DCIT, NEW DELHI vs. SMT. SHALINI GOYAL, NEW DELHI

PER: N.K. SAINI, AM This is an appeal filed by the Department and is directed against the order dated 31/10/2013 of Ld. CIT(A)- XXXI, New Delhi pertaining to Assessment Year 2008-09. The Revenue has raised the following grounds of appeal:-

“1. The order of Ld. CIT(A) is not correct is law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in law by deleting the addition of Rs. 60,95,852/- made by AO on a/c of unexplained cash credit.

. Smt. Shalini Goyal, Delhi-110034.

4. On the facts and circumstances of the case the Ld. CIT(A) has erred in law by deleting the addition of Rs. 8,94,067/- made by AO on a/c of unexplained investment in jewellery. 5. The appellant craves leave to add, amend any/all the grounds of appeal

before or during the course of hearing of the appeal.

2. Facts of the case in brief are that a search u/s 132(1) of the Income-tax Act, 1961 was conducted in Gee. ISPAT Group of cases and notice u/s 153A was issued to the assessee. In response, the assessee furnished a return declaring income of Rs. 1,49,250/-. The AO, however, framed the assessment u/s 143(3)/ 153A of the Income Tax Act, 1961(hereinafter referred to as the Act) at an income of Rs. 73,07,169/-.

3. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and challenged the validity of the additions in the absence of incriminating materials found during the course of search. The assessee also furnished certain additional evidence on which the Ld. CIT(A) asked the Remand Report from the AO. The Ld. CIT(A) observed that the specific finding has not been given by the AO in the Remand Report, he therefore asked the AO to furnish the Remand Report again. The Remand Report dated 28.10.2013 furnished by the AO was forwarded by the Ld. CIT(A) to the Additional CIT. The said report has been reproduced by the Ld. CIT(A) at page No. 7 of the impugned order which reads as under:-

“ sub: Remand report in the case of Smt. Shalini Goyal (Gee Ispat Group) AY 2004-05 to 2010-11 –regarding.

. Smt. Shalini Goyal, Delhi-110034.

Kindly refer to letter F. No. CIT(A)-XXXI/Remand Report/13-14/264 dated 17.10.2013 on the above mentioned subject. In this connection. It is informed that the seized material and documents have been examined. There is panchnama dt. 14.01.2010 and 08.03.2010 available with (1) carbon copy of valuation report of jewellery of Rs. 54,21,057/- (seized Rs. 12,58,720/-) , (ii) Inventory of cash of Rs. 3,52,000/- not seized. No addition is made on the basis of the seized material in the assessment year 2004-05 to 2010-11 in the case of assessee Smt. Shalini Goyal. Submitted for your kind perusal and necessary adjudication.”

“4.7 I have considered the submission of the AR and the remand reports. Even though the additions could have been made in the normal assessment proceedings after conducting proper enquiries, the judicial opinion is against such action in the proceedings u/s 153A. Hence, there is merit in the AR’s submission that no additions can be made in the proceedings u/s 153A without drawing necessary support from the seized documents. 4.8 The Hon’ble jurisdictional ITAT (F-Bench), in the case of ACIT Central Circle-IV vs. PACL India Ltd. (ITA No. 267/Del/2010) has held on 20.06.2013 that when no incriminating documents were found during the search, the AO cannot make any addition by making roving and fishing inquiries while making assessment u/s 153A. Similarly in the case of ACIT Vs Asha Kataria (ITAT No. 3105,3106 and 3107/Del/2011), the Hon’ble ‘A’ bench of jurisdictional ITAT, on 20/05/2013, has held that “ ex expounded in the case of Allcargo Global Logistics Ltd. Vs DCIT 137 ITD 287 (SB) assessment u/s 153A can be made only on the basis of incriminating material found during the course of search. “ Again Hon’ble E Bench of ITAT New Delhi, in the case of MGF Automobiles Ltd. Vs. ACIT Central Circle-05 (ITA No. 4212 and 4213/Del/2011) has held that in the case where assessment or reassessment was not pending as on the day of search and which did not abate, AO is required to pass assessment order u/s 153A as per the original assessment whether u/s 143(1) or 143(3). All the three decision cited above have taken into account the decision of the Hon’ble High Court of Delhi in the case of CIT vs. Anil Kumar Bhatia (2012) 211 Taxman 453 (Del) and the decision of special bench of Hon’ble ITAT in the case of Allcargo Global Logistics Ltd. (Supra).

. Smt. Shalini Goyal, Delhi-110034.

4.9 In view of the above judicial pronouncement it has to be held that additions made by the AO without drawing support from the documents seized u/s 132 cannot be sustained. Therefore, all additions made to the total income are hereby deleted.”

“10. On a identical issue, the Hon’ble Jurisdictional High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573 (supra) held as 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 decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act,

. Smt. Shalini Goyal, Delhi-110034. notice under Section 153 A(l) 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 or made without any relevance or nexus with the seized material. Obviously an 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. ”

. Smt. Shalini Goyal, Delhi-110034. not see any merit in this appeal of the department.”

We therefore, by keeping in view the ratio laid down by the 9.

Hon’ble Jurisdictional High Court in the aforesaid referred to order, do not find any merit in this appeal of the Department.

Order pronounced in the open court on 31/5/2018