A search and seizure operation u/s 132 of the Income-tax Act, 1961 was carried out on 31.07.2008. Assessee filed returns pursuant to notice u/s 153A for the year under consideration declaring long term capital loss of ` 5,87,272/- on sale of flat. Assessee claimed that the property was inherited by him from his father and was originally purchased for sum of 14,32,674/- which was subsequently sold by the assessee for a sum of 9,90,050/- resulting into capital loss. In the absence of any Conveyance deed, etc. filed, the AO noticed that the plot was sold prior to 15.06.2002 and held that the whole matter was a story made up by the assessee to introduce his own unaccounted funds as sale of the property. This led to an addition u/s 68 of the Act. Relying on the judgment of All Cargo Global Logistics 137 ITD 287 (SB) (Mum) &Pratibha Industries 141 ITD 151 (Mum), it is held that no addition can be made for any assessment year u/s 153A, the assessment for which is not pending on the date of search, unless any incriminating material is found in the course of search.
Sanjay Aggarwal – Appellant – Versus – DCIT - Respondent
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: G : NEW DELHI
Assessment Year : 2003-04
Representatives of Assessee: Sh. Vinod Bindal, CA
and Mrs.Sweety Kothari, CA
Department: Shri Ramesh Chandra, CIT,DR
Hon’ble Shri R.S. Syal, AM and Hon’bleShri C.M. Garg, JM
Date of pronouncement: 16/06/2014
Judgement and facts of the case
PER R.S. SYAL, AM:
This appeal by the assessee arises out of the order passed by the CIT(A) on 30.03.2013 in relation to the assessment year 2003-04.
2. Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) was carried out in this case along with other cases of Rajdarbar Group on 31.07.2008. Pursuant to notice issued for filing the returns u/s 153A, the assessee filed his returns inter alia for the year under consideration declaring long term capital loss of ` 5,87,272/- on sale of flat at DLF, Gurgaon. The assessee was called upon to furnish details of purchase cost and sale consideration of the property. The assessee claimed that this property was inherited by him from his father and his father originally purchased it for a sum of ` 14,32,674/- which was subsequently sold by the assessee in this year for a sum of ` 9,90,050/- resulting into capital loss as shown in the return. In the absence of any Conveyance deed, etc. filed, the AO noticed that the plot was sold prior to 15.06.2002. As the assesse applied cost indexation by showing that the plot was acquired in financial year 2000-01, the AO held that the said plot was held for less than 36 months and there was no question of computing any long-term capital gain or loss. Since the assessee did not file Conveyance deed, etc., the AO held that the whole matter was a story made up by the assessee to introduce his own unaccounted funds as sale of the property. This led to an addition of `9,90,050/- made u/s 68 of the Act. The ld. CIT(A) upheld the assessment order. The assessee is aggrieved against the sustenance of such addition.
3. The ld. Counsel for the assessee raised an additional ground to the effect that since no incriminating evidence was found at the time of search relating to this transaction, the resultant addition so made was not called for u/s 153A of the Act. The ld. AR was fair enough to concede that this issue was not taken up before the authorities below and that is why it was raised before the Tribunal as additional ground for the first time. It was prayed that this additional ground be admitted and disposed of on merits. The ld. DR strongly opposed to the raising of this ground at this belated stage before the Tribunal. He submitted that it was too late in the day for the assessee to come out with such a ground before the Tribunal which was neither raised before the ld. CIT(A) nor the AO.
4. We are not convinced with the arguments put forth by the ld. DR that the additional ground so raised before us cannot be admitted. It is clear from the ground itself that the assessee has taken up a question of law in support of not making this addition because no incriminating material was found during the course of search on this score and further, no assessment was pending. The Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. vs. CIT (1998) 229 ITR 383 (SC), has held that the Tribunal has jurisdiction to examine a question of law for the first time which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee, notwithstanding the fact that the same was not raised before the lower authorities. In view of the above verdict given by the Hon’ble Supreme Court, we are inclined to admit the additional ground raised on behalf of the assessee, which is a pure legal ground.
5. On the merits of this additional ground, the ld. AR contended that no assessment for the AY 2003-04 was pending on the date of search, which could abate and empower the AO to compute total income even without any incriminating material found during the course of search. It was submitted that in the absence of any such incriminating material relating to the transaction of sale of property resulting into capital loss, there was no reason to make any addition. Relying on certain decisions including the Special Bench order in the case of All Cargo Global Logistics Ltd. vs. DCIT(2012) 137 ITD 287 (SB) (Mum) and ACIT vs. Pratibha Industries Ltd. (2013) 141 ITD 151 (Mum), the ld. AR contended that the Special Bench of the Tribunal has held in unequivocal terms that no addition can be made in respect of concluded assessments onthe date of search unless some incriminating material was found during the course of search. The ld. DR opposed this contention by relying on certain decisions including SSP Aviation Ltd. vs.DCIT (2012) 252 CTR (Del) 291; CIT vs. Chetan Das Lachman Das(2012) 254 CTR (Del) 392 ; and CIT vs. Anil Kumar Bhatia (2013)352 ITR 493 (Del). In the light of the above decisions rendered bythe Hon’ble jurisdictional High Court, the ld. DR submitted that the Tribunal orders relied on by the ld. AR were required to be discarded and the view taken by the Hon’ble jurisdictional HighCourt followed.
6. We have absolutely no doubt in our mind that the superior wisdom of Hon’ble High Court overrides the inferior Tribunal opinion. It goes without saying that when a particular issue is decided by the Hon’ble High Court, contrary view taken by the Tribunal should bow down to give way to the opinion expressed by the Hon’ble High Court. The only caveat in this regard is that the question for consideration by both the judicial forums must be same. If the Hon’ble High Court has decided another aspect of the matter which is different from that decided by the Special Bench of the Tribunal, then, obviously, there can be no occasion for the Division benches of the tribunal in throwing to the winds the decision of the Special Bench of the Tribunal. That is precisely an aspect of the judicial discipline in so far as the tribunal benches are concerned.
7. Let us examine the judgments of the Hon’ble jurisdictional High Court relied on by the ld. DR. The first is that in the case of SSP Aviation Ltd. (supra). The ld. DR accentuated on para 15 of this judgment to canvass the view that addition can be made u/s 153A de horse any incriminating material found in the course of search. This para reads that the satisfaction required to be reached by the AO having jurisdiction over searched person is that the valuable articles or books, etc., seized during the search belong to a person other than the searched person. The later line on which the ld. DR forcefully emphasized is that: “there is no requirement in Section 153A (1) that the AO should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to conclusively reflect or disclose any undisclosed income.”
To read the full judgement, please find the attached file.