Income Tax Appellate Tribunal - Chandigarh
Sh.Rajinder Mittal, Panchkula vs Acit, Chandigarh on 29 March, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी ", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा ग&ु ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.238/Chd/2014
नधा रण वष / Assessment Year : 2006-07
Sh.Rajinder Mittal, बनाम The D.C.I.T.,
H.No.666, Sector 21, Central Circle-II,
Panchkula. Chandigarh.
थायी लेखा सं./PAN NO: A B J P M 7 9 3 2 R
नधा रती क ओर से/Assessee by : Shri Neeraj Jain, CA
राज व क ओर से/ Revenue by : Shri K.K. Mittal, CIT DR
सन
ु वाई क तार"ख/Date of Hearing : 12.02.2019
उदघोषणा क तार"ख/Date of Pronouncement: 29.03.2019
आदे श/ORDER
Per Anna pur na Gupta, Account ant Member The present app eal has been pre ferred by the as sessee agai nst the order dated 9.10.2013 of the Commi ssi oner of I ncome Ta x ( Appeal s) ( Central ) , Gurgaon [ herei nafter referred to as CI T( A) ] , passed u/s 250( 6) of the Income Ta x Act,1961( herei nafter referred to as "Act") .
2. Bri efl y stated, search operati on u/s 132( 1) of the Act was carri ed out on the Mi ttal gro up of cases on 1 6.1.2009 i n whi ch the resi denti al premi ses of the assessee was al so covered. Thereaft er noti ce u/s 153A of the Act was i ssued to the assessee i n response to whi ch return decl ari ng i ncome of Rs.2,08,940/- was fi l ed by the assessee. Noti ces were i ssued 2 ITA No.238/Chd/2014 A.Y.2006-07 thereafter for assessi ng the i ncome of the assessee u/s 142( 1) and 1 43( 2) of the Act al ong wi t h detai l ed questi onnai re. Meanwhi l e i t was seen that the accounts of the group concer n and the sei zed documents were compl e x i n nature and henc e i n the i nterest of revenue the case of the group i ncl udi ng the assessee was referred to the speci al audi tor u/s 142(2A) of the Act. The audi t report u/s 142( 2A) was submi tted by the assessee and thereafter the i ncome was assessed at Rs.17,93,536/- after maki ng addi ti ons u/s 68 of the Act on account of une xpl ai ned cash found deposi ted i n t wo bank accounts of the assessee amounti ng to Rs.8,70,000/- and une xpl ai ned l oan of Rs.5,00,000/- and addi ti ons u/s 69C on account of une xpl ai ned e xpense s emanati ng from certai n documents found duri ng search.
3. The matter was carri ed i n appeal before the Ld.CI T( A) where the assessee contested onl y the addi ti ons made u/s 68 of the Act whi ch were al l uphel d by the Ld.CI T( A) on meri ts hol di ng that the assessee had been unable to e xpl ai n the same .
4. Aggri eved by th e same the asse ssee has come up in appeal before us, rai si ng the fol l o wi ng grounds of appeal :
1. That the order of Ld. Commissioner on Income (Appeal) (Central), Gurgaon is contrary to the facts of the case and legally incorrect and without any basis of proper justification.
2. That the Ld. Commissioner on Income (Appeal) (Central), Gurgaon grossly erred and his action is unjustified and illegal in addition of Rs. 3,70,000/- on account of unexplained cash credit u/s 68 on the basis of Bank statement. As in replied by the assessee that section 68 did not apply to assessee, along with bank statement did not constitute any books of accounts, but Ld. CIT (A) ignored 3 ITA No.238/Chd/2014 A.Y.2006-07 it. So, this addition is highly unjustified. Therefore, the addition of Rs. 3,70,000/- is prayed to be deleted.
3. That the Ld. Commissioner on Income (Appeal) (Central), Gurgaon grossly erred and his action is unjustified and illegal in addition of Rs. 5,00,000/- on account of unexplained cash credit u/s 68 on the basis of Bank statement. As in replied by the assessee that section 68 did not apply to assessee, along with bank statement did not constitute any books of accounts and that the cash deposit in bank account by all three joint holders, but Ld. CIT (A) ignored it. So, this addition is highly unjustified. Therefore, the addition of Rs. 5,00,000/- is prayed to be deleted.
4. That the Ld. Commissioner on Income (Appeal) (Central), Gurgaon grossly erred and his action is unjustified and illegal in addition of Rs. 5,00,000/- on account of unexplained cash credit u/s 68 on the basis of Bank statement. As in replied by the assessee that section 68 did not apply to assessee, along with supporting documentary evidence, but Ld. CIT (A) ignored it. So, this addition is highly unjustified. Therefore, the addition of Rs.5,00,000/- is prayed to be deleted.
5. Charging interest under section 234 A, 234 B and 234 C are not warranted due to the facts of the case.
5. The asse ssee ha s al so rai sed ad di ti onal ground before us whi ch reads as under:
"That the Ld. CIT (A) is not justified in confirming the additions / disallowances in assessment made u/s. 153A (1) (b) r.w.s. 143 (3) of the I. T. Act, 1961 in the absence of incriminating material found during the course of Search as no assessment was pending for the A. Y. 2006-
07 on the date of initiation of search."
6. Vi s a vi s the same i t was contended that si nce the issue rai sed i n the addi ti onal ground was a l egal i ssue and further si nce no ne w fresh facts were requi red to be consi dered for adjudi cati ng the same, i t ma y be a dmi tted for adjudi cati on. In support the assessee rel i ed upon the deci si on of the Hon'bl e Ape x C ourt i n the cas e of N TPC Li mi ted Vs. CI T, 283 I TR 390.
7. The Ld. DR, on the other hand, fi l ed hi s objections to the admi ssi on of the addi ti onal ground i n wri ting stati ng that i ncri mi nati ng materi al were sei zed duri ng search and, 4 ITA No.238/Chd/2014 A.Y.2006-07 therefore, there was no i l l egal i t y i n the assessment framed i n the present case. I t was poi nted out that an document havi ng noti fi cati on marked A-2 was found and sei zed, pages 82 to 89 of whi ch pertai ned to a sal e deed i n respect of l and purchased by th e assessee i n vi l l age Dhakol i al o ng wi th the other co-o wners. The Ld. DR al so poi nted out that the assessee has ma de di scl osure of Rs.1,63,400/- on account of the same.
8. Havi ng heard the ri val contenti ons, we agree wi th the Ld. counsel for assessee that th e addi ti onal gro und rai sed before us i s a l egal ground and si nce no fresh facts need to be consi dered for adjudi cati on of the same, we have no hesi tati on to ad mi t the same for adjudi cati on. Th e objecti on of the Ld. DR i s onl y an arg ument for the purpose of adjudi cati ng the i ssue rai sed i n the addi ti onal ground and, therefore, cannot be consi dered a t the stage of ad mi ssi on of the addi ti onal ground. The ob jecti on of the Ld.DR is therefore, di smi ssed and the addi ti onal ground raised by the assessee i s admi tted for adjudi cati on.
9. Si nce the addi ti onal ground rai sed chal l enges the val i di t y of the addi ti on made u/s 68 of the Act, we shal l deal wi th the same fi rst.
10. Duri ng the course of heari ng before us, , the Ld. counsel for assessee poi nted out that i n the assessment framed subsequent to the search conducted on th e as sessee addi ti ons were made on acc ount of une xpl ai ned cash deposi ts i n the bank account of the assessee amounti ng to 5 ITA No.238/Chd/2014 A.Y.2006-07 Rs.3,70,000/- and Rs.5 l acs, i n t wo separate bank accounts of the assessee and further on account of une xpl ai ned cash credi t i n the form of unsecured l oan recei ved from one Shri Devi nder Si ngh of Rs.5 l acs and further on account of an document found duri ng search pertai ni ng to a sal e deed i n respect of purchase of l and made by the assessee amounti ng to Rs.1,63,000/- and Rs.31,100/-. The Ld. co unsel for assessee poi nted out that i t was not pressi ng agai nst the addi ti on made vi s-à-vi s documents sei zed duri ng search. I t was stated by the Ld. counsel for assessee that i t was only contesti ng the addi ti on made on account of une xpl ained cash i n bank and une xpl ai ned cash credi t and i ts sol i tar y argument agai nst the same was that no i nc ri mi nati ng materi al rel ati ng to these addi tions was found during the course of search and that i t was s i mpl y based on d ocuments procured duri ng the course of post search enqui ry when the copi es of bank accounts were submi tted and i t was noted therefrom that th ere were cash de posi ts and unsec ured l oans taken by the assessee i n the bank accounts, the e xpl anati on of whi ch was sought from the assessee and found to be unsati sfactor y. The Ld.Counsel for the assessee thereafter poi nted out that there was no pendi ng assessment rel ati ng to the i mpugned year as on the date of search and, therefore, i n vi e w of the above facts and i n vi e w of vari ous judi ci al deci si ons i n thi s regard, no addi ti on unconnected wi th any materi al sei zed duri ng the course of search coul d have been made i n the hands of the assessee. Our attenti on was dra wn to paras 6, 7 and 8 of the assessment order 6 ITA No.238/Chd/2014 A.Y.2006-07 wherei n the addi ti ons on account of cash deposi ts in the bank and unsecured l oan found deposi ted in bank was di scussed and made. The Ld. counsel for assessee al so dre w our attenti on to the fact that the assessment year i nvol ved i n the i mpugne d case was ass essment year 2 006-07 and statutori l y speci fi ed peri od for i s sui ng noti ce for i ni ti ati ng assessment proceedi ngs u/s 143 ( 2) of the Act e xpi red on 31.3.2007 and no such noti ce was i ssued to the assessee. Therefore, there were no ongoi ng assessment proceedi ngs when the sear ch was conduc ted on the as sessee on 16.1.2009, whi ch woul d have abated for the purpose of frami ng assessm ent as per the pr ovi si ons of secti o n 153A of the Act.
11. The Ld. DR, on the other hand contended that though undeni abl y the bank books i n whi ch the cash credi ts entri es were found and pertai ni ng to w hi ch addi ti ons were made, were not found duri ng the cours e of search but the fact of the matter was that the accounts of the group cases and the sei zed documents were compl e x i n nature and, therefore, case of the group was referred for speci al audi t u/s 142( 2A) of the Act whi ch was not objected to by the assessee al so and i t was i n terms of the report submi tted by the speci al audi tors to whom no e xpl anati on of the cash deposi ts was furni shed and on hi s recommendati on the assessee was sho w caused as to why the i mpugned addi ti ons be not made and whi ch resul ted in the i mpugned addi ti ons. I t was further poi nted out that sei zed document were found duri ng the 7 ITA No.238/Chd/2014 A.Y.2006-07 course of search rel ati ng to purchase of l and which the assessee had co ntended that the pa yment was m ade out of the ver y same ba nk account i n wh i ch there were u ne xpl ai ned cash deposi ts. In these facts an d ci rcumstances, therefore, the Ld. DR contended that the addi ti on made on account of une xpl ai ned cash deposi ts i n the bank coul d not be seen i n i sol ati on but were rel ated to the i nvestment found to have been made by the assessee from earl i er undi scl osed cash credi ts duri ng the course of search and, therefore, i t coul d not be sai d th at the addi ti on was not base d on any i ncri mi nati ng materi al found duri ng the course of search.
12. We have heard the ri val contenti ons and perused the orders of the authori ti es bel o w. The assesse e ,i n its addi ti onal groun d has chal l enged the addi ti on ma de u/s 68 of the Act of une xpl ai ned cash deposi ted in bank and une xpl ai ned l oan taken ,on the ground that the materi al on whi ch the addi ti on was based w as not found du ri ng search ,i n other words the addi ti on was not based on any i ncri mi nati ng materi al found duri ng search.
13. Vi s a Vi s the proposi ti on of l a w that i n assessments made pursuant t o search conduc ted i n cases wh ere earl i er assessment was compl eted, addi ti on can be made onl y on the basi s of i ncri mi n ati ng materi al fo und duri ng searc h there i s no di spute. I n fact courts have time and agai n i n the cases of CI T Vs. Conti nental Warehousi ng Corporati on i n I TA No. 523 of 2013 repo rted i n ( 2015) 27 9 C TR 038 9 ( Bo mba y) , CI T Vs. Kabul Cha wl a, 234 Ta xman 3 00 ( Del hi ) . Pri nci pal CI T Vs. 8 ITA No.238/Chd/2014 A.Y.2006-07 MeetaGutguti a Prop M/s Ferns 'N' Petal s", I TA 306/2017 and others ( Del hi ) hel d that i f no i ncri mi nati ng material i s found duri ng the searc h acti on, the add i ti on i n the case of al ready concl uded assessment cannot be made whi l e frami ng assessment u/s 153A of the Act.
The onl y di spute i s whether the addi ti on made u/s 68 of the Act was based on any i ncri mi nati ng materi al or not.
14. The fact that the i nformati on rel ati ng to the impugned addi ti ons emana ted from bank a ccounts and ban k book of the assessee is not di sputed. Further we fi nd that the assessment order does not menti on the same havi ng been found duri ng s earch, nor has the Ld.DR be en abl e to establ i sh the sa i d fact before u s. I n fact the L d.DR has admi tted that the sai d documents were not found duri ng search but the i nformati on was obtai ned i n the course of speci al audi t conducted u/s 142( 2A) of the Act.
15. I n the l i ght of the above facts we fi nd meri t in the contenti on of the Ld.Counsel for the assessee that the addi ti on u/s 68 of Rs13,70,000/- was not based on any i ncri mi nati ng materi al found duri ng search and si nce admi ttedl y the assessment for the i mpugned year had not abated, no addi ti on therefore coul d have been made on account of the same.
16. We do not fi nd a ny meri t i n the a rgument of the L d.DR that that the addi ti on made on account of une xplai ned cash deposi ts i n the bank coul d not be seen i n i sol ati on but were 9 ITA No.238/Chd/2014 A.Y.2006-07 rel ated to the i nvestment found to have been made by the assessee duri ng the course of se arch and whi ch were from earl i er undi scl osed cash credi ts. The Ld.DR has not substanti ated hi s contenti on that the i nvestment was from undi scl osed cash credi t, wi th any cogent evi dence. No ne xus has been sho wn to us by the Ld. DR bet ween the une xpl ai ned cash deposi ted in bank and the i nvestment made for purchase of l and, documents pertai ni ng to whi ch were found duri ng search. I n the absence of any l i nk havi ng been establ i shed by the Ld.DR bet ween the une xpl ai ned cash deposi ts and the i nvestments found to have been by the assessee duri ng search , we see no reason to vi ew the t wo documents together to hol d that the documents pertai ni ng to the cash credi ts were i ncri mi nati ng documents found duri ng search for the purpose of maki ng addi ti on u/s 153A of the Act, as argued by the Ld.DR. We therefore di smi ss the contenti on of the Ld.DR.
17. I n vi e w of the above we hol d that the addi ti on u/s 68 of the Act on account of une xpl ai ned cash deposi t i n Bank of Rs.3,70,000/- & Rs.5,00,000/- a nd une xpl ai ned l oan taken of Rs. 5,00,000/- was not based on any i ncri mi nati ng materi al found duri ng search and coul d not be made u/s 153A of the Act. The addi ti on so made i s therefore di rected to be del eted.
The addi ti onal ground rai sed by the asses see is therefore al l o wed.
10 ITA No.238/Chd/2014
A.Y.2006-07
18. Si nce the addi ti o n has been del et ed on the l egal g round rai sed as above , the grounds rai s ed chal l engi ng th e addi ti on on meri ts are m erel y academi c i n nature and ar e therefore not bei ng deal t wi th by us.
19. I n the resul t, the appeal of the assessee i s ther efore al l o wed i n above terms.
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/-
संजय गग अ नपण
ू ा ग&ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
*दनांक /Dated: 29th March, 2019
*रती*
आदे श क ( त)ल*प अ+े*षत/ Copy of the order forwarded to :
1. अपीलाथ,/ The Appellant
2. (-यथ,/ The Respondent
3. आयकर आय.
ु त/ CIT
4. आयकर आय.
ु त (अपील)/ The CIT(A)
5. *वभागीय ( त न1ध, आयकर अपील"य आ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar