DCIT CC 38, MUMBAI V. AZAM PLASTICS, THANE

ITA 1829/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75614 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2004-2005
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Keywords: Search and seizure
• Section: 143(3); 142(1); 153A; 80IB; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.1825/M/2011 ( AY: 2008 - 2009 ) ./I.T.A. NO.1826 /M/2011 ( AY: 2007 - 2008 ) ./I.T.A. NO.1827/M/2011 ( AY: 2006 - 2007 ) ./I.T.A. NO.1828/M/2011 ( AY: 2005 - 2006 ) ./I.T.A. NO.1829/M/2011 ( AY: 2004 - 2005 ) ./I.T.A. NO.1830/M/2011 ( AY: 2003 - 2004 ) ./I.T.A. NO.1831/M/2011 ( AY: 2002 - 2003 ) DCIT - CC 38, R.NO. 32(1), GROUND FLOOR, AAYAKAR BHAVAN, MUMBAI 20. / VS. M/S. AZAM PLASTICS, SHETH INDUSTRIAL ESTATE, NEAR ONIDA NAVGHAR, VASAI (E), THANE 401 210. ./ PAN : AADFA 1579 R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P.K. SHUKLA, CIT - DR / RESPONDENT BY : NONE / DATE OF HEARING :04.2.2014 / DATE OF PRONOUNCEMENT :19 .2.2014 / O R D E R PER BENCH: THERE ARE 7 APPEALS UNDER CONSIDERATION. ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE COMMON ORDER OF THE CIT (A) - 41, MUMBAI DATED 3.12.2010 FOR THE ASSESSMENT YEARS 2002 - 03 TO 2008 - 09. SINCE, THE ISSUES RAISED IN ALL THE SEVEN APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE CLUBBED, HEARD C OMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS. 2 2. SINCE, THE GROUNDS RAISED IN ALL THE SEVEN APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF REFERENCE, THE GROUNDS RAISED IN APPEAL I TA NO.1825/M/2011 FOR THE AY 2008 - 2009 ARE REPRODUCED HERE UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN QUASHING THE ASSESSMENT ORDER PASSED UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 BY THE ASSESSING OFFICER WHEN THE ASSESSEE HAS FILED RETURNS OF INCOME IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT AND HAS NOT RAISED THE ISSUE OF JURISDICTION BEFORE THE AO AND HENCE, THE PROVISIONS OF SECTION 1 24(3) ARE APPLICABLE AND ASSESSEE CANNOT RAISE THIS ISSUE BEFORE THE CIT (A) FOR THE FIRST TIME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS NOT RIGHT IN HOLDING THAT MAKING OF ESTIMATED DISALLOWANCE OF EXPENSES ON THE GROUND THAT BOOKS OF ACCOUNT WAS NOT PRODUCED, CANNOT BE SUSTAINED. HE HAS DONE SO WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND BILLS / VOUCHERS ETC., IN SUPPORT OF THE INCOME RETURNED BY THEM. 3. BRIEFLY STATED REL EVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE JOB WORK IN MAKING PLASTIC ARTICLES. THERE WAS A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT ON THE BUSINESS AND RESIDENTIAL PREMISES OF SHRI AZAM KHAN AND HIS ASSOCIATES / BUSINESS CONCERNS . PURSUANT TO SEARCH ACTION NOTICE U/S 142(1) WAS ISSUED AND IN RESPONSE, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL. DURING THE ASSESSMENT PROCEEDINGS, AO CONSIDERED THE TOTAL INCOME OF THE ASSESSEE AT RS. 24,141/ - , WH ICH WAS BEFORE SET OFF OF BROUGHT FORWARD LOSS. SUBSEQUENTLY , AO COMPLETED THE ASSESSMENT U/S 143 (3) R.W.S 153A OF THE ACT AND DETERMINED THE TOTAL INCOME AT RS. 9,53,041/ - AFTER MAKING CERTAIN ADDITIONS / DISALLOWANCES. AGGRIEVED WITH THE DECISION OF TH E AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CONTENDED BEFORE THE CIT (A) THAT THE AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S 153A OF THE ACT WITH OUT FOLLOWING THE PROCEDU RE PRESCRIBED UNDER SECTION 153 A OF THE ACT AND THEREFORE, THE ASSESSMENT ORDER PASSED IS NULL AND VOID BEING WITHOUT JURISDICTION. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) DISCUSSED THE ISSUE AT LENGTH VIDE PARA 1.6 TO 1.9 OF HIS ORDER AND ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEALS BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR HEA VILY RELIED ON THE ORDER OF THE AO AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 3 6. ON THE OTHER HAND, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. 7. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS OF THE REVENUE AUTHO RITIES AS WELL AS THE MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARA 1.6 TO 1.9 IN PARTICULAR, WE FIND THAT THE SAME ARE RELEVANT AND THEY ARE REPRODUCED AS UNDER: 1.6. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER AND REMAND REPORT OF THE AO. IT IS NOTICED THAT THE AO HAS ADMITTED THE FACT THAT NO WARRANT OF AUTHORIZATION WAS ISSUED AND SERVED UPON THE APPELLANT AND NO PAPER RELATING TO THIS FIRM WAS SEIZED FROM ANY OTHER GROUP CONCERN. FURTHER, THE AO HAS STATED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAVE NOT TAKEN ANY OBJECTION TO THE ISSUE OF NOTICE U/S 153A OF THE ACT. THUS, THE OBJECTION APPEARS TO HAVE TAKEN FOR THE FIRST TIME IN THE APP ELLATE PROCEEDINGS AND THE OBJECTION OF THE ASSESSEE MAY BE REJECTED IN VIEW OF THE PROVISIONS OF SECTION 292BB. I HAVE PERUSED THE PROVISIONS OF SECTION 292 BB AND NOTICED THAT THIS SECTION WAS INSERTED IN THE ACT BY FINANCE ACT 2008 W.E.F 1.4.2008 RELEVA NT FOR AY 2009 - 10. MOREOVER, FROM THE PLAIN READING OF THIS SECTION, IT IS CLEAR THAT THIS SECTION IS INSERTED TO TAKE CARE OF NOTICE DEEMED TO BE VALID IN CERTAIN CIRCUMSTANCES. ANY NOTICE UNDER ANY PROVISION OF THIS ACT WHICH IS REQUIRED TO BE SERVED U PON HIM HAS BEEN DULY SERVED UPON HIM ANY TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND THE ASESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT. THE WORDING OF THIS SECTION IS CLEAR THAT ANY NOTICE WHI CH IS REQUIRED TO BE SERVED UPON ASSESSEE HE CANNOT BE RAISED OBJECTION THAT NOTICE WAS NOT SERVED IS NOT HELPFUL TO THE AO. IN THE PRESENT CASE, NO WARRANT OF AUTHORIZATION WAS ISSUED AND NO PAPER RELATED TO THIS FIRM WAS FOUND AND SEIZED IN THE SEARCH A ND SEIZURE OPERATION OF OTHER GROUP CASES. THE AO IS EMPOWERED BY SECTION 153A TO ISSUE NOTICE UNDER THIS SECTION ONLY IN CASES WHERE A WARRANT OF AUTHORIZATION WAS ISSUED OR ANY REQUISITION HAS BEEN MADE OR PAPER RELATING TO A PERSON WERE FOUND AND SEIZE D IN ANOTHER SEARCH. BUT NO CONDITION IS SATISFIED IN THE PRESENT CASE. KEEPING IN VIEW ALL THESE FACS AND CIRCUMSTANCES, IT IS HELD THT THE AO HAS ISSUED NOTICE U/S 153A WITHOUT ANY APPLICATION OF MIND, AS NO WARRANT OF AUTHORIZATION WAS ISSUED IN THIS CASE. THUS, THE NOTICE ISSUED UNDER SECTION 153A WITHOUT JURISDICTION AND THE AO HAS CROSSED ALL LIMITS TO SCRUTINIZE SIX YEARS OF THE ASSESSEE WITHOUT ANY JURISDICTION. THE DECISION OF HONBLE DELHI TRIBUNAL SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PR ODUCTS (P) LTD. VS. DCIT 28 SOT 292 IS DIRECTLY APPLICABLE TO THE FACTS OF THIS CASE WHEREIN IT IS HELD - COMING TO THE PROVISIONS CONTAINED SECTION 292BB, IT IS POINTED OUT THAT THE SAME CAME INTO FORCE W.E.F 1.4.2008. IF IT IS CONSIDERED TO BE A PROCEDU RAL SECTION, ITS PROVISION WILL APPLY WHERE THE HEARING WAS CONDUCTED ON OR AFTER 1.4.2008, IN WHICH THE ASSESSEE PARTICIPATED. IF IT IS CONSIDERED TO BE A SUBSTANTIVE PROVISION, IT WILL APPLY TO THE PROCEEDINGS OF THE ASSESSMENT YEAR 2008 - 2009 AND SUBSEQ UENT YEARS AND NOT TO ANY EARLIER YEAR. THEREFORE, THIS PROVISION DOES NOT ADVANCE THE CASE OF THE REVENUE. HENCE, WE QUASH THE ASSESSMENT ORDER ON THIS GROUND. CONSEQUENTLY GROUND NOS. 1 AND 2 TAKEN BY THE ASSESSEE ARE ALLOWED. 1.7. KEEPING IN VIEW TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE NOTICE U/S 153A WAS WITHOUT JURISDICTION. THE PROVISIONS OF SECTION 292BB ARE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION BECAUSE IT WAS INSERTED W.E.F 1.4.2008 RELEVANT FOR AY 2009 - 2010 A ND MOREOVER, ARE ALSO NOT APPLICABLE TO THE FACTS OF THIS CASE BECAUSE IN THIS CASE THE NOTICE WAS ISSUED WITHOUT JURISDICTION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, ALL THE ASSESSMENT ORDERS PASSED FOR THE AYS 2002 - 03 TO 2008 - 2009 ARE QUASHED. THUS, THE GROUND OF APPEAL IS ALLOWED. 1.8. SO FAR AS THE MERIT OF THIS CASE IS CONCERNED, THE AO HAD DISALLOWED THE DEDUCTION CLAIMED BY THE APPELLANT U/S 80IB ONLY ON THE FLIMSY GROUNDS THAT BOOKS OF ACCOUNTS WERE NOT PRODUCED FOR AY 2002 - 2003. HOWEVER, IT I S PERTINENT TO NOTE THAT 4 DEDUCTION FOR THE LAST 4 YEARS WAS ALREADY ALLOWED TO THE APPELLANT, THEREFORE, ONLY ON FLIMSY GROUND IT CANNOT BE DISALLOWED. HENCE, ON MERITS ALSO THE GROUNDS OF APPEALS ARE ALLOWED. 1.9. IN ALL OTHER ASSESSMENT ORDERS, THE AO HAD MADE DISALLOWANCE ON THE SAME GROUND THAT BOOKS OF ACCOUNTS WERE NOT PRODUCED, HENCE, MADE ESTIMATED DISALLOWANCES OF EXPENSES CLAIMED. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, IT IS HELD THAT EVEN ON MERITS NO ADDITION IS SUSTAINABLE, HENCE, ALL THE GROUNDS OF APPEAL ARE ALLOWED. 8. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE DECISION OF THE CIT (A) IS FAIR AND REASONABLE AND HE HAS RIGHTLY ADJUDICATED THE ISSUE WHILE ALLOWING THE APPEAL OF THE ASSESSEE . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . 10. REGARDING THE APPEALS FOR THE AYS 2002 - 2003 TO 2007 - 2008, SINCE THE GROUNDS RAISED IN ALL THESE ASSESSMENT YEARS ARE IDENTICAL TO THAT OF THE AY 2008 - 2009 , WHICH IS ADJUDICATED BY US IN THE ABOVE PARAGRAPHS OF THIS ORDER, THE DECISION TAKEN BY US IN THE SAID APPEAL ITA NO.1825/M/2 011 APPLIES TO ALL THESE APPEALS ALSO. THEREFORE, ALL THE GROUNDS RAISED BY THE REVENUE IN THE REMAINING 6 APPEALS ARE DISMISSED. 11. IN THE RESULT, ALL THE 7 APPEALS FILED BY THE REVENUE ARE DISMISSED . ORDER PRONO UNCED IN THE OPEN COURT ON 1 9 T H FEBRUARY, 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 19 .2 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 5 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI