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IN THE HIGH COURT OF DELHI AT NEW DELHI
S. MURALIDHAR, PRATHIBA M. SINGH, JJ.
Principal Commissioner of Income Tax, Delhi - Appellant
Versus
Best Infrastructure (India) Pvt. Ltd. - Respondent
ITA Nos. 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 of 2017
Decided On : 01-08-2017
Income Tax Act - Revenue Appeals - Section 260A - Assessee's Directors' Statements - Section 68, 153A - Summary: The court considered the appeals filed by the Revenue under Section 260A of the Income Tax Act against the common order passed by the Income Tax Appellate Tribunal (ITAT) in the appeals filed by the Assessee for Assessment Years 2005-06 to 2009-10. The court analyzed the additions made under Section 68 of the Income Tax Act on account of the statements made by the Assessee's Directors in the course of search under Section 132 of the Act and the assumption of jurisdiction under Section 153A of the Act. The court found that the additions made under Section 68 were not justified and the assumption of jurisdiction under Section 153A and the consequent additions made by the Assessing Officer were not justified. Therefore, the appeals of the Revenue were dismissed.
Fact of the Case:
The appeals filed by the Revenue under Section 260A of the Income Tax Act were against a common order passed by the Income Tax Appellate Tribunal (ITAT) in the appeals filed by the Assessee for Assessment Years 2005-06 to 2009-10. The Assessees belong to the 'Best Group'. A search took place in the case of both Mr. Tarun Goyal and the Best Group of Companies on 15th September, 2008. The Revenue relied on the statements of Mr. Tarun Goyal and Mr. Anu Aggarwal recorded on the day of search and certain seized documents to assume jurisdiction under Section 153A of the Act.
Finding of the Court:
The court found that the additions made under Section 68 of the Income Tax Act on account of the statements made by the Assessee's Directors in the course of search under Section 132 of the Act were not justified. The court also held that the assumption of jurisdiction under Section 153A of the Act and the consequent additions made by the Assessing Officer were not justified.
Issues: The issues before the court were whether the additions made under Section 68 of the Income Tax Act on account of the statements made by the Assessee's Directors in the course of search under Section 132 of the Act were justified and whether the assumption of jurisdiction under Section 153A of the Act and the consequent additions made by the Assessing Officer were justified.
Ratio Decidendi: The court held that the additions made under Section 68 of the Income Tax Act on account of the statements made by the Assessee's Directors in the course of search under Section 132 of the Act were not justified. The court also held that the assumption of jurisdiction under Section 153A of the Act and the consequent additions made by the Assessing Officer were not justified.
Final Decision: The appeals of the Revenue were dismissed.
1. These appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) are against a common order dated 31st May, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in the appeals filed by the Assessee for Assessment Years (‘AYs’) 2005-06 to 2009-10. The Assessees belong to the ‘Best Group’.
Questions of law
2. In three of the appeals filed by the Revenue i.e. ITA Nos. 11, 12 and 21 of 2017 the question of law framed by the Court by the order dated 21st March, 2017 reads as under:
“Did the ITAT fall into error in holding that the additions made under Section 68 of the Income Tax Act, 1961, on account of the statements made by the assessee’s Directors in the course of search under Section 132 of the Act were not justified?”
3. In the other appeals, ITA Nos. 13 to 20 and 22 of 2017, the question of law framed by this Court by the order dated 21st March, 2017 reads as under:
“Whether having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the assessee, additions made by the Assessing Officer under Section 153A, were not justified as held by the ITAT?”
Background facts
4. The facts which lead to the filing of these appeals are that a search took place in the case of both Mr. Tarun Goyal as well as the Best Group of Companies on 15th September, 2008. During the search various loose papers were found. According to the Revenue, the seized documents were with regard to unaccounted receipts from sale of certain properties and unrecorded expenditure in the construction business.
5. In support of its assumption of jurisdiction under Section 153 A of the Act, the Revenue places reliance on the statements of Mr. Tarun Goyal and Mr. Anu Aggarwal as recorded on the day of search i.e. 15th September 2008 and the statements of Mr. Anu Aggarwal and Mr. Harjeet Singh, Directors of the Best Group, as recorded on 24th October, 2008. These statements were made under Section 132 (4) of the Act. The case of the Revenue is that for the purposes of Section 153A of the Act these statements, by themselves, constitute incriminating material. The Revenue also places reliance on three documents i.e. A-1, A-4 and A-11.
Statement of Tarun Goyal
6. The relevant portion of the statement of Mr. Tarun Goyal as recorded on 15th September, 2008 during the survey/search and relied upon by the Revenue reads as under:
Q. No.2 Please provide details of your transaction with Best Group of Companies, such as M/s Best Infrastructure (I) (P) Ltd. M/s Best City Projects (I) (P) Ltd. their directors, Sh. Harjeet Singh Arora, Sh. Balvinder Singh, Sh. Anu Aggarwal and other group concern?
Ans. Personally, I had made no transactions with Best Group of Companies or their directors. However, certain companies for which I am the authorized signatory has made transactions with the Best Group of Companies, such as M/s Best Infrastructure (I) (P) Ltd., M/s Best City Projects (I) (P) Ltd., M/s Best City Realtors (I) (P) Ltd. and other group concerns. M/s Best group of companies, through their Directors, Sh. Harjeet Singh Arora had approached us for providing them entry for share capital. They had provided us cash, against which we issued him cheques through companies of which I am the authorized signatory. These companies have taken a commission of 0.25% for providing them cheque against the cash received. We have provided them approx. 8 crores of bogus share capital against which we have received commission income in these companies we are offering this income for taxation, which is over and above the normal income earned by me during the course of the year. At the rate of 0.25% of the undisclosed income earned by us would tantamount to Rs. 2 lakhs.
Q. No. 3 Have you provided entries to the Best Group of Companies or to their directors also?
Ans. The companies for which I am authorized signatory
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