ACIT, NEW DELHI vs. M/S RENU NANDA, NEW DELHI

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SMT BEENA A. PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 3719/Del/2011 (Assessment Year: 2001-02) ITA No. 3720/Del/2011 (Assessment Year: 2005-06) ITA No. 3721/Del/2011 (Assessment Year: 2007-08) ITA No. 4808/Del/2014 (Assessment Year: 2007-08) ACIT, Vs. Renu Nanda, Central Circle-13, Room No. 332, D-108, Defense Colony, ARA Centre, Jhandewalan Extn, New Delhi New Delhi PAN:ABWOB1541N (Appellant) (Respondent)

ITA No. 3700/Del/2011 (Assessment Year: 2007-08) Renu Nanda, Vs. ACIT, D-108, Defense Colony, Central Circle-13, Room No. 332, New Delhi ARA Centre, Jhandewalan Extn, PAN:ABWOB1541N New Delhi (Appellant) (Respondent)

Wealth Tax No. 27/Del/2014 (Assessment Year: 2010-11) ACWT, Vs. Renu Nanda, Central Circle-13, D-108, Defense Colony, New Delhi New Delhi PAN:ABWPN1541N (Appellant) (Respondent) Revenue by : Shri Paramita Tripathy, CIT DR Assessee by: Shri Ajay Wadhwa, Adv Ms. Megha Mittal, CA Date of Hearing 12/07/2017 Date of pronouncement 11/08/2017 O R D E R PER PRASHANT MAHARISHI, A. M. These are the appeal filed by the revenue as well as assessee for several years under the income tax act as well as for assessment year 2010 – 11 under the wealth tax act. As the issues involved are common and the matters are also heard together. Therefore they are disposed off by this common order.

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 ITA No 3719/ Del/2011 A Y 2001-02 ( By Revenue) 1. This is an appeal filed by the Revenue against the order of the ld CIT(A)-II, New Delhi dated 30.05.2011 for the Assessment Year 2001-02. 2. The Revenue has raised the following grounds of appeal in ITA No. 3719/Del/2011:- “1. The order of the Ld, CIT (Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law as well as in facts that the assessment made u/s 153A cannot be held to be valid and has to be annulled. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs. 57,99,662/- made by the assessing officer on account of unexplained money received by the assessee from Shri Suresh Nanda.” 3. Brief facts of the case are that assessee is an individual who has income from other sources being interest from bank. Search in seizure action under section 132 of the income tax act was carried out on Suresh Nanda group of cases on 28/2/2007 and pursuant to that notice under section 153A was issued to assessee on 09/09/2008. In response to this return of income of Rs. 1 05870/– was filed on 08/10/2009. 4. Assessment under section 143 (3) read with section 153A of the income tax act, 1961, was passed on 29/12/2009 wherein an addition of Rs. 5 799662/– was made to the total income of the assessee on account of some received from such Suresh Nanda, her husband, as assessee could not show to the satisfaction of the Ld assessing officer about the source of income of such Suresh Nanda. The assessee preferred appeal before the Ld. CIT (A) who deleted the addition. Therefore, revenue is in appeal before us. 5. The Ld. CIT DR relied heavily upon the order of the Ld. assessing officers stating that assessee has failed to prove the identity and creditworthiness of Mr. Suresh than the and has also not disclosed the source of his income abroad. She therefore said that the addition has rightly been made. 6. Ld. authorized representative relied upon the order of the Ld. CIT (A) and stated that Sh. Suresh Nanda is the husband of the assessee and is regularly assessed to the income tax. The moneys paid by the cheque from the bank account of the assessee’s husband. He further referred to the order of the Ld. CIT (A) stated that there is no question of the identity as the sum is received from the husband of the assessee. With respect to the creditworthiness of the giver, He submitted that

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 sufficient money is lying into the non-resident external account of Sh. Suresh Nanda, who is separately assessed to tax. Therefore, the creditworthiness is also proved. With respect to the genuineness of the transactions, the submitted that the giver of the money is the husband of the assessee, Therefore, there is no doubt about the genuineness. In view of this he submitted that the addition has wrongly been made by the Ld. assessing officer. Invoking rule 27 of the income tax appellate tribunal rules, he submitted that there is no incriminating material found during the course of the search respect to this amount and therefore the addition was made without finding any incriminating documents therefore it does not survive. He relied upon the decision of the Hon’ble Delhi High Court in case of Kabul Chawla 61 Taxmann.com 412. 7. We have carefully considered the rival contentions and also perused the orders of the lower authorities. In the present case search took place on 28/2/2007 and the impugned assessment year before us is assessment year 2001 – 02. It was found during the course of assessment proceedings that the assessee has received a sum of Rs. 5 799662/– through 7 cheques of different months from the Deutsche bank, non-resident external account of the husband of the assessee. The patterns of the cheques are that for 5 months cheques of Rs. 60,000 each approximately were given from that account to the assessee. On 09/11/2000, Rs. 5 Lacs was given from that account and on 14/2/2001 sum of Rs. 50 Lacs was given from that particular account. Be identical issue arose in the hands of the daughter of the assessee miss Sonali punj wherein she received the sum from Mr. Suresh Nanda through the same bank account. The coordinate bench in ITA No. 3717/del/2011 for the same assessment year 2001- 2002 has held that assessment order clearly shows that there was no incriminating evidence found during the course of the search and therefore following the decision of the Hon’ble Delhi High Court in case of CIT versus Kabul Chawla deleted the above addition. In the present case also, it is apparent that no incriminating evidence was found during the course of search mentioned in the assessment order. These are the regular entries in the bank account of the assessee received from her husband; therefore, the addition has not been made on the basis of any incriminating material. 8. However, the issue involved in this appeal is that the assessee has not filed any appeal against order of the Ld. CIT appeal, but has invoked the provisions of rule 27 3

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 of the income tax appellate tribunal rules. This aspect has been carefully considered by us and according to us Rule 27 provides that though the assessee may not have filed appeal, the assessee may support the order appealed against on any of the grounds decided against him. This rule embodies the fundamental principle that the person, who may not have been aggrieved by an order of the lower authority or the Court and has therefore not filed any appeal against such order, is free to defend the order before the Appellate Forum on all grounds including the ground, which may have been held against him by the lower authority or the Court, whose order is otherwise in his favour. Recently Hon’ble Gujarat High Court has considered this issue in principal Commissioner of income tax versus sun pharmaceuticals Ltd (2017 – TIOL – 2008 – Gujarat – HC ) as under:- “8. Rule 27 of the Rules reads as under: "Respondent may support order on grounds decided against him. 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him." 9. This Rule thus provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. This rule embodies the fundamental principle that the person, who may not have been aggrieved by an order of the lower authority or the Court and has therefore not filed any appeal against such order, is free to defend the order before the Appellate Forum on all grounds including the ground, which may have been held against him by the lower authority or the Court, whose order is otherwise in his favour. 10. The contention of the counsel for the Revenue was that the assessee had to file independent appeals or cross-objections in terms of section 253 (4) of the Act to enable the assessee to raise the ground of validity of the notices for reopening of the assessments since the said ground was held by the Commissioner (Appeals) against the assessee. For multiple reasons, we cannot accept this contention. As noted, under subsection (1) of section 253, an appeal can be filed before the Appellate Tribunal by an assessee being aggrieved by the order of the Appellate Commissioner. Under sub-section (2) of section 253, only if the Principal Commissioner or the Commissioner objects to any order passed by the Appellate Commissioner, he would direct the Assessing Officer to file appeal before the Appellate Tribunal. Essentially therefore, an appeal before the Tribunal against the order of Appellate Commissioner would lie against an order which is adverse to the appellant. May be, on one out of two grounds if the appeal of the assessee is allowed by the Appellate Commissioner in its entirety, he cannot be stated to be a person aggrieved by such order. His appeal under sub-section (1) of section 253 would not be maintainable. The assessee cannot file a standalone appeal challenging a finding of the Appellate Commissioner which may be against the assessee as long as the appellate order of the Commissioner is entirely in favour of the assessee and no part of the appeal of 4

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 the assessee's claim is rejected. Under subsection (4) of section 253, it is open for a person either an Assessing Officer or, the assessee, upon receipt of a notice of the appeal filed before the Tribunal to file cross-objection against any part of the order of the Commissioner (Appeals) and such cross-objection would be dealt with by the Tribunal as if it were an appeal presented within the time specified. Two things thus become clear. A cross-objection under section (4) of Section 253 could be directed against any part of the order of the Appellate Commissioner and if so presented, it would be disposed of by the Tribunal in the manner an appeal would be decided. In other words, such cross-objection would have independent existence even if for some reason, the appeal of the opponent does not survive. The cross-objection could be filed only against any part of the order of the Appellate Commissioner and necessarily therefore, that part of the order of the Commissioner (Appeals) has to be adverse to the person raising the cross-objection. Rejection of a ground, an argument or a contention would not come within the expression "any part of the order of the Commissioner" in context of which, the said phrase has been used in sub-section (4) of section 253. 11. To put the controversy beyond doubt, Rule 27 of the Rules makes it clear that the respondent in appeal before the Tribunal even without filing an appeal can support the order appealed against on any of the grounds decided against him. It can be easily appreciated that all prayers in the appeal may be allowed by the Commissioner (Appeals), however, some of the contentions of the appellant may not have appealed to the Commissioner. When such an order of the Commissioner is at large before the Tribunal, the respondent before the Tribunal would be entitled to defend the order of the Commissioner on all grounds including on grounds held against him by the Commissioner without filing an independent appeal or crossobjection. 12. Rule 27 of the Rules is akin to Rule 22 Order XLI of the Civil Procedure Code. Sub-rule (1) provides that any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been decided in his favour; and may also take any cross-objection to the decree which he could have taken by way of an appeal. In case of Virdhachalam Pillai vs. Chaldean Syrian Bank Ltd. Trichur and anr reported in AIR 1964 SC 1425 in context of the said Rule the Supreme Court observed as under: "32. Learned Counsel for the appellant raised a short preliminary objection that the learned Judges of the High Court having categorically found that there was an antecedent debt which was discharged by the suit-mortgage loan only to the extent of Rs. 59,000/- and odd and there being no appeal by the Bank against the finding that the balance of the Rs. 80,000/- had not gone in discharge of an antecedent debt, the respondent was precluded from putting forward a contention that the entire sum of Rs. 80,000/- covered by Exs. A and B went for the discharge of antecedent debts. We do not see any substance in this objection, because the respondent is entitled to canvass the correctness of findings against it in order to support the decree that has been passed against the appellant."

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 13. Likewise, in case of S.Nazeer Ahmed vs. State Bank of Mysore and ors reported in 2007 AIR SCW 766 it was held and observed as under: "7. The High Court, in our view, was clearly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings that might have been rendered by the trial court against himself. For supporting the decree passed by the trial court, it is not necessary for a respondent in the appeal, to file a memorandum of crossobjections challenging a particular finding that is rendered by the trial court against him when the ultimate decree itself is in his favour. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial court and in addition to what he has already been given by the decree under challenge. We have therefore no hesitation in accepting the submission of the learned counsel for the appellant that the High Court was in error in proceeding on the basis that the appellant not having filed a memorandum of cross-objections, was not entitled to canvass the correctness of the finding on the bar of Order II Rule 2 rendered by the trial court." 14. Similar issue came-up before Division Bench of this Court in case of Dahod Sahakari Kharid Vechan Sangh Ltd. vs. Commissioner of Income Tax reported in 282 ITR 321 = 2005-TIOL-242-HC-AHM-IT in which the Court observed as under: "17. Taking up the second issue first, the Tribunal has committed an error in law in holding that the assessee having not filed cross-objection against findings adverse to the assessee in the order of Commissioner (Appeals), the said findings had become final and remained unchallenged. The Tribunal apparently lost sight of the fact that the assessee had succeeded before the Commissioner (Appeals). The appeal had been allowed and the penalty levied by the assessing officer deleted in entirety. In fact, there was no occasion for the assessee to feel aggrieved and hence, it was not necessary for the assessee to prefer an appeal. The position in law is well settled that a cross objection, for all intents and purposes, would amount to an appeal and the cross objector would have the same rights which an appellant has before before the Tribunal. 18. Section 253 of the Act provides for appeal to the Tribunal. Under sub-section (1), an assessee is granted right to file an appeal; under sub-section (2), the Commissioner is granted a right to file appeal by issuing necessary direction to the assessing officer; sub-section (3) prescribes the period of limitation within which an appeal could be preferred. Section 253(4) of the Act lays down that either the assessing officer or the assessee, on receipt of notice that an appeal against the order of Commissioner (Appeals) has been preferred under subsection (1) or subsection (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or a discretion to file cross objection. 6

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 19. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 20. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redundant and nugatory. It is not possible to interpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and an interpretation which makes other connected provisions otiose has to be to avoided. Rule 27 of the Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to provisions of Section 253(4) of the Act. The Tribunal was, therefore, in error in holding that the finding recorded by the Commissioner (Appeals) remained unchallenged since the assessee had not filed cross objections." 15. The first question is, therefore, answered against the Revenue and in favour of the assessee.”

ITA No 3721 & 4808/ Del/2011 & 2014 ( By revenue) A Y 2007-08 11. in the present case the assessment under section 143 (3) of the income tax act was passed on 29/12/2009 in response to the return of income filed by the assessee on 09/08/2007 of Rs. 2 03110/– wherein an addition of Rs. 1 296300 on account of unexplained cash was made by the Ld. assessing officer and confirmed by the Ld. CIT appeal. Therefore, assessee is in appeal before us. 7

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 12. The assessee has raised the following grounds of appeal in ITA No. 3700/Del/2011:- “1. That the order dated 30.05.2011 passed by the Ld. ClT(A)-ll, New Delhi is against facts and bad in law. 2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the order of the Assessing Officer wherein the AO treated a sum of Rs. 12963000/- out of total cash found of Rs. 17,96,300/- as unexplained disbelieving the availability of cash out of cash withdrawn from bank account of assessee and her husband. 13. During the course of search proceeding certain cash were founded the various premises in possession of the assessee. A sum of Rs. 7.46 Lacs was founded the defense colony residence of the assessee and Rs. 10.50 Lacs was founded local No. 44 4 with Oriental bank of commerce. During the course of assessment proceedings, the assessee was asked to explain the source of the above cash and assessee explained that she has withdrawn a sum of Rs. 14.65 Lacs from her bank account and her husband has withdrawn a sum of Rs. 60.45 Lacs, and therefore after meeting the day to day expenses there are sufficient balance available with the assessee which covers the above amount of cash found during the course of search. The Ld. assessing officer disbelieved the above explanation of the assessee and made an addition of Rs. 1 296300 on account of unexplained cash. The Ld. CIT appeal confirmed the addition because admittedly, the appellant and her husband were living apart and he gives money to the assessee through cheque and appellants cash on hand, a different than the cash on hand of her husband. Therefore, the addition was confirmed. 14. The Ld. authorized representative submitted that that search was carried on at the residence of the Suresh Nanda and cash was found. Undeniably the assessee and her husband are living apart, but both of them have made substantial cash withdrawal from their bank accounts and cash found at their residence is covered by the amount of withdrawal from the bank made by both of them. He further submitted that as Rs. 10 Lacs is the opening balance in the hands of the assessee for which a cash flow statement was given. He therefore submitted that irrespective of the fact that assessee and her husband are living apart, the amount of cash found is covered by the amount of withdrawal from the account of husband and the assessee. He further submitted that it is a fact that no unaccounted cash was recorded by the assessing officer in this assessment order that was found by the revenue during the course of search on account of land owned by husband. Therefore, the credit is 8

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 required to be given of the withdrawal made by her husband. He further referred to page No. 40 of his paper book to show the amount of cash available. 15. The Ld. CIT DR vehemently relied upon the order of the lower authorities and submitted that the credit of the cash withdrawn by the husband of the assessee cannot be given credit to the assessee because both are living apart. 16. We have carefully considered the rival contention and also perused the orders of the lower authorities. Admittedly during the course of search cash of Rs. 17.96 Lacs was found. The explanation given by the assessee is that assessee has withdrawn Rs. 14.65 Lacs and her husband has withdrawn 60.45 Lacs during the year and therefore after meeting the expenditure amount of cash found during the course of search is covered. Admittedly, the search was on Suresh Nanda group. During the course of search cash was found at the residence of the assessee. Admittedly a sum of Rs. 14.65 Lacs has been withdrawn by the assessee from her bank account and XT .45 Lacs were withdrawn from bank by her husband. At page No. 40 of the paper book. The assessee has given a detailed cash flow statement wherein opening balance of Rs. 10 Lacs in the hands of the assessee and Rs. 4.29 Lacs in the hands of the assessee is husband is shown. Further, the withdrawal amount is also shown, therefore, the total withdrawal amount of the husband of the assessee and assessee amounts to Rs. 66 Lacs and out of this after deducting the household expenditure. The assessee has shown the available cash on hand of Rs. 67 lakhs. Therefore, if the combined effect of the total cash withdrawal of the assessee as well as her husband is given that the amount of cash found during the course of search is covered by the availability of the cash in their hands. However, the Ld. CIT (A) has held that both are living apart and therefore the credit cannot be given of the cash withdrawn by the husband of the assessee. We do not agree with that for the simple reason that nowhere it is established by the revenue that amount of cash withdrawn by the husband of the assessee is not available to assessee. Merely because the reason that the assessee and the husband of the assessee are legally separate cannot be the reason for not giving the credit of the cash found during the course of search. It is never established that both are not staying in the same residence and further over and above the sum of Rs. 60,000 per month, the husband of the assessee was not paying her other sums. It is pertinent to note here the assessment proceedings for assessment year 2001 – 02 which was also before us in a separate 9

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 appeal wherein a sum of Rs. 58 lakhs was received from the husband of the assessee. Therefore it is apparent that despite the fact being both the assessee and her husband separate the amount of cash found during the course of search is covered by the withdrawal of assessee and her husband. Furthermore it is not the case of the revenue that amount of cash withdrawal by the husband of the assessee has been used somewhere else and is not available. In view of this we reverse the finding of the Ld. Lower authorities and allow the appeal of the assessee directing the assessing officer to delete the addition of Rs. 12.96 Lacs on account of excess cash found during the course of search. In the result ground No. 2 of the appeal of the assessee is allowed. 17. Ground No. 1 and 3 of the appeal of the assessee is general in nature and therefore dismissed. 18. In the result appeal No. 3700/del/2011 for assessment year 2007 – 08 filed by the assessee is partly allowed. 19. The Revenue has raised the following grounds of appeal in ITA No. 3721/Del/2011 for assessment year 2007 – 08:- “1. The order of the Ld. CIT (Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs. 12,30,700/- made by the assessing officer on account of unexplained money received by the assessee from Shri Suresh Nanda, 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs. 1,20,73,114/- made by the assessing officer on account of unexplained Jewellery found with the assessee.” The 1st ground of appeal is general in nature and therefore same is dismissed. 20. The 2nd ground of appeal is with respect to the addition of Rs. 1 230700 received by 21. the assessee from her husband Mr. Suresh that the account payee cheques. During the year assessee has received a sum of Rs. 1 230700 from 13th cheques from Deutsche bank non-resident external account of the husband of the assessee. The pattern of the amount received is Rs. 1 lakh for each of the month and a paltry sum of Rs. 30700/-was received on 03/08/2006. As assessee could not explain the source of the above funds in the hands of the appellant’s husband the addition was made. The Ld. CIT appeal deleted the same and therefore revenue is in appeal before us.

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 22. The Ld. CIT DR vehemently relied upon the order of the Ld. Assessing officer. The Ld. authorized representative relied upon his written submission and the order of the Ld. CIT appeal. 23. We have carefully considered the rival contentions. Admittedly, the sum of Rs. 1 lakh each was received by the assessee from her husband from his Deutsche bank non- resident external account on monthly basis for 12 months and further sum of Rs. 3 0700 was received on 03/08/2006. Assessee explained that these money was paid by the husband of the assessee as maintenance in pursuance of an order of the court for her living expenditure. The assessee submitted that the husband of the assessee is a regular income tax assessee and the money has been received by the banking channel. It was also explained that the money is in the non-resident external account was from the bank account in Singapore of the husband of the assessee and the money is deposited in the non-resident external bank account. Therefore, creditworthiness of the giver is established. It was further submitted that sum received ace capital in nature as the sum is received on the instruction of the court for living expenditure. The Ld. CIT appeal deleted the above disallowance after obtaining the report of the Ld. assessing officer for the reason that husband of the assessee is an income tax payee regularly filing his return of income, the money is available in the non-resident external bank account of the assessee’s husband. He held that the addition has been made solely for the reason that source of the foreign income has not been disclosed by Suresh Nanda in his assessment proceedings. He further held that it is nowhere established by the revenue that money belongs to the assessee and it is rooted through the bank account of her husband. In fact, he held that there is sufficient money in the bank account of the husband of the assessee, and the above sum as been paid on account of order of the Hon’ble court who has determined the sum based on the creditworthiness of the payer. The Ld. departmental representative could not point out that how the identity, creditworthiness of the husband of the assessee is not proved and further when the sum is paid in pursuance of a court order, the genuineness of the transaction cannot be doubted. In view of this we confirm the order of the Ld. CIT (A) in deleting the addition of Rs. 1 230700 made in the hands of the assessee on account of some received by assessee from her husband. In the result ground No. 2 of the appeal of the revenue is dismissed. 11

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 24. Ground No. 3 of the appeal of the revenue is against the deletion of the addition of Rs. 1 207 3114 on account of unexplained jewellery found during the course of the search. During the course of search jewellery of Rs. 1.75 crores was found in the possession of the assessee. The assessee explained that jewellery found is exactly matching with the description in the valuation report dated 07/03/2003 filed by her along with the return of will tax for assessment year 2002 – 03. The assessing officer made the addition of Rs. 1.20 crores in the hands of the assessee for the reason that total jewellery owned by the assessee is much more than what was found during the course of search and as per the explanation of the assessee jewellery more than one crore was lying with a jeweller in Mumbai. Further, there was no item wise reconciliation given by the assessee. On appeal before the Ld. CIT (A) the above addition was deleted and therefore revenue is in appeal before us. 25. The Ld. CIT DR vehemently relied upon the order of the Ld. Assessing officer. The Ld. authorized representative relied upon his written submission and the order of the Ld. CIT appeal. 26. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Admittedly, the jewellery of Rs. 1.74 crores for found during the course of search and out of that jewellery of Rs. 1.20 crores was seized and the Ld. assessing officer has made addition on that account. The Ld. CIT appeal wide para No. 12 of his order has held as under:- “12. I have considered the facts of the case, the AO’s order, the submission of the appellant, the AO’s report and the position of law. As per the remand report the Annexure is filed with the submissions by the appellant does not constitute additional evidence. These Annexure’s contained detailed reconciliation of jewellery by the appellant. The detailed submissions of the appellant have also been considered. It is observed that the detailed reconsideration of the jewellery has been made by the appellant and was fully submitted before the assessing officer along with letter dated 21, 12, 2009. The appellant has made the reconciliation by identifying the rate of gold and caratage of diamonds in the valuation report filed by her and her daughter along with their will tax return or assessment year 2002 – 03. Similarly, the weight of gold and caratage of diamonds have been identified from the valuation report prepared by the departmental valuer during the course of search. To the weight of gold and ^ at of diamonds identified the valuation report filed with the will tax return, 12

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 the weight of the gold and ^ age of diamond as per the purchase invoices after 01/04/2002 to have been added. The assessing officer stated that the appellant has merely increase the value of jewellery by applying the rate of gold on 31st of March of the previous year. Hence, the appellant has not considered the value of diamonds owned by her. According to the appellant, the valuation report filed along with the return of wealth in respect of assessment year 2002 – 03 contained items of jewellery comprising of gold and diamond. On those items of jewellery, the appellant has been ending the jewellery purchase during the year after a while 2002 – 03 and thereafter after applying the rate of gold on 31st March of each previous year. Hence, jewellery comprising of both, gold and diamond, has been increased each year according to the market value of the gold. It cannot therefore be said that the diamonds have not been considered in the jewellery report in the wealth tax return. As per the reconciliation, the appellant has included the total weight of gold in grams of the jewellery found during the course of search on 28 /2/2007. She has also computed the total caratage of diamonds in respect of the said jewellery found. The appellant has also computed the total weight of gold of jewellery returned in her wealth tax return along with her daughter for assessment year 2002 – 03. The total ^ age of diamond in jewellery returned/declared by the appellant and her daughter has also been computed as per the reconciliation statement. The appellant’s contention that both she and her daughter were using the jewellery interchangeably cannot be ignored. The appellant’s husband Mr. Suresh Nanda has filed a confirmation before the assessing officer stating that his family had placed the jewellery in a common pool and used the same interchangeably. It is observed that the total weight of gold declared by the appellant had her daughter exceeds the weight of gold found with them on the date of search by 1577.446 gms. Similarly, the total diamond declared in the wealth tax return exceeds the total weight of diamonds found during the course of search. In terms of the value, the value of declared jewellery taking the rate of gold at Rs. 900 per gram in respect of the family comprising of appellant, Mr. Suresh Nanda and Miss Sonali Punj works out to Rs. 7.5572939/– against the total jewellery found of rupees 41224097/–. Hence, the value of jewellery declared is far in excess of the value of jewellery found during the course of search. Even individually the value of jewellery declared taking the rate of gold at Rs. 900 per gram is in excess of jewellery found during the course of search.” 13

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 27. Therefore, from the above finding it is apparent that the value of the jewellery found during the course of search was far less than the value of jewellery declared by the family. Further more in para No. 13 of the order. He has considered the individual wealth tax return of the assessee and held that merely because the description of the jewellery do not tally with the description of the jewellery declared by the appellant cannot be added in the hands of the assessee due to the frequent repair, renovation, alteration, modification of jewellery which can be explained in the available cash on hand and withdrawals of the assessee. Therefore in view of the above finding of the Ld. CIT appeal which is not disputed, we do not find any infirmity in the order of the Ld. CIT appeal in deleting the above addition. Further more on the identical facts and circumstances in case of daughter of the assessee. The coordinate bench has confirmed the deletion of the addition vide para No. 16 – 20 of the order. The above decision has not been disputed by the revenue as stated before us. In view of this, we also direct the Ld. assessing officer to delete the above addition on account of jewellery found. In the result ground No. 3 of the appeal of the revenue is dismissed. 28. In the result appeal of the revenue for assessment year 2007 – 08 in ITA No. 3721/Del/2011 is dismissed. 29. The Revenue has raised the following grounds of appeal in ITA No. 4808/Del/2014 for assessment year 2007 – 08 wherein the penalty levied by the Ld. assessing officer on the addition of Rs. 1 296300 on account of unexplained case found during the course of search was deleted by the Ld. CIT appeal:- “1. The order of Ld. CIT (A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in law in deleting the penalty u/s 271(l)(c) of the Income Tax Act, 1961 amounting to Rs.4,32,512/- levied by Assessing Officer on account of unexplained cash found during the course of search without appreciating the fact that during the course of assessment proceedings it was found by the AO that during the course of search proceedings total cash of Rs.17,96,300/- was found from the residential premises and locker of the assessee and the Assessing Officer added a sum of Rs.12,96,300/- on account of unexplained cash found which has been confirmed by Ld. CIT(A).” 30. The Ld. assessing officer levied the penalty of Rs. 4 32512 on the addition of Rs. 1 296300/– on account of unexplained cash found during the course of search wide order dated 16/11/2012. The Ld. assessing officer held that assessee has concealed the particulars of the income. The above penalty was deleted by the Ld. CIT appeal 14

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 wide order dated 25/06/2014 holding that appellant has no source of income except money given by Sri Suresh Nanda and from bank interest. Therefore, the addition was rightly made in the hands of the Suresh than the and no addition can be made in the hands of the assessee and therefore the penalty has been remanded for the fresh adjudication in the hands of the Suresh Nanda, therefore, the penalty does not survive. The revenue aggrieved before us contested that excess cash was found and therefore the penalty should have been levied and confirmed. 31. We have carefully considered the rival contention and as we have already deleted the addition made by the Ld. assessing officer and confirmed by the Ld. CIT appeal for the reasons given by us in ITA No. 3700 Del 2011 for assessment year 7 – 08, the penalty does not survive. Hence, the appeal of the revenue is dismissed. AY 2005-06 32. The Revenue has raised the following grounds of appeal in ITA No. 3720/Del/2011:- “1. The order of the Ld. CIT (Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as facts in holding that the assessment made u/s 153A cannot be held to be legally valid as the assessment was not pending and no evidence of undisclosed income was found during the course of search and therefore the assessment deserves to be annulled. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs. 1,50,07,557/- made by the assessing officer on account of unexplained money received by the assessee from Shri Suresh Nanda. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs.4416694/- made by the assessing officer on account of unexplained investment in purchase of a E- 240 Merecedes car. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the addition of Rs 52,70,000/- made by the assessing officer on account of unexplained investment in jewellery.” 33. A brief fact of the case is that pursuant to search on Suresh Nanda group of cases on 28/2/2007. The assessee filed her return of income in response to notice under section 153A declaring income of Rs. 7 2845/– on 27/01/2009. Consequently, the assessment under section 143 (3) read with section 153A of the income tax act was passed on 29/12/2009 wherein the Ld. assessing officer made following 3 additions: a. Rs. 1 50, 07557/– on account of money provided by Mr. Suresh Nanda to the assessee

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 b. Rs. 441 6694/on account of purchase of the motor car by the husband of the assessee c. Rs. 52700000/- on account of purchase of jewellery. 34. The assessee contested the above addition before the Ld. CIT appeal who deleted the above addition vide order dated 30/05 /2001 and therefore revenue is in appeal before us. The 1st ground of appeal was general in nature and therefore dismissed. 35. The 2nd ground of appeal was against the finding of the Ld. CIT (A. That assessment 36. order passed under section 153A cannot be held to be legally valid as the assessment was not pending and no evidence of undisclosed income was found during the course of search and therefore the assessment deserves to be annulled. 37. The Ld. CIT DR vehemently supported the order of the Ld. assessing officer and submitted that that the Ld. CIT appeal has wrongly held that the addition cannot be made in the hands of the assessee in absence of any incriminating material. She further submitted that despite there being no incriminating material such additions could have been made in the hands of the assessee. 38. The Ld. authorized representative supported the order of the Ld. CIT A, and submitted that no addition can be made in the hands of the assessee Pursuant to the search in absence of any incriminating material. 39. We have carefully considered the rival contention and perused the orders of the lower authority. In the present case, the Ld. assessing officer has passed an assessment order under section 143 (3) read with section 153A of the income tax act. According to the provisions of section 153 A of the income tax act. The assessing officer sell issue notice to such person requiring him to furnish within such period as may be specified in the notice, the return of income in respect of each assessment year falling within the 6 assessment years and further relevant assessment year in the prescribed format, such written shall be treated as a written furnish under section 139 of the income tax act. Further, it is provided that the assessing officer shall assess or reassess the total income of the 6 assessment years immediately preceding the assessment year relevant to the previous year in which such searches conducted or requisition is made and further relevant assessment year. It is further provided that if on the date of initiation of the search under section 132 or making of recreation under section 132A. If any of the 16

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 assessment or reassessment is pending within the period of 6 assessment years, or for the relevant assessment year then they shall abate. Therefore, in the present case the assessment for assessment year 2005 – 06 was not pending and therefore the assessing officer sell assess or reassess the total income in respect of this assessment year because it is falling within such 6 assessment years. Hence, it cannot be said that the assessment order passed by the Ld. assessing officer is invalid. In view of this ground No. 2 of the appeal of the revenue is allowed and order of the Ld. CIT appeal annulling the assessment order is set aside. 40. Now we come to ground No. 3, 4 and 5 of the appeal of the revenue where the additions are made with respect to unexplained money received by the assessee of Rs. 1 50, 07557/– from Mr. Suresh Nanda, addition of Rs. 4416694/– on account of unexplained investment in purchase of a car and Rs. 5 270, 000 made by the assessing officer on account of unexplained investment in jewellery. The Ld. CIT (A) deleted the above addition. Therefore, revenue is in appeal before us. 41. The Ld. departmental representative vehemently supported the order of the Ld. assessing officer. 42. The Ld. authorized representative vehemently submitted that there is no incriminating material found during the course of search on this aspect and therefore the addition cannot be made. He vehemently submitted that the issue is now squarely covered in favour of the assessee been view of the decision of the Hon’ble jurisdictional High Court in case of CIT versus Kabul Chawla (supra) which is held that no addition can be made in the hands of the assessee with respect to the assessment years which are not pending before the assessing officer on the date of the search without any incriminating material pertaining to that year. 43. We have carefully considered the rival contentions and also perused the orders of the lower authority. We also noted the reasons stated by the Ld. assessing officer for making those additions. The assessment year involved in this appeal is assessment year 2005 – 06 return for which was filed on 01/08/2005 and till the date of search, no notice under section 143 (2) or under section 148 of the income tax act has been issued. The search took place on 28/02/2007. The notice under section 143 (2) could have been issued to the assessee up to 30/9/2006. Therefore as on the date of the search i.e. on 28/02/2007 assessment for assessment year 2005 – 06 was not pending before the assessing officer. Therefore, if any addition is 17

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 required to be made in assessment year 2005 – 06 it is to be made on the basis of the incriminating material found during the course of search. We have carefully perused the assessment order also with respect to the various additions made by the Ld. assessing officer. On perusal of the same, we find that with respect to the addition of Rs. 1 50, 07557/–. With respect to the amount paid by Mr. Suresh Nanda to the assessee, with respect to the addition of Rs. 4416694/- With respect to purchase of Mercedes car and with respect to the addition of Rs. 52.70 Lacs on account of purchase of jewellery there is no incriminating material mentioned by the assessing officer in his assessment order. In the remand report furnished before the Ld. CIT (A) ld. Assessing officer did not submit any incriminating material with respect to the above addition. Hon’ble Delhi High Court in case of CIT versus Kabul Chawla (supra) It has been held that when the assessment is not pending on the date of the search, the Hon’ble high court held that :-

“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, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. Page No : 0590 (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer 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 assessment years "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although section 153A 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 Assessing Officer 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 the seized material."

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 (v) In the 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 153A is relatable to abated pro ceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdic tion to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A 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.” 44. Therefore it is apparent that the addition in this assessment year can be made only on the basis of incriminating material found during the course of search. In the present case, we are not convinced that the Ld. assessing officer has made the above additions based on the incriminating material. On perusal of the assessment order , we find that with respect to the addition of Rs. 1 50, 07557/–. With respect to the amount paid by Mr. Suresh Nanda to the assessee, with respect to the addition of Rs. 4416694/- With respect to purchase of Mercedes car and with respect to the addition of Rs. 52.70 Lacs on account of purchase of jewellery there is no incriminating material mentioned by the assessing officer in his assessment order. In the remand report furnished before the Ld. CIT (A) ld. Assessing officer did not submit any incriminating material with respect to the above addition. In view of this, respectfully following the decision of the Hon’ble Delhi High Court, we confirm the finding of the Ld. CIT (A) that no addition can be made on account of all these 3 items as no incriminating material with respect to these additions have been found during the course of search by revenue. Hence, we direct the Ld. assessing officer to delete the above the additions involved in ground No. 3, 4 and 5 of the appeal of the revenue. In the result ground No. 3 – 5 of the appeal of the revenue is dismissed. 45. In the result appeal No. 3720/del/2011 for assessment year 2005 – 06 of the revenue is dismissed. A Y 2010-11 WTA No 27/del/2014( By Revenue) 19

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11

ACIT V Renu Nanda ITA No 3719, 3720,3721, 3700 & 4808/Del/2011 & 2014 & WTA 27/Del/2014 A Y 2001-02 ,2005-06,2007-08,2010-11 the addition in the income tax proceedings based on which the addition has been made has not been sustained by the appellate authorities there is no question of making the identical addition in the wealth tax act. 51. We have carefully considered the rival contentions. The revenue could not show us that how the addition when deleted by the appellate authority will result into accretion in the net wealth of the assessee. In view of this we do not find any infirmity in the order of the Ld. CIT (W) in deleting the above addition. Hence, we dismiss the appeal of the revenue. 52. In the result appeal number WTA 27/del/2014 for assessment year 2010 – 11 filed by the revenue is dismissed. Order pronounced in the open court on 11/09/2017. -Sd/- -Sd/- (BEENA A. PILLAI) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:11/09/2017 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi