT(A) has failed to appreciate that impugned assessment order passed by the Learned Assessing Officer is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard.
4. That on the facts and circumstances of the case and the provisions of law the Ld.CIT(A) has erred in upholding an addition of Rs.10,00,000/- u/s 69B of Income Tax Act."
3. A search and seizure was initiated u/s 132 of the Income Tax Act on 09.09.2010 in Amrapali group of cases with which the assessee entered into transactions of bulk investment in flats/commercial space. During search, a MoU between M/s Ultra Home Construction Pvt. Ltd. (UHCPL) and the assessee was found. The said MoU indicated that investments by the assessee into property under construction by UHCPL. The said document contained details of payments, including cash payment, and assured return on investment. Based on this document, the Assessing Officer recorded satisfaction and initialed proceedings u/s 153C in the case of the assessee. Return declaring loss of Rs. 13,869/- was originally filed on 4.09.2008. Notice u/s 153C was issued on 29.01 2013, and in response the assessee filed a letter on 18.02.2013 stating that the original return be treated as return in response to the said notice. Notice u/s 143(2) & u/s 142(1) with questionnaire was issued on 25.02.2013. Another notice u/s 142(1) was issued on 22 43.2013. The case was assessed at an income of Rs.9,86,131/- after making additions/ disallowances.
4. Being aggrieved by the assessment order, the assssee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submits that the initiation of assessment proceedings u/s 153C of the Income Tax Act, 1961 on the basis of unsigned MoU seized during 3 ITA No. 3487/Del/2014 the course of search and seizure operation of third party on the presumption that the same belonged to the assessee is bad in law. The Ld. AR submits that the MoU seized cannot be said to 'belong to' the assessee and being unsigned MoU, no proceedings u/s 153C of the Act can be initiated against the assessee. The Ld. AR further submits that there is no satisfaction recorded as Assessing Officer of the searched person. In the present case from the extract of satisfaction note it will be observed that this was recorded as Assessing Officer of the third party i.e. Assessee. The date of the recording of satisfaction is also absent. The Ld. AR relied upon the Hon'ble Delhi High Court decision in case of CIT vs. Renu Constructions Pvt. Ltd. (ITA No.499/2011dated 06.09.2017).
6. The Ld. DR relied upon the orders of the Assessing Officer and the CIT(A). The Ld. DR further relied upon the decision of PCIT vs. Nau Nidh Overseas Pvt. Ltd. (ITA Nos. 58,59,82,83/2017 dated 03.02.2017 Del. H.C.) wherein it is held that satisfaction recorded by the Officer issuing notice u/s 153C is sufficient if the Assessing Officer of the searched person and third party are the same. The Ld. DR also relied upon the decision of the Hon'ble Delhi High Court in case of PCIT vs. Instronics Ltd. (2017) 82 taxmann.com 357 (Del.) wherein it is held that where satisfaction note was recorded by the Assessing Officer of searched person who also happened to be Assessing Officer of the assessee (other person) to effect that seized documents belonged to assessee, issuance of notice under Section 153C against assessee on basis of said note was justified. The Ld. DR relied upon the decision PCIT vs. Sheetal International Pvt. Ltd. (2017-TIOL-1355-HC-DEL-IT) wherein it is held by the Hon'ble Delhi High Court that proceedings u/s 153C cannot be invalidated, merely because the Assessing Officer of the searched party who was also that of the assessee, did not record a separate satisfaction note.
7. We have heard both the parties and perused the records. It is pertinent to note that in letter dated 12.02.2013 the Assessing Officer recorded the extract of the satisfaction for initiation of proceedings u/s 153C of the Income 4 ITA No. 3487/Del/2014 Tax Act, but has not recorded the finding that the seized document i.e. MoU belongs to the third party i.e. the assessee. As per the provisions u/s 153C where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article on thing or books of account or documents seized or requisitioned belongs to a person other than the person referred to in Section 153A, then the books of account or documents or assets requisitioned shall be handed over to the Assessing Officer who shall proceed against such other person and issue such person notice and assess or reassess income of such other person in accordance with the provisions of Section 153A. The said MoU does not bear the signature of the assessee. Thus, finding of document in the premises of Amrapali Group does not constitute that the document to be belonging to the assessee. The reliance of the decision of the Hon'ble Delhi High Court in case of CIT vs. Renu Constructions Pvt. Ltd. is apt as the Hon'ble High Court held that it is necessary to show that the seized material 'belonged to' the other person other than the person referred to in Section 153A of the Act. The Thus, the CIT(A) was failed to appreciate that the assessment framed is against the statutory provision of the Act. The Assessing Officer cannot merely on presumption states that the seized documents are that of assessee. Firstly, the Assessing Officer has to establish that the seized documents belong to the assessee which the Assessing Officer as well as CIT(A) failed to looked into. The case laws referred by the Ld. DR is only on the principle that the satisfaction recorded by the officer issuing notice u/s 153 C is sufficient if the AO of the searched person and third party are same. But the same will not be applicable in the present case as the Assessing Officer has failed to looked into the seized documents whether belongs to assessee or not. Thus, the proceedings u/s 153C itself becomes bad in law and the assessment order is quashed and there is no need to adjudicate the issue on merit.
5 ITA No. 3487/Del/20148. In result, appeal of the assessee is partly allowed.
Order pronounced in the Open Court on 28th FEBRUARY, 2018.
Sd/- Sd/-
(G. D. AGRAWAL) (SUCHITRA KAMBLE)
PRESIDENT JUDICIAL MEMBER
Dated: 28/02/2018
R. Naheed *
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date
1. Draft dictated on 06/02/2018 PS
2. Draft placed before author 06/02/2018 PS
3. Draft proposed & placed before .2018 JM/AM
the second member
4. Draft discussed/approved by JM/AM
Second Member.
5. Approved Draft comes to the PS/PS
Sr.PS/PS 28.02.2018
6 ITA No. 3487/Del/2014
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk 28.02.2018 PS
8. Date on which file goes to the AR
9. Date on which file goes to the
Head Clerk.
10. Date of dispatch of Order.