SHRI ANIRUDDHA R RANDER, NAGPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), NAGPUR

ITA 255/NAG/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5582 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 11-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP HEDAOO
• Keywords: Revision of order; Opportunity of being heard; Assessment record; Set aside
• Section: 263; 132; 56(2)(vii)(b); 143(3); 153A

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ,नागप ु र मɅ । IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (Through Virtual Hearing at Raipur) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 255/NAG/2018 Ǔनधा[रण वष[ / Assessment Year : 2014-15 Shri Anirudha Ramesh Rander, Sarvodaya Cloth Market, GandhiBaug, Nagpur-440 002 PAN : AYSPR5004R .......अपीलाथȸ / Appellant बनाम / V/s. The Pr. Commissioner of Income Tax (Central), Nagpur. ......Ĥ×यथȸ / Respondent Assessee by : Shri Vijay Chandak, CA Revenue by : Shri Pradeep Hedaoo, CIT-DR स ु नवाई कȧ तारȣख / Date of Hearing :16.02.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 30.03.2022 2 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed u/s 263 of the Income-tax Act, 1961 (for short ‘the Act’), dated 27.09.2018 by the Pr. Commissioner of Income Tax (Central), Nagpur (for short ‘Pr. CIT’), which in turn arises from the order passed by the A.O dated 28.11.2016 under Sec. 153A r.w.s 143(3) of the Act, for assessment year 2014-15. Before us the assessee has assailed the impugned order on the following grounds of appeal : “1. That the order u/s.263 is erroneous and bad in law and therefore, it is liable to be cancelled. 2. That the Original Asst Order was passed on 21.12.2014 and again u/s.143(2) r.w.s153A was passed on 28.11.2016. Thus, the order u/s.163 is without jurisdiction as out of time limit with reference to order dt.21.12.2014 and issue u/s.263 could not be the matter u/s.143(3) read with 153A. 3. That the order u/s.263 is vitiated in law in as much as there is no payment effected in Asst. year 2014-15 and full payment was effected in Asst. Year 2012-13 itself when the provision of section 56(2)(vii)(b) were not applicable. 4. That the order u/s.263 dt.27.09.2018 is further vitiated in law as on the order u/s.263 on the basis of which demand is raised against the assessee on 20.06.2018 as per E portal of Dept. was already passed. Assessee applied for copy of which 3 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 is yet to be received as this 263 order is not serve3d on assessee- Appellant. 5. That in any case the order u/s.263 is liable to be cancelled.” 2. Succinctly stated, search and seizure proceedings were conducted u/s 132 of the Act at the office premises of Rander Group of cases on 12.02.2015 and the assessee was therein covered. In compliance to notice u/s 153A of the Act, dated 31.08.2015, the assessee e-filed his return of income for the assessment year 2014-15 on 03.07.2016, declaring a total income of Rs.8,77,340/-. Subsequently assessment was framed by the Assessing Officer vide his order passed u/s.153A r.w.s.143(3) of the Act, dated 28.11.2016, determining the total income of the assessee at Rs.8,77,340/-, i.e, as returned. 3. After completion of the assessment proceedings the Pr. CIT called for the assessment records of the assessee. It was observed by the Pr. CIT that a perusal of the records, revealed, that a ‘sale deed’ was executed on 22.10.2013 between Shri Anil Tukaramji Sawarkar R/o Somalwada Wardha Road, Nagpur and the assessee, i.e, Shri Aniruddha Ramesh Rander, R/o. “Sarvodya” Cloth Market, Gandhi 4 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 Baug, Nagpur. Observing, that while for the consideration that had changed hands as per the ‘sale deed’ was Rs. 30 lacs, however, the market value of the property under consideration was Rs.60,06,000/-, the Pr. CIT held a conviction that the failure on the part of the Assessing Officer to have made an addition of the aforesaid difference of Rs.30,06,000/- [Rs.60,06,000 (-) Rs.30,00,000/-] had therein rendered the assessment order passed by him u/s..153A r.w.s.143(3), dated 28.11.2016 as erroneous in so far it was prejudicial to the interest of the revenue u/s 263 of the Act. 4. Backed by his aforesaid observation, the Pr. CIT vide order passed u/s. 263 of the Act, dated 27.09.2018 held the order passed by the Assessing Officer u/s 153A r.w.s 143(3) of the Act, dated 28.11.2016 as erroneous in so far it was prejudicial to the interest of the revenue and, set-aside the assessment order with a direction to the Assessing Officer to frame a fresh assessment after affording a reasonable opportunity of being heard to the assessee. 5 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 5. Aggrieved, the assessee has assailed the impugned order passed by the Pr. CIT u/s.263 of the Act, dated 27.09.2018 before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Controversy involved in the present appeal lies in a narrow compass, i.e, as to whether or not the Pr. CIT had validly assumed jurisdiction u/s.263 of the Act and, therein, set-aside the assessment order passed by the Assessing Officer u/s.153A r.w.s.143(3), dated 28.11.2016. 7. Shorn of unnecessary details, search and seizure proceedings u/s. 132 of the Act were conducted on Rander Group of cases on 12.02.2015. As stated by the Ld. Authorized Representative (for short ‘AR’), no incriminating material pertaining to the assessee were found during the course of the search proceedings. Backed by the aforesaid facts, it is the claim of the Ld. AR, that as on the date of initiation of 6 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 the search proceedings u/s 132 of the Act, i.e, on 12.02.2015, no assessment or re-assessment relating to the assessment year in question, i.e, AY 2014-15 was pending, therefore, it was a case of an unabated assessment in the case of the assessee before us. It was the claim of the Ld. AR that as no incriminating material in the course of the search proceedings relating to the assessee was found, therefore, the Assessing Officer considering the fact that the assessment in the case of the assessee for the year under consideration was unabated on the date of search, thus, remaining well within the realm of his jurisdiction had not made any addition. It was claimed by the Ld. AR that now when the Assessing Officer in the absence of any incriminating material relating to the assessee could not have made any addition as regards the unabated assessment of the assessee for the year under consideration, therefore, the Pr. CIT could not have stepped in and exercised his revisionary jurisdiction u/s.263 of the Act, and, held the assessment order passed by the Assessing Officer u/s.153A r.w.s.143(3) of the Act dated 28.11.2016 as erroneous. In sum and substance, it was the claim of the Ld. AR, that now when in 7 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 the absence of any incriminating material relating to the assessee having been found during the course of search proceedings, the Assessing Officer stood divested of his jurisdiction of making any addition in respect of the unabated assessment of the assessee, therefore, Pr. CIT could not have assumed jurisdiction u/s 263 of the Act and dubbed the said assessment order as erroneous, for the reason that the Assessing Officer had failed to make an addition of Rs.30.06 lacs u/s.56(2)(vii)(b)(ii) of the Act, which the latter was divested of his jurisdiction to make while framing the assessment. 8. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the order passed by the Pr. CIT u/s.263 of the Act, dated 27.09.2018. It was submitted by the Ld. DR that as the Assessing Officer had failed to make an addition of Rs. 30.06 lacs, i.e, the difference between the value adopted in the ‘sale deed’ as against the market value of the property in question, therefore, the Pr. CIT had rightly held the assessment order passed by the Assessing Officer as 8 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 erroneous in so far it was prejudicial to the interest of the revenue u/s 263 of the Act. 9. After deliberating at length on the issue in hand, we are of the considered view, that as stated by the Ld. AR, and rightly so, the Pr. CIT had clearly exceeded the jurisdiction that was vested with him u/s.263 of the Act. Admittedly, no incriminating material belonging to the assessee was found during the course of search proceedings that were conducted u/s.132 of the Act on 12.02.2015. Also, the fact that the assessment in the case of the assessee was unabated on the aforesaid date of initiation of search, i.e, on 12.02.2015 had not been controverted by the ld. Departmental Representative (“D.R”, for short). As per the settled position of law, no addition can be made in respect of an unabated assessment of an assessee which had become final if no incriminating material was found during the course of the search proceedings. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., ITA No.523 of 2013, 9 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 dated 21.04.2015. In the aforesaid case following substantial questions of law were, inter alia, raised for consideration of the Hon’ble High Court: “(i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment u/s 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax ? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO ? (iii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in limiting the scope of Section 153A only to undisclosed income when as per the section the AO has to assess the total income of the six assessment years?” After relying on its earlier order passed in the case of Commissioner of Income Tax (Central) Nagpur vs. M/s. Murli Agro Products Limited in Income Tax Appeal No.36 of 2009, dated 29th October, 2010, it was observed by the Hon’ble High Court as under : “17. On the other hand, while canvassing the lead arguments, Mr. Dastur, learned senior counsel appearing for the assessee - All Cargo Global Logistics Ltd. would submit that the power under section 153A of the IT Act and its ambit and scope has rightly been interpreted in the impugned judgment. Mr. Dastur submits that the title of the section itself is indicative of the object and namely assessment in case of search or requisition. This section contains a non-obstante clause so as to not to restrict the powers 10 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 which are conferred by virtue of section 153A in the Assessing Officer. However, the exercise of power under that provision is where search is initiated under section 132 or books of account or other documents or assets are requisitioned under section 132A of the Act after 31st May, 2003. Then the Assessing Officer shall issue notice to such person requiring him to furnish within such period as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A and clause (b) postulates assessment or reassessment of the total SRP 12/61 ITXA523.13.doc income of six years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The first proviso mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso, according to Mr. Dastur, is important because the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in sub-section (1) pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Equally, sub- section (2) of section 153A deals with a situation where any proceeding initiated or any order of assessment or reassessment is made under sub-section (1) but that has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Further, proviso to this sub-section says that such SRP 13/61 ITXA523.13.doc revival shall cease to have effect if the order of annulment is set aside. 18. Mr. Dastur would submit that the Revenue is protected completely in this case. The power is of drastic nature and has to be exercised within constitutional parameters. However, though the second proviso to sub-section (1) of section 153A would not apply in the first three years of this case, yet, as far as the second three year period is concerned, the assessments were pending. The proceedings in relation thereto abate. Now the entire assessment in relation to the second phase of three years can be made but the foundation for all this and the action under section 153A is a search under section 132 or requisition of books of account and other assets under section 132A.In the present case, the notice under section 153A is founded on search. If there is no incriminating material found during the search, then, the Special Bench was right in 11 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 holding that the power under section 153A being not expected to be exercised routinely, should be exercised if the search reveals any incriminating material. If that is not found, then, in relation to the second phase of three years, there is no warrant for making an order within the meaning of this provision.In any event, the issue stands concluded by a Division Bench judgment of this Court rendered in the case of Commissioner of Income Tax (Central) Nagpur vs. M/s. Murli Agro Products Limited in Income Tax Appeal No.36 of 2009 decided on 29th October, 2010. It is, therefore, apparent that the law laid down by this Court is binding on the Revenue. If that is binding then the questions of law and with regard to applicability of section 153A need to be answered against the Revenue and in favour of the assessee.” In the backdrop of the aforesaid judgment of the Hon’ble High Court of Jurisdiction, we are of the considered view, that now when the Assessing Officer acting well in conformity with the aforesaid view of the Hon’ble Jurisdictional High Court, had therein in the absence of any incriminating material in respect of the unabated assessment of the assessee for the year under consideration, not made any addition, therefore, the order passed by him u/s.153A r.w.s.143(3) of the Act, dated 28.11.2016 on the said count could have been by any stretch of imagination held as erroneous by the Pr. CIT u/s.263 of the Act. We, thus, finding no infirmity in the view taken by the Assessing Officer, which as observed by us hereinabove falls within the four corners of the aforesaid judgment of the Hon’ble Jurisdictional High Court in the 12 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), therefore, set-aside the order passed by the Pr. CIT u/s.263 of the Act, dated 27.09.2018 and restore the order passed by the Assessing Officer u/s.153A r.w.s. 143(3) of the Act, dated 28.11.2016. Thus, the Grounds of Appeal No(s). 1 & 2 are allowed in terms of our aforesaid observations. 10. As we have quashed the order passed by the Pr. CIT u/s.263 of the Act, therefore, we refrain from adverting to and therein adjudicating the other contentions raised by the Ld. AR as regards the sustainability of order passed u/s.263 of the Act which, thus, are left open. Thus, the Grounds of appeal No(s). 3 and 4 are accordingly disposed off in terms of our aforesaid observations. 11. Ground of appeal No.5 being general in nature is dismissed as not pressed. 13 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 12. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in open court on 30 th day of March, 2022. Sd/- Sd/- JAMLAPPA D. BATTULL RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 30 th March, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT (Central), Nagpur. 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, नागप ु र/ DR, ITAT, Nagpur. 5. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 14 Shri Anirudha Ramesh Rander Vs. Pr.CIT ( Central) ITA No. 255/NAG/2018 Date 1 Draft dictated on 16.02.2022 Sr.PS/PS 2 Draft placed before author 17.02.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order