Assistant Commissioner of Income-tax, V. Laxmi Civil Engineering Services Pvt. Ltd., Kolhapur

ITA 1243/PUN/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6645 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-12-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 10-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K KULKARNI SHRI S N PURANIK; KIRAN M DOSHI
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.1175/PUN/2015 '% & '& / ASSESSMENT YEAR : 2005-06 LAXMI CIVIL ENGINEERING SERVICES PVT. LTD. 1148E, SYKES EXTENSION, KOLHAPUR-416 001. PAN : AAACL5602N .... / APPELLANT (% / V/S. THE ASST. COMMISSIONER OF INCOME TAX, (CENTRAL) CIRCLE, KOLHAPUR. / RESPONDENT . / ITA NOS. 1241 TO 1243/PUN/2015 '% & '& / ASSESSMENT YEARS: 2005-06 TO 2007-08 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLHAPUR. .... / APPELLANT (% / V/S. LAXMI CIVIL ENGINEERING SERVICES PVT. LTD. 1148, E-WARD, SYKES EXTENSION, TAKALA, KOLHAPUR-416 001. PAN : AAACL5602N / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI, SHRI S.N. PURANIK & SHRI KIRAN M. DOSHI REVENUE BY : SHRI S. B PRASAD, CIT 2 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 / DATE OF HEARING : 04.12.2018 / DATE OF PRONOUNCEMENT : 27.02.2019 ) / ORDER PER VIKAS AWASTHY, JM ITA NO.1175/PUN/2015 FOR THE ASSESSMENT YEAR 2005-0 6 HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1 & 2, KOLHAPUR DATED 01.06.2015. THE DEPARTMENT HAS FILED APPEALS IN ITA NOS.1241 TO 1243 /PUN/2015 AGAINST AFORESAID ORDER OF COMMISSIONER OF INCOME TAX (APPE ALS)-1 & 2, KOLHAPUR, COMMON FOR THE ASSESSMENT YEARS 2005-06, 2006 -07 AND 2007- 08. 2. SHRI M.K. KULKARNI APPEARING ON BEHALF OF THE ASSESSEE SU BMITTED AT THE OUTSET THAT ON INSTRUCTION FROM ASSESSEE, HE IS NOT PRESSING THE APPEAL AND WISHES TO WITHDRAW THE SAME. THE LD. COUNSEL FILED A RE QUEST LETTER TO WITHDRAW APPEAL IN ITA NO.1175/PUN/2015. 3. SHRI S.B. PRASAD REPRESENTING THE DEPARTMENT RAISED N O OBJECTION IN ASSESSEES WITHDRAWAL OF APPEAL. 4. IN VIEW OF THE REQUEST MADE BY LD. COUNSEL FOR THE ASS ESSEE, THE APPEAL OF THE ASSESSEE IN ITA NO.1175/PUN/2015 IS DISMISSED AS WITHDRAWN . 3 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 ITA NO.1241/PUN/2015 (BY DEPARTMENT) ASSESSMENT YEAR 2005-06 5. BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A CIVIL ENGINEER AND MECHANICAL CONTRACTOR. A SEARCH AND SEIZ URE ACTION U/S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 15.06.20 10. NOTICE U/S.153A(A) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 30.0 5.2011. THE ASSESSEE VIDE LETTER DATED 19.07.2011 INFORMED THAT THE R ETURN ALREADY FILED U/S.139 OF THE ACT BE TREATED AS RETURN IN RESPONSE T O NOTICE U/S.153A(A) OF THE ACT. DURING THE COURSE OF SEARCH ACTION, CASH AGGREG ATING TO RS.2,73,70,860/- WAS FOUND. FURTHER, JEWELLERY VALUED AT RS .46,82,110/- WAS ALSO FOUND, OUT OF WHICH JEWELLERY WORTH RS.7,97,181/- WA S SEIZED. THE STATEMENT OF SHRI VIJAY RAJARAM SHAH AND SHRI HEMANT VIJAY SHAH, DIRECTORS OF THE ASSESSEE COMPANY WERE RECORDED U/S.13 2(4) OF THE ACT. SHRI HEMANT VIJAY SHAH ADMITTED UNACCOUNTED INCOME OF ASSES SEE AT RS.29,15,76,000/- AND OFFERED THE SAME AS INCOME OF THE ASS ESSEE FOR ASSESSMENT YEARS AS UNDER: ASSESSMENT YEAR AMOUNT 2009-10 7,00,00,000/- 2010-11 17,90,76,000/- 2011-12 4,25,00,000/- TOTAL 29,15,76,000/- AS REGARDS THE ASSESSMENT YEAR 2005-06, NO INCOME WAS OFFERED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IA(4) ON VA RIOUS 4 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 MISCELLANEOUS RECEIPTS WHICH ARE NOT ELIGIBLE FOR CLAIMING DEDUC TION. CONSEQUENTLY, THE ASSESSING OFFICER DISALLOWED DEDUCTION U/ S.80IA(4) IN RESPECT OF MISCELLANEOUS RECEIPTS AGGREGATING TO RS.1,28,59,6 81/-. APART FROM ABOVE DISALLOWANCE OF DEDUCTION U/S.80IA(4) OF THE ACT, NO OTHER ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2005-06. 6. AGGRIEVED BY THE ASSESSMENT ORDER DATED 07.03.2013 PASSED U/S. 143(3) R.W.S.153A(B) OF THE ACT, THE ASSESSEE FILED APPEAL BE FORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING THE ADDITION ON TWO GROUNDS: A. NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH FOR TH E ASSESSMENT YEAR 2005-06, THEREFORE, NO ADDITION CAN BE MADE. B. ORIGINAL ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS COM PLETED BEFORE DATE OF SEARCH. SINCE THE ASSESSEE HAD CLAIMED DED UCTION U/S.80IA(4) IN THE RETURN OF INCOME FILED U/S.139 OF THE ACT, T HE ISSUE HAD REACHED FINALITY, THEREFORE, CANNOT BE RAKED UP AGAIN IN ASSESSMENT PROCEEDINGS U/S.153A OF THE ACT IN THE ABSE NCE OF ANY INCRIMINATING MATERIAL. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER EXAMINING THE FACTS OF CASE CAME TO THE CONCLUSION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERATION FOR THE ASSESSMENT YEAR 2 005-06. THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS COMPLETED U/S.143(3) OF THE ACT. THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80IA(4) IN RET URN OF INCOME FILED U/S.139 OF THE ACT AND AFTER EXAMINING ASSESSEES CLA IM, THE SAME WAS ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS). SINCE AT THE TIME OF 5 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 SEARCH, NO ASSESSMENT WAS PENDING, THE ASSESSING OFFICER C OULD NOT HAVE MADE ANY ADDITION IN PROCEEDINGS U/S.153A OF THE ACT. 7.1 DEHORS, THE LEGAL POSITION, THE COMMISSIONER OF INCOME TA X (APPEALS) EXAMINED ALLEGED MISCELLANEOUS RECEIPTS ON WHICH DEDUCTION U/S.80I A(4) WAS DISALLOWED BY THE ASSESSING OFFICER AND CAME TO THE CONCLUS ION THAT ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S.80IA(4) OF THE ACT ON ALL SUCH RECEIPTS. THUS, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM O F ASSESSEE AND DELETED THE ADDITION. 8. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE HAS FILED APPEAL BEFORE THE TRIBUNAL BY RAISING FOLLOWING GROUNDS: 1) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AO HAD NOT JUR ISDICTION U/S 153A FOR THE IMPUGNED ASSESSMENT YEARS ONCE ASSESSMENT WAS C OMPLETED FOR THOSE YEARS, WHEN THE RETURN OF INCOME FILED IN RES PONSE TO NOTICE U/S 153A CAN BE ASSESSED OR REASSESSED BY THE AO U/S 1 53A(B) OF THE ACT. 2) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW. THE LD. CIT(A) HAS ERRED IN PROPOUNDING THAT AVAILABILITY O F INCRIMINATING MATERIAL WAS PRELUDE TO ASSESS U/S.153A ONCE ASSESS MENTS HAD BEEN COMPLETED FOR THE IMPUGNED ASSESSMENT YEARS. 3) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEES CONTEN TION THAT COMPLETED ASSESSMENTS COULD NOT BE REVISITED WHEREAS AS PER S ECTION 153A(2) OF THE ACT HAS GIVEN THE MANDATE TO REVISIT CASES ANNU LLED BY HIGHER JUDICIAL AUTHORITIES. 4) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A)HAS ERRED WHILE ALLOWING THE ASSESSES APPE AL OR ELIGIBILITY OF MISCELLANEOUS RECEIPTS OF RS.1,28,59,681/- WITHOUT CONTROVERTING THE FACTS ENUMERATED BY THE AO IN HIS ORDER AND FURTHER ERRING IN TREATING THE SAID RECEIPTS AS PROFITS AND GAINS DERIVED FROM ELIGIBLE BUSINESS AS REQUIRED BY SECTION 80IA(4) OF THE ACT. 5. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 6 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 9. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY SUPPORTIN G THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED AT THE OUTS ET THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORP ORATION (NHAVA SHEVA) REPORTED AS 374 ITR 645. IT IS AN UNDISPUTED FACT THAT ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS COMPLETED AT THE TIME OF SEARCH AND SEIZURE OPERATION. NO INCRIMINATING MATERIAL WHATSOEVER WAS FOUND B Y THE DEPARTMENT FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSE SSEE IN ITS RETURN OF INCOME FILED U/S.139 OF THE ACT HAD CLAIMED DEDUCTION U/S.80IA(4) OF THE ACT . THE RETURN OF THE ASSESSEE WAS SUBJECT TO SCRUTINY A ND THE ASSESSING OFFICER FOUND THE CLAIM OF THE ASSESSEE IN ORDER AND ALLOWED THE S AME. NOW THE ASSESSMENT PROCEEDINGS CONSEQUENT TO SEARCH, ASSESSING OFFICER CANNOT FIDDLE WITH THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4), WH ERE ASSESSMENT HAS NOT ABATED AND NO INCRIMINATING MATERIAL IS FOUND. 10. ON THE OTHER HAND, SHRI S.B. PRASAD REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ACTION OF ASSESSING OFFICER IN DIS ALLOWING ASSESSEES CLAIM U/S.80IA(4) IN RESPECT OF MISCELLANEOUS RECE IPTS. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS. CIT-CEN TRAL, 75 TAXMANN.COM 15 (KERALA). 11. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESE NTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW. THE UN-REBUTTED FACTS IN THE INSTANT CASE ARE: 7 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 - NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE DEPARTMENT AGAINST TH E ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. - IN THE RETURN OF INCOME FILED U/S.139 OF THE ACT, THE ASS ESSEE HAD CLAIMED DEDUCTION U/S.80IA(4) OF THE ACT, HENCE ASSESSMENT FOR ASSESSMENT YEAR 2005-06. THE ASSESSMENT UNDER REGULAR PROVISIONS WAS COMPLETED IN THE CASE OF THE ASSESSEE AND CLAIM OF TH E ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER. - THERE WAS NO PENDING ASSESSMENT WHEN SEARCH AND SE IZURE ACTION WAS CARRIED OUT BY THE DEPARTMENT. 12. IT IS A WELL SETTLED LAW THAT WHEN THERE IS NO INCRIMIN ATING MATERIAL, NO ADDITION CAN BE MADE WHERE ORIGINAL ASSESSMENTS HAVE NOT ABATED. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CON TINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) (SUPRA.) HAS HELD TH AT NO ADDITION CAN BE MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOM E FINAL IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH. 13. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . MURLI AGRO PRODUCTS LTD. REPORTED AS 49 TAXMANN.COM 172 HAS HELD AS UNDE R: 12) ONCE IT IS HELD THAT THE ASSESSMENT FINALIZED ON 29.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED UNDER SECTION 80 HHC OF THE INCOME-TAX ACT AS WELL AS THE LOSS COMPUTED UND ER THE ASSESSMENT DATED 29-12-2000 WOULD ATTAIN FINALITY. IN SUCH A C ASE, THE A.O. WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER UNDER SECT ION 153A READ WITH SECTION 143(3) OF THE I.T. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/ REASSESSMENT ORDER WHICH HAS ATTAINED F INALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEED INGS UNDER SECTION 153A OF THE INCOME-TAX ACT ESTABLISH THAT THE RELIE FS GRANTED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153 A PROCEEDINGS . 8 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 14. THE LD. DR HAS PLACED RELIANCE ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR VS. CIT- CENTRAL (SUPR A.). WE ARE OF CONSIDERED VIEW THAT THE AFORESAID DECISION WOULD NOT SUPP ORT THE CAUSE OF REVENUE, AS THERE IS BINDING DECISIONS OF HON'BLE JURISDICT IONAL HIGH COURT DIRECTLY ON THE ISSUE IN HAND. IN VIEW OF THE FACTS OF THE CASE AND THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), RESULTANTLY THE SAME IS UPHELD. THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2005- 06 IS DISMISSED BEING DEVOID OF ANY MERIT . ITA NOS. 1242 & 1243/PUN/2015 (BY DEPARTMENT) ASSESSMENT YEARS 2006-07 & 2007-08 15. THE REVENUE IN BOTH THE AFORESAID APPEALS HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING IDENTICAL GROU NDS AS WERE RAISED IN THE ASSESSMENT YEAR 2005-06. BOTH SIDES ARE U NANIMOUS IN STATING THAT THE FACTS IN ASSESSMENT YEARS 2006-07 AND 2007-0 8 ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2005-06. SINCE GROUNDS OF APPEA L IN THE APPEALS BY THE DEPARTMENT FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE IDENTICAL TO GROUNDS OF APPEAL IN ASSESSMENT YEAR 2005-06 AND FAC TS ARE ALSO IDENTICAL, THE FINDINGS GIVEN BY US IN ASSESSMENT YEAR 2005 -06 WOULD MUTATIS-MUTANDIS APPLY TO THE APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2006-07 AND 2007-08. ACCORDINGLY, BOTH THE APPEALS OF TH E REVENUE I.E. APPEALS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE DI SMISSED. 9 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 16. TO SUM UP, APPEAL FILED BY ASSESSEE FOR ASSESSMENT YEA R 2005-06 IS DISMISSED AS WITHDRAWN. THE APPEALS BY REVENUE FOR ASSESS MENT YEARS 2005-06 TO 2007-08 ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 27 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 27 TH FEBRUARY, 2019 SB ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-1 & 2, KOLHAPUR. 4. THE CIT-I & II, KOLHAPUR, 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE. 10 ITA NO.1175/PUN/2015 ITA NOS. 1241 TO 1243/PUN/2015 DATE 1 DRAFT DICTATED ON 15.02.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25.02.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER