DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 8(3) (ERSTWHILE DCIT, CC-46, MUMBAI), MUMBAI V. MANEKCHAND KOTHARI, MUMBAI

ITA 260/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6913 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: CHETAN A KARIA
• Keywords: Sale consideration of property below Jantri Value; Gift; Search and seizure; Question of law; Cost of acquisition; Reason to believe; Reassessment proceedings
• Section: 143(3); 50C; 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 260/ MUM/20 18 ( ASSESSMENT YEAR : 2011 - 12 ) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 8(3),(ERSTWHILE DCIT), CC - 46 MUMBAI V S. SHRI MANEKCHAND KOTHARI A/7, BHARAT NAGAR M.S.ALI ROAD, GRANT ROAD, MUMBAI PAN/GIR NO. AEJPK7982J APPELLANT ) .. RESPONDENT ) REVENUE BY MS. N. HEMALATHA ASSESSEE BY SHRI CHETAN A. KARIA DATE OF HEARING 06 / 06 /201 8 DATE OF PRONOUNCEMENT 20 / 06 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 50, MUMBAI DATED 25/10/2017 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 153A OF THE IT ACT, 1961. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DECIDING THAT THERE IS NO JURISDICTION OF AO TO PASS THE ORDER U/S 143(3) R.W.S. 153A OF THE IN COME TAX ACT, 1961.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OFRS. 39,31,080/ - U/S ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 2 50C OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF SHORT TERM CAPITAL GAIN FROM THE SALE OF IMMOVABLE PR OPERTY.' 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CONDUCTED IN RSBL GROUP OF CASES ON 11/06/2013. THE ASSESSEE BEING ASSOCIATED WITH THE GROUP WAS ALSO COVERED IN THE SEARCH. DURING THE COURSE OF ASSESSMENT U/S.143(3) R.W.S. 153A, AO OBSERVED THAT F ROM THE INDIVIDUAL TRANSACTION STATEMENT OF THE ASSESSEE, IT IS FOUND AS PER CIB INFORMATION THAT THE ASSESSEE HAD SOLD THREE PROPERTIES AS UNDER : ADDRESS OF THE PROPERTY TRANSACTION AMOUNT (RS.) VALUE FOR STAMP DUTY (RS.) REGISTRATION NO. P. NO. 143 BHINMAL, RAJASTHAN 5,00,000/ - 13,07,040/ - 2011004200 PLOT BHINMAL, RAJASTHAN 17,00,0007 - 34,28,693/ - 2011004329 MAGH COLONY, BHINMAL RAJASTHAN 20,00,000/ - 26,24,0407 - 2011004201 5. THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE TRANSACTIONS. THE ASSESSEE VIDE SUBMISSION DATED 12.3.2016 SUBMITTED THAT TRANSACTION AS PER REG ISTRATION NO. 2011004329 OF RS. 17,00,000/ - (STAMP DUTY VALUATION RS. 34,25,693/ - ) PERTAINS TO AY 2012 - 13 AND THIS PROPERTY BELONG TO HIS BROTHER SHRI PRITHVIRAJ S. KOTHARI AND HE SOLD THE PROPERTY ON ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 3 BEHALF OF SHRI PRITHVIRAJ S. KOTHARI AS POWER OF ATTORN EY HOLDER AND CAPITAL GAIN ON ACCOUNT OF THE TRANSACTION HAS BEEN OFFERED BY SHRI PRITHVIRAJ S. KOTHARI IN HIS RETURN OF INCOME FOR THE AY 2012 - 13. 6. AS REGARDS OTHER TWO PROPERTIES, THE ASSESSEE VIDE SUBMISSION DATED 12.3.2016 SUBMITTED THAT HE IS TRYING TO TRACE OUT THE DOCUMENTS AS THE TRANSACTIONS ARE OLD AND NEED SOME TIME TO FURNISH THE DETAILS. THE AO OBSERVED THAT ALREADY SUFFICIENT OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE TO EXPLAIN THE TRANSACTIONS AND THE ASSESSEE HAS FAILED TO EXPLAIN THE S AME. AO FURTHER OBSERVED THAT A S PER CIB INFORMATION, THE ASSESSEE HAD SOLD FOLLOWING PROPERTIES DURING THE YEAR UNDER CONSIDERATION: ADDRESS OF THE PROPERTY TRANSACTION AMOUNT (RS.) VALUE FOR STAMP DUTY (RS.) REGISTRATION NO. P. NO. 143 BHINMAL, RAJASTHAN 5,00,000 / - 13,07,040/ - 2011004200 MAGH COLONY, BHINMAL RAJASTHAN 20,00,000/ - 26,24,040/ - 2011004201 8 . THE AO OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT IN SUPPORT OF THE SALE OF PROPERTIES. HENCE, THE ASSESSEE HAS NOT SHOWN CAPITAL GAIN ON SALE OF THESE PROPERTIES. IT IS SEEN THAT TRANSACTION AMOUNT IS BELOW VALUE FOR STAMP DUTY. HENCE, THE VALUE TAKEN ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 4 BY THE STAMP DUTY AUTHORITIES IS CONSIDERED AS SALE CONSIDERATION RECEIVED AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961. AS NO DETAILS REGARDING COST OF ACQUISITION A RE GIVEN, COST OF ACQUISITION WAS TAKEN BY AO A S NIL. SIMILARLY, NO DETAILS REGARDING PERIOD OF HOLDING OF THE ASSETS WAS GIVEN AND HENCE THE CAP ITAL GAIN WA S ASSESSED AS SHORT TERM CAPITAL GAIN. HENCE, THE SHORT TERM CAPITAL GAIN OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION ON ACCOUNT O F SALE OF IMMOVABLE PROPERTIES WA S ASSESSED AT RS. 39,31,080/ - AND ADDED BACK TO THE TOTAL INCOME OF THE ASSE SSEE. PENALTY PROCEEDINGS WA S ALSO INITIATED UNDER SECTION 271(L}(C) OF THE INCOME TAX ACT, 1961 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 9 . BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER OBSERVING AS UNDER: - 5.2.3 I HAVE FURTHER GONE T HROUGH THE RATIO OF THE VARIOUS JUDGMENTS LAID DOWN BY THE JURISDICTIONAL HIGH COURT OF MUMBAI AND OTHER HIGH COURTS AS WELL AS JURISDICTIONAL ITAT, MUMBAI AND OTHER HONBLE TRIBUNALS AND FIND THAT THE COURTS HAVE VERY CLEARLY HELD THAT ADDITIONS IN RESPEC T OF COMPLETED ASSESSMENT AGAIN BEING COMPLETED U/S.153A OF THE I.T.ACT CAN ONLY BE MADE IF INCRIMINATING DOCUMENTS, POINTING OUT TO UNDISCLOSED INCOME ARE FOUND DURING THE COURSE OF SEARCH. IN THIS REGARD, SOME OF THE JUDGMENTS ARE REFERRED HERE. I) THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. KURELE PAPER MILLS (P) LTD (2017) 81 TAXMANN.COM 82 DELHI HAS HELD AS UNDER: - 'THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDER DATED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN 3761/DEL/2011 PERTAINING TO THE ASSESSMENT YEAR 2002 - 03. THE QUESTION WAS WHETHER THE LEARNED CIT (APPPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 89 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 5 T AX ACT, 1961 (ACT) ON BOGUS SHARE CAPITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT. THE COURT FINDS THAT THE ORDER OF THE CIT(APP EALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE ORDER OF THE AO.' CONSEQUENTLY, IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN INVOKIN G SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE IS NOTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL DETERMINATION IS PERVERSE. CONSEQUENTLY, AFTE R CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE IMPUGNED ORDER OF THE ITAT WHICH REQUIRES EXAMINATION. THE APPEAL IS, ACCORDINGLY, DISMISSED.' II) IN CASE, THERE ARE NO INCRIMINATING DOCUMENTS FOUND, NO ADDITION CAN BE MADE. IN THIS REGARD, THE DECISION OF ITAT, MUMBAI, IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DCIT, CITED SUPRA, WHICH WAS SUBSEQUENTLY CONFIRMED BY BOMBAY HIGH COURT, WHEREIN IT WAS HELD THAT I N CASE OF COMPLETED ASSESSMENTS, THE ASSESSMENT U/S. 153A OF THE I.T.ACT HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL ONLY. IF THERE IS NO INCRIMINATING MATERIAL FOUND AND SEIZED, NO ADDITION CAN BE MADE. I FIND THAT THE SAID DECISION HAS BEEN FOL LOWED BY VARIOUS ITATS. THE ITAT, MUMBAI, IN THE CASE OF GURINDER SINGH BAWA VS. DCIT, CITED SUPRA, HAS FOLLOWED THE SAID DECISION. I, THEREFORE, FIND THAT IN CATENA OF CASES THE COURTS HAVE EXPRESSED THE VIEW THAT ADDITION IN SEARCH ASSESSMENTS CAN BE MAD E ONLY IF INCRIMINATING DOCUMENTS ARE FOUND AND SEIZED. III) FURTHER IN THE CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (2015) 58 TAXMANN.COM 78 (BOMBAY), THE JURISDICTIONAL HIGH COURT OF BOMBAY HAS HELD AS UNDER: - 'A BARE PERUSAL OF SECTION 153A WOULD INDICATE AS TO HOW A NON - OBSTANTE CLAUSE HAS BEEN INSERTED AND WITH A DEFINED INTENT. WHERE SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31 - 5 - 2003, THAT THE ASSESSING OFFICER IS IN A POSITION ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 6 TO AND MANDATED TO ISSUE NOTICE WITHIN THE MEANING OF SUB - SECTION (1) OF SECTION 153A. THAT IS BECAUSE, CHAPTER XIII WITHIN WHICH THE POWERS OF SEARCH AND SEIZURE AND POWERS TO REQU ISITION BOOKS OF ACCOUNT ARE SPELT OUT ENABLE THE REVENUE TO TAKE CARE OF CASES WHERE IT EFFECTS A SEARCH AND SEIZURE. THAT SEARCH AND SEIZURE IS EFFECTED AND AFTER THE SAME IS EFFECTED, BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY O R OTHER VALUABLE ARTICLE OR THING IS FOUND AS A RESULT THEREOF THAT NOTWITHSTANDING ANYTHING AND WITHIN THE MEANING OF THE ABOVE PROVISIONS HAVING BEEN CONCLUDED, IT IS OPEN FOR THE REVENUE TO MAKE AN ASSESSMENT. IT IS ALSO OPEN TO THE REVENUE TO MAKE A REASSESSMENT IN CASES WHERE IT EXERCISES THE POWERS TO REQUISITION BOOKS OF ACCOUNT ETC. THIS IS BECAUSE IT IS OF THE VIEW THAT THE BOOKS OF ACCOUNT ARE REQUIRED TO BE SUMMONED OR TAKEN INTO CUSTODY. IT, THEREFORE, ISSUES A SUMMONS IN THAT REGARD. IT MAY ALSO REQUISITION THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOR THAT MIGHT BE USEFUL AND OR ANY ASSETS REPRESENTING WITHHOLDING OR PART INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE INDIA N INCOME - TAX ACT, 1922 OR THE INCOME - TAX ACT OF 1961 BY ANY PERSON FROM WHOSE POSSESSION OR CONTROL THEY HAVE BEEN TAKEN INTO CUSTODY. THIS IS WHEN THE AUTHORITIES HAVE REASON TO BELIEVE THAT SUCH POWERS NEED TO BE EXERCISED. THEREFORE, THE FETTERS AND WH ICH ARE TO BE FOUND IN OTHER PROVISIONS ARE REMOVED AND A NOTICE OF ASSESSMENT IN SUCH CASES IS THEN ISSUED. THAT IS MANDATED BY SUB - SECTION (1) OF SECTION 153A. IT IS NOT ONLY THE ISSUANCE OF THE NOTICE BUT ASSESSMENT OR REASSESSMENT OF TOTAL INCOME OF SI X ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION HAS TO BE MADE.[PARA 22]' THERE IS MUCH SUBSTANCE IN THE CONTENTIONS OF THE ASSESSEE THAT THE PROVISIONS SUCH AS SECTION 153A ENABLING ASSESSMENT IN CASE OF SEARCH OR REQUISITION MAKING SPECIFIC REFERENCE TO THE PROVISIONS WHICH ENABLE CARRYING OUT OF SEARCH OR EXERCISE OF POWER OF REQUISITION THAT THE ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. [PAR A 23] ASSESSEE'S RELIANCE UPON THE DIVISION BENCH JUDGMENT OF THIS COURT RENDERED IN CIT V. MURLI AGRO PRODUCTS LTD. [2014] 49 TAXMANN.COM 172 IN THAT CONTEXT IS, THEREFORE, WELL PLACED.[PARA 24] ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 7 THE DIVISION BENCH OUTLINED THE AMBIT AND SCOPE OF THE PO WERS CONFERRED BY SECTION 153A AND OBSERVED THAT ON A PLAIN READING OF SECTION 153A, IT BECOMES CLEAR THAT ON INITIATION OF THE PROCEEDINGS UNDER SECTION 153A, IT IS ONLY THE ASSESSMENT/REASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SE ARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132A STAND ABATED AND NOT THE ASSESSMENTS/REASSESSMENTS ALREADY FINALISED FOR THOSE ASSESSMENT YEARS COVERED UNDER SECTION 153A. BY A CIRCULAR NO. 8 OF 2003, DATED 18 - 9 - 2003 (SEE 263 ITR (ST) 61 AT 107) THE CBDT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE PROCEEDINGS PENDING IN APPEAL, REVISION OR RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT/REASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALISED ASSESSM ENTS/REASSESSMENTS DO NOT ABATE, THE APPEAL REVISION OR RECTIFICATION PENDING AGAINST FINALISED ASSESSMENT/RE ASSESSMENTS WOULD NOT ABATE. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE SSESSMENTS/REASSESS MENTS FINALISED FOR THE ASSESSMENT YEARS COVERED UNDER SECTION 153A STAND ABATED CANNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSESSMENT MADE UNDER SECTION 153A (1) WHAT STANDS REVIVED IS THE PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH STOOD ABATED AS PER SECTION 153A(1). ONCE IT IS HELD THAT THE ASSESSMENT HAS ATTAINED FINALITY, THEN THE ASSESSING OFFICER WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143 (3) COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE .MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 153A . TO ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CO NTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. IF THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS, THE ASSESSING OFFICER WHILE PASSING ORDER UNDER SECTION 153A REA D WITH SECTION 143(3) CANNOT DISTURB THE ASSESSMENT ORDER [PARA 28] THE STAND OF REVENUE THAT THESE OBSERVATIONS ARE MADE IN PASSING OR THAT THEY ARE NOT BINDING ON INSTANT COURT IS NOT AGREEABLE BECAUSE THE ESSENTIAL CONTROVERSY BEFORE THE BENCH WAS SOME WHAT DIFFERENT. REVENUE URGED THAT WAS ONLY IN RELATION TO THE LEGALITY AND VALIDITY OF THE ORDER OF ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 8 THE COMMISSIONER UNDER SECTION 263. HAD THAT BEEN THE CASE, THE DIVISION BENCH WAS NOT REQUIRED TO TRACE OUT THE HISTORY OF SEC TION 153A AND THE POWER THAT IS CONFERRED THEREUNDER. WHEN THE REVENUE ARGUED BEFORE THE DIVISION BENCH THAT THE POWER UNDER SECTION 153A CAN BE INVOKED AND EXERCISED EVEN IN CASES WHERE THE SECOND PROVISO TO SUB - SECTION (1) IS NOT APPLICABLE THAT T HE DIVISION BENCH WAS REQUIRED TO EXPRESS A SPECIFIC OPINION. THE PROVISION DEALS WITH THOSE CASES WHERE ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REF ERRED TO IN SUB - SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PENDING ON THE DATE OF THE INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WO ULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSESSMENT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. AS THAT SPECIFIC ARGUMENT WAS CANVASSED AND DEALT WITH BY THE DIVISION BENCH AND THAT I S HOW IT WAS CALLED UPON TO INTERPRET SECTION 153A , THEN, EACH OF THE ABOVE CONCLUSIONS RENDERED BY THE DIVISION BENCH WOULD BIND THE INSTANT COURT. [PARA 29]. EVEN OTHERWISE, COURT IS IN AGREEMENT WITH THE DIVISION BENCH WHEN IT OBSERVES AS ABO VE WITH REGARD TO THE AMBIT AND SCOPE OF THE POWERS CONFERRED UNDER SECTION 153A . EVEN IF THE EXERCISE OF POWER UNDER SECTION 153A IS PERMISSIBLE STILL THE PROVISION CANNOT BE READ IN THE MANNER SUGGESTED BY THE REVENUE. NOT ONLY THE FINALISED ASSESSMEN T CANNOT BE TOUCHED BY RESORTING TO THOSE PROVISIONS, BUT EVEN WHILE EXERCISING THE POWER CAN BE EXERCISED WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31 - 3 - 200 3. THERE IS A MANDATE TO ISSUE NOTICES UNDER SECTION 153(L)(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS 'SEARCH' AND 'REQUISITION' APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. IT BEING ENACTED TO A SEARCH OR REQUISITION THAT ITS CONSTRUCTION WOULD HAVE TO BE ACCORDINGLY. THAT IS THE CONCLUSION REACHED BY THE DIVISION BENCH IN MURLI AGRO (SUPRA). THESE ARE THE CONCLUSIONS WHICH CAN BE REACHED AND UPON READING OF THE LEGAL PROVISIONS IN QUESTION.[PARA 30] ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 9 THEREFORE, THE SPECIAL BENCH'S UNDERSTANDING OF THE LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD.[PARA31] W IV) FURTHER IN THE CASE OF CIT VS CIT - 20 VS DEEPAK KUMAR AGARWAL (2017) 86 TAXMANN.COM 3(BOMBAY), THE JURISDICTIONAL HIGH COURT OF BOMB AY HAS HELD AS UNDERL INE TRIBUNAL CONCLUDED THAT THE ARGUMENTS RELATING TO THE VALIDITY OF THE NOTICE UNDER SECTION 153A AND THOUGH THAT PROVISION COULD HAVE BEEN INVOKED IN THE GIVEN FACTS AND CIRCUMSTANCES, BUT THE ADDITIONS MADE BY THE ASSESSING OFFICE R WERE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THEREFORE, THEY ARE NOT SUSTAINABLE AND THEY CAME TO BE DELETED. [PARA 30] ONE DOES NOT THINK THAT ANY VIEW OTHER THAN THE ONE TAKEN BY THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF SKS ISP AT & POWER LTD. (SUPRA) OR THE REPORTED JUDGMENT IN CONTINENTAL WAREHOUSING CORPN. AND ALL CARGO GLOBAL LOGISTICS (SUPRA) CAN BE TAKEN. [PARA 31] ONCE ONE IS OF THE FIRM VIEW THAT THE QUESTION NO.L PROPOSED BY THE REVENUE IS ALREADY ANSWERED BY THIS COURT IN A SERIES OF JUDGMENTS, PARTICULARLY REFERRED ABOVE, THEN ONE DOES NOT THINK THAT ONE SHOULD ALLOW THE REVENUE TO ARGUE THAT THESE JUDGMENTS ARE RENDERED IN IGNORANCE OF THE BINDING JUDGMENT OF THE SUPREME COURT IN THE CASE OF RAJESH JHAVER I STOCK BROKERS (P.) LTD. (SUPRA). AFTER HAVING NOTED THE CONTEXT AND THE FACTUAL BACKDROP IN WHICH THE DECISION IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P.) LTD. (SUPRA) WAS DELIVERED AND HAVING DISTINGUISHED IT, ONE DOES NOT SEE HOW THE QUESTION CAN BE PROPOSED BY THE REVENUE AS A SUBSTANTIAL QUESTION OF LAW. IT IS NOT A SUBSTANTIAL QUESTION OF LAW AS THE ISSUE IS ALREADY ANSWERED BY THE COURT. [PARA 32] EVEN WITH REGARD TO THE UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE ALLEGEDLY AND THE ADDITION MAD E UNDER SECTION 68, THE TRIBUNAL HAS RELIED UPON ITS ORDER IN THE CASE OF GOVIND AGARWAL (HUE) V. DY. CIT [IT APPEAL NO.8917 (MUM.) OF 2010, DATED 16 - 5 - 2013] FOR THE ASSESSMENT YEAR 2005 - 2006. [PARA 33] THERE AS WELL RELIANCE WAS PLACED ON THE JUDGMENT OF THE BOMBAY HIGH COURT RENDERED IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) AND EQUALLY THE CONCLUSION THAT HAS BEEN REACHED THAT ONCE THERE IS NO INCRIMINATING MATERIAL IN SUPPORT OF THE ADDITION AND BROUGHT ON RECORD BY THE REVENUE, THEN THE ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 10 E ARLIER VIEW OF THIS COURT BINDS THE REVENUE EVEN ON THIS ADDITION. THUS EVEN THIS QUESTION CANNOT BE TERMED AS SUBSTANTIAL QUESTION OF LAW IN THE LIGHT OF THE TWO JUDGMENT OF THE COURT IN CONTINENTAL WAREHOUSING CORPN. AND ALL CARGO GLOBAL LOGISTICS (SUPRA ) FOLLOWED BY SKS ISPAT & POWER LTD. (SUPRA). [PARA 34] IN VIEW OF THE AFORESAID, THE APPEAL FILED BY THE REVENUE DESERVED TO BE DISMISSED. [PARA 37]' THUS, THE ISSUE REGARDING ADDITION WITHOUT ANY INCRIMINATING SEARCH MATERIAL GOES IN FAVOUR OF THE ASSE SSEE IN SO FAR AS ATLEAST THE JURISDICTION OF BOMBAY HIGH COURT I.E. ENTIRE MAHARASHTRA. HENCE, I HOLD THAT WHATEVER ADDITION HAS BEEN MADE BY THE A.O WHICH HAS BEEN RAISED BY THE APPELLANT GROUND ARE LIABLE TO BE DELETED WHICH ARE DISCUSSED IN DIFFERENT P ARAGRAPHS. TO SUM UP, IT IS NOW A SETTLED LAW WITHIN THE TERRITORIAL JURISDICTION OF BOMBAY HIGH COURT, THAT NO ADDITIONS CAN BE MADE DEVOID OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. 5.2.4. AS OBSERVED BY ME IN THE ABOVE PARAS THERE IS NOTHING ON RECORD/ASSESSMENT ORDERS TO SUGGEST THAT THE ADDITIONS WERE MADE BASED ON ANY SPECIFIC INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF THE SEARCH. HENCE, FOLLOWING THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (SUPRA) I HOLD THAT THE ADDITIONS MADE WHILE COMPETING THE ASSESSMENTS U/S. 153A OF THE I.T. ACT, 1961 CANNOT BE SUSTAINED. 5.2.5 SINCE I HAVE DECIDED THE GROUND NO. 1 RELATED TO VALIDITY OF ADDITIONS MADE U/S 153A OF THE I.T ACT, 1961 IN FAVOUR OF THE APPELLANT AND IS ALLOWED, CONSEQUENTLY ALL OTHER GROUNDS RAISED BY THE APPELLANT HAVE BECOME ACADEMIC, HENCE DECLARED AS INFRUCTUOUS. ACCORDINGLY, I AM NOT GOING INTO MERITS OF THE ADDITIONS/ DISALLOWANC E MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT MADE U/S. 143 R.W.S. 153A IN THE PRESENT CASE. THE GROUNDS RAISED ON MERITS ARE NOT ADJUDICATED. 5.2.6. IN THE RESULT, GROUNDS OF APPEALS OF THE APPELLANT ARE ALLOWED, ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 11 10. AGAINST THE ABOVE ORDER OF CIT(A ), REVENUE IS IN FURTHER APPEAL BEFORE US. 11. IT WAS ARGUED BY LEARNED DR THAT ASSESSEE HAS NOT FILED ANY RETURN OF INCOME, THEREFORE, THERE IS NO QUESTION OF ANY NON - ABATEMENT OF ASSESSMENT AND THE ADDITION SO MADE WITH REGARD TO THE PROPERTY SOLD DURIN G THE YEAR WERE CORRECTLY ADDED BY THE AO WHILE FRAMING ASSESSMENT U/S.153A R.W.S.143(3) OF THE IT ACT. 12. ON THE OTHER HAND, LEARNED AR VEHEMENTLY ARGUED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THEREFORE, WHILE FRAMING ASSES SMENT U/S.153A, NO ADDITION CAN BE MADE. HE RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS REFER RED BY CIT(A) IN HIS ORDER FOR REACHING TO THE CONCLUSION THAT WITHOUT FINDING ANY INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE U/S.153 A OF THE IT ACT. 13. WE HA VE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORI TIES BELOW. WE HAVE DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COU RSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT THERE WAS A SEARCH AT THE PREMISES OF THE ASSESSEE. AFTER SEARCH, AO ISSUED NOTICE U/S.153A ON 07/10/2014. IN RESPONSE TO THE SAID NOTICE, ASSESSEE HAS FI LED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.3,40,030/ - AFTER ISSUING NOTICE U/S.143(2) AND 142(1). AO FRAMED ASSESSMENT U/S.153A R.W.S 143(3) WHEREIN ADDITIONS WERE MADE IN ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 12 RESPECT OF PROPERTIES SOLD BY THE ASSESSEE DURING THE YEAR BUT INCOME FRO M WHICH WAS NOT OFFERED TO DEPARTMENT BY FILING RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT U/S.153A THE ASSESSEE DID NOT FURNISH ANY DOCUMENTS IN SUPPORT OF THE SALE OF PROPERTIES NOR ANY CAPITAL GAINS ON SALE OF THESE PROPERTIES WERE SHOWN. AO ALSO FOUND THAT TRANSACTION AMOUNT WAS BELOW VALUE FOR STAMP DUTY. ACCORDINGLY, VALUE TAKEN BY STAMP DUTY AUTHORITIES WERE CONSIDERED AS SALE CONSIDERATION RECEIVED AS PER THE PROVISIONS OF SECTION 50C AS NO DETAILS REGARDING COST OF ACQUISITION WAS FURNISHED BY ASSESSEE . SINCE, THE ASSESSEE ALSO DID NOT FILE ANY DETAIL REGARDING PERIOD OF HOLDING OF THE ASSETS, HENCE CAPITAL GAIN WAS ASSESSED BY AO AS SHORT TERM CAPITAL GAINS AT RS.39,31,080/ - . IT WAS ALSO FOUND THAT ASSESSEE OWNS TWO HOUSE PROPERTIES, ACCORDI NGLY, THE ACTUAL VALUE OF ONE HOUSE PROPERTY WAS TAXED U/S.23(4)(B) OF THE IT ACT. HOWEVER, THE CIT(A) HAS DELETED THE ENTIRE ADDITION MERELY BY RELYING ON THE PROPOSITION OF LAW LAID DOWN IN VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF ALL C ARGO GLOBAL LOGISTICS LTD. ITAT SPECIAL BENCH WHICH WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT. THE CIT(A) HELD THAT SINCE NO INCRIMINATING DOCUMENTS WERE FOUND DURING COURSE OF SEARCH NO ADDITION IS WARRANTED U/S.153A U/S.143(3) OF I.T. ACT. HOWEVER, THE CIT(A) HAS NOT DECIDED THE MERITS OF ADDITION. 14. AFTER GOING THROUGH THE DECISION OF THE ALL CARGO GLOBAL LOGISTICS LTD . WE FOUND THAT SPECIAL BENCH HELD THAT IN CASE OF NON - ABATED OR COMPLETED ASSESSMENT, ASSESSMENT U/S.153A OF THE ACT HAS TO BE MADE ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 13 ON THE BASIS OF INCRIMINATING MATERIAL ONLY. EVEN IN THE OTHER JUDICIAL PRONOUNCEMENTS, AS DISCUSSED BY THE CIT(A), IT WAS HELD THAT IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. IT HAS THUS BEEN HELD THAT IN CASE OF COMPLETED ASSESSMENTS, THE ASSESSMENT U/S.153A HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL ONLY I.E., UNDISCLOSED INCOME / PROPERTY / BOOKS OF ACCOUNTS / DOCUMENTS. IT HAS BEEN HELD THAT ONCE THE ORIGINAL ASSESSMENT HAS ATTAINED FINALITY, THEN THE ASSESSING OFFICER WHILE PASSING THE INDEPENDENT ASSE SSMENT ORDER U/S.153A R.W.S. 143(3) CAN NOT DISTURB THE ASSESSMENT / REASSESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS U/S.153A ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALIZED ASSESSMENT / REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING COURSE OF 153A PROCEEDINGS. THUS FOR APPLYING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE JUDICIAL PRONOUNCEMENTS TWO CONDITIONS ARE REQUIRED TO BE SATISFIED. FIRSTLY THERE SHOULD NOT BE ANY P ENDING ASSESSMENT AND SECONDLY THERE SHOULD NOT BE ANY INCRIMINATING MATERIAL FOUND DURING COURSE OF SEARCH. IF ANY ONE OF THE CONDITIONS IS NOT SATISFIED, THE PROPOSITION LAID DOWN IN THESE JUDICIAL PRONOUNCEMENTS WILL NOT APPLY. THUS CIT(A) HAS WRONGLY A PPLIED THE PROPOSITION LAID DOWN IN THESE JUDICIAL PRONOUNCEMENTS TO THE FACTS OF INSTANT CASE WHICH ARE ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 14 DISTINGUISHABLE IN SO FAR AS BOTH THE CONDITIONS ARE NOT SATISFIED . HOWEVER, IN THE INSTANT CASE BEFORE US, THERE IS NO QUESTION OF ANY COMPLETED ASSES SMENT IN SO FAR AS THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME AT ALL FOR THE YEAR UNDER CONSIDERATION . IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT TIME PERIOD FOR ISSUING NOTICE U/S.143(2) HAS BEEN EXPIRED. UNDER THESE FACTS AND CIRCUMSTANCES, IT CAN NOT BE SAID THAT ASSESSMENT IS NOT ABATED. IN THE INSTANT CASE, NOWHERE THE CIT(A) HAS RECORDED ANY FINDING WITH REGARD TO ASSESSMENT HAVING BEEN COMPLETED OR ABATED NOR ANY OBSERVATION REGARDING ANY RETURN HAVING BEEN FILED BY ASSESSEE , OR TIME PERIOD FO R ISSUE OF NOTICE U/S.143(2) HAVING BEEN OVER. ACCORDI NGLY, WE DO NOT FIND ANY MERIT I N THE ACTION OF THE CIT(A) FOR DELETING THE ADDITION BY RELYING ON THE JUDICIAL PRONOUNCEMENTS WHICH PERTAINS TO THE ASSESSMENT HAVING BEEN COMPLETED AND NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. MOREOVER, WITHOUT CONTROVERTING VARIOUS FINDINGS RECORDED BY THE OF THE AO, CIT(A) HAS DELETED THE ADDITION. 15. IN VIEW OF ABOVE DISCUSSION , WE ARE INCLINED TO AGREE WITH THE LEARNED DR MS. N. HEMALATHA TH AT THERE IS NO MERIT IN THE ORDER PASSED BY CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF INCOME EARNED BY ASSESSEE ON SALE OF PROPERTY WHICH WAS NOT DISCLOSED BY ASSESSEE TO THE DEPARTMENT BY FILING RETURN OF INCOME. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND MATTER IS RESTORED BACK TO HIS FILE FOR DECIDING AFRESH THE MERIT OF ADDITION AFTER CONSIDERING THE FINDINGS RECORDED BY THE AO. ITA NO. 260/MUM/2018 SHRI MANEKCHAND KOTHARI 15 NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN FULL OPPORTUNITY BEFORE DECIDING THE APPEAL. 16 . IN THE RESUL T, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 / 06 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI ; DATED 20 / 06 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//