TMI Blog2016 (6) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... completed, then no additions could have been made to the income already assessed in the original assessment proceedings. On the basis of foregoing discussion, we are inclined to hold that the assessment orders framed by the AO u/s 153A r.w.s 143(3) of the Act for both the A.Ys and additions made therein u/s 40A(3) of the Act are bad in law and thus the same are not sustainable - Decided in favour of assessee. - ITA Nos. 5836 & 5837/Del/2013 & CO. No. 169/Del/2014, ITA Nos. 6361/Del/2013 - - - Dated:- 17-6-2016 - Chandra Mohan Garg (Judicial Member) And L. P. Sahu (Accountant Member) For the Assessee : Rakesh Gupta, Somil Aggarwal For the Revenue : Sulekha Verma, CIT DR ORDER Chandra Mohan Garg (Judicial Member) The above captioned cross appeals by the assessee as well as the Revenue and cross objections by the assessee for A.Y 2007-08 are directed against the order of the CIT(A)XXXIII, New Delhi, dated 26/07/2013 passed in first appeal No. 62/12-13/1088. The appeal of the assessee for A.Y 2008-09 has been filed against the order of the ld. CIT(A)- XXXIII, New Delhi, dated 26/07/2013 passed in first appeal No. 61/12-13/1087. Assessee s Appeal ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not sustainable. The assessee has also challenged the validity of assessment framed u/s 153A of the Act by alleging that the assessee filed original return of income for A.Y 2007-08 on 28.3.2008 and assessment order was passed u/s 143(3) of the Act on 11.12.2009 and hence assessment was not pending and same got completed on the date of search i.e. 22.3.2011. The ld. AR has mainly challenged the conclusion of the AO in paras 4 to 4.7 of the assessment order and the conclusion of the ld. CIT(A) in para 5.5 at pages 11 to 14 of the impugned order by alleging that in view of the recent decision of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Kabul Chawla dated 28.8.2015 passed in ITA No. 707/2014 and other appeals, no addition can be made in the completed assessments wherein no incriminating material has been found pertaining to the impugned additions. 4. The ld. AR has also placed reliance on the decision of the Hon'ble High Court of Bombay dated 25.2.2016 passed in writ petition No. 1753/2016 in the case of HDFC Bank Ltd, Mumbai VS. Dy. CIT and submitted that it is not open to the Tribunal to disregard the binding decision of the Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n towards Hon'ble Delhi High Court in the case of Apoorva Extrusion Pvt Ltd in ITA No. 3308/Del/2010 for A.Y 2002-03 and contended that as per section 153A of the Act, the initiation of assessment or reassessment for all six A.Ys in the case of searched person is not dependent on the findings of any incriminating material. But once notice u/s 153A of the Act has been issued, then the AO is duty bound to assess or reassess income of the person searched for all the six A.Ys as per the provisions of the Act. 7. In WS-II, the ld. CIT-DR mainly contended that the ratio of the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Kabul Chawla [supra] is not applicable as a precedent because in this case no question of law has been framed by the Hon'ble High Court. The ld. CIT-DR also contended that the judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Anil Bhatia [supra] and Filatex India Ltd [supra] has not been over ruled as this can only be done by referring to a larger Bench. Therefore, benefit of ratio of this decision in the case of Kabul Chawla [supra] cannot be extended to the assessee in the present case. The ld. CIT-DR also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as payments in question are covered under second proviso to section 40A(3) r.w.r 6DD(h) of the Rules. Therefore, by submitting this legal propositions the ld. Counsel of the assessee vehemently contended that the AO made addition on the same material which was placed alongwith original return of income without any incriminating material. Therefore, not only legal ground but on the merits the impugned addition is not sustainable. The ld. Counsel pressing the sole ground of cross objection of the assessee also pointed out that even as per the Revenue s paper book page 8, the assessee has shown closing stock of ₹ 27 crores and particulars of income as shown by the assessee for F.Y. 2006-07 were NIL and income shown for F.Y. 2007-08 as accrued to the assessee only on two sources viz. Profit on sale of investments and interest income amounting to ₹ 70,72,427/- and there was no sale of agricultural land purchased by the assessee and kept as stock in trade. The ld. Counsel also pointed out that since there was no sale during the year, the assessee has not claimed any expenditure regarding purchase of agricultural land including the impugned cash payments. Therefore, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to file returns for the six assessment years prior to the year in which the search took place. The Court clarified in para 24 as under: 24. We are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open. 21. Therefore it is clear that the decision in CIT v. Anil Kumar Bhatia (supra) does not deal with a situation where, as in the present case, no incriminating material was found during the search conducted under Section 132 of the Act. Further, on vigilant reading of summary of legal position mentioned by their Lordships, speaking for Hon'ble Jurisdictional High Court in para 37 of the decision, we respectfully note that in sub-para (iv) to (vii), has held as under: 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 a search takes place under Section 132 of the Act, notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. First of all, we may point out that the contention of the ld. DR that the earlier judgments of Hon'ble Supreme Court and Hon ble High Court have not been properly considered in the case of CIT Vs. Kabul Chawla [supra] is not sustainable and in fact, it is incorrect because from the vigilant reading of the judgment of Hon ble High Court of Delhi in the case of Kabul Chawla [supra] it is amply clear that the Hon ble High Court has considered ratio of the decisions of Hon'ble Supreme Court and Hon ble High Court in the case of CIT Vs. Ankitech pvt. Ltd [2011] 11 Taxmann Com. 100 [Del], Anil Kumar Bhatia [supra], Madugula Venu Vs. DIT [2013] 29 Taxmann 200 [Del], Chetan Das Lachman Das ITA No. 2021/2010, Filatex India Ltd [supra], Ranbaxy Laboratories Ltd. Vs. CIT [2011] 12 Taxmann.com 74 [Del], Jai Steel (India) Vs. ACIT [2013] 36 Taxmann.com 523 [Raj and judgment of Hon ble Bombay High Court dated 29.10.2010 in ITA No. 36/2009 CIT Vs. Murli Agro Products Ltd. [Bom] and judgment of Hon ble Karnataka High Court in the case of M/s Canara Housing Development Company Vs. DCIT dated 25.7.2014 in ITA No.38/2014 have been considered by their Lordships and thereafter, summar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2003) 7 SCC 197, 206 (para 23); --decision applicable to facts of the case is not to be treated as a precedent: as held in (i) National Ins. Co. Ltd. v. Swarna Singh (2004) 3 SCC 297. --observation or simply what was done in a given case, without laying down the law cannot be read as a precedent, as held in Common Cause v. Uol (2004) 5 SCC 222, 223 (para 6)}. --Judgment to be applied should not be per incuriam: as held in Mukesh K. Tripathi v. Sr. DM LIC (2004) 8 SCC 387 396 (para 23). --Judgment to be applied should not be sub silentio . as held in (i) State of UP Synthetics Chemicals (1991) 4 SCC 139 SC; (ii) Amrit Das v. State of Bihar (2000) 5 SCC 488 para 20. II The decisions being relied upon by the AR as being discussed below are the ones which were obtained by suppressing the vital fact that before the AO there was no challenge to his jurisdiction on the grounds in these case (i) that there was no incriminating material or (ii) that years in which assessment were framed were outside the purview of 6 years contemplated u/s 153C or (iii) that there was no document found which belonged to them so as to invoke 153C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther in the Satisfaction note drawn by the AO (i) Documents referred were only pertaining to AY 07-08 08- 09 (ii) Satisfaction Note did not show any denial qua documents on the part of the party subjected to 132. (iii) Satisfaction Note does not show any satisfaction recorded in the case of party subjected to 132. (iii) Kurele Paper Mils P. Ltd. (Delhi High Courtorder dated 06-07-2015) (iv) Jasjit Singh (Delhi High Court in ITA No. 337 / 2015 ) (v) GRG Steel P. Ltd. (Delhi High Court order dated 04-08-2013) (vi) Vrindavan Farms P. Ltd. (Delhi High Court order 12-08-2015) These are not applicable as in these cases neither question of law was formulated nor answered and for this reliance is placed on (i) K.L. Manhas { W.P.(c) No. 4079/2013} in para 9 holding that mere prima facie observation of the Court, not dealing with the issue on merits, does not constitute a binding precedent. (ii) Mehboob Dawood Sheikh v. State of Maharashtra (2004) 2 SCC 362 para 12 (iii) Satwant Singh v. State of Punjab v. {194 ITR 434 SC)} -where it was held that a decision is available as precedent only if it decides a question of law. (vii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not referable to search finding. (vi) Unlike Kabul Chawla s case where there was no search material, in the present appeals (as seen from AO s order) there was material in the shape of statements recorded u/s 132(4) during the search and also the other material collected during the currency of the search itself. (ix) Kusum Gupta Delhi HC: Cannot be relied upon because (a) Here in this case no Substantial Question of Law was formulated as required u/s 260A. (b) It just follows its judgment in Kabul Chawla(which is shown to be not applicable in this note). (x) Pepsico India Holdings P Ltd f 370 ITR 29'i Delhi High Court). As already submitted in para 2.2(page 5 of Written Note) the above decision was given in a Writ and was fundamentally on facts where the High Court found no documents to be belonging to the petitioner. Judgment being on facts, concession and also for the reason that this neither shows as to what all questions of law were raised nor formulates substantial questions of its own, is not available to be used as a binding precedent. (i) DSL Properties Delhi Trib; (ii) RL Allied Industries {167 TTT 201; (iii) Chain R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bhatia which were accepted to be obiter but strangely stilled relied on them in adjudication without appreciating that these observations did not carry precedential value. (c) Adjudication that addition is not the result of incriminating document. travel beyond the grounds raised. (d) Objection not raised within section 124 time. (xviii) Lakshmi Singh { 68 SOT 26}: Not applicable for the reasons given in case of Sunita Bai above, (xix) Natural Products Tech {15 3 ITD s8{ : Not applicable because; (a) Before ITAT only two relevant grounds were that (i) order is not based on incriminating material and (ii) order is without jurisdiction; and relief given in view of ratio decidendi in Pepsi Holdings without appreciating that there was no ratio there because this decision was just on peculiar facts. (b) Here in the present appeals additions/order is based upon incriminating material being Statements recorded u/s 132(4) of the Entry Operator and also of Ashok Minda. (c) DSL Properties decision of Delhi ITAT relied was not available as a precedent. (d) Runs contrary to SSP Aviations (Delhi High Court) where too similar Satisfaction was involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra of judgments in assessee s favour a feeble and valiant attempt has been made to upset the entire jurisprudence settled by the Hon'ble Supreme Court, various Hon'ble High Court including the Hon'ble Jurisdictional High Court of Delhi. There is a commonality in the arguments of the ld. CIT-DR that all these decisions have been rendered on alleged and suggested suppression of crucial and vital facts contrary to assessee has withheld that jurisdiction is not alleged before the AO. On this ground, the ld. CIT-DR has painfully argued that all the precedents on given issue are distinguishable on this ground. We are of the consistent view that at multiple occasions it has been consistently and repeatedly held that the issue relating to jurisdiction of the AO can be raised at any stage even in collateral proceedings because the same strikes at the root of the matter. We are reminded of the classical and land mark decision of the Hon'ble Supreme Court [Four Judges Bench] in the case of Raja Textiles Ltd VS. ITO 87 ITR 539 wherein it was held that : It was contended by Mr. Manchanda, the learned Counsel for the revenue, that the appellant had a right of appeal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent; but all through he never forgets what he owes to himself and to others. He will not knowingly misstate the law- he will not wilfully misstate the facts, though it be to gain the cause for his client. He will ever bear in mind that if he be the advocate of an individual, and retained and remunerated (often inadequately) for his valuable services, yet he has a prior and perpetual retainer on behalf of truth and justice; and there is no Crown or other licence which in any case, or for any party or purpose, can discharge him from that primary and paramount retainer. (Emphasis supplied) 37. At this stage, it is necessary and relevant to respectfully remind the preposition laid down by the Hon'ble Supreme Court in the case of ACCE VS. Dunlop India Ltd [1985] 154 ITR 172 [SC] that the judgments/orders of the Hon'ble Supreme Court/Hon'ble High Court have binding effect on the Tribunal and the orders of the Tribunal have persuasive value or effect on the other Benches of the Tribunal. Speaking for the Hon'ble Supreme Court of India, their Lordships held that the judicial system only works if someone is allowed to have the last word and the last word, once sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot based on any incriminating material found during the course of search, or post search material or information available with the AO which can be related to the evidence found during the course of search. Therefore, we safely observe that the additions have been made on the basis of same documents and material which were placed during the original assessment proceedings and these additions are not based on any incriminating material found and seized during the course of search or any other post search material or evidence found or unearthed by the AO during the post search investigation and enquiry. 18. In view of summary of legal position laid down by their Lordships in the case of Kabul Chawla [supra], speaking for Hon ble High Court of Delhi, it is amply clear that once search takes place u/s 132 of the Act, notice u/s 153A of the Act will have to be mandatorily issued to the person searched requiring him to file returns for six A.Ys immediately preceding the previous year relevant to the A.Y in which the search takes place; assessment and reassessment pending on the date of search shall abate and total income for such A.Ys will have to be computed by the AO as a fresh exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically analyse the facts and circumstances of the present case in light of rival contentions of both the sides, then undisputedly and admittedly, assessment for both the A.Ys. 2007-08 and 2008-09 has been completed on the date of search, i.e before 22.3.2011 and in this situation, as per ratio and summarised legal position laid down by Hon ble High Court, in the case of Kabul Chawla [supra] para 37(vii) completed assessment can be interfered by the AO while making assessment u/s 153A r.w.s 143(3) of the Act only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed by the assessee or made known in the course of original assessment to the AO. Since no incriminating material pertaining to additions made by the AO u/s 40A(3) of the Act was unearthed during the course of search or requisition of documents or any subsequent post search enquiry or investigation and on the date of search assessment for both the A.Ys already stood completed, then no additions could have been made to the income already assessed in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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