THE Dy CIT, Vijayawada V. Lingam Ravindra Rao, Vijayawada

ITA 339/VIZ/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4184 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 24-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBA KUMAR SONAWAL CIR
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Gift
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 339 / VIZ /201 5 (ASST. YEAR : 20 0 3 - 0 4 ) DCIT, CIRCLE - 2(1), VIJAYAWADA. V S . LINGAM RAVINDRA RAO, D.NO. 64 - 9 - 2, SBH COMPLEX, PATAMATA LANKA, VIJAYAWADA. PAN NO. AAMPL 1674 R (APPELLANT) (RESPONDENT) C.O.NO. 34/VIZ/2015 (ARISING OUT OF ITA NO. 339 / VIZ /201 5) (ASST. YEAR : 20 03 - 04 ) LINGAM RAVINDRA RAO, D.NO. 64 - 9 - 2, SBH COMPLEX, PATAMATA LANKA, VIJAYAWADA. VS. DCIT, CIRCLE - 2(1), VIJAYAWADA. PAN NO. AAMPL 1674 R (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI M. CHANDRAMOULESWARA RAO ,C A. DEPARTMENT BY : SHRI DEBA KUMAR SONAWAL, CIR DR DATE OF HEARING : 05 / 1 0 /201 8 . DATE OF PRONOUNCEMENT : 12 / 1 0 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF 2 ITA NO. 339/VIZ/2015 C.O.NO. 34/VIZ/2015 ( LINGAM RAVINDRA RAO ) INCOME TAX (APPEALS) - 4 , HYDERABAD , DATED 31 /0 5 /201 6 FOR THE ASSESSMENT YEAR 200 3 - 0 4 . 2. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT HON'BLE ITAT, HYDERABAD BENCH HAS CONSIDERED THE APPEAL FILED BY THE D EPARTMENT IN ITA NO. 1170/HYD/2013, BY ORDER DATED 31/05/2016 AND QUASHED THE ENTIRE ASSESSMENT ORDER BY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWAL IN ITA NO. 707/2014, DATED 28/08/2015. THEREFORE, THIS APPEAL FILED BY THE DEPARTMENT IS NOT ENTERTAINABLE AND PRAYED THAT SAME MAY BE DISMISSED. 3 . ON THE OTHER HAND, L D. DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE GROUNDS OF APPEAL. 4 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. 5. WE FIND THAT ITAT, HYDERABAD BENCH BY CONSIDERING ALL THE FACTS OF THE CASE, THE ENTIRE ASSESSMENT ORDER HAS BEEN QUASHED BY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWAL (SUPRA) . FOR THE SAKE OF CONVENIENCE, THE RE LEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 3 ITA NO. 339/VIZ/2015 C.O.NO. 34/VIZ/2015 ( LINGAM RAVINDRA RAO ) 8. WE FIND THAT FOR THE A.YS. 2003 - 04 TO 2006 - 07 THE ASSESSEE HAD FILED HIS RETURNS OF INCOME AND THE STATUTORY TIME LIMIT FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT HAD ALSO LAPSED BEFORE THE DATE OF SEARCH AND THEREFORE, THE ASSESSMENTS WERE NOT PENDING AND HENCE, NOT ABATED. 8.1. LET US FIRST EXAMINE THE APPLICABILITY OF THE DECISIONS RELIED UPON BY THE LD. D.R. IN THE CASE OF THE CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHAVA) LTD., (CITED SUPRA), THE HONBLE SUPREME COURT HAS ONLY GRANT ED SLP AGAINST THE RULING OF THE HONBLE BOMBAY HIGH COURTS FINDING THAT NO ADDITION CAN BE MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH OR DURING 153A PROCEEDINGS. IT IS SEEN THAT THE HONBLE APEX COURT HAS NOT STAYED OR SUSPENDED THE OPERATION OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT AND THEREFORE, IT CANNOT BE SAID THAT THE HIGH COURTS DECISION CANNOT BE FOLLOWED. IN THE CASE OF RAJ KUMAR ARORA (CITED SUPRA), THE HONBLE ALLAHABAD HI GH COURT WAS CONSIDERING THE CASE WHERE IN ADDITION TO THE MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH, THE A.O. HAD MADE AN ADDITION OF ALSO GIFTS IN RESPECT OF WHICH NO INCRIMINATING MATERIAL WAS FOUND AND IT WAS IN THESE CIRCUMSTANCES THAT THE HONBLE HIGH COURT HELD THAT UNDER SECTION 153A OF THE ACT, THE A.O. HAS THE POWER TO RE - ASSESS THE RETURNS OF THE ASSESSEE NOT ONLY FOR THE UNDISCLOSED INCOME, WHICH WAS FOUND DURING THE SEARCH OPERATION BUT ALSO WITH REGARD TO THE MATERIAL THAT WAS AVAI LABLE AT THE TIME OF THE ORIGINAL ASSESSMENT. IN THE CASE OF GOPAL LAL BHADRUKA (CITED SUPRA), THE QUESTION BEFORE THE HONBLE HIGH COURT WAS WHETHER, FOR THE PURPOSE OF COMPUTING INCOME UNDER SECTION 153A/153C OF THE ACT, THE A.O. IS REQUIRED TO CONFINE H IMSELF ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND IT WAS IN ANSWER TO THIS QUESTION THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE A.O. CAN TAKE INTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND S EIZURE OPERATION FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. THUS, THE ABOVE DECISIONS ARE DISTINGUISHABLE FROM ASSESSEES CASE ON FACTS. 8.2. AS REGARDS THE DECISIONS RELIED UPON BY THE ASSESSEE, WE FIND THAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTIC (CITED SUPRA), IS WITH REGARD TO THE CORRECTNESS OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC REPORTED IN (2012) 18 ITR (TRIBU.) 106 (MUM.) (SB) AND THE HONBLE BOMBAY HIGH COURT HAS UPHELD THE ORDER OF THE SPECIAL BENCH HOLDING THAT THE NOTICE UNDER SECTION 153A WAS FOUNDED ON SEARCH AND IF THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THEN THE 4 ITA NO. 339/VIZ/2015 C.O.NO. 34/VIZ/2015 ( LINGAM RAVINDRA RAO ) TRIBUNAL WAS RIGHT IN H OLDING THAT THE POWER UNDER SECTION 153A BEING NOT EXPECTED TO BE EXERCISED ROUTINELY, SHOULD BE EXERCISED IF THE SEARCH REVEALED ANY INCRIMINATING MATERIAL. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA.NO.707/2014 AND OTHERS DAT ED 28.08.2015 HAS SUMMARIZED THE LEGAL POSITION ON THE ISSUE AS UNDER : SUMMARY OF THE LEGAL POSITION: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT;, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECI SIONS, 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 A.YS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE A Y IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSM ENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH A YS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE A.O. 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 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SE ARCH 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 UN DER 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 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) 5 ITA NO. 339/VIZ/2015 C.O.NO. 34/VIZ/2015 ( LINGAM RAVINDRA RAO ) 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 A.O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE M AKING THE ASSESSMENT UNDER SECTION 153 A 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. CONCLUSION 38. THE PRESENT APPEALS CONCERN A YS, 2002 - 0 3, 2005 - 06 AND 2006 - 07. ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY T HE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8.3. THUS, IN THE ABOVE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, IT HAS BEEN HELD THAT WHERE ASSESSMENTS ARE NOT PENDING, THERE CANNOT BE ANY ABATEMENT OF THE ASSE SSMENTS AND HENCE, THE A.O. HAS NO POWER TO BRING TO TAX ANY INCOME ON THE BASIS OF THE ASSESSEE IS ALLOWED FOR ALL THE A.YS. 2003 - 04 TO 2006 - 07. SINCE GROUND NO.3 IS ALLOWED, OTHER GROUNDS ON THE MERITS OF THE ADDITIONS CONFIRMED BY THE CIT(A) HAVE BECOME ACADEMIC AND HENCE, NEED NO ADJUDICATION. CONSEQUENTLY, GROUND NO.3 IS ALLOWED AND THE ASSESSMENTS FOR THE A.YS. 2003 - 04 TO 2006 - 07 ARE HEREBY QUASHED. SINCE THE ASSESSMENTS ARE QUASHED, THE REVENUE APPEALS ARE ALSO DISMISSED. 9. IN THE RESULT, RE VENUE APPEALS FOR THE A.YS. 2003 - 04 TO 2006 - 07 ARE DISMISSED AND CROSS OBJECTIONS OF THE ASSESSEE FOR THE A.YS. 2003 - 04 TO 2006 - 07 ARE PARTLY ALLOWED. 10. TO SUM - UP, REVENUE APPEALS FOR THE A.YS. 2003 - 04 TO 2006 - 07 ARE DISMISSED AND CROSS OBJECTIONS OF T HE ASSESSEE FOR THE A.YS. 2003 - 04 TO 2006 - 07 ARE PARTLY ALLOWED. 6 ITA NO. 339/VIZ/2015 C.O.NO. 34/VIZ/2015 ( LINGAM RAVINDRA RAO ) 6 . IN VIEW OF THE ABOVE DECISION IN ASSESSEES OWN CASE FOR THE VERY SAME ASSESSMENT YEAR, WE FIND THAT THIS APPEAL IS NOT MAINTAINABLE AND THE SAME IS HEREBY DISMISSED. 7 . SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR DECISION ABOVE, THIS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 2 T H DAY OF OCT . , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 2 T H OCT . , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE LINGAM RAVINDRA RAO, D.NO. 64 - 9 - 2, SBH COMPLEX, PATAMATA LANKA, VIJAYAWADA . 2. THE REVENUE - DCIT, CIRCLE - 2(1), VIJAYAWADA. 3. THE CIT, VIJAYAWADA. 4. THE CIT(A) - 4, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.