DR SARITA MILIND DAVARE, MUMBAI V. ACIT CEN CIR 40, MUMBAI

ITA 2183/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100899 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2014
• Court: TRIBUNAL
• Department Lawyers: NEELIMA V NADKARNI
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Gift
• Section: 80C; 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 2183/M/2014 (AY:2005 - 200 6 ) I.T.A. NO. 2184/M/2014 (AY:2006 - 200 7 ) DR. SARITA MILIND DAVARE, FLAT NO.501, SWAPNA APARTMENT, PARANJPE SCEME B, VILE PARLE (E), MUMBAI 400 057. / VS. ACIT, CENTRAL CIRCLE - 40, MUMBAI. ./ PAN : AHVPD8632R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY C. KOTHARI / RESPONDENT BY : MS. NEELIMA V. NADKARNI, DR / DATE OF HEARING : 02 .07.2015 / DATE OF PRONOUNCEMENT : 01 .09 .2015 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07. SINCE, THE ASSESSEE RAISED THE IDENTICAL ISSUES IN BOTH THE APPEALS, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. ITA NO.2183/M/2014 (AY 2005 - 06) 2. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 38, MUMBAI DATED 27.12.2013 FOR THE ASSESSMENT YEAR 2005 - 06. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN CONFIRMING THE PROCEEDINGS U/S 153A OF THE ACT EVEN THOUGH NO ASSESSMENT OR RE - ASSESSMENT PROCEEDINGS IN RELATION TO THIS YEAR WERE PENDING AS ON THE DATE OF SEARCH U/S 132 AND WHILE DOING SO HE AMONGST ERRED IN: A. ASSESSING THE INVESTMENTS MADE IN NSC OF RS. 4,60,000/ - BY THE GRANDFATHER OF THE APPELLANT IN THE NAME OF THE APPELLANT AS UNDISCLOSED INCOME OF THE APPELLANT. B. WRONGLY ASSUMING THAT THE APPELLANT HAD MADE AN ADMISSION OF UNDISCLOSED INCOME OF RS. 4,60,000/ - IN THE RETURN OF INCOME FILED U/S 153A. C. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT (A) ERRED IN NOT ADJUDICATING THE CLAIM OF APPELLANT FOR GRANTING DEDUCTIO N U/S 80C ON ACCOUNT OF INVESTMENTS MADE IN NSC. 2 2. THE LD CIT (A) ERRED IN COMPUTING THE INTEREST U/S 234A WRONGLY GIVING A CREDIT OF TAXES AS OF 9 TH MARCH, 2011 AS AGAINST 12 TH JANUARY, 2010 IE THE D ATE OF SEARCH U/S 132 OF THE ACT, WHEN THE CASH WAS SEI ZED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN PRACTICING IN THE AREA OF CONSULTING PAIN AND WEIGHT MANAGEMENT AND ATTACHED TO TILAK HOSPITAL POLYCLINIC, MUMBAI . ASSESSEE FILED THE RETURN OF INCOME ORIGINALLY U/S 139(1) OF THE ACT ON 29.3. 2006 DECLARING THE TOTAL INCOME OF RS. 1,37,360/ - . THERE WAS A SEARCH ACTION U/S 132 OF THE ACT ON THE ASSESSEE ON 12.10.2010. DURING THE SEARCH, THE NATIONAL SAVINGS CERTIFICATES (NSC) WERE FOUND IN THE POSSESSION OF THE ASSESSEE AND HOWEVER, THEY WERE NOT SEIZED AS THEY WERE FOUND DISCLOSED IN THE RETURN OF INCOME. NOTICE U/S 153A OF THE ACT WAS ISSUED ON 3.9.2010 . IN RESPONSE TO THE SAME, ASSESSEE FILED THE RETURN OF INCOME CONTAINING THE DISCLOSURE OF UNDISCLOS ED INCOME TO THE EXTENT OF INVESTMENTS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE NSCS, WHICH WAS DISCLOSED IN THE RETURN OF INCOME WERE TREATED BY THE ASSESSEE AS DISCLOSED ASSETS. IT IS AN UNDISPUTED FACT THAT THE NSCS, WHICH IS THE SUBJECT MATTER OF AD DITION BY THE AO AND APPEAL BEFORE THE TRIBUNAL, WERE NOT SEIZED BY THE DEPARTMENT DURING THE SAID SECTION ACTION. DURING THE ASSESSMENT PROCEEDINGS U/S 153A R.W.S 143(3) OF THE ACT, THE SOURCE OF INVESTMENT TO THE NSCS TO THE EXTENT OF RS. 4.6 LAKHS WAS THE AREA OF CONTENTION BETWEEN THE ASSESSEE AND THE AO. IN RESPONSE TO THE AOS QUERY IN THIS REGARD, ASSESSEE SUBMITTED THAT THE SAID NSCS WORTH RS. 4.6 LAKHS WERE INVESTED BY THE GRANDFATHER OF THE ASSESSEE BY WAY OF GIFT. THE ASSESSEE FILED THE WRITTE N EXPLANATION LETTER DATED 10.3.2011. HOWEVER, ASSESSEE COULD NOT FURNISH EVIDENCES IN SUPPORT OF THE SAME AS THE DONOR OF THE SAID GIFT WAS EXPIRED BY THAT TIME. ASSESSEES EXPLANATION WAS REJECTED BY THE AO , AND THE AO PRO CEEDED TO MAKE AN ADDITION IN THE IMPUGNED ASSESSMENT. ACCORDINGLY, THE ASSESSED INCOME WAS DETERMINED AT RS. 14,87,553/ - . AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE IS IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTH ORITY, ASSESSEE RAISED THE LEGAL ISSUE THAT WHEN THE TIME LIMITATION FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT HAS LAPSED WITH REFERENCE TO THE ORIGINAL RETURN OF INCOME U/S 139(1) OF THE ACT, THE SAID ASSE SSMENT IS TO BE CONSIDERED AS NON - ABATED ASSESSMEN T. IN SUCH CASES, THE 3 ADDITIONS MADE BY THE AO IN THE RE - OPENED ASSESSMENT SHOULD BE RESTRICTED TO THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION. FOR THIS PROPOSITION, ASSESSEE RELIED ON THE COORDINATE BENCH DECISION IN THE CASE OF GURINDER S INGH BAWA VS. D CIT IN ITA NO.2075/MUM/2010 (AY 2005 - 06), DATED 16.11.2012 ALONG WITH OTHER DECISIONS IE (I) ANIL P KHIMANI VS. DCIT IN ITA NOS. 2855/M/2008 (1999 - 2000) ; (II) SHRI GOVIND AGARWAL VIDE ITA NO.3389/M/2011 AND (III) JUDGEMENT OF THE HONBLE RAJ ASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) LTD 259 CTR 281 (RAJ.). FURTHER, REFERRING TO THE SAID NSCS, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE SAME CANNOT CONSTITUTE INCRIMINATING MATERIAL AS THEY WERE DISCLOSED IN THE RETURN OF INCOME, AN D THEY WERE NOT SEIZED BY THE SEARCH TEAM, ON FINDING THAT THEY WERE NOT ACCOUNTED FOR IN THE RETURN OF INCOME. FURTHER, HE SUBMITTED THAT IT IS A DIFFERENT CASE WHERE THE ADDITION WAS MADE BY THE AO WHICH IS OF COURSE DISPUTED BY THE ASSESSEE. CIT (A) D ID NOT ACCEPT THE ABOVE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO. AND DISMISSED THE APPEAL. AGAIN AGGRIEVED WITH THE DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GRO UNDS. 5. DURING THE PR OCEEDINGS BEFORE US, IN CONNECTION WITH GROUND NO.1 WITH ITS SUB - GROUNDS, LD COUNSEL FOR THE ASSESSEE REITERATED THE ABOVE REFERRED ARGUMENTS OF THE ASSESSEE MADE BEFORE THE CIT (A) AND MENTIONED THAT THE COORDINATE BENCH DECISIONS AR E REQUIRED TO BE FOLLOWED. HE ALSO SUBMITTED WITHOUT PREJUDICE THAT IN CASE THE ADDITION IS CONFIRMED ON MERITS, ASSESSEE IS ENTITLED TO DEDUCTION U/S 80C OF THE ACT IN RESPECT OF THE NSCS AS PER THE LAW. HOWEVER, HE MENTIONED THAT ASSESSEE SHOULD BE ENT ITLED TO RELIEF ON THE LEGAL ISSUE THAT NO ADDITION IS REQUIRED TO BE MADE WHEN NO INCRIMINATING MATERIAL IS SEIZED IN THE CASE OF NON - ABATED ASSESSMENT, AS THE SAID ASSESSMENT IS COMPLETED IN ALL RESPECTS. 6. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIE D ON THE ORDER OF THE AO AND THE CIT (A) AND ARGUED VEHEMENTLY AGAINST THE GROUND RAISED BY THE ASSESSEE. 7. I HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSUE IF THE NSCS WHICH WERE FOUND IN THE RETURN OF INCOME OF THE ASSESSEE CONSTITUTE INCRIMINATING MATE RIAL WHEN THEY ARE FOUND AND NOT SEIZED BY THE SEARCH TEAMS. THIS IS AN UNDISPUTED FACT THAT THE TIME HAS EXPIRED FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT BY THE AO IN RESPECT OF THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT. ON PERUSAL OF THE CITED C OORDINATE BENCH 4 DECISION IN THE CASE OF GURINDER SINGH BAWA (SUPRA), WE FIND THE CASE ON HAND CONSTITUTES A CASE OF NON - ABATED ASSESSMENT. IN THAT CASE, THE RE - ASSESSMENT MADE U/S 153A R.W.S 143(3) OF THE ACT SHOULD BE RESTRICTED TO THE INCRIMINATING MATE RIAL GATHERED DURING THE SEARCH ACTION. REGARDING THE NSCS, WE FIND THEY WERE UNDISPUTEDLY F OUND ACCOUNTED IN THE RETURN OF INCOME / P & L ACCOUNT OF THE ASSESSEE. THEREFORE, THE SEARCH TEAMS DID NOT SEIZED WHERE THE SEIZURE OF ANY DOCUMENT PROVIDES SOME COLOUR OF INCRIMINATING NATURE TO ANY DOCUMENT. THE SAME IS MISSING IN THIS CASE AS THE NSCS WERE FOUND ACCOUNTED FOR IN THE P & L ACCOUNT OF THE ASSESSEE. FROM THIS POINT OF VIEW, IN MY CONSIDERED OPINION, THE IMPUGNED NSCS SHOULD NOT BE TREATED AS AN INCRIMINATING MATERIAL. CONSEQUENTLY, THE ADDITION OF RS. 4.6 LAKHS MADE BY THE AO RELYING ON SUCH ACCOUNTED NSCS IS NOT UNSUSTAINABLE IN LAW. THUS, THE LEGAL GROUND RAISED BY THE ASSESSEE STANDS ALLOWED IN HIS FAVOUR. CONSIDERING MY DECISION ON THE LEG AL GROUND, I AM OF THE OPINION THAT THERE IS NO NEED FOR ADJUDICATING THE MERITS OF THE ADDITION OF RS. 4.6 LAKHS. ACCORDINGLY, THIS PART OF THE GROUND IS DISMISSED AS ACADEMIC. 8. FURTHER, IN CONNECTION WITH GROUND NO.1(C) OF THE APPEAL, IT IS THE RESPON SIBILITY OF THE ASSESSING OFFICER TO GRANT DEDUCTION U/S 80C OF THE ACT AS THE CLAIM IS BORNE IN THE RETURN OF INCOME ITSELF. IT IS THE DUTY OF THE AO TO MAKE ASSESSMENT AS PER THE LAW AND GRANT ALLOWABLE DEDUCTIONS AS PER THE PROVISIONS OF LAW. ACCORDIN GLY AO IS DIRECTED. 9. GROUND NO.2 RELATES TO THE COMPUTATION OF INTEREST U/S 234 OF THE ACT. DURING THE PROCEEDINGS BEFORE US, IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE DID NOT ARGUED MUCH ON THIS ISSUE AS SUCH, THE SAI D SECTION 234 IS OMITTED W.E.F 1.4.1989 . IT IS MOST PROBABLE THERE IS AN ERROR IN QUOTING OF THE SAID SECTION 234 IN THE GROUNDS OF APPEAL. THE SIMILAR ERROR WAS FOUND IN FORM NO.35 BEFORE THE CIT (A) ALSO. CONSIDERING ALL THESE FACTS, I FIND THE ORDER OF THE CIT (A) GIVEN IN PARA 6 OF THE CIT (A) ORDER IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 IS DISMISSED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 5 ITA NO.2184/M/2014 (AY 2006 - 07 ) 11. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 38, MUMBAI DATED 27.12.2013 FOR THE ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN CONFIRMING THE PROCEEDINGS U/S 153A OF THE ACT EVEN THOUGH NO ASSESSMENT OR RE - ASSESSMENT PROCEEDINGS IN RELATION TO THIS YEAR WERE PENDING AS ON THE DATE OF SEARCH U/S 132 AND WHILE DOING SO HE AMONGST ERRED IN: A. ASSESSING THE INVESTMENTS MADE IN NSC OF RS. 2,20,000 / - BY THE GRANDFATHER OF T HE APPELLANT IN THE NAME OF THE APPELLANT AS UNDISCLOSED INCOME OF THE APPELLANT. B. WRONGLY ASSUMING THAT THE APPELLANT HAD MADE AN ADMISSION OF UNDISCLOSED INCOME OF RS. 4,60,000/ - IN THE RETURN OF INCOME FILED U/S 153A. C. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT (A) ERRED IN NOT ADJUDICATING THE CLAIM OF APPELLANT FOR GRANTING DEDUCTION U/S 80C ON ACCOUNT OF INVESTMENTS MADE IN NSC. 2. THE LD CIT (A) ERRED IN COMPUTING THE INTEREST U/S 234A WRONGLY GIVING A CREDIT OF TAXES AS OF 9 TH MARCH, 2011 AS AGAINST 1 2 TH JANUARY, 2010 IE THE DATE OF SEARCH U/S 132 OF THE ACT, WHEN THE CASH WAS SEIZED. 12. IN THIS APPEAL, ASSESSEE RAISED THE ABOVE GROUNDS WHICH ARE IDENTICAL TO THAT OF THE GROUNDS RAISED FOR THE AY 2005 - 06 AND THE ONLY DIFFERENCE IS IN FIGURES. WHIL E ADJUDICATING THE SAID APPEAL, I HAVE ALREADY DECIDED TH E LEGAL ISSUE INVOLVED THEREIN IN FAVOUR OF THE ASSESSEE. CONSIDERING THE COMMONNESS OF THE ISSUES INVOLVED IN THE PRESENT APPEAL AS WELL AS THE APPEAL FOR THE AY 2005 - 06, WHICH IS ADJUDICATED IN THE ABOVE PARAS OF THIS ORDER, I AM OF THE OPINION, THE DECISION GIVEN THEREIN FOR THE AY 2005 - 06 SQUA RELY APPLIES TO THE INSTANT APPEAL TOO. CONSIDERING THE SAME, THE LEGAL ISSUE RAISED IN GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE AND GROUND NO.2 IS DISMISSED. 13. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST SEPTEMBER, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 1 . 9 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 6 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI