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Income Tax Appellate Tribunal, DELHI BENCHES: ‘G’, NEW DELHI
Before: SHRI N.S. SAINI & SHRI SMT. BEENA A PILLAI
Assessee by : Shri Ashu Goel, CA Department by : Shri Sameer Kumar Srivastava, CIT DR Date of Hearing : 11/12/2018 Date of Pronouncement: 13/12/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER These are group of appeals remanded by Hon’ble Delhi High Court vide consolidated order dated 10/07/17 and 08/09/17, wherein, Hon’ble Court after admitting question of law framed being: “Whether the ITAT was right in law in holding that the proceedings under section 153C of the act were not validly initiated” held as under:
5. “From the impugned order dated 28.10.2016, it is seen that the short ground on which it was held by the ITAT that the proceeding was not validly initiated u/s 153C of the Act since there was no satisfaction note recorded by the Assessing Officer (‘AO’) of the searched person.
In the present case, the AO of the searched person and the other person (the Assessee) was the same. In similar circumstances, the Court has recently in the decision dated 25th May, 2017 in WP(C) No. 525 of 2015 (Ganpati Fincap Services Pvt. Ltd. vs. Commissioner of Income Tax) held, inter alia, as under: “(iv) Where the AO of the searched person and the other person is the same, such a satisfaction note qua the other person has to be recorded by the AO of the searched person prior to the initiation of the proceedings against the other person. This is a sine die non for triggering the proceedings against the other person under section 153C of the Act , 570, 651, 652, 653, 928 & 929/Del/2013 Sheetal International Pvt. Ltd. (v) There do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. In such event, the AO need make only one satisfaction note. That satisfaction note is qua the other person. Further, it is sufficient that such satisfaction note is placed in the file of the other person by the AO in his capacity as the AO of such other person.”
In that view of the matter, the impugned order of the ITAT which proceeds to invalidate the proceedings u/s 153C of the Act only for the reason that the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note cannot be sustained in law.
The question framed is, accordingly, answered in the negative i.e., in favour of the Revenue and against the Assessee. The impugned order of the ITAT is hereby set aside.” From the above, Hon’ble Court has set aside appeals to this Tribunal to decide the issues on merits. It is observed that there are cross appeals for AY 2007-08 & 2008-09.
Ground No. 2 and Additional Ground No. 12 raised by assessee in its appeals is in respect of assumption of jurisdiction by Ld.AO under section 153 of the Act, which is barred by limitation. In our considered opinion this issue attained finality vide Hon’ble Delhi High Court vide consolidated order dated 10/07/17 and 08/09/17. Accordingly these grounds stand dismissed. , 570, 651, 652, 653, 928 & 929/Del/2013 Sheetal International Pvt. Ltd.
Now coming to merits of the case, it is observed from order passed by Ld.CIT (A) that only observation made in orders passed by him are as under:
For A.Y:2004-05 Addition u/s 68 has been challenged, wherein Ld. CIT(A) recorded as under:
6. Now coming to the merits of additions, it is seen that appellant had received advances from 3 parties and he failed to file before the AO the requisite information in the form of confirmation, details of income tax returns and balance sheet etc to establish the creditworthiness and genuineness of the transaction. As during the appellate proceedings also know requisite details were filed, in spite of the number of opportunities given, hence in these circumstances, I am constrained to hold that the appellant has not discharged its onus to satisfactorily explain the source of credit, hence the addition made by the AO is upheld.
On perusal of the same it is observed that Ld.CIT (A) while coming to such conclusion has not relied upon any materials/evidences. Merely because assessee has not filed any details either before the Ld. CIT (A) or before Ld.AO the addition has been confirmed. It is further observed that no details has been filed by assessee before authorities below.
Under such circumstances and in interest of natural Justice to both sides, we are of opinion that assessee must get proper opportunity as per law to substantiate its claim by filing all necessary evidences/materials in support, which Ld. AO can verify and deal with. We are, therefore, inclined to set aside this appeal back to file of Ld. AO for fresh consideration of issues with 4 , 570, 651, 652, 653, 928 & 929/Del/2013 Sheetal International Pvt. Ltd. a direction to decide by giving proper opportunity to assessee as per law. Assessee is thus directed to file all necessary evidences before Ld.AO to discharge its onus, in respect of addition made under section 68, by establishing identity, creditworthiness of creditors and most importantly genuineness of transaction. Ld.AO is then directed to pass order, after verifying such details filed by assessee, by undertaking all procedures that would be necessary in order to appreciate such evidences as per law.
Accordingly grounds raised by assessee on merits stand allowed for statistical purposes.
In the result appeal filed by assessee for AY 2004-05 stands partly allowed for statistical purposes.
Assessment years 2006-07 to 2009-10:
6. It is observed that issues for these assessment years involves addition made by Ld.AO on account of excess claim under section 86, as well as addition u/s 68 of the Act.
7. Ld.CIT (A) in all these assessment years recorded that details of AOP’s, in of which assessee was a member was not placed before authorities below along with assessee’s return. Ld.CIT(A) observed that on subsequent verification of returns filed by Association of persons, there was no mention that assessee was having different sharing various project carried on by AOP. It was only on this pretext that alleged excess exemption claimed under section 86 was added to the income of assessee, against which assessee is in appeal. , 570, 651, 652, 653, 928 & 929/Del/2013 Sheetal International Pvt. Ltd.
8. Another issue pertaining to assessment years 2007-08 and 2008-09 is in respect of difference in credit appearing in assessee’s books in the name of creditor namely Mayfield Project, an Association of person of which assessee is a member. It has been recorded by Ld.CIT(A) that from the submissions filed by assessee, creditworthiness and genuineness of transaction cannot be doubted. It is observed that Ld. CIT(A) has deleted this addition, against which revenue is in appeal.
Ld. DR submitted that no details have been sent to Ld. AO, relied upon by Ld.CIT (A), in impugned order, for a remand. He submitted that Assessing Officer has not received opportunity to verify the same. He further submitted that apart from a reply filed by assessee, there is no mention of any evidences filed by Assessee to discharge the primary onus cast upon assessee to establish identity, creditworthiness of creditors and most importantly genuineness of transaction.
We have perused rival submissions advanced by both sides in light of records placed before us. In our considered opinion, issues in assessee’s and Revenue appeal deserve to be remanded back to Ld.AO to pass detailed order, after calling for relevant information in respect of claims made by assessee. It is observed that Ld.CIT (A) decided issues regarding excess claim made by assessee u/s 86 and addition u/s 68, without proper appreciation of facts and without relevant materials been placed on record by assessee. It is also observed that Ld.AO has not received opportunity to verify any details in respect of these , 570, 651, 652, 653, 928 & 929/Del/2013 Sheetal International Pvt. Ltd. issues, based upon which, Ld.CIT(A) upheld denial of excess claim u/s 86 and deleted additions u/s 68 of the Act.
We are, therefore, in the interest of Natural Justice to both sides, are inclined to set aside these issues back to Ld.AO for fresh consideration. Assessee is directed to file all relevant details in respect of both these issues its claim before Ld.AO. Ld.AO shall then verify the same by following due process of law.
Accordingly grounds raised by Assessee as well as Revenue on merits stand allowed for statistical purposes.
In the result appeals filed by Revenue stand allowed for statistical purposes and appeals filed by Assessee stand partly allowed for statistical purposes. Order pronounced in the open court on 13/12/2018