Income Tax Appellate Tribunal - Chandigarh
Smt. Reena Gambhir, New Delhi vs Pr. Commissioner Of Income Tax, Gurgaon on 21 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.901/Chd/2015
(Assessment Year : 2007-08)
Smt.Reena Gambhir, Vs. The Principal C.I.T.,
N-56, Panchsheel Park, Gurgaon.
New Delhi.
P A N : AAGPG8771N
(Appellant) (Respondent)
Appellant by : Shri Parikshit Aggarwal, CA
Respondent by : Shri Ravi Sarangal,CI T DR
Date of hearing : 29.08.2017
Date of Pronouncement : 21.09.2017
ORDER
PER ANNAPURNA GUPTA, A.M.:
Th i s a p p e a l h a s b e e n p r e f er r e d by t h e a s s es s e e ag a i n st t h e o r d e r o f L d. P r i n c i p al C o mm i s s i o n e r o f I nc o m e Ta x ( C e n t r a l ) ( h er e i na f t e r re f e r r ed to a s Ld . P r . CI T) , G u r g a o n dated 3 .1 1 . 2 0 15 relating to a s s e s s m e nt y e ar 2007-08 p a s s e d u n d er s ec t i o n 2 6 3 o f t he I n c om e Ta x A c t , 1 9 6 1 ( i n s h o r t ' t he A c t ') .
2. Th e b r i e f f a c t s l e a d i n g t o t h e pre s e n t a p pe a l a re t h a t , pursuant to s ea r c h c o n d uc t e d on the a s s es se e , i n i t i a l l y a s s e s s m e nt o r der u / s 15 3 A ( 1 ) ( b ) o f t he A c t w a s p a s s e d on 3 1 . 1 . 2 0 1 4 f or t he i m p u g n e d a s s es s m e n t y e a r . Th e r e a f t e r o n examining the records, the Ld . P r . CI T found that the a s s e s s e e h ad r e ce i v e d t w o g i f t s of R s . 1 0 l a c s an d R s . 5 l a c s d u r i n g t h e y e ar f r o m M / s R a m e sh C h a n d r a K a p oo r & S o ns ( H U F ) , w h i c h a cc o r d i n g t o hi m w a s t a x a b l e i n th e h a n d s o f 2 t h e a s s e s s e e a s p e r t h e p r o v i si on s o f s e c t i o n 5 6 o f t h e A c t . H e f o u n d t h a t th e A s s e ss i n g O ff i c e r h ad f a i l e d t o t a x t h e s a m e a n d t h e r e fo r e , t h e r e w a s a p r i m a f a c i e ca s e o f t h e a s s e s s m e nt o r d er b e i n g e r ro n e o us a s w e l l a s pr e ju d i c i a l t o t h e i n t e r es t o f th e r e v e n u e. A c co r d i n g l y , n o t i c e u / s 2 6 3 of t h e A c t w a s i s s ue d t o t h e a s s e s se e t o s h o w c a u s e a s t o w h y t h e a s se s s m e nt s h o u l d n o t be re v i s e d u / s 26 3 o f t h e A c t . I n re s p o n s e th e a s s e s s e e s ta t e d t h a t t h e i m pu g ne d g i f t w a s n o t t a x a bl e a n d r e l i e d u po n t he j u d g m e n t o f th e R a j k ot Bench of the I . T. A . T. in the case of Vi n e e t k u m ar R a g h a v j i bh a i , Bh a l o d i a V s . I TO , 1 4 0 TTJ 5 8 i n th i s r e g ar d . Th e L d . P r . CI T rejected the c on t e n t i o n of the assessee, d i s t i n g u i s h i n g t he c a s e l a w r e l i ed u p o n b y t he a s se s s e e a n d h o l d i n g t h e gi f t t o b e t a x a b l e i n t h e h a n ds o f t h e a s s e s s ee. Th e L d . P r . CI T th e r e a f t e r d i r ec t ed t h e As s e s s i n g O f f i c er t o e n h a n c e th e i n com e o f t h e a s s e sse e b y R s .1 5 l a cs .
3. A g g r i e v e d b y t he s a m e , t h e a s s e ss e e h a s f i l e d p r es e n t a p p e a l b ef o r e us r a i s i n g f o l l o wi n g g r o u n d s :
"1. That the order of the Id. Principal Commissioner of Income tax(Central)(PCIT), Gurgaon passed on 3.11.2015 was illegal, erroneous, perverse and thus uncalled for.
2. That the Id. PCIT is not justified in invoking the provisions of section 263 of the Income tax Act, 1961, which is void ab-initio and thereby holding the order passed by the Id. Assessing Officer (AO) u/s 153A(l)(b) of the Income tax Act, after perusing for complete details as even filed along with the Income tax return and after due application of mind and perusing the concerned provisions of Income tax Act, 1961.3
3. That section 263 of the Act. confers power to examine an assessment order so as to ascertain whether it is erroneous and prejudicial to the interest of the revenue but does not confer jurisdiction to substitute his opinion for the opinion of the AO.
4. That gift of Rs.15.00 lacs made under Gift Deed between Karta of (HUF)Mr.Ramesh Chander Kapoor (father) for her daughter(appellant) Smt.Reena Gambhir out of natural love and affection. Surjeet Lai Chhabda v CIT (1975) 101 ITR 776 (SC) recognize HUF constitutes all persons lineally descended from a common ancestor. All these persons fall in the definition of relative as provided in explanation to clause (vi) of section 56(2) of the Act. HUF is a group of relatives.
5. That section 56(2)(vi) along with the explanation to that section and on understanding the intention of legislature from the section it could be seen that a gift received from relative, irrespective of whether it is from individual relative or from a group of relatives is exempt from tax as a group of relatives also falls within the explanation to section 56(2)(vi) of the Act. It is not expressly defined in the explanation that the word relative represent a single person.
6. That section 6 of the Hindu Succession (Amendment) Act, 2005, express that devolution of interest in coparcenaries property, the daughter of coparcener shall a) by birth become a coparcener in her own right in the same manner as the son;
b)have the same rights in the coparcenaries property as she would have had if she had been a son; (c) be subject to the same liabilities in respect of the said coparcenaries property as that of a son.
7. That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal."
4. A s i s e v i d e nt f r om t h e g r o u n ds of a p p e a l r ai s e d be f o r e u s , t h e a s s e ss e e h a s c o n t e s t ed t h e o r d e r p a ss ed o n b o t h t h e l e g a l i s s u e of a s s u m p t i o n o f j u r i s d i c ti o n u / s 2 6 3 o f t h e 4 A c t a s w e l l a s on t h e m e r i t s o f th e c a s e o f m a k i n g a d d i t i o n o f t h e i m p u g n e d g i f t i n t h e h a nd s o f t h e a s s e s s ee .
5. W e s h a l l f i r s t b e d e a l i ng w i t h the l e g a l g r ou n d ra i s e d b y t h e a s s e s s ee i n g r o u nd N o .2 . B e f o r e u s Ld Co u n s e l fo r t h e a s s e s se e f i rs t c o n t e n de d t ha t t h e o r d er p a ss e d b y t he A s s e s s i n g O f fi c er c o u l d n o t b e h e l d t o b e e r r o ne o u s a t a l l since t h e A O c o u l d n o t h a v e m a d e t h e i m p u g n ed a d d i t i on i n t h e s a i d o rde r a s p e r l a w. Th e L d . c o u n s e l f o r t h e a s s e s s e e p o i n t ed o u t t h a t t h e i m p u g n e d o r de r h a d b e e n passed u/s 1 53 A of the Act in pursuance to search c o n d u c t e d o n t he a s s e s s e e . H e t h e r e a f t er p o i n t ed o u t t h at a s o n t h e d a t e o f i n i t i a t i o n o f s e a r c h , a s s es s me n t s t o od c o m p l e t e d s i n ce t h e time p e ri od for i s s u i n g no t i c e u /s 1 4 3 ( 2 ) o f t h e Ac t h a d e x p i r e d . Th e L d . c o u n s el f o r a s s e s s e e t h e r e a f t er s t at e d t h a t i n s u ch c as e s a d d i t i o n i n as s e s s m e n t framed u/ s 1 53A could be mad e only on th e basis of i n c r i m i n at i n g ma t e r i a l f o u n d d ur i n g t h e c o u r s e o f s e a r c h w h i c h i n t h e pr e s e n t c as e w a s a b s e n t vi s - à - vi s t h e g i ft r e c e i v e d b y t h e as s e s s e e . Th e r e for e , a d d i ti o n o n ac c o u n t o f t h e s a i d g i ft s c ou l d n o t h a v e b e en m a d e i n a ny ca s e i n t he o r d e r p a s s ed u /s 1 5 3 A a n d a s su m p t i o n o f ju r i sd i c t i o n b y the L d . P r . CI T holding the o rd e r passed u/s 153A as e r r o n e o u s o n t hi s c o u n t i s , t h er e f o r e , i n c o r re c t. Th e L d . c o u n s e l f o r a sse s s e e d re w o u r a t t e n t i o n t o t he f o l l o wi n g f a c t s t o s u b s t an ti a t e i s p l e a d i ng s :
a) A s s e s s m e nt y e a r i n v o l v e d 2 0 0 7 - 08
b) R e t u r n f o r t h e i m p u g n e d a s s ess m e n t ye a r w a s
f i l e d o n 3 1 - 0 7- 20 0 7 .
5
c) Th e d a t e f o r i s s u i n g n o t i c e u / s 1 4 3 ( 2 ) e x p i r ed o n
30-09-08 and no notice was issued to t he
assessee.
d) S e a r c h co n d u c ted o n t h e a s s e s see o n 8 . 9 .2 0 1 1
6. Th e L d . c o u n s e l f o r a s s e s s e e p o i n t e d o u t t h at t h e above facts c l ea r l y show that the a s s e s s m e nt for the i m p u g n e d y ea r st o o d c o m p l et e d o n t h e d a t e o f i n i t i a t i o n o f search. Th e L d . c o u n s e l f o r a ss e s s e e t h e r e af t er d r e w o u r a t t e n t i o n t o t h e f a c t t ha t i n a num b e r o f c a s e s t he H o n ' b l e C o u r t s h a v e h e l d t h a t i n ca s e o f c o m pl e t e d a ss e s s m e n t s, a s s e s s m e nt u / s 1 5 3 A c o ul d b e m a d e o n l y o n t he b a s i s o f i n c r i m i n at i n g mat e r i a l fo u n d d ur i n g t h e c ou r s e of s e a r c h .
1) C I T V s . Ka b u l Cha w l a , 3 8 0 I TR 5 73 ( D e l )
2) Th e P r i n c i p a l CI T V s . L a t a J a i n
I TA N o . 2 74 / 2 0 1 6 o r d e r d at e d 2 9.4 . 2 0 1 6 ( De l )
3) D CI T V s . Ti m e s F i n v e s t & C o m me r c e L t d . & A n r.
( 2 0 1 5 ) 4 5 C H 3 24 ( C h d . Tr i b . )
7. Th e L d . c o u n s e l f o r a s s e s se e a l s o p o i n t e d o u t t h at t h e order of t he L d . P r .CI T m ak e s no m e n t i on of any i n c r i m i n at i n g ma t e r i a l re l a t i ng to t h e g i ft s r e ce i v e d b y t he assessee fo u n d during the c ou r s e of s e ar c h . Th e Ld. c o u n s e l f o r as s es s e e s t at e d th a t t h e o rd e r of t h e A s s e s s i n g Officer was, t he r e f o r e , not e rr o n e o u s at all and the L d . P r . CI T h a d e r r e d i n a s s u m i n g t h e j u r i s d i ct i o n u / s 2 6 3 o f t h e A c t . R e l i a n ce w a s pl a c e d o n t h e d e c i s i o n of th e H o n ' bl e D e l h i H i g h C o urt i n t h e c a s e o f P r . CI T v s . S h r i . M a h e s h Kumar Gupta in I TA 810/2016 & CM Nos.43256- 4 3 2 5 7 / 2 0 1 6 d t . 22 - 1 1 - 2 0 1 6 i n t hi s r e g a r d .
6
8. Th e Ld. DR, on the other h an d stated that non- i n c l u s i o n o f g i ft w h i c h w a s c l e ar l y t a x a bl e i n the h a n d s o f t h e a s s es s e e u/ s 5 6 o f t h e Ac t , ta n t a m o n t ed t o e rr o r h a v i n g b e e n c r e p t i n th e o r d e r o f t h e A s s e s s i n g O f f i c e r w h i c h c a u s e d p r e j u d i ce t o t h e i nt e r e st o f t h e R ev e n ue a n d t he a s s u m p t i on o f ju r i s d i c t i o n b y t he L d . P r . CI T w a s , t h e r e f o r e, valid.
9. H a v i n g he a r d bo t h t h e p a r t i e s w e f i n d m e r i t i n t h e c o n t e n t i on o f t he L d . c o u n s el f or a s s e ss e e . U nd i s p u t e d l y, t h e a s se s s m e nt o r d e r wh i c h h a d b e e n h e l d t o b e e r r o n eo u s by the L d . P r. CI T was p a s s ed in pursuance to search c o n d u c t e d, u / s 15 3 A o f t h e A c t . A l s o i t i s n o t d i sp u t e d t h a t a s o n t h e d a te o f i n i t i a t i on o f s e ar c h t h e a s se s s me n t f o r t h e i m p u g n e d y ea r s t o o d c o m p l e t e d. Th e A s s e s s i ng O f f i c e r , t h e r e f o r e, c o u l d h a v e m a d e a d d i t i o n i n t h e o r d e r pa s s e d u / s 1 5 3 A o f t h e A c t o n l y o n t h e b a si s o f i n c r i mi n a t i ng m a t e ri a l f o u n d d u r i ng t he c o u r s e o f s e ar c h . V a r i o u s de c i s i o n s o f H o n ' b l e H i g h C ou r t a n d I TA T C h a n d i g a r h B e nch h a v e l a i d d o w n t he a b ov e p r o p o s i t i o n . Th e H o n ' bl e D el h i H i g h C ou rt in the c a s e o f Ci t v s K a b u l C h a wl a ( 2 0 1 6 ) 3 8 0 I TR 5 7 3 ( D e l ) l a i d d o w n t h i s p ro p o s i t i o n h o l d i ng a s u n d er "On a conspectus of Section 153A(1) read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges was that, firstly, once a search takes place u/s 132, notice u/s 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Secondly, Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. Thirdly, AO will exercise normal assessment powers in respect of the six years previous to the 7 relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". Fourthly, Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post- search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." Fifthly, In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153A was relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. Sixthly, Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment u/s 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. Seventhly, Completed assessments can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."
10. Th e s a m e w a s r ei t e r a t e d i n t h e f o l l o w i n g d ec i s i o ns a l s o PRINCIPAL COMMISSIONER OF INCOME TAX vs. SAUMYA CONSTRUCTION P. LTD.(2016) 387 ITR 0529 (Guj) PRINCIPAL COMMISSIONER OF INCOME TAX vs. MS. LATA JAIN (2016) 384 ITR 0543 (Delhi) PRINCIPAL COMMISSIONER OF INCOME TAX vs. DEVANGI ALIAS RUPA (2017) 98 CCH 0051 Guj HC
11. H a v i n g s a i d s o w e f u r t h e r f i nd t h a t t h e o r d e r of t h e L d . P r . CI T p a s se d u / s 2 63 o f t h e A c t f i nd s n o m e nt i o n o f a n y i n c r i m i n at i n g ma t e r i a l f o u n d d ur i n g t h e c o u r s e o f s e a r c h r e l a t i n g t o i m pu g n e d g i ft s . I n f a c t , t he L d . co u n s e l f or a s s e s s e e h a s dem o n s t r a t ed b e f o re u s t h a t i t w a s d u r i n g t h e course of a s s es s m e n t p ro c e e di n g s u/s 153A that a 8 q u e s t i o n na i r e wa s i s s u e d t o the a s s e s s e e d at ed 7 . 8 . 2 0 1 3 a s k i n g th e a ss es s e e t o f i l e d e ta i l s o f a n y g i f t m a d e or r e c e i v e d d ur i n g t h e i m p u g n ed y ea r , in response to which t h e a s s e s se e h a d f i l e d t h e c op y o f c a p i t a l a c co u n t d i s c l o s i ng t h e i m p u g n e d g i ft s r e c e i v e d f r o m R a m e s h C h a n d er K a p o o r & Sons (HUF). I t i s e v i d e n t , t h er e f o r e , t h a t i t w a s o n t h e b a s i s o f t h i s i nf o r m a t i o n w h i c h w a s p r o c u r ed d u r i n g t he c o u r s e o f as s e s sm e n t p ro c e e d i n gs a n d n o t o n the b a s i s o f any i n c r i mi n a t i n g material f o un d during the course of s e a r c h wh i c h l e d t h e L d. P r . CI T t o b e l i e v e t h a t a n e r r o r h ad c r e p t i n t h e o rd er o f t h e A s s e s si ng O f f i c er .
12. W e t h e r e fo r e a gr e e w i t h t h e L d . c o u n s e l fo r a s se s s ee t h a t s i n c e n o i n fo r m a t i o n r e l a t i ng t o t h e i m p u g n ed g i f t s w a s f o u n d d u r i n g t he c o u r s e o f s e ar c h t h e A s s e s s i n g O f f i c er c o u l d n o t h av e m a d e a n y a d di t i o n v i s - à - vi s t h e s a i d g i f t s i n t h e o r d e r p as s ed u / s 1 5 3 A a nd , t h e r e f or e , t he L d . P r . CI T cannot now hold the order of the Assessing Officer as e r r o n e o u s fo r n ot m a k i n g a d d i t i on o n a c c o u n t o f t h e s a m e . Th e H o n ' b l e D e l h i H i g h C ou r t i n t h e c a s e of CI T v s M a h e sh G u p t a ( s u pr a ) h as i n i d e n t i c a l fa c t u a l m a t ri x , w h e r e t h e o r d e r s ou g h t to b e r e vi s e d wa s p a s s e d u / s 153 A a n d th e addition so u g h t to be made was not b a se d on a ny i n c r i m i n at i n g ma t e r i a l f o un d during s e a r ch , held the a s s u m p t i on o f ju r i s d i c t i o n b y t he CI T u / s 2 63 as b a d . Th e r e l e v a n t p o rt i o n o f t h e o r d e r o f th e H o n ' b l e H i g h C o u r t i s a s under:
1. The Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) and urges that the impugned order, inasmuch as it upset and set aside the addition 9 made by the Commissioner of Income Tax (CIT) in exercise of the powers under Section 263 of the Income Tax Act, 1963 (in short the Act) bringing to tax certain amounts as "deemed dividend" under Section 2(22)(e) of the Act, was erroneous.
2. The brief facts of the case are that further to search and seizure proceedings the assessee filed its returns under Section 153A of the Act. The assessment was completed by the Assessing Officer (AO). The jurisdictional CIT was of the opinion that the assessment order was both prejudicial and erroneous to the interest of the Revenue and directed its revision inasmuch as an addition under Section 2(22)(e) of the Act was mandated. The assessee successfully appealed to the ITAT.
3. The ITAT concluded based upon the materials available that the search and seizure operations did not yield any fresh material warranting addition under Section 153A of the Act, and therefore, could not clothe the CIT with the authority to add an amount on the basis of a fresh appraisal of the existing materials that formed part of the original assessment. It is urged by the Revenue that CIT acted within his jurisdiction in concluding that the AO erroneously did not bring to tax the amount that had to be included under Section2(22)(e)facially itself, therefore, the CIT's order was justified, consequently, the ITAT should not have interfered with that determination.
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 willfully derived or had been deemed or otherwise withheld from the assessment an addition under Section 153 A 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 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
6. For the above reasons, we are of the opinion that no questions of law arise. The appeal is, therefore, dismissed."
13. F o r t h i s r e a s o n a l o n e w e h o l d th a t t h e L d . P r .CI T h a s e r r e d i n a s s um i n g t h e j u r i s di c t i o n u / s 2 6 3 o f th e A c t t o revise the order of the Assessing Officer. W e , t h er e f o r e , s e t a s i d e t h e o r d e r of t h e L d .P r . CI T.
14. S i n c e w e ha v e he l d t h e a ss u m p ti o n o f j u ri s d i c tio n b y t h e L d .P r . CI T u /s 2 6 3 o f th e Ac t t o be i n va l i d , w e d o n o t c o n s i d e r i t n e ce ss a r y t o d e a l w i t h t h e m e r i t s o f t he a d d i t i o n m a d e s i n c e i t wo u l d o n l y b e a n a c a d e m i c e x e r c i se . Nor do w e c o n s i d e r i t n e c e s s a r y t o d ea l w i t h o t h e r l e g al g r o u n ds r a i s e d b y t h e ass e s s e e . I n v i e w o f t h e a bo v e , th e a p p e a l of t h e a s s e ss e e s tan d s a l l o we d .
15. I n t h e r es u l t , t h e a p p e a l of t h e a ss e s s e e i s a l l o w ed .
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 21 s t September, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh
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