DCIT CEN CIR 8(1), MUMBAI V. SILVER SAND BEACH INN P.LTD, THANE

ITA 4907/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4447 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA LD
• Section: 143(3); 80HHC; 153A; 263; 132

Judgement Text

ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.4907/MUM/2016 ( ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-8(1) ROOM NO.656, 6 TH FLOOR AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. SILVER SAND BEACH INN. PRIVATE L TD. ROOM NO.505, 5 TH FLOOR NB-1, MAHAVIR NAGAR MANPADA ROAD, DOMBIVALI (E) THANE PAN : AADCR-5784-L ( ! APPELLANT ) : ( '# ! RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : S.PADMAJA, LD. DR $ DATE OF HEARING : 25/07/2018 %&' / DATE OF PRONOUNCEMENT : 08/08/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2008-09 CONTEST THE COMMON ORDER OF LD. COMMISSIONER OF INC OME-TAX (APPEALS)-50 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-50/IT-123/2014-15 DATED 31/03/2015 QUA DELETION OF CERTAIN ADDITION OF RS.12.70 CRORES U/S ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 2 68 AS MADE BY LD. AO BY RELYING UPON THE DECISION O F HONBLE BOMBAY HIGH COURT RENDERED IN CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE, MS. S. PADMAJA, LD. CIT DR. 2. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-8(1), MU MBAI [AO] U/S 143(3) READ WITH SECTION 153C OF THE INCOME TAX ACT ,1961 ON 30/03/2015 WHEREIN THE ASSESSEE HAS BEEN SADDLED WI TH IMPUGNED ADDITIONS OF RS.12.70 CRORES U/S 68.THE ASSESSEE WA S SUBJECTED TO PROCEEDINGS U/S 153C PURSUANT TO SEARCH & SEIZURE O PERATIONS U/S 132 ON 09/01/2013 IN THE GROUP CASES BELONGING TO M/S ENPAR . THE QUANTUM ASSESSMENT ORDER AT PARA-3 RECORD A FINDING THAT THE TRIAL BALANCES BELONGING TO ASSESSEE FOR THE PERIOD APRIL 2010 TO MARCH 2011, APRIL 12 TO 9.1.2013 & APRIL 2011 TO MARCH 2012 WERE SEIZED. IN RESPONSE TO NOTICE U/S 153C, THE ASSESSEE OFFERED THE SAME RETU RN OF INCOME AS FILED U/S 139(1) AT RS.41,400/-. 3. FROM THE PERUSAL OF FINANCIAL STATEMENTS, IT WAS FOUND THAT THE ASSESSEE RAISED A SUM OF RS.12.70 CRORES BY WAY OF ISSUE OF SHARE CAPITAL FROM FIVE PARTIES, THE DETAILS OF WHICH HAV E ALREADY BEEN EXTRACTED AT PARA-7 OF THE QUANTUM ASSESSMENT ORDER. THE LD. AO, NOT S ATISFIED WITH CREDITWORTHINESS OF THE SHARE ALLOTTEES , ADDED THE AFORESAID AMOUNT TO THE INCOME OF THE ASSESSEE AS CASH CREDIT U/S 68. ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 3 4. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 31/03/2015 WHE REIN THE MATTER WAS CONCLUDED IN THE FOLLOWING MANNER:- 7. DECISION ON GROUND NO.3: 7.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE AO AND SUBMISSIONS OF THE AR. I FIND THAT THOUGH THE DOCUMENTS RELIED UPON BY THE AO FOR INITIATING THE PROCEEDINGS U/C 153C FOR AY 2007-08 TO AY 2012-13 P ERTAIN TO PERIOD AY 2010-11, 2011-12 AND 2013-14, NO ADDITIONS HAVE BEEN MADE IN THOSE ASSESSMENT YEARS. THE ONLY ASSESSMENT YEAR IN WHICH ADDITIONS HAVE BE EN MADE IS THE AY 2008-09. EVEN IN THAT ASSESSMENT YEAR, THE ADDITIONS MADE WE RE NOT BASED ON THE DOCUMENTS AS RELIED UPON BY THE AO. THIS CLEARLY SH OWS THAT NO INCRIMINATING DOCUMENTS RELATING TO THE APPELLANT WAS SEIZED FOR A.Y.2008-09. I ALSO FIND THAT THE ASSESSMENT FOR A.Y. 2008-09 WAS COMPLETED U/S 143(3 ) R.W.S. 147 OF THE ACT. BEFORE THE DATE OF INITIATION OF THE SEARCH. 7.2 IN PARA 9.6 OF THE ASSESSMENT ORDER, THE AO HAS RELIED ON THE ORDER OF THE HONBLE BOMBAY HIGH-COURT IN THE CASE OF MURLI AGRO PRODUCTS LTD IN ITA NO. 36 OF 2009. IN PARA 13 OF THAT ORDER, THE HON'BLE BOMBAY HIGH COURT OBSERVED AS UNDER: '13. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80HH C WAS ERRONEOUS. IN SUCH A CASE, THE AO. WHILE PASSING THE ASSESSMENT O RDER UNDER SECTION 153A READ WITH SECTION 143(3) COULD NOT HAVE DISTUR BED THE ASSESSMENT ORDER FINALIZED ON 29.12.2000 RELATING TO SECTION 8 0HHC DEDUCTION AND CONSEQUENTLY THE C.I.T. COULD NOT HAVE INVOKED JURI SDICTION UNDER SECTION 263 OF THE ACT.' 7.3 THUS, THE HIGH COURT OBSERVED THAT THE A.O., WH ILE PASSING THE ASSESSMENT ORDER UNDER SECTION 153A R.W.S. 143(3) COULD NOT HA VE DISTURBED THE ASSESSMENT ORDER ALREADY FINALIZED AS THERE WAS NOTHING ON REC ORD TO SUGGEST THAT ANY MATERIAL HAD BEEN UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80HHC WAS ERRONE OUS. FROM THIS THE AO WRONGLY INFERRED THAT THE HON'BLE BOMBAY HIGH COURT HAD HEL D THAT HAD ANY MATERIAL BEEN UNEARTHED DURING THE 153A PROCEEDINGS, THE A.O. WHI LE PASSING THE ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) C OULD HAVE DISTURBED THE ASSESSMENT ORDER ALREADY FINALIZED. 7.4 THE AO ALSO RELIED ON THE ORDER OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. (274 CTR 122) (KA RNATAKA) WHEREIN THE HON'BLE COURT HELD THAT THE ASSESSING OFFICER CAN D ETERMINE THE TOTAL INCOME OF THE ASSESSEE TAKING INTO CONSIDERATION THE MATERIALS WH ICH WAS THE SUBJECT-MATTER OF EARLIER RETURN AND THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND ALSO ANY OTHER INCOME WHICH COMES TO HIS NOTICE IN COURSE OF PROCEEDINGS U/S 153A. ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 4 7.5 THE HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX-II, THANE US CONTINENTAL WAREHOUSING COR PORATION (NHAVA SHEVA) LTD, BHARATI VIDYAPEETH MEDICAL FOUNDATION, IT HAS BEEN HELD THAT NO ADDITIONS CAN BE MADE FOR UNABATED ASSESSMENTS WHICH HAVE ACHIEVED F INALITY AND FOR WHICH NO INCRIMINATING MATERIAL HAS BEEN FOUND. 7.6 THUS, I FIND THAT THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IS CONTRARY TO THE DECISION OF THE JURISDICTIONAL HIGH COURT (BOMB AY HIGH COURT). HOWEVER, THE DECISION OF THE JURISDICTIONAL COURT IS BINDING ON ME. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL BOMBAY H IGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX-11, THANE VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD, I HOLD THAT THE AO WAS NOT JUSTI FIED IN MAKING THE ADDITION. ACCORDINGLY, I DIRECT THE AO TO DELETE THE ADDITION OF RS 12,70,00,000/-. 7.7 THERE IS NO NEED TO DECIDE THE SUSTAINABILITY O F THE ADDITION ON MERIT BECAUSE THAT WOULD BE A FUTILE EXERCISE. 7.8 IN THE RESULT, THE GROUND OF APPEAL IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. THE LD. CIT DR, MS. S. PADMAJA SUBMITTED THAT THE ASSESSEE MISERABLY FAILED TO PROVE THE CREDITWORTHINESS OF T HE SHARE ALLOTTEES AND THEREFORE, THE ADDITIONS WERE JUSTIFIED. 6. WE HAVE CAREFULLY HEARD THE SUBMISSIONS AND PERU SED THE MATERIAL AS AVAILABLE ON RECORD. UPON CAREFUL CONSIDERATION, FROM THE FINDINGS OF LD. AO AT PARA-3, IT IS EVIDENT THAT THE TRIAL BALANCES BELONGING TO THE ASSESSEE FOR OTHER AYS WERE FOUND DURING SEARCH OPE RATIONS. NOTHING ON RECORD SUGGEST THAT THERE WAS ANY INCRIMINATING MAT ERIAL QUA IMPUGNED ASSESSMENT YEAR. THIS FACT REMAINS UNCONTROVERTED. THE ORIGINAL ASSESSMENT HAD ALREADY COMPLETED U/S 143(3) READ WITH SECTION 147 BEFORE THE DATE OF INITIATION OF SEARCH. HAVING NOT ED SO, WE FIND THAT THE FACTS OF THE CASE GET SQUARELY COVERED BY OUR JURIS DICTIONAL BOMBAY HIGH COURT RENDERED IN CIT VS. CONTINENTAL WAREHOUSING CORPORATION [2015 374 ITR 645]. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE DELHI HIGH C OURT IN CIT VS. KABUL CHAWLA [380 ITR 573]. FURTHER, UPON PERUSAL OF SLP ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 5 NO. 18560 OF 2015 DATED 12/10/2015 ADMITTED BY HONBLE SUPREME COURT AGAINST THE DECISION OF HONBLE BOMBAY HIGH C OURT RENDERED IN CIT VS. CONTINENTAL WAREHOUSING CORPORATION [SUPRA] , WE FIND THAT HONBLE APEX COURT HAS ONLY ADMITTED SLP AGAINST TH E RULING OF THE HON'BLE BOMBAY HIGH COURT'S FINDING THAT NO ADDITIO N CAN BE MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF N O INCRIMINATING MATERIAL IS FOUND DURING SEARCH OR DURING 153A PROC EEDINGS. HOWEVER, IT IS SEEN THAT THE HON'BLE APEX COURT HAS NOT STAYED OR SUSPENDED THE OPERATION OF THE DECISION OF THE HON'BLE BOMBAY HIG H COURT IN ANY MANNER AND THEREFORE, AT THE MOMENT, THE DECISION O F JURISDICTIONAL HIGH COURT IS BINDING ON US AND WE ARE BOUND TO FOLLOW I T. 7. FOR THE SAKE OF COMPLETENESS, WE FIND THAT HON'B LE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA ( SUPRA ) AND OTHERS DATED 28/08/2015 HAS SUMMARIZED THE LEGAL POSITION ON THE ISSUE AS U NDER :- 'SUMMARY OF THE LEGAL POSITION: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTI ONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER : I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF TH E ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX A.YS IMMEDIAT ELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE A Y IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE A.O. WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A.Y. IN WHICH THE SEARCH T AKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX A YS. ''IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOS ED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT A DDITIONS SHOULD BE STRICTLY MADE ON ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 6 THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T CAN BE ARBITRAR Y OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED A ND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MAD E. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATE D PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSE SS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY F OR EACH A Y ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M ATERIAL E XISTING OR BROUGHT ON THE RECORD OF THE A.O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006-07. ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDE NT, WE UPHELD THE CONCLUSIONS DRAWN BY LD. CIT(A) AND DISMISS REVENUE S APPEAL. 8. RESULTANTLY, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH AUGUST, 2018 SD/- SD/- (SAKTIJIT DEY) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ($ MUMBAI; DATED : 08.08.2018 SR.PS:-THIRUMALESH ITA NO.4907/MUM/2016 SILVER SAND BEACH INN. PRIVATE LIMITED ASSESSMENT YEAR-2008-09 7 ! COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. ) *' + +' ($ / DR, ITAT, MUMBAI 6. * ,-. $ GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) ($ / ITAT, MUMBAI