ACIT, CHENNAI V. VGP Video Vision of India, CHENNAI

ITA 464/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7520 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 02-03-2016
• Court: TRIBUNAL
• Department Lawyers: PARASHIVAIAH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Search and seizure; Commercial expediency
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L REDDY, JUDICIAL MEMBER ./ ITA NOS.:463 TO 468/MDS/2016 / ASSESSMENT YEARS : 2003-04 TO 2008-09 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), CHENNAI 600 034. V. M/S. VGP VIDEO VISION OF INDIA , NO.6, VGP SQUARE, DHARMARAJA KOIL STREET, SAIDAPET, CHENNAI 600 015 PAN: AAAFV4302J ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI PARA SHIVAIAH, CIT /RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOCATE /DATE OF HEARING : 02.03.2017 /DATE OF PRONOUNCEMENT : 15.03.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : ALL T HESE SIX APPEALS ARE FILED BY THE REVENUE ARE DIRE CTED AGAINST THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-18, CHENNAI, PASSED UNDER SECTION 153C R.W.S.153A R.W.S. 143(3) R.W.S. 263 OF THE ACT DATED 30.11.2015 FOR THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06, 2006- 07, 2007-08 & 2008-09 . SINCE ISSUES INVOLVED IN ALL THESE REVENUES APP EALS 2 I.T.A. NO. 463 TO 468/MDS/2016 ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED TOG ETHER, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. THE BRIEF FACTS ARE THAT IN ALL THESE CASES, SE ARCH AND SEIZURE OPERATION WAS CONDUCTED IN VGP GROUP OF CASES ON 3.3.2009. TH ERE WAS A SEARCH IN THE ASSESSEES PREMISES ALSO. CONSEQUENT TO THE SEARCH AND SEIZURE OPERATION, NOTICES UNDER SECTION 153A AND 153C WERE ISSUED TO THE ASSESSEE CALLING FOR RETURNS . THE ASSESSEE FILED RETURNS IN RESPONSE TO THE SAID NOTICES FOR ALL THESE ASSESSMENT YEARS . ASSESSMENTS WERE COMPLETED UNDER SECTION 153A AND 153C READ WITH SECTION 143(3) ON 29.12.2010 ACC EPTING THE INCOME / LOSS RETURNED BY THE ASSESSEE. SUBSEQUENTLY, NOTICE UNDE R SECTION 263 OF THE ACT WAS ISSUED BY THE COMMISSIONER OF INCOME TAX STATIN G THAT ASSESSMENT ORDERS PASSED UNDER SECTION 153A READ WITH SECTION 153C & 143(3) FOR ALL THESE ASSESSMENT YEARS ARE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE, AS THE ASSESSING OFFICER HAS NOT MADE ANY SORT OF ENQUIRIES IN THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF VARI OUS ISSUES RAISED IN THE SHOW CAUSE NOTICE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED REPLY CONTENDING THAT ASSESSMENTS WERE ALL COMPLETED BASE D ON THE SEARCH MATERIAL & APPRAISAL REPORT AND THEREFORE ASSUMPTION OF JURI SDICTION UNDER SECTION 263 OF THE ACT BY COMMISSIONER OF INCOME TAX IS NOT SUS TAINABLE IN LAW. THE COMMISSIONER OF INCOME TAX PASSED ORDER UNDER SECTI ON 263 OF THE ACT DIRECTING THE ASSESSING OFFICER TO REDO THE ASSESSM ENT AFTER MAKING THOROUGH 3 I.T.A. NO. 463 TO 468/MDS/2016 VERIFICATION OF THE ISSUES MENTIONED IN THE ORDER. AGAINST THIS, THE ASSESSEE CAME IN APPEAL BEFORE US. 3. THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.1 724 TO 1729/MDS./2013 VIDE ORDER DATED 29.05.2015 DISMISSED THE APPEAL OF ASSESSEE BY OBSERVING THAT:- 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE CASE LAWS RELIED ON. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUC TED IN THE PREMISES OF THE ASSESSEE ON 3.3.2009. RETURNS WERE CALLED FOR BY IS SUE OF NOTICE UNDER SECTION 153C OF THE ACT. IN RESPONSE TO THE SAID NOTICE, RETURNS WERE FILED DECLARING INCOME / LOSS FOR ALL THESE ASSESSMENT YEARS I.E. 2003-04 TO 2008 -09. THE ASSESSMENTS WERE COMPLETED ON 29.12.2010 ACCEPTING THE INCOME / LOSS ADMITTED BY THE ASSESSEE. ON GOING THROUGH THE ASSESSMENT ORDERS, WE FIND THAT A SSESSING OFFICER HAS NOT MADE ANY SORT OF ENQUIRIES IN RESPECT OF THE ISSUES RAIS ED BY THE COMMISSIONER OF INCOME TAX IN THE ORDER PASSED UNDER SECTION 263 OF THE AC T. THE ASSESSING OFFICER HAS SIMPLY ACCEPTED WHAT THE ASSESSEE REPORTED IN THE R ETURN OF INCOME EITHER IT IS INCOME OR LOSS WITHOUT MAKING ANY SORT OF ENQUIRY A ND THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER AT ALL ON ANY OF THE ISSUES RAISED BY THE COMMISSIONER OF INCOME TAX. THE COMMISSIONER OF INCOME TAX IN THE ORDER PA SSED UNDER SECTION 263 OF THE ACT HAS RAISED SEVERAL ISSUES IN WHICH THE ASSESSIN G OFFICER HAS FAILED TO EXAMINE ANY OF SUCH ISSUES WHILE COMPLETING THE ASSESSMENTS . 7. FOR THE SAKE OF BETTER APPRECIATION OF THE FACTS , WE EXTRACT THE ISSUES RAISED BY THE COMMISSIONER OF INCOME TAX IN THE ORDER PASSED B Y HIM FOR THE ASSESSMENT YEAR 2003-04 AS UNDER:- 1.THE ASSESSEE PURCHASED FILM RIGHTS FOR RS.30.17 LAKHS. THE A.D. DID NOT CALL FOR ANY DETAILS ON THE SAID PURCHASES FOR VERIFICATION TO CONFIRM THE GENUINENESS AND REASONABLENESS OF THE C OST PAID. THE A.O OUGHT TO HAVE CALLED FOR THE NAMES AND ADDRESSE S OF THE PARTIES FROM WHOM THE ASSESSEE FIRM PURCHASED THE FILM RIGH TS AS WELL AS AGREEMENT COPIES WITH THE SAID PARTIES FOR PERUSAL. THE AO ALSO DID NOT SEEK CLARIFICATION AS TO WHY AN AMOUNT OF RS.41 .32 LAKHS WAS SHOWN AS PAYABLE AT THE END OF THE ACCOUNTING YEAR. GENERALLY, THE PERSONS WHO SOLD THE FILM RIGHTS WOULD NOT HAVE WAI TED FOR A LONG TIME TO REALIZE THE AMOUNTS FROM THE BUYERS. 4 I.T.A. NO. 463 TO 468/MDS/2016 2. THE METHOD OF CLOSING STOCK VALUATION OF FILM RI GHTS WAS NOT EXPLAINED BY THE ASSESSEE AND THE A.D. ALSO DID NOT TAKE STEPS TO FIND OUT HOW THE CLOSING STOCK OF RS.48.13 LAKHS WA S VALUED. 3. THE ASSESSEE RECEIVED AN ADVANCE OF RS.L CRORE F ROM CERTAIN PARTIES. THE DETAILS OF THE SAID PARTIES WERE NOT O BTAINED BY THE A.D. FOR FURTHER VERIFICATION TO CONFIRM THE [GENUINENES S OF THE TRANSACTION AND THE NATURE OF THE ADVANCES RECEIVED WAS ALSO NOT LOOKED INTO. 4. THE ASSESSEE OBTAINED LOAN FROM BANK BY PAYING I NTEREST OF RS.2.14 LAKHS WHEREAS IT ADVANCED LOAN TO V.G.S. RA JESH OF RS.30 LAKHS WITHOUT CHARGING INTEREST. APART FROM THAT, A SUM OF RS.1.5 CRORES WAS LYING WITH THE ASSESSEE'S GROUP CONCERNS . NO INTEREST WAS RECEIVED FROM THESE INTERESTED PARTIES. PRIMA F ACIE THERE APPEARED TO BE NO COMMERCIAL EXPEDIENCY AS STATED I N THE SUPREME COURT DECISION OF M/S. S.A. BUILDERS. THE A.D. OUGH T TO HAVE DISALLOWED THE SAID INTEREST CLAIM. 5. THE CLAIM OF ELECTRICITY CHARGES WERE RS.L0.77 L AKHS AND RS.11.91 IAKHS FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 RESPECTIVELY. BUT IN THE LAST YEAR, THE ASSESSEE DISCLOSED SALES OF RS.2.29 CRORES WHEREAS THIS YEAR THE SAID SALES WAS RS.1.68 CRORES. THIS INDICATES THAT THE SALES DID NOT HIKE WHEN COMPARED WITH THE INCREASE IN THE POWER C ONSUMPTION. THE PRODUCTION FIGURES ARE ALSO NOT AVAILABLE IN TH E RECORD. SO, NO CORRELATION COULD BE MADE WITH POWER CONSUMPTION. T HE A.D. ALSO DID NOT ASK FOR ANY CLARIFICATION IN THIS REGARD. T HERE WAS AN ADDITION TO THE ASSET FOR RS.8.06 LAKHS. THE A.D. OUGHT TO H AVE OBTAINED EVIDENCE FOR SUCH ADDITION. 6. A ROUND SUM OF RS.5 LAKHS WAS CLAIMED AS 'COURIE R'. THE NATURE AND GENUINENESS OF THIS EXPENDITURE WAS NOT LOOKED INTO. 7. THE NATURE AND GENUINENESS OF 'HIRE CHARGES' OF RS.1.90 LAKHS WAS NOT VERIFIED. T.D.S. WAS ALSO NOT EFFECTED U/S.194 I OF THE I.T.ACT. 8. THE CLAIM OF 'SUNDRY BALANCES' WRITTEN OFF WAS A LLOWED WITHOUT CALLING FOR PARTICULARS. 9. WHEN THE CLAIM OF 'SALARY/WAGES' WAS RS.12.02 LA KHS, THE CLAIM OF 'GRATUITY' WAS RS.16.99 LAKHS. NO CLARIFICATION WAS OBTAINED BY THE A.D. THE CLAIM UNDER THIS HEAD WAS ONLY RS.20 LAKHS LAST YEAR, WHEREAS IT WAS RS.31.95 LAKHS THIS YEAR. 10.THE NATURE AND GENUINENESS OF THE CLAIM OF 'SALE S PROMOTION' OF RS.10.07 LAKHS WERE NOT ENQUIRED INTO BY THE A.O. 11. THE CLOSING BALANCES LYING IN THE ACCOUNTS OF S UNDRY CREDITORS WERE NOT VERIFIED BY THE A.O. BY CALLING FOR CONFIR MATIONS OF STATEMENTS OF ACCOUNTS. --- 9. AS COULD BE SEEN FROM THE ABOVE, NONE OF THE ISS UES RAISED BY THE COMMISSIONER OF INCOME TAX IN THE ORDER PASSED UNDER SECTION 263 OF THE ACT HAVE BEEN EITHER CALLED FOR BY THE ASSESSING OFFICER NOR EXAMINED TH EM. THEREFORE IN THE ABSENCE OF 5 I.T.A. NO. 463 TO 468/MDS/2016 THE ASSESSING OFFICER EXAMINING THE ISSUES, THE ORD ER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE. IN OUR CONSIDERED VIEW, THE COMMISSIONER OF INCOME TAX HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 263 IN DIRECTING THE ASSESSING OFFICER T O REDO THE ASSESSMENTS AFTER MAKING THOROUGH VERIFICATION OF ISSUES MENTIONED IN THE ORDER. THEREFORE, WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX AND REJE CT THE GROUNDS RAISED BY THE ASSESSEE. WE ALSO OBSERVE THAT THE ASSESSING OFFICE R WHILE FRAMING THE ASSESSMENTS AFRESH SHALL TAKE INTO CONSIDERATION THE PRINCIPLES LAID DOWN BY THIS TRIBUNAL IN THE CASES OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT ( SB) (SUPRA) AND M/S. RM K.VISWANATHA PILLAI & SONS (SUPRA). 10. IN THE RESULT, ALL THESE APPEALS FILED BY THE A SSESSEE ARE DISMISSED. 4. IN THE MEANTIME, THE AO PASSED THE CONSEQUENTIAL ORDER TO THE ORDER PASSED BY THE CIT U/S.263 OF THE ACT ON ALL THE ASSESSMENT YEARS ON 07.03.2014. AGAINST THIS ORDER, ASSESSEE WENT IN APPEAL BEFORE THE LD.C IT(A). THE LD.CIT(A) PASSED THE ORDER ON 30.11.2015 WHEREIN HE DELETED ALL THE ADDI TION MADE BY THE AO ON THE REASON THAT THERE IS NO SEIZED MATERIAL CORRESPONDI NG TO THE ADDITION MADE BY THE AO. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE U S. 5. BEFORE US, LD.D.R SUBMITTED THAT THE AO HAVE NO OCCASION TO CONSIDER THE FINDINGS OF THE TRIBUNAL IN ITS ORDER DATED 29.05.2 015 AND THE AO PASSED THE ORDER ON 07.03.2014 I.E. BEFORE THE ORDER OF TRIBUNAL D ATED 29.05.2015. ACCORDINGLY, HE PLEADED THAT THE ISSUE MAY BE REMITTED TO THE FILE OF AO FOR PASSING FRESH ORDER AFTER CONSIDERING THE FINDINGS OF THE TRIBUNAL IN ITS ORD ER. 6. ON THE OTHER HAND, LD.A.R SUBMITTED THAT THOUG H THE AO HAVING NO OCCASION TO GO THROUGH THE ORDER OF TRIBUNAL CITED SUPRA, T HE CIT(A) BEFORE ADJUDICATING THE ISSUE BEFORE HIM, HE CALLED FOR THE REMAND REPORT F ROM THE AO AND DELETED THE 6 I.T.A. NO. 463 TO 468/MDS/2016 ADDITION MADE BY THE AO IN ITS ASSESSMENT ORDER PAS SED U/S.. 153A R.W.S 153 C R.W.S. 263 & R.W.S. 143(3) OF THE ACT. ACCORDING TO HIM, THERE IS NO INJURY TO THE DEPARTMENT, IF THE TRIBUNAL CONFIRMED THE ORDER OF LD.CIT(A) AND THERE IS NO SEIZED MATERIAL CORRESPONDING TO THE ADDITION MADE BY THE AO AND THE ISSUE IS ALREADY COVERED BY THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI IN THE CASE OF M/S.ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT REPORTED IN [2012] 1 37 ITD 287 (MUM.)(SB). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, AGAINST THE ORDER PASSED U/S.263 THE AS SESSEE CARRIED THE APPEALS BEFORE THE TRIBUNAL IN ITA NOS.1724 TO 1729/13 VIDE ORDER DATED 29TH MAY, 2015 WHEREIN THE TRIBUNAL CONFIRMED THE ORDER OF CIT. TH E AO PASSED HIS ASSESSMENT ORDER IN ALL THESE ASSESSMENT YEARS ON 07.03.2014 A ND HE HAD NO OCCASION TO GO THROUGH THE FINDINGS OF THE TRIBUNAL. AT ALL FAIRN ESS, WHEN THE ASSESSMENT ORDERS ARE CHALLENGED BEFORE THE LD.CIT(A) BY THE ASSESSEE, HE SHOULD HAVE REMITTED BACK TO THE FILE OF AO FOR FRESH CONSIDERATION. THE LD.CIT (A) AT THE RELEVANT POINT OF TIME HAVE NO POWER TO REMAND THE CASE BACK TO THE FILE O F LD. ASSESSING OFFICER, HE DECIDED THE ISSUE HIMSELF. 8. WE FIND FORCE IN THE ARGUMENT OF THE LD.D.R. AS RIGHTLY POINTED OUT BY THE LD.D.R, THE LD.CIT(A) STRAIGHTAWAY PLACED RELIANCE IN THE DECISION OF SPECIAL BENCH OF MUMBAI IN THE CASE OF M/S.ALL CARGO GLOBAL LOGIS TICS LTD. VS. DCIT (SUPRA), THOUGH THERE WERE SEIZED MATERIALS FOUND DURING THE COURSE OF SEARCH. THE ORDER IS CRYPTIC AND HE HAS NEVER DISCUSSED ANY RELEVANCE OF THE SEIZED MATERIALS FOUND DURING THE COURSE OF SEARCH TO FRAMING THE ASSESSME NT. IN OUR OPINION, IT IS 7 I.T.A. NO. 463 TO 468/MDS/2016 APPROPRIATE TO REMIT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF AO TO PASS THE ORDERS AFTER GOING THROUGH THE ORDER OF THE TRIBUNAL IN IT A NOS.1724 TO 1729/MDS./2013 IN ASSESSEE'S OWN CASE (SUPRA) AND ALSO WE MAKE IT CLE AR THAT WHILE PASSING THE CONSEQUENTIAL ORDER, THE AO IS DIRECTED TO CONSIDER THE JUDGMENET OF KERALA HIGH COURT IN THE CASE OF DR.P.SASIKUMAR IN [2016] 387 I TR 8(KERALA) WHEREIN HELD THAT: ON A PLAIN READING OF SECTION 153A, IT IS CLEAR TH AT ONCE SEARCH IS INITIATED UNDER SECTION 132 OR A REQUISITION IS MAD E UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003, THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FOLLOWING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B). IT FURTHER TREATS THE RETURNS SO FILED AS IF SUCH RETURN WERE A RETURN RE QUIRED TO BE FURNISHED UNDER SECTION 139. SO THAT ON A READING O F SECTION 153A(1) IT IS CATEGORICAL AND CLEAR THAT ONCE A NOTICE IS I SSUED AND THE ASSESSING OFFICER HAS REQUIRED THE ASSESSEE TO FURN ISH RETURN FOR A PERIOD OF SIX ASSESSMENT YEARS AS CONTEMPLATED UNDE R CLAUSE (B) THEN THE ASSESSEE HAS TO FURNISH ALL DETAILS WITH R ESPECT TO EACH ASSESSMENT YEAR SINCE THE SAME IS TREATED AS A RETU RN FILED UNDER SECTION 139. IT IS TRUE THAT AS PER THE FIRST PROVI SO, THE ASSESSING OFFICER IS BOUND TO ASSESS OR REASSESS THE TOTAL IN COME WITH RESPECT TO EACH ASSESSMENT YEAR FOLLOWING THE SIX ASSESSMEN T YEARS SPECIFIED IN SUB-CLAUSES (A) AND (B) OF SECTION 153A. HOWEVER , EVEN IF NO DOCUMENTS ARE UNEARTHED OR ANY STATEMENT MADE BY TH E ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 AND N O MATERIALS ARE RECEIVED FOR THE AFORE SPECIFIED PERIOD OF SIX YEAR S, THE ASSESSEE IS BOUND TO FILE A RETURN, IS THE SCHEME OF THE PRO VI SION. EVEN THOUGH THE SECOND PROVISO TO SECTION 153A SPEAKS OF ABATEM ENT OF ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF T HE INITIATION OF SEARCH WITHIN THE PERIOD OF SIX ASSESSMENT YEARS SP ECIFIED UNDER THE PROVISION THAT WILL ALSO NOT ABSOLVE THE ASSESSEE F ROM HIS LIABILITY TO 8 I.T.A. NO. 463 TO 468/MDS/2016 SUBMIT RETURNS AS PROVIDED UNDER SECTION 153A(1)(A) . THIS BEING THE SCHEME OF THE PROVISIONS OF THE ACT, THE APPELLATE TRIBUNAL OUGHT TO HAVE CONSIDERED THE ISSUE WITH SPECIFIC REFERENCE T O THE FACTS INVOLVED IN THE CASE AND AS PROVIDED UNDER SECTION 153A.' IN THE LIGHT OF THE JUDGMENT OF THIS COURT, THE AFO RESAID CONCLUSION OF THE TRIBUNAL CANNOT BE SUSTAINED. WITH THIS OBSERVATION, WE REMIT THE ISSUE IN DISPU TE IN ALL THESE APPEALS TO THE FILE OF AO FOR PASSING FRESH ORDER AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, ALL THESE APPEALS FILED BY THE RE VENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( (( ( ) )) ) ( ) (DUVVURU R.L REDDY) (CHAN DRA POOJARI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, / DATED, THE 15TH MARCH, 2017. KSSUNDARAM. / COPY TO: 1 . / APPELLANT 3. ( ) / CIT(A) 5. ! / DR 2. ' / RESPONDENT 4. / CIT 6. #$ %& / GF