ACIT, New Delhi v. Mr. Devender Kumar Aggarwal, New Delhi

ITA 3554/DEL/2012 | 2006-2007
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 355420114 RSA 2012
Assessee PAN AFRPA8286N
Bench Delhi
Appeal Number ITA 3554/DEL/2012
Duration Of Justice 4 year(s) 2 month(s) 25 day(s)
Appellant ACIT, New Delhi
Respondent Mr. Devender Kumar Aggarwal, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 25-07-2016
Next Hearing Date 25-07-2016
Assessment Year 2006-2007
Appeal Filed On 05-07-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B NEW DELHI BEFORE SH. SUDHANSHU SRIVASTAVA JUDICIAL M EMBER AND SH. O.P. KANT ACCOUNTANT MEMBER ITA NO S . 3555 & 3554 /DEL/ 2012 ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 5 ROOM NO. 361 3 RD FLOOR ARA CENTRE JHANDEWALAN EXTN. NEW DELHI VS. SH. DEVENDER KUMAR AGGARWAL 13 - B 3 RD FLOOR NETAJI SIBHASH MARG DARYA GANJ NEW DELHI PAN : AFRPA8286N (APPELLANT) (RESPONDENT) AND C.O. NO. 309/DEL/2012 [IN ITA NO. 3555/DEL/2012] ASSESSMENT YEAR: 2005 - 06 WITH C.O. NO. 310/DEL/2012 [IN ITA NO. 3554/DEL/2012] ASSESSMENT YEAR: 2006 - 07 SH. DEVENDER KUMAR AGGARWAL 13 - B 3 RD FLOOR NETAJI SIBHASH MARG DARYA GANJ NEW DELHI VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 5 ROOM NO. 361 3 RD FLOOR ARA CENTRE JHANDEWALAN EXTN. NEW DELHI PAN : AFRPA8286N (APPELLANT) (RESPONDENT) DEPARTMENT BY SH. SUNIL CHANDER SHARMA CIT(DR) ASSESSEE BY S/SH. GAUTAM JAIN & PIYUSH KUMAR KAMAL ADVOCATES DATE OF HEARING 25.07.2016 DATE OF PRONOUNCEMENT 30.09.2016 2 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 ORDER PER O.P. KANT A. M. : THESE TWO APPEALS BY THE REVENUE AND TWO CROSS OBJECTIONS OF THE ASSESSEE HAVE EMANATED FROM TWO SEPARATE ORDERS DATED 30.04.2011 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - XXXI NEW DELHI FOR ASSESSMENT YEAR 2005 - 06 AND ASSESSMENT YEAR 2006 - 07 RESPECTIVELY . IN BOTH THE APPEALS OF THE REVENUE IDENTICAL GROUNDS HAVE BEEN RAISED EXCEPT CHANGE OF AMOUNT INVOLVED. SIMILARLY IN THE CROSS OBJECTIONS RAISED ALSO IDENTICA L GROUNDS HAVE BEEN RAISED EXCEPT CHANGE OF AMOUNT. IN VIEW OF IDENTICAL GROUNDS IN APPEAL AND CROSS OBJECTIONS BOTH THE APPEALS AND CROSS OBJECTIONS HAVE BEEN HEARD TOGETHER AND DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVI TY . GROUND OF APPEAL AND CROSS OBJECTIONS IN APPEAL NUMBER 3555/DEL/2012 AND CROSS OBJECTION NO. 309/DEL/2012 ARE REPRODUCED AS UNDER: G ROUNDS OF APPEAL IN ITA NO. 3555/DEL/2012 I. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT CORRECT IN LAW AN D ON FACTS. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 4751295/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED PURCHASES FROM M/S. SUPARIWALA & CO. ON THE BASIS OF STATEMENT GIVEN BY ITS PROPRIETOR SH. MAHABIR PRASAD GUPTA RECORDED ON 12.04.2006 U/S 132(4)/131 OF INCOME - TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') 1961 DURING THE COURSE OF SEARCH. III. THE APPELLANT CRAVES LEAVE TO ADD AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 C ROSS OBJECTIONS RAISED IN C.O. N O. 309/DEL/2012 1. THAT NOTICE ISSUED U/S 153C OF THE ACT AND ASSESSMENT FRAMED U/S 153A/143(3) OF THE ACT WITHOUT SATISFYING THE STATUTORY PRECONDITIONS CONTAINED IN THE ACT WERE WITHOUT JURISDICTION AND THEREFORE DESERVES TO BE QUASHED AS SUCH. 1.1 THAT WHILE UPHOLDING THE ASSUMPTION OF JURISDICTION THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT SI NCE NO MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS BELONGING TO THE APPELLANT WERE SEIZED AS A RESULT OF SEARCH ON RAJDARBAR GROUP NOTICE ISSUED U/S 153C OF THE ACT WAS ILLEGAL INVALID AND UNSUSTAINABLE. 1.2 THAT APPROACH ADOPTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO UPHOLD THE ASSUMPTION OF JURISDICTION WITHOUT SUPPLYING EITHER THE SATISFACTION NOTE OR THE COPIES OF INCRIMINATING MATERIAL SEIZED FROM THE SEARCHED PERSON IS HIGHLY ARBITRA RY CONTRARY TO LAW AND THUS UNSUSTAINABLE. 1.3 THAT FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT SINCE UNDER SECTION 153A BOTH THE ASSESSMENT PROCEEDINGS ARE MERGED TOGETHER THE NATURE OF THE ADDITIONS TO BE MADE CANNOT BE RESTRICTED TO ASSESS ONLY UNDISCLOSED INCOME DETECTED AS A RESULT OF SEARCH OVERLOOKS THE FOUNDATIONAL SUBMISSION THAT NOTICE ISSUED U/S 153C OF THE ACT WITHOUT SATISFYING THE STATUTORY PRECONDITIONS IS ERRONEOUS AND THUS NOT TENABLE. 1.4 THAT THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N. CHANDRANI VS. ACIT REPORTED IN 333 ITR 436 WHEREIN IT HAS BEEN HELD THAT LOOSE PAPERS FOUND AS A RESULT OF SEARCH CONTAINING APPELLANT S N AME CANNOT BE A BASIS TO ASSUME THAT SUCH PAPERS BELONG TO THE APPELLANT AND INABSENCE THEREOF CONDITION PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED AND AS SUCH ACTION TAKEN U/S 153C OF THE ACT STANDS VITIATED. 1.5 THAT INITIATION OF PROCEEDINGS U/ S 153C OF THE ACT AND FRAMING OF ASSESSMENT U/S 153A/143(3) OF THE ACT IS OTHERWISE TOO BAD IN LAW AND WITHOUT JURISDICTION SINCE 4 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 A) THERE HAD BEEN NO SEARCH CONDUCTED ON THE ASSESSEE U/S 132(1) OF THE ACT; B) THERE HAD BEEN NO VALID SATISFACTION NOT R ECORDED PRIOR TO ISSUE OF NOTICE U/S 153C OF THE ACT AS NONE HAS BEEN CONFRONTED TO THE APPELLANT; AND C) THERE HAD BEEN NO MONEY BULLION JEWELLERY OR OTHER VALUABLE OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS WAS SEIZED AND BELONGING TO ASSESSEE F ROM THE SEARCHED PERSON (OTHER THAN SUCH BOOKS OF ACCOUNTS AND DOCUMENTS WHICH WERE DULY DISCLOSED) AND IN ANY CASE NONE OF IT REPRESENTS INCRIMINATING FRESH MATERIAL. 2. THAT ADDITION MADE OF RS. 47 51 295/ - BY THE LEARNED DEPUTY COMMISSIONER OF INCO ME TAX IS PERSE WITHOUT JURISDICTION SINCE THE SAME IS NOT BASED ON ANY MATERIAL FOUND AS A RESULT OF SEARCH ON RAJDARBAR GROUP OF CASES AS HAS BEEN HELD BY SPECIAL BENCH OF HON BLE TRIBUNAL IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT IN IT A NO(S) 5018 TO 5022 AND 5059/M/2010 FOR ASSESSMENT YEARS 2004 - 05 TO 2009 - 10. IT IS THEREFORE PRAYED THAT IT BE HELD THAT ASSUMPTION OF JURISDICTION AND ADDITION MADE OF RS. 47 51 295/ - WERE ILLEGAL INVALID AND UNSUSTAINABLE. ITA NO. 3555/DEL/2012 & C .O. NO. 309/DEL/2012 2. FACTS IN BRIEF OF THE CASE ARE THAT A SEARCH AND SEIZURE OPER ATION UNDER SECTION 132 OF THE INCOME - TAX ACT 1961 (IN SHORT THE ACT ) WAS CARRIED OUT ON 31/07/2008 AT THE PREMISES OF RAJDARBAR G ROUP OF CASES. ACCORDING TO THE ASSESSING OFFICER CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED IN THE COURSE OF SEARCH OPERATION AND ACCORDINGLY NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED ON 21/07/2010. IN RESPONSE THE ASSESSEE FILED RETURN OF INCOME ON 12/08/20 10 AND NOTICE UNDER SECTION 143 (2) OF THE ACT WAS ISSUED AND SERVED WITHIN STIPULATED PERIOD AND THE ASSESSMENT WAS 5 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 COMPLETED UNDER SECTION 153C/143(3) OF THE ACT ON 28 /12/2010. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS OBSERVED THAT THE P ROPRIETARY CONC ERN OF ASSESSEE I.E. M/S . P . R . E NT ERPRISES WAS ONE OF THE GUTKHA/ PAN MASALA MANUFACTURING CONCERN OF THE RAJDARBAR G ROUP . THEREAFTER THE ASSESSING OFFICER OBSERVED THAT IN ANOTHER SEARCH AND SEIZURE ACTION DATED 22/03/2006 UNDER SECTION 132 OF THE AC T IN THE CASE OF M/S . SUPARIWALA AND C OMPANY 555 - 57 KATRA ISHWAR BHAWAN KHARI BAOIL NEW DELHI SH. MAHA BIR PRASAD GUPTA PR OPRIETOR OF M/S SUPARIWALA AND C OMPANY IN HIS STATEMENT RECORDED UNDER SECTION 132(4)/131 OF ACT ON 12/04/2006 ADMITTED OF H AVING M ADE CASH SALES AMOUNTING TO RS.11 27 10 598/ - TO RAJDARBAR GROUP DURING THE YEAR 2005 - 06. IN POST - SEARCH PROCEEDINGS IN RAJDARBAR GROUP OF CASES AGAIN SH. MAHABIR PRASAD GUPTA WAS SUMMON ED UNDER SECTION 131 OF THE ACT AND HIS STATEMENT WAS RECORDED ON 17/10/2008 WHEREIN HE REITERATED HIS EARLIER ADMISSION OF CASH SALES OF SUPARI TO RAJDARBAR GROUP . ACCORDING TO THE ASSESSING OFFICER SH. MAHABIR PRASAD GUPTA ADMITTED UNACCOUNTED CASH SALES ON THE BASIS OF INCRIMINATING DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S . SUPARIWALA AND C OMPANY. THE ASSESSING OFFICER DETERMINED UNACCOUNTED CASH PURCHASES DURING THE FINANCIAL YEAR 2004 - 05 CORRESPONDING TO THE ASSESSMENT YEAR UNDER CONSIDERATION ON THE BASIS OF STATEMENT OF SH. MAHABIR PRASAD GUPTA AND DOCUMENTS SEIZED DURING SEARCH AT M/S . SUPARIWALA AND COMPANY WHICH AMOUNTED TO RS. 2 09 20 200/ - . THE ASSESSING OFFICER ALSO REJECTED BOOKS OF 6 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 ACCOUNTS OF THE ASSESSEE. THE ASSESSING OFFICER COM PUTED UNDISCLOSED INCOME OF RS. 86 08 610/ - CORRESPONDING TO THE SE UNACCOUNTED PURCHASES OF RS.2 09 20 200/ - . THE ASSESSING OFFICER ALSO ESTIMATE D UNDISCLOSED INVESTMENT OF RS.18 44 240/ - . THEREAFTER THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS MANUFACTU RING ALONG WITH ANOTHER PERSON S H . MANOJ HORA WHO WAS HAVING 18 POUCH PACKING MACHINE S WHEREAS THE ASSESSEE WAS HAVING ONLY 15 POUCH PACKING MACHINE S AND THEREFORE THE TOTAL UNDISCLOSED INCOME ESTIMATED OF RS. 1 04 52 850/ - (RS.86 08 610 + 18 44 240) WAS DIVIDED IN THE RATIO OF POUCH PACKING MACHI NES AND INCOME IN THE CASE OF THE ASSESSEE WAS ESTIMATED AT RS. 47 51 295 / - FOR ASSESSMENT YEAR INVOLVED AND ACCORDINGLY THE TOTAL INCOME OF T HE ASSESSEE WAS ASSESSED AT RS.51 64 725/ - . 2.1 AGGRIEVED THE ASSESSEE APPEALED TO THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) CHALLENGING THE ASSESSMENT ORDER ON LEGAL GROUNDS AS WELL AS ON MERIT OF THE ADDITIONS. THE ASSESSEE CHALLENGED THAT THE ASSESSMENT ORDER WAS BAD IN LAW AS THE ASSESSMENT HAD NOT BEEN FRAMED ON THE MATERIAL SEIZED PURSUANT TO THE SEARCH ACTION UNDER SECTION 132 OF THE ACT AT THE P REMISES OF RAJDARBAR G ROUP . THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) WAS OF THE VIEW THAT UNDER SECTION 153A BOTH THE ORIGINAL AND RE ASSESSMENT PROCE EDINGS ARE MERGED TOGETHER SO THE NATURE OF ADDITIONS TO BE MADE CANNOT BE RESTRICTED TO ONLY UNDISCLOSED INCOME DETECTED AS A RESULT OF SUCH AND ACCORDINGLY HE UPHELD THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS UNDER SECTION 153C 7 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 OF THE ACT. HOWEVER ON MERIT HE DELETED THE ADDITION HOLDING THAT ADDITION ON THE BASIS OF STATEMENT OF THIRD PARTY WITHOUT ANY CORROBORATIVE EVIDENCE WAS NOT TENABLE. 2.2 AGGRIEVED WITH THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. THE ASSESSEE IS IN CROSS OBJECTION AGAINST THE VALIDITY OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 153C/153A OF THE ACT UPHELD BY THE LEARNED COMMISSIONER OF INCOME - TAX ( A PPEALS). 3. WE FIND THAT GROUND S TAKEN IN CROSS OBJECTION CHALLENGES THE LEGALITY OF ASSUMING JURISDICTION BY THE ASSESSING OFFICER WHICH GOES TO THE ROO T OF THE MATTER AND THEREFORE CROSS OBJECTION ARE FIRST TAKEN FOR ADJUDICATION. 4 . THE LEARNED COU NSEL OF THE AS SESSEE IN SUPPORT OF GROUND NO. 2 OF THE CROSS OBJECTIONS SUBMITTED THAT NO ADDITION HAS BEEN MADE IN THE CASE OF THE ASSESSEE ON ANY MATERIAL SEIZED DURING THE COURSE OF SEARCH ACTION UNDER SECTION 132 OF THE ACT ON RAJDARBAR GROUP AND THE ASSESSMENT IN THE YEAR UNDER C ONSIDERATION WAS NOT ABATED THEREFORE FOLLOWING THE JUDGMENTS OF THE HON BLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF I NCOME T AX ( CENTRAL) - III NEW DELHI VS. KABUL CHAWLA REPORTED IN (2015) 61 TAXMANN.COM 412 (DELH I) AND COMMISSIONER OF INCOME T AX - 7 VS. RRJ SECURITIES LTD REPORTED IN (2015) 62 TAXMANN.COM 391 (DELHI) NO ADDITION COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED IN THE CASE OF THE ASSESSEE. 8 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 5. THE LEARNED COMMISSIONER OF INCOME T AX (DEPARTMENTAL REPRESENTATIVE) ON THE OTHER HAND RELIED ON THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ON THE ISSUE IN DISPUTE. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE CASE OF KABUL CHAWLA (SUPRA) HON BL E DELHI HIGH COURT HAS HELD THAT IF ON T HE DATE OF SEARCH THE ASSESSMENT ALREADY STOOD COMPLETED AND NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH NO ADDITION COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED . THE RELEVANT FINDING OF THE H ON BLE HIGH COURT IS REPRODUCED AS UNDE R : 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 O F 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. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMP UTED 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 AFORE MENTIONED 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'. 9 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 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 DOE S 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 MATERI AL 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 SH ALL 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 ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS 2002 - 03 2005 - 06 AND 2006 - 07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH NO ADD ITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 10 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 6 . S IMILARLY IN THE CASE OF RRJ S ECURITIES (SUPRA) I N THE REASSESSMENT COMPLETED U/S 153C/153A OF THE ACT 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. THE QUESTION OF LAW WHICH WAS DECIDED BY THE HON BLE HIGH COURT IN THE CASE OF THE RRJ SECURITIES (SUPRA) WAS AS UNDE R: WHETHER THE AO HAD JURISDICTION TO ASSESS AND REASSESS THE INCOME OF THE ASSESSEE UNDER SECTION 15 3C IN RESPECT OF ASSE SSMENT YEAR 2003 - 04 TO 2008 - 09. 7 . THE HON BLE HIGH COURT AFTER CONSIDERING THE JUDGMENT IN THE CASE OF KABUL CHAWLA (SUPRA) AND JUDGMENT IN THE CASE OF SSP A VIATION 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 PROVISIONS 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 RELEVAN CE 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 AO HAD NO JURISDICTION TO MAKE THE REASSESSMENT 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 11 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 COULD BE INITIATED AGAINST THE ASSESSEE IS ANSWERED IN FAV OUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8 . IN THE LIGHT OF THE RATIO LAID DOWN IN ABOVE DECISIONS WE FIND THAT NO ADDIT ION COULD BE MADE U/S 153C/153A I F FOLLOWING TWO CONDITIONS ARE SATISFIED: I. NO INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE FOUND/SEIZED IN THE SEARCH ON THE BASIS OF WHICH PROCEEDINGS U/S 153C ARE INITIATED. II. THE ASSESSMENT IN THE YEAR UNDER CONSIDERATION STOOD COMPLETED A S ON THE DATE OF SEARCH. 9. W HEN WE ADVERT T O THE FACTS OF THE CASE IN HAND WE FIND FROM THE ORDER OF THE LOWER AUTHORITIES THAT IN THIS CASE REASSESSMENT PROCEEDING UNDER SECTION 153C OF THE ACT HAVE BEEN INITIATED ON THE GROUND THAT CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED DURING THE SEARCH ACTION UNDER SECTION 132 OF T HE ACT AT THE PREMISES OF RAJDARBAR GROUP ON 31 ST JULY 2008. BUT FROM THE ORDERS OF THE ASSESSING OFFICER WE FIND THAT ADDITIONS HAVE BEEN MADE ON THE BASIS OF STATEMENT OF SH. MAHABIR PRASAD GUPTA PROPRIETOR OF M/S SUPARIWALA & CO. IN POST SEARCH PRO CEEDINGS ON 17 TH OCTOBER 2008 IN WHICH HE REITERATED HIS EARLIER STATEMENT UNDER SECTION 132(4)/131 OF THE ACT RECORDED ON 12 TH APRIL 2006 DURING THE SEARCH ACTION UNDER SECTION 132 OF THE ACT DATED 22 ND MARCH 2006 CONDUCTED AT THE PREMISES OF M/S . SU PARIWALA & COMPANY . THE A DDITIO N IN THE CASE OF ASSESSEE HAS ALSO BEEN MADE BASED ON ESTIMATION OF GROSS PROFIT. THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) IN THE IMPUGNED ORDER HAS REPRODUCED THE ADDITIONS MADE IN A TABULAR FORMAT AS UNDER: 12 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 S.NO PARTICULARS WORKING A.Y. 2005 - 06 1 UNACCOUNTED PURCHASE OF SUPARI AS PER RECORDED STATEMENT OF MAHABIR PRASAD GUPTA AND BASED ON DIARY SEIZED IN HIS OWN CASE. RS.2 09 20 000 2 FOR MAKING THE ADDITION FOR A.Y. 05 - 06 BASE OF A.Y. 06 - 07 IS TAKEN (UNACCOUNTED PURCHASE AY 05 - 06 PROFIT AY 06 - 07/UNACCOUNTED PURCHASE AY 06 - 07) 3 GROSS PROFIT AS ESTIMATED BY AO (2 09 20 000*4 63 80 1 31/11 27 10 598) RS.86 08 610 4 PEAK FIGURE IN THE DIARY OF MAHABIR PRASAD GUPTA OF M/S SUPARIWALA & CO. RS. 18 44 240 5 TOTAL (SR.NO. 3 + SR. NO. 4) RS.1 04 52 850 6. 7. PROFIT APPROPRIATED IN CASE OF MANOJ HORA BASED ON 18 MANUFACTURING MACHINES OF GUTKA PROFIT APPROPRIATED IN CASE OF DEVENDER KR. ARAWAL BASED ON 15 MANUFACTURING MACHINE OF GUTKA (1 04 52 850*18/33) RS.57 01 554 13 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 9 . O N PERUSAL OF THE ABOVE TABLE AND THE ASSESSMENT ORDER IT IS EVIDENT THAT NO ADDITION MADE ARE BASED ON ANY INCRIMINATING FOUND DURIN G THE COURSE OF SEARCH AT THE RAJDARBAR GROUP WHICH IS THE SOLE BASIS OF INITIATING PROCEEDINGS UNDER SECTION 153C OF THE ACT IN THE CASE OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ALSO OBSERVED ON PAGE 18 OF THE IMPUGNED ORDER BELOW THE TABL E THAT THE ADDITIONS WERE BASED ON THE EVIDENCE OF THIRD - PARTY ENTRY ANY STATEMENTS. THE RELEVANT FINDING OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ARE REPRODUCED AS UNDER: THE CHART ON BASIS OF WHICH ADDITION HAS BEEN MADE ON ACCOUNT OF SERIAL NO. 1 TO 7 ABOVE IS BASED ON EVIDENCE OF THIRD PARTY ENTRY AND STATEMENT AT SERIAL NO.1. FROM SERIAL NO 2 TO SERIAL NO.7 THE AO HAS CREATED AN EDIFICE OF ADDITION BASED ON HIS OWN IMAGINATION THAT THE APPELLANT MUST HAVE CONVERTED UNACCOUNTED PURCHASES OF SUPARI INTO GUTKA. HE HAD APPLIED CERTAIN GP RATE TO ARRIVE AT THE FIGURE OF THE PROFIT WHICH IS FURTHER APPORTIONED BETWEEN THE .TWO ENTITIES. IT IS VERY IMPORTANT TO MENTION THAT NO REFERENCE OF SEIZED MATERIAL OR ANY OTHER EVIDENCES HAVE BEEN MADE TO C ORROBORATE THE FINDINGS OF UNACCOUNTED PRODUCTION OR SALE. THE WHOLE ADDITION HINGES ON SERIAL NO.1 I.E EVIDENCE GATHERED FROM THIRD PARTY DOCUMENT OR STATEMENT. NOW THE ISSUE IS CAN THIRD PARTY STATEMENT OR ENTRY IN ABSENCE OF ANY CORROBORATIVE EVIDENCE D ESPITE USING ULTIMATE WEAPON OF SEARCH CAN RESULT IN JUSTIFIED ADDITION. THE LEGAL PROVISION RELATING TO PRESUMPTION U/S 132(4A) IS APPLICABLE TO THE PERSON FROM WHOSE POSSESSION OR CONTROL THE INCRIMINATING MATERIAL IS FOUND & SEIZED. BASED ON THE INCRIM INATING MATERIAL FOUND FROM THIRD PARTY SEARCH BUT NOT BELONGING TO THE APPELLANT THIS PRESUMPTION WILL NOT BE APPLICABLE UNLESS CORROBORATED BY OTHER EVIDENCE. PRESUMPTION AVAILABLE UNDER SECTION 132(4A) CAN BE DRAWN 14 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 AGAINST THE PERSON IN WHOSE CASE SEARC H IS AUTHORIZED AND FROM WHOSE POSSESSION OR CONTROL BOOKS OF ACCOUNT DIARY OR DOCUMENTS ARE FOUND IN THE COURSE OF SEARCH. PRESUMPTION REGARDING CORRECTNESS OF CONTENTS OF BOOKS OF ACCOUNT ETC. CANNOT BE RAISED AGAINST THE THIRD PARTY. 10 . SINCE NO ADDI TION HAS BEEN MADE ON THE BASIS OF MATERIAL SEIZED BELONGING TO ASSESSEE ON THE BASIS OF WHICH PROCEEDINGS UNDER SECTION 153C OF THE ACT HAVE BEEN INITIA TED IN THE CASE OF THE ASSESSEE IN OUR OPINION THE FIRST CONDITION OF NO INCRIMINATING MATERIAL FOU ND IN THE CASE OF THE ASSESSEE DURING THE COUR SE OF SEARCH IS SATISFIED. 11 . REGARDING THE SECOND CONDITION THE ASSESSEE SUBMITTED THAT ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT ABATED AS THE RETURN OF INCOME UNDER SECTION 139 (1) OF THE ACT W AS FILED ON 30/10/2005 AND LIMITATION FOR ISSUE OF NOTICE UNDER SECTION 143(2) WAS ALSO OVER AND NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS REC EIVED BEFORE THE DATE OF SEARCH THUS THE PROCEEDINGS IN THE ASSESSMENT YEAR UNDER CONSIDERATION STOOD COMPLET ED. THE LEARNED COMMISSIONER OF INCOME T AX (DEPARTMENTAL REPRESENTATIVE) ALSO COULD NOT CONTROVERT THIS POSITION OF COMPLETION OF ASSESSMENT. 12 . AS BOTH THE CONDITIONS LAID DOWN IN THE DECISION OF KABUL CHAWLA (SUPRA) HAVE BEEN SATISFIED IN THE CASE OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION RESPECTFULLY FOLLOWING THE FINDINGS OF HON BLE HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) WE HOLD THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSE E IN THE INSTANT ASSESSMENT YEAR. THE GROUND NO. 2 OF THE CROSS OBJECTION IS ACCORDINGLY ALLOWED. 15 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 13 . SINCE WE HAVE ALREADY HELD THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE THE OTHER GROUNDS OF THE CROSS OBJECTION ARE RENDERED ACADEM IC ONLY AND THEREFORE WE ARE NOT REQUIRED TO ADJUDICATE UPON THOSE ISSUES. 1 4 . FURTHER S INCE WE HAVE ALREADY ALLOWED THE CROSS OBJECTION OF THE ASSESSEE AND HELD THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF T HE ASSESSEE THE APPEAL OF THE R EVEN UE CHALLENGING THE MERIT OF THE ADDITION IS ALSO RENDERED INFRUCTUOUS AND THEREFORE THE APPEAL OF THE R EVENUE IS DISMISSED. 15 . IN THE RESULT THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE R EVENUE IS DISMISSED. ITA NO. 3554/DEL/2012 & C.O. NO. 310/DEL/2012 1 6 . THE FACTS AND CIRC UMSTANCES OF THE APPEAL OF THE R EVENUE IN ITA NO. 3554/DEL/2012 AND CROSS OBJE CTION OF THE ASSESSEE IN C.O. NO. 310 /DEL/2012 ARE IDENTICAL TO THE FACTS AND CIRC UMSTANCES OF THE APPEAL OF THE R EVENUE IN ITA NO. 3555/DEL/2012 AND CROSS OBJECTION OF THE ASSESSEE IN C . O . NO. 309/DEL/2012 RESPECTIVELY THEREFORE FOLLOWING OUR FINDINGS IN ITA NO. 3555/DEL/2012 AND C.O. NO. 309/DEL/2012 WE DISMISS THE APPEAL OF THE R EVENUE IN ITA NO. 3554/DEL/2 012 AND ALLOW THE CROSS OBJECTION OF THE ASSESSEE IN C . O . NO. 310/DEL/2012. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 0 T H SEPT. 2016 . S D / - S D / - ( SUDHANSHU SRIVASTAVA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H SEPTEMBER 2016 . LAPTOP / - 16 ITA NOS. 3555 & 3554 /DEL/2012 & C.O. NOS. 309 & 310/DEL/2012 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT NEW DELHI