PRAKASH P. MALI, MUMBAI V. DCIT CENT. CIR. 4(4), RANGE -4, MUMBAI

ITA 2181/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1349 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 11-04-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 04-04-2016
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Gift; Income from undisclosed sources
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NOS.2181 TO 2183/MUM /2016 ASSESSMENT YEARS-2004-05 TO 2006-07 PRAKASH P. MALI, PROP. OF M/S JUNCTION, 33, ASHISH INDUSTRIAL ESTATE, GOKHALE ROAD (S), DADAR (WEST), MUMBAI-400025 / VS. DCIT, OSD-1, CENTRAL RANGE-7, NOW DCIT, CENTRAL CIRCLE-4(4), RANGE-4, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI PAN NO. ADSPM1174C ( / ASSESSEE) ( / REVENUE) / ASSESSEE BY SHRI GIRISH DAVE / REVENUE BY SHRI RAJESH KUMAR YADAV- DR / DATE OF HEARING : 11/04/2017 / DATE OF ORDER: 11/04/2017 ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDERS DATED 26/09/2013 FOR THE ASSESSMENT YEAR 2004-05, 2005-06 AND DATED 24/11/2015 FOR ASSESSMENT YEAR 2006-07 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBA I, CHALLENGING IMPOSITION/CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, SHRI GIRISH DAVE, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE QUANTUM ADDITI ON ON THE BASIS OF WHICH, PENALTY WAS IMPOSED HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 14/01/2016 (ITA NO.7282 TO 7284 AND 7405/MUM/2013). THE LD. COUNSEL ALSO FILED THE COPY OF THE AFORESAID ORDER DATED 14/01/2016. THIS FACTUAL ASSERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY T HE LD. DR, SHRI RAJESH KUMAR YADAV. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER DATED 14/01/2016 FOR READY REFERENCE AND ANALYSIS:- 7. THERE ARE FOUR APPEALS UNDER CONSIDERATION PERT AINING TO THE ASSESSEE (SHRI PRAKASH P. MALI) INVOLVING THE A SSESSMENT YEARS 2001-02 TO 2004-05. SINCE, THE ASSESSEE IDENTICAL ISSUES IN ALL THE ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 3 APPEALS UNDER CONSIDERATION, EXCEPT THE FIGURES, TH EREFORE, FOR THE SAKE OF ADJUDICATION AND REFERENCE, THE GROUNDS RAI SED IN THE APPEAL FOR THE AY 2001-2002 ARE REPRODUCED AS UNDER : 1. THE LD CIT (A) HAS ERRED IN LAW AND ON THE FACT S & IN THE CIRCUMSTANCES OF THE CASE IN HOLDING NOTICE ISSUED UNDER SECTION 153C OF THE ACT AS VALID AND CONSEQUENTIAL ERRED IN LAW IN HOLDING THE ASSESSMENT MADE UNDER SECTION 153C OF THE ACT AS VALID. WITHOUT PREJUDICE TO THE ABOVE, 2. THE LD CIT (A) HAS ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IN UPHOLDING THE ORDER O F THE AO MAKING ADDITION OF RS. 1 LAKH BY TREATING THE GIFT RECEIVE D AS INCOME OF THE APPELLANT IGNORING ALL THE DETAILS SUBMITTED TO HIM RELATING TO THE GIFT INCLUDING THE ORDER PASSED IN REGULAR ASSESSMENT BY THE PREDECESSOR AO. 3. THE LD CIT (A) HAS ERRED IN NOT GRANTING REBATE OF RS. 506 U/S 88 FOR THE LIFE INSURANCE PREMIUM OF RS. 2,530/- PAID ON THE LIFE OF THE ASSESSEE. 8. IN ALL THESE AYS, THE ADDITIONS MADE BY THE END THE FATE OF THESE ADDITIONS IN THE FIRST APPELLATE PROCEEDINGS ARE TA BULATED AS UNDER:- 9. LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTIO N TO EACH OF THE ASSESSMENT YEAR AND SUBMITTED THAT NONE OF THESE ADDITIONS WERE MADE BASED ON THE SEIZED MATERIAL. FURTHER, HE SUBMITTED THAT THE SHRI PRAKASH P. MALI WAS NOT COV ERED U/S 132 OF THE ACT BY DRAWING AN ASSESSEES SPECIFIC. THER E WAS SURVEY ACTION U/S 133 OF THE ACT. FURTHER, HE INFORMED TH AT IN ALL THESE ASSESSMENT YEARS, AO MADE ASSESSMENTS U/S 143(3) R. W.S 153C OF THE ACT WITHOUT HAVING SEIZED ANY DOCUMENTS FROM THE PREMISES OF THE SEARCH PERSON IMPLICATING THE ASSES SEE ON THE ISSUE OF UNACCOUNTED INCOME. REFERRING TO THE DOCU MENTS SEIZED NAMELY THE GIFT RELATING TRANSACTION BETWEEN MR. SHIVLAL AND THE ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 4 ASSESSEE AND THE STATEMENT SHOWING PAYMENT FOR PURC HASE OF PLOT (PARA C OF PAGE 7 OF THE CIT (A)S ORDER I S RELEVANT), WHICH ARE SEIZED FROM THE SEARCH PREMISES, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE GIFT IN QUESTION WAS AN ACC OUNTED ONE, DULY DECLARED IN THE RETURN OF INCOME. REFERRING TO THE OTHER PAPERS RELATING TO THE TRANSACTION BETWEEN MR. SHIV LAL AND ASSESSEE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE SAID TRANSACTION IS NOT BETWEEN MR. SHIVLAL AND THE ASSE SSEE. THEY MISTAKENLY COMMUNICATED THESE PAPERS TO THE ASSESSE E. PARA 10 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. REFERRING TO THE OTHER PAPERS ALSO, LD COUNSEL FOR THE ASSESSEE MENT IONED THAT NO ADDITION WAS EVENTUALLY MADE ON THIS ACCOUNT AS THEY ARE ALL FOUND TO BE ACCOUNTED TRANSACTIONS. THEREFORE, FOR ALL THE FOUR YEARS UNDER CONSIDERATION, THE TRANSACTIONS APPEARE D ON THE PAPERS SEIZED, ALLEGEDLY CONNECTED TO THE ASSESSEE, ARE FOUND TO BE EITHER ACCOUNTED OR NOT FOUND WORTHY FOR MAKING ANY ADDITIONS. IN SUCH CASE, THE UNABATED ASSESSMENTS COULD NOT HAVE BEEN RE-OPENED. HE RELIED ON VARIOUS IN SUPPO RT OF THE SAME INCLUDING THE DECISION OF TRIBUNAL IN THE CASE OF SHRI VIMAL KUMAR RATHI VS. DCIT IN ITA NOS. I.T.A. NO.3094/M/2013 AND OTHERS, DATED 16.10.2015, WHEREI N ONE OF US (AM) IS A PARTY TO THE SAID ORDER AND DEMONST RATED THAT AS AND WHEN THE ASSESSMENTS INVOLVED ARE NON- ABATED ASSESSMENT (EITHER REGULAR ASSESSMENTS ARE COMPLETED U/S 143(3) AND THE QUANTUM PROCEEDINGS ARE NOT PEND ING OR THE DUE DATE FOR ISSUE OF NOTICE US 143(2) HAS EXPIRED) , THE ADDITIONS, IF ANY, IN THE SEARCH ASSESSMENT CAN BE MADE BASING ON ANY INCRIMINATING MATERIAL SEIZED U/S 132 OF THE ACT AND FORWARDED TO THE CONCERNED AO AS PER THE PROCEDURE LAID DOWN IN THE ACT. DRAWING OUR ATTEN TION TO EACH OF THE ASSESSMENT ORDER AND THE ADDITIONS MADE BY T HE AO, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THERE IS NO REFERENCE TO THE SEIZED MATERIAL IN ANY OF THE ADDITIONS MADE BY THE AO. IN SUPPORT OF HIS CONTENTION THAT WHEN THERE IS FIN DING OR DISCUSSION ABOUT THE ANY INCRIMINATING MATERIAL SEI ZED DURING THE SEARCH, THE ASSESSMENT ORDER PASSED U/S 153A R.W.S 143(3) OF THE ACT IS NOT TENABLE IN LAW, LD COUNSEL FOR THE A SSESSEE FILED WRITTEN SUBMISSIONS AND ALSO RELIED ON FOLLOWING DE CISIONS VIZ., (I) CIT VS. SMT SHAILA AGARWAL, 346 ITR 130; (II) ALL C ARGO GLOBAL LOGISTICS LTD VS. DCIT [18 ITR 106] (MUM.) (SB); (I II) SPACEWOOD FURNISHERS PVT LTD ORS VS. DGIT & ORS. [340 ITR 393 (BOM)] (IV) SHRI GOVIND AGARWAL V. ACIT BEING ITA NO: 3389/ M UM / 2011 DATED 10.01.2014; (V) SKS ISPAT AND POWER LIMITED VS. DCIT L (VI) SINHGAD TECHNICAL EDUCATION SOCIETY VS. ACIT [ 2011] 140 TTJ 233 AND OTHERS. ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 5 10. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO AND THE CIT (A). FURTHER, ON THE LEGAL PROPOSITION S, LD DR HAS NOTHING TO CONTROVERT EXCEPT RELYING ON THE DECISIO NS OF THE REVENUE AUTHORITIES. HE FURTHER MENTIONED THAT THE EVENT OF SURVEY ACTION IS UNSUSTAINABLE AS THE ISSUE OF NOTI CE U/S 153C IS BASED ON THE CONDITIONS SPECIFIED IN THE SAID PROVI SIONS OF SECTION 153C AND NOT ON THE OUTCOME OF THE SURVEY ACTION. IN THIS REGARD, LD DR FILED WRITTEN SUBMISSIONS REFERRING T O THE FACTS CONCERNING THE EVENT OF SURVEY ACTION ON THE ASSESS EE. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DEC ISION OF THE TRIBUNAL IN THE CASE OF SHRI GOVIND AGARWAL V. ACIT BEING ITA NO: 3389/ M UM / 2011 DATED 10.01.2014 (SUPRA); ALL CARGO GLOBAL LOGISTICS V . ADDL . CIT (SUPRA); SKS ISPAT AND POWER LIMITED VS. DCIT CC 45 (ITA 8746/M/12 AND ITA 8747/M/12) (SUPRA) AS WELL AS THE JUDGMENT OF THE H ONBLE BOMBAY HIGH COURT IN THE CASES OF CIT V. ALL CARGO GLOBAL LOGISTIC (374 ITR 645) (SUPRA), COPIES OF WHICH ARE PLACED ON RECORD. ON PERUSAL OF THE SAID DECISIONS, WE FI ND THEY ARE RELEVANT FOR THE PROPOSITION THAT WHEN NO ASSESSMENT HAS ABATED, THE QUESTION OF MAKING ANY ADDITION OR MAKI NG DISALLOWANCE WHICH ARE NOT BASED ON ONLY MATERIAL F OUND DURING THE SEARCH IS BAD IN LAW. CONSIDERING THE FACTU AL MATRIX OF THE CASE AS WELL CONSIDERING THE ABOVE SETTLED LEGAL PO SITION OF THE ISSUE THAT IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL FOUND DURING SEARCH, ADDITIONS MADE ON THE ASSESSED INCOM E ARE UNSUSTAINABLE IN LAW, WE ARE OF THE CONSIDERED OPIN ION THAT THE ADDITIONS MADE IN THE INSTANT CASE ARE NOT SUSTAINA BLE AND ACCORDINGLY, WE DELETE THE SAME. 2.2. WE FIND THAT THE TRIBUNAL, IN THE AFORESAID ORDER, ON QUANTUM ADDITION, QUASHED THE NOTICES ISS UED U/S 153/153C OF THE ACT WERE HELD TO BE INVALID, RESULTANTLY THE ASSESSMENT ORDERS PASSED U/S 143(3) R.W.S 153C DATED 29/12/2008 WERE CANCELLED. IDENTICALLY, FOR ASSESSMENT YEAR 2001-02 AND 2003-0 4 IN THE CASE OF ASSESSEE ITSELF, THE TRIBUNAL VIDE ORDE R DATED 02/01/2017 (ITA NO.2179 AND 2180/MUM/2016) DELETED THE PENALTY. IN VIEW OF THIS FACTUAL MATRIX, WE A RE OF THE VIEW THAT PENALTY IMPOSED U/S 271(1)(C) WILL NOT SU RVIVE. ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 6 OUR VIEW FIND SUPPORT FROM THE DECISION IN K.C. BUI LDERS VS ACIT (2004) 265 ITR 562 (SC) AND THE RATIO LAID DOWN IN CIT VS S.P. VIZ, 176 ITR 76 (PATNA). EVEN OTHERW ISE, WHEN THE QUANTUM ADDITION IS DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMEN T OR FURNISHING INACCURATE PARTICULARS. THE PENALTY CANN OT STAND ON ITS LEGS WHEN ADDITION ON THE BASIS OF WHI CH THE PENALTY WAS IMPOSED REMAINS NO MORE IN EXISTENCE, T HUS, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 11/04/2017. SD/- SD/ - (RAJENDRA) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; # DATED : 11/04/2016 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. ++ , ( %& ) / THE CIT, MUMBAI. ITA NO.2181 TO 2183/MUM/2016 MR. PRAKASH P. MALI 7 4. ++ , / CIT(A)- , MUMBAI, 5. /01)2 , +%& %23 , / DR, ITAT, MUMBAI 6. 145 / GUARD FILE. ! / BY ORDER, */&) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI