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2016 (8) TMI 53 - ITAT DELHI

2016 (8) TMI 53 - ITAT DELHI - TMI - Unexplained purchase u/s 69C - unexplained purchases - admission of additional grounds - Held that:- No incriminating material belonging to the assessee was seized and in both the cases additions were made for unexplained purchases under section 69C of the Act on the basis of the statement of third-party recorded subsequent to the search. - Thus, respectfully following the judgment of the Hon’ble Jurisdictional High Court in the cases of R.R.J. Securities .....

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- Dated:- 27-7-2016 - Sh. H. S. Sidhu, Judicial Member And Sh. O. P. Kant, Accountant Member Department by Smt. Renuka Jain Gupta, CIT (DR) Assessee by Sh. Anil Jain, Adv. ORDER Per Bench These six appeals of the Revenue and the six cross objections of the assessee are emanated from the common order of the learned Commissioner of Income-tax (Appeals)-II, Delhi, dated 24/11/2011 for assessment year 2003-04 to assessment year 2008-09 respectively. In these appeals of the Revenue and assessee s cro .....

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33,03,880/- made on account of unexplained purchase u/s 69C of the I.T. Act. 2. That the learned CIT(A) erred in law and on facts of the case in accepting the transaction made in cash by the assessee company regarding sale and purchase. 3. That the learned CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 3,81,596/- made on account of expenses and depreciation. 4. That the learned CIT(A) erred in law and on facts of the case in holding that the statement of various .....

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oss objection C.O. No. 80/Del/2012 are only reproduced as under: 1. That in view of the facts & circumstances of the case and in law the CIT (A) has erred in not holding that the notice issued U/s 153C and the assessment order passed U/s 153C/143(3) are illegal, bad in law, without jurisdiction and barred by time limitation. 2. That the documents found during search proceedings, as referred to in the satisfaction note, do not belong to assessee as the same were part of working papers of the .....

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law & without jurisdiction. 4. That in view of the facts & circumstances of the case the CIT (A) has erred on facts and in law in holding that the assessment has been framed in conformity with statutory provision of Section 153C r/w Section 153 A of the Act. 5. That in view of the facts and circumstances of the case the CIT(A) has erred in facts and on law in upholding the validity of assessment particularly when the seized document were never handed over to the A.O. who framed the asses .....

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to be quashed. 7. That the respondent reserves the right to add/amend/alter the grounds of cross objection. 4. The Revenue also filed additional grounds in all the appeals in ITA Nos. 559 to 564/Del/2012 in respect of assessment year 2003-04 to 2008-09, which are identical, therefore, for the sake of brevity we are only reproducing the additional grounds in ITA No. 559/Del/2012 in respect of assessment year 2003-04 as follows: i. The Ld. CIT(A) has erred in law and on the facts and circumstances .....

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) of the Income Tax Act, 1961. In the case the assessee had received order on 31/12/2010 and thereby was required to file appeal on or before 30/01/2011 and it has filed appeal on 31/01/2011 which was beyond the prescribed period. iii. The appellant craves to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 5. The facts in brief of the case in respect of assessment year 2003-04, are that a search action under section 132 of the .....

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ncome Tax-III, New Delhi, passed under section 127 of the Act on 21/10/2009. A notice under section 153C r.w.s 153A of the Act was issued on 10/09/2010 requiring the assessee to file the return of income within 15 days of service of the notice. The case was subsequently transferred to ACIT, Central Circle-21, New Delhi, by an order under section 127 of the Act of the Commissioner of Income Tax (Central) dated 19/10/2010. In response to the notice issued under section 153C r.w.s. 153A of the Act, .....

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f Income-tax (Appeals) decided the legal grounds against the assessee, whereas on merit decided the appeal in favour of the assessee. Aggrieved with the impugned order, both the Revenue and the assessee are before the Tribunal raising the grounds of appeal and cross objections respectively as reproduced above. 6. First, we proceed to decide the admissibility of the additional ground. 6.1 The learned Commissioner of Income Tax (Departmental Representative) submitted that issue involved in grounds .....

