Y.Swamy Reddy, Hyderabad V. Asst.CIT, Central Circle-5, Hyderabad

ITA 1134/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6665 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Keywords: Question of law; Procedural lapse

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER S.NO. ITA NO. AY APPELLANT RESPONDENT 1 TO 6 1131 TO 1136/H/14 2003-04 TO 2008-09 Y. SWAMI REDDY, HYDERABAD PAN AAMPY 0159 Q ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYDERABAD. 7 1139/H/14 2006-07 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 5, HYDERABAD. Y. SWAMI REDDY, HYDERABAD PAN AAMPY 0159 Q ASSESSEE BY: SRI A. SRINIVAS REVENUE BY: SRI M. SITARAM DATE OF HEARING: 15/03/2016 DATE OF PRONOUNCEMENT: 07/04/2016 O R D E R PER BENCH: THESE APPEALS PERTAINING TO ONE ASSESSEE ARE DIREC TED AGAINST A COMMON ORDER OF CIT(A)-I, HYDERABAD, DATE D 20/03/2014 FOR THE AYS 2003-04 TO 2009-10. THE REVE NUE ALSO FILED AN APPEAL FOR AY 2006-07 AGAINST THE SAID ORD ER OF CIT(A). AS IDENTICAL ISSUES ARE INVOLVED IN THESE A PPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON ORDER IS PASSED. 2. IN THESE APPEALS, THE ASSESSEE FILED A PETITION FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS, WHIC H ARE COMMON IN ALL THE APPEALS, FOR WHICH RELYING UPON T HE I.T.A. NOS. 1131 TO 1136 & 1139/HYD/2014 Y. SWAMY REDDY, HYD. 2 JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F NATIONAL THERMAL POWER CO. LTD. VS. CIT, [1998] 229 ITR 383 (SC), THE ASSESSEE SUBMITTED THAT THE ITAT HAS JURISDICTION T O EXAMINE THE QUESTION OF LAW WHICH WAS NOT ARISEN BEFORE THE ASSESSING OFFICER BUT AROSE BEFORE THE ITAT FOR THE FIRST TIM E AND REQUESTED TO ADMIT THE ADDITIONAL GROUNDS OF APPEAL : 12. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO ERRED IN ISSUING NOTICE U/S 153C O F THE ACT TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATIO N WITHOUT THERE BEING ANY INCRIMINATING MATERIAL BELO NGING TO ASSESSEE FOUND DURING THE COURSE OF SEARCH. 13. THE LEARNED CIT (A) ERRED IN ISSUING NOTICE U/S 153C WITHOUT RECORDING THE SATISFACTION WHICH IS A PRE-C ONDITION FOR INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT. 14. THE LEARNED CIT (A) ERRED IN MAKING ADDITIONS T O THE INCOME OF ASSESSEE WITHOUT THERE BEING ANY INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THER EFORE, ADDITIONS SO MADE CANNOT BE SUSTAINED. 15. THE ASSESSEE MAY ADD, ALTER, OR MODIFY OR SUBST ITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TI ME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. LEARNED COUNSEL SUBMITTED THAT FACTS NECESSARY F OR CONSIDERATION OF THE ADDITIONAL GROUNDS ARE ALREADY ON RECORD, AND BEING A PURE QUESTION OF LAW INVOLVED IN THE AD DITIONAL GROUND, SUPPORTED BY THE JUDGMENT OF THE APEX COURT AS WELL AS THE CIRCULAR ISSUED BY THE CBDT, THE SAME DESERV ES TO BE ADMITTED. HAVING REGARD TO THE CIRCUMSTANCES OF TH E CASE, WE ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE S IN THESE APPEALS. 4. THE BRIEF FACTS OF THE CASE ARE, SEARCH AND SEIZ URE OPERATIONS WERE CONDUCTED IN THE CASE OF HRI M. SAM BASIVA RAO AND OTHERS, HYDERABAD AND ITS GROUP OF CASES ON 16.7.2008. CERTAIN INCRIMINATING MATERIAL/DOCUMENTS PERTAINING TO THE ASSESSEE APPEAR TO HAVE BEEN FOUN D DURING I.T.A. NOS. 1131 TO 1136 & 1139/HYD/2014 Y. SWAMY REDDY, HYD. 3 THE COURSE OF SEARCH, AND HENCE, THE ASSESSING OFF ICER INITIATED PROCEEDINGS UNDER S.153C OF THE ACT AND U LTIMATELY COMPLETED THE ASSESSMENTS IN THE CASE OF THE ASSES SEE FOR THE RELEVANT YEARS UNDER APPEAL, BY MAKING CERTAIN ADDITIONS/DISALLOWANCES. 5. AGGRIEVED BY THE ASSESSMENTS MADE AS ABOVE, ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A), AND F URTHER AGGRIEVED BY THE ADDITIONS SUSTAINED BY THE CIT(A), ASSESSEE PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 6. BY WAY OF ADDITIONAL GROUND NOTED ABOVE, T HE ASSESSEES CONTEND THAT IN ORDER TO ASSUME JURISDICT ION UNDER S.153C OF THE ACT, IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER, IN THE ASSESSMENT FILE OF SHRI M. SAMBASIVA RAO WHICH WAS SUBJECT TO PROCEEDINGS UNDE R S.132 OF THE ACT, TO RECORD SATISFACTION THAT THE ASSESSE ES INCOME ESCAPED ASSESSMENT, AND IN THE ABSENCE OF RECORDING SATISFACTION BY THE ASSESSING OFFICER DEALING WITH THE MATTER OF SHRI M. SAMBASIVA RAO, THE ASST. COMMISSIONER OF I NCOME- TAX CENTRAL CIRCLE 5, HYDERABAD HAS NO JURISDICTION TO INITIATE THE PROCEEDINGS UNDER S.153C OF THE ACT IN THE CASE OF THE ASSESSEE HEREIN. IN THIS REGARD, THE ASSESSEE PLACE D BEFORE US A COPY OF CIRCULAR NO.24/2015 ISSUED BY THE CBDT , (F.NO.279/MISC./140/2015(ITJ) DATED 31.12.2015), WH EREIN THE CENTRAL BOARD OBSERVED THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S. CALCUTTA KNITWEARS (362 ITR 67 3) HAS LAID DOWN THAT FOR THE PURPOSE OF S.158BD OF THE ACT, RE CORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATIS FACTION NOTE MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECORD TO THE OTHER ASSESSING OFFICER WHO HAS J URISDICTION OVER SUCH OTHER PERSON U/S. 1538BD OF THE ACT, AND THE BOARD FURTHER OBSERVED THAT THE PROVISIONS OF S.153 C ARE I.T.A. NOS. 1131 TO 1136 & 1139/HYD/2014 Y. SWAMY REDDY, HYD. 4 SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF S.158BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINES OF THE HON'BLE SUPREME COURT APPLY TO THE PROCEEDINGS UNDER S.153C OF THE ACT. IN PARA 5 OF THE CIRCULAR, IT WAS CLARIFIED THAT EVEN IN THE PENDING LITIGATION, IF SATISFACTION IS NOT AVAILABLE, THE R EVENUE HAS TO ABIDE BY THE GUIDELINES ISSUED BY CBDT WHICH ARE IN TERMS OF THE GUIDELINES LAID DOWN BY THE APEX COURT. LEAR NED COUNSEL ALSO PLACED BEFORE US A COPY OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. S HETTYS PHARMACEUTICALS & BIOLOGICALS LTD. (2015) 57.TAXMA NN.COM. 282 (ANDHRA PRADESH) WHEREIN THE HON'BLE COURT OBS ERVED THAT RECORDING OF SATISFACTION IS A PRECONDITION FO R INVOKING JURISDICTION UNDER S.153C OF ACT AND IN THE ABSENCE OF FOLLOWING OF SUCH PROCEDURE, THE ASSESSMENTS FRAMED UNDER S.153C DESERVE TO BE QUASHED. 7. LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE ISSUE STANDS SQUARELY COVERED BY THE CIRCULAR ISSUED BY THE CBDT AS WELL AS THE DECISION OF THE JURISDICTIONAL HIGH COURT. AT THE SAME TIME, THE LE ARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT NON-RECO RDING OF SATISFACTION IS ONLY A PROCEDURAL IRREGULARITY AND ONE HAS TO REFER TO THE FACTS OF THE CASE AND THE INCRIMINATI NG DOCUMENTS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS TO AP PRECIATE WHETHER IT IS A DESERVING CASE FOR INITIATING THE PROCEEDINGS UNDER S.153C OF THE ACT. THUS, HE STRONGLY SUPPORT ED THE ORDER PASSED BY THE ASSESSING OFFICER. 8. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH CO URT IN LINE WITH THE VIEW TAKEN BY THE APEX COURT AND THE BINDING CI RCULAR ISSUED BY THE CBDT(BINDING UPON THE REVENUE), WE AR E OF THE VIEW THAT THE PROCEEDINGS INITIATED UNDER S.153C OF THE ACT IN I.T.A. NOS. 1131 TO 1136 & 1139/HYD/2014 Y. SWAMY REDDY, HYD. 5 THE CASES OF THESE ASSESSEES FOR THE RELEVANT YEARS UNDER APPEAL, DESERVE TO BE QUASHED IN AS MUCH AS THE CO NCERNED ASSESSING OFFICER HAS ADMITTEDLY NOT RECORDED ANY S ATISFACTION BEFORE FORWARDING THE FILES TO THE ASSESSING OFFICE R IN WHOSE CHARGE, THE ASSESSEE HEREIN IS ASSESSED. IN OTHER WORDS, THE ASSESSMENTS MADE UNDER S.153C OF THE ACT ARE HEREBY QUASHED. IN THIS VIEW OF THE MATTER, THE OTHER GROU NDS URGED BY THE ASSESSEES HAVE NO LEGS TO STAND, SINCE THE V ERY ASSESSMENTS GIVING RISE TO THESE APPEALS ARE QUASHE D. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED. 10. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTAT IVE HAS NOT PRESSED ITS APPEAL NO. 1139/HYD/2014 FILED BEFORE US AND, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSE D. 11. TO SUM UP ALL THE APPEALS OF THE ASSESSEE ARE A LLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 07/04/2016. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 7 TH APRIL, 2016 KV COPY FORWARDED TO: 1. SHRI Y. SWAMY REDDY, C/O P. MURALI & CO., CAS., 6-3- 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2. ASST. COMMISSIONER OF INCOME-TAX, CC-5, HYDERABA D. 3. CIT(A) - 1, HYDERABAD 4 CIT (CENTRAL), HYDERABAD 5 THE DR, ITAT, HYDERABAD