M/S. HERITAGE INFRACON PVT. LTD.,NEW DELHI vs. ACIT, HARYANA

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] - 3, Gurgaon dated 27.01.2015 pertaining to assessment year 2006-07.

Vide Ground No. 1, the assessee has challenged the validity of the order framed u/s 153A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] dated 25.03.2013 claiming that the entire additions have been made without any reference to any incriminating material/evidence found during the course of search and seizure proceedings.

All other grounds are on merits of the additions.

Briefly stated, the facts of the case are that by virtue of the authorization of the Director of Income tax [Investigation], Chandigarh, business as well as residential premises of M/s Best Food Group of cases, Karnal were subjected to search and seizure operations on 23.11.2010. Accordingly, notices u/s 153A of the Act were issued and served upon the assessee.

During the course of scrutiny assessment proceedings, the Assessing Officer formed a belief that M/s Best Food Group of Karnal have introduced their own unaccounted money in the form of share capital and share premium from non-existent companies and concerns.

Before the first appellate authority also, the assessee has challenged the validity of the assessment on the ground that the entire additions have been made without any reference to any incriminating material. However, the assessee could not succeed before the ld. CIT(A).

Before us, the ld. counsel for the assessee vehemently relied upon the decision of the Hon'ble High Court of Delhi in the case of Kabul Chawla 380 ITR 573 and Meeta Gutgutia 395 ITR 526. The ld. counsel for the assessee further relied upon the decision of the Tribunal in one of the group concerns of Best Food in ITA No. 1184/DEL/2014.

Per contra, the ld. DR strongly supported the findings of the Assessing Officer and placed reliance on the decision of the Hon'ble Kerala High Court in the case of E.N. Gopakumar 390 ITR 131 and decision of the Hon'ble High Court of Delhi in the case of Anil Kumar Bhatia 552 ITR 493.

We have given thoughtful consideration to the orders of the authorities below and have carefully perused the decisions relied upon by the ld. representatives. It is true that the entire assessment is devoid of any reference to any incriminating material or evidence found during the course of search and seizure proceedings. We find that the Assessing Officer has taken a leaf from the search operations conducted at the premises of Jain brothers and formed a belief that the assessee is one of the beneficiaries of the accommodation entries provided by the Jain brothers. However, the premises of the assessee were also searched and in the search proceedings, no incriminating material or evidence was found by the search party.

Share application money/premium received by the assessee has already been recorded in its books of account and return of income was already filed on 30.03.2007. No notice u/s 143(2) of the Act was issued and served upon the assessee and by necessary implication, return of income was accepted. The ratio laid down by the Hon'ble Delhi High Court in the case of Kabul Chawla squarely applies on the facts of the case in hand wherein the Hon'ble High Court has held that completed assessment can be interfered with by the Assessing Officer while making assessment u/s 153A of the Act only on the basis of some incriminating material unearthed during the course of search.

While laying down the aforesaid ratio, the Hon'ble High Court has considered the decision in the case of Anil Bhatia 352 ITR 493, also of the Hon'ble High Court of Delhi. The decision relied upon by the ld. DR in the case of E.N. Gopakumar [supra] is of the Hon'ble Kerala High Court and since we are governed by the Hon'ble Jurisdictional High Court of Delhi, with our utmost respect to the Hon'ble High Court of Kerala, we are following the ratio laid down by the Hon'ble High Court of Delhi. Respectfully following the decision of the Hon'ble Jurisdictional High Court, Ground No. 1 is allowed and the assessment order is held to be bad in law and, accordingly, quashed.

Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the additions.

In the result, the appeal of the assessee in is allowed.