Kantilal Dayalal Oswal, Pune V. Assistant Commissioner of Income-tax,

ITA 311/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7196 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Business income; Deemed dividend
• Section: 143(3); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 311 /PUN/20 15 / ASSESSMENT YEAR : 2008 - 09 KANTILAL DAYALAL OSWAL, ARCHANA BUNGALOW, 473/30/B/1, GULTEKADI, PUNE - 411 037 PAN : AADPO5033C ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE. / RESPONDENT A SSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ACHAL SHARMA, ADDL. CIT / DATE OF HEARING : 16.10.2017 / DATE OF PRONOUNCEMENT : 22 .11.2017 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 12, PUNE DATED 20.01.2015 FOR THE ASSESSMENT YEAR 2008 - 09. 2 ITA NO. 311/PUN/2015 A.Y. 2008 - 09 2. THE FACTS GERMEN TO THE PRESENT APPEAL ARE: A SEARCH ACTION U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED AT THE RESIDENTIAL PREMISES OF ASSESSEE ON 18.11.2009. NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE ON 07.06.2010 . THE ASSESSEE VIDE LETTER DATED 22.07.2010 COMMUNICATED TO THE DEPARTMENT THAT RETURN OF INCOME FILED U/S.139(1) OF THE ACT MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE U/S. 153A OF THE ACT. THE ASSESSEE HAD FILED HIS RETURN OF INCOME U/S. 139(1) FOR THE IMPUGNED ASSESSMENT YEAR ON 29.07.2008 DECLARING TOTAL INCOME OF RS.51,59,160/ - . IN THE RETURN OF INCOME, THE ASSESSEE HAD DISCLOSED LONG TERM CAPITAL GAIN FROM SALE OF RIGHTS IN PLOT OF LAND. DURING THE COURSE OF SEARCH, NO INCREMENTING MATERIAL W AS FOUND. THE AS SESSING OFFICER WHILE MAKING ASSESSMENT U/S. 143(3) R.W.S 153A MERELY CHANGED THE HEAD OF INCOME IN RESPECT OF SALE OF RIGHTS IN PLOT OF LAND FROM CAPITAL G AIN TO B USINESS INCOME AND ASSESSED TOTAL INCOME OF ASSESSEE AT RS. 52,35,260/ - . 52,35,260/ - . AGGRIEVED BY THE ASSESSMENT ORDER DATE 30.11.2012, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING THE ADDITION WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND AND SEIZED DURING SEARCH. THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTION OF ASSESSEE AND UPHELD THE FINDINGS OF ASSESSING OFFICER. NOW, ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 3. THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN COMPLETING THE ASSESSMENT ORDER U/S. 143(3) R.W.S.153A OF THE INCOME TAX ACT, 1961 IN CONSEQUENCE TO SEARCH U/S. 132 OF THE INCOME TAX ACT, 1961 FOR A.Y. 2008 - 2 009. IN VIEW OF THE FACT THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND FOR A.Y.2008 - 2009. THEREFORE, THE ORDER PASSED IN BAD IN LAW. 3 ITA NO. 311/PUN/2015 A.Y. 2008 - 09 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE CAPIT AL GAIN ARISING ON ACCOUNT OF TRANSACTIONS OF SALE OF RIGHTS IN PROPERTY BY TREATING THE SAME AS BUSINESS INCOME AND BY DISREGARDING THE FACT THAT THE SAME IS RIGHTLY OFFERED AS CAPITAL GAIN BY THE APPELLANT. 4. SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT A SEARCH ACTION U/S. 132 WAS CARRIED OUT IN THE CASE OF ASSESSEE ON 18.11.2009. DURING SEARCH NO INCRIMINATING MATERIAL WAS FOUND. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 27.09.2008. NO NOT ICE U/S. 143(2) WAS EVER SER VED ON THE ASSESSEE TILL THE DUE DATE AS MANDATED UNDER THE ACT. THE INCOME RETURNED BY ASSESSEE HAD ATTAINED FINALITY. THUS, THIS IS A CASE OF COMP LE TED ASSESSMENT. IN RESPONSE TO THE NOTICE U/S. 153A, THE ASSESSEE VIDE LETTER DATED 22.07.2010 ( AT PAGE 2 8 OF THE PAPER BOOK) REQUESTED THE ASSESSING OFFICER TO TREAT ORIGI NAL RETURN OF INCOME FILED U/S. 139(1) AS RETURN IN RESPONSE TO THE NOTICE U/S. 153A OF THE ACT. IN THE RETURN OF INCOME FILED U/S. 139(1), THE ASSESSEE HAD DECLARED LONG TERM C APITAL G AIN FRO M SALE OF RIGHTS IN THE LAND. IN ASSESSMENT PROCEEDINGS U/S. 153A, THE ASSESSING OFFICER ASSESSED INCOME FROM SALE OF RIGHTS IN LAND AS BUSINESS I NCOME. NO OTHER ADDITION WAS MADE. THE LD. AR REFERRING TO PARA 2.2.2 OF THE IMPUGNED ORDER CONTENDED THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS ENDORSED THAT NO ADDITION HAS BEEN MADE BUT ONLY HEAD OF INCOME HAS BEEN CHANGED. THE LD. AR SUBMITTED THAT IT IS A WELL SETTLED LAW THAT WH ERE NO INCRIMINATING MATERIAL I S FOUND DURING SEARCH, NO ADDITION CAN BE MADE. IN SUPPORT OF HIS CONTENTION S , THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) CIT VS. GURINDER SINGH BAWA REPORTED AS 386 ITR 4 83 ( BOM.) II) CIT VS. CONTINENTAL WAREHOUSING CORPORATION REPORTED AS 374 ITR 645 ( BOM.) 4 ITA NO. 311/PUN/2015 A.Y. 2008 - 09 5. ON THE OTHER HAND, SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN SUSTAIN ING THE ADDITION. THE LD. DR AD MITTED THAT NO NEW ADDITION HAS BEEN MADE. THE ASSESSEE HAS SHOWN PROFITS FROM SALE OF RIGHTS IN PLOT AS CAPITAL GAIN WHEREAS THE ASSESSING OFFICER AFTER ANALYSING THE FACTS & DOCUMENTS ON RECORD CAME TO THE CONCLUSION THAT GAINS ARE IN THE NATURE OF BUSINESS I NCOME . THE LD. DR FAIRLY ADMITTED THAT TIME FOR ISSUING NOTICE U/S. 143(2) HAD EXPIRED; NO NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE BEFORE THE DUE DATE QUA RETURN FILED BY ASSESSEE U/S.139 (1). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY GROUND RAISED BY ASSESSEE IN APPEAL IS , WHETHER THE ASSESSMENT ORDER GROUND RAISED BY ASSESSEE IN APPEAL IS , WHETHER THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S 153A, IN ABSENCE OF ANY INCRIMINATING MATERIAL , IS VALID. IT IS AN UNDISPUTED FACT THAT DURING SEARCH ACTION, NO INCRIMINATING MATERIAL WAS FOUND. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE IN HIS RETURN OF INCOME FILED U/S. 139(1) HAD DISCLOSED INCOME FROM SAL E OF RIGHTS IN PLOT OF LAND AS LONG TERM C APITAL G AIN. FURTHER, IT IS NOT DISPUTED THAT IT IS A CASE OF NON ABATED ASSESSMENT. IN ASSESSMENT PROCEEDINGS ARISING FROM SEARCH, THE ASSESSING OFFICER MADE NO OTHER ADDITION EXCEPT CHANGING HEAD OF INCOME IN RESPECT OF GAINS FROM SALE OF RIGHTS IN PLOT OF LAND FROM CAPITAL G AIN TO BUSINESS I NCOME . IN OUR CONSIDERED VIEW, ACTION OF THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CHANGING HEAD OF INCOME AND MAKING ADDITION IN INCOME RETURNED U/S.153A PROCEEDINGS. THERE WAS NO INCRIMINATING MATERIAL FOUND AT T HE TIME OF SEARCH WHICH COULD HAVE LED THE ASSESSING OFFICER TO CHANGE HEAD 5 ITA NO. 311/PUN/2015 A.Y. 2008 - 09 OF INCOME. IT IS A WELL SETTLED LAW THAT IN CASE OF NON - ABATED ASSESSMENT, IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH, NO ADDITION CAN BE MADE. 7. THE HON'BLE BOMBA Y HIGH COURT IN THE CASE OF CIT VS. GURINDER SINGH BAWA (SUPRA.) UNDER SIMILAR CIRCUMSTANCES CONFIRMED THE ORDER OF TRIBU NAL HOLDING THE ASSESSMENT U/S.143(3) R.W.S. 153A WITHOUT JURISDICTION IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. IN THE SAID CASE, THE ASSESSEE HAD DECLARED RS. 93.72 LACS AS GIFT S. THE ASSESSING OFFICER HELD THE SAME AS UNEXPLAINED CASH CREDIT S AND ADDITION WAS MADE U/S. 68 OF THE ACT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING SEARCH . THE ASSESSEE IN HIS RETURN OF I NCOME HAD DECLARED INCOME RS. 9.61 LACS AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT. NO NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE. THEREFORE, IT WAS A CASE OF NON ABATED ASSESSMENT. THE HON'BLE HIGH COURT CONFIRMI NG THE VIEW OF OF NON ABATED ASSESSMENT. THE HON'BLE HIGH COURT CONFIRMI NG THE VIEW OF TRIBUN AL HELD : 7 . ..IN THE APPEAL BEFORE US, THE REVENUE HAS MADE NO GRIEVANCE WITH REGARD TO THE IMPUGNED ORDER OF THE TRIBUNAL HOLDING THAT IN LAW THE PROCEEDINGS UNDER SECTION 153A OF THE ACT ARE WITHOUT JURISDICTION. THIS IN VIEW OF THE FACT THAT NO ASSESSMENT WERE PENDING, SO AS TO ABATE NOR ANY INCRIMINATING EVIDENCE WAS FOUND. THE GRIEVANCE OF THE REVENUE IS ONLY WITH REGARD TO FINDING IN THE IMPUGNED ORDER ON THE MERITS OF THE INDIVIDUAL CLAIM REGARDING GIFTS AND DEEMED DIVIDEND. HOWEVER, ONCE IT IS NOT DISPUTED BY THE REVENUE THAT THE DECISION OF THIS COURT IN CONTINENTAL WAREHOUSING CORPORATION (NHAVA - SHEVA) LTD. (SUPRA) WOULD APPLY TO THE PRESENT FACTS AND ALSO THAT THERE ARE NO ASSESSMENTS PENDING ON THE TIME OF THE INITIATION OF PROCEEDINGS U NDER SECTION 153A OF THE ACT. THE OCCASION TO CONSIDER THE ISSUE RAISED ON MERITS IN THE PROPOSED QUESTIONS BECOMES ACADEMIC. IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA.) THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT NO ADDITION CAN BE MAD E IN 6 ITA NO. 311/PUN/2015 A.Y. 2008 - 09 RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH. 8. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT , WE HOLD TH AT ASSESSMENT ORDER PASSED U/ S.143(3) R.W.S. 153A WAS WITHOUT JURISDICTION AND IS THUS, UNSUSTAINABLE. ACCORDINGLY, IMPUGNED ORDER IS SET ASIDE AND APPEAL OF ASSESSEE IS ALLOWED. 9. IN THE RESULT , APPEAL OF ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON WEDNESDAY, THE 22 ND DAY OF NOVEMBER , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 22 ND NOVEMBER , 2017 . / PUNE; / DATED : 22 ND NOVEMBER , 2017 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 12, PUNE. 4. THE CIT (CENTRAL), PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .