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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SHRI J. S. REDDY & SMT. BEENA A. PILLAI
Date of hearing: : 07.09.2016 Date of Pronouncement: : 09.09.2016 ORDER
PER BEENA A. PILLAI, JM:
The present cross appeals have been filed by the assessee as well as the Revenue against the order dated 27.08.2013 passed by Ld. CIT(A) III, New Delhi for the Assessment Year 2007-08 on the following grounds of appeal: I.T.A.No. 5150/Del/2013 (Assessee’s appeal):
2 I.T.A.No.5150./Del/2013 I.T.A.No. 5772/Del/2013 “1. That the ld. Commissioner of Income Tax (Appeals) has acted arbitrarily and on presumption basis, contrary to principles of natural justice and provision of law as such the action and findings based thereon stands vitiated and order is bad in law.
2. On the facts and in the circumstances of the case, the Ld CIT (A) was not correct in holding that assessment proceedings are validly initiated and further holding that assessment order was not illegal and invalid
3. On the facts and circumstances of the case the notice u/s. 153 A is misconceived and illegal being without jurisdiction, contrary to facts and provision of law and hence the assessment based thereon must be quashed as erroneous and void.
4. That on the facts and circumstances the Ld Commissioner of Income Tax (Appeals) is not justified in confirming the action of Ld. AO in disturbing the completed assessment U / s 143(1) & 143(3) of the Income Tax Act'1961 in the absence of any seized material pertaining to the Assessment year under consideration and making an addition of Rs.3,42,79,320 which is against the principles of natural justice, contrary to facts and provision of law as such the action of Ld. CIT(A) need to be undone and the addition made by Ld AO and confirmed by CIT(A) needs to be deleted.
5. That on the facts and circumstances the Ld Commissioner of Income Tax (Appeals) is not justified in confirming the action of Ld. AO in rejecting the method of valuation of WIP of petal project consistently followed by the assessee and accepted by the department in earlier and subsequent assessment years and making addition of Rs.3,42,79,320/- on this account which is contrary to principles of natural justice, facts and provision of law
3 I.T.A.No.5150./Del/2013 I.T.A.No. 5772/Del/2013 as such the action of Ld. CIT(A) need to be undone and the addition made by Ld AO and confirmed by CIT(A) needs to be deleted.
That on the facts and circumstances the Ld AO in rejecting the Audited books of accounts maintained in regular course of business and duly accepted in earlier Assessment proceedings without pointing out any defects in same which is contrary to principles of natural justice, facts and provision of law as such the action of Ld. AO need to be undone and the book result should be accepted.”
I.T.A.No. 5772/Del/2013 (Revenue’s appeal)”:
“1 On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.~2,69,48,770/- out of interest expenses.
2 On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.2,69,48,770/- and ignoring the facts that the assessee company failed to produce the relevant receipts of the interest paid by it and copy of agreements with the Director Town & Country Planning and the assessee company during the course of assessment proceedings.
3 On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.2,69,48,770/- and in ignoring the facts that the assessee company failed to substantiate its claim as to for which project the interest / expenses have been borne by it, when the company was having 12 other projects in hand.
4 On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.2,69,48,770/- and in ignoring the facts that the licence certificate was issued in the name of M/s Vipul Infrastructure Developers Ltd. and all the 4 I.T.A.No.5150./Del/2013 I.T.A.No. 5772/Del/2013 installments have been paid by M/s Vipul Infrastructure Developers Ltd. and not by the assessee company.
5 On the facts and in the circumstances of the case, the CIT(A) has erred in admitting additional evidence without following Rule 46A as laid down by the Hon'ble Delhi High Court in the case of Manish Build Well Pvt. Ltd. 204 Taxman 106.
6 The order of the CIT(A) is erroneous and is not tenable on facts and in law.”
At the outset, Ld. A.R. submitted that in the appeal filed by the assessee, ground Nos.1, 2 & 7 are general in nature. Grounds No.2 & 3 are legal issues challenging the validity of the assessment proceedings u/s 153A of the Act. The Revenue has preferred an appeal against the additions deleted by Ld. CIT(A). 2.1 The legal issues raised b the assessee in pertains to the validity of assessment proceedings. It is necessary to deal with the legal issue first. Accordingly, we take up the legal issue raised by the assessee in its appeal.
The brief facts of the case are as under: 3.1 Search and seizure proceedings took place at Shri Ram Hari Ram group of cases and thereby assessee was also searched on 26.02.2009. The assessee filed its original return declaring its income at Rs.12,41,50,220/- on 06th November 2007 and the assessment order u/s 143(3) was passed on 30.12.2008.
5 I.T.A.No.5150./Del/2013 I.T.A.No. 5772/Del/2013
Ld. A.R. submitted that as such no assessment was pending for the year under consideration, as on the date of search. He further submitted that during the search, the Assessing Officer could not find any incriminating material that could lead to the addition being made in respect of interest expenses and difference in valuation of W.I.P. He further submitted that since no assessment was pending, there was no question of abatement of proceedings for assessment to be conducted u/s 153A without referring to any incriminating materials. Ld. A.R. relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs Kabul Chawla reported in 380 ITFR 573.
On the contrary, Ld. D.R. relied upon the order passed by the authorities below. 6. We have perused the details and record placed before us vis-à-vis the rival contentions raise by the Ld. A.R. The legal dispute raised by the assessee is, ‘As to whether on a completed assessment, can there be addition in subsequent assessment proceedings initiated u/s 153A pursuant to search, without there being any incriminating material? As per the ratio laid down by Hon'ble Delhi High Court in case of Kabul Chawla (supra), only pending assessment can abate and completed assessment remain unaffected unless Assessing Officer has any seized material that can justify the addition.
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In this case, return of income for the year under consideration was filed on 06.11.2007 has attained finality on passing the assessment order u/s 143(3) on 30.12.2008. As it is observed from the records placed before us that there has been no reference to any incriminating document in respect of the addition made by the Assessing Officer. The Assessing Officer has completed the assessment and made addition without there being any seized material / documents.
The Ld. D.R. could not controvert the submissions made by the Ld. A.R. that there was no incriminating material that was found or seized during the search and seizure proceedings. Hence, the additions made in the assessment order by the Assessing Officer in admittedly not based on any material found or seized during the course of search. 9. We are, therefore, of the opinion that the case o the assessee is squarely covered by the decision of CIT Vs Kabul Chawla (supra). For the reasons set out above, we uphold ht legal issue raised by the assessee in the cross objection and hold the impugned assessment as null and void. 10. As the assessment proceeding has been quashed and set aside, the other grounds raised by the assessee as well as the Revenue, stand infructuous without going into the merits.
7 I.T.A.No.5150./Del/2013 I.T.A.No. 5772/Del/2013
Accordingly, the appeal filed by the assessee stands allowed on the legal issue raised and appeal filed by the Revenue stands dismissed. Order pronounced in the open court on 09th Sep., 2016.