ACIT Central Circle 3(3), CHENNAI V. Mailam Subramaniya Swamy Educational Trust, Villupuram

ITA 2087/CHNY/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5774 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 04-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDI
• Keywords: Depreciation; Search and seizure; Documents seized; Set aside
• Section: 143(3); 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ! BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NOS. 2085, 2086, 2087 & 2088/CHNY/2018 / ASSESSMENT YEARS: 2009-10, 2010-11, 2011-12 & 2012 - 13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -3(3), CHENNAI 600 034. VS. M/S. MAILAM SUBRAMANIYA SWAMY EDUCATIONAL TRUST, NO. 54, MEENATCHI NAGAR, POONTHOTAM, VILLUPURAM 605 602. [PAN: AAATM 3311L] ( / APPELLANT) ( '#% /RESPONDENT ) REVENUE BY : SHRI. SAILENDRA MAMIDI, CIT ASSESSEE BY : NONE - /DATE OF HEARING : 12.11.2018 - /DATE OF PRONOUNCEMENT : 06.12.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED ALL THESE APPEALS AGAINST THE OR DERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-19 (INCHARGE), CHENNAI IN ITA NOS. 370, 113 TO 115/2017-18 DATED 02.04.2018 FOR A SSESSMENT YEARS 2009-10 TO 2012-13, RESPECTIVELY. :-2-: ITA NOS.2085 TO 2088/CHNY/2018 2. M/S. MAILAM SUBRAMANIYA SWAMY EDUCATIONAL TRUST, THE ASSESSEE, IS ENGAGED IN THE FIELD OF IMPARTING ENGI NEERING EDUCATION AND PART OF SHRI MANAKULA VINAYAGAR EDUCATION TRUS T, PUDUCHERRY. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE C ASE OF SHRI MANAKULA VINAYAGAR EDUCATION TRUST ON 17.07.2014. THEREAFTER, THE ASSESSING OFFICER HAS FRAMED ASSESSMENTS U/S. 143(3 ) R.W. 153A FOR ASSESSMENT YEARS 2009-10 TO 2012-13. WHILE DOING S O, THE AO DISALLOWED THE COST OF FIXED ASSETS PURCHASED OUT O F BORROWED FUNDS HOLDING THAT IT WAS NOT ACQUIRED OUT OF THE DONATIO NS RECEIVED BY THE ASSESSEE. FURTHER, IN RESPECT OF THE DEPRECIATION CLAIMED ON THE ASSETS WHICH WERE ACQUIRED FROM THE INCOME ALLOWED AS APPL ICATION OF INCOME IN THE EARLIER YEARS, HE REFUSED TO ALLOW DEPRECIAT ION STATING THAT IT IS DOUBLE DEDUCTION. AGGRIEVED AGAINST ALL THESE ASSE SSMENT ORDERS, THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE CIT( A) PASSED THE CONSOLIDATED ORDERS IN WHICH RELYING ON THE FOLLOWI NG ORDERS, HE ALLOWED THE APPEAL HOLDING, INTER ALIA, THAT THE AO HAS NOT ROPED IN ANY SEIZED MATERIAL WHILE MAKING THE IMPUGNED ADDITIONS . IN VIEW OF THAT THE IMPUGNED ADDITIONS CANNOT BE SUSTAINED AND ACCO RDINGLY, HE ALLOWED THE APPEALS. A. SPECIAL BENCH OF THE ITAT IN THE CASE OF ALL CA RGO GLOBAL LOGISTICS - ITA NOS. 5018 TO 5022 & 5059/M/2010 B. COMMISSIONER OF INCOME-TAX-20 V. DEEPAK KUMAR AG ARWAL - [2017] 86 TAXMANN.COM 3 (BOMBAY) - HIGH COURT OF BOMBAY :-3-: ITA NOS.2085 TO 2088/CHNY/2018 C. COMMISSIONER OF INCOME TAX, CENTRAL III VS. KABU L CHAWLA - [2015] 61 TAXMANN.COM 412 (DELHI) - HIGH COURT OF DELHI D. PRINCIPAL CIT, CENTRAL -2, NEW DELHI V.MEETAGUTG UTIA - [2017] 86 TAXMANN.COM 3 (BOMBAY) - HIGH COURT OF DELHI E. PRINCIPAL COMMISSIONER OF INCOME-TAX-4 V. SAUMYA CONSTRUCTION (P.) LTD. -[2017] 81 TAXMANN.COM 292 (GUJARAT) - HIGH CO URT OF GUJARAT F. ACIT, CENTRE CIRCLE VS. KURELE PACKAGING (P) LTD - ITA NO.3287/DEL/ 2010 - ITAT DELHI G. ACIT, CENTRE CIRCLE VS. LIMELIGHT TOWERS PVT. LT D - ITA NO.2673/DEL! 2010 ITAT DELHI H. ACIT, CENTRE CIRCLE VS. MANIDEVI AGARWAL - ITA N O.4531, 4566, 876, 877 ,878 /MUM/2011 - ITAT MUMBAI. 3. AGGRIEVED AGAINST THOSE ORDERS, THE REVENUE FILE D SIMILAR GROUNDS IN RESPECT OF EACH OF THE ASSESSMENT YEAR AND HENCE ONE OF THE GROUNDS OF APPEAL IS EXTRACTED AS UNDER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS ON FACTS OF THE CASE AND IN LAW. 2. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANC E OF RS.19,25,213/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSETS PROCURED THROUGH BORROWED FUNDS IN THE ASSESSMENT FOR AY 2009-10 PAS SED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961, IN THE ASS ESSEES CASE. 3. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANC E OF RS.1,23,81,327/- MADE BY THE ASSESSING OFFICER TOWA RDS DEPRECIATION OF ASSETS IN THE ASSESSMENT FOR AY 2009-10 PASSED U /S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1951, N TIE ASSESSEES CASE. 3.1 THE LD. CIT(A) ERRED IN HOLDING THAT ADDITIONS IN ASSESSMENT U/S 153A OF THE IT ACT CAN BE MADE ONLY BASED ON INCRIM INATING DOCUMENTS SEIZED, WHEN AS PER SECTION 153A OF THE I T ACT, THE AO IS REQUIRED TO ASSESS THE TOTAL INCOME OF THE ASSESSEE FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR IN WHICH SEARCH WAS CON DUCTED. :-4-: ITA NOS.2085 TO 2088/CHNY/2018 3.2 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. IS BEING CONTESTED BY THE REVENUE AND IS PENDING BEFOR E THE HONBLE SUPREME COURT. 3.3 THE LD. CIT(A) ERRED IN NOT FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASES OF CIT V S. ST. FRANCIS CLAY DECOR TILES (385 ITR 624)(2016), CIT VS. PROMY KURI AKOSE (386 ITR 597) AS WELL AS EN. GOPAKUMAR VS. CIT, CENTRAL(2016 )[75 TAXMANN.COM 215(390 ITR 131), WHEREIN THE HONBLE H IGH COURT HAS HELD THAT IT IS NOT NECESSARY THAT THE SEARCH ON WH ICH AN ASSESSMENT WAS FOUNDED, SHOULD HAVE NECESSARILY YIELDED ANY IN CRIMINATING MATERIAL AGAINST THE ASSESSEE OR A PERSON TO WHOM N OTICE U/S 153A WAS ISSUED 4. FOR THESE GROUNDS AND ANY OTHER GROUND INCLUDING AMENDMENT OF GROUNDS THAT MAY BE RAISED DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ORDER OF LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE LD DR PRESENTED THE CASES ON THE LINES OF THE G ROUNDS OF APPEALS AND SUPPORTED THE ORDERS OF THE LD. AO. NONE WAS P RESENT FOR THE ASSESSEE. 4. WE HEARD THE LD. DR, GONE THROUGH THE RELEVANT M ATERIAL. THE REVENUE FILED THESE APPEALS ON THE BASIS OF JUDGEME NT OF KERALA HIGH COURT IN CIT VS M/S. FRANCIS CLAY DECOR TILES (2016 ) 385 ITR 624 ETC. THE HONBLE DELHI HIGH COURT HAS TAKEN A CONTRARY V IEW AS THAT OF THE HONBLE KERALA HIGH COURT. THE SPECIAL LEAVE PETIT ION FILED BY THE REVENUE AGAINST THE JUDGEMENT OF DELHI HIGH COURT W AS DISMISSED BY THE APEX COURT IN PRINCIPAL CIT VS MEETA GUTGUTIA ( 2018) 96 :-5-: ITA NOS.2085 TO 2088/CHNY/2018 TAXMANN.COM 468. THOUGH, THE ORDER OF THE SPECIAL LEAVE PETITION MAY NOT LAY DOWN ANY LAW, HOWEVER, PRIMA FACIE, THE APEX COURT APPROVED THE JUDGEMENT OF DELHI HIGH COURT. THUS, THERE ARE TWO HIGH COURT JUDGEMENTS, ONE IS IN FAVOUR OF REVENUE AND ANOTHER ONE IS IN FAVOUR OF ASSESSEE. WHEN THERE ARE TWO CONFL ICTING VIEWS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. THEREFORE, IN THE ABS ENCE OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H & SEIZURE OPERATIONS, WE HOLD THAT THERE CANNOT BE ANY ADDITI ON U/S. 153A. THEREFORE, THIS TRIBUNAL FIND NO REASON TO INTERFER E WITH THE IMPUGNED ORDERS OF THE LD. CIT(A) AND ACCORDINGLY WE CONFIRM THEM. CONSEQUENTLY, ALL THE ABOVE REVENUES APPEALS ARE D ISMISSED. 5. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. ORDER PRONOUNCED ON THURSDAY, THE 06 TH DAY OF DECEMBER, 2018 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 06 TH DECEMBER, 2018 JPV -'3454 /COPY TO: 1. % / APPELLANT 2. '#% /RESPONDENT 3. 7 ) ( /CIT(A) 4. 7 /CIT 5. 4' /DR 6. : /GF