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Income Tax Appellate Tribunal, DELHI BENCHES “F” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
PER BENCH :
This Order shall dispose of all the above 37 cross- appeals as the issues involved are common in all these appeals. According to the Office, M/s. MDLR Group of cases have 179 appeals listed for hearing which have been consolidated on the request of the Department having the common issues.
10 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 2. We have heard the Learned Representative of both the parties, perused the material available on record and written submissions filed by both the parties.
Both the parties initially argued in the case of assessee M/s. M/s. Alankar Saphire Developers, in which, 03 Departmental Appeals and 03 Appeals of the Assessee have been filed by the parties. The issues in the remaining appeals are identical and arguments of the parties are also identical, therefore, for the purpose of disposal of all the above appeals, we proceed to decide the appeals in the case of M/s. Alankar Saphire Developers i.e., ITA.No.2606/Del./ 2016 of Revenue and ITA.No.2277/Del./2016 by Assessee for A.Y. 2003-2004 are as under.
The appeals ITA.No.2606/Del./ 2016 by Revenue and ITA.No.2277/Del./2016 by Assessee are directed against the Order of the Ld. CIT(A)-XXVI, New Delhi, Dated 18.02.2016, for the A.Y. 2003-2004.
11 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 5. Briefly the facts of the case that assessee is a company dealing in real estate, land trading, trading and development. A search was conducted at the office premises of the company on 31st January 2008. Accordingly, notice under section 153A was issued on 24th November 2008 and 15th July, 2009 further statutory notices were issued. The assessee on 17th December 2009 filed a letter with a printout of return for the A.Y. 2003-2004 and requested that return filed originally under Section 139 of the Income Tax Act, 1961, should be treated as return filed under section 153A of the Income Tax Act, 1961. Thereafter, no details were furnished. Accordingly, proceedings were culminated by passing an order under section 153A/144 of the Income Tax Act on 24th December 2009 at Rs.2,14,55,132/-. Thereafter the assessee moved an application before Commissioner of Income Tax, Central (2), New Delhi, under section 264 of the Income Tax Act, 1961, which was disposed of by Order dated 12th March 2012 for the A.Y. 2002-2003 to A.Y. 2008-2009 and matter was restored back to the A.O. with direction to decide the matter
12 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. as per Law. The A.O, in pursuance of the Order of the Commissioner of Income Tax, Central (2), New Delhi, took- up the assessment afresh. Show cause notice was issued to assessee and objections of the assessee were dropped.
5.1. The A.O. noted that in assessment year under appeal, assessee has claimed administrative and general expenses to the tune of Rs.82,685/-. The assessee-company during the course of assessment as well as reassessment proceedings has failed to furnish any evidence of the source from which this expenditure was incurred. Therefore, in the absence of any evidence i.e., source of the expenditure, the A.O. made the addition of Rs. 82,685/-.
5.2. The A.O. further noted that during assessment year under appeal, the assessee-company has issued share capital of Rs.2,13,70,020/-. The assessee-company during the course of assessment as well as re-assessment proceedings has failed to discharge its onus of proving the identity, creditworthiness and genuineness of the transaction. Therefore, same was considered as unexplained
13 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. credit section 68 of the Income Tax Act, 1961. The A.O. accordingly made addition of Rs.2,13,70,020/-. The assessment was completed under section 153A/144 of the Income Tax Act, 1961 Dated 15th March 2013.
The assessee challenged both the additions on merit as well as assumption of jurisdiction to proceed under section 153A of the Income Tax Act, 1961, before the Ld. CIT(A). The appeal of assessee was late by 20 days. The assessee submitted before the Ld. CIT(A) in the application for condonation of delay in filing the said appeal that the Orders were suddenly passed in the last week of February 2013 and assessee was under pressure of completing around 250 assessments for the block period and 50 + assessments of companies and individuals of the same group. The same were getting time barred on 31st March 2013. Further, various orders of the same Group of assessee were passed in a piecemeal manner from the last week of February 2013 to last week of March 2013. Since all the issues were interrelated, therefore, assessee was under tremendous mental pressure and stress and in a confused
14 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. state of mind. The assessee due to the above facts was not able to defend its case properly and no opportunity were given before making the said additions. There was a gross contravention of provisions of Section 264 and 153A of the Income Tax Act. Further, the assessee filed writ petition before Hon’ble Delhi High Court for redressal of its grievance and to protect its rights and interest. The writ petition was schedule for hearing on 23rd April 2013 which was deferred to second week of May 2013, therefore, appeal could be filed with delay before Ld. CIT(A).
6.1. The Ld. CIT(A) accepted the above contention of assessee and the reasoning given about that various assessment orders were passed for Group Companies and writ petition was pending in High Court which got differed, therefore, 20 days was not considered abnormal and delay was not attributable to the assessee and no negligence was found in the case of assessee. The Ld. CIT(A) relied upon Judgment of the Hon’ble Supreme Court in the case of Smt. Prabha vs., Ramprakash Kalra 1987 (Suppl.) 339 (SC) in which it was held that “Courts should not adopt an injustice
15 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. oriented approach in rejecting the application for condonation of delay.” The Ld. CIT(A) also relied upon Judgment of the Hon’ble Supreme Court in the case of Vedabhai alias Vyjayantibhai Baburao Patil vs., Santaram Baburao Patil 253 ITR 798 (SC) in which the Hon’ble Apex Court made a distinction in delay and inordinate delay and it was held that “Court should adopt a pragmatic approach where delay is of few days only.” The Ld. CIT(A) has also relied upon several other decisions and considering nominal delay in filing the appeal before him and for cause of substantial justice, condoned the delay in filing the appeal.
The assessee further raised issue of jurisdiction of the A.O. to proceed under section 153A of the Income Tax Act in respect of the year under consideration as no incriminating documents, assets had been found as a result of search on assessee. The assessee submitted before the Ld. CIT(A) that assessment proceedings under appeal had not abated inasmuch as the returns are accepted under section 143(1) of the Income Tax Act, 1961 and no notice under section 143(2) of the Income-Tax Act, 1961, was
16 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. issued and served upon the assessee. It was further submitted that impugned additions made are without jurisdiction. The assessee relied upon several decisions of different Benches of the Tribunal and Judgments of the Hon’ble Delhi High Court and Judgment of Hon’ble Bombay High Court in the case of Sinhagad Technical Education Society 378 ITR 84 (Bom.). It was submitted that both the additions are made without reference to any incriminating material. The perusal of the assessment order makes it clear that assessment has been framed without reference to any incriminating documents or assets if found during the course of search. The Ld. CIT(A) referred to several decisions in the appellate order including the Judgment of Hon’ble Delhi High Court in the case of CIT vs., Kabul Chawla 380 ITR 573 (Del.) etc., and the summary of the legal position was noted at Page-20 of the appellate order, in which, one of the relevant condition for proceeding under section 153A have been mentioned at Para-(g), which reads as under :
17 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. “g) Completed assessments can be interfered with the A.O. while making the assessment under section 153A only on basis of some incriminating material unearthed during 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 course of original assessment.”
The Ld. CIT(A) considering the above facts and legal proposition supra held that “A.O. could not have proceeded to frame assessment under section 153A in respect of the year under consideration as no incriminating documents / assets have been found during the course of search operation pertaining to this year. This ground of appeal of Assessee was accordingly allowed.
The Ld. CIT(A) as regards addition under section 68 of the Income Tax Act, 1961 of Rs.2,13,70,020/- confirmed the addition on merit. The Ld. CIT(A), however,
18 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. deleted the addition of Rs.82,685/- an account of disallowance of expenses. Appeal of assessee partly allowed.
The Revenue in its appeal has raised several grounds in which the Revenue has challenged the Order of Ld. CIT(A) in condoning the delay in filing the appeal, in admitting the additional evidence under Rule 46A, in holding that A.O. could not have proceeded to frame the assessment under section 153A, in the absence of any incriminating material and in deleting the addition of Rs.82,685/- on account of administrative and general expenses.
The assessee in its appeal has challenged the addition of Rs.2,13,70,020/- under section 68 of the Income Tax Act, 1961.
The Ld. D.R. contended that there was a delay of 20 days in filing the appeal before the Ld. CIT(A). She has referred to ground of appeal, in which it is contended that the Ld. CIT(A) without considering the illegal conduct of the assessee and during the search operation including
19 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. manhandling of the Search Officer, looting of seized material and registration of criminal cases against the protesters of the Group and their Associates due to the criminal action, should not have condoned the delay. The assessee was also non-cooperative at every stage, therefore, the delay should not be condoned.
On the other hand, Learned Counsel for the Assessee reiterated the submissions made before Ld. CIT(A) and submitted that delay was due to the above reasons and that penalty imposed under section 271(1)(b) of the Income Tax Act, 1961, is cancelled on the same reasons. He has submitted that assessment order is appealable, therefore, nominal delay was rightly condoned.
After considering the rival submissions, we are of the view that Ld. CIT(A) was justified in condoning the nominal delay of 20 days in filing the appeal before him. The assessee has explained the reasons which are sufficient to hold that assessee was prevented by sufficient cause in not filing the appeal within period of limitation because large
20 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. number of assessments were pending before the authorities below of the Group and assessee has also filed writ petition before the Hon’ble High Court for redressal of their grievance, but, when it was deferred, assessee filed appeal before the Ld. CIT(A). The decisions relied upon by the Ld. CIT(A) in support of his findings squarely apply to the facts of the case that the Court should adopt a pragmatic approach in condoning the delay where the delay is of few days only. The discretion exercised by the Ld. CIT(A) in condoning the delay of 20 days in filing the appeal is just and proper, therefore, we do not find any merit in these grounds of appeal. These Grounds in Departmental Appeal are dismissed.
The Ld. D.R. also contended that the Ld. CIT(A) should not have admitted the additional evidence under Rule 46A because the case of the assessee would not fall within the four exceptions provided under Rule 46A of the I.T. Rules, 1962 because assessee was non-cooperative before the A.O. and conduct of the assessee was improper.
21 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 16. Learned Counsel for the Assessee however submitted that no additional evidences have been admitted by the Ld. CIT(A) as substantive addition have been confirmed by the Ld. CIT(A) and only small addition on account of administrative expenses have been deleted by the Ld. CIT(A). He has submitted that the issue of jurisdiction to frame assessment under section 153A is legal in nature which could be raised at any point of time and he rely upon the Judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company 229 ITR 383 (SC).
We have considered the rival submissions and do not find any justification to interfere on these grounds in Departmental Appeal. The Order of the Ld. CIT(A) did not show if he has considered any additional evidence. The Ld. CIT(A) has confirmed the substantive addition under section 68 of the Income Tax Act, 1961. Therefore, Revenue should not have any grievance. However, as regards small addition of disallowances of administrative expenses, the Ld. CIT(A) has referred to the assessment proceedings and proceedings under section 264 of Income Tax Act, 1961, in which details
22 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. of these expenses are referred to. Therefore, the Ld. CIT(A) on the basis of the material on record, deleted the addition. The issue as regards assumption of jurisdiction under section 153A of the Income Tax Act for deleting the addition is concerned, it is a legal issue and can be dealt by the authorities at any point of time based on the material on record. The Ld. CIT(A), thus, did not violate any of the conditions of Rule 46A of the Income Tax Rules, 1962, therefore, this issue has no relevance to the matter in issue. These Grounds of appeal of Revenue are dismissed.
The Ld. D.R. as regards the assumption of jurisdiction under section 153A of Income Tax Act, 1961, to delete the above two additions submitted that this issue was not raised before the A.O. or before the Commissioner of Income Tax, Central-(2), New Delhi, under section 264 of the Income Tax Act, 1961, therefore, it cannot be raised before the Ld. CIT(A). The brief synopsis filed in this case by the Department on record states that search and seizure operation under section 132 of the Act was conducted on 31.01.2008 in M/s. MDLR Group of cases. The Group has
23 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. its business interest in trading of land, commercial and real estate development, hotels and operating a regional Airline with brand name of MDLR Airlines. The Group is controlled by Shri Gopak Kumar Goyal and his brother and sons of Shri Muralidhar Goyal. Various assessments have been passed in the group cases under section 153A/144 of the I.T. Act, 1961. On filing of the petition by assessee, the Ld. CIT, Central-2, New Delhi passed the Order under section 264 of the I.T. Act, 1961, in respect of the Orders passed under section 153A/144 of the I.T. Act, 1961, for the A.Ys. 2002-2003 to 2008-2009 and matter was set aside to the file of A.O. The Ld. D.R. while concluding the arguments in Group cases and when arguments were going on in the cases of M/s. Witness Builders Pvt. Ltd., M/s. Witness Construction Pvt. Ltd., M/s. Worldwide Realtors Pvt. Ltd., and M/s. Vinman Estate Pvt. Ltd., of MDLR Group Appeals, have also submitted written submissions in which it is submitted that search material was found during the course of search and post-search investigation of the Investigation Wing, on which, assessments have been framed by the A.O.
24 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. Copy of the relevant pages of the appraisal report and statement on oath recorded during search under section 132(4) are placed on record. Without prejudice to the above, it was submitted with regard to plea of the assessee that no assessment under section 153A can be completed in the absence of any incriminating material found during the course of search, placing reliance on the decision of Hon’ble jurisdictional Delhi High Court in the case of CIT vs., Kabul Chawla 380 ITR 571 (Del.), the Ld. CIT-D.R. submitted that SLP filed by the Department in this case was also admitted by the Hon’ble Supreme Court. Further, although the question of Law was framed in the matter, it was subsequently dismissed due to low tax effect. It was further submitted that SLP has been admitted by the Hon’ble Supreme Court in the case of CIT vs., M/s. APAR Industries on the same issue. Therefore, in the light of fact that SLP has been admitted and converted into Civil Appeal by framing the substantial question of Law, the decisions of Hon’ble Supreme Court is not yet final. The Ld. D.R, therefore, submitted that decision of other High Courts are
25 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. in favour of the Revenue on this legal issue that assessments can be framed even without incriminating material found during the course of search. The Ld. D.R. relied upon Judgment of Hon’ble Kerala High Court in the case of Mr. E.N. Gopakumar vs., CIT (Central) [2017] 390 ITR 131 (Kerala) in which it was held as under :
“Assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a).”
18.1. On the same proposition the Ld. D.R. relied upon Judgment of Hon’ble Kerala High Court in the cases of Mr. K.P. Ummer vs., CIT vide Order Dated 19.02.2019 and CIT vs., Dr. P. Sasikumar 73 taxmann.com 173 that “when notice under section 153A is issued, which enables the Department to carry-out re-assessment or assessment with reference to six immediate prior years and the year in which
26 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. search is carried-out. This does not require any incriminating material recovered during the course of search to those prior years in which there is no time left on the date of the search for assessment under section 143 of the I.T. Act.” The Ld. D.R. submitted that A.O. is a quasi judicial authority and rigor of the rules of evidence contained in the Evidence Act are not applicable. There is no presumption in Law that A.O. has to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal cases. The Ld. D.R. without prejudice to the above submission also submitted that the Ld. CIT(A) exceeded his jurisdiction by deciding an issue which was not agitated by the assessee as per the grounds of appeals enclosed with Form No.35. In this case, the assessee was aggrieved by the Order of the A.O, filed an appeal on various grounds which, however, did not include the issue of making assessment under section 153A of the Act without incriminating material being available on the said issue. This was, therefore, against the Law. Copy of the Panchanama in Group Case and statement of Shri Visesh
27 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. Gupta are filed on record. The Ld. D.R, therefore, submitted that the Ld. CIT(A) should not have decide this issue of non- recovery of incriminating material against the Revenue. Ld. CIT-DR further wanted to place on record gist of written submissions by 20.03.2020, but, till date nothing is placed on record.
Learned Counsel for the Assessee reiterated the submissions made above that since it was a legal issue and sufficient material was available on record, therefore, it being a legal issue, was rightly considered by the Ld. CIT(A) and similarly relied upon Judgment of the Hon’ble Supreme Court in the case of NTPC (supra). Learned Counsel for the Assessee referred to synopsis to pages 1 to 3 to show that original return of income for the assessment year under appeal i.e., 2003-2004 was filed on 28th November 2003 declaring income of Rs.2427/-. A search under section 132(1) of the Income Tax Act, 1961, had taken place at the business premises of MDLR Group of cases on 31st January 2018. Notice under section 153A of the Income Tax Act, 1961, was issued on 15th July 2009. The assessee
28 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. submitted before A.O. that original return may be treated as return having filed in response to notice under section 153A of the Income Tax Act, 1961. He has submitted that no incriminating material was found during the course of search so as to make the above additions.
19.1. Learned Counsel for the Assessee apart from the above submissions also submitted that assessee has filed revised grounds of appeal before the Ld. CIT(A) and as per the revised grounds of appeal, the Ld. CIT(A) has decided the issue of non-recovery of incriminating material during the course of search and relied upon Judgment of Hon’ble jurisdictional Delhi High Court in the case of CIT vs., Kabul Chawla (supra). Therefore, there is no illegality in the Order of the Ld. CIT(A) in deciding this issue in favour of the assessee. Learned Counsel for the Assessee submitted that both the additions have been made by the A.O. based on the items already mentioned in the balance-sheet which were already disclosed to the Revenue Department in the original return of income. The original assessments were already completed. Therefore, in the absence of recovery of
29 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. incriminating material during the course of search, the Ld. CIT(A) rightly decided the issue in favour of the assessee. He has submitted that Ld. CIT, Central (2), New Delhi directed the A.O. to re-frame the assessment under section 153A as per Law. Therefore, the Ld. CIT(A) rightly decided the issue in favour of the assessee. Learned Counsel for the Assessee submitted that in case this issue is decided in favour of the assessee, then, the appeal of assessee on merit and other grounds on merit of the Departmental Appeal, would be left with academic discussion only and there is no need for adjudication of the same.
We have considered the rival submission and perused the material available on record. Before proceeding to decide the issue, we may note that these are Group appeals related to M/s. MDLR Group of Cases in which search and seizure action under section 132 were carried- out on 31.01.2008. Notices under section 153A were issued in all the Group cases. Original assessments were framed under section 153A/144 of the I.T. Act, 1961. The assessees have preferred petition under section 264 of the I.T. Act,
30 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 1961, before the Ld. CIT, Central-2, New Delhi, who vide Order Dated 12.03.2010 disposed of the same setting aside the assessment orders for A.Ys. 2002-2003 to 2008-2009 and restored the matter in issue to the file of A.O. with a direction to re-frame the assessments as per law. The A.O. in pursuance to the directions issued under section 264 of the I.T. Act by Ld. CIT, Central-2, New Delhi, re-framed the assessment under section 153A of the I.T. Act, 1961. These are 179 appeals which were listed before the Bench for hearing of the Group cases as these were clubbed/ consolidated on the request of the Department. Since the issues are same in these appeals, therefore, the issue decided in the present appeals and the findings in this A.Y. 2003-2004, could be followed in the remaining appeals. Further submissions made by the Ld. D.R. in other cases will also be considered while considering the remaining appeals.
20.1. In assessment year under appeal i.e., 2003-2004 the assessee filed original return of income on 28.11.2003
31 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. declaring income of Rs.2,427/-. Search was conducted under section 132 of the I.T. Act, 1961, at the business premises of M/s. MDLR Group of Companies including the assessee on 31.01.2008. Thus, on the date of search, the assessment was concluded and no assessment was pending for the assessment year under appeal. No assessment was found abated. The A.O. noted in the impugned assessment order that the assessee in response to the notice under section 153A of the I.T. Act requested that return filed originally under section 139 of the I.T. Act may be treated as return having been filed in response to the notice under section 153A of the I.T. Act, 1961. The A.O, however, did not accept the contention of assessee with regard to dropping of the proceedings. The A.O. in the impugned assessment order while making the additions on account of administrative and general expenses to the tune of Rs.82,685/- noted that assessee company during the course of assessment as well as re-assessment proceedings has failed to furnish any evidence of source from which this expenditure have been incurred. The A.O. further noted in
32 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. the impugned assessment order that during assessment year under appeal assessee company issued share capital of RS.2,13,70,020/-. The assessee company during the course of assessment as well as re-assessment proceedings failed to discharge onus of providing identity of the share applicants, their creditworthiness and genuineness of the transaction. The addition was, therefore, made under section 68 of the I.T. Act, 1961. These facts clearly show that both these additions have been made by the A.O. of the items which were already disclosed to the Revenue Department in the original return of income which was already completed on the date of search. Thus, no incriminating material was found during the course of search so as to make these additions against the assessee. Since the A.O. specifically noted in the assessment order that no details were filed on these issues in the original assessment proceedings clearly supports the finding of fact recorded by the Ld. CIT(A) that no incriminating material was found during the course of search so as to make these two additions. The perusal of the assessment order, therefore, makes it clear that assessment
33 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. under section 153A/144 of the I.T. Act, 1961 have been framed without reference to any incriminating documents/ material relevant to assessment in appeal. The Judgment of Hon’ble jurisdictional Delhi High Court in the case of CIT vs., Kabul Chawla 380 ITR 573 (Del.) held as under :
“Completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment.”
20.2. The Hon’ble jurisdictional Delhi High Court in the case of Pr. CIT, Central IT, New Delhi vs., Meeta Gutgutia 395 ITR 526 (Del.) in paras 69 to 72 considering the Judgment in the case of CIT vs., Kabul Chawla (supra), held as under :
“69. What weighed with the Court in the above decision as the “habitual concealing of income and indulging in clandestine operations” and that a person indulging in
34 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 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. 70. The above distinguishing factors inDayawanti 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 quaeach of those AYs.
Conclusion
To conclude :
35 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
(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.”
20.3. The Revenue preferred SLP before the Hon’ble Supreme Court in the case of Pr. CIT, Central IT, New Delhi vs., Meeta Gutgutia (supra), which have been dismissed by the Hon’ble Supreme Court reported in 96 taxmann.com 468 (SC). Thus, the legal proposition decided in the case of Kabul Chawla (supra) and Meeta Gutgutia (supra) have become confirmed as is decided by the Hon’ble jurisdictional Delhi High Court. The Hon’ble Supreme Court in the case of CIT vs., Singhad Technical Education Society 397 ITR 344 (SC) considering the issue under section 153C of the I.T. Act, 1961, held that “the incriminating material which was seized had to pertain to assessment years in question.” It is, therefore, clear from the above Judgments that incriminating material which was seized should pertain
36 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. to assessment year in question and that documents should have co-relation with these assessment years. However, no incriminating material if found in search have been referred in assessment order. The Ld. D.R, however, contended that Judgment of Hon’ble Kerala High Court in the case of Shri E.N. Gopakumar vs., CIT (Central) (supra), should be considered in favour of the Revenue in which it was held that “there is no requirement for recovery of any incriminating material during the course of search so as to make the assessment under section 153A of the I.T. Act or to make the addition.” It is well settled Law that the Judgments of the Hon’ble jurisdictional High Court is binding on all the subordinate authorities and Courts. No preference could be given to the decisions of other High Court as against the binding precedent of the jurisdictional High Court. In the cases of assessee, the Judgments of Hon’ble Delhi High Court being the jurisdictional High Court are binding on all the subordinate authorities as well as Tribunal. Further the decision of Hon’ble Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra) have been confirmed by
37 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. the Hon’ble Supreme Court by dismissing the SLP of the Department. The Ld. D.R. however, contended that the Department appeal in the case of Kabul Chawla (supra) have been dismissed by the Hon’ble Supreme Court because of the low tax effect. Further in the case of Meeta Gutgutia (supra), the Hon’ble Delhi High Court considered its earlier decision in the case of Kabul Chalwa (supra). Therefore, while dismissing the SLP of the Department in the case of Meeta Gutgutia (supra), the legal proposition propounded by the Hon’ble jurisdictional Delhi High Court in the case of Kabul Chawla (supra) have attained finality. Therefore, the submissions of the Ld. D.R. has no merit and is rejected. The Ld. D.R. further submitted that the Hon’ble Supreme Court in the case of M/s. APAR Industries on the same issue has admitted the SLP by framing the substantial question of Law, therefore, the decision of the Hon’ble High Court is not yet final. The contention of Ld. D.R. is answered by Hon’ble Madhya Pradesh High Court in the case of CIT vs., Darshan Talkies [1996] 217 ITR 744 (M.P.) in which it is held as under:
38 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. “The decision of the High Court is binding and the pendency of a petition for special leave to appeal to the Supreme Court from such a decision cannot obliterate its impact. It is binding until it is reversed or overruled.”
20.4. The Hon’ble Madras High Court in the case of T.S. Santanam vs., Expenditure Tax Officer 87 ITR 582 (Mad.) while considering the Rule of Finality held “the essential principle as to the Rule of Finality of an assessment is that the A.O. cannot change his mood and try to reopen the closed state of affairs.” Thus, the Rule of Finality apply in this case clearly show that legal proposition decided by the Hon’ble jurisdictional Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra), have reached finality that “completed assessment can be interfered with by A.O. while making the assessments under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment.” Since both the additions made by the A.O. in the impugned assessment order under section 153A of the
39 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. I.T. Act are based on the items already disclosed in the original return of income and balance-sheet to the Revenue Department and such assessment have completed prior to the date of search and no assessment was abated, therefore, in the absence of recovery of any incriminating material on both these additions, A.O. could not have made any additions against the assessee. The Ld. D.R. also argued that the Ld. CIT(A) has exceeded his jurisdiction by deciding this issue which was not agitated by the assessee as per the grounds of appeals enclosed in Form No.35. Learned Counsel for the Assessee, however, produced the copy of the revised grounds of appeal which was submitted before the Ld. CIT(A) before deciding the appeal in which such ground have been raised by the assessee. Therefore, there is no merit in the contention of the Ld. D.R. Further, the Ld. CIT(A) has decided this issue in detail based on the material already available on record. The Hon’ble Punjab & Haryana High Court in the case of VMT Spinning Co. Ltd., vs., CIT 389 ITR 326 (P&H) held as under:
40 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. “Held, that the Tribunal could decide the appeal on a ground neither taken in the memorandum of appeal nor by seeking its leave. The only requirement was that the Tribunal could not rest its decision on any other ground unless the party who might be affected had sufficient opportunity of being heard on that ground. Therefore, the Tribunal ought to have exercised its discretion in view of the fact that the assessee intended raising only a legal argument without reference to any disputed questions of fact. Since there were no additional evidence required for the decision on the new ground raised by the assessee and such question arose from the facts which were already on the record of the assessment proceedings and since a decision upon the new ground raised by the assessee would only help in determining the assessee's correct tax liability, the matter could be remanded to the Tribunal for adjudicating upon the additional ground on its merits. [Matter remanded].”
41 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 20.5. The Ld. CIT(A) while deciding this ground of appeal as per revised grounds of appeal has also noted the arguments of the assessee and reproduced, meaning thereby, the submissions were made before the Ld. CIT(A) that no addition could be made in assessment year under appeal as there were no incriminating material was recovered during the course of search. Therefore, the contention of the Ld. D.R. cannot be accepted. The same is accordingly, rejected. In view of the above discussion and in the light of decisions of Hon’ble jurisdictional Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra), we do not find any illegality or irregularlity in the Order of the Ld. CIT(A) in deciding this issue in favour of the assessee finding that there were no incriminating material unearthed during the course of search so as to make these additions. These additions are, therefore, rightly deleted. The Ld. CIT(A) was, therefore, justified in allowing this ground of appeal of assessee. These Grounds of appeal of Revenue are, therefore, dismissed.
20.6. The Other Ground of appeal in the Departmental Appeals is deletion of addition of Rs.82,685/- and in the appeal of assessee, the assessee has agitated the addition on merit
42 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. under section 68 of the I.T. Act, 1961 at Rs.2,13,70,020/- on several grounds of appeals. In view of the finding on the issue of assumption of jurisdiction under section 153A of the I.T. Act and making the additions on merits as decided in the Departmental Appeal, the issues on merits are left with academic discussion only and as such, we do not propose to decide the same.
In the result, for the A.Y. 2003-2004 ITA.No.2606/Del./2016 of the Department is dismissed and ITA.No.2277/Del./2016 of the Assessee is treated as allowed.
REMAINING APPEALS
ITA.No.2278/Del./2016 - Assessment Year 2004-2005 ITA.No.2279/Del./2016 - Assessment Year 2005-2006
M/s. Alankar Saphire The DCIT, Central Circle-15 vs. (Old), Central Circle-14 (New) Developers, New Delhi.
(Appellant) (Respondent)
43 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. ITA.No.2607/Del./2016 - Assessment Year 2004-2005 ITA.No.2608/Del./2016 - Assessment Year 2005-2006
M/s. Alankar Saphire The ACIT, Central Circle-14, vs. Developers, New Delhi – 110 055.
(Appellant) (Respondent)
ITA.No.6358/Del./2016 - Assessment Year 2004-2005
The DCIT, Central Circle-15 M/s. Ashutosh Developers vs. (Old), Central Circle-14 (New) P. Ltd., New Delhi. (Appellant) (Respondent)
ITA.No.122/Del./2017 - Assessment Year 2004-2005 ITA.No.675/Del./2017 - Assessment Year 2006-2007
vs. M/s. Ashutosh The ACIT, Central Circle-14, Developers P. Ltd., (Appellant) (Respondent)
ITA.No.6444/Del./2015 - Assessment Year 2005-2006
M/s. Believe Developers & vs. The ACIT, Central Circle-14, Promoters Pvt. Ltd., (Appellant) (Respondent)
44 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
ITA.No.1975/Del./2016 - Assessment Year 2005-2006
M/s. Gee Gee Buildtech vs. The ACIT, Central Circle-14, (P) Ltd., (Appellant) (Respondent)
ITA.No.3501/Del./2016 - Assessment Year 2005-2006 ITA.No.3460/Del./2016 - Assessment Year 2006-2007
The ACIT, Central Circle-14, vs., M/s. King Buildcon Pvt. Ltd., (Appellant) (Respondent)
ITA.No.3081/Del./2016 - Assessment Year 2005-2006 & C.O.No.259/Del./2016 in ITA.No.3460/Del./2016 Assessment Year – 2006-2007
The DCIT, Central Circle-15 M/s. King Buildcon Pvt. (Old), Central Circle-14 (New) vs. Ltd., New Delhi. (Appellant/Cross Objector) (Respondent)
45 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. ITA.No.6431/Del./2016 - Assessment Year 2003-2004 ITA.No.6432/Del./2016 - Assessment Year 2004-2005 ITA.No.6433/Del./2016 - Assessment Year 2006-2007
The ACIT, M/s. Lakshya vs., Central Circle-14, Consultants Pvt. Ltd., (Appellant) (Respondent)
ITA.No.118/Del./2017 - Assessment Year 2003-2004 ITA.No.119/Del./2017 - Assessment Year 2004-2005 ITA.No.121/Del./2017 - Assessment Year 2006-2007
The ACIT, M/s. LKG Builders P. vs., Central Circle-14, Ltd., (Appellant) (Respondent) ITA.No.6353/Del./2016 - Assessment Year 2003-2004 ITA.No.6354/Del./2016 - Assessment Year 2004-2005 ITA.No.6356/Del./2016 - Assessment Year 2006-2007
M/s. LKG Builders The DCIT, Central Circle-15 vs., (Old), Central Circle-14 (New) P. Ltd., New Delhi. (Appellant) (Respondent)
46 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
ITA.No.3449/Del./2016 - Assessment Year 2006-2007
The ACIT, M/s. M.M. Buildcon Pvt. vs., Central Circle-14, Ltd., (Appellant) (Respondent)
C.O.No.251/Del./2016 in ITA.No.3449/Del./2016 Assessment Year 2006-2007
M/s. M.M. Buildcon Pvt. vs., The ACIT, Central Circle-14, Ltd., (Cross Objector) (Respondent)
ITA.No.1972/Del./2016 - Assessment Year 2006-2007
The ACIT, vs., M/s. Nageshwar Realtors Central Circle-14. Pvt. Ltd., (Appellant) (Respondent)
ITA.No.2274/Del./2016 - Assessment Year 2005-2006
M/s. Pegasus Softech (P) The DCIT, Central Circle-15 vs., (Old), Central Circle-14 (New) Ltd., New Delhi. (Appellant) (Respondent)
47 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. ITA.No.2610/Del./2016 - Assessment Year 2005-2006
The ACIT, vs., M/s. Pegasus Softech (P) Central Circle-14. Ltd., (Appellant) (Respondent)
ITA.No.3456/Del./2016 - Assessment Year 2005-2006
The ACIT, vs., M/s. Shine Star Buildcon Central Circle-14 Pvt., Ltd., (Appellant) (Respondent)
ITA.No.1971/Del./2016 - Assessment Year 2006-2007
The ACIT, vs., M/s. Witness Builders Central Circle-14. Pvt., Ltd., (Appellant) (Respondent) C.O.No.193/Del./2016 in ITA.No.1971/Del./2016 Assessment Year 2006-2007
M/s. Witness Builders Pvt., vs., The ACIT, Ltd., Central Circle-14, (Cross Objector) (Respondent)
ITA.No.2603/Del./2016 - Assessment Year 2006-2007
The ACIT, vs., M/s. Witness Central Circle-14 Constructions Pvt., Ltd., (Appellant) (Respondent)
48 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
ITA.No.2280/Del./2016 - Assessment Year 2005-2006
M/s. Worldwide Realtors The DCIT, Central Circle-15 (Old), Central Circle-14 (New) (P) Ltd., vs., New Delhi. (Appellant) (Respondent)
ITA.No.2601/Del./2016 - Assessment Year 2005-2006
The ACIT, vs., M/s. Worldwide Realtors Central Circle-14, (P) Ltd., (Appellant) (Respondent)
The issues in these remaining Departmental Appeals as well as Appeals/Cross Objections of the Assessee are identical. The issues in remaining Departmental Appeals are also with regard to delay of 20 days condoned by the Ld. CIT(A) in filing the appeal before him, violation of Rule 46A, allowing the grounds of appeal of assessee qua the jurisdiction to make the additions under section 153A in the absence of recovery of any incriminating material and additions deleted on merits.
49 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 24. In the remaining appeals of the assessee, the assessee challenged the additions on merit partly maintained by the Ld. CIT(A).
The arguments of the Learned Representatives of both the parties are identical as have been considered in the case of M/s. Alankar Saphire Developers [ITA.No.2277/Del,./2016 – A.Y. 2003-2004], (supra), decided above. In the case of M/s. Ashutosh Developers P. Ltd., the Ld. D.R. also submitted that modus operandi of the assessee regarding share application money pending allotment is in issue along with land dealings, on which, allegations were before search made against the assessee, therefore, search was made in the Group cases. The issue of share application money, unexplained credits and unexplained sources of investment in land is mentioned in the appraisal report and sale deeds were found during the course of search, therefore, there were recovery of the incriminating
50 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. material during the course of search, therefore, such a legal proposition would be different in the present case.
On the other hand, Learned Counsel for the Assessee demonstrated before us that all these items on which A.O. has made addition were part of the balance- sheet item which were already disclosed to the Revenue Department on filing the original return of income. The original assessments have already completed prior to the date of the search. Therefore, no incriminating material was found during the course of search. Therefore, the issue is covered by the Judgment of Hon’ble jurisdictional Delhi High Court in the case of Kabul Chawla (supra). The A.O. also made additions in respect of expenses, share capital and credit and debit mentioned in the balance-sheet. Thus, facts are identical.
In the case of M/s. Believe Developers & Promoters Pvt. Ltd., the Ld. D.R. similarly contended
51 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. that sale deed was found during the course of search, source of investment was not filed by assessee. The appraisal report contained all the allegations against the assessee, on which, no source was explained by assessee before the Investigation Wing. Therefore, facts of this case are also distinguishable.
On the other hand, Learned Counsel for the Assessee reiterated the submissions made above and submitted that no incriminating material was recovered during the course of search so as to make the additions. The assessee disclosed all the items based on the balance-sheet in the original return of income.
In the case of M/s. King Buildcon Pvt. Ltd., the Ld. D.R. submitted that A.O. has access to the material and statement under section 132(4) was recorded during the course of search. During the course of search sale deed, valuation report were found and seized. During the post-search investigation, enquiries
52 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. were conducted and share capital was referred in the appraisal report which was the basis of making search against the Group cases. Cash deposited in the Bank is also referred to in the appraisal report. Agreement to Sell, receipts were also found during the course of search.
Learned Counsel for the Assessee submitted that in assessment year there is no reference to any incriminating material so as to make the additions. Therefore, all the items were disclosed in the original return of income and assessment was completed on the date of search. The Ld. CIT(A) correctly decided this issue in favour of the assessee.
In the case of M/s. M.M. Buildcon Pvt. Ltd., the Ld. D.R. submitted that A-91 [PB-50] was recovered. The assessee made surrender of income and statement under section 132(4) was recorded, therefore, additions were correctly made in this case.
53 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 32. On the other hand, Learned Counsel for the Assessee submitted that no specific material qua any of the additions have been referred to by the A.O. in the assessment order. The assessee did not make any surrender of amount for assessment year under appeal. He has referred to findings of A.O. and Ld. CIT(A) to show that no additions have been made based on any incriminating material. He has further submitted that no such addition was made in original assessment order under section 153A/144 of the I.T. Act, 1961. Present assessment order have been passed in pursuance to the Order under section 264 of the I.T. Act, 1961, in which no such issue have been raised. Therefore, A.O. could not have taken a new item to make the addition against the assessee which have not been considered by the Ld. CIT, Central-(2), New Delhi, in proceeding under section 264 of the I.T. Act, 1961.
54 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 33. In the case of Witness Builders Pvt. Ltd., the Ld. D.R. referred to Order of the A.O. and Ld. CIT(A) to show that land was purchased at Badshahpur. Appraisal report did not find mention any cash deposit.
On the other hand, Learned Counsel for the Assessee submitted that the same additions are based on the items already mentioned in the balance-sheet and reported in the original return of income. The A.O. has mentioned that documents were filed during original assessment proceedings.
As regards remaining Departmental Appeals, the submissions of the Ld. D.R. are same as have been considered above. The submissions of the Learned Counsel for the Assessee is also same that in all the above years the additions are based on the items which already mentioned in the balance-sheet which were disclosed in the original return of income and no assessments were pending on the date of the search,
55 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. details of which are filed in paper book and synopsis. Therefore, completed assessment cannot be interfered in the absence of any incriminating material.
We have considered the rival submissions and perused the material on record and find that the issue is same in the remaining appeals as is considered in the case of M/s. Alankar Saphire Developers (supra) in A.Y. 2003-2004. The A.O. has made all the additions which were disclosed in the books of account and balance- sheet and in the original return of income. Whatever points have been raised by the Ld. D.R. have not been supported by any incriminating material found during the course of search. The appraisal report of the Department is an internal matter of the Investigation Wing which has nothing to do with the incriminating material if found during the course of search. What was the modus operandi of the assessee to keep the share application money pending or in land dealing are mere
56 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. an allegation and may be the basis for conducting search in the group cases, but, nothing has been pointed-out during the course of hearing of these appeals, if any of the additions are based on any incriminating material found during the course of search. Assessments were completed on filing original returns of income and no assessment was pending or abated. Therefore, the issue is covered by Judgments of Hon’ble jurisdictional Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra). We have already decided an identical issue of assumption of jurisdiction under section 153A of the I.T. Act for deleting the above additions in the case of M/s. Alankar Saphire Developers (supra). Following the reasons for decision in this case, we do not find any infirmity in the Order of the Ld. CIT(A) in holding that no addition could be made against the assessee as no incriminating material was found during the course of search against the assessee. Therefore, there were no justification to
57 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. make any addition against the assessee. The issue relating to condonation of delay and violation of Rule 46A have also been decided being identical in the case of M/s. Alankar Saphire Developers (supra). Following the reasons for decision for the same, we do not find any infirmity in the Order of the Ld. CIT(A) in deciding these issues in favour of the assessee. In view of the above discussion, we hold that the Ld. CIT(A) correctly decided these issues in favour of the assessee holding that delay shall have to be condoned and there is no violation of Rule 46A and in deciding the issue of assumption of jurisdiction under section 153A in favour of the assessee, in the absence of any incriminating material during the course of search, when original assessments were already completed on the date of search. The issues on merit decided by the Ld. CIT(A) in favour of the assessee and against the assessee are thus left with academic discussion only. Accordingly, all the remaining appeals of the Department are dismissed and
58 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. remaining Appeals/Cross Objections of the Assessee are treated as allowed.
In the result, all the remaining appeals of the Department are dismissed and remaining appeals of the Assessee and Cross Objection of the Assessee are treated as allowed.
ITA.No.1589/Del./2016 - A.Y - 2005-2006
M/s. Vinman Estates (P) vs., The DCIT, Central Circle-15 (Old), Central Circle-14 (New) Ltd., New Delhi. (Appellant) (Respondent)
ITA.No.1980/Del./2016 - A.Y - 2005-2006
The ACIT, vs., M/s. Vinman Estates (P) Central Circle-14, Ltd., (Appellant) (Respondent)
Both the above cross-appeals are directed against the Order of the Ld. CIT(A)-XXVI, New Delhi, Dated 07.01.2016, for the A.Y. 2005-2006.
59 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
Briefly the facts in this case are also same that search was conducted in the case of assessee being Group case of M/s. MDLR Group of cases. Notice under section 153A was issued. The assessee requested before A.O. that original return filed under section 139 may be treated as return having been filed in response to notice under section 153A of the I.T. Act, 1961. The A.O. completed the assessment under section 153A/143(3) of the I.T. Act, 1961, Dated 29.12.2009 at Rs.3,69,911/-. The assessee similarly preferred application under section 264 of the I.T. Act, 1961, before the Ld. CIT, Central (2), New Delhi, who has disposed of the application and set aside the original assessment order and directed the A.O. to re-frame the assessment as per Law. The A.O, therefore, proceeded to pass the impugned assessment order afresh. The objections of the assessee are dropping. The proceedings under section 153A were decided against the assessee. The A.O. noted that during assessment year under appeal, assessee has issued share capital of Rs.1 lakhs. During original assessment proceedings as well as in re-assessment
60 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. proceedings, assessee failed to discharge onus under section 68 of the I.T. Act, 1961, therefore, addition of Rs.1 lakh was made under section 68 of the I.T. Act, 1961. The A.O. further noted that during the year assessee has received advance for land from Shri Praveen Kumar amounting to Rs.7 lakhs. No land was sold to any of the parties. The assessee was asked to furnish to prove the identity, creditworthiness and genuineness of the transaction in the case of Shri Praveen Kumar. No evidence was furnished during assessment proceedings as well as re- assessment proceedings. The A.O, therefore, made addition of Rs.7 lakhs on account of income from undisclosed sources. The A.O. further noted that during initial assessment proceedings assessee was asked to file copies of the Agreements, Details of Land, for which, advance has been received from M/s. Unitech. In the absence of any details, notice under section 133(6) of the Act was issued regarding transaction made by M/s. Unitech with M/s. MDLR Group of Companies. M/s. Unitech confirmed that advance of Rs.5.50 crores was given to the assessee, but, in
61 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. the absence of any supporting documents, A.O. made addition of Rs.5.50 crores being income from undisclosed sources. The A.O. also noted that during assessment year assessee has given Rs.30,000/- as advance to others. In the absence of any evidence, addition of Rs.30,000/- was made on account of unexplained investment. The A.O. also noted that assessee has claimed administrative and general expenses of Rs.18,081/-. The assessee failed to furnish evidences at the original assessment as well as in re- assessment, therefore, the addition was made on account of disallowance of expenditure of Rs.18,081/-. The A.O. also noted that assessee has claimed preliminary expenses to the tune of Rs.76,470/- during original assessment as well as re-assessment. Assessee failed to furnish any evidences, therefore, addition was made of Rs.76,470/- on account of preliminary expenses.
The assessee made a request before the Ld. CIT(A) for condonation of delay of 20 days as well as challenged the additions on merit and assumption of jurisdiction under section 153A of the I.T. Act, 1961, for making the above
62 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. additions, in the absence of recovery of any incriminating material.
The Ld. CIT(A) condoned the delay in filing the appeal. The Ld. CIT(A), however, decided the issue of assumption of jurisdiction under section 153A in the year under consideration on account of non-recovery of any incriminating material during the course of search against assessee on the reasons that during the course of search operation Agreement to Sell with Shri Praveen Kumar was found and seized. Therefore, it is not a case where additions have been made without recovery of the incriminating material. The issue of proceedings under section 153A and making the additions was, therefore, decided against the assessee. The Ld. CIT(A) also confirmed the addition of Rs.7 lakhs and Rs.1 lakhs. The Ld. CIT(A), however, deleted the additions of Rs.30,000/-, additions of Rs.5.50 crores, Rs.76,470/- and Rs.18,081/- of expenses. The Department in its appeal has challenged the Order of Ld. CIT(A) in condoning the delay in filing the appeal and deleting the addition of Rs.30,000/- and Rs.5.50 crores.
63 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 43. The assessee in appeal challenged the additions of Rs.7 lakhs and 1 lakhs on merits.
43.1. The assessee in its appeal raised an additional ground of appeal challenging the Order of the Ld. CIT(A) in upholding the initiation of proceedings under section 153A of the I.T. Act and framing the assessment under section 153A/143(3) of the I.T. Act, 1961, since no incriminating material was found as a result of search conducted on assessee, therefore, the assessment framed is without jurisdiction. It is also contended in the additional ground that additions are made without jurisdiction since it is not based on any material found as a result of search on the applicant and relied upon Judgments of Hon’ble Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra). Learned Counsel for the Assessee submitted that it is a legal ground which emanate from the Order of the Ld. CIT(A) and relied upon Judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT (supra) and other decisions of the High Courts and
64 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. submitted that the above additional ground may be admitted for disposal of the appeal being legal in nature.
On the other hand, the Ld. D.R. strongly opposed the request for admission of the additional ground of appeal.
After considering the rival submissions, we are of the view that since the Ld. CIT(A) has decided this ground against the assessee and all the material are available on record of the impugned orders, therefore, it being the legal issue which goes to the root of the matter and legality of assessment order, therefore, we admit the same for disposal of the appeal of the assessee.
Learned Counsel for the Assessee on additional ground of appeal submitted that Ld. CIT(A) has decided this issue at pages 6 to 21 of the appellate order. The Ld. CIT(A) has decided this issue against the assessee because Agreement to Sell in cash was seized during the course of search as belonging to Shri Praveen Kumar from whom advance was received. He has referred to Para-14 of the
65 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. assessment order in which A.O. has mentioned that assessee has received advance for land from Shri Praveen Kumar amounting to Rs.7 lakhs. No land was sold to any of the party. The assessee failed to prove identity of Shri Praveen Kumar, his creditworthiness and genuineness of the transaction. Therefore, in the absence of any evidence, addition of Rs.7 lakhs was made. Learned Counsel for the Assessee has submitted that assessee has filed original return of income declaring loss of Rs.34,400/- on 18.07.2005 for the assessment year under appeal. PB-6 is balance-sheet of the assessee in which assessee has shown advance received from Shri Praveen Kumar of Rs.7 lakhs. PB-122 is Ledger Account of Shri Praveen Kumar in the books of the assessee showing advance received from Shri Praveen Kumar. PB-127 is Agreement to Sell to show advance of Rs.7 lakhs have been received from Shri Praveen Kumar which was found during the course of search. Learned Counsel for the Assessee, therefore, submitted that in the original return of income assessee has already disclosed receipt of Rs.7 lakhs as advance received from
66 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. Shri Praveen Kumar and original assessment was completed because no notice under section 143(2) of the I.T. Act, 1961, was issued within 12 months from the date of filing of the return. Therefore, original return was completed on the date of the search. Since the advance received through Agreement to Sell was already disclosed to the Revenue Department in original return of income, therefore, recovery of the Agreement to Sell could not be treated as incriminating material so as to make any of the additions against the assessee. He has submitted that issue is, therefore, covered by Judgments of Hon’ble jurisdictional High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra). Learned Counsel for the Assessee in the alternate contention submitted that at the most if the Agreement to Sell is considered as incriminating material, the addition could be made of Rs.7 lakhs only. The other additions are not based on any evidence or material found during the course of search, therefore, no other addition could be made against the assessee.
67 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 47. The Ld. D.R. reiterated the submissions made in the above Group cases and also submitted that in the case of Kabul Chawla (supra), there should be nexus between the material and the addition, which is lacking in the case of assessee. therefore, the additions have been rightly made.
We have considered the rival submissions. It is a fact that assessee has already filed original return of income accompanied by P & L A/c, balance-sheet. In the original return of income, the assessee has disclosed the receipt of Rs.7 lakhs from Shri Praveen Kumar as per balance-sheet. Copy of the ledger account shows that it is already disclosed in the books of account of the assessee. Therefore, receipt of Rs.7 lakhs from Shri Praveen Kumar as advance was already disclosed in the original return of income. Further, on the date of search, the return was not pending as same was completed because no proceedings were initiated against the assessee for passing the original assessment. Further the original assessment order were passed in the Group cases in which the Ld. CIT, Central-(2), New Delhi, has invoked jurisdiction under section 264 of the I.T. Act,
68 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 1961 and all the matters were restored to the file of A.O. for passing the Order afresh, as per Law. Thus, all the facts with regard to receipt of Rs.7 lakhs from Shri Praveen Kumar was disclosed to the Revenue Department in the original return of income. therefore, mere recovery of the Agreement to Sell, through which, advance of Rs.7 lakhs was received by assessee from Shri Praveen Kumar could not be treated as incriminating material found in search. Thus, there is no recovery of any incriminating material during the course of search against the assessee so as to make any of the additions against the assessee. The issue is, therefore, covered by Judgments of Hon’ble jurisdictional High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra). Identical issue have considered and decided in the Group cases of M/s. Alankar Saphire Developers (supra) and following the reasons for decision in the same case of the Group, we set aside the Orders of the authorities below and delete all the additions. The additional ground is, therefore, allowed.
69 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi. 49. The remaining ground in the Departmental Appeal and in Appeal of Assessee on merits are thus, left with academic discussion only. The issue of condonation of delay by the Ld. CIT(A) is already considered and decided in the case of M/s. Alankar Saphire Developers (supra). Following the reasons for decision, we do not find any infirmity in the Order of the Ld. CIT(A) in condoning the delay in filing the appeal before him. Accordingly, appeal of the Assessee is allowed and Departmental appeal is dismissed.
In the result, appeal of the Assessee allowed and appeal of the Department dismissed.
To sum-up, all the Departmental Appeals are dismissed and all appeals of the Assessee and Cross Objection are treated as allowed.
Order pronounced in the open Court. Sd/- Sd/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 27th April, 2020 VBP/-
70 ITA.No.2277/Del./2016 etc., batch M/s. Alankar Saphire Developers, New Delhi.
Copy to
The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘F’ Bench, Delhi 6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches : Delhi.