ACIT CEN CIR 33, MUMBAI V. JAYENDRA P. JHAVERI, MUMBAI

ITA 2141/MUM/2012

• Counselvise Citation: 214119914 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 31-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Search and seizure; Audit objection; Period of limitation; Validity of assessment; Time period of passing order; Revised return; Reason to believe
• Section: 143(3); 142(1); 153A; 139(5); 147; 148; 6; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NOS.2141/MUM/2012 : ASST.YEAR 2003-04 ITA NOS.2142/MUM/2012 : ASST.YEAR 2004-05 ITA NOS.2143/MUM/2012 : ASST.YEAR 2005-06 ITA NOS.2144/MUM/2012 : ASST.YEAR 2006-07 THE ACIT CENT. CIR. 33, MUMBAI. VS. SHRI JAYENDRA P JHAVERI, 311, MEHTA BHAVAN, OPP CHARNI ROAD STATION, MUMBAI 400 004. PAN AAAPJ5395D (APPELLANT) (RESPONDENT) CO NO. 248/MUM/13 (ARISING OUT OF ITA NOS.2141/MUM/2012 : ASST.YEAR 2 003-04) CO NO. 249/MUM/13 (ARISING OUT OF ITA NOS.2142/MUM/2012 : ASST.YEAR 2 004-05) CO NO. 250/MUM/13 (ARISING OUT OF ITA NOS.2143/MUM/2012 : ASST.YEAR 2 005-06) CO NO. 251/MUM/13 (ARISING OUT OF ITA NOS.2144/MUM/2012 : ASST.YEAR 2 006-07) SHRI JAYENDRA P JHAVERI, MUMBAI 400 004. PAN AAAPJ5395D VS. THE ACIT CENT. CIR. 33, MUMBAI. (CROSS-OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI S D SRIVASTAVA CROSS-OBJECTORY BY : SHRI DHARMESH SHAH DATE OF HEARING : 31.12.2013 DATE OF PRONOUNCE MENT : 20.02.2014 ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 2 O R D E R PER BENCH: THESE FOUR APPEALS BY THE REVENUE ARISE OUT OF THE COMMON ORDER OF THE CIT(A)- 41, MUMBAI, DATED 11.01.2012 PERTAINING TO A.YS. 2 003-04, 2004-05, 2005-06 & 2006-07. THE CROSS-OBJECTIONS ARE BY THE ASSESSE E AGAINST THE VERY SAME ORDER OF THE CIT(A). AS COMMON ISSUES ARE INVOLVED IN THESE APPEALS AND CROSS-OBJECTIONS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. 2. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT I N THE CASE OF THE ASSESSEE ON 14.08.2008 U/S. 132 OF THE INCOME TAX ACT. PURSU ANT THERETO, THE AO ISSUED NOTICE U/S. 153A TO THE ASSESSEE TO FILE THE RETURN OF INCOME FOR SIX YEARS SUBSEQUENT TO THE SEARCH. IN RESPONSE TO THE NOTICE , THE ASSESSEE FILED RETURN OF INCOME BEFORE THE AO. THE AO, THEREAFTER, ISSUED NO TICE U/S. 143(2) AND 142(1) OF THE I.T. ACT ALONG WITH QUESTIONNAIRE FOR SUBMIS SION OF DETAILS. THE ASSESSEE SUBMITTED BEFORE THE AO THAT BOOKS OF ACCOUNT AND O THER DETAILS WERE DESTROYED IN THE FLOOD IN THE YEAR 2005 AND, THEREFORE, THE S AME COULD NOT BE PRODUCED. SINCE THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF A CCOUNTS, THE AO PASSED THE ORDER U/S. 144 R.W.S. 153A OF THE I.T. ACT. THE AO ESTIMATED THE NET PROFIT OF THE ASSESSEES PROPRIETARY CONCERN, M/S. J. P. EXPORTS @ 0.99% ON THE BASIS OF NET PROFIT RATIO OF CERTAIN OTHER PERSONS WHO WERE ENGA GED IN A SIMILAR BUSINESS AS THAT OF THE ASSESSEE AND THUS MADE THE ADDITIONS AC CORDINGLY TO THE TOTAL INCOME OF THE ASSESSEE. THE AO FURTHER DISALLOWED THE DEDU CTIONS UNDER CHAPTER VI CLAIMED BY THE ASSESSEE AND ALSO DECLINED TO GIVE C REDIT OF TAX PAID FOR WANT OF PROOF. 3. THE CIT(A) UPHELD THE ACTION OF THE AO FOR PASSI NG THE ORDER U/S. 144 R.W.S 153A OF THE INCOME TAX ACT. HOWEVER HE DIRECT ED THE AO TO RE-COMPUTE THE NET PROFIT OF THE ASSESSEE BY ADOPTING THE NET PROFIT OF 0.14% AND DELETED THE ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 3 BALANCE ADDITION OUT OF THAT WAS MADE BY THE AO. HE FURTHER DIRECTED THE AO TO LOOK INTO THE RECORD AND ALLOW THE CREDIT OF TAX PA ID AS PER LAW. 4. THE REVENUE THUS IS IN APPEAL BEFORE US, AGAINST THE ACTION OF THE CIT(A) IN DIRECTING THE AO TO REWORK THE NET PROFIT OF THE ASSESSEE AT THE LOWER RATE OF 0.14% AS AGAINST THE 0.99% ESTIMATED BY THE AO. WHE REAS THE ASSESSEE HAS FILED THE CROSS OBJECTIONS AGAINST THE ACTION OF TH E CIT(A) IN UPHOLDING OF ASSESSMENT PROCEEDINGS MADE BY THE AO UNDER SECTION 153A OF THE ACT. 5. THE LEARNED REPRESENTATIVE OF THE ASSESSEE, AT T HE OUTSET HAS SUBMITTED, AS ADMITTED BY THE LEARNED DR ALSO, THAT THE QUESTION AS TO VALIDITY OF ASSESSMENT U/S 153A BE ADJUDICATED FIRST BECAUSE IF THE SAME I S DECIDED IN FAVOUR OF THE ASSESSEE, THEN THE CONSEQUENTIAL COMPUTATION OF NET PROFITS WILL NOT SURVIVE. HENCE THE ISSUE OF VALIDITY OF ASSESSMENT U/S 153A RAISED BY THE ASSESSEE IN HIS CROSS OBJECTIONS IS TAKEN FIRST FOR ADJUDICATION. 6. THE CONTENTION OF THE LEARNED AR HAS BEEN THAT S INCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE OP ERATION, THE RE-ASSESSMENT MADE BY THE AO U/S 153 A WAS NOT VALID. HE HAS FURT HER SUBMITTED THAT SINCE THE LIMITATION PERIOD FOR ISSUING NOTICE U/S 143(2) OF THE ACT HAD ALREADY BEEN EXPIRED AND AS SUCH THE ASSESSMENTS IN RELATION TO ABOVE MENTIONED ASSESSMENT YEARS HAD ATTAINED FINALITY. THERE WAS AS SUCH NO A BATEMENT OF ANY PENDING ASSESSMENT PROCEEDINGS. THE REASSESSMENT COULD HAVE BEEN MADE ONLY IF THERE WERE FOUND ANY INCRIMINATING MATERIAL AGAINST THE A SSESSEE. 7. ON THE OTHER HAND, THE CONTENTION SH. S.D. SHRIV ASTVA, THE LEARNED DR, HAS BEEN THAT IN THIS CASE NO BOOKS OF ACCOUNTS WER E FOUND DURING SEARCH OPERATION CARRIED U/S 132 OF THE ACT. THE EXPLANATI ON OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS WERE DESTROYED IN FLOODS WAS NOT PLAUSIBLE. THE ABSENCE OF THE BOOKS OF ACCOUNTS, ITSELF, WAS THE INCRIMINATIN G EVIDENCE AGAINST THE ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 4 ASSESSEE NECESSITATING INITIATION OF ASSESSMENT PRO CEEDINGS U/S 153A OF THE ACT. HIS FURTHER CONTENTION HAS BEEN THAT THE EARLIER TH E RETURN FILED BY THE ASSESSEE IN THIS CASE WAS PROCESSED BY THE AO U/S 143(1) OF THE ACT WHICH AMOUNTS TO JUST THE INTIMATION AND CANNOT BE SAID TO BE AN ASSESSME NT AS PER THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI 291 ITR 500. APART FROM THAT, BOTH THE REPRESENTATIVES OF THE PA RTIES HAVE RELIED UPON VARIOUS CASE LAWS WHICH WE WILL ALSO DISCUSS ALONG WITH THE RELEVANT POINTS OF ARGUMENTS. 8. THE LEARNED DR HAS ALSO FILED WRITTEN SUBMISSION S. TO STRESS HIS POINT THAT THE RETURN PROCESSED U/S. 143(1) CANNOT BE SAI D TO BE AN ASSESSMENT BUT A MERE INTIMATION, HE HAS RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (2007) 291 ITR 500 (SC). HIS CONTENTION HAS BEEN THAT IN THE CASE IN HAND TH E ASSESSMENT WAS NOT DONE ORIGINALLY U/S. 143(3) HENCE THE ESTIMATION IN QUES TION HAS BEEN RIGHTLY MADE U/S. 153A OF THE ACT BY THE AO. HE HAS FURTHER CON TENDED THAT THE PRINCIPAL LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CA SE OF ALL CARGO GLOBAL LOGISTICS LTD. 137 ITD 287 CAN BE APPLIED TO THE C ASE WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT AND NOT TO THE CASE WHERE THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR. SO FAR SO THE RELIANCE PLACED BY HIM IN THE CASE OF RAJESH JHAVE RI STOCK BROKERS P. LTD. (SUPRA) IS CONCERNED, WE MAY OBSERVE THAT THE ISSUE BEFORE THE HONBLE SUPREME COURT IN THAT CASE WAS REGARDING THE REOPENING OF T HE ASSESSMENT U/S. 147 OF THE ACT. THE HONBLE SUPREME COURT HELD THAT THE PROPO SITION OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ADAN I EXPORTS V. DEPUTY CIT, (1999) 240 ITR 224 (GUJ) WAS NOT APPLICABLE IN THAT CASE. IN THE CASE OF ADANI EXPORTS (SUPRA), WHERE THE ASSESSMENT WAS MADE U/S . 143(3) OF THE ACT, AND THE ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 5 AO DID NOT HOLD ANY BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF ERRONEOUS COMPUTATION, THE RE-OPENING U/S. 147 MADE MERELY ON THE BASIS OF AUDIT OBJECTIONS WAS HELD TO BE BAD IN LAW BY THE H ONBLE HIGH COURT. IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUP RA), THE HONBLE SUPREME COURT WHILE INTERPRETING THE PROVISIONS OF SECTION 143(1) AND SECTION 143(3) (AS WERE IN FORCE DURING THE RELEVANT TIME PERIOD) HAS HELD THAT IN CASE OF ASSESSMENT MADE U/S. 143(3), THE ASSESSMENT IS MADE BY THE AO BY APPLYING HIS MIND WHEREAS IN CASE OF PROCESSING OF RETURN U/S. 1 43(1) OF THE ACT, THERE IS NO APPLICATION OF MIND BY THE AO AND AS SUCH, IF A NEW MATERIAL COMES INTO THE KNOWLEDGE OF THE AO AND THE REQUIREMENTS OF SECTION 147 OF THE ACT ARE FULFILLED, THE AO IS FREE TO INITIATE PROCEEDINGS U /S. 147 AND THE FAILURE TO TAKE STEPS U/S. 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE RE-ASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION U/S. 143(1) HAD BE EN ISSUED. SO THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) RELATES TO THE POWERS OF THE AO FOR RE-OPENING OF ASSESSMENT U/S. 147IN RELATION TO THE ASSESSMENT PROCEEDINGS CONDUC TED UNDER SECTION 143(1) VIZ-A-VIZ U/S 143(3) OF THE ACT. (AS WERE IN FORC E DURING THE RELEVANT PERIOD, SINCE SECTION 143 HAS BEEN FURTHER AMENDED VIDE FIN ANCE ACT 2008 W.E.F 01.04.2008.) IT IS TO BE NOTED THAT POWERS OF THE AO TO RE-OPEN AN ASSESSMENT U/S. 147 IS SUBJECT TO LIMITATION OF TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT. SO THE REASONABLE CONCLUSION WILL BE THAT WHETHER T HE RETURN WAS PROCESSED U/S. 143(1) OR U/S. 143(3), IF THE AO HAS A REASON TO BE LIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE CAN RE -OPEN THE ASSESSMENT U/S. 147 BY ISSUING NOTICE U/S. 148 BUT WITHIN THE TIME LIMIT AS PRESCRIBED U/S. 149 OF THE ACT. 10. SO FAR SO, THE QUESTION AS TO THE PROCESSING OF RETURN U/S. 143(1) VIZ-A-VIZ ASSESSMENT MADE U/S. 143(3) IS CONCERNED, IT MAY FU RTHER BE OBSERVED THAT AFTER PROCESSING OF RETURN U/S. 143(1) THE SAME CAN BE AS SESSED U/S. 143(3) BY ISSUE OF ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 6 NOTICE U/S. 143(2) SUBJECT TO ITS ISSUANCE WITHIN T HE LIMITATION PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FURNISHED AS PER THE PROVISO TO CLAUSE (II) OF SECTION 143(2) [AS WAS E XISTING AT THE TIME OF RELEVANT ASSESSMENT YEAR]. ONCE THE LIMITATION PERIOD AS PR ESCRIBED VIDE PROVISO TO CLAUSE (II) OF SUB SECTION (2) OF SECTION 143 IS EX PIRED, IT IS NOT OPEN TO THE AO TO ASSESS THE INCOME U/S. 143(3) OF THE ACT AND THE RE TURN FILED BY THE ASSESSEE U/S. 139 IS DEEMED TO BE ACCEPTED, WHICH HOWEVER, CAN BE RE-OPENED U/S. 147 OF THE ACT SUBJECT TO THE FULFILLMENT OF INGREDIENTS OF SE CTION 147 AND WITHIN THE TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT, AS DISCUS SED IN THE PRECEDING PARA. SO UNDER SUCH CIRCUMSTANCES IF THE RETURN IS PROCESSED U/S. 143(1) AND NOT U/S. 143(3) AND AFTER THE PRESCRIBED PERIOD OF LIMITATIO N, THE SAME CANNOT BE ASSESSED U/S. 143(3) THOUGH IT MAY BE INTERPRETED AS MERE IN TIMATION ASSESSMENT OR OTHERWISE, BUT THE SAME SHALL BE DEEMED TO BE ACCEP TED BY THE AO AND IT WILL NOT HAVE ANY DIFFERENT COLOUR OTHER THAN THE RETURN WHICH IS PROCESSED U/S. 143(3) OF THE ACT. THE ONLY DISTINGUISHING FEATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA), WOULD BE THAT IF TO A SET OF FACTS AND CIRCUMSTANCE S, THE AO HAS APPLIED HIS MIND AND HE WAS OF THE BELIEF THAT THERE WAS NO ESCAPEME NT OF INCOME THEN FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT, HE IS PRECLUDED, ON THE BASIS OF SAME FACTS AND CIRCUMSTANCES, TO SAY THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. WHEREAS IN CASE OF RETURNS PROCESSED U/S. 143(1), SINCE THE AO DOES NOT APPLY HIS MIND, SUCH A DEFENSE IS NOT AVAILABLE TO THE ASSESSEE. HOWEVER, THAT PROPOSITI ON OF LAW DOES NOT HELP THE REVENUE IN THE PRESENT CASE WHICH IS A CASE OF ASSE SSMENT/RE-ASSESSMENT U/S. 153A OF THE ACT. 11. ADMITTEDLY, IN THE CASE IN HAND, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT BUT THE SAME HAS ATTAINED FINALITY DUE TO T HE EXPIRY OF LIMITATION PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED. ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 7 HENCE, THE ASSESSMENT IS DEEMED TO BE COMPLETED AND NOT PENDING ON THE DATE OF SEARCH ON 14.08.2008. ADMITTEDLY, NO INCRIMINAT ING MATERIAL WAS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE SEARCH U/S. 132 OF THE ACT. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLO BAL LOGISTICS LTD. (SUPRA), HAS HELD THAT ASSESSMENT U/S. 153A CAN BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THE HONBLE RAJA STHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ACIT (2013) 259 CTR 281 HAS HELD THAT IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENT DOES NO T ARISE. UNDER SUCH CIRCUMSTANCES, IT IS NOT OPEN TO THE ASSESSEE TO SE EK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN THE ORIGI NAL AND ALREADY CONCLUDED ASSESSMENT, IN THE CASE OF ASSESSMENT U/S. 153A IN PURSUANCE OF SEARCH ACTION. HONBLE HIGH COURT REJECTED THE ARGUMENT OF THE LEA RNED COUNSEL FOR ASSESSEE TO THE EFFECT THAT ONCE THE NOTICE U/S. 153A IS ISSUED , THE ASSESSMENTS FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND THE ASSESSEE. IT HAS BEEN FURTHER HELD BY THE HONBLE HIGH COURT THAT THE PROVISIONS OF SECTION 1 53A TO 153C CANNOT BE INTERPRETED TO BE FURTHER INNINGS TO THE AO AND/OR ASSESSEE BEYOND THE PROVISIONS OF SECTION 139(RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 263( REVISION OF ORDERS) OF THE ACT. THE HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THE WO RDS ASSESS OR RE-ASSESS HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTIO N AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF A BATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT P ROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF IN ITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSAR ILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH OR ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 8 REQUISITION OF DOCUMENTS. THE HONBLE HIGH COURT WHILE REPRODUCING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF K P VARGHESE V. ITO (1981) 24 CTR 358 THAT IT IS RECO GNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISO MUST BE SO CONSTRUED, IF P OSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED HAS OBSERVED THAT IF THE A RGUMENT OF THE COUNSEL FOR THE ASSESSEE WAS TO BE ACCEPTED, IT WOULD MEAN THAT EVEN IN CASE WHERE THE APPEAL ARISES OUT OF THE COMPLETED ASSESSMENT HAS B EEN DECIDED BY THE CIT(A) OR TRIBUNAL AND THE HIGH COURT, ON A NOTICE ISSUES U/S. 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED BY THE HIGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION HAS T O BE REPELLED AND/OR AVOIDED AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF K P VARGHESE (SUPRA). ALMOST SIMILAR PROPOSITION OF LAW HAS BEEN LAID DOW N BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S DEEPA RE STAURANT & BAR P. LTD. IN ITA NO.1336/M/2012 DECIDED ON 05.02.2014 (ONE OF US BEING THE PARTY OF THE SAID ORDER) WHEREIN, IT HAS BEEN OBSERVED THAT WHER E THE SCRUTINY ASSESSMENT ORDER U/S. 143(3) OF THE ACT WAS SET ASIDE BY THE H IGHER AUTHORITIES THAT, ITSELF, CANNOT BE A GROUND FOR RE-OPENING THE ASSESSMENT U/ S. 147 OF THE ACT ON THE PLEA THAT SINCE SCRUTINY ASSESSMENT HAS BEEN ANNULLED ON THE LEGALITY OF NOTICE U/S. 143(2) OF THE ACT AND THE CASE HAS NOT BEEN HEARD A T ANY OF THE STAGE HENCE, THERE WAS A REASON TO BELIEVE THAT THE INCOME ASSES SED IN THIS CASE HAS ESCAPED ASSESSMENT. THE CO-ORDINATE BENCH IN THE ABOVE SAI D CASE HAS FURTHER HELD THAT SUCH AN ACTION CANNOT BE ALLOWED UNDER THE LAW AS I T MAY AMOUNT TO DEFEATING ONE OF THE STATUTORY PROVISIONS IN THE GRAB OF ACTI NG UNDER OTHER PROVISIONS OF THE STATUTE. ONCE ASSESSMENT U/S. 143(3) HAD BEEN ANNULLED BY HIGHER AUTHORITIES ON THE GROUND OF LEGALITY OF NOTICE U/S . 143(2) OF THE ACT, RE-OPENING U/S. 147 ON THAT VERY GROUND WOULD MEAN NOTHING ELS E BUT THE ABUSE OF PROCESS OF LAW. HENCE, THE CONTENTION OF THE LEARNED DR THA T AS THE RETURN WAS PROCESSED U/S. 143(1) AND IT WAS A MERE INTIMATION HENCE, THE AO HAD REASON TO BELIEVE ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 9 THAT INCOME HAD ESCAPED ASSESSMENT AND IT WAS OPEN TO THE AO TO RE-ASSESS THE INCOME U/S. 153A, EVEN WITHOUT ANY INCRIMINATING MA TERIAL FOUND DURING THE SEARCH ACTION, IS NOT TENABLE. 12. THE LEARNED DR HAS FURTHER RELIED ON THE JUDGME NT OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BADRUK A VS. DCIT, 346 ITR 106 (AP) TO STRESS THE POINT THAT THE AO CAN USE EVIDEN CE OTHER THAN THAT FOUND DURING THE COURSE OF SEARCH WHILE FRAMING THE ASSES SMENT U/S. 153A OF THE ACT. THE SAID JUDGMENT OF HONBLE ANDHRA PRADESH HIGH CO URT HAS BEEN DULY DISCUSSED BY THE SPECIAL BENCH OF THE TRIBUNAL IN T HE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), HOLDING THAT THE SAME WAS DISTINGUISHABLE ON THE FACTS. IN THE CASE OF GOPAL LAL BADRUKA VS. DCIT (SUPRA) , INCRIMINATING EVIDENCE WAS FOUND IN RELATION TO EIGHT PLOTS OF LAND BUT NO EVIDENCE WAS FOUND IN RESPECT OF 24 PLOTS. SINCE INCRIMINATING MATERIAL WAS FOUN D IN RESPECT OF EIGHT PLOTS, HONBLE COURT HELD THAT THE AO CAN ESTIMATE THE INC OME IN RESPECT OF ALL 32 PLOTS. THE FACT WAS THAT INCRIMINATING MATERIAL WA S FOUND IN THAT CASE. THE OTHER JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETAN DASS LACHMAN DASS [2012] 211 TAXMANN 61 , STRONGLY RELIED UPON BY THE LEARNED DR, IS ALSO OF NO HELP TO THE REVENU E BUT TO THE ASSESSEE ONLY. IN THE SAID CASE THE HONBLE DELHI HIGH COURT, IN PARA 11 OF THE ORDER, THOUGH HAS HELD THAT THERE IS NO CONDITION IN SECTION153A THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND DURING THE COUR SE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND AND THAT THE SEIZED MATERIAL CAN BE RELIED UPON TO ALSO DRAW INFERENCE THAT THERE CAN BE SIMILAR TRANSACTIONS TH ROUGHOUT THE RELEVANT PERIOD, YET, AT THE SAME TIME IT HAS BEEN FURTHER OBSERVED THAT THIS HOWEVER, DOES NOT MEAN THAT ASSESSMENT U/S 153 A CAN BE ARBITRARILY M ADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 10 THE PROPOSITION OF LAW WHICH EMERGES OUT IN THE LIG HT OF THE LAW LAID DOWN BY THE RAJASTHAN HIGH COURT IN THE CASE OF JA I STEEL (INDIA) (SUPRA), HONBLE GUJARAT HIGH COURT IN THE CASE OF GOPAL LA L BADRUKA (SUPRA) AND ALSO BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHETAN DASS LACHMAN DASS IS THAT WHERE INCRIMINATING MATERIAL IS FOUN D DURING THE SEARCH ACTION, THE AO WHILE MAKING ASSESSMENT U/S. 153A CAN TAKE NOTE OF OTHER MATERIALS ON RECORD, WHICH ARE RELEVANT AND CONNECTED TO THE MAT ERIAL FOUND DURING THE SEARCH AND INFERENCE CAN BE DRAWN RELATING TO OTHER TRANSA CTIONS OF SIMILAR NATURE. HOWEVER, WHEN NO INCRIMINATING EVIDENCE IS FOUND DU RING SEARCH, IT IS NOT OPEN TO THE AO TO MAKE RE-ASSESSMENT OF CONCLUDED ASSESS MENT IN THE GARB OF INVOKING THE PROVISIONS OF SECTION 153A. AS OBSERV ED ABOVE, SUCH AN ACTION WILL DEFEAT THE OTHER RELEVANT PROVISIONS OF THE AC T AND ALSO THE RIGHTS OF THE ASSESSEE ACCRUED THEREIN. 13. THE NEXT ARGUMENT OF THE LEARNED DR HAS BEEN TH AT SINCE IN THE CASE IN HAND, NO BOOKS OF ACCOUNT WERE FOUND DURING THE SEA RCH ACTION THAT ITSELF IS THE INCRIMINATING MATERIAL AGAINST THE ASSESSEE, IN OUR VIEW HAS NO FORCE OF LAW. THOUGH THE REVENUE MAY NOT BE SATISFIED WITH THE EX PLANATION OF THE ASSESSEE THAT THE BOOKS OF ACCOUNT WERE LOST IN FLOODS, STIL L THE ASSESSMENT OR ADDITION CANNOT BE MADE ON THIS GROUND. SUCH AN INFERENCE O F CONCEALMENT OF INCOME CANNOT BE MADE JUST ON MERE ASSUMPTIONS, PRESUMPTIO NS OR SUSPICION. THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JITE NDRA KUMAR JAIN V. DCIT ITA NOS. 5951- 5953/M/2011 DECIDED ON 16.01.2014 (I NCIDENTALLY CONSTITUTED BY BOTH OF US) HAS HELD THAT SUCH AN ASSUMPTION CAN NOT BE SAID TO BE HAVING ANY VALUE OF EVIDENCE IN EYES OF LAW AND EVEN THE ASSES SEE CANNOT BE CALLED TO DISAPPROVE SUCH TYPE OF ASSUMPTIONS AND PRESUMPTION S BASED ON MERE SUSPICIONS. THE REVENUE HAS TO STAND ON ITS OWN LE GS TO BRING INCRIMINATING EVIDENCE AGAINST THE ASSESSEE. IT IS NOT OPEN TO T HE REVENUE TO RELY ON THE WEAKNESS OF THE EVIDENCE PRODUCED BY THE ASSESSEE T O MAKE ANY ADVERSE ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 11 PRESUMPTION OR CONCLUSION OF HIS INDULGING IN ANY I LLEGAL ACTIVITY, WITHOUT BEING THERE ANY DIRECT OR EVEN CIRCUMSTANTIAL EVIDENCE ON RECORD AGAINST HIM. 14. THE NEXT LIMB OF ARGUMENT OF THE LEARNED DR, WH ILE RELYING UPON THE AUTHORITY OF HONBLE SUPREME COURT IN THE CASE OF PADMA SUNDER RAO 255 ITR 147 (SC), HAS BEEN THAT THE COURT SHOULD NOT PL ACE RELIANCE ON THE DECISIONS WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS TO THE FACTUAL SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. HIS CONT ENTION IS THAT ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWE EN CONCLUSIONS IN TWO CASES. THERE IS NO DOUBT ABOUT THE ABOVE SAID PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT. THE COURT MUST OBSERVE THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER WHICH A CERTAIN PROPOSITION OF LAW I S LAID DOWN BY THE HONBLE SUPREME COURT AND THEN TO COMPARE THE SAME WITH THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER ADJUDICATION BEFORE IT. HOWEVER, THIS PROPOSITION OF LAW, PUT BY THE LEARNED DR, IN OUR VIEW, IS OF NO HELP TO TH E REVENUE BUT TO THE ASSESSEE ONLY. AS OBSERVED ABOVE, THE VARIOUS CASE LAWS RELI ED UPON BY THE LEARNED DR ARE QUITE DISTINGUISHABLE ON THEIR OWN FACTS WHEREA S, THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF JAI STEEL (INDIA) (SUPRA), DE CIDED BY HONBLE RAJASTHAN HIGH COURT BETTER FITS INTO THE FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE. 15. IN VIEW OF OUR ABOVE OBSERVATIONS, IT IS ACCORD INGLY, HELD THAT THE RE- ASSESSMENTS MADE BY THE AO UNDER SECTION 153A, WITH OUT ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARCH ACTION CONDU CTED U/S. 132 OF THE ACT, WERE NOT IN ACCORDANCE WITH LAW AND THE SAME ARE HE REBY SET ASIDE AND THE CONSEQUENTIAL RESULT IS THAT THE RETURN/ORIGINAL AS SESSMENTS WHICH HAVE ACQUIRED FINALITY ARE TO BE REITERATED. SINCE THE CROSS-OBJE CTIONS OF THE ASSESSEE HAVE BEEN ALLOWED, THE DISPUTE RELATING TO THE ADDITIONS MADE IN CONSEQUENCE OF THE RE- ASSESSMENTS MADE U/S. 153A DOES NOT SURVIVE. ITA NOS.: 2141, 2142, 2143 & 2144/M/2012 CO NOS. 248, 249, 250 & 251/M/13 12 IN THE RESULT THE CROSS-OBJECTIONS FILED BY THE ASS ESSEE ARE ALLOWED AND THE APPEALS FILED BY THE REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY 2014 SD/- SD/- (P M JAGTAP) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 20 TH FEBRUARY, 2014 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, J - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI