Smt. Bhartiben Prahladbhai Sewani, Ahmedabad V. The Dy.Commissioner of Income Tax,Circle-1(3), Ahmedabad

ITA 1734/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7024 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR SINGH
• Assessee Lawyers: BIREN SHAH
• Section: 271(1)(c); 153A; 143(1); 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1734/AHD/2017 / ASSTT. YEAR: 2008-2009 SMT. BHARATIBEN PRAHLADBHAI SEWANI 45, ASHWAMEGH BUNGALOW-3 NR. SOMESHWAR DERASAR SATELLITE ROAD AHMEDABAD 380 015. PAN : ACSPS 6476 L VS. DCIT, CENT.CIR.1(3) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI BIREN SHAH, AR REVENUE BY : SHRI RANJAN KUMAR SINGH, SR.DR ! / DATE OF HEARING : 09/01/2019 '#$ ! / DATE OF PRONOUNCEMENT: 11 /01/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-11, AHMEDABAD DATED 6.4.2017 PASSED FOR T HE ASSTT.YEAR 2008-09. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1,53,420/- WHICH WAS IMPOS ED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . ITA NO.1734/AHD/2017 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME ON 28.9.2008 DECLARING TOTAL INCOME AT RS.12 ,50,860/-. A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE CASE OF SEWANI GROUP ON 20.12.2011. NOTICE UNDER S ECTION 153A WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE T O THE NOTICE, THE ASSESSEE HAS FILED HER RETURN INCOME ON 28.1.2013 D ECLARING TOTAL INCOME ATRS.12,66,480/-. THE AO FOUND THAT THE ASS ESSEE HAS WRONGLY DEDUCTED INCOME TAX EXPENSES AND REFUND FROM THE TO TAL INCOME INSTEAD OF ADDING BACK THE SAME TO THE TOTAL INCOME. WHEN THIS FACT WAS BROUGHT TO THE ASSESSEE, SHE ADMITTED THE SAME AND ADDITION OF RS.4,34,488/- WAS MADE. THE ASSESSEE REALIZED HER MISTAKE AND DID NOT CHALLENGE THIS ADDITION. THE AO HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY I MPOSED PENALTY OF RS.1,53,420/- ON ACCOUNT OF FURNISHING INACCURATE P ARTICULARS OF HER INCOME. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE HAS R AISED TWO FOLD SUBMISSIONS. IN THE FIRST FOLD OF CONTENTIONS, HE PLEADED THAT BONA FIDE MISTAKE WAS COMMITTED AT THE END OF THE ASSESSEE. TWO AMOUNTS I.E. INCOME TAX REFUND AND EXPENSES OUGHT TO HAVE BEEN A DDED BACK INSTEAD OF CLAIMING DEDUCTION. THIS WAS DONE INADV ERTENTLY. THERE WAS NO DELIBERATE ATTEMPT IN THIS ACT. IN THE SECOND F OLD OF CONTENTIONS, HE SUBMITTED THAT DURING THE COURSE OF SEARCH NO INCRI MINATING MATERIAL WAS FOUND, WHICH CAN AUTHORISE THE AO TO PASS ASSES SMENT ORDER UNDER SECTION 153A IN THE PRESENT ASSESSMENT YEAR. HE PO INTED OUT THAT THE ASSESSMENT YEAR INVOLVED HERE IS A.Y.2008-09. RETU RN WAS FILED ON 28.9.2008 AND NOTICE COULD BE ISSUED UPON THE ASSES SEE ON OR BEFORE 30.9.2009. NO SUCH NOTICE WAS ISSUED, HENCE PROCEE DINGS ATTAINED FINALITY. THIS COULD BE DISTURBED, IF SOME INCRIMI NATING MATERIAL WAS FOUND AND ASSESSMENT WAS BEING MADE. IT IS IMMATER IAL THAT THE ASSESSEE HAS NOT CHALLENGED THIS ADDITION IN QUANTU M APPEAL, BUT SHE ITA NO.1734/AHD/2017 3 ABSOLVED HERSELF FROM THE VIGOUR OF PENALTY BY TAKI NG THIS LEGAL DEFENCE. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE JU DGMENTS: I) CIT VS. KABUL CHARWALA, 380 ITR 0183 (DEL) II) CIT VS. KURELE PAPERS, 380 ITR 571 (DEL) III) CIT VS. LATA JAIN, 384 ITR 543 (DEL) 5. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES. HE CONTENDED THAT BOTH THE IT EMS WHICH HAVE BEEN CLAIMED AS DEDUCTION WERE INADMISSIBLE TO THE ASSESSEE. THERE IS NO DEMONSTRATIVE EVIDENCE, HOW THIS MISTAKE HAS HAP PENED. IT IS VERY DIFFICULT TO ACCEPT THAT IT WAS A HUMAN ERROR. IT CAN BE A DELIBERATE ACT FOR CLAIMING UNDUE BENEFIT. WITH REGARD TO SECOND FOLD OF CONTENTION, HE SUBMITTED THAT THE ASSESSEE HAS NOT TAKEN ANY SUCH PLEA BEFORE THE REVENUE AUTHORITIES, AND THEREFORE, SHE IS PRECLUDE D FROM TAKING SUCH PLEA. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD. HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. KABUL CHAWLA (SUPRA) HAS EXAMINED SCOPE OF SECTION 153A. AFTER A DETAILED ANALYSIS HONBLE COURT HAS SUMMARIZED LEGAL PROPOSITION EMER GING OUT FOR APPLICATION OF SECTION 153A. SUCH PROPOSITION READ S AS UNDER: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDE R SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSU ED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS F OR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH ITA NO.1734/AHD/2017 4 TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REA SSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN S EPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'I N WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR I NFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEI ZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE D ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIA L EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASS ESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 7. IT IS ALSO PERTINENT TO NOTE THAT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HONBLE COURT HAS OBSERVED THAT RETU RN FOR ASSTT.YEARS 2002-03, 2005-06 AND 2006-07 WERE ACCEPTED UNDER SE CTION 143(1) OF THE ACT. THUS, HONBLE COURT HAS CONSIDERED THIS A CCEPTANCE OF RETURN AS AN ASSESSMENT MADE UNDER SECTION 143(1). IN CON CLUDING PARAGRAPH, THE HONBLE COURT HAS HELD THAT ON THE D ATE OF SEARCH, ASSESSMENTS FOR A.YS. 2002-03, 2005-06 AND 2006-07 ALREADY STOOD ITA NO.1734/AHD/2017 5 COMPLETED AND NO INCRIMINATING MATERIAL WAS UNEARTH ED DURING THE SEARCH, THEREFORE, NO ADDITION SHOULD HAVE BEEN MAD E TO THE INCOME OF THE ASSESSEE. 8. AT THIS STAGE, IT IS PERTINENT TO TAKE NOTE OF T HE FINDING OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SOMAYA CONSTRUCTION LTD., 387 ITR 529 (GUJ). IT READS AS UNDER: 18. IN THIS CASE, IT IS NOT THE CASE OF THE APPELL ANT THAT ANY INCRIMINATING MATERIAL IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND DURING THE COURSE OF SEARCH . AT THE RELEVANT TIME WHEN THE NOTICE CAME TO BE ISSUED UND ER SECTION 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF I NCOME. MUCH LATER, AT THE FAG END OF THE PERIOD WITHIN WHICH TH E ORDER UNDER SECTION 153A OF THE ACT WAS TO BE MADE, IN OTHER WO RDS, WHEN THE LIMIT FOR FRAMING THE ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS ABOUT TO EXPIRE, THE NOTICE HAS BEEN ISSUED IN THE PRESENT CASE SEEKING TO MAKE THE PROPOSED ADDITION OF RS.11 ,05,51,000/- ON THE BASIS OF THE MATERIAL WHICH WAS NOT FOUND DU RING THE COURSE OF SEARCH, BUT ON THE BASIS OF A STATEMENT O F ANOTHER PERSON. IN THE OPINION OF THIS COURT, IN A CASE LIK E THE PRESENT ONE, WHERE AN ASSESSMENT HAS BEEN FRAMED EARLIER AND NO ASSESSMENT OR REASSESSMENT WAS PENDING ON THE DATE OF INITIATI ON OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SE CTION 132A, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UN DER SECTION 153A OF THE ACT, ADDITIONS OR DISALLOWANCES CAN BE MADE ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURIN G THE SEARCH OR REQUISITION. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, HOWEVER, IT IS ON THE BASIS OF SOME MATERIAL COLLEC TED BY THE ASSESSING OFFICER MUCH SUBSEQUENT TO THE SEARCH, TH AT THE IMPUGNED ADDITIONS CAME TO BE MADE. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTENDED T HAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING TH AT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATE RIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOW ANCE IN RESPECT OF ALL THE SIX ASSESSMENT YEARS. IN THE OPI NION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANC E, INASMUCH AS, THE ASSESSMENT IN RESPECT OF EACH OF THE SIX AS SESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTIO N 153A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATION TO TH E SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLO SED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESS MENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITION OR DIS ALLOWANCE CAN BE ITA NO.1734/AHD/2017 6 MADE IN RELATION TO THAT ASSESSMENT YEAR IN EXERCIS E OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSES SMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT I S IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HI GH COURT IN THE CASE OF JAI STEEL (INDIA), JODHPUR (SUPRA). BES IDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDE NT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CON CLUDED BY THE DECISION OF THIS COURT IN THE CASE OF JAYABEN RATIL AL SORATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHIL E IT CANNOT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RE SPECT TO SIX PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIM INATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR . 9. WE ARE CONSCIOUS OF THE FACT THAT WE ARE DEALING WITH PENALTY IMPOSED FOR ADDITION OF RS.4,34,488/-. IN THE PRES ENT PROCEEDINGS WE CANNOT DISTURB AND/OR WE ARE NOT DISTURBING THE ADD ITION MADE BY THE AO WHICH ATTAINED FINALITY. THE ASSESSEE HAS TO PA Y TAX ON THIS ADDITION. ISSUE BEFORE US IS, IF A SPECIFIC DEFENS E WAS NOT TAKEN BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS, WHETHER THAT D EFENSE NOW BE TAKEN FOR ABSOLVING HERSELF FROM LEVY OF PENALTY ? TO OUR MIND, QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS ARE INDE PENDENT TO EACH OTHER. EVEN IF IN THE QUANTUM PROCEEDINGS ASSESSEE HAS AGREED TO FOR AN ADDITION. IF SHE HAS SOME LEGAL DEFENSE AVAILAB LE, THEN ON THE BASIS OF THAT DEFENSE SHE CAN ABSOLVE HERSELF FORM THE LE VY OF PENALTY. IT IS A FUNDAMENTAL RULE THAT JURISDICTION CANNOT BE INFUSE D BY VIRTUE OF THE CONSENT OF THE ASSESSEE. JURISDICTION IN ANY AUTHO RITY COULD BE ASSIGNED BY VIRTUE OF PROVISIONS IN THE INCOME TAX ACT. INT ERPRETATION OF SCOPE OF SECTION 153A HAS COME UP AFTER ASSESSMENT ORDER. A LL THESE DECISIONS REFERRED ABOVE ARE SUBSEQUENT TO THE ASSESSMENT ORD ER PASSED BY THE AO. IT IS PERTINENT TO OBSERVE THAT THE WELL SETTLE D PROPOSITION OF LAW IN SUCH A SITUATION WOULD BE THAT COURTS USED TO DECID E A DISPUTE BETWEEN THE PARTIES, BECAUSE IT INVOLVES DECISIONS ON FACTS . IT CAN ALSO INVOLVE DECISION ON POINT OF LAW. BOTH MAY HAVE BEARING ON THE ULTIMATE RESULT OF DECISION. WHEN A COURT INTERPRETS A PROVISION, IT DECIDES AS TO WHAT IS THE MEANING OF PROVISION AND EFFECT OF THE WORDS US ED BY THE ITA NO.1734/AHD/2017 7 LEGISLATURE. IT IS A DECLARATION REGARDING THE STAT UTE. IN OTHER WORDS, JUDGMENT DECLARES AS TO WHAT IS THE LEGISLATIVE INT ENT AT THE TIME OF PROCLAMATION OF LAW. THE DECLARATION IS . THIS WAS THE LAW, THIS IS THE LAW AND THIS IS HOW PROVISION SHALL CONSTRUE. FOU R DECISIONS REFERRED BY THE LD.COUNSEL FOR THE ASSESSEE (SUPRA) ARE SUBSEQU ENT TO THE ORDERS OF THE LD.CIT(A). SCOPE OF SECTION 153A HAS BEEN EXPL AINED IN THESE FOUR DECISIONS THEREFORE, IT IS INCUMBENT UPON US TO TAK E COGNIZANCE ALL THESE DECISIONS AND TAKE NOTE OF ADDITIONAL LEGAL POINT R AISED IN APPEAL. 10. IN THE LIGHT OF THE ABOVE JUDGMENTS, IF FACTS A RE BEING EXAMINED, THEN IT WOULD REVEAL THAT HAD THE ASSESSEE CHALLENG ED QUANTUM ADDITION, THEN THAT ADDITION COULD HAVE BEEN DELETE D. BUT SINCE THE ASSESSEE HAS NOT CHALLENGED THAT DOES NOT MEAN THAT THE AO HAS GOT JURISDICTION TO VISIT THE ASSESSEE WITH PENALTY ALS O. ONCE NO INCRIMINATING MATERIAL WAS FOUND AND TIME LIMIT TO ISSUE NOTICE UNDER SECTION 143(2)HAD ALREADY EXPIRED, NO ACTION COULD HAVE BEEN TAKEN AGAINST THE ASSESSEE EVEN IN QUANTUM. IF NO ACTION COULD HAVE BEEN TAKEN IN THE QUANTUM PROCEEDINGS, THEN HOW PENALTY WHICH IS TO BE COMPUTED ON THE BASIS OF QUANTUM ADDITION COULD BE LEVIED UPON THE ASSESSEE ? CONSIDERING THE ABOVE FACTS AND CIRCUMS TANCES, AND IN THE LIGHT OF THE ABOVE FOUR DECISIONS, WE ARE OF THE VI EW THAT PENALTY IS NOT SUSTAINABLE IN THE CASE OF THE ASSESSEE. IT IS DEL ETED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 11 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 11/01/2019