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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue and the Cross Objection is filed by the assessee against the order dated 21/8/2015 passed by CIT(A)-XXVI, New Delhi for Assessment Year 2007-08.
The grounds for appeal are as under:-
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ITA No. 5957/DEL/2015
“That the CIT (A) has erred on facts and in law in deleting the addition of Rs. 34,06,11,102/- without appreciating that any document has to be relied upon in entirely and the part of it cannot be deemed as true and part as untrue. 2. That the CIT (A) has erred on facts and in law in deleting the addition of Rs. 34,06,11,102/- without properly analyzing and considering the contents and words of seized document viz paid, received, refund. To pay, calculation of commission etc. 3. That the CIT (A) has erred on facts and in law in deleting the addition of Rs.1,20,00,000/- on account of alleged receipt of rent. 4. (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on fact. (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.”
C.O No. 38/Del/2016 “1. That on facts and circumstances of the case, Ld CIT(A) was not justified in confirming the reopening of assessment u/s 147 of the I T Act, 1961. 2. That on facts and circumstances of the case, the reasons recorded are mechanical and without independent application of mind and solely on the basis of letter from higher authority. 3. That on facts and circumstances of the case, the reopening is only on the basis of change of opinion as the original assessment was completed u/s 153C/143(3) and reopening is merely on account of re-appreciation of assessment record. 4. That on facts and circumstance of the case, there is no tangible material so as to justify the reopening of assessment u/s 147 and as such the reopening is illegal and without jurisdiction.”
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The original return was filed on 31/7/2007 u/s 139(1) of the Income Tax Act, 1961 declaring total income of Rs.4,70,97,930/- by the assessee. There was search and seizure operation within the meaning of Section 132 on 29/4/2008 in consonance of which reassessment had been completed u/s 153A/143(3) at total income of Rs.4,70,97,930/- vide order dated 29/12/2010. The case of the assessee was further subjected to scrutiny in view of the search in case of Lalit Modi on 19/6/2009 because of which Section 153C proceedings were initiated and assessment was framed vide order dated 29/12/2011 at total income of Rs. 4,70,97,930/-. The Assessing Officer issued notice u/s 148 dated 28/3/2014 on the basis of satisfaction recorded. The assessee on receipt of reasons for reopening the assessment filed his objections before the Assessing Officer. The Assessing Officer after considering the assessee’s objection against the reopening, did not find any merit in them and preceded with the reassessment proceedings. During the course of reassessment proceedings, the assessee was confronted with the workings as recorded on the seized documents found from the premises of Shri Lalit Modi. The assessee was asked to explain as to why an addition of Rs. 34,06,11,102/- should not be made as it represented an unaccounted investment in the purchase of commercial space in Vasant Square Mall as on 1/10/2006 in para 7 of the assessment order, the AO held as under:-
“7. The assessee on being served with the said show cause notice requested for supply of copies of seized documents relied upon by the department and also the basis of alleged undisclosed investment of Rs 34,06,11,102. It was submitted before the AO that no rent had been received from M/s Suncity Project (P) Ltd for the year under consideration and the rent had actually been received from 01.05.2009. It was also requested by the assessee to cause necessary verification u/s 133(6) from M/s Suncity Project (P) Ltd and M/s Pantaloon Retails India Ltd to confirm non-receipt of rent during the year under consideration. It was also contended before the AO that similar proceedings initiated in the case of M/s Suncity Project
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(P) Ltd had been dropped by Assessing Officer on Central Circle-1. The A.O after considering the assessee’s submissions did not agree with the same.” The Assessing Officer proceeded to make an addition on substantive basis to the tune of Rs.16,42,68,528/- and Rs.16,42,68,832/- on protective basis as the said income had already been assessed in the Assessment Year 2010-11.
Being aggrieved by the said assessment order, the assessee filed appeal before the CIT(A). The CIT (A) partly allowed the appeal of the assessee.
The Ld. AR submitted that there was search in case of assessee on 29/04/2008 pursuant to which Assessing Officer initiated action u/s. 153 A. However, in the absence of any incriminating material having being found as a result of search, returned income was accepted vide assessment order u/s. 153A dtd. 29/12/2010. Subsequently, there was another search in the case of Lalit Modi (property dealer) on 19/06/2009 and based on Annexure A-l page 5 placed in the PB at page 120, AO initiated action u/s. 153C in the case of assessee. However, in the absence of any incriminating material or evidence of any document belonging to assessee which indicated any undisclosed income, proceedings u/s. 153C were completed at returned income vide assessment order dtd. 29/12/2011. The assessee purchased a property from M/s. Suncity Projects Pvt. Ltd. vide registered sale deed dtd. 13/05/2009. However, based on seized Annexure A-l page 5, the AO made following additions in assessment year 2010-11.
(i) Unexplained investment 16,42,68,522/- (ii) Sinking Fund 39,65,106/- (iii) Maintenance Security 29,73,830/- (iv) Feeehold Charges 1,24,90,084/- (v) Commission 65,70,747/-
The CIT(A) deleted addition in respect of sinking fund, maintenance security, freehold charges and commission and confirmed the addition of
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Rs.16,42,68,522/- and also made enhancement of Rs.5,50,72,700/-. Both assessee and revenue filed appeal before Tribunal against order of CIT(A) which was disposed off by the Tribunal vide order dated 29/5/2015 (ITA NO. 3551 & 3343/Del/2013 DCIT vs. Vinita Chaurasia). The Tribunal dismissed the appeal of Revenue and allowed appeal of the assessee. The revenue filed appeal before Hon’ble Delhi High Court against order of Tribunal in respect of relief allowed to assessee and dismissal of appeal of the revenue. The Hon’ble Delhi High Court vide consolidated order dtd. 18/05/2017 in ITA 1004 & 1005/2015 dismissed both the appeals of revenue as per detailed finding on merits. As the order of CIT(A) is based on order of Tribunal confirmed by Hon’ble Delhi High Court, there is no merit in appeal of the revenue. Further, assessment order made by the Assessing Officer is factually incorrect and additions were made on illegal and arbitrary basis. The Assessing Officer has not brought on record any details or evidences which could corroborate investment of a sum of Rs. 32,85,37,354/- before 01-10-2006 with M/s. Suncity Project Pvt. Ltd. The entire dispute is with reference to Annexure- A-l which is in the context of purchase of property vide sale deed dtd. 13/05/2009 and AO himself has considered this annexure in A.Y. 2010-11 and made addition to the extent of Rs. 19,02,68,289/-.This document has no relevance to any undisclosed income relating to year under reference. There is thus no case of any income escaping assessment or any tangible material which has relevance to A.Y. 2007-08. Submission of revenue before the Tribunal is merely general observation on issue of reopening u/s. 147 and does not make reference to any details or evidence of any undisclosed income relating to A.Y. 2007-08. Once the very same addition has been deleted in A.Y. 2010-11 by the ITAT & confirmed by the Hon’ble Delhi High Court, there is no case for any action u/s. 147 in the A.Y. 2007-08.
The Ld. DR submitted that the order of the Assessing Officer is well within the ambit of law and the CIT(A) is right in holding that proceedings
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initiated u/s 148 of the Income Tax Act are legally sustainable. The CIT(A) finding in Para 10/Page 25 is very pertinent in this regard.
We have heard both the parties and perused all the relevant records available before us. It is pertinent to note here that the Assessing Officer proceeded to make an addition on substantive basis to the tune of Rs.16,42,68,528/- and Rs.16,42,68,832/- on protective basis as the said income had already been assessed in the Assessment Year 2010-11. There was search in case of assessee on 29/04/2008 pursuant to which Assessing Officer initiated action u/s. 153A, but in the absence of any incriminating material, return of income was accepted vide assessment order u/s. 153A dtd. 29/12/2010. Subsequently, there was another search in the case of Lalit Modi (property dealer) on 19/06/2009 and based on Annexure A-l therein, the action u/s. 153C was initiated in the case of assessee. However, in the absence of any incriminating material or evidence of any document belonging to assessee which indicated any undisclosed income, proceedings u/s. 153C were completed at return of income vide assessment order dtd. 29/12/2011. The assessee purchased a property from M/s. Suncity Projects Pvt. Ltd. vide registered sale deed dtd. 13/05/2009. However, based on seized Annexure A-l, the Assessing Officer made additions in assessment year 2010-11. The CIT(A) deleted addition in respect of sinking fund, maintenance security, freehold charges and commission and confirmed the addition of Rs.16,42,68,522/- and also made enhancement of Rs.5,50,72,700/-. Both assessee and revenue filed appeal before ITAT against order of CIT(A) which was disposed off by the Tribunal vide order dated 29/5/2015. The Tribunal dismissed the appeal of Revenue and allowed appeal of the assessee. The revenue filed appeal before Hon’ble Delhi High Court against order of Tribunal in respect of relief allowed to assessee and dismissal of appeal of the revenue. The Hon’ble Delhi High Court vide consolidated order dtd. 18/05/2017 dismissed both the appeals of revenue as per detailed finding on merits. As the order of CIT(A) is based on order of Tribunal confirmed by Hon’ble Delhi High Court, there is no merit in
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appeal of the revenue. Further, assessment order made by the Assessing Officer is factually incorrect and additions were made on illegal and arbitrary basis. The Assessing Officer has not brought on record any details or evidences which could corroborate investment of a sum of Rs. 32,85,37,354/- before 01- 10-2006 with M/s. Suncity Project Pvt. Ltd. The entire dispute is with reference to Annexure- A-l page 5 which is in the context of purchase of property vide sale deed dtd. 13/05/2009 and Assessing Officer himself has considered this annexure in A.Y. 2010-11 and made addition to the extent of Rs. 19,02,68,289/-.This document has no relevance to any undisclosed income relating to year under reference. There is thus no case of any income escaping assessment or any tangible material which has relevance to A.Y. 2007-08. Submission of revenue before the Tribunal is merely general observation on issue of reopening u/s. 147 and does not make reference to any details or evidence of any undisclosed income relating to A.Y. 2007-08. All these submission of the Ld. AR could not be contradicted by the Revenue at the time of the hearing. Once the very same addition has been deleted in A.Y. 2010-11 by the Tribunal & confirmed by the Hon’ble Delhi High Court, there is no case for any action u/s. 147 in the A.Y. 2007-08. The Hon’ble Delhi High Court held as under:
“27. The Court is unable to accept the above submission of Mr. Shivpuri. The Court in this regard notices that the detailed interrogation of Mr. Modi revealed the source of the document and the fact that Mr. Modi was not the author of the document. Mr. Modi had suggested that it was some other broker who had given him the said document as a ‘proposal’. There appears to have been no attempt made by the AO to enquire into the matter further to find out if at all there was any such other broker who had prepared the document. Further, there is no attempt also made to ascertain whether the prevalent market value of the space purchased by the Assessee could at all fetch the value indicated in the document which is Rs.32,85,37,354/-. This was too fundamental an issue to be left un-investigated. The AO appears to
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have proceeded purely on conjectures as regards what the document has stated without noticing the internal contradictions and inconsistencies. For instance, the document talks of rent payable for a period from 2006 onwards wherein fact even according to the Revenue the Assessee purchased the property on 13th May, 2009. The shifting of the burden on the Assessee without making these basic enquiries to unearth the truth of the document could not have been accepted and was rightly commented upon by the ITAT. The entire basis for making the additions to the assessable income of the Assessee was a single document i.e., Annexure A-1. The attempt at making additions on the basis of Annexure A-1, without any further investigation on the above lines, is bound to be rendered unsustainable in law.
Therefore, even as regards the merits of the additions made by the Court funds no error having been committed by the ITAT in deleting them.”
In the present case, though there was search in case of assessee on 29/04/2008 pursuant to which Assessing Officer initiated action u/s. 153A of the Act, in the absence of any incriminating material, returned income was accepted vide assessment order u/s. 153A dtd. 29/12/2010. But because of the search in case of Mr. Modi and Annexure -1 found therein, the addition was made in the present case. The entire basis for making the additions to the assessable income of the Assessee was a single document i.e., Annexure A-1. The attempt at making additions on the basis of Annexure A-1, without any further investigation on the above lines, is bound to be rendered unsustainable in law. In the present case, no reason was assigned by the Assessing Officer or any fresh material was taken into account by the Assessing Officer for re- opening the assessment u/s 147 of the Act. The said action of the Revenue was challenged before the Hon’ble High Court and the Hon’ble High Court has given a finding of dismissing the appeal of the Revenue therein. The finding of the Hon’ble High Court is applicable in the present case and therefore, the action u/s 147 of the Act itself is not maintainable and is quashed. Thus,
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appeal of the Revenue is dismissed and cross objection of the assessee is allowed.
In result, appeal of the Revenue is dismissed and cross objection of the assessee is allowed. Order pronounced in the Open Court on 05th October, 2018. Sd/- Sd/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 05/10/2018 R. Naheed