M/s. Namrata Developers Flora City, Pune V. Deputy Commissioner of Income-tax,

ITA 1676/PUN/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9652 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-11-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 04-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Assessee Lawyers: V L JAIN
• Keywords: Reopening of assessment; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , . ! , ' , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM $ / ITA NOS.1676 & 1677/PUN/2016 % & & / ASSESSMENT YEARS : 2007-08 & 2008-09 M/S. NAMRATA DEVELOPERS FLORA CITY, 592, RAVIWAR PETH, TELEGAON DABHADE, TALUKA MAVAL, PUNE-410 506, PAN : AAAAN4708C ....... / APPELLANT '% / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE. / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SMT. DIVYA BAJPAI, CIT / DATE OF HEARING : 29.11.2018 / DATE OF PRONOUNCEMENT : 12.12.2018 ( / ORDER PER D. KARUNAKARA RAO, AM : THESE TWO APPEALS FILED BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, PUNE COMMONLY DA TED 13.05.2016 FOR ASSESSMENT YEARS 2007-08 & 2008-09. 2 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 ITA NO. 1676/PUN/2016 A.Y.2007-08 2. IN ITA NO.1676/PUN/2016, ASSESSEE HAS RAISED FOLLOWING GROUN DS: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITIONS MADE IN ASSESSMENT PROCEEDINGS THE SA ME BEING BEYOND THE JURISDICTION PROVIDED IN LAW IN VIEW OF THE FACT THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF CLAIM FOR CARRY FORWARD OF LOSSES B Y TREATING THE ASSESSEE AS NOT LIABLE FOR TAX AUDIT IN TERMS OF TH E PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT, 1961. 3. THE LEARNED CIT(A) HAS ERRED IN TREATING THE RET URN OF INCOME AS BELATED RETURN AS THE SAME WAS FILED ON 23.10.2007. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR DE LETE ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME, IF DEEMED NEC ESSARY. IDENTICAL GROUNDS HAVE BEEN RAISED BY ASSESSEE IN ITA NO.1677/PUN/2016. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF BUILDER & DEVELOPERS. THE ASSESSEE FILED RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 23.10.2007 DECLARING TOTAL INCOME AT RS. NIL. SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDUCTED BY THE DEPARTMENT IN NAMRATA, PRISTINE AND JALAN GROUP OF CASES ON 12.02.2013. THE ASSESSEE BELONGS TO THE SAID GROUP OF CASES. AFTER SEARCH ACTION, N OTICES U/S. 153C AND 143(2) WERE ISSUED TO THE ASSESSEE AND DULY SERVED ON THE ASSESSEE. ASSESSMENT IN THIS CASE WAS COMPLETED U/S.143(3) R.W.S.153 C R.W.S. 153B(1)(B) OF THE ACT. IN ASSESSMENT, ASSESSING OFFICER DID NOT ALLOW THE CLAIM OF CARRY FORWARD OF BUSINESS LOSS OF RS.48,12,569/-. AS PER CONTENTIONS OF PARA 4.2 TO 6 OF THE ASSESSMENT ORDER, THE ASSESSING O FFICER HELD THAT, IN A CASE, WHERE THERE WAS NO SALE, NO VALUE OF WORK IN PROGRESS 3 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 ETC., THE SAME DO NOT CONSTITUTE THE TURN OVER. HENCE, T HE ASSESSEE WAS NOT LIABLE FOR TO GET ITS ACCOUNT AUDITED IN TERMS OF SECTIO N 44AB OF THE ACT. IN THE INSTANT CASE, THE DUE DATE OF FILING RETURN OF INCOME WAS 31 ST JULY, 2007 AND THE ASSESSEE FILED RETURN OF INCOME ON 29 TH OCTOBER, 2007. FOR THE REASON TO FAILURE TO FILE VALID RETURN WITH AUDIT REP ORT WITHIN DUE DATE, THE ASSESSING OFFICER DID NOT ALLOW CARRY FORWARD BUSIN ESS LOSS OF RS.48,12,569/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE FILED APP EAL BEFORE THE CIT(A). DURING FIRST APPELLATE PROCEEDINGS, THE CIT(A) DEALT WIT H THIS ISSUE VIDE PARA 4.4 TO 4.8 AND DISCUSSED/CONSIDERED VARIOUS JU DGMENTS ON WHICH LD. AR HAS PLACED HIS RELIANCE. EVENTUALLY, CIT(A) HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CARRY FORWARD THE BUSINESS LOSS AS R ETURN WAS FILED AFTER THE DUE DATE U/S.139(1) OF THE ACT AND UPHELD TH E FINDINGS OF ASSESSING OFFICER. 5. STILL AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE FILED APPE AL BEFORE US BY RAISING GROUNDS AS EXTRACTED ABOVE. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE DRAWS OUT ATT ENTION TO GROUND NOS. 1 TO 3 OF THE APPEALS AND SUBMITTED THAT AD DITIONS MADE IN ASSESSMENT PROCEEDINGS WERE BEYOND THE JURISDICTION PRO VIDED IN LAW IN VIEW OF THE FACT THAT THERE WAS NO INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH. THE SOLITARY ISSUE RAISED IN APPEAL BY AS SESSEE IS AGAINST ASSESSING OFFICERS DENIAL OF ASSESSEES CLAIM OF CARR Y FORWARD BUSINESS LOSS. HE FURTHER STATED THAT THIS IS CASE OF A C ONCLUDED ASSESSMENT (I.E. NON ABATED ASSESSMENT) AS DUE DATE FOR IS SUE OF NOTICE 4 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 U/S.143(2) AND 153C OF THE ACT EXPIRED LONG BEFORE THE DAT E OF SEARCH ACTION ON THE ASSESSEE. IN SUCH CIRCUMSTANCES, ASSESSM ENT CAN ONLY BE RE-OPENED U/S.153C OF THE ACT WHEN THERE WAS NO INCRIMIN ATING MATERIAL AGAINST THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT NO SUCH INCRIMINATING EVIDENCE HAS BEEN BROUGHT IN BY THE ASSESSIN G OFFICER WHILE ISSUING NOTICE U/S. 143(2) AND 153C OF THE ACT. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY P LACED RELIANCE ON THE ORDERS OF ASSESSING OFFICER/ CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE A ND PERUSED THE ORDERS OF REVENUE AS WELL AS THE DECISIONS RELIED ON BY TH E LD. COUNSEL FOR THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT ORIGINAL ASSESSMENT C ONSTITUTES A NON-ABATED ASSESSMENT AS THE DUE DATE FOR DUE DATE FOR ISSUING NOTICE U/S.143(2) AND 153C OF THE ACT EXPIRED LONG BEFORE THE EVE NT OF SEARCH ACTION ON THE ASSESSEE. FURTHER, NO SPECIFIC INCRIMINATING EV IDENCE WAS MENTIONED ON THE RECORD OR IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. IN FACT, NO ADDITION WAS MADE BY THE ASSESSING OFFICER TO THE INCOME RETURNED BY THE ASSESSEE. THERE IS NO REPORTAB LE DISCREPANCY, WAS RECORDED BY THE ASSESSING OFFICER FOR THE YEAR UNDER CON SIDERATION REGARDING NATURE OF WORK AND METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THEREFORE, EXISTENCE OF INCRIMINATING EVIDENCE SUGG ESTING ESCAPEMENT OF INCOME DOES NOT ARISE IN THE INSTANT CASE. IN THIS CASE, WE ALSO PERUSED THE BINDING JUDGMENT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION REPORTED AS 374 ITR 645 . THIS JUDGMENT RELATES FOR THE PROPOSITION THAT THE ISSUE OF NOTICE U/S.15 3C OF THE ACT IS 5 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 INVALID IN CASE NO INCRIMINATING MATERIAL HAS BROUGHT IN BY TH E ASSESSING OFFICER AT THE TIME OF REOPENING OF ASSESSMENT U/S. 153C OF THE ACT. IT IS A SETTLED LEGAL PROPOSITION THAT NOTICE U/S.153C OF THE ACT CANNOT BE ISSUED IN RESPECT OF A CONCLUDED ASSESSMENT, IF THERE IS NO INCRIMINATING MATERIAL IN SUPPORT OF ALTERING THE INCOME RETU RNED BY ASSESSEE. DENIAL OF CLAIM OF CARRY FORWARD LOSSES WAS THE S OLITARY ISSUE IN THIS CASE AND THE SAME IS NOT SUPPORTED BY ANY INCRIMINA TING EVIDENCES GATHERED DURING THE SEARCH. IN ANY CASE, THE SAID DENIAL IS LINKED TO THE DEBATABLE ISSUE OF FAILURE TO FILE THE RETURN OF INCOME ENCLOSIN G OF THE STATUTORY AUDIT REPORT. THEREFORE, WE ARE OF CONSIDERED VIEW THAT THE GROUND NO. 1 SHOULD BE ALLOWED IN FAVOUR OF THE ASS ESSEE . ACCORDINGLY, WE HOLD SO. CONSIDERING THE RELIEF GRANTED TO THE ASSESSE E, ADJUDICATION OF OTHER GROUNDS ON MERITS I.E. GROUNDS NO. 2 AND 3 BECOMES ACADEMIC. ACCORDINGLY , THEY ARE DISMISSED AS SUCH. 9. GROUND NO. 4 RAISED IN APPEAL BY ASSESSEE IS GENERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMEN T YEAR 2007-08 IS PARTLY ALLOWED. ITA NO. 1677/PUN/2016 A.Y.2008-09 11. THE FACTS, ISSUES, DECISION OF ASSESSING OFFICER/CIT(A), ARGU MENTS OF BOTH THE PARTIES ARE COMMON AS THAT OF APPEAL FOR ASS ESSMENT YEAR 2007-08. THEREFORE, FOLLOWING THE SAME REASONING, WE ALLOW TH E GROUND NO.1 RAISED IN APPEAL AND GROUND NO. 2 AND 3 ARE DISMISSE D AS ACADEMIC. 6 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 GROUND NO. 4 RAISED IN APPEAL BY ASSESSEE IS ALSO GENERAL IN NATURE AND HENCE REQUIRES NO ADJUDICATION. 12. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE FOR A.Y . 2007-08 AND 2008-09 ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 12 TH DAY OF DECEMBER, 2018. SD/- SD/- ( / SUSHMA CHOWLA ) ( . ! / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; !' / DATED : 12 TH DECEMBER, 2018. SB ()*+,-.-+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-12, PUNE. 4. THE PR. CIT, CENTRAL, PUNE. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // * 2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE. 7 ITA NOS. 1676 & 1677/PUN/2016 A.YS. 2007-08 & 2008-09 DATE 1 DRAFT DICTATED ON 29 .1 1 .2018 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 03 .12.2018 SR. PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR. PS/PS 7 DATE OF UPLOADING OF ORDER SR. PS/PS 8 FILE SENT TO BENCH CLERK SR. PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER