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Income Tax Appellate Tribunal, DELHI BENCH “D”, NEW DELHI
Before: SH. N. K. SAINI & SMT. BEENA A. PILLAI
ORDER PER BEENA A. PILLAI, JM: These are cross appeals filed by revenue as well as 1. assessee against order dated 21.11.2013 passed by Ld. CIT(A)-12, New Delhi, for assessment year 2007-08 on the following grounds of appeal:
The Commissioner of Income Tax (Appeal) erred in law and on facts of the case in deleting the addition of Rs. 7,62,92,143/- made on account of undisclosed investment. 2. (a) The order of the CIT(A) is erroneous and not tenable in law 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. CO No. 5/Del/2016
1(i). That addition of Rs. 7,62,92,1437- based on documents found at the premises of third party is not sustainable in the absence of recording of satisfaction by the Assessing Officer of search party and the Assessing Officer of the assessee in terms of provisions of sec. 153C of the Income Tax Act, 1961. (ii) That even otherwise, the said document does not belong to the assessee and there could be no assessment on the basis of same.
CO no. 5/del/2016 (AY 2007-08)
That orders of lower authorities are illegal and without jurisdiction. 2. Ld.AR submitted that issue raised in cross objection by assessee is a legal issue pertaining to jurisdiction of Assessing Officer. He submitted that the additions are based on documents found at the premises of third-party and in the absence of any satisfaction being recorded under section 153C of the Act, by Assessing Officer of searched party, no addition could be made in the hands of the assessee.
Since this issue goes to the root of assessment proceedings, we are inclined to deal with cross objection raised by assessee first.
Brief facts of the case as observed from assessment order are as under: Assessee derived its income from house property, business, capital gains and other sources during the year under consideration. Search and seizure operation under section 132 of the Act was undertaken in the case of assessee on 29.04.2008 and notice under section 153A of the Act was issued on 15.03.2010. Assessing Officer completed the assessment on 29.12.2010, on an income of Rs.19,86,22,400/-. Later on assessee’s case was centralised pursuant to search conducted on Lalit Modi Group on 19.06.2009, a notice under section 153A was again issued to assessee. In response to notice, return was filed declaring CO no. 5/del/2016 (AY 2007-08) income of Rs.12,20,78,260/-. Assessing Officer made addition based on the basis of Annexure A-1 found in search and seizure action conducted under section 132 in case of Lalit Modi Group on 19.06.2009. Assessing Officer completed the assessment on 29.12.2011, under section 153A read with section 143 (3) of the Act.
Ld. AR submitted that all the proceedings initiated in case of assessee are based on incriminating documents found from the premises of Lalit Modi. He has submitted that as there is no satisfaction recorded the Assessing Officer of searched person in respect of the incriminating material relating to the other person i.e assessee, therefore, the proceedings initiated in the case of the assessee is beyond jurisdiction.
Ld. DR opposed the argument advanced by Ld. AR and submitted that assessment in case of assessee has been made by Assessing Officer under section 153A as the assessee was also searched. He placed his reliance on the decision of Hon’ble Kerla High Court in the case of E. N. Gopal Kumar Vs. CIT reported in (2016) 75 taxmann.com.215. He also submitted that the cross objection raised by the assessee does not arise from the order of Ld. CIT(A) and therefore, the same may be dismissed
We have perused the submissions advanced by both the sides in the light of the records placed before us.
CO no. 5/del/2016 (AY 2007-08)
We do not agree with the submissions advanced by Ld. AR as Assessing Officer has completed the assessment under section 153A read with section 143(3). The requirement of recording satisfaction in the case of searched person as laid down by Hon’ble Courts is when the notice is issued under section 153C. Even otherwise, we agree with the objection raised by Ld. DR for considering the cross objection. Ld. CIT(A) has not given any finding in this respect. Therefore, the cross objection filed by the assessee is infractuous.
We accordingly dismiss the cross objection raised by the assessee.
The issues raised by the revenue are in respect of the addition that has been deleted on account of undisclosed investment.
Ld. DR submitted that various loose sheets were found from the possession of third-party which has been brought to the knowledge of assessee at the time of assessment proceedings. He submitted that the explanation offered by assessee was not accepted because of which the addition was made by Ld. AO. He placed his reliance upon observations the order of Assessing Officer.
On the contrary Ld. AR submitted that the materials obtained from premises of a third-party could not be relied CO no. 5/del/2016 (AY 2007-08) upon especially when third-party himself has given statement clarifying that, name of the assessee, does not appear on the seized documents and that these documents do not represent any transaction of property or otherwise with assessee in any manner whatsoever. He submitted that the ownership of transaction in respect of the documents recovered from the possession and control of 3rd parties should be established before making any addition in the hands of assessee. Ld. AR placed his reliance upon the observations and findings given by Ld. CIT (A).
We have perused the submissions advanced by both the parties in the light of the records placed before us. It is observed that Assessing Officer has made addition merely on the basis of surmises and conjunctures and has rejected the explanation given by assessee without there being any material contrary to that on record. It is also observed that Assessing Officer has not even considered the statement given by Lalit Modi from whose premises the alleged documents were obtained.
Ld. CIT(A) has dealt with the addition made by Assessing Officer in detail and has analyzed the issue on merits threadbare. A perusal of Annexure-I, shows that nowhere assessee’s name appears. Ld. CIT (A) has correctly held that this piece of paper (Annexure-I) to be a dumb document. We do not find any infirmity in the findings of Ld. CO no. 5/del/2016 (AY 2007-08)
CIT(A) and uphold the same. Accordingly ground raised by the revenue stands dismissed.
Ground No. 2 raised by the revenue’s general in nature and does not require any adjudication.
In the result appeal filed by the revenue and cross objection filed by assessee stand dismissed.
Order pronounced in the open court on 08th February, 2017.