Shri Navinchandra Mohanlal Patel, RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Cen.Cir-1, RAJKOT-GUJARAT

ITA 279/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2301 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: HARISH RANPURA
• Keywords: Search and seizure
• Section: 153A; 14A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - C OURT AT AHMEDABAD] SHRI NAVINCHANDRA MOHANLAL PATEL, 6102, TAKSHASHEELA SOCIETY, NR. PHULCHHAB PRESS, RAJKOT PAN: ABPPB7558L (APPELLANT) VS THE ASSISTANT COMMISSIONER OF I NCOME TAX, CENTRAL CIRCLE - 1, RAJKOT (RESPONDENT) REVENUE BY : S H RI YOGESH PANDEY , D . R. ASSESSEE BY: S H RI HARISH . RANPURA , A.R. DATE OF HEARING : 03 - 12 - 2 015 DATE OF PRONOUNCEMENT : 10 - 02 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE TWO ASSESSEE S APPEAL S FOR A.Y. 2006 - 07 TO 2007 - 08 , AR ISE FROM ORDER OF THE CIT(A) - 11, AHMEDABAD DATED 2 5 - 03 - 2015 IN APPEAL NO S . CIT(A) - 11 / 632 - R & 633 - R/CC.1/2014 - 15 , IN PROCEEDINGS UNDER SECTION 1 53A R.W.S. 43(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 278 & 279 / RJT /20 15 A SSESSMENT YEAR 200 6 - 07 TO 2007 - 08 I.T.A NO S . 278 TO 279 /RJT /20 15 A.Y. 2006 - 07 TO 2007 - 08 PAGE NO SHRI NAVINCHANDRA MOHANLAL PATEL VS. ACIT 2 2. A COMBINED PERUSAL OF THESE TWO CASE FILES REVEALS THAT FORMER APPEAL ITA NO. 278/RJT/2015 RAISES FOUR SUBSTANTIVE GROUNDS INTER ALIA IN ASSAILING THE LOWER APPELLATE ORDER UPHOLDING VAL IDITY OF SECTION 153A PROCEEDINGS, TREATING LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES OF RS. 1,92,868/ - AS PROFITS AND GAINS FROM BUSINESS AND PROFESSION THEREBY DISALLOWING SETTING OFF OF THE SAME U/S. 71(1), DISALLOWANCE OF INTEREST EXPENSES OF RS. 2,01,586/ - U/S. 57 FOLLOWED BY THAT MADE U/S. 14A OF RS. 30,000/ - BY THE ASSESSING OFFICER. THE LATTER APPEAL RAISES IDENTICAL GROUNDS QUA VALIDITY OF SECTION 153A PROCEEDINGS, SECTIONS 57 AND 14A DISALLOWANCES OF RS. 20,000/ - AND RS. 50,000/ - ; RESPECTI VELY. BOTH THE LD. REPRESENTATIVES SUBMIT AT THE OUTSET THAT RELEVANT FACTS QUA THE ABOVE STATED LEGAL ISSUES ARE IDENTICAL AND GO TO ROOT OF THE MATTER. WE PROCEED TO DECIDE THIS LEGAL ISSUE FIRST AND TREAT ITA 278/RJT/2015 AS THE LEAD CASE. 3. THE ASSESSEE - INDIVIDUAL APPEARS TO HAVE FILED HIS RETURN U/S. 139(1) OF THE ACT ON 31 - 07 - 2006 DISCLOSING INCOME OF RS. 4,49,360/ - . HIS UNDISPUTED CASE AS PER STATEMENT OF FACTS GIVEN IN FORM NO. 35 APPEARS TO BE THAT THE ASSESSING OFFICER ACCEPTED THIS INCOME IN TOTO VIDE ASSESSMENT ORDER DATED 16 - 07 - 2008. THE CIT(A) IN LOWER APPELLATE OR D ER DOES NOT REBUT THIS SPECIFIC AVERMENT. THE DEPARTMENT CARRIED OUT A SEARCH AT ASSESSEE S PREMISES ON 08 - 09 - 2011. THE SAM E CULMINATED IN INITIATION OF SECTION 153A PROCE EDINGS VIDE NOTICE DATED 12 - 06 - 2010. THE ASSESSEE RESPONDED THE SAME BY I.T.A NO S . 278 TO 279 /RJT /20 15 A.Y. 2006 - 07 TO 2007 - 08 PAGE NO SHRI NAVINCHANDRA MOHANLAL PATEL VS. ACIT 3 FILLING A FRESH RETURN ON 31 - 10 - 2012 REITERATING THE INCOME ALREADY RETURNED. THE ASSESSING OFFICER THEREAFTER COMPLETED SEARCH ASSESSMENT ON 28 - 08 - 2014 IN T ER ALIA MAKING ABOVE STATE D THREE DISALLOWANCES ON MERITS. 4. THE ASSESSEE PREFERRED APPEAL. HE INTER ALIA ARGUED THAT THE ASSESSING OFFICER HAD ALREADY COMPLETED A REGULAR ASSESSMENT AND NO PROCEEDINGS WERE PENDING AS ON THE DATE OF SEARCH. HIS CASE WAS THAT THE SEARCH IN QUE STION ALSO DID NOT LEAD TO SEIZURE OF ANY INCRIMINATING MATERIAL. THE ASSESSEE ACCORDINGLY POSED CHALLENGE TO LEGALITY OF SECTION 153A PROCEEDINGS. THE C IT(A) HAS REJECTED THIS LEGAL GROUND BY HOLDING THAT THIS STATUTORY PROVISION IS TO BE INVOKED QUA SI X PRECEDING ASSESSMENT YEARS TO THE DATE OF SEARCH. THIS LEAVES THE ASSESSEE AGGRIEVED. 5. WE HAVE HEARD BOTH THE PARTIES . RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE ASSESSEE S ARGUMENTS ARE IN TUNE WI TH THOSE MADE IN T HE LOWER APPELLATE PROCEEDINGS THAT HIS REGULAR ASSESSMENT STOOD COMPLETED WELL BEFORE SEARCH AND THE ASSESSING OFFICER OUGHT NOT TO HAVE INVOKED SECTION 153A IN ABSENCE OF ANY INCRIMINATING EVIDENCE. WE FIND THAT HE HAS ALSO PLACED ON R ECORD RELEVANT PANCHNAMA DRAWN ON 09 - 09 - 2011. THE REVENUE FAILS TO REBUT THIS FACTUAL POSITION. IN THESE CIRCUMSTANCES, WE FIND THAT A CO - ORDINATE BENCH IN ITAS 280/RJT/2015 SHRI KIRANKUMAR VALJIBHAI BHALODIA VS. ACIT DECIDED ON 22 - 01 - 2016 ACCEPTS IDENTI CAL ARGUMENTS AS UNDER: - I.T.A NO S . 278 TO 279 /RJT /20 15 A.Y. 2006 - 07 TO 2007 - 08 PAGE NO SHRI NAVINCHANDRA MOHANLAL PATEL VS. ACIT 4 5. WE HAVE HEARD BOTH THE PARTIES. IT IS EVIDENT TO US THAT EVEN THE LOWER APPELLATE FINDINGS NOWHERE SPECIFICALLY REBUT ASSESSEE S CONTENTION QUOTING ABSENCE OF INCRIMINATING MATERIAL. HE REITERATES THE VERY ARGUMENT BEFORE US THAT THE IMPUGNED ASSESSMENT ITSELF IS LIABLE TO BE QUASHED ON THIS GROUND ALONE AS HELD BY HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. JAYABEN RATILAL TAX APPEAL NO. 914 OF 2012 DECIDED ON 02 - 07 - 2013, HON BLE DELHI HIGH COURT IN CIT VS. MGF AUTOMOBILE LT D ITA 13 OF 2014 DECIDED ON 13 - 08 - 2015 AND IN ITA 707 OF 2014 DOD 28 - 08 - 2015 AS WELL SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALCARGO GLOBAL LOGISTICS LTD VS. DCIT 137 ITD 287 (MUMBAI). |HIS FURTHER ARGUMENT IS THAT HIS REGULAR ASSESSMENTS ARE DEEDED TO HAVE BEEN COMPLETED SINCE LIMITATION FOR ISSUING SECTION 143(2) NOTICE WAS OVER ON 30 - 09 - 2007 TURNING OUT TO BE MUCH BEFORE THE IMPUGNED SEARCH DATED 08 - 09 - 2011. THE ASSESSEE ACCORDINGLY PRAYS FOR ACCEPTANCE OF THE INSTANT APPEAL ON THIS LEGAL ASPECT. 6. THE REVENUE STRONGLY SUPPORTS THE CIT(A) ORDER AND PRAYS FOR UPHOLDING THE SAME. IT QUOTES CASE LAW OF CIT VS. RAJKUMAR ARORA (2014) 367 ITR 517 (ALLAHABAD) TO THE EFFECT THAT EVEN IF THE ASSESSING OFFICER COMPLETES A SUMMARY ON REGULAR ASSESSMENT THA T ITSELF COME IN THE WAY OF REOPENING AND REASSESSMENT OF TOTAL INCOME IN VIEW OF UNDISCLOSED INCOME FOUND IN THE COURSE OF SEARCH AND SEIZURE OPERATION. AND THAT SECTION 153A IN THE NATURE OF NON - OBSTANTE CLAUSE REMOVES ALL FETTERS IMPOSED UPON THE /ASSE SSING OFFICER U/S. 147/148. NEXT DECISION IS (2012) 346 ITR 106 (AP) GOPAL LAL BHADRUKA VS. DCIT THAT A ASSESSING OFFICER CAN TAKE INTO CONSIDERATION ANY MATERIAL OTHER THAN WHAT WAS ALREADY AVAILABLE DURING SEARCH AND SEIZURE OPERATION FOR THE PURPOSE OF COMPLETING A SEARCH ASSESSMENT. THEN COMES THE DECISION OF (2014) 362 ITR 664 (KERALA) SUNNY JACOB JEWELLERS AND WEDDING CENTRE VS. DCIT PROPOUNDING A PROPOSITION THAT THERE IS NO PROHIBITION OR EMBARGO ON THE DEPARTMENT TO CONSIDER ANY INFORMATION FOR A SSESSMENT OR REASSESSMENT CONTEMPLATES U/S. 153A. THE REVENUE ACCORDINGLY PRAYS FOR REJECTION OF THE INSTANT APPEAL. 7. BOTH PARTIES HEARD. RELEVANT RECORD PERUSED. THE ASSESSEE S FIRST SUBSTANTIVE ARGUMENT SEEKS TO QUASH THE IMPUGNED ASSESSMENT FRAME D U/S. 153A FOR WANT OF ANY INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH. WE REITERATE THAT THE AUTHORITIES BELOW NOWHERE REBUT SPECIFIC AVERMENT IN LOWER APPELLATE PROCEEDINGS THAT A REGULAR ASSESSMENT ALREADY STOOD FRAMED IN THE INSTANT CAS E. WE FIND IN THESE CIRCUMSTANCES THAT ALL THE JUDGMENTS QUOTED AT THE I.T.A NO S . 278 TO 279 /RJT /20 15 A.Y. 2006 - 07 TO 2007 - 08 PAGE NO SHRI NAVINCHANDRA MOHANLAL PATEL VS. ACIT 5 ASSESSEE S BEHEST INCLUDING THAT OF HON BLE JURISDICTIONAL HIGH COURT HEREINABOVE HOLD THAT NO ADDITION IS TO BE MADE IN FRAMING OF SEARCH ASSESSMENT WITHOUT THERE BEING ANY IN ANY INC RIMINATING EVIDENCE FOUND IN THE COURSE OF SEARCH PROCEEDINGS ITSELF. THE REVENUE S CASE LAW (SUPRA) DOES NOT INVOLVE ANY JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT. WE FOLLOW HON BLE JURISDICTIONAL HIGH COURT DECISION IN THESE CIRCUMSTANCES AND HOLD THAT THE LOWER AUTHORITIES HAVE WRONGLY INITIATED SECTION 153A PROCEEDINGS IN ABSENCE OF ANY SUCH INCRIMINATING EVIDENCE. WE ACCEPT ASSESSEE S ARGUMENT ACCORDINGLY. THE IMPUGNED SEARCH ASSESSMENT ITSELF STANDS QUASHED. THIS RENDERS ASSESSEE S OTHER GROU NDS AS HAVING BECOME INFRUCTUOUS. WE DRAW SUPPORT FROM THE ABOVE EXTRACTED CO - ORDINATE BENCH DECISION IN ABSENCE OF ANY DISTINCTION ON FACTS AND LAW TO HOLD THAT INITIATION OF SECTION 153A PROCEEDINGS IN ABSENCE OF ANY INCRIMINATING EVIDENCE IS NOT SUS TAINABLE. THE SAME IS ACCORDINGLY QUASHED. WE ADOPT THE SAME REASONING TO ACCEPT CORRESPONDING LEGAL ARGUMENT IN THE LATTER ASSESSMENT YEAR. OUR THIS LEGAL ADJUDICATION IN ASSESSEE S FAVOUR RENDERS HIS OTHER SUBSTANTIVE GROUNDS RAISED IN THE TWO APPEALS TO HAVE BECOME INFRUCTUOUS. 6. BOTH THESE ASSESSEE S APPEALS ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 10 - 02 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD : DATED 10 /02 /2016 AK I.T.A NO S . 278 TO 279 /RJT /20 15 A.Y. 2006 - 07 TO 2007 - 08 PAGE NO SHRI NAVINCHANDRA MOHANLAL PATEL VS. ACIT 6 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT