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Facts
Information was received on 17.11.2018 about a passenger carrying cash of Rs. 10,00,000/-, which was identified as belonging to the assessee, Sh. Mohd. Zahid Siddiqui. Subsequently, proceedings under Section 153C of the Income Tax Act were initiated against the assessee for Assessment Year 2017-18, and an addition of Rs. 88,03,137/- was made under Section 68 for unexplained capital. The CIT(A) deleted this addition, noting that the seizure date (17.11.2018) pertained to Assessment Year 2019-20 and there was no incriminating material for AY 2017-18.
Held
The Tribunal upheld the CIT(A)'s decision, ruling that no proceedings under Section 153C should have been initiated for Assessment Year 2017-18. This was because the date of seizure of the incriminating amount (17.11.2018) was relevant to Assessment Year 2019-20, and there was no other incriminating material found pertaining to AY 2017-18. Therefore, the appeal by the Revenue was dismissed.
Key Issues
Whether the initiation of proceedings under Section 153C for Assessment Year 2017-18 was valid when the incriminating material (cash seizure) pertained to Assessment Year 2019-20, and if an addition under Section 68 could be sustained without relevant incriminating material for the specific assessment year.
Sections Cited
Section 153A, Section 153C, Section 127, Section 142(1), Section 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SH. PRADIP KUMAR KEDIA & SHRI YOGESH KUMAR U.S.
This appeal is filed by the Revenue for Assessment Year 2017- 18 against the order of the Ld. Commissioner of Income Tax (Appeals), Kanpur, dated 27/10/2022.
The Grounds of Appeal are as under:-
“ 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs. 88,03,137/-, on account of introduction of unexplained capital during the year.
ACIT Vs. Mohd. Zahid Siddiqui 2. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that as elaborated in the assessment order that the assessee has no sufficient income in earlier years for which reason the assessee has not filed ITR for earlier years. Thus, the capital of Rs. 88,03,137/- is the fresh introduction of capital during the assessment year 2017-18. The assessee has not explained the sources of the capital during the assessment proceedings. 3 On facts and circumstances of the case and in law, the Ld. CIT(A) is not justified in pronouncing its decision only based upon referring the judgment of the Apex Court in the case of M/s Singhad Technical and Educational Society and CIT vs Kabul Chawla. However. the other referred judicial decisions quoted by the AO in his order, have not been considered and analyzed with respect to the case. Like:
In the case of E.N. Gopa kumar vs. CIT (2016) 75 taxmann.com 215 (Kerla), Hon'ble Court held that assessment proceedings can be concluded against the interest of the assessee including making additions even without any incriminating materials being available against the assessee.
In the case of CIT vs. Kesarwani Zarda Bhandar Sahson Alld. of 2014 the Hon'ble Court held that the assessing officer has power to reassess return of the assessee not only for undisclosed income found during search but also the materials found at the time of original assessment.
In the case of Filatex India Ltd. vs. CIT (49 Taxmann.com 465) - Hon'ble Delhi High Court held that during the assessment under section 153A, addition need not be restricted to or limited to incriminating materials found during the course of search.
ACIT Vs. Mohd. Zahid Siddiqui In the case of Pr. CIT vs M/s Shri Mehandipur Balaji, Hon'ble Allahabad High Court held that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of original assessment.”
Brief facts of the case as mentioned in the CIT(A) are that:
“On 17.11.2018, information was received from AJU Delhi that a passenger Sh. Firoz Rana was travelling by Indigo Flight No. 6E-943 from New Delhi to Lucknow and carrying cash of Rs. 10,00,000/-, Sh. Firoz Rana was intercepted at Lucknow Airport and cash of Rs. 10,00,000/- was found from his possession. The warrant was executed over Sh. Firoz Rana and the search assessment proceedings were completed u/s 153A of IT Act. However during the search proceedings, post search inquiries and assessment proceedings in case of Sh. Firoz Rana, it was found that this money belonged to Sh. Mohd. Zahid prop. of M/s.
Hitkari Productions and Creations, therefore information was passed on to the jurisdictional assessing officer.
Order u/s 127 of IT Act was passed by PCIT Ghaziabad
ACIT Vs. Mohd. Zahid Siddiqui vide order F No. Pr. CIT-GZB/ITO(T&J)/u/s 127/Meerut/2021-22/1482 dt. 23.08.2021 centralizing the case from ITO Ward 1(1)(1). Meerut to DCIT/ACIT CC- Meerut. The case records and the appraisal report were transferred to DCIT Central Circle Meerut on 06.04.2021 in pursuance to guidelines of the board vide F No. 225/126/2020/ITA-II dt. 17.09.2022. The reasons for initiating proceedings u/s 153C of IT Act were recorded on 02.09.2021 and notice u/s 153C of IT Act was issued and served on 14.09.2021. Notice u/s 142(1) along with questionnaire was issued on 23.09.2021 and final show cause was issued to the appellant on 25.09.2021 and the assessment order was passed on 30.09.2021. The A.O. completed assessment by making addition of Rs. 88,03,137/- u/s 68 of IT Act.”
Aggrieved by the assessment order dated 30/09/2021, the assessee preferred an Appeal before the CIT (A). The Ld. CIT (A) deleted the addition on the ground that the notice issued u/s 153C of the Act and the addition made by the A.O. without their being
ACIT Vs. Mohd. Zahid Siddiqui incriminating material found and seized pertaining to the year under consideration. Though, the Ld. Departmental Representative relied on the orders of the Lower Authorities, but has not put forth any material to contradict the findings of the Ld. CIT (A).
Per contra, the Assessee's Representative by relying on the findings of the Ld. CIT (A) submitted that, no proceedings u/s 153C of the Act should have been initiated for the Assessment Year 2017-18 as the date of seizure of the amount was 17/11/2018 which is relevant to the Assessment Year 2019-20, therefore, submitted that the Ld. CIT (A)has rightly deleted the addition.
We have heard both the parties and perused the material available on record. It is not in dispute that on 17/11/2018 an amount of Rs. 10,00,000/- was found in the possession of Sh.
Firoz Ran who was traveling from New Delhi to Lucknow. The said Sh. Firoz Rana stated that he was carrying the said amount which belongs to Sh. Md. Zahid Siddiqui to be used for payments to labours at Prayagraj. Based on the said seizure the proceedings
ACIT Vs. Mohd. Zahid Siddiqui u/s 153C was initiated in the case of the assessee. As there was no any other incriminating seized material, the Ld. CIT(A) held that no proceedings u/s 153C should have been initiated for the Assessment Year 2017-18 as the date of seizure of the amount was 17/11/2018 which is relevant to Assessment Year 2019-20. Thus, in our opinion the order of the Ld. CIT(A) does not suffer any infirmity and we find no merit in the grounds of Revenue, accordingly, Appeal of the Revenue is dismissed.
Order pronounced in the open court on 10th JULY, 2024.