Krishna Ghosh, Dakshin Dinajpur V. ACIT, CC-XX, KOLKATA, Kolkata

ITA 1410/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9346 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 09-09-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 20-06-2014
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD JCITLD
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Gift; Question of law
• Section: 143(3); 142(1); 153A; 147; 6; 132

Judgement Text

ITA NO. 1410/KOL/2014 KRISHNA GHOSH 1 IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, KOLKATA BEFORE : SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 1410/KOL/2014 A.Y 2001-02 SRI KRISHNA GHOSH PAN: ADLPG 9916B VILL: BANGAR, P.O GANGARAMPUR DIST: DAKSHIN DINAJPUR. .APPELLANT -VS.- ASST. COMMISSIONER OF INCOME TAX CC-XX, KOLKATA ..RESPONDENT APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, LD. AR FOR THE A SSESSEE SHRI RAJENDRA PRASAD, JCIT, LD.DR FOR THE REVEN UE DATE OF HEARING : 11-01 -2017 DATE OF PRONOUNCEMENT : 15-02-2017 ORDER SHRI. S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D T: 28-02-2014 PASSED BY THE COMMISSIONER OF INCOME TAX-(APPEALS), CENTRA L-III, KOLKATA FOR THE ASSESSMENT YEAR 2001-02. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED AS MANY A S SIX GROUNDS, AMONGST WHICH THE ONLY EFFECTIVE ISSUE IS GROUND NO-1 QUEST IONING THE ASSESSMENT AS COMPLETED AND PASSED AN ORDER U/S. 153A/144 OF THE ACT IS BAD IN LAW. THEREFORE, TAKING INTO CONSIDERATION THE SAID GROUN D AS PRELIMINARY ISSUE AND ITA NO. 1410/KOL/2014 KRISHNA GHOSH 2 WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR THE APPEAL AND DISPOSE OF THE SAME ON MERITS. 3. THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF BRICKS AND CONDUCTING HIS BUSINESS UNDER THE NAME & STYLE AS MUKTA BRICKS AND IS A PROPRIETARY CONCERN. HE DERIVES HIS INCOME FROM SUCH BUSINESS. A SEARCH WAS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESS EE ON 09-03-2005 IN PURSUANCE OF PROVISION OF SECTION 132 OF THE ACT. N OTICE U/S. 153A WAS ISSUED ON 19-01-2006 AND, THEREAFTER A LETTER WAS ISSUED A GAIN ON 20-09-2006 TO FILE HIS RETURN. SUBSEQUENTLY, NOTICE U/S. 142(1) OF THE ACT ALONG WITH A QUESTIONNAIRE WAS ALSO ISSUED TO FILE THE RETURN. H OWEVER, THE ASSESSEE FILED HIS RETURN ON 13-12-06 SHOWING TOTAL INCOME OF RS.2,37, 730/-. IN RESPONSE TO NOTICE ISSUED U/S. 143(2) THE LD.AR OF THE ASSESSEE APPEARED BEFORE THE AO AND EXPRESSED HIS INABILITY TO PRODUCE THE BOOKS OF ACCOUNTS OF THE ASSESSE, BUT, HOWEVER, THE ASSESSEE FILED WRITTEN EXPLANATIO N ALONG WITH PHOTOCOPIES OF THE BANK ACCOUNTS OF THE ASSESSEE. ACCORDING TO AO, IN ABSENCE OF ANY SPECIFIC EVIDENCE, HE PROCEEDED TO DETERMINE THE INCOME OF T HE ASSESSEE ON THE BASIS OF DOCUMENTS, RECORDS AND EVIDENCES AS AVAILABLE BE FORE HIM BY MAKING ADDITIONS TO AN EXTENT OF RS.27,83,520/- BY ESTIMAT ING THE PROFIT OF BUSINESS, GIFTS AND UNSECURED LOANS BY AN ORDER DATED 29-12-0 6 PASSED U/S. 153A/144 OF THE ACT. 4. IN FIRST APPEAL, THE ASSESSEE CHALLENGED THE ASS ESSMENT AS FRAMED U/S. 153A/144 OF THE ACT AND RELIED ON THE DECISIONS OF CO-ORDINATE BENCHES OF ITAT KOLKATA IN THE CASE OF LMJ INTERNATIONAL VS. DCIT R EPORTED IN 119 TTJ 214 (KOL), ITAT AHMADABAD IN THE CASE OF MEGHMANI ORGAN ICS LTD VS. DCIT REPORTED IN 129 TTJ 255 AND ITAT DELHI IN THE CASE OF ANIL KUMAR BHATIA VS. ITA NO. 1410/KOL/2014 KRISHNA GHOSH 3 ACIT REPORTED IN 1 ITR (TRIB) 484. THE CIT-A DISMIS SED THE APPEAL OF BY OBSERVING THAT THERE WAS NO REGULAR ASSESSMENT U/S. 143(3) OF THE ACT PRIOR TO THE SEARCH OPERATION AND IT IS PARADOXICAL TO EQUAT E THE INTIMATION AS ISSUED U/SEC 143(1) OF THE ACT TO THAT OF REGULAR ASSESSME NT U/SEC 143(3) OF THE ACT. THE CIT-A FOUND THAT ALL THE DECISIONS AS RELIED ON BY THE ASSESSEE ARE NOT ACCEPTABLE AND DISTINGUISHED THE SAME WITH THE FACT S OF THE PRESENT CASE. ACCORDINGLY, HE CONFIRMED THE ACTION OF THE AO IN P ASSING THE ASSESSMENT ORDER U/S. 153A OF THE ACT. 5. BEFORE US THE LD.AR SUBMITS THAT ALL THE ADDITIO NS MADE BY THE AO UNDER 153A PROCEEDINGS BEING NORMAL ADDITION AND MADE NOT ON THE BASIS OF INCRIMINATING MATERIAL, WHICH SAID TO HAVE BEEN FOU ND BY THE RESPONDENT REVENUE DURING SEARCH PROCEEDINGS. THE LD.AR REFER RED TO PAGE NO- 3 OF THE ORDER OF CIT-A WITH REFERENCE TO DECISIONS AS THE A SSESSE RELIED ON AND ARGUED THAT THE ASSESSEE WAS IN THE SAME BUSINESS AND THAT THE TURNOVER, GROSS PROFIT AND NET PROFIT FROM AYS.1999-2000 TO 2003-04 SUFFER ED LOSS AND FURTHER ARGUED THAT THE ASSESSMENT MADE U/S. 153A IS LIABLE TO BE QUASHED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. 6. ON THE CONTRARY, THE LD.DR RELIED ON THE ORDERS OF THE AO AND THE CIT-A. 7. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF A DDITIONS MADE BY AO UNDER SECTION 153A PROCEEDINGS OF THE ACT. UNDER THE PROV ISIONS OF SECTION 153A, IN ALL CASES, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS C ONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELAT ING TO ANY ASSESSMENT ITA NO. 1410/KOL/2014 KRISHNA GHOSH 4 YEAR FALLING WITHIN PERIOD OF SIX ASSESSMENT YEARS IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN D IVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDISCLOSED INCOM E. THE COORDINATE BENCHES OF TRIBUNAL HAD TAKEN THE VIEW THAT IN CASE NO INCR IMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSE SSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT JURISDICTIO N UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSES SMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDICTION UNDER SECTION 153A, ADDITION CAN BE MA DE IN ASSESSMENT /REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENC H OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. V. DY. CIT REPORTED IN [2012] 137 ITD 287/23 TAXMANN.COM 103 (MUM.) AND ORDER OF SPECIAL BENCH D ATED 6.7.2012. 8. THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. SUPRA , HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPER ATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SAT ISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSO N REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDIN G THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION U NDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR S EPARATELY. THUS, THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT IN A CASE WHER E ASSESSMENT HAS ABATED, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. B UT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTIO N 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CO NTEXT OF RELEVANT PROVISIONS ITA NO. 1410/KOL/2014 KRISHNA GHOSH 5 MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSME NT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSEE FILED HIS RETURN ON 27-03-2002 FOR THE YEA R UNDER CONSIDERATION AT PAGE NO-9 OF PAPER BOOK AND ASSESSMENT HAD BEEN COM PLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSU E OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE , THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS N O QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. 9. IN THE PRESENT CASE, THE AO HAD MADE ASSESSMENT ON THE MATERIAL INFORMATION AVAILABLE IN THE RETURN OF INCOME. WHER E, THE AO HAS ESTIMATED THE PROFIT FROM BRICK BUSINESS AT A HIGHER RATE OF PROF IT ON THE BASIS ANALYSING OF EARLIER YEARS AND FINANCIAL DATA OF SUBSEQUENT YEAR S OF THE ASSESSEE. THE AO HAS BROUGHT NO DEFECT IN THE PROFIT & LOSS ACCOUNT OF T HE ASSESSEE. SIMILARLY THE INFORMATION REGARDING THE GIFT AND UNSECURED LO AN WAS AVAILABLE IN THE RETURN OF INCOME AS CAPITAL ACCOUNT HAD BEEN CREDIT ED AND BALANCE SHEET REFLECTING THE LOAN. IT IS PERTINENT TO NOTE THAT A LL THE DETAILS I.E ITR AND SOME BANK STATEMENTS OF DONORS ARE PLACED AT PAGE NOS 2 4 TO 41 WHICH CLEARLY SHOWS THAT THE DONORS I.E SMT.RADHA GHOSH DONATED R S.2,00,000/- IN CASH TO ASSESSEE, LIKE WISE SMT MINATI GHOSH DONATED RS.2,0 0,000/- BY CHEQUE, BRINDAVAN GHOSH FOR RS.50,000/-, SAMBHU GHOSH FOR R S.50,000/-, ASHWINI GHOSH FOR RS.2,00,000/- AND SITA GHOSH FOR RS.1,00, 000/- AND CONFIRMED THE SAID TRANSACTIONS BY LETTER OF CONFIRMATIONS. IT IS OBSERVED FORM THE ASSESSMENT ORDER THAT THE AO HAD NOT REFERRED TO ANY INCRIMINA TING MATERIAL FOUND DURING THE SEARCH BASED ON WHICH ADDITION HAD BEEN MADE. T HEREFORE FOLLOWING THE ITA NO. 1410/KOL/2014 KRISHNA GHOSH 6 DECISION OF THE SPECIAL BENCH ( SUPRA ), WE HOLD THAT THE AO HAD NO JURISDICTION TO MAKE ADDITIONS UNDER SECTION 153A AND ACCORDINGL Y, ARE LIABLE TO BE DELETED. 10. WE ALSO FIND GUIDANCE & SUPPORT FROM THE JUDGME NT DATED 4 TH AUGUST 2016 OF HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. VEERPRABHU MARKETING LIMITED VIDE ITA NO. 661/2008 PLACED ON RECORD IN PAPER BO OK WHEREIN THE REVENUE RAISED A QUESTION OF LAW AND OB SERVATION OF HONBLE HIGH COURT OF CALCUTTA THEREIN RELEVANT TO THE ISSUE ON HAND WHICH IS REPRODUCED AND AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INCOME TAX APPELLATE TRIBUNAL IS JUSTIFIED IN NOT HOLDING THAT ALL ASSES SMENTS WERE MADE UNDER SECTION 143(1) OF THE I.T.ACT, THEREFORE, DISALLOWANCE AS PER LAW WERE NO T EARLIER MADE. AS PER SECTION 153(C) OF THE IT.T.ACT ASSESSMENT IS TO BE MADE AFRESH AND INCOME TO BE ASSESSED OR REASSESSED. THE MEANING OF REASSESSMENT IS THAT THAT THERE IS NO NEED TO RE SORT TO SECTION 147 OF THE ACT AND CONSIDER THE DISALLOWANCE IN THE ASSESSMENT TO BE UNDER SECTION 153 OF THE I.T.ACT? IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER . BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECT ION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UP HELD BY THE CIT-A BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES. 11. RESPECTFULLY FOLLOWING THE RATIO AS ENUNCIATED BY THE HONBLE HIGH COURT OF CALCUTTA, IN OUR VIEW THE ADDITIONS MADE ARE, TH EREFORE, DELETED AND ACCORDINGLY, THE PRELIMINARY GROUND AS TAKEN UP IS ANSWERED IN FAVOUR OF ASSESSEE, THEREFORE, NO ADJUDICATION REQUIRES ON OT HER GROUNDS AND THEY ARE DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15-02-2017. SD/- SD/- WASEEM AHMED S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 15 -02-2017 ITA NO. 1410/KOL/2014 KRISHNA GHOSH 7 **PP/SPS: COPIES TO : (1) APPELLANT/ASSESSEE : SHRI KRISHAN GHOSH VILL: BANGAR P.O GANGARAMPUR, DIST: DAKSHIN DINAJPUR. (2) RESPONDENT/DEPARTMENT: THE ASSTT. COMMISSIONER OF INCOME TAX, CC-XX AAAYKAR BHAWAN, POORVA, 9 TH FLOOR, 110 SHANTI PALLY, E.M BYE PASS, KOLKATA-107. (3)COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA