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2015 Supreme(Del) 3006
IN THE HIGH COURT OF DELHI
S. MURALIDHAR & VIBHU BAKHRU, JJ.
PR. COMMISSIONER OF INCOME TAX -03 – Appellant
Versus
FLUCKY LEASING & FINANCE PVT. LTD. - Respondent
ITA 719, 728, 730, 731, 732, 733, 734, 751, 791, 792, 794 & 795 of 2015
Decided On : 18.12.2015
Advocate Appeared:
For the Appellant : Ms Suruchi Aggarwal, Senior Standing counsel with Ms Lakshmi Gurung, Mr Shiv Raj Singh, Dy. CIT
For the Respondent:Mr C.S. Aggarwal, Senior Advocate with Mr Prakash Kumar and Mr.Gautam Jain
The main legal point established in the judgment is the interpretation and application of jurisdiction under Section 153C of the Income Tax Act and the validity of additions under Section 68.
Headnote:
Income Tax Act - Jurisdiction under Section 153C - Summary of Acts and Sections: Section 132, Section 153A, Section 153C, Section 68 - The court discussed the jurisdiction under Section 153C of the Income Tax Act and the validity of additions under Section 68. The court also considered the ownership of documents seized during search operations under Section 132. The key legal provisions discussed were Section 153C and Section 68, and the court's interpretation influenced the decision to dismiss the appeals.
Fact of the Case:
The appeals involved the Revenue challenging a common order passed by the Income Tax Appellate Tribunal in a batch of 12 appeals related to six Assessment Years. The appeals concerned the jurisdiction under Section 153C of the Income Tax Act and the validity of additions under Section 68.
Finding of the Court:
The court found that the proceedings under Section 153C were without jurisdiction as the documents seized during the search did not belong to the Assessee. The court also held that the additions under Section 68 were deleted as the sources of money received by the Assessee were duly explained.
Issues: The principal controversy involved the assumption of jurisdiction by the AO under Section 153C of the Act and the ownership of documents seized during the search. The second issue was whether the additions under Section 68 were valid.
Ratio Decidendi: The court held that the proceedings under Section 153C were without jurisdiction and the additions under Section 68 were deleted due to the duly explained sources of money received by the Assessee.
Final Decision: The court dismissed the appeals, stating that no substantial question of law arose in the appeals, and left the parties to bear their own costs.
VIBHU BAKHRU, J.
1. The Revenue has filed these appeals under Section 260A of the Income Tax Act, 1961 (hereafter the ‘Act’) impugning a common order dated 29th October, 2014 passed by the Income Tax Appellate Tribunal (hereafter the ‘Tribunal’) in a batch of 12 appeals in respect of six Assessment Years (‘AY’) being 2003-04, 2004-05, 2005-06, 2006-2007, 2007-2008, and 2009-10. The aforesaid 12 appeals included 6 appeals preferred by the Assessee and 6 appeals preferred by the Revenue. The said appeals, respectively, impugned six separate orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)] – all dated 22nd February, 2012 -disposing of the respective appeals preferred by the Assessee against the assessment orders dated 31st December, 2010 passed in respect of the aforementioned AYs.
2. The Revenue has projected the following questions of law in each of the aforesaid appeals:-
“(i) Whether in the facts and circumstances of the case and in law, ITAT could have held that both the AOs making assessment u/s 153A as well as AO initiating proceedings u/s 153C, should have separately recorded their satisfaction even when the AO making assessment u/s 153A is the same person as the one initiating proceedings u/s 153C?
(ii) Whether in the facts and circumstances of the case and in law, ITAT could have upheld the deletion of addition u/s 68, even when it was established that the assessee is an entry operator?
(iii) Whether in the facts and circumstances of the case, ITAT could have deleted additions under section 68 of the Act on the ground that they are not based on any material found as a result of the search on the assessee company?
(iv) Whether in the facts and circumstances of the case, ITAT could have held that there was no valid search since the impugned additions have been made under section 153C/143(3) of the Act without reference to any material found as a result of search?
(v) Whether in the facts and circumstances of the case, ITAT could have held that additions made in non-abated assessments, are invalid?
(vi) Whether on the facts and circumstances of the case, findings of the ITAT are perverse?”
3. Since the issues involved and the questions of law projected by the Revenue are common, these appeals were heard together.
4. The above proceedings emanate from the search and seizure operations under Section 132 of the Act, which commenced on 14th October, 2008 in respect of “SVP Group of companies”.
5. According to the Revenue, the core of SVP Group of companies consisted of four companies, namely, SVP Builders India Ltd., SVP Developers (India) Pvt. Ltd., SVP Liquors India Limited and Five Vision Promoters Pvt. Ltd, which were engaged in the business of construction of residential, commercial and business complexes as well as in sale and purchase of lands. It was found that the aforesaid four companies had received share capital from 106 companies during the AYs 2003-04 to 2009-10. It is the case of the Revenue that the aforesaid four companies forming core of the SVP Group, had been charging on-money on sale of flats and shops which was not accounted for in the regular books of accounts. According to the Revenue, usually this on-money was taken in cash and was routed back into the Group companies in the form of share application/unsecured loans, share capital, etc. These funds were further invested by the SVP Group of companies to purchase lands for new projects as well as for booking bogus expenses, as site development charges, for inflating the cost of construction. In addition to the four companies forming the core of the SVP Group, warrants for search and seizure operations were also issued in respect of twenty other companies.
6. The AO categorized the 106 companies, which had invested in the share capital of the aforesaid four companies of the SVP Group during the AYs 2003-04 to 2009-10, into 3 groups tabulated in Table-I, II and III. Table-I shareholders consisted of 20 companies which had been su
