Principal Commissioner Ofincome Tax (Central)-2 v. Vinita Chaurasia

Signature Not Verified $~1 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 638/2019 PRINCIPAL COMMISSIONER OFINCOME TAX (CENTRAL)-2 ..... Appellant Through:Mr Zoheb Hossain, Sr. St. CounselwithMrVipulAgrawal,Jr.St.Counsel, Mr Parth Semual, Jr. St.counsel for Income Tax Department. versus VINITA CHAURASIA ..... Respondent Through: Mr. Arta Trana Panda, Advocate. Date of decision: 22[nd]November, 2022 % CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMEET PRITAM SINGH ARORA, J (Oral): ITA 638/2019 1.Present appeal has been filed by Revenue challenging the order dated05[th]October, 2018 passed by Income Tax Appellate Tribunal (‘ITAT’) inITA No. 5957/DEL/2015 and C.O. NO. 38/DEL/2016 for the AssessmentYear (‘AY’) 2007-08. 2.Learned counsel for the Revenue states that ITAT erred in deleting theaddition of Rs.34,06,11,102/- without analysing and considering the ITA 638/2019 contents and the words of the seized document, identified in the appeal aspage no. 5 of Annexure A-1 (‘Seized Document’). He states that as per thesaid Seized Document the Vasant Square Mall was acquired by the Assesseefor Rs.32,85,37,354/- before 1[st]October 2006, which was undisclosed in theIncome Tax Return (‘ITR’) of the Assessee. He states that the ITAT erred indeleting the addition of Rs.1.20 Crores on account of receipt of rent, withoutconsidering that the amount of rent pertaining to period from 1[st]October2006 to 31[st]March 2007, was undisclosed in the ITR. He states that as perthe Seized Document, the Vasant Square Mall was in the possession of theAssessee before 01[st]October 2006 and the rent started with effect from 01[st]October 2006. 3.He states that ITAT erred in relying upon the decision of this court inthe case of Assessee for AY 2010-11. He states that the Assessment order inthe year under consideration was framed under Section 147 read with 143(3)of the Act and ITAT erred in holding that the proceedings were notmaintainable. He further, states that ITAT failed to consider that a perusal ofthe Seized Document, reveals that the Assessee had invested a sum ofRs.32,85,37,354/- with M/s Suncity Project Pvt. Ltd. before 01[st]October2006. 4.We have perused the paper book and considered the submissions ofthe learned counsel for the Revenue. The Assessment order was passed bythe Assessing Officer (‘AO’) under Section 147 read with 143(3) of the Act.The original return was filed on 31[st]July 2007 under Section 139(1) of theIncome TaxAct, 1961(‘the Act’)declaringthe total income ofRs.4,70,97,930/-. There was search and seizure operation on 29[th]April, 2008and in consequence thereof, the reassessment had been completed under ITA 638/2019 Page 2 of 6 Signature Not Verified Section 153A read with Section 143(3) of the Act at the returned income ofRs.4,70,97,930/- vide order dated 29[th]December, 2010. 5.The case of the Assessee was subjected to further scrutiny in view ofthe distinct search conducted in the case of one Mr. Lalit Modi on 19[th]June,2009 and consequently, proceedings under Section 153C of the Act wereinitiated against the Assessee and assessment was framed vide order dated29[th]December, 2011 at the total income of Rs.4,70,97,930/-. 6.Subsequently, on the basis of the Seized Document found during thesearch of Mr. Lalit Modi, the AO issued a Section 148 notice dated 28[th]March, 2014 on the basis of the satisfaction recorded. The ITAT hasreturned a finding that AO based on the seized Annexure A-1 (page no. 5)alone, without any further investigations, made additions and passed theimpugned assessment order. 7.The ITAT has held that the additions made by the AO are factuallyincorrect, illegal and arbitrary. The finding of the ITAT reads as under: 6.Subsequently, on the basis of the Seized Document found during thesearch of Mr. Lalit Modi, the AO issued a Section 148 notice dated 28[th]March, 2014 on the basis of the satisfaction recorded. The ITAT hasreturned a finding that AO based on the seized Annexure A-1 (page no. 5)alone, without any further investigations, made additions and passed theimpugned assessment order. 7.The ITAT has held that the additions made by the AO are factuallyincorrect, illegal and arbitrary. The finding of the ITAT reads as under: 7…..Further, assessment order made by the Assessing Officer isfactually incorrect and additions were made on illegal and arbitrarybasis. The Assessing Officer has not brought on record any details orevidences which could corroborate investment of a sum of Rs.32,85,37,354/- before 01-10-2006 with M/s. Suncity Project Pvt. Ltd.The entire dispute is with reference to Annexure- A-l page 5 which isin the context of purchase of property vide sale deed dtd. 13/05/2009and Assessing Officer himself has considered this annexure in A.Y.2010-11 and made addition to the extent of Rs. 19,02,68,289/-. Thisdocument has no relevance to any undisclosed income relating to yearunder reference. There is thus no case of any income escapingassessment or any tangible material which has relevance to A.Y.2007-08. Submission of revenue before the Tribunal is merely generalobservation on issue of reopening u/s. 147 and does not makereference to any details or evidence of any undisclosed incomerelating to A.Y. 2007-08. All these submission of the Ld. AR could notbe contradicted by the Revenue at the time of the hearing. Once the Signature Not Verified very same addition has been deleted in A.Y. 2010-11 by the Tribunal& confirmed by the Hon'ble Delhi High Court, there is no case for anyaction u/s. 147 in the A.Y. 2007-08. 8.The ITAT has further returned a finding of fact that the entire basis ofthe AO for making the additions to the assessable income of the Assessee isa single document i.e. page no. 5 of Annexure A-1[Seized Document]. TheITAT observed that no fresh material has been taken into account by the AOfor reopening the assessment under Section 147 of the Act. The relevantfinding of the ITAT reads as under: “….. In the present case, though there was search in case of assessee on29/04/2008 pursuant to which Assessing Officer initiated actionu/s. 153A of the Act, in the absence of any incriminating material,returned income was accepted vide assessment order u/s. 153A dtd.29/12/2010. But because of the search in case of Mr. Modi andAnnexure -1 found therein, the addition was made in the presentcase. The entire basis for making the additions to the assessableincome of the Assessee was a single document i.e., Annexure A-1.The attempt at making additions on the basis of Annexure A-1,without any further investigation on the above lines, is bound to berendered unsustainable in law. In the present case, no reason wasassigned by the Assessing Officer or any fresh material was takeninto account by the Assessing Officer for reopening the assessmentu/s 147 of the Act. The said action of the Revenue was challengedbefore the Hon'ble High Court and the Hon'ble High Court hasgiven a finding of dismissing the appeal of the Revenue therein. Thefinding of the Hon'ble High Court is applicable in the present caseand therefore, the action u/s 147 of the Act itself is notmaintainable and is quashed. Thus, appeal of the Revenue isdismissed and cross objection of the Assessee is allowed.” 9.We have also perused the judgment of this Court in ITA 1004/2015and ITA 1005/2015 in the assessee’s own case in the reassessmentproceedings undertaken under Section 153C of the Act pursuance to the ITA 638/2019 9.We have also perused the judgment of this Court in ITA 1004/2015and ITA 1005/2015 in the assessee’s own case in the reassessmentproceedings undertaken under Section 153C of the Act pursuance to the ITA 638/2019 search on Mr. Lalit Modi. We find that the Seized Document, described aspage no. 5 of Annexure A-1, was specifically deliberated upon by thelearned predecessor Division Bench and this Court has returned acategorical finding on merits to hold that the said document does not affordany ground or justification to the AO for making additions on the said basis.The relevant paragraph of judgement reads as follows: “….. 26. Turning to the document itself, Mr. Shivpuri urged that thefurther presumption in Section 292C(1)(ii) would stand attractedviz., that the contents of the document should be presumed to betrue. His submission was that the said presumptions have not beenrebutted by the Assessee and, therefore, whatever was said in thedocument should be taken to be sufficient proof of concealment ofthe income by the Assessee. 27. The Court is unable to accept the above submission of Mr.Shivpuri. The Court in this regard notices that the detailedinterrogation of Mr. Modi revealed the source of the document andthe fact that Mr. Modi was not the author of the document. Mr.Modi had suggested that it was some other broker who had givenhim the said document as a ‘proposal’. There appears to have beenno attempt made by the AO to enquire into the matter further tofind out if at all there was any such other broker who had preparedthe document. Further, there is no attempt also made to ascertainwhether the prevalent market value of the space purchased by theAssessee could at all fetch the value indicated in the documentwhich is Rs.32,85,37,354. This was too fundamental an issue to beleft un-investigated. The AO appears to have proceeded purely onconjectures as regards what the document has stated withoutnoticing the internal contradictions and inconsistencies. Forinstance, the document talks of rent payable for a period from 2006onwards where in fact even according to the Revenue the Assesseepurchased the property on 13th May, 2009. The shifting of theburden on the Assessee without making these basic enquiries tounearth the truth of the document could not have been acceptedand was rightly commented upon by the ITAT. The entire basis formaking the additions to the assessable income of the Assessee wasa single document i.e., Annexure A-1. The attempt at making-additions on the basis of Annexure A1, without any furtherinvestigation on the above lines, is bound to be renderedunsustainable in law. Signature Not Verified 28. Therefore, even as regards the merits of the additions made bythe AO, the Court funds no error having been committed by theITAT in deleting them.” (Emphasis Supplied) 10.In view of the factual finding returned by ITAT in the assessmentproceedings to the effect that no fresh material was taken into account by theAO for making additions in the present proceedings and the sole basis formaking the additions was the Seized Document, we find that the issuesraised in the present appeal are covered in favour of the assessee and againstthe Revenue by the judgment of this Court dated 18[th]May 2017. Theadditions were deleted by the Court after detailed examination of the merits.The Special leave petition filed against the said judgment also standsdismissed. We therefore find that no substantial question of law arises fromthe impugned order of the ITAT. The appeals is dismissed. MANMEET PRITAM SINGH ARORA, J MANMOHAN, J NOVEMBER 22, 2022/hp ITA 638/2019