Subject: For the sake of convenience, all the three appeals were heard together and are being disposed of by this common order.
Referred Sections:
Section 68 of the IT Act.
Section 153B of the Act
Referred Cases / Judgments
ACITvs. Sarvmangalam Builders & Developers Pvt. Ltd., vide ITA No.196 to 198/Del/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : F : NEW DELHI
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA Nos.3245, 3248 & 3250/Del/2013
Assessment Years: 2005-06, 2009-10 & 2010-11
Ramprastha Builders Pvt. Ltd., Vs DCIT,
B-23-25, Kailash Colony, Central Circle-14,
New Delhi. New Delhi.
PAN: AADCR3877N
(Appellant) (Respondent)
Assessee by : Shri Rajesh Jain, CA
Revenue by : Shri Kanwaljit Singh, CIT, DR
Date of Hearing : 14.02.2019
Date of Pronouncement : 07.05.2019
ORDER
PER R.K. PANDA, AM:
The above three appeals filed by the assessee are directed against the separate
orders of the CIT(A)-23, New Delhi, relating to assessment years 2005-06, 2009-10
and 2010-11, respectively. For the sake of convenience, all the three appeals were
heard together and are being disposed of by this common order.
ITA No.3245/Del/2013 (A.Y. 2005-06)
2. Facts of the case, in brief, are that the assessee is a company. A search and
seizure operation u/s 132 of the IT Act, 1961 was conducted by the Investigation Wing
ITA Nos.3245, 3248 & 3250/Del/2013
of the Department on 30th July, 2009 in the Ramprastha group of cases. The business
premises of the assessee company situated at B-23-25, Kailash Colony, New Delhi,
Gurgaon was also covered u/s 132(1) of the IT Act. In response to notice u/s 153A of
the IT Act issued on 11th May, 2011, the assessee filed its return of income declaring
an income of Rs.1,01,98,710/- on 31st May, 2010.
3. The Assessing Officer noted that during the examination of books of account
and seized material, it was noticed that as per page 114 to 118, Annexure A-6/Party
A.O.-6 which is a summary of draft verification report by Company Law Board
auditors on the issue of diversion/siphoning of funds of Ramprastha group of
companies, in the heading of sum of money mentioned in the agreements/documents
verified by the auditor but not reflected in the books of account, it was mentioned that
RBPL has given advance to Shyam Sunder Charitable Trust for purchase of land in
Village Chajarsi, Gautam Budh Nagar. The said trust did not transfer the land as per
the agreement and M/s Ramprastha Builders Pvt. Ltd., has filed a case in the Court of
Civil Judge, Gautam Budh Nagar. On going through the Petition filed by Shri
Balwant Singh on behalf of the assessee company, it was noticed that M/s Ramprastha
Builders Pvt. Ltd., has paid a sum of Rs.50 lakhs on 20th January, 2005 to the said
Trust which is not reflected in the books of M/s Ramprastha Builders Pvt. Ltd. It has
further been mentioned that M/s Ramprastha Builders pvt. Ltd. has purchased land
measuring 1 Bigha, 15 Biswa at Village Chajarsi, District Gautam Budh Nagar.
However, all the documents of purchase of land are in favour of Shri Surat Singh,
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ITA Nos.3245, 3248 & 3250/Del/2013
Director of M/s Ramprastha Builders Pvt. Ltd. The Assessing Officer, therefore,
asked the assessee to explain as to why the amount of Rs.50 lakhs advanced to M/s
Shyam Sunder Charitable Trust towards advance for purchase of land and not reflected
in the books of account may not be added to its income. He further mentioned in the
said notice that this payment has been made on 20th January, 2005. The assessee in its
reply submitted that it has made a payment of advance of Rs.50 lakhs to M/s Shyam
Sundar Charitable Trust towards advance for purchase of land. The matter is pending
in the Court of law. The advance amount was received from other party and the
journal entry could not be passed due to some oversight.
4. The Assessing Officer noted from the reply filed by the assessee that the
assessee has received the advance amount from other party and journal entry could not
be passed due to some oversight, but, no evidence in support of this contention was
furnished. He, therefore, treated the argument of the assessee as vague and without
any support. Since the advance of Rs.50 lakhs has been given to Shyam Sundar
Charitable Trust on 20th January, 2005 and has been admitted by the assessee and
since no source of this money/advance was explained, the Assessing Officer made
addition of Rs.50 lakhs invoking the provisions of section 68 of the IT Act. The
Assessing Officer has also made another addition of Rs.1,98,060/-. However, the
assessee is not in appeal on this issue. Therefore, we are not concerned with the same.
Thus, the Assessing Officer determined the total income of the assessee at
Rs.1,53,96,770/-.
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ITA Nos.3245, 3248 & 3250/Del/2013
5. Before the CIT(A), the assessee challenged the validity of the assessment on the
ground that no incriminating documents has been seized u/s 132(1) of the Act and the
documents relied by the Assessing Officer for making the addition in the assessment
u/s 153A/143(3) of the Act were duly accounted for in the regular books of account.
The assessee has also challenged the addition on merit. However, the ld.CIT(A)
rejected both the issues. So far as the legal ground is concerned, he held that there is
incriminating seized documents on the basis of which the addition of Rs.50 lakhs was
made. Therefore, the legal ground raised by the assessee is not sustainable. So far as
the merit of the case is concerned, he also dismissed the ground raised by the assessee
by observing as under:-
"I have considered the assessment order and written submission of Ld. AR. As
per the document seized referred in the assessment, namely, page no. 114 to 118,
Annexure A6/Party AO-6, which is the verification report of Company Law
Board stating that the appellant company has paid Rs. 50 lacs on 20.01.2005 to
M/s Shyam Sunder charitable Trust. Therefore, payment made by the appellant
company is conclusive. During assessment proceedings, the appellant company
has not objected the truthfulness of the payment. The appellant company has
contended that it has received advance from various persons for making advance
of Rs. 50 lacs to M/s Shyam Sunder Charitable Trust and necessary entries could
not be made. Now, at appellant stage, Ld. AR is taking the stand that Rs. 50 lacs
was only paid and the matter is subjudice and balance Rs. 50 lacs was not paid.
As per seized material the payment is Rs 50 lacs alongwith specific date.
Therefore, the question of total payment and balance payment does not arise. The
fact is Rs. 50 lacs as per the seized document was paid by the appellant company
which is not recorded in the books of accounts. Hence, the source remains
unexplained. Keeping the entire facts and circumstances of the case, I confirm
the addition made by A.O. to the tune of Rs. 50 lacs. This ground of appeal is
hereby dismissed."
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ITA Nos.3245, 3248 & 3250/Del/2013
6. Aggrieved with such order of the CIT(A), the assessee is in appeal before the
Tribunal by raising the following grounds:-
"1. That the learned CIT(A) erred in upholding the validity of the
Assessment Order passed u/s 153A/143(3) of the Act in spite of the fact that no
search u/s132(1) of the Act was initiated on the appellant or documents or any
assets of the appellant were requisitioned u/s 132A of the Act
Without Prejudice to Ground No.1 above,
2. That the Learned CIT(A) fails to appreciate the fact that the appellant
company has already been assessed u/s 143(3) of the Act vide Assessment Order
dt.02 Nov, 2007 and addition of Rs.3,49,475/- was made on account of
unexplained creditors and therefore, assessment now made u/s153A /143(3) of
the Act on different income, without reference to any seized document, is not
valid and against the various judicial precedents.
3. That the Learned CIT(A) erred in upholding addition of Rs.51,98,060/-
in spite of the fact that no incriminating document has been seized u/s 132(1) of
the Act and the documents relied by the Assessing Officer for making addition in
the Assessment u/s 153A/143(3) of the Act, were duly accounted for in the
regular books of accounts.
4. That the Learned CIT(A) erred in upholding addition of Rs.50,00,000/-
on account of advance to M/s Shyam Sunder Charitable Trust without
considering the facts of the case and without giving adequate opportunity to the
appellant to justify its claim.
5. That the Learned CIT(A) erred in upholding the contentions of
Assessing Officer in challenging the genuineness of the various liabilities
amounting to Rs.1,98,060/- shown under the head "Current Liabilities" by the
appellant as the said amounts were received in the preceding years.
6. That the Learned CIT(A) erred in upholding the Assessment u/s
153A/143(3) of the Act without giving reasonable opportunity of being heard to
the appellant.
7. That there was no justification for levying of interest u/s 234A and 234B
of the Act on the facts and circumstances of the case and as per Law.
8. Without prejudice to the Ground No. 7, interest u/s 234A and 234B of
the Act has been wrongly calculated as the starting date for calculation should
have been the date of Assessment Order u/s 143(3) of the Act. The credit for the
tax paid has been given only for Rs.35,38,184/- against Rs.38,67,221/-(including
Rs. 2,71,929/- paid as regular assessment.
5
ITA Nos.3245, 3248 & 3250/Del/2013
9. That the appellant craves leave to add to, alter, amend, modify,
substitute, delete and/or rescind all or any of the Grounds of Appeal on/or before
the final hearing.
10. That the Orders of the Assessing Officer & CIT(Appeals) are not based
on the facts of the case & as per law and hence additions sustained by the
CIT(Appeals) are totally illegal and not based on binding judicial precedents."
7. The ld. counsel for the assessee strongly challenged the order of the CIT(A).
He submitted that the original assessment in this case was completed u/s 143(3) of the
Act on a total income of Rs.1,01,98,710/- on 2nd November, 2007 against the returned
income of Rs.96,69,150/-. A search and seizure operation u/s 132(1) of the Act was
conducted on 30th July, 2009 on Ramprastha Group of Companies whose registered
offices were located at C-10, C Block Market, Vasant Vihar, New Delhi and their
corporate office at 114, Sector-44, Gurgaon. He submitted that the registered office of
the assessee company i.e., Ramprastha Builders Pvt. Ltd. is at B-23, 25 Kailash
Colony, New Delhi and corporate office is at C-165, Ramprastha Colony, Ghaziabad.
There is no other place of business of the said company in Delhi or any other place in
India. He submitted that only a survey action u/s 133A of the Act was conducted at B-
23, 25 Kailash Colony, New Delhi and at corporate office at C-165, Ramprastha
Colony, Ghaziabad. Therefore, when there was no search at the premises of the
assessee at B-23, 25 Kailash Colony, New Delhi, u/s 132(1) of the Act as there is no
Panchnama other than the Panchnama prepared u/s 133A, therefore, the Assessing
Officer could not have completed the assessment u/s 153A/143(3). He submitted that
during the appellate proceedings before the CIT(A), the assessee has challenged the
6
ITA Nos.3245, 3248 & 3250/Del/2013
validity of the assessment order u/s 153A as there was no search u/s 132(1) of the Act
on any of the business premises of the assessee company and only survey proceedings
u/s 133A of the Act was conducted. However, the ld.CIT(A) without any valid
reasons, has upheld the action of the Assessing Officer.
7.1 Referring to the decision of the Delhi Bench of the Tribunal in the case of ACIT
vs. Sarvmangalam Builders & Developers Pvt. Ltd., vide ITA No.196 to 198/Del/2011
and vice versa, he submitted that the Tribunal has held that since no search was
conducted in the premises of the assessee and the search conducted on the premises
not owned by the assessee therefore the proceedings u/s 153A of the Act are invalid
and bad in law. He submitted that the above decision of the Tribunal has been upheld
by the Delhi High Court vide ITA 943 to 945/2015. He also relied on various other
decisions filed in the paper book and submitted that when there is no search took place
and only survey u/s 133A was conducted, the assessment u/s 153A/143(3) is invalid,
illegal and void ab initio.
7.2 So far as the merit of the case is concerned, he submitted that the audit report as
mentioned by the Assessing Officer is only a draft audit report without any signature
which was found during the course of the survey. He submitted that the original
assessment u/s 143(3) was completed before the survey took place, therefore, that
assessment order can be disturbed only when some incriminating material or
document is found or comes to the notice of the Assessing Officer. He submitted that
the draft audit report cannot be called as an incriminating document at all because it is
7
ITA Nos.3245, 3248 & 3250/Del/2013
an unsigned document or audit report and, therefore, much credence cannot be given
to the same. Referring to page 129 of the paper book, he submitted that the auditors
M/s K.C. Jain & Co. has written to the directors of Ramprastha Builders Pvt. Ltd. that
it is only a draft report and they have asked for the comments on the same. He
accordingly submitted that the draft audit report cannot be called as incriminating
material. Otherwise also, the ld. counsel for the assessee submitted that the audit report
was found and seized during the course of survey u/s 133A of the Act on the corporate
office of the assessee situated at C-165, Ramprastha Colony, Ghaziabad. Referring to
page 108 of the paper book, he submitted that as per the petition filed by Shri Balwant
Singh, Director, on behalf of the RBPL, it is mentioned therein that a total sum of Rs.1
crore has been paid to the said trust the details of which are as under:-
Cheque No./Pay Order Date Amount (Rs.)
898503 (Cheque) 27/01/2005 5,000,000
589557 (Pay Order) 27/01/2005 1,000,000
589558 (Pay Order) 27/01/2005 1,000,000
589559 (Pay Order) 27/01/2005 1,000,000
589560 (Pay Order) 27/01/2005 1,000,000
589561 (Pay Order) 27/01/2005 1,000,000
8. The above amount of Rs.50 lakhs paid by five pay orders has not been found to
be recorded in the books of account of RBPL. Referring to the audit report, he
submitted that neither any document has been seized during the course of survey
which incorporates such details nor the draft audit report explains from which
8
ITA Nos.3245, 3248 & 3250/Del/2013
document the said details were procured. He accordingly submitted that both legally as
well as factually the addition is not sustainable.
9. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He
submitted that the name of the assessee is appearing in the warrant of authorization u/s
132 of the Act. As per the Panchnama prepared after execution of search warrant at
the premises 7/27, South Patel Nagar, New Delhi, the name of the appellant is not
appearing in the Panchnama. He submitted that the statement of the director was
recorded u/s 132(4) with respect to all group concerns including the assessee wherein
he surrendered the undisclosed income of Rs.52 crores in various entities including the
assessee. Survey action u/s 133A has been conducted at the other premises of the
assessee. Therefore, it cannot be said that no search has taken place in the case of the
assessee. Further, the issue of validity of search was never raised in the assessment
proceedings. Referring to various decisions, he submitted that the assessee just wants
to scuttle the search proceedings by creating a technical issue which cannot be
considered at this stage. He submitted that the draft audit report was found during the
course of survey where the auditors have mentioned regarding the payment of Rs.50
lakhs made to the Trust for purchase of land. The above land is not reflected in the
books of account of the assessee, therefore, when the assessee was unable to explain
the source of such payment, the addition made u/s 68 of the Act of Rs.50 lakhs by the
Assessing Officer and upheld by the CIT(A) is fully justified in the facts and
circumstances of the case.
9
ITA Nos.3245, 3248 & 3250/Del/2013
10. We have considered the rival arguments made by both the sides and perused the
orders of the authorities below. We find when the appeals for assessment years 2004-
05, 2006-07 and 2008-09 were argued by the counsel for the assessee before the
Tribunal, it was argued that the additions made in the assessment without having any
reference to any incriminating material seized during the course of search, such
additions cannot be sustained. Once the assessee has argued before the Tribunal that
no incriminating material was found during the course of search, no addition can be
made for which it got relief. Now it cannot backtrack and say that no search has taken
place in the case of the assessee and only survey action was conducted u/s 153A. We,
therefore, dismiss the legal ground raised by the assessee challenging the validity of
assessment framed u/s 153A/143(3).
11. So far as the merit of the case is concerned, no doubt, the same is made on the
basis of a draft verification report. We find some force in the argument of the ld.
counsel for the assessee that it is not understood as to from where the auditors got
these figures and they have not explained from which document the said details were
procured. No such document was also seized during the course of search which
incorporates such details. The auditors have simply asked for some comments from
the assessee. However, what comments were given by the assessee was neither found
in the draft audit report nor the Assessing Officer asked during the course of
assessment proceedings regarding the comments of the assessee. It is also pertinent to
mention here that during the course of assessment proceedings, the assessee had
10
ITA Nos.3245, 3248 & 3250/Del/2013
submitted that he had obtained certain amount from others which was given to the
trust towards purchase of land and journal entries could not be passed. Since such
details were not provided during the course of assessment proceedings, the Assessing
Officer made addition u/s 68 of the IT Act which has been upheld by the CIT(A).
Considering the totality of the facts of the case and in the interest of justice, we deem
it proper to restore the issue to the file of the Assessing Officer with a direction to give
an opportunity to the assessee to substantiate the source of the amount of Rs.50 lakhs
paid as advance towards purchase of land. The Assessing Officer shall decide the
issue as per fact and law, after giving due opportunity of being heard to the assessee.
We hold and direct accordingly. The grounds on merit are accordingly allowed for
statistical pruposes.
ITA No.3248/Del/2013 (A.Y. 2009-10)
12. The grounds raised by the assessee are as under:-
"1. That the learned CIT(A) erred in upholding the validity of the
Assessment Order passed u/s 153A/143(3) of the Act in spite of the fact that no
search u/s132(1) of the Act was initiated on the appellant or documents or any
assets of the appellant were requisitioned u/s 132A of the Act
Without Prejudice to Ground No.1 above,
2. That the Learned CIT(A) erred in upholding addition of Rs.8,94,487/-
(actual total of different amounts mentioned in the assessment order comes to
Rs.4,40,012/-) in spite of the fact that no incriminating document has been seized
u/s 132(1) of the Act and the documents relied by the Assessing Officer for
making addition in the Assessment u/s 153A/143(3) of the Act, were duly
accounted for in the regular books of accounts.
3. That the Learned CIT(A) erred in upholding the contentions of
Assessing Officer for challenging the genuineness of the various liabilities
11
ITA Nos.3245, 3248 & 3250/Del/2013
amounting to Rs.8,94,487/- (Actual total of different amounts mentioned is the
Assessment order comes to Rs.4,40,012/-) shown under the head "Current
Liabilities" by the appellant as the said amounts were received in the preceding
years.
4. Without prejudice to ground No.2 &3, that the ld. CIT(A) erred in not
giving relief even in relation to arithmetical error of addition of Rs.8,94,487/- in
place of Rs.4,40,012/- (actual total of different amounts mentioned in the
Assessment Order comes to Rs.4,40,012/-)
5. That the Learned CIT(A) erred in upholding the Assessment u/s
153A/143(3) of the Act without giving reasonable opportunity of being heard to
the appellant.
6. That there was no justification for levying of interest u/s 234A and 234B
of the Act on the facts and circumstances of the case and as per Law.
7. Without prejudice to the Ground No. 6, interest u/s 234A and 234B of
the Act has been wrongly calculated as the starting date for calculation should
have been the date of Intimation Order 143(1) of the Act. The credit for the tax
paid has been given only for Rs.2,14,22,938/- against Rs.2,28,75,485/- paid by
the assessee.
8. That the appellant craves leave to add to, alter, amend, modify,
substitute, delete and/or rescind all or any of the Grounds of Appeal on/or before
the final hearing.
9. That the Orders of the Assessing Officer & CIT(Appeals) are not based
on the facts of the case & as per law and hence additions sustained by the
CIT(Appeals) are totally illegal and not based on binding judicial precedents."
13. So far as ground of appeal No.1 is concerned, the same is inter-connected to the
ground raised in assessment year 2005-06. We have already decided the issue against
the assessee. Following the same reasoning, this ground raised by the assessee is
dismissed.
14. So far as the second ground is concerned, i.e., the addition of Rs.8,94,487/- is
concerned, it is the case of the ld. counsel that there is a calculation error. We,
12
ITA Nos.3245, 3248 & 3250/Del/2013
therefore, restore this issue to the file of the Assessing Officer with a direction to
verify the arithmetical error in addition and pass suitable order. Needless to say, the
Assessing Officer shall decide the issue after affording a reasonable opportunity of
being heard to the assessee and decide the issue as per fact and law. So far as levy of
interest u/s 234A and 234B is concerned, it is the case of the ld. counsel for the
assessee that there is some calculation error and less credit of tax. We, therefore,
deem it proper to restore this issue also to the file of the Assessing Officer with a
direction to verify the correctness of the interest calculation after giving due
opportunity of being heard to the assessee. The grounds raised by the assessee are
accordingly partly allowed for statistical purposes.
ITA No.3250/Del/2013 (A.Y. 2010-11)
15. The grounds raised by the assessee are as under:-
"1. That the learned CIT(A) erred in upholding the validity of the
Assessment Order passed u/s 143(3) of the Act in accordance with Section 153B
of the Act in spite of the fact that no search u/s132(1) of the Act was initiated on
the appellant or documents or any assets of the appellant were requisitioned u/s
132A of the Act
Without Prejudice to Ground No.1 above,
2. That there was no justification for levying of interest u/s 234B of the Act
on the facts and circumstances of the case and as per Law.
3. Without prejudice to the Ground No. 2, interest u/s 234A and 234B of
the Act has been wrongly calculated as credit of seized cash of Rs.50 lacs which
was to be adjusted as advance tax as requested by the appellant was not
considered.
4. Without prejudice to ground No.3 above, that the ld. CIT(A) erred in
not adjudicating ground of appeal wherein the appellant was aggrieved as the
Assessing Officer erred in not providing credit for the tax paid against
13
ITA Nos.3245, 3248 & 3250/Del/2013
Rs.2,11,95,392/- (including Rs.50,00,000/-) seized by the search party for which
adjustment for advance tax was made by the assessee.
5. That the appellant craves leave to add to, alter, amend, modify,
substitute, delete and/or rescind all or any of the Grounds of Appeal on/or before
the final hearing.
6. That the Orders of the Assessing Officer & CIT(Appeals) are not based
on the facts of the case & as per law and hence additions sustained by the
CIT(Appeals) are totally illegal and not based on binding judicial precedents."
16. The ld. counsel for the assessee did not press ground Nos.1, 2 and 3 for which
ld. DR has no objection. Accordingly, these grounds are dismissed.
17. So far as ground No.4 is concerned, it is the grievance of the assessee that credit
for tax paid against Rs.2,11,95,392/- seized by the search party was not treated as
advance tax. In view of the CBDT Circular issued on 12th June, 2017 and decision of
various High Courts as well as the coordinate Benches of the Tribunal whenever any
amount is seized during the course of search and the assessee moves an application for
treating such amount seized as payment towards advance tax, the same has to be
considered as tax paid by the assessee as advance tax from the date of making such
application. Since, in the instant case, the assessee has moved an application for
treating the seized cash as payment towards advance tax, therefore, we are of the
considered opinion that the grievance of the assessee is justified. We find the
ld.CIT(A) has not adjudicated this ground although specifically raised before him.
We, therefore, deem it appropriate to restore this issue to the file of the CIT(A) with a
direction to decide the issue as per fact and law, after giving due opportunity of being
14
ITA Nos.3245, 3248 & 3250/Del/2013
heard to the assessee. We hold and direct accordingly. The grounds raised by the
assessee are accordingly partly allowed for statistical purposes.
18. In the result, all the three appeals filed by the assessee are partly allowed for
statistical purposes.
The decision was pronounced in the open court on 07.05.2019.
Sd/- Sd/-
(SUCHITRA KAMBLE) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 07th May, 2019
dk
Copy forwarded to :
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asstt. Registrar, ITAT, New Delhi
15
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