Niti Wadhawan v. Dcit, Central Circle-10

order as to costs. S. RAVINDRA BHAT (JUDGE) R.V. EASWAR (JUDGE) MARCH 31, 2014

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 11.03.2014 Pronounced on: 31.03.2014 + ITA 483/2012, C.M. No. 14602/2012 (for exemption) & 20240/2013 (for amendment of appeal) NITI WADHAWAN …..Appellant Versus DCIT, CENTRAL CIRCLE-10 …..Respondent + ITA 251/2013 THE COMMISSIONER OF INCOME TAX XV …..Appellant Versus M/S. NITI WADHAWAN …..Respondent Through: Ms. Prem Lata Bansal, Sr. Advocate with Mr. Ram Avtar Bansal and Mr. Naman Nayar, Advocates, for Ms. Niti Wadhawan. Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Ruchir Bhatia, Jr. Standing Counsel, for Revenue. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V. EASWAR MR. JUSTICE S. RAVINDRA BHAT % 1. The following questions of law arise in the present cross appeals by the assessee and the Revenue against a common order of the Income Appellate Tribunal ("ITAT") dated 20.04.2012 in IT (SS) A. Page 2 No 242/Del/2006 and IT (SS) A. No. 8/Del/2007. The following questions of law arise for consideration: (a) Did the Tribunal fall into error in not holding that the addition made to the assessee's income was in a proceeding without jurisdiction on account of no satisfaction (and consequent notice) under Section 158BD of the Income Tax Act (ITA 483/2012); (b) Did the Tribunal fall into error in deleting a part of the amount added back by the AO as the assessee's undisclosed income on account of consideration received for property sold (ITA 251/2013). 2. On 27.05.2003, a search and seizure action under Section 132 of the Income Tax Act, 1961, ("the Act") was carried out in the case of Mr. Y.C. Wadhawan, the assessee's husband. As a result of that search, carried out on Mr. Y.C. Wadhawan (a separate assessee), the evidence and material were seized in the form of a draft agreement to sell and the carbon copy of a receipt. Shri Wadhwan was proprietor of M/s R.R. Enterprises (India). The business premises of M/s R.R. Enterprises were covered under Section 133A of the Act. Notice under Section 158BC of the Income Tax Act was issued. These assessees were served by affixture on two separate dates for filing a return of income for the Block Period within 15 days. A "nil" return of income was filed on 15.03.05. Notice under Sections 142(1) and 143(2) were issued. These remained unanswered. Even the final Page 3 show cause notice dated 12.05.05 remained unanswered. Therefore, the AO completed the assessment on the basis of the material available on record. 3. The appellant is the wife of Shri Y.C. Wadhawan, proprietor of the said R.R. Enterprises and M/s R.R. Enterprize (India). These concerns manufacture a range of fire-fighting equipment for ocean going ships such as pull tugs, floats, survey ships, passenger ships etc. They also cater for salvage group for ships and special items such as tobacco smoke filter, smoke vessels, etc. The AO completed assessment, and brought to tax an amount in excess of ` 49 lakhs in the hands of the appellant. She appealed to the CIT (A), contending that a search warrant had been issued in respect of her assets, limited to the locker in her name and that the search operations in respect of that yielded nothing. Consequently, the appellant/asseseee argued that the search and assessment were without jurisdiction and the AO's order had to be set aside. It was argued that the warrant and panchnama were not issued in her name and consequently the entire assessment was without jurisdiction. The CIT (Appeals) was of the opinion that since the assessee had not urged the question of lack of jurisdiction on account of want of notice before the AO, that issue could not be raised in appeal. He was also of the opinion that the material, used by the AO to saddle the appellant with a tax demand, was obtained on the basis of a search of her husband. Since the material – in the form of Page 4 documents – was also backed by her statements, the assessment of income in her hands was legal and valid. 4. The assessee appealed to the ITAT, cont