M/s Indo Pacific Finlease Ltd., Chandigarh V. ACIT, Chandigarh

ITA 1042/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95506 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: ASHWANI KUMAR; ASHOK KUMAR GOYAL
• Keywords: Block assessment
• Section: 147; 68; 148; 132; 139; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1042/CHD/2013 (ASSESSMENT YEAR : 2004-05) M/S INDO PACIFIC FINLEASE LTD., VS. THE A.C.I.T., 98-99, SUB CITY CENTRE, CIRCLE-II, SECTOR 34. CHANDIGARH. CHANDIGARH. PAN: AAAC12176E (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ASHWANI KUMAR & ASHOK KUMAR GOYAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 20.08.2015 DATE OF PRONOUNCEMENT : 31.08.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON DATED 4.9.2013 FOR ASSE SSMENT YEAR 2004-05, RAISING THE FOLLOWING GROUNDS : 1. THAT THE LEARNED CITA HAS ERRED IN CONFIRMING TH E ACTION OF AO FOR ISSUE OF NOTICE U/S 153A OF THE INCOME TAX A CT AND SUBSEQUENT ASSESMENT INSPITE OF THE FACT THAT THERE WAS NO WARRANT IN THE NAME OF THE COMPANY. AS NO SEA RCH WAS INITIATED IN CASE OF COMPANY THE NOTICE AND SUBSEQUENT ASSESMENT BE DECLARED NULL & VOID. 2 2. THAT THE LEARNED CIT(A HAS ERRED IN LAW AS WELL A S ON FACTS IN CONFIRMING THE ADDITION OF RS.4,77,00,000/- O N ACCOUNT OF ALLEGED SHARE APPLICATION MONEY RECEIVED U/ S 68 OF INCOME TAX ACT WITHOUT APPRECIATING THE EXPLANATIO N & CONFIRMATIONS FILED WHICH IS ARBITRARY & UNJUSTIFIED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD DELETE OR MODIFY ANY GROUND OF APPEAL BEFORE THE SAME IS HEARD OR DI SPOSED OFF. 2. DURING THE COURSE OF HEARING, AN ADDITIONAL GRO UND WAS ALSO FILED, WHICH READS AS UNDER : THAT ASSESSMENT FRAMED U/S 153A(1)(B) R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH COULD WARRANT SUCH AN ADDITION. 3. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE SEARCH OPERATION UNDER SECTION 132(1) OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF MODERN GROUP O F CASES AS ON 17.3.2010. A NOTICE UNDER SECTION 153A OF T HE ACT WAS ISSUED TO THE ASSESSEE AS ON 25.1.2011 FOR THE ASS ESSMENT YEAR 2004-05. THE PRELIMINARY GROUND RAISED BY TH E ASSESSEE BEFORE US WAS THAT SINCE NO SEARCH WARRANT IN THE N AME OF THE ASSESSEE COMPANY WAS ISSUED AND SINCE NO SEARCH WAS INITIATED IN ASSESSEES CASE, A NOTICE UNDER SECTIO N 153A OF THE ACT AND SUBSEQUENT ASSESSMENT ARE NULL AND VOID . THIS GROUND WAS ALSO RAISED BEFORE THE LEARNED CIT (APPE ALS) WHO HAD DISMISSED THE SAME VIDE PARA 4.1 AT PAGE 3 OF T HE APPELLATE ORDER. ON AN EARLIER DATE OF HEARING WHI LE 3 ADJUDICATING THIS ISSUE THE BENCH HAD DIRECTED THE DEPARTMENTAL REPRESENTATIVE TO FIND OUT FROM THE RE CORDS WHETHER WARRANT WAS ISSUED IN THE CASE OF THE PRES ENT ASSESSEE OR NOT. IN PURSUANCE OF THE SAME, A LET TER DATED 25.6.2015 WAS RECEIVED IN THE OFFICE OF THE COMMISS IONER OF INCOME TAX (ITAT-I) BY THE DEPUTY DIRECTOR OF INCOM E TAX (INVESTIGATION)-II, CHANDIGARH. THIS LETTER WAS F ILED BEFORE THE BENCH IN ORIGINAL. ON PERUSAL OF THE SAME, IT IS SEEN THAT THE DIT(INVESTIGATION) IN THE LAST PARA OF THE SAME LETTER HAS STATED AS UNDER : IN THIS REGARD, IT IS INTIMATED THAT THE PERUSAL O F THE RECORD OF THIS OFFICE REVEALS THAT NO WARRANT W AS ISSUED IN THE OF M/S INDO PACIFIC FINLEASE LTD., AN D THE PROPOSAL FOR CENTRALIZATION OF THE CASE WAS SEN T TO CENTRAL CIRCLE CHANDIGARH VIDE THIS OFFICE LETTE R NO.132 DATED 04.05.2010 ON THE REQUEST OF THE ASSESSEE (COPY ENCLOSED). 4. FROM THE PERUSAL OF THE ABOVE SAID LETTER, IT I S QUITE CLEAR THAT IN THE CASE OF PRESENT ASSESSEE NO SEARC H WARRANT WAS ISSUED AS ADMITTED BY THE DEPARTMENT ITSELF. 5. THE LEARNED COUNSEL FOR THE ASSESSEE MADE DETAI LED SUBMISSIONS TO THE EFFECT THAT IN THE ABSENCE OF SE ARCH WARRANT, NOTICE ISSUED UNDER SECTION 153A AND SUBSE QUENT PROCEEDINGS BOTH ARE INVALID. HE ALSO RELIED UPON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. RAM SINGH & OTHERS (2013) 262 CTR 96 (P&H) AND ALSO THAT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT-I VS. JOLLY FANTASY WORLD LTD. (2015) 373 ITR 530 (GU J). 4 6. THE LEARNED D.R. DURING THE COURSE OF HEARING J UST RELIED UPON THE ORDER OF THE ASSESSING OFFICER AS W ELL AS OF THE LEARNED CIT (APPEALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON SPECIFIC PERUSAL OF THE LETTER FILED BY THE DIT (INVESTIGATION), CHANDIGARH TO THE COMMISSIONER OF INCOME TAX (ITAT-I), IT IS CLEAR TH AT THE FACT THAT NO SEARCH WARRANT WAS ISSUED IN THE NAME OF TH E ASSESSEE IS CORRECT. FURTHER, ON PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE ASSESSING OFFICER HAS MENTIONED THE F ACT THAT SEARCH WAS CARRIED OUT AT THE RESIDENTIAL AND BUSIN ESS PREMISES OF MODERN GROUP OF CASES INCLUDING THE ASS ESSEE BY THE INVESTIGATION WING, CHANDIGARH ON 17.3.2010. HOWEVER, WE COULD NOT SEE ANY EVIDENCE TO THAT EFFECT. THE LEARNED CIT (APPEALS) ALSO HAS ADJUDICATED THE SAID ISSUE RAISE D BY THE ASSESSEE IN A SUMMARILY MANNER. NOW THE ISSUE TO BE DECIDED BY US IS WHETHER IN THE ABSENCE OF SEARCH W ARRANT CAN THERE BE A VALID PROCEEDINGS INITIATED BY ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT. 8. ON THE ASPECT OF APPLICABILITY OF CONDITION PRE CEDENT FOR MAKING THE ASSESSMENT UNDER SECTION 153A OF THE ACT, IT IS PERTINENT TO QUOTE THE PROVISIONS OF THIS SECTION : 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTH ER PARTICULARS AS MAY BE PRESCRIBED 5 AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASS ESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YE ARS REFERRED TO IN THIS [SUB-SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARCH UND ER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, SHALL ABATE : [PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY R ULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASS ESSMENT OR REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLA SSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR A SSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDI NG THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR R EQUISITION IS MADE.] [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF AS SESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION ( 1) OR SECTION 153 , THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WIT H EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE [PRINCIPAL COMMISSIO NER OR] COMMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE.] EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT, (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C , ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMEN T MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPE CT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. 9. FROM THE PERUSAL OF THE PROVISIONS OF SUB-SECT ION (1) OF SECTION 153A, IT IS QUITE EVIDENT THAT THE INITI AL POINT FOR MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT, TH E PROCEEDINGS UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A IS A MUST. THE PROVISIONS OF THIS SECTION WO ULD APPLY IN CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CA RRIED OUT UNDER SECTION 132 OR ASSETS HAVE BEEN REQUISITED UNDER SE CTION 132A OF THE ACT. THE LAW IN THIS REGARD SEEMS VERY CLEAR AND U NAMBIGUOUS. THE 6 EXISTENCE OF A VALID SEARCH AGAINST ANY ASSESSEE IS THE ROOT OF THE MATTER AND ANY ASSESSING OFFICER GETS THE JURIS DICTION TO ISSUE NOTICE OR MAKE ASSESSMENT UNDER SECTION 153A OF THE ACT ONLY IN THE PRESENCE OF VALID SEARCH THAT TOO I N THE CASE OF THE ASSESSEE ITSELF. IN CASE OF SOME INCRIMINATIN G MATERIAL AGAINST THE ASSESSEE BEING FOUND IN THE COURSE OF S EARCH OF ANOTHER PERSON, SEPARATE PROVISIONS OF SECTION 153C OF THE ACT HAVE BEEN PROVIDED. THE RELIANCE PLACED BY THE LEA RNED COUNSEL FOR THE ASSESSEE IN THIS REGARD ON THE JUDG MENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF R AM SINGH & OTHERS (SUPRA) IS NOT OUT OF PLACE, WHICH OBSERVES AS FOLLOWS : IN THE ABSENCE OF ANY SEARCH WARRANTS IN RESPECT O F THESE ASSESSES UNDER S. 132(1) OF THE ACT, ASSESSMENT COULD NOT HAVE BEEN UNDER S. 158BC OF THE ACT. SUCH AN ASSESSMENT WITHOUT AUTHORIZATION IS VOID AB INITIO. THE TRIBUNAL HAS REFERRED TO TH E JUDGMENT OF THE SPECIAL BENCH IN THE CASE OF PROMAI N LTD. VS. DY.CIT (2005) 95 TTJ (DEL)(SB) 825 : (200 5) 95 ITD 489 (DEL) (SB), DELHI SPECIAL BENCH IN THIS BEHALF. NO ISSUE REMAINS RESINTEGRA AND LAW HAS BEEN SETTLED BY VARIOUS JUDGMENT OF THE HIGH COURTS AS WELL. 10. ON PERUSAL OF THE ABOVE, IT HAS BEEN DECLARED IN NO AMBIGUOUS TERM THAT FOR ASSUMING THE JURISDICTION U NDER SECTION 153A OF THE ACT, THE CONDITION OF A VALID S EARCH AGAINST THE ASSESSEE IS A MUST. 11. FOR THIS, STRENGTH CAN ALSO BE TAKEN FROM TH E CASE OF AJIT JAIN VS. UNION OF INDIA & ORS. (2000) 242 I TR 302 (DEL), WHEREBY THE HON'BLE COURT HELD AS UNDER : 7 'SINCE THE SEARCH IN THE PRESENT CASE HAD TAKEN PLA CE ON LLTH JAN., 1996, IN ACCORDANCE WITH THE SAID PROVIS IONS, AN EX PARTE BLOCK ASSESSMENT FOR THE ASSESSMENT YEARS 198 6-87 TO 1996-97 WAS MADE ON 31ST. JAN., 1997, CREATING A TO TAL DEMAND OF RS. 50,13,204 ON THE PETITIONER IN HIS ST ATUS AS INDIVIDUAL. AS THE TITLE OF THE SAID CHAPTER SUGGES TS THESE ARE SPECIAL PROVISIONS FOR ASSESSMENT OF SEARCH CASES A ND, THEREFORE, A SEARCH UNDER S. 132 IS A PRE-REQUISITE FOR INVOKING THE PROVISIONS OF THE SAID CHAPTER. IT IS AXIOMATIC THAT SEARCH UNDER S. 132, AS CONTEMPLATED IN THE CH APTER HAS TO BE A VALID SEARCH. AN ILLEGAL SEARCH IS NO SEARC H AND AS A NECESSARY COROLLARY IN SUCH A CASE, CHAPTER XIV-B W OULD HAVE NO APPLICATION. SINCE IN THE INSTANT CASE, WE HAVE COME TO THE CONCLUSION THAT THE SEARCH CONDUCTED ON LLTH JAN., 1996, WAS WITHOUT JURISDICTION AND WAS THUS VOID AB INITI O, THE IMMINENT CONSEQUENCE WOULD BE THAT THE PROVISIONS O F CHAPTER XIV-B CANNOT BE INVOKED AGAINST THE PETITIO NER, PURSUANT TO THE SAID SEARCH OF HIS ROOM AT CHENNAI. CONSEQUENTLY, THE BLOCK ASSESSMENT ORDER DT. 31ST J AN., 1997, CANNOT BE SUSTAINED. WE ACCORDINGLY QUASH THE SAME'. 12. IN ANOTHER JUDGMENT OF THE HON'BLE GUJARAT HIG H COURT IN THE CASE OF JOLLY FANTASY WORLD LTD. (SUP RA), IT HAS BEEN HELD THAT IN THE ABSENCE OF WARRANT AUTHORIZA TION IN THE NAME OF THE ASSESSEE, THE ASSESSMENT IS AB INITIO V OID. WE WOULD ALSO LIKE TO REFER TO ANOTHER ORDER OF THE MU MBAI BENCH OF THE ITAT IN THE CASE OF J.M. TRADING CORPORATION VS. ACIT REPORTED IN (2008) 20 SOT 489 (MUM), WHICH HAS BEEN UPHELD BY THE HON'BLE BOMBAY HIGH COURT IN ITS JUDGMENT DA TED 29.6.2009, IN ITA NO.276/2009, AND FURTHER, THE HON 'BLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE RE VENUE AS ON 6.9.2010 WHILE DECIDING CC NO.13456/2010 AGAINST THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT. IN THIS CAS E, THE 8 ITAT HELD THAT, NO SEARCH BEING CONDUCTED AGAINST T HE ASSESSEE, THE PERIOD OF OPERATION TO WHICH THE PROV ISIONS OF SECTION 153A OF THE ACT WOULD APPLY, CANNOT BE DETE RMINED AND THE INVOKING OF PROVISIONS OF SECTION 153A OF T HE ACT IS BASELESS. IT WAS ALSO HELD THAT THE PROVISIONS OF SECTION 153A OF THE ACT ARE ONLY APPLICABLE IN CASE VALID SEARCH IS CONDUCTED AGAINST THE ASSESSEE UNDER SECTION 132 OF THE ACT AND ITAT ALSO HELD THAT PROCEEDINGS UNDER SECTION 1 43(3) R.W.S. 153A OF THE ACT ARE NULL AND VOID AND THE S AME ARE CANCELLED. 13. THERE ARE A NUMBER OF OTHER JUDGMENTS BY THE VARIOUS HIGH COURTS INCLUDING THAT OF HON'BLE JURIS DICTIONAL HIGH COURT AND VARIOUS BENCHES OF THE TRIBUNAL TO T HIS EFFECT. HOWEVER, FOR THE SAKE OF BREVITY, WE ARE NOT REFERR ING TO ALL OF THOSE. 14. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE T HAT THERE WAS NO SEARCH CONDUCTED AT THE ASSESSEES PRE MISES, NO ONE FROM THE DEPARTMENT VISITED IT TO EXECUTE ANY S EARCH AND SEIZURE PROCEEDINGS AND NO PANCHNAMA IN ASSESSEES NAME WAS EVER DRAWN. ON TOP OF THAT THE DEPARTMENT ITSE LF HAS ADMITTED THE FACT THAT NO SEARCH WARRANT IN THE NAM E OF THE ASSESSEE WAS ISSUED. IN VIEW OF THE SAME, THE NOT ICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 153A OF THE ACT AND SUBSEQUENT PROCEEDINGS ARE HELD TO BE VOID AB INITI O AND IS HEREBY QUASHED. 15. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER MAD E BY THE ASSESSING OFFICER UNDER SECTION 153A OF THE ACT , WE DO NOT 9 FIND ANY NEED TO ADJUDICATE THE ISSUES RAISED BY TH E ASSESSEE ON THE MERITS OF THE CASE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 31 ST AUGUST, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH