Income Tax Appellate Tribunal - Chandigarh
Deputy Commissioner Of Income Tax ... vs Amarjit Singh , Bathinda on 6 March, 2025
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'A' CHANDIGARH
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 774/CHD/2023
नधा रण वष / Assessment Year: 2019-20
The DCIT, Shri Amarjit Singh,
Central Circle-2, Vs 76, Green Avenue,
Ludhiana. Improvement Trust Colony,
Opp. Rose Garden, Bathinda.
थायी लेखा सं./PAN NO: AJNPS6631H
अपीलाथ /Appellant यथ /Respondent
&
C.O. No. 07/CHD/2024 in
आयकर अपील सं./ ITA No. 774/CHD/2023
नधा रण वष / Assessment Year: 2019-20
Shri Amarjit Singh, The DCIT,
76, Green Avenue, Vs Central Circle-2,
Improvement Trust Colony, Ludhiana.
Opp. Rose Garden, Bathinda.
थायी लेखा सं./PAN NO: AJNPS6631H
अपीलाथ /Appellant यथ /Respondent
Assessee by : Shri Pankaj Bhalla, CA
Revenue by : Shri Rohit Sharma, CIT DR
Date of Hearing : 04.02.2025
Date of Pronouncement : 06.03.2025
HYBRID HEARING
ORDER
PER RAJ PAL YADAV, VP The Revenue is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 2 short 'the CIT (A)'] dated 25.09.2023 passed for assessment year 2019-20.
2. On receipt of notice in Revenue's appeal, assessee has filed Cross Objection bearing No. 07/CHD/2024.
3. The assessee has raised 7 grounds in his Cross Objection, however, ld. Counsel for the assessee did not press Ground No. 3 and 6 at the time of hearing. Hence, both the grounds are rejected. Ground No. 7 is general ground which does not call for recording of any finding.
4. I n G r ou nd N o . 1 o f t he C r os s O bj e c ti o n, a s s e s s e e ha s pl e a de d t ha t ld. CI T( A) ha s r i g ht l y pa s s e d or de r und e r Se c t i o n 2 50 o f th e I nc o m e Tax A c t a nd de l e t e d t h e a dd i ti on o f Rs . 9, 65 , 71, 414 /- . Si m i l ar ly, i n G r o und N o. 5 , t h e assessee ha s pl e a d e d t ha t C I T( A) ha s ri g ht l y de l e t ed a dd i ti on m a de u nde r Se c t i o n 68 r e ad w i t h Se c t i o n 11 5B B E a m o unt i ng t o th e t u ne o f R s . 9, 65, 71, 41 4/- . I n o t her w or ds , bo t h t he g r o unds ar e i n s u ppo r t o f t he C I T( A) 's f i ndi ng . I f w e pe r us e s u b- c l au s e ( 4) of Se c t io n 2 53 o f t h e I nc om e T ax A c t , i t pr o v i d e s t hat t h e AO or t he a s s es s e e , as ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 3 t he c a s e m a y b e , on r e c e i pt of n oti c e t ha t a n ap pe a l a g ai ns t t he or de r of t he CI T( A) has be e n pr e fe r r e d und e r s ub - s e c t i o n ( 1) o r s ub- s e c t i o n ( 2 ) by t he ot he r pa r ty, m a y no t wi t hs t a ndi ng t ha t he m a y no t be a pp e al e d a g ai ns t s uc h o r d e r , or a ny p ar t t he r e o f, w i thi n 3 0 d ays o f r e c e i pt o f t he no t i c e , fi l e a M e m or a ndum of C r o s s O bj e c t i o n an d i n o t he r w or ds , a r e s p o nde nt c o ul d fi l e a C r os s O bj e c t i on wi t hi n 30 da ys o n r e c e i p t o f no t i c e i n a n a pp e al . T hi s c l a us e f ur t he r c o nt e m pl a t e s tha t t hi s C ro s s O b j e c ti on s ho ul d be a ga i ns t a ny p ar t of t he o r d e r of t he C I T( A). I t m e a ns i t i s t o be f i l e d a g g r i e v e d w i t h a ny par t o f t he or d e r. No Cr o ss O b j e c ti o n i s ma i nt ai n ab l e q ua i n s upp o r t of t h e or d er . H e n c e , t he s e g r o unds c o ul d ha v e no t be e n r a i s e d i n t he C r o s s O bj e c t i on . Ac c o r d i ng l y, Gr o un d N o. 1 an d 5 a r e rejected.
5. G ro un d N o . 2 a nd 4 ar e i nt er - co nne c t e d w i th e ac h o t he r . I n t h e s e g r o un ds , a s s e s s e e ha s c ha l l e ng e d t he v e r y j u r i s di c t io n o f t he AO f o r pas s i ng a n a s s e s s m e nt o r d e r und e r Se c t i o n 15 3A r e a d w i t h Se c t i on 14 3( 3) o f t he I nc o m e Ta x Ac t .
ITA No.774/CHD/2023
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6. I n b ri e f, f a c t s o f t he c a s e a r e , a s e a r c h & s e i z ur e o pe r a ti o n was c ar r i e d o ut upo n t he pr e m i s e s of t he a s s e s s e e o n 26 . 02 . 2 02 0. Ac c o r di n g t o t he AO , a s s e s s e e be l o ng s to H om e Li ne Gr o up of Ca s e s , M o hal i . A s i m ul t a ne o us se a r c h w a s co nd uc t e d o n t he pr e mi s e s of o ne S hr i K ap il R o m a na o n w ho s e p r e m i s e s a d o c um e n t he a di ng " B TD 20 11 " w a s f o und an d s e i z e d . A c c o r d i ng t o t he AO , t hi s d oc um e nt e x hi bi t s an o ut s t a nd i ng l oa n t a ke n from o ne Shr i " Ha pp y Jee" at Rs . 11 , 45, 7 8, 645 /- is a v ai l a bl e . T he AO w a s of t he v i e w t ha t a s s e s s e e m us t hav e a dv a nc e d t hi s l oa n t o Shr i Ka pi l R om a na w hi ch i s r ec or de d i n s a i d l e d g e r. The r e f o r e, o n t he b as i s o f t hi s d ocu m e nt , t he AO c o n f r o nt e d t he a s s e s s e e t o e xp l ai n t he s o ur ce of s uc h l o a ns a dv a nc e d by hi m to Shr i K a pi l R om ana . The a s s e s s e e ha s s ub m i tt e d t ha t t hi s d o c um e nt w as n ot i n hi s ha nd w r i ti n g . I t w a s no t f o und f r o m hi s po s s e s s i o n. I t is i n t he han dw ri ti ng of s o m e o t he r pe r s o n, i t w as f o un d f r om t he po s s e s s i on o f t hi r d p e r s o n. H e ha s no c o nn e c t i o n wi t h a ny s u c h t r an s ac ti o n. W e wi ll b e d e a li n g w i th t hi s i s s u e o n m e r i t w hi l e t a ki ng up t he a ppe al of t he r e v e nue b ut f o r ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 5 a li m i t e d pur po s e , i t s r ef e r e nc e i s b e i ng m e nt i o ne d he r e be c aus e ac c or di ng t o t he as s e s s e e , t h e as s e s s m e n t ha s be e n f r am e d u nde r Se c t i on 15 3A a nd d o c um e n t s f o und du r i ng t he s e ar c h of a t hi r d pe r s o n i s b ei ng us e d by t h e l d . AO f or m a ki ng a n a d di t i o n o n t he ba s i s o f a do cum e n t s e i z e d f r om t hi r d p e r s o n, a n a s s e s s m e nt o u g ht to hav e be e n p as s e d u n de r Se c t i o n 1 53C o f t he I nc o m e Ta x Ac t . I n o t he r w o r d s, AO o ug ht t o ha v e f o ll o w e d t he p r o c e d ur e c o nt e m pl a t e d in Se c t i o n 15 3C o f t he I nc o m e Ta x Ac t . The l d . C o uns e l f or t he as s e s s e e dr e w o ur a t t e nt i on to w ar ds Se c t i o n 15 3C a nd th e r e a f t e r s ub m i t t e d that s i nc e AO f ai l e d to a dh e re t hi s p r o c e d ur e , he nc e h i s as s e s s m en t o r d e r i s no t s us t a i na bl e. I n sup po r t of hi s co nt e n t i o n, he r e li e d up o n t he j ud g e m e nt of Ho n'b l e Ka r na t ak a High C o ur t i n t h e c as e o f CI T, B anga l or e Vs I B C Kno wl e dge P a r k Pv t . L t d. r e po r t e d i n ( 2 016 ) 69 t a x m a nn. c om 1 08 ( Kar ), c o py o f t hi s j udg e m e n t h as b e e n pl ac e d i n t h e Pa pe r Bo o k a t pa g e No . 72 to 9 1.
6. 1 Si m i l ar l y, he r e l i e d up on the j ud g e m e nt o f I TAT C ha ndi g ar h i n t he c a s e o f S hr i Tar s e m S i ng l a Vs C I T- ITA No.774/CHD/2023
& C.O. 07/CHD/2024 A.Y.2019-20 6 C e nt r al , i n I TA No . 2 63 /CH D /201 2, c op y i s pla c e d at p ag e N o . 92 t o 1 08. H e f ur t he r r e l i e d up o n t he o r d e r of t he I T AT i n t h e c a s e o f G a ne s h B ui l de r s Vs CI T pa s s e d i n I TA N o . 45 2/ CH D / 20 22. Co py of th i s or d e r i s bei ng pl ace d a t pa g e N o. 1 09 to 12 3. On t he strength of t he s e j u dg e m e nt s , l d. Co uns e l f or the a s s e s s e e c o nt e nd e d t ha t a s s e s s m e nt o r de r i s no t s us t ai na bl e i n t he p r es e nt f or m .
6. 2 T h e l d . CI T DR , o n t he o t her ha nd c o n te nde d t ha t s i nc e no t i c e u nd e r Se c t i on 1 53 A w as s e r v e d up o n t h e assessee as the assessee was also co v e r e d und e r the s e a r c h ac t i o n, t he r e f o r e, i t w as o pe n f or t he AO t o l oo k i n t o a ll t he r el e v an t m a t e r i al .
7. W e ha v e d ul y c on s i d e r e d t he r i v al c o nt e nt i o ns a nd ha v e pe r us e d t he r e c or d c a r ef ul l y. Se c t io n 15 3C ha s a di r e c t b e ar i ng o n t he c o nt r ove r s y. T he r e f or e , w e d ee m i t a pp r o pr i at e to t a ke no t e of t he r e l e v an t pa r t of t his Se c t i o n w hi c h r e ad a s und e r :
Assessment of income of any other person.
"153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,--ITA No.774/CHD/2023
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(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) 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, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A :"
8. A b a r e p e r us a l of t hi s Se c t ion w o ul d r e v e al t ha t if du r i ng t he c o ur s e of a s e ar c h, an y m o ne y, b ul l i o n, j e w el l er y or bo ok s of ac c oun t pe r t ai ns t o an y pe r s o n o t he r t ha n t he s e ar c h e d pe r s on , t he n A O o f t he s e a r c he d p e r s on w o ul d r e c or d hi s s at i sf a c ti on e x hi bi ti ng th e fact t hat income pe r ta ini ng to o t he r as s e s s e e has e s c a pe d a s s e s s m e nt . T he r e af t e r , he w ou l d tr a ns m i t t ha t s e i z e d m a t e r i al al o ng wi t h h i s s ati s f a ct i o n no t e to t h e AO ha v i n g t e r ri t or i al j ur i s di c t i o n o v e r s uc h o t he r pe r s o n, t he AO o f t he o t he r p e r s o n w o ul d al s o r e c o r d h i s s at is f a c t i on a nd i s s ue no t i c e un d e r Se c t i o n 15 3C o f t h e I nc om e Ta x Ac t . I n t he pr e s e nt c a s e , t he AO o f Shr i K ap il Ro m an a ha s no t ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 8 recorded a ny s a t i s fa c t io n t h at d o c um e nt 'BT D - 20 11 ' pe r t a i ns to t he a s s e s s e e . I t is a l e d g e r a c c ount o f Shr i K a pil Rom a na. At t he m o s t , i nf o r ma t io n c o nta i ne d i n t hi s do c um e nt p ar t ia ll y be p e r ta i nin g t o t he as s e s s e e . B ut i n bo t h t he c o ur se s , he ha s t o fi r s t r e c or d hi s s at i sf a c t i on t ha t i nc o m e p e r t ai ni n g to t he as s e s s e e S hr i Am ar ji t S i ng h ha s e s c ap e d a s s e s s m e nt a nd t he r e f o r e, he i s t r a ns m i t ti n g t he s e s e i z e d m a t e r i a l s to t he AO o f t he a s s e s s e e b ut no s uc h pr o c e dur e ha s b e e n f ol lo w e d. A s i mi l ar s i t ua t i o n has be e n de a l t w i t h b y H o n'bl e Kar na t a ka Hi g h Co ur t i n t he case of CI T Vs IBC Kn ow le d g e P ar k. T he r e l e v an t o bs e r v a t io ns c o nt a i ne d i n par ag r a ph N o. 49 t o 51 a r e w or t h t o b e n ote d w hi c h r e ad as un de r :
" 4 9. On a conjoint reading of the aforesaid provisions, it becomes clear that a search can take place only when a concerned officer has information and reason to believe that any person is in possession of any valuable assets, which has not been or would not be disclosed under the Act. In such a case, a search can take place. Following the search, if any books of account, other documents, any valuable assets is or are found in the possession or control of any person in the course of a search, then the books of account or other documents or valuable assets could be seized. Under Section 153A, the satisfaction regarding an inference of liability must be recorded. The Assessing Officer has to issue notice to the assessee i.e., the person searched for the purpose of assessment or reassessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Section 153C as already noted, deals with assessment of income of any other person, when the Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to under sub-section(l) of Section 153A of the Act. In such a ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 9 case, the Assessing Officer has to issue notice to assess or reassess income of other person under Section 153A of the Act. Thus, the fact that search has been conducted would not justify issuance of notice under Section 153A. If it is only during a valid search when certain incriminating materials are detected, notice could be issued.
50. Chapter XIV-B which deals with special procedure for assessment of search cases deals with undisclosed income as a result of search, the computation thereof and such other provisions. Undisclosed income is defined in Clause (b) of Section 153B. Undisclosed income includes money, bullion or other valuable assets. It is only when the concerned officer has information about the same and has reason to believe that the said valuable assets has not been or would not be disclosed would give jurisdiction to the officer authorized to conduct a search operation. Therefore, the object and purpose of a search is to detect undisclosed income. As defined under Clause
(b) of Section 158B of the Act, it is only when the undisclosed income is detected in a search operation that there would be assessment or reassessment, under the provisions of Chapter XIV-B of the Act, of the person who is presumed to be in possession of the undisclosed income. If during the course of search, any valuable assets belongs to or any books of account or document seized or requisitioned pertains to or any information contained therein relates to a person other than the persons searched, then the Assessing Officer, on recording satisfaction, can also assess and reassess the income of any other person. Thus, what emerges is that the sine qua non for the purpose of assessment or reassessment pursuant to a search operation is detection of undisclosed income. In fact, the initiation of search proceeding is also based on possession of information and reason to believe that a person is in possession of certain valuable assets, which has not been or would not be disclosed under the Act. The same is nothing but 'undisclosed income' as defined in Clause (b) of Section 158B(b) of the Act.
This becomes even more clear on a comparison of section 132(l)(c) with Section 158B(b) of the Act. It is for the above reason that Sections 153A and 153C begin with a non-obstante clause in order to make these provisions exclusive of Sections 139, 147, 148, 149, 151 and 153 of the Act. If a search operation does not lead to detection of undisclosed income as defined in Chapter XIV-B of the Act, then no purpose would be served in reopening the assessment already completed. Also, if there is no detection of any undisclosed income, then there would be no need for pending assessment to abate. Thus, when particulars of income declared in the return is already available with the Assessing Officer, such income cannot form part of undisclosed income even if such return is filed beyond the time-limit, but before search, as long as they relate to any year covered in the block. Thus, a block assessment is justified only on the basis of evidence found during search and the materials or information relatable thereto. Section 153C is in pari materia with Section 158BD conferring jurisdiction over third parties to a search providing certain conditions before the Assessing Officer having jurisdiction over a third party can assume jurisdiction. Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 10 should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the seized documents and other incriminating materials on the basis of which the Assessing Officer having jurisdiction over such third party would issue notice under Section 153C. On receipt of the aforesaid material, the Assessing Officer having jurisdiction over such third party would proceed against the said third party. Thus, where no material belonging to a third party is found during a search, but only an inference of an undisclosed income is drawn during the course of enquiry, during search or during post-search enquiry, Section 153C* would have no application. Thus, the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of Section f 53C of the Act.
51. Before considering the decisions cited at the Bar, it is necessary to refer to a decision of the Hon'ble Supreme Court in Manish Maheshwah v. Asst. CIT [2007] 289 ITR 341/158 Taxman 258. In that case, search was conducted on one of the directors of the assessee-company M/s. Indore Construction (Pvt.) Ltd. When the search was conducted in the premises of the director Sri. Manish Maheshwari and his wife several incriminating documents relating to the company were seized. While dealing with Section 158BD of the Act, the Hon'ble Supreme Court has observed as under:
"Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other ,than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person.
The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act."
8. 1 T he o t he r o r d e r s r e l i e d upo n b y t he a s s e s s e e o f I T AT C ha ndi g a r h B e nc h ar e o n t he s a m e li ne . ITA No.774/CHD/2023
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9. I t i s f ur th e r o b s e r v e d t ha t Se c t i on 158 B D i s p ar i materia to Se c t i o n 1 53 C a nd j udg e m e nt of H on 'bl e Sup r e m e C o ur t i n t he c as e of CI T Vs C al c ut t a K ni tw ear s r e po r t e d i n 3 62 I TR 6 73 a l so l ai d d o w n t he c o nd i t i o ns w h e n 1 58 BD coul d b e i nv o ke d .
10 . At t he t i m e of he a r i ng , l d. CIT D R h as e x pr es s e d hi s a pp r e he ns i o n as t o ho w i nc om e p e r t ai ns t o a n a s s e s s e e une a r t he d du r i ng t he c o ur s e o f s e a r c h c a r ri ed upo n t hi r d pe r s o n i s to be t a ke n i nt o c o ns i de r a ti o n w h e n as s e ss m e n t pr o c e e d i ng s o f t he a s s e s s e e u nd e r Se c t i o n 1 5 3 A ar e op e n. I n ot h e r wo r d s, w he n s e a r c h w a s c a r ri e d out u po n t h e a s s e s s e e a l s o , t he n ho w t he m a t e ri al c ol l e c te d f r om t he pr e m i s e s of t h i r d p e r s o n i s t o be t a ke n i nt o c o ns i de r a t io n. I n o ur opi n i o n, i f t hi s s i t ua t i on e m e r g e s o ut , t he n A O ha s t o p as s o r d er und e r Se c t i o n 15 3A an d t h e r e a f t e r i n t hat v e r y o r de r , he c a n c o m m e nc e 15 3( C) pr o c e e di ng s t oo a f t er f ol lo w i ng t he c o m pl e t e p ro c e dur e . M e ani ng t he r e by, a f t e r r e c e i v i ng s a t i s fa c t i o n no t e fr om t he AO o f t he s e a r c he d pe r s o n, he c o ul d d i s c u s s t he i ng r e d i e n t s o f 15 3C a nd t h e m a t e r i al on merit t he r eaf t er . He c a nnot t a ke i nt o ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 12 c o ns i de r ati o n the m a t e r i al c ol l e c t e d at t he p r e m i s es of t hi r d pe r so n w i t ho ut f ol lo w i ng m an da t or y p r o c e d ur e c o nt e m pl a t e d i n Se c t i o n 1 53 C . H e nc e , t he w ho l e a ddi ti on i s no t s us t a i n ab l e on t hi s g ro un d. I n s upp or t o f ou r a b ov e c o nc l us i o n, w e a r e f or ti f i e d by t he j ud g e m e n t o f H on 'bl e j u r i s di c t io na l H i g h Co ur t r end e r e d i n t he c a s e of M /s Misty Meadows Private Limited Vs U n i o n o f I ndi a, C i v i l W r i t Pe t i t io n N o. 5 13 9 o f 2 02 4, c op y o f t hi s de c i s i on ha s be e n pl a c e d on t he re c or d by t he l d. C o uns e l fo r the a s se s s e e . Th e R e v e nue h a s c ha l l e ng e d t hi s de c i s i o n i n t he H on 'bl e Sup r e m e Co ur t an d SL P ha s be e n d i s m i s s e d . The H on 'bl e Sup r e m e Co ur t h as s p e c i f i c all y o b s e r v e d t ha t i n v i ew o f t he f i n di n g s r ec o r d e d i n p ar ag r a ph N o. 33 of t he H on 'bl e H i g h C o ur t 's de c i s i o n, n o i nt e r f e r e nc e i s ca ll e d f or . The br i e f f a c t s of t h e c as e b e f o r e H on 'bl e H i g h C ou r t w a s t ha t a search & se i z ur e o pe r a t ion w as c ar r i e d out at t he pr e m i s e s of M 3M (I ndi a) Lt d. s i t uat e d at Paras Tw i n To w e r- B, 6 t h Fl o or , G ol f C o ur s e Ro a d, Se c t o r 5 4, G ur g a o n. Th e R e g i s t e r e d O ff i c e o f t he as s e s s e e w a s s i t u a t e d a t Sho p No. 4/ 36, DD A M a r ke t , D aks hi n Pu r i E xt e ns i o n, N ew ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 13 D e l hi . A c c o r d i ng to t he R e v e nue , w hi l e pr e p ar i ng Pa nc h na m a d r a w n at t he Par a s T wi n T o w er , G ur g ao n, na m e o f t he a ss e s s e e c o m p a ny w a s al so a dd ed , t ho ug h no s e a r c h w a s c a r r i e d o ut at t he p r e m i s e s o f the a s s e ss e e . Th e AO h as i s s ue d no t i c e un de r Se c t i on 15 3A a nd ul t i m at e l y pa s s e d t he a s s e s s m e nt o r de r . The as s e s se e ha d c ha l l e ng e d t hi s as s e s s m e nt o r de r by w a y of a W r i t Pe ti t io n be ar i ng No. 5139 o f 20 24. The H on 'bl e H i gh C o ur t ha s a ll ow e d t h e w r i t pe ti t io n a nd he l d t ha t no s e ar c h w as c a r r i e d o ut a t t he pr e m i s e s o f t he a s s e s s e e , t he r e f o r e, no no t i c e o ug h t t o ha v e be e n is s ue d u nd e r S e c t i o n 15 3A. H o n'b l e H i g h Co ur t t oo k c o g niz an c e o f Se c t i on 15 3C o f t he I nc om e Tax Ac t an d r e c o r de d t ha t the p r o c e d ur e c o nt e m pl a t e d in 1 53C i s a m a nd at or y pr oc e dur e . Th e H o n'b l e Co ur t ha s a l s o ma de r e f e r e nc e t o t he d e c i s i o n of H o n'b l e Sup r e m e Co ur t i n t he c a s e o f Abhi s a r B uil dw e l l Pv t . L t d. 4 54 I T R 21 2 a nd o t he r s . W e f i n d t ha t o n t h e pr i n c i pl e o f l aw, w he t he r w i t h ou t f ol lo w i ng t he m a nd at o r y pr o c e du r e of Se c t i o n 1 53 C, t he d oc um e nt 'B TD 20 11 ' f o und a t t he pr e m i s e s o f S hr i K ap il R om an a c o ul d b e us e d ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 14 i n an a s s e s s m e nt p r o c e e d i ng o f t h e as s e s s e e und e r t a ke n und e r Se c t i o n 153 A or no t. We ha v e h el d t h at t hi s do c um e nt c a n no t be us e d a nd for r el yi ng upo n t hi s do c um e nt , t he Re v e nu e has to f ol l o w t he m a nda t o r y pr o c e du r e c on t em p l a t e d unde r S e c t i o n 153 C . 11 . Th e ki nd of r e v e nue i nv ol v e d in t hi s ap pe al o f t he D e p a r t m e nt i nd i c a t e s t ha t di s p ut e wi ll be c a rr i e d on be f o r e t he hi g he r a pp e l l a nt aut ho r i ti e s . The r e f o r e, w e de e m i t ap pr o pr i a t e to a dj udi c at e t he i s s ue o n m e r i t s a l so. Th e R e v e n u e h as t a ke n s i x gr o un ds o f a p pe a l but i t s g r i e v a nc e r e v ol v e s a r o und t h e s i ng l e i s s ue n am e l y, l d. C I T( A) ha s erred in de l e t i ng t he a dd i t i on of R s . 9 , 65 , 7 1, 414/- w hi c h was a dd e d by the AO und e r Se c t i o n 68 r e ad w i t h Se c t io n 1 15B B E of t he I nc om e Tax Ac t , 1 96 1. T he r e s t o f t h e p l e as t a ke n b y t he D e p ar tm e n t a r e p e r i phe r al a r g um e nt s i n s up po r t o f t hi s c e nt r a l p oi nt . W e h av e t a ke n no t e of t he f a c t w hi l e a d j ud i c a ti ng t h e C r o s s O bj e c t io ns . I t e m e r g e s o ut f r om t h e r e c o r d tha t a s e a r c h w a s c ar r i e d o ut a t t h e p r e m i s e s of t h e as s e s s e e on 26 . 0 2. 2 02 0. H o w e v e r , n o i nc r im i n ati ng m a t e r ia l w as f o und ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 15 a t hi s pr e mi s e s b ut s i m ul t a ne ous s e ar c h w as c on duc t e d a t t he p r e m i s e s of o ne Shr i K a pi l R o m a na w h e r e a c c o r di ng t o t he R e v e nu e , a d o c um e n t w i t h t i t l e 'B TD 201 1' w as f ou nd. Th i s do c um e nt i s a l e dg e r a c c o unt o f t he as s e s s e e i n t h e bo o k s o f Shr i Ka pi l Rom a na. I t i s f or t h e p e r i o d f ro m 01 . 0 4. 2 01 9 t o 02. 1 1. 201 9. The he a di n g of t he l e dg e r r e a d 'B TD 20 11 H ap py Ji I NT A/ c '. A c c o r d i ng t o t he AO , a s s e s s e e i s b e i n g k no w n a s 'H a ppy J i ' he n c e i t i s an i n t e r e s t ac c o un t of 'Ha pp y Ji ' i n t he b oo k s o f Sh r i Ka pil R o m a na. Th e AO f o und o pe ni ng b al an c e i n t h is a c c o unt a t R s . 1 5, 6 7, 08, 109/ - . Th e AO , th e r e a f t e r , o b s e rv e d t ha t t hi s l e dg e r a c c o unt de a l s wi t h t r a ns a c t io ns e nt e r e d i n to be t w e e n M /s A S E B ui l de r s P v t . w hi c h i s a c onc e r n o f Sh r i Am ar ji t Si ng h i . e . a s s e s s e e he r e i n a nd H M O v e r s e a s . He f o und t ha t t hi s op e ni ng ba l anc e m us t b e a c l o s i ng ba l a nc e f or a s s e s s m e nt ye a r 20 18 - 19 . M /s H M O v e r s ea s i n bo o ks o f ac c ou nt o f M /s ASC B ui l d e rs P v t . Lt d. w hi c h s ho w s an o pe n i ng b al an c e o f R s . 6 , 01 , 36, 6 95 /- a s o n 01 . 0 4. 2 01 9. Th us , AO h ar bo ur e d a be l i e f t ha t o ut o f t he t o t al bal a nc e , a s s e s s e e i s m ain ta i ni ng ac c ount o f R s. 6, 01, 36, 6 95 /- . He ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 16 de bi t e d t hi s am o unt a nd t r e at e d t he r e s t as une x pl ai ne d a m o unt o f t h e a s s e s s e e . Ac c o r d i n gl y, l d. AO has m a d e a dd i ti on s .
12 . D i s s a ti s f i e d w i th t he ab o v e , a s s e s s e e c a r r i e d the m a t t e r i n a p pea l be f or e t he C I T( A) . L d. Fi r s t App el l at e Aut ho r i t y ha s a pp r e c i a t e d t he i s s ue i n de ta i l a nd r e c o r de d t he f i nd i ng f r om p ag e N o . 1 8 t o 31 o f t h e im pug ne d o r d e r . Th e ld. Fi r s t Ap pe l l a t e Aut h o ri t y ha s s um m a r i z e d i ts f i ndi ng a t p a g e 31 w hi c h r e ad as un de r :
" (C) To summarize :
(i) In view of the above discussion, it is held that the Assessing Officer has erred in interpreting the transactions mentioned on same seized document in two different ways which led him to conclude that the part transactions reflected in the seized ledger accounts is either accounted for or is not related to him and does not represent his income in any form and the other part (opening balance)is unexplained cash credit. In fact, in case if the part transactions are wrong, there is no reason to make unexplained cash credit. In fact, in case if the part transactions are wrong, there is no reason to make impugned addition of other part (i.e. the opening balance) which is unsubstantiated in absence of any corroborative evidence. Since part of the transaction has been accepted as not related to the assessee then the same logic should have been applied to other part (i.e. opening balance).
(ii) The relied upon document is not a genuine document. Not only no addition has been made in case of assessee for AY 2020-21, ASC builders Pvt Ltd for all the relevant years but also no addition has been made in case of Jagjeet Chawla whose ledger the AO has strongly relied on to allege that the amount represents unexplained credit. Following the principles of consistency, addition cannot to be made in the case of the appellant for current year, Moreover, the AO has failed identify the entity BTD 2011.
(iii) The AO has also failed to refer to any corroborative evidence apart from the unsubstantiated ledger found at the premises of third person. The said document was found at premises of third person, thus presumption of section 132(4A) and 292C cannot be used against the appellant.ITA No.774/CHD/2023
& C.O. 07/CHD/2024 A.Y.2019-20 17 In view of the above discussion, the addition of Rs. 9,65,71,414/- made in the hands of the assessee is liable to be deleted." 13 . Th e l d. CI T D R r e l i e d u po n t h e o r d e r of A O a nd s ub m i tt e d t h at s i nc e a s s e s s e e i s k no w n a s 'Ha p py J i ' hi s l e dg e r ac c ou nt w a s f o un d d ur i ng t h e s e ar c h u p o n o ne Sh r i K a pil R o m ana , t he r e f o r e, i t i s t he d ut y of t he a s s es s e e t o e x pl ai n t he s ou r c e o f o p e ni n g ba l a nc e i n t he b oo k s of Shr i K a pil Ro ma na .
14 . O n t he o t he r h a nd l d. Co uns e l f or t he a s s e s s e e ha s r ai s e d m ul t i pl e c o nt e n t ions . In hi s f ir s t fo l d of a r g um e nt s , he s ubm i t t e d t ha t t hi s d o c um e n t w a s fo und f r o m th e p r e m is e s o f a t hi r d p e r s o n. As s e s s e e ha s no c o nt r ol ov e r wr i t i ng t hi s do c um e n t . A t hi r d pe r s o n c o ul d write a nyt hi n g , ho w as s e s s e e w o ul d be r e sp o ns i b l e to e x pl ai n t ho s e e n t r i e s . Th e r e i s no o t he r c or r ob or a ti v e e v i de nc e po s s e s s e d by t he R e v e nue . He relied up on j u dg e m e nt o f H o n'b l e S upr e m e C o ur t i n t he c as e of C BI Vs V. C . S hukl a a nd o t he r s ( 1 99 8) 3 S CC pa g e 4 1 0 . I n t hi s j u dg e m e nt , Ho n'b l e S upr e m e C o ur t h as c o ns i de r e d w h e t he r c o nt e n t s of D i ar y i mp ou nde d f r om t h i r d pa r t y c o ul d l e a d to p ro v e c h ar g e s a g ai ns t t he a c c us e d und e r t he ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 18 Pr e v e n ti o n of Co r r up ti o n Ac t , 19 88. I t i s a f am o us c a s e of 'J ai n H aw al a '. I n h i s s e c ond f ol d o f cont e nt i on s , he s ub m i tt e d t ha t i t i s n ot a s c e r t ai na b l e w ho ha s w r i t t e n t hi s l e dg e r . I t i s n ot di s c e r ni b l e w he t h e r s t at em e nt of Sh r i K a pil Ro m an a w a s r e c or de d unde r Se c t i o n 132( 4) of t he I nc om e Ta x Ac t o r not . I t i s al s o n ot o n t he r e c o rd w h e t he r he w as c o nf ro nt e d w i th t hi s l e d g e r o r no t . Apa r t f r o m abo v e , he e m ph as i z e d t hat t h e p r e s um pt i on o f t r ut h a t t ac h e d t o di sc o v e r y o f a n ev i d e nc e an d t h e s t a t e m e n t r e c o r d e d und e r Se c t i o n 132 ( 4) i s c o nf i n e d t o t h e p er s on f r o m w ho s e po ss e s s i o n s uc h do c um e n t w a s f o und an d w ho ha s m ad e t he de c l ar a tio n. I n a s t a t e m e nt und e r Se ct i on 13 2( 4) , t he do cum e nt a s w e l l as t he s t a t e m e nt c a nno t bi nd a t hi r d pe r so n na m e l y i n t he p r e s e nt c a s e , the a s s es s e e . Th e pr e s um pt i on o f e vi de n c e of t h i s l e dg e r coul d o nl y be us e d a g ai ns t Shr i Ka pil Rom an a a nd no t a g ai ns t t he assessee. I n s up po r t of hi s c o nt e nt i o n, he r e l ie d upo n t h e j u dg e m e nt o f H o n'b l e D e l hi Hi g h C o ur t i n t he c a s e of C I T Vs Pa r v e e n J un e j a, I T App e a l No . 57 of 2 01 7. H e f ur t he r r e li e d upo n d e c i s i o n of H o n'bl e Bo m b a y H i g h C o ur t i n t he ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 19 c a s e o f P CI T Vs H a s s a n Al i Kha n 4 26 I TR 556 . H e al s o pl a c e d on r e c or d t he c o p i e s of t he s e de c i s i o ns a s w e l l as s o m e ot h e r o r de r s o f t he I T AT o n t hi s po i nt . H e f ur t he r c o nt e nd e d t ha t a ut ho r of t he l e d g e r ac c o un t i s unk no w n. H e w as ne v e r put t o c r o s s - exa m i na ti o n by the a s s e s se e . Th e a s s e s s e e h as m a de s pe c i fi c r e que s t fo r thi s pur po s e. H e poi nt e d o ut t ha t i n pa ra g ra p h N o . 4. 11, t he AO has o bs e r v e d t h at Shr i K a pi l Rom ana ha s a c c e pt e d t hi s l e dg e r a c c o unt i n hi s s t a t e m e nt 'o n o at h' b ut i t i s pe r t i n e nt t o no t e t ha t he c a n a c c e p t 'o n o at h ' q ua hi m s e l f an d c an no t bi nd t he a s s e s s e e . T he l d. C ou ns e l f o r t he a s s e s s ee has r e li e d upo n j ud g e m e n t o f Hon'b l e Sup r e m e C o ur t i n t he c a s e of Sh r i Va s a nt l a l & C o. Vs CI T 45 I TR 20 6. H e al so r e li e d up o n t wo d e c i s i o ns of H o n'bl e D e l hi H i g h Co ur t, na m e l y; CI T Vs A s hw a ni G upt a 32 2 I T R 32 6 a nd CI T Vs Pr a de e p K um ar G up t a 30 3 I TR 9 5.
15 . Th e l d. Co uns e l for the assessee f ur t he r c o nt e nd e d t ha t do c um e nt i s to b e r e a d a s a w hol e . He t o o k u s t hr o ug h t h e d oc um e nt w hi c h i s b e i ng r e pr od uc e d by t he C I T ( A) at pa g e 20 o f t he i m pug ne d or de r. He ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 20 po i nt e d o ut t hat a f t e r t he f i r s t e n t r y e x hi b it i ng o p e ni n g ba l anc e , ne x t en t r y i s APE X HD FC Ba nk 'R e c e i p t '. T he AO f ai l e d to e s t a bl i s h a ny r e l at i ons hi p o f t he as s e s s ee w i t h t hi s e nt r y. Si m il ar l y, t hi r d e n t r y i s no t r e l at e d t o t he assessee. T he assessee do e s no t k no w a ny M a l ho t r a G r o up e t c . an d a s t o w hy t he s e e nt r i e s o f t hi r d pe rs o n a r e be i ng a ppe ar i ng i n a l e d g e r a c c o unt al l e g e d to be r e l a t i n g t o t he b us i ne s s o f t he as s e s s e e i n Shr i K a pi l Rom a na's bo o k s . H e f ur the r c on t e nde d t ha t a r e f e r e nc e w a s m ad e b y t he AO r e g ar di ng ASC B ui l de r s Pv t . Lt d . Assessment pr o c e e d i ng s w er e i ni ti a t e d fo r as s e s s m e nt y e ar 20 20 - 21 bu t no a c t i o n w a s t ak e n by t he AO . T he CI T( A) has r e pr od uc e d t he as s e s s m e n t o r d e r o n p ag e N o . 2 2 and 2 3. Si m i l arl y CI T( A) ha s r e pr o duc e d a s s e s s m e nt or de r of Shr i J ag j e e t Si n g h on p a g e No . 2 5. T he C I T( A) ha s o bs e r v e d t ha t AO ha s ma de a m e nt io n o f on e Sh r i Ja gj e e t Si ngh C ha w l a but n o ad di ti o n w a s m ad e i n t he na m e of Shr i J ag j e e t Si n g h C haw la . I n ot h e r w or d s , a c c or d ing t o t he l d. C o uns e l f o r t h e a s s e s s e e , e xc e pt t he a d di ti on of a l l e g e d ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 21 o pe n i ng b a l a nce , AO ha s n ot m a de a ny ad di t io n o ut of t his pa p e r .
16 . W e h av e dul y c on s i d e r e d t he r i v a l c on t e nt io ns a nd g o ne t hr oug h t he r e c or d c a r e f ul l y. We f i nd t ha t do c um e nt was no t fo un d fr o m t he premises of t he assessee. A n ad di ti o n und e r S e c t i o n 1 53A c o ul d no t be m a d e i n t he i n c o m e o f t h e a s s e s s e e un l e s s i nc r i m i na t i n g m a t e r i al w a s f oun d d ur i ng t h e c o ur s e o f s e ar ch c ar ri e d ou t up on t he p r e m i s e s o f t he a s s e s s e e . W e r el y upo n t he j u dg e m e nt of H o n'b l e Sup r e m e C o ur t in t he case of Ab hi s a r B uil dw e l l Pv t. L t d. 454 I TR 212 . The c o nc l us i on o f th e Ho n'b l e Co ur t i n p ar a g r aph N o. 1 2 r e a d as unde r :
"12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other .material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 1 5 3 A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 22 assessments. It does not provide that all completed' unabated assessments shall abate. "
17 . Th e aut he nt i c i t y o f t h e d o c ume n t ha s no t bee n pr o v e d by t he AO be c a us e a s s um pt i o n of tr ut h c o nt e m pl a t e d unde r Se c ti o n 13 2( 4) i s c o nf i ne d q ua t he pe r s o n w h o h as c o nf e s s e d a do c um e nt . I n o t he r wo r ds , t hi s do c um e nt w as f r o m t he b oo k s of Sh r i Kap il R om a na a nd i f he a dm it s t he s e e n t r i e s pe r t ai ni ng t o hi m c a n be c o ns t r ue d a s t r ue q ua hi m a nd h e c a n be b o und f o r t he l i a bi li ti e s, b ut n ot a t hi r d pe r s o n. W e r e l y up on t h e j u dg e m e nt o f H o n'b l e S upr e m e C o ur t i n t he c as e of C BI Vs V. C . S hukl a ( s up r a ) .
17 . 1 Th e AO ha s n ot pu t S h r i K a pi l R o m a na f o r cr oss e x a mi nat i o n of t he as s e s s e e a nd in t he ab s e nc e of o pp o r t uni t y of c r o s s e x a mi n ati o n, a ny e v i d e nc e c o l l e c t e d f r o m t he ba c k o f t he as s e s s e e o r t h e s t a t e m e nt c ann ot be us e d a g a i ns t t he a s s e s s e e . The H o n'b l e S u p r e m e C o ur t ha s pr o po und e d t hi s pr o po si t i o n in th e j ud g e m e n t of And am a n Ti m be r I nd us t r i e s vs . C om m i s si o ne r of C e nt r al E x c i s e , Ko l ka ta- I I 28 1 C TR 241 , t he ot h e r H o n'b l e H i g h ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 23 C o ur t s na m e l y; H o n'b l e D e l hi H i g h Co ur t i n t he c a s e o f As hw a ni G upt a a nd P r a d e e p K um ar G upt a , Al laha ba d Hi g h C o ur t i n t he c a s e o f Ga r gi Di n J w a la Pr a s ad Vs C I T a r e a l s o un ani m o us i n t he i r opi n ion o n th i s p ro p os i t i on t ha t if c r os s - e xa m i na tio n w a s no t g i v en t o a n a s s e s s e e , s t a t e m e n t r e c o r d e d a t t he b ac k of t he a s s e s s e e w il l n ot b e use d a g ai ns t t h e a s se s s e e i n e v i d e nc e .
18 . I t i s pe r t i ne n t t o no t e t ha t w h e n a n e x pl ana t i on or def e nc e by an assessee ba s e d on num be r of f ac ts e s t a bl i s he d by e v i d e nc e and c i r c um s t a nc e s r e q ui r e d c o ns i de r ati o n, w he t he r it is s o und or no t , m us t be de t e r m i ne d no t b y c o ns i de r i ng t he w e i g ht to be a t t a c he d t o each s i ng l e fact in i s o la t io n bu t by a s s e s s i ng t he c um ul a t i v e e f f e c t o f al l t he f ac t s a s a w ho l e. Thus , t hi s c um ul a t i v e s e t t i ng o f a ll t he s e f ol ds of c o nt e nt i o ns r ai s ed by t he a s s e s s e e do i n di c at e t hat e v i d e nc e p o s s e s s e d by t h e R e v e nue i s n ot w or t hy of cr e de nc e an d o n t h i s b as i s, no a dd i ti on c o ul d be m ad e i n t he ha nds o f t he a s s e s s e e . We f i nd t hat l d. Fi r s t Ap pe l l a t e Aut h or i t y h as c on s i d er e d a ll t he s e a s p e c t s e l a b or a t e l y i n a w e l l r e as o ne d or d e r w he r e i n ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 24 l d . Fi r s t App e l l at e Aut ho r i t y h a d t ak e n i nt o c on s i d e r a ti on v a r i o us p r o po si t i o ns p r op o unde d b y t he H on 'b l e Supr e m e C o ur t a s w el l as H o n'b l e H i g h C o ur t s . W e d o n ot f i nd an y e r r or i n t he f i nd i ng o f t he C I T( A) a nd w e c on c ur w i t h i t. Ac c o r di ng l y, t he ap pe a l o f t he R e v e n ue i s di s mi s s e d on m e r i t al s o.
19 . I n t he r e s ul t , C r o s s O bj e c t i ons of t h e a s s e s s e e a r e pa r tl y al l o w e d. The l d . CI T ( A) h as r i g ht l y d e l e t e d t he a dd i ti on s . T he a pp e al o f t he Re v e nue i s di s mi s s e d o n m e r i t.
O r de r p ro no un c e d on 06 . 0 3. 2 02 5.
Sd/- Sd/-
(KRINWANT SAHAY) (RAJPAL YADAV)
ACCOUNTANT MEMBER VICE PRESIDENT
"Poonam"
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File आदेशानुसार/ By order सहायक पंजीकार/ Assistant Registrar