Assistant Commissioner of Income Tax Central Circle-2(2), Bangalore V. M/s GMR Infrastructure Ltd , Bangalore

ITA 1581/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4205 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-10-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: SUNIL JAIN
• Keywords: Validity of assessment; Set aside
• Section: 143(3); 153A; 250; 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 1581 /BANG/201 7 ASSESSMENT YEAR : 20 09 - 1 0 THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), BENGALURU VS. M/S GMR INFRASTRUCTURE LTD., NO.25/1, SKIP HOUSE, MUSEUM ROAD, BENGALURU-560 025. PAN AABCG 8889 P APPELLANT RESPONDENT ITA NO.1427 & 1428/BANG/2017 ASSESSMENT YEAR : 2008-09 & 2009-10 CO NO. 02 /BANG/201 8 ASSESSMENT YEAR : 20 09 - 1 0 M/S GMR INFRASTRUCTURE LTD., NO.25/1, SKIP HOUSE, MUSEUM ROAD, BENGALURU-560 025. PAN AABCG 8889 P VS. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), BENGALURU. APPELLANT RESPONDENT REVENUE BY : SHRI MUZAFFAR HUSSAIN, CIT (DR) RESPONDENT BY : SHRI SUNIL JAIN, ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 2 OF 9 DATE OF HEARING : 01.10.2020 DATE OF PRONOUNCEMENT : 28.10.2020 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS AND CROSS APPEALS HAS BEEN FI LED BY ASSESSEE AS WELL AS REVENUE AGAINST ORDER IS DATED 26/03/2016 AND 26/04/2017 PASSED BY LD.CIT(A)-11, BANGALORE UN DER SECTION 143 (3) READ WITH SECTION 144C AND 153A OF THE ACT, AND 143(3) READ WITH SECTION 153A OF THE ACT, FOR ASSES SMENT YEARS 2009-10 AND 2008-9 RESPECTIVELY. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE IS AN INFRASTRUCTURE COMPANY ENGAGED IN THE BUSINESS OF HANDLING ENGINEERING PROCUREMENT CONSTR UCTION SOLUTIONS IN INFRASTRUCTURE SECTOR, CORPORATE SUPPO RT SERVICES TO VARIOUS INFRASTRUCTURE SPECIAL PURPOSE VEHICLES, IN FRASTRUCTURE DEVELOPMENT, FINANCING, INVESTMENT WITH BANKS, INVE STMENT IN SHARES AND SECURITIES IN ITS SUBSIDIARIES WHETHER I NCORPORATED IN INDIA OR ABROAD, INVESTMENT AND MUTUAL FUNDS, RE NDERING MANAGERIAL SERVICES ETC ASSESSEE WAS DERIVING ITS I NCOME BY WAY OF CONTRACT REVENUE, MANAGEMENT SERVICE FEES, INTER EST, PROFIT ON DISPOSAL OF SHARES AND SECURITIES. 3. FOR YEARS UNDER CONSIDERATION ASSESSEE FILED ITS RETURN OF INCOME ON 30/09/2008 AND 30/09/2009 RESPECTIVELY. ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 3 OF 9 4. DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, LD. AO MADE ADDITION UNDER SECTION 14 A READ WITH RULE 8 D FOR ASSESSMENT YEARS UNDER CONSIDERATION. ASSESSMENT WAS COMPLETED FOR YEARS UNDER CONSIDERATION BY LD.AO UNDER SECTION 143 (3) ON 23/12/2010 AND 12/12/2011 FOR ASSESSMENT YEARS 2008 -09 AND 2009-10 RESPECTIVELY, BY COMPUTING DISALLOWANCE UNDER SECTION 14 A IN BOTH THE YEARS. 5. SUBSEQUENTLY SEARCH WAS UNDERTAKEN ON 11/10/2012 IN THE PREMISES OF ASSESSEE. 6. LD.AR SUBMITTED THAT, PRIMARY QUESTION RAISED BY ASSESSEE IN PRESENT APPEALS FOR YEARS UNDER CONSIDERATION A RE IN RESPECT OF VALIDITY OF ASSESSMENT ORDER PASSED BY LD.AO UN DER SECTION 153A OF THE ACT, WITHOUT THERE BEING ANY INCRIMINAT ING MATERIAL/UNDISCLOSED INCOME FOUND DURING COURSE OF SEARCH, SINCE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) OF THE ACT, FOR YEARS UNDER CONSIDERATION. 7. LD.AR PLACED RELIANCE ON VARIOUS DECISION INCLUD ING ASSESSEES OWN CASE PASSED BY THIS TRIBUNAL ON IDENTICAL ISSUE IN PRECEDING ASSESSMENT YEARS: DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) L TD REPORTED IN 374 ITR 645 SPECIAL BENCH OF THE TRIBUNAL IN CASE OF AL CARGO GLOBAL LOGESTIC LTD VS DCIT REPORTED IN (2012) 18 ITR 106 (TRIB.) ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 4 OF 9 DECISION OF HONBLE DELHI TRIBUNAL IN CASE OF DCIT VS DHARAM PAL SATYA PAL LTD IN ITA NO. 3877- 3881/DEL/2016 AND ITA NO. 3310, 3717-3719, 3737/DEL/2016 FOR ASSESSMENT YEAR 2005-06 TO 2009-10 VIDE ORDER DATED 17/05/2018DECISION OF S UPREME COURT DISMISSING SLP IN THE CASE OF KURELE PAPER MI LLS P LTD PR.CIT VS KURELE PAPER MILLS (P) LTD (81 TAXMANN.COM 82) (DELHI HIGH COURT) ACIT VS CORNERSTONE PROPERTIES PVT LTD IN ITA CO NOS . 1714 TO 1717/BANG/2013 AND CORNERSTONE PROPERTIES PVT LTD V S ACIT IN C.O.NOS.62 TO 65/BAN G12014 (IN ITA NOS. 1714 TO 1717/BANG/2013) DATED SEPTEMBER 8, 2017 (BANGALORE TRIBUNAL) THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL ( INDIA' V. ACIT 1(259 CTR 281) (RAI.)] THE HON'BLE HIGH COURT OF KARNATAKA, IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. V. DCIT (49 TAXMANN.COM 98) DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (61 TAXMANN.COM 412- PARA 25 TO 27) DELHI HIGH COURT IN THE CASE OF MEETA GUTGUTIA (82 TAXMANN.COM 287). HONBLE SUPREME COURT DISMISSED SLP FILED BY THE RE VENUER IN MEETA GUTGUTIA CASE (96 TAXMANNNN.COM 468) BANGALORE ITAT IN CASE OF GMR KAMALANGA ENERGY LTD VS DCIT IN ITA NO. 1235,1236, 1307 & 1308/ BANG/2017 DA TED APRIL 5, 2019 FOR AY 2008-09 TO AY 2011-12 8. IT HAS THUS BEEN CONTENDED BY ASSESSEE THAT NO INCRIMINATING MATERIAL IS FOUND IN SEARCH IN CONNEC TION WITH ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION. 9. ON THE CONTRARY LD.CIT.DR SUBMITTED THAT FOR ASS ESSMENT YEAR 2007-08, HONBLE HIGH COURT REMANDED THE ISSUE TO THIS ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 5 OF 9 TRIBUNAL FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW. HE SUBMITTED THAT EVEN IF THERE IS NO INCRIMINATING MA TERIAL THAT WAS SEIZED LEADING TO UNDISCLOSED INCOME, PROCEEDIN GS UNDER SECTION 153A COULD BE INVOKED ON AN ISSUE THAT HAS BEEN SUBJECT MATTER OF CONSIDERATION IN ORIGINAL ASSESSM ENT PROCEEDINGS. HE PLACED RELIANCE ON DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS CIT REPORTED IN 62 TAXMANN.COM 250 . 10. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 11. AT THE OUTSET A QUERY WAS RAISED BY THE BENCH, AS TO WHETHER, THERE IS A FINDING OF ANY AUTHORITIES BELO W ON THE FACTUAL ASPECTS THAT ANY INCRIMINATING MATERIAL FOR THE ASSESSMENT YEARS UNDER CONSIDERATION WAS FOUND DURI NG COURSE OF SEARCH OR NOT AND THAT THE ADDITIONS MADE ARE BA SED ON SUCH INCRIMINATING MATERIALS THAT WAS UNEARTHED DURING T HE COURSE OF SEARCH. 12. BOTH SIDES REPLIED THAT LD. CIT (A) HAS NOT GIV EN A FINDING ON THIS ASPECT, THOUGH IT WAS RAISED FOR THE YEARS UNDER CONSIDERATION IN GROUND NO. 3 FOR ASSESSMENT YEAR 2 009-10 AND GROUND NO.I FOR ASSESSMENT YEAR 2008-09. 13. ON PERUSAL OF THE ORDERS PASSED BY AUTHORITIES BELOW, WE NOTE THAT THEY HAVE PROCEEDED ON THE FOOTING THAT, UNDISCLOSED INCOME OR INCRIMINATING MATERIAL IS NOT A PRECONDIT ION FOR ISSUE ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 6 OF 9 OF NOTICE UNDER SECTION 153A. LD.CIT.DR AS WELL AS THE AUTHORITIES BELOW HAVE PLACED RELIANCE ON DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS CIT (SUPRA). 14. WE HAVE CONSIDERED THE ARGUMENT ADVANCED BY LD. SR.DR IN LIGHT OF DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS CIT (SUPRA). WE NOTE THAT THE VIEW TAKEN BY HONBLE COURT IN THIS CASE IS THAT HAVING INVOKED THE PROVISIONS OF SECTION 153A IN PROPER MA NNER, ASSESSMENT IS TO BE CARRIED ON BASED ON INCOME FOUN D IN THE SEARCH AND/OR DECLARED BY ASSESSEE DURING SEARCH AN D/OR ANY OTHER INCOME THAT COMES IN LIGHT DURING ASSESSMENT PROCEEDINGS UNDER SECTION 153A. WE NOTE THAT HONBL E COURT HAD OBSERVED THAT, THERE WAS INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH IN THAT CASE. HENCE IN OUR CONSIDERED OPINION THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT IS NOT RELEVANT TO DECIDE THE ASPECT AS TO WHETHER SECTION 153A CAN BE INVOKED FOR THE YEARS, WHERE THERE IS N O FINDING REGARDING INCRIMINATING MATERIAL BEING FOUND IN SEA RCH IN AN UNABATED ASSESSMENT. 15. FROM THE RECORDS PLACED BEFORE US FOR YEARS UND ER CONSIDERATION, WE NOTE THAT THE ASSESSMENT ORDERS, WERE PASSED UNDER SECTION 143(3) BEFORE THE DATE OF SEAR CH. WE REFER TO CERTAIN DECISIONS RELIED BY LD.AR WHEREIN PLETHO RA OF ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 7 OF 9 DECISIONS PASSED BY HONBLE SUPREME COURT AND VARIOUS HONBLE HIGH COURTS HAVE BEEN CONSIDERED ON IDENTICAL ISSUE. ON PERUSAL OF DECISION OF HONBLE DELHI TRIBUNAL IN CASE OF CIT VS DHARAMPAL SATYAPAL LTD.(SUPRA), WE NOTE THAT HONBLE SUPREME COURT IN CASE OF CIT VS SINHAGD TECHNICAL EDUCATION SOCIETY REPORTED IN 397 ITR 344 HELD THAT, INCRIMINATING MATERIAL HAD TO PERTAIN TO ASSESSMENT YEAR FOR MAKI NG ADDITION IN A CONCLUDED ASSESSMENT. 16. UNDER SUCH CIRCUMSTANCES, WITHOUT THERE BEING A CLEAR FINDING IN RESPECT OF THEIR BEING INCRIMINATING MATERIAL/UNACCOUNTED MONEY UNEARTHED DURING THE COU RSE OF SEARCH, VALIDITY OF ASSESSMENT ORDER PASSED UNDER S ECTION 153A CANNOT BE ASCERTAINED. HENCE WE FEEL IT PROPER TO R EMAND THE ISSUE BACK TO LD.CIT(A) FOR FRESH CONSIDERATION ON THIS ASPECT ABOUT VALIDITY OF INVOCATION OF SECTION 153A IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS SINHAGD TECHNICAL EDUCATION SOCIETY (SUPRA). IN THE EVENT ASSESSEE SUCCEEDS ON THIS ASPECT THEN NOTHING REMAINS TO BE DECIDED ON MERITS. BUT IF ASSESSEE FAILS ON THIS ASPECT, THEN THE ISSUE ON MERITS SHOULD BE DECIDED BY LD.CIT(A) AFRESH, IN AC CORDANCE WITH LAW. 17. WE ALSO NOTE THAT LD.CIT(A) REMANDED CERTAIN I SSUES TO LD.AO TO CONSIDER IN ACCORDANCE WITH LAW. IN OUR OP INION AFTER THE AMENDMENT TO SECTION 251, LD.CIT(A) CANNOT REMA ND ANY ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 8 OF 9 ISSUE TO LD.AO AND HAS TO DECIDE IT HIMSELF. HENC E WE SET ASIDE THE ORDERS OF LD.CIT(A) IN BOTH THE YEARS UND ER CONSIDERATION AND REMAND ENTIRE ISSUES ALLEGED BY ASSESSEE, WITH A CLEAR DIRECTION THAT, HE SHOULD 1 ST DECIDE THE LEGAL GROUND RAISED BY ASSESSEE AS INDICATED HEREINABOVE AND THEREAFTER DECIDE THE ISSUE ON MERITS IF ASSESSEE F AILS IN THE LEGAL GROUND. IN THE RESULT APPEAL IS FILED BY ASSESSEE AS WELL A S REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES AND CROSS O BJECTION FILED BY ASSESSEE BECOMES INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 28 TH OCT, 2020 SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH OCT, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. ITA NO.1427, 1428 & 1581/BANG/2017 CO NO.02/BANG/2018 PAGE 9 OF 9 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -10-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -10-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -10-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -10-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -10-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -10-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS