Shri Avtarsingh Khurana, Ahmedabad V. The Dy. CIT, (OSD) Range - 1, Ahmedabad

CO 173/AHD/2013

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3118 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA UPMANYA
• Keywords: Search and seizure; Documents seized
• Section: 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ IT(SS)A.NO.157/AHD/2013 / ASSTT. YEAR: 2008-2009 DCIT (OSD) RANGE-1, AHMEDABAD. VS. SMT.MADHU KHURANA SAHJANANAD PLAZA SANJAY SACHIN ROAD AHMEDABAD. PAN : ALYPK 2443 E ./ IT(SS)A.NO.158/AHD/2013 WITH CO NO.173/AHD/2013 / ASSTT. YEAR: 2008-2009 DCIT (OSD) RANGE-1, AHMEDABAD. VS. SHRI AVTARSINGH KHURANA SAFAL VIHAN, NR.EKLAVYA SCHOOL SARKHEJ SANAND ROAD AHMEDABAD. PAN : AFHPK 5758 B ( APPLICANT ) ( RESPONENT ) REVENUE BY : MS.VASUNDHARA UPMANYA, CIT- DR ASSESSEE BY : SHRI S.N. SOPARKAR WITH SHRI PARIN SHAH, AR / DATE OF HEARING : 30/08/2017 / DATE OF PRONOUNCEMENT: 07 /09/2017 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE HAS CHALLENGED ORDER OF THE LD.CIT(A)-VI, A HMEDABAD DATED 28.2.2013 PASSED ON THE RESPECTIVE APPEALS OF RESPO NDENTS IN THE ASSTT.YEAR IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 2 2008-09. ON RECEIPT OF NOTICE IN THE REVENUES APPE AL, THE ASSESSEE, SHRI AVTARSINGH KHURANA HAS FILED CROSS-OBJECTION BEARIN G CO NO.173/AHD/2013. 2. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT ASSESSMENT ORDERS ARE NOT SUSTAINABLE BECAUSE JURIS DICTION ASSUMED BY THE AO UNDER SECTION 153C IS NOT AVAILABLE TO HIM, AND THE REFORE, WITHOUT GOING INTO THE MERITS OF ADDITION DELETED BY THE LD.CIT(A) AND CHALLENGED BY THE REVENUE, IT IS NECESSARY TO ADJUDICATE THIS PRELIMI NARY OBJECTION OF THE ASSESSEE WHICH IS A JURISDICTIONAL ISSUE. HE POINT ED OUT THAT IN THE CO FILED BY SHRI AVATARSINGH KHURANA, THE ASSESSEE HAS CHALLENG ED ASSUMPTION OF JURISDICTION UNDER SECTION 153C OF THE INCOME TAX A CT BY THE AO. HE FURTHER CONTENDED THAT IN THE CASE OF SMT.MADHU KHURANA, TH E ASSESSEE HAS NOT FILED CO, BUT TAKEN THIS GROUND OF APPEAL BEFORE THE LD.C IT(A), AND THEREFORE, WITH THE HELP OF RULE 27 OF THE INCOME TAX (APPELLATE TR IBUNAL) RULES, THE ASSESSEE CAN SUPPORT ORDERS OF THE LD.CIT(A) ON THE BASIS OF ANY ISSUE WHICH WERE AGAINST HIM AND NOT CHALLENGED IN APPEAL AS WE LL AS BY CO. HE DREW OUR ATTENTION TOWARDS GROUND NO.2 TAKEN BEFORE THE LD.C IT(A). IT IS IDENTICAL TO GROUND NO.1.1 AND 1.2 TAKEN IN THE CO FILED BY SHRI AVATARSINGH KHURANA. THESE GROUNDS READ AS UNDER: 1.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF T HE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN REJEC TING GROUNDS NO. 1 AND 2 OF THE RESPONDENT'S APPEAL BEFORE HIM CHALLEN GING THE VERY VALIDITY OF THE ASSESSMENT ORDER PASSED U/S. 153A R EAD WITH SECTION 153C AND 143(3) OF THE INCOME-TAX ACT, 1961. 1.2 WITHOUT PREJUDICE TO THE FOREGOING, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE IMPUGNE D ASSESSMENT ORDER PASSED U/S. 153A READ WITH SECTION 153C AND 143(3) OF THE INCOME-TAX ACT, 1961 IS VOID AND DESERVES TO BE CANCELLED. BEFORE THE LD.CIT(A) IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 3 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE PROCEEDING U/S 153C AND CONSEQUENTIAL ORDER U/S . 153C/153A R.W.S 143(3) PASSED BY THE A.O. IS BAD IN LAW, VOID, ILLE GAL AS IT HAS BEEN PASSED WITHOUT PROPER JURISDICTION AND AUTHORIZATIO N AND WITHOUT COMPLYING WITH THE REQUIREMENTS OF 153C. THUS, THE SAME IS REQUIRED TO BE DROPPED BY HOLDING IT TO BE ILLEGAL, INVALID AND VOID AB INITIO.: 3. BEFORE TAKING UP THE ARGUMENTS OF THE LD.REPRESE NTATIVES, WE DEEM IT APPROPRIATE TO TAKE NOTE OF RULE 27 OF THE INCOME T AX (APPELLATE TRIBUNAL) RULES, 1963. IT READS AS UNDER: 27. RESPONDENT MAY SUPPORT ORDER ON GROUNDS DE CIDED AGAINST HIM:- THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF TH E GROUNDS DECIDED AGAINST HIM. 4. A PERUSAL OF THIS RULE WOULD INDICATE THAT RESPO NDENT MAY SUPPORT THE IMPUGNED ORDER ON THE BASIS OF GROUND WHICH WAS DEC IDED AGAINST HIM BY THE LOWER APPELLATE AUTHORITY DESPITE OF THE FACT THAT THE RESPONDENT HAS NOT CHALLENGED THE ORDER OF THE LOWER AUTHORITIES IN FU RTHER APPEAL. IN OTHER WORDS, THE ASSESSEE WHO HAS TAKEN A GROUND BEFORE T HE LD.CIT(A) AND THAT GROUND WAS DECIDED AGAINST THE ASSESSEE, AND THE OR DER WAS NOT CHALLENGED BY THE ASSESSEE BEFORE THE TRIBUNAL, IN SPITE OF THAT, IN THE APPEAL OF THE REVENUE, THE ASSESSEE CAN PLEAD THAT APPEAL OF THE REVENUE D ESERVES TO BE DISMISSED ON THE GROUND TAKEN BY HIM BEFORE THE LD.CIT(A). IN O THER WORDS, THE ASSESSEE COULD PLEAD FOR UPHOLDING THE ORDER OF THE LD.CIT(A ) ON THE GROUND RAISED BY HIM BEFORE THE LD.CIT(A) THOUGH THAT GROUND WAS DEC IDED AGAINST THE ASSESSEE. THE TRIBUNAL MAY UPHOLD ORDER OF THE LD. CIT(A) BY RE-APPRECIATING THE GROUNDS RAISED BY THE ASSESSEE BEFORE THE LD.CI T(A) AND WHICH WAS DECIDED AGAINST THE ASSESSEE. ON SUCH RE-APPRECIA TION THAT GROUND CAN BE CONSIDERED AS ALLOWED AND CAN RESULT INTO UPHOLDING OF THE ORDER OF THE IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 4 LD.CIT(A). THEREFORE, WE TAKE COGNIZANCE OF THE GR OUND NO.2 RAISED BY THE ASSESSEE BEFORE THE LD.CIT(A) WHICH IS PARI MATERIA TO GROUND RAISED BY SHRI AVTARSINGH KHURANA IN HIS CO. SHRI S.N.SOPARKAR HA S FURTHER CONTENDED THAT A SEARCH UNDER 132 OF THE INCOME TAX ACT WAS CARRIE D OUT ON 30.5.2008 AT THE PREMISES OF DR. RAJESH RAJORA. ACCORDING TO THE RE VENUE, SOME INCRIMINATING EVIDENCE WAS FOUND AT HIS PREMISES WH ICH SATISFIED THE AO OF THE SEARCHED PERSON TO TRANSMIT THAT INCRIMINATING MATERIAL TO THE AO OF THESE ASSESSEES FOR TAKING UP THE PROCEEDINGS UNDER SECTI ON 153C OF THE INCOME TAX ACT. AS FAR AS PROPOSITION OF LAW CONTEMPLATED UN DER SECTION 153C FOR INITIATING PROCEEDINGS AGAINST PERSON OTHER THAN TH E SEARCHED PERSONS IS CONCERNED NO-ONE HAS DISPUTED BEFORE US. THE DISPU TE RAISED BY THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE SEARCHED PE RSON HAS CHALLENGED THE SEARCH BY WAY OF WRIT PETITION BEFORE THE HONBLE M ADHYA PRADESH HIGH COURT IN WRIT PETITION NO.13833 OF 2010 I.E. WRIT P ETITION WAS ALLOWED BY THE HONBLE HIGH COURT AND SEARCH WAS DECLARED AS ILLEG AL. A CONCLUSION OF THE HONBLE HIGH COURT READS AS UNDER: 12. IN THE PRESENT CASE, IN SEPTEMBER 2007 THE SEA RCH WAS CARRIED OUT IN THE PREMISES OF DR. YOGI RAJ SHARMA. THE DOCUMENT A NNEXURE RJ-1 WAS SEIZED BY THE RESPONDENTS. AT THE RELEVANT TIME PET ITIONER NO. 1 WAS THE CHIEF HEALTH SECRETARY AND THIS FACT WAS WITHIN THE KNOWLEDGE OF THE RESPONDENTS, BUT WHY THE SEARCH WAS CONDUCTED ON 30 .5.2008 AFTER A PERIOD OF NEAR ABOUT 9 MONTHS, THERE IS NO EXPLANAT ION IN THIS REGARD. THE DOCUMENT ANNEXURE RJ-1 WAS SEIZED FROM THE PREMISES OF DR. YOGI RAJ SHARMA BUT UNTIL AND UNLESS THERE IS CORROBORATING EVIDENCE THE RESPONDENTS COULD NOT HAVE FORMED THE BASIS OF ISSU ING WARRANT OF AUTHORIZATION. IT APPEARS THAT BECAUSE OF THE ALLOT MENT OF HOUSE TO RESPONDENT NO.4, THERE WAS SOME ANNOYANCE OF THE AU THORITIES AND AS SOON AS ON 20.5.2008 THE HOUSE WAS GOT ALLOTTED BY CHIEF MINISTER, ON 28.5.2008 WARRANT OF AUTHORIZATION WAS ISSUED AND ON 30.5.200 8 SEARCH WAS CONDUCTED. IF THERE WAS SOME MATERIAL WITH THE DEPA RTMENT THAT THE PETITIONERS HAD PURCHASED SOME HOUSE OR LAND PROPER TY, THEN THERE COULD HAVE BEEN DEFINITE EVIDENCE IN THIS REGARD, BUT FOR A PERIOD OF 8 MONTHS NO INFORMATION WAS COLLECTED AND ALL OF A SUDDEN THE W ARRANT OF AUTHORIZATION WAS ISSUED. FROM THE PERUSAL OF PANCHNAMA PREPARED DURING SEIZURE IT APPEARS THAT NO OBJECTIONABLE DOCUMENT OR UNDISCLOS ED PROPERTY WAS FOUND EXCEPT THOSE WHICH WERE DECLARED IN THE EARLIER RET URN. THERE IS NO OTHER EVIDENCE AVAILABLE ON RECORD THAT THE DOCUMENT ANNE XURE RJ-1 RELATES TO IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 5 THE PETITIONER AND THE WORD CH OF WHICH CORRECTNE SS IS DISPUTED BY THE PETITIONER INDICATES TO THE PETITIONER. IN ABSENCE OF ANY COGENT REASONS IN THE PRESENT MATTER WARRANT OF AUTHORIZATION COULD N OT HAVE BEEN ISSUED, AS HAS BEEN HELD BY THE AFORESAID JUDGMENTS. ISSUANCE OF WARRANT OF AUTHORIZATION IS A SERIOUS ACTION AND FOR THIS AUTH ORIZATION OFFICER SHOULD HAVE RECORDED HIS SATISFACTION. THOUGH NORMALLY THI S COURT IS NOT LOOKING TO THE REASONS OF SATISFACTION, BUT IN THE PRESENT CAS E IT APPEARS THAT THE WARRANT OF AUTHORIZATION WAS ISSUED MERELY ON HYPOT HECATED GROUNDS, WHICH IS NOT SUSTAINABLE UNDER THE LAW. 13. A DIVISION BENCH OF THIS COURT IN GAYA PRASAD P ATHAK VS. ASSISTANT COMMISSIONER OF INCOME TAX AND OTHERS (2007) 290 IT R 128 (MP) HAS CONSIDERED THAT IN THE ASSESSMENT PROCEEDINGS THE A UTHORITIES HAVE NO POWER TO CONSIDER THE VALIDITY OF AUTHORIZATION UND ER SECTION 132(1) OF THE ACT AND THE REMEDY AVAILABLE TO THE PETITIONERS IS BY WAY OF FILING WRIT PETITION. 14. IN THE PRESENT CASE, WE HAVE EXAMINED THE ENTIR E PROCEEDINGS, SATISFACTION NOTE, THE DOCUMENT ANNEXURE RJ- 1, WHI CH IS THE BASIS FOR ISSUANCE OF WARRANT OF AUTHORIZATION AND ULTIMATELY THE SEIZURE MEMO AND FIND THAT THE ENTIRE ACTION WHICH WAS INITIATED AND TAKEN WAS BASED ON WITHOUT ANY SUFFICIENT GROUND OR MATERIAL AND IT AP PEARS THAT BECAUSE OF DISPUTE IN RESPECT OF ALLOTMENT OF HOUSE, THE RESPO NDENTS COULD GET AN OPPORTUNITY TO ISSUE WARRANT OF AUTHORIZATION, RESU LTANTLY SEARCH IN THE PREMISES OF PETITIONERS AS CONDUCTED. 15. IN VIEW OF AFORESAID, THE ACTION OF THE RESPOND ENTS CANNOT BE SUSTAINED UNDER THE LAW AND ACCORDINGLY THIS PETITION IS ALLO WED AND THE ISSUANCE OF WARRANT OF AUTHORIZATION AND CONSEQUENT SEARCH AND SEIZURE PROCEEDINGS ARE HEREBY QUASHED. CONSIDERING THE FACTS OF THE CA SE, THERE SHALL BE NO ORDER AS TO COSTS. 5. ON THE STRENGTH OF THIS ORDER, IT HAS BEEN PLEAD ED BEFORE US THAT ONCE ISSUANCE OF WARRANT OF AUTHORIZATION AND SUBSEQUENT SEARCH AND SEIZURE PROCEEDINGS ARE QUASHED, THEN IT WILL BE CONSTRUED THAT NOTHING WAS RECOVERED FROM THE SEARCHED PERSON. IN OTHER WORDS, NO COGNI ZANCE CAN BE TAKEN FOR THE PURPOSE OF ASSUMING JURISDICTION UNDER SECTION 153C OF THE INCOME TAX ACT FOR INITIATING PROCEEDINGS AGAINST THE ASSESSEE. T HE LD.DR WAS UNABLE TO CONTROVERT THIS DECISION. 6. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE DEEM IT APPROPRIATE TO TAKE NOTE OF SECTION 153C WHICH READ S AS UNDER: IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 6 153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON -(1 ) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SEC TION 148, SECTION 149, SECTION 151 AND SECTION 163, WHERE THE ASSESSI NG OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR RE QUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRE D TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SE IZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SU CH OTHER PERSON NOTICE AND ASSESSEE OR REASSESS INCOME OF SUCH OTHE R PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A.' 7. A BARE PERUSAL OF THE SECTION WOULD REVEAL THAT WHERE THE AO OF THE SEARCHED PERSON IS SATISFIED THAT ANY MONEY, BULLIO N, JEWELLERY, BOOKS OF ACCOUNT OR OTHER DOCUMENTS, ETC., BELONG TO A PERSO N OTHER THAN THE PERSON SEARCHED, THEN, SUCH DOCUMENTS OR ASSETS SHALL BE H ANDED OVER TO THE AO OF OTHER PERSON AND THE LATTER AO SHALL PROCEED AGAINS T SUCH OTHER PERSON TO ASSESS OR REASSESS HIS INCOME. HOWEVER, BEFORE HAND ING OVER THESE DOCUMENTS AND ASSETS, THE AO OF THE SEARCHED PERSON WOULD REC ORD HIS SATISFACTION THAT THE ASSETS AND DOCUMENTS BELONG TO SOME OTHER PERSO N THAN THE SEARCHED PERSON. THE AO OF SUCH OTHER PERSON WOULD ACQUIRE J URISDICTION TO MAKE ASSESSMENT OR REASSESSMENT OF THE OTHER PERSON ONLY WHEN SATISFACTION WAS RECORDED BY THE AO OF THE SEARCHED PERSON EXHIBITIN G THAT DOCUMENTS AND ASSETS BELONGING TO OTHER PERSONS SO FOUND AND IT I S TRANSMITTED TO THE AO OF THE OTHER PERSON HAVING JURISDICTION OVER SUCH OTHE R PERSON. 8. IT IS PERTINENT TO OBSERVE THAT VERY FOUNDATION FOR RECORDING SATISFACTION WITH EVIDENCE EXHIBITING RECOVERY OF ANY MONEY, BUL LION, JEWELLERY ETC. WAS FOUND FROM THE PREMISES OF SEARCHED PERSON IS RELAT ED TO OTHER PERSON HAS BEEN EXTINGUISHED AFTER DECISION OF THE HONBLE MAD HYA PRADESH HIGH COURT. IT IS TO BE CONSTRUED THAT DEPARTMENT WAS NOT ABLE TO LAY ITS HAND ON ANY OF THE MATERIAL WHICH COULD AUTHORISE THE AO OF THE SEARCH ED PERSON TO RECORD HIS IT(SS)A NO.157 AND 158/AHD/2013 WITH CO 7 SATISFACTION AND TRANSMIT THAT MATERIAL TO THE AO O F THE PRESENT ASSESSES. THEREFORE, THE ASSESSMENT ORDERS ARE NOT SUSTAINABL E. ORDER OF THE LD.CIT(A) PASSED IN THE APPEAL OF THE RESPECTIVE APPELLANTS I S THEREFORE, UPHELD. IN OTHER WORDS, BOTH THE APPEALS OF THE REVENUE ARE DISMISSE D. CO IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED AND THE CO OF THE ASSESSEE IS ALLOWED STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 7 TH SEPTEMBER, 2017 AT AHMEDABAD. SD/- SD/- ( PRADIP KUMAR KEDIA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER