ACIT, CHENNAI V. M/s. SRM Hotels P Ltd., CHENNAI

ITA 1541/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61185 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SIBENDU MOHARANA IRS
• Assessee Lawyers: N DEVANATHAN; B S PURSHOTH AM CHARTERED
• Keywords: Document seized; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NOS.1541, 1542, 1543 & 1544(MDS)/2011 ASSESSMENT YEARS: 2001-02, 2002-03, 2003-04 & 2004- 05 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE I(3), CHENNAI. VS. M/S. SRM HOTELS P. LTD., 2, VEERASAMY STREET, WEST MAMBALAM,CHENNAI-600033 PAN AABCS5185L. (APPELLANT) (RESPONDENT) APPELLANT BY : DR.SIBENDU MOHARANA, IRS , CIT RESPONDENT BY : S/SHRI N.DEVANATHAN, ADVOCAT E & B.S.PURSHOTH AM, CHARTERED ACCOUNTANT DATE OF HEARING : 22 ND MAY, 2012 DATE OF PRONOUNCEMENT : 22 ND MAY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT ALL THESE FOUR APPEALS ARE FILED BY THE REVENUE, IN RESPECT OF THE SAME ASSESSEE. THE RELEVANT ASSESSMENT YEAR S ARE 2001-02, 2002-03, 2003-04 AND 2004-05. THE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE COM MISSIONER OF INCOME-TAX(APPEALS)-II AT CHENNAI, DATED 27-6-20 11 AND ARISE - - ITA1541 TO 1544 OF 2011 2 OUT OF THE ASSESSMENTS COMPLETED UNDER SECTION 143( 3), READ WITH SECTIONS 153C AND 153A OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF RUNNING HOTELS. A SEARCH ACTION WAS CA RRIED OUT UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961 IN SR M GROUP, ITS EDUCATIONAL INSTITUTIONS AND IN THE PREMISES OF ITS CHAIRMAN SHRI T.R.PACHAMUTHU ON 12-8-2004. SIMULTANEOUSLY, A SUR VEY UNDER SECTION 132A WAS ALSO CONDUCTED. IN VIEW OF THE AB OVE, ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF THE ASSE SSEE COMPANY UNDER SECTION 153C, READ WITH SECTION 153A OF THE ACT. 3. WHEN THESE ASSESSMENTS WERE TAKEN IN FIRST APPEALS BEFORE THE COMMISSIONER OF INCOME-TAX(APPEA LS), HE FOUND THAT THE INCOME-TAX APPELLATE TRIBUNAL HAS AL READY CONSIDERED THE APPEAL OF THE ASSESSEE FOR THE ASSES SMENT YEAR 2005-06, WHICH AROSE OUT OF EXACTLY ON SIMILAR FACT S AND CIRCUMSTANCES. THE TRIBUNAL HAS HELD IN ITS ORDER THAT THE ASSESSING OFFICER DID NOT HAVE VALID JURISDICTION T O MAKE ASSESSMENT UNDER SECTION 153C. ACCORDINGLY, THE AS SESSMENT WAS QUASHED AS AB INITIO VOID. THE COMMISSIONER OF INCOME- TAX(APPEALS) FOUND THAT THE ORDER OF THE TRIBUNAL F OR THE - - ITA1541 TO 1544 OF 2011 3 ASSESSMENT YEAR 2005-06 IS SQUARELY APPLICABLE TO T HE ASSESSMENTS OF THESE IMPUGNED ASSESSMENT YEARS AS W ELL AND ACCORDINGLY HE QUASHED THE ASSESSMENTS, AS THE ASSE SSMENTS ARE AB INITIO VOID. 4. IT IS AGAINST THE ABOVE DISMISSAL BY THE COMMISSIONER OF INCOME-TAX(APPEALS) THAT THE REVENU E HAS COME IN SECOND APPEALS BEFORE US. 5. THE COMMON GROUNDS RAISED BY THE REVENUE IN ALL THESE APPEALS READ AS BELOW:- 1. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE RELIED UPON ORDER OF THE ITAT B BENCH DATED 30-3- 2010 IN ITA NO.1356/MDS/09 IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 HAS BEEN DISPUTED AND THAT THE ISSUE HAS NOT BECOME FINAL. 2. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THERE IS NO SPECIFIC REQUIREMENT IN SECTION 153C OF THE IT A CT 1961 THAT REASONS/SATISFACTION NOTE HAS TO BE RECORDED BY THE A.O BEFORE INITIATING PROCEEDINGS - - ITA1541 TO 1544 OF 2011 4 3. THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE ASSESSING OFFICER IS COMMON FOR THE ENTIRE SRM GROUP CASES AND THAT AFTER PERUSING THE RELEVANT MATERIALS LIKE SEIZED DOCUMENTS, APPRAISAL REPORT AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE, THE A. O WAS SATISFIED THAT THIS IS A FIT CASE FOR INITIATIN G PROCEEDINGS U/S 153C AND ACCORDINGLY INITIATED PROCEEDINGS U/S 153C. 6. WE HEARD DR.SIBENDU MOHARANA, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E AND SHRI N.DEVANATHAN, THE LEARNED COUNSEL ALONGWITH SH RI B.S.PURSHOTHAM, CHARTERED ACCOUNTANT, FOR THE RESPO NDENT- ASSESSEE. 7. THE ASSESSMENT MADE UNDER SECTION 153C FOR THE ASSESSMENT YEAR 2005-06 BECAUSE OF THE SAME SEARCH MADE UNDER SECTION 132, WAS CONSIDERED BY THE INCOME-TAX APPELLATE TRIBUNAL, B-BENCH, CHENNAI, IN ITA NO.1356(MDS)/200 9, THROUGH THEIR ORDER DATED 30-3-2010. ONE OF THE PROMINENT GROUNDS RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL WAS THAT THE - - ITA1541 TO 1544 OF 2011 5 ASSESSING OFFICER LACKED JURISDICTION UNDER SECTION 153C TO MAKE THAT ASSESSMENT, AS THE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 153C WERE NOT SATISFIED. THIS LEGAL GROUND WAS EXAMINED BY THE TRIBUNAL IN DETAIL. THE TRIBUNAL F OUND THAT THE ASSESSING AUTHORITY HAS NOT AT ALL RECORDED ANY SA TISFACTION NOTE THAT THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH, BELONGED TO THIS ASSESSEE. THE TRIBUNAL FURTHER NOTICED THAT ADDITIONS IN THE HANDS OF THE ASSESSEE WERE MADE ON LY ON THE BASIS OF THE STATEMENTS FILED BY THE ASSESSEE AND N OT ON THE BASIS OF ANY OTHER MATERIALS AVAILABLE ON RECORD. THE TRIBUNAL ALSO DID NOT AGREE WITH THE COMMISSIONER OF INCOME- TAX(APPEALS) IN THAT CASE THAT SECTIONS 153C AND 15 8BD ARE QUITE DIFFERENT IN SUBSTANCE. THE TRIBUNAL HELD TH AT THE REQUIREMENTS OF SECTION 153C ARE SIMILAR TO THE REQ UIREMENTS OF SECTION 158BD. ON THE BASIS OF THESE EXAMINATIONS, THE TRIBUNAL HELD THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) I GNORED THE MAIN CONDITION REGARDING RECORDING OF SATISFACTION, WHICH IS THE PRIMARY CONDITION PRECEDENT FOR ASSUMPTION OF JURIS DICTION UNDER SECTION 153C FOR INITIATING ACTION AGAINST OTHER P ERSON. THE TRIBUNAL MADE REFERENCE TO THE DECISION OF THE HON BLE SUPREME - - ITA1541 TO 1544 OF 2011 6 COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT & A NOTHER, 289 ITR 341, WHEREIN THE HONBLE APEX COURT HAS HEL D THAT IT IS NECESSARY FOR THE ASSESSING OFFICER TO RECORD HIS S ATISFACTION THAT ANY UNDISCLOSED INCOME BELONGED TO THE OTHER ASSES SEE BEFORE INITIATING ACTION AGAINST THE OTHER ASSESSEE. TH E TRIBUNAL ALSO RELIED ON A SERIES OF OTHER ORDERS OF THE TRIBUNAL AND FINALLY HELD THAT THE ASSESSMENT WAS MADE WITHOUT ANY JURISDICTI ON. ACCORDINGLY, THE ASSESSMENT WAS SET ASIDE AS AB INI TIO VOID. 8. THESE APPEALS ALSO ARISE OUT OF THE ASSESSMENTS FRAMED UNDER THE VERY SAME SET OF FACTS, WHICH AROS E OUT OF THE VERY SAME SEARCH MADE UNDER SECTION 132 ON SRM GROU P OF CONCERNS AND ITS CHAIRMAN. THEREFORE, WE FIND THAT THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI BENCH-B IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO.1356(MDS)/2009 DATED 30-3-2010 IS APPLICABLE TO THE PRESENT APPEALS AND, THEREFORE, HOLD THAT THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS RIGHTLY QUASHED THE ASSESSMENTS AS AB INITIO VOID. 9. IN RESULT, THESE APPEALS FILED BY THE REVENUE A RE DISMISSED. - - ITA1541 TO 1544 OF 2011 7 ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON TUESDAY, THE 22 ND OF MAY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 22 ND MAY, 2012. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.