Smt. Radha Satish Timblo., Margao V. The Deputy Commissioner of Income Tax, Central Circle, Panaji., Panaji

CO 119/PAN/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4329 (ITAT-PANAJI)
• Duration Of Justice: 5 year(s) 5 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Assessment record; Capital Gains
• Section: 132; 143(3); 153A; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T. (SS) A. No. 74/PAN/2016 Assessment Year: 2009-10 Deputy Commissioner of Income Tax, Central Circle, Pundalik Niwas, Rua-De-Ourem, Panaji, Goa Vs. Smt. Radha Satish Timblo 1 st Floor, Kadar Manzil, Near Hari Mandir, Margao, Salcete, Goa 403601 [PAN: ABUPT 4107E] (Appellant) (Respondent) C. O. No. 119/PAN/2016 (In I.T. (SS) A. No. 74/PAN/2016) Assessment Year: 2009-10 Smt. Radha Satish Timblo 1 st Floor, Kadar Manzil, Near Hari Mandir, Margao, Salcete, Goa 403601 [PAN: ABUPT 4107E] Vs. Deputy Commissioner of Income Tax, Central Circle, Pundalik Niwas, Rua-De-Ourem, Panaji, Goa (Appellant) (Respondent) Appellant by : Shri M. R. Hegde, CA & Shri Shravan Swarup, CA Respondent by: Shri Manoj Joshi CIT, DR Date of Hearing: 04.04.2022 Date of Pronouncement: 13.05.2022 IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 2 ORDER Per Dr. M. L. Meena, AM: The appeal by the Revenue and cross objection by the assessee is filed against the impugned order dated 22.06.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Panaji, in respect of the Assessment Year 2009-10. 2. The Revenue has raised the following grounds of appeal: “1. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made on account of capital gain on sale of property at Majorda property? 2. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made on account of disallowance of loss on sale of assets? 3. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made on account of disallowance of gifts debited to P& L account? 4. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the additions relying on decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd and All Cargo Global Logistics Ltd in 374 ITR 645, stating that the assessment under section 153 A has to be made only on the basis of seized/incriminating material? 5. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in not considering the decisions given by the of Hon’ble High Court of Andhra Pradesh in the case of Gopal Lai Bhadruka in 346 ITR 106 and also the decision of Hon’ble Delhi Court in the case of Filatex India Ltd (229 Taxmann 559) wherein the courts held that the Assessing Officer has power to assess/reassess the total income of the assessee? IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 3 6. Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in not considering the decision of the Hon’ble High Court of Karnataka at Bangalore in the case of M/s Canara Housing Development Company in it A No. 38/2014 wherein it was held that AO is required to assess the “ total income “ and is not confined only to income which was unearthed during search? 7. For the above grounds and any additional grounds that may be agitated during the course of the hearing it is prayed that the order of the Ld. CIT(A)-2, Panaji may be quashed and that of the AO restored.” 3. Briefly the facts of the case as per record that the AO has made an addition of Rs. 15,04,99,641/- by way of income from capital gains arising out of agreement of sale dated 01.11.2008 in respect of property at Majorda Village in respect of the assessment year under consideration, i.e., 200910, based upon incriminating material alleged to be found and seized during the course of search conducted on the assessee u/s 132 of the IT Act, 1961 on 21.04.2010. Similarly, the AO further made additions by way of disallowance on loss of sale of assets and disallowance of gifts. 4. Aggrieved by the assessment order, the assessee filed an appeal before the ld. CIT(A) who has granted relief on merits vide para 4.1 & 4.2 of the appellate order by observing as under: “4.1 I have gone through the assessment order and the submissions made by the appellant and the ratio of the decision of the Jurisdictional High Court reported in 374 ITR 645. The AO has made 3 additions in the order u/s 153A r.w.s. 143(3) viz. income from capital gains from transfer of Majorda land, disallowance of loss on sale of assets and disallowance of gifts. In all the cases, no incriminating material was found during the course of search. AO has not made any mention of incriminating material or evidence of any kind relating to IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 4 these properties, assets and gifts found during the course of search in the assessment order. The AO was specifically asked to go through the seized material and appraisal report to ascertain whether there was any document relating to Majorda property or gifts found during the course of search? The AO after verification confirmed on 21.06.2015 that there was no incriminating material found relating to any of the additions made by the AO. The additions made by the AO are the routine addition, which cannot be made in an order passed u/s. 153A. As decided by the Jurisdictional High Court in 374 ITR 645 (referred supra) which confirms the decision of the special Bench of ITAT, Mumbai in the case of All Cargo Global Logistics Ltd. Vs DCIT, 16 ITR (Tribunal) 380, as there was no incriminating material found during the course of search relating to the additions made in the assessment made by the AO, the additions cannot be sustained. The additions u/s. 153A can be made if search revealed any incriminating material and if that was not found, the provisions of section 153A do not warrant making any order. Hon'ble High Court of Delhi also examined this issue in the case of CIT Vs Kabul Chawla 380 ITR 573. The Hon'ble High Court concurred with the decision of the Jurisdictional High Court in the case of Continental Warehousing Corporation (supra). In the case of CIT Vs Kabul Chawla, the summary of legal position with reference to the provisions of section 153A are given, the same are reproduced below for clarity about the provisions. “On a conspectus of section 153A(1) of the Act, read with the provisions thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place u/s. 132 of the Act, notice u/s. 153(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding to previous year relevant to the A.Y. in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs “in which IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 5 both the disclosed and the undisclosed Income would be brought to tax.” iv. Although, section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this section only on the basis of seized material. ” v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment u/s. 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment u/s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.’’ 4.2. Thus, after going through the legal provisions on the ratio of judgments of various High Courts including the Jurisdictional High Court, it is found that the additions made by the AO are routine additions without reliance on any incriminating documents found during the course of search. As held in the judgments referred to above, a completed assessment cannot be interfered with by the AO while making an assessment u/s. 153A unless some incriminating material is unearthed during the course of search or requisition of documents or IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 6 undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. It is true, that section 153A does not specify that the additions should be made strictly on the basis of evidence found in the course of search, or other post search material or information available with the AO which can be related to the evidence found. But at the same time it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Therefore, the assessment has to be made u/s. 153A only on the basis of seized/incriminating material, undisclosed assets/investments etc. Hence, the additions made by the AO in the assessment order amounting to Rs.15,16,28,551/- relating to long term capital gains, disallowance on loss of sale of assets and disallowance of gifts is hereby deleted. Ground no.2 is allowed.” 5. The ld. Departmental Representative submitted that the ld. CIT(A) has erred in deleting the addition made on account of capital gains on the sale of the property at Majorda Village and that he has deleted addition made on account of disallowance of loss on sale of assets and disallowance of Gifts debited to P & L Account. He objected to the the CIT(A)’s reliance on the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. and All Cargo Global Logistics Ltd. 374 ITR 645, contending that assessment u/s 153A is to make only on the basis of the seized and incriminating material. The ld. DR has further submitted that the CIT(A) erred by not considering the decisions of Hon’ble High Court of Andhra Pradesh in the case of Gopal Lal Bhadruka 346 ITR 106 and also the decision of Hon’ble Delhi High Court in the case of Filatex India Ltd. 229 Taxmann 559 wherein the courts held that the AO has to power to assess/reassess the total income of the assessee. He also contended that the CIT(A) ignored the decision of the Hon’ble High Court of Karnataka in the case of M/s Canara Housing Development Company in ITA No. 38/2014 wherein it was held that the AO is required to assessee total income and not confined to the income unearthed during IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 7 the course of search. Further, submitted that the assessee gets fourteen villas/ Rs. 3 crore as consideration of sale of land, thus it is required to substantiate the value of sale consideration and in this present case, the assessee has actual possession by way of construction rights, so liable for the capital gains tax. He prayed that the addition may be sustained an addition made by the ld. AO on account of capital gains on the property may be sustained. 6. Per contra, the ld. counsel for the assessee supported the order of the ld. CIT(A). He has filed a written submission in support of its argument with a brief note which reads as under: “1. This written submission is being filed on the instructions of the Hon’ble Bench and it accordingly is confined to the issue where the impugned addition of Rs. 15,04,99,641/-, which is the subject matter of this appeal, made by the assessing officer in the assessment order for the impugned assessment year 2009-10, by way of Income from capital gains arising out of agreement of sale dated 01/11/2008 in respect of property at Majorda Village is relatable to or based upon incriminating material found and seized during the course of search made on the assessee, u/s 132 of the I.T. Act,1961, on 21/04/2010. 2. It is submitted that the above addition is not relatable to or based upon incriminating material found and seized during the course of search made on the assessee, u/s 132 of the I.T. Act, 1961 on 21/04/2010. 3. The Commissioner of Income Tax Appeals has in his order dated 22/06/2016, which is challenged by the Department in this impugned appeal, states categorically in Para 4.1 of his order that the assessing officer was specifically asked to go through the seized material and appraisal report to ascertain whether there was any document relating to Majorda Property found during the course of search. The CIT(Appeals) further states that the A.O. after verification confirmed on 21/06/2015 that there was no incriminating material found relating to the same. The CIT(Appeals) therefore deleted this addition as the same was not based IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 8 on any seized incriminating material as admitted by the assessing officer on 21/06/2015. The CIT(Appeals) relied upon the decision of the jurisdictional Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation [374 ITR 645] and the decision of the Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla [380 ITR 573] in deleting the said addition. 4. The Hon’ble Bench had, during the course of hearing on 05/10/2021, directed the CIT-DR to ascertain from the assessing officer and the relevant assessment records whether there was any seized material which indicated the impugned transaction and to inform the bench regarding the same on 06/10/2021. 5. The learned CIT-DR has orally informed the bench, today, that no such incriminating seized material was found and also filed a letter to this effect.” 7. We have gone through the rival submissions, perused the material on record and case law cited before us. It is seen that the disputed addition made by the AO is not based upon incriminating material found and seized during the course of search made on the assessee, u/s 132 of the I.T. Act, 1961 on 21/04/2010. The Commissioner Appeals has in the impugned order, categorically mentioned in Para 4.1 that the AO, was specifically asked to go through the seized material and appraisal report to ascertain whether there was any document relating to Majorda Property found during the course of search. The CIT(Appeals) further stated that the A.O. after verification of records has confirmed vide letter dated 21/06/2015 that there was no incriminating material found relating to the aforesaid disputed property. Accordingly, the CIT(Appeals) has deleted this addition as the addition made by the AO was not based on any seized document or incriminating material as admitted by the AO. The CIT(Appeals) has placed reliance upon the decision of the Hon’ble Jurisdictional Bombay High Court IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 9 in the case of “CIT Vs. Continental Warehousing Corporation” [374 ITR 645], wherein considering the Special Bench of ITAT, Mumbai in the case of All Cargo Global Logistics Ltd. Vs DCIT, 16 ITR (Tribunal) 380, held that as there was no incriminating material found during the course of search relating to the additions made in the assessment made by the AO, the additions cannot be sustained. and further the decision of the Hon’ble Delhi High Court in the case of “CIT Vs. Kabul Chawla”, [380 ITR 573] and deleted the said addition. 8. The Ld. CIT(DR), during the course of hearing on 05/10/2021, was directed by the Bench to verify and ascertain from the assessing officer and the relevant assessment records whether there was any seized material, indicating the impugned transaction and if yes, please, inform the bench regarding the same on 06/10/2021. On the latter date of hearing, the learned CIT(DR) has orally informed the bench, that no such incriminating seized material was found and also filed a letter to this effect which is placed on record. 9. On merits, the Ld. AR submitted that the assessee has handed over documentary possession of the property in the year 2012 on receiving possession of Villas on 06/03/2013 as per clause 17 as per agreement to sale (APB, Pg.149-190, specific pg. 164) and therefore, the disputed property is assessable to capital gains tax in the assessment year 2012-13 and accordingly, the assessee has offered the same for taxation with payment of Taxes of Rs. 5.18 crore in the return of income filed where Assessment was completed accepting the return income by the AO. The defendant Counsel argued that the same income cann’t be tax twice i. e. once in the year 2009-10 and again in 2012-13. In our view, the assessee IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 10 has offered the income from the disputed property for capital gains tax in the assessment year 2012-13 on handing over of possession as per agreement to sale, and completion of transaction under the law and accordingly, offered for taxation by way of payment of Taxes of Rs. 5.18 crore in the return of income filed. We find no merits in the grounds of appeal of the department and arguments of the Ld. (DR) in taxing the property in the year of appeal. 10. The case laws relied upon by the department in the grounds of appeal, are distinguishable on the peculiar facts of the case. Further, the defendant counsel placed reliance on the direct decision of the Hon’ble Jurisdictional Bombay High Court in the case of “CIT Vs. Continental Warehousing Corporation” (Supra) which is binding judgement as per judicial disciple and accordingly it has to be followed. 11. We understand that section 153A does not specify that the additions should be made strictly on the basis of evidence found in the course of search, or other post search material or information available with the AO which can be related to the evidence found. But at the same time, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. In our view, the assessment has to be made u/s. 153A only on the basis of seized/incriminating material, undisclosed assets/investments etc. Thus, we hold that the Ld. CIT(A) was justified in deleting the additions made by the AO in the assessment order amounting to Rs.15,16,28,551/- relating to long term capital gains, disallowance on loss of sale of assets and disallowance of gifts. Thus, finding no infirmity, the CIT(A)’s order is sustained and IT(SS)A No.74 & CO 119/PAN/2016 Assessment Year: 2009-10 11 Accordingly, Revenue Ground Nos. 1, 2, 3 in specific and 4 to 7 in general are hereby dismissed. C.O. No. 119/PAN/2016 (In I.T. (SS) A. No. 74/PAN/2016) 12. At the time of hearing, the Ld AR submitted that he is not pressing its grounds and additional grounds raised under C.O. No. 119/PAN/2016 in I.T. (SS) A. No. 74/PAN/2016, regarding recording of satisfaction by AO for issuance of notice u/s 153A of the Act, and hence, the Co119/PNJ/2016 in respect of the Assessment Years 2009-10 is dismissed as not pressed. 13. In the result, the appeal of the revenue and the Cross objection of the assessee are dismissed. Order pronounced in the open court on 13.05.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 13.05.2022 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order