The DCIT, Central Circle-1(1), Ahmedabad V. Shri Umang H. ThaKkar, Ahmedabad

ITA 2404/AHD/2008

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 6163 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-07-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 25-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Unexplained cash credit; Depreciation; Corroborative evidences; Valuation report; Set aside
• Section: 143(3); 153A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NOS. 2404 & 2405/AHD/2008 ( ASSESSMENT YEARS : 1999-2000 & 2000-01) DCIT CENTRAL CIRCLE-1(1), ROOM NO. 303, AAYKAR BHAVAN, AHMEDABAD / VS. SHRI UMANG H THAKKAR 305, SAHAJANAND PLAZA, BHATTA CHAR RASTA, PALDI, AHMEDABAD ( APPELLANT ) .. ( / RESPONDENT ) & ./ I.T.A. NO. 2146/AHD/2008 ( ASSESSMENT YEAR : 1999-2000) SHRI UMANG H THAKKAR DHARMADEV HOUSE, SHYAMAL CROSS ROAD, SATELLITE, AHMEDABAD 380015 / VS. THE DY. COMM. OF INCOME TAX CENTRAL CIRCLE-1(1), AHMEDABAD ./ ./ PAN/GIR NO. : AAVPT8621R ( APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY : SHRI O. P. VAISHNAV, CIT. D.R. / ASSESSEE BY : SHRI BANDISH SOPARKAR, A.R. DATE OF HEARING 07/08/2019 !'# / DATE OF PRONOUNCEMENT 11/09/2019 / O R D E R ITA NOS.2404, 2405 & 2146/AHD/08 [SHRI UMANG H THAKKAR] A.Y. 1999-2000 & 2000-01 - 2 - PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS AT THE INSTANCE OF ASSESSEE & REVENUE ARISE FROM THE RESPECTIVE ORDERS OF THE COMMISSIONER OF I NCOME TAX (APPEALS)- III, AHMEDABAD (CIT(A)) AGAINST RESPECTIVE ASSESS MENT ORDERS FOR DIFFERENT ASSESSMENT YEARS AS TABULATED BELOW: ITA NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS ORDER DATED AOS ORDER UNDER SECTION 2404 & 2146/AHD/08 SHRI UMANG H. THAKKAR 1999- 2000 28.03.2008 29.12.2006 153A(B) OF THE INCOME TAX ACT, 1961 2405/AHD/08 -DO- 2000- 2001 28.03.2008 29.12.2006 153A(B) OF THE ACT 2. BOTH ASSESSEE AND REVENUE HAVE FILED CROSS APPEA LS AGAINST THE ORDER OF THE CIT(A) DATED 28.03.2008 CONCERNING AY 1999-2000. T HE ISSUE INVOLVED BEING COMMON BOTH THE APPEALS ARE DISPOSED OF BY COMMON ARE AS U NDER: ITA NOS. 2404 /AHD/2008 - AY 1999-2000 (REVENUES APPEAL) 1 THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN ADM ITTING THE FRESH EVIDENCE U/S. 46A WITHOUT CONSIDERING THE A.OS OBJECTION THAT NONE O F THE CONDITIONS MENTIONED UNDER THAT RULE WAY-SATISFIED. 2 THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITIONS OF RS.21,46,280/- AND RS.38,52,800/- MADE ON ACCOUNT O F UNEXPLAINED CAPITAL AND UNEXPLAINED CASH CREDITS RESPECTIVELY WITHOUT CONS IDERING THE FACTUAL POSITION THAT THE ASSESSEE FAILED TO PROVE IDENTITY AND CAPA CITY OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS. 3 THE CIT (A) HAS ERRED IN LAW AND-ON FACTS IN DELE TING THE ADDITION OF RS.1,85,634/- MADE ON AMOUNT OF UNVERIFIABLE REPAIR EXPENSE WITHOUT CONSIDERING THE FINDINGS OF THE A.O. THAT THE ASSESSEE FAILED T O PROVE THCS.5 EXPENSES BY SUPPORTING EVIDENCE. 4 THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.66,233/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST FOR NON -BUSINESS USE OF THE BORROWED FUNDS WITHOUT CONSIDERING THE FACT THAT BORROWED FU NDS WERE USED FOR NON- BUSINESS PURPOSE. 5 THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTR ICTING THE ADDITION OF RS.8,78,756/- TO RS.4,69,849/- MADE ON ACCOUNT OF U NEXPLAINED INVESTMENT IN RESIDENTIAL HOUSE AM HOTEL BUILDING WITHOUT CONSIDE RING AND APPRECIATING THE VALUATION REPORT OF DISTRICT VALUATION OFFICER. ITA NOS.2404, 2405 & 2146/AHD/08 [SHRI UMANG H THAKKAR] A.Y. 1999-2000 & 2000-01 - 3 - ITA NOS. 2146/AHD/2008 - AY 1999-2000- (ASSESSEES APPEAL) 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 49,168/- FOR THE ALLEGED EXCESS DEPRECIATION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6,798/- MADE BY T HE A.O. @ 20% OF THE EXPENSES ON TELEPHONE/ MOBILE. 3. THE LEARNED COMMISSIONER OF INCOME TAX OFFICER (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.4,69,849/- IN RESPECT OF HOTEL NEELTOP . 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE AT THE OUTSET ADVERTED TO THE ADDITIONAL GROUND FILED IN R ELATION TO ITA NO.2146/AHD/2008 RAISING A LEGAL OBJECTION. THE ADDITIONAL GROUND S O RAISED READS AS UNDER: APPELLANT CRAVES LEAVE TO RAISE THIS ADDITIONAL GR OUND OF APPEAL BEFORE THE HON'BLE ITAT. THIS IS A LEGAL GROUND AND THEREFORE AS PER T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER (229 TTR 383) IT CAN BE RAISED BEFORE THE HON'BLE ITAT. 1. BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITIONS IN THE ASSESSMENT UNDER SECTION 143(3) R. W.S. 153A IGNORING THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURIN G COURSE OF SEARCH FOR MAKING SUCH ADDITIONS AND HENCE SUCH ADDITIONS ARE REQUIRED TO BE DELETED. IT BE SO HELD NOW. 4. AS PER ADDITIONAL GROUND, THE ASSESSEE HAS CHALL ENGED THE JURISDICTION USURPED BY THE AO UNDER S.153A OF THE ACT TOWARDS ADDITIONS/DI SALLOWANCES MADE IN THE CONSEQUENT ASSESSMENT PROCEEDINGS OWING TO SEARCH OPERATIONS. IN VIEW OF THE PRELIMINARY OBJECTION OF THE ASSESSEE WHICH SEEKS TO PUT QUESTION MARK OV ER THE LEGITIMACY OF THE ADDITIONS/DISALLOWANCES MADE UNDER S.153A OF THE AC T, WE DEEM IT EXPEDIENT TO DISPOSE OF THE AFORESAID PRELIMINARY GROUND AT THE THRESHOL D AS IT STRIKES TO ROOT OF THE MATTER. 5. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD .AR FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ADDITIONS/DISALLOWANCES MADE IN ALL THE CAPTIONED APPEALS HAS NO RATIONAL CONNECTION OR LIVE LINK WITH MATERIAL FOUN D IN THE COURSE OF SEARCH ACTION CARRIED OUT UNDER S.132 OF THE I.T.ACT ON 09/02/2005 IN DHA RAMDEO BUILDERS GROUP OF CASES. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT PRIOR TO THE SEARCH, THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME UNDER S.139 OF THE ACT ON 31.08.1999 DISCLOSING TOTAL INCOME OF RS.1,97,060/-. THE REGULAR ASSESSMENT RELATING TO AY 1999-2000 AS WELL AS 2000-01 IN ITA NOS.2404, 2405 & 2146/AHD/08 [SHRI UMANG H THAKKAR] A.Y. 1999-2000 & 2000-01 - 4 - APPEAL FALLING WITHIN THE PERIOD OF 6 ASSESSMENT YE ARS REFERRED TO IN SECTION 153A(1) HAD STOOD CONCLUDED AND WERE NOT PENDING ON THE DATE OF INITIATION OF SEARCH UNDER S.132 OF THE ACT. THEREFORE, THE REGULAR ASSESSMENT SURVIVE S AND DOES NOT GET ABATED. IT WAS FURTHER VEHEMENTLY ASSERTED THAT THE ASSESSMENT ORD ER WAS FRAMED MAKING CERTAIN OBSERVATIONS ON RE-APPRECIATION OF FACTS ALREADY DI SCLOSED/AVAILABLE WITH THE DEPARTMENT PRIOR TO SEARCH. IT WAS FURTHER VEHEMENTLY ASSERT ED THAT THE ADJUSTMENTS MADE IN THE SEARCH ASSESSMENTS ARE POSSIBLY SUBJECT MATTER OF R EGULAR ASSESSMENT AND DO NOT RESONATE WITH THE SCHEME OF SEARCH ASSESSMENT UNDER S.153A O F THE ACT DE HORS REFERENCE TO ANY INCRIMINATING MATERIAL IN THIS REGARD. THE LEARNED AR REITERATED THAT BOTH THESE ASSESSMENTS STOOD CONCLUDED ON THE DATE OF SEARCH A ND WERE NOT PENDING FOR ASSESSMENT AND HENCE IN THE ABSENCE OF INCRIMINATING MATERIAL, NO ADJUSTMENT IN THE RETURNED INCOME IS PERMISSIBLE UNDER SECTION 153A OF THE ACT. THE LEARNED AR THEREAFTER SUBMITTED THAT THE LAW IS WELL SETTLED IN THIS REGARD. A REFERENC E WAS MADE TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. SAUMYA CONSTRUCTION PVT. LTD. (2016) 387 ITR 529 (GUJ.) FOR THE PROPOSITION THAT ONLY UNDISCLOSED INCOME A ND UNDISCLOSED ASSETS DETECTED DURING SEARCH CAN BE BROUGHT TO TAX UNDER S. 153A OF THE ACT. IT WAS THUS CONTENDED THAT THE REVENUE IS NOT ENTITLED TO MAKE ADDITIONS/DISALLOWANCES UNRELATED TO OR UNCONNECTED WITH INCRIMINATING MATERIAL FOUND IN TH E COURSE OF SEARCH WHERE THE ASSESSMENTS WERE NOT PENDING AND STOOD COMPLETED ON THE DATE OF SEARCH. THE LEARNED AR FURTHER SUBMITTED THAT THE NARROWER SWEEP OF PRO CEEDINGS UNDER S.153A OF THE ACT HAS BEEN FORTIFIED BY SEVERAL JUDGMENTS OF THE HONBLE HIGH COURTS AND TRIBUNALS. THE LEARNED AR THUS SUBMITTED IN CONCLUSION THAT IN VIE W OF THE INHERENT LACK OF JURISDICTION IN CARRYING OUT THE ADDITIONS/DISALLOWANCES AS MADE BY THE AO IN SECTION 153A PROCEEDINGS, THE CONTROVERSY CROPPED UP IN RESPECTI VE APPEALS FLOWING FROM THE ORDERS OF THE CIT(A) / AO IS INFRUCTUOUS AT THE THRESHOLD. 6. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ACTION OF THE AO. ON A SPECIFIC QUERY FROM THE BENCH, THE LEARNE D DR COULD NOT CONTROVERT ASSERTIONS MADE ON BEHALF OF THE ASSESSEE ABOUT THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH WHICH HAS ANY BEARING ON THE ADDIT IONS/DISALLOWANCES IN CONTROVERSY. 7. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS AND PERUSED THE CASE RECORDS. THE FIRST AND FOREMOST CONTROVERSY THAT ARISES FOR ADJUDICATION IS ON THE SCOPE AND AMBIT OF ASSESSMENT PROCEEDINGS UNDER S.153A OF THE ACT. THE CASE PROPOUNDED ON BEHALF OF ITA NOS.2404, 2405 & 2146/AHD/08 [SHRI UMANG H THAKKAR] A.Y. 1999-2000 & 2000-01 - 5 - THE ASSESSEE THAT ADDITIONS/DISALLOWANCES MADE IN SECTION 153A PROCEEDINGS HAS NO RATIONAL CONNECTION WITH INCRIMINATING MATERIAL, IF ANY, FOUND AS A RESULT OF SEARCH REMAINS UNDISPUTED. IT IS ALSO NOT DISPUTE THAT AS SESSMENT PERTAINING TO THE ASSESSMENT YEARS IN QUESTION VIZ. AYS. 1999-2000 & 2000-01 STO OD CONCLUDED EITHER UNDER S.143(1) OR UNDER S.143(3) OF THE ACT AND WERE NOT PENDING A T THE TIME OF SEARCH. IN THE BACKDROP OF THESE FACTS, WE STRAIGHTWAY NOTICE THAT THE SCOP E OF ASSESSMENT UNDER S.153A OF THE ACT IN RESPECT OF COMPLETED ASSESSMENT IS CIRCUMSCRIBED BY THE CONDITION THAT THE ADDITIONS/DISALLOWANCES MUST HAVE SOME BEARING WITH THE INCRIMINATING MATERIAL DETECTED IN THE COURSE OF SEARCH. THE SCOPE OF ASSESSMENT U NDER S.153A OF THE ACT IN RESPECT OF CONCLUDED ASSESSMENT IS THUS NARROWER IN ITS SWEEP AS HELD IN LONG LINE OF JUDICIAL PRECEDENTS INCLUDING THE DECISION RENDERED BY THE H ONBLE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTION (SUPRA), PCIT VS. DEEPAK J PANCHAL (20 17) 397 ITR 0153 (GUJ), CIT VS. DEEPAKKUMAR AGRAWAL (2017) 398 ITR 586 (BOMBAY) & P RIYA HOLDINGS PVT. LTD. VS. ACIT (2018) 90 TAXMANN.COM 408 (AHD). WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN PR.CIT VS. MEETA GUTGUTIA (2017) 82 TAXMAN N.COM 287 (DELHI) EXPRESSED THE SAME VIEW, THE SLP AGAINST WHICH FILED BY THE REVEN UE WAS DISMISSED AS REPORTED IN (2018) 96 TAXMANNC.OM 468 (SC). IN THE LIGHT OF TH E CONSISTENT VIEW BY HIGHER JUDICIAL FORUM, THE POSITION OF LAW IS EXPLICITLY CLEAR. IN THE ABSENCE OF ANY CONNECTION WITH THE INCRIMINATING MATERIAL, THE ADDITIONS/DISALLOWANCES IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO INITIATION OF SEARCH ARE NOT PERMISSIBLE I N LAW. 8. IN THE ABSENCE OF ANY INCRIMINATING MATERIALS SH OWN TO BE FOUND IN THE COURSE OF SEARCH, THE ACTION OF THE AO IS CONTRARY TO THE POS ITION OF LAW JUDICIALLY ENUMERATED. THEREFORE, WHERE THE ADDITIONS/DISALLOWANCES ITSELF ARE UNSUSTAINABLE AND BAD IN LAW, THE CONTROVERSY CROPPED UP IN THE RESPECTIVE APPEALS OF BOTH SIDES ON MERITS OF ADDITIONS/DISALLOWANCES IS RENDERED NON EST . IN THE LIGHT OF THE AFORESAID TRANSACTIONS, THE ADDITIONS/DISALLOWANCES MADE IN ASSESSMENT FRAMED U NDER S.153A OF THE ACT IS DEVOID OF ANY LEGITIMACY. UNDER THE CIRCUMSTANCES, THE ADDIT IONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED AT THE THRESHOLD AS THE ACTION OF THE AO ITSELF SUFFERS FROM LACK OF JURISDICTION. THE O RDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE AO IS DIRECTED TO CANCEL THE ADDITION S/DISALLOWANCES MADE WITHOUT REFERENCE TO THE INCRIMINATING MATERIAL. ITA NOS.2404, 2405 & 2146/AHD/08 [SHRI UMANG H THAKKAR] A.Y. 1999-2000 & 2000-01 - 6 - 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED FOR AY 1999-2000. 10. WE NOW ADVERT TO ITA NO. 2405/AHD/2008 CONCERNI NG AY 2000-01. THE FACTS AND CIRCUMSTANCES IN THE CAPTIONED REVENUES APPEAL ARE IDENTICAL TO AY 1999-2000 (SUPRA). THUS FOR THE SIMILARITY OF REASONS, THE A PPEAL OF THE REVENUE IS REQUIRED TO BE DISMISSED AT THE THRESHOLD. 11. IN THE COMBINED RESULT, BOTH THE APPEALS OF REV ENUE ARE DISMISSED AND THE ASSESSEES APPEAL FOR AY 1999-2000 IS ALLOWED. SD/- SD/- (RAJPAL YADAV) (PRADIP KU MAR KEDIA) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD: DATED 11/09/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 11/09/20 19