Subject: M/s Raffle Mercantile Pvt. Ltd. In support of the same assessee had produced a confirmation,
Referred Sections: Section 153A r.w.s 143(3) of the Income Tax Act, Section 153A of the Act Section 153A of the Act. Section 143(2) Section 153A of the Act Section 68 of the Act, Section 143(1) of the Act Section 133(6)
Referred Cases / Judgments Smt. Dayawanti vs. CIT (2017) 390 ITR 496, CIT vs. Anil Kumar Bhatia 252 ITR 493, Filatex India Ltd. vs. CIT Navodaya Castle Pvt. Ltd. vs. CIT (2015-TIOL-314-SC-IT), CIT vs. NR Portfolio Pvt. Ltd. 206 (2014) DLT 97. Ashok Chadda vs. Income Tax Officer, Kabul Chawla vs. CIT
1 ITA No. 459/Del/2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `B' NEW DELHI
BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 459/DEL/2016 ( A.Y 2009-10)
DCIT Vs Landcraft Developers Pvt.
Central Circle-18, Room NO. 327, Ltd. 309, 3rd Floor, Plot No.
3rd Floor, ARA Centre, E-2, 13, Parmesh Corporate
Jhandewalan Extn. Towers Community Centre,
New Delhi Karkardooma, Delhi
AABCL1391F
(APPELLANT) (RESPONDENT)
Appellant by Ms. Rachna Singh, CIT DR
Respondent by Sh. Raj Kumar & Sh. Sumit
Goel, CA's
Date of Hearing 28.08.2018
Date of Pronouncement 03.10.2018
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 26/11/2015
passed by CIT(A)-29, Delhi for Assessment Year 2009-10.
2. The grounds for appeal are as under:-
1. "That on the facts and in the circumstances of the case, the Ld. CIT(A) has
erred in law and on facts in deleting the addition of Rs. 6,65,00,000/- u/s
68, made on account of unexplained share application money by the AO,
without discussing the merit of the case.
2. That on the facts and in the circumstances of the case, the Ld. CIT(A)
failed to appreciate that the Hon'ble Allahabad High Court has held in the
case of Commissioner of Income Tax, Central Kanpur V. Raj Kumar Arora
2 ITA No. 459/Del/2016
[2014] 52 taxmann. Com 172 (Allahabad), after considering the judgement
given by the Hon'ble Delhi High Court in the case of CIT v. Anil Kumar
Bhatia [2012] 211 Taxman 453/24 taxmann. Com 98, that the AO has
power to reassess returns of assessee not only for undisclosed income,
which was found during search operation but also with regard to material
that was available at time of original assessment.
3. That on the facts and in the circumstances of the case, the Ld. CIT(A) has
erred in law and on facts in deleting the addition of Rs. 50,00,000/-, on
account of unexplained unsecured loan u/s 68, and addition of rs.
77,71,138/- on account of interest earned on unsecured loans, made vide
the original assessment order dated 30.12.2011.
4. That the order of the CIT(A) is perverse, erroneous and is not tenable on
facts and in law.
5. That the grounds of appeal are without prejudice to each other.
6. That the appellant craves leave to add, amend, alter or forgo any
ground(s) of appeal either before or at the time of hearing of the appeal."
3. Search & seizure operation u/s 132 of the Income Tax Act, 1961 was
carried out on 23.8.20129 in M/s Land craft Group of cases. The case of the
assessee was also covered u/s 132(1). Subsequently, the case was centralized
with Central Circle - 27, Delhi (Erstwhile Central Circle - IS) vide order dated
5.12.2012 passed by the CIT-II, New Delhi alongwith some other group cases.
Notice u/s 153A was issued to the assessee on 5 2014. hr response to this
notice, return declaring total income of Rs. Nil was filed on 10.6.2014. Original
return in this case was filed on 30.12.2011 declaring total income at Rs. Nil.
The same was processed u/s 143(1). The case of the assessee was taken up for
scrutiny. Notices u/s 143(2) and 142(1) alongwith questionnaire were issued to
the assessee. In response to above notices, CA, attended the proceedings before
Assessing Officer. Requisite information/details were filed by them. The case
was examined and discussed. As per information provided by the assessee, the
company is engaged in the business of development & sales of various types of
land and building. In this case, original assessment u/s 143(3) was passed by
ITO, Ward-4(3) New Delhi on 30.12.2011 vide which total income was assessed
at an income of Rs. Rs. 1,33,86,230/- after making addition of Rs.
3 ITA No. 459/Del/2016
1,33,86,230/-. The assessee filed appeal against the order passed by the
Assessing Officer before CIT(A), New Delhi. The CIT(A) deleted the addition
made by the Assessing Officer. The revenue filed appeal against the order of
CIT(A) before the Tribunal. The appeal of the department was pending before
Tribunal at the time of 153A proceeding. During the course of assessment
proceedings vide questionnaire dated 24.11.2014 and 30.12.2014 which have
been placed on record, assessee was asked to file various details with regard to
share capital received by it during the year under assessment. From the replies
filed by the assessee it was observed that it had received an amount of
6,65,00,000/ - as unsecured loan which was transferred to share application
account in A.Y.2010-11 from M/s Raffle Mercantile Pvt. Ltd. In support of the
same assessee had produced a confirmation, Bank statement of M/s Raffle
Mercantile, copy of balance sheet of the Raffle along with relevant Schedule - 4
of Raffle for A.Y. 2009 - 2010 (showing Advances of Rs. 6.65 Cr. to assessee.)
and B/s. of Raffle for A.Y. 2010 - 2011. (showing Investment in Share Appln.
Money of Rs. 7.40 Cr.) After analyzing the documents submitted by the
assessee and giving it ample opportunity to prove the identity, genuineness
and creditworthiness of the above share capital a show cause notice dated
20.3.2015 was served vide which the assessee was asked to show cause why
the said amount may not be added to its total income being unexplained
credits u/s 68 of the I. T. Act, 1961. In this regard, the assessee filed reply
dated 26.03.2015. The reply of the assesee has been duly considered and it
has been found that investment in M/s Landcraft Developers Pvt. Ltd. has
been routed through a sham enterprise, M/s Raffle Mercantile Pvt. Ltd. which
is registered out of Kolkalta. On enquiry its credentials are found to be dubious
as the money or the funds which were utilized by M/s Raffle Merchantile Pvt.
Ltd to invest in Landcraft Developers were arranged from bogus/fictitious entry
providing companies which are based out of Kolkata. Thus, the Assessing
Officer passed Assessment Order dated 31.03.2015 under Section 153A r.w.s
143(3) of the Income Tax Act, 1961.
4 ITA No. 459/Del/2016
4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
5. The Ld. DR submitted that the assessment proceedings were properly
taken out by the Assessing Officer and CIT(A) erred in deleting the addition of
Rs.6,65,000/- on account of unexplained share application money by the
Assessing Officer without discussing the merit of the case. The Ld. DR
submitted that the provisions of Section 153A of the Act is clear and do not
mandate requirement of incriminating documents for purpose of finalizing
assessment or reassessment under Section 153A of the Act. The Ld. DR relied
upon the decisions of the Hon'ble Delhi High Court in case of Smt. Dayawanti
vs. CIT (2017) 390 ITR 496, CIT vs. Anil Kumar Bhatia 252 ITR 493, Filatex
India Ltd. vs. CIT 49 taxmann.com 465 as well as Navodaya Castle Pvt. Ltd. vs.
CIT (2015-TIOL-314-SC-IT), CIT vs. NR Portfolio Pvt. Ltd. 206 (2014) DLT 97.
6. The Ld. AR relied upon the order of the CIT(A) and also that of the
assessee's own order in Assessment Year 2010-11 and also for Assessment
Year 2009-10 for original Assessment u/s 143(3). The Ld. AR submitted that
the CIT(A) in para 1.9 of the order held that the assessment proceedings were
already completed and unabated and no incriminating evidence found.
Therefore, the case of Kabul Chawla relied by the assessee is applicable to the
facts of the case.
7. We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that the case laws relied upon by the
Ld. DR will not be applicable in the present case as each case has its distinct
facts. In present case, the assessment proceedings were already completed and
unabated and no incriminating evidence found. Thus, the Revenue could not
differ from the fact that there was no incriminating evidence found in the
5 ITA No. 459/Del/2016
present case. In fact, in Assessee's own case for A.Y. 2010-11, the Tribunal
while dismissing the appeal of the revenue held as under:
"5. After hearing the submissions of both the sides and perusing
the materials available on record, we find that the search was
conducted on 23.08.2012, but the case relates to the assessment year
2010-11. We observe from the assessment order that the assessing
officer has not referred any incriminating material found in the search.
During the course of appellate proceedings before the ld. CIT (A), the ld.
CIT(A) specifically asked the Assessing Officer for clarifying the status
of assessment on the date of search for the impugned assessment
year. The Assessing Officer vide his reply dated 16.10.2015 mentioned
"after perusal of record, it is observed that as on the date of search,
assessment in this case was not pending, hence, it was unabated".
The case law relied by the assessee, as noted above is fully
applicable. The ld. CIT (A) has made a reasoned order. The findings
reached by the ld. CIT (A) are as under :
I have carefully considered the submissions made by AO and
the appellant. As reported, no notice under section 143(2) is available
on record, though it has been mentioned in the assessment order and
order sheet. It is a settled law now that there is no need to issue a
separate notice under section 143(2) for proceedings related to 153A of
the Act. Accordingly, looking to the provisions of section 153A of the Act
and also respectfully following the judgment in the case of Ashok
Chadda vs. Income Tax Officer, as cited above, the proceedings
under section 153A read with section 143(3) is held to be valid as it is
not necessary to issue and serve notice under section 143(2) of the Act.
Thus, the assessment proceedings are found to be in order and this
ground of appeal is not maintainable.
6 ITA No. 459/Del/2016
10. As per ground no. 2,4(A/B,C,D,E and F) and 5(A,B,C,D,E and F),
the appellant raised the issue regarding addition of Rs.75 lacs and
Rs.1.30 crores respectively, made under section 68 of the Act,
considering the unsecured loan/share application money received from
M/s Raffle Mercantile P. Ltd. and M/s Purishottam Vinimay P. Ltd. as
unexplained. The addition has been disputed on legal ground as well
as on the merits.
10.1 The appellant has raised the legality of the addition made by
stating that these two additions amounting to Rs.2.05 crores are not
emanating from any incriminating material found/seized during
search, therefore these additions are outside the scope of assessment
under section 153A of the Act, since the proceedings for the AY 2010-
11 stands completed and unabated at the date of search.
10.2 Search was conducted in this case on 23.08.2012. Original return
was submitted by the appellant on 15.10.2010, declaring nil income.
This was processed under section 143(1) of the Act.
10.3 Looking to the argument put forth by the appellant that
assessment proceedings were complete and unabated the AO was
specifically asked to clarify the status of assessment on the date of
search. Vide his reply dated 16.10.2015 it has been mentioned by the
AO i.e. ACIT, Central Circle-27 that:-
Y ' ."After perusal of records, 'it is observed that as on the date -of
search, assessment in this case was not pending. Hence, it was
unabated/'.
10.4 From the above submissions of the AO it is clear that the
assessment proceedings were complete on the date of search and
hence the proceedings are unabated.
7 ITA No. 459/Del/2016
10.5 With respect to the fact that whether this additions of Rs.2.05
crores are emanating from any incriminating material found/seized
during search, nowhere it has been mentioned in the assessment order
that any such seized material or otherwise has been found during
search to conclude that this amount Ts unexplained cash credit in the
hands of the company. Further, nothing has been mentioned in the
assessment order to show that during search any unaccounted
income, cash, jewellery or any other asset has been found/seized. No
trace of any generation of unaccounted income has also been pointed
out. Therefore, AO was specifically asked whether the addition made
in assessment order is arising out of any incriminating material
found/seized during the search, as nothing has been mentioned in the
assessment order.
10.6 Vide letter dated 16.10.2015 it was submitted that "with regard
to point 2 of your letter, it is submitted that an addition of Rs.2.05
crores was made on the grounds that the assessee simply filed copy of
confirmation and bank statement of M/s Raffle Mercantile P. Ltd. and
Purshottam Vinimay P, Ltd. but failed to prove the genuineness and
creditworthiness of the transaction. Although the number of
opportunities were provided to the assessee to explain the
transactions. On examination of the bank statement submitted by the
assessee, it was observed that funds were transferred M/s Landcraft
Developers P. Ltd. after the receipts of funds from another entity within
a few days of deposit During the course of assessment proceedings, it
was observed by the AO that M/s Raffle Mercantile P. Ltd. was
registered in Kolkata and it was observed by the AO that M/s Raffle
Mercantile P, Ltd. used to arrange bogus entries for the different
companies. Notices under section 133(6) were issued in M/s Raffle
Mercantile P. Ltd. for the AY 2011-12. However, the reply was not
found satisfactory. Since the company involved is same, it was held by
8 ITA No. 459/Del/2016
the AO that the credentials of the company are dubious/' However no
such seized material or incriminating document was referred by the
AO, based on which the addition has been made.
10.7 In its rejoinder dated 05.11.2015 it was stated by the appellant
that all the relevant information and documents were furnished to the
AO as well as to the investigation wing and the director of Raffel was
also produced. Information under section 133(6) of the Act was also
furnished by Raffel and Purushootam Vinimay P. Ltd. and no
discrepancy has been found even though the source of SGurts 1 has
been explained. Therefore, nothing is available with the AO in the form
of seized documents or any other evidence which formed the basis for
such additions.
10.8 It has also been stated by the appellant that in paragraph 5.4
and 6.3 of the assessment order AO has mentioned about the
"unqualified admission of the assessee company" regarding the
addition, which is incorrect. No such admission has been made by
anybody on behalf of the company and they are vigorously contesting
the addition.
10.9 The AO in his report has stated that this expression in the
assessment order is with respect to the introduction of share capital of
Rs.2.05 crores, not found satisfactory by the AO and used in that
context which is otherwise not connected with any type of admission
by the appellant. Therefore, the said expression of AO in the
assessment order is not considered as any such admission of
undisclosed income by the appellant.
10.10 From the above discussions it is clear that there is no material or
evidence found or seized during the course of search proceedings of the
appellant nor any evidence found for generation of unaccounted
9 ITA No. 459/Del/2016
income nor any undisclosed/unaccounted asset, cash, jewellery and
investment etc. has been discovered.
1.0.11 Therefore, looking to the facts of this case where the
assessment proceedings were already completed and unabated and.
no such incriminating material or evidence found/seized during search
to conclude the generation of' undisclosed income of the appellant, the
decision ,of Hon'ble Delhi High Court relied upon by the appellant in
the case of Kabul Chawla vs. CIT dated 28.08.2015 is applicable in
this case.
10.12 Accordingly, respectfully following the decision of the
jurisdictional high court where it has been held that in an unabated
assessment under section 153A of the Act, the addition can be made
only on the basis of incriminating material found and seized during the
course of search, whereas the addition made in the present case is
without having any incriminating material/seized document is not
sustainable.
10.13 Therefore, the addition cannot be sustained in view of the legal
provisions as defined by the Hon'ble Jurisdictions! High Court in the
above -eferreci case law.
10.14 Since, the issue has been decided on the legal grounds
regarding jurisdiction of AO to make such additions under section
153A of the Act and the addition has not been sustained, the ground
relating to the merit of this case has not been considered.
6. In view of the above findings, we dismiss the appeal of the Revenue.
7. In the result, the appeal of the Revenue is dismissed."
10 ITA No. 459/Del/2016
Thus, the issue is squarely covered by the decision of the Tribunal in
assessee's own case. Hence, appeal of the Revenue is dismissed.
8. In result, appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 03rd October, 2018.
Sd/- Sd/-
(N. K. SAINI) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 03 /10/2018
R. Naheed
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
11 ITA No. 459/Del/2016
Date of dictation 28.08.2018
Date on which the typed draft is placed 29.08.2018
before the dictating Member
Date on which the typed draft is placed
before the Other Member
Date on which the approved draft comes to
the Sr. PS/PS
Date on which the fair order is placed
before the Dictating Member for
pronouncement
Date on which the fair order comes back to 03.10.2018
the Sr. PS/PS
Date on which the final order is uploaded 03.10.2018
on the website of ITAT
Date on which the file goes to the Bench 03.10.2018
Clerk
Date on which the file goes to the Head
Clerk
The date on which the file goes to the
Assistant Registrar for signature on the
order
Date of dispatch of the Order
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