SMT. SEEMA MUNDRA, KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, KOTA

ITA 431/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3688 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DR DHK
• Assessee Lawyers: C M BIRLA
• Keywords: Business income
• Section: 143(3); 142(1); 153A; 132; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 431/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2014-15 SMT. SEEMA MUNDRA 524-A, TALWANDI KOTA CUKE VS. THE DCIT CENTRAL CIRCLE KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADGPM 6758 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI C.M. BIRLA, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI VARINDER MEHTA, CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/06/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21/06/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-4, JAIPUR DATED 1-02-2018 FOR THE ASSESSM ENT YEAR 2014-15 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT F.Y. 2013- 14 BEING THE SEARCH YEAR THE ISSUANCE OF NOTICE U/S 142(1) R.W.S.S 153A FOR ASSTT.YEAR 2014-15 WAS BEYOND LEGISLATIVE POWERS OF THE AO AND THEREFORE, ENTIRE PROCEEDINGS BASED ON THIS ILLEGAL NOTICE BEING VOID THE ORDER U/S 143(3) R.W.S. 153B(1) DESERVES ANNULMENT. ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 2 2. THAT WITHOUT PREJUDICE TO GOA 1 ABOVE THE LD. CI T(A) ERRED IN CONFIRMING ADDITION/ DISALLOWANCE OF RS. 7 ,34,042/- FROM INTEREST A/C. 3. THAT WITHOUT PREJUDICE TO GOA 1 AND 2 ABOVE THE LD. CIT(A) FURTHER ERRED IN NOT CONSIDERING THAT INTERE ST RS. 2,98,920/- IS ALREADY CHARGED FROM PAWAN MUNDRA AND THEREFORE, AD DITION, IF ANY SHOULD BE RS. 4,35,122/- (734042 298920) ONLY WIT H CORRESPONDING RELIEF IN PAWAN MUNDRA WHO IS ALSO TAXED FOR ASSTT. YEAR 2014-15 U/S 143(3) R.W.S. 158B(1). 2.1 APROPOS GROUND NO. 1 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 3. IN THE PRESENT CASE, IT IS SEEN THAT APPELLANT DERIVED INCOME FROM JOB WORK IN HER PROPRIETORSHIP CONCERN NAMELY M/S. PREET STONE INDUSTRIES, INTEREST INCOME AND ALSO DECLARED AGRICULTURAL INCOME. APPELLANT E-FILED HER ORIGINAL RETURN OF INCOME ON 29-11-2014 FOR THE A.Y. 2014-15 DECLARING TOTAL INCOME AT RS. 2,81,210/- AND ALSO D ECLARED AGRICULTURAL INCOME OF RS. 1,72,000/- APPELLANT BELONGS TO MUNDRA GROUP, KOTA ON WHOSE PREMISES, A SEARCH U/S 132 OF THE ACT WAS CARRIED O UT ON 13- 08-2013. VARIOUS ASSETS/BOOKS OF ACCOUNTS AND DOCUM ENTS WERE FOUND, INVENTORIZED AND SEIZED AS PER ANNEXURE PREPARED DURING THE COURSE OF SEARCH. PURSUANT TO T HIS, AO ISSUED A NOTICE U/S 142(2) R.W.S. 153A OF THE ACT T O THE APPELLANT, IN COMPLIANCE OF WHICH, APPELLANT FILED HER RETURN OF INCOME ON 19-01-2015 FOR THE A.Y. 2014-15 DECLAR ING TOTAL INCOME AT RS. 2,81,210/- AND ALSO DECLARED AG RICULTURAL INCOME OF RS. 1,72,000/-. FINALLY, AO COMPLETED ASS ESSMENT U/S 143(3) R.W.S. 153B(1)(B) OF THE ACT VIDE ORDER DATED 29- 01-2016 AT A TOTAL INCOME OF RS. 10,15,250/-. 4. 5. THE APPELLANT HAS TAKEN A LEGAL GROUND THAT SINCE NOTICE U/S 153A WAS ISSUED TO HIM FOR THE INS TANT A. YR. THE ENTIRE ASSESSMENT SHOULD BE QUASHED. THE AP PELLANT ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 3 HAS CITED SEC 153A TO STATE THAT FOR THIS A. YR. NO TICE CANNOT BE ISSUED. I HAVE PERUSED THE GROUND AND SUBMISSION MADE. I AM OF THE VIEW, THOUGH NOTICE U/S 153A NEED NOT BE ISSUED FOR THE INSTANT A.YR. BEING SEARCH ASSESSMEN T YEAR (DATE OF SEARCH BEING 13-08-2013), IT DOES NOT CAUS E ANY PREJUDICE TO THE APPELLANT. FURTHER, ADMITTEDLY NO DISPUTE, LEGAL OR PROCEDURAL, IS RAISED BY THE APPELLANT EIT HER BEFORE THE AO OR BEFORE ME REGARDING COMPLETION OF ASSESSM ENT U/S 143(3). MERELY ISSUE OF NOTICE U/S 153A AND MENTION ING OF SAME IN THE TOP HEADER OF ASSESSMENT ORDER DOES NOT VITIATE THE ENTIRE ORDER. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE, IN MY VIEW THE LEGAL OBJECTION RAISED BY THE APPELL ANT DESERVES TO BE DISMISSED. APPELLANTS APPEAL IN GRO UND NO. 1 IS DISMISSED 2.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED FOR QUASHING OF THE ASSESSMENT ORDER FOR WHICH THE LD.A R OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION. BEFORE WE PROCEED FURTHER WE SUBMIT SEC.153A HAS BE EN AMENDED BY THE FINANCE ACT 2017 W.E.F. 01.04.2017. BECAUSE OF AMENDMENT IN SECTION 153A(1)(A), 153A(1)(B), ITS THREE PROVISOS, SECTION 153B AND 153C AFTER SIX ASSESSMENT YEARS -AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS- IS INSERTED. WE HOWEVER SUBMIT THIS AMENDMENT IS EFFECTIVE FROM 01.04.2017; IT DOES APPLY WHERE SEARCH UNDER SECTION 132 OF THE INCOME-TAX AC T IS INITIATED OR REQUISITION UNDER SECTION 132A OF THE INCOME-TAX ACT IS MADE ON OR AFTER THE 1ST DAY OF APRIL, 2017 AND IT APPLIES TO ASSESSMENT YEARS PRECEDING TO SEARCH YEARS ONLY. THOUGH THE HONBLE CIT(A) HAS ACCEPTED THAT THIS AS S.YEAR BEING SEARCH YEAR THE AO SHOULD NOT HAVE ISSUED NOTICE U/S 153A BUT TO HIM AS IT HAS NOT CAUSED ANY PREJUDICE TO ASSESSEE AND AS THE AO HAS ISSUED NOTICE U/S 143(2) BEFORE ASSESSMENT U/S 143(3) IS FINALIZED MERELY IS SUE OF NOTICE U/S 153A AND MENTIONING OF SAME IN THE TOP HEADER OF ASSESSMENT ORDER DOES NOT VITIATE THE ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 4 ENTIRE ORDER. WE SUBMITT HONBLE CIT(A) FAILED TO A PPRECIATE THAT THERE ARE PLETHORA OF JUDGMENTS WHEREIN BECAUSE OF FAILURE TO GIVE NOTICE U/S 143(2) ASSESSMENT COMPLETED U/S 143(3) ARE VITIATED. IN CIRCUMSTANCES AKIN TO US HONBLE CHANDIGARH BENC H IN RAJEEV KUMAR VS. ACIT (2017) 186 TTJ 522 RELYING ON DECISION OF HONBLE DELHI BENCH OF ITAT IN UPENDRA KUMARA SHARMA VS DCIT, CIRCLE 9(1) (ITA NO.3141/DEL/09 DATED 12.04.2010) HAVE QUASHED ASSESSMENT ORDER. WE MAY ADD THAT DECISION OF HONBLE CHANDIGARH BENCH (SUPRA) DOES ANSWER DOUBTS RAISED BY HONBLE CIT(A) ALSO. WE THEREFORE SUBMIT ASSESSMENT ORDER BE QUASHED. 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LD. CIT(A). 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IMPERATIVE TO REPEAT THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE LD. CIT(A) HAS ELA BORATELY DISCUSSED THE ISSUE IN HIS ORDER. HOWEVER, IT IS NOTED THAT ON TH E SIMILAR ISSUE THE ITAT CHANDIGARH BENCH IN THE CASE OF RAJEEV KUAMR VS ACI T (2017) 186 TTJ 522 RELYING ON DECISION OF ITAT DELHI BENCH IN THE CASE OF UPENDRA KUMAR SHARMA VS DCIT CIRCLE 9(1) (ITA NO.3141/DEL /09 DATED 12-04- 2010) HAS QUASHED THE ASSESSMENT ORDER. THE RELEVA NT OBSERVATION OF ITAT CHANDIGARH BENCH IS AS UNDER:- 11..IT IS WELL SETTLED THAT AN ASSESSMENT IS TO BE FRAMED FOR THE PREVIOUS YEAR WHICH PRECEDES THE ASSESSMENT YEA R. THEREFORE, FOR THE PREVIOUS YEAR 2006-07, THE ASSESSMENT YEAR 2007 -08, THIS ASSESSMENT YEAR SUCCEEDS THE PERIOD OF SEARCH AND N OT PRECEDES. FROM THE PLAIN LANGUAGE OF THE PROVISIONS CONTAINED IN C L. (B) OF SUB-S(1) OF SECTION 153A OF THE ACT, IT IS CLEAR THAT THE ASSES SMENT UNDER SECTION 153A OF THE ACT COULD HAVE BEEN FRAMED FOR THE 6 AS SESSMENT YEARS ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 5 WHICH PRECEDES THE ASSESSMENT YEAR 2007-08. THEREFO RE, WE ARE OF THE CONFIRMED VIEW THAT THE ASSESSMENT UNDER SECTION 15 3A OF THE ACT COULD HAVE BEEN FRAMED FROM THE ASSESSMENT YEARS 20 01-02 TO 2006- 07 ONLY AND NOT FOR THE ASSESSMENT YEAR 2007-08. AS THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FRA MED BY THE AO UNDER SECTION 153A OF THE ACT, THEREFORE, THIS ASSE SSMENT WAS NOT VALID IN THE EYES OF LAW AND OF INITIO. THUS THE SA ME IS QUASHED. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER UNDER CONSIDER ATION CONSIDERING THE SAME AS INVALID, NO FINDINGS ARE GIVEN ON OTHER GROUNDS RAISED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF ITAT CHANDIG ARH BENCH IN THE CASE OF RAJEEV KUMAR VS ACIT (SUPRA), IT IS NOTED T HAT THE LEGAL OBJECTION RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) HAS M ERIT AND WE CONCUR WITH THE SUBMISSIONS OF THE ASSESSEE. THUS GROUND N O. 1 OF THE ASSESSEE IS ALLOWED. 3.1 APROPOS GROUND NO. 2 AND 3 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 6. WITH REFERENCE TO GROUND NO. 2, IT IS SEEN THA T ON PERUSAL OF DETAILS FILED BY THE APPELLANT AO REV EALED THAT THE APPELLANT PAID PROCESSING CHARGES AND INTEREST TO BANK AT RS. 7,34,042/-. HOWEVER, INTEREST FREE LOANS WERE A DVANCED TO VARIOUS PERSONS/ CONCERNS WHICH ALSO INCLUDES PE RSONS COVERED U/S 40A(2)(B). ACCORDINGLY, THE APPELLANT W AS REQUIRED TO JUSTIFY THE PAYMENT OF INTEREST W.R.T. NOT CHARGING OF INTEREST ON INTEREST FREE LOAN. THE REASON FURNI SHED BY THE APPELLANT THAT LOAN TAKEN FROM BANK WAS ADVANCE TO SHRI PAWAN MUNDRA HAS NOT SUPPORTED WITH ANY EVIDENCES THEREFORE, NEXUS FOR PAYMENT OF PROCESSING CHARGES AND INTEREST TO BANK HAS NOT BEEN PROVED. THEREFORE, TH E PROCESSING CHARGED AND INTEREST PAID TO BANK OF RS. ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 6 7,34,042/- WAS DISALLOWED AND ADDITION MADE BY THE AO TO THE INCOME OF THE APPELLANT. 7. 8. GROUND 2(I) AND (II) ARE TAKEN TOGETHER AS REQUESTED BY THE APPELLANT. FIRSTLY THE APPELLANT H AS TAKEN A LEGAL PLEA THAT DISALLOWANCE CANNOT BE MADE AS NO INCRIMINATING SEIZED MATERIAL IS FOUND. JUDGEMENT N AMELY JAI STEEL VS ACIT 259 CTR 281 (JAIPUR) & CIT VS KABUL CHAWLA 281 CTR 45 (DEL.) ARE CITED IN SUPPORT OF TH E CONTENTION. THE LEGAL PLEAS IS UNTENABLE AS ON THE DATE OF SEAR CH (13-08-2013) NO RETURN WAS FILED FOR THE A.YR. 2014 -15. IN FACT THE RETURN WAS FILED ON 29-11-2014. SINCE ON T HE DATE OF SEARCH THE ASSESSMENT WAS PENDING THE JUDGEMENTS CI TED ARE NOT APPLICABLE. THE LEGAL PLEA THUS IS DISMISSED. COMING TO THE MERITS OF THE ISSUE, THE AO HAS MADE DISALLOWANCE IN PARA 6 OF THE ASSESSMENT ORDER WITH A CRUCIAL OBSERVATION THAT THE REASON FURNISHED BY THE APPE LLANT THAT LOAN TAKEN FROM WAS ADVANCED TO SHRI PAWAN MUNDRA H AS NOT SUPPORTED WITH ANY EVIDENCE THEREFORE, NEXUS FOR PA YMENT OF PROCESSING CHARGE AND INTEREST TO BANK HAS NOT BEEN PROVED. PERUSAL OF SUBMISSIONS MADE (ENTIRE PORTION REPRODU CED ABOVE) DOES NOT ADDRESS NOR REBUT THE FINDING BY TH E AO. UNDER THESE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, ADDITION MADE BY THE AO OF RS. 7,34,042/- IS CONFIR MED. 3.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED THAT THE DISALLOWANCE OF RS. 7,34,042/- BE DELETED AND T HE LD.AR FURTHER SUBMITTED THAT ASSESSEE HAS ALREADY CHARGED INTERES T OF RS. 2,98,920/- FROM SHRI PAWAN MUNDRA FOR WHICH THE AO BE DIRECTED TO RESTRICT THE ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 7 DISALLOWANCE TO RS. 4,35,122/- (RS. 7,34,042 MINUS 2,98,920) ONLY WITH A CORRESPONDING SET OFF RELIEF TO PAWAN MUNDRA. 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LD. CIT(A). 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE IT IS NOTED THAT THE INTEREST PAID AND RECEIVED ARE APPEARING IN ASSESSEE'S PAPER BOOK PAG E 5 FROM WHICH IT IS APPARENT THAT INTEREST RECEIVED FROM 4 PERSONS AND PAID TO BANK IS SHOWN IN PROFIT & LOSS ACCOUNT WHERE THERE IS SURPLUS OF RS. 1,01,394/- AND IT IS SHOWN IN COMPUTATION STATEMENT AT ASSESSEE'S PAP ER BOOK PAGE 3 UNDER BUSINESS INCOME HEAD. IT IS NOTED THAT THE LOWER AU THORITIES HAVE CONFIRMED THE ADDITION BECAUSE ASSESSEE FAILED TO F URNISH THE NEXUS OF LOAN TAKEN FROM BANK QUA ADVANCED TO SHRI PAWAN MUN DRA. IT IS FURTHER NOTED THAT THE ASSESSEE HAS SUBMITTED THE BANK STAT EMENTS OF SELF (CENTRAL BANK OF INDIA, KOTA) AND ALSO OF M/S. STONE EDGE CO . (A PROPRIETARY CONCERN OF SHRI PAWAN MUNDRA PUNJAB NATIONAL BANK , KOTA) WHEREFROM NEXUS IS VERIFIABLE (APB 14-15). IN THIS VIEW OF THE MATTER, THE DISALLOWANCE OF RS. 7,34,042/- MADE BY THE AO IS DIRECTED TO BE DELETED. AS REGARDS THE CHARGING OF INTEREST BY TH E ASSESSEE OF RS. 2,98,920/- FROM SHRI PAWAN MUNDRA, THE AO IS DIRECT ED TO RESTRICT THE ITA NO.431/JP/2018 SMT. SEEMA MUNDRA VS DCIT, CENTRAL CIRCLE, KOTA 8 DISALLOWANCE TO RS. 4,35,122/- (RS. 7,34,042 MINUS 2,98,920) ONLY WITH A CORRESPONDING SET OFF RELIEF TO PAWAN MUNDRA IN VIE W OF THE SUBMISSIONS MADE BEFORE US. THUS THE GROUND NO. 2 AND 3 OF THE ASSESSEE ARE ALLOWED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 -06-2018 . SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 /06/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. SEEMA MUNDRA, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE, KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.431 /JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR