Pr. Commissioner Of Income Tax Central-2, Newdelhi v. Subhash Khattar

$~ 15 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 60/2017 PR. COMMISSIONER OF INCOME TAX CENTRAL-2, NEWDELHI..... AppellantThrough:Mr. Asheesh Jain, Sr. StandingCousel with Mr. Vikrant A.Maheshwari, Advocate. versus SUBHASH KHATTAR..... RespondentThrough:Mr. Salil Aggarwal with Mr. MadhurAggarwal, Advocate. CORAM:JUSTICE S.MURALIDHARJUSTICE PRATHIBA M. SINGH O R D E R%25.07.2017 1. This is an appeal filed by the Revenue under Section 260A of the IncomeTax Act, 1961 (‘Act’) against the order dated 30[th]June, 2016 passed by theIncome Tax Appellate Tribunal (‘ITAT’) in ITA No. 902/Del/2015 for theAssessment Year (‘AY’) 2006-07. 2. While admitting the appeal on 7[th]February, 2017, this Court framed thefollowing question of law: "Did the Income Tax Appellate Tribunal (ITAT)fall into error in holding that the additions madeunder Section 153A read with Section 143(3) of theIncome Tax Act, 1961 in the circumstances of thecase, were not justified and supportable in law? " 3. The facts leading to the filing of the present appeal are that a search took ITA 60/2017 place on 17[th]August, 2011 in the corporate office of AEZ Group at 301-303,Bakshi House, Nehru Place, New Delhi during which a hard disc was foundand seized from which, a print out of a file named “D.P. CorrectionSheet.xls” was taken. This sheet contained details of Sales Status oflndirapuram Habitant Centre and at serial No. 32 of the said sheet, the nameof the Assessee appeared. According to the Revenue, the Assessee hadinvested a sum of Rs. 20 crores. Therefore, on 10[th]February, 2012, a searchoperation was undertaken under Section 132 of the Act in the case of theAssessee. There is no dispute that this search did not result in the discoveryof any incriminating material qua the Assessee. 4. The case of the Revenue is that on 21[st]February, 2012 a letter was writtento the AO by the Authorized Representative of the Assessee inter aliastating that: “To the best of our assessee knowledge andrecords, the assessee have not made any cashpayment in the project of M/s Aerens Group. However to avoid any litigation/duress and to buypeace of mind the assessee state that the payment toM/s Aerens group payment have been made asreflected in the books of accounts Paper shown.” 5. Thereafter, on 29[th]October, 2013, a notice was issued to the Assesseeunder Section 153A of the Act. In compliance thereof, the Assessee filed thereturn of income which he had originally filed and which had already beenscrutinized by the AO under Section 143 (3) of the Act for the AY inquestion i.e. AY 2006-07. By the assessment order dated 27[th]March, 2014,the AO came to the conclusion that the Assessee had failed to explain the ITA 60/2017 Page 2 of 4 nature and the source of the investment made in cash and, consequently,added the sum of Rs.3.21 Crores to the Return Income. 6. The Assessee went in appeal before the Commissioner of Income Tax(Appeals) who dismissed it by an order dated 27[th]November, 2014. Afurther appeal was filed by the Assessee before the ITAT. The ITAT, interalia, found substance in the contention of the Assessee that the assessmentunder Section 153(A) of the Act, in the absence of any incriminatingmaterial found during the search on the premises of the Assessee was notsustainable in law. Reliance was placed on the decision of this Court inCommissioner of Income Tax v. Kabul Chawla, [2016] 380 ITR 573. ITA 60/2017 Page 2 of 4 nature and the source of the investment made in cash and, consequently,added the sum of Rs.3.21 Crores to the Return Income. 6. The Assessee went in appeal before the Commissioner of Income Tax(Appeals) who dismissed it by an order dated 27[th]November, 2014. Afurther appeal was filed by the Assessee before the ITAT. The ITAT, interalia, found substance in the contention of the Assessee that the assessmentunder Section 153(A) of the Act, in the absence of any incriminatingmaterial found during the search on the premises of the Assessee was notsustainable in law. Reliance was placed on the decision of this Court inCommissioner of Income Tax v. Kabul Chawla, [2016] 380 ITR 573. 7. A question was posed to the learned counsel for the Revenue whether inthe present case anything incriminating has been found when the premises ofthe Assessee was searched. The answer was in the negative. The entire caseagainst the Assessee was based on what was found during the search of thepremises of the AEZ Group. It is thus apparent on the face of it, that thenotice to the Assessee under Section 153A of the Act was misconceivedsince the so-called incriminating material was not found during the search ofthe Assessee's premises. The Revenue could have proceeded against theAssessee on the basis of the documents discovered under any otherprovision of law, but certainly, not under Section 153A. This goes to theroot of the matter. 8. Consequently, the impugned order of the ITAT calls for no interference ofthis Court. The question framed by this Court on 7[th]February, 2017 is ITA 60/2017Page 3 of 4 answered in negative, that is, in favour of the Assessee and against theRevenue. 9. The appeal is accordingly dismissed. S.MURALIDHAR, J JULY 25, 2017srb PRATHIBA M. SINGH, J ITA 60/2017