IN THE HIGH COURT OF DELHI AT NEW DELHI
ITA No.185/2009
# CIT ..... Appellant through
! Ms. P.L. Bansal with
Mr. M.P. Gupta and
Mr. Sanjeev Rajpal, Advs.
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versus
$ CONCORDE CAPITAL MANAGEMENT
COMPANY LTD. .....Respondent through
None
Date of Hearing: April 02, 2009
Date of Decision: May 20th,2009
20.05.2009
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WITH
ITA No.353/2009
CIT ..... Appellant through
Ms. P.L. Bansal with
Mr. M.P. Gupta and
Mr. Sanjeev Rajpal, Advs.
.
versus
THREE-N PRODUCTS PVT. LTD......Respondent through
None
Date of Hearing : May 18, 2009
Date of Decision :May 20th, 2009
CORAM:
HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE RAJIV SHAKDHER
1. Whether reporters of local papers may be
allowed to see the Judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the Judgment should be reported
in the Digest? Yes
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VIKRAMAJIT SEN, J.
ITA No.185/2009
1. This Appeal under Section 260A of the Income Tax Act, 1961 (Act for
short) has been preferred by the Commissioner of Income Tax, Delhi-I against the
Order dated 11.4.2008 passed by the ITAT. The Tribunal had dismissed the Appeal
of the Revenue assailing the Order of the CIT(A), who had deleted the
addition of Rupees 68,00,000 made by the Assessing Officer under Section 69A of
the Act. Both the Appellate Authorities had concluded that no incriminating
material had been collected in the course of a simultaneous search under Section
132 carried out on 24.11.2000 on the Assessee along with allegedly connected
concerns including Nopani Group and Mourya Investments Pvt. Ltd.. Revenue had
endeavoured to rely on materials and statements recorded of a third party,
namely, Shri Sushil Kumar Tulsian during a consequent survey under Section 133A.
Predicated on this Statement an inference was drawn, nay it was taken as having
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been proved, that the Assessee was engaged in affording accommodation entries in
exchange/lieu of cash.
2. The Tribunal has dismissed the Appeal of the Revenue on the ground that
the evidence which was sought to be acted upon should have been gathered in the
course of the Search or Requisition under Chapter XIV-B of the Act. The Tribunal
has applied CIT ?vs- G.K. Senniappan, [2006] 284 ITR 220 in which the Division
Bench of the High Court of Madras has opined that in the context of a Block
Assessment whilst material gathered in the course of the Search may be acted
upon by virtue of Section 158BB, material collected during the Survey under
Section 133A does not constitute requisite evidence. The ITAT has also applied
CIT ?vs- Ravi Kumar, [2007] 294 ITR 78 where the Division Bench of the High
Court of Punjab and Haryana held that it was improper to take into consideration
?loose slips? recovered during a Search of the Assessee, which slips did not
conclusively prove anything, as sufficient cause to invoke Section 69A of the
Act. This reasoning was applied by the ITAT to the facts obtaining in the case
in hand, to arrive at the conclusion that there was no justification to hold
that Rupees 68,00,000 could be added into the profits of the Assessee as
undisclosed cash.
3. The Division Bench of this Court, comprising Arijit Pasayat and D.K.
Jain, JJ., as their Lordships then were, have held in CIT ?vs- Ravi Kant Jain,
[2001] 250 ITR 141 that undisclosed income not determined on the basis of
material gathered in a Search cannot justify the ordering of a Block Assessment.
4. It will be useful to recall that in CIT ?vs- Mukundray K. Shah, [2007]
290 ITR 433 their Lordships considered it valid to take into account the
contents of a Diary found as a result of a Search. Unlike the loose slips found
in Ravi Kumar, in an enquiry founded on the recovered Diary it emerged that
Rupees 5,99,00,000 was undisclosed income. In other words, the Diary in the said
case was a material which was the starting point of the enquiry which when
connected with the other results of the enquiry led the Department to the
undisclosed income of the assessee. It was in this context that the Supreme
Court upheld the stand of the Department in invoking the provisions of chapter
XIV-B of the Act.
5. Similar observations are to be found in CIT ?vs- Balaji Wire Pvt. Ltd.,
[2008] 304 ITR 393(Delhi) where the Bench observed that the Search had been
conducted on 11th/12th September, 2001 but the Revenue had sought to proceed
against the assessee on the strength of a statement made by a third party on
25.9.2001 and 14.12.2001. As it was manifestly not any part of the sequence of
the Search, the said statement was held not to be of any consequence. A similar
analysis is available in CIT ?vs- Jupiter Builders P. Ltd., [2006] 287 ITR 287
(Delhi) where the conclusion was that income not disclosed or unearthed as a
result of the Search or Requisition cannot be brought to tax under Chapter-XIVB
of the Act.
6. So far as the case in hand is concerned, the CIT(A) as well as the ITAT
have arrived at the conclusion that the Revenue had taken into consideration a
Statement made by a third party independent of the Search and since nothing was
discovered in the course of the Search, the action was contrary to law. This is
also our appreciation of the facts and our understanding of the law. Therefore,
no substantial question of law arises for our consideration in this Appeal,
which is accordingly dismissed.
ITA No.353/2009
7. The Revenue has filed this Appeal under Section 260A of the Act against
the Order of the Tribunal passed on 14.3.2008. The facts were that the addition
was predicated on the statement of Shri Vinod Arora, recorded after the
conclusion of the Search. Even this statement was controverted by Shri Arora in
cross-examination inasmuch as he had confirmed having supplied all the goods in
question to the assessee. On a different plank it was also observed that the
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Respondent Assessee as well as the other supplier were assessed to Income Tax
and Sales Tax and were transacting business independent of each other.
8. No substantial question of law arises for our consideration in this
Appeal, which is accordingly dismissed.
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( VIKRAMAJIT SEN )
JUDGE
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May 20th , 2009 ( RAJIV SHAKDHER )
tp JUDGE
ITA 185/20090Page 1 of 5
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