Appeal details
Counselvise Citation
[2018] 123 COUNSELVISE.COM (IT) 3913 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 4 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
11-07-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2006-2007
Appeal Filed On
07-07-2016
Judgement Text
, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A NO. 122, 123 AND 124/AHD/2016 WITH CO NO.95, 96 AND 97/AHD/2016 / ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 DCIT, CENT.CIR.2(3) AHMEDABAD. VS ARVIND JOSHI & CO. PLOT NO.18, MAITRI BHAVAN SECTOR 8 GANDHIDHAM-KUTCH. PAN : AABFA 6236 D / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI V.K. SINGH, SR.DR ASSESSEE BY : SHRI K.C. THAKER, AR / DATE OF HEARING : 10/07/2018 /DATE OF PRONOUNCEMENT : 11 /07/2018 O R D E R PER BENCH : PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST COMMON ORDER OF THE LD.CIT(A)-12, A HMEDABAD DATED 28.12.2015 PASSED FOR THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. ON RECEIPT OF NOTICE IN THE REVENUES APPEALS, THE ASSESSEE FILED CO NO.95, 96 AND 97/AHD/2016. 2. THOUGH REVENUE HAS TAKEN NUMBER OF GROUNDS IN TH ESE THREE YEARS, BUT ITS GRIEVANCE REVOLVES AROUND TO ISSUES, VIZ. DELETION OF DISALLOWANCE OUT OF INTEREST EXPENSES, (B) DELETION OF DISALLOWANCE OUT OF DCIT VS. ARVIND JOSHI & CO. WITH CO - 2 - EQUIPMENTS HIRE CHARGES AND WAREHOUSE RENT CHARGES. FIRST COMMON GROUND IS THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.4,45,234/-, RS.2,90,662/- AND RS.2,90,662/-MADE BY THE AO IN THE ASSESSMENT YEARS 2006-07 TO 2008-09 RESPECTIVELY. FACTS ON ALL VITAL POINTS ARE COMMON. THEREFORE, FOR THE FACILITY OF REFERENCE WE TAKE UP THE FACTS FROM THE ASSESSMENT YEAR 2007-08. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE OPERATION WAS CARRIED OUT IN THE CASE OF FRIENDS GROUP ON 15.6. 2011 UNDER SECTION 132 OF THE INCOME TAX ACT. THE CASE OF THE ASSESS EE WAS ALSO COVERED IN THIS SEARCH ACTION AND IN ORDER TO GIVE LOGICAL END TO THE PROCEEDINGS, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE HAS FILED HIS RETURN OF INC OME ON 2.7.2013 AND 29.6.2013 (2008-09) DECLARING TAXABLE INCOME AT RS. 39,63,985/-, RS.33,20,358/- AND RS.4,93,40,266/- IN THE ASSESSME NT YEARS 2006-07 TO 2008-09 RESPECTIVELY. THE LD.AO HAS OBSERVED THAT THE ASSESSEE HAS GIVEN ADVANCES TO M/S.GAUTAM FREIGHT P.LTD., FRIEND S SALT WORKS AND ALLIED INDUSTRIES AND ANTAI BALAJI LTD. WITHOUT CHA RGING INTEREST. THE ASSESSEE HAS PAID INTEREST ON SECURED LOAN OF RS.28 ,49,043/- IN THE ASSESSMENT YEAR 2006-07. HE FURTHER FOUND THAT SIM ILAR INTEREST EXPENDITURES WERE CLAIMED IN OTHER YEARS ALSO. THU S, THE LD.AO HARBOURED A BELIEF THAT INTEREST BEARING FUNDS WERE DIVERTED TOWARDS INTEREST FREE ADVANCES TO ASSOCIATE CONCERN. IN HI S OPINION, INTEREST BEARING FUNDS WERE NOT USED FOR THE PURPOSE OF BUSI NESS. ACCORDINGLY, HE MADE DISALLOWANCE. ON APPEAL, THE LD.CIT(A) DEL ETED THE DISALLOWANCE BY OBSERVING THAT DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND EXHIBITING THE FAC T THAT THE ASSESSEE HAS MISUSED INTEREST BEARING FUNDS. DCIT VS. ARVIND JOSHI & CO. WITH CO - 3 - 4. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, WE HA VE GONE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE ASSESSMENT ORDER WOULD INDICATE THAT THE ASSESSEE HAS PLEADED THAT IT HAS SUFFICIEN T INTEREST FREE FUNDS OUT OF WHICH IT COULD EASILY ADVANCE THESE INTEREST FRE E LOANS TO THE SISTER CONCERNS. IT IS PERTINENT TO OBSERVE THAT IN THE A SSESSMENT YEAR 2006-07, THE ASSESSEE FIRM WAS HAVING INTEREST FREE FUNDS OF RS.1,59,23,2625/- WHEREAS AT THE CLOSE OF THE ACCOUNT, ADVANCE OUTSTA NDING AGAINST THE NAME OF ANTAI BALAJI LTD WAS OF RS.24,22,185/-. SI MILARLY IN THE ASSESSMENT YEAR 2007-08, THE ASSESSEE WAS HAVING IN TEREST FREE FUNDS OF MORE THAN RS.4.63 CRORES AGAINST THE OUTSTANDING OF RS.24,22,185/-. SIMILAR IS THE POSITION WITH REGARD TO THE ASSESSME NT YEAR 2008-09. THE ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS OUT OF WHICH IT COULD GIVE INTEREST FREE FUNDS TO ASSOCIATE CONCERNS. TH E LD.CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. THERE IS NO OTHER GROUND IN THE ASSESSMENT YEAR 2006-07. THIS APPEAL OF THE REVENUE IS DISMISSED. 5. NEXT COMMON GROUNDS RELATES TO DELETION OF DISAL LOWANCE OUT OF EQUIPMENT HIRE CHARGES AND WAREHOUSE RENT PAYMENT. THE CONCLUSION OF THE AO IN THESE TWO YEARS ARE VERBATIM SAME. THE REFORE, WE TAKE NOTE OF THE FINDING OF THE AO FROM THE ASSESSMENT ORDERS . IT READS AS UNDER: ASSTT.YEAR : 2007-08 THE SUBMISSION MADE BY THE ASSESSEE HAVE BEEN CARE FULLY CONSIDERED. HOWEVER, THE SAME IS NOT ACCEPTABLE. IT IS ADMITTED BY THE ASSESSEE IN HIS REPLY THAT THERE IS NO AGREEMENT IN WRITING FOR THE RENT WITH SISTER CONCERN AND OTHERS. THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTARY EVIDENCE REGARDING ITS CLAIM OF SUCH EXPENSES. THE ENTRIES WERE MADE ON THE LAST DATE ON 31-03-2007, THOUGH THE PAYMENTS WE RE MADE FROM 01-04- 2006 TO 31-03-2007. THUS, THIS IS NOTHING BUT ACCOM MODATION ENTRY JUST TO AVOID THE LEGITIMATE PAYMENT OF TAX. THEREFORE, THE AMOUNT OF RS, DCIT VS. ARVIND JOSHI & CO. WITH CO - 4 - 88,70,000/- BEING EQUIPMENT HIRE CHARGES AND RS. 43 ,63,462/- BEING WAREHOUSE RENT CHARGES TOTAL AMOUNTING TO RS. 1,32, 33.,462/- (RS, 88,70,000/- + RS. 43,63,462/-) ARE DISALLOWED AND A DDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM. ASSTT.YEAR 2008-09: THE SUBMISSION MADE BY THE ASSESSEE HAVE BEEN CARE FULLY CONSIDERED. HOWEVER, THE SAME IS NOT ACCEPTABLE. IT IS ADMITTED BY THE ASSESSEE IN HIS REPLY THAT THERE IS NO AGREEMENT IN WRITING FOR THE RENT WITH SISTER CONCERN AND OTHERS. THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTARY EVIDENCE REGARDING ITS CLAIM OF SUCH EXPENSES. FURT HER, THE ASSESSEE HAS NOT FURNISHED ANY REASONS FOR INCREASING EQUIPMENT RENT AS COMPARE TO THE PRECEDING YEAR. THE ENTRIES WERE MADE ON THE LA ST DATE ON 31-03-2008, THOUGH THE PAYMENTS WERE MADE FROM 01-04-2007 TO 31 -03-2008. THUS, THIS IS NOTHING BUT ACCOMMODATION ENTRY JUST TO AVO ID THE LEGITIMATE PAYMENT OF TAX. THEREFORE, THE AMOUNT OF RS. 3,06,6 0,000/- BEING EQUIPMENT HIRE CHARGES AND RS. 43,45,449/- BEING WA REHOUSE RENT CHARGES TOTAL AMOUNTING TO RS. 3,50,05,449/- (RS. 3,06,60,0 00/- + RS. 43,45,449/- ) ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF TH E ASSESSEE FIRM. 6. DISSATISFIED WITH THE DISALLOWANCE, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) HAS DELETED DISALLOWANCE BY HOLDING THAT DURING THE COURSE OF SEARCH NO INCR IMINATING MATERIAL WAS FOUND SHOWING EXCESS PAYMENT OF EQUIPMENT HIRE CHARGES AND WAREHOUSE RENT. THE DISCUSSION MADE BY THE LD.CIT( A) ON THIS POINT READS AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE ON BEHALF OF THE APPELLANT, PERUSED THE ABOVE MENTIONED DECISIONS AN D ALSO AS FURTHER MADE AVAILABLE TO ME IN THE CONTEXT OF DISALLOWANCE MADE BY THE AO. THE AR VEHEMENTLY PLEADED THAT THE AO WAS DUTY BOUND TO CONSIDER, DEAL WITH AND FOLLOW SB AND OTHER DECISIONS CITED BEFORE HIM IN VIEW OF SC MANDATE IN UNION OF INDIA V. KAMALAKSHI FINANCE COR PORATION LIMITED (1991) 53 ELT 433. THE DR PRESENT FOR THE DEPARTMENT HAS NOT POINTED OUT ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF THE SEARCH HAVING ANY CONNECTION WITH OR FORMING THE BASIS OF AFORESA ID DISALLOWANCES/ADDITIONS WHICH EMANATE EXCLUSIVELY F ROM THE REPORT OF THE SPECIAL AUDITOR AND WHICH ARE BASED ON THE REGULAR AND AUDITED BOOKS OF DCIT VS. ARVIND JOSHI & CO. WITH CO - 5 - ACCOUNT. THE DR HAS MADE GENERAL ARGUMENTS TO THE E FFECT THAT THE LANGUAGE USED IN SECTION 153A DOES NOT IN ANY WAY S UGGEST THAT THE TOTAL INCOME TO BE COMPUTED U/S. 153A SHOULD BE ON THE BA SIS OF INCRIMINATING SEIZED MATERIAL ONLY, AS THE PLAIN LANGUAGE GRANTS PLENARY POWERS TO AO 'TO ASSESS OR REASSESS THE TOTAL INCOME'. ANY INFOR MATION COMING TO THE NOTICE OF THE AO SUBSEQUENT TO THE DATE OF SEARCH C AN BE USED FOR DETERMINATION OF TOTAL INCOME U/S. 153A. THE DR HAS ALSO VAGUELY SUBMITTED THAT TILL THE TIME THESE DECISIONS REMAIN SUBJECT MATTER OF FURTHER APPEAL, THE AO IS JUSTIFIED IN MAKING IMPUG NED ADDITIONS IN VIEW OF PLAIN LANGUAGE OF STATUTE. 5.4 AFTER CAREFUL CONSIDERATION AND PERUSAL OF DECI SIONS CITED, I FIND THAT THE SPECIAL BENCH IN ALL CARGO GLOBAL (SUPRA) HAS CL EARLY RULED THAT IN ORDER U/S 153A R.W.S. 143(3) IN ASSESSMENTS UNABATED ON THE DATE OF SEARCH, NO ADDITION DE HORS THE REFERENCE TO AND ST RENGTH FROM INCRIMINATING DOCUMENTS OR ASSETS SEIZED DURING THE SEARCH CAN BE MADE BY THE AO. BEFORE AND SUBSEQUENT TO THE SPECIAL BEN CH DECISION, MANY MORE AUTHORITIES, INCLUDING GUJARAT HC IN JAYABEN RA TILA SORATHIA (SUPRA) HAVE ALSO TAKEN THE SAME VIEW ARID WHICH WER E ALSO CITED BEFORE THE AO. IN THIS SCENARIO, WHEN BINDING JURISDICTIONA L HC AND SB TRIBUNAL DECISIONS, WERE CITED AND RELIED UPON BEFO RE THE AO, I AM IN COMPLETE AGREEMENT WITH THE LD. AR THAT THE AO WAS INDEED REQUIRED TO DEAL WITH (AND RESPECTFULLY FOLLOW) THESE AUTHORITIE S IN VIEW OF CLEAR AND UNAMBIGUOUS MANDATE CONTAINED IN THE RATIO OF THE H ON'BLE SC IN KAMLAKSHI FINANCE 53 ELT 433, ALSO CITED BEFORE HIM , WHICH, AND FEW MORE BROUGHT TO MY NOTICE DURING THE COURSE OF HEAR ING, I MAY QUOTE IN THIS BEHALF: DCIT VS. MANJARA SHETKARI SAHAKARI SAKHAR 2004 91IT D 361 MUM 21.......IN REGARD TO THE OBJECTION OFSHRI KAPILA T HAT THE HON'BLE HIGH COURT DID NOT CONSIDER THIS ASPECT IN DETAIL AND AL L THE RELEVANT ARGUMENTS, IT WOULD BE PERTINENT HERE TO REFER THE DECISION OF THE HON'BLE APEX COURT RENDERED IN THE CASE OFAMBIKA PRASADMISH RA V. STATE OF UP, AIR 1980 SC 1762, AT PAGE 1764, WHEREIN IT WAS HELD : 'EVERY NEW DISCOVERY OR ARGUMENTATIVE NOVELTY CANNO T UNDO OR COMPEL RECONSIDERATION OF A BINDING PRECEDENT...... A DECI SION DOES NOT LOOSE ITS AUTHORITY MERELY BECAUSE IT WAS BADLY ARGUED, INADE QUATELY CONSIDERED OR FALLACIOUSLY REASONED.....' 22. IN VIEW OF THE ABOVE, WE TAKEN THE DECISION OF THE HON'BLE HIGH COURT RENDERED IN THE CASE OFSHIVAMRUT DOODH UTPA'DAK SAH AKARI SANGH DCIT VS. ARVIND JOSHI & CO. WITH CO - 6 - MARYADIT CITED SUPRA, AS A BINDING PRECEDENT. IT WO ULD BE PERTINENT HERE TO NOTE THAT THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA V. KAMALAKSHI FINANCE CORPORATION LIMITED (1991) 53 ELT 433, HAS HELD AS UNDER:- 'JUDICIAL PROPRIETY DEMANDS THAT THE ORDER OF THE TR IBUNAL SHOULD NOT ONLY BE RESPECTED BUT IT SHOULD BE FOLLOWED BY A LO WER AUTHORITY. IF THE AUTHORITY SUBORDINATE TO THE TRIBUNAL IS ALLOWED TO PICK UP HOLES, GAPS OR SOME INFIRMITIES OR IS OF THE VIEW THAT DIFFERENT L INE OF THINKING IS POSSIBLE, THEN THERE WILL BE JUDICIAL CHAOS AND THERE WILL NO T BE ANY FINALITY TO LITIGATION. THIS PROCESS, IF PERMITTED, WILL LEAD T O UNNECESSARY HARASSMENT TO THE TAX PAYER WHICH IS NOT ENVISAGED BY THE STAT UTE NOR PERMITTED BY LAW. THE CIT(A) IS DUTY BOUND TO FOLLOW THE DECISION OF THE TRIBUNAL IT IS WELL SETTLED THAT THE DECISION OF THE HIGHER AUTHOR ITIES IS BINDING ON A LOWER-AUTHORITY IN THE JUDICIAL HIERARCHY. THEREFOR E, THE DECISION OF THE TRIBUNAL IS BINDING ON THE REVENUE AUTHORITY WHICH THEY SHOULD SCRUPULOUSLY FOLLOW.' AGRAWAL WAREHOUSING & LEASING LTD. 12002] 124 TAXMA N 440 (MP) ......NEEDLESS TO SAY THAT THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE J URISDICTION OF THE TRIBUNAL. OBVIOUSLY, THE COMMISSIONER (APPEALS) NOT ONLY COMMITTED JUDICIAL IMPROPRIETY BUT ALSO ERRED IN LAW IN REFUS ING TO FOLLOW THE ORDER OF THE TRIBUNAL. EVEN WHERE HE MIGHT HAVE SOME RESE RVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL, HE HAD TO FOLLOW THE ORDER. BANK OF BARODA V. H. C. SHRIVATSAVA [2002] 122 TAXMA N 330 (BOM.) ...... ....'IT IS INEVITABLE IN HIERARCHICAL SYSTEM OF THE COURTS THAT THERE ARE DECISIONS OF THE SUPREME APPELLATE TRIBUNALS WHICH DO NOT ATTRACT THE UNANIMOUS APPROVAL OF ALL MEMBERS OF THE JUDICIARY. BUT THE JUDICIAL SYSTEM ONLY WORKS IF SOMEONE IS ALLOWED TO HAVE THE LAST WORD, AND THAT LAST WORD ONCE SPOKEN IS LOYALLY ACCEPTED'. THE BET TER WISDOM OF THE COURT BELOW MUST YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE AS HELD BY THE SUPREME COURT...... 5.5 THE ID. AR IS THUS ALSO ABSOLUTELY RIGHT IN SUB MITTING THAT DUTY OF LOWER AUTHORITIES TO COMMITTEDLY FOLLOW THE RATIOS AND PRINCIPLES ENUNCIATED BY HIGHER AUTHORITIES HAS BEEN EXPRESSLY AND CLEARLY LAID DOWN BY APEX COURT AND OTHER AUTHORITIES. AS EXPLAI NED IN BANK OF BARODA V. H.C. SHRIVASTAVA, 'THE BETTER WISDOM OF T HE COURT BELOW MUST YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE'. IN VIEW OF THIS, IT IS TO BE DCIT VS. ARVIND JOSHI & CO. WITH CO - 7 - OBSERVED THAT THE LD. AO HAS ERRED IN NOT EXPRESSLY DEALING WITH AND RESPECTFULLY FOLLOWING THE BINDING AUTHORITIES CITE D BEFORE HIM. 5.6 TURNING TO THE RATIO OF ALL CARGO GLOBAL 23 TAX MANN.COM 103 DATED 6/7/2012 CITED BEFORE THE AO, THE SPECIAL BENCH HAD UNAMBIGUOUSLY AND EXPRESSLY ANSWERED THE QUESTION REFERRED TO IT AS U NDER: THUS, QUESTION RAISED BEFORE THE SPECIAL BENCH NO. 1 IS ANSWERED AS UNDER: (A) IN ASSESSMENT THAT ARE ABATED, THE ASSESSING OFF ICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFE RRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FO R EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; (B) IN OTHER CASES, IN ADDITION TO. THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS - BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE C OURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. [PARA 58] 5.7 MOREOVER, IT WAS FURTHER SUBMITTED DURING THE C OURSE OF HEARING THAT SUBSEQUENT TO ALL CARGO GLOBAL (SUPRA),THERE ARE FU RTHER DECISIONS WHICH INCLUDE DECISIONS OF BOMBAY HC IN CONTINENTAL WAREH OUSING 58 TAXMANN.COM 78, DELHI HC IN KABUL CHAWALA 61 TAXMAN N.COM 412 (DEL) AND VARIOUS OTHER TRIBUNALS, INCLUDING JURISDIC TIONAL TRIBUNAL CONCURRING WITH THE VIEW OF THE SPECIAL BENCH IN AL L CARGO GLOBAL (SUPRA) WITH REGARD TO SCOPE OF ADDITIONS U/S 153A/ 153C. THE LD. AR HAS FURTHER POINTED OUT THAT THE LATEST DECISION OF DEL HI HC IN KABUL CHAWALA, RELIED UPON BY HIM, (AND REPRODUCED SUPRA) , HAS, AFTER THOROUGHLY REVIEWING THE EXISTING AUTHORITIES, REIT ERATED ALL CARGO GLOBAL (SUPRA), WHICH, NOW IN TURN, IS ALSO BEING C ONSISTENTLY FOLLOWED BY AHMEDABAD TRIBUNAL. IT WAS THEREFORE SUBMITTED TO H OLD THE ADDITIONS MADE BY THE AO AS UNSUSTAINABLE IN LAW AND THUS DEL ETE THE SAME. HAVING GONE THROUGH THE DECISIONS, WHILE FULLY AGRE EING WITH THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT, I WOUL D ONLY QUOTE FROM KABUL CHAWALA 61 TAXMANN.COM 412 (DEL) AND DESAI CON SRUCTION (AND TRIB) AND SAUMYA CONSTRUCTION (AHD TRIB) THE COPIES O F WHICH HAVE BEEN FURNISHED: KABUL CHAWALA 61 TAXMANN.COM 412 (DEL) 'SUMMARY OF THE LEGAL POSITION DCIT VS. ARVIND JOSHI & CO. WITH CO - 8 - 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I......... II ............ III ............ VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON TH E BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.... ......'. DESAI CONSTRUCTION P. LTD., V. ACIT DATED 22 /7/2O15 IT(SS)A. NOS.12 & 13/AHD/2012 (AHD) 3.2 ................ THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY OTHER EVIDENCE INCLUDING ANY INCRIMINATING MATERIAL WAS F OUND DURING COURSE OF SEARCH FOR THE RELEVANT ASSESSMENT YEARS IN RESPECT OF CLAIM, U/S. 80IA OF THE ACT IN THIS BACKGROUND, IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, NO ADDI TION CAN BE MADE IN RESPECT OF UNABATED ASSESSMENTS AND WHICH H AVE BECOME FINAL AS ON THE DATE OF SEARCH. THE COMPLETED ASSES SMENTS FOR THE YEARS UNDER APPEAL HAVE BECOME FINAL AND ARE NOT AB ATED SINCE THEY ARE NOT PENDING AS ON THE DATE OF SEARCH. THEREFORE , EVEN THOUGH PURSUANT TO ISSUE OF NOTICE U/S. 153A, ASSESSMENTS FOR 6 YEARS IMMEDIATELY PRIOR TO THE DATE OF SEARCH ARE TO BE F RAMED U/S. 153A, BUT IN RESPECT OF UNABATED ASSESSMENTS WHICH HAVE B ECOME FINAL AND NO INCRIMINATING MATERIAL IS FOUND DURING THE C OURSE OF SEARCH FOR THOSE YEARS, NO ADDITION COULD BE MADE IN RESPE CT OF SUCH UNABATED ASSESSMENTS. IN THIS REGARD, HON'BLE BOMBA Y HIGH COURT IN CASE OF CONTINENTAL WAREHOUSING CORPORATION (58 TAXMANN.COM 78) HAS HELD AS UNDER: SIMILAR VIEW HAS ALSO BEEN HELD BY THE PUNE ITAT IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (137 TTJ 627) AND THE DELHI TTAT CASE OF SANJAY AGGARWAL (47 TAXMANN.COM 210). IN VIEW OF BINDING PRECEDENTS, REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING DISALLOWANCE CLAIMED U/S. 8OIA IN RESPECT OF UNABAT ED ASSESSMENTS DCIT VS. ARVIND JOSHI & CO. WITH CO - 9 - BECAUSE THERE WAS NO INCRIMINATING DOCUMENT FOUND D URING SEARCH WHICH COULD SUGGEST THAT CLAIM U/S. 80IA IS NOT PER MISSIBLE EVEN THOUGH ASSESSMENT U/S. 153A CAN BE MADE. WE HOLD SO . ACCORDINGLY, SAME IS QUASHED AND CLAIM OF ASSESSEE U/S.80IA(4) AMOUNTING TO RS.61,82,292/- CANNOT BE NEGATED. ASSE SSING OFFICER IS DIRECTED ACCORDINGLY. SAUMYA CONSTRUCTION PVT. LTD. VERSUS ACIT, CENTRAL CIRCLE-1 (3), IT(SS)A. NO.3/AHD/2014 DATED:-21-8-2O15 AHMEDA BAD 9 TMI 188 6.WE HAVE NOTED THAT, AS LEARNED COUNSEL FAIRLY A CCEPTS, THE GRIEVANCE OF THE ASSESSEE IS NOT AGAINST FRAMING OF THE ASSESSMENT U/S 153A BUT IS CONFINED TO MAKING OF ANY ADDITIONS OR DISALLOWANCES OTHER THAN ON THE BASIS OF INCRIMINAT ING MATERIAL FOUND DURING SEARCH OPERATIONS. IN EFFECT THUS, ADD ITIONS CANNOT BE MADE OTHER THAN ON THE BASIS OF INCRIMINATING MATER IAL FOUND DURING SEARCH OPERATIONS. THAT PLEA STANDS APPROVED BY A COORDINATE BENCH OF THE TRIBUNAL, IN THE CASE OF SA NJAY AGGARWAL VS. DOT [(2014) 47 TAXMANN.COM 210 (DEL)], BY OBSER VING AS FOLLOWS: 13. THE ABOVE EXTRACTED OBSERVATIONS OF THE HON. HI GH COURT, WHICH ARE THOUGH OBITER DICTA, MAKE THE POIN T CLEAR THAT WHERE AN ASSESSMENT ORDER HAS ALREADY BEEN PAS SED FOR A YEAR (S) WITHIN THE RELEVANT SIX ASSESSMENT YEARS, T HEN ALSO THE AO IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AN D REASSESS THE TOTAL INCOME BUT BY 'TAKING NOTE OF TH E UNDISCLOSED INCOME IF ANY 'UNEARTHED DURING THE SEA RCH'. THE EXPRESSION 'UNEARTHED DURING THE SEARCH' IS QUI TE SIGNIFICANT TO DENOTE THAT IN RESPECT OF COMPLETED OR NON- PENDING ASSESSMENTS, THE ASSESSING OFFICER IS ALBEI T DUTY BOUND TO ASSESS OR REASSESS THE TOTAL INCOME BUT TH ERE IS A CAP ON THE SCOPE OF ADDITIONS IN SUCH ASSESSMENT, BEING THE ITEMS OF INCOME 'UNEARTHED DURING THE SEARCH'. IN OTHER W ORDS, THE DETERMINATION OF 'TOTAL INCOME; IN RESPECT OF THE A SSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALREADY COMPLET ED ON THE DATE OF SEARCH, SHALL NOT BE INFLUENCED BY THE ITEM S OF INCOME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DU RING THE COURSE OF SEARCH................. DCIT VS. ARVIND JOSHI & CO. WITH CO - 10 - 7. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE SAME, AND HAVING NOTED THAT THE ADDITIONS OF RS. 11 ,05,51,000/-IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURIN G SEARCH OPERATIONS ON THE ASSESSEE, WE DELETE THE SAID ADDI TION......' 5.8 IN VIEW OF THE BINDING AUTHORITIES AS DISCUSSED ABOVE, IT IS DOUBTLESSLY IMPERATIVE THAT THE AO AND I BOTH RESPE CTFULLY FOLLOW THE PRINCIPLE THAT NO ADDITIONS DE HORS THE INCRIMINATI NG MATERIAL SEIZED DURING SEARCH CAN BE MADE OR SUSTAINED IN UNABATED ASSESSMENTS FRAMED U/S 153A. ON FACTS, THERE IS NO DISPUTE THAT THE AS SESSMENTS UNDER REFERENCE WERE CONCLUDED AND UNABATED ON THE DATE O F THE SEARCH. THERE IS ALSO NO DISPUTE THAT THERE IS NO INCRIMINATING SEIZ ED MATERIAL USED, RELIED UPON OR REFERRED TO BY THE AO OR POINTED OUT DURING THE COURSE OF HEARING, FOR MAKING OR SUPPORTING ANY OF THE ADDITI ONS. THUS, THE APPELLANT'S CASE IS SQUARELY COVERED BY THE RATIOS OF THE BINDING AUTHORITIES DISCUSSED, AND THEREFORE, ANY OF THE AD DITIONS MADE BY THE AO FOR ANY OF THE YEAR UNDER APPEAL ARE NOT SUSTAINABL E. THUS AND THEREFORE, ALL THE ADDITIONS MADE BY THE AO IN CONTRAVENTION O F LAW LAID DOWN BY BINDING AUTHORITIES DISCUSSED SUPRA ARE DELETED FOR ALL THE THREE YEARS UNDER REFERENCE. THE APPELLANT GETS EQUIVALENT RELI EF AS UNDER: A.Y. RELIEF (RS.) 2006 - 07 4,45,234/ - 2007 - 08 1,35,24,124/ - 2008 - 09 3,52,96,111/ - 6. AS THE GROUND ON LEGALITY OF ADDITIONS IS ALLOWE D, THE OTHER GROUNDS ON MERITS ARE CONSIDERED NOT NECESSARY TO BE ADJUDICAT ED AT THIS JUNCTURE. THE RELATED GROUNDS ARE THEREFORE DISMISSED AS PURE LY ACADEMIC NOT REQUIRING ADJUDICATION. 7. BEFORE US, THE LD.DR RELIED UPON THE ORDER OF TH E AO. HE SUBMITTED THAT AUDITOR OF THE ASSESSEE HAS POINTED OUT DISCREPANCY IN THE PAYMENT OF CHARGES. THE CHARGES WERE DEBITED ON TH E LAST DAY I.E. AT THE END OF THE MARCH. IT GAVE RISE TO A DOUBT ABOUT TH E GENUINENESS OF THIS PAYMENT, AND THUS, THE AO HAS RIGHTLY MADE DISALLOW ANCE. ON THE OTHER DCIT VS. ARVIND JOSHI & CO. WITH CO - 11 - HAND, THE LD.COUNSEL FOR THE ASSESSEE TOOK US THROU GH PAGE NO.66 OF THE PAPER BOOK WHEREIN DETAILS IN TABULAR FORM SHOWING YEAR-WISE GROSS RECEIPTS FROM CONTAINER FREIGHT STATION HAS BEEN PL ACED ON RECORD. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, IN TH E ASSESSMENT YEAR 2007- 08, GROSS RECEIPT FROM THIS DIVISION WAS OF RS.15,8 7,27,161/-. THERE IS NET PROFIT AT RS.4,51,76,919/-. THE ASSESSEE IS NOT HA VING CRANE AND OTHER EQUIPMENTS. THUS, IT HAS TO PAY CRANE HIRE CHARGES AS WELL AS WAREHOUSE RENT. SIMILARLY, HE POINTED OUT THAT IN THE ASSESS MENT YEAR 2008-09, NET PROFIT OF RS.4.88 CRORES. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE FINDING OF THE AO ON THIS ISSUE WOULD INDICATE THAT THE LD.AO FAILED TO BRING ANY MATERIA L ON RECORD DEMONSTRATING AS TO HOW THIS EXPENDITURE ARE NOT GE NUINE, OR WHETHER THE ASSESSEE HAS MADE PAYMENT IN EXCESS OF MARKET R ATE. THOUGH, THE LD.CIT(A) HAS EXAMINED THE ISSUE WITH THE ANGLE, WH ETHER IN ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH, THI S ISSUE COULD BE EXAMINED BY THE AO AND DISALLOWANCE COULD BE MADE. THE REVENUE FAILED TO BRING ANY MATERIAL TO OUR NOTICE CONTRARY TO THE FINDING OF THE LD.CIT(A). THE LD.AO HAS NOT MADE REFERENCE TO ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH SHOWING NON-GENUINENESS OF THE EXPENDITURE OR EXCESS PAYMENT OF THIS EXPENDITURE. WE HAVE EXTRACTED THE FINDING THE AO FOR BOTH THE YEARS. APART FROM THE ABOVE, WE HAVE EXAMINED THE ISSUE VIZ. WHETHER THERE IS ANY INCOME FROM THIS ACTIVITY, AND IF IT HAS INCOME, THEN EXPENDITURE OF THIS NATU RE HAS ANY NEXUS WITH THIS GROSS RECEIPT. THE AO NOWHERE CONSIDERED WHET HER THE ACTIVITY UNDERTAKEN BY THE ASSESSEE GIVES RISE TO INCOME OF MORE THAN RS.4.51 CRORES IN THE ASSESSMENT YEAR 2007-08 AND RS.4.88 C RORES IN THE DCIT VS. ARVIND JOSHI & CO. WITH CO - 12 - ASSESSMENT YEAR 2008-09 WOULD REQUIRE EXPENDITURE. TO OUR MIND, THE AO HAS MADE DISALLOWANCE WITHOUT ANY APPLICATION OF MIND IN SWEEPING MANNER. HE HAS NOT MADE REFERENCE TO ANY SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH AND ALSO NOT MADE ANY ANALYSIS OF BUSINESS NEEDS AND THE EXPENDITURE DEBITED BY THE A SSESSEE. HE HAS SIMPLY DISBELIEVED CLAIM OF THE ASSESSEE ON THE GRO UND THAT THE EXPENDITURE WERE DEBITED ON THE LAST DATE. TO OUR MIND, THIS APPROACH OF THE AO IS UNACCEPTABLE. THE LD.CIT(A) HAS CONSI DERED THE ISSUE IN RIGHT PERSPECTIVE AND RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A). THE SAME IS CO NFIRMED. 9. AS FAR AS COS. ARE CONCERNED, THE LD.COUNSEL FOR THE ASSESSEE DID NOT PRESS, HENCE THEY ARE DISMISSED. 10. IN THE RESULT, APPEALS OF THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER
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