ACIT, NEW DELHI vs. M/S. SUNKAN TRAVELS PVT. LTD., NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘G’ NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA Nos. 559 to 564/Del/2012 Assessment Years: 2003-04 to 2008-09 ACIT, Central Circle-21, Vs. M/s. Sunkan Travels Pvt. Room No. 344, ARA Centre, Ltd., B-33, Shivalik, Malviya E-2, Jhandewalan Extn., Nagar, New Delhi New Delhi GIR/PAN :AAICS9275Q (Appellant) (Respondent) And C.O. Nos. 80 to 85/Del/2012 [In ITA Nos. 559 to 564/Del/2012] Assessment Years: 2003-04 to 2008-09 M/s. Sunkan Travels Pvt. Vs. ACIT, Central Circle-21, Ltd., B-33, Shivalik, Malviya Room No. 344, ARA Centre, Nagar, New Delhi E-2, Jhandewalan Extn., New Delhi GIR/PAN :AAICS9275Q (Appellant) (Respondent) Department by Smt. Renuka Jain Gupta, CIT (DR) Assessee by Sh. Anil Jain, Adv. Date of hearing 13.07.2016 Date of pronouncement 27.07.2016 ORDER PER BENCH: These six appeals of the Revenue and the six cross objections of the assessee are emanated from the common

2 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 order of the learned Commissioner of Income-tax (Appeals)-II, Delhi, dated 24/11/2011 for assessment year 2003-04 to assessment year 2008-09 respectively. In these appeals of the Revenue and assessee’s cross objections, common and identical grounds have been raised, therefore, we are disposing of these appeals and cross objections by this consolidated order for the sake of convenience. 2. Since common grounds have been raised by the Revenue in all the appeals, except difference in amount, the grounds raised in ITA No. 559/Del/2012 (AY 2003-04) are only reproduced as under for the sake of brevity: 1. That the learned CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 33,03,880/- made on account of unexplained purchase u/s 69C of the I.T. Act. 2. That the learned CIT(A) erred in law and on facts of the case in accepting the transaction made in cash by the assessee company regarding sale and purchase. 3. That the learned CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 3,81,596/- made on account of expenses and depreciation. 4. That the learned CIT(A) erred in law and on facts of the case in holding that the statement of various persons without being confronted to the assessee company have weak evidentiary value. 5. (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 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 raised in cross objection C.O. No. 80/Del/2012 are only reproduced as under: “1. That in view of the facts & circumstances of the case and in law the CIT (A) has erred in not holding that the notice issued U/s 153C and the assessment order passed U/s 153C/143(3) are illegal, bad in law, without jurisdiction and barred by time limitation. 2. That the documents found during search proceedings, as referred to in the satisfaction note, do not belong to assessee as the same were part of working papers of the C.A Sh. B.K. Dhingra in whose office the search was conducted. Hence, the notice issued U/s 153C, based on said documents, is illegal, bad in law and without jurisdiction. 3. That admittedly, as recorded in the satisfaction note, no seized document related to the relevant assessment year was found and the seized paper referred in the said satisfaction note were duly reflected in the regular books of A/c and no incriminating material was found. Hence the notice issued U/s 153C is illegal, bad in law & without jurisdiction. 4. That in view of the facts & circumstances of the case the CIT (A) has erred on facts and in law in holding that the assessment has been framed in conformity with statutory provision of Section 153C r/w Section 153 A of the Act. 5. That in view of the facts and circumstances of the case the CIT(A) has erred in facts and on law in upholding the validity of assessment particularly when the seized document were never handed over to the A.O. who framed the assessment and the additions made are illegal, bad in law & without jurisdiction. 6. That on the facts and circumstances of the case and the provisions of the law, the Ld CIT (A) has erred in not considering the fact that the assessment proceeding for the

4 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 year under appeal was not pending on the date of the recording of satisfaction u/s 153C of the Act and accordingly the same did not abate for the purpose of initiation of proceedings u/s 153C and as such the assessment being bad in law deserves to be quashed. 7. That the respondent reserves the right to add/amend/alter the grounds of cross objection.

5 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 5. The facts in brief of the case in respect of assessment year 2003-04, are that a search action under section 132 of the Income-tax Act, 1961 (in short ‘the Act’) was carried out on 28/10/2008 in the cases of Sh. B.K. Dhingra, Smt Poonam Dhingra and M/s Madhusudhan Buildcon Private Limited and during the course of search action, certain documents belonging to the assessee company were seized from residential premises at F-6/5, Vasant Vihar, New Delhi. The assessee company belongs to the ‘Thapar Group’. The case of the assessee was centralized with ACIT, Central Circle-17, New Delhi, by the order of Commissioner of Income Tax-III, New Delhi, passed under section 127 of the Act on 21/10/2009. A notice under section 153C r.w.s 153A of the Act was issued on 10/09/2010 requiring the assessee to file the return of income within 15 days of service of the notice. The case was subsequently transferred to ACIT, Central Circle-21, New Delhi, by an order under section 127 of the Act of the Commissioner of Income Tax (Central) dated 19/10/2010. In response to the notice issued under section 153C r.w.s. 153A of the Act, the assessee filed return of income for the year under consideration on 03/11/2010 declaring income of Rs. 8,690/-. Subsequently, notices under section 143(2)/142(1) alongwith detailed questionnaire were issued and the assessment proceedings were completed making addition of Rs. 33,03,880/- for unexplained purchases under section 69C of the Act. Aggrieved, the assessee challenged the jurisdiction under section 153C of the Act as well as the additions on merit. The learned

6 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 Commissioner of Income-tax (Appeals) decided the legal grounds against the assessee, whereas on merit decided the appeal in favour of the assessee. Aggrieved with the impugned order, both the Revenue and the assessee are before the Tribunal raising the grounds of appeal and cross objections respectively as reproduced above. 6. First, we proceed to decide the admissibility of the additional ground. 6.1 The learned Commissioner of Income Tax (Departmental Representative) submitted that issue involved in grounds are purely legal in nature and no further investigation of facts was required and it is settled law that additional ground can be raised at any stage of appellate proceedings. She, accordingly, requested that the additional grounds raised might be admitted. Whereas on the contrary, the learned Authorized Representative (AR) of the assessee submitted that application for the additional grounds has been filed after a period of more than three years from the filing of appeal, hence the same might not be admitted. 6.2 We have heard the rival submissions on the issue of admissibility of the additional grounds. We find that the issue raised in additional grounds are purely legal in nature and no further examination of fact is required. It is settled law that legal ground can be raised at any stage of appellate proceedings in view of the finding of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs.

7 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 Commissioner of Income Tax, reported in 229 ITR 383, therefore, we admit the same. 7. In additional ground No. 1, the Revenue has raised the issue that the assessee has failed to file a statement of facts before the learned Commissioner of Income Tax (Appeals), which being mandatory for filing appeal before the learned Commissioner of Income Tax(Appeals) and, therefore, the appeal of the assessee was defective and should have been rejected by the learned Commissioner of Income Tax(Appeals). Addressing the grounds, the learned Commissioner of Income Tax (Departmental Representative) further submitted that order of the learned Commissioner of Income Tax(Appeals) was bad in law as the appeal of the assessee was defective. 7.1 On the other hand, learned Authorized Representative of the assessee relying on the decision of the Tribunal in the case of S.V.P. Builders India Ltd Vs. DCIT in ITA No. 4674/Del/2014 pronounced on 19/02/2015, wherein it is held that the right of appeal is a substantive right and the procedural issue cannot take away the substantial right of a person, submitted that the Revenue cannot be allowed to raise this issue before the Tribunal. 7.2 We have heard the rival submissions and perused the material on the issue in dispute. The identical issue of non-filing of statement of facts in form No. 35, before the learned Commissioner of Income Tax(Appeals), has been decided by the Tribunal in the case of S.V.P. Builders India Ltd. Vs. DCIT

8 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 (supra) wherein para 15 of the order, the Tribunal has observed as under: “15.Rival contentions heard. On a careful consideration of the facts and circumstances of the case, a perusal of the papers on record and the orders of the authorities below, as well as case laws cited, we hold as follows:- * The first objection of the ld. DR is that the statements of facts have not been filed by the assessee, in Form No. – 35, filed before the CIT(A). The CIT(A) has not treated the forms filed before him as defective. He admitted the appeal and adjudicated the matter on merits. The order of learned CIT(A), is the impugned order appealed against before us. The learned DR wants us to hold that the order of the learned CIT(A) is illegal and against the law as there is a defect in form no. 35 * In our view the arguments raised by the learned DR are devoid of merit. Defects in the return of income filed, defects on Form No. – 35 which is the form of appeal etc. are to be considered by the respective authorities before whom these are filed and the maintainability of the appeal before us cannot be challenged. The right of appeal is a substantive right. Procedural issues cannot take away substantial rights of a person. This cannot be a ground for the Revenue to challenged the order of the learned CIT(A), which is in this case in favour of the Revenue. The arguments, to say the least are farfetched. Hence, we dismiss the same.”

7.3 Since the present controversy has already been decided by the above decision of the Tribunal, following the above finding we dismiss the additional ground No. 1 of the appeal. 8. The second additional ground relates to filing of appeal before the learned Commissioner of Income Tax(Appeals) with

9 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 the delay of one-day and the learned Commissioner of Income Tax(Appeals) passed the order without condoning the delay.

8.1 In respect of the ground, the learned Authorized Representative of the assessee submitted that due date of filing of the appeal before the learned Commissioner of Income-tax (Appeals) was on 30/01/2011 and 29th and 30th, January being Saturday and Sunday, the appeal was filed on 31/01/2011 and, therefore, there was no delay in filing the appeal before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income Tax(Departmental Representative) also could not controvert the fact of 29th and 30th, January being holiday, and therefore the appeal was filed on the next working day.

8.2 We have heard the rival submissions and perused the material on record on the issue in dispute. In view of the fact that there was no delay in filing the appeal before the learned Commissioner of Income-tax (Appeals), we dismiss the ground.

10 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 the proposition. As both the parties agreed, we have heard the cross objections of the assessee, before hearing the other grounds of the appeal of the Revenue. 10. In cross objections before us, the assessee has raised legal ground which challenges the jurisdiction of the Assessing Officer in making additions in the assessments completed under section 153C r.w.s. 153A of the Act. 10.1 Before us, the learned Authorized Representative of the assessee addressing the ground No. 3 of the cross objections submitted that no incriminating material was found belonging to the assessee and the material referred in the satisfaction note were duly reflected in the regular books of accounts and, therefore, following the judgment of the Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax (Central)-III, Vs. Kabul Chawla in ITA No. 707/2014 decided on 28/08/2015, no additions could have been made to the already completed assessments. He further submitted that disallowance has been made on the basis of the statement of a third-party, which was not recorded during the course of search proceedings, and therefore no addition could be made in respect of purchases which were already appearing in books of accounts of the assessee company. 10.2 On the other hand, the learned Commissioner of Income Tax (Departmental Representative), relying on the orders of the lower authorities, vehemently argued that contention of the learned Authorized Representative that no incriminating material was found, was totally incorrect. According to her, in

11 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 the post search proceedings, the statement of Sh. Rajiv Khurana, Director of M/s. Indu Surveyors and Loss Assessor was recorded and the purchases of the assessee have been disallowed on the basis of his statement and evidence of any stock not found during the course of search. She referred to the judgment of the Jurisdictional High Court in the case of Kabul Chawla (supra) and submitted that information gathered in post search proceedings was also the material relying on which completed assessment could have been interfered with by the Assessing Officer while making the assessment under section 153A of the Act. 10.3 We have heard the rival submissions and perused the material on record including the paper book of the assessee. The issue in dispute in the cross objection in ground No. 3 raised by the assessee is that no incriminating material was found in the course of search belonging to the assessee and, therefore, no addition could have been made in the completed assessments in the proceedings under section 153C r.w.s. 153A of the Act. Thus, the issue before us is whether any incriminating material was found in the courses of search belonging to the assessee and for this purpose, we would like to reproduce the satisfaction note which is available at page No. 4 of the assessee’s paper book: “Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 of M/s. Sunkan Travels Pvt. Ltd., Aq-1-82, 2nd Floor, Hastsal Road, Uttam Nagar, New Delhi, PAN : AAICS9275Q for A.Y. 2003-04 to 2008-09.

12 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 08.09.2010 In the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra, M/s. Madhusudan Buildcon Pvt. Ltd., search & seizure took place u/s 132 on 30.10.2008. The undersigned is the jurisdictional Assessing Officer of these cases. During the course of search & seizure documents/papers page 89 to 189 of annexure A-31, seized by party R-2, are found to belong to M/s Sunkan Travels Pvt. Ltd., Aq-1-82, 2nd Floor, Hastsal Road, Uttam Nagar, New Delhi, I have examined the above mentioned documents/papers and provision of section 153C is invokeable in this case. As the undersigned is also the jurisdictional Assessing Officer of M/s. Sunkan Travels Pvt. Ltd., A1-1- 82, 2nd Floor, Hastsal Road, Uttam Nagar, New Delhi, this satisfaction note is placed in the file before issuing notice u/s 153C.”

10.4 In the course of assessment proceedings under section 153C r.w.s. 153A of the Act, as evident from the page 2 of the assessee’s paper book, the assessee was asked to explain about the pages 89-189 of Annexure-31 on the basis of which proceedings under section 153C were initiated. It was explained by the assessee in its submission dated 22/11/2010, which is available at page-9 of the assessee’s paper book, that the seized documents contained cheque books of the assessee company in respect of bank account maintained in the Centurian Bank of Punjab Ltd, Green Park, New Delhi (now known as ‘HDFC bank Ltd’) and the said bank account was disclosed in the audited financial statements. The assessee further explained that all the transactions were duly entered in the regular books of accounts maintained in the course of

13 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 business. We find from the assessment order in consideration, that no addition has been made in respect of the seized material found as belonging to the assessee which goes to establish that material found was not incriminating in nature and the addition of Rs. 33,03,880/- for unexplained purchases under section 69C has been made on the statement of Sh. Rajiv Khurana, Director of M/s Indu Surveyors and Loss Assessor, which was recorded in post search proceedings by the Investigation Wings. The relevant findings of the Assessing officer are reproduced as under: “6. During the current year the assessee has purchased, textile goods of Rs. 33,03,880/- and has made sales of Rs. 37,25,270/- The assessee was directed to prove its trading activities and to produce sale tax records. The assessee has claimed that since it deals with tax free goods only there is no necessity for it to file sales tax returns. Thus, it seems that except the declaration of the assessee, there is no independent proof of sale/purchase of the goods except the bank transactions. During the course of assessment proceedings the assessee was asked to give break up of cash or cheque purchases. In response thereto a reply has been filed and placed on record in which assessee has declared its entire purchase as cash/cheque purchases of Rs. 33,03,880/-. Assessee company has also stated that it did not maintain any bank account during the year and the assessee deals with tax free goods only there is no necessity for it to file sales tax return. The post search enquiries conducted by the Investigation Wing from the address of the assessee has indicated that atleast 4 no. of concerns connected with the Thapar Group were declared as operating from the address, 1/82, 2nd Floor, Hastsal Road, Uttam Nagar, New Delhi and the number may be much higher also. The concerns declared operating from this address 3and their directors/partners were:- Shri Rajeev Khurana. Director of M/s Indu Surveyors Loss

14 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 Assessor was recorded. Excerpts from the same are reproduced below: “Q.16. How much investment you have made through your company in the Thapar Group of Companies during last six years? Ans. I have no idea how much amount of investment I have made in Thapar Group of companies. Q.17. If you have no idea, who has idea about your investment in the Thapar Group of Companies? Ans. Sh. Anup Grover has an idea about my investment in the Thapar Group 0f Companies who is an Accountant in the M/s Bhupesh Kumar Dhingra and Co. Q.18. Do you have an idea that you have made any investment in M/s Thapar Group of Companies during last six years? Please clarify the same? Ans. I have totally no idea that how much amount I have invested during last six years with M/s Thapar Group of Companies. All my books of accounts are maintained by Sh. Anup Grover he knows my investments.” From the above statements and inquiries, it is apparent that Shri B.K. Dhingra is running these companies and using these shell companies to provide accommodation entries to Thapar Group and other groups as well. The above statements made it amply clear that the company was capital formation Company only operating from a fictional address. 7. The inquires indicate that the director/shareholder is not a man of means and the premises and the premises are not commercial premises. The investigation wing has also reported that no evidence of stock was found from any other premises of the Thapar Homes Group. During the course of assessment proceedings the assessee has claimed

15 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 that the assessee had a godown at Khasra No. 34/7, Village Dera Mandi, Tehsil Mehrauli, New Delhi. The claim is non- verifiable due to lapse of so many years. Most of the concerns of Thapar group have sought to declare this premises as their godown but no such claim was made during search proceedings. 8. In the case of present assessee all the purchases & sales are in cash. The items purchased & sold are textile & fabrics. The name and style of the textiles & fabrics are "Denim, fabrics K-lll Super line (N). fabric (PS), fabric (PS) Embroidery. fabric (PS) Excel, fabrics, Kashmiri fabrics-l. Kashmiri fabrics-l(D)" etc. From these items it can be seen that the assessee is not dealing in branded items. There is no name of any company in these products. Shawls are purchased and sold in pieces and rest other items are sold in meters. It is further seen that the purchases & sales are within M/s Thapar Homes Group of cases. In inventories of fabric & Textile Goods shown in the balance sheet the closing stock of last year stands at Rs. 4,04,85,052/-. This year the figure is Rs. 4,04,72,632/- which us almost the same. Therefore, purchases & sales are only out of current year "transactions" which are held unverifiable and bogus. It is highly improbable that with a huge stock inventory of goods which change in fashion and taste the assessee has to make sales from fresh purchases only. The preponderance of probability suggests that the stocks are not genuine but since these are declared prior to 1.4.02. no action is being taken for now. 9. Keeping in view the facts of the case and reply of the assessee, it is crystal clear that all cash purchases are unverifiable and hence a sum of Rs. 33,03,880/- is disallowed. (The opening stock is of the period before the block period of section 153C). Penalty proceedings u/s 271(c) are being initiated for furnishing inaccurate particulars of income. Since, all the cash purchases of Rs. 33,03,880/- are bogus and are brought to tax as unaccounted expenditure

16 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 u/s 69C of the IT Act, no further addition is made u/s 40A(3) of the IT Act since the entire amount of cash purchases is brought to tax.” 10.5 In the course of hearing before us, also the learned Commissioner of Income Tax(Departmental Representative) was asked to give detail of the incriminating material relied upon, but she could not refer any material of incriminating nature which was belonging to the assessee. She only referred to the statement of Sh Rajeev Khurana, which was relied upon by the Assessing Officer. 10.6 We also note from the judgment of the Hon’ble High Court in the case of Kabul Chawla (supra), wherein the Hon’ble Court held that since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. The Hon’ble High Court considered all the decisions/judgments of the other High Court on the issue in dispute and summarized the legal position as under: “Summary of the legal position 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 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.

17 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO 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 AYs “in which both the disclosed and the undisclosed income would be brought to tax”. iv. Although Section 153 A 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 AO 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 seized material.” v. In 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 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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

18 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 already disclosed or made known in the course of original assessment.” 10.7 In the instant case also, no incriminating material belonging to the assessee has been found during the course of search and the assessment has been only made on the basis of statement of a third-party recorded subsequent to the search proceeding. The learned Commissioner of Income Tax(Departmental Representative) referred to para 37(iv) of the judgment of the Hon’ble High Court in the case of Kabul Chawla (supra) and submitted that post search material has also been considered by the Hon’ble High Court along with the evidences found in the course of search for the purpose of proceeding under section 153A of the Act. However, the learned Authorized Representative of the assessee relied on the judgment of the Jurisdictional High Court in the case of Commissioner of Income Tax- VII Vs. R.R.J. Securities Ltd., reported in (2016) 380 ITR 612. The assessee in that case also belonged to the ‘Thaper’ group i.e. the group to which the instant assessee belonged. The proceedings under section 153C of the Act in that case was also initiated on the basis of the cheque books belonging to the assessee found during the course of search at the premises of Sh. B.K. Dhingra, Smt Poonam Dhingra and M/s Madhusudhan Buildcon Private Limited. In the instant case of assessee also, proceedings u/s 153C have been initiated on the basis of cheque books of the assessee found during the course of search at the premises of Sh. B.K. Dhingra, Smt Poonam Dhingra and M/s. Madhusudhan

19 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 Buildcon Private Limited. In the case of said assessee also, purchases were held as unexplained by the Assessing Officer under section 69C of the Act on the basis of the statement of the third party similar to the case of present assessee. We find that the question of law which was decided by the Hon’ble High Court in the case of R.R.J. Securities (supra) was as under: “Whether the AO had jurisdiction to assess and re-assess the income of the assessee under section 153C in respect of assessment year 2003-04 to 2008-09.” 10.8 The Hon’ble High Court after considering the judgment in the case of Kabul Chawla (supra) and judgment in the case of SSP Aviation Ltd Vs. Deputy Commissioner of Income Tax (2012) 346 ITR 177 held as under: “37. As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provision of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not possibly reflect any undisclosed income. This being the undisputed position, no investigation was necessary. Thus, the provisions of section 153C, which are to enable an investigation in respect of the seized asset, could not be resorted to; the Assessing Officer had no jurisdiction to make the re-assessment under Section 153C of the Act. 39. In view of the above, the third question framed, whether the proceedings under Section 153C of the Act could be initiated against the Assessee, is answered in favour of the Assessee and against the Revenue.”

20 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09

10.9 The facts and circumstances of the above case are identical to the case in hand as in both the cases no incriminating material belonging to the assessee was seized and in both the cases additions were made for unexplained purchases under section 69C of the Act on the basis of the statement of third-party recorded subsequent to the search. 10.10 Thus, respectfully following the judgment of the Hon’ble Jurisdictional High Court in the cases of R.R.J. Securities Ltd. (supra) and Kabul Chawla (supra), we hold that since in the case, as on the date of search, the assessments already stood completed, therefore, no addition could have been made in the year under consideration in absence of any incriminating material, and accordingly, the additions made by the Assessing Officer are directed to be deleted. The ground of the cross objection is allowed. 11. Since we have already held that no addition could have been made in the instant case, the other grounds raised in the cross objections are merely rendered academic and, therefore, we are not adjudicating on other grounds of the cross objections. 12. In the result, the cross objections of the assessee in C.O. No. 80/Del/2012 are allowed. 13. We find that in the remaining cross objections raised in C.O. Nos. 81/Del/2012 to 85/Del/2012, facts and circumstances, are identical to the objections and facts & circumstances of cross objections in C.O. No. 80/Del/2012, we

21 ITA Nos. 559 to 564/Del/2012 & C.O. Nos. 80 to 85/Del/2012 AYs: 2003-04 to 2008-09 accordingly allow all these cross objections of the assessee, following our findings in C.O. No. 80/Del/2012. 14. The additional grounds raised by the Revenue in ITA No. 560 to 564/Del/2012 are identical to the additional ground raised in ITA No. 559/Del/2012, hence, same are dismissed, as already held by us in ITA No. 559/Del/2012. 15. Further, since we have already allowed the cross objections of the assessee and additions have been directed to be deleted, the grounds raised in appeals of the Revenue in ITA No. 559 to 564/Del/2012 are rendered infructuous and accordingly all the appeals in ITA Nos. 559 to 564/Del/2012 of the Revenue are also dismissed.

The decision is pronounced in the open court on 27th July, 2016.

Sd/- Sd/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27th July, 2016. Laptop/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi