M/s. Rasayana Hotel, New Delhi V. ITO, Uttrakhand

ITA 2718/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1156 (ITAT-DEHRADUN)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K CHATTERJEE
• Keywords: Depreciation; Search and seizure; Principle of natural justice
• Section: 143(3); 153A; 80IC; 143(2); 80IC; 153C; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH: DEHRADUN (THROUGH VIDEO CONFERENCING) BEFORE, SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.2718/DEL/2017 (ASSESSMENT YEAR-2011-12) M/S RASAYANA HOTEL, 26/6 EAST PATEL NAGAR, NEW DELHI-110008. PANAAKFR 2179K VS. INCOME TAX OFFICER, TEHRI, HQ. RISHIKESH. (APPELLANT) (RESPONDENT) APPELLANT BY SH. P.C. YADAV, ADV. RESPONDENT BY SH. S.K. CHATTERJEE. SR. DR DATE OF HEARING 25.09.2020 DATE OF PRONOUNCEMENT 27.11 .2020 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST OR DER DATED 28.02.2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DEHRADUN, {CIT(A)} AND PERTAINS TO AS SESSMENT YEAR 2011-12. 2 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM AND HAD FILED ITS RETURN OF INCOME DECLARING INCOME AT RS. NIL AFTER CLAIMING DEDUCTION OF RS.57,86,300 /- U/S 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT). A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED O N 22.09.2011 ON THE RESIDENTIAL AND OFFICIAL PREMISES OF M/S KAN ATAL RESORTS AND SPA PVT. LTD. AND RESIDENCES OF SH. ASHWANI MITTAL A ND SH. DEEPAK MITTAL. DURING THE COURSE OF SEARCH, CERTAIN DOCUME NTS RELATING TO THE ASSESSEE FIRM WERE ALSO FOUND AND SEIZED BY THE SEARCH PARTY. THEREAFTER, THE ISSUE WAS REFERRED TO THE ASSESSING OFFICER OF THE ASSESSEE BY THE ASSESSING OFFICER OF M/S. KANATAL R ESORTS AND SPA PVT. LTD. AND PROCEEDINGS U/S 153C OF THE ACT WERE I NITIATED. ADMITTEDLY, NO INCRIMINATING MATERIAL FOR THE YEAR UNDER CONSIDERATION WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH. HOWEVER, THE ASSESSING OFFICER PROCEEDED TO DISALLO W THE ASSESSEES CLAIM MADE U/S 80IC OF THE ACT AS WELL AS A PART OF THE DEPRECIATION CLAIMED. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.58,62,260/-. 3 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO 2.1 THE ASSESEES APPEAL BEFORE THE LD. CIT (A) WA S PARTLY ALLOWED WITH THE LD. CIT (A) HOLDING THAT THE DISALL OWANCE WITH RESPECT TO DEPRECIATION WAS NOT WARRANTED. THE LD. CI T (A), HOWEVER, UPHELD THE DISALLOWANCE OF ASSESSEES CLAIM U/S 80IC OF THE ACT. THE LD. CIT (A) ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ASSESSMENT DISALLOWING THE ASS ESSEES CLAIM OF DEDUCTION U/S 80IC WITHOUT THERE BEING ANY INCRIM INATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEA RCH. 2.2 NOW, THE ASSESSEE HAS APPROACHED THIS TRIBUNAL CHALLENGING THE ACTION OF THE LD. CIT (A) IN UPHOLD ING THE ORDER OF ASSESSMENT AND HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED U/S 153C BY LD. CIT (APPEALS) IS BAD IN THE EYES OF LAW AND ON FACTS. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE ORDER OF AO IS BAD IN LAW AS NO SATISFACTION U/ S 153C OF THE ACT HAS BEEN RECORDED BY THE AO OF SEARCH PERSO N BEFORE HANDLING OVER THE MATERIAL PERTAINING TO THE ASSESS EE. 3. THE ORDER OF AO AS UPHELD BY THE CIT (A) IS N OT TENABLE AS REQUISITE CONDITIONS PRESCRIBED UNDER SECTION 15 3C HAS 4 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO NOT BEEN FOLLOWED BEFORE ASSUMING JURISDICTION OF S ECTION 153C OF THE ACT. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE , THE ORDER PASSED BY LD. CIT (APPEAL) IS BAD IN THE EYES OF LA W AND ON FACTS AS THE ASSESSMENT ORDER PASSED U/S 153C ITSEL F IS INVALID AND LIABLE TO BE QUASHED AS THERE WAS NO INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BE ING FOUND DURING THE SEARCH. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER U/S 153C BEING PASSED IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE AND WITHOUT GIVING ADEQUATE TIME AND OPPORT UNITY TO THE ASSESSEE TO REPRESENT ITS CASE AND TO FILE ITS REPLIES AND CLARIFICATION, IS BAD IN THE EYE OF LAW AND LIABLE TO BE QUASHED. 6. THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS. 57,86,300/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IC OF THE INCOME TA X ACT, 1961. 7. THAT THE LD. CIT (A) HAS ERRED ON FACTS A ND IN LAW IN MAKING THE IMPUGNED ADDITION BY NOT TREATING HOTEL BUSINESS AS A COMPONENT OR PART AND PARCEL OF ECO- TOURISM ACTIVITY/PROJECT. 5 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO 8. THAT THE IMPUGNED ADDITION IS NOT SUSTAI NABLE AS THE SAME IS ALREADY BEEN MADE IN THE ORDER U/S 143(3) O F THE INCOME TAX ACT, 1961 VIDE ORDER DATED 25.03.2013 WH ICH IS SUBJECT MATTER OF APPEAL BEFORE ITAT NEW DELHI IN I TA NO.3071/2015. 9. THAT THE IMPUGNED APPELLATE ORDER IS ARBIT RARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPL ES OF CONTEMPORARY JURISPRUDENCE. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTE R ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) S UBMITTED THAT ACTION U/S 153C OF THE ACT WAS INITIATED IN THE CASE OF THE ASSESSEE FROM ASSESSMENT YEARS 2006-07 TO 2012-13. IT WAS SUB MITTED THAT THE DOCUMENTS RELATING TO THE ASSESSEE WERE HANDED OVER TO THE ASSESSING OFFICER ON 17.02.2014 I.E., RELEVANT TO A SSESSMENT YEAR 2014-15 AND, THEREFORE, THE YEAR OF SEARCH FOR THE ASSESSEE WAS TO BE CONSIDERED AS ASSESSMENT YEAR 2014-15 AND NOT AS SESSMENT YEAR 2012-13 AS HAS BEEN DONE BY THE ASSESSING OFFI CER. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE 6 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO CASE OF CIT VS. RRJ SECURITIES REPORTED IN 380 ITR 612 (DEL .) AND IT WAS SUBMITTED THAT BY VIRTUE OF FIRST PROVISO TO SEC TION 153C OF THE ACT, THE DATE OF HANDING OVER OF THE DOCUMENTS WOUL D BECOME THE DATE OF SEARCH IN THE CASE OF OTHER PERSON AND THE PREVIOUS SIX YEARS PERIOD WOULD HAVE TO BE RECKONED FROM THIS DATE. IT WAS SUBMITTED THAT SINCE THE DATE OF HANDING OVER THE DOCUMENST WA S 17.02.2014, ASSESSMENT YEAR 2014-15 WILL BE THE YEAR OF SEARCH F OR THE ASSESSEE AND, THEREFORE, THE TIME LIMIT FOR ISSUING THE NOTI CE U/S 143(2) OF THE ACT VIS A VIS THE RETURN FILED ON 27.09.2011 STOOD EXPIRED ON 30.09.2012 I.E., SIX MONTHS FROM THE END OF FINANCI AL YEAR IN WHICH THE RETURN WAS FILED. 3.1 IT WAS FURTHER SUBMITTED THAT IT IS NOW WEL L SETTLED THAT ASSESSMENT OF THOSE YEARS WHICH WERE NOT PENDING ON T HE DATE OF SEARCH CAN ONLY BE TINKERED WITH ONLY IF THERE WAS AN Y INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH WHIC H IS ADMITTEDLY NOT SO IN THE CASE OF ASSESSEE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN [2016] 380 ITR 573 (DEL.) AND IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINA TING MATERIAL 7 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO WHILE FRAMING THE ASSESSMENT AND HAS RATHER MADE ADDITIONS/DISALLOWANCES OF THOSE ITEMS WHICH HAD ALRE ADY BEEN DISCLOSED BY THE ASSESSEE IN ITS RETURN OF THE INCO ME. 3.2 ON MERITS OF THE CASE REGARDING THE A SSESSEES CLAIM U/S 80IC OF THE ACT, IT WAS SUBMITTED THAT THE ITAT HAS ALREADY SETTLED THE ISSUE IN ASSESSEES FAVOUR IN ASSESSMENT YEARS 2010-11 AND 2011-12. OUR ATTENTION WAS DRAWN TO THE ORDERS OF THE TRIBUNAL PLACED IN PAPER BOOK IN THIS REGARD. 4.0 PER CONTRA, THE LD. SR. DEPARTMENTAL REPRESENT ATIVE (DR) SUBMITTED THAT THE LANGUAGE OF SECTION 153A/153C DO ES NOT REQUIRE ANY INCRIMINATING MATERIAL TO BE FOUND DURING THE C OURSE OF SEARCH FOR THE PURPOSES OF MAKING THE ADDITION. IT WAS ALSO SUBMITTED THAT THE DEPARTMENT HAD EVERY RIGHT TO EXAMINE THE ASSES SEES CLAIM U/S 80IC OF THE ACT. THE LD. SR. DR ALSO RELIED ON THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS. CIT REPORTED IN [2016] 75 TAXMAN.COM 215 (KERALA) WHEREIN IT HAD BEEN HELD THAT ASSESSMENT PROCEEDINGS GENERATED BY ISSUA NCE OF A NOTICE U/S 153A (1)(A) CAN BE CONCLUDED AGAINST THE INTERE ST OF THE ASSESSEE INCLUDING MAKING ADDITIONS EVEN WITHOUT ANY 8 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO INCRIMINATING MATERIAL BEING AVAILABLE AGAINST THE ASSESSEE IN SEARCH U/S 132 OF THE ACT. THE SR. DR SUBMITTED THA T IN VIEW OF THE FACTS AND SETTLED LAW, THE ASSESSEES APPEAL DESERVE D TO BE DISMISSED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. AS FAR AS THE LEGAL ISSUE OF THE IMPUGNED ADDITION BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IS CONCERNED, IT IS SEE N THAT EVEN THE LD. CIT (A) HAS STATED IN PARAGRAPH 3 PAGE 2 OF THE IMPUGNED ORDER THAT THERE WAS NO INCRIMINATING MATERIAL RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. CIT (A) HAS ALSO OBSERVED THAT THE ASSESSMENT WAS COMPLETED ON THE BASIS OF MATERIAL AL READY AVAILABLE ON RECORD AND AS FURNISHED BY THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, IT IS UNDIS PUTED THAT NO INCRIMINATING MATERIAL PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND DURING THE SEARCH WHICH WAS R ELATING TO OR BELONGING TO THE ASSESSEE. IN SUCH A SITUATION THE LAW HAS ALREADY BEEN CRYSTALLIZED BY THE JUDGMENT OF THE HONBLE AP EX COURT IN THE CASE OF CIT VS. SINGHAD TECHNICAL EDUCATION SOCIETY (2017) 397 ITR 9 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO 344 (SC) WHEREIN THE HONBLE APEX COURT DISMISSED THE SPECIAL LEAVE PETITION OF THE REVENUE FOR THE ASSESSMENT YE ARS WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE O F SEARCH. THE REVENUES RELIANCE ON THE JUDGMENT OF THE HONBLE K ERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR (SUPRA) ALSO DOES NOT COME TO THE AID OF THE REVENUE IN VIEW OF THE JUDGMENT OF THE HONBL E APEX COURT IN THE CASE OF SINGHAD TECHNICAL EDUCATION SOCIETY (SU PRA). OUR VIEW IS ALSO FORTIFIED BY THE JUDGMENT OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) AS, UNDISPU TEDLY, NO REFERENCE HAS BEEN MADE TO ANY INCRIMINATING MATERI AL WHILE FRAMING THE ASSESSMENT AND THE ASSESSMENT HAS BEEN COMPLETED ON THE BASIS OF INFORMATION/DOCUMENTS FILED ALONG WITH THE RETURN OF INCOME OR FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, IN ABSENCE OF INCRIMINATING MATERIAL HAV ING BEEN FOUND DURING THE COURSE OF SEARCH WHICH COULD BE SAID TO B E RELATING TO OR BELONGING TO THE ASSESSEE AND WHICH WAS RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WE HAVE NO HES ITATION IN HOLDING THAT THE IMPUGNED ADDITIONS WERE BAD IN LAW AND THE SAME CANNOT BE SUSTAINED. BEFORE PARTING, WE MAY ALSO MEN TION THAT AS 10 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO FAR AS THE ISSUE OF ASSESSEES CLAIM OF DEDUCTION U /S 80IC OF THE ACT ON MERITS IS CONCERNED, THE SAME ALSO STANDS COVERE D IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THIS TRIBUNAL FOR ASSE SSMENT YEAR 2010-11 IN ITA NO.3071/DEL/2015 VIDE ORDER DATED 11 .10.2017 AND FOR ASSESSMENT YEAR 2012-13 IN ITA NO.2719/DEL/2017 VIDE ORDER DATED 04.08.2020. WE ALSO NOTE THAT IN ASSESSMENT Y EAR 2010-11 THE TRIBUNAL HAD DULY CONSIDERED THE FACTUAL MATRIX OF THE ASSESSEES CLAIM U/S 80IC BEFORE HOLDING THAT THE A SSESSEE WAS ELIGIBLE FOR SUCH CLAIM OF DEDUCTION. IN SUCH A SIT UATION WE FIND NO REASON TO GO AGAIN INTO THE MERITS OF THE CLAIM MAD E U/S 80IC AND RESPECTFULLY FOLLOWING THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2010-11 AND 2011-12 AS AFORESAID, WE REFUSE TO INTERFERE ON THE ISSUE. THEREFORE, THE ORDER OF THE LD. CIT (A) CANNOT BE SUSTAINED ON MERITS ALSO. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED ON 27 TH NOVEMBER, 2020. SD/- SD/- (R.K.PANDA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:27/11/2020 11 ITA NO.2718/DEL/2017 M/S RASAYANA HOTEL VS . ITO PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT DEHRADUN