TaxTMI 
TaxTMI 
2024 (10) TMI 1628
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....n confirming the order passed by the AO under section 153A(1)(b) read with 143(3) of the Act despite the same is illegal and void-ab initio in the absence of any search initiated under section 132 of the Income Tax Act in the name of the assessee. 3. On the facts and circumstances of the case, the notice issued by the AO and proceedings initiated thereto under section 153C of the Act is bad in law, being barred by limitation and hence the assessment order passed in consequence thereto is liable to be quashed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and assumption of jurisdiction by AO are illegal and void ab initio. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment order passed in consequence thereto are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of search. 6. On th....
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.... facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that assessment order has been passed by AO on the basis of surmises and conjectures, without there being any adverse material on record. 12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in passing the order without providing adequate opportunity of being heard to the assessee in clear violation of principle of natural justice 13. That the appellant craves leave to add, amend or alter any of the grounds of appeal." 3. In ITA No. 3402/Del/2023 for assessment year 2014-15, the assessee has raised following grounds of appeal: "On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eyes of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 12,86,416/- made by the AO treating the sales/ purchases made by the assessee as not genuine. (ii) That the above addition has been confirmed despite the same has been made on....
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....08-09 the assessee filed its return of income on 15.03.2016 at a total income of Rs. 1,19,780/-. The AO completed the assessment vide order dated 30.03.2016 u/s 153(1)(b) read with section 143(3) of the Act at Rs. 7,27,172/- by adding Rs. 6,07,392/- on account of bogus sales/purchases. 4.2 Similarly, in response to notice issued u/s 153C, for A.Y. 2014-15 the assessee filed its return of income on 15.03.2016 at a total income of Rs. 8,21,340/-. The AO completed the assessment vide order dated 30.03.2016 u/s 143(3) of the Act at Rs. 21,07,560/- by adding Rs. 12,86,416/- on account of bogus sales/purchases. 4.3 Aggrieved against the assessment orders passed by the AO the assessee preferred appeals before the learned CIT(Appeals) who vide his impugned consolidated order dated 30.06.2018 for A.Y. 2008-09, 2013-14 & 2014-15, dismissed the appeals and affirmed the orders of the AO. Aggrieved against this now the assessee is in appeal before this Tribunal. 5. First we take up assessee's appeal for A.Y. 2008-09 being ITA No. 3400/Del/2023. In ground No. 3 the assessee has taken legal ground challenging the initiation of proceedings u/s 153C being barred by time, falling beyond the....
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....r consideration is AY 2008-09 and the notice was issued on 20.01.2016. i.e. AY 2016-17. 5. It is now a settled position of law that the period of six years for the purposes of Section 153C has to be construed from the assessment year relevant to the previous year in which satisfaction for issue of notice u/s 153C was recorded. 6. Therefore, the six years of which the assessment proceedings could have been initiated u/s 153C were AYs 2010-11 to AY 2015-16. 7 The above has been summarized as below: Date of Search in case of Sunstar Group (third person) 19.12.2013 Notice issued u/s 153C 20.01.2016 Deemed Search year for the purpose of section 153C AY 2016-17 Period of six years for the purposes of Section 153C AY 2010-11 to AY 2015-16 Assessment year under consideration AY 2008-09 8. Since the assessment year under consideration is AY 2008-09, it falls beyond the period of six years referred to in Section 153C and thus is outside the scope of Section 153C of the Act and thus the AO had no jurisdiction to make an assessment of the assessee's income for the year under consideration. 9. Reliance is place....
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....igh Court and the coordinate bench, we hold that the assessment made for the AY 2008-09 is barred by limitation. Grounds raised in the cross objection of the assessee on this issue are allowed. Since, we have held that the assessment made u/s 153C r.w.s 153A is time barred. The appeal of the Revenue challenging the order of the Ld.CIT(A) on the merits of the addition/disallowance becomes infructuous." ITAT Delhi in the case of DCIT Central Circle -20 New Delhi Versus Rajesh Vashisht, 2023 (12) TMI 294 Dated: 29-11-2023, held that- "4. Without going into the merits of the case a perusal of the grounds read with the order of the CIT(A) we find that the first appellate authority has decided the appeal in favour of the assessee following the binding decision of the Hon'ble Delhi High Court in the case of RRJ Securities Limited 380 ITR 612 and subsequent amendment in the section 153C of the Act w.e.f. 01.04.2017. We do not find any merit in the grievance of the revenue. If the revenue is aggrieved by the binding decision of the Hon'ble Jurisdictional High Court of Delhi (supra) the revenue may approach the Hon'ble Supreme Court but in no case the revenue ca....
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....elhi High Court in the case of ARN Infrastructure India Ltd. Versus Assistant Commissioner Of Income-Tax, Central Circle28, New Delhi, 2017 (4) TMI 1194 - DELHI HIGH COURT Delhi High Court in the case of PCIT Versus Sarwar Agency Pvt. Ltd., 2017 (8) TMI 733, Dated: -17-8- 2017 ITAT Delhi in the case of DCIT CENTRAL CIRCLE 14 NEW DELHI VERSUS M/S. RAJESH SHARMA, 2023 (8) TMI 1181, Dated: 23-8-2023 ITAT Delhi in the case of ACIT, CENTRAL CIRCLE-13, NEW DELHI VERSUS PRAGUN FINANCE PVT. LTD, 2024 (7) TMI 1414, Dated: 30-5-2024 ITAT Chennai in the case of M/S. KSJ INFRASTRUCTURE PVT. LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1 (1), CHENNAI, 2024 (8) TMI 1421, Dated: - 6-3-2024 11. Therefore, in view of the above-mentioned facts and circumstances of the case and the case laws relied upon by the assessee, the initiation of assessment proceedings u/s 153C beyond the period of six Assessment Years immediately preceding the assessment year relevant to the previous year in which satisfaction has been recorded is illegal and liable to be quashed. Ground No. 5-6 Addition on the basis of material which is not....
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....firmed by the HON'BLE APEX COURT in the case of PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-3 VERSUS ABHISAR BUILDWELL P. LTD., 2023 (4) TMI 1056-SUPREME COURT, dated: - April 24, 2023. The Supreme Court following the ratio of Abhisar Buildwell (supra) has applied the same ratio to section 153C of the Act vide SC order in the case of DCIT Central Circle 20 V. M/S U.K. Paints (Overseas) Ltd. [2023] 454 ITR 441 (SC), dated April 25, 2023 ITAT Delhi in the case of GOLDIES TRADING CO. LTD. FARIDABAD C/O RRA TAXINDIA VERSUS DCIT, CENTRAL CIRCLE-II, FARIDABAD HARYANA, 2024 (6) TMI 419, Dated: - May 31, 2024 ITAT Delhi in the case of VIDHYA DEVI C/O M/S. RRA TAX INDIA VERSUS DCIT CENTRAL CIRCLE NOIDA, 2024 (2) TMI 1199, Dated: February 22, 2024 17. Thus, in view of the above discussion and precedents laid down by the judgments, it can be concluded that in the absence of any incriminating material in the possession of the AO, the exercise of jurisdiction u/s 153A/153C is not legally sustainable. Hence, the additions made by the AO is not sustainable and bad in law and liable to quashed Ground No. 8 Addition of Rs. 6,07,392/- on ac....
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.... It beyond the reasonable understanding of the assessee that despite of the fact that all relevant material has been brought on record, still the AO has preferred to place his reliance only on his whims and Fancies. Moreover, the AO without detecting even a single defect in the books of accounts blatantly rejected the same. The provisions of section of 145(3) of the Act expressly provides that books of accounts can be rejected only when the Id. AO is satisfied that the books are not correct or incomplete. However, in the case of assessee the Id. AO has failed to record his satisfaction that the books are incomplete or incorrect. AO after rejecting Books of accounts u/s 145(3) relied upon the turnover and GP rate shown in Trading P&L Account, which is contradictory in itself. 23. The AO estimated a GP rate and applied the same on the sales recorded in the books of accounts of the assessee it is beyond the reasonable understanding of the assessee that, how come the AO has placed the reliance on the books of account which he has already has rejected for the calculation of the GP rate and applying the same on the sales as per books of account. 24. Therefore, ....
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....not Rs. 6,07,392/-. Ground No. 10: No addition can be made relying on the statements recorded on the back of the assessee without providing an opportunity of cross-examine the same. Un-confronted third-party Statements without opportunity of cross examination is illegal and addition made on That basis is unsustainable in the eyes of law 31. During the course of search operation on M/s Sunstar Group (third party), the statements of CFO/ Director of Sunstar Overseas Ltd were recorded under oath, which was used to bring out a case against the assessee by the Id. AO. 32. It is to mentioned here that, the aforesaid statements have been collected at the back of the assessee without giving the assessee an opportunity to reconcile the same. The said statements were never even confronted to the assessee during the course of search proceeding and at is only in the assessment order the Ld. AO has quoted the said statement, and hence the assessee was not aware about how these statements were being used to draw negative inferences against the assessee. 33. It is also pertinent to note that the principles of natural justice form an integral p....
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....alers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them." Delhi High Court in the case of PCIT, Delhi V. Best Infrastructure (India) Pvt. Ltd., 2017 (8) TMI 250, dated:1-8-2017 "37. Fourthly, a copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the AO before the CIT(A) unmistakably showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr. Tarun Goyal, whom the Assessees clearly stated that they did not know could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross-....
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....of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 14. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present batch of appeals and accordingly, the same are dismissed along with pending applications. 38. Reliance is also placed on following judgements: ITAT Delhi in the case of M/s. Maple Destinations And Dreambuild Pvt. Ltd. Versus DCIT, Circle-16 (1), New Delhi, 2024 (3) TMI 1071, dated: 21-3-2024 ITAT Delhi in the case of M/S. Rswm Ltd. Versus DCIT, Central Circle-31, New Delhi, 2024 (2) TMI 278, dated: 31-1-2024 ITAT Delhi in the case of Divya Exim Pvt. Ltd. C/O. Kapil Goel, Adv., Renu Jain C/O. Kapil Goel, Adv., Nisha Jain C/O. Kapil Goel, Adv. Versus DCIT Central Circle 25 New Delhi 2024 (1) TMI 750. dated:-15-1-2024 39. In view of above judicial pronouncements, the adverse inference drawn against the assessee on the basis of statement recorded without giving assessee to cross examine the same is illegal, unjustified and ....
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....itself being barred by limitation the other grounds raised by the assessee have become of academic interest only and we refrain to adjudicate the same at this stage and is kept open. 7. Appeal of the assessee for A.Y. 2008-09 stands allowed. 8. Now coming to assessee's appeal for A.Y. 2014-15 in ITA No. 3402/Del/2023, we find that assessee has filed ground-wise synopsis. For the sake of clarity the synopsis is reproduced as under: "1. This is an appeal filled by the assessee against the order passed by the CIT(A) confirming the action of Ld. AO in making the addition of Rs. 12,86,416/- on account of undisclosed income holding the sales/purchases made by assessee as bogus/ not genuine. Assessment order passed u/s 143(3) is illegal, invalid and liable to be quashed as the assessment has been made without complying to the mandatory provisions of section 153C of the Act. 2. Brief facts of the case are that the assessment has been made u/s 143(3) on the basis of certain documents found and seized during the course of search conducted on Sunstar Group of cases on 19.12.2013. 3. At the outset, it is an undisputed fact that the Assessment Year unde....
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.... 22 has been wrongly framed under section 143(3) of the Act by ignoring the mandatory provision of section 153C of the Act. Relevant extract is being reproduced below as under. - "13. From the above discussion the date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 202122 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. Therefore, the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. The additional grounds filed by the assessee are allowed." 11. ITAT Delhi in the case of Akanksha Gupta VS. ACIT, Central Circle-04, Delhi, 2024 (7) TMI 1133, dated 10.07.2024 wherein Hon'ble Tribunal under the verbatim same circumstan....
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....reated as void ab initio. 13. ITAT Mumbai in the case of DIWAKAR N. SHETTY v. DY. CIT, CENTRAL CIRC LE-6 (1), MUMBAI, 2020 (11) TMI 560, Dated: 30-9-2020, Relevant extract is being reproduced below: - "11. The Assessing Officer in the impugned assessment year has made assessment under regular provisions. Since, the impugned assessment year forms part of the block of six assessment year prior to the date of search, the assessment should have been made u/s. 153C of the Act. Therefore in our considered view, the assessment order for the impugned year suffers from legal infirmity and hence, is liable to be quashed. We hold and direct accordingly. The assessee succeeds on legal issue raised in additional ground of appeal." 14. ITAT Delhi in the case of M/S SPLENDOR LANDBASE LIMITED v. ACIT, CIRCLE-9 (1), NEW DELHIL 2020 (1) TMI 85-ITAT DELHI, Dated: - 31.12.2019. Relevant extract is being reproduced below "5.3 Coming to ITA No. 3533/Del/2010 pertaining to assessment year 2008-09, we agree with the contention of the learned Authorised Representative that since the seized material alleged to be belonging to the assessee was handed over to the Assessing ....
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....he Act. Because Hon'ble jurisdictional High Court in case of CIT vs. RRJ Securities Ltd. (supra) has categorically held that, "In terms of provisa to section 153C of the Act, a reference to the date of the search under the second proviso to section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. 26. So, in these circumstances, the assessment framed u/s 143(3) of the Act for AY 2012-13, which was otherwise required to be framed u/s 153C, is also not sustainable in the eyes of law on account of jurisdictional error. 27. In view of what has been discussed above, we are of the considered view that without going into the merits of the case, assessment orders framed u/s 153C r/w section 153A of the Act for AYs 2009-10, 2010- 11 and 2011-12 and u/s 143(3) of the Act for AY 2012-13 are bad in law and as such not sustainable, hence quashed. Consequently, all the appeals filed by the assessee are allowed." 16. ITAT Delhi in the case of EON AUTO INDUSTRIES (P) LTD. v. DCIT, CENTRAL CIRCLE 17, NEW ....
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....and judicial pronouncements, the assessment framed under section 143(3) of the Act for AY 2014-15, which was otherwise required to be framed under section 153C of the Act is no sustainable in the eyes of law on account of jurisdictional error and therefore liable to be quashed. Addition of Rs. 12,86,416/- on account of undisclosed income treating the sales/ purchases made by assessee as not genuine. AO has rejected books of accounts u/s 145(3) of the Act without detecting even a single defect in the books c accounts 21. Further, the AO has also the ignored all the detailed submissions and documents brought on record like its books of accounts, copy invoices, GR, bilties etc. with a view to corroborate the sale/purchase transactions entered into during the year under consideration. It beyond the reasonable understanding of the assessee that despite of the fact that all relevant material has been brought on record, still the AO has preferred to place his reliance only on his whims and Fancies. Moreover, the AO without detecting even a single defect in the books of accounts blatantly rejected the same. The provisions of section of 145(3) of the Act expressly....
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....assessee. Meaning thereby, the amount to be added in the hands of assessee should have been Gross Profits computed by the AO less Gross Profits accounted for in books of accounts. It is be noted that an amount can be brought to tax in the hands of assessee only once and subjecting the same amount to tax again would be detrimental to the interest of assessee. 27. Therefore, in view of the above, the addition made by AO is bad in law and liable to quashed. No addition can be made relying on the statements recorded on the back of the assessee without providing an opportunity of cross-examine the same. Un-confronted third-party Statements without opportunity of cross examination is illegal and addition made on that basis is unsustainable in the eyes of law 28. During the course of search operation on M/s Sunstar Group (third party), the statements of CFO/ Director of Sunstar Overseas Ltd were recorded under oath, which was used to bring out a case against the assessee by the Id. AO. 29. It is to mentioned here that, the aforesaid statements have been collected at the back of the assessee without giving the assessee an opportunity to reconcil....
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.... the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex- factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them." Delhi High Court in the case of PCIT, Delhi V. Best Infrastructure (India) Pvt.Ltd., 2017 (8) TMI 250, dated:1-8-2017 "37. Fourthly, a copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the AO before the CIT(A) unmistakably showed that the attempts by the AO, in ....
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....eement with the ITAT that his statement needs to be excluded and cannot be relied upon as a piece of evidence to make any addition, In fact, the Supreme Court in the case of M/s Andaman Timber Industries vs. CCE (SC), 127DTR 241 has held...not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 14. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present batch of appeals and accordingly, the same are dismissed along with pending applications. 35. Reliance is also placed on following judgements: ITAT Delhi in the case of Mis. Maple Destinations And Dreambuild Pvt. Ltd. Versus DCIT, Circle - 16 (1), New Delhi, 2024 (3) TMI 1071, dated: 21-3-2024 ITAT Delhi in the case of M/S. Rswn Ltd. Versus DCIT, Central Circle-31, New Delhi, 2024 (2) TMI 278, dated: 31-1-2024 ITAT Delhi in the case of Divya Exim P....
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....rned CIT(Appeals) as the proceedings u/s 143(3) and 153C of the Act operate in two different and distinct fields. The law is well settled that issue related to jurisdictional error cannot be cured u/s 292BB of the Act. In the case in hand the AO wrongly passed order u/s 143(3) of the Act while the initiation of the proceedings was by way of issuing notice u/s 153(2). It is also recorded by the Assessing Authority that the order of assessment was passed with the statutory approval of the Joint Commissioner of Income-tax in accordance with section 153D of the Act. It goes to demonstrate that the proceedings were related to section 153C of the Act. The coordinate Bench of this Tribunal in the case of Shri Jagjit Singh v. ACIT, Central Circle-21, New Delhi, 2019 (10) TMI 350 -ITAT Delhi, dated 01.10.2019, following the judgment of the Hon'ble Delhi High Court in the case of CIT v. RRJ Securities Ltd. held that assessment framed u/s 143(3) of the Act which was otherwise required to be framed u/s 153C of the Act is also snot sustainable in the eyes of law on account of jurisdictional error. We, therefore, respectfully following the binding precedence hold that the finding of the learned ....
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....peal before this Tribunal. 9.4 Learned counsel for the assessee reiterated the submissions as made in the synopsis filed on behalf of the assessee and submitted that all relevant details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer. The AO without detecting any defect in the books of accounts, rejected the same u/s 145(3) of the Act and made addition of Rs. 12,86,416/- by applying the GP rate of 0.24% (declared in its books of accounts) on the total turnover accounted by it in its books of accounts. Learned counsel submitted that the AO has made addition of Gross Profit which has already been considered by the assessee for computing its tax liability. He submitted that the AO by adding gross profit again to the income of the assessee has made double taxation which is unsustainable and unjust in the eyes of law. He submitted that the AO has made the addition by relying on the statements recorded on the back of the assessee without providing an opportunity of cross-examine the same. Relying upon the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE 2015 SCC Online SC 1051 he submitted that....