FAZAL ABDUL WAHAB SARANG, MUMBAI V. D.C.I.T. CENTRAL RANGE - 36, MUMBAI

ITA 1455/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1414 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Section: 143(3); 133A; 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 4929/MUM/2013 (ASSESSMENT YEAR: 2006-07) ITA NO. 1455/MUM/2012 (ASSESSMENT YEAR: 2007-08) SHRI FAZAL ABDUL WAHAB SARANG VS. DY. COMISIONER OF INCOME TAX 302, SHABNAM APT. 33 S.V. ROAD OPP. LAKDI MARKET, ANDHERI (W) MUMBAI 400058 CENTRAL RANGE 36 MUMBAI PAN AABPS9385F APPELLANT RESPONDENT APPELLANT BY: SHRI PIYUSH CHHAJED RESPONDENT BY: MS. S. PADMAJA DATE OF HEARING: 01.12.2016 DATE OF PRONOUNCEMENT: 14.12.2016 O R D E R PER JASON P. BOAZ, A.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-36, MUMBAI DATED 19.03.2013 FOR A.Y. 2006-07 AND OF THE CIT(A)- 41, MUMBAI DATED 21.12.2011 FOR A.Y. 2007-08. THESE APPEALS OF THE ASSESSEE HAVING CERTAIN COMMON ISSUES WERE HEARD TO GETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. IN THESE APPEALS, THE ASSESSEE HAS RAISED THE FOLLO WING ORIGINAL/ REVISED GROUNDS: - 2.1 FOR A.Y. 2006-07 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED ASSESSING OFFICER ERRED IN ASSUMING JURISDICTION U/ S.153A OF THE INCOME TAX ACT AND CONSEQUENTLY PASSING THE ORDER U /S 143(3) READ WITH SECTION 153A. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ITA 1455/M/2012 & 4929/M/2013 SHRI FAZAL ABDUL WAHAB SARANG 2 ADDITION OF RS.5,43,000/- U/S. 68 WITHOUT APPRECIAT ING THAT THE SAME WAS DULY EXPLAINED BY THE CASH BOOK FILED DURI NG THE ASSESSMENT PROCEEDINGS. 2.2.1 FOR A.Y. 2007-08 (REVISED) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED ASSESSING OFFICER ERRED IN ASSUMING JURISDICTION U/ S.153A OF THE INCOME TAX ACT AND CONSEQUENTLY PASSING THE ORDER U /S 143(3) R.W.S. 153A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.13,78,500/- U/S. 68, WITHOUT APPRECI ATING THAT THE SAME WAS DULY EXPLAINED BY THE CASH BOOK FILED DURI NG THE ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED ASSESSING OFFICER ERRED IN MAKING AN ADDITION OF RS .58,846/- AS UNDISCLOSED INCOME. WITHOUT APPRECIATING THAT THE P ROFIT EARNED ON MUTUAL FUNDS WERE LONG TERM AND HENCE EXEMPT FROM T AX. 2.2.2 BY LETTER DATED 17.08.2015, THE ASSESSEE SUBM ITS THAT GROUND NO. 1 OF THE REVISED GROUNDS (SUPRA) HAS BEEN RAISED FOR THE FIRST TIME AND HAS PRAYED FOR ADMISSION OF THE SAME FOR CONSIDERATION, SINCE IT IS A LEGAL GROUND AND GOES TO THE VERY ROOT OF THE JURISDICTIO NAL ISSUE THEREIN. THE ASSESSEES PETITION FOR ADMISSION OF ABOVE GROUND [ I.E. GROUND NO. 1 OF REVISED GROUNDS (SUPRA)] HAS BEEN DULY CONSIDERED. WE ARE OF THE VIEW THAT IT IS IN THE INTEREST OF EQUITY AND JUSTICE THAT TH IS GROUND BE ADMITTED FOR HEARING, BEING A LEGAL GROUND WHICH GOES TO THE ROO T OF THE MATTER IN RESPECT OF THE ASSESSEES CHALLENGING THE ASSESSING OFFICERS (AO) ASSUMPTION OF JURISDICTION UNDER SECTION 153A OF TH E INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AND PASSING THE ORDER OF ASSES SMENT UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. THIS GROUND IS ACCOR DINGLY ADMITTED FOR CONSIDERATION AND ADJUDICATION IN THIS APPEAL. WE H AVE ACCORDINGLY HEARD THESE APPEALS ON THIS GROUND NO. 1. 3. GROUND NO. 1 (FOR BOTH ASSESSMENT YEARS 200607 AND 2007-08) VALIDITY OF AOS ASSUMPTION OF JURISDICTION UNDER S ECTION 153A OF THE ACT AND CONSEQUENT PASSING OF ORDERS OF ASSESSM ENT UNDER SECTION 143(3) R.W.S. 153A 3.1 IN THIS GROUND, FOR BOTH ASSESSMENT YEARS 2006- 07 AND 2007-08, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE AOS AS SUMPTION OF JURISDICTION UNDER SECTION 153A AND CONSEQUENT PASSING OF ORDERS OF ASSESSMENT UNDER ITA 1455/M/2012 & 4929/M/2013 SHRI FAZAL ABDUL WAHAB SARANG 3 SECTION 143(3) R.W.S. 153A OF THE ACT DATED 27.12.2 010. ACCORDING TO THE LEARNED A.R. OF THE ASSESSEE, IT IS EVIDENT FROM PA GE 1 OF THE ORDERS OF ASSESSMENT THAT THE AO INITIATED THE ASSESSMENT PRO CEEDINGS ON A FACTUALLY ERRONEOUS BASIS I.E. THAT A SEARCH AND SE IZURE ACTION WAS CARRIED OUT, AMONG OTHERS, ON THE ASSESSEE ALSO ON 24.02.20 09. IT IS SUBMITTED THAT NO SEARCH UNDER SECTION 132 OF THE ACT THAT WA S CARRIED OUT AT THE ASSESSEES PREMISES ON 24.02.2009, BUT A SURVEY UND ER SECTION 133A OF THE ACT WAS CONDUCTED. IT IS CONTENDED BY THE ASSESSEE THAT IN VIEW OF THE ABOVE FACTS ON RECORD, THE ASSESSING OFFICERS ASSU MPTION OF ASSESSMENT JURISDICTION BY ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT WAS INVALID AND THEREFORE THE CONSEQUENT ORDERS OF ASSESSMENT F OR ASSESSMENT YEARS 2006-07 AND 2007-08 PASSED UNDER SECTION 143(3) R.W .S. 153A OF THE ACT ARE VOID AB-INITIO. FURTHER, INSPITE OF DIRECTIONS BY THE BENCH, REVENUE WAS NOT ABLE TO PRODUCE A COPY OF THE WARRANT OF AUTHOR ISATION FOR SEARCH UNDER SECTION 132 OF THE ACT IN THE ASSESSEES CASE TO ES TABLISH THAT THE ASSESSEE WAS SEARCHED ON 24.02.2009. IN FACT THE LETTER OF T HE AO DATED 30.11.2016 CLEARLY ACKNOWLEDGES THE INABILITY OF THE DEPARTMEN T TO PRODUCE THE WARRANT OF AUTHORIZATION FOR SEARCH AND ONLY CONFIR MS THAT A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE ASSESS EES PREMISES ON 24.02.2009. IN SUPPORT OF THE PROPOSITION, THAT IN THE ABSENCE OF A SEARCH WARRANT OF AUTHORISATION UNDER SECTION 132 OF THE A CT IN THE CASE OF THE ASSESSEE, THE PREREQUISITE CONDITIONS FOR ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT WERE ABSENT AND CONSEQUENTLY VALID ORDER S OF ASSESSMENT COULD NOT HAVE BEEN PASSED UNDER SECTION 153A OF THE ACT, THE LEARNED A.R. OF THE ASSESSEE, INTER ALIA, PLACED RELIANCE ON THE DE CISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. RAMESH D. P ATEL (2014) 42 TAXMANN.COM 540 (GUJARAT), WHICH IS STATED TO BE ON SIMILAR FACTS AND ISSUES. IT IS PRAYED THAT IN THE LIGHT OF THE FACTS THAT THERE BEING NO SEARCH UNDER SECTION 132 OF THE ACT IN THE CASE ON HAND, T HE NOTICES ISSUED UNDER SECTION 153A OF THE ACT LACKING LEGAL SANCTION, WER E INVALID AND ORDERS OF ASSESSMENT PASSED UNDER SECTION 153A OF THE ACT PAS SED CONSEQUENT THERETO FOR BOTH ASSESSMENT YEARS ARE INVALID AND A RE TO BE QUASHED. ITA 1455/M/2012 & 4929/M/2013 SHRI FAZAL ABDUL WAHAB SARANG 4 3.2 PER CONTRA, THE LEARNED D.R. FOR REVENUE PLACED RELIANCE ON THE ORDERS OF THE AO. 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE FACTS OF THE MATTER AS EMANATE FROM THE RECORD ARE THAT A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE ASSESSEES PREMISES ON 24.02.2009. THE AO, HOWEVER, IN THE ORDERS OF ASSES SMENT FOR ASSESSMENT YEARS 2006-07 AND 2007-08 STATED THAT A SEARCH WAS CARRIED OUT IN THE CASE OF HICONS & PRANAY GROUP OF CASES; INCLUDING T HE ASSESSEE IN THE CASE ON HAND. THESE STATEMENTS OF THE AO WERE CONTRADICT ED BY THE AO HIMSELF LATER IN THE ORDER OF ASSESSMENT WHEN HE MENTIONS T HAT DURING THE SURVEY UNDER SECTION 133A OF THE ACT AT THE BUSINESS PREMI SES OF THE ASSESSEE ON 24.02.2009, THE ASSESSEE HAD DEPOSED ON OATH IN SUR VEY PROCEEDINGS. IT IS THE CONTENTION OF THE ASSESSEE THAT NO SEARCH PROCE EDINGS UNDER SECTION 132 OF THE ACT WERE CARRIED OUT IN HIS CASE ON 24.0 2.2009 AND THEREFORE THE AO HAD NO LEGAL SANCTION OR JURISDICTION TO ISSUE N OTICE UNDER SECTION 153A OF THE ACT IN HIS CASE AND PASS ORDERS OF ASSESSMEN T UNDER SECTION 153A OF THE ACT SUBSEQUENT THERETO; WHICH WERE INVALID AND REQUIRED TO BE QUASHED OR CANCELLED. 3.3.2 IN ORDER TO CLEAR THIS CONFUSION, THE BENCH G AVE REVENUE AMPLE/ SUFFICIENT OPPORTUNITIES TO PRODUCE THE WARRANT OF AUTHORISATION FOR SEARCH UNDER SECTION 132 OF THE ACT IN THE ASSESSEES CASE AS STATED BY THE AO. DESPITE THESE OPPORTUNITIES, REVENUE COULD NOT PROD UCE THE SAME AND IN REPORT DATED 30.11.2016, THE AO HAS STATED THAT AS PER THE APPRAISAL REPORT, SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CAR RIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 24.02.2009 AND A ST ATEMENT OF THE ASSESSEE WAS RECORDED ON THAT DAY. IN THIS FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WE CONCLUDE THAT THERE WAS NO SEAR CH WARRANT AUTHORISING SEARCH UNDER SECTION 132 OF THE ACT IN THE ASSESSEE S CASE ON 24.02.2009. REVENUE WAS UNABLE TO CONTROVERT THIS VIEW AS EXPRE SSED BY US. 3.3.3 SECTION 153A OF THE ACT PERTAINS TO ASSESSMEN TS TO BE CARRIED OUT IN CASE OF SEARCH UNDER SECTION 132 OR REQUISITION UND ER SECTION 132A OF THE ITA 1455/M/2012 & 4929/M/2013 SHRI FAZAL ABDUL WAHAB SARANG 5 ACT. SUBSECTION (1) OF SECTION 153A PROVIDES THAT N OTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 139, 147, 148, 149, 151 AND 1 43 OF THE ACT, IN THE CASE OF A PERSON IN WHOSE CASE SEARCH IS INITIATED UNDER SECTION 132 OF THE ACT OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASS ETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT AFTER 31.05.2003, THE AO SHALL ISSUE NOTICE REQUIRING SUCH PERSON TO FURNISH THE RETURNS OF INC OME FOR AND ASSESS OR RE-ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH WAS CONDUCTED OR REQUISITION IS MADE. IN OUR CONSID ERED VIEW, IN THE LIGHT OF THE FACTUAL MATRIX OF THE CASE AS DISCUSSED FROM PARA 3.1 TO 3.3.2, WE RECORD THE FINDING THAT THERE WAS NO WARRANT OF AUT HORISATION ISSUED TO SEARCH THE ASSESSEES PREMISES ON 24.02.2009 AND RE VENUE WAS UNABLE TO PRODUCE THE SAME, IF ANY, TO CONTROVERT OUR FINDING . THIS WAS SPECIFICALLY REQUIRED IN THE LIGHT OF THE CONTRADICTORY STATEMEN TS MADE BY THE AO IN THE ORDER OF ASSESSMENT WHICH LED TO THE CONFUSION OF W HETHER THE ASSESSEE WAS SUBJECTED TO SEARCH OR NOT. IN THE ABSENCE OF A NY WARRANT OF AUTHORISATION TO SEARCH THE ASSESSEES PREMISES UND ER SECTION 132 OF THE ACT, ON 24.02.2009, THE AO HAD NO JURISDICTION TO I SSUE THE NOTICES UNDER SECTION 153A OF THE ACT DATED 05.10.2009 ISSUED BY HIM; THEREBY RENDERING THEM INVALID AND CONSEQUENTLY THE ORDERS OF ASSESSM ENT UNDER SECTION 153A OF THE ACT FOR ASSESSMENT YEARS 2006-07 AND 20 07-08 SUBSEQUENT TO THE ISSUE OF THOSE NOTICES UNDER SECTION 153A OF TH E ACT COULD NOT HAVE BEEN PASSED AND THE SAME ARE ALSO HELD TO BE VOID A BNITIO AND ACCORDINGLY CANCELLED. IN COMING TO THIS FINDING WE DRAW SUPPOR T FROM THE DECISIONS OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. RAMESH D. PATEL (2014) 42 TAXMANN.COM 540 (GUJARAT), WHICH IS ON SI MILAR FACTS AND IS SQUARELY APPLICABLE TO THE CASE ON HAND. GROUND NO. 1 OF ASSESSEES APPEAL FOR BOTH ASSESSMENT YEARS 2006-07 AND 2007-08 ARE A LLOWED. 4. IN VIEW OF OUR FINDING IN GROUND NO. 1 ALLOWING THE ASSESSEES APPEALS FOR BOTH ASSESSMENT YEARS 2006-07 AND 2007-08 (SUPR A), THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS ARE NOT BEING ADJUDICATED AT THIS JUNCTURE. ITA 1455/M/2012 & 4929/M/2013 SHRI FAZAL ABDUL WAHAB SARANG 6 5. IN THE RESULT, THE ASSESSEES APPEALS FOR ASSESSMEN T YEARS 2006-07 AND 2007-08 ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH DECEMBER, 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -41, MUMBAI 4. THE CIT, CENTRAL III, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.