Income Tax Appellate Tribunal - Delhi
Dcit, Central Circle- I, Gurgaon vs Ajit Singh , New Delhi on 30 September, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A', NEW DELHI
BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND
SH. NARENDER KUMAR CHOUDHARY, JUDICIAL MEMBER
ITA Nos. 6306, 8989 & 8990/Del/2019
(Assessment Years : 2010-11, 2012-13 & 2013-14)
DCIT Vs. Shri Ajit Singh
Central Circle - 1 G-194, Prashant Vihar,
Gurugram New Delhi - 110 085
PAN : AANPS 7282 B
(APPELLANT) (RESPONDENT)
Assessee by Shri Rajat Jain, Adv.
Shri Akashat Jain, Adv.
Revenue by Shri Ishtiyaque Ahmed, CIT-D.R.
Date of hearing: 28.09.2022
Date of Pronouncement: 30.09.2022
ORDER
PER ANIL CHATURVEDI, AM :
These three appeals filed by the Revenue are directed against the order dated 08.05.2019, 06.09.2019, 06.09.2019 of the Commissioner of Income Tax (Appeals)-3, Gurgaon relating to Assessment Years 2010-11, 2012-13 & 2013-14 respectively.
2. The relevant facts as culled from the material on records are as under :
23. Assessee is an individual and is stated to be having income from business and profession. AO has noted that in the case of the assessee, the residential as well as business and office premises of M/s. Antriksh Group of cases were subjected to search and seizure operation. Accordingly, in view of provision of Section 153A(1)(a) of the Act, a notice u/s 153A r.w.s 153C of the Act was issued and served upon the assessee. In response to the aforesaid notice, assessee submitted that return of income for A.Y. 2010-11 filed by the assessee on 31.07.2010 declaring income of Rs.1,55,510/- be considered as return of income in response to notice u/s 153A of the Act. Thereafter, the case was taken up for scrutiny and consequently, assessment was framed u/s 153A(1)(b) of the Act vide order dated 28.03.2016 and the total income was determined at Rs.1,82,66,760/-.
4. As far as A.Y. 2012-13 is concerned, in response to notice u/s 153A(1)(a) of the Act, assessee vide reply dated 26.02.2016 submitted that the return of income for A.Y. 2012-13 filed on 29.07.2012 declaring income of Rs.3,70,524/- be considered as return of income in response to notice u/s 153A r.w.s 153C of the Act. Thereafter, the case was taken up for scrutiny and consequently, assessment was framed u/s 153A(1)(b) of the Act vide order dated 28.03.2016 and the total income was determined at Rs.4,10,70,524/-.
35. As far as A.Y. 2013-14 is concerned, in response to notice u/s 153A(1)(a) of the Act, assessee vide reply dated 26.02.2016 submitted that the return of income for A.Y. 2013-14 filed on 30.07.2013 declaring income of Rs.8,30,380/- be considered as return of income in response to notice u/s 153A r.w.s 153C of the Act. Thereafter, the case was taken up for scrutiny and consequently, assessment was framed u/s 153A(1)(b) of the Act vide order dated 28.03.2016 and the total income was determined at Rs.3,08,30,380/-.
6. Aggrieved by the orders of AO for the aforesaid 3 assessment years, assessee carried the matter before CIT(A) who vide order dated 08.05.2019 (for A.Y. 2010-11) & 06.09.2019 (for A.Ys. 2012- 13 & 2013-14) granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds:
7. Grounds raised by Revenue in ITA No.6306/Del/2019 (for A.Y. 2010-11) are as under:
i) Whether on the facts and circumstances of the case the CIT(A) was right in concluding that there was a difference in scope of proceedings under section 153A/153C of the Income Tax Act, 1961 for an abated assessment and for a completed assessment.
ii) Whether on the facts and circumstances of the case the CIT(A) was right in holding that no addition can be made u/s 153A/153C in respect of completed assessment if no incriminating material is found during search.4
iii) Whether there is any restriction on the powers of. the Assessing Officer under section 153A/153C of the Income Tax Act, 1961 to confine only to the "incriminating material found during the search", even though such words or conditions are not mentioned in the section per se.
iv) Whether on the facts and circumstances of the case the CIT(A) was correct in interpreting section 153A which starts with a 'non-obstante clause ' stating therein that the operation of section 139, 147, 148, 149, 151 & 153 was de-posed, meaning thereby that in search cases the Assessing Officer is duty bound to take up the assessment u/s 153A and that the above mentioned sections cannot be invoked. Therefore, even if incriminating material is not found during search, but if an escaped income or under-assessed income or undisclosed income has to be assessed for such completed assessment, then it has to be done in the proceedings u/s 153A in search cases.
v) Whether on the facts and circumstances of the case the CIT(A) was right in ignoring the basic difference in search assessment u/s 153A/153C and Chapter XIVB being that in section 153A the "total income" has to be assessed or reassessed in six separate A. Vs., as opposed to assessing only "undisclosed income " in the scraped Chapter XIV B for block period in a single assessment.
vi) Whether on the facts and circumstances of the case the CIT(A) was right in following Delhi High Court decision in the case of CIT v. Kabul Chawla, 61 taxman.com 412 when the Hon'ble HC itself admits in para 37 (iv) the "Although Section 153A does not say that additions should strictly be made on the basis of evidence found in course of search...." there by interpreting the statue in the manner which were never worded or intended by the legislature.
vii) Whether on the facts and circumstances of the case the CIT(A) has erred in ignoring the Principle of Strict interpretation of statues when the words used on the statue i.e. sec 153A(l)(b) of the IT Act, 1961 are "Assess" or "Reassess" the "Total Income 5
viii) Whether on the facts and circumstances of the case the CIT(A) is right in not following the Hon'ble SC Judgment on interpretation of statute in the case of Smt. Tarulata Shyam & Other v. CIT 108 ITR 345, Keshav ji Ravji And Co v. CIT 183 ITR 1. Padamsundara Rao (Deed.) &Others v. State of Tamil Nadu 255 ITR 147, Prakash Nath Khanna & Others v. CIT 266 ITR 1, Institute of Charted Accountants of India v. Price Water House 93 Taxman 588.
ix) Whether on the facts and circumstances on the case the CIT (A) is right in not following the judgments on the issue of additions in search case u/s 153A rendered in the case of CIT v. Anil Kumar Bhatia 352 ITR 493 (Delhi HC), Madugula Venu v. DIT 49 Taxman.com 200 (Delhi HC), CIT v. Raj Kumar Arora 367 ITR 517 (Allahabad HC), Canara Housing Development Company v. DCIT 49 taxman.com98 (Karnataka HC), Filatx India Ltd. v. CIT 229 Taxman 555 (Delhi HC) Sunny Jacob Jewellers and Wedding Centre, 362 ITR 664 (Kerala HC).
x) Whether on the facts and in the circumstances of the case and in law the CIT(A) erred in not deciding additions on account of unexplained cash credit in form of unsecured loans from Sh. Hemant Gandhi and Sh. Kulbir Singh amounting to Rs. 75,00,000/- and unexplained investment of Rs. 36,11,250/- in the company M/s Mercury General Corporation (P) Ltd on merits ignoring the fact that the AO made these additions after elaborately discussing the issues in the assessment order.
xi) Whether on the facts'and in the circumstances of the case and in law the CIT (A) failed to appreciate the transactions written in the seized documents and failed to notice that the date of transaction was required to be read as 07.01.2010 in continuation of the series of transactions written in the said document.
xii) Whether on the facts and in the circumstances of the case and in law the CIT (A) failed to appreciate that the additions were made on the basis of incriminating documents belonging to the assessee which were found during search.
6xiii) The appellant craves to add, amend, alter or modify any grounds of appeal at the time of hearing."
8. Grounds raised by Revenue in ITA No.8989/Del/2019 (for A.Y. 2012-13) are as under:
(i) The satisfaction note in the instant case was recorded on 25.02.2016. The provisions of section 153C have been substituted by the Finance Act, 2015 w.e.f. 01.06.2015. Being procedural provisions, these will apply to all the proceedings u/s 153C initiated after 01.06.2015. As per substituted section 153C, the proceedings u/s 153C can be initiated on the basis of satisfaction of the AO that any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein relates to a person other than the person referred to in section 153A.
(ii) The satisfaction note in the instant case has been properly recorded, which clearly mentioned that incriminating documents seized from possession of Sh. Rakesh Yadav reveals that Sh. Ajit Singh had entered into various cash transactions with him.
(iii) The AO in his satisfaction note has clearly mentioned the documents which would be handed over to the AO of the person i.e. Sh. Ajit Singh (who was same in the instant case).
(iv) The AO in his report has submitted that while issuing notice u/s 153C of the Act the incriminating documents found from the residence of searched person were perused and these revealed unrecorded transactions with Sh. Ajit Singh and satisfaction note was recorded in the case of searched person as well as other person (the assessee) on 25.02.2016. It was categorically held that the documents seized from the premises of searched person belong to the assessee (Sh. Ajit Singh) and hence notice u/s 153C of the Act was issued.
(v). As regards addition of Rs.25,00,000/- on account of unsecured loan made in AY 2011-12 which was deleted by the CIT(A) on the ground that the same is not based on any incriminating document found during the search it is 7 submitted that the judgment of the Hon'ble Delhi High Court in the case of Kabul Chawla has not been accepted by the Department. Hence, the order of the CIT(A) is not acceptable
9. Similar grounds are raised by Revenue in ITA No.8990/Del/2019 for A.Y. 2013-14.
First we take up appeal of Revenue for A.Y. 2010-11 in ITA No.6306/Del/2019:
10. Before us, at the outset, Learned DR submitted that though various grounds have been raised by Revenue but the same are the arguments of the Revenue but however the sole controversy is with respect the setting aside the assessment framed by AO by CIT(A) and quantum additions made by AO but deleted by CIT(A).
11. In the assessment framed u/s 153A(1)(b) of the Act, AO made 3 additions aggregating to Rs.1,81,11,250/-. The 1st addition made by AO was of Rs.75,00,000/- on account of unsecured loan that was received by assessee from two parties by treating it as unexplained credit u/s 68 of the Act. The 2nd addition made by AO was of Rs.36,11,250/- by treating the investment made by the assessee as unexplained investment. The 3rd addition made by AO was of Rs.70,00,000/- on account of alleged unaccounted transactions.
12. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), assessee challenged the validity of the 8 assessment framed u/s 153A of the Act and on merits challenged the quantum additions made by AO. CIT(A) on the validity of assessment framed u/s 153A of the Act has given a finding that no incriminating documents/records or any evidence found were seized during the course of search proceedings which resulted into the additions made by the AO and additions made inter alia on account of unexplained credit and unexplained investments are not borne out of any incriminating material found during the search action. He has further given a finding that at the time of search action on 05.02.2014, the original return of income filed by the assessee u/s 139 of the Act on 31.07.2010 was processed u/s 143(1) of the Act and on the date of search no assessment or reassessment were pending nor abated. CIT(A), thereafter, after placing reliance on the decision of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) and various other decisions cited in his order held that no additions could be made in the case of the assessee in the absence of any incriminating material found during the search proceedings.
13. With respect to the addition of Rs.70,00,000/- that was made by AO, CIT(A) has given a finding that the date written in the document found from the possession of Shri Rakesh Yadav was 07.01.2009 which fell in F.Y. 2008-09 relevant to A.Y. 2009-10 and, therefore, for that reason also no addition of the same could be made in A.Y. 2010-11. He thus decided the issue in favour of 9 the assessee. Aggrieved by the order of CIT(A), Revenue is now before us.
14. Before us, Learned DR took us to the finding of AO and supported the order of AO.
15. Learned AR on the other hand reiterated the submissions made before the AO and CIT(A) and submitted that the addition which have been made are not based on incriminating material found during the search. He further submitted that at the time of search on 05.02.2014, no assessment or reassessment were pending and therefore it is a settled law that in case of completed assessments no addition can be made in the absence of any incriminating material. He thus supported the order of CIT(A).
16. We have heard the rival submissions and perused the material available on record. It is undisputed fact that assessee had filed original return of income u/s 139 of the Act for A.Y. 2010-11 on 31.07.2010 which was processed u/s 143(1) of the Act. At the time of search action on 05.02.2014, no assessment/reassessment proceedings were pending nor abated. It is a settled law that as per the provision of section 153A, assessments/reassessments already finalized do not abate meaning thereby that they attain finality which cannot be disturbed unless some incriminating material are gathered during the course of search. Further completed assessments can be 10 interfered with by the AO while making the assessment u/s 153A only on the basis of incriminating material unearthed during the course of search. We find that CIT(A) while deciding the issue has given a finding that the additions made by the AO on account of unexplained credit and unexplained investment are not based on any incriminating material found during the course of search. We find that Hon'ble Delhi High Court in the case of Kabul Chawla (supra) has held that when the documents that were seized had no relevance or bearing on the income of the assessee for the relevant assessment years and could not possibly reflect any undisclosed income, the provision of Section 153C of the Act would not be applicable. Before us, no fallacy in the findings of CIT(A) has pointed out by Revenue. We, therefore, find no reasons to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed.
17. In the result, appeal of the Revenue is dismissed.
Now we take up ITA Nos.8989 & 8990/Del/2019 for A.Ys. 2012-13 & 2013-14 :
18. Before us, both the parties submitted that facts and issue involved in both the appeals are identical, therefore, the arguments made by them while arguing one appeal would be applicable on other year also. We therefore proceed with the facts for A.Y. 2012- 13 (ITA No.8989/Del/2019). 11
19. AO had noted that during the course of search proceedings at the premises of Shri Rakesh Kumar Yadav, incriminating documents were found which contained numerous transactions in respect of receipt and payments pertaining to the assessee (which are tabulated by AO under para 3 of his order). AO noted that assessee did not provide required explanation or documentary evidence to substantiate the genuineness of unaccounted and unexplained transactions amounting to Rs.4,07,00,000/-. He accordingly treated Rs.4,07,00,000/- as unexplained income and made its addition.
20. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), apart from challenging the issue on merits, assessee also challenged the validity of proceedings. CIT(A) after considering the submissions of the assessee, the remand report and assessee's reply to the remand report held that the assumption of jurisdiction u/s 153A/153C of the Act was not in accordance with law. Since CIT(A) held the assumption of jurisdiction to be not accordance with law, he did adjudicate on merits the additions. The relevant findings of CIT(A) is as under:
"6.10 In view of the facts of the case, provisions of the Act applicable and the judicial pronouncements discussed above, following observations are made with regard to the Notice u/s 153C r.w.s. 153A issued to the appellant for the years under consideration:-
(i) It is apparent from the satisfaction note recorded in the case of the appellant that documents seized in the search of M/s Antriksh Group do not belong to Sh. Ajit Singh, but some other person, Sh. Rakesh Yadav in this case.12
(ii) In this connection, it is pertinent to mention section 292C of the Act places presumption that the material found during the course of search belongs to the searched person and the contents of such books of account and other documents are true. So it is the obligation of the AO as well as the searched person to prove that the incriminating material found during the course of search in fact does not belong to the searched person, but belonged to the other person. Therefore, unless there is satisfaction recorded with valid reasons it cannot be simply presumed that the seized material does not belong to the searched person, but in fact belonged to the other person.
Therefore, satisfaction of the assessing officer of the searched person is mandatory requirement to transfer the records and to hold that the incriminating material found in the premises of the searched person in fact belonged to such other person.
(iii) The AO in the satisfaction note has not listed the documents which were to be handed over to the AO of the person (appellant in this case) to whom the said document "belongs" as per provisions of section 153C of the Act.
(iv) Unless and until, it is established that the documents do not belong to the searched person, the provisions of section 153C of the Act do not get attracted as the satisfaction note itself must display the reasons or basis for the conclusion that the AO of the searched person is satisfied that the seized documents belong to a person other than the searched person. These conditions have not been established in the satisfaction note of the appellant recorded by the AO for the years under consideration.
(v) The contention of the JCIT, Central Range in the report sent during the appellate proceedings that the provision of section 153C of the Act has been amended with effect from 01.06.2015 and the issue may be considered as per the amended provision cannot be accepted as the search in Antriksh Group of cases was conducted on 05.02.2014 and the change brought about by the prospective amendment in section 153C of the Act w.e.f. 1st June 2015 is that for initiating proceedings under section 153C arising from searches after that as held by Hon'ble Delhi High Court in the case of Canyon Financial Services. In the present case, since 13 the proceedings u/s 153 of the Act arises from search conducted before 1st June 2015. AO had the burden of showing that the seized document in fact belongs to (and not merely pertain to) the appellant.
Keeping in view the facts and circumstances of the case as discussed above and respectfully following the decision of Hon'ble Courts as discussed in the order and Hon'ble Supreme Court in the case of CIT v/s Singhad Technical Education Society, wherein it was held that document seized 'should belong to a person other than person referred to in section 153A of the Act', it is held that assumption of jurisdiction u/s 153C of the Act is not in accordance with law and hence held to be erroneous.
6.11 Further, in view of the above discussion, the additions which have been made by the AO on the basis of documents related to the appellant and not belonging to him during the years under consideration in case of the appellant are discussed as hereunder:-
AY 2011-12
(i) Addition of Rs. 25,00,000/- on account of unsecured loan is not based on any incriminating document found during the search.
(ii) Addition of Rs. 80,00,000/- on account of unaccounted transactions has not been made on basis of any document belonging to the appellant. It has been done on the basis of documents found during search at the premises of Sh. Rakesh Yadav, wherein cash transactions with appellant were recorded.
AY 2012-13
(i) Addition of Rs. 4,07,00,000/- on account of unaccounted transactions has not been made on basis of any document belonging to the appellant. It has been done on the basis of documents found during search at the premises of Sh. Rakesh Yadav, wherein cash transactions with appellant were recorded.
AY 2013-14 14
(i) Addition of Rs. 3,00,00,000/- on account of unaccounted transactions has not been made on basis of any document belonging to the appellant. It has been done on the basis of documents found during search at the premises of Sh. Rakesh Yadav, wherein cash transactions with appellant were recorded.
As the appeal has been decided on legal grounds with regard to assumption of jurisdiction by the AO to issue notice u/s 153C r.w.s 153A, other grounds are not adjudicated."
21. Aggrieved by the order of CIT(A), Revenue is now before us.
22. Before us, Learned DR supported the order of lower authorities.
23. Learned AR on the other hand reiterated the submissions made before the AO and CIT(A) and supported the order of CIT(A).
24. We have heard the rival submissions and perused the material available on record. In the present appeal Revenue is challenging the setting aside of assessment proceedings by CIT(A). We find that CIT(A) while deciding the issue in favour of the assessee has given a finding that on the basis of satisfaction note recorded and the document seized in the search of Antriksh Group, the documents found did not belong to assessee but it belonged to Shri Rakesh Yadav. He has further given a finding that AO in the satisfaction note has not listed the documents which were handed over to the AO of the assessee to whom the said documents belonged as per the provision of section 153C of the Act. Before us, Revenue has not pointed to any fallacy in the 15 findings of CIT(A) nor has placed on record any contrary binding decisions in its support. In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed.
25. In the result, appeal of Revenue is dismissed.
26. As far as ITA No.8990/Del/2019 for A.Y. 2013-14 is concerned, before us, both the parties have submitted that the issue raised in the appeal for A.Y. 2013-14 is identical to that of A.Y. 2012-13. We have hereinabove while deciding the appeal for A.Y. 2012-13 for the reasons stated therein have dismissed the grounds of Revenue and thus the appeal of the Revenue was dismissed. We therefore for similar reasons also dismiss the grounds of the Revenue for A.Y. 2013-14. Thus the appeal of the Revenue is dismissed.
27. In the result, appeal of the Revenue is dismissed.
28. In the combined result, all the three appeals of the Revenue are dismissed.
Order pronounced in the open court on 30.09.2022 Sd/- Sd/-
(NARENDER KUMAR CHOUDHARY) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date:- 30.09.2022
PY*
16
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI