DCIT CEN CIR 7(3), MUMBAI V. MADAHU PRAKASH KAPOOR, MUMBAI

ITA 1060/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9193 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT SINGH ARNEJA
• Assessee Lawyers: ANUJ KISNADWALALD
• Keywords: Search and seizure
• Section: 143(3); 153A; 54; 132; 139

Judgement Text

ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 1060/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(3) R.NO.655,6 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 / VS. MADHU PRAKASH KAPOOR PALLONJI MANSION FLAT NO.G/D 43 CUFF PARADE MUMBAI 400 005 ./ ./PAN/GIR NO. AGQPK-0792-D ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : ANUJ KISNADWALA,LD.AR RE VENUE BY : RANJIT SINGH ARNEJA, CIT(DR) / DATE OF HEARING : 06/09/2017 / DATE OF PRONOUNCEMENT : 04 /10/2017 ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010- 11 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 49 [CIT(A)], MUMBAI DATED 21/12/2015 QUA DELETION OF ADDITION OF RS.2,30,66,654/- RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS SUBJECTED TO AN ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 ON 26/03/2014 AT RS. 2,51,89,060/-. PURSU ANT TO SEARCH AND SEIZURE ACTION U/S 132(1) ON 24/11/2011 ON BHARTI SHIPYARD GROUP OF COMPANIES, THE ASSESSEE BEING CONNECTED ENTITY WAS ALSO COVERED UNDER THE SAME. CONSEQUENTLY NOTICE U/S 153A WAS IS SUED ON 31/03/2013 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). THE ORIGINAL RETURN OF INCOME WAS FILED ON 31/07/20 10 AT RS.9,80,274/-. THE RETURN, PURSUANT TO SECTION 153A, WAS FILED ON 19/06/2013 AT RS.10,16,407/- WHICH WAS LATER REVISED AT THE SAME FIGURES ON 31/12/2013. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE, JOINTLY WITH HER DAUGHTER, SOLD A FLAT AT PALLONJI MANSION FOR RS.9.48 CRORES AND AFTER CLAIMING DEDUCTION U/S 54 REFLECTE D NIL LONG TERM CAPITAL GAINS [LTCG]. HOWEVER, LD. AO, AFTER PERUSING THE DETAILS / DOCUMENTS RE-WORKED LTCG AGAINST THE SAME AT RS.2,30,66,654/-. THE ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 3 LD. AO ALSO ESTIMATED DEEMED RENTAL VALUE FROM THE SOLD PROPERTY FOR FIVE MONTHS SINCE ASSESSEE DECLARED ANOTHER PROPERT Y AS SELF OCCUPIED PROPERTY DURING THE IMPUGNED AY WHICH LED TO NET ADDITION OF RS.9.56 LACS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. AGGRIEVED THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 21/12/2015 WHE RE THE ASSESSEE CONTESTED THE PROCEEDINGS ON LEGAL GROUND AND ADDIT IONS ON MERITS. THE ASSESSEE DREW ATTENTION TO THE FACT THAT NO INCRIMI NATING MATERIAL WAS FOUND IN THE SEARCH OPERATIONS QUA THE ASSESSEE AND THEREFORE, THE ADDITIONS WERE BAD IN LAW SINCE THE ASSESSMENT FOR IMPUGNED YEAR HAD NOT ABATED. IN OTHER WORDS, THE ASSESSEE CONTENDED THAT WHERE ASSESSMENT HAD ALREADY BEEN COMPLETED AND NO INCRIM INATING MATERIAL WERE FOUND BY THE SEARCH TEAM, NO ADDITION COULD BE MADE U/S 153A AS PER THE RATIO OF TRIBUNAL SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LTD. AS CONFIRMED BY HONBLE BOMBAY HIGH COURT ALONG WIT H CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) [ 58 TAXMANN.COM 78]. THE LD.CIT(A) AGREED WITH ASSESSEES SUBMISSION AND CONCLUDED THE MATTER AS FOLLOWS:- 9.2 I FIND THAT THE APPELLANT HAS FILED RETURN OF INCOME U/S 139 FOR A.Y 2009-10 ON 27.08.2009 DECLARING NIL TOTAL INCOME AND CURRENT Y EAR LOSS AT RS.15,56,964/- AND FOR A.Y 2010-11 ON 31.07.2010 DECLARING TOTAL INCOME AT RS. 980274/-. NO NOTICE U/S 143(2) HAS BEEN ISSUED TILL THE EXPIRY OF THE TIME PRESCRIBED U/S.143 TO ISSUE SUCH NOTICE I.E. UP TO 30.09.2010 FOR A.Y 2009-10 AND UP TO 30.09.2011 FOR A.Y.2010-11. SEARCH WAS CONDUCTED U/S.132(1) IN THE CASE OF THE APPELLANT ON 24/11/20 11. THUS, THE RETURN OF INCOME OF THE APPELLANT CAN BE TREATED AS HAVING BEEN ACCEPTED AN D ATTAINED FINALITY. AS A RESULT, NO ASSESSMENT WOULD BE PENDING ON THE DATE OF SEARCH I .E. 24/11/2011 AND THEREFORE, THE ASSESSMENT FOR BOTH THE ASSESSMENT YEARS HAD NOT AB ATED. RELIANCE IS PLACED ON THE DECISION OF THE ITAT DELHI F BENCH IN THE CASE OF PACL INDIA LTD VS ACIT, CENTRAL CIRCLE-4 DELHI IN ITA NO.2637/DEL/2010, WHEREIN IT WAS HELD THAT THE TIME PERIOD FOR ISSUING NOTICE U/S 143(2) WAS ALREADY EXPIRED PRIOR TO THE DATE OF SEARCH. THEREFORE, THE PROCEEDINGS DO NOT GET ABATED BY VIRTUE OF PROVISO TO SECTION 153A . ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 4 9.3 THE APPELLANT HAS SUBMITTED THAT NO INCRIMINATI NG MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH TO JUSTIFY THE ADDITIONS MADE IN THE ASSESSMENT ORDER U/S.153A OF THE ACT. I FIND THAT THE A.O HAS MADE ADDITION OF RS. 2 3,55,388/- FOR A.Y.2009-10, AS NOTED IN PARA 6.2 ABOVE, WITHOUT MAKING REFERENCE TO ANY INC RIMINATING MATERIAL, FOUND AS A RESULT OF THE SEARCH. SIMILARLY, THE A.O HAS MADE DISALLOWANC ES AS NOTED IN PARA 7.1, ADDITION OF RS. 230,66,654/- AS NOTED IN PARA 7.2 AND RS. 11,06,000 /- AS NOTED IN PARA 7.3 ABOVE FOR A.Y. 2010-11, WITHOUT MAKING REFERENCE TO ANY INCRIMINAT ING MATERIAL, FOUND AS A RESULT OF THE SEARCH. THE ADDITIONS AND DISALLOWANCES HAVE BEEN W ORKED OUT ON THE BASIS OF DETAILS FILED BY THE ASSESSE AND AIR INFORMATION AVAILABLE WITH T HE A.O 9.4 I FIND THAT SEARCH WAS CONDUCTED U/S.132(1) IN THE CASE OF THE APPELLANT ON 24/11/2011 AND THE ASSESSMENT IN BOTH THE CASES DID NOT ABATE ON THE DATE OF SEARCH AS NOTED IN PARA 9.2 ABOVE. IN THIS REGARD, THE SPECIAL BENCH OF ITA T, MUMBAI, IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS DCIT (2012) 137 ITD 287(SB )(MUM) HAS GIVEN THEIR DECISION AS UNDER: THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER: (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATEL Y; (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS O F INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I)BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT P RODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH THIS DECISION HAS BEEN FURTHER AFFIRMED BY THE HON BLE HIGH COURT OF BOMBAY IN ITA NO.1969 OF 2013 IN THE CASE OF CIT VS ALL CARGO GLO BAL LOGISTICS LTD. VIDE THEIR ORDER DATED 21.04.2015 9.5 IN VIEW OF THE ABOVE SAID DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD, CITED BY THE APPELLANT IN HER SUBMISSION, THE ADDITION IN TH IS CASE FOR BOTH THE ASSESSMENT YEARS COULD HAVE BEEN MADE ONLY ON THE BASIS OF INCRIMINA TING MATERIAL FOUND IN THE COURSE OF SEARCH. THEREFORE, I AM OF THE CONSIDERED OPINION T HAT THE ABOVE SAID ADDITIONS/DISALLOWANCES FOR BOTH THE ASSESSMENT YEA RS, AS DISCUSSED IN PARA 6.2,7.1,7.2 AND 7.3, WERE NOT JUSTIFIED AND THE SAME ARE DELETE D. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEND ED THAT THE DEPARTMENTS SPECIAL LEAVE PETITION [SLP] AGAINST THE CITED ORDER OF HONBLE BOMBAY HIGH COURT HAS BEEN ADMITTED BY HON BLE SUPREME COURT VIDE SLP NO. 18560 OF 2015 DATED 12/10/2015 [64 TAXMANN. COM 34] AND THEREFORE THE ISSUE IS YET TO ATTAIN FINALITY. PER CONTRA, LD. AR CONTENDED THAT AT THE MOMENT THE ISSUE STOOD COVERE D IN ASSESSEES FAVOR BY JURISDICTIONAL HIGH COURT. ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 5 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING THE CITED CASE LAWS. SO FAR AS THE FACTS ARE CONCERNED, IT IS UN-CONTROVERTED POSITION THAT NO I NCRIMINATING MATERIAL WAS FOUND IN THE SEARCH OPERATIONS QUA THE ASSESSEE AND THE ADDITIONS ARE BASED ONLY ON THE RETURN OF INCOME FILED BY THE ASSESSEE. SECONDLY, THE DATE OF SEARCH IS 24/11/2011 WHEREAS THE LAST D ATE FOR ISSUANCE OF REGULAR SCRUTINY NOTICE U/S 143(2) FOR IMPUGNED AY WAS 30/09/2011 AS NOTED BY LD. CIT(A) AND THEREFORE, TIME LIMIT FOR I SSUANCE OF REGULAR NOTICE U/S 143(2) HAD ALREADY ELAPSED. CLEARLY, NO ASSESSMENT WAS PENDING ON THE DATE OF SEARCH OPERATIONS AND NO PRO CEEDINGS HAVE ABATED ON THE DATE OF SEARCH I.E. 24/11/2011. THERE FORE, WE FIND THAT, AT THE MOMENT, THE ISSUE STOOD SQUARELY COVERED IN ASS ESSEES FAVOR BY THE CITED DECISION OF JURISDICTIONAL HIGH COURT AS RIGH TLY NOTED BY LD. CIT(A). SIMILAR VIEW HAS BEEN TAKEN BY HONBLE DELHI HIGH C OURT IN CIT VS. KABUL CHAWLA [380 ITR 573]. FURTHER, UPON PERUSAL OF SLP NO. 18560 OF 2015 DATED 12/10/2015 ADMITTED BY HONBLE SUPREME COURT, WE FIND THAT HONBLE APEX COURT HAS ONLY GRANTED SLP AGAINST THE RULING OF THE HON'BLE BOMBAY HIGH COURT'S FINDING THAT NO ADDITIO N CAN BE MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF N O INCRIMINATING MATERIAL IS FOUND DURING SEARCH OR DURING 153A PROC EEDINGS. IT IS SEEN THAT THE HON'BLE APEX COURT HAS NOT STAYED OR SUSPE NDED THE OPERATION OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT AN D THEREFORE, AT THE MOMENT, THE DECISION OF JURISDICTIONAL HIGH COURT I S BINDING ON US AND WE ARE BOUND TO FOLLOW IT. ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 6 6. FURTHER, HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA ( SUPRA ) AND OTHERS DATED 28/08/2015 HAS SUMMARIZED THE LE GAL POSITION ON THE ISSUE AS UNDER :- 'SUMMARY OF THE LEGAL POSITION: 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 AFOREMENTI ONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER : I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF TH E ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX A.YS IMMED IATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE A Y IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE A.O. WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A.Y. IN WHICH THE SEARCH T AKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX A YS. ''IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOS ED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE R EITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATE D PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSE SS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY F OR EACH A Y ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M A TERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A.O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQ UISITION OF DOCUMENTS OR ITA NO.1060/M/2016 MADHU PRAKASH KAPOOR ASSESSMENT YEAR 2010-11 7 UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006-07. ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 7. THE FACTS OF THE PRESENT CASE ARE MATERIALLY ID ENTICAL TO THE FACTS INVOLVED IN THE ABOVE CITED DECISIONS AND THEREFORE , RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE ARE INCLINED TO DISMISS REV ENUES APPEAL. 8. IN NUTSHELL, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04. 10.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. '%- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI