ACIT, NEW DELHI vs. SMT. RASHMI WADHWA, NEW DELHI

ORDER Per L.P. Sahu, A.M.: These two appeals have filed by the assessee as well as the Revenue against the order of ld. CIT(A)-XXXII, New Delhi dated 10.10.2014 for the assessment year 2007-08.

1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without serving the valid notices as per law and without recording requisite satisfaction as per law and without obtaining requisite approval as per law and without complying with other mandatory conditions under the Act and without serving the mandatory notices u/s 143(2) and 142(1) of Income Tax Act, 1961.

2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making notional addition of Rs.2,90,000/- on account of foreign travel u/s 69C and that too by disregarding the evidences/submissions filed by the assessee and by recording incorrect facts and findings and in any case impugned addition is beyond the scope and jurisdiction of the impugned assessment order.

3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.2,90,000/- on account of foreign travel and framing the impugned assessment order is contrary to law and facts, void ab initio, and without giving adequate ./2014 & 453/Del./2015 3 opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds.

4. The brief facts of the case as culled out from the orders of the authorities below are that the assessee is an individual, and during the year under consideration derived income from salary and other sources. A search and seizure operation u/s 132 of the IT Act, 1961 was conducted by the Investigation Wing of the Department in Nussli (Switzerland) Ltd. group of cases on 19.10.2010 and since the appellant was a member of this group, her premises was also simultaneously searched. Thereafter, the case of the appellant was centralized with the Assessing Officer of Central Circle-8, New Delhi u/s 127. On the basis of this search operation, notice u/s 153A was issued and served upon the assessee on 08.01.2013. In response to the same, the assessee filed her return of income on 31.03.2008 declaring an income of Rs.1,89,665/-. Thereafter, notices u/s 143(2) and 142(1) along with the detailed questionnaire were issued and served upon the assessee. In response to the same, the AR of the appellant attended the assessment proceedings and filed various information and explanations. The assessment was completed in terms of an order u/s 153A r.w.s 143(3) of the I T Act, 1961 at a total income of Rs.43,09,670/- as against the returned income of Rs.1,89,665/- wherein the Assessing Officer made the following additions of Rs.35,00,000/- on account of sale of land, Rs.2,90,000/- u/s. 69C on account of foreign trip expenses and Rs.3,30,000/- on account of low household expenses. In appeal, the ld. CIT(A) sustained the addition of Rs.2,90,000/- made on account of foreign trip expenses made u/s. 60C of the Act and deleted remaining two additions, as noted above. Aggrieved by the sustenance of the addition, the assessee is in appeal before the Tribunal. ./2014 & 453/Del./2015 4

6. On the other hand, the ld. DR relied on the order of the lower authorities.

“8. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that the facts of the present case are identical to the facts involved in the assessee’s own case for the assessment year 2005- 06, which we have already disposed off vide our order dated 18.01.2016 in and the issue has been decided in favour of the assessee by observing in paras 7 & 8 as under: “7. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that a similar issue having identical facts was a subject matter of adjudication in ITA No. 501 & 502/Del/2015 for the assessment years 2008-09 and 2009-10 respectively in ./2014 & 453/Del./2015 5 assessee’s own case wherein vide order dated 19.10.2015, ITAT Delhi Bench SMC-2, New Delhi, by following the order of the jurisdictional High Court in the case of CIT Vs Kabul Chawla passed in 709, 713/2014 order dated 28.08.2015 deleted the addition and the relevant findings have been given in paras 5 & 6 of the order dated 19.10.2015 which read as under:

“5. Admittedly no incriminating material was found or seized during the course of search and seizure operation u/s. 132 of the Act in the case of the assessee. It is also not in dispute, that the assessment for both these assessment years have not abated. Under the circumstances, I find that the issue is covered in favour of the assesee and against the Revenue by the decision dated 28.8.2015 of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla passed in 709 and 713/2014 held has under:-

37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned 709 and 713 of 2014 of decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six Ays immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs “in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary ./2014 & 453/Del./2015 6 or made without any relevance or nexus with the seized material. Obviously an 709 and 713 of 2014 of assessment has to be made under this Section only on the basis of seized material.” v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the 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 the course of original assessment.

8. Since the facts for the year under consideration are identical to the facts involved in assessee’s own case for the assessment years 2008-09 and 2009-10 in & ./2014 & 453/Del./2015 7 502/Del/2015 (supra) so respectfully following the order dated 19.10.2015, the impugned addition is deleted.” 9. So, respectfully following the aforesaid referred to order dated 18.01.2016 in for the assessment year 2005-06 in assessee’s own case, we allow the appeal in favour of the assessee and the addition made by the AO and sustained by the ld. CIT(A) is deleted.”