Appeal Details
Counselvise Citation
[2022] 105 COUNSELVISE.COM (IT) 5054 (ITAT-GUWAHATI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 8 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-04-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2014-2015
Appeal Filed On
14-07-2019
Judgement Text
1 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, (VIRTUAL HEARING AT KOLKATA) [Before Shri A. T. Varkey, JM & Shri Manish Borad, AM ] I.T.A. No. 324/GAU/2019 Assessment Year:2014-15 Assistant Commissioner of Income-tax, Circle-1, Guwahati Vs. Karan Rohit Jain (PAN:AFIPJ2087B) Appellant Respondent & I.T.A. No. 325/GAU/2019 Assessment Year:2014-15 Assistant Commissioner of Income-tax, Circle-1, Guwahati. Vs. Karishma Rohit Jain (PAN: ALGPJ9403M) Appellant Respondent & I.T.A. No. 326/GAU/2019 Assessment Year:2014-15 Assistant Commissioner of Income-tax, Circle-1, Guwahati. Vs. Reshmi Rohit Jain (PAN: ACEPJ2602D) Appellant Respondent Date of Hearing 31.03.2022 Date of Pronouncement 07.04.2022 For the Appellant Shri P S Thuingaleng, ACIT For the Respondent Shri Somnath Ghosh, Advocate ORDER Per Shri A. T. Varkey, JM: The captioned three appeals preferred by the revenue against the orders passed in respect of the three different assessee’s by the Ld. CIT(A)-1, Guwahati all dated 08.04.2019 for assessment year 2014-15. 2 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 2. At the outset itself, since both the representatives of the revenue as well as the assessee submitted that the facts involved in all the three appeals are the same and the grounds of appeal raised by the revenue are also identical except variance in amount, we take the appeal of the revenue against the assessee Shri Karan Rohit Jain as the lead case and the result of the same will be followed in the other two appeals of the revenue. 3. The grounds of appeal raised by the revenue are as under: “1. That in the fact and circumstances of the case and the law in this matter, the Ld. CIT(A) is not justified in deleting the addition stating that the assessment for the Ay 2014-15 is non- abated and stood already completed despite the fact that the original assessment in this case for AY 2014-15 against the return filed on 31.07.2014 was abated and the assessment u/s. 153A r.w.s. 143(3) on 31.12.2018 is an abated assessment. 2. The Ld. CIT(A) was not justified in deleting the addition stating that in absence of any incriminating material the addition made by the Ao in the impugned order is deleted while the original assessment in this case for Ay 2014-15 was abated.” 4. From a perusal of the aforesaid grounds of appeal raised by the revenue, the issue raised are (i) against the finding of the Ld. CIT(A) that the assessment for AY 2014-15 is not abated whereas according to the revenue it is an abated assessment (ii) that there was no incriminating material justifying the addition made by the AO whereas according to the revenue this action of the Ld. CIT(A) is wrong. 5. Brief facts as noted by the AO are that he noticed that during the AY 2014-15 the assessee had earned income from salary, capital gain and income from other sources. And assessee also received share of profit from its partnership concern. And in this regard i.e. filing of return, the Ld. CIT(A) has noted that the assessee had filed the original return of income u/s. 139(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for the relevant AY 2014-15 declaring gross total income of Rs.3,10,077/- and assessable income of Rs.2,00,080/- after claiming deduction under Chapter VIA of the Act of Rs.1,10,000/-. 6. A search and seizure operation u/s. 132(1) of the Act was conducted at the assessee’s residential premises on 02.06.2016 ( AY 2017-18) in Mumbai and other places. Later on 3 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 the AO of the assessee issued notice u/s. 153A of the Act and pursuant to which the assessee filed the return of income declaring Rs.2,00,080/- (reiterated the income filed originally u/s. 139(1) of the Act). Thereafter, the AO passed the scrutiny assessment u/s. 153A/143(3) of the Act dated 31.12.2018 whereby the income has been assessed at Rs.4,25,30,080/-. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) which was allowed by the Ld. CIT(A). Hence, the revenue is in appeal before us. 7. Taking up the issue no. 1 raised by the Revenue regarding the impugned finding of the Ld. CIT(A) that assessment pertaining to AY 2014-15 was abated as per section 153A of the Act. The facts pertaining to the abatement of the proceedings is that it is undisputed that the assessee had filed the original return of income u/s. 139(1) on 31.07.2014 declaring income of Rs.2,00,080/-. It is also undisputed that the time limit to issue mandatory notice before scrutiny for AY 2014-15 u/s. 143(2) of the Act was 30.09.2016. It is an undisputed fact that no notice u/s. 143(2) of the Act was issued by the AO in respect of the return filed by the assessee u/s. 139(1) of the Act on 31.07.2014 or that is the case of the revenue. The undisputed fact is that the assessee’s return u/s. 139(1) of the Act was processed u/s. 143(1)(a) of the Act and neither any notice u/s. 143(2) was issued by the AO picking up the case of assessee in respect of assessment for assessment year 2014-15 for scrutiny u/s. 143(3) of the Act nor the case of the Revenue that the assessee’s case for AY 20-14-15 was pending before the AO on the date of search which could have enabled the AO to hold that the assessment for AY 2014-15 was abated as per section 153A of the Act [as per second proviso to section 153A of the Act] which is not the case in any of the three appeals before us. 8. As noted, a search and seizure operation u/s. 132 of the Act took place from 02.06.2016 to 07.07.2016 meaning thereby it took place in AY 2017-18 and the relevant assessment year before us is AY 2014-15. As per section 153A of the Act assessment in case of search has to be done u/s. 153A of the Act which empowers the AO to issue notice to the assessee for assessment/reassessment of six assessment years immediately preceding 4 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 assessment year relevant to previous year in which such search has been conducted. Therefore, the AO was well within his jurisdiction to issue notice u/s. 153A of the Act to the assessee for AY 2014-15 since it falls in the ken of six assessment years u/s. 153A of the Act. However, second proviso to section 153A of the Act provides that if an assessment order/reassessment pertaining to any of the assessment year falling within the period of six assessment years, if pending on the date of initiation of the search u/s. 132 of the Act, then such assessments shall be treated as abated and the AO has all the powers to deal with the assessment and can assess without the aid of incriminating material qua assessee for that abated assessment year. However, that is not the case in all the three appeals before us. The assessment pertaining to AY 2014-15 being not pending before AO on the date of search, it is unabated assessment. Then in such a scenario, the AO can make additions only on the basis of incriminating materials qua the assessee qua the assessment year (unabated assessment year) as held by the Hon’ble High Court of Delhi in CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) wherein it was held that the assessment/reassessment of assessment years falling in six assessment years which are not pending on the date of initiation of the search then it would be treated as unabated assessment and the AO can make addition only on the basis of incriminating materials. Therefore, when tested as the touch stone of this judicial precedent on the facts of this case it is clear that when the return of income u/s. 139(1) of the Act was filed by the assessee on 31.07.2014 declaring income of Rs.2,00,080-/- and when the statutory notice u/s. 143(2) of the Act was not issued by the AO dated 30.09.2015 proposing scrutiny of the assessee and the time bar for not issuance of section 143(2) notice has expired, then the necessary corollary is that assessment pertaining to AY 2014-15 is not pending on the file of the AO when the search happened on 02.06.2016. Therefore, the finding of the Ld. CIT(A) on this issue that on the date of search i.e. on 02.06.2016 the assessment pertaining to AY 2014-15 was not pending before the AO and, therefore, the assessment is an unabated assessment has been rightly decided by the Ld. CIT(A) which finding is in line with the judicial precedents which will be discussed infra. 5 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 9. The Ld. CIT, DR Shri P S Thuingaleng has however, submitted that in assessee’s case the return u/s. 139(1) of the Act was processed only u/s. 143(1)(a) of the Act [ intimation] and, therefore, cannot be said to have been assessed by the AO and, therefore, for the purpose of section 153A of the Act it has to be treated as pending before AO, so it should be treated as an abated proceeding only. And for that he relied on the decision of Hon’ble Supreme Court in ACIT Vs. Rajesh Jhavery Stock Brokers Pvt. Ltd. (2007) 161 Taxman 316 (SC). 10. However, we find that the said ratio of the decision in Rajesh Jhavery Stock Brokers Pvt. Ltd (supra) is not applicable to the facts and law pertaining to the issue in hand because the observation was in respect of reopening u/s. 147 of the Act and the question was whether the additional requirement of law as per the proviso to section 147 of the Act would be attracted in a case wherein admittedly no scrutiny assessment was carried out and only intimation u/s. 143(1) of the Act took place. In the aforesaid facts, the Hon’ble Supreme court held that the provision which required additional condition to be satisfied u/s 147 of the Act does not exist because intimation u/s. 143(1) of the Act cannot be equated with that of scrutiny assessment u/s. 143(3) of the Act, which ratio is not applicable in this case. 11. The next issue is with regard to the Ld. CIT(A)’s finding that since there was no incriminating material and since the assessment year 2014-15 is an unabated proceeding, no addition was warranted without any incriminating material. The Ld. AR drew our attention to the fact that the AO has made the addition only on the basis of a statement given by the assessee ‘s father which was retracted within ten days. And the Ld. AR drew our attention to pages 96 to 105 of the paper book wherein the affidavit of the assessee retracting the statement is found to be reproduced wherein he alleged coercion and duress to obtain it. The Ld. AR drew our attention to the decision of the Hon’ble Delhi High court in the case of Pr. CIT, Delhi-2 Vs. Best Infrastructure (India) P. Ltd. (2017) 84 taxmann.com 287 (Delhi) (Paper book pages 73 to 93 to be checked) wherein the Hon’ble High Court has held that on the sole basis of the statement of the assessee when retracted subsequently, no 6 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 addition should be made unless there is any material to support the addition. And in this case in hand, other than the retracted statement, no other evidence/material was relied upon by AO to make the addition in all the three appeals. In the light of the aforesaid facts, and by relying on the decision of the Hon’ble Delhi High Court in Kabul Chawla (supra) the Ld. CIT(A) held that since there was no incriminating material against the assessee in respect of the share transaction in question, no addition could have been made and deleted the addition. This action of Ld. CIT(A) has been challenged by the Revenue. 12. The Ld. CIT(A) has held as under: “For the above assessment year, I note that the Appellant had filed a return of income under Section 31/07/2014 wherein the Appellant had duly disclosed the impugned capital gain and claimed the exemption accordingly. Admittedly there was no regular assessment made on the Appellant for the above assessment year. Also the time limit for issuance as well as service of notice under Section 143(2} of the Act in the case of the Appellant for the above assessment year had already expired on 30/09/2015. Thus as on the date of Search in the case of the Appellant, i.e. on 02/06/2016, the assessment for the above assessment year 2014-15 was a completed assessment and therefore following the ratio of the above judgments as discussed earlier, in the absence of any incriminating documents or material, the already completed assessment cannot be disturbed unless any incriminating material is found during the course of search. In this case, it is vivid that the AD has not referred to any such incriminating material found during the course of search in the impugned order. Thus, it is clear that the above addition has been made without reference to any incriminating material. Even at the cost of repetition, it is clear from the ratio of the above judgments, that the law is trite that in assessments under Section 153A, with regard to years where the assessment have been completed i.e. unabated assessment year, the scope of addition is to be restricted only to the extent of incriminating material found and there is no scope for any general or routine addition or disallowance. In view of the above facts, and in the absence of any reference to any incriminating material as regards the impugned addition, found during the course of search, I have no hesitation in holding that the impugned addition which has been made solely on the basis of a retracted statement and without reference to any incriminating material or document found during the course of search is outside the realm of the assessment proceedings under Section 153A of the Act. In view of the above discussion, I find no hesitation in deleting the impugned addition of Rs. 4,23,30,000/- as the same has been made for a year whose assessment stood already completed by virtue of expiration of time limit to issue a notice under Section 143(2) of the Act and without there being any reference to any incriminating material or document. The above grounds of appeal are, hereby, allowed. While adjudicating the above grounds of Appeal, my decision has been rendered solely on the basis of the facts and observations stated b y the AO in the impugned assessment order, submissions of the Appellant and the ratio of judgments relied upon and referred above. As is 7 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 evident my above adjudication is purely legal in nature. In this case, since the Appellant has not furnished the copies of Demat Account, Contract Notes etc. as averred in the impugned order, these evidences filed before me have not been considered as these are additional evidences which have been filed without any petition under Rule 46A. My above decision is based on the fact that the AO has not referred to any incriminating material or document while making the impugned addition in the hands of the Appellants and thus the impugned addition, in the absence of reference to any incriminating material and considering that in view of the ratio of the judgment in the case of Kabul Chawla, discussed per supra, the proceedings for the impugned assessment year were completed and could not have been disturbed.” 13. In Kabul Chawla (supra) the Hon’ble Delhi High court has held as under: “34. In Kabul Chawla (supra) the legal position was summarised thus: 37. On a conspectus of Section 153A (I) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant A Y in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six A Ys "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each A Y on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” 8 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 14. Turning to the facts of the case, it is noted that only on the basis of retracted statements, the AO has made the addition. From a perusal of the assessment order, it is noted that there is no other incriminating material seized during search. Other than the retracted bald statement of assessee’s father addition has been made by AO [which has been retracted within few days wherein assessee’s father/assessee has alleged coercion/duress of obtaining it (refer page 19 of paper book)]. It is noted that other than the statement of his father which has been obtained under threat/coercion/duress [ which has been retracted within few days] the AO has made the addition as undisclosed income the assessee’s LTCG to the tune of Rs.4,40,50,000/-. However we find that other than the retracted statement there was no iota of evidence/material to substantiate the impugned additions. The Ld. CIT(A) has given a finding of fact that other than the assessee’s father’s statement regarding the LTCG of assessee, there was no incriminating material found during search qua the assessee qua the AY 2014-15. In such a scenario, no addition was legally sustainable as held by the Hon’ble Delhi High court in Kabul Chawla (supra) and in this context it is noted that similar ratio was agreed upon in the case of Meeta Gutgutia (supra) Delhi High Court. And it is noted that several other High Courts have also come to similar conclusion either by following Kabul Chawla (supra) or otherwise. This includes the decisions of the Hon’ble Gujarat High Court in Pr CIT v. Soumya Construction (P.) Ltd. [2016] 387 ITR 529/[2017] 81 taxmann.com 292 (Guj.); Pr. CITv. Devangi alias Rupa [Tax Appeal Nos. 54, 55 to 57 of 2017, dated 2-2-2017]; the Hon’ble Karnataka High Court in CIT v. IBC Knowledge Park (P.) Ltd. [2016] 385 ITR 346/69 taxmann.com 108 (kar.); the Hon’ble Calcutta High Court in Pr. CIT v. Salasar Stock Broking Ltd. [GA No.1929 of 2016, dated 24-8-2016] and the Hon’ble Bombay High Court in CITv. Gurinder Singh Bawa 12016] 386 ITR 483/12017] 79 taxmann.com 398. In Meeta Gutgutia (supra) the Hon’ble Delhi High Court has considered the entire gamut of the lis in hand and has analysed and the aforesaid legal position was reiterated that unless there is incriminating material qua each of the A Y s in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law for an unabated assessment. 9 ITA No.324/Gau/2019 (Karan Rohit Jain & ITA No. 325/Gau/2019 (Karishma Rohit Jain) & ITA No.326/Gau/2019 (Reshmi Rohit Jain) AY 2014-15 15. In the light of the aforesaid facts and the law discussed, we do not find any infirmity in the impugned order passed by the Ld CIT(A), so we are inclined to dismiss the revenue appeal ITA. No. 324/GAU/2019. 16. Since the facts & law involved in all the three appeals are the same and the grounds of appeal raised by the revenue are also identical except variance in amount, and in the light of the decision of ours in the lead case [revenue appeal ITA. No. 324/GAU/2019], we are inclined to dismiss all the three appeals of the revenue. 17. In the result all the appeals of the revenue are dismissed. Order is pronounced in the open court on 7th April, 2022 Sd/- Sd/- (Manish Borad) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 7 th April, 2022 JD(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – ACIT, Circle-1, Guwahati 2 Respondent – Shri Karan Rohit Jain, Sm. Karishma Rohit Jain, Sm. Reshmi Rohit Jain, 402, Raheja Heaven, Prananjali, 10 th Road, JVPD, Mumbai-400049. 3. 4. 5. CIT(A), Guwahati-1, Guwahati CIT ,Guwahati. DR, ITAT, Guwahati. /True Copy, By order, Assistant Registrar
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