Income Tax Appellate Tribunal - Delhi
Dilbagh Rai Chawla, New Delhi vs Acit, New Delhi on 8 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'B' NEW DELHI
BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER
&
SHRI K.N. CHARY, JUDICIAL MEMBER
ITA No.-257/Del/2013
(Assessment Year: 2006-07)
Dilbagh Rai Chawla vs ACIT
C/o Raj Kumar & Associates, CA, Central Circle 19,
4435/7, Ansari Road, Darya Ganj, Jhandewalan,
New Delhi. New Delhi.
AAWPR6716J
Assessee by Sh. Raj Kumar Gupta, CA
Revenue by Ms. Renu Amitabh, CIT DR
Date of Hearing 02.08.2017
Date of Pronouncement 08.08.2017
ORDER
PER SHRI K.N. CHARY, J.M.
This is an appeal challenging the order dated 30.11.2012 in appeal no. 533/10-11/180 passed by the Ld. Commissioner of Income Tax (Appeals)-XXXIII, New Delhi.
2. Briefly stated facts are that after the assessee filed the return of income on 16.03.2007 declaring a total income of Rs. 11,10,510/- for the AY 2006-07, there was a search and seizure operation carried out in R.H. Group of cases including the 2 ITA No. 257/Del/2013 assessee on 10.02.2009. Pursuant to the statutory notice u/s 153A of the Income Tax Act, 1961 the assessee filed the copy of the original return and from time to time furnished the details sought by the Department. AO found that the assessee was deriving income from M/s R.H. Agro Overseas Pvt. Ltd. as salary besides interest on capital and remuneration from M/s Raghunath Agro Industries as a partner and income from other sources. There were long term capital gains on the sale of shares of LT Overseas Ltd. for a consideration of Rs. 1,31,92,160/- which was not reflected in the computation filed with the original return and the long term capital gain was Rs. 56,81,323/- which the AO added to the income of the assessee. Appeal carried by the assessee before the Ld. Commissioner of Income Tax (Appeals)- XXXIII, New Delhi was dismissed by way of impugned order, as such the assessee is before us in this appeal challenging the said addition on the ground that in the absence of any incriminating material, a concluded assessment cannot be reopened to make any additions u/s 153A and for this proposition he placed reliance on the decisions of the Hon'ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla (2015) 61 taxmann.com 412 (Del.) 3 ITA No. 257/Del/2013 and Pr. CIT vs. Meeta Gutgutia Prop. M/s Ferns 'N' Petals (ITA No. 306/2017 dated 25th May, 2017). Per contra Ld. DR while placing reliance on the decisions reported in EN Gopa Kumar vs. CIT 75 taxman.com 215 and judgment of the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia 352 ITR 493 argued that when once the assessment is reopened the jurisdiction of the AO extends to make any addition basing on record.
3. So far as the facts are concerned absolutely there is no dispute. Original return of income filed on 16.03.2007 declaring an income of Rs. 11,10,510/- was processed u/s 143(1) and subsequent to the search and seizure on 10.02.2009, and pursuant to the notice issued u/s 153A on 20.07.2009, the assessee filed a copy of his original return on 20.09.2010. It is not the case of the Revenue that any material incriminating the accused of any concealment of income was unearthed during the search and seizure operations.
4. Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla (2015) 61 taxmann.com 412 (Del) considering its earlier decision in 4 ITA No. 257/Del/2013 the case of CIT vs. Anil Kumar Bhatia (supra) considered the following question of law :
"2. The issue that the Court proposes to address in these appeals is the same that was considered by the ITAT viz., "Whether the additions made to the income of the Respondent-Assessee for the said A.Ys under section 2(22)(e) of the Income Tax Act, 1961 ('Act') were not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search ?"
5. Further, the Hon'ble Delhi High Court in the above case as regards completed assessment held as under :
"vii. Completed assessments can be interfered with by the A.O. while making the assessment under section 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"
6. The Hon'ble Delhi High Court in its recent decision in the case of Pr. CIT vs. Meeta Gutgutia (supra) in paras 69 to 72 has held as under :
"69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission.5 ITA No. 257/Del/2013
70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts.
71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs.
Conclusion
72. To conclude :
(i)Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenue was not justified in invoking Section 153 A of the Act against the Assessee in relation to AYs 2000-01 to AYs 2003-04."
7. It is, therefore, clear that in the absence of any incriminating material that could be found during the search and seizure operations the concluded assessment of the assessee for the AY 2006-07 was sought to be reopened to make the additions. Ld. DR argued that the return of income processed u/s 143(1) of the Act, as such in view of the judgment in ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500 (SC), there was no scrutiny of the return of income and consequently no question of reopening the same arises, but in PCIT vs. World Window Impex India (P) Ltd. (ITA No. 175/Del/2016) decided on 09.03.2016 the Hon'ble Delhi High Court held as follows:
6ITA No. 257/Del/2013
"4. Mr. Dileep Shivpuri, Ld. Senior Standing Counsel for the Revenue, sought to distinguish the judgment in Commissioner of Income Tax (Central)-III vs. Kabul Chawla (supra) on the ground that it did not consider a situation where the original return was merely processed under Section 143(1) of the Act.
5. The Court notes that the decision in Commissioner of Income Tax (Central)-III vs. Kabul Chawla (supra) does deals with the said situation as is evident from para 3 of the said judgment read with the conclusion in para 37(v). The Court is, therefore, not persuaded to frame any question of law in this appeal."
8. In view of the circumstances, we are of the considered opinion that there is no material much less incriminating material justifying the AO to reopen the concluded assessment and to make an addition as such we hold that the invocation of Section 153A by the Revenue for the AY 2006-07 was without any legal basis and cannot be sustained. We, accordingly, set aside the orders of the authorities below and delete the addition.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 08.08.2017 Sd/- Sd/-
(B.P. JAIN) (K. NARSIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 08.08.2017 *Kavita Arora 7 ITA No. 257/Del/2013 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI Draft dictated on 02.08.2017/03.08.17 Draft placed before author 03.08.2017 Draft proposed & placed before the second member Draft discussed/approved by 08.8.17 Second Member. Approved Draft comes to the 08.8.17 Sr.PS/PS Kept for pronouncement on 08.8.17 File sent to the Bench Clerk 10.8.17 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.