Deputy Commissioner of Income-tax, V. Pride Purple Properties, Pune

ITA 425/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6967 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRA
• Assessee Lawyers: NIKHIL PATHAK SUHAS BORA
• Keywords: Search and seizure
• Section: 143(3); 153A; 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 425 & 426 /P U N/20 1 6 / ASSESSMENT YEAR S : 20 0 7 - 0 8 & 200 8 - 0 9 THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1(1) , PUNE . / APPELLANT VS. PRIDE PURPLE PROPERTIES, 504, CORPORATE PLAZA, NEXT TO CHATURSHINGI TEMPLE, PUNE 400016 . / RESPONDENT PAN: AAIFP0363M / APPELLANT BY : MS. NIRUPAMA KOTRA, CIT / RESPONDENT BY : S /S HRI NIKHIL PATHAK / SUHAS BORA / DATE OF HEARING : 07 . 12 .2017 / DATE OF PRONOUNCEMENT: 15 . 1 2 .2017 / ORDER PER SUSHMA CHOWLA, JM: BOTH T HE APPEAL S FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT(A) - 13 , PUNE , DATED 31.12.2015 RELATING TO ASSESSMENT YEAR S 200 7 - 0 8 & 200 8 - 0 9 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 1 53C OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 ITA NO S . 425 & 426 /PUN/20 16 PRIDE PURPLE PROPERTIES 2 . THESE TWO APPEALS FILED BY THE REVENUE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO.425/PUN/2016 TO ADJUDICATE THE ISSUES. 3. THE REVENUE IN ITA NO. 425 /PUN/201 6 , RELATING TO ASSESSMENT YEAR 200 7 - 0 8 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ISSUES, WHICH HAVE BEEN CONCLUDED DURING PROCEEDINGS U/S 143(3) CANNOT BE REVISITED U/S 153A OF THE INCOME TAX ACT 1961 BY RELYING UPON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (374 ITR 645) AND MUR L I AGRO PRODUCTS (49 TAXMANN.COM 172), WHEN THESE DECISIONS HAVE NOT REACHED FINALITY AND HAVE BE EN ADMITTED IN SLP BY THE HON BLE SUPREME COURT. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN OVERLOOKING THE NON - OBSTANTE NATURE OF SECTION 153A, WHICH TREATS THE RETURN FILED OR RELIED UPON BY THE ASSESSEE AS A FRESH RETURN AND IN CONSEQUENCE THE ASSESSING OFFICER WAS WELL WITHIN HIS RIGHTS TO ASSUME JURISDICTION OVER THE SAID FILED OR RELIED UPON RETURN U/S 143(3) TREATING THE RETURNS FILED U/S 153A AS FRESH RETURN FILED BY THE ASSESSEE. 3. THE ORDER OF THE L D. CIT(A) MAY BE VACATED AND THE ASSESSING OFFICER BE RESTORED. 4. THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) IN HOLDING THAT THE ISSUES WHICH WERE CONCLUDED DURING THE COURSE OF PROCEEDINGS UNDER SECTION 143(3) OF THE ACT COULD NOT BE REVISITED UNDE R SECTION 153A OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON THE PRIDE GROUP OF CASES ON 07.09.2011. THE ASSESSEE WAS ISSUED NOTICE UNDER SECTION 153C OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE FURNISHED RETURN OF INCOME DECLARING INCOME OF RS.15,923/ - . THE ASSESSING OFFICER NOTED THAT THE ASSESSED INCOME IN THE HANDS OF ASSESSEE UNDER SECTION 3 ITA NO S . 425 & 426 /PUN/20 16 PRIDE PURPLE PROPERTIES 147 R.W.S. 143(3) OF THE ACT WAS RS.33,92,510/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND REAL ESTATE CONSULTANCY. THE ASSESSING OFFICER NOTED THAT PARTNERS OF ASSESSEE HAD OVERDRAWN THEIR CAPITAL ACCOUNTS AND HENC E, INTEREST ON THE LOAN BORROWED BY THE ASSESSEE WAS PROPORTIONATELY DISALLOWED IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER INVOKED PROVISIONS OF SECTION 36(1)(III) OF THE ACT AND DISALLOWED SUM OF RS.33,76,583/ - . FURTHER, DISALLOWANCE WAS MADE UNDER SECTION 14A OF THE ACT AT RS.63,119/ - . 6. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF THE ORDER PASSED UNDER SECTION 153C R.W.S. 143(3) OF THE ACT. THE CLAIM OF ASSESSEE WAS THAT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT HAS BEEN MADE ON ACCOUNT OF PROVISIONS OF THE ACT AND NOT ON THE BASIS OF ANY INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRIVATE LTD. (2011) 15 TAXMAN.COM 183 (BOM) AND IN THE CASE OF CONTINENTAL CARGO PVT. LTD. (2015) 58 TAXMAN.COM 78 (BOM) AND STATED THAT SINCE THE ADDITIONS WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, ASSESSMENT ORDER W AS INVALID. THE CIT(A) RELYING ON THE BASIS OF AFORESAID DECISIONS HELD THAT NO DISALLOWANCE UNDE R SECTION 14A OF THE ACT IS WARRANTED. SIMILARLY, IN RESPECT OF DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT, SAME PRINCIPLE WAS APPLIED AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT( A). 4 ITA NO S . 425 & 426 /PUN/20 16 PRIDE PURPLE PROPERTIES 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE ORDER OF ASSESSING OFFICER. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER HAD MADE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT, AGAINST WHICH THE APPEAL IS PENDING BEFORE THE APPELLATE FORUM AND THERE WAS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN MAKING THE SAID DISALLOWANCE AGAIN WHILE PASSING THE ORDER UNDER SECTION 153C R.W.S. 143(3) OF THE ACT. IN RESPECT OF ADDITION MADE UNDER SECTION 14A OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRIVA TE LTD. (SUPRA) AND POINTED OUT THAT THIS IS NOT NON - ABATED ASSESSMENT AND IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THERE IS NO MERIT IN THE AFORESAID DISALLOWANCE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE PRESENT SET OF FACTS AFTER SEARCH AND SEIZURE OPERATIONS ON THE PRIDE GROUP OF CASES ON 07.09.2011 NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 153C R .W.S. 143(3) OF THE ACT NOTED THAT THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT HAD FURNISHED RETURN OF INCOME DECLARING INCOME OF RS.15,923/ - AGAINST ASSESSED INCOME OF RS.33,92,510/ - UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. THE AS SESSING OFFICER THEREAFTER, DISALLOWED INTEREST EXPENSES UNDER SECTION 36(1)(III) OF THE ACT AT RS. 33,76,583/ - . ANOTHER DISALLOWANCE WAS MADE IN THE HANDS OF ASSESSEE AT RS.63,119/ - UNDER SECTION 14A OF THE ACT. THE CASE OF ASSESSEE BEFORE US IS THAT IN THE ABSENCE OF ANY 5 ITA NO S . 425 & 426 /PUN/20 16 PRIDE PURPLE PROPERTIES INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH, BOTH THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ARE UNWARRANTED AS THE YEARS UNDER APPEAL ARE NON - ABATED ASSESSMENTS. IT MAY BE POINTED OUT HEREIN ITSELF THAT IN BOTH THE YE ARS, ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, WHEREIN DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT WAS MADE IN BOTH THE YEARS. HOWEVER, NO DISALLOWANCE WAS MADE UNDER SECTION 14A OF THE ACT . THUS , WE FIND NO MERIT IN THE ORDER OF ASSESSING OFFICER THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT IS WARRANTED. 11. IN RESPECT OF DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT, THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER HAD ALREADY DISALLOW ED THE SAME . SO, THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 153C R.W.S. 143(3) OF THE ACT WAS DUTY BOUND TO ADOPT THE ASSESSED INCOME IN THE HANDS OF ASSESSEE AS A GAINST INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SECTION 153C OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE SAME AND ASSESS THE INCOME IN THE HANDS OF ASSESSEE. THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT STANDS DELETED. WE ACCORDINGLY, DELETE DISALLOWANCES IN THE HANDS OF ASSESSEE IN THE ORDER PASSED UNDER SECTION 153C R.W.S. 143(3) OF THE ACT , WITH DIRECTIONS TO THE ASSESSING OFFICER TO ADOPT THE INCOME AS ASSESSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. THE DISALLOWANCE OF INTEREST IS TO BE AGITATED BY THE ASSESSEE AGAINST ORIGINAL ASSESSMENT ORDER AND THAT HAS NO CONNECTION WITH THE PRESENT APPEAL. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DECIDED AS INDICATED ABOVE . 6 ITA NO S . 425 & 426 /PUN/20 16 PRIDE PURPLE PROPERTIES 12 . THE FACTS AND ISSUES IN ITA NO.426/PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.425/PUN/2016 AND OUR DECISION IN ITA NO.425/PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.426/PUN/2016. 1 3 . IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DIS MISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF DECEM BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 15 TH DECEM BER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 13 , PUNE ; 4. THE PR. C IT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE