* 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 &
Mr. Sanjeev Rajpal, Advs.
versus
$ CONCORDE CAPITAL MANAGEMENT
^ COMPANY LTD. .....Respondent through
None
Date of Hearing: April 02, 2009
Date of Decision: May 20th,2009
WITH
ITA No.353/2009
CIT ..... Appellant through
Ms. P.L. Bansal with
Mr. M.P. Gupta &
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
ITA 185/2009 Page 1 of 5
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
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
ITA 185/2009 Page 2 of 5
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
ITA 185/2009 Page 3 of 5
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.
ITA 185/2009 Page 4 of 5
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 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.
( VIKRAMAJIT SEN )
JUDGE
May 20th , 2009 ( RAJIV SHAKDHER )
tp JUDGE
ITA 185/2009 Page 5 of 5