Case Number: ITA 1517/DEL/2020
Appellant: DCIT Central Circle-8, New Delhi
Respondent: Vatika Ltd, Gurgaon
Assessment Year: 2011-12
Result: Unexplained Cash Transactions Challenged
Case Filed On: 2020-08-28
Order Type: Final Tribunal Order
Date of Order: 2023-02-07
Pronounced On: 2023-02-07
The case of DCIT Central Circle-8 vs. Vatika Ltd. revolves around the challenge to the addition of unexplained cash transactions for the assessment year 2011-12. This appeal was brought before the Income Tax Appellate Tribunal (ITAT) Delhi Benches ‘H’, where the appeal by the DCIT was heard and the Tribunal provided specific directions for further proceedings.
Vatika Ltd., the respondent, filed a return of income for the assessment year 2011-12 on September 29, 2011, declaring a total income of Rs. 29,10,97,142/-. A revised return was filed on November 30, 2011, declaring a total income of Rs. 19,34,16,486/-. Subsequently, a search was conducted on the appellant on January 16, 2013, under section 132 of the Income Tax Act, and action under section 153A was initiated. The assessment was completed on March 30, 2015, at an income of Rs. 41,07,52,967/-, against the returned income of Rs. 19,34,16,486/-. The CIT(A) further enhanced the assessed income to Rs. 52,02,50,970/-, which was then challenged by the appellant before the Tribunal.
A second search action was conducted on the appellant on October 17, 2016. In response to a notice issued under section 153A, the appellant filed a return of income declaring an income of Rs. 19,34,16,486/- on March 27, 2018. The assessment was completed on December 30, 2018, at an income of Rs. 156,52,50,970/-, with an addition of Rs. 104,50,00,000/- as unexplained cash transactions.
The Assessing Officer (A.O.) made the addition based on the search operation conducted against the India Bulls Group by the Investigation Wing, Mumbai, on July 12, 2016. During the search, a laptop was found in the office chamber of Shri Ashok Sharma, CFO of India Bulls Group, where cash transactions involving Vatika were noted. India Bulls Group filed a settlement petition with the Settlement Commission, offering income on these transactions on a peak basis.
The appellant was served with a notice under section 142(1) on December 4, 2018, to show cause why the total of these transactions, amounting to Rs. 163,11,26,062/-, should not be added to the appellant’s income for the assessment year 2011-12. The appellant objected, stating that no cash transactions were made or received from India Bulls Group, and no incriminating documents were found during the search. The appellant also highlighted the lack of opportunity to cross-examine the persons involved and the absence of direct evidence.
The CIT(A) deleted the addition made by the A.O., leading the Revenue to approach the Tribunal with the following grounds:
The Tribunal considered the arguments and records, noting that no incriminating material was found during the search on the appellant. The Tribunal referenced several legal precedents emphasizing that additions under section 153A should be based on evidence found during the search. The Tribunal found that the A.O. relied on digital information retrieved from the India Bulls Group’s CFO’s laptop without providing it to the appellant or allowing cross-examination.
The Tribunal highlighted the importance of providing the assessee with an opportunity to rebut adverse evidence and cross-examine witnesses. The Tribunal referred to the judgment in the case of CIT vs. Kabul Chawla, which held that no addition can be made under section 153A without incriminating material found during the search.
The Tribunal found no merit in the Revenue’s grounds, concluding that the CIT(A) rightly deleted the addition based on the lack of direct evidence and the procedural lapses by the A.O. The Tribunal dismissed the appeal filed by the Revenue.
The ITAT’s decision underscores the necessity of substantial evidence and adherence to procedural fairness in tax assessments. By upholding the CIT(A)’s deletion of the addition, the Tribunal reinforced the principles of justice and the requirement for concrete evidence to support additions during assessments.
Order:
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on February 7, 2023.
Sd/- Shamim Yahya, Accountant Member
Sd/- Anubhav Sharma, Judicial Member
Copy to:
// By Order //
Assistant Registrar, ITAT Delhi Benches, Delhi
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