M/s. Jakson Ltd., New Delhi v. ACIT, New Delhi

ITA 351/DEL/2013 | 2005-2006
Pronouncement Date: 11-04-2014 | Result: Dismissed

Appeal Details

RSA Number 35120114 RSA 2013
Assessee PAN AAACJ1625K
Bench Delhi
Appeal Number ITA 351/DEL/2013
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant M/s. Jakson Ltd., New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 11-04-2014
Date Of Final Hearing 13-01-2014
Next Hearing Date 13-01-2014
Assessment Year 2005-2006
Appeal Filed On 18-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI I. C. SUDHIR JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A.NOS.349 & 350/DEL/2013 ASSESSMENT YEARS: 2006-07 & 2007-08 JAKSON ENGINEERING LTD. VS. ACIT 626 6 TH FLOOR TOWER-A CENTRAL CIRCLE-25 DLF TOWER JASOLA NEW DELHI. NEW DELHI. PAN: AAACJ1625K. (APPELLANT) (RESPONDENT) I.T.A.NOS.351 & 352/DEL/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 JAKSON LTD. VS. ACIT 626 6 TH FLOOR TOWER-A CENTRAL CIRCLE-25 DLF TOWER JASOLA NEW DELHI. NEW DELHI. PAN: AAACJ5347C (APPELLANT) (RESPONDENT) I.T.A.NOS.660 & 661/DEL/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 ACIT VS. JAKSON ENGINEERS LTD. CENTRAL CIRCLE-25 ROOM NO.331 102 RATAN JYOTI BU ILDING ARA CENTRE JHANDEWALAN EXTN. 18 RAJENDRA PLACE NEW DELHI. NEW DELHI. PAN: AAACJ1625K (APPELLANT) (RESPONDENT) 2 APPELLANT BY : SHRI VED JAIN & RANO JAIN CA RESPONDENT BY : SHRI D. K. MISHRA (CIT) DR. O R D E R PER BENCH THE GRIEVANCE OF THE ASSESSEE AGAINST THE FIRST AP PELLATE ORDER IS THAT THE LD. CIT (A) HAS ERRED IN REJECTING THE CONTENTI ON OF THE ASSESSEE THAT THE ASSESSMENT ORDER FRAMED U/S 153A IS BAD AND THUS IS LIABLE TO BE QUASHED AS THE SAME HAS BEEN FRAMED CONSEQUENT TO A SEARCH WHI CH ITSELF WAS UNLAWFUL AND INVALID IN THE EYES OF LAW (GROUND NOS. 1 TO 5) . IN GROUND NO.6 & 7 THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER WHERE BY LD. CIT (A) HAS SUSTAINED THE DISALLOWANCE OF RS.7 83 005/- U/S 14A OF THE ACT AND DISALLOWANCE OF EXPENDITURE TO THE EXTENT TO 2.08% OF THE TOTAL EXPENDITURE. 2. THE REVENUE ON THE OTHER HAND HAS IMPUGNED THE F IRST APPELLATE ORDER WHEREBY THE LD. CIT (A) HAS DELETED THE ADDITION OF RS.10 69 882/- OUT OF DISALLOWANCE OF RS.18 52 887/- IN ASSESSMENT YEAR 2 006-07 AND RS. 10 69 882/- OUT OF DISALLOWANCE OF RS.29 39 302/- I N ASSESSMENT YEAR 2007- 08 UNDER THE PROVISIONS OF RULE 8D OF I T RULES 19 62 (GROUND NO.2) AND IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATI ON ON WDV OF COMPUTER SOFTWARE EXPENDITURE(GROUND NO.3). 3 3. GROUND NO.1 IS GENERAL IN NATURE. SINCE THE ISS UE INVOLVED IN GROUND NOS. 1 TO 5 OF THE APPEALS PREFERRED BY THE ASSESSE E QUESTIONING THE VALIDITY OF ASSESSMENT FRAMED U/S 153A IS LEGAL IN NATURE AN D GOES TO THE ROOT OF THE MATTER WE PREFERRED TO HEAR THE PARTIES ON THIS IS SUE FIRST AND IT IS BEING ACCORDINGLY ADJUDICATED UPON BEFORE PROCEEDING TO O THER GROUNDS. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PANELS CANOPIES AND P ARTS OF DG SETS WAS SUBJECTED TO SEARCH AND SEIZURE OPERATIONS ON 10.02 .2010. DURING THE COURSE OF WHICH UNDISCLOSED INCOME OF RS.19.94 CRORES WAS FOUND AND WAS SURRENDERED BY SHRI S. K. GUPTA. IN RESPONSE TO NOT ICE ISSUED U/S 153A IT FILED RETURN OF INCOME AT RS.3 75 75 260/- AND ASSE SSMENT WAS FRAMED AT RS.3 95 03 150/- INCLUDING THE ADDITION OF RS.18 52 887/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES RELATING TO EXEMPT INCOME AND A FURTHER DISALLOWANCE OF RS.75 000/- OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES ON ACCOUNT OF PERSONAL USE OF DIRECTORS. 5. BEFORE THE LD. CIT (A) THE ASSESSEE QUESTIONED THE VALIDITY OF ASSESSMENT ORDER FRAMED U/S 153A OF THE ACT BUT COU LD NOT SUCCEED. THE LD. CIT (A) HAS HOWEVER GIVEN SOME OTHER RELIEF OUT OF DISALLOWANCES/ ADDITIONS RESULTING IN CROSS APPEALS BEFORE THE TRIBUNAL. 4 6. IN SUPPORT OF THE GROUND NOS. 1 TO 5 OF THE APPE ALS OF ASSESSEE THE LD. AR WHILE REITERATING THE SUBMISSIONS MADE BEFORE TH E LD. CIT (A) CONTENDED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE ORIGINAL ASSESSMENT ORDER U/S 143(3) WAS FRAMED AFTER THOROUGH SCRUTINY INCLUDING THE ISSUE OF DISALLOWAN CE U/S 14A OF THE ACT BEFORE THE DATE OF SEARCH. THE LD. AR REFERRED TO T HE ORIGINAL PROCEEDINGS COMPLETED U/S 143(3) OF THE ACT MADE AVAILABLE AT P AGE NO.55 OF THE PAPER BOOK. HE SUBMITTED THAT THE ASSESSING OFFICER ISSUE D QUESTIONNAIRE AND IN RESPONSE THEREOF THE ASSESSEE HAD FILED EXPLANATIO N ON DISALLOWANCE OF EXPENDITURE U/S 14A VIDE LETTER DATED 29.04.2008 A COPY HAS BEEN MADE AVAILABLE AT PAGE NO.39 OF THE PAPER BOOK. HE POINT ED OUT THAT A FURTHER CLARIFICATION WAS FILED VIDE LETTER DATED 29.04.200 8 PLACED AT PAGE NO.42 OF THE PAPER BOOK WHEREIN THE DETAILS OF EXEMPT INCOM E BEING DIVIDEND ON SHARES WERE FILED. HE SUBMITTED THAT AGAIN VIDE LET TER DATED 12.05.2008 MADE AVAILABLE AT PAGE NOS.47 AND 48 OF THE PAPER BOOK DETAILS OF DIVIDEND EARNED WERE AGAIN PROVIDED. THE DETAILS OF THE INTEREST PA ID WAS ALSO PROVIDED VIDE LETTER DATED 16.05.2008 MADE AVAILABLE AT PAGE 50 O F THE PAPER BOOK. FURTHER CLARIFICATION WAS SUBMITTED VIDE LETTER DATED 21.05 .2005 ON DISALLOWANCE OF EXPENDITURE U/S 14A. 5 7. THE ASSESSING OFFICER THEREAFTER PASSED THE ORDE R U/S 143(3). THUS THE ISSUE OF DISALLOWANCE OF EXPENDITURE U/S 14A WAS SU BJECT MATTER OF VERIFICATIONS BY THE ASSESSING OFFICER IN THE ORIGI NAL PROCEEDINGS. HE ALSO REFERRED THE CONTENTS OF THE ASSESSMENT ORDER IN QU ESTION TO SUPPORT HIS CONTENTION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AS THE ASSESSING OFFICER HAS ALSO MADE DISA LLOWANCE ON THE BASIS OF ORIGINAL RETURN ONLY WITHOUT REFERRING TO ANY INCRI MINATING MATERIAL BEING FOUND IN THE CASE OF THE ASSESSEE. THUS THE ORDER P ASSED BY THE ASSESSING OFFICER IS REVIEW TO ITS EARLIER ORDER WHICH IS NOT PERMISSIBLE IN THE LAW SUBMITTED THE LD. AR. HE ARGUED THAT IT IS NOW A SE TTLED LAW THAT NO ADDITION CAN BE MADE IN A PROCEEDING U/S 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF THE SEARC H. IN THIS REGARD HE PLACED RELIANCE ON THE FOLLOWING CASE LAWS: I) KUSUM GUPTA VS. DCIT REPORTED IN ITA NO.4873/DEL /2009 DATED 28.03.2013. II) ACIT VS. ASHA KATARIAL REPORTED IN ITA NO. 3105 /DE/2011 DATED 20 TH MAY 2013. III) CIT VS. LACHMANDASS BHATIA REPORTED IN 77 DTR 17 (DEL) DT. 07.05.2012. IV) GURINDER SINGH BAWA VS. DCIT REPORTED IN ITA N O.4214/DEL/2011 DATED 28.06.2013. V) MGF AUTOMOBILES LTD. VS. ACIT REPORTED IN ITA NO .4214/DEL/2011 DATED 28.06.2013. VI) ACIT VS. PRATIBHA INDUSTRIES LTD. REPORTED IN 1 41 ITD 151 DATED 19.12.2012. VII) ACIT VS. PACL INDIA LTD. ITA NO. 2637/DEL/2010 DATED 20.06.2013 6 VIII) SSP AVIATION LTD. VS. DCIT REPORTED IN 346 IT R 177 (DEL) DATED 20.03.2012. 8. THE LD. CIT DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF VALIDITY OF THE ASSESSMENT FRAMED U/S 153A OF THE ACT. HE SUBMITTED THAT THERE IS NO REQUIREMENT OF FINDING OF INCRIMINATING MATERIAL DU RING THE COURSE OF SEARCH TO INITIATE PROCEEDINGS U/S 153A OF THE ACT AND FRA MED ASSESSMENT THERE UNDER IN FURTHERANCE THEREOF. ANY OBJECTION TO THE VALIDITY OF PROCEEDINGS INITIATED U/S 153A SHOULD HAVE BEEN RAISED BY THE A SSESSEE AT THE FIRST AVAILABLE OPPORTUNITY BUT THE ASSESSEE IN THE PRESE NT CASE HAS NOT RAISED SUCH OBJECTION BEFORE THE ASSESSING OFFICER AND PARTICIP ATED IN THE ASSESSMENT PROCEEDINGS. THUS THERE IS NO QUESTION OF RAISING S UCH ISSUE AT THE APPELLATE STAGE OF THE PROCEEDINGS. HE CONTENDED THAT THE ONL Y REQUIREMENT FOR INITIATION OF PROCEEDINGS U/S 153A IS CONDUCTION OF SEARCH WHICH FACT HAS NOT BEEN DENIED IN THE PRESENT CASE. UNDER THE PROVISIO NS OF SECTION 153A THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE A SSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASS ESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. HE SUBMITTED THAT T HE PROCEEDINGS U/S 153A ARE DIFFERENT FROM BLOCK ASSESSMENT WHICH WAS THE U NDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE RESERVED R ESULTING IN MULTIPLE 7 ASSESSMENTS. U/S 153A HOWEVER THE ASSESSING OFFICE R HAS THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSE SSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. HE PLACED RELIANCE ON T HE FOLLOWING CASE LAWS: I) GOPAL LAL BADRUKA VS. DCIT (2012) 346 ITR 106 (A P) II) ANIL BHATIA: 352 ITR 493(DEL) & ORS. 9. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW MATERIAL AVAILABLE ON RECORD AS WELL AS THE DECISIONS RELIED UPON WE FIND THAT IN THE ASSESSMENT ORDER THERE IS NO ANY REFERENCE OF INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH ON THE ISSUE OF DISALLO WANCE OF EXPENDITURE U/S 14A OR OTHER DISALLOWANCES HAVE BEEN MADE IN THE AS SESSMENT ORDER FRAMED U/S 153A READ WITH SECTION 143(3) OF THE ACT. AN ID ENTICAL ISSUE ON THE VALIDITY OF NOTICE ISSUED U/S 153A AND ASSESSMENT F RAMED THERE UNDER IN ABSENCE OF ANY INCRIMINATING MATERIAL DURING THE CO URSE OF SEARCH WAS REFERRED TO FOR THE ADJUDICATION BY THE SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC VS. DCIT REPORTED IN 137 ITRD 287(SB). IN THAT CASE IT WAS HELD THAT ANY ASSESSMENT THAT A RE ABATED THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL A S THAT IS CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH AS SESSMENT YEAR SEPARATELY. IN OTHER CASES IN ADDITION TO THE INCOM E THAT HAVE ALREADY BEEN 8 ASSESSED THE ASSESSMENT U/S 153A WILL BE MADE ON TH E BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISION S MEANS: I) BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN T HE COURSE OF SEARCH BUT NOT PURCHASED IN THE COURSE OF ORIGINAL ASSESSM ENT. II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED DURIN G THE COURSE OF SEARCH. 10. FOLLOWING THE DECISION OF SPECIAL BENCH THE DE LHI BENCH OF THE TRIBUNAL HAS ALSO DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE IN THE CASES OF KUSUM GUPTA VS. DCIT (SUPRA). THE DELHI BENCH OF TH E TRIBUNAL IN THE ABOVE CITED CASES WAS HAVING OCCASION TO DISCUSS TH E DECISIONS RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE INCLUDING TH E DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANIL BHATIA (SUPRA). THUS WHEN IN THE PRESENT CASE THE ORIGINAL ASSESSMENT WAS ALREAD Y FRAMED U/S 143(3) OF THE ACT BEFORE THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL WAS FOUND CONNECTED TO THE ASSESSEE DURING THE COURSE OF SEAR CH THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS U/S 153 A OF THE ACT AND FRAMING ASSESSMENT THERE UNDER IN FURTHERANCE THEREOF. 11. THE DECISION RELIED UPON BY THE LD. CIT DEPART MENTAL REPRESENTATIVE HAVING DISTINGUISHABLE FACTS ARE NOT HELPFUL TO THE REVENUE. IN THE CASE OF GOPAL LAL BHADRUKA VS. DCIT (SUPRA) DURING THE COUR SE SEARCH AND SEIZURE OPERATIONS IT CAME TO LIGHT THAT MR. GOPAL HAD OBTA INED A GENERAL POWER OF 9 ATTORNEY TO DEVELOP THE SIKAND PROPERTY DEALING TO TWO PERSONS AND IT WAS REVEALED THAT THE SALE CONSIDERATION AS PER THE SAL E DEED DID NOT TALLY WITH THE ACTUAL PAYMENTS MADE BY THE PURCHASERS. 12. LIKE WISE IN THE CASE OF ANIL BHATIA (SUPRA) BE FORE THE HONBLE JURISDICTIONAL DELHI HIGH COURT THE HONBLE DELHI HIGH COURT DID NOT AGREE WITH THE FINDING OF THE TRIBUNAL THAT THE UNSIGNED PAPER (UNDERTAKING/ AGREEMENT) FOUND DURING THE COURSE OF SEARCH WAS NO T THE DOCUMENT MUCH LESS INCRIMINATING MATERIAL SINCE IT WAS NOT SIGNED BY THE PARTIES. THE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT THE SAI D PAPER CONTAINING THE DETAILS OF TRANSACTION CONNECTED WITH THE ASSESSEE WAS IN THE CATEGORY OF DOCUMENT/ INCRIMINATING MATERIAL EVEN THOUGH THE P APER IS NOT SIGNED BY THE PARTIES THERETO BUT WAS SUFFICIENT TO GIVE INFORMAT ION REGARDING THE UNDISCLOSED TRANSACTION. HOWEVER IN THE PRESENT CAS E BEFORE US NO DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH REVEALING SOM E UNDISCLOSED TRANSACTION OR INCOME. 13. WE THUS DECIDE THE ISSUE OF VALIDITY OF INITIAT ION OF PROCEEDINGS U/S 153A OF THE ACT AND THE ASSESSMENT FRAMED THERE UND ER IN FURTHERANCE TO THE SAID NOTICE IN FAVOUR OF THE ASSESSEE. IN RESULT WE HOLD THAT THE NOTICE ISSUED U/S 153A IN ABSENCE OF INCRIMINATING MATERIAL WAS I NVALID AND ACCORDINGLY THE ASSESSMENT FRAMED IN FURTHERANCE THERETO IS HEL D NULL AND VOID AND IS 10 QUASHED. THE RELATED GROUNDS NO.1 TO 5 ARE THUS ALL OWED IN FAVOUR OF THE ASSESSEE. 14. IN VIEW OF THE ABOVE FINDING WHEREBY THE VERY ASSESSMENT FRAMED U/S 153A READ WITH SECTION 143(3) OF THE ACT HAS BEEN H ELD INVALID AND QUASHED THE OTHER GROUNDS OF THE APPEALS PREFERRED BY THE P ARTIES ON THE ISSUES OF JUSTIFICATION OF DISALLOWANCES/ ADDITIONS MADE IN T HE SAID ASSESSMENT ORDER SUSTAINED/ DELETED BY THE LD. CIT (A) HAVE BECOME I NFRUCTUOUS. THE REMAINING GROUNDS OF THE APPEALS ARE ACCORDINGLY DI SPOSED OFF AS NOT MAINTAINABLE BEING TURNING IN A ACADEMIC ONLY. IN R ESULT APPEAL S PREFERRED BY THE ASSESSEE ARE ALLOWED ON THE ISSU E OF VALIDITY OF NOTICE ISSUE U/S 153A AND ASSESSMENT FRAMED THEREUNDER AND THOSE PREFERRED BY THE REVENUE QUESTIONING THE RELIEF GRANTED BY THE LD. C IT (A) ON THE ISSUE OF DISALLOWANCES /ADDITIONS ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH .04.2014. SD/- SD/- (SHAMIM YAHYA) (I. C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH APRIL 2014. *S. SINHA* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 11 3. CIT 4. CIT(A) 5. DR BY ORDER DEPUTY REGISTRAR ITAT.