Income Tax Appellate Tribunal - Delhi
Esha Kedia,New Delhi vs Acit, Central Circle-3,, New Delhi on 17 March, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B': NEW DELHI
BEFORE
SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
AND
SHRI MANISH AGARWAL, ACCOUNTANT MEMBER
ITA No.5142/Del/2018
(ASSESSMENT YEAR 2012-13)
ITA No.5143/Del/2018
(ASSESSMENT YEAR 2013-14)
ITA No.5144/Del/2018
(ASSESSMENT YEAR 2015-16)
Esha Kedia Asst. CIT,
59/17, Bahubali Central Circle-3,
Apartment, New Rohtak Vs. New Delhi.
Road, Karol Bagh,
New Delhi-55.
PAN-ASEPK4977G
(Appellant) (Respondent)
Assessee by Sh. Amit Goel, CA and
Sh. Pranav Yadav, Adv.
Department by Sh. Surender Pal, CIT-DR
Date of Hearing 27/02/2025
Date of Pronouncement 27/02/2025
ORDER
PER MANISH AGARWAL, AM:
All these appeals are filed by the assessee, since the issues in all the appeals are common, thus, these are taken together for consideration.
2 ITA Nos.5142 to 5144 /Del/2024Esha Kedia vs. ACIT ITA No.5142/Del/2019 for Asst. Year 2012-13
2. This appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) by the ld. Commissioner of Income Tax (Appeals), New Delhi dated 21.06.2018 for Assessment Year 2012-13.
3. Brief facts of the case are that the assessee is an individual and filed her return of income for the year under appeal on 07.07.2012 declaring at loss of Rs.4,67,970/-. The said return was processed. Thereafter, the search and seizure operation carried u/s 132 of the Act in the case of Shri R.K. Kedia group and its group concerns, residential/factory premises of partners, directors and proprietors of the group on 13.06.2014. During the course of search certain documents pertaining to Ms. Esha Kedia were found and seized from the premises of Sh. Raj Kumar Kedia which were handed over to the Assessing Officer of the assessee. The AO of the assessee after recording the satisfaction note on 10.11.2016 issued notice u/s 153C r.w.s. 153A of the Act in the case of the assessee for Asst. Years 2009- 10 to 2014-15 and after verification of the return and replies filed by the assessee from the time to time the assessment was completed u/s 153C r.w.s. 153 of the Act on 26.05.2017 wherein addition of Rs.15,25,264/- was made by holding the long term capital gain declared by the assesse as bogus and further 6% of such gain is added as commission expenses.
3 ITA Nos.5142 to 5144 /Del/20244. In first appeal, the Ld. CIT(A) vide impugned order dismissed the appeal of the assessee both on legal as well as on merits. Thus, the present appeal is preferred before the Tribunal.
5. The assessee has taken following grounds of appeal:
"1. On the facts and circumstances of the case and in law, the notice u/s 153C issued in this case is bad-in law, without jurisdiction and illegal and therefore the said notice alongwith the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
2. On the facts and circumstances of the case and in law, the notice u/s 153C is illegal & without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice u/s 153C alongwith the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
3. On the facts and circumstances of the case and in law, the addition of Rs.1438928/- made by the assessing officer on account of disallowance of Long Term Capital Gain is beyond the scope/jurisdiction of provisions of section 153C r.w.s 153A of the Income Tax Act, 1961 and, therefore, the addition made is liable to be deleted and CIT(A) erred in not holding so.
4. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs. 1438928/- made by the assessing officer on account of disallowance of Long Term Capital Gain and, therefore, the addition made is liable to be deleted.
5. On the facts and circumstances of the case and in law, the addition of Rs.86336/- made by the Assessing Officer on account of alleged commission expense is beyond the scope/jurisdiction of provisions of section 153C r.w.s.153A of the Income Tax Act, 1961 and, therefore, the addition made is liable to be deleted and CIT(A) erred in not holding so.
6. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs. 86,336/- made by the assessing officer on account of alleged commission expense and, therefore, the addition made is liable to be deleted.
7. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal.4 ITA Nos.5142 to 5144 /Del/2024
Esha Kedia vs. ACIT
8. The aforesaid grounds of appeal are without prejudice to each other."
6. Ground No.1 to 3 are relation to the legality of the order passed u/s 153C of the Act. Therefore, these three grounds are taken first for consideration.
7. Before us, the Ld. AR submit that the Assessing Officer has recorded satisfaction note for A.Y. 2009-10 to A.Y. 2014-15 and no separate satisfaction for each year falling in block period of six yeas was recorded. Neither any separate approval u/s 153D for each year was taken in the case of the assessee. For this, he relied upon the judgment of Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma & Ors. [2024] (2) TMI 116 which was affirmed by the Hon'ble Supreme Court vide order dated 20.08.2024 reported in [2024] (8) TMI 1086-Supreme Court. He further submitted that from the perusal of the assessment order it could be seen that no paper whatsoever found and seized as a result of search was referred by the Assessing Officer and the additions have been made on the basis of information supplied in the regular return filed by the assessee. This fact is evident from para 4.1 of page 2 of the assessment order wherein the Ld. AO himself has observed as under"
"on perusal of computation of income and share transaction detail submitted by the assessee......".
He further submitted that during the course of search, the documents seized was the copy of HDFC Bank book for the period from 1st March, 2009 to 31st March, 2015 which is printout of the ledger account of HDFC Bank book taken from Tally Software, copy of which is placed 5 ITA Nos.5142 to 5144 /Del/2024 Esha Kedia vs. ACIT in PB at page 1 to 13. According to Ld. AR, these bank books are regular bank account of the assessee and duly declared in regular returns filed, therefore, it is not the incriminating material rather it is a part of disclosed and regular books of accounts of the assessee. He further prayed that when no incriminating paper was found and seized, thus, in case where the assessment was completed u/s 153C r.w.s. 153A of the Act, no addition could have been made dehors the seized incriminating material. In this regard, he placed reliance on the judgment of Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. reported in [2023] 454 ITR 212 (SC).
8. On the other hand, the Ld. CIT-DR vehemently supported the orders of the lower authorities and requested for the confirmation of the same.
9. We have heard the rival submissions and perused the materials available on record. At the outset, in the instant case, from the perusal of the assessment order, we find that AO has made the addition on account of long term capital gain claimed exempt by the assessee u/s 10(38) of the Act in the return of income filed which was held as bogus and sham transaction, however, during the course of search no incriminating paper whatsoever was found and seized nor referred by the AO which could suggest that the transaction of long term capital gain declared by the assessee was bogus. The entire exercise of the AO is based on the regular return filed and no material found and seized during the course of search was referred. This being so in our 6 ITA Nos.5142 to 5144 /Del/2024 Esha Kedia vs. ACIT opinion, no addition could be made in the order passed u/s 153C r.w.s. 153A of the Act. This view is duly supported by the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) wherein the Hon'ble Supreme Court in para 14 has concluded as under:
"14. In view of the above and for the reasons stated above, it is concluded as under:
i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A;
ii) all pending assessments/reassessments shall stand abated;
iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and
iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.
The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs."
10. In view of the above, in our opinion, no addition could be made de-hors seized material, therefore, the addition made is herby deleted, however in terms of the directions given by the Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) the AO is at liberty to 7 ITA Nos.5142 to 5144 /Del/2024 Esha Kedia vs. ACIT take suitable action as per law keeping in mind the limitation provided under the Act.
11. As a result, the legal grounds of appeal No.1 to 3 by the assessee are allowed.
12. Since, we have allowed the legal grounds of assessee and deleted the addition, the other grounds on merits became academic, thus, not adjudicated.
13. As a result, the appeal of the assessee is allowed.
ITA No.5143/Del/2019 for Asst. Year 2013-1414. Since the facts of the case are identical to the facts of 5142/Del/2018 above except the amount of capital gain, therefore, by following the observations made therein which are mutatis mutandis applied in this year also, and accordingly, the appeal of the assessee for this year is allowed.
ITA No.5144/Del/2019 for Asst. Year 2012-1315. The assessee has challenged the order of Ld. Commissioner of Income Tax (Appeals)-23, New Delhi in Appeal No.80/17-18 dated 21.06.2018 on the strength of following grounds of appeal:
"1. On the facts and circumstances of the case and in law, the assessment order passed u/s 143(3) of the Act is bad in law, without jurisdiction and CIT(A) erred in not holding so.
2. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs.259214/- made by the Assessing Officer on account of disallowance of Short Term Capital Loss and, therefore, the addition made is liable to be deleted.8 ITA Nos.5142 to 5144 /Del/2024
Esha Kedia vs. ACIT The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal."
16. In ground No.1, the assessee has challenged the legality of the order passed u/s 143(3) of the Act. It is submitted by Ld. AR that the assessment was completed u/s 143(3) by making addition of Rs.2,59,241/-. In the case of the assessee, the proceedings were initiated in terms of the satisfaction note recorded u/s 153C of the Act on 10.11.2016, therefore, the date of search in the case of the assessee would be 10.11.2016 and, accordingly, the search year was assessment year 2017-18 relevant to previous year 2016-17 and six preceding years for which the proceedings u/s 153C could be initiated were A.Y.2011-12 to 2016-17. Thus, the assessment year in appeal i.e., AY 2015-16 is fallen in the block period and, therefore, any order could be passed was u/s 153C of the Act and not u/s 143(3) as has been done in the instant case. For this, he placed reliance on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Jasgit Singh [2023] (10) TMI 572-(SC) and also by this Bench of Tribunal in case of Raja Varshney vs. DCIT in ITA No.1459/Del/2024 dated 26.09.2024 and also in case of in Akansha Gupta vs. ACIT in ITA No.3074/Del/2023 dated 04.02.2025. Ld. AR prayed that assessment order passed u/s 143(3) is without jurisdiction and deserves to be hold bad in law and be quashed.
17. On the other hand, the Ld. CIT-DR vehemently supported the order of the lower authorities and request for confirmation of the same.
9 ITA Nos.5142 to 5144 /Del/202418. We have heard the rival submissions and perused the materials available on record. Admittedly in the instant case, the satisfaction note based on the seized material pertaining to assessee supplied by the Assessing Officer of the personal searched to the AO of assessee, was recorded by the Assessing Officer on 10.11.2016, thereafter, the notice u/s 153C were issued for A.Y.2009-10 to 2014-15. The assessment order under appeal i.e., A.Y. 2015-16 notice u/s 143(2) was issued on 24.11.2016 i.e., after the date of recording of satisfaction note u/s 153C in the case of the assessee. Since, satisfaction note for initiation of proceedings u/s 1543C of the Act was recorded on 10.11.2016 in the case of the assessee, in view of the proviso of 153C(1) the date of search would be the date when the seized material was handed over to the AO of assessee satisfaction note is recorded i.e., on 10.11.2016, thus, the search year would be A.Y.2017-18 and six years for which proceedings 153C could be initiated were AY 2011-12 to AY 2016-17. The Assessment Year 2015- 16 i.e., year before us also fallen within the block period of six years, therefore, the assessment for AY 2015-16 must be completed u/s 153C and not u/s 143(3) of the Act, therefore, the orders so passed u/s 143(3) is bad in law. The Hon'ble Delhi High Court in the case of Jasjit Singh (supra) has expressed the similar view and the said order is affirmed by the Hon'ble Supreme Court also. The Co-ordinate Bench of the ITAT, Delhi in the case of Raja Varshney (supra) and Akansha Gupta (supra) also expressed the same view. Thus, by respectfully following the judgment of Hon'ble Supreme Court and Co-
10 ITA Nos.5142 to 5144 /Del/2024Esha Kedia vs. ACIT ordinate Bench of Tribunal, in our view, the assessment completed u/s 143(3) for A.Y.2015-16 is bad in law and, therefore, is quashed.
18 As a result, the ground of appeal no.1 of the assessee is allowed.
19. Since, we have allowed the ground No.1 in favour of the assessee and other grounds of appeal taken up by assessee on merits became academic and not adjudicated.
As a result, all the appeals i.e., ITA Nos.5142, 5143 and 5144/Del/2018 are allowed.
Order pronounced in open court on 27/02/2025.
Sd/- Sd/-
(SATBEER SINGH GODARA) (MANISH AGARWAL)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 17/03/2025
PK/Ps
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI