ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "B", NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. Nos. 5430 to
5436/Del/2013
A.YRS. : 2003-04 to
2009-10
DCIT, Central Circle- VS. M/s Devi Dayal
21, Room No. 344, Petro Chemicals Pvt.
E-2, ARA Centre, Ltd.,
Jhandewalan Extn., Lane W-17A, House
New Delhi-55 No. 18, Western
Avenue, Sainik Farm
(South), New Delhi
(PAN:- AACCD2454J)
(APPELLANT) (RESPONDENT)
AND
C.O. NOS. 83 TO
88/Del/2014
(In ITA Nos. 5430 to
5435/Del/2013
A.YRS. : 2003-04 to
2008-09
M/s Devi Dayal Petro VS. DCIT, Central
Chemicals Pvt. Ltd., Circle-21, Room
Lane W-17A, House No. 344, E-2, ARA
No. 18, Western Centre,
Avenue, Sainik Farm Jhandewalan Extn.,
(South), New Delhi
New Delhi-55
(PAN:- AACCD2454J)
(APPELLANT) (RESPONDENT)
Department by : Dr. Sudha Kumari, CIT(DR)
Assessee by : Mr. Kapil Goel, Adv.
08-09-
Date of Hearing : 08-09-2014
Date of Order : ....-09-2014
....-09-
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
ORDER
BENCH:-
PER BENCH:-
These are the appeals filed by the Revenue and Cross
objections filed by the Assessee emanate out of the separate
orders passed by the Ld. CIT(A)-II, New Delhi pertaining to
respective assessment years. Since some of the issues involved
in these appeals as well as cross objections are common, we are
therefore, proceeding to dispose them off by this consolidated order
for the sake of convenience. The grounds raised in the Revenue's
appeal are more or less same except difference in the figures,
hence, we are adjudicating the Revenue's appeal with reference to
ITA No. 5430/Del/2013 (A.Y. 2003-04) and adjudicating Assessee's
Cross Objection with reference to CO No. 83/Del/2014 (A.Y. 2003-
04).
2. The grounds raised in the Revenue's appeal read as under:-
"1. That the Ld. CIT(A) erred in law and on facts of the
case in deleting the addition of Rs. 35,08,525/-
made by the Assessing Officer on account of
unexplained purchase u/s. 69C of the I.T. Act, 1961
and in directing the Assessing Officer to consider
only the addition of the peak of financial
transactions.
2. That the Ld. CIT(A) erred in law and on facts of the
case in deleting the addition of Rs. 1,64,550/- made
by the Assessing Officer by way of disallowance of
50% of expenses claimed and in directing the
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
Assessing Officer to consider only the addition of
the peak of financial transactions.
3. That the Ld. CIT(A) erred in law and on facts of the
case in deleting the addition of Rs. 98,000/- made
by the Assessing Officer on account of increase in
share capital u/s. 68 of the I.T. Act, 1961 and in
directing the Assessing Officer to consider only the
addition of the peak of financial transactions.
4. (a) The order of the Ld. CIT(A) is erroneous and
not tenable in law and on facts.
(b) The appellant craves leave to add, alter or
amend any / all of the grounds of appeal before or
during the course of the hearing of the appeal."
3. The grounds raised in the Assessee's Cross Objection read as
under:-
1. That the CIT(A) has failed to appreciate that on
the facts and circumstances of the case and the
provisions of the law, the proceedings initiated uls
153C is illegal, bad in law and without jurisdiction
and as such the assessment order passed in
consequence thereof is illegal, bad in law and
without jurisdiction, barred by limitation and against
the principle of natural justice,
2. That in view of the facts and circumstances of the
case and the provision of law the CIT(A) has erred in
law and on facts in issuing notice uls 153C and
assessment order passed by the AO is illegal, bad in
law, barred by limitation and without jurisdiction.
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
3. That the CIT(A) has failed to appreciate that
assessment framed is against the scheme of the Act
whereby the reassessment 153C in such cases is to
be confined to the additions and disallowances
consequent to the material found during the course
of the search The additions which are not based on
any incriminating material found during search are
liable to deleted.
4. That in the absence of any incriminating material
found during search, the additions made by the AO
while completing assessment uls 153C rws
153A/143(3) are unjust, arbitrary, and bad in law
and without jurisdiction.
5. That in view of the facts and circumstances of
the case CIT (A) has erred in law and on facts in
holding that the audited books and transactions
through bank notwithstanding, the book results are
required to be rejected, since the entries are
artificial, sham and not reflective of actual business
I commercial transactions.
6. That the CIT (A) has failed to appreciate that on
the facts and circumstances of the case, the various
observations and findings of the learned assessing
officer in the impugned assessment order are
irrelevant and vitiated in the law.
7. That in view of the facts and circumstances of
the case, CIT (A) has erred in law and on facts in
disregarding the purchase, the sales and the
expenses claimed by the appellant.
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
8. That on the facts and circumstances of the case
the interest charged u/s 234A and 234 B has been
wrongly and illegally charged and in any case is
highly excessive.
9. That the material available on record have
not been properly considered and judicially
interpreted and the same do not justify the addition
made.
10. That the addition made is based on mere
surmises and conjectures and the same cannot be
justified by any material on record and the same
are highly excessive.
11. That the appellant craves the right to amend,
append, delete any or all grounds of appeal."
4. Briefly stated the facts are that a search and seizure action u/s
132 of the I.T. Act, 1961 was carried out in the cases of Sh. BK
Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt.
Ltd. on 20.10.2008 and during the course of search at their
residential premises at F-6/5, Vasant Vihar, New Delhi certain
documents belonging to the assessee were seized. On the basis of
documents so found belonging to the assessee company,
proceedings were initiated in the case of the assessee company u/s.
153C read with section 153A of the I.T. Act. The case initially
centralized with the ACIT, Central Circle-17, New Delhi and
subsequently transferred to Central Circle-21 by an order dated
19.10.2010 u/s. 127 of the I.T. Act, 1961. In response to notice u/s.
153C, the assessee filed a return for assessment year 2003-04 on
8.9.2010 declaring its income. Thereafter, notices u/s. 142(1)/143(2)
dated 1.11.2010 alongwith the detailed questionnaire were issued
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
and served upon the assessee fixing the case for 10.11.2010. In
response to the notices, authorized representative attended the
assessment proceedings from time to time, furnished certain details
and books of accounts were also produced. On going through the
details filed by the assessee, the Assessing Officer assessed an
income of Rs. 37,68,450/- vide his assessment order dated
31.12.2010 passed under section 153C/ 143(3) of the I.T. Act, 1961.
5. Against the aforesaid assessment order dated 31.12.2010
passed under section 153C/143(3) of the I.T. Act, 1961, assessee
appealed before the Ld. First Appellate Authority, who vide
impugned order dated 19.7.2013 partly allowed the appeal of the
assessee.
6. Against the order dated 19.7.2013 of the Ld. CIT(A), Revenue
filed an appeal and assessee filed cross objection before us.
7. At the time of hearing, Ld. Counsel of the assessee, Sh. Kapil
Goel has stated that assessee has filed the cross objections
challenging the proceedings initiated u/s. 153C of the Income Tax
Act, 1961 being illegal, bad in law and without jurisdiction and as
such the assessment order passed in consequence thereof is illegal,
bad in law and without jurisdiction, barred by limitation and against
the principle of natural justice. Ld. Counsel of the assessee further
stated that assessment framed is against the scheme of the Act
whereby the reassessment u/s. 153C in such cases is to be confined
to the additions and disallowances consequent to the material found
during the course of the search. The additions which are not based
on any incriminating material found during search are liable to be
deleted. He also submitted that the revenue authorities have erred
in law and on facts in holding that the audited books and
transactions through bank nowithstanding, the book results are
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
required to be rejected, since the entries are artificial, sham and not
reflective of actual business / commercial transactions. Ld.
Counsel of the assessee filed a Paper Book having pages 1 t 27
containing the assessment records etc. and draw our attention
towards the Page No. 1 of the same Paper Book viz. Satisfaction
Note dated 5.7.2010 for issuing Notice u/s. 153C of the I.T. Act,
1961 to the assessee for the assessment years 2003-04 to 2008-09
and stated that documents at pages 1 to 25 of Annexure A-25
seized by the department are the cheque book which are not
related to the assessment year 2003-04 to 2008-09 and also
submitted that the same has already been accounted for in the
books of accounts by the assessee. He also draw our attention
towards the decision dated 29.3.2012 of the Hon'ble Delhi High
Court delivered in the case of SSP Aviation Ltd. vs. Deputy
Tax [2012] 346 ITR 177 (Delhi)
Commissioner of Income Tax in support
of its case. Ld. Counsel of the assessee also submitted that the
view taken by the Hon'ble High Court is fortified by the Legislative
amendment made by the Finance Act, 2014 in section 153C of the
Income tax Act, 1961. Accordingly, Ld. Counsel of the assessee
requested that the issues involve in the assessee's cross objections
and in the Revenue's appeals may be set aside to the Assessing
Officer to verify whether the seized documents mentioned in the
Satisfaction Note dated 5.7.2010 relating to the assessee on which
notice u/s. 153C has been issued to the assessee and if these
documents namely the cheques have already been accounted for in
the books of accounts of the assessee and are not relating to the
period i.e. asstt. year 2003-04 to 2008-09, then the proceedings u/s.
153C may be cancelled, otherwise, the Assessing Officer may take
action, as per law.
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
8. On the other hand, Ld. Department Representative relied upon
the order of the Assessing Officer and she oppose the request of
the assessee's counsel.
9. We have heard both the counsel and perused the records. We
have also gone through the orders of the lower authorities, Paper
Book filed by the assessee and the case law relied upon by the
assessee. We find that Ld. Counsel of the assessee filed a Paper
Book having pages 1 to 27 containing the assessment records etc.
and he drawn our attention towards the Page No. 1 of the same
Paper Book viz. Satisfaction Note dated 5.7.2010, the same is
reproduced here-below:-
"Satisfaction Note for issuing notice u/s. 153C of the I.T.
Act, 1961 in the case of M/s Devi Dayal Petro Chemicals
Pvt. Ltd., Lane W-17-A, House No. 18, Western Avenue,
Sainik Farm South, New Delhi, AACCD454J for A.Y. 2003-
04 to 2008-09.
05/7/2010 Documents at pages 1 to 25 of Annexure
A-25 seized by the Party R-2 from the
premises at F-6/5, Vasant Vihar, New
Delhi during the course of search
conducted u/s. 132 of the I.T. Act, 1961
on 20.10.2008 in the case of Sh. BK
Dhingra, Smt. Poonam Dhingra, M/s
Madhusudan Buildcon Pvt. Ltd. have
been found to belong to M/s Devi Dayal
Petro Chemicals Pvt. Ltd., Lane W-17-A,
House NO. 18, Western Avenue, Sainik
Farm South, New Delhi which has not
been covered u/s. 132 of the I.T. Act,
1961. Accordingly, in terms of provisions
of section 143C of the Act, notices u/s.
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
153C are hereby issued for the A.Y.
2003-04 to 2008--09 in the case of M/s
Devi Dayal Petro Chemicals Pvt. Ltd.. The
case was centralized in the Central
Circle-17, New Delhi vide orders dated
14.12.2009 of CIT-IV, New Delhi.
SD/-
Dated 5.7.10
DCIT, Central Circle-17, New"
9.1 It was contended by the learned counsel that the documents
mentioned by the Assessing Officer in the satisfaction note i.e.
documents at pages 1 to 25 of Annexure A-5 are only the counterfoil
of the cheque book which is duly accounted for in the books of
account. He had also contended that the counterfoil belonged to
the year 2008-09 and, therefore, the proceedings under Section
153C could not have been initiated for the years to which the
documents do not belong and even after initiating proceedings to
the year to which the documents belonged, the Assessing Officer
ought to have dropped the proceedings because all transactions
reflected by the counterfoils by the cheques is duly accounted for.
In support of this contention, he had relied upon the decision of
Hon'ble Jurisdictional High Court in the case of SSP Aviation Ltd.
346 ITR 177. At page 189 of the report in paragraph 17, their
Lordships held as under:-
"The section merely enables the Revenue authorities to
investigate into the contents of the document seized,
which belongs to a person other than the person
searched so that it can be ascertained whether the
transaction or the income embedded in the document
has been accounted for in the case of the appropriate
person. It is aimed at ensuring that income does not
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
escape assessment in the hands of any other person
merely because he has not been searched under section
132 of the Act. It is only a first step to the enquiry, which
is to follow. The Assessing Officer who has searched the
satisfaction that the document relates to a person other
than the searched person can do nothing except to
forward the document to the Assessing Officer having
jurisdiction over the other person and thereafter it is for
the Assessing Officer having jurisdiction over the other
person to follow the procedure prescribed by section
153A in an attempt to ensure that the income reflected
by the document has been accounted for by such other
person. If he is so satisfied after obtaining the returns
from such other person for the six assessment years, the
proceedings will have to be closed. If the returns filed by
the other person for the period of six years does not show
that the income reflected in the document has been
accounted for, additions will be accordingly made after
following the procedure prescribed by law and after
giving adequate opportunity of being heard to such other
person. That, in sum and substance, is the position."
9.2 Considering the facts of the case and the arguments of both
the sides, we set aside the matter to the file of the Assessing Officer
for re-examination of the issue in the light of the above decision of
Hon'ble Jurisdictional High Court i.e., the Assessing Officer will first
verify the years to which the seized documents belonged. There
would be no justification for continuation of the proceedings under
Section 153C to which the seized documents do not belong.
Therefore, the Assessing Officer will drop the proceedings initiated
under Section 153 of the years to which the seized documents do
not belong. For the year to which the seized documents belonged,
he will verify whether the transaction reflected by the seized
documents are duly accounted for in the books of account. If the
transactions are duly accounted for in the books of account, as
contended by the learned counsel, the Assessing Officer will drop
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
the proceedings initiated under Section 153C. However, if for the
year to which the seized documents belonged, the transaction
reflected by the seized documents is not recorded in the books of
account, the proceedings under Section 153C will continue and the
Assessing Officer will make the assessment afresh in accordance
with law. Since we have set aside all the years under appeal, the
Revenue's appeals on merits do not require any adjudication and
they are also deemed to be allowed for statistical purposes. The
Assessing Officer will proceed to make the assessment afresh only in
the year where proceedings under Section 153C can validly continue
in the light of the above decision of Hon'ble Jurisdictional High Court.
10. In the result, all the cross objections filed by the assessee and
all the appeals filed by the Revenue stands allowed for statistical
purposes.
Order pronounced in the Open Court 10-9-2014.
Sd/-
Sd/- Sd/-
Sd/-
AGRAWAL]
[G.D. AGRAWAL] SIDHU]
[H.S. SIDHU]
VICE PRESIDENT JUDICIAL MEMBER
Date 10/9/2014
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014
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