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Income Tax Appellate Tribunal, DELHI BENCH “C”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
Date of Hearing : 17-12-2015 Date of Order : 15-1-2016
ORDER
PER H.S. SIDHU : JM
This appeal by the Revenue and the Cross Objection by the Assessee is directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-I, New Delhi dated 24.5.2013 pertaining to assessment year 2006- 07.
The grounds raised in the Revenue’s Appeal read as under:-
“On the facts and in the circumstances of the case the Ld. CIT(A) has erred in:-
1. The order of the CIT(A) is not correct in law and facts.
2. On the facts and circumstances of the cse, the Ld. CIT(A) has erred in deleting the addition of Rs. 25,00,96,500/- made by AO u/s. 68 of the I.T. Act. 3. 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. The grounds raised in the Assessee’s Cross Objection read as under:-
1. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and order passed by the learned Assessing Officer (AO) under Section 153C/143(3) is without jurisdiction.
2. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153C is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in. the eye of law.
3. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.
4. On .he facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment framed under Section 153C is bad and liable to be quashed in the absence of any satisfaction being recorded by the AO of the searched person that the incriminatinq material belonging to the assessee was found during the course of the search.
5. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the assessment framed under Section 153C is bad and liable to be quashed as no valid notice under Section 153C as required under the law has been issued and served on the assessee.
The respondent craves leave to add, amend or alter any of the grounds of cross objection.
The brief facts of the case are that the assessee is engaged in the business of investments in capital market. A search was initiated on the Jakson Group and its associates on 10.2.2010. Notice u/s. 153C was issued on 2.6.2011, in response to which the assessee filed a return on 1.7.2011 declaring income of Rs. 17,640/-. Notices u/s. 143(2) and 142(1) alongwith questionnaire were issued on 16.8.2011. These notices were complied with and the income of the assessee was assessed at Rs. 25,01,13,960/-, which included an addition of Rs. 25,00,95,500/- u/s. 68 of the I.T. Act, 1961 vide order dated 29.12.2011 passed u/s. 143(3) r.w.s. 153C of the I.T. Act.
Against the aforesaid assessment order, the assessee appealed before the Ld. CIT(A), who vide impugned order dated 24.5.2013 partly allowed the appeal of the assessee and deleted the addition in dispute.
Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal.
Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal.
8. On the contrary, Ld. Authorised Representative of the assessee has relied upon the order of the Ld. CIT(A) and stated that the order of the Ld. CIT(A) is a well reasoned order and therefore, the same may be upheld and Revenue’s appeal may be dismissed accordingly.
We have heard both the parties and perused the relevant records, especially the orders of the authorities below and the case law cited by the Ld. Authorised Representative of the Assessee. We find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the Ld. Counsel of the assessee and adjudicated the issue in dispute as under vide para 4.3 at page 26 to 27 of his impugned order.
4.3 I have considered the assessment order and submissions of the appellant. It is settled law that the onus of proving a claim is initially on the assessee but this is a shifting burden and once an assessee discharges its primary onus, the burden shins on the revenue. In the present case the appellant had duly discharged its onus by submitting necessary evidence available to establish the bona fide of the transactions. Thereafter, the onus shifted on the revenue to prove that the claim of the appellant was factually incorrect. Simply by pointing out that the applicant companies did not have sufficient income or that the bank accounts indicated credits and debits in rapid succession leaving little balance does not discharge the burden cast upon the revenue to take an adverse view in the matter. Further, if there was statement of a person or any other material indicating tax evasion by the appellant, or persons in control of its management, the material relied upon should have been made available to the appellant in its entirety. From the records, it appears that this was not done. it has been held by the Hon’ble Apex Court that taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as miuht indicate that scales are wcishtcd against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to tile assessee. they should be deemed to have exercised it in a proper and judicious manner {CIT v. Simon Carves Ltd. 1]9761 105 ITR 212 (SC)}. In my considered opinion, this is not the case where addition should have been made u/s. 153C, but u/s. 147/ 143(3) after making proper enquiries. In the present facts of the case, the addition is not legally sustainable and is deleted. Appellant gets relief of Rs. 25,00,96,500/-.
9.1 On going through the aforesaid finding of the Ld. CIT(A) on the issue in dispute and the case laws cited in the impugned order, we are of the view that the assessee during the course of proceedings has discharged its by submitting necessary evidence available to establish the bona fide of the transactions. Thereafter, the onus shifted on the revenue to prove that the claim of the assessee was factually incorrect. Simply by pointing out that the applicant companies did not have sufficient income or that the bank accounts indicated credits and debits in rapid succession leaving little balance does not discharge the burden cast upon the revenue to take an adverse view in the matter. Moreover, if there was statement of a person or any other material indicating tax evasion by the assessee, or persons in control of its management, the material relied upon should have been made available to the assessee in its entirety. We find that this was not done. However, it has been held by the Hon’ble Apex Court that taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to tile assessee. they should be deemed to have exercised it in a proper and judicious manner {CIT v. Simon Carves Ltd. 1]9761 105 ITR 212 (SC)}. Therefore, we are in agreement with the Ld. CIT(A) finding that this is not the case where addition should have been made u/s. 153C, but u/s. 147/ 143(3) after making proper enquiries. In the present facts of the case, the addition is not legally sustainable and therefore, was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and decide the issue agaisnt the Revenue. Our view is fortified by the following judgments:- i) CIT vs. Vrindavan Farms (P) Ltd. decided in ITA No.
71&72/2015 and 84/2015 vide order dated 12.8.2015. ii) Pr. CIT vs. Rakam Money Matters Pvt. Ltd. decided in ITA
No. 778/2015 on 13.10.2015.
The Cross objection filed by the assessee, which is in support of the impugned order, is also dismissed as infructuous.
In the result, the Appeal filed by the Revenue and the Cross Objection filed by the Assessee stand dismissed.
Order pronounced in the Open Court on 15/1/2016.