BABITA MALKANI, MUMBAI V. DCIT CC 25, MUMBAI

ITA 3350/MUM/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2162 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SASI KUMAR
• Assessee Lawyers: MA YUR KISHNADWALA
• Keywords: Search and seizure; Earning of tax free income; Question of law
• Section: 143(3); 153A; 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 3345/MUM/2015 (ASSESSMENT YEAR : 2005-06) ITA NO. 3348/MUM/2015 (ASSESSMENT YEAR : 2008-09) ITA NO. 3349/MUM/2015 (ASSESSMENT YEAR : 2009-10) ITA NO. 3350/MUM/2015 (ASSESSMENT YEAR : 2010-11) BABITA MALKANI, 102, BHARAT NAGAR CHS LTD. JUHU VERSOVA LINK ROAD, ANDHERI (W), MUMBAI 400 053 PAN: AACPM 4051F ... APPELLANT VS. THE DCIT, CENTRAL CIRCLE -25, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI MAYUR KISHNADWALA RESPONDENT BY : SHRI T. SASI KUMAR DATE OF HEARING : 14/10/2015 DATE OF PRONOUNCEMENT : 30/11/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED FOUR APPEALS PERTAINING TO THE SAME ASSESSEE INVOLVE CERTAIN COMMON ISSUES, THEREFORE, THEY HAVE BEEN HEARD 2 BABITA MALKANI TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED F OR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN BRIEF, THE RELEVANT FACTS ARE THAT A SEARCH A ND SEIZURE ACTION UNDER SECTION 132(1) OF THE INCOME TAX ACT, 1961( I N SHORT THE ACT) WAS CONDUCTED ON 16/12/2010 IN THE CASE OF M/S. PA TEL ENGINEERING LTD., GROUP OF CASES. THE DISCUSSION IN THE ASSESS MENT ORDERS REVEALS THAT ASSESSEE WAS ALSO, INTER-ALIA, COVERED IN SUCH SEARCH AND SEIZURE OPERATION. AS A CONSEQUENCE, ASSESSMENTS FOR THE CA PTIONED ASSESSMENT YEARS WERE FINALIZED BY THE ASSESSING O FFICER UNDER SECTION 143(3) R.W.S. 153C OF THE ACT, WHEREIN THE INCOME A SSESSED WAS HIGHER THAN THE RETURNED INCOME AND SUCH DIFFERENCE IS THE SUBJECT MATTER OF CONTROVERSY BEFORE ME IN THE CAPTIONED APPEALS. 3. IN SO FAR AS THE APPEALS, WHICH RELATE TO THE AS SESSMENT YEARS 2005-06, 2008-09 AND 2009-10 ARE CONCERNED, THE AS SESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL WHICH WAS HITHERTO N OT RAISED BEFORE THE LOWER AUTHORITIES. SINCE SUCH ADDITIONAL GROU ND IS COMMON FOR THE THREE ASSESSMENT YEARS EXCEPT WITH REGARD TO TH E AMOUNT OF ADDITION, THE FOLLOWING ADDITIONAL GROUND RELATING TO ASSESSMENT YEAR 2008-09 IS REPRODUCED BELOW IN ORDER TO APPRECIATE THE CONTROVERSY:- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN AFFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING FOLLOWING DISALLOWANCE U/S.143(3) R.W.S. 153C OF THE ACT IN ABSENCE OF ANY INCRIMINATING SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE DISALLOW ANCE ARE BAD IN LAW: (A) RS.56,912/- BEING DISALLOWANCE U/S.14A. 3 BABITA MALKANI 4. THE RELEVANT FACTS RELATING TO ASSESSMENT YEAR 2 008-09 ARE AS FOLLOWS. IN PURSUANCE TO THE SEARCH AND SEIZURE AC TION UNDER SECTION 132 OF THE ACT ON 16/12/2010, ASSESSEE WAS SERVED W ITH A NOTICE UNDER SECTION 153C OF THE ACT CALLING FOR FILING HER RET URN OF INCOME. IN RESPONSE, THE ASSESSEE FILED A RETURN OF INCOME O N 15/12/2011 DECLARING AN INCOME OF RS.6,17,374/-, WHICH WAS SAM E AS THE INCOME DECLARED IN THE RETURN OF INCOME ORIGINALLY FILED U NDER SECTION 139(1) OF THE ACT ON 30/09/2008. SUCH RETURN OF INCOME WAS S UBJECT TO A SCRUTINY ASSESSMENT UNDER SECTION 143(3) R.W.S. 153C OF THE ACT ON 25/03/2013, WHEREBY THE TOTAL INCOME WAS ASSESSED AT RS.6,74,29 0/-. THE DIFFERENCE BETWEEN THE RETURNED AND THE ASSESSED IN COME WAS SOLELY ON ACCOUNT OF AN ADDITION OF RS.56,912/- MADE BY TH E ASSESSING OFFICER BY INVOKING SECTION 14A OF THE ACT ON THE GROUND TH AT DURING THE YEAR ASSESSEE HAD EARNED EXEMPT INCOME OF RS.2,93,920/- AND HAD INVESTED RS.80,59,685/- IN THE SHARES, BONDS AND MUTUAL FU NDS. BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A), THE DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS RESISTED ON FACTS AND IN LAW. PERTINENTLY, IT WAS ASSERTED BY THE ASSESSEE THAT SHE WAS CARRYING ON BUSINESS OF READYMADE GARMENTS AS PROPRIETOR OF M/S. ANNIKA AND THE INVESTMENTS IN QUESTION WERE MADE IN HER PERSONAL CAPACITY AND WERE REFLECTED IN HER PERSONAL ACCOUNT WHICH WAS DISTINCT FROM HER BU SINESS ACCOUNT. IT WAS ALSO ASSERTED THAT NEITHER ANY EXPENSES WERE BOOKED AND NOR ANY DEDUCTIONS HAVE BEEN CLAIMED FROM PERSONAL ACCO UNTS; AND THAT THERE WERE NO BORROWINGS AT ALL. THE ASSESSING OFF ICER AND, THEREAFTER, THE CIT(A) DISAGREED WITH THE ASSESSEE AND DISALLOW ED A SUM OF RS.56,912/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES B Y APPLYING THE 4 BABITA MALKANI FORMULA PRESCRIBED IN RULE 8D(2)(III) OF THE INCOME TAX RULES, 1962 ( IN SHORT THE RULES) 5. IN THIS BACKGROUND, THE LD. REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT BY WAY OF AN ADDITIONAL GROUND OF AP PEAL, THE ASSESSEE SEEKS TO CHALLENGE THE JURISDICTION OF THE ASSESSIN G OFFICER TO MAKE THE IMPUGNED DISALLOWANCE IN THE PROCEEDINGS UNDER SEC TION 143(3) R.W.S. 153C OF THE ACT ON THE GROUND THAT DURING THE COURS E OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND AND SEIZED. THE L D. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT SUCH ADDITIONAL GRO UND INVOLVES A PURE POINT OF LAW THAT THE RELEVANT FACTS BEING ON RECO RD AND, THEREFORE, IT DESERVES TO BE ADMITTED FOR ADJUDICATION FOLLOWING THE RATIO OF THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF N ATIONAL THERMAL POWER CO. LTD. VS. CIT, 229 ITR 383(SC) AND THE HON BLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDER S PVT. LTD., 349 ITR 336(BOM). 6. IN SO FAR AS THE ASPECT OF ADMISSION OF THE AFOR ESAID ADDITIONAL GROUND IS CONCERNED, THE LD. DEPARTMENTAL REPRESENT ATIVE APPEARING FOR THE REVENUE HAS NOT MADE ANY COGENT REASONING TO OPPOSE THE PLEA OF THE APPELLANT. MOREOVER, IN MY CONSIDERED OPINI ON, THE AFORESAID ADDITIONAL GROUND INVOLVES A QUESTION OF LAW WHICH ARISES FROM THE FACTS ALREADY AVAILABLE ON RECORD AND THE SAME IS A LSO RELEVANT TO DETERMINE THE CORRECT TAX LIABILITY OF THE ASSESSEE . THEREFORE, FOLLOWING THE RATIO OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA), I DEEM IT FIT AND PROPER TO ADMIT SUCH ADDITIONAL GROUND OF APPEAL FOR ADJUDICA TION. THE AFORESAID DECISION WAS PRONOUNCED IN THE COURSE OF HEARING A ND ACCORDINGLY THE 5 BABITA MALKANI RIVAL COUNSELS MADE THEIR RESPECTIVE SUBMISSIONS ON THE MERITS OF THE ADDITIONAL GROUND. 7. THE LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDE D THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AND SEI ZED DURING THE COURSE OF SEARCH, THE IMPUGNED ADDITION WAS UNSUSTA INABLE. IT WAS POINTED THAT IN THE CONTEXT OF THE ORIGINAL RETURN FILED UNDER SECTION 139(1) OF THE ACT ON 30/09/2008, NO NOTICE UNDER SE CTION 143(2) OF THE ACT WAS ISSUED WITHIN THE PRESCRIBED PERIOD I.E. 3 0/09/2009 AND, THEREFORE, THE ASSESSMENT STOOD COMPLETED, AND, IN ANY CASE AS, ON THE DATE OF SEARCH I.E. 16/12/2010, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR OF 2008-09 WAS NOT PENDING. ON THE BASIS OF THE AFORESAID, THE LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION DID NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. IN SUPPORT OF HIS STAND THAT THE IMPUGNED ADDITION COULD NOT BE MADE UNLESS SOME INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THE LD. REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE FOL LOWING DECISIONS:- (I) ALL CARGO GLOBAL LOGISTICS, 374 ITR 645 (BOM) (II) SUNCITY ALLOYS (P) LTD. VS. ACIT, 124 TTJ 674 (JOD) (III) ATHITHI N. PATEL, ITA NO.43/MUM/2010 ORDER DA TED 22/08/2012 (IV) SAF YEAST COMPANY PVT. LTD. VS. ACIT, ITA NO.1 074/PN/2007 ORDER DATED 03.10.2012 (V) B.R. MACHINE TOOLS PVT. LTD. VS. ACIT, ITA NO.4 174 TO 4177/MUM/2013 ORDER DATED 06.12.2013. (VI) GURINDER SINGH BAWA, ITA NO.2075/MUM/2010 ORD ER DATED 16/11/2012 6 BABITA MALKANI (VII) RAKSHA CHHADWA VS. ACIT, ITA NO.8576& 8577/MU M/2010 FOR A.Y 2003-04 & 2005-06 ORDER DATED 17.10.2014 8. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION OF THE INCO ME TAX AUTHORITIES AND POINTED OUT THAT THE PROVISIONS OF SECTION 153A OF THE ACT EMPOWER THE ASSESSING OFFICER TO ASSESS OR RE-ASSESS THE TO TAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDU CTED. AS PER LD. DEPARTMENTAL REPRESENTATIVE THE ASSESSING OFFICER WAS DUTY BOUND TO ASSESS OR REASSESS TOTAL INCOME OF SUCH ASSESSMEN T YEARS AND, THEREFORE, THE IMPUGNED ADDITION WAS JUSTIFIABLY MA DE AS IT INVOLVES APPLICATION OF SECTION 14A OF THE ACT. 9. AS THE AFORESAID DISCUSSION SHOWS, THE PERTINEN T POINT RAISED BY THE ASSESSEE BEFORE ME IS THAT THE IMPUGNED ADDITIO N HAS BEEN MADE IN THE ABSENCE OF REQUISITE JURISDICTION. THE IMPUGNED ASSESSMENT HAS BEEN MADE BY INVOKING SECTION 153C OF THE ACT, WHIC H PRESCRIBES THAT THE ASSESSMENT IS TO BE MADE IN THE MANNER PROVIDE D IN SECTION 153A OF THE ACT. IN ORDER TO APPRECIATE THE CONTROVERSY , IT IS PERTINENT TO OBSERVE THAT SECTION 153A OF THE ACT POSTULATES THE ASSESSMENT IN CASES OF SEARCH OR REQUISITION UNDER SECTION 132 OR UNDER SECTION 132A OF THE ACT RESPECTIVELY. THE SAID SECTION ENVISAGE S THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME F OR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECOND PRO VISO TO SECTION 153A(1) OF THE ACT ALSO PRESCRIBES THAT ASSESSMENT OR RE-ASSESSMENT, IF 7 BABITA MALKANI ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX YEARS REFERRED TO IN SUB-SECTION(1) OF SECTION 153 A OF THE ACT, WHICH IS PENDING ON THE DATE OF INITIATION OF SEARCH OR MAKI NG OF REQUISITION AS THE CASE MAY BE , SHALL ABATE. IN OTHER WORDS, IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCERNED, THE COMPETENCE OF THE A SSESSING OFFICER TO MAKE THE ORIGINAL ASSESSMENT CONVERGES WITH THE ASSESSMENT TO BE MADE U/S.153A OF THE ACT, I.E. ONLY ONE ASSESSMENT SHALL BE MADE FOR SUCH ASSESSMENT YEARS BASED ON THE FINDINGS OF THE SEARCH AS WELL AS ANY OTHER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE ASSESSING OFFICER. NOTABLY, THERE WOULD ASSESSMENTS IN THE P ERIOD OF THE SIX ASSESSMENT YEARS IDENTIFIED IN SECTION 153A(1) OF T HE ACT, WHICH WOULD HAVE BECOME FINAL (I.E. WHICH ARE NOT PENDING ON T HE DATE OF SEARCH); SUCH ASSESSMENTS DO NOT ABATE IN TERMS OF THE SECON D PROVISO TO SEC.153A(1) OF THE ACT. THE SCOPE AND AMBIT OF S UCH AN ASSESSMENT IS THE CONTROVERSY BEFORE ME. IN THIS CONTEXT, IT WO ULD BE PERTINENT TO REFER TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA- SHEVA) 58 TAXMANN.COM 78 (BOM) WHEREIN THE SCOPE OF AN ASSESS MENT UNDER SECTION 153A OF THE ACT HAS BEEN CONSIDERED. ONE O F THE POINTS ADDRESSED BY THE HONBLE HIGH COURT WAS WHETHER THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT ENVISAGES ADDITIONS, WHICH ARE OTHERWISE NOT BASED ON ANY INCRIMINATING MATERI AL FOUND DURING THE COURSE OF SEARCH. AS PER HONBLE HIGH COURT, NO AD DITION COULD BE MADE IN RESPECT OF THE ASSESSMENT THAT HAD BECOME FINAL IN THE EVENT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THE HONBLE HIGH COURT ALSO NOTICED ITS EARLIER JUDGMEN T IN THE CASE OF MURALI AGRO-PRODUCTS LTD. (SUPRA) AND ELABORATELY CULLED OUT THE SCOPE 8 BABITA MALKANI AND AMBIT OF THE ASSESSMENT AND REASSESSMENT OF TOT AL INCOME UNDER SECTION 153A(1) OF THE ACT READ WITH THE PROVISO THEREOF, AND RULED THAT AN UNABATED ASSESSMENT UNDER SECTION 153A(1 ) WOULD NOT ENCOMPASS AN ADDITION, IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, BECAUSE IN SUCH A CASE, THE ORIG INAL ASSESSMENT HAD BECOME FINAL. THIS PROPOSITION HAS BEEN CANVASSED B Y THE LD. REPRESENTATIVE FOR THE ASSESSEE BEFORE ME IN ORDER TO ASSAIL THE DISALLOWANCE OF RS.56,912/- MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 14A OF THE ACT. 9.1 MOREOVER, THE HONBLE DELHI HIGH COURT IN THE C ASE OF CIT(CENTRAL)-III VS. KABUL CHAWLA IN ITA 707/2014 D ATED 28/08/2015 HAS EXTENSIVELY CONSIDERED THE LEGAL POSITION AND SUMMA RIZED IT IN THE FOLLOWING WORDS:- SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISO THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UN DER: 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 IMMEDIATE LY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACES. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE D ATE 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 AY IN WHICH THE SEARCH TA KE 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 AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 9 BABITA MALKANI IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIO NS 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 A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE AS SESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WI TH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABAT ED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSE SS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIA L EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION 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. 9.2 FACTUALLY SPEAKING, IN THE PRESENT CASE THE ASS ESSMENT ON THE DATE OF SEARCH STOOD COMPLETED IN AS MUCH AS THE DA TE FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IN RELATION TO RETURN ORIGINALLY FILED UNDER SECTION 139(1) ON 30/09/2008 HAD LAPS ED. I HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT THERE IS NOTHING BROUGHT ON RECORD TO SUGGEST THAT ANY MATERIAL WAS FOUND DURING COURS E OF SEARCH WHICH WOULD TRIGGER THE INVOKING OF SECTION 14A OF THE A CT. RATHER, THE ASSESSMENT ORDER REVEALS THAT THE DISALLOWANCE UNDE R SECTION14A OF THE ACT HAS BEEN RESORTED TO ON A MERE REAPPRAISAL OF T HE EXISTING MATERIAL AND IS DEHORS ANY INCRIMINATING MATERIAL FOUND I N THE COURSE OF SEARCH. THE ENTIRE DISCUSSION ON THIS POINT IN PARAS-6&7 O F THE ASSESSMENT ORDER DOES NOT REFER TO ANY MATERIAL FOUND DURING THE COURSE OF SEARCH, 10 BABITA MALKANI LEAVE ALONE ANY INCRIMINATING MATERIAL. THEREFORE, IN THIS FACTUAL BACKGROUND, I DO NOT FIND ANY JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE THE IMPUGNED ADDITION IN AN ASSESSMENT FINALIZ ED UNDER SECTION 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH, QUA THE IMP UGNED DISALLOWANCE U/S. 14A OF THE ACT. 9.3 IN CONCLUSION, I, THEREFORE, HOLD THAT FOLLOWIN G THE RATIO OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CONTINENTAL WAREHOUSING CORPORATION (NHAVA-SHEVA) (SUPRA) AS AL SO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABU L CHAWLA (SUPRA), THE IMPUGNED ADDITION COULD NOT HAVE BEEN MADE IN RESPE CT OF AN UNABATABLE ASSESSMENT WHICH HAD OTHERWISE BECOME F INAL, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL HAVING NOT BE EN FOUND IN THE COURSE OF SEARCH, QUA THE IMPUGNED DISALLOWANCE U/ S. 14A OF THE ACT. ACCORDINGLY, I SET ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.56,917/- AS TH E SAME IS PURPORTED TO BE BEYOND THE SCOPE AND AMBIT OF ASSESSMENT ENVISAG ED UNDER SECTION 153A OF THE ACT. THUS, ON THIS ASPECT, THE ASSESSE E SUCCEEDS. 10. SINCE ASSESSEE HAS SUCCEEDED ON THE ADDITION AL GROUND OF APPEAL, THE OTHER GROUND RAISED REGARDING MERITS OF THE DISALLOWANCE OF RS.56,912/- IS NOT ADJUDICATED AS IT IS RENDERED AC ADEMIC. THUS, APPEAL FOR ASSESSMENT YEAR IS ALLOWED. 11. SO FAR AS THE APPEALS FOR ASSESSMENT YEAR 2005- 06 AND 2009-10 ARE CONCERNED, IT WAS A COMMON POINT BETWEEN THE PA RTIES THAT THE FACTS AND CIRCUMSTANCES IN RELATION TO THE ADDITION AL GROUND OF APPEAL ARE SIMILAR TO THOSE CONSIDERED BY ME IN RELATION T O ASSESSMENT YEAR 11 BABITA MALKANI 2008-09. THEREFORE, MY DECISION IN THE APPEAL FOR ASSESSMENT YEAR 2008-09 SHALL APPLY MUTATIS MUTANDIS IN THE APPEALS FOR ASSESSMENT YEARS 2005-06 AND 2009-10, WHICH ARE ALSO ALLOWED A CCORDINGLY. 12. IN SO FAR AS APPEAL FOR ASSESSMENT YEAR 2010-11 IS CONCERNED, THE SAME IS DIRECTED AGAINST ORDER PASSED BY CIT(A)-51, MUMBAI DATED 24/03/2015, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 25/03/2013 UNDER SECTION 1 43(3) R.W.S. 153C OF THE ACT. 13. THE FIRST ISSUE IN THIS APPEAL IS WITH REGARD T O A DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 1 4A OF THE ACT. SECTION 14A WAS INVOKED BY THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE HAD EARNED EXEMPT INCOME OF RS.2,17,495/- AND HAD INVESTED RS.1,51,526/- IN THE SHARES, BONDS AND MUTUAL FUNDS . THE ASSESSING OFFICER APPLIED THE FORMULA CONTAINED IN RULE 8D(2) (III) AND COMPUTED THE DISALLOWANCE AT RS.78,401/- OUT OF THE ADMINIST RATIVE EXPENSES. THE SAID ADDITION HAS SINCE BEEN SUSTAINED BY THE CIT(A ) ALSO. 13.1 IN THIS CONTEXT, THE CONSISTENT STAND OF THE A SSESSEE HAS BEEN THAT THE INVESTMENTS ARE MADE IN HER PERSONAL ACCOUNT, W HICH IS DISTINCT FROM HER BUSINESS ACCOUNT. BEFORE ME, THE LD. REPR ESENTATIVE FOR THE ASSESSEE ASSERTED THAT ASSESSEE WAS MAINTAINING SEP ARATE BOOKS OF ACCOUNT FOR HER PROPRIETARY BUSINESS AND SO FAR AS THE IMPUGNED INVESTMENTS IN SHARES, BONDS AND MUTUAL FUNDS WAS C ONCERNED, THEY WERE REFLECTED IN HER PERSONAL ACCOUNT, WHICH IS D ISTINCT FROM HER BUSINESS ACCOUNT. THE ASSESSEE ALSO POINTED OUT TH AT NEITHER HAVE ANY EXPENSES BEEN BOOKED NOR CLAIMED AS A DEDUCTION I N HER PERSONAL ACCOUNT AND THAT THERE ARE NO BORROWINGS. 12 BABITA MALKANI 13.2 ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTA TIVE APPEARING FOR THE REVENUE CONTENDED THAT IN SPITE OF THE INVE STMENTS BEING FROM PERSONAL ACCOUNT, THE DISALLOWANCE ON ACCOUNT OF SE CTION 14A OF THE ACT IS JUSTIFIED. 13.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT IN THE FACTS OF THE PRESENT CASE, THERE IS NO JUSTIFIC ATION FOR INVOKING OF SECTION 14A OF THE ACT TO DISALLOW ANY EXPENDITURE ON ACCOUNT OF APPLICATION OF RULE 8D(2)(III) OF THE RULES. THERE IS NO MATERIAL ON RECORD TO NEGATE THE FACTUAL ASSERTIONS WHICH HAVE BEEN MADE BY THE ASSESSEE CONSISTENTLY FROM THE LEVEL OF THE ASSESS ING OFFICER, WHICH IS TO THE EFFECT THAT THE INVESTMENTS MADE ARE IN HER PER SONAL CAPACITY AND ARE REFLECTED IN HER PERSONAL ACCOUNT WHICH ARE DIS TINCT FROM HER BUSINESS ACCOUNT. THERE IS NO FINDING BY THE LOWER AUTHORITIES THAT ANY OF THE EXPENSES FOUND RECORDED IN THE BUSINESS ACCO UNT WAS, IN ANY MANNER, RELATED TO THE EARNING OF EXEMPT INCOME FRO M SUCH INVESTMENTS, WHICH ARE OBVIOUSLY NOT PART OF THE BU SINESS ACCOUNT. AS A CONSEQUENCE, I SET ASIDE THE ORDER OF THE CIT(A) ON THIS ASPECT AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.78,401/-. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 14. THE SECOND ADDITION IN DISPUTE IS OF A SUM OF R S.17,526/- AS INTEREST INCOME. IN PARA-8 OF THE ASSESSMENT ORDER , IT IS STATED THAT ON VERIFICATION OF THE INFORMATION RECEIVED IN AIR, ASSESSEE WAS FOUND TO HAVE RECEIVED INTEREST INCOME OF RS.17,526/-, WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. IN THE ABSENCE OF ANY D ETAILS FORTHCOMING FROM THE ASSESSEE, THE SAID AMOUNT WAS ADDED TO THE TOTAL INCOME AS 13 BABITA MALKANI INCOME FROM OTHER SOURCES, WHICH HAS FURTHER BEEN S USTAINED BY THE CIT(A). 14.1 ON THIS ASPECT, THE LIMITED PLEA OF THE ASSESS EE BEFORE ME WAS THAT NO DETAILS IN THIS CONTEXT WERE MADE AVAILABLE TO THE ASSESSEE AND, THEREFORE, IF THE MATTER IS RESTORED BACK TO THE FI LE OF THE ASSESSING OFFICER, ASSESSEE WOULD BE IN A POSITION TO EXPL AIN THE IMPUGNED SUM. LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE R EVENUE HAS NOT OPPOSED THE SAID PLEA OF THE APPELLANT. 14.2 CONSIDERING THE AFORESAID , I DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR A DECISION AFRESH AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF B EING HEARD IN SUPPORT OF THE AMOUNT OF RS.17,526/- FOUND IN THE A IR INFORMATION. THUS, ON THIS ASPECT THE ASSESSEE SUCCEEDS. 15. IN THE RESULT, THE CAPTIONED APPEALS ARE ALLOWE D AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2015. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 30/11/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI