Sri Venkatesh Developers , Hyderabad V. Asst. Commissioner of Income Tax, Circle-4(1), Hyderabad

ITA 1687/Hyd/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1242 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Capital Gains
• Section: 132; 143(3); 153A; 143(2); 64; 13; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Before Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member O R D E R Per Laliet Kumar, J.M. The present appeal is filed by the assessee feeling aggrieved by the order of ld.CIT(A) – 8, Hyderabad dt.13.09.2019 for the assessment year 2009-10 on the following grounds : “1. The learned CIT(Appeals) erred in rejecting Appellant's contention that the Order passed u/s 143(3) r/w section 153C is bad in law as no Return of Income was filed in response to the Notice u/s 153C and in absence of Return of Income entire proceedings and Order passed u/s. 143(3) r/w section 153C is without jurisdiction and illegal. 2. That the learned CIT(Appeals) observation that interpretation of Appellant's letter dated 11.11.2011 is that Appellant wishes Return of Income filed on 21.05.2010 to be taken into consideration while making the assessment u/s 153C is wrong as in the said letter Appellant has not at all stated that Return filed on 21.05.2010 should be treated as filed in response to Notice u/s 153C. ITA No.1687/Hyd/2019 Assessment Year: 2009-10 Sri Venkatesh Developers, Hyderabad. PAN : ABCFS6497A Vs. The Assistant Commissioner of Income Tax, Circle – 4(1), Hyderabad. (Appellant) (Respondent) Assessee by: Sri Siddharth Toshnival Revenue by : Sri K.P.R.R. Murthy Date of hearing: 14.06.2022 Date of pronouncement: 30.06.2022 ITA No.1687/Hyd/2019 2 3. The learned CIT(Appeals) erred in ignoring Appellant's contention that Assessing Officer admitted in the Orders passed u/ 143(3) rws 153C for assessment years 2004-05 to 2008-09 that no Return of Income was filed for assessment year 2009-10 in response to the Notice u/s 153C and this proves that Return of Income was not filed in response to Notice u/s 153C for assessment year 2009-10. 4. That the learned CIT(Appeals) observation that Appellant has filed the information called for in response to the Notice u/s 143(2) issued pursuant to Notice u/s 153C and has not objected to the proceedings initiated is incorrect as Appellant was continuously objecting to the proceedings. 5. That the learned CIT(Appeals) erred in ignoring Appellant's contention that even otherwise Notice u/s 143(2) issued pursuant to notice u/s 153C was consolidated Notice for six assessment years i.e. 2004-05 to 2010-11 and Appellant in having response filed to the Return Notice of u/s Income 153C for had assessment to respond years to the 2004-05 Notice u/s 143(2). 6. The appellant craves leave to amend or add any other grounds of appeal. 2. Subsequently, assessee filed the following additional grounds : “1. The Learned CIT(Appeals) erred in confirming the Capital Gain worked out by Assessing Officer at Rs.2,79,44,478/- as against the returned Capital Gain by assessee at Rs.1,08,07,822/- 2. That in confirming the Long Term Capital Gain computed by AO, the learned CIT(Appeal) should not have ignored the Indexed Cost of the expenditure incurred by the assessee from FY 2004-05 to 2007-08 and the entire expenditure is further supported by the fact that all is by Account Payee Cheques, hence question of disallowing such expenditure does not arise.” 3. The present case is having checkered history and therefore, it is essential to narrate certain facts in this case. In this case, the assessment order was passed by the Assessing Officer in the first round of litigation on 30.12.2011 u/s 143(3) r.w.s 153C of the Act for A.Y. 2009-10. ITA No.1687/Hyd/2019 3 The brief facts of the assessment order are as follows : “The assessee originally had e-filed the return of income on 21.05.2010 declaring long term capital gains of Rs. 1,08,07,822/ -. A search and seizure operation was conducted u/s. 132 of I.T.Act, 1961 at the residence of Sri. M.Lingaiah, Director of M/s. Shanta Sriram Constructions Pvt. Ltd. on 25.03.2010. Certain incriminating material belonging to the assessee was found and seized. Accordingly, notice u/s. 153C was issued to the assessee on 08.11.2010. The assessee requested for providing copies of seized material on the basis of which action u/s. 153C was proposed and copies of the sized material were provided to the assessee. The assessee vide letter dt.20.10.2011 contested that the provisions of sec.153C will not be applicable to this case as the return of income by declaring the capital gains has been voluntarily filed. Lastly, in response to the notices u/s. 153C, assessee filed his returns of income for the Assessment Years 2004-05 to 2008-09 on 11.11.2011 declaring 'nil' income. It was claimed that the firm was, dissolved on 30.4.2008, and therefore, no returns were to be filed for the Assessment Years 2009-10 and 2010-11 in response to the notice u/s. 153C and 142(1). The Assessing Officer therefore considered the return filed for the Assessment Year 2009-10 originally as the one filed in response to the notice u/s 153C. Accordingly, an addition of Rs.1,71,36,656/- on account of undisclosed capital gains was made by the Assessing Officer.” 4. After feeling aggrieved by the order passed by the Assessing Officer, the assessee preferred appeal before the ld.CIT(A). The ld.CIT(A) vide order dt.29.11.2012 had dismissed the appeal of the assessee. The relevant portion of ld.CIT(A)’s order at Para 04.1 at page 64 mentioned as under : “04.1 The Authorised Representative submitted that despite the above submission the Assessing Officer continued the proceedings and issued a notice u/s.276CC on 8-11-2011, requiring the appellant to file returns for the Assessment Years 2004-05 to 2009-10 and also issued a notice u/s.144 dated 811-2011. He submitted that the appellant vide letter dated 11-11-2011 explained that it had already filed the return of income for the Assessment Year 2009-10. The appellant also filed the returns of income for the Assessment Years 2004-05 to 2008-09 "under protest". He denied that the appellant had ever stated that the return originally for the Assessment Year 2009-10 be treated as one filed in response to notice u/s.153C. The Authorised Representative asserted that no return was filed for the Assessment Officer Year 2009-10 in response to the notice u/s. 153C, as mentioned by the Assessing Officer also. Accordingly, he claimed that the ITA No.1687/Hyd/2019 4 present Assessing Officer had no jurisdiction to make an assessment u/s 143(3) r.w.s. 153C.” 5. The ld.CIT(A) in para 5 had decided the issue against the assessee in the following manner : “05.0 I have gone through the facts of the case and the submissions of the appellant. As regards the contention that proceedings u/s.153C could not have been initiated as the appellant had filed its return of income for the Assessment Year 2009-10 on 21-5-2010 itself, whereas the notice was issued on 8-11-2010, after the search and seizure action on 25-3-2010, it is clear that the appellant had only filed his return of income for the Assessment Year 2009-10 at the relevant time and proceedings following the same were pending as on the said date. Therefore, in the light of the decision of the Hon'ble High Court of Delhi in the case of Commissioner of Income-tax Vs. Anil Kumar Bhatia, the Assessing Officer was very much within his power to initiate the proceedings. 05.1 As regards the contention that the document seized from the premises of M/s. Shantha Shriram Constructions Pvt Ltd did not belong to appellant, it seen that the Hon'ble Delhi High Court in their decision in the case of SSP Aviation Ltd Vs. DCIT (346 ITR 177) have discussed the scheme of assessment as provided in sections 153A to 153B of the I.T.Act 1961 elaborately. In para 17 of the said order, they have observed that sec.153C " .... .... merely enables the Revenue Authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched u/s 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has reached the satisfaction that the document relates to a person (emphasis supplied) other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow. The procedure prescribed u/s.153A is an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed. If the returns filed by the other person for a period of six years does not show that the income reflected in the document has been accounted for, additions will be accordingly made after following the procedure prescribed by law.” ITA No.1687/Hyd/2019 5 05.2 From the above, it is abundantly clear that the requirement of the provision merely is that the seized document should "relate to" and not that it should physically "belong to" some other person. Besides, it also emerges from the above decision that there is no requirement in sec.153C that such documents must conclusively reflect or disclose any undisclosed income. It is clear that in the case in hand, certain documents were found and seized in the course of search in the premises of M/s. Shantha Shriram Constructions, and even if those belonged to the said company, the transactions mentioned therein related to the present appellant, and on the basis of such documents, the Assessing Officer was satisfied in this regard and initiated the proceedings u/s.153C. Once the provisions of sec. 153C are applicable, the Assessing Officer is indeed required to follow the procedure prescribed u/s.153A and call for the returns for six Assessment Years. It is clear that there is no requirement of law that the seized material should relate to each year specifically in the said six years. As regards the contention that such document should have been forwarded to the Assessing Officer in Range-5, as the return for the Assessment Year 2009-10 was filed in the said Range, it is seen that the jurisdiction over the instant case was indeed with the Deputy Commissioner of Income-tax, Central Circle-2, Hyderabad as on the date of the issue of the said notice. Accordingly, finding no merit in the objection of the appellant, the grounds raised in this regard are decided against the appellant.” 6. Feeling aggrieved by the order passed by the ld.CIT(A), the assessee preferred appeal before the Tribunal in ITA No.98/Hyd/2013 wherein the Tribunal in Para 13 at Page 80 and Paras 14 and 15 had held as under : 13. First effective grievance of the assessee in this appeal is with regard to legality of issuance of notice under S.153C of the Act, and the second effective grievance of the assessee in this appeal is with regard to the jurisdiction of the DCIT Central Circle to frame the impugned assessment. We have already considered the corresponding grounds of the assessee in this behalf, while considering the appeal of the assessee for the assessment year 2007-08. Facts and circumstances of the case and the contentions of the parties on the relevant grounds of the assessee in respect of these issues are identical, for the detailed reasons given in paras 6 and 9, in this context hereinabove, for this year also, we reject the grounds of the assessee on these aspects, as the same are devoid of merit. 14. . The next effective grievance of the assessee in this appeal in ground No.5, which reads as follows- "5. The question of completing assessment u/sec. 143(3) r.w.s. 153C does not at all arise, as the assessee has not filed any return of income in response to the notice us./ 153C of the present Assessing Officer and assessee only brought to the notice that the assessee has already filed the ITA No.1687/Hyd/2019 6 return for 2009-10 on 21.05.2010 with Jurisdictional Officer, Circle V. Hence treating the said return as if filed in response to the Assessing Officer's notice u/sec. 153C is very much wrong as at no place the assessee has stated that the return field for Asst. Year 2009-10 on 21.05.2010 may be treated as filed in response to notice u/sec.153C. Therefore, it stands totally established that assessment so made u/sec.143(3) r.w.s. 153C is out and out illegal as question of applying provision of sec.143(3) does not at all arise. The learned CIT(A) failed to dispose of this specific Ground taken by the assessee in the grounds of Appeal." The contention of the assessee is that though specific ground, being ground No.4 on this issue, was taken by the assessee before the CIT(A), there is no adjudication by the CIT(A). We find merit in this contention of the assessee. We accordingly, remit this issue to the file of the CIT(A), with a direction to adjudicate ground No.4 before him, which goes to the root of the matter, in accordance with law and after giving reasonable opportunity of hearing to the assessee. 15. Other grounds of the assessee in this appeal relate to the merits of addition of Rs.1,71,36,656 as long term capital gains. We refrain to go into this ground, having remitted the matter in the context of ground No.5 of this appeal, with regard to non-adjudication of ground No.4 before the CIT(A), to the file of the CIT(A) for proper adjudication in accordance with law. 7. From the perusal of Paras 13 to 15(supra) in appeal No. ITA No.98/Hyd/2013, it is abundantly clear that the Tribunal had effectively decided the legality of section 143(3) of the Act against the assessee. However, with respect to remaining grounds , the Tribunal has noted down that since the ground No.5 is remanded back to the file of ld.CIT(A) for deciding afresh therefore co-ordinate Bench had refrained from deciding other grounds as the other ground was remitted back to the file CIT(A) 8. That the assessee filed M.A.No.131/Hyd/2019 stating herein that the Tribunal has not decided the issue on merit and prayed before the Tribunal for recalling the order. However, the Tribunal vide order dt.23.12.2019 had dismissed the application of the assessee mentioning therein that the Tribunal in its order had remitted the matter back to the file of ld.CIT(A) for denovo consideration. ITA No.1687/Hyd/2019 7 9. The ld.CIT(A) pursuant to the direction of the Tribunal dt.17.01.2013 had passed an order on 13.09.2019 dismissing ground no.5 which was remitted back by the Tribunal to ld.CIT(A) with following findings : ITA No.1687/Hyd/2019 8 10. Now having aggrieved by the order of ld.CIT(A), the assessee is before us only on the grounds mentioned hereinabove. The ld.AR had submitted that the ld.CIT(A) had erred in deciding the ground No.4 (ground No.5 in the earlier round) and had submitted that there was no reason for the ld.CIT(A) to decide the issue in the manner which was decided by the ld.CIT(A) at Page 8.2 wherein it was submitted that no return of income was filed by the assessee before the Assessing Officer in pursuant to the notice and therefore, in the absence of any return of income, the order passed by the ld.CIT(A) was incorrect. It was further submitted that since there was no adjudication of grounds on merits, in case, the Tribunal comes to a ITA No.1687/Hyd/2019 9 conclusion against the assessee in respect to ground No.4 then the matter is required to be heard on merit. 11. Per contra, the ld.DR had submitted that the order passed by the ld.CIT(A) is in accordance with the law and in terms of the directions issued by the Tribunal and there is no error in the order passed by the ld.CIT(A). 12. We have heard the rival contentions of both the parties and perused the material available on record. The major ground raised by the assessee, is as under : “no return of income was filed in response to the notice u/s 153C of the Act and in absence of return of income, entire proceedings and order passed u/s 143(3) r.w.s. 153C is without jurisdiction and illegal.” 13. From the bare perusal of the reply given by the assessee, which is reproduced by the ld.CIT(A) in the order (supra). It is clear that the assessee had filed return of income in pursuant to the notice vide inward no.055000024 on 21.05.2010. In this case, the notice was issued on the assessee on 08.11.2011. Now the question arises whether any return of income was filed by the assessee after receipt of the notice or not? It is not the case of the assessee that he has filed the return of income after receipt of the notice. In fact, on perusal of notice dt.08.11.2011 and the reply dt.11.11.2011, it is abundantly clear that the assessee had submitted that no return of income was filed in response to the notice u/s 153C. However, there was no other purpose for mentioning in the letter that “return of income” already filed for A.Y. 2009-10 along with the letter dt.11.11.2011. In our view, if the assessee failed to file the reply and return of income in response to section 153C, then the Assessing Officer was left with no other option but to decide the issue in accordance with the law. The Assessing Officer has no other option but to proceed in accordance with the law as has ITA No.1687/Hyd/2019 10 been done in the present case. Therefore, in our view, the reasoning given by the ld.CIT(A) cannot be faulted with and accordingly, we uphold the same. 14. Now coming to other grounds urged before us, the conjoint reading of the order of the Tribunal dt.07.10.2013 more particularly para 15 (supra) and para (3) and the order dated 23/12/2019 in M.A., it is amply clear that the Tribunal have not decided the issue on merit neither in original order nor in the M.A. order. 15. A perusal of various dates would shows that Tribunal vide order dt.07.10.2013 had remanded back the ground no.5 to the file of ld.CIT(A) to decide afresh and had refrained from deciding the issue on merit. The ld.CIT(A) vide order dt.13.09.2019 had decided the issue against the assessee vide the impugned order and had not decided the substantial ground on merit. However, the Tribunal on the M.A. of the assessee dt.05.12.2019, had dismissed the M.A. by observing that the issue was remanded back to the file of ld.CIT(A) for denovo consideration. There is contradiction in the order passed by the Tribunal in M.A. and the order of the Tribunal dt.07.10.2013 i.e., in both the orders, nowhere it was stated that the Tribunal had remanded back the matter for denovo consideration the substantial ground before the ld.CIT(A). However, the fact remains that the Tribunal had not adjudicated the grounds of the assessee on merit. 16. At the same time, this Bench cannot revisit any of these orders in current proceedings in accordance with scheme of Act. The assessee may take appropriate remedy on this aspect before the appropriate forum. In the light of the above noted observations, the appeal of the assessee in respect of ground No.5, is dismissed. However, the other grounds raised by the assessee are not maintainable in view of the above said observations on merits. ITA No.1687/Hyd/2019 11 17. In the result, the appeal of the assessee is dismissed. Order pronounced in the Open Court on 30 th June, 2022. Sd/- Sd/- (RAMA KANTA PANDA) ACCOUNTANT MEMBER (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 30 th June, 2022. TYNM/sps Copy to: S.No Addresses 1 Sri Venkatesh Developers, C/o.Siddharth Toshnival, Advocate, 3-5- 144/5, Eden Garden, Hyderabad. 2 The Assistant Commissioner of Income Tax, Circle 4(1), Hyderabad 3 CIT(Appeals), Hyderabad. 4 Pr.CIT-1, Hyderabad. 3 DR, ITAT Hyderabad Benches 4 Guard File By Order