ACIT Central Circle I, Kanpur V. M/s Mudit Finnce P. Ltd., Kanpur

ITA 546/LKW/2011

• Counselvise Citation: 54623714 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-05-2014
• Assessment Year: misc
• Appeal Filed On: 22-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Assessee Lawyers: S K JAIN
• Keywords: Assessment record
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO S . 546 & 547/LKW/2011 ASSESSMENT YEAR S : 2000 - 01 & 2001 - 02 ACIT CENTRAL CIRCLE 1 KANPUR V. M/S MUDIT FINANCE (P) LTD. 52/34, NAYA GANJ KANPUR PAN: AACM9821A (APP ELL ANT) (RESPONDENT) C.O. NOS. 21 & 10/LKW/2012 [IN ITA NO S . 547 & 546/LKW/2011] ASSESSMENT YEAR S : 2001 - 02 & 2000 - 01 M/S MUDIT FINANCE (P) LTD. 52/34, NAYA GANJ KANPUR V. ACIT CENTRAL CIRCLE 1 KANPUR PAN: AACM9821A ( CROSS OBJECTOR ) (RESPONDENT) DEPARTMENT BY: SHRI. VIVEK MISHRA, CIT (DR) ASSESSEE BY: SHRI. S. K. JAIN, FCA DATE OF HEARING: 13 05 2014 DATE OF PRONOUNCEMENT: 20 05 2014 O R D E R PER SUNIL KUMAR YA DAV: THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON COMMON GROUNDS, WHICH ARE AS UNDER: - 1 . THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACT IN COMING TO THE CONCLUSION THAT PROCEEDINGS U/S 153C WERE BAD IN LAW AND ASSESS MENT SHOULD HAVE BEEN MADE U/S 153A OF THE ACT DESPITE THE FACT THAT WARRANT OF AUTHORISATION WAS ISSUED IN THE NAME OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : THREE PERSONS NAMELY M/S ASHOK PAN PRODUCTS (P) LTD, M/S MUDIT IMPEX & M/S MUDIT FINANCE (P)LTD. 2 . THAT THE LD. CIT (A) HAS ERRED IN LAW A ND ON FACT IN NOT HONOURING THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF CIT VS. VANDANA VERMA WHERE THE HON'BLE COURT HAS COME TO THE CONCLUSION THAT IN CASE OF WARRANT ISSUED IN J OINT NAMES, PROCEEDINGS U/S 153 A COULD BE INITIATED IN THE CASE OF AOP OF THE ABOVE NAMED THREE PERSONS. AS A NATURAL COROLLARY IN CASE OF ASSESSEE ONLY AN ACTION U/S 153 COULD HAVE BEEN TAKEN. 3 . THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACT IN COMING TO CONCLUSION THAT PROCEEDINGS U/S 153C COULD NOT BE INITIATED WHEN DOCU MENTS RELATING TO CONCEALMENT INCOME OF THE ASSESSEE WERE FOUND DURING THE COURSE OF SEARCH AND THE A.O. HAD RECORDED HIS SATISFACTION AS REQUIRED U/S 153C OF THE I.T. ACT. 4 . THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACT IN COMING TO CONCLUSION THAT SINC E ALL MATERIAL WAS AVAILABLE WITH THE A.O. RIGHT FROM THE VERY BEGINNING, THE ASSESSMENT IN INSTANT CASE SHOULD HAVE BEEN DONE U/S 153A IGNORING THE FACT THAT IN VIEW OF THE HON'BLE HIGH COURT DECISION IN THE CASE O F CIT VS. VANDANA VERMA (SUPRA) , ACTION U /S 153A COULD HAVE INITIATED ONLY AGAINST THE AOP CONSISTING OF THREE PERSONS NAMELY M/S ASHOK PAN PRODUCTS (P) LTD., M/S MUDIT IMPEX AND M/S MUDIT FINANCE (P) LTD. 5 . THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACT IN COMING TO CONCLUSION THAT THE ASSESSME NT IS BARRED BY LIMITATION BY 31.03.2006 INSPITE OF THE FACT NOTICE U/S 153C WA S ISSUED ON 01/11/2006 AFTER RECASTING OF REASONS AS REQUIRED U/S 153C OF THE I.T. ACT. 2 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT(A). 3 . T HE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT AS PER PANCHNAMA DATED 9.12.2003, A SEARCH WAS CONDUCTED UPON THE ASSESSEE - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : COMPANY ALONG WITH OTHER COMPANIES. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A(A) OF THE INCOME - TAX ACT, 1961 (HERE INAFTER CALLED IN SHORT THE ACT') REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR ASSESSMENT YEARS 1998 - 99 TO 2003 - 04 WITHIN 15 DAYS FROM THE DATE OF RECEIPT OF THE SAID NOTICE. BUT NO ACTION WAS TAKEN BY THE ASSESSING OFFICER EITHER TO WITHDRAW THE SAID NOTICE OR COMPLETE THE ASSESSMENT THEREUNDER. SUBSEQUENTLY, ANOTHER SET OF NOTICES UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT WERE ISSUED BY THE SAME ASSESSING OFFICER REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR ASSESSMENT Y EARS 1998 - 99 TO 2003 - 04. IN COMPLIANCE TO THE SAID NOTICES, THE ASSESSEE FILED THE REPLY STATING THAT THE RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT MAY BE TREATED AS RETURN FILED IN COMPLIANCE TO THE NOTICES ISSUED UNDER SECTION 153C READ WIT H SECTION 153A OF THE ACT . THE ASSESSEE ALSO CONTENDED THAT THE NOTICES ISSUED UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT ARE BARRED BY LIMITATION AND ALSO CONTENDED THAT SINCE THE ASSESSEE WAS A SEARCHED PERSON UNDER SECTION 132(1) OF THE ACT , THE ISSUANCE OF NOTICES UNDER SECTION 153C OF THE ACT WERE ILLEGAL AND NOT SUSTAINABLE IN LAW. THE ASSESSING OFFICER DID NOT TAKE COGNIZANCE OF THESE OBJECTIONS AND PROCEEDED TO COMPLETE THE ASSESSMENT FOR ALL THE YEARS IN THE CASE OF THE ASSESSEE. 4 . THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND REITERATED ITS CONTENTIONS. THE LD. CIT(A) TOOK COGNIZANCE OF ALL THESE FACTS AND HAS HELD THAT ONCE THE ASSESSEE WAS SUBJECTED TO SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, NO NOTICE UNDER SECTION 153C OF THE ACT CAN BE ISSUED AND THE CORRECT PROCEDURE WAS TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT , WHICH WAS ACTUALLY DONE BY THE THEN ASSESSING OFFICER. THE LD. CIT(A) ACCORDINGLY ANNULLED THE ASSESSMENT. THE OBSERVATIONS OF THE LD. CIT(A) IN T HIS REGARD ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT RECORDS, ASSESSMENT ORDER, AND THE REPORT OF THE AO AND ALSO THE ARGUMENTS OF THE LD. A.R. THE FACT THAT EMERGES IS THAT THE APPELLANT COMPANY AL ONG WITH PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : OTHER, GROUP CONCERNS HAD BEEN SUBJECTED TO SEARCH ACTION U/S 132(1) OF THE I.T. ACT ON 09.12.2003. THEREFORE, THE CORRECT PROCEDURE WAS TO ISSUE NOTICES U/S 153A OF THE ACT, WHICH WAS ACTUALLY DONE BY THE THEN ASSESSING OFFICER BY ISSUING NOTIC ES FOR A.Y. 98 - 99 TO 2004 - 05 AS WAS REQUIRED UNDER THE LAW. IT APPEARS FROM THE RECORDS THAT BY INADVERTENCE, THE ASSESSMENT ORDERS IN THESE CASES COULD NOT BE PASSED. AND THUS, TO RESUSCITATE THESE TIME BARRED CASES, THE AO TOOK THE ROUTE OF ISSUING THE N OTICES U/S 153C OF THE ACT, WHICH WAS TOTALLY UNWARRANTED AS THE RECORDS SHOW THAT THERE WAS NO FRESH MATERIAL WHICH COULD PROMPT THE AO TO INITIATE SUCH PROCEEDINGS. FURTHER, IF THE AO HAD BEEN REALLY SURE AS TO WHAT HE DID, HE WOULD HAVE PASSED A SPEAKIN G ORDER CONTROVERTING THE OBJECTIONS RAISED BY THE APPELLANT DURING THE COURSE OF SUCH ASSESSMENT PROCEEDINGS, WHICH WAS NEVER DONE. STILL FURTHER, THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE DOCUMENTS/MATERIAL RELATED TO THE APPELLANT COMPANIES WERE RECEIVED ONLY DURING F.Y.2005 - 06. NO SPECIFIC DATE HAS BEEN MENTIONED. THERE IS NO NOTING IN THE ASSESSMENT RECORDS. IT IS STRANGE THAT APART FROM NO SPECIFIC DATE BEING MENTIONED, NO SPECIFIC NOTING AS TO WHAT MATERIAL WAS RECEIVED HAS BEEN PUT ON RE CORD. THIS DATE (OR RECEIPT OF MATERIAL) IS VERY IMPORTANT SINCE AS PER SECTION 153B THE TIME BARRING DATE (FOR ASSESSMENT U/S 153C) IS ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH DOCUMENTS ARE HANDED OVER TO THE A.O. HAVING JURISDICTION. IN THIS CASE, AS I HAVE MENTIONED EARLIER, IT WAS THE SAME AO WHO APART FROM THE APPELLANT HAD THE JURISDICTION OVER THE OTHER CASE, I.E. M/S R.P. SALES AND OTHER CONCERNS. THUS, IT WAS THE SAME AO WHO, RIGHT FROM THE VERY BEGINNING, HAD ALL THE MATERIAL AVAILA BLE WITH HIM AND THUS, THERE WAS NO QUESTION OR OCCASION OF HANDING OVER THE RECORDS OR MATERIAL FROM ONE AO TO ANOTHER AND, THEREFORE, THIS PROVISION OF SECTION 153B OF THE ACT WHICH EXTