NAZNEEN FAROOQ SARANG, MUMBAI V. DCIT CEN CIR 36, MUMBAI

ITA 3226/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9095 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-11-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 27-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: M P CHHAJED
• Keywords: Search and seizure; Reason to believe; Reassessment proceedings
• Section: 69C; 143(3); 153A; 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5198/MUM/2013 A.Y. 2003-04, ITA NO. 5199/MUM/2013 A.Y. 2004-05 ITA NO. 5200/MUM/2013 A.Y. 2005-06 ITA NO. 5201/MUM/2013 A.Y. 2006-07 ITA NO. 1458/MUM/2012 A.Y. 2007-08 ITA NO. 3226/MUM/2015 A.Y. 2004-05 ITA NO. 3227/MUM/2015 A.Y. 2005-06 ITA NO. 3228/MUM/2015 A.Y. 2006-07 MRS. NAZNEEN FAROOQ SARANG, 302 SHABNAM APARTMENT, 33, S.V.ROAD, ANDHERI (W) MUMBAI 400 058 PAN BEJPS3282N VS. DCIT CENTRAL CIRCLE 36, MUMBAI (APPELLANT) (RESPONDENT) FOR THE APPELLANT : S/SHRI PIYUSH CHHAJED & M P CHHAJED FOR THE RESPONDENT: S/SHRI ANAND MOHAN & SUMAN KUMA R DATE OF HEARING : 12. 0 9 .2017 DATE OF PRONOUNCEMENT : 09 . 1 0 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE A GAINST RESPECTIVE ORDERS OF THE CIT(A). ITA NOS. ITA NO. 5198, 5199, 5200, 5201/MUM/2013 FOR A.YS. 2003-04, 2004-05, 2005-06, 2006-07 & ITA NO. 1458/MUM/2012 FOR A.Y. 2007-08 RELATE TO QUANTUM APPEAL WHILE ITA NOS . 3226, 3227 & 3228/MUM/2015 FOR A.Y. 2004-05, 2005-06 & 2006-07 R ELATE TO LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF THE ADDITION MA DE IN THE QUANTUM APPEAL. NAZNEEN FAROOQ SARANG 2 2. WE SHALL FIRST TAKE UP THE QUANTUM APPEAL IN ITA NOS. 5198, 5199, 5200, 5201/MUM/2013 FOR A.YS. 2003-04, 2004-05, 200 5-06, 2006-07 & ITA NO. 1458/MUM/2012 FOR A.Y. 2007-08. THE ASSESSEE H AS RAISED COMMON GROUNDS OF APPEAL IN ITA NOS. 5198, 5199, 5200, 520 1/MUM/2013, EXCEPT FOR THE CHANGE IN FIGURES. THE GROUND RAISED IN A.Y. 2 003-04 READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER ERRED IN ASSUMING JURISDICTION U/ S. 153A OF THE INCOME TAX ACT AND CONSEQUENTLY PASSING THE ORDER U /S 143(3) READ WITH SECTION 153A PARTICULARLY WHEN THE PROCEE DINGS U/S. 132 ITSELF WERE ILLEGAL AND BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS .5,85,600/- U/S. 68 WITHOUT APPRECIATING THAT THE C ASH DEPOSITS IN THE BANK WERE DULY EXPLAINED BY THE CAS H BOOK FILED DURING THE ASSESSMENT PROCEEDINGS. IN GROUND NO.2 FOR A.Y. 2004-05, 2005-06 AND 2006-0 7, THE FIGURE RS 5,85,600/- BE READ AS ` 4,31,800/-, ` 12,52,200/- AND ` 11,43,000/- RESPECTIVELY. 3. IN ITA NO. 1458/MUM/2012 FOR A.Y. 2007-08, THE A SSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER ERRED IN ISSUING NOTICE U/S. 153A OF THE INCOME TAX ACT SINCE THE ASSESSEE WAS NOT A SEARCH PARTY A ND THERE WAS NO WARRANT OF AUTHORIZATION OR PANCHNAMA MADE ON DA TE OF SEARCH I.E. 24/2/2009 & 25/2/2009. CONSEQUENTLY, THE ASSE SSMENT MADE U/S. 143(3) READ WITH SECTION 153A NEEDS TO BE QUAS HED SINCE THE SAME IS WITHOUT JURISDICTION. NAZNEEN FAROOQ SARANG 3 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS .2,73,850/- AS CASH CREDIT U/S. 68 IGNORING THE CAS H BOOK FILED WHEREIN THE CASH DEPOSITS WERE SUBSTANTI ATED BY THE PREVIOUS CASH WITHDRAWALS FROM THE BANK. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF ` 56,00,000/- U/S. 69(C) TOWARDS INVESTMENT IN RESIDENTIAL FLAT WITHOUT APPRECIATING THAT THE SAID FLAT WAS AGREED TO BE BOUGHT IN NAME OF ASSESSEES HUSBAND AND THE AMO UNTS PAID WERE ALREADY REFLECTED IN HIS ACCOUNT AND FURTHER M ORE THE SAID FLAT WAS FINALLY NEVER ACQUIRED DUE TO NON-PAYMENT OF TH E AGREED AMOUNT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME FOR EACH OF THE ASSESSMENT YEAR, WHICH WAS P ROCESSED U/S. 143(1) AS UNDER: ASSESSMENT YEAR DATE OF FILING RETURN RETURNED INCOME ( ` `` ` ) 2003-04 29.03.2004 1,14,200/- 2004-05 28.03.2005 1,31,490/- 2005-06 28.03.2006 1,37,450/- 2006-07 30.03.2007 1,28,750/- 2007-08 28.03.2008 1,32,480/- A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S. 132 OF THE INCOME TAX ACT IN HICONS & PRANAY GROUP OF CASES INCLUDING THE ASSESSEE ON 24.02.2009. SUBSEQUENT TO THE SEARCH, THE CASE OF THE ASSESSEE WAS CENTRALIZED WITH DCIT CENTRAL CIRCLE 36, MUMBAI ON 18.01.2010. NOTICES U /S. 153A DATED 20.07.2010 WERE ISSUED IN THE CASE OF THE CASE OF T HE ASSESSEE FOR EACH OF NAZNEEN FAROOQ SARANG 4 THE AFORESAID ASSESSMENT YEARS. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETURN ON 12.11.2010 DECLARING INCOME AS UNDER: ASSESSMENT YEAR RETURNED INCOME ( ` `` ` ) 2003-04 1,14,200/- 2004-05 1,31,490/- 2005-06 1,37,450/- 2006-07 1,28,750/- 2007-08 1,63,850/- SUBSEQUENTLY, NOTICE U/S. 143(2) R.W.S. 153A WERE S ERVED ON THE ASSESSEE AND AFTER HEARING THE ASSESSEE THE ASSESSMENT IN EA CH OF THE ASSESSMENT YEAR WAS COMPLETED ON THE INCOME AS DETAILED BELOW: ASSESSMENT YEAR RETURNED INCOME ( ` `` ` ) 2003-04 6,99,800/- 2004-05 5,63,290/- 2005-06 13,89,650/- 2006-07 12,72,020/- 2007-08 60,37,690/- THUS, MAKING THE FOLLOWING ADDITIONS IN EACH ASSESS MENT YEAR ASSESSMENT YEAR INCOME ADDED ( ` `` ` ) UNDER SECTION 2003-04 5,85,600/- 68 2004-05 4,31,800/- 68 2005-06 12,52,200/- 68 2006-07 11,43,000/- 68 2007-08 2,73,850/- 68 56,00,000/- 69C SO FAR AS THE ADDITION MADE IN EACH OF THE ASSESSME NT YEAR U/S. 68 IS CONCERNED, THEY HAVE BEEN MADE ON THE BASIS OF CASH DEPOSIT MADE BY THE ASSESSEE IN THE FOLLOWING BANK ACCOUNTS NAZNEEN FAROOQ SARANG 5 ASSESSMENT YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 BANKS MALAD 6370 4,03,000 1,09,000 4,80,000 8,00,000 3 ,000 SYNDICATE 50612010044496 - 3,22,500 1,67,500 3,43,000 CORPORATION 15124 1,50,500 6,03,000 2,70,850 CORPORATION 15125 10,900 500 CORPORATION 15126 10,900 300 1,200 CORPORATION 15127 10,300 5 , 85 , 600 4,31,800 12,52,200 11,43,000 2,73,850 THE ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFIC ER IN RESPECT OF THE CASH DEPOSITED BY THE ASSESSEE IN THE RESPECTIVE BANK IN RESPECTIVE ASSESSMENT YEARS. SO FAR AS THE ADDITION OF ` 56,00,000/- IS CONCERNED, THE ASSESSING OFFICER MADE THIS ADDITION U/S. 69C IN THE A.Y 2007 -08 ON THE BASIS OF THE DECLARATION OF ASSESSEES HUSBAND SHRI MOHAMMED FAR OOQ, WHEREIN HE HAS STATED THAT HIS WIFE HAS PURCHASED A FLAT NO.603, B WING, HERITAGE HOUSING DEVELOPMENT (INDIA) PVT. LTD. HAVING CARPET AREA OF 1045 SQ.FT. AT SANTACRUZ, FOR ` 61 LACS. HE FURTHER STATED THAT OUT OF 61 LACS, ` 25 LACS TO ` 30 LACS WAS PAID BY CHEQUE AND THE REMAINING AMOUNT WAS PAID IN CASH AND BALANCE IS TO BE PAID BEFORE POSSESSION OF THE FLAT, WHICH WILL B E GIVEN IN THREE TO SIX MONTHS. THE ASSESSING OFFICER NOTED FROM THE BALA NCE SHEET OF THE ASSESSEE THAT SHE HAS SHOWN ONLY A SUM OF ` 5 LACS BEING PAID TO HERITAGE HOUSING DEVELOPMENT. IN THE ABSENCE OF ANY CONVINCING EXPL ANATION THE ASSESSING NAZNEEN FAROOQ SARANG 6 OFFICER ADDED THE BALANCE SUM OF ` 56 LACS TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE AS SESSING OFFICER. 5. BEFORE US, THE LEARNED AR VEHEMENTLY CONTENDED T HAT THE ASSESSMENTS PASSED IN CONSEQUENCE OF NOTICE U/S. 153A ARE INVAL ID AND VOID AB INITIO, AS IN THIS CASE THE ADDITIONS HAVE NOT BEEN MADE ON THE B ASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN FAC T, THERE WAS NO SEARCH WARRANT IN THE NAME OF THE ASSESSEE ON 24.02.2009, AS SUBMITTED BY THE LEARNED DR VIDE HIS LETTER DATED 14.12.2015, THE SE ARCH WARRANT IN THE NAME OF THE ASSESSEE WAS ISSUED ON 06.03.2009 ONLY FOR T HE PURPOSE OF SEARCHING LOCKER NO.82, SYNDICATE BANK, WHICH WAS NOT EVEN IN THE NAME OF THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TOWARDS PAN CHNAMA AS ANNEXURE A TO LETTER OF THE CIT-DR, DATED 14.12.2015, IN THIS REGARD. IT WAS ALSO POINTED OUT THAT THE ASSESSMENT U/S. 153A WAS MADE ON THE B ASIS OF THE SEARCH TAKEN PLACE ON 24.02.2009. IT WAS FURTHER SUBMITTED THAT IN EACH OF THE ASSESSMENT YEARS, THE ASSESSEE HAS SUBMITTED THE RE TURN BEFORE THE SEARCH. THEREFORE, THE ASSESSMENT ORDER U/S. 153A IS INVALI D. 6. THE LEARNED DR, ON THE OTHER HAND, VEHEMENTLY CO NTENDED THAT IN ALL THESE ASSESSMENT YEARS, THE ASSESSMENT WAS COMPLETE D U/S. 143(3) R.W.S. 153A OF THE I.T.ACT. HE RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. M/S. ST. FRANCIS CLAY DECOR TIL ES [385 ITR 624], IN WHICH IT WAS HELD THAT U/S. 153A THE PHRASEOLOGY INCRIMINAT ING WAS ANY MATERIAL NAZNEEN FAROOQ SARANG 7 WHICH WAS UNEARTHED DURING SEARCH OPERATIONS OR ANY STATEMENT MADE DURING THE COURSE OF SEARCH BY THE ASSESSEE IS A VALUABLE PIECE OF EVIDENCE IN ORDER TO INVOKE SECTION 153A OF THE INCOME-TAX ACT, 1961. HE ALSO DREW OUR ATTENTION TOWARDS THE PANCHNAMA AS WELL AS THE STAT EMENT OF THE ASSESSEES HUSBAND RECORDED DURING THE COURSE OF SEARCH, A COP Y OF WHICH IS AVAILABLE AS ANNEXURE B TO THE LETTER OF THE CIT-DR DATED 14.1 2.2015. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF FILATEX INDIA LTD VS CIT (2014) 229 TAXMAN 555 AS WELL AS JUDGMEN T OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMEN T COMPANY LTD. VS. DCIT 274 CTR 122 FOR THE PROPOSITION OF LAW THAT DU RING ASSESSMENT U/S. 153A, ADDITIONS NEED NOT BE RESTRICTED OR LIMITED T O INCRIMINATING MATERIAL FOUND DURING COURSE OF SEARCH. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSING OFFICER IN EACH OF THE ASSESSMENT YEARS H AS CLEARLY MENTIONED THAT THE SEARCH HAS TAKEN PLACE ON 24.02.2009 IN THE CAS E OF HICONS & PRANAY GROUP OF CASES INCLUDING THE ASSESSEE. WHILE THE C IT-DR VIDE HIS LETTER DATED 14.02.2015 FILED COPY OF WARRANT OF AUTHORIZATION, INFORMED THAT THESE AUTHORIZATION IS DATED 05.03.2009 AND EXECUTED ON 0 6.03.2009 AND, IN VIEW OF THIS AUTHORIZATION, A PANCHNAMA WAS EXECUTED ON 06.03.2009 AT 9.50 A.M. COPY OF THE PANCHNAMA IS ANNEXED TO THE SAID LETTER AS ANNEXURE A. WE NAZNEEN FAROOQ SARANG 8 NOTED THAT IN PARA 2 OF THE SAID PANCHNAMA THAT DAY S SEARCH WAS IN CONTINUATION OF THE PROCEEDINGS OF 24.02.2009. SIM ILAR PANCHNAMA WAS ALSO FILED BY THE ASSESSEE AS PAPER-BOOK AT PAGES 2 AND 3. THIS PANCHNAMA WAS ALSO DRAWN ON 06.03.2009, WHEREIN ALSO UNDER PARA 2 , WE FIND SIMILAR LANGUAGE. FROM THIS IT IS APPARENT THAT THE SEARCH HAS TAKEN PLACE IN THE CASE OF THE ASSESSEE ON 24.02.2009 AND THE WARRANT OF AU THORIZATION DATED 05.3.2009 WAS IN CONTINUATION OF THE SEARCH WARRANT DATED 24.02.2009 AND WAS ISSUED ONLY IN RESPECT OF LOCKER NO.82, SYNDICA TE BANK, MALAD BRANCH, MUMBAI. IN VIEW OF THIS FACT, WE RECHECKED THE SUB MISSION OF THE LEARNED AR THAT THERE WAS NO SEARCH IN THE CASE OF THE ASSESSE E ON 24.02.2009. NOW THE QUESTION BEFORE US ARISES WHETHER THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE ON THE BASIS OF THE MATERIAL FOUND IN T HE COURSE OF THE SEARCH. IT IS NOT DISPUTED THAT IN RESPECT OF ALL THESE ASSESS MENT YEARS THE ASSESSEE HAS FILED RETURN BEFORE THE DATE OF THE SEARCH. THE RE TURNS SO FILED WERE ALSO PROCESSED U/S. 143(1) PRIOR TO THE DATE OF THE SEAR CH. SINCE THE ASSESSMENT HAS ALREADY BEEN COMPLETED FOR EACH OF THE ASSESSME NT YEAR BY PROCESSING THE RETURN U/S. 143(1), THEREFORE THESE ASSESSMENTS WERE NOT PENDING AND WERE NOT ABATED. WE HAVE ALSO GONE THROUGH CASE LA WS AS RELIED UPON BY BOTH THE PARTIES. WE NOTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHA VA SHEVA) LTD. (SUPRA). APPROVED THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS. DCIT 137 ITD 287 UND ER VARIOUS PARAGRAPH OF NAZNEEN FAROOQ SARANG 9 ITS ORDER ON THE QUESTION OF WHETHER ANY ADDITION C AN BE MADE WHILE COMPLETING ASSESSMENT U/S. 153A ON THE BASIS OF THE MATERIAL WHICH WAS NOT FOUND DURING THE COURSE OF SEARCH, WHERE ASSESSMENT HAVE NOT BEEN UNABATED. HEAD NOTES OF THE ORDER REPORTED READ AS UNDER: A BARE PERUSAL OF SECTION 153A WOULD INDICATE AS TO HOW A NON- OBSTANTE CLAUSE HAS BEEN INSERTED AND WITH A DEFINE D INTENT. WHERE SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER 31-5- 2003, THAT THE ASSESSING OFFICER IS IN A POSI TION 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 REQUISIT ION BOOKS OF ACCOUNT ARE SPELT OUT ENABLE THE REVENUE TO TAKE CA RE OF CASES WHERE IT EFFECTS A SEARCH AND SEIZURE. THAT SEARCH AND SEIZURE IS EFFECTED AND AFTER THE SAME IS EFFECTED, BOOKS OF A CCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING IS FOUND AS A RESULT THEREOF THAT NOTWITHSTAN DING ANYTHING AND WITHIN THE MEANING OF THE ABOVE PROVISIONS HAVING B EEN CONCLUDED, IT IS OPEN FOR THE REVENUE TO MAKE AN ASSESSMENT. I T IS ALSO OPEN TO THE REVENUE TO MAKE A REASSESSMENT IN CASES WHERE I T 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 OTH ER 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 INDIAN INCOME -TAX ACT, 1922 OR THE INCOME-TAX ACT OF 1961 BY ANY PERSON FROM WH OSE POSSESSION OR CONTROL THEY HAVE BEEN TAKEN INTO CUS TODY. THIS IS WHEN THE AUTHORITIES HAVE REASON TO BELIEVE THAT SU CH POWERS NEED TO BE EXERCISED. THEREFORE, THE FETTERS AND WHICH A RE TO BE FOUND IN OTHER PROVISIONS ARE REMOVED AND A NOTICE OF ASSESS MENT IN SUCH CASES IS THEN ISSUED. THAT IS MANDATED BY SUB-SECTI ON (1) OF SECTION 153 A. IT IS NOT ONLY THE ISSUANCE OF THE NOTICE BU T ASSESSMENT OR REASSESSMENT OF TOTAL INCOME OF SIX ASSESSMENT YEAR S IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION HAS T O BE MADE. [PARA 22] NAZNEEN FAROOQ SARANG 10 THERE IS MUCH SUBSTANCE IN THE CONTENTIONS OF THE A SSESSEE 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 THER EOF IS CONTEMPLATED. [PARA 23] ASSESSEE'S RELIANCE UPON THE DIVISION BENCH JUDGMEN T 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] THE DIVISION BENCH OUTLINED THE AMBIT AND SCOPE OF THE POWERS CONFERRED BY SECTION 153A AND OBSERVED THAT ON A PL AIN READING OF SECTION 153A, IT BECOMES CLEAR THAT ON INITIATION O F THE PROCEEDINGS UNDER SECTION 153 A, IT IS ONLY THE ASSESSMENT/REAS SESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCT ING SEARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTI ON 132A STAND ABATED AND NOT THE ASSESSMENTS/REASSESSMENTS ALREAD Y 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 PROCEEDING S UNDER SECTION 153A, THE PROCEEDINGS PENDING IN APPEAL, REVISION O R RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT/REASSESSME NT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALISED ASSESSMENT S/REASSESSMENTS DO NOT ABATE, THE APPEAL REVISION OR RECTIFICATION PENDING AGAINST FINALISED ASSESSMENT/REASSESSMENTS WOULD NOT ABATE. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE ASSESSMENTS/REASSESSMENTS F INALISED FOR THE ASSESSMENT YEARS COVERED UNDER SECTION 153A STA ND ABATED CANNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSES SMENT MADE UNDER SECTION 153A (1) WHAT STANDS REVIVED IS THE P ENDING ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH STOOD ABA TED AS PER SECTION 153A(1). ONCE IT IS HELD THAT THE ASSESSMENT HAS ATTAINED FI NALITY, THEN THE ASSESSING OFFICER WHILE PASSING THE INDEPENDENT ASS ESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143 (3) COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH H AS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COUR SE OF THE PROCEEDINGS UNDER SECTION 153A ESTABLISH THAT THE R ELIEFS GRANTED UNDER THE FINALISED ASSESSMENT/REASSESSMENT WERE CO NTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDIN GS. IF THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED NAZNEEN FAROOQ SARANG 11 DURING THE SEARCH OR DURING THE 153A PROCEEDINGS, T HE ASSESSING OFFICER WHILE PASSING ORDER UNDER SECTION 153A READ WITH SECTION 143(3) CANNOT DISTURB THE ASSESSMENT ORDER [PARA 28 ] THE STAND OF REVENUE THAT THESE OBSERVATIONS ARE MA DE IN PASSING OR THAT THEY ARE NOT BINDING ON INSTANT COURT IS NO T AGREEABLE BECAUSE THE ESSENTIAL CONTROVERSY BEFORE THE BENCH WAS SOMEWHAT DIFFERENT. REVENUE URGED THAT WAS ONLY IN RELATION TO THE LEGALITY AND VALIDITY OF THE ORDER OF THE COMMISSIONER UNDER SECTION 263. HAD THAT BEEN THE CASE, THE DIVISION BENCH WAS NOT REQUIRED TO TRACE OUT THE HISTORY OF SECTION 153A AND THE POWER THAT IS CONFERRED THEREUNDER. WHEN THE REVENUE ARGUED BEFOR E THE DIVISION BENCH THAT THE POWER UNDER SECTION 153A CAN BE INVO KED AND EXERCISED EVEN IN CASES WHERE THE SECOND PROVISO TO SUB-SECTION (1) IS NOT APPLICABLE THAT THE DIVISION BENCH WAS R EQUIRED 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 Y EARS REFERRED TO IN SUB-SECTION (1) OF SECTION 153A WERE PENDING. IF TH EY WERE PENDING ON THE DATE OF THE INITIATION OF THE SEARCH UNDER S ECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CA SE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD AB ATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSE SSMENT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. AS THAT SPECIFIC ARGUMENT WAS C ANVASSED AND DEALT WITH BY THE DIVISION BENCH AND THAT IS HOW IT WAS CALLED UPON TO INTERPRET SECTION 153A , THEN, EACH OF THE ABOVE CONCLUSIONS RENDERED BY THE DIVISION BENCH WOULD BIND THE INSTA NT COURT.[PARA 29] EVEN OTHERWISE, COURT IS IN AGREEMENT WITH THE DI VISION BENCH WHEN IT OBSERVES AS ABOVE WITH REGARD TO THE AMBIT AND SCOPE OF THE POWERS CONFERRED UNDER SECTION 153A '.EVEN IF T HE EXERCISE OF POWER UNDER SECTION 153 A IS PERMISSIBLE STILL THE PROVISION CANNOT BE READ IN THE MANNER SUGGESTED BY THE REVENUE. NOT ONLY THE FINALISED N ASSESSMENT CANNOT BE TOUCHED BY RESORTI NG TO THOSE PROVISIONS, BUT EVEN WHILE EXERCISING THE POWER CAN BE EXERCISED WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UND ER SECTION 132A AFTER 31-3- 2003. THERE IS A MANDATE TO ISSUE NOTIC ES UNDER SECTION 153(1)(A) AND ASSESS OR REASSESS THE TOTAL INCOME O F SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS NAZNEEN FAROOQ SARANG 12 MADE. THUS, THE CRUCIAL WORDS 'SEARCH' AND 'REQUISI TION' APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WO ULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. IT BEING ENACTED TO A SEARCH OR REQUISITION THAT ITS CONSTRUCTION WOULD H AVE 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 QUESTIO N.[PARA 30] THEREFORE, THE SPECIAL BENCH'S UNDERSTANDING OF TH E LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR O F LAW APPARENT ON THE FACE OF THE RECORD. [PARA 31] FURTHER, REVENUE WOULD SUBMIT THAT THE ABOVE OBSE RVATIONS AND CONCLUSIONS OF THE SPECIAL BENCH ARE SPECIFICALLY D ISAPPROVED IN CIT V. ANIL KUMAR BHATIA [2012] 24 TAXMANN.COM 98/211 T AXMAN 453 (DELHI). HOWEVER, THIS ARGUMENT IS NOT FOUND TO BE ACCURATE . UPON READING OF THE OBSERVATIONS OF THE DELHI HIGH COURT AS A WHOLE AND IN ENTIRETY, IT IS NOT POSSIBLE TO AGREE WITH REVEN UE THAT THE HIGH COURT OF DELHI REACHED A CONCLUSION DIFFERENT THAN THE VIEW TAKEN BY THE DIVISION BENCH.[PARA 35] 8. WE HAVE ALSO GONE THROUGH THE DECISION OF THE SP ECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA), WHEREIN THE BENCH WAS CONSTITUTED TO DECIDE THE FOLLOWING QUEST ION OF LAW: 'WHETHER, ON THE FACTS AND IN LAW, THE SCOPE OF ASS ESSMENT U/S 153A ENCOMPASSES ADDITIONS, NOT BASED ON ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH? WE NOTED THAT BEFORE THE SPECIAL BENCH, LD SR. COUN SEL RELIED ON THE DECISION OF LMG INTERNATIONAL LTD AS IS APPARENT FROM PARA 1 6 OF THAT ORDER. WE NOTED THAT IN THE SAID JUDGMENT IN PARA 52 OF ITS ORDER, THE TRIBUNAL HAS HELD THAT SECTION 153A COMES INTO OPERATION IF A SEARCH OR RE QUISITION IS INITIATED AFTER NAZNEEN FAROOQ SARANG 13 31.5.2003. ON THE SATISFACTION OF THIS CONDITION, T HE ASSESSING OFFICER IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSONS REQUIRING HIM TO FURNISH THE RETURN OF INCOME OF IMMEDIATELY PRECEDING SIX YEARS FROM THE YEAR OF SEARCH. THIS FINDING IMPLIED THAT THE PROCEEDINGS U/S.153A IS NO T TO BE RESTRICTED TO THE YEARS FOR WHICH INCRIMINATING MATERIAL IS FOUND DUR ING THE SEARCH. ULTIMATELY, IN RESPECT OF QUESTION REFERRED TO THE SPECIAL BENC H, THE SPECIAL BENCH IN PARA 58 OF ITS ORDER HELD AS UNDER: '58. THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS U NDER: A) IN ASSESSMENTS THAT ARE ABATED , THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF T HE SI X ASSESSMENT YEARS SEPARATELY. B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT H AS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN T HE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINA L ASSESSMENT, AND; (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH'. IN VIEW OF THIS DECISION, NO DOUBT, THE ADDITION IN THE CASE OF THE ASSESSEE CAN BE MADE BY THE ASSESSING OFFICER ONLY ON THE BA SIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. NO DOU BT, BEFORE US LEARNED DR HAS PLACED RELIANCE ON THE DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF FILATEX INDIA LTD VS CIT (SUPRA), AS WELL AS JUDGME NT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMEN T COMPANY LTD. (SUPRA), IN WHICH IT WAS HELD BY THE RESPECTIVE HIG H COURT HELD THAT THE NAZNEEN FAROOQ SARANG 14 ASSESSING AUTHORITY SHALL DETERMINE THE TOTAL INCOM E OF THE ASSESSEE TAKING- INTO CONSIDERATION THE MATERIALS WHICH WAS THE SUBJ ECT-MATTER OF EARLIER RETURN AND THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND ALSO ANY OTHER INCOME WHICH COMES TO HIS NOTICE. BUT WHEN WE HAVE JURISDICTIONAL HIGH COURT DECISION, THAT WILL BE BINDING BEFORE US AND, THUS, WE ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) L TD. (SUPRA). 9. NOW COMING TO THE ADDITION MADE BY THE ASSESSING OFFICER, WE NOTED, ON THE BASIS OF THE FACTS INVOLVED THAT THE ADDITIO NS IN A.YS. 2003-04, 2004- 05, 2005-06, 2006-07 AND 2007-08 MADE U/S. 68 RELAT E TO THE CASH DEPOSITED BY THE ASSESSEE IN ITS BANK ACCOUNTS. BUT IT IS A FACT THAT THESE BANK ACCOUNTS WERE NOT FOUND DURING THE COURSE OF THE SE ARCH. EVEN THE LEARNED DR DID NOT PRODUCE ANY MATERIAL SHOWING THAT THESE BANKS ACCOUNTS WERE FOUND DURING THE COURSE OF SEARCH. IN THESE CIRCUM STANCES, WE ARE BOUND TO DELETE THE ADDITION MADE U/S. 68 IN EACH OF THE ASS ESSMENT YEARS. THUS, GROUND NO.2 OF THE ASSESSEES APPEAL IN EACH OF THE ASSESSMENT YEAS IS ALLOWED AND WE DELETE THE ADDITIONS MADE U/S. 68 OF ` 5,85,600/- ` 4,31,800/-, ` 12,52,200/- ` 11,43,000/- AND ` 2,73,850/- RESPECTIVELY. 10. NOW REMAINS GROUND NO.3 IN A.Y. 2007-08 RELATIN G TO THE ADDITION OF ` 56 LACS MADE BY THE ASSESSING OFFICER U/S. 69C TOWA RDS INVESTMENT IN THE RESIDENTIAL FLAT. WE HEARD THE RIVAL SUBMISSIONS I N THIS REGARD. THE LEARNED NAZNEEN FAROOQ SARANG 15 AR, BEFORE US VEHEMENTLY CONTENDED THAT THIS ADDITI ON HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE REPLY FURNISH ED BY THE ASSESSEE IN RESPONSE TO QUERY NO.4(V) DATED 11.04.2009 AND THIS IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF T HE SEARCH. THE LEARNED DR HAS RELIED ON THE STATEMENT RECORDED U/S 132 (4) OF ASSESSEES HUSBAND SHRI MOHAMMED FAROOQ, ON 24.02.2009, WHEREIN HE HAS STAT ED THAT HIS WIFE HAS PURCHASED A FLAT NO.603, B WING, HERITAGE HOUSING DEVELOPMENT (INDIA) PVT. LTD. HAVING CARPET AREA OF 1045 SQ.FT. AT SANTACRUZ , AND THAT THE INVESTMENT OF ` 61 LACS WAS MADE BY THE ASSESSEE FOR WHICH PAYMENT HAS BEEN MADE DURING 2006-07. SUBSEQUENTLY, IN REPLY TO QUESTION NO.1, THE HUSBAND OF THE ASSESSEE STATED THAT IN RESPECT OF THE SAID FLAT A SUM OF ` 20 LACS HAD BEEN GIVEN IN CASH. IT IS A FACT THAT THE ASSESSEE IS A MUSLIM LADY AND AS PER THEIR RELIGION THEY ARE NOT PERMITTED TO SHOW THEIR FACE TO ANY PERSON OUTSIDE FAMILY. THEREFORE, WE NOTED, UNDER THESE CIRCUMSTA NCES, THE REVENUE HAS TAKEN THE STATEMENT OF THE ASSESSEES HUSBAND. . T HE STATEMENT UNDER THESE CIRCUMSTANCES GIVEN BY HUSBAND OF THE ASSESSEE, IN OUR OPINION, WILL BE BINDING ON THE ASSESSEE. 11. NOW THE QUESTION BEFORE US ARISE WHETHER THE ST ATEMENT SO RECORDED WILL BE REGARDED AS INCRIMINATING MATERIAL FOR THE PURPOSE OF MAKING ADDITION IN UNABATED ASSESSMENT. THE LEARNED DR IN THIS REG ARD RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. M/S. ST. FRANCIS CLAY DECOR NAZNEEN FAROOQ SARANG 16 TILES (SUPRA). WE NOTED, IN THIS DECISION, THE HON BLE HIGH COURT DEFINED THE PHRASEOLOGY INCRIMINATING AND TOOK THE VIEW THAT INCRIMINATING WILL MEAN ANY MATERIAL UNEARTHED DURING SEARCH OPERATIONS OR ANY STATEMENT MADE DURING THE COURSE OF SEARCH BY THE ASSESSEE WILL BE A VALUABLE PIECE OF EVIDENCE IN ORDER TO INVOKE SECTION 153A OF THE ACT . NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE BY THE LEARNED AR BUT AS A ALTERNATIVE, HE SUBMITTED THAT THE ASSESSEE HAS PAID A SUM OF ` 5 LACS THROUGH CHEQUE OUT OF HER BANK ACCOUNT WHILE A SUM OF ` 20 LACS WAS PAID BY HER HUSBAND SHRI MOHAMMED FAROOQ AND THE SAID AMOUNT HAS DULY BEEN S HOWN BY HIM IN HIS IT RETURN, A COPY OF WHICH WAS FILED BEFORE US. TH US, IT WAS CONTENDED THAT IF ANY ADDITION HAS TO MADE, THE SUM OF ` 20 LACS HAS ALSO TO BE TREATED AS SOURCE OF INVESTMENT ALONG WITH THE SUM OF ` 5 LACS, AS HAS BEEN ALLOWED BY THE ASSESSING OFFICER. WE NOTED THAT IN THIS CASE, THE ASSESSEE HAS MADE AN INVESTMENT OF ` 61 LACS AS HAS BEEN DISCLOSED BY THE ASSESSEES HU SBAND IN THE STATEMENT RECORDED U/S. 132(4). OUT OF THE SAI D SUM OF ` 61 LACS, ` 5 LACS HAS BEEN PAID BY THE ASSESSEE AND ` 20 LACS HAS BEEN PAID BY THE ASSESSEES HUSBAND, WHICH HAS BEEN SHOWN IN HIS IT RETURN COPY OF WHICH HAS FILED BEFORE US. FOR THE BALANCE AMOUNT OF ` 36 LACS, THE ASSESSEE HAS NOT PROVED ANY SOURCE. THEREFORE, WE CONFIRM THE ADDITION OF ` 36 LACS AS UNDISCLOSED INVESTMENT U/S. 69C OF THE I.T ACT. THUS, GROUND N O.3 IN A.Y. 2007-08 IS PARTLY ALLOWED, THEREBY REDUCING THE ADDITION OF ` 56 LACS TO ` 36 LACS. NAZNEEN FAROOQ SARANG 17 THE QUANTUM APPEALS FOR A.YS. 2003-04 TO 2006-07 A RE ALLOWED AND THE APPEAL FOR A.Y. 2007-08 IS PARTLY ALLOWED. 12. NOW COMING TO THE APPEALS RELATING TO PENALTY I MPOSED U/S. 271(1)(C) FOR THE A.Y. 2004-05 , 2005-06 AND 2006-07. WE NOT ED THAT THE PENALTY HAS BEEN LEVIED AND CONFIRMED BY THE CIT(A) ON THE ADDI TIONS IN EACH OF THE ASSESSMENT YEAR. SINCE, WE HAVE DELETED THE ADDITI ONS IN THE PRECEDING PARAGRAPHS WHILE DEALING WITH THE QUANTUM APPEALS, THE PENALTY WILL ALSO GET DELETED. 13. IN THE RESULT, APPEALS FOR A.YS. 2003-04 TO 200 6-07 ARE ALLOWED AND THE APPEAL FOR A.Y. 2007-08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF OCTOBER, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 9 TH OCTOBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, B BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI