Dilip Avtar Construction Pvt.Ltd., Ahmedabad V. The Dy.CIT.,(OSD)Range-1, Ahmedabad

CO 3/AHD/2013

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2015 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMLENDRA VERMA
• Keywords: Unexplained investment; Search and seizure; Reason to believe
• Section: 143(3); 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER DCIT(OSD), RANGE - 1, AHMEDABAD (APPELLANT) VS DILIP AVTAR CONSTRUCTION PVT. LTD , 75. SAFAL VIHAN, NR. EKLAVYA SCHOOL, SARKHEJ SANAND ROAD, AHMEDABAD - 382110 PAN: AACCD5462E (RESPONDENT) DILIP AVTAR CONSTRUCTION PVT. LTD ., 75. SAFAL VIHAN, NR. EKLAVYA SCHOOL, SARKHEJ SANAND ROAD, AHMEDABAD - 382110 PAN: AACCD5462E (CROS S OBJECTOR ) VS DCIT(OSD), RANGE - 1, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI VIMLENDRA VERMA, CIT - D . R. ASSESSEE BY: S H RI S.N. SOPARKAR , A.R. DATE OF HEARING : 12 - 02 - 2 016 DATE OF PRONOUNCEMENT : 15 - 02 - 2 016 I T (SS) A NO S . 530 TO 532 /AHD /2012 A SSESSMENT YEAR 200 7 - 08 TO 2009 - 10 CROSS OBJEC TION NOS. 01 TO 03/AHD/2013 (IN IT (SS) A NO S . 530 TO 532/AHD/2012 ) ASSESSMENT YEAR 200 7 - 08 TO 2009 - 10 I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 2 / ORDER P ER BENCH : - THIS BATCH OF SIX CASES COMPRISES OF REVENUE S THREE APPEAL S AND ASSESSEE S C ROSS OBJECTION THEREIN FOR ASSESSMENT YEAR 2007 - 08 TO 2009 - 10 , AR ISING FROM DIFFERENT ORD ERS OF THE CIT(A) - 6 , AHMEDABAD ; ALL DATED 21 - 08 - 2012 IN APPEAL NO S. CIT(A) - VI/ACIT.(OSD)/R.1/333/11 - 12, CIT(A) - VI/ACIT.(OSD)/R.1/332/11 - 12 AND CIT(A) - VI/ACIT.(OSD)/R.1/330/11 - 12 ; RESPECTIVELY, IN PROCEEDINGS U NDER SECTION 153C R.W.S. 143 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME TO RESPECTIVE PLEADINGS OF BOTH THE PARTI ES FIRST IN T H E SE THREE ASSESSMENT YEARS. THE REVENUE S THREE SUBSTANTIVE GROUNDS IN ITA 530/AHD/2012 FOR ASSESSMENT YEAR 2007 - 08 CHALLENGE THE LOWER APPELLATE ORDER DE LETING UNEXPLAINED INVESTMENT ADDITIONS OF RS. 83,75,000/ - AND RS. 52,84,000/ - . THIRD SUBSTANTIVE GROUND SEEKS TO REVIVE UNEXPLAINED PAYMENTS ADDITION OF RS. 20,20,000/ - . THE ASSESSING OFFICER MADE THESE THREE ADDITIONS IN HIS ASSESSMENT ORDER DATED 30 - 1 2 - 2011. ASSESSEE S CROSS OBJECTION NO. 01/AHD/2013 ASSAILS VALIDITY OF INITIATION OF SECTION 153C PROCEEDINGS , SECTION 69 ADDITION OF RS.52,000/ - , INTEREST LEVY U/S. 234A AND B A ND INITIATION OF SECTION 271(1)(C) PENALTY PROCEEDINGS. I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 3 3 . SECOND ASSESSM ENT YEAR 2008 - 09 INVOLVES REVENUE S APPEAL ITA 531/AHD/2012 SEEKING RESTORATION OF UNEXPLAINED INVESTMENT ADDITION OF RS. 9,60,000/ - , RS. 54,76,000/ - AND RS. 5 LACS AND THAT OF UNEXPLAINED MONEY OF RS. 7 LACS AS DELETED IN THE LOWER APPELLATE ORDER. IT E MERGES FRO M THE ASSESSEE S CROSS OBJECTION 02/AHD/2013 THAT ITS GROUNDS OF SECTION 153C VALIDITY , INTEREST U/S. 234A AND B AND PENALTY INITIATION ARE IDENTICAL TO THOSE IN PRECEDING ASSESSMENT YEAR. 4. THIS LEAVES US THIRD AND LAST ASSESSMENT YEAR 2009 - 1 0. THE REVENUE S TWO SUBSTANTIVE GROUNDS ASSAIL CORRECTNESS OF THE LOWER APPELLATE ORDER DELETING ADDITIONS OF RS. 3,92,04,000/ - AND RS. 8 LACS UNDER THE HEADS UNEXPLAINED INVESTMENTS AND MONEY; RESPECTIVELY . THE ASSESSEE S CROSS OBJECTION 03/AHD/2013 ON THE OTHER HAND SEEKS TO QUASH THE IMPUGNED 153C PROCEEDINGS. WE HAVE HEARD BOTH THE PARTIES. 5. LD . AUTHORIZE D REPRESENTATIVE APPEARING AT ASSESSEE S BEHEST POINTS OUT IN THE COURSE OF HEARING THAT THE IMPUGNED ASSESSMENT COMPLETED U/S. 153C OF THE A CT ARISE S FROM A SEARCH ACTION CARRIED OUT IN THE CASE OF DOCTOR RAJESH RAJORA AND OTHERS GROUP CASES IN MADHYA PRADESH. HE SUBMITS THAT THIS SEARCH LED TO SEIZURE OF SOME ALLEGED DOCUMENTS BELONGING TO ASSESSEE. THE DEPARTMENTAL AUTHORITIES ARE STATED TO HAVE FINALIZED A SATISFACTION NOTE ALONG WITH LPS - 2 & 3. THIS CULMINATED IN INITIATION OF SECTION 153C PROCEEDINGS VIDE NOTICES DATED 01 - 11 - 2011. THE ASSESSEE S CASE I S THAT THE I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 4 ASSESSING OFFICER FRAMED THE IMPUGNED ASSESSMENT MAKING VARIOUS ADDITIONS SUB JECT MATTER OF OUR ADJUDICATION IN THE INSTANT APPEAL AND CROSS OBJECTION . HE FILES BEFORE US COPY OF TRIBUNAL S ORDER IT(SS)A NO. 137/AHD/2013 DCIT VS. SMT. MADHU KHURANA DECIDED ON 26 - 06 - 2015 DISMISSING IDENTICAL REVENUE S APPEALS BASED ON THE VERY SEAR CH ACTION ON THE GROUND THAT THE HON BLE MADHYA PRADESH IN ITS JUDGMENT REPORTED AS RAJESH RAJORA VS. UNION OF INDIA (2013) 40 TAXMANN. COM 330 (MP) HAS QUASHED THE ISSUANCE OF SEARCH WARRANT ITSELF. WE FIND THAT LEARNED CO - ORDINATE BENCH HAS DISMISSED TH E SAID REVENUE S APPEAL AS UNDER: - 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH ACTION U/S 132A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER THE ACT) WAS CARRIED OUT IN THE GROUP CASES OF DR. RAJESH RAJORA & OTHERS. DURING THE COURSE OF SEARCH OPERATION DOCUM ENTS BELONG TO THE ASSESSEE WERE SEIZED AND INFORMATION BY WAY OF SATISFACTION NOTE ALONG WITH LPS - 2 AND LPS - 3 WAS PASSED ON TO THE OFFICE. THEREFORE, A NOTICE U/S 153C OF THE ACT WAS ISSUED ON 01.11.2011 AND THE SAME WAS SERVED ON THE ASSESSEE ON 02.11.20 11, REQUESTING THE ASSESSEE TO FILE THE RETURN OF INCOME WITHIN 21 DAYS FROM THE SERVICE OF THE NOTICE. 4.1 IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 08.11.2011 REQUESTED FOR THE REASONS RECORDED, RELEVANT MATERIALS AND DETAILS AS TO WHEN SUCH MATERIALS WAS RECEIVED AND FROM WHOM SUCH MATERIALS ARE RECEIVED. THEREFORE THE ASSESSEE WAS PROVIDED VIDE LETTER DTD.14.11.2011 ALL THE DETAILS SUCH AS 1) SATISFACTION NOTE, 2) COPIES OF ALL RELEVANT MATERIALS AND 3) ORDER U/S 127. THEREAFTER THE ASSESSEE HAS FILE D RETURN OF INCOME FOR AY 2007 - 08 ON 01.12.2011 DECLARING TOTAL INCOME AT RS.13,17,310/ - . THE ASSESSING OFFICER FRAMED THE ASSESSMENT ORDER U/S 153A R.W.S. 153C & 143(3) OF THE ACT, DATED 30.12.2011. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL OF ASSESSEE. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE DELETION OF ADDITION WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION RAISING THE ISSUE OF VALIDITY OF THE ASSESSMENT FRAMED U/S 153A R.W.S. 153C & 143(3 ). I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 5 4.2 AT THE OUTSET, THE ID. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 153C SHOULD BE QUASHED. THE ID. AR IN SUPPORT OF HIS CONTENTION PLACED RELIANCE ON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF RAJESH RAJORA VS. UNION OF INDIA (2013) 40 TAXMANN.COM 330 (MADHYA PRADESH) WHEREIN THE ASSESSEE WAS SUBJECTED TO PROCEEDINGS U/S 153 R.W.S. 153A OF THE ACT CONSEQUENT TO SEARCH CARRIED OUT AT T HE PREMISES OF SHRI RAJESH RAJORA AT BHOPAL ON 30.05.2008. HE PLACED ON RECORD A COPY OF THE DECISION. IN SAID CASE SHRI RAJESH RAJORA CHALLENGED THE VALIDITY OF SEARCH AND SEIZURE PROCEEDINGS BEFORE THE HON'BLE MADHYA PRADESH HIGH COURT VIDE A WRIT PETITI ON NO. 13833 OF 2010. THE HON'BLE HIGH COURT AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE QUASHED ISSUANCE OF WARRANT AND CONSEQUENT SEARCH AND SEIZURE PROCEEDINGS AGAINST SHRI RAJESH RAJORA. ON THE STREN GTH OF THE ABOVE DECI SION OF HON'BLE MADHYA PRADESH HIGH COURT, THE ID. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRESENT APPEAL ISSUE ORIGINATED FROM ABOVE MATTER, SO THE CONSEQUENT PROCEEDINGS U/S 153C R.W.S. 153A OF THE ACT IN THE HANDS OF PRESENT ASSESSEE OUGHT TO BE QUASHED AS CHALLENGED VIDE GROUND NO. 1 OF THE CROSS OBJECTION. THE REMAINING GROUNDS OF THE CROSS OBJECTIONS MAY NOT BE ADJUDICATED ON MERITS SINCE THE SEARCH PROCEEDINGS IS HELD TO BE INVALID. ON OTHER HAND, THE ID. DR ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER AND REQUESTED TO ALLOW ALL ALTERNATIVE REMEDY IN THIS CASE INCLUDING REOPENING OF THE CASES. 4.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOING THROUGH THE RECORD WE FIND THAT HON'BLE MADHYA PRADESH HIGH CO URT IN THE CASE OF RAJESH RAJORA VS. UNION OF INDIA (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE WHEREIN THE HEAD NOTE OF THE DECISION IS AS UNDER : - 'SECTION 132 OF THE INCOME - TAX ACT, 1961 - SEARCH AND SEIZURE (VALIDITY OF SEARCH) - SEARCH AND SEIZU RE PROCEEDINGS WERE CONDUCTED IN PREMISES OF A GOVERNMENT OFFICER ON WARRANT ISSUED BY DIRECTOR, ON BASIS OF A DOCUMENT FOUND DURING SEARCH CONDUCTED IN PREMISES OF ANOTHER PERSON ABOUT 9 MONTHS BEFORE - WHETHER, SINCE SECTION 132 DOES NOT CONFER ANY ARBITR ARY AUTHORITY UPON REVENUE OFFICERS, THEY MUST HAVE IN CONSEQUENCE OF INFORMATION, REASON TO BELIEVE THAT STATUTORY CONDITIONS FOR EXERCISE OF POWER TO ORDER SEARCH EXISTED - HELD, YES - WHETHER, WHERE ENTIRE BASIS OF RECORDING I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 6 SATISFACTION IN ASSESSEE'S CA SE WAS A DOCUMENT FOUND DURING SEARCH CONDUCTED IN PREMISES OF ANOTHER PERSON, WHICH NEITHER BORE ASSESSEE'S NAME NOR INDICATED THAT IT WAS RELATED TO ASSESSEE, WARRANT OF AUTHORIZATION WAS ISSUED MERELY ON HYPOTHECATED GROUNDS, AND THEREFORE, ISSUANCE OF WARRANT OF AUTHORIZATION AND SUBSEQUENT SEARCH AND SEIZURE PROCEEDINGS WERE LIABLE TO BE QUASHED - HELD, YES (PARA 15) (IN FAVOUR OF ASSESSEE).' 4.4 IN VIEW OF THE ABOVE DECISION, WHICH IS ORIGINAL POINT IN THIS CASE ASSESSMENT ORDER DOES NOT SURVIVE. SO, WE QUASH THE IMPUGNED ASSESSMENT PROCEEDINGS. T HUS, FIRST GROUND OF THE CROSS OBJECTION IS ALLOWED. SINCE THE ASSESSMENT PROCEEDINGS ARE QUASHED, THE GROUNDS RAISED IN THE APPEAL OF REVENUE HAVE BECOME ACADEMIC AND INFRUCTUOUS AND SAME IS FACT OF OTHER GRO UNDS OF CROSS OBJECTION RAISED BY ASSESSEE. REGARDING SUBMISSION OF DEPARTMENTAL REPRESENTATIVE FOR DIRECTION FOR ALTERNATE REMEDY IN THIS CASE, WE HOLD THAT IN THE FACTS AND CIRCUMSTANCES, REVENUE IS AT LIBERTY TO TAKE ACTION AS PER LAW AFTER PROVIDING DU E OPPORTUNITY OF HEARING TO ASSESSEE. 6. THE REVENUE IS UNABLE TO REBUT THIS FACTUAL POSITION. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO VARIOUS PLEADINGS RAISED IN THE INSTANT APPEAL. THERE CAN HARDLY BE ANY DISPUTE THAT ONCE THE SEARCH ACTI ON ITSELF STANDS QUASHED , THE INSTANT PROCEE DINGS HAVE NO LEGS TO STAND. WE FIND THAT LD. CO - ORDINATE BENCH HAS ACCEPTED REVENUE S SUBMISSION FOR ALTERNATE REMEDY TO BE EXERCISED AS PER LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO ASSESSEE. WE ALSO GRANT LIBERTY TO THE DEPARTMENT TO PROCEED IN THE SAME TERMS. THE IMPUGNED ASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE ARE QUASHED. THE REVENUE S PLEADINGS ON MERITS HAVE BEEN RENDERED INFRUCTUOUS. THE ASSESSEE S CROSS OBJECTIONS RAISING LEGAL GROUND ARE ACCEPTED. ITS OTHER PLEADINGS ON I.T(SS) A NO. 530 - 532 /AHD /20 12 & CO NOS. 01 TO 03/A HD/2013 A.Y 2007 - 08 TO 2009 - 10 PAGE NO DCIT (OSD) VS. DILIP AVTAR CONSTRUCTION PVT. LTD 7 MERITS AND CONSEQUENTIAL ACTION OF PENALTY AND INTEREST HAVE BECOME ACADEMIC. ORDERED ACCORDINGLY. 8. THESE THREE REVENUE S APPEALS IT (SS) A 530 - 532/AHD/2012 ARE DISMISSED. ASSESSEE S CROSS OBJECTIONS NO. 01 - 0 3/AHD/2013 ARE PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 15 - 02 - 201 6 SD/ - S D/ - ( ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 15 /02 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,