DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(2), MUMBAI V. SAMEER NERURKAR, MUMBAI

ITA 4883/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5361 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALARA
• Section: 143(3); 153A; 143(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4891/MUM/2017 ASSESSMENT YEAR: 2007-08 & ITA NO. 4883/MUM/2017 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, CC-6(2), R. NO.1903, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400 021. VS. SHRI SAMEER NERURKAR, G-8, SHRIKANT CHAMBERS, NEXT TO R K STUDIO, SION TROMBAY ROAD, CHEMBUR, MUMBAI-400 071. PAN NO. AADPN7509C APPELLANT RESPOND ENT REVENUE BY : MS. VIDISHA KALARA, CIT-DR ASSESSEE BY : MR. GAURAV KABRA, AR DATE OF HEARING : 18/10/2019 DATE OF PRONOUNCEMENT: 31/10/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5 4, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 144 R.W.S 153A OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSU ES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOL IDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 2 ITA NO. 4891/MUM/2017 ASSESSMENT YEAR: 2007-08 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN GRANTING RELIEF TO THE ASSESSEE WHILE HOLDING THAT NO ADDITION CAN BE MADE IN RESPECT OF AN UNABATED ASSESSMENT WHICH HAS BECOME FINAL IF NO IN CRIMINATING MATERIAL IS FOUND DURING THE SEARCH 3. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) SUBMITS THAT THERE IS A CONCEPTUAL DIFFERENCE BETWEEN SECTION 14 3(1) AND 143(3) AS POINTED OUT BY THE HONBLE SUPREME COURT IN ACIT V. RAJESH JHAVERI STOCK BROCKERS (P) LTD. 161 TAXMAN 316 (SC) AND EXPLAINS THAT INTIMATION U/S.143(1)(A) CANNOT BE TREATED TO BE AN ORDER OF A SSESSMENT. IT IS EXPLAINED THAT THE ORDER OF THE SUPREME COURT IN RAJESH JHAVERI (SUPRA) HAS NOT BEEN DISCUSSED BY THE HONBLE BOMBAY HIGH C OURT IN CONTINENTAL WAREHOUSING CORPORATION DECIDED ON 21.04.2015. RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT V. KABUL CHAWLA (61 TAXMANN.COM 412), THE LD. DR SUBMITS THAT THERE IS A WIDE DEFINITION OF INCRIMINATING MATERIAL WHICH INC LUDES (I) A STATEMENT IN THE COURSE OF SEARCH, (II) BOOKS OF ACCOUNTS AND OT HER DOCUMENTS AND (III) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN SEARCH . IT IS FURTHER SUBMITTED THAT IF INTIMATION U/S. 14 3(1)(A) AND ASSESSMENT U/S.143(3) ARE EQUATED AND THE FORMER IS HELD AS ASSESSMENT, THEN IT LEAD TO A SITUATION WHICH IS BASICALLY AGAI NST THE PROVISIONS OF SECTION 153A. FURTHER, IT IS STATED BY THE LD. DR T HAT (I) NO EXPRESSION AS ABATED ASSESSMENT VERSUS NON-ABATED ASSESSMENT IS I N THE ACT, (II) ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 3 REPEATED USAGE OF ASSESSMENT OR RE-ASSESSMENT IS TH ERE IN SECTION 153A, (III) THERE IS LIMITED SIGNIFICANCE OF SECOND PROVI SO TO SECTION 153A (1). THUS IT IS ARGUED THAT HARMONIOUS CONSTRUCTION OF V ARIOUS SECTIONS OF THE ACT INCLUDING 153A PROVISIONS CANNOT BE ACHIEVE D IN A SITUATION WHERE ONLY INTIMATION U/S. 143(1)(A) HAS BEEN ISSUED PRIO R TO THE DATE OF SEARCH AND IN POST-SEARCH, THE AO IS NOT ALLOWED TO SCRUTI NIZE THE RETURNED INCOME. THUS, THE LD. DR MENTIONS THAT THE AO HAS WIDE POWE R TO MAKE AN ASSESSMENT/RE-ASSESSMENT FOR ALL THE SIX YEARS MAND ATORILY, IN CASE NO 143(3) WAS DONE PRIOR TO SEARCH PROCEEDINGS. IT IS CLARIFIED FURTHER THAT NO ASSESSMENT U/S.143( 3) WAS DONE IN ALL THESE CASES PRIOR TO SEARCH AND HENCE THERE WAS NO OCCASION FOR AO TO EXAMINE THE BOOKS OF ACCOUNTS AND THUS NO SCRUTINY HAD TAKEN PLACE. THE LD. DR THUS SUBMITS THAT AS PER THE LANGUAGE AN D SPIRIT OF SECTION 153A, THE AO HAS WIDE JURISDICTION FOR ALL THE ASSE SSMENT YEARS IN ASSESSEES CASE. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT THE ISSUE IN THE PRESENT APPEAL IS DECIDED IN ITS FAVOU R BY THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. CONTINENTAL WAREHOUSING CORPORATION (2016) 374 ITR 645 (BOM). THEREFORE, IT IS STATED B Y HIM THAT THE ORDER PASSED BY THE LD. CIT(A) BE AFFIRMED. 5. THE SHORT QUESTION HERE IS : WHETHER ADDITION CAN BE MADE IN RESPECT OF AN UNABA TED ASSESSMENT WHICH HAS BECOME FINAL IF NO INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH ? ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE REASONS FOR A DEC ISION ARE GIVEN BELOW. IN THE INSTANT CASE, WE FIND THAT FOR A.Y. 2007-0 8, THE LD. CIT(A) HAS CONFIRMED AND ADDITION OF RS.14,80,000/-, RS.10,68, 230/-, WHEREAS HE HAS DELETED RS.1,12,000/-, RS.2,00,000/-, RS.1,22,49,90 0/-. SIMILARLY, WE FIND THAT FOR A.Y. 2008-09, THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.18,00,000/- MADE BY THE AO, WHER EAS HE HAS DELETED THE DISALLOWANCE OF RS.1,15,000/-, RS.1,50,000/-, RS.1, 02,22,625/-, RS.64,000/-, RS.2,48,271/-, RS.25,33,229/-, RS.14,2 5,643/-. WE FIND THAT THE LD. CIT(A) HAS CONFIRMED OR DELET ED THE ADDITION/DISALLOWANCE FOR THE ABOVE TWO ASSESSMENT YEARS ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. IN THE CASE OF SKS ISPAT & POWER LIMITED (2017) 298 ITR 584, THE HONBLE BOMBAY HIGH COURT AFTER REFERRING TO ITS OW N DECISION IN CONTINENTAL WAREHOUSING CORPORATION (SUPRA) AND CIT V. GURINDER SINGH BAWA (2016) 386 ITR 483 (BOM)HAS HELD THE FOLLOWING: IN CASE OF CIT V. GURINDER SINGH BAWA AND IN THE C ASE OF CIT V. CONTINENTAL WAREHOUSING CORPORATION & ANR. (REFERRED TO SUPRA), IT HAS BEEN OBSERVED THAT SECTION 153A CANNOT BE A TOOL TO HAVE A SECOND INNI NG OF ASSESSMENT EITHER TO THE REVENUE OR THE ASSESSEE. EVEN IN CASE OF CIT V. GURINDER SINGH BAWA (REFERRED TO SUPRA) THE ASSESSMENT WAS UNDER SECTIO N 143(1) OF THE ACT AND THE COURT HELD THAT THE SCOPE OF ASSESSMENT AFTER SEARC H UNDER SECTION 153A WOULD BE LIMITED TO THE INCRIMINATING EVIDENCE FOUND DURI NG THE SEARCH AND NO FURTHER. IN THE SAID JUDGMENT, THE JUDGMENT OF COURT IN CIT V. CONTINENTAL WAREHOUSING CORPORATION & ANR. (REFERRED TO SUPRA) HAS BEEN FOL LOWED. CONSIDERING THE AUTHORITATIVE PRONOUNCEMENTS OF COU RT IN ABOVE REFERRED CASES ONE OF WHICH IS ALSO WITH REGARD TO ASSESSMENT UNDE R SECTION 143(1), THE ISSUE IS NO LONGER RES INTEGRA AND STANDS CONCLUDED IN TH E ABOVE REFERRED JUDGMENTS. ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 5 SECTION 153A COULD NOT BE TOOL TO HAVE SECOND INNIN G OF ASSESSMENT EITHER TO REVENUE OR ASSESSEE THUS SCOPE OF ASSESSMENT AFTER SEARCH U/S 153A WOULD BE LIMITED TO INCRIMINATING EVIDENCE FOUND DURING SEAR CH. 5.1 IN RESPONSE TO A QUERY RAISED BY THE BENCH TO E XPLAIN THE ADDITIONS MADE WITH REGARD TO INCRIMINATING DOCUMENTS, THE LD . DR HAS FILED A WRITTEN SUBMISSION STATING THAT THE SAME IS CONTAIN ED IN PARA 7.3.6 FOR A.Y. 2007-08 & A.Y. 2008-09. AS MENTIONED EARLIER, LD. CIT(A) HAS CONFIRMED OR DELETED THE ADDITION/DISALLOWANCE FOR THE ABOVE TWO ASSESSMENT YEARS ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. 6. IN HDFC BANK LTD. V. DCIT (2016) 383 ITR 529 (BOM), THE HONBLE BOMBAY HIGH COURT AT PARA 23 HAS HELD: WE ARE CONSCIOUS OF THE FACT THAT WE ARE FALLIBLE AND, THEREFORE, AN ORDER PASSED BY US MAY NOT MEET THE APPROVAL OF ALL AND SOME MAY JUSTIFIABLY CONSIDER OUR ORDER TO BE INCORRECT. HOWEVER THE SAME HAS TO BE C ORRECTED/RECTIFIED IN A MANNER KNOWN TO LAW AND NOT BY DISREGARDING BINDING DECISIONS OF THIS COURT. IN FACT OUR COURT IN PANJUMAL HASSOMAL ADVANI VS. HARPAL SINGH ABNASHI S INGH SAWHNEY & ORS . AIR 1975(BOM) 120 HAS OBSERVED THAT A COORDINATE BENCH CANNOT REFUSE TO FOLLOW AN EARLIER DECISION ON THE GROUND THAT IT IS INCORRECT AND / OR RENDERED ON MISINTERPRETATION. THIS FOR THE RE ASON THAT THE DECISION OF A COORDINATE BENCH WOULD CONTINUE TO BE BINDING TILL IT IS CORRECTED BY A HIGHER COURT. THIS PRINCIPLE LAID DOWN IN RESPECT OF A COO RDINATE COURT WOULD APPLY WITH GREATER FORCE ON SUBORDINATE COURTS AND TRIBUN ALS. WE ARE ALSO CONSCIOUS OF THE FACT THAT WE ARE NOT FINAL AND OUR ORDERS AR E SUBJECT TO APPEALS TO THE SUPREME COURT. HOWEVER, FOR THE PURPOSES OF CERTAIN TY, FAIRNESS AND UNIFORMITY OF LAW, ALL AUTHORITIES WITHIN THE STATE ARE BOUND TO FOLLOW THE ORDERS PASSED BY US IN ALL LIKE MATTERS, WHICH BY ITSELF IMPLIES THA T IF THERE ARE SOME DISTINGUISHING FEATURES IN THE MATTER BEFORE THE TR IBUNAL AND, THEREFORE, UNLIKE, THEN THE TRIBUNAL IS FREE TO DECIDE ON THE BASIS OF THE FACTS PUT BEFORE IT. HOWEVER TILL SUCH TIME AS THE DECISION OF THIS COUR T STANDS IT IS NOT OPEN TO THE TRIBUNAL OR ANY OTHER AUTHORITY IN THE STATE OF MAH ARASHTRA TO DISREGARD IT WHILE CONSIDERING A LIKE ISSUE. IN CASE WE ARE WRONG, THE AGGRIEVED PARTY CAN CERTAINLY TAKE IT UP TO THE SUPREME COURT AND HAVE IT SET ASI DE AND / OR CORRECTED OR WHERE THE SAME ISSUE ARISES IN A SUBSEQUENT CASE TH E ISSUE MAY BE REURGED BEFORE THE COURT TO IMPRESS UPON IT THAT THE DECISI ON RENDERED EARLIER, REQUIRES ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 6 RECONSIDERATION. IT IS NOT OPEN TO THE TRIBUNAL TO SIT IN APPEAL FROM THE ORDERS OF THIS COURT AND NOT FOLLOW IT. IN CASE THE DOCTRINE OF PRECEDENT IS NOT STRICTLY FOLLOWED THERE WOULD COMPLETE CONFUSION AND UNCERTA INTY. THE VICTIM OF SUCH ARBITRARY ACTION WOULD BE THE RULE OF LAW OF WHICH WE AS THE INDIAN STATE ARE SO JUSTIFIABLY PROUD. FURTHER, IN EAST INDIA COMMERCIAL CO. LTD. V. COLLECTOR OF CUST OMS, AIR 1962 SC 1893, IT HAS BEEN HELD BY THE HONBLE SUPREME CO URT THAT THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE IS BINDI NG ON AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE, AND THAT THEY CANNOT IGNORE IT EITHER IN INITIATING A PROCEEDING OR DECIDING ON THE RIGHT S INVOLVED IN SUCH A PROCEEDING. 7. AS MENTIONED EARLIER, IN THE CASE OF GURINDER SINGH BAWA (SUPRA), THE ASSESSMENT WAS UNDER SECTION 143(1) AND THE HONBLE BOMBAY HIGH COURT HELD THAT THE SCOPE OF ASSESSMENT AFTER SEARCH U/S 153A WOULD BE LIMITED TO THE INCRIMINATING EVIDENCE FOUND DURING THE SEAR CH AND NO FURTHER. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD TH E ORDER OF THE LD. CIT(A). FACTS BEING IDENTICAL, OUR DECISION FOR THE A.Y. 2007-08 APPLIES MUTATIS MUTANDIS TO A.Y. 2008-09. 8. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2019 SD/ SD/- (SAKTIJIT DEY) (N.K. PRADHAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 31.10.2019 S. SAMANTA, P.S.( ON TOUR) ITA 4883 & 4891/MUM/2019/A.Y.2008-09 & 2007-08 SAMEER NERURKAR 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI