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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
Date of Hearing : 25.07.2019 Date of Order : 29.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Central Circle 23, New Delhi (hereinafter referred to as the ‘Revenue’) by filing the present appeal sought to set aside the impugned order dated 14.07.2014 passed by the Commissioner of Income-tax (Appeals)-XXXIII, New Delhi qua the assessment year 2005-06 on the grounds inter alia that :-
“1. On the facts and in the circumstances of the case, the CIT(A) has erred in not holding the income on account of surrender of tenancy rights of Rs. 1.10
Crores as income from other sources, as held by the AO instead of income from long term capital gain, as shown by the assessee.
On the facts and in the circumstances of the case, the CIT(A) has erred in allowing deduction u/s 54F as claimed by the assessee and disallowed by the AO by treating the above income as income from other sources.
3. The order of the CIT(A) is erroneous and is not tenable on facts and in law.” 2. Briefly stated the facts necessary for adjudication of the issues raised by the assessee at hand are : From the perusal of computation of income, Assessing Officer (AO) noticed that the assessee has shown Long Term Capital Gain (LTCG) of Rs.1,10,00,000/- on account of surrender of tenancy right in favour of M/s. ISG Estate Pvt. Ltd. qua land situated at Village Sarhaul, Tehsil & Distt. Gurgaon, Haryana, which has been claimed as exempt under section 54F of the Income-tax Act, 1961 (for short ‘the Act’) on the ground that the same has been invested in a residential property. AO accordingly made addition of Rs.1,10,00,000/- on account assessee’s income from other sources.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the addition by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. DR for the Revenue challenging the impugned order relied upon the order passed by the AO. However, on the other hand, ld. AR for the assessee contended that the issue in controversy is covered in favour of the assessee by the order passed by the coordinate Bench of the Tribunal in the group case titled as ACIT, CC-23, New Delhi vs. Shri Gobind Gulati in order dated 30.05.2018. 6. Ld. CIT (A) proceeded to delete the addition by quashing the assessment on the ground that the assessment in this case was not abated and no incriminating evidences were found in the search and seizure operation conducted u/s 132 of the Act.
Undisputedly, assessment in this case and in case of Shri Gobind Gulati (supra), father of the assessee was framed u/s 153A/143(3) of the Act vide order dated 18.12.2009. It is also not in dispute that the addition has been made by holding income on account of surrender of tenancy rights of Rs.1,10,00,000/- as income from other sources qua the same land measuring 2823 sq.yds. situated in Village Sarhaul, Tehsil & Distt. Gurgaon, Haryana jointly owned by the assessee and his family members, namely, Shri Gobind Gulati, Shri Abhinav Gulati, Shri Balden Raj Gulati and Ms. Chanderkanta Gulati, all residents of 16/19, Punjabi Bagh, New Delhi for a period of 99 years on the monthly rent of RS.2,200/- and tenancy rights has been surrendered in favour of M/s. ISG Estates (P) Ltd. for a consideration of Rs.1,10,00,000/- and the assessee and his family members have handed over the vacant possession of the land in question to M/s. ISG Estates (P)
Ltd. on receipt of Rs.1,10,00,000/-.
The issue in controversy has been decided in favour of the assessee in group case of Shri Gobind Gulati (supra) by the coordinate Bench of the Tribunal by returning following findings :-
“4. Before the ld. CIT (A), it was challenged that the impugned addition made by the Assessing Officer is not based on any incriminating material found during the course of search, and therefore, the impugned addition is beyond the scope of Section 153A, because the assessment for the Assessment Year 2005-06 had attained finality much before the date of search. Reliance was placed on catena of decisions which has been noted by the ld. CIT (A) in the impugned order. Ld. CIT (A) has deleted the addition on the ground that, since there is no incriminating material found in the course of search, therefore, addition cannot be made u/s.153A. The relevant finding of the ld. CIT (A) is reproduced hereunder:- “I have perused the assessment orders. The entire addition is on account of surrender of tenancy right shown as capital gain claimed as exempt u/s.54F of the IT Act, which is assessed as income from other source.
Nowhere, there is reference of incriminating material/evidences seized during the action u/s 132 in the assessment order. Therefore, it is apparent that there is no incriminating material seized in the hands of the appellant company as a result of search action u/s 132 of l.T. Act.
Ld. AR has relied upon various decisions of hon’ble ITAT, Delhi cited supra even after considering the decision of Hon’ble High Court of Delhi in the case of Anil Bhatia cited supra, where Hon’ble ITAT has held that no addition can be made u/s 153A in respect of assessment which were not pending at the time of initiation of search.
I have perused the decision of Hon’ble jurisdictional High Court of Delhi in the case of Anil Bhatia cited supra. In the said judgment, in my view, Hon’ble High Court has empowered the assessing officer to assess total income irrespective of seized material for various assessment year u/s 153A provided in any assessment year. Some incriminating material is found. Hon’ble High Court has not given opinion when there is no seized incriminating documents/evidences for any assessment year covered under the search. The relevant portion of judgment is reproduced as under:-
“23 We are not concerned with a case where no incriminating material was found during the search conducted during under section 132 of the Act. We, therefore, express no opinion as to whether section 153A can he invoked even in such a situation. That question is therefore left open. ”
In present case, apparently there is no incriminating seized incriminating document for any of the assessment year covered u/s 153 A. Therefore, the decision in the case of Anil Kumar Bhatia does not empower the assessing officer to make the addition u/s 153A.
Hon’ble ITAT, Delhi in series of decision relied by Ld. AR such Parivar Properties (P) Ltd. PACL India Ltd., M/s. Marigold Merchandise (P) Ltd. Cited supra after considering the decision of hon’ble jurisdictional High Court have held that addition u/s 153A cannot be made without incriminating evidences in case of assessment which are not abated.
Relying on the decision of Hon'ble ITAT, New Delhi in above cited case, in my view, in present case, addition cannot be made u/s 153A in case where the assessment are not abated or closed assessments, as no incriminating evidences were found as a result of search and seizure operation u/s 132 of the IT Act, Accordingly, the addition made is hereby deleted. Grounds of appeal are allowed.”
5. After hearing both the parties, we find that on the date of search, i.e., 15.11.2007, the assessment for the Assessment Year 2005-06 was not pending and hence it cannot be reckoned as abated assessment in terms of 2nd proviso to Section 153A. It is now a well settled law by the Hon'ble Jurisdictional High Court that in case of unabated assessment, if no incriminating material has been found or seized during the course of search, then no addition can be made merely based on information already available on record, i.e., in the return of income filed originally/original assessment. The Assessing Officer himself in the impugned assessment order has not referred to any seized documents or incriminating material found during the course of search albeit has proceeded on the perusal of the computation of income filed in the original return of income. The Hon'ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla, reported in (2016) 380 ITR 573 (Del.) after considering catena of decision has held that if in relation to any Assessment Year, no incriminating material is found then no addition or disallowance can be made in relation to that Assessment Year in exercise of power u/s.153A. This principle has been reiterated by the Hon'ble Jurisdictional High Court in the case of Pr.CIT vs. Meeta Gutgutia, reported in (2017), 395 ITR 526 and again in the case of Pr.CIT vs. Best Infrastructure (India) Pvt. Ltd. (2017) 84 taxmann.com 287 (Del.). In view of the binding judicial precedent of the Hon'ble Jurisdictional High Court, we hold that no addition can be roped in the assessment made u/s.153A in absence of any incriminating found during the course of search, especially in the case of unabated assessment. Thus, the observation and the finding of the ld.
CIT (A) is affirmed and the appeal of the Revenue is dismissed.” 9. In view of what has been discussed above and following the decision of the coordinate Bench of the Tribunal in group case of the assessee, we are of the considered view that the ld. CIT (A) has rightly deleted the addition made in the assessment order framed u/s 153A on the ground that when assessment is not abated and no incriminating evidences were found in search and seizure operation conducted u/s 132 of the Act, no addition can be made. So, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 29th day of July, 2019.