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not be admitted. 6.2 We have heard the rival submissions on the issue of admissibility of the additional grounds. We find that the issue raised in additional grounds are purely legal in nature and no further examination of fact is required. It is settled law that legal ground can be raised at any stage of appellate proceedings in view of the finding of the Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs. Commissioner of Income Tax, reported in 229 ITR 383, therefo .....

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Departmental Representative) further submitted that order of the learned Commissioner of Income Tax(Appeals) was bad in law as the appeal of the assessee was defective. 7.1 On the other hand, learned Authorized Representative of the assessee relying on the decision of the Tribunal in the case of S.V.P. Builders India Ltd Vs. DCIT in ITA No. 4674/Del/2014 pronounced on 19/02/2015, wherein it is held that the right of appeal is a substantive right and the procedural issue cannot take away the subs .....

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ntentions heard. On a careful consideration of the facts and circumstances of the case, a perusal of the papers on record and the orders of the authorities below, as well as case laws cited, we hold as follows:- * The first objection of the ld. DR is that the statements of facts have not been filed by the assessee, in Form No. - 35, filed before the CIT(A). The CIT(A) has not treated the forms filed before him as defective. He admitted the appeal and adjudicated the matter on merits. The order o .....

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s cannot be challenged. The right of appeal is a substantive right. Procedural issues cannot take away substantial rights of a person. This cannot be a ground for the Revenue to challenged the order of the learned CIT(A), which is in this case in favour of the Revenue. The arguments, to say the least are farfetched. Hence, we dismiss the same. 7.3 Since the present controversy has already been decided by the above decision of the Tribunal, following the above finding we dismiss the additional gr .....

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ing Saturday and Sunday, the appeal was filed on 31/01/2011 and, therefore, there was no delay in filing the appeal before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income Tax(Departmental Representative) also could not controvert the fact of 29th and 30th, January being holiday, and therefore the appeal was filed on the next working day. 8.2 We have heard the rival submissions and perused the material on record on the issue in dispute. In view of the fact tha .....

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ition. As both the parties agreed, we have heard the cross objections of the assessee, before hearing the other grounds of the appeal of the Revenue. 10. In cross objections before us, the assessee has raised legal ground which challenges the jurisdiction of the Assessing Officer in making additions in the assessments completed under section 153C r.w.s. 153A of the Act. 10.1 Before us, the learned Authorized Representative of the assessee addressing the ground No. 3 of the cross objections submi .....

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the basis of the statement of a third-party, which was not recorded during the course of search proceedings, and therefore no addition could be made in respect of purchases which were already appearing in books of accounts of the assessee company. 10.2 On the other hand, the learned Commissioner of Income Tax (Departmental Representative), relying on the orders of the lower authorities, vehemently argued that contention of the learned Authorized Representative that no incriminating material was .....

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lso the material relying on which completed assessment could have been interfered with by the Assessing Officer while making the assessment under section 153A of the Act. 10.3 We have heard the rival submissions and perused the material on record including the paper book of the assessee. The issue in dispute in the cross objection in ground No. 3 raised by the assessee is that no incriminating material was found in the course of search belonging to the assessee and, therefore, no addition could .....

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Uttam Nagar, New Delhi, PAN : AAICS9275Q for A.Y. 2003-04 to 2008-09. 08.09.2010 In the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra, M/s. Madhusudan Buildcon Pvt. Ltd., search & seizure took place u/s 132 on 30.10.2008. The undersigned is the jurisdictional Assessing Officer of these cases. During the course of search & seizure documents/papers page 89 to 189 of annexure A-31, seized by party R-2, are found to belong to M/s Sunkan Travels Pvt. Ltd., Aq-1-82, 2nd Floor, Hastsal Road, U .....

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paper book, the assessee was asked to explain about the pages 89-189 of Annexure-31 on the basis of which proceedings under section 153C were initiated. It was explained by the assessee in its submission dated 22/11/2010, which is available at page-9 of the assessee s paper book, that the seized documents contained cheque books of the assessee company in respect of bank account maintained in the Centurian Bank of Punjab Ltd, Green Park, New Delhi (now known as HDFC bank Ltd ) and the said bank .....

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nder section 69C has been made on the statement of Sh. Rajiv Khurana, Director of M/s Indu Surveyors and Loss Assessor, which was recorded in post search proceedings by the Investigation Wings. The relevant findings of the Assessing officer are reproduced as under: 6. During the current year the assessee has purchased, textile goods of ₹ 33,03,880/- and has made sales of ₹ 37,25,270/- The assessee was directed to prove its trading activities and to produce sale tax records. The asses .....

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sh/cheque purchases of ₹ 33,03,880/-. Assessee company has also stated that it did not maintain any bank account during the year and the assessee deals with tax free goods only there is no necessity for it to file sales tax return. The post search enquiries conducted by the Investigation Wing from the address of the assessee has indicated that atleast 4 no. of concerns connected with the Thapar Group were declared as operating from the address, 1/82, 2nd Floor, Hastsal Road, Uttam Nagar, N .....

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has idea about your investment in the Thapar Group of Companies? Ans. Sh. Anup Grover has an idea about my investment in the Thapar Group 0f Companies who is an Accountant in the M/s Bhupesh Kumar Dhingra and Co. Q.18. Do you have an idea that you have made any investment in M/s Thapar Group of Companies during last six years? Please clarify the same? Ans. I have totally no idea that how much amount I have invested during last six years with M/s Thapar Group of Companies. All my books of accoun .....

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d the premises are not commercial premises. The investigation wing has also reported that no evidence of stock was found from any other premises of the Thapar Homes Group. During the course of assessment proceedings the assessee has claimed that the assessee had a godown at Khasra No. 34/7, Village Dera Mandi, Tehsil Mehrauli, New Delhi. The claim is nonverifiable due to lapse of so many years. Most of the concerns of Thapar group have sought to declare this premises as their godown but no such .....

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ompany in these products. Shawls are purchased and sold in pieces and rest other items are sold in meters. It is further seen that the purchases & sales are within M/s Thapar Homes Group of cases. In inventories of fabric & Textile Goods shown in the balance sheet the closing stock of last year stands at ₹ 4,04,85,052/-. This year the figure is ₹ 4,04,72,632/- which us almost the same. Therefore, purchases & sales are only out of current year "transactions" whic .....

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7; 33,03,880/- is disallowed. (The opening stock is of the period before the block period of section 153C). Penalty proceedings u/s 271(c) are being initiated for furnishing inaccurate particulars of income. Since, all the cash purchases of ₹ 33,03,880/- are bogus and are brought to tax as unaccounted expenditure u/s 69C of the IT Act, no further addition is made u/s 40A(3) of the IT Act since the entire amount of cash purchases is brought to tax. 10.5 In the course of hearing before us, a .....

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material was unearthed during the search, no additions could have been made to the income already assessed. The Hon ble High Court considered all the decisions/judgments of the other High Court on the issue in dispute and summarized the legal position as under: Summary of the legal position 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 .....

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ect 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 aforementioned 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 . iv. Although Section 153 A does not say that additions should be strictly made on the ba .....

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ssment 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 shall be made separately for each AY on the basis of the findings of the search and any other material existing or b .....

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ssessee has been found during the course of search and the assessment has been only made on the basis of statement of a third-party recorded subsequent to the search proceeding. The learned Commissioner of Income Tax(Departmental Representative) referred to para 37(iv) of the judgment of the Hon ble High Court in the case of Kabul Chawla (supra) and submitted that post search material has also been considered by the Hon ble High Court along with the evidences found in the course of search for th .....

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books belonging to the assessee found during the course of search at the premises of Sh. B.K. Dhingra, Smt Poonam Dhingra and M/s Madhusudhan Buildcon Private Limited. In the instant case of assessee also, proceedings u/s 153C have been initiated on the basis of cheque books of the assessee found during the course of search at the premises of Sh. B.K. Dhingra, Smt Poonam Dhingra and M/s. Madhusudhan Buildcon Private Limited. In the case of said assessee also, purchases were held as unexplained .....

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f Kabul Chawla (supra) and judgment in the case of SSP Aviation 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 provision 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 .....

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Section 153C of the Act. 39. In view of the above, the third question framed, whether the proceedings under Section 153C of the Act could be initiated against the Assessee, is answered in favour of the Assessee and against the Revenue. 10.9 The facts and circumstances of the above case are identical to the case in hand as in both the cases no incriminating material belonging to the assessee was seized and in both the cases additions were made for unexplained purchases under section 69C of the A .....

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