Vinod Kumar Vs DCIT (ITAT Delhi)
It is not in dispute from the above facts that search and seizure action was conducted in M/s. Krrish Realty Nirman Pvt. Ltd., on 09.11.2011. Thereafter, survey was conducted in the premises of the assessee on 05.11.2011 and his Company M/s. Ambawata Buildwell Pvt. Ltd., the jurisdiction over the case of assessee was transferred to CIT, Central, Gurgaon vide Order Dated 12.08.2013, who transferred the case to A.O. of Central Circle-1, Faridabad and the seized documents were received in the same Central Circle on 29.08.2013. The Tribunal in the background of these identical facts and decision of the Hon’ble Delhi High Court and the Order of the Tribunal in the case of BNB Investment & Properties Ltd., vs., DCIT [2018] 68 ITR 567 [Delhi-Tribu.] has held that impugned A.Y. 2012-2013 cannot be treated as year of the search. Therefore, assessment order were declared as null and void and cross objection of the assessee is allowed.
In the background of these facts it is clear that impugned documents have been received by the A.O. on 29.08.2013. No satisfaction note have been recorded under section 153C of the I.T. Act. The A.O. passed the assessment order for the assessment year under appeal i.e., 2013-2014 under section 143(3) considering the preceding A.Y. 2012-2013 to the year of the search. However, the First proviso to Section 153C of the I.T. Act provides that six assessment years for which assessments or re-assessments could be made under section 153C of the I.T. Act would also have to be construed with reference to the date of handing-over of the assets or documents to the A.O. of the assessee. Therefore, the six assessment years under section 153C in the case of the assessee would be A.Ys. 2008-2009 to 2013-2014 [under appeal]. Thus the A.O. shall have to pass the assessment order under section 153C of the I.T. Act instead of passing the assessment order under section 143(3) of the I.T. Act.
The A.O. has not followed the proviso to Section 153C of the I.T. Act. No satisfaction note have been recorded in the case of person searched and no notice under section 153C have been issued to the assessee. The ITAT in the case of same assessee had decided an identical issue following the Order in the case of BNB Investment & Properties Ltd., vs., DCIT [2018] 68 ITR 567 [Delhi-Tribu.] in which case also the search was connected with the case of M/s. Krrish Realty Nirman Pvt. Ltd., Group of cases on 09.11.2011 and the issue have been decided in favour of the assessee by following the Judgment of Hon’ble Delhi High Court. Therefore, the issue is covered in favour of the assessee by the Order of the Tribunal in the case of assessee for the A.Y. 2012-2013 (supra) as well as Order of the Tribunal in the case of BNB Investment & Properties Ltd., vs., DCIT (supra). The assessment order, therefore, vitiated and is void, illegal and bad in Law and cannot be sustained. The contention of the Ld. D.R. have also been taken care in the aforesaid decision as noted above because the mandatory provisions of Section 153C shall have to be followed by the A.O. before proceeding in the matter where A.O. is same in the case of person searched or the third party. The mandatory conditions of Section 153C of the I.T. Act shall have to be complied with by the A.O. which is also subsequently clarified by the CBDT in their Circular issued in this regard. Therefore, the contention of the Ld. D.R. have no merit and are accordingly rejected.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-3, Gurgaon, Dated 28.02.2017, for the A.Y. 2013-2014.
2. We have heard the Learned Representative of both the parties and perused the material available on record.
3. Briefly the facts of the case are that a return of income declaring total income of Rs.3,10,05,770/- was filed by the assessee on 31.03.2014. The A.O. noted that assessee enjoys income from house property, long term capital gains and from other sources. The books of account produced by assessee were found to be correct. The A.O. asked the assessee to explain the method of valuation of 231 shares held by him of M/s. Krrish Realty Nirman Pvt. Ltd., and sold by him to M/s. Olmec Properties Pvt. Ltd. The assessee filed a detailed reply before A.O, but, the A.O. was not satisfied with the explanation of assessee. The A.O. noted that same issue was considered in A.Y. 2012-2013 in which the Ld. CIT(A) has deleted the addition of Rs.38,61,24,029/- and the appeal of the Department is filed before the Tribunal. The A.O. considering the explanation of assessee, made addition of Rs.73,86,427/- on account of long term capital gains and also made addition of Rs.12,45,000/- under section 68 of the I.T. Act on account of agricultural income. The A.O. passed the assessment order under section 143(3) Dated 22.01.2016. The assessee challenged both the additions before the Ld. CIT(A). The Ld. CIT(A) partly allowed the appeal of assessee.
4. The assessee in the present appeal has raised the following additional grounds :
a) “The A.O. has erred in assuming and assessing the impugned year as year of search, ignoring that the year of search for the present assessee would be AY 2014-15, as the documents pertaining to present assessee were received on 29.08.2013, as is evident from the assessment order.
b) On the facts and under the circumstances of the case the assessment of the impugned year, without following the mandatory provisions of law applicable for cases covered under section 153C, is bad in law and void ab-initio.
c) Without prejudice to the above, On the facts and under the circumstances of the case, the jurisdiction of the AO under is bad in law as no satisfaction in the file of searched person has ever been recorded for assuming the jurisdiction of assessee’s case for the present AY 2013-14.”
4.1. Learned Counsel for the Assessee submitted that the additional grounds are legal in nature and goes to the root of the matter and relied upon Judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT 229 ITR 383 (SC) and submitted that identical issue have been considered by ITAT, Delhi G-Bench, Delhi in the case of the same assessee for preceding A.Y. 20122013 vide Order Dated 09.08.2019 and this issue have been considered in favour of the assessee. He has, therefore, submitted that since the additional grounds raised are legal in nature and goes to the root of the matter, therefore, the same may be admitted for disposal of the appeal.
5. The Ld. D.R. on the other hand opposed to the admission of the additional grounds.
6. Considering the facts of the case in the light of Order of the Tribunal Dated 09.08.2019 (supra) and that the additional grounds are legal in nature and goes to the root of the matter, therefore, we admit the additional grounds for the purpose of disposal of the appeal.
7. Learned Counsel for the Assessee submitted that search and seizure action was conducted by the Department on M/s. Krrish Realty Nirman Pvt. Ltd., Group on 09.11.2011. The A.O. made the additions on account of long term capital gains and under section 68 of the I.T. Act, 1961 solely relying upon his assessment order for the preceding A.Y. 2012-2013. He has submitted that A.O. has incorrectly assumed the impugned assessment year as search year and hence, erred in framing the assessment of the impugned year under section 143(3) of the I.T. Act, 1961 instead of passing the Order under section 153C of the I.T. Act, 1961. He has submitted that A.O. has not recorded any satisfaction note under section 153C of the I.T. Act and has referred the reply Dated 20.05.2020 under RTI Act in which A.O. has specifically admitted that no such satisfaction is recorded in assessment year under appeal and the same have not been found-out from the record. He has submitted that no satisfaction note have been recorded in the case of the person searched, therefore, assessment order is invalid and bad in Law. He has submitted that it is an admitted fact that documents pertaining to assessee had been transferred to the A.O. of Central Circle on 29.08.2013. Hence, as per the First proviso to Section 153C of the I.T. Act the date of search in the case of assessee would be 29.08.2013 which would fall in A.Y. 2014-2015, therefore, the previous six years period would have to be reckoned from this date which would mean the relevant assessment year of the search in the case of assessee would be from A.Ys. 2008-2009 to 2013-2014. He has submitted that the A.O. instead of passing the Order under section 153C of the I.T. Act passed the assessment order under section 143(3) of the I.T. Act, 1961 which is illegal and bad in Law. He has submitted that the same issue have been considered by ITAT, Delhi G-Bench, Delhi in the case of the same assessee for preceding A.Y. 2012-2013 in ITA.No.2550/Del./2015 and C.O.No.146/Del./2018 vide Order Dated 09.08.2019 and cross-objection of the Assessee has been allowed and Departmental appeal have been dismissed. He has submitted that the issue is, therefore, covered in favour of the assessee and impugned assessment order is void abinitio. He has submitted that same issue is also considered by ITAT in this Order following the Order in the case of BNB Investment & Properties Ltd., vs., DCIT [2018] 68 ITR 567 [Delhi-Tribu.] vide Order Dated 27.06.2018. Similarly, the ITAT in the case of M/s. Ambawata Buildwell Pvt. Ltd., in ITA.No.2592/2015 vide Order Dated 23.08.2018 held that “year of search in these cases would be A.Y. 2014-2015 as the documents pertaining to assessee were received on 29.08.2013.” The Learned Counsel for the Assessee, therefore, submitted that the assessment order is null and void.
8. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below and submitted that the ITO in the case of the person searched and the third person i.e., assessee are the same, therefore, one A.O. cannot handover the documents with another A.O. Thus, it is evident that the instant case of the assessee is not the one where the documents were handed-over to another A.O. holding the jurisdiction over the assessee, but, a case where the case of the assessee was handed-over to the A.O. who completed the assessment in the case of assessee, covered under section 153A. Thus, the First proviso to Section 153C does not get attracted at all in the instant case. The Ld. D.R. submitted that decision in the case of CIT vs., RRJ Securities Pvt. Ltd., 380 ITR 612 (Del.) (HC) the Hon’ble Delhi High Court took a view that the years covered under section 153C would be determined from the date of handing-over the documents to the other A.O. considering such date as initiation of the search and same view have been taken by the Hon’ble Delhi High Court in its subsequent decision in the case of CIT vs., Swar Agencies 397 ITR 400 (Del.), but, Review Petition could not be filed because of low tax effect. Thus, this decision will not apply in the case of assessee. The Ld. D.R. submitted that seventh year in the case of the assessee would be A.Y. 2012-2013. Thus, the proceedings for the year under consideration i.e., A.Y. 2013-2014 has been rightly completed under section 143(3) of the I.T. Act and there is no obligation on the A.O. to record satisfaction under section 153C of the I.T. Act, 1961. The Ld. D.R. also filed written submissions as well as certain decisions referred to in the written submissions.
9. We have considered the rival submissions and perused the material on record. The A.O. in response to the RTI Application reported to the assessee vide letter Dated 20.05.2020 that as per the record available in his Office the satisfaction note recorded by assuming jurisdiction in the case of the assessee under section 153C in the case of M/s. Venta Realtech Pvt. Ltd., [Formerly known as M/s. Krrish Realty Nirman Pvt. Ltd., ] has not been found. The ITAT, Delhi Bench in the case of the assessee in Departmental Appeal and Cross Objection vide Order Dated 08.09.2019 considered the identical issue and declared the assessment order to be null and void. The Cross Objection of the Assessee is allowed and Departmental Appeal is dismissed.
The Order of the Tribunal Dated 09.08.2019 (supra) is reproduced as under :
“IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “G” NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
SHRI L. P. SAHU, ACCOUNTANT MEMBER
I.T.A. No.2550/DEL/2015
Assessment Year: 2012-13
