M/s. Shiv Developers, Baroda V. The ACIT.,Central Circle-1, Baroda

CO 192/AHD/2009

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6304 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 24-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M MEHTA
• Assessee Lawyers: S P TALATI
• Keywords: Opportunity of being heard; Validity of assessment
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2289,2290 / AHD/2009 (ASSESSMENT YEAR 2001-02, 2002-03) ACIT, CC-I, BARODA VS. M/S. SHIV DEVLEOPERS, MALHAR PARK, B/H, YOGESHWAR SOCIETY, TARASALI, BARODA C.O. NO.192 & 193/AHD/2009 IN I.T.A.NOS.2289 & 2290/AHD/2009 (ASSESSMENT YEARS 2001-02 & 2002-03 RESPECTIVELY) M/S. SHIV DEVLEOPERS, VS. ACIT, CC-I, MALHAR PARK, BARODA B/H, YOGESHWAR SOCIETY, TARASALI, BARODA PAN/GIR NO. : AAOFS5244Q (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S.P. TALATI, SR. DR RESPONDENT BY: SHRI P M MEHTA, AR DATE OF HEARING: 26.09.2011 DATE OF PRONOUNCEMENT: 30.09.2011 O R D E R PER BENCH:- THESE TWO APPEALS OF THE REVENUE AND TWO CROSS OBJ ECTIONS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST TWO SEPA RATE ORDERS OF LD. CIT(A) IV, AHMEDABAD BOTH DATED 13.01.2009 FOR THE ASSESSMENT YEARS 2001-02 & 2002-03. I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 2 2. FIRST, WE TAKE UP THE CROSS OBJECTIONS FILED BY THE ASSESSEE. THE GROUNDS RAISED BY THE ASSESSEE IN BOTH THE CROSS OB JECTIONS ARE IDENTICAL EXCEPT SOME DIFFERENCE IN DATES REGARDING FILING OF ORIGINAL RETURN OF INCOME AND HENCE, WE REPRODUCE THE GROUNDS RAISED B Y THE ASSESSEE IN C.O. FOR THE ASSESSMENT YEAR 2001-02 I.E. C.O. NO.1 92/AHD/2009: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN NOT UPHOLDING THE ASSESSEES OBJECTION TO THE PROCEEDINGS BEING TAKEN U/S 153C. 2) WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE ALSO HELD THAT SIN CE THE CLAIM IN REGARD TO DEDUCTION U/S 80-IB(10) WAS MADE BY THE A SSESSEE IN ITS ORIGINAL RETURN ALSO WHICH WAS FILED ON 27.08.2011 I.E. MUCH BEFORE THE PROCEEDINGS WERE INITIATED U/S 153C THE PROCESS ING OF THIS CLAIM WAS NOT PERMISSIBLE IN THE ORDER PURPORTEDLY MADE U/S. 153C. 3. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT A SEARCH ACTION U/S 132 OF TH E INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE MANGLA GROUP OF CASES ON 24. 11.2005. NOTICE U/S 153C WAS ISSUED ON 27.07.2007 IN BOTH THE YEARS AN D IN RESPONSE TO THIS, THE ASSESSEE FIELD THE RETURN ON 21.09.2007 IN BOTH THE YEARS DECLARING AN INCOME OF RS.19,71,460/- IN ASSESSMENT YEAR 2001-02 AND RS.3.64 LACS IN ASSESSMENT YEAR 2002-03. IT IS ALSO NOTED BY THE A .O. THAT THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 27.08 .2001 DECLARING AN INCOME OF RS.19,71,460/- IN ASSESSMENT YEAR 2001-02 AND IN ASSESSMENT YEAR 2002-03, ORIGINAL RETURN OF INCOME WAS FILED B Y THE ASSESSEE ON 11.09.2002 DECLARING AN INCOME OF RS.3.64 LACS. IN THE IMPUGNED ASSESSMENT ORDER FOR BOTH THE YEARS, THE A.O. HAS M ADE ONLY ONE ADDITION I.E. BY WAY OF DISALLOWING THE ASSESSEES CLAIM FOR DEDUCTION U/S 80- IB(10) OF RS.1,27,60,248/- IN ASSESSMENT YEAR 2001- 02 AND RS.29,57,865/- IN ASSESSMENT YEAR 2002-03. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CI T(A) IN BOTH THE YEARS. I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 3 4. BEFORE CIT(A), APART FROM RAISING THE GROUNDS ON MERIT OF THE DISALLOWANCE MADE BY THE A.O., LEGAL GROUND WAS ALS O RAISED CONTENDING THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS VOI D AND IS UNCALLED FOR MORE SO WHEN NO INCRIMINATING DOCUMENT PERTAINING T O THE ASSESSEE WAS FOUND DURING THE SEARCH OPERATION AT MANGLA GROUP. THIS LEGAL ISSUE WAS DECIDED BY THE LD. CIT(A) ON THIS BASIS THAT THE AS SESSEE HAS NOT RAISED ANY OBJECTION WITHIN THE TIME SPECIFIED FOR THE SAM E AFTER RECEIPT OF THE NOTICE CALLING FOR RETURN U/S 153C ON 27.07.2007 AN D HENCE, IT WAS NOT OPEN FOR THE ASSESSEE TO QUESTION THE SAME BEYOND T HE TIME LIMIT. IT IS FURTHER STATED BY HIM THAT THE ASSESSMENT WAS ALSO FRAMED ON THE BASIS OF MATERIAL SEIZED IN THE SEARCH CARRIED OUT U/S 132 I N THE CASE OF MANGLA GROUP OF CASES ON 24.11.2005. NOW, THE ASSESSEE HA S RAISED THIS ISSUE BEFORE US BY WAY OF THIS C.O. IN BOTH THE YEARS. 5. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT THE RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED BY THE A. O. U/S 153C WAS FILED BY THE ASSESSEE FOR BOTH THE YEAS UNDER PROTEST AND IN SUPPORT OF THIS CONTENTION, OUR ATTENTION WAS DRAWN TO THE COPY OF RETURN OF INCOME FILED BY THE ASSESSEE WHICH IS AVAILABLE ON PAGES 1-11 OF THE PAPER BOOK. IN PARTICULAR OUR ATTENTION WAS DRAWN TO NOTE NO.4 ATT ACHED WITH THE COMPUTATION OF INCOME, AS PER WHICH, IT WAS CONTEND ED BY THE ASSESSEE THAT NO SEARCH HAS TAKEN PLACE IN THE CASE OF THE A SSESSEE U/S 132 AND NO BOOKS WERE REQUISITIONED U/S 132A AND THEREFORE, TH E NOTICE ISSUED BY THE A.O. U/S 153A APPEARS TO BE VOID AND IS REQUIRED TO BE WITHDRAWN AND THE RETURN IS BEING FILED UNDER PROTEST. IT WAS THE SU BMISSION BY THE LD. A.R. THAT IT IS NOT PROPER ON THE PART OF LD. CIT(A) TO SAY THAT NO OBJECTION WAS RAISED BY THE ASSESSEE BEFORE THE A.O. REGARDING TH E LEGAL VALIDITY OF THE PROCEEDINGS INITIATED BY THE A.O. U/S 153C. RELIAN CE WAS PLACED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 4 VIJAYBHAI N CHANDRANI VS ACIT AS REPORTED IN 333 IT R 436 (GUJ.) WHEREIN, IT WAS HELD BY THE HON'BLE GUJARAT HIGH CO URT THAT IF THE DOCUMENTS FOUND IN THE COURSE OF SEARCH DO NOT BELO NG TO THE ASSESSEE, ALTHOUGH THERE IS A REFERENCE TO THE ASSESSEE IN TH OSE DOCUMENTS, ISSUE OF NOTICE TO THE ASSESSEE U/S 153C IS NOT VALID. 6. LD. D.R. OF THE REVENUE SUPPORTED THE ORDER OF L D. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE LEGAL ISSUE RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 2.1 OF HIS ORDER, WHICH IS REPRODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE RECORDS. ON PERUSAL OF RECORDS,' IT HAS BEE N NOTICED THAT THE APPELLANT HAS NOT RAISED ANY OBJECTION WITHIN THE T IME SPECIFIED FOR THE SAME AFTER RECEIPT OF NOTICE CALLING FOR RETURN U/S 153C ON 27.07.2007, SO THAT IT WAS NOT OPEN TO. HIM TO QUES TION THE SAME BEYOND TIME LIMIT. IN COMPLIANCE TO THIS NOTICE, TH E APPELLANT HAD FILED RETURN ON 21.09.2007 WHICH IS EVIDENCE OF ACC EPTANCE OF THE JURISDICTION OF THE ASSESSING OFFICER. NOT ONLY THI S, EVEN THE ASSESSMENT WAS ALSO FRAMED ON THE BASIS OF MATERIAL SEIZED IN THE SEARCH CARRIED OUT U/S 132 IN CASE OF MANGLA GROUP OF CASES ON 24.11.12005. FURTHER, WHERE JURISDICTION HAS J BEEN WRONGLY ASSUMED, IT CANNOT BE RAISED FOR THE FIRST TIME IN APPEAL IN VIEW OF SECTION 124(3) AS DECIDED BY HON'BLE SUPREME COURT IN CASE OF RAI BAHADUR SETH TEOMAL V/S. CIT (36 ITR 9). THE PRINCIPLE BEHIND SECTION 124(3) IS THAT NO ASSESSEE CAN CLAIM A BASI C RIGHT TO BE ASSESSED BY ANY PARTICULAR ASSESSING OFFICER. IT WAS HELD BY HON'BLE GUJARAT HIGH COURT IN CASE OF SHIVABHAI KOD ABHAI PATEL V/S. CIT (244 ITR 457) THAT THE JURISDICTION CAN BE CHALLENGED ONLY BY THE PROCEDURE LAID DOWN BY LAW, SO THAT, WHERE' IT IS NOT CHALLENGED, IT AMOUNTS TO WAIVER OR ACQUIESCENCE, W HICH RE LAW WILL NOT DISREGARD. HENCE, THE VALIDITY OF ASSESSMENT OR DER IS HEREBY CONFIRMED INCLUDING JURISDICTION OF THE ASSESSING O FFICER. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES-OF THE CAS E, THE FIRST GROUND OF APPEAL IS HEREBY DISMISSED. I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 5 8. IN ASSESSMENT YEAR 2002-03 ALSO, THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) ON SIMILAR BASIS. LD. A.R. HAS BROUGHT TO OU R NOTICE THE NOTE NO.4 ANNEXED BY THE ASSESSEE ALONG WITH THE COMPUTATION OF INCOME WHICH HAS BEEN FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME FILED IN PURSUANCE TO THE NOTICE ISSUED BY THE A.O. U/S 153C AND IN VIEW OF THIS NOTE, THIS IS NOT PROPER ON THE PART OF CIT(A) TO S AY THAT NO OBJECTION HAS BEEN RAISED BY THE ASSESSEE BEFORE THE A.O. REGARDI NG VALIDITY OF THE PROCEEDINGS INITIATED BY THE A.O. U/S 153C. IN THI S VIEW OF THE MATTER, WE FEEL THAT THIS ISSUE HAS NOT BEEN PROPERLY DECIDED BY THE LD. CIT(A) AND NO FINDING HAS BEEN GIVEN BY HIM AS TO WHETHER ANY MATERIAL BELONGING TO THE ASSESSEE WAS FOUND AND SEIZED IN THE COURSE OF SEARCH AT MANGLA GROUP OF CASES ON 24.11.2005 OR NOT. REGARDING THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT CITED BY THE LD. A.R., WE FEEL T HAT FOR THE PURPOSE OF DECIDING AS TO WHETHER THIS JUDGEMENT IS APPLICABLE IN THE PRESENT CASE OR NOT, IT HAS TO BE SEEN AS TO WHETHER ANY MATERIAL B ELONGING TO THE ASSESSEE WAS SEIZED IN THE COURSE OF SEARCH AT MANGLA GROUP OR NOT AND SINCE THIS ASPECT IS NOT CLEAR FROM THE ORDER OF CIT(A), WE FE EL THAT THIS ISSUE SHOULD GO BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECIS ION. HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) IN BOTH THE YEARS AND RESTORE THE MATTER BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION . LD. CIT(A) SHOULD FIRST DECIDE THIS LEGAL ASPECT AFTER EXAMINING ALL THE ASPECTS AS TO WHETHER ANY MATERIAL BELONGING TO THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH AT MANGLA GROUP OR NOT. HE SHOULD ALSO EXAMINE AS TO WHETHER ANY SATISFACTION AS REQUIRED U/S 153C WAS RECORDED BY T HE A.O. OR NOT AND THEREAFTER, HE SHOULD PASS A SPEAKING ORDER. NEEDL ESS TO SAY HE SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. IN THE I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 6 RESULT, BOTH THE CROSS OBJECTIONS OF THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. 9. NOW, WE TAKE UP THE APPEAL FIELD BY THE REVENUE. IN BOTH THE YEARS, THE ONLY ISSUE RAISED BY THE REVENUE IS REGARDING T HE DISALLOWANCE DELETED BY LD. CIT(A) OF THE DEDUCTION CLAIMED BY THE ASSES SEE U/S 80-IB(10). 10. SINCE, WE HAVE SET ASIDE THE ORDER OF LD. CIT(A ) ON THE LEGAL ISSUE RAISED BY THE ASSESSEE BEFORE US, WE FEEL THAT NO A DJUDICATION IS CALLED FOR ON MERIT AT THIS STAGE AND LD. CIT(A) SHOULD DECIDE THE MERIT ALSO AFRESH IF IT IS FOUND T HAT THERE IS NO MERIT IN THE LEGAL ISSUE RAISED BY THE ASSESSEE. IF THE ASSESSEE SUCCEEDS ON LEGAL ISSUE , MERIT BECOMES OF ACADEMIC NATURE ONLY. 11. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE COMBINED RESULT, BOTH THE CROSS OBJECTIO NS OF THE ASSESSEE AS WELL BOTH THE APPEALS OF THE REVENUE ARE ALLOWED FO R STATISTICAL PURPOSES. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEP., 2011. SD./- SD./- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 30.09. 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 2289,2290 /AHD/2009 C.O.NO.192 & 193/AHD/2009 7 1. DATE OF DICTATION 27/9 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/9.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.28/9 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30.09.2011 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30.09 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.09 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 30.09.2011 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..