Case Law Details
PCIT Vs Param Dairy Ltd. (Delhi High Court)
Regular Books Of Accounts Maintained By Assessee Can Not Be Termed As Incriminating Material To Frame Assessment Under Section 153A , All Addition On Basis Of Such Material Is Therefore Invalid
The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act. It was further held that assessment for the Assessment Years 2008-2009 and 2009-2010 were completed under Section 143(3) vide orders dated 28th July, 2010 and 31st May, 2011 respectively and audited books of account were thoroughly examined and details of purchase of milk must have been scrutinized as it was part of audited financial statement of accounts; as per Kabul Chawla supra, completed assessments can be interfered only on the basis of some incriminating material unearth during the search. With respect to the Assessment Years 2010-2011 to 2012-2013, the ITAT held that though no assessment was framed under Section 143(3) but it could safely be concluded that the period of limitation for issuing a notice under Section 143(2) expired much before the date of the search; reliance was placed on Chintels India Ltd. Vs. Deputy Commissioner of Income-Tax (2017) 397 ITR 416 (Delhi) holding that once an assessee does not receive a notice under Section 143(2) of the Act within the stipulated period, such an assessee can take it that the return filed by him has become final and no scrutiny proceeding are to be undertaken with respect to that return. Appeal of the revenue is dismissed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. The appeals impugn the common order dated 19th November, 2019 of the Income Tax Appellate Tribunal (ITAT) in ITA Nos.3988 to 3992/DEL/2019 for the Assessment Years 2008-2009 to 2012-2013 preferred by the respondent assessee as well as in ITA Nos.5023 to 5027/DEL/2019 for the Assessment Years 2008-2009 to 2012-2013, preferred by the appellant Revenue.
2. Vide the impugned order, the appeals of the respondent assessee were allowed and the appeals of the appellant Revenue were dismissed.
ITA 37/2021 & ITA 41/2021 Page 1 of 4
3. The counsel for the appellant Revenue contends that a substantial question of law arises, as ITAT has expanded the scope of what was held by this Court in Commissioner of Income Tax (Central)-III Vs. Kabul Chawla (2016) 380 ITR 573 (Delhi).
4. It is argued, (i) that a search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out in the case of Param and Rama Group, on 28th February, 2014; (ii) that pursuant to search, notice under Section 153A of the Act was issued and served on the respondent assessee, asking the respondent assessee to file the return of income; (iii) that the respondent assessee responded that the return of income already filed, be treated as return filed in response to the notice under Section 153A of the Act; (iv) that the assessment order under Section 143(3) read with Section 153A of the Act was framed, after making several additions to income and other alterations; (v) that though the respondent assessee in his return of income had claimed cash payment of about Rs.17,00,00,000/- to dairy owners from whom the respondent assessee claimed to have purchased milk but during search, it was found that the said payments were not to dairy owners but to middlemen and cash payments whereto were not permitted and which led to addition of the said sum of about Rs.17,00,00,000/- to the income of the respondent assessee; (vi) that the said fact of cash payments to the middlemen emerged during the search only; (vii) that the ITAT wrongly held that since the entries of cash payments were made in the books of account, which had been subjected to audit and which audited financial statements of account were part of the return of income filed and assessment whereof stood concluded, it was not incriminating evidence found during the search; (viii) that the ITAT did not consider that the return of income filed was merely processed under Section 143(1) of the Act and was not assessed; and, (ix) that it is the settled law that processing of return of income filed and assessment of income, are two distinct things.
5. We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the ITAT. The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act. It was further held that assessment for the Assessment Years 2008-2009 and 2009-2010 were completed under Section 143(3) vide orders dated 28th July, 2010 and 31st May, 2011 respectively and audited books of account were thoroughly examined and details of purchase of milk must have been scrutinized as it was part of audited financial statement of accounts; as per Kabul Chawla supra, completed assessments can be interfered only on the basis of some incriminating material unearth during the search. With respect to the Assessment Years 2010-2011 to 2012-2013, the ITAT held that though no assessment was framed under Section 143(3) but it could safely be concluded that the period of limitation for issuing a notice under Section 143(2) expired much before the date of the search; reliance was placed on Chintels India Ltd. Vs. Deputy Commissioner of Income-Tax (2017) 397 ITR 416 (Delhi) holding that once an assessee does not receive a notice under Section 143(2) of the Act within the stipulated period, such an assessee can take it that the return filed by him has become final and no scrutiny proceeding are to be undertaken with respect to that return.
6. Dismissed.
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