Orissa Cricket Association, Cuttack V. Assistant Commissioner of Income Tax (Exemption), Bhubaneswar

ITA 177/CTK/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5595 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 16-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Reason to believe; Documents seized; Set aside
• Section: 132; 15; 153A; 153; 158BD; 153C

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.177/CTK/2020 (नििाारण वषा / Asses s m ent Year :2001-2002) Orissa Cricket Association, Barabati Statidum, Cuttack P AN No. AAAAO 0319 F ................. Assessee Versus ACIT (Exemptions), Bhubaneswar ..................Revenue Shri S.K.Sarangi, CA and Shri Digant Das, Advocate for the assessee Shri M.K.Gautam, CIT-DR for the Revenue Date of Hearing : 20/06/2022 Date of Pronouncement : 20/06/2022 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A)-1, Bhubaneswar, dated 21.11.2019 passed in I.T. Appeal No.0442/16-17 for the assessment year 2001-2002. 2. At the outset, we found that the present appeal filed by the assessee is barred by 210 days. In this regard, the assessee has filed application for condonation of delay stating therein that due to COVID-19 pandemic and lock down, the assessee could not pursue the matter within the time. It was also submitted that the above delay is neither deliberate ITA No.177/CTK/2020 2 nor intentional and the same may kindly be condoned. Ld. CIT-DR did not have any objection to condone the delay occurred in filing the instant appeal. Accordingly, we condone the delay of 210 days in filing the present appeal and the appeal is heard finally. 3. It was submitted by the ld. AR that there was a search & seizure conducted on 28.03.2016 in the residential premises of Sri Ashirbad Behera, Secretary of the assessee. It was the submission that in the course of search one set of document marked as AB-3 was seized. Ld. AR also drew our attention to page 45 of the Paper Book, which was the copy of the ordersheet entry dated 27.09.2007, which is extracted as follows :- ITA No.177/CTK/2020 3 4. It was the submission that nothing was found in the course of search, relevant to the assessment year 2001-2002. It was further submission that in view of the decision of the coordinate bench of the Tribunal in the case of Bajrang Engineers Pvt. Ltd., in ITA No.04/CTK/2019, order dated 07.06.2022, the assessment year under consideration i.e. A.Y.2001-2002 is liable to be annulled. In this regard, ld. AR drew our attention to para 17 of the above order of the Tribunal, which reads as under :- 17. Here it would be worthwhile to read the provisions of Section 153C of the Act. The opening words of the Section 153C of the Act is, “Notwithstanding anything contained”. This clearly the Section 153C of the Act has been given its own legs to stand on. A further reading shows that, “where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to a person other than the person referred to in section 153A of the Act”. Here, the distinction is drawn insofar as Section 153A of the Act is in respect of person searched, Section 153C of the Act is in respect of transferring of the information found in the course of search of a person but relating to any other person, then that information, documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person in respect of whom the information has been found. It is then that the AO of such person in respect of whom the information has been found will proceed to do the assessment and determine the total income of such other person “for six assessment years immediately preceding assessment year relevant to the previous year in which search is conducted or requisition is made”. The distinction here is drawn in respect of Section 153A of the Act, wherein the words used as “issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years.” Thus, under section 153C of the Act it is very much available for the AO to issue notice in respect of such assessment year to which the information pertains but subject to the control being six assessment years immediately the preceding assessment year relevant to the previous year in which search was conducted or requisition was made. Thus, clearly under the provisions of Section 153C of the Act, it is not open to the AO to issue notice for all six assessment years and do any assessment just because information in respect of one assessment year, was found in the course of the search of a ITA No.177/CTK/2020 4 third party. When doing an assessment u/s.153C of the Act, the assessment would get restricted to the year to which the information has been provided by the AO of the person searched in the satisfaction note. This view of ours find support from the decision of the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society (supra) and also from the decision of Hon’ble Bombay High Court in the case of R.M. Investment (supra). In the present case, as the information provided by the AO of Shivom Minerals Pvt. Ltd., specifically relates to the assessment year 2014-2015 and has no way any relationship to the assessment year 2010-2011, the notice u/s.153C of the Act and also the assessment completed u/s.153C r.w.s.143(3) of the Act does not have any legs to stand on and consequently stands quashed. 5. Further, to support his contentions, ld. AR placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Sri Sai Cashews, reported in [2021] 131 taxmann.com 177 (Orissa) 6. In reply, ld. CIT-DR filed his written submission, which reads as under :- Additional grounds of appeal filed on 23.02.2020 i.) It has been alleged in these grounds of appeal that the AO was not right in initiating the proceedings u/s.153C in the absence of incriminating documents. At the outset, this is the third round of litigation and such ground of appeal was not raised in earlier two rounds. The Seized papers in question (pages-29, 30 and 32 of AB- 3) belong to the appellant AOP. ii.) Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in Section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess total income (disclosed and undisclosed income) of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to such other person, whereas under Section 158BD if the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed against such ITA No.177/CTK/2020 5 other person under section 158BC. From the comparison of language of Sections 153C and 158BD, it is crystal clear that the condition for recording satisfaction by the Assessing Officer of the person searched is present in both the cases. In Section 158BD, the Assessing Officer of the person searched is to be satisfied that any undisclosed income belong to any person other than the person searched, while, in the case of Section 153C, the Assessing Officer of the person searched is to be satisfied that any money, bullion, jewellery or other valuable article/thing or books of account/documents belongs or belong to a person other than the person searched. Thereafter, the subsequent procedure in both Sections 158BD and 153C is the same. The Total income as defined in section 153C shall include both the disclosed and undisclosed income. The job of the judiciary is to interpret the law and never to write it and since restricting the additions u/s 15 3A/15 3 C only in reference to incriminating material would amount to writing the law. iii.) There is no law that assessment order u/s.153C can be passed only on the basis of incriminating documents. The Hon'ble Delhi High Court in the case of SSP Aviations Ltd. vs. DCIT (346 ITR 177) held in para-15 that in view of provisions of section 153C, satisfaction that is required to be reached by A.O. having jurisdiction over searched person is that valuable article or books of account or documents seized during search belong to a person other than searched person. However, there is no requirement in section 153C(1) that Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to other person must conclusively reflect or disclose any undisclosed income. The relevant observations of Hon'ble Delhi High Court in paras 15 & 17 are reproduced as under: "15. It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in Section 153 (l) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income. 17. The judgment of this court in Saraya Industries Ltd. (306 ITR 189) was relied upon by Mr. Bajpai, in support of his contention that the seizure of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of Section I53C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The ITA No.177/CTK/2020 6 said decision does not assist the petitioner. The section 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 under Section 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 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 by Section 153A in 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 the 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 and after giving adequate opportunity of being heard to such other person. That, in sum and substance, is the position. iv.) In the case of Savesh Kumar Agarwal vs. Union of India (35 taxmann.com 85), the Hon'ble Allahabad High Court held that even if assessing authority receiving satisfaction note had not found any thing adverse against assessee on examination of account books, and further seized goods had already been released, notice under section 153C could still be issued to assessee to file return of income. Where bullion seized was released to assessee for having been validly entered in stock books, the Assessing Officer on receiving satisfaction note could still proceed under section 153A against assessee to find out source of income. The observations of the Hon'ble Allahabad High Court in para-22,23 & 24 are reproduced as under: "22. The question which now calls for consideration is whether on receipt of satisfaction note, even if the assessing authority receiving satisfaction note has already examined account books, and has not found anything adverse against the assessee, and further seized goods have already been released in favour of the assessee, he is required to issue notice under section 153C of the Act to file returns for six years. 23. The Department has taken a stand that even if the books of account were examined by the Assessing Officer of the petitioner, and the bullion having found validly entered in the ITA No.177/CTK/2020 7 stock books was released under section 132B, still the Assessing Officer can proceed under section 153A and assess the petitioner to find out the source of income. 24. Where there is power to act in a particular manner, unless it is shown that power has been exercised without jurisdiction and lacks bona fide, the statutory notice given in exercise of such powers, may not be set aside by the court under article 226 of the Constitution of India. The argument that the second assessment for the same year and of the previous years will amount to duplication and will be needless exercise of power, overlooks the fact that such power actually exists and if there is any reason to believe, namely, the satisfaction of the assessing authority to examine the source of income, the court would not interfere to close such enquiry". In view of above judicial precedents and facts, the legal grounds filed by the assessee AOP are required to be dismissed. 7. It was further his submission that the appeals in the assesse’s case have undergone three rounds. It was the submission that in none of the earlier rounds the assessee has raised the ground challenging the assessment on the ground that there was no incriminating material or seized material. It was the submission that this ground should not be permitted to be raised now. To support his arguments, ld. CIT-DR relied on the decision of Delhi Bench of the Tribunal in the case of Neetee Clothing (P.) Ltd., reported in [2010] 129 TTJ 342 (DELHI) and submitted that where the assessee had not challenged reopening of assessment before the CIT(A) and the CIT(A) had also not adjudicated upon issue of assumption of jurisdiction as issue was not before him, the assessee could neither file appeal before the Tribunal nor memorandum of cross- objection raising the issue relating to assumption of jurisdiction to reopen assessment. ITA No.177/CTK/2020 8 8. We have heard rival submissions. 9. Admittedly, the issue which has been raised by the ld. AR is squarely covered by the decision of Hon’ble Jurisdictional High Court of Orissa in the case of Sri Sai Cashews(supra) as also the decision of Hon’ble Jurisdictional High Court of Orissa in the case of Smt. Jami Nirmala, in W.P.(C) No.2857 of 2018, order dated 10.08.2021. The fact that the issue has been adjudicated by the Hon’ble Jurisdictional High Court, as also by the coordinate Bench of the Tribunal in the case of Bajrang Engineers Pvt. Ltd. (supra), clearly shows that the issue is purely an issue which gives rise to substantial questions of law and a challenge to the grounds of law can be raised at any point of time as has been held by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., reported in [1998] 229 ITR 383 (SC). 10. A perusal of the assessment order in the present case, clearly shows that the AO has not used any material found in the course of search for the purpose of making the assessment for the assessment year 2001-2002. This being so, in respectful obedience to the principle laid down by the Hon’ble Jurisdictional High Court in the case of Sri Sai Cashews (supra) and in the case of Smt. Jami Nirmala (supra), the assessment order is liable to be quashed and we do so. This view of ours also finds support from obiter dicta by the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, reported in [2017] 84 taxmann.com 290 (SC). ITA No.177/CTK/2020 9 11. In the result, appeal filed by the assessee is allowed. Order dictated and pronounced in the open court on 20/06/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 20/06/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Ori ssa Cr icke t Ass ociation, Barabati Sta tidum , Cuttack 2. प्रत्यथी / The Respondent- ACIT (E xem ption s), Bhubanes war 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पिभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//