PR.COMMISSIONER OF INCOME TAX (CENTRAL)- 2 vs. M/S MEROFORM INDIA PVT. LTD.

PDF · subscribers
ITA/664/2019HC DelhiDLHC01029816201922 July 2019Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE TALWANT SINGH6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the impugned common order of the ITAT. Regarding AYs 2006-07 to 2008-09, the ITAT correctly followed the High Court's judgment in CIT v. Kabul Chawla, holding that additions under Section 153A were beyond the scope of assessment as no incriminating material was found and assessments were already completed prior to the search. For AYs 2010-11 and 2011-12, the ITAT found that expenses were incurred in the normal course of business, and the CIT(A)'s deletion of additions was justified. Concerning the statement recorded in the case of M/s Nitin Enterprises, the ITAT noted that the assessee had produced documents showing a settlement of litigation, and the statement was recorded ex-parte without cross-examination. The ITAT concurred with the CIT(A)'s findings. Similarly, for purchases from M/s Kiran Furnitures, the ITAT examined the evidence and concurred with the CIT(A)'s deletion of additions. The Court found concurrent findings of fact by the CIT(A) and ITAT, leading to the dismissal of the appeals.

What were the facts?

The Revenue (Principal Commissioner of Income Tax) appealed against a common order dated July 31, 2018, passed by the Income Tax Appellate Tribunal (ITAT) concerning Income Tax Appeals (ITAs) 4630 to 4635/Del/2014. These appeals related to Assessment Years (AYs) 2006-07 to 2011-12. The core issue was the validity of additions made by the Assessing Officer (AO) under Section 153A of the Income Tax Act, 1961, following a search and seizure operation at the assessee's (M/s Meroform India Pvt. Ltd.) premises on October 19, 2010. Notices under Section 153A were issued on September 27, 2012. For AYs 2006-07 to 2008-09, assessments had already been completed under Section 143(3) before the search.

What were the issues?

1. Whether the ITAT erred in upholding the deletion of additions made under Section 153A of the Income Tax Act, 1961, for AYs 2006-07 to 2008-09, when assessments for these years were already completed prior to the search and no incriminating material was found? Assessee's Contention: The assessee argued that for AYs 2006-07 to 2008-09, since returns were filed on due dates and assessments completed under Section 143(3) before the search, the additions under Section 153A were beyond its scope, relying on the High Court's judgment in CIT v. Kabul Chawla (2016) 380 ITR 573. Revenue's Contention: The Revenue contended that additions were warranted under Section 153A. The judgment does not record specific arguments from the Revenue for these AYs beyond the general appeal against the ITAT's order. 2. Whether the ITAT erred in deleting additions for AYs 2009-10, 2010-11, and 2011-12, particularly concerning alleged bogus purchases and expenses based on a statement recorded during a survey in another case? Assessee's Contention: The assessee presented documents showing litigation and settlement with M/s Nitin Enterprises, which were considered by the AO. The statement relied upon by the Revenue was recorded behind the assessee's back, and the deponent was not cross-examined. Similar arguments were made regarding purchases from M/s Kiran Furnitures. The assessee also argued that expenses shown in books for AYs 2010-11 and 2011-12 were incurred in the normal course of business. Revenue's Contention: The Revenue relied on a statement recorded during a survey under Section 133A in the case of M/s Nitin Enterprises, alleging that the assessee had issued cheques against bogus bills and received cash later. The Revenue also questioned purchases from M/s Kiran Furnitures.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 133A

AI-generated summary — verify with the full judgment below

i. $~64 to 69 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 658/2019 PR. COMMISSIONER OF INCOME TAX _ (CENTRAL)-2 Appellant Through; Mr. Deepak Anand, Junior Standing Counsel for Mr. Zoheb Hossain, Senior Standing Counsel, both for Revenue versus M/S MEROFORM INDIA PVT. LTD. Respondent Through: Mr. Sameer Rohatgi, Mr. Akshit Pradhan and.Ms; P. Shree Banerjee, Advocates + ITA 659/2019 PR. COMMISSIONER OF INCOME TAX (CENTRAL)- 2 Appellant Through: Mr. Deepak Anand, Junior Standing Counsel, for Mr. Zoheb Hossain, Senior Standing Counsel, both for Revenue versus M/S MEROFORM INDIA PVT. ltd; Respondent , ' Through: Mr. Sameer Rohatgi, Mr. Akshit ^ Pradhan and Ms. P. Shfee Banerjee, ^ ' Advocates + ITA 660/2019 . PR.-COMMISSIONER OF INCOME TAX (CENTRAL)-2 ....; Appellant , Through: Mr. Deepak Anand, Junior Standing Counsel for; Mr. Zoheb Hossain, Senior Standing Counsel, both for Revenue JTA 658/2019 etc. Page I of 6 - Signed By:RAM DATT Signing Date:15.10.2024 16:15 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified

(p versus MEROFORM INDIA PVT.LTD. Respondent Through: Mr. Sameer Rohatgi, Mr. Akshit Pradhan and Ms. P. Shree Banerjee, Advocates + ITA 661/2019 PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 .....Appellant Through: Mr. Deepak Anand, Junior Standing Counsel for Mr. Zoheb Hossain, Senior Standing Counsel, both for O Revenue versus MEROFORM INDIA PVT. LTD. Respondent Through: Mr. Sameer Rohatgi, I^. Akshit Pradhan and Ms. P. Shree Banerjee, Advocates + ITA 663/2019 PR. COMMISSIONER OF INCOME TAX (CENTRAL)- 2 Appellant , Through: Mr. Deepak Anand, Junior Standing Counsel for Mr. Zoheb Hossain, Senior Standing Counsel, both for Revenue versus ,

M/S MEROFORM INDIA PVT. LTD. ..... Respondent Through: Mr. Sameer Rohatgi, Mr, Akshit Pradhan and Ms. P. Shree Banerjee, Advocates + ITA 664/2019 PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 .....Appellant Through: Mr, Deepak Anand, Junior Standing ITA 658/2019 etc.

Counsel for Mr. Zoheb Hossain, Senior Standing Counsel, both for Revenue versus M/S MEROFORM INDIA PVT. LTD. Respondent Through: Mr. Sameer Rohatgi, Mr. Akshit Pradhan and Ms. P. Shree Banerjee, Advocates CORAM: JUSTICE S. MURALIDHAR JUSTICE TALWANT SINGH ORDER o/„ 22.07.2019 CM APPLs. 32137/2019. 32138/2019. 32139/2019, 32140/2019, 12142/2019 3nd 32143/2019 (delay in rp-filinP the appeals) 1. For the reasons explained in the applications, the delay in re-fihng t ,e appeals is condoned. The applications are allowed. TTA 658/2019. 6^9/2019. 660/2019. 6617201Q, fifil/2019. 664/2019 2.; These appeals by the Revenue are against common impugned order dated 3L' July, 2018 passed in ITR Nos. 4630, 4631, 4632, 4633, 4634, ' © 4635/Del/2014 for Assessment Years (AYs) 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12. 3. The comiiion question of law that has been urged by the Revenue in all these appeals concerns the correctness of the impugned order of the Income Tax Appellate .Tribunal (TTAT') upholding the order of Commissioner of Income Tax (Appeals) ['CIT (A)'] that there was no incriminating material Page 3 of 6 ITA 658/2019 etc.

recovered against the Assessee during the eourse-of the search warranting re-op?ning of assessments and making the additions under Section 153 A of the Income Tax Act, 1961 ('the Act'). 4. The ITAT has noticed that search and seizure was conducted in the business premises of the Assessee on 19^'' October, 2010 and notices under Section 153 A of the Act were issued on 27/^ September, 2012. In each of the above Assessment Years for which notices were issued, as far as AYs 2006- 07 to 2008-09 were concerned, returns had been filed on the due date and even assessment had been completed under Section 143 (3) of the Act much before the date of the search. The learned CIT(A) agreed with the Assessee that the judgment of this Court in CITy. Kabul Chawla (2016) 380ITR 573 would apply, particularly since the Revenue was not able to dispute that-no incriminating material was found qua the additions made for . the AYs in question. 5. In the impugned order, the ITAT followed the judgment of this Court in. CIT V. Kabul Chawla (Supra) and for the AYs 2006-2007 to 2008-2009, it held that the additions were beyond the scope of assessment under Section 153,A of-the Act. 6. The ITAT then proceeded to discuss the additions for the remaining AYs i.e. 2009-2010, 2010-2011 and 2011-2012. As regards two of the AYs i.e. 2010-2011 and 201.1-2012, it found that the experises shown by the Ass.essee in its.books of accounts were incurred during the normal course of business. Page 4 of 6 IT'A 658/2019 etc.

Consequently, these additions were rightly held to have been deleted by the CIT (A). 7. Learned Counsel for the Revenue has drawn the attention of the Court to a statement recorded during a course of a suryey made under Sectioin 133A of the Act in the case of one M/s Nitin Enterprises by one of its partners, - The. statement adverted to the said Nitin Enterprises being engaged in the practice of issuing bogus bills to various parties. The statement was to the 0 effect that the Assessee had issued cheques against bogus bills for which cash had been later paid to the Assessee. 8. The IT AT has in the impugned order taken note of the fact that before the AO; the Assessee produced various docunients which showed that there was litigation between the Assessee and M/^itin Enterprises which ended in a settlement. These documents were before the AO who took no adverse view thereof. The ITAT noted that the statement had been recorded behind the ; Assessee's back and.the person making the statement was not subjected to cross-examination. In the circumstances, the ITAT concurred-with the detailed findings rendered by the CIT(A) on this issue. . 9. A similar view was taken by the ITAT in respect of purchases niade from . one M/s Kiran Furnitures. The ITAT has.in the impugned order examined the documents and evidence afresh and has given detailed reasons in support of its concurrence -with view expressed by the CIT (A). The additions made by the AO for AY 2011-2012, which have been deleted by the CIT (A),- " have also been discussed in detail by the ITAT in the impugned order and Page 5 of 6 ITA 658/2019 etc. ^ I

pressed by the CIT(A) have been findings concurring with the views ex' rendered. 10 In view of the concurrent findings of both the CXT(A) and ITAT .on facts, the court finds that m the present cases, no substantial question of law arises from the impugned common order of the ITAT. 0 11. These appeals are accordingly dismissed. S. MURALIDHAR, J. © JULY 22, 2019 T^^OTANT SINGH, ITA 658/2019 etc. Page 6 of 6

More judgments on Section 153A

All 18,957 judgments and leading authorities on Section 153A →

Recent GST High Court judgments

Search GST case law →