ACIT, Bangalore V. M/s Golf View Homes Pvt. Ltd., Bangalore

ITA 1362/BANG/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0404 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SIBICHEN K MATHEW CITIIIDR
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Principle of natural justice
• Section: 153A; 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEOERGE, ACCOUNTANT MEMBER ITA NOS.1362 TO 1364/BANG/2012 ASSESSMENT YEARS : 2003-04 TO 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BANGALORE. VS. M/S. GOLF VIEW HOMES PVT. LTD., NO.73/1, 5 TH FLOOR, SHERIFF CENTRE, ST. MARKS ROAD, BANGALORE 560 001. PAN: AABCG 4059M APPELLANT RESPONDENT APPELLANT BY : DR. SIBICHEN K. MATHEW, CIT-III(DR) RESPONDENT BY : SHRI S. RAMASUBRAMANIAN, CA DATE OF HEARING : 26.05.2016 DATE OF PRONOUNCEMENT : 31.05.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE ARE APPEALS PREFERRED BY THE REVENUE AGAINS T THE COMMON ORDER OF THE CIT(APPEALS)-VI, BANGALORE DATED 31.7. 2012 FOR THE AYS 2003- 04 TO 2005-06 ON A SOLITARY GROUND THAT THE CIT(APP EALS) HAS ERRED IN FACT AND IN LAW IN HOLDING THAT THE ADDITION CANNOT BE S USTAINED U/S. 153A R.W.S. 153C OF THE INCOME TAX ACT AS NO INCRIMINATING MATE RIAL TO JUSTIFY THE ADDITIONS MADE HAVE UNEARTHED DURING THE SEARCH. ITA NOS.1362 TO 1364/BANG/2012 PAGE 2 OF 9 2. THE FACTS IN BRIEF BORROWED FROM THE RECORD ARE THAT A SEARCH WAS CONDUCTED AT M/S. INDIA BUILDERS CORPORATION AND OT HERS AT THEIR RESIDENTIAL PREMISES, DIAMOND DISTRICT, AIRPORT ROAD, BANGALORE . A NOTICE U/S. 153C WAS ISSUED TO THE ASSESSEE ON 29.12.2008, IN RESPON SE TO WHICH THE ASSESSEE HAS FILED THE RETURN DECLARING INCOME. TH E AO EXAMINED RETURN FILED BY THE ASSESSEE AND MADE CERTAIN ADDITIONS. 3. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE HAS P REFERRED APPEAL BEFORE THE CIT(APPEALS) WITH THE SUBMISSION THAT DU RING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL RELATING TO ASSESS EE WAS FOUND, THEREFORE THERE WAS NO PROPER ASSUMPTION OF JURISDICTION U/S. 153C OF THE ACT. 4. THE CIT(APPEALS) EXAMINED THE CLAIM OF THE ASSES SEE AND BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE CIT(APPEALS) HELD THAT NO INCRIMINATING MATERIAL HAVE BEEN BROUGHT ON RECO RD TO JUSTIFY THE DISALLOWANCES AND HE ACCORDINGLY DELETED THE ADDITI ONS. THE RELEVANT OBSERVATION OF THE CIT(APPEALS) ARE EXTRACTED HEREU NDER FOR THE SAKE OF REFERENCE:- I HAVE CONSIDERED THE GROUNDS OF APPEAL, SUBMISSI ONS MADE AND REMAND REPORTS. THERE ARE TWO MAIN ISSUES WHICH EMERGE A) WHETHER THE ASSESSMENT U/S 153A READ WITH SECTI ON 153C IS VALID IN THE ABSENCE OF ANY INCRIMINATING MATERI ALS? B) WHETHER THE ADDITIONS ARE JUSTIFIED ON MERITS? ITA NOS.1362 TO 1364/BANG/2012 PAGE 3 OF 9 IF THE ANSWER TO THE QUESTION (A) IS IN NEGATIVE, IT IS NOT NECESSARY TO DISCUSS THE ISSUE ON MERITS. THEREFORE , I FIRST CONSIDER WHETHER THE ASSESSMENT IS VALID OR NOT (IN LIGHT OF SPECIAL BENCH ORDER). A PERUSAL OF RECORDS WOULD SHOW THAT THE SEARCH A ND SEIZURE OPERATION TOOK PLACE IN JUNE, 2008. THE ASS ESSMENT FOR THE FOLLOWING ASSESSMENT YEARS WERE COMPLETED AS PE R DETAILS GIVEN BELOW: IT IS ALSO SEEN THAT FOR THE A.Y. 2003-04 EVEN TH E APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL WERE COMPLETED. THE TRIBUNAL PASSED THE ORDER FOR THE A.Y. 2003-04 ON 01.11.2007 . FOR THE A.Y. 2004-05, THE CIT(A) HAS PASSED THE ORDER ON 05 .07.2007. OF COURSE, FOR THE A.Y. 2005-06, THE APPELLATE PROC EEDINGS WERE PENDING BEFORE CIT(A) ON THE DATE OF SEARCH. BUT SU BSEQUENTLY, THE APPELLATE PROCEEDINGS WERE ALSO COMPLETED. IN T HIS FACTUAL BACKGROUND, IT HAS TO BE EXAMINED WHETHER THE ASSES SMENTS FOR THE A.Y. 2003-04 TO 2005-06 ARE PENDING ON THE DATE OF SEARCH AND THEREFORE, ABATE UNDER 2 ND PROVISO TO SECTION 153A OF THE ACT. THE HON'BLE SPECIAL BENCH OF ITAT IN ALL CARGO GLOB AL LOGISTIC LTD VS. DCIT, CENTRAL CIRCLE 44 (MUMBAI) CONSIDERED THIS QUESTION. THE SPECIAL BENCH HELD THAT THERE IS NOTH ING IN THE PROVISO TO SUGGEST THAT EVEN COMPLETED ASSESSMENTS ABATE. THE TRIBUNAL HELD THAT A COMPLETED ASSESSMENT CANNOT AB ATE. I WOULD LIKE TO QUOTE THE FOLLOWING RELEVANT OBSERVATIONS F ROM THE JUDGMENT. PARA 53 OF PAGE NO.60 A. IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESS MENT U/S 153A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EAC H ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BAS IS OF THE A.Y. DATE OF COMPLETION OF ASSESSMENT 2003-04 27.01 . 2006 2004-05 29.12.2006 2005-06 10.12.2007 ITA NOS.1362 TO 1364/BANG/2012 PAGE 4 OF 9 FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE AO. B. IN RESPECT OF NON-ABATED ASSESSMENTS, THE ASSESSMEN T WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCU MENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT F OUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCL OSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. PARA 55 (B) OF PAGE NO.62 AGAIN OUR DECISION DOES NOT COME IN CONFLICT IN ANY MANNER WITH THIS DECISION AS IT IS HELD THAT ONLY SUCH MATERIAL WHICH WAS NOT PRODUCED BEFORE THE AO, UNDISCLOSED INCOME OR ASSET , IF FOUND IN THE COURSE OF SEARCH, HAS TO BE TAKEN INTO ACCOUNT. PARA 55 (C) OF PAGE NO.63. WE HAVE ALSO SEEN THAT INTERPRETATION PLACED BY US DOES NOT VIOLATE ANY PRINCIPLE OF NATURAL JUSTICE. FURTHER, IT DOES NOT PRODUCE IRRATIONAL, ABSURD OR WHOLLY UNJUST RESULTS , RATHER IT PRODUCES A VERY VALID RESULT THAT UNDISCLOSED INCOM E OR ASSET, BOOKS OF ACCOUNT OR DOCUMENTS NOT PRODUCED IN THE C OURSE OF REGULAR ASSESSMENT SHOULD BE TAKEN INTO ACCOUNT. PARA 55(D) OF PAGE NO.64 WE HAVE READ THE PROVISION OF SECTION 132 (1) AND 1 53A TOGETHER, WHICH ARE IN THE NATURE OF CAUSE AND EFFECT AND THE REFORE IN OUR HUMBLE OPINION WE HAVE RIGHTLY READ THEM TOGETHER. READING SECTION 153A IN ISOLATION AND AS INTERPRETED BY THE LD. STANDING COUNSEL WOULD HAVE THE EFFECT THAT IN CASE OF AN AS SESSMENT, WHICH IS NOT PENDING AND WHERE NOTHING IS FOUND, TH E SAME MAY BE REOPENED. SUCH INTERPRETATION WILL PRODUCE A RES ULT THAT AN ASSESSMENT WHICH HAS COME TO AN END AND FOR WHICH T HERE IS NO CAUSE OF REOPENING SHALL REVIVE SIMPLE BECAUSE A SE ARCH HAS BEEN CONDUCTED. ACCORDING TO US, THIS WILL NOT BE HARMON IOUS INTERPRETATION OF VARIOUS PROVISIONS OF SECTIONS 13 2(1) AND 153A. PARA 55 (G) OF PAGE NO.66 THE AVOWED PURPOSES OF SEARCH HAVE ALREADY BEEN STA TED BY US. IN CASES DECIDED U/S 147 OR 263, THE SCOPE OF ASSESSME NT IS NARROWER THAN THE SCOPE OF ORIGINAL ASSESSMENT. THIS IS BECA USE MATTERS ITA NOS.1362 TO 1364/BANG/2012 PAGE 5 OF 9 WHICH HAS BEEN DISCUSSED AND DEBATED IN ASSESSMENT, WHICH HAS BECOME FINAL, AND FOR WHICH THERE IS NO REASON TO A GITATE AGAIN IN THE RE-ASSESSMENT, THERE IS NO REASON TO REOPEN THE M. THIS CONSIDERATION WOULD BE APPLICABLE IN THE APPLICABLE IN THE RE- ASSESSMENT U/S 153A AND GUIDELINES CAN BE CLEARLY D ISCERNED IN THE PROVISION CONTAINED IN 132(1) PARA 55 (H) OF PAGE NO.67 THERE IS NO WORD IN THE PROVISION TO THE EFFECT THA T EVEN COMPLETED ASSESSMENTS ABATE. THEREFORE, SANCTITY O F SUCH ASSESSMENT SHOULD BE MAINTAINED EXCEPT WHEN SOMETHI NG IS FOUND IN SEARCH WHICH GO AGAINST SUCH SANCTITY. PARA 56 (E) OF PAGE NO.71 IN THE CASE OF SHAILA AGGARWAL DECIDED BY THE HON'B LE ALLAHABAD HIGH COURT, IT HAS BEEN HELD THAT ONLY SUCH ASSESSM ENTS OR REASSESSMENTS WHICH ARE PENDING ON THE DATE OF INIT IATION OF SEARCH STAND ABATED. HOWEVER, AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) IN RESPECT OF ASSES SMENT IS NOT A CONTINUATION OF PROCEEDINGS OF ASSESSMENT. SUCH PRO CEEDINGS DO NOT ABATE, AND IF THE APPEAL HAS BEEN DISPOSED OFF BY THE TRIBUNAL BEFORE THE DATE OF INITIATION OF SEARCH, THE ORDER SHALL HOLD. ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS EFFECTS IN AS MUCH AS THE ABATEMENT TAKES AWAY ALL THE CONSEQUENCES THAT ARISE THEREAFTER. THUS, REGULAR ASSESSMENT PROCEEDINGS, W HICH HAVE BECOME FINAL, CANNOT BE ABATED CANNOT BE SET AT NAU GHT BY THE TRIBUNAL FOR MAKING FRESH ASSESSMENT U/S 153A. THE CONSEQUENCES OF THIS DECISION HAS BEEN TAKEN INTO A CCOUNT IN OUR FINDING WHILE DECIDING THE MATTER REGARDING SCOPE O F RE- ASSESSMENTS U/S 153A. \ PARA 58 OF PAGE NO.73 (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCU MENTS, ITA NOS.1362 TO 1364/BANG/2012 PAGE 6 OF 9 FOUND IN THE COURSE OF SEARCH .BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. A READING OF THE ABOVE OBSERVATIONS MAKES IT ABUN DANTLY CLEAR THAT IF AN ASSESSMENT HAS BEEN COMPLETED U/S 143(3), THE ASSESSMENT 153A CANNOT RE-AGITATE THE ISSUES THAT H AVE BECOME FINAL. ANY ADDITION IN SUCH ASSESSMENT IN RESPECT O F COMPLETED ASSESSMENT THAT HAS NOT ABATED CAN BE ONLY BASED ON THE INCRIMINATING MATERIAL. APPLYING THE ABOVE PRINCIPLE TO THE FACTS OF PRES ENT CASE, I FIND THAT THE ASSESSMENTS WERE COMPLETED WELL BEFOR E THE DATE OF SEARCH AND FOR A COUPLE OF ASSESSMENT YEARS, EVEN T HE APPEALS HAVE BEEN DISPOSED OFF. THEREFORE, AS HELD BY THE SPECIAL BENCH IN ALL CARGO LOGISTICS LTDS CASE, SUCH ASSESSMENTS DO NOT ABATE. IN FIND THAT THE ASSESSING OFFICER HAS ADDED THE VE RY SAME AMOUNT WHICH WAS SUBJECT MATTER OF EARLIER YEAR ASSESSMENT AND SUBJECT OF THE APPELLATE PROCEEDINGS. NO INCRIMINATING MAT ERIALS HAVE BEEN UNEARTHED DURING SEARCH. THE RATIO OF THE SPEC IAL BENCH DECISION SQUARELY APPLIES TO THE FACTS OF THE PRESE NT CASE. I HOLD THAT THE ADDITION OF INTEREST WHICH WAS THE SUBJECT MATTER OF EARLIER ASSESSMENT AND APPEAL PROCEEDINGS CANNOT BE SUSTAINED. AS FAR AS PROCESSING FEES IS CONCERNED, I FIND TH AT IN THE ORIGINAL ASSESSMENT ORDER U/S 143(3), NO DISALLOWAN CE HAD BEEN MADE IN ORDER U/S 153A READ WITH SECTION 153C, THE A.O. HAS DISALLOWED THE PROCESSING FEES. NO INCRIMINATING MA TERIALS HAVE BEEN BROUGHT ON RECORD TO JUSTIFY THE DISALLOWANCE. THIS DISALLOWANCE DEFINITELY AMOUNTS TO RE-AGITATING A S ETTLED ISSUE WHICH IS NOT PERMITTED AS PER THE DECISION OF THE S PECIAL BENCH. HENCE, I DELETE THE ADDITION MADE ON ACCOUNT OF PRO CESSING FEES. AS I HAVE HELD THAT THE ADDITIONS CANNOT BE SUSTAIN ED IN THE ASSESSMENT MADE U/S 153A READ WITH SECTION 153C OF THE ACT, THERE IS NO NEED TO GO INTO THE MERITS OF THE CASE. THEREFORE, THE GROUNDS ON MERIT ARE NOT DEALT WITH. 5. AGGRIEVED, THE REVENUE HAS PREFERRED THESE APPEA LS BEFORE THE TRIBUNAL AND BESIDES PLACING RELIANCE UPON THE ASSE SSMENT ORDER, THE LD. DR HAS CONTENDED THAT DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS ITA NOS.1362 TO 1364/BANG/2012 PAGE 7 OF 9 RELATING TO THE ASSESSEE WERE FOUND, THEREFORE THE AO HAS RIGHTLY ISSUED A NOTICE U/S. 153C OF THE ACT. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS CONTENDED THAT THE ALLEGED DOCUMENTS WERE NOT CONFRONTED TO T HE ASSESSEE. MOREOVER, THE ASSESSMENT IN THE CASE OF ASSESSEE WA S COMPLETED EVEN BEFORE THE SEARCH AND THE ISSUES ON WHICH ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE WHILE COMPLETING ASSESSMENT U /S. 153A R.W.S. 153C WERE ALREADY EXAMINED IN THE REGULAR ASSESSMENT. T HEREFORE, THE ISSUES WHICH HAVE ALREADY BEEN EXAMINED CANNOT BE READJUDI CATED WHILE FRAMING AN ASSESSMENT U/S. 153C OF THE ACT THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT ONUS IS UPON THE REVENUE TO ESTABLISH AS TO WHAT INCRIMINATING MATERIAL RELATING TO THE ASSESSEE WAS FOUND DURING THE COURSE OF SEARCH. 7. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND FROM A PERUSAL OF THE ORDERS OF AUTHORITIES, WE FIN D THAT THERE IS NO INDICATION OF THE EVIDENCE/INCRIMINATING MATERIAL RELATING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH. DURING THE COURSE OF HEARING , A SPECIFIC QUERY WAS RAISED TO THE LD. DR WITH REGARD TO THE INCRIMINATI NG MATERIAL RELATING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH. THE LD . DR COULD NOT EXPLAIN AS TO WHAT MATERIAL RELATING TO THE ASSESSEE WAS FO UND. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL RELATING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH, THE PROVISIONS OF SECTION 153C OF THE AC T CANNOT BE INVOKED. AS ITA NOS.1362 TO 1364/BANG/2012 PAGE 8 OF 9 PER THE PROVISIONS OF SECTION 153C, NOTICE CAN ONLY BE ISSUED TO A PERSON WITH RESPECT TO WHOM SOME INCRIMINATING MATERIAL IS FOUND AND THE AO FORMS A BELIEF THAT THIS MATERIAL RELATES TO THE SA ID PERSON. UNLESS AND UNTIL THE AO FORMS A BELIEF THAT SUCH SEIZED MATERIAL BEL ONGS TO THE THIRD PERSON, THE PROVISIONS OF SECTION 153C CANNOT BE INVOKED. IN THE INSTANT CASE, NOTHING IS BROUGHT ON RECORD AS TO WHAT WAS THE INC RIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH RELATES TO THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE AO HAS NOT A SSUMED JURISDICTION TO ISSUE NOTICE U/S. 153C OF THE ACT TO THE ASSESSEE. THEREFORE, WE FIND OURSELVES IN AGREEMENT WITH THE FINDINGS OF THE CIT (APPEALS). ACCORDINGLY, WE CONFIRM HIS ORDER. 8. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2016. SD/- SD/- ( ABRAHAM P. GEORGE ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDICIA L MEMBER BANGALORE, DATED, THE 31 ST MAY, 2016. /D S/ ITA NOS.1362 TO 1364/BANG/2012 PAGE 9 OF 9 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.