DY. C.I.T. CENTRAL CIR.-2(2), Nagpur V. M/S MARYTIME SUPPLIERS P. LTD., Nagpur

ITA 177/NAG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1284 (ITAT-NAGPUR)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: SACHIN LUTHRA
• Keywords: Business income; Search and seizure; Additional evidence; Documents seized
• Section: 143(3); 153A; 27; 132

Judgement Text

1 ITA NO. 177/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 177/NAG/2016 ASSESSMENT YEAR : 2006 - 07. DY. COMMISSIONER OF INCOME - TAX, M/S MARYTIME SUPPLIERS PVT. LTD., CENTRAL CIRCLE - 2(2), NAGPUR. VS. NAGPUR. PAN AA BCM7271M. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SHRI SACHIN LUTHRA. DATE OF HEARING : 2 5 - 11 - 2016 DATE OF PRONOUNCEMENT : 19 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA , A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - 3 , NAGPUR DATED 29 - 01 - 2016 AND PERTAINS TO ASSESSMENT YEAR 200 6 - 07 . THE GROUND S OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE NOTICE AND ACTION U/S 153 A OF THE I . T. ACT WAS BAD IN LAW , EVEN THOUGH THE ASSESSING OFFICER HAD RECORDED HIS SATISFACTION THAT THE DOCUMENTS SEIZED FROM VARIOUS PREMISES. BELONGED TO THE ASSESSEE, WHICH IS THE ON LY PRECONDITION FOR . . ISSUE OF NOTICE UNDER SECTION 153 A OF THE INCOME - TAX ACT, 1961? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE ADDITIONAL GROUND AND CANCELLING THE ASSESSMENT WHEREAS THE DELHI HIGH COURT IN THE CASE OF CIT VS . ANIL KUMAR BHATIA REPORTED IN 352 ITR 493 AND THE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. VS. DCIT, HAVE AFFIRMED THE SCOPE OF THE ASSESSING OFFICER TO ASSESS THE TOTAL INCOME IN THE P ROCEEDINGS U/S 153 A OF THE INCOME TAX ACT . ALSO, THE PUNE ITAT HAS HELD IN THE CASE OF KRANTI REALTORS PVT LTD. (ITA NO . 2021 TO 2023/PN/2013 . DATED 10.11 . 2015), THAT THE BOMBAY HIGH COURT DECISION OF CIT VS . CONTINENTAL WAREHOUSING CORPORATION IS ON 'COM PLETED BASIS' AND WHERE NO ASSESSMENT HAS BEEN COMPLETED U/S. 143(3), THE AO IS COMPETENT TO INVOKE THE JURISDICTION U/S. 153A1153C OF THE ACT AND COMPLETE THE A SSESSMENT FOLLOWING THE PROCEDURE LAID DOWN U/S . 143(3) OF THE ACT, EVEN IN THE ABSENCE OF 2 ITA NO. 177/NAG/2016. INCRIMINATING DOCUMENTS FOUND . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE AS S ESSING OFFICER ' IS REQUIRED TO ASSESS OR RE - ASSESS THE TOTAL INCOME OF 6 ASSESSMENT YEARS AS PER PROVISIONS OF SEC TION 153A(I)(B) OF THE I . T . ACT . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEA N ED CIT (A) HAS ERRED IN ALLOWING ADDITIONAL EVIDENCE UNDER RULE 46A WHEREAS THE ASSESSEE'S CASE IS NOT COVERED BY THE EXCEPTIONS PROVIDED UNDER RULE 46A OF THE I T . RULES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN DELETING THE ADDITION MADE BY TH E ASSESSING OFFICER OF RS.66, 12,979/ - BEING UNEXPLAINED BUSINESS INCOME . 2. IN THIS CASE THE ASSESSEE HAS FILED THE RETURN OF INCOME U/S 139(1) ON 27 - 11 - 2006 DECLARING TOTAL INCOME AT RS. NIL. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT ON 16 - 08 - 2007. SUBSEQUENTLY SEARCH AND SEIZURE OPERATION U/S 132 OF THE I.T. ACT WAS CA RRIED OUT AND NOTICE U/S 153A WAS ISSUED ON 03 - 08 - 2012. IN THIS ASSESSMENT THE AO MADE AN ADDITION OF RS.66,12,12,979/ - ON THE PLEA THAT LONG TERM CAPITAL GAIN OF RS.66,12,979/ - WHICH HAS BEEN CLAIMED AS EXEMPT U/S 10(38) IS NOT SUPPORTED BY RELEVANT WORK ING. 3. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE TOOK ADDITIONAL GROUND CHALLENGING THE JURISDICTION OF NOTICE U/S 153A, ALLEGING THAT THE SAME IS VITIATED AS THE ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. LEARNED CIT (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY PLACING RELIANCE UPON SEVERAL CASE LAWS. REFERRING TO HONBLE JURISDICTIONAL HIGH COURT DECISION IN CONTINENTAL WAREHOUSING CORPORATION, LEARNED CIT(APPEALS) OBSERVED AS UNDER : IN CONTINENTAL WAREHOUSING CORPORATION (NAVA SHEVA) LTD. (SUPRA), THE BOMBAY HIGH COURT ANSWERED THE QUESTION FRAMED BY IT AS UNDER : A. IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; 3 ITA NO. 177/NAG/2016. B. IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. THE HONBLE HIGH COURT REFERR ED TO THE DECISIONS OF HONBLE NAGPUR BENCH OF BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRODUCTS LTD. AND OF SPECIAL BENCH OF ITAT, MUMBAI IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. LEARNED CIT(APPEALS) CONCLUDED AS UNDER : FROM THE AOS REPORT, I T IS SEEN THAT THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND THE ASSESSMENT WAS NOT ABATED. THE TIME FOR ISSUE OF NOTICE U/S 143(2) HAD EXPIRED AS ON THE DATE OF SEARCH AND THEREFORE THE ASSESSMENT HAD BECOME FINAL IN VIEW OF ITAT, MUMBAI DECISIONS REFE RRED ABOVE IN CASE OF GURINDER SINGH BAWA AND THAT OF ATUL BAROT. CONSIDERING THE DECISIONS DISCUSSED ABOVE AND RELYING UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING (BOMBAY HIGH COURT) (APPEAL NO. 5 23 OF 2013) & CIT VS. MURLI AGRO PRODUCTS LTD. (NAGPUR BENCH OF BOMBAY HIGH COURT) (APPEAL NO. 36 OF 2009), THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. THE AO HAS MADE ONLY ONE ADDITION IN THE ASSESSMENT ORDER TREATING THE LONG TERM CAPITAL GAIN OF RS.66,12,980/ - AS UNEXPLAINED BUSINESS INCOME. THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REFERENCE TO ANY MATERIAL SEIZED DURING SEARCH. 4. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPN. (SUPRA). WE FURTHER FIND THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GURINDER SINGH BAWA IN INCOME TAX APPEAL NO. 1839 OF 2013 VIDE ORDER DATED 05 - 10 - 2015 IN A CASE WHERE RETURN OF INCOME FILED BY THE ASSESSEE WAS 4 ITA NO. 177/NAG/2016. PROCESSED U/S 143(1) HAS ALSO UP HELD THE DECISION OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA). HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 7. SINCE WE HAVE ALREADY DIS MISSED THE APPEAL ON INVALID JURISDICTION, ADJUDICATION O N MERITS OF ISSUES RAISED IS ONLY OF ACADEMIC INTEREST. HENCE WE ARE NOT DEALING WITH THE ADDITION ON MERITS 8 . IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 19 TH DEC. , 2016. COPY FORWARDED TO : 1. M/S MARYTIME SUPPLIERS PVT. LTD., 216, WARDHAMAN NAGAR, NAGPUR. 2. D.C.I.T., CENTRAL CIRCLE - 2(2), NAGPUR. 3. C.I.T. - (CENTRAL) , NAGPUR. 4. CIT(APPEALS) - 3 , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR.