SHRI NASIR AHMED DAR , SRINAGAR V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, SRINAGAR

ITA 263/ASR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6988 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-04-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 13-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 132; 44AD; 153A; 69A; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No. 263/Asr/2023 Assessment Year: 2018-19 Sh. Nasir Ahmad Dar, 92, Hyderpora, Near Masjid Sharief, Srinagar, 190014 [PAN: BSVPD7988N] (Appellant) Vs. DCIT/ACIT Central Circle, Srinagar (Respondent) Appellant by Respondent by : : Sh. Rohit Kapoor, CA & Sh. V.S. Aggarwal, ITP Sh. Davinder Pal Singh, Sr. D.R. Date of Hearing Date of Pronouncement : : 17.04.2024 29.05.2024 ORDER Per Dr. M. L. Meena, AM: The captioned appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-5, Ludhiana dated 10.05.2022 in respect of Assessment Year: 2018-19. 2. The assessee has raised the following grounds of appeal: 2 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT “1. On the facts and circumstances of the case, the Ld. CIT(A) vide order u/s 250(6) dated 10.05.2022 has erred in confirming the addition to the tune of Rs. 2103912/-. The CIT(A) has erred in confirming the addition of Rs. 1602829/- u/s 69A in respect of credits in saving accounts and Rs. 501083/- in respect of difference in undisclosed profit calculated @ 8% on the gross receipts in the CC Account. 2. That the Ld. CIT(A) has erred in increasing the net profit rate from 6% to 8% on the total credits in CC Account. The Ld. CIT(A) has erred in confirming the addition of Rs. 501083/- without giving the notice of enhancement u/s 251. That the CIT(A) has erred in enhancing the net profit rate of 6% on disclosed turnover reflected in the ITR and accepted by the AO. 3. The CIT(A) has erred in reducing the gross income declared under the head PGBP at Rs. 486163/- against Rs. 649217/-. 4. The Ld. CIT(A) has erred in not giving the benefit of contra entries and CC bank interest to determine the undisclosed income. 5. The Ld. CIT(A) has erred in confirming the addition of Rs. 1602829/- ignoring the fact that the credits in the saving account represent sale proceeds from bakery business and as such, the addition has to be restricted to profit element and entire sales cannot be added. 6. That the Ld. CIT(A) has erred in confirming the addition of Rs. 1602829/- without appreciating the fact that the assessee was a small business man and had filed the return of income under section 44AD on presumptive taxation basis. That the provision of section 69A could not be applied where no books of accounts were maintained. 7. That the Ld. CIT(A) has erred in confirming the addition of Rs. 1602829/- on account of unexplained credits in bank by not appreciating that the debits in the same bank account represent the amount expended for business purposes and as such, addition made u/s 69A is untenable. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off.” 3 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT 3. The appeal was filed late by 432 days. The assessee has requested for condonation of delay vide its application dated 14.09.2023 for condonation of delay on account of exceptional circumstances that the appellant had to undergo various medical test and was to undergo Endovascular surgery by admitting in AIIMS Hospital, Ansari Nagar, New Delhi.Following Hon’ble Apex Court judgment on condonation of delay in filing the appeal on account of exceptional circumstances citation [1956] 29 ITR 607; the said delay is condoned, and appeal is admitted for hearing on merits of the case. 4. The appellant has raised the additional grounds of appeal vide its application dated 17.04.2024 which reads as under: “Without prejudice to the other grounds, the assessment framed u/s 153A is without jurisdiction as the same has been framed on the basis of material seized from the premises of the company M/s Golden Tulip Hospitality Pvt. ltd during search operation conducted u/s 132 of the Income Tax Act 1961. That assessment so framed is bad in law in as much as appropriate section is section 153C of the Income Tax Act 1961. 5. At the outset, the Ld. AR submitted that the assessment was framed u/s 153A on the basis of material seized from the premises of the company M/s Golden Tulip Hospitality Pvt. Ltd during search operation conducted u/s 132 of the Income Tax Act 1961 is bad in law in as much as appropriate 4 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT section is section 153C of the Income Tax Act 1961. Since this is a legal ground of appeal, the permission may, please, be granted in view of the judgment of M/s National Thermal Plant Co. Ltd vs CIT as reported in 229 ITR 383 and oblige. Ld. DR has no objection. Since no new facts are required to be investigated the issue and, as such, the permission for taking the additional ground is granted. 6. The Ld AR submitted that the assessment framed u/s 153A is without jurisdiction as the same has been framed on the basis of material seized from the premises of the company M/s Golden Tulip Hospitality Pvt Ltd during search operation conducted u/s 132 of the Income Tax Act 1961 and not from the premises of the appellant assessee. Thus, the assessment so framed is bad in law in as much as appropriate section is section 153C of the Income Tax Act 1961. The Ld. AR argued that the Assessment Order passed by the AO under Section 153A, and the impugned order passed by the Learned CIT(A) under Section 250(6) dated May 10,confirming the addition, are bad in law due to the fact that while issuing the impugned orders, the materials relied upon were found on the premises of M/S Golden Tulip Hospitality during a search. These materials could only have been used in the appellant case in accordance with the procedure outlined 5 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT in Section 153C of the Act. He pleaded that the assessment order may be quashed as void ab initio. 7. Per contra, the Ld. DR stands by the impugned order but he failed to rebut the contention of the ld. AR on the legal issue of validity of the assessment order. 8. Heard both the sides, perused material on record, impugned order, written submission, and citations relied. Admittedly, the Ld CIT(A) upholds the addition of Rs. 21,03,912/- without acknowledging the fact that the document relied upon by the Assessing Officer was discovered on the premises of M/S Golden Tulip Hospitality, which underwent a search under Section 132. Consequently, the assessment proceedings should have been initiated by the AO through a notice under Section 153C of the Income Tax Act. Further, the CIT(A) did not consider the vital fact that the searched premises from which the certificate being treated incriminating material was discovered do not belong to the assessee. 9. In the case of PCIT (CENTRAL) - 3 VERSUS ANAND KUMAR JAIN (HUF), SATISH DEV JAIN, SAJAN KUMAR JAIN [2021] (3) TMI 8 the Hon’ble Delhi High Court held that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., 6 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. No perversity in the view taken by the ITAT. - Decided in favour of assessee. 10. In our view, in the present case, assessment proceedings must be initiated under Section 153C rather than Section 153A of the Act, only after the satisfaction was being arrived in the assessment proceedings of M/S Golden Tulip Hospitality Pvt. that the material found and seized during search pertain to appellant. 7 ITA No. 263/Asr/2023 Nasir Ahmad Dar v. ACIT/DCIT 11. Accordingly, we hold that the assessment order passed under Section 153A is without jurisdiction and as such, quashed. 12. Since, the assessee gets relief on the legal grounds, and hence, other grounds on merits do not require adjudication. 13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.05.2024 Sd/- Sd/- (Udayan Dasgupta) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T. True Copy By Order