Smt.Jalaja Nair, Trivandrum V. The ADIT(Inv), Trivandrum

ITA 258/COCH/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5528 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Unexplained cash credit; Salary income; Question of law; Block assessment; Reason to believe
• Section: 142(1); 153A; 68; 132; 144

Judgement Text

ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI GEORGE GEORGE K, JM & MANJUNATH A . G, AM ITA NO S . 7 TO 13/COCH/2015 (A SST YEAR S 2002 - 03 TO 2008 - 09 ) SHRI K NANDAKUMAR SREE VIDYA OPP TAGORE THEATRE VAZHUTHACAUD THIRUVANANTHAPURAM PA N NO.ALOPK9492P VS THE ASST DIRECTOR OF INCOME TAX (INV) TRIVANDRUM ITA NO S . 14 TO 20/COCH/2015 (A SST YEAR S 2002 - 03 TO 2008 - 09 ) SMT REMY NANDAKUMAR SREE VIDYA KALYANI MANDIRAM COMPOUND OPP TAGORE THEATRE VAZHUTHACAUD THIRUVANANTHAPURAM PAN NO. ABLPN9 498B VS THE ASST DIRECTOR OF INCOME TAX (INV) TRIVANDRUM ITA NO S 257 TO 259/COCH/2017 (A SST YEAR 2004 - 05, 05 - 06 & 0 7 - 08 ) SMT JALAJA NAIR MOHANAM TC 55/294 KAIMANAM TRIVANDRUM PAN NO. ANBPJ8795P VS THE ASST DIRECTOR OF INCOME TAX (INV) TRIVANDRUM ( APPEL LANT) (RESPONDENT) ASSESSEE BY SHRI T M SREEDHARAN REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 30 TH AUG 201 7 DATE OF PRONOUNCEMENT 31 ST AUG 201 7 ORDER PER BENCH: THESE APPEALS FILED BY DIFFERENT ASSESSES ARE DIRECTED AGAINST SEPARA TE ; BUT IDENTICAL ORDERS OF THE CIT(A) TRIVANDRUM AND PERTAIN TO THE ASSESSMENT YEARS 2002 - 03 TO 2008 - 09. ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 2 2 SINCE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVEN IENCE. 3 BRIEF FACTS EXTRACTED FROM ITA NO.7/COCH/2015 FOR THE ASSESSMENT YEAR 2002 - 03 ARE THAT A SEARCH ACTION U/S 132 OF THE I T A CT, 1 961 WAS CARRIED OUT ON 11.10.2007 IN THE CASE OF M/S PARTHAS INFOPARK PVT LTD, TRIVANDRUM AND OTHERS. THE ASSESSEE IS ALSO COVERED UNDER THE SEARCH ACTION CONDUCTED IN THE GROUP OF M/S PARTHAS INFOPARK PVT LTD., AND ACCORDINGLY, THE CASE OF THE ASSESSEE WAS ASSIGNED TO CENTRAL CIRCLE - II, TRIVANDRUM VIDE ORDER IN C.NO.CR.43/CIT( C) - CHN/2008 - 09 DATED 20.1.2009. CONSEQUE NT TO SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED AND CALLED FOR RETURN OF INCOME FOR THE SIX YEARS IMMEDIATELY PROCEEDING TO THE ASSESSMENT YEAR IN WHICH SEARCH ACTION HAS BEEN TAKEN PLACE. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED RETURN OF INCOME ON 12 . 6.2008. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICES U/S 143(2) AND 142(1) WERE ISSUED. SINCE THERE WAS NO RES PONSE FROM THE ASSESSEE, A SHOW CAUSE NOTICE DATED 14.9.2009 OF THE ACT WAS ISSUED AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED U/S 144 OF THE I T ACT AS PER THE INFORMATION AVAILABLE ON RECORD. AFTER CONSIDERING THE RELEVANT MATERIALS ON RECORD, THE ASSESSMENT WAS COMPLETED U/S 144 R.W.S 153A OF THE ACT ON 31.12.2009 DETERMINING THE TOTAL INCOME OF RS. 3,48,094/ - ; INTER - ALIA , MAKING CERTAIN ADDITIONS TOWARDS INCOME FROM HOUSE PROPERTY, INCOME FROM SALARY AND ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 3 UNEXPLAINED CREDITS FOUND IN THE BANK ACCOUNT U/S 68 OF THE I T ACT, 1961. THE ASSESSEE CARRIED THE MATTER IN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A), F OR THE DETAILED REASONS RECORDED IN HIS ORDER DATED 31.10.2014 DISMISSED THE APPEAL FILED BY THE ASSESSEE AND UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS INCOME FROM HOUSE PROPERTY, INCOME FROM SALARY AND INCOME FROM OTHER SOURCES. 4 AGGRI EVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5 THE ASSESSEE , MORE OR LESS RAISED COMMON GROUNDS IN ALL THE ASSESSMENT YEARS. FROM THESE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE BY THE ASSESSING OFFICER T OWARDS VARIOUS INCOMES. THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUNDS ON 12.11.2016 RAISING 4 GROUNDS OF APPEAL CHALLENGING THE VALIDITY OF PROCEEDINGS COMPLETED U/S 153A OF THE I T ACT 1961 . THE RELEVANT ADDITIONAL GROUNDS RAISED IN THE APPEAL ARE EXTRACTED BELOW: 1. IT IS RESPECTFULLY SUBMITTED THAT THE ASST. ORDER PASSED U/S.144 R.W.S. 153A IS ARBITRARY, ILLEGAL AND UNSUSTAINABLE. IT IS SUBMITTED THAT SECTION 153A HAS BEEN WRONGLY INVOKED IN THE APPELLANT'S CASE. 2. THE APP ELLANT HAD NO CONNECTION WHATSOEVER WITH THE TRANSACTIONS BETWEEN M/S.PARTHAS INFOPARK PVT. LTD. AND OTHERS WITH REGARD TO LAND DEALINGS EXCEPT THAT THE APPELLANT'S FATHER - IN - LAW, SHRI C.P. NARAYANAN NAIR WAS A PARTY TO THE LAND TRANSACTION. ONCE THE SEAR CH IS ILLEGAL AND NOT ON BONA FIDE GROUNDS, THE CONSEQUENTIAL BLOCK ASSESSMENT PROCEEDINGS ARE ALSO ILLEGAL. 3. THE ASSESSING OFFICER ALSO FAILED TO CONSIDER THAT THERE WAS NO MATERIAL OR EVIDENCE FOUND AT THE TIME OF SEARCH DISCLOSING ANY UNDISCLOSED I NCOME FOR THE APPELLANT FOR THE ASSESSMENT PERIODS. THE PROCEEDINGS INITIATED U/S 153A ARE, THEREFORE, AB - INITIO VOID. ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 4 4. FOR THE ABOVE ASSESSMENT YEAR, THE ASSESSING OFFICER HAS ILLEGALLY ADDED RS.70,0001 - AS INCOME UNDER OTHER SOURCES. THIS ADDITION I S ILLEGAL AND UNSUSTAINABLE. IT IS HUMBLY PRAYED THAT THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN, MAY KINDLY BE PLEASED TO CONSIDER THE ABOVE GROUNDS OF APPEAL ALONG WITH THE GROUNDS OF APPEAL ALREADY FILED IN THE ABOVE APPEAL AND REN DER JUSTICE 6 THE ASSESSEE HAS FILED PETITION FOR ADMISSION OF ADDITIONAL GROUNDS ALONG WITH AN AFFIDAVIT. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF SUCH PROCEEDINGS COMPLETED U/S 132A OF THE ACT. 7 THE LD AR FOR THE ASSESSEE, REFERRING TO THE PETITI ON FILED FOR ADMISSION OF ADDITIONAL GROUNDS, SUBMITTED THAT IT IS AN EVIDENT FROM THE ASSESSMENT ORDER THAT SEARCH WAS IN CONNECTION WITH CERTAIN LAND DEALINGS BETWEEN M/S PARTHAS INFOPARK PVT LTD., AND THE CONCERNED PARTIES WITH WHICH THE ASSESSEE HAD NO CONNECTION AND WAS NOT A PARTY TO THE LAND DEALINGS. THE SEARCH WAS CARRIED IN VIOLATION OF SECTION 132 AND NO MATERIAL OR EVIDENCE WAS SEIZED AT THE TIME OF SEARCH SHOWING ANY UNDISCLOSED INCOME. THE PROCEEDINGS WERE MECHANICALLY INITIATED U/S 153A AND T HEREAFTER COMPLETED BY MAKING ESTIMATED ADDITIONS TO THE DECLARED INCOME WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE LD AR FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS NOT TAKEN THE ISSUE OF VALIDITY OF SEARCH ACTION BEFORE THE LOWER AUTHORITIES, THE SAME MAY BE TAKEN AT ANY TIME BEFORE THE ITAT IN VIEW OF THE FACT THAT THE ISSUE IS PURELY A LEGAL ISSUE WHICH INVOLVED SUBSTANTIAL QUESTION OF LAW. THE LD AR FURTHER ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 5 SUBMITTED THAT THE LEGAL ISSUE RAISED BY THE ASSESSEE BY WAY OF ADDITIONAL GROUNDS OF APPEAL EMANATES FROM THE FACT ALREADY ON RECORD AND NO NEW FACTS OR EVIDENCE HAS BEEN RELIED UPON OR BROUGHT, IN SUPPORT OF THE ADDITIONAL GROUNDS. THEREFORE, THE SAME MAY BE ADMITTED AND ADJUDICATE THE ISSUE AS PER LAW. IN SUPPORT OF HIS ARGUMENTS, HE RELIED THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF NTPC LTD VS CIT REPORTED IN (1998) 229 ITR 383 (SC . THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS PROMY KURIAKOSE RE PORTED IN (2016) 386 ITR 597. 7.1 ON THE OTHER HAND, THE LD DR STRONGLY OPPOSED FOR ADMISSION OF THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. THE LD DR FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT TAKEN ALL THESE LEGAL PLEA IN TIME BEFORE THE LOWER AUTHO RITIES AND HENCE, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE SHALL NOT BE ADMITTED FOR ADJUDICATION. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE WHICH LEADS TO THE IMPUGNED DISP UTE ARE THAT THERE IS A SEARCH ACTION IN THE CASE OF M/S PARTHAS INFORTPAK PVT LTD AND OTHERS. DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEE WAS SUBJECTED TO THE PROCEEDINGS U/S 132 OF THE I T ACT, 1961. THE ASSESSEE CLAIMS THAT SEARCH ACTION INITIA TED AGAINST HIM IS IN VALID AS THERE WAS NO INCRIMINATING MATERIAL WAS FOUND AND SEIZED IN THE COURSE OF SEARCH WHICH SUGGESTS ANY UNDISCLOSED ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 6 INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSEE FURTHER CONTENDED THAT AS PER THE PROVISIONS OF SECTION 132 OF THE ACT THERE IS A PRE - CONDITION FOR CONDUCTING SEARCH WHICH SAYS THAT IN CONSEQUENCE OF INFORMATION WITH THE AUTHORIZED OFFICER HAS REASON TO BELIEVE THAT ANY PERSON IS IN P OSSESSION OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT BE, DISCLOSED FOR THE PURPOSES OF THE TAX. IN THIS CASE, THE FACTS BORNE OUT FROM THE RECORDS CLE ARLY INDICATE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH INDICATES UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. THEREFORE, SEARCH PROCEEDINGS INITIATED U/S 132 OF THE ACT IN THE HANDS OF THE ASSESSEE AND CONSEQUENT ASSES SMENT PROCEEDINGS ARE BAD IN LAW AND LIABLE TO BE QUASHED. 9 HAVING HEARD BOTH THE PARTIES AND OTHER RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS TAKEN A LEGAL PLEA ON THE VALIDITY OF THE SEARCH PROCEEDINGS INITIATED U/S 132 OF THE ACT , ON T HE GROUND THAT THE SEARCH WAS CARRIED IN VIOLATION OF PROVISIONS OF SECTION 132 OF THE ACT AS THERE WAS NO MATERIAL OR EVIDENCE WAS SEIZED AT THE TIME OF SEARCH SHOWING ANY UNDISCLOSED INCOME. SINCE THE LEGAL ISSUE RAISED BY THE ASSESSEE IS EMANATES FROM THE FACTS ALREADY ON RECORD, WE DEEM IT APPROPRIATE TO ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE FOR ADJUDICATION. THIS VIEW WAS SUPPORTED BY THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF NTPC LTD (SUPRA) WHEREIN IT WAS ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 7 HELD THAT THERE IS NO REASO N TO RESTRICT THE POWER OF THE T RIBUNAL U/S 254 OF THE A CT ONLY TO DECIDE THE GROUNDS RAISED FROM THE ORDER OF THE CIT . THE ASSESSEE AS WELL A S THE DEPARTMENT HAS A RIGHT TO FILE APPEAL/CROSS OBJECTION BEFORE THE TRIBUNAL . THERE IS NO REASON WHY THE TRIBUNAL SH OULD BE PREVENTED FROM CONSIDERING THE QUESTION OF LAW ARISING FROM THE ASSESSMENT PROCEEDINGS , ALTHOUGH NOT RAISED EARLIER . HOW EVER, WE FURTHER NOTICE THAT THIS LEGAL PLEA HAS BEEN TAKEN FIRST TIME BEFORE THE TRIBUNAL AND THE LOWER AUTHORITIES DID NOT HAD AN OCCASION TO CONSIDER THE LEGAL ISSUE RAISED BY THE ASSESSEE. WHETHER THERE WAS AN INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR NOT, IS A MATTER O F FACT, WHICH CAN BE FIND OUT FROM THE RECORDS AVAILABLE WITH THE DEPARTMENT. UNLESS THE ASSESSING OFFICER OR THE CIT(A) EXAMINE THE SEARCH FO LDER , IT IS DIFFICULT TO CONCLUDE THAT THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. SINCE THE LOWER AUTHORITIES DID NOT HAD AN OCCASION TO EXAMINE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF SEARCH PROCEEDINGS IN THE LIGHT O F CLAIM OF THE ASSESSEE, WE DEEM IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) FOR HIS CONSIDERATION AND DIRECT HIM TO ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND ADJUDICATE THE ISSUE AS PER LAW. 10 SINCE WE HAVE SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) FOR ADJUDICATING THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON THE LEGAL ISSUE OF VALIDITY OF SEARCH PROCEEDINGS, THE GROUNDS RAISED BY THE ASSESSEE, CHALLENGING THE ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 8 ADDITIONS MADE BY THE ASSESSING OFFICER ON MERITS HAS NOT BEEN CONSIDER AT THIS JUNCTURE. 11 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NOS.8 TO 13/COCH/2015 ITA NOS. 14 TO 20/COCH/2015 ITA NOS 257 TO 259/COCH/2017 12 THE ISSUES INVOLVED IN OTHER AP PEALS ARE AKIN TO THE ISSUE CONSIDERED BY US IN ITA NO. 7/COCH/2015 IN THE PRECEDING PARAS. THEREFORE, FOR THE SAME REASONS, WE SET ASIDE THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE SEARCH PROCEEDINGS IN ALL THE OTHER APP EALS , CONSEQUENTLY NOT ADJUDICATED OTHER ISSUES ON MERITS. 13 TO SUM - UP , ALL THE APPEALS FILED BY THE ASSESSEE S ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST AUG 2017 . SD/ - SD/ - (GEORGE GEORGE K ) ( MANJUNATH A .G) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 31 ST AUG 201 7 RAJ* ITA NO S 7 TO 20/C/2015 & ITA NOS. 257 TO 259/C/2017 9 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN