DEVANG GANDHI, NAVI MUMBAI V. ACIT, CENTRAL CIRCLE-45, MUMBAI

ITA 2031/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5555 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ARJU GARODIA
• Assessee Lawyers: RISHABH S HAH
• Keywords: Set aside
• Section: 143(3); 153A; 143(1); 201; 143(2); 68; 132; 15

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 2031/MUM/2018 (ASSESSMENT YEAR 2007 - 08) I.T.A. NO. 2032 /MUM/ 201 8 (ASSESSMENT YEAR 20 08 - 09 ) I.T.A. NO. 2033/MUM/2018 (ASSESSMENT YEAR 2006 - 07) SHRI D EVANG GANDHI A/303, BALAJI GARDENS SECTOR - 11, KOPARKHAIRANE NAVI MUMBAI - 400 709. PAN : ABHPG0909N V S . ACIT CC - 45 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 2035/MUM/2018 (ASSESSMENT YEAR 2006 - 07) I.T.A. NO. 2036/M UM/2018 (ASSESSMENT YEAR 2007 - 08) SMT. POOJA GANDHI A/303, BALAJI GARDENS SECTOR - 11, KOPARKHAIRANE NAVI MUMBAI - 400 709. PAN : AABPA1069Q V S . ACIT CC - 45 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RISHABH SH AH DEPARTMENT BY MRS. ARJU GARODIA DATE OF HEARING 08 . 11 . 201 8 DATE OF PRONOUNCEMENT 08 . 11 . 201 8 O R D E R BOTH THE ASSESSEES HAVE FILED THESE APPEALS CHALLENGING THE ORDERS PASSED BY THE LEARNED CIT(A) - 48, MUMBAI FOR THE YEARS MENTIONED IN T HE CAPTION AGAINST THE NAME OF EACH OF THE ASSESSEES . SINCE THE ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATURE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. BOTH THE ASSESSEES ARE AGGRIEVED BY THE DECISION OF LD CIT(A) IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE AO COULD NOT HAVE MADE THE SHRI DEVANG GANDHI & SMT. POOJA GANDHI 2 ADDITIONS IN THE ASSESSMENT YEARS UNDER CONSIDERATION IN THE ABSENCE OF ANY INCRIMINATING MATERIAL SUPPORTING THE ADDITION. 3 . I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEES HEREIN WERE SUBJECTED TO SEARCH OPERATIONS U/S. 132 OF THE ACT ON 10.2.2012. CONSEQUENT THERETO, ASSESSMENT S OF THE YEARS UNDER CONSIDERATION WERE COMPLETED U/S. 153A READ WITH SECTION 143(3) OF TH E ACT. IN ALL THESE APPEALS, THE ASSESSING OFFICER HAS MADE ADDITION U/S. 68 OF THE ACT IN RESPECT OF CERTAIN CASH CREDIT S FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 4 . BEFORE THE LEARNED CIT(A), THE ASSESSEE CONTENDED THAT ASSESSMENT YEARS UNDER CO NSIDERATION FALL UNDER THE CATEGORY OF UNABATED ASSESSMENT S OR COMPLETED ASSESSMENT S. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SEVA) LTD (3 74 ITR 645)(BOM), IT WAS CONTENDED THAT THE ADDITION COULD BE MADE BY THE ASSESSING OFFICER IN UNABATED ASSESSMENT YEARS ONLY ON THE BASIS OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. IT WAS SUBMITT ED THAT THE REVENUE DID NOT FIND ANY INCR IMINATING MATERIAL TO DOUBT THE GENUINENESS OF THE CASH CREDITS ALREADY RECORDED IN THE BOOKS OF ACCOUNTS PRIOR TO THE DATE OF SEARCH. HOWEVER, THE ASSESSING OFFICER HAS MADE ADDITION S U/S. 68 OF THE ACT IN ALL THE YEARS UNDER CONSIDERATION IN THE HANDS O F BOTH THE ASSESSEES IN RESPECT OF CASH CREDITS FOUND IN THE BOOKS OF ACCOUNT S MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE . ACCORDINGLY, IT WAS CONTENDED THAT IMPUGNED ADDITION S MADE BY THE ASSESSING OFFICER IN ALL THE YEARS UNDER CONSIDERATION IN TH E HANDS OF BOTH THE ASSESSEES ARE LIABLE TO BE DELETED , AS THE REVENUE DID NOT UNEARTH ANY INCRIMINATING MATERIAL TO SUPPORT THE ADDITION . 5 . THE LEARNED CIT(A), HOWEVER, TOOK THE VIEW THAT DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA) DID NOT CONSIDER DIFFERENCE BETWEEN THE PROCESSING OF RETURNS U/S. 143(1) OF THE ACT AND THE C OMPLET ION OF ASSESSMENTS U/S. 143(3) SHRI DEVANG GANDHI & SMT. POOJA GANDHI 3 OF THE ACT. THE LEARNED CIT(A) TOOK THE SUPPORT OF THE DECISION RENDERED BY HON'B LE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (161 TAXMAN 316), WHEREIN IT WAS HELD THAT INTIMATION GIVEN U/S. 143( 1 )(A) IS NOT AN ASSESSMENT AT ALL . THE LD CIT(A) TOOK THE VIEW THAT THERE WAS NO OPPORTUNITY FOR THE ASSES SING OFFICER TO EXAMINE BOOKS OF ACCOUNT IN RESPECT OF YEARS WHERE INTIMATION U/S 143(1) WAS GIVEN. ACCORDINGLY THE LD CIT(A) TOOK THE VIEW THAT THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA) S HALL APPLY ONLY TO THE ASSESSMENTS COMPLETED U/S. 143(3) OF TH E ACT BEFORE THE DATE OF SEARCH . ACCORDINGLY THE LD CIT(A) TOOK THE VIEW THAT THE ASSESSING OFFICER HAD ALL POWERS TO MAKE ASSESSMENT AFRESH U/S. 143(3) READ WITH SECTION 153A OF THE ACT , WHE N THE ASSESSMENT WAS NOT MADE EARLIER U/S 143(3) OF THE ACT. IN THE YEARS UNDER CONSIDERATION , THE AO DID NOT COMPLETE THE ASSESSMENT S U/S 143(3) OF THE ACT. ACCORDINGLY, THE LEARNED CIT(A) HELD THAT THE AO WAS HAVING POWER TO EXAMINE THE BOOKS OF ACCOU NTS IN THE PROCEEDINGS COMPLETED U/S 153A OF THE ACT AND ACCORDINGLY REJECTED THE LEGAL GROUND URGED BY BOTH THE ASSESSEES. BOTH THE ASSESSEES ARE AGGRIEVED BY THE DECISION RENDERED BY THE LD CIT(A) ON THE LEGAL ISSUE CONTESTED BY THEM. 6. I HEARD TH E PARTIES AND PERUSED THE RECORD. B EFORE LEARNED CIT(A), THE ASSESSEE RAISED A LEGAL GROUND THAT THE ADDITIONS COULD BE MADE IN THE CASE OF UNABATED ASSESSMENTS OR CONCLUDED ASSESSMENTS ONLY ON THE BASIS OF SEIZED MATERIALS. FOR APPRECIATING THE CONTENT IONS OF THE ASSESSEE, WE FEEL IT PERTINENT TO EXTRACT BELOW T HE PROVISIONS OF SE C. 153A OF THE ACT : - ASSESSMENT IN CASE OF SEARCH OR REQUISITION. 153A (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 15 1 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) 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 SHRI DEVANG GANDHI & SMT. POOJA GANDHI 4 OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN TH E PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS T HE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPE CT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB - SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE : PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATE LY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB - SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OT HER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1), SHALL STAND REVIVED WITH EFFECT F ROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER. A S PER THE PROVISIONS OF SEC. 153A OF THE ACT, THE ASSESSING OFFICER IS REQUIRED TO ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIAT ELY PRECEDING THE YEAR IN WHICH THE SEARCH WAS INITIATED. AS PER THE SECOND PROVISO TO SEC. 153A(1) THE ASSESSMENT OR REASSESSMENT, IF ANY, PERTAINING TO THE SIX ASSESSMENT YEARS PENDING AS ON THE DATE OF INITIATION OF SEARCH SHALL ABATE . SHRI DEVANG GANDHI & SMT. POOJA GANDHI 5 7. A CAREFU L PERUSAL OF THE ABOVE SAID PROVISIONS WOULD SHOW THAT, WHAT IS REQUIRED TO BE SEEN IS WHETHER ANY ASSESSMENT OR REASSESSMENT PERTAINING TO SIX ASSESSMENT YEARS MENTIONED IN SEC. 153A(1) IS PENDING ON THE DATE OF INITIATION OF SEARCH OR NOT. IF ASSESSMENT OF ANY OF THE ASSESSMENT YEAR IS NOT PENDING, THEN THE SAME SHALL NOT ABATE. IF THE ASSESSMENT OF ANY OF THE AY IS PENDING, THEN THE SAME SHALL ABATE. HENCE THE PENDENCY OF THE ASSESSMENT PROCEEDINGS IS THE RELEVANT CRITERIA. I HAVE NOTICED EARLIER THA T THE LD CIT(A) HAS EXPRESSED THE VIEW THAT THE TEST TO BE APPLIED IS WHETHER THE EARLIER ASSESSMENT WAS COMPLETED U/S 143(3) OR NOT. A CAREFUL READING OF THE PROVISIONS OF SEC.153A WOULD SHOW THAT SEC. 153A DOES NOT CONTAIN ANY PROVISION TO SUPPORT THE V IEW TAKEN BY LD CIT(A). 8. SEC. 153A MAKES IT CLEAR THAT THE ASSESSMENTS WHICH ARE NOT PENDING ON THE DATE OF INITIATION OF SEARCH WOULD NOT ABATE, I.E., THOSE ASSESSMENTS WI LL REMAIN INTACT AND THEY WILL NOT GET RE - OPENED BY VIRTUE OF THE PROVISIONS OF SEC. 153A OF THE ACT. AT THIS STAGE, A QUESTION THAT ARISES IS AS TO WHEN AND HOW AN ASSESSMENT SHOULD BE CONSIDERED AS PENDING AS ON THE DATE OF INITIATION OF SEARCH. IN THIS REGARD , I MAY REFER TO THE DECISION RENDERED BY THE MUMBAI BENCH OF TRIBUNA L IN THE CASE OF GURINDER SINGH BAWA VS. DCIT (2014)(150 ITD 40), WHEREIN THE TRIBUNAL HAS OBSERVED THAT AFTER THE EXPIRY OF TIME LIMIT PRESCRIBED FOR ISSUING NOTICE U/S 143(2) OF THE ACT, THE ASSESSMENT CANNOT BE CONSIDERED TO BE PENDING IF NO NOTICE UNDE R THAT SECTION WAS ISSUED. UNDER THE SCHEME OF THE ACT, AFTER FILING OF RETURN OF INCOME, THE ASSESSING OFFICER CAN ASSUME JURISDICTION TO ASSESS THE INCOME BY ISSUING NOTICE U/S 143(2) OF THE ACT. THE RETURN OF INCOME IS ACCEPTED AS IT IS, IF THE AO DI D NOT INTEND TO SCRUTINIZE THE SAID RETURN OF INCOME. IN THAT CASE, NO NOTICE IS ISSUED U/S 143(2) OF THE ACT. IT IS PERTINENT TO NOTE THAT THE ACT PRESCRIBES A TIME LIMIT FOR ISSUING NOTICE U/S 143(2) OF THE ACT AND IT IS WELL SETTLED PROPOSITION THAT TH E AO CANNOT ISSUE SUCH NOTICE AFTER THE EXPIRY OF PRESCRIBED TIME LIMIT. HENCE, THE CO - ORDINATE BENCH HAS HELD IN THE CASE OF GURINDER SINGH BAWA (SUPRA) THAT THE ASSESSMENT OF A PARTICULAR YEAR WOULD NOT BE CONSIDERED TO BE PENDING SHRI DEVANG GANDHI & SMT. POOJA GANDHI 6 AS ON THE DATE OF INIT IATION OF SEARCH, IF THE PERIOD FOR ISSUING NOTICE U/S 143(2) OF THE ACT HAD EXPIRED BY THE TIME THE SEARCH IS INITIATED U/S 132 OF THE ACT AND NO NOTICE WAS ISSUED. IN SUCH KIND OF CASES, THE ASSESSMENT SHALL BE CONSIDERED TO HAVE BECOME FINAL BY OPERATIO N OF LAW AFTER THE EXPIRY OF TIME LIMIT PRESCRIBED U/S 143(2) OF THE ACT, IF THE AO DID NOT ISSUE NOTICE U/S 143(2) OF THE ACT. IN THE CASES WHERE THE ASSESSMENTS WERE NOT CONSIDERED TO BE PENDING, THE QUESTION OF ABATEMENT OF THE SAME DOES NOT ARISE AT A LL, MEANING THEREBY THE SAME WOULD FALL IN THE CATEGORY OF UNABATED ASSESSMENTS. HENCE, IN MY OPINION, THE VIEW TAKEN BY LD CIT(A) THAT AVAILABILITY OF ORDER U/S 143(3) IN ORDER TO MAKE THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF C ONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEWA) LTD (SUPRA) IS NOT IN ACCORDANCE WITH THE SCHEME OF THE ACT. 9. IN THIS REGARD, IT IS ALSO PERTINENT TO REFER TO THE FOLLOWING OBSERVATIONS MADE BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOG ISTICS LTD (SUPRA): - 57 (F) IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (106 ITR 57)(SC), IT HAS BEEN MENTIONED IN THE LAST PARAGRAPH OF THE JUDGMENT THAT THE COURT HAS TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. O UR DECISION IS IN CONSONANCE WITH THIS OBSERVATION. THE DECISION RENDERED BY THE SPECIAL BENCH THAT THE ASSESSING OFFICER CAN MAKE ADDITIONS IN THE CASE OF CONCLUDED ASSESSMENTS ON THE BASIS OF INCRIMINATING MATERIALS IS ALSO BASED UPON PRINCIPLE LA I D BY THE HONBLE S UPREME COURT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD (SUPRA). 10. IN THE INSTANT CASES, THERE IS NO DISPUTE THAT THE ASSESSMENT YEARS UNDER CONSIDERATION ARE UNABATED ASSESSMENT YEARS AND HENCE THE AO COULD MAKE ANY ADDITION T O THE TOTAL INCOME ONLY ON THE BASIS OF INCRIMINATING MATERIALS. HOWEVER, THE ASSESSING OFFICER HAS ADDED CASH CREDITS ALREADY RECORDED IN THE SHRI DEVANG GANDHI & SMT. POOJA GANDHI 7 BOOKS OF ACCOUNTS AND NO INCRIMINATING MATERIAL RELATING TO THOSE CASH CREDITS WAS FOUND DURING THE COURSE OF SE ARCH. HENCE, AS PER THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (NHAVA SEWA) LTD (SUPRA), THE AO COULD NOT HAVE MADE THE IMPUGNED ADDITION S. ACCORDINGLY, I SET ASIDE THE ORDERS PASSED BY LD CIT(A) IN ALL THE YEARS UNDER CONSIDERATION IN THE HANDS OF BOTH THE ASSESSEES AND DIRECT THE AO TO DELETE THE ADDITIONS MADE BY HIM IN ALL THE YEARS UNDER CONSIDERATION. 11. SINCE I HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THERE IS NO NECESSI TY TO ADDRESS THE GROUNDS URGED ON MERITS. 1 2 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 08 . 11 . 201 8 . SD/ - (B.R.BASKARAN) ACCOUNTANT MEMB ER MUMBAI ; DATED : 08 / 11/ 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI