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Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI B.P. JAIN, & SHRI C.M. GARG
PER B.P. JAIN, ACCOUNTANT MEMBER,
This appeal filed by the assessee is directed against the order dated 26.7.2013 of Commissioner of Income Tax (Appeals)-III, New Delhi and relates to assessment year 2009-10.
2. The following grounds of appeal have been raised by the assessee:
“1) That Ld. CIT(A) has erred in not appreciating either the facts and in the circumstances of the case or the provisions of law. He has further erred in passing an order which is bad in law and on facts.
2) On the facts and the circumstances of the case, the Ld. CIT(A) erred in confirming the action of the AO in disallowing the administrative and other expenses to Rs. 55,03,963/-.
3) While doing so, on the facts and circumstances of the case the ld. CIT(A) has erred in assuming that since there was no revenue recognition in r/o Agra Project, hence the administrative expenses incurred for the purpose of business of the assessee company was not allowable.
4) The Ld. CIT(A) has failed to appreciate the difference between setup of business and commencement of business as much as administrative expenses ought to have been allowable even though direct expenses of project relating to Agra Project was Capitalized shown as work in progress as per accounting policy consistently followed by the assessee.
5) The Ld. CIT(A) has erred in confirming the disallowance of Rs. 31 Lakh made by AO u/s 36 in respect of bad debts written off in the P/L a/c on the ground that no income/revenue was shown in the preceding year.
6) The Ld. CIT(A) has erred in not appreciating that the appellant Co. had declared revenue from business operations Rs. 2,00,20,415/- during the year.
7) Alternatively, the Ld. CIT(A) has erred in not appreciating that non recovery of advances given for acquiring Land (stock in trade of the appellant) on revenue account is a business loss and ought to have allowed as business loss of the year u/s 37 of the Income tax Act.
8) While doing so, the Ld. CIT(A) further erred in not considering the fact that in the peculiar nature of the business of real estate, the advances are sometimes given through broker who directly dealt with villagers which can be recovered only through brokers and the Assessee Co have to depend upon the broker for recovery of advances.
9) The Ld. CIT(A) has erred in confirming the disallowance of Bad debts/non recovery of advance as business loss contrary to the judicial precedents.”
2. Apart from the above, an application dated 26.10.2015 was filed raising the following additional ground of appeal:
“That on the facts and circumstances of the case, the order of assessment dated 31.12.2010 passed by learned Assessing Officer u/s 143(3) of the Income Tax Act, 1961 is illegal and non maintainable as the same had to be framed u/s 153C of the Act and not u/s 143(3) of the Act. Hence, the same deserves to be quashed as such.”
During the course of hearing, the learned counsel for the assessee contended that the additional ground raised is a legal ground and all facts necessary to dispose off the said grounds are also on record and, therefore, the same be admitted in terms of judgment of Apex Court in the case of National Thermal Power Corporation vs. CIT reported in 299 ITR 383 [SC]. It was also submitted that identical ground was also raised in the case of CIT vs. Jasjit Singh in dated 5.11.2010 wherein the said ground was admitted and the said decision of the Tribunal stands affirmed by the judgment of the Jurisdictional High Court in the case of CIT vs. Jasjit Singh in ITA No. 337/2015 dated 11.8.2015. The learned DR objected to the aforesaid submissions made by the assessee company.
Having considered the rival submissions, we find that the issue raised is purely a legal ground, whose all facts are available on record. The Hon’ble Supreme Court in the case of NTCP vs. CIT (supra) has held that “where Tribunal is only required to consider a question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to raise when it is necessary in order and correctly assess the tax liability of the assessee”. Having regard to the aforesaid, additional ground is admitted for consideration.
In support of the additional ground, the ld. counsel for the assessee filed written synopsis stating that on 5.1.2009, a search and seizure operation under section 132 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] was carried out on M/s. Taneja Puri Group. It was also stated that on 31.3.2010, a return of income was filed declaring income of Rs. 76,26,060/- for the instant assessment year. It was further submitted that a satisfaction note dated 4.10.2010 was recorded by the learned Deputy Commissioner of Income Tax, Central Circle 18, New Delhi for assessment years 2003-04 to 2008-09. It was also stated that on 22.10.2010, notice was issued under section 143(2) of the Act and pursuant thereto, an order of assessment dated 31.12.2010 has been framed under section 143(3) of the Act. It was contended that this order of assessment is without jurisdiction as an order of assessment ought to have been framed under section 153C of the Act. Reliance was placed on the following judgments: (i) 380 ITR 612 (Delhi) CIT vs. RRJ Securities Ltd. (ii) (Del) Jasjit Singh vs. ACIT (iii) ITA No. 337/2015 (Delhi) CIT vs. Jasjit Singh
The ld. DR further supported the action of the Assessing Officer.
We have considered the rival submissions and perused the facts on record. The satisfaction note dated 4.10.2010 reads as under:
“A search & seizure operation u/s 132(1) of the Income Tax Act was carried out on 5.1.2009 at various business and residential premises of M/s. Taneja-Puri Group of cases. During the course of search at 9, K.G. Marg, New Delhi, the residence of Sh. Ravinder Kumar Taneja and various offices premises of TDI group of companies, certain incriminating documents were found and seized. These documents also included a copy of provisional balance sheet as on 30.9.2005 of M/s Ridgeview Developers Pvt. Ltd. marked as pages 70 to 72, Annexure A-2 of Party A-2. The company M/s. Ridgeview Developers Pvt. Ltd. is closely associated with the Taneja-puri group of cases as the directors/share holders of this company are closely related to the directors/share holders of Taneja-puri group of cases. Under these circumstances, it is obvious that the seized documents marked as pages 70 to 72, Annexure A-2 of Party A-2 belong to M/s Ridgeview Developers Pvt. Ltd.
In view of the above facts, I am satisfied that the books of accounts and documents belonging to the assessee company have been found and seized during the course of search u/s 132(1) of the Income Tax Act, 1961 carried out at 9, K.G. Marg, New Delhi, the residence of Sh. Ravinder Kumar Taneja and office premises of various TDI group of companies.
In the light of the above, I am satisfied that the above case is a fit case for issuing notice u/s 153C of the Income Tax Act, 1961 as the seized documents mentioned above belong to M/s Ridgeview Developers Pvt. Ltd. being a person other than a person in whose case the search has been initiated.”
It is apparent from the above that since the date of satisfaction note is 4.10.2010, the year of search would be Assessment year 2011- 12 and as such, based on the said note, six assessment years for framing assessment u/s 153C of the Act would be assessment year 2005-06 to assessment year 2010-11. In the instant case, assessment for Assessment year 2009-10 has been framed by an order dated 31.12.2010 u/s 143(3) of the Act; instead of section 153C of the Act. Accordingly, the Assessing Officer was incorrect in assuming jurisdiction u/s 143(3) of the Act for Assessment year 2009-10.
We find that identical facts were also there in the case of Jasjit Singh vs. ACIT in for assessment year 2009-10 wherein the coordinate Bench in an order dated 5.11.2010 noted that search was conducted on 19.2.2009 under section 132(1) of the Act and the case was transferred to Central Circle - 11 on 16.6.2009. It was further held that taking into account the date 16.6.2009, the previous assessment year under section 153C of the Act would have to be assessment years 2003-04 to 2009-10. It was therefore, held that assessment framed under section 143(3) of the Act for assessment year 2009-10 was without jurisdiction and held as not valid. The relevant findings in the order are as under: “13. We find that there is no dispute on the relevant facts of the case that search and seizure operation u/s 132 of the Act in the case of Koutons was conducted on 19/02/2009 which is relevant to the F.Y. 01/04/2008 to 31/03/2009 and the relevant assessment year is 2009-10. It is also undisputed that the case of the assessee was centralized by ld. CIT u/s 127 of the Act and the jurisdiction of the assessee from Ward 25(3) to Central Circle 11 was transferred to 16/06/2009, hence previous year would be 01/04/2009 to 31/03/2010 and the A.Y. will be 2010- 11. On the basis of these facts the contention of the assessee in the additional ground is that the assessment order framed u/s 143(3) of the Act for the assessment year in question is not valid and not maintainable. As per him, the date of search in the case of the present assessee would be the date i.e. 16/06/2009 when
documents belonging to the assessee (found during the course of search) were handed over and jurisdiction for framing the assessment was transferred to the AO having jurisdiction for the assessment on the assessee. Taking into account the date 16/06/2009 as date of search in the case of the assessee, the contention of the ld. AR remained that the search year in the case of assessee would be A.Y. 2010-11 and six previous assessment years would be 2009-10 to 2004-05. In other words, the regular assessment u/s 143(3) of the Act in the present case should have been framed for the assessment year 2010-11 and the assessment for the assessment year under consideration should have been framed u/s 153C read with 143(3) of the I.T. Act. In support the above cited decisions were relied upon by the ld. AR.”
The aforesaid decision stand affirmed by the Hon’ble High Court of Delhi in the case of CIT vs. Jasjit Singh (supra) wherein vide judgment dated 11.8.2015, it has been held as under:
“5. It may be noted that in the present case satisfaction note was prepared by the AO on 25th February 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY 2009-10 was not valid, calls for no interference. No substantial question of law arises in the facts and circumstances of the present case.”
Also, the Hon’ble Jurisdictional High Court in the case of CIT vs. RRJ Securities Ltd. (supra) have observed as under:
“Section 153A requires that where a search has been initiated under Section 132 of the Act, the AO is required to issue notice requiring the noticee to furnish returns of income in respect of six assessment years relevant to the six previous years preceding the previous year in which the search is conducted. As discussed hereinbefore, by virtue of second proviso to Section 153A, the assessment/reassessment pending on the date of initiation of search abate. In the context of proceedings under Section 153C of the Act, the reference to the date of initiation of the search in the second proviso to Section 153A has to be construed as the date on which the AO receives the documents or assets from the AO of the searched person. Thus, by virtue of second proviso to Section 153A of the Act as it applies to proceedings under Section 153C of the Act, the assessment/reassessment pending on the date on which the assets/documents are received by the AO would abate. In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment.”
Therefore, since facts of the case are pari materia with the aforesaid binding judgments of jurisdictional High Court, it is held that the Assessing Officer ought to have framed the assessment for assessment year 2011-12 under section 143(3) of the Act and not for the instant assessment year i.e. assessment year 2009-10. It is thus held that the Assessing Officer was incorrect in assuming jurisdiction u/s 143(3) of the Act for assessment year 2009-10 and, therefore, the present assessment is not valid. The additional ground raised is therefore, allowed. Consequently, the assessment order is quashed as having become void. In view of the aforesaid discussion, remaining grounds of appeal have become academic and, therefore, they are not being adjudicated.
In the result, the appeal of the assessee in is allowed. The order is pronounced in the open court on 02.01.2018.