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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI SUDHANSHU SRIVASTAVA
assessee against the order dated 16/07/2014 passed by the Ld. & 5478/D/2014 Assessment year 2007-08 Commissioner of Income Tax (Appeals) – XXXII, New Delhi whereas ITA No. 5478/Del/2014 is the Department’s cross appeal.
2. The brief facts of the case are that the assessee is an individual deriving income from salary and other sources. A search and seizure operation under section 132 of the Income Tax Act, 1961 was conducted by the investigation wing of the Department in Nussli (Switzerland) Ltd group of cases on 19/10/2010 and simultaneously the assessee’s premises were also searched. The case of the assessee was centralised under section 127 of the Income Tax Act, 1961. Thereafter, statutory notice under section 153A of the Income Tax Act, 1961 was issued in response to which the assessee filed his return of income declaring a total income of Rs. 2,58,627/-. The assessment was completed in terms of section 153A read with section 143 (3) of the Income Tax Act, 1961 at a total income of Rs. 42,61,130/- after making addition under section 69C on account of low house hold withdrawals amounting to Rs. 2,12,500/-, addition under section 69C on account of foreign trips amounting to Rs. 2,90,000/- and addition on account of income from short-term capital gains amounting to Rs. 35 lakhs. & 5478/D/2014 Assessment year 2007-08 2.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT (A) challenging the assumption of jurisdiction under section 153A as well as challenging the various additions on merits. The Ld. CIT (A) rejected the assessee’s legal ground challenging the assumption of jurisdiction under section 153A of the Income Tax Act, 1961 but deleted the addition of Rs. 2,12,500/- made on account of low household withdrawals. However, the addition of Rs. 2,90,000/- on account of foreign tour expenses was confirmed by the Ld. CIT (A). The Ld. CIT (A) also deleted the addition of Rs. 35 lakhs on account of short-term capital gains.
Now the Department as well as the assessee are in appeal against the order of the Ld. CIT (A) and the respective grounds raised by both the parties are as under –
“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 making addition of Rs.2,90,000/- on account of foreign travel u/s 69C of Income Tax Act, 1961.
2. 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 is bad in law and against the facts and circumstances of the case and in any case impugned addition is beyond the scope and jurisdiction of the impugned assessment order.
& 5478/D/2014 Assessment year 2007-08 3. Without prejudice to the above grounds, additions/disallowances could not have been made in the present appeal because no incriminating material has been found as a result of search. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
ITA No.5478/Del/2014:-
“1. Whether the CIT (A) is correct in law and on facts of the case in deleting the addition of Rs.2,12,500/- made by A.O. on account of low house hold withdrawals u/s 69C.
Whether the CIT (A) is correct in law and on facts of the case in deleting the addition Rs.35,00,000/- made by A.O. on account of income from short term capital gain.
(a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
3. At the outset, the Ld. authorised representative submitted that ground No. 3 of the assessee’s appeal was the legal ground and was germane to the entire issue and it was prayed that this ground may be taken up first for adjudication. The Ld. CIT DR agreed to the proposal of the Ld. authorised representative.
The Ld. authorised representative submitted that this ground challenges the jurisdiction assumed by the assessing 4 & 5478/D/2014 Assessment year 2007-08 officer as no additions could have been made under section 153A of the Income Tax Act, 1961 since no incriminating material had been found during the course of search. It was submitted that the date of search is 19/10/2010 and thus the search year is financial year 2010 – 11 and the year under consideration was assessment year 2007 – 08. Our attention was drawn to pages 1 and 2 of the paper book which contain copy of computation of income and acknowledgement of return showing that the return of income was filed on 31/03/2008 under section 139 (4) of the Income Tax Act, 1961 and, thus, which had attained finality on 31/03/2009. It was further submitted that perusal of the assessment order would show that all the three additions were made in absence of any incriminating material having been found during the course of search upon the assessee. Our attention was drawn to pages 3 and 4 of the paper book which is assessee’s reply dated 23/10/2012 filed before the assessing officer pointing out that no incriminating document or material was found or seized which was relevant to the year under consideration and as such the assessment should not be disturbed. It was also submitted that this plea was also taken before the Ld. CIT (Appeals) and our attention was drawn to pages 116 to 120 of the ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 paper book wherein a request for deleting the disallowances/additions in absence of any incriminating material was made. It was also submitted that the Ld. CIT (Appeals) had called for a remand report from the AO wherein the assessing officer had accepted that no incriminating material had been found during the course of search. Our attention was invited to pages 6 to 9 of the impugned order wherein the remand report dated 16/06/2014 has been reproduced and wherein at page 7 it has been observed by the AO that he was free to make addition even in absence of any incriminating material. The Ld. authorised representative submitted that the Ld. first appellate authority had decided this issue against the assessee by holding that additions can be made under section 153A of the Income Tax Act, 1961 even in absence of incriminating material. It was submitted that the Hon’ble Delhi High Court in the cases of CIT versus Best Infrastructure (India) Private Limited in ITA No. 13/2017, Principal CIT versus Meeta Gutgutia and Others reported in 99 CCH 24 and CIT versus Kabul Chawla reported in 380 ITR 573 had held that any additions made under section 153A de hors any incriminating material was contrary to law. It was also submitted that ITAT Delhi bench in assessee’s own case for ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 assessment year 2006 – 07 had allowed the assessee’s appeal on identical facts and following the judgement of the Hon’ble Delhi High Court in the case of CIT versus Kabul Chawla (supra) in vide order dated 21st of January 2016. It was submitted that in view of the legal precedents as well as the undisputed fact that no incriminating material was found during the course of search, the impugned order was liable to be quashed.
In her rival submissions, the Ld. CIT DR, although supported the orders of the authorities below, could not controvert the aforesaid contentions of the Ld. authorised representative for the assessee.
We have considered the submissions of both the parties and have also perused the material on record. It is seen that ITAT Delhi has allowed the assessee’s appeal for assessment year 2006 – 07 in on identical facts and by following the ratio laid down by the Hon’ble jurisdictional High Court in the case of CIT versus Kabul Chawla (supra). During the course of arguments before us, the Department could not point out any distinguishing fact in the year under appeal. It is also seen that the Hon’ble jurisdictional High Court has reiterated the ratio laid 7 ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 down in CIT versus Kabul Chawla (supra) in the cases of Principal CIT versus Best Infrastructure (India) Private Limited (supra) and Principal CIT versus Meeta Gutgutia and Others (supra). Therefore, on an overall consideration of the facts as well as the settled judicial precedent, we allow the legal ground taken up by the assessee and hold that the assessment framed under section 153A, in absence of any incriminating material found during the course of search, is bad in law and cannot be sustained.
6.1 In view of our findings in the assessee’s appeal as aforementioned, the appeal filed by the Department becomes in fructuous and the same is dismissed as such.
In the final result the appeal of the assessee is allowed whereas the appeal of the Department stands dismissed.
The order is pronounced in the open court on 31st October, 2017.