Mr. Tahir Isani, Mapusa V. ACIT, Circle - 2(1), Panaji

CO 5/PAN/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8797 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 26-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Assessee Lawyers: SHRINIVAS NAYAK
• Keywords: Documents seized
• Section: 143(3); 54F; 133A; 153A; 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 93 /PNJ/201 2 : (ASST. YEAR : 2009 - 10) ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), PANAJI, GOA. (APPELLANT) VS. MR. TAHIR ISANI MANEK HOUSE, ALTINHO, MAPUSA - GOA PAN AAEPI5579C (RESPONDENT) CO NO. 5/PNJ/2013 (IN ITA NO. 93 /PNJ/201 2) : (ASST. YEAR : 2009 - 10) MR. TAHIR ISANI MANEK HOUSE, ALTINHO, MAPUSA - GOA PAN AAEPI5579C (CROSS OBJECTOR) VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), PANAJI, GOA. (RESPONDENT) REVENUE BY : SMT. ASHA DESAI, D.R ASSESSEE BY : SHRINIVAS NAYAK, CA DATE OF HEARING : 1 5 /04/2013 DATE OF PRONOUNCEMENT : 28 / 6 /2013 O R D E R PER D.T. GARASIA : 1. THE ABOVE APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) DT. 31.8.2012 FOR A.Y. 2009 - 10. ITA NO. 93/PNJ/2012 : THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL HAVE BEEN RAISED BY THE DEPARTMENT IN THE APPEAL : 2 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) 1) WHETHER THE LD CIT(A) WAS RIGHT IN HOLDING THAT THE CONDITIONS TO ISSUE NOTICE U/S. 153C ARE NOT SATISFIED AND HENCE THE ASSESSING OFFICER WAS NOT JUSTIFIED I N INITIATING PROCEEDINGS U/S. 153C OF THE I. T. ACT. AS THE AO HAS RECORDED REASONS BEFORE ISSUE OF NOTICE U/S. 153C OF THE I. T. ACT. 2) THE LD CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE AO HAS PROPER JURISDICTION OVER THE ASSESSEE TO ASSESS/ RE - AC CESS THE INCOME U/S. 153A R.W.S. 153C OF THE I. T. ACT. 3) THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION REGARDING ISSUE OF NOTICE U/S. 153C DURING THE ASSESSMENT PROCEEDINGS AND THIS FACTS FALLS WITHIN THE PURVIEW OF SECTION 292BB OF I. T. ACT 1961. 4) THE APPELLANT PRAYS TO BE ALLOWED TO ADD VARY AND AMEND THE GROUNDS OF APPEAL AT OR BEFORE THE DATE OF HEARING. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER : 2.1 A SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF MR. SADIQ SHAIKH AND MR. PRADEEP PALYEKAR ON 25.2.2010. DURING THE COURSE OF SEARCH PROCEEDINGS, IT WAS FOUND THAT MR. TA HIR ISANI ENTERED INTO AGREEMENT FOR PURCHASE OF RIGHTS OVER 4 FLATS VIZ. J - 302, J - 402, J - 401 AND J - 203 IN THE PROJECT CASTLE ROCK FROM MR. SADIQ SHAIKH. COPIES OF THE AGREEMENTS ENTERED BY MR. SADIQ SHAIKH WITH MR. TAHIR ISANI WERE IMPOUNDED. THE SAME W ERE SENT TO JURISDICTIONAL OFFICER FOR COMPLETION OF ASSESSMENT U/S 153C. SHOW CAUSE NOTICE WAS GIVEN AND THE ASSESSEE FILED REPLY THAT RETURN FILED ON 30.9.2009 TO BE TREATED AS RETURN IN RESPONSE TO THE NOTICE U/S 153C. THE AO HAS ALSO NOTICED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS.37,92,150/ - AND SAID INVESTMENT HAS EARNED DIVIDEND INCOME WHICH IS EXEMPT FROM TAX AND AFTER HEARING THE ASSESSEE, THE SUM OF RS.18,960/ - I.E. 5% OF RS.37,92,150/ - WAS DISALLOWED U/S 14A AS EXPENDITURE INCURRED FOR EARNI NG EXEMPTED INCOME. THE AO HAS ALSO VERIFIED CLAIM OF EXEMPTION OF RS.3,50,00,000/ - U/S 54F. THE AO HAS VERIFIED THE CLAIM AND FOUND THAT THE ASSESSEE WAS HAVING TWO PROPERTIES; A RESIDENTIAL HOUSE AT MUMBAI AND A SELF - OCCUPIED PROPERTY AT CARANZALEM ARE IN THE NAME OF THE ASSESSEE. THE EXEMPTION OF RS. 3,50,00,000/ - CLAIMED U/S 54F WAS DISALLOWED. 3 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) 2.2 THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER : IN VIEW OF THE FACT AND JUDICIAL PRONOUNCEMENTS DISCUSSED ABOV E, AS THE PRIMARY CONDITIONS FOR ISSUE OF NOTICE UNDER SECTION 153C OF IT ACT ARE NOT SATISFIED, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS UNDER SECTION 153C OF THE IT ACT AND PASSING ORDERS UNDER SECTION 153C R.W.S. 143(3) O F THE IT ACT. THEREFORE, THE APPEALS FILED ON GROUND NO. 2 & 3 FOR THE ABOVE ASSESSMENT YEARS ARE ALLOWED. SINCE IT HAS BEEN HELD THAT THE ASSESSING OFFICER WAS NOT HAVING JURISDICTION TO ASSESS OR REASSESS THE INCOME U/S 153A R.W.S. 153C OF THE I T ACT, T HEREFORE THE OTHER ISSUES HAVE NOT BEEN DECIDED ON MERIT, SO AS TO PRE - EMPT ANY FINDING ON MERIT IN RESPECT OF THE ISSUES FOR WHICH THE A.O. IS FREE TO TAKE APPROPRIATE REMEDIAL MEASURES AS PER LAW. IN THE RESULT, THE APPEAL FOR ABOVE ASSESSMENT YEAR IS TREATED AS ALLOWED. 2.3 THE LD. DR RELIED UPON THE ORDER OF THE A.O. 2.4 THE LD. AR RELIED UPON THE ORDER OF CIT(A). 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT NO DOCUM ENTS PERTAINING TO EXEMPTION OF CAPITAL GAINS OF RS. 3,50,00,000/ - U/S 54F AND EXPENSES OF RS. 18,960/ - DISALLOWED U/S 14A OF THE INCOME TAX ACT WERE IMPOUNDED D URING THE PROCEEDINGS U/S 132 OF THE INCOME TAX ACT IN THE PREMISES OF MR. SADIQ SHAIKH . T HE O NLY DOCUMENTS WHICH WERE IMPOUNDED WERE THE AGREEMENTS PERTAINING TO ASSIGNMENT OF RIGHTS OF FOUR FLATS BETWEEN MR. SADIQ SHAIKH AND THE ASSESSEE. THERE ARE TWO PARTIES TO THE AGREEMENT, MR. SADIQ SHAIKH AND THE ASSESSEE. AS PER THE AGREEMENT, MR. SADIQ SHAIKH HAD AGREED TO ASSIGN RIGHTS OVER FOUR FLATS VIZ. J - 302, J - 402, J - 401 AND J - 203 IN THE PROJECT CASTLE ROCK. AS PER THE AGREEMENT, TWO PARTIES HAVE ACCEPTED THE TERMS AND CONDITIONS OF THE AGREEMENT. THUS, THE AGREEMENTS FOUND FROM MR. SADIQ SHAIKH BELONGED TO MR. 4 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) SADIQ SHAIKH AND NOT THE ASSESSEE. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N. CHANDRANI VS. ACIT REPORTED IN 231 CTR 474 HELD THAT THUS A CONDITION PRECEDENT FOR ISSUING NOTICE U/S 153C AND ASSESSING OR RE - ASS ESSING THE INCOME OF SUCH PERSON IS THAT MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED, RESORT CANNOT BE HAD TO THE PROVISIONS OF SEC. 153C . WE FIND THAT IN THIS CASE, NO DOCUMENTS WERE FOUND PERTAINING TO THE ASSESSEE. THEREFORE, CIT(A) IS JUSTIFIED IN HIS ACTION. CO NO. 5/PNJ/2013 : 3. THE ASSESSEE HAS INCOME FROM REMUNERATION, HOUSE PROPERTY, CAPITAL GAINS AND OTHER SOURCES. NOTICE WAS ISSUED TO ASSESSEE ON BASIS OF SURVEY CARRIED OUT U/S 133A IN THE CASE OF MR. SADIQ SHAIKH. THE ASSESSMENT ORDER WAS PASSED BY INVOKING SEC. 153C R/W SEC. 143(3) O F THE INCOME TAX ACT. THE AO MADE ADDITION OF RS. 3,50,18,960/ - ON THE BASIS OF COPY OF AGREEMENT FOUND FOR THE PURCHASE OF RIGHTS OVER FOUR FLATS BY THE ASSESSEE FROM MR. SADIQ SHAIKH. THE ADDITION OF RS.3,50,18,960/ - WAS MADE BY DISALLOWING THE CLAIM U/S 54F AND ALSO DISALLOWING THE DEDUCTION OF EXPENDITURE OF RS. 18,960/ - U/S 14A. 3.1 THE ASSESSEES CROSS OBJECTION IS ON THE GROUND THAT DURING THE SURVEY PROCEEDINGS CARRIED OUT IN THE CASE OF MR. SADIQ SHAIKH, AGREEMENTS WERE FOUND AND IN THESE AGREE MENTS, MR. SADIQ SHAIKH HAD AGREED TO HAND OVER FOUR FLATS TO THE ASSESSEE. THE ASSESSEES MAIN CONTENTION IS THAT THESE DOCUMENTS WERE NOT FOUND DURING THE COURSE OF SEARCH BUT THESE DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY. THEREFORE, THE PROCE EDINGS U/S 153C CANNOT BE ISSUED IN THE CASE OF THE ASSESSEE. THEREFORE, THE AO IS NOT HAVING JURISDICTION TO ASSESS OR RE - ASSESS INCOME UNDER SEC. 153 A R/W SEC. 153C OF THE ACT. 5 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) 3.2 ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF THE A.O. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE PROVISIONS OF SEC. 153 OF THE ACT READS AS UNDER : 153C. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A :] ON THE PLAIN READING OF THE AFORESAID PROVISION, IT IS APPARENT THAT SECTION 153 IS SIMILARLY WORDED TO SECTION 158BD OF THE ACT. THE FIRST AND FOREMOST CONDITION IS THAT IF THE A.O IS SATISFIED THAT ANY MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SEC. 153A, HE SHA LL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON. ON THIS PLAIN READING OF THE SECTION IT IS NECESSARY THAT THE A.O OF MR. SADIQ SHAIKH MUST RECORD SATISFACTION BEFORE HANDING OVER THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH TO THE A.O OF THE ASSESSEE THAT THESE DOCUMENTS BELONGED TO THE ASSESSEE. UNLESS AND UNTIL THIS SATISFACTION IS RECORDED, THE A.O OF THE ASSESSEE IS NOT ENTRUSTED WITH THE JURISDICTION TO INITIATE PROCE EDINGS U/S 153C IN THE CASE OF THE ASSESSEE. IN THIS CASE, THE AGREEMENTS WERE NOT FOUND DURING THE COURSE OF SEARCH BUT WERE IMPOUNDED DURING THE COURSE OF SURVEY CARRIED OUT IN THE CASE OF MR. SADIQ SHAIKH. WE HAVE ALSO INQUIRED FROM THE LD. DR WHETHER THE DOCUMENTS WERE IMPOUNDED DURING THE COURSE OF SEARCH IN THE CASE OF MR. SADIQ SHAIKH OR WERE 6 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) IMPOUNDED DURING THE COURSE OF SURVEY. THE LD. DR SUBMITTED THAT THE DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY. THEREFORE, IN THIS CASE, A CONDITION PRECEDENT FOR ISSUING NOTICE U/S 153C AND ASSESSING OR RE - ASSESSING THE INCOME OF OTHER PERSON IS THAT MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS TO SUCH PERSON. THIS RE QUIREMENT IS NOT SATISFIED. THEREFORE, A.OS RESORT TO PROVISIONS OF SEC. 153C OF THE ACT IS NOT VALID. WE HAVE EXAMINED THE FACTS IN THE PRESENT CASE IN THE LIGHT OF LAW. IT IS ADMITTED POSITION EMERGING FROM THE RECORDS THAT THE DOCUMENTS I.E. AGREEME NTS WERE RECOVERED DURING THE SURVEY PROCEEDINGS AND NOT FOUND DURING THE COURSE OF SEARCH. MOREOVER, THESE DOCUMENTS WERE UNREGISTERED AGREEMENTS. UNDER THESE CIRCUMSTANCES, THE CONDITION PRECEDENT FOR ISSUING NOTICE U/S 153C IS NOT FULFILLED AND ANY AC TION TAKEN U/S 153 OF THE ACT STANDS VITIATED. WE HOLD THAT THE NOTICE U/S 153C IS NOT VALID NOTICE AS THE A.O WAS NOT HAVING VALID JURISDICTION TO ISSUE NOTICE U/S 153C OF THE ACT AND THE ASSESSMENT ORDER IS AB INITIO OPPOSED TO LAW. IN THE RESULT, THE C.O IS ALLOWED. 4. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMISSED AND THE C.O OF THE ASSESSEE IS ALLOWED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON 28 / 6 /2013. SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 28 / 6 / 2013 *SSL* 7 ITA NO. 93/PNJ/2012 & CO NO. 5/PNJ/2013 (ASST. YEAR : 2009 - 10) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA