M/S. AVALANCHE REALITY PVT. LTD., Indore V. THE ACIT3(1), Indore

ITA 535/IND/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0654 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 12-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: AYUSH GUPTA
• Keywords: Search and seizure; Loose papers
• Section: 132; 40A(3); 139; 143(3); 153A

Judgement Text

[ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.535/IND/2013 ASSESSMENT YEAR: 2008-09 M/S. AVALANCHE REALIT Y PVT. LTD. 205, SATYA GEETA APARTMENT, 90/47, SNEH NAGAR, MAIN ROAD INDORE / VS. ACIT - 3(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAGCA2183B APPELLANT BY SHRI SUMIT NEMA, SR.ADV. & SHRI AYUSH GUPTA, ADV. RESPONDENT BY SHRI LAL CHAND, DR DATE OF HEARING: 11.10.2018 DATE OF PRONOUNCEMENT: 04.12.2018 / O R D E R PER KUL BHARAT, J.M: APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF T HE CIT(A)-7, MUMBAI (CONCURRENT JURISDICTION OVER THE C HARGE [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 2 OF CIT(A)-I INDORE) DATED 21.3.2013 PERTAINING TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER AS PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 153C OF THE INCOME TAX ACT IS BAD IN LAW, IL LEGAL AND BARRED BY LIMITATION OF TIME. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN CONFIRMING THE A.OS ACTION IN ISSUING NOT ICE U/S 153C OF THE INCOME TAX ACT AND THEREBY PASSING ORDER U/S 153C R .W.S. 143(3) OF THE INCOME TAX ACT WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. WITHOUT PREJUDICIE TO THE ABOVE 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ALSO ERRED IN MAINTAINING ADDITION OF RS.68926888/- AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROJECT AT SATELLIT E HILLS WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUB MISSION MADE BEFORE HIM. 4. THE ASSESSEE RESERVES ITS RIGHT TO ADD, ALTER, MODI FY OR AMEND THE GROUNDS OF APPEAL AS AND WHEN REQUIRED. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WERE CONDU CTED AT THE VARIOUS PREMISES, PERSONS AND CONCERNS COMMONLY KNOWN AS SATELLITE HILLS ON 19.11.2009. THE SEAR CH OPERATION WAS INITIATED IN THE CASE OF M/S. M/S. PHOENI X [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 3 DEVCONS PVT. LTD. AND OTHERS ON 19.11.2009. IT IS AL LEGED BY THE A.O. THAT DURING THE SEARCH OPERATION, VARIOUS DOCUMENTS/LOOSE PAPERS WERE SEIZED FROM THE PREMISES OF M/S. PHOENIX DEVCONS PVT. LTD., 434-ORBIT MALL, INDO RE BELONGING TO M/S. AVALANCHE REALITY PVT. LTD. IT IS AL SO RECORDED THAT COPIES OF DOCUMENTS RELATED TO THE ASSES SEE AND ON THE BASIS OF WHICH SATISFACTION WAS RECORDED FOR ISSUING NOTICE U/S 153C OF THE ACT WERE SUPPLIED. THE A.O. THEREFORE MADE TWO ADDITIONS OF RS.6,89,26,888/- TREATING AS OWN MONEY AND DISALLOWANCE OF RS.15,16,961/- BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 3. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISS IONS, PARTLY ALLOWED THE APPEAL. THEREBY THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.6,89,26,888/- AND DELETE D THE ADDITION OF RS.16,25,964/-. THE LD. CIT(A) ALSO REJE CTED [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 4 THE OBJECTION OF THE ASSESSEE THAT NO SATISFACTION WAS RECORDED BY THE ASSESSEE OF THE SEARCHED PERSON. 4. AGGRIEVED BY THIS, THE ASSESSEE IS IN PRESENT APPE AL. GROUND NO.1 & 2 OF THE ASSESSEES APPEAL ARE AGAINST INITIATION OF PROVISIONS U/S 153C OF THE ACT IN THE ABSENCE OF THE SATISFACTION RECORDED BY THE A.O. OF THE SEARCH ED PERSON. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS DIRECTED THE REVENUE TO FURNISH COPY OF THE SATISFACTION RECORDED BY THE A.O. OF THE SEARCHED PERS ON. IT IS STATED THAT THERE IS NO AMBIGUITY UNDER THE PROVISI ONS OF LAW. IT IS MANDATED BY THE LAW THAT SATISFACTION OF TH E A.O. OF THE SEARCHED PERSON IS A SINE QUA NON FOR ISSUANCE OF NOTICE U/S 153C OF THE ACT. IT IS SUBMITTED THAT EX FACIE ACTION OF THE A.O. IS CONTRARY TO THE MANDATE OF LAW AN D ASSESSMENT SO FRAMED DESERVES TO BE QUASHED. LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON VARIOUS CASE L AWS. LD. SENIOR COUNSEL PLACED RELIANCE ON THE JUDGEMENT O F [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 5 HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CAS E OF CIT VS. MECHMEN 11-C (2015) 60 TAXMANN.COM 484 (M.P. ). LD. SENIOR COUNSEL SUBMITTED THAT ADMITTEDLY NO SATISFACTION WAS RECORDED BY THE A.O. IN THE CASE OF SEARCHED PERSON. HE SUBMITTED THAT THE REVENUE HAS MISERABLY FAILED TO PRODUCE AND PLACE ON RECORD THE REQUISITE SATISFACTION NOTE RECORDED IN THE CASE OF THE SEARCHED PERSON. HE SUBMITTED THAT LAW IS WELL SETTL ED THAT JURISDICTION IN THE CASE OF THE OTHER PERSON THE ASSE SSEE HEREIN U/S 153C OF THE ACT COULD BE EXERCISED ONLY IN THE EVENT WHEN THE ASSESSING OFFICER OF THE SEARCHED PER SON MAKES A SATISFACTION NOTE THAT DURING THE SEARCH, SOME MATERIAL BELONGING TO THE ASSESSEE IS FOUND. THE A.O. OF THE SEARCHED PERSON, THEREAFTER, TRANSMITS SUCH MATERI AL ALONG WITH SATISFACTION NOTE TO THE A.O. OF THE ASSESS ING OFFICER OF SUCH OTHER PERSON. IF THIS EXERCISE IS FOUND TO BE [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 6 WANTING, ANY ACTION TAKEN WOULD BE ILLEGAL AND NOT IN CONFIRMITY WITH THE LAW. 5. LD. D.R. SUPPORTED THE ORDER OF THE AUTHORITY BEL OW AND SUBMITTED THAT LAW DOES NOT REQUIRE THE ASSESSING OFFICER OF THE SEARCHED PERSON TO MAKE A WRITTEN NOTE . HE HAS TO JUST SATISFY HIMSELF AND TRANSFER THE MATERIAL TO THE CONCERNED A.O., WHO THEREAFTER IN ACCORDANCE WITH LAW WOULD ISSUE A NOTICE CALLING UPON THE ASSESSEE TO FILE RETURN OF INCOME AND ACCORDINGLY ASSESS THE INCOME. HE SUBMITTED THAT THROUGHOUT, THE ASSESSEE HAS NOT RAISED ANY OBJECTION WITH REGARD TO THE SATISFACTION NOTE IN T HE ENTIRE PROCEEDINGS. THE ASSESSEE HAD ATTENDED THE ASSESSMENT PROCEEDINGS, FILED DETAILS, THEREAFTER HE FILED AN APPEAL BEFORE LD. CIT(A). BEFORE BOTH THE AUTHORITIE S, THE ASSESSEE HAS NOT TAKEN ANY GROUND THAT NO SATISFACTION HAS BEEN RECORDED. HE SUBMITTED THAT NO SUCH GROUND WAS TAKEN EVEN BEFORE THE LD. CIT(A). UNDER THESE FACTS, THE [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 7 ASSESSEE CANNOT BE ALLOWED TO TAKE AN OBJECTION THAT NO SATISFACTION HAS BEEN RECORDED AND THE ASSESSMENT PROCEEDINGS ARE VITIATED ON THIS ACCOUNT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND MERIT INTO THE CO NTENTION OF THE LD. D.R. THAT NO SPECIFIC GROUND WAS RAISED BEF ORE LD. CIT(A) CHALLENGING THE ASSESSMENT ON THE GROUND T HAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER O F THE SEARCHED PERSON. HENCE, THE ASSESSMENT IS VITIATED. LD. SENIOR COUNSEL SHRI SUMIT NEMA IN RESPONSE TO THE QUE RY SUBMITTED THAT LAW IS WELL SETTLED THAT A GROUND ON LE GAL ISSUE CAN BE RAISED AT THE APPELLATE STAGE. IN SUPPORT OF THIS CONTENTION, LD. COUNSEL RELIED UPON THE JUDGEM ENT OF THE HON'BLE APEX COURT RENDERED IN THE CASE OF NTPC LIMITED VS. CIT (1998) 229 ITR 353 (SC). THEREFORE , RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 8 SUPREME COURT RENDERED IN THE CASE OF NTPC LIMITED V S. CIT (SUPRA), THE GROUND RAISED WAS ADMITTED FOR ADJUDICATION. 7. BEFORE EMBARKING UPON RIVAL CONTENTIONS, FOR THE S AKE OF CLARITY, RELEVANT TO THE PROVISIONS OF THE ACT IS REPRODUCED HEREUNDER:- 153C [NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT,-- (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING, SEIZED OR REQUISITIONED, BELONGS TO; OR (B) ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUIS ITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN , RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTI ON 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITI ONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON] [AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSES SING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR R EQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OT HER PERSON [FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE AND] FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB-SECTION (1) OF SECTION 153A]:] [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION132 OR MAKING OF REQUISI TION UNDER SECTION 132A IN THE SECOND PROVISO TO [SUB-SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DO CUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON:] [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 9 [ PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLAS S OR CLASSES OF CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFFICE R SHALL NTO BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOM E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE [A ND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS AS REFERRED TO IN SUB-SECT ION (1) OF SECTION 153A] EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS A BATED.] 8. A BARE READING OF THE ABOVE PROVISION OF LAW SUGGES TS THAT THE SATISFACTION OF THE A.O. OF THE SEARCHED PERSO N IS A SINE-QUA-NON TO THE EFFECT THAT (A) ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, SEIZED OR REQUISITIONED BELONGS TO; OR (B) ANY BOOKS OF ACCOUNTS OR DOCUMENTS, SEIZED OR REQUISITIONED PERTAINS OR PERTAIN TO, FOR ANY INFORMATION CONTAINED THERETO, RELATES TO A PERS ON OTHER THAN PERSON REFERRED TO IN SUB SECTION 153A OF THE ACT. 9. ADMITTEDLY, IN THE PRESENT CASE, NO SATISFACTION NO TE BY THE A.O. OF THE SEARCHED PERSON IS FURNISHED BY REVE NUE, DESPITE CATEGORICAL DIRECTIONS DATED 21.6.2017 & 17.5. 2018 [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 10 GIVEN BY THIS TRIBUNAL. HOWEVER, A SATISFACTION NOTE I N THE CASE OF ASSESSEE HAS BEEN FURNISHED BY THE REVENUE VID E LETTER DATED 24.4.2017. LD. CIT(DR) FAIRLY CONCEDED THE FACT THAT DESPITE VARIOUS REMINDERS, THE SATISFACTION NOTE B Y A.O. OF SEARCHED PERSON I.E. M/S. PHOENIX DEVCONS PV T. LTD., 434, ORBIT MALL, INDORE IS NOT MADE AVAILABLE. 10. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MECHMEN 11-C (SUPRA) HAS HELD AS UNDER: [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 11 [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 12 [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 13 11. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY OTH ER BINDING PRECEDENT BY THE HON'BLE SUPREME COURT OR T HE HON'BLE JURISDICTIONAL HIGH COURT. WE THEREFORE, RESPECTFULLY FOLLOWING THE HON'BLE HIGH COURT OF MA DHYA PRADESH IN THE CASE OF CIT VS. MECHMEN 11-C (SUPRA) HO LD THAT THE PROCEEDINGS U/S 153C OF THE ACT IS NOT VALID LY INITIATED AND IS CONTRARY TO SETTLED POSITION OF LAW AN D THE SAME IS THEREFORE HEREBY QUASHED. 12. THE OTHER GROUNDS ARE NOT BEING ADJUDICATED AS WE HAVE QUASHED THE INITIATION OF PROCEEDINGS ITSELF. APP EAL OF THE ASSESSEE IS ALLOWED IN THE TERMS INDICATED ABOVE. [ITA NO.535/IND/2013] [M/S. AVALANCHE REALITY, INDORE] 14 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 04 . 12.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 04/12/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER SR. PRIVATE SECRETARY, INDORE