Sh. Amarjit Goyal, Chandigarh v. ACIT, Chandigarh

ITA 432/CHANDI/2014 | 2007-2008
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 43221514 RSA 2014
Assessee PAN AATPG9784E
Bench Chandigarh
Appeal Number ITA 432/CHANDI/2014
Duration Of Justice 2 year(s) 6 month(s) 2 day(s)
Appellant Sh. Amarjit Goyal, Chandigarh
Respondent ACIT, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-10-2016
Date Of Final Hearing 14-07-2016
Next Hearing Date 14-07-2016
Assessment Year 2007-2008
Appeal Filed On 24-04-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO.432/CHD/2014 (ASSESSMENT YEAR : 2007-08) SHRI AMARJIT GOYAL VS. THE A.C.I.T. SCO 98-99 SUB CITY CENTRE CENTRAL CIRCLE-II SECTOR 34 CHANDIGARH. CHANDIGARH. PAN: AATPG9784E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK KUMAR GOEL RESPONDENT BY : SHRI MANJIT SINGH DR DATE OF HEARING : 24.10.2016 DATE OF PRONOUNCEMENT : 26.10.2016 O R D E R PER ANNAPURNA GUPTA A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL) GURGAON DATED 20.2.2014 FOR ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND LAW IN UPHOLDING THAT EVEN IN THE ABSENT OF ANY INCREMENTING MATERIAL FOUND DURING THE COURSE OF SEARCH ADDITION IS STILL GOOD. 2. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING T HE ADDITION OF RS.380000/-TAKING SALE CONSIDERATION AT 2 RS.880000/- THAN THE ACTUAL MARKET VALUE OF RS.500000/ ONLY. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD DELETE OR MODIFY ANY GROUND OF APPEAL BEFORE THE SAME IS HEARD OR DISPOSED OFF. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT SEARC H & SEIZURE OPERATION WAS CONDUCTED AT THE BUSINESS PRE MISES OF THE MODERN GROUP OF CASES OF THE ASSESSEE ON 17.3.2010. THE ASSESSEE FILED RETURN OF INCOME UND ER SECTION 139(1) OF THE INCOME TAX ACT 1961 (IN SHOR T THE ACT) ON 26.7.2007 SHOWING TOTAL INCOME OF RS.49 08 430/- AND THE SAME WAS REITERATED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT . THEREAFTER THE ASSESSMENT WAS FRAMED AT AN INCOME OF RS.60 83 694/- AFTER MAKING ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN AMOUNTING TO RS.3 80 000/- AFTER APPLYING PROVISIONS OF SECTION 50C OF THE ACT AND AFTER DISALLOWING INTEREST AMOUNTING TO RS.7 95 264/- ON ACCOUNT OF PROVISIONS OF SECTION 36(1)(III) OF THE ACT. 4. AGGRIEVED BY THE SAME THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (APPEALS) WHERE BE SIDES CHALLENGING THE ADDITIONS/ DISALLOWANCES MADE IN TH E ASSESSMENT FRAMED THE ASSESSEE RAISED AN ADDITIONA L GROUND CHALLENGING THE LEGALITY/VALIDITY OF THE ASS ESSMENT FRAMED UNDER SECTION 153A(1)(B) OF THE ACT IN THE A BSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH. THE LEARNED CIT (APPEALS) VIDE HER ORDER D ATED 20.2.2014 PARTLY ALLOWED THE ASSESSEES APPEAL DIS MISSING 3 THE ADDITIONAL GROUND RAISED HOLDING THAT THE ASSES SING OFFICER IS NOT OBLIGED TO UTILIZE ONLY THE INCRIMIN ATING MATERIAL COLLECTED DURING THE SEARCH OPERATION DEL ETING THE DISALLOWANCE MADE UNDER SECTION 36(1)(III) OF T HE ACT AND UPHOLDING THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. 5. AGGRIEVED BY THE ACTION OF THE LEARNED CIT (APPEALS) IN DISMISSING TWO GROUNDS RAISED BY THE ASSESSEE BEFORE HER THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 6. GROUND NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF THE LEARNED CIT (APPEALS) UPHOLDING T HE ORDER OF THE ASSESSING OFFICER DESPITE THE FACT THA T NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. 6. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE I.T.A.T. CHANDIGARH BENCH IN GROUP OF CASES WITH LEAD ORDER IN M/S MALA BUILDERS PVT. LTD . VS. ACIT CC-III IN ITA NOS.433 TO 437/CHD/2014 HAS HEL D THAT THE ADDITION UNDER SECTION 153A IN THE CASE OF EARLIER COMPLETED ASSESSMENT CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT IN THE PRESENT CASE THE ADDITION MADE HAS NO NEXUS AT ALL TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH NOR IS THERE MENTION OF ANY SUCH MATERIAL IN THE 4 ASSESSMENT ORDER ALSO. THE LEARNED COUNSEL FOR THE ASSESSEE THEREFORE STATED THAT THE DECISION RENDE RED IN THE CASE OF M/S MALA BUILDERS PVT. LTD. (SUPRA) SQU ARELY APPLIED IN THE CASE OF THE ASSESSEE AND THE ORDER P ASSED THEREFORE OUGHT TO BE SET ASIDE. 7. THE LEARNED D.R. ON THE OTHER HAND RELIED UPO N THE ORDER OF THE LEARNED CIT (APPEALS). FURTHER ON A QUERY RAISED BY THE BENCH REGARDING THE INCRIMINATING MA TERIAL WHICH FORMED THE BASIS OF THE ADDITION MADE THE LE ARNED D.R. EXPRESS HIS INABILITY TO PRODUCE ANY SUCH MATE RIAL. 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AS ALSO THE DOCUMENTS REFERRED TO US. THE SOLE ISS UE IN THIS GROUND RAISED BEFORE US IS WHETHER ADDITION IN ASSESSMENT FRAMED UNDER SECTION 153A CAN BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE CASE OF EARLIER COMPLETED ASSESSMENT. THIS ISSUE UNDISPUTEDLY HAS BEEN DECID ED IN A NUMBER OF CASES BY THE HIGH COURTS IN FAVOUR OF T HE ASSESSEE. THE DELHI HIGH COURT IN THE CASE OF KAB UL CHAWLA AFTER CONSIDERING VARIOUS DECISIONS OF THE HIGH COURTS SUMMARIZED THE LEGAL POSITION RELATING TO T HE PROVISIONS OF SECTION 153A OF THE ACT IN PARAGRAPH 37 OF ITS ORDER AS FOLLOWS : 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 T HE AFOREMENTIONED DECISIONS THE LEGAL POSITION THAT EMERGES IS AS UN DER: 5 I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE S EARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E 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 SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESS MENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F 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 THA T THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WI TH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABAT ED 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 T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARAT ELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M ATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASI S OF SOME 6 INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. 9. FOLLOWING THE ABOVE DECISION AND VARIOUS OTHER DECISIONS OF THE HIGH COURTS THE I.T.A.T. CHANDIG ARH BENCH IN BUNCH OF CASES WITH LEAD CASE IN M/S MALA BUILDERS PVT. LTD.( SUPRA) HELD THAT IN CASE OF COM PLETED ASSESSMENT UNDER SECTION 143(3)/143(1) OF THE ACT I N THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE ANY ADDITION UNDER SECTION 153A OF THE ACT. 10. THE FACTS RELATING TO THE PRESENT CASE ARE THA T SEARCH WAS CONDUCTED ON THE ASSESSEE ON 17.3.2010. THE IMPUGNED ASSESSMENT YEAR IS ASSESSMENT YEAR 2007-08 FOR WHICH RETURN OF INCOME WAS FILED UNDER SECTION 139( 1) OF THE ACT ON 26.7.2007. NO NOTICE UNDER SECTION 143( 2) OF THE ACT HAS ADMITTEDLY BEEN ISSUED TO THE ASSESSEE. THUS AS ON THE DATE OF INITIATION OF SEARCH THERE WAS NO PENDING ASSESSMENT AND MOREOVER ASSESSMENT WAS COMPLETED U/ S 143(1) OF THE ACT. HAVING SAID SO WE FIND THAT THE RE IS NO DISPUTE ABOUT THE FACT ALSO THAT THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENT ORDER WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. ON A SPECIFIC QUERY RAISED BY THE BENCH IN THIS REG ARD THE LEARNED D.R. FAILED TO PRODUCE ANY SUCH MATERIA L BEFORE 7 US. MOREOVER THE PERUSAL OF THE ASSESSMENT ORDER ALSO REVEALS THAT THE ADDITIONS MADE HAD NO NEXUS AT ALL WITH ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN WE FIND WAS MADE BY APPLYING THE PROV ISIONS OF SECTION 50C OF THE ACT THEREBY SUBSTITUTING THE STAMP DUTY VALUE OF THE PROPERTY TO THE SALE CONSIDERATIO N RECEIVED BY THE ASSESSEE AND THUS INCREASING THE LO NG TERM CAPITAL GAIN EARNED BY THE ASSESSEE BY AN AMOU NT OF RS.3 80 000/-. PARA 4 OF THE ASSESSMENT ORDER WHIC H DEALS WITH THE IMPUGNED ADDITION STATES THAT WHILE EXAMINING THE CLAIM OF THE ASSESSEE OF LONG TERM CA PITAL GAIN THE ASSESSING OFFICER NOTICED THAT WHILE THE ASSESSEE HAD DISCLOSED THE SALE PRICE OF THE PLOT A T RS.5 LACS SALE DEED DISCLOSED THE STAMP VALUE OF THE IM PUGNED PLOT AT RS.8 80 000/-. IT IS CLEAR THEREFORE THA T IT WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF THAT NON-COMPLIANCE WITH THE PROVISIONS OF SECTION 50C O F THE ACT CAME TO THE NOTICE OF THE ASSESSING OFFICER RE SULTING IN THE IMPUGNED ADDITION .THUS CLEARLY THERE WAS N O NEXUS OF THE ADDITION MADE WITH ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN VIE W OF THE ABOVE FACTS WE FIND THAT THE DECISION OF VARIOUS HIGH COURTS FOLLOWED BY THE ITAT CHANDIGARH BENCH IN T HE CASE OF MALA BUILDERS (SUPRA) LAYING DOWN THE RATI O THAT IN CASE OF COMPLETED ASSESSMENTS NO ADDITION IN ASSESSMENTS FRAMED U/S 153A CAN BE MADE IN THE ABSE NCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH APPLIES 8 TO THE PRESENT CASE ALSO FOLLOWING WHICH WE SET AS IDE THE ORDER OF THE CIT(A) ON THIS GROUND. 11. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THEREFORE ALLOWED. 12. SINCE WE HAVE ALLOWED THE LEGAL GROUND RAISED BY THE ASSESSEE THERE IS NO NEED TO GO INTO THE MERIT S OF THE ISSUE. THE GROUND NO.2 RAISED BY THE ASSESSEE IS ACCORDINGLY DISPOSED OFF. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH OCTOBER 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR ITAT CHANDIGARH