Kadir Usman Shaikh, Satara V. ITO,Cen.II Pune, Pune

ITA 473/PUN/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4302 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2018
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VIJAYA B REDDY
• Keywords: Capital asset; Business income; Search and seizure; Earning of tax free income
• Section: 40A(3); 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS. 472 TO 475/PUN/2012 / ASSESSMENT YEARS : 2002-03 TO 2005-06 MRS. BILKIS KADIR SHAIKH, L/H OF LATE SHRI KADIR USMAN SHAIKH, BUNGLOW NO.1, VIJAY NAGAR, VARDHAMAN SOCIETY, LONAVALA, DIST. PUNE PAN : ABXPS8262Q ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, CENTRAL-II, PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI T. VIJAYA B. REDDY / DATE OF HEARING : 18.07.2018 / DATE OF PRONOUNCEMENT : 03.08.2018 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE 4 APPEALS OF THE ASSESSEE UNDER CONSIDERATIO N INVOLVING A.YRS. 2002-03 TO 2005-06. THE APPEALS ARE FILED AGAINST 4 DIFFERENT ORDERS OF THE CIT(A) CENTRAL, PUNE, COMMONLY DATED 24-11- 2011. ASSESSEE RAISED ALMOST SIMILAR GROUNDS IN ALL THE APPEALS, THEREFORE, APPEAL NO.472/PUN/2012 FOR A.Y. 2002-03 IS TAKEN AS A STANDARD ONE. 2 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH ITA NO.472/PUN/2012 A.Y. 2002-03 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE EX TRACTED AS UNDER : 1. THE LD.CIT(A) ERRED IN HOLDING THAT THE ASST. M ADE BY THE LD. AO U/S.153A R.W.S. 143(3) WAS VALID WITHOUT APPRECIATI NG THAT NO NOTICE U/S.143(2) WAS ISSUED BY THE LD. AO WITHIN THE TIME LIMIT PRESCRIBED AND HENCE, THE SAID ASST. ORDER PASSED BY THE LD. AO WA S NULL AND VOID. 1.1 THE LD.CIT(A) ERRED IN HOLDING THAT NO NOTICE U /S.143(2) WAS REQUIRED TO BE SERVED ON THE APPELLANT FOR THE PURP OSE OF COMPLETING THE ASST. U/S.153A AND HENCE, JUST BECAUSE THE NOTICE U /S.143(3) WAS NOT FOUND WITHIN THE TIME LIMIT PRESCRIBED DID NOT MEAN THAT THE ASST. ORDER PASSED BY THE AO WAS NULL AND VOID. 1.2 THE LD.CIT(A) FAILED TO APPRECIATE THAT ISSUE O F NOTICE U/S.143(2) WAS THE BASIC REQUIREMENT FOR STARTING THE ASST. PR OCEEDINGS U/S.153A AND ONCE, THE NOTICE U/S.143(2) WAS NOT ISSUED WITHIN T HE PRESCRIBED TIME LIMIT, THE ASST. OUGHT TO HAVE BEEN HELD AS NULL AND VOID. 2. THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE ASST. WAS BARRED BY LIMITATION AND WITHOUT JURISDICTION SINCE THE ASST. ORDER WAS SERVED ON THE APPELLANT ON 11-01-2010 WHICH WAS BEYOND THE LIMITA TION PERIOD PRESCRIBED U/S.153B AND THEREFORE, THE ASST. ORDER OUGHT TO HAVE BEEN DECLARED NULL AND VOID. 3. THE LD.CIT(A) ERRED IN NOT ADMITTING THE ADDITIO NAL GROUND OF APPEAL RELATING TO THE ISSUE OF WARRANT OF AUTHORIZATION W ITHOUT APPRECIATING THAT THE ISSUE RAISED WAS PURELY LEGAL ISSUE AND SINCE A LL THE FACTS WERE ON RECORD, THE SAME OUGHT TO HAVE BEEN ADMITTED. 3.1 THE LD.CIT(A) FURTHER FAILED TO APPRECIATE THAT SINCE THE WARRANT OF AUTHORIZATION WAS ISSUED IN THE NAME OF MORE THAN O NE PERSON, THE SAME WAS NOT VALID AND ACCORDINGLY, THE ASST. COMPLETED U/S.153A WAS ILLEGAL AND WITHOUT JURISDICTION AND HENCE, THE SAME SHOULD HAVE BEEN HELD NULL AND VOID. 4. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION O N ACCOUNT OF INCOME FROM HOUSE PROPERTY OF RS.42,000/- WITHOUT APPRECIA TING THAT IN THE COURSE OF SEARCH, NO INCRIMINATING EVIDENCE WAS FOUND PERT AINING TO THIS ISSUE AND HENCE, NO ADDITION COULD BE MADE IN THE ASST. ORDER PASSED U/S.153A. 4.1 WITHOUT PREJUDICE, THE APPELLANT SUBMITS THAT T HE ADDITION MADE OF RS.42,000/- IS NOT JUSTIFIED AND THE SAME MAY KINDL Y BE DELETED. 5. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION O N ACCOUNT OF TREATING AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES OF RS.19,200/- WITHOUT APPRECIATING THAT IN THE COURSE OF SEARCH, NO INCRI MINATING EVIDENCE WAS FOUND PERTAINING TO THIS ISSUE AND HENCE, NO ADDITI ON COULD BE MADE IN THE ASST. ORDER PASSED U/S.153A. 3 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH 5.1 WITHOUT PREJUDICE, THE APPELLANT SUBMITS THAT THE ADDITION MADE OF RS.19,200/- IS NOT WARRANTED AT ALL AND THE SAME MA Y KINDLY BE DELETED. 6. THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE LD. AO HAD ERRED IN CHARGING INTEREST U/S.234A, 234B & 234C AND THE SAM E OUGHT TO BE DELETED. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. REFERRING TO THE ABOVE SAID GROUNDS, LD. AR FOR THE AS SESSEE BROUGHT OUR ATTENTION TO GROUND NOS. 1, 1.1 AND 1.2 AND SUBMITTED THAT THE SAID GROUNDS HAVE TO BE DECIDED AGAINST THE ASSESS EE IN VIEW OF THE BINDING HIGH COURT JUDGMENT IN THE CASE OF ASHOK CHADDHA VS. ITO REPORTED IN 337 ITR 399 (DEL.) WHICH IS RELEVANT FOR THE PR OPOSITION THAT THE ISSUE OF NOTICE U/S.143(2) OF THE ACT IS NOT MANDATORY IN A CASE OF THE ASSESSMENT MADE U/S.153A OF THE ACT. LD. AR FILED THE WR ITTEN NOTE RELYING ON THE SAID PROPOSITION. CONSIDERING THE CONCESSION GIVEN BY THE LD. AR FOR THE A SSESSEE IN THIS REGARD BY VIRTUE OF THE JUDGMENT OF HONBLE DELHI HIGH COURT CITED (SUPRA), THE SAID GROUND NOS. 1, 1.1 AND 1.2 ARE DISMISSED. 4. REFERRING TO THE GROUND NOS. 2, 3, AND 3.1, LD. AR FOR TH E ASSESSEE SUBMITTED THAT THE SAID GROUNDS ARE NOT BEING PRESSED. CONSIDERING THE CONCESSION GIVEN BY THE LD. AR, THE SAME ARE DISMISSED AS NOT PRESSED. 5. REFERRING TO THE GROUND NOS. 6 AND 7, LD. AR FOR THE A SSESSEE SUBMITTED THAT THE SAME ARE EITHER CONSEQUENTIAL OR GEN ERAL, AS THE CASE MAY BE. ACCORDINGLY, THE SAME ARE DISMISSED AS SUCH. THA T LEAVES THE 4 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH GROUNDS NOS. 4, 4.1, 5 AND 5.1 ARE ONLY TO BE ADJUDICATED BY US. RELEVANT FACTS ARE NARRATED AS FOLLOWS. 6. BRIEFLY STATED RELEVANT FACTS OF THE CASE FOR THE A.Y. 2 002-02 INCLUDE THAT THE ASSESSEE IS A PARTNER IN M/S. K.K. ESTATE ENTERPRISES, A REAL ESTATE DEALER. THERE WAS SEARCH AND SEIZURE ACTION ON THE ASSESSEE ON 18-09-2007. AO ISSUED NOTICE U/S.153A OF THE ACT CALLIN G FOR THE RETURNS IN FEBRUARY, 2008. ASSESSEE FILED THE RETURN OF INCOME ON 24-03-2008. AO ISSUED NOTICE U/S.143(2) OF THE ACT ON 12- 08-2009 AND COMPLETED THE ASSESSMENT DETERMINING THE ASSESSED INCOM E AT RS.1,35,750/- AGAINST THE RETURNED INCOME OF RS.74,550/-. AO MADE ADDITION ON ACCOUNT OF RENTAL INCOME FROM KONDHWA FLAT AMO UNTING TO RS.42,000/-. AO ALSO MADE ANOTHER ADDITION OF RS.19,200/- ON ACCOUNT OF CLAIM OF AGRICULTURAL INCOME. THE RELEVANT DISCUSSION ON TH ESE 2 ACCOUNTS ARE GIVEN IN PARA NOS. 3 TO 5 OF THE ASSESSME NT ORDER AND THE SAME ARE EXTRACTED BELOW : 3. THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF R S.19,200/-. IN MY DETAILED ORDER FOR A.Y. 2003-04 I HAVE REJECTED THE ASSESSEES CLAIM FOR AGRICULTURAL INCOME FOR THE VARIOUS YEARS INCLUDING THIS YEAR. ACCORDINGLY, THE CLAIM FOR AGRICULTURAL INCOME IS R EJECTED IN THIS YEAR ALSO AND THE INCOME OF RS.19,200/- IS TAXED AS INCOME FROM OTHER SOURCES. PENALTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED F OR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. IT WAS SEEN FROM THE BALANCE SHEET OF THE ASSESS EE THAT HE HAD HOUSE PROPERTIES AT LONAWALA AND AT ASHOK MEW, KOND HWA, PUNE. IN HIS RETURN OF INCOME THE ASSESSEE HAS NOT SHOWN INCOME FROM EITHER OF THESE PROPERTIES. THE ASSESSEES EXPLANATION WAS ASKED V IDE THIS OFFICE LETTER DATED 23-12-2009. THE ASSESSEE HAS EXPLAINED VIDE HIS LETTER DATED 29- 12-2009 THAT HE HAD PURCHASED 2 FLATS AT VIJAY NAGA R, LONAWALA AND JOINED BOTH THE FLATS AND IS USING THE SAME AS HIS RESIDENCE. AS REGARD THE FLAT AT PUNE, THE ASSESSEE HAS STATED THAT AS HE IS SUFFERING FROM HYPERTENSION AND DIABETES, HE HAS TO COME TO PUNE R EGULARLY FOR TREATMENT. THEREFORE, THE PUNE FLAT IS ALSO BEING USED BY HIM FOR HIS RESIDENCE. 5. AS PER THE PROVISIONS OF SUB-SECTION 4 OF SECTIO N 23 OF THE I.T. ACT, THE ASSESSEE IS NOT ENTITLED TO TREAT ONLY ONE OF T HE HOUSES AS SELF OCCUPIED. THE ANNUAL VALUE OF THE OTHER HOUSES HAS TO BE DETE RMINED AS IF IT HAD BEEN LET OUT. ACCORDINGLY, THE INCOME FROM THE KON DHWA FLAT IS COMPUTED 5 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH AS IT IS LET OUT. IN THE SUBSEQUENT YEARS THE ASSE SSEE HAS SHOWN RENT INCOME FROM THIS PROPERTY AT RS.60,000/-. ACCORDINGLY, THE ANNUAL VALUE OF THIS PROPERTY IS TAKEN AT RS.60,000/- AND PROPERTY INCOME COMPUTED ACCORDINGLY IS ADDED TO THE ASSESSEES INC OME. AS THE ASSESSEE CONCEALED THE PARTICULARS OF THIS INCOME P ENALTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED. 7. IN THE FIRST APPELLATE PROCEEDINGS, THE ABOVE TWO ADD ITIONS WERE CONFIRMED BY THE CIT(A) DISMISSING THE APPEAL OF THE ASSESSEE. BEFORE THE TRIBUNAL 8. DURING THE PROCEEDINGS BEFORE US, LD. AR FOR THE ASSES SEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS RELEVANT TO THE AD DITIONS IN QUESTION, I.E. RS.42,000/- ON ACCOUNT OF INCOME FROM KONDHWA FLAT AND RS.19,200/- ON ACCOUNT OF CLAIM OF AGRICULTURAL INCOME AND S UBMITTED THAT THE AO MADE THESE ADDITIONS (1) IN THE ABSENCE OF AN Y INCRIMINATING MATERIAL AND (2) BASED ON INFORMATION DISCLOSED IN THE BALANC E SHEET AND FINANCIAL STATEMENTS OF THE ASSESSEE ORIGINALLY DISCLOSED IN T HE RETURN SO INCOME FILED U/S.139(1) OF THE ACT. FURTHER, LD. AR SUBMITTED THAT THIS IS A CASE OF NON-ABATED ASSESSMENT AND THEREFORE, THE ADDITIONS CAN ONLY BE MADE WHICH ARE SUPPORTED BY THE SEIZED MATERIAL/INCRIMINAT ING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATIONS U/132 OF THE ACT. REFERRING TO THE ADDITION OF RS.42,000/- LD. AR BROUGHT OU R ATTENTION TO THE ABOVE EXTRACTED PARA NOS.4 AND 5 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE BALANCE SHEET CONTAINS TH E DETAILS OF HOUSE PROPERTY, SOURCE OF INFORMATION ABOUT THE PROPERTIES IN L ONAVALA AND KONDHWA. THE SAID PARAS DID NOT REFER TO ANY SEIZED MAT ERIAL WHATSOEVER THAT ASSISTED THE AO TO MAKE ADDITION ON THIS ACCOUNT. 6 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH SIMILARLY THE AO MADE ADDITION OF RS.19,200/- WHICH IS CLAIME D AS AGRICULTURAL INCOME BY THE ASSESSEE. IN THE ASSESSMENT , AO TOOK A DIFFERENT VIEW AND TAXED THE SAME AS INCOME FROM OTHER SO URCES. THEREFORE, LD. AR FOR THE ASSESSEE SUBMITTED THAT THE AO DID NOT HAVE ANY INCRIMINATING MATERIAL FOR THE AFORESAID ADDITION TOO. 9. LD. COUNSEL FILED A WRITTEN NOTE ON THESE ISSUES AND TH E SAME IS EXTRACTED HERE AS UNDER : 4] GROUND NO. 4 - 4.1 : ADDITION OF RS.42,000/- 4.1] THIS ISSUE HAS BEEN DISCUSSED BY THE LEARNED A.O. IN PARA 4 OF THE ASSESSMENT ORDER. THE LEARNED A.O. HAS MADE AN ADDI TION OF RS.42,000/- ON ACCOUNT OF INCOME FROM HOUSE PROPERTY. ACCORDING TO THE LEARNED A.O., AS PER THE BALANCE SHEET OF THE ASSESSEE, HE OWNED TWO FLATS AT LONAVALA AND PUNE. TILE A.O. HAS HELD THAT AS PER SECTION 23 (4) ONLY ONE FLAT CAN BE CONSIDERED AS SELF OCCUPIED AND THEREFORE, HE HAS C ONSIDERED THE ANNUAL VALUE OF THE FLAT AT KONDHWA, PUNE AT RS.60,000/- A ND AFTER REDUCING THE STANDARD DEDUCTION OF RS.1 8,000/-, HE HAS COMPUTED THE NET INCOME UNDER THE HEAD 'HOUSE PROPERTY' AT RS.42,000/-. THE LEARN ED CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE LEARNED A.O. THE ASSESSEE SUBMITS THAT FOR THIS YEAR, HE HAD FILED THE RETURN PRIOR T O SEARCH. THE COPY OF HIS RETURN IS ON PAGE 1 OF THE PAPER BOOK. THE COPY OF THE BALANCE SHEET FILED ALONG WITH THE RETURN IS ENCLOSED ON PAGES 2 - 9 OF THE PAPER BOOK. THE TWO FLATS OWNED BY THE ASSESSEE ARE CLEARLY DISCLOSED I N THE BALANCE SHEET. THE LEARNED A.O. HAS NOWHERE POINTED OUT ANY INCRIM INATING EVIDENCE FOUND AS A RESULT OF SEARCH IN RESPECT OF THIS ISSU E. ACCORDINGLY, SINCE THE ASST. FOR THIS YEAR IS NOT PENDING AS ON THE DATE O F SEARCH AND IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE, NO ADDITION CAN BE MADE IN THE ASST. COMPLETED U/S1 53A. FOR THIS PROPOSITION, THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY H.C. IN THE CASE OF DEEPAK KUMAR AGARWAL AND THE DECISION OF HON'BLE ITAT, PUN E IN THE CASE OF SHRI GAJENDRA PAWAR [ITA NO. 1009 -1012/PN/15]. ACCORDI NGLY, IN VIEW OF THE ABOVE DECISIONS, THE ASSESSEE SUBMITS THAT THE ADDI TION MADE ON ACCOUNT OF INCOME FROM HOUSE PROPERTY WITHOUT ANY INCRIMINA TING EVIDENCE IS BAD IN LAW AND THE SAME MAY KINDLY BE DELETED. 5] GROUND NOS. 5 - 5.1 : ADDITION OF RS.19,200/- 5.1] THIS ISSUE IS DISCUSSED BY THE A.O. IN PARA 3 OF THE ASST. ORDER. THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.19,200 /- IN HIS RETURN FILED PRIOR TO SEARCH. THE LEARNED A.O. HAS TAXED THE SAI D AMOUNT AS INCOME FROM OTHER SOURCES. THE ASSESSEE SUBMITS THAT ON TH IS ISSUE NO INCRIMINATING EVIDENCE WAS FOUND AS A RESULT OF SEAR CH AND IN VIEW OF THE ABOVE REFERRED DECISIONS, THE ADDITION MADE IS NOT WARRANTED. EVEN, THE LEARNED A.O. IN THE ASST. ORDER HAS NOT REFERRED TO ANY INCRIMINA TING EVIDENCE RELATING TO THIS ISSUE AND THEREFORE, THE ADDITION MADE IS NOT JUSTIFIED IN LAW. 7 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH 10. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO AND THE CIT(A). 11. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE AS WELL AS THE WRITTEN NOTE FURNISHED BY THE LD. AR FOR THE A SSESSEE. CONSIDERING THE UNDISPUTED POSITION IN THIS REGARD, WE ARE OF THE OPINION THAT THIS IS A CASE WHERE BOTH THE ADDITIONS ARE MADE W ITHOUT HAVING SUPPORT OF ANY INCRIMINATING MATERIAL AND THEREFORE, THEY C ONSTITUTE THE ADDITIONS TO BE MADE IN THE REGULAR ASSESSMENT ONLY. REGARDING THE REGULAR ASSESSMENT, IT IS A FACT THAT THE SAME IS AN UNABATED ASSESSMENT IN THIS CASE. RELEVANT FACTS INCLUDE T HAT THE ASSESSEE FILED THE RETURN U/S.139(1) OF THE ACT ON 22-11-2 000. RETURN WAS PROCESSED U/S.143(1A) OF THE ACT. THE DUE DATE FOR IS SUE OF NOTICE U/S.143(2) EXPIRED IN NOVEMBER, 2003. CONSIDERING THE ABOV E FACTS AS WELL AS CONSIDERING THE DECISION OF HONBLE JURISDICTION HIGH CO URT IN THE CASE OF CIT VS. DEEPAK KUMAR AGARWAL VIDE WRIT PETITION NO.1709/2014 AND OTHERS, DATED 11-09-2017 AND THE DECISION OF ITAT, PUNE IN THE CASE OF SHRI GAJENDRA PAWAR VIDE ITA NOS. 1009 -1012/PN/15, T HE TIME FOR ISSUE OF SAID STATUTORY NOTICE EXPIRED MUCH BEFORE THE SE ARCH ACTION U/S.132 OF THE ACT THAT TOOK PLACE ON 18-09-2007. IN T HIS FACTUAL MATRIX OF THE CASE, THE ASSESSMENT IS UNDISPUTEDLY A NON-ABATE D ASSESSMENT. THEREFORE, THE ADDITIONS, IF ANY HAVE TO BE MADE ONLY WITH THE SUPPORT OF ANY INCRIMINATING MATERIAL. CONSIDERING THE SAME, WE ARE OF T HE OPINION THAT THE ADDITIONS MADE BY THE AO BEING UNSUPPORTED B Y INCRIMINATING MATERIAL ARE NOT SUSTAINABLE TECHNICALLY. ACCORDINGLY, THE GROUNDS OF APPEAL NO. 4. 5 AND 5.1 RAISED BY THE ASSESSEE HAVE TO B E ALLOWED ON TECHNICAL GROUNDS. 8 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS. 473 TO 475/PUN/2012 A.YRS. 2003-04 TO 2005-06 13. BEFORE US, LD. AR FOR THE ASSESSEE SUBMITTED THAT ASS ESSEE RAISED THE ISSUE RELATING TO VALIDITY OF THE ASSESSMENT MADE BY T HE AO U/S.153A R.W.S. 143(3) OF THE ACT IN ALL THESE APPEALS AND GROUNDS OF APPEAL NOS. 1, 1.1 AND 1.2 FOR THE A.YRS. 2003-04 TO 2005-06 RELATE TO THIS ISSUE. HE FAIRLY SUBMITTED THAT THIS ISSUE HAS TO BE DECIDED AGAINS T THE ASSESSEE BY VIRTUE OF JUDGMENT IN THE CASE OF ASHOK CHADDHA VS. IT O REPORTED IN 337 ITR 399 (DEL.) WHICH IS RELEVANT FOR THE PROPOSITION THAT TH E ISSUE OF NOTICE U/S.143(2) IS NOT MANDATORY IN CASE OF THE ASSESSME NT MADE U/S.153A OF THE ACT. CONSIDERING THE CONCESSION GIVEN BY THE LD. AR FOR THE A SSESSEE, THE GROUNDS OF APPEAL NO.1, 1.1 AND 1.2 RAISED BY THE ASSE SSEE IN THESE APPEALS ARE DISMISSED IN VIEW OF THE JUDGMENT OF HONBLE DE LHI HIGH COURT IN THE CASE OF ASHOK CHADDHA VS. ITO (SUPRA). ACCO RDINGLY, THE SAID GROUNDS ARE DISMISSED FOR ALL THE A.YRS. 2003-04 TO 2005-06. 14. LD. AR FOR THE ASSESSEE SUBMITTED THAT GROUND NOS. 2 , 3 AND 3.1 RAISED BY THE ASSESSEE IN ALL THESE APPEALS ARE NOT BEIN G PRESSED. THEREFORE, THE SAID GROUNDS IN ALL THESE APPEALS ARE DISMISSED. 15. LD. AR FOR THE ASSESSEE SUBMITTED THAT GROUND NOS. 4 , 4.1, 5 AND 5.1 RELATES TO THE ADDITIONS MADE BY THE AO ARE ON ACCO UNT OF KONDHWA FLAT AND CLAIM OF AGRICULTURAL INCOME WITHOUT HAVING SUPPORT OF ANY INCRIMINATING MATERIAL WHATSOEVER. THE ISSUES ARE IDENTICAL T O THAT OF 9 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH A.Y. 2002-03. THEREFORE, THESE ADDITIONS MADE BY THE AO AR E UNSUSTAINABLE AND HAVE TO BE DELETED IN PRINCIPLE. 16. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUES RAISED BY THE ASSESSEE IN THESE APPEALS ARE IDENTICAL TO THAT OF ISSUES IN A.Y. 2002-03. WE HAVE ALREADY HELD THAT THESE ADDITIONS MADE BY THE A O ARE UNSUSTAINABLE AS THEY WERE MADE WITHOUT THE SUPPORT OF ANY INCRIMINATING MATERIAL AND THE REGULAR ASSESSMENT IS UNABAT ED ONE. THEREFORE, FOR THE REASONS MENTIONED BY US WHILE DECIDING T HE ISSUES IN THE A.Y. 2002-03, WE ALLOW THESE GROUNDS IN FAVOUR OF THE ASSESSEE FOR THE A.YRS. 2003-04 TO 2005-06 AS WELL. 17. ASSESSEE RAISED THE GROUND RELATING TO CHARGING OF I NTEREST U/S.234A, 234B AND 234C IN ALL THESE APPEALS. WE DISMISS T HE SAID GROUND IN ALL THESE APPEALS BEING CONSEQUENTIAL IN NATURE. 18. FURTHER, THERE IS COUPLE OF NEW ISSUES RAISED BY THE A SSESSEE FOR THE A.YRS. 2003-04 TO 2005-06 THAT REMAINS TO BE ADJUD ICATED. THE SAID GROUNDS ARE DISCUSSED IN THE FOLLOWING PARAGRAPHS. 19. THE FIRST COMMON ISSUE THAT IS RAISED BY THE ASSESSE E IN THE APPEALS FOR A.YRS 2003-04 TO 2005-06 IS ON THE DISALLOWANC E MADE BY THE AO U/S.40A(3) OF THE ACT. THE SAID GROUND READS AS UNDER : 6. THE LD.CIT(A) ERRED IN CONFIRMING THE DISALLOWA NCE MADE U/S.40A(3) OF RS.2,16,485/- WITHOUT APPRECIATING THAT IN THE C OURSE OF SEARCH, NO INCRIMINATING EVIDENCE WAS FOUND PERTAINING TO THIS ISSUE AND HENCE, NO ADDITION COULD BE MADE IN THE ASST. ORDER PASSED U/ S.153A. 6.1 THE LD.CIT(A) FAILED TO APPRECIATE THAT THE LAN D PURCHASED BY THE APPELLANT WAS HIS CAPITAL ASSET AND NOT A TRADING A SSET AND THEREFORE, THE PROVISIONS OF SECTION 40A(3) WERE NOT APPLICABLE AN D HENCE, THE DISALLOWANCE MADE U/S.40A(3) OUGHT TO HAVE BEEN DEL ETED. 10 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH 20. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE OFFERED THE SAME AS EXEMPT INCOME CONSIDERING THE AGRICULTURAL NATURE OF TH E LAND. HOWEVER, THE AO TREATED THE SAME AS BUSINESS INCOME. T HE ARGUMENTS OF THE LD. AR FOR THE ASSESSEE BEFORE US ARE THAT THE A O DID NOT HAVE ANY INCRIMINATING MATERIAL AND THE ADDITIONS MADE BY THE AO AR E UNSUSTAINABLE. LD. AR DREW OUR ATTENTION TO THE ASSESSM ENT AS WELL AS THE APPELLATE ORDERS AND DEMONSTRATED THE ABSENCE OF A NY INCRIMINATING MATERIAL SUPPORT THE ABOVE VIEWS AND DISCLOSURE OF THE SA ID INFORMATION IN THE RETURNS OF THE ASSESSEE WELL BEFORE THE SEARCH A ND SEIZURE ACTION TOOK PLACE ON THE ASSESSEE, I.E. ON 18-09-2007. IN THIS REGARD, LD. AR SUBMITTED A WRITTEN NOTE AND THE SAID SUBMISSIONS ARE EX TRACTED HERE AS UNDER : 6] GROUND NO. 6 - 6.1: ADDITION U/S 40A(3) OF RS.2 ,16,485/- -- 6.1] THIS ISSUE IS DISCUSSED BY THE LEARNED A.O. IN PARA 18 OF HIS ORDER. ACCORDING TO HIM, THE ASSESSEE HAD PURCHASED LANDS WHICH WERE SHOWN AS AN INVESTMENT BY THE ASSESSEE. THE LEARNED A. O . HAS CONSIDERED THE LANDS PURCHASED AS STOCK IN TRADE. NOW, THE LANDS P URCHASED ARE DULY ACCOUNTED IN THE BOOKS. THE CASH PAID BY THE ASSESS EE FOR PURCHASE OF LAND AND TREATED AS AN INVESTMENT IS DULY ACCOUNTED IN THE BOOKS. THE A.O. HAS DISALLOWED THE PAYMENT MADE U/S 40A(3). THE ASSESSEE SUBMITS THAT ALL THE AMOUNTS ARE DULY ACCOUNTED IN THE BOOK S AND IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE, NO ADDITION IS WARRANTE D IN THE HANDS OF THE ASSESSEE. THE ASSESSEE PLACES RELIANCE ON THE DECIS IONS OF HON'BLE BOMBAY H.C. IN THE CASE OF DEEPAK KUMAR AGARWAL AND THE DECISION OF HON'BLE ITA , PUNE IN THE CASE OF SHRI GAJENDRA PAW AR [ITA NO. 1009- 1012/PN/15]. ACCORDINGLY, THE DISALLOWANCE MADE IS NOT JUSTIFIED . 21. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 22. AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDE RS OF THE REVENUE AS WELL AS THE WRITTEN SUBMISSIONS OF THE ASSESS EE, WE ARE OF THE OPINION THAT THE ASSESSMENTS MADE BY THE AOS ARE NON- ABATED ASSESSMENTS. THE ADDITION MADE BY THE AO ON THIS ISSUE CANNOT BE SUSTAINED ON TECHNICAL GROUNDS IN THE ABSENCE OF ANY INCR IMINATING 11 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH MATERIAL. THUS, WE DIRECT THE AO TO DELETE THE DISALLOWANCE U/S.40A(3) OF THE ACT IN ALL THESE ASSESSMENT YEARS UNDER CONSIDERAT ION. ACCORDINGLY, THE GROUND NO. 6 AND 6.1 RAISED BY THE ASSESSEE IN THE APPEALS FOR A.YRS. 2003-04 TO 2005-06 STANDS ALLOWED IN FAVOUR OF THE ASSESSEE TECHNIC ALLY. 23. THE SECOND COMMON ISSUE THAT IS RAISED BY THE ASSES SEE FOR THE A.YRS. 2003-04 AND 2005-06 IS ON THE ADDITION OF RS.2,20,277 /- FOR THE A.Y.2003-04 AND RS.9,89,248/- FOR THE A.Y. 2005-06. ON THIS ISSUE, THE GROUNDS RAISED BY THE ASSESSEE FOR A.Y. 2003-04 READ AS UNDER : 7. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF 2,20,277/- (4,36,762-2,16,486) BY TREATING THE GAIN ON SALE OF AGRICULTURAL LAND AS BUSINESS INCOME AS AGAINST THE CLAIM OF THE ASSESSE E THAT THE SAID GAIN WAS EXEMPT FROM TAX AND WITHOUT APPRECIATING THAT N O SUCH ADDITION COULD BE MADE IN THE ASST. U/S.153A PARTICULARLY BECAUSE NO INCRIMINATING EVIDENCE WAS FOUND IN THE COURSE OF SEARCH PERTAINI NG TO THIS ISSUE. 7.1 THE LD.CIT(A) ERRED IN HOLDING THAT THE GAIN AR ISING ON SALE OF LAND OF RS.2,20,277/- WAS TAXABLE AS BUSINESS INCOME ON THE GROUND THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN LANDS AND HENCE, THE GAIN WAS TAXABLE AS BUSINESS INCOME. 7.2 THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ASS ESSEE HAS HELD THE LANDS AS AN INVESTMENT AND THE ASSESSEE WAS NOT ENGA GING IN THE BUSINESS OF TRADING IN LANDS AND THEREFORE, THE GAI N ARISING ON SALE OF THE LANDS WAS NOT TAXABLE AS BUSINESS INCOME OF THE ASS ESSEE. 7.3 THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT TH E LANDS SOLD BY THE ASSESSEE WERE AGRICULTURAL LANDS AND SINCE THOSE LA NDS WERE HELD AS AN INVESTMENT, THE GAIN ARISING ON SALE OF SUCH LANDS WERE EXEMPT FROM TAX. 24. IN CONNECTION WITH THE ABOVE ISSUE, LD. AR FOR THE A SSESSEE FILED THE WRITTEN SUBMISSIONS AND THE SAME IS EXTRACTED IS HERE AS UNDER : 7] GROUND NOS. 7 - 7.3 : TREATING GAIN ON SALE OF LAND AS BUSINESS INCOME - 7.1] THE ASSESSEE HAS SOLD COUPLE OF LANDS IN THIS YEAR AND THE GAIN THEREOF WAS CLAIMED AS AN EXEMPT SINCE THE SAID LAN DS WERE AGRICULTURAL LANDS. THE DETAILS OF LAND SOLD ARE GIVEN ON PAGE 1 6A OF THE PAPER BOOK. THE LEARNED A.O. HAS TAXED THE GAIN ON SALE OF LAND AS BUSINESS INCOME. THE ASSESSEE SUBMITS THAT IN THE ORIGINAL RETURN FI LED PRIOR TO THE SEARCH, THE RELEVANT DETAILS WERE DULY SUBMITTED OF THE SAL E OF LAND. THE COPY OF THE RETURN IS ON PAGES 1 - 6 OF THE PAPER BOOK. IN THE COURSE OF SEARCH, THE DEPT. HAS NOT FOUND ANY INCRIMINATING EVIDENCE RELAT ING TO THIS ISSUE. THE 12 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH LEARNED A.O. HAS ALSO NOT REFERRED TO ANY INCRIMINAT ING EVIDENCE RELATING TO THIS ISSUE IN THE ASST. ORDER. ACCORDINGLY, IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE, NO ADDITION CAN BE MADE ON T HIS ISSUE. 25. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE A O AND THE CIT(A). 26. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AS WELL AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. CONSIDER ING THE FACT THAT THE ASSESSMENTS MADE BY THE AOS ARE NON-ABATED ASSESSMENTS, WE ARE OF THE OPINION THAT THE ADDITION MADE BY THE AO ON T HIS ISSUE CANNOT BE SUSTAINED ON TECHNICAL GROUNDS IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THUS, WE CONCUR WITH THE ARGUMENTS OF THE LD. A R FOR THE ASSESSEE AND THEREFORE, DIRECT THE AO TO DELETE THE ADD ITION MADE BY THE AO IN THESE ASSESSMENT YEARS UNDER CONSIDERATION. ACCOR DINGLY, THE GROUND NO. 7 AND 7.3 RAISED BY THE ASSESSEE IN THE APPE ALS FOR A.YRS. 2003-04 AND 2005-06 STANDS ALLOWED IN FAVOUR OF THE ASSE SSEE TECHNICALLY. 27. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR THE A .YRS. 2003-04 TO 2005-06 ARE PARTLY ALLOWED. 28. TO SUM UP, ALL THE APPEALS OF THE ASSESSEE FOR THE A.Y RS. 2002-03 TO 2005-06 ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 03 RD DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 03 RD AUGUST, 2018. SATISH 13 ITA NOS.472 TO 475/PUN/2012 MRS. BILKIS K. SHAIKH LEGAL HEIR OF SHRI KADIR USMAN SHAIKH # # # # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) CENTRAL, PUNE. 4. THE CIT CENTRAL, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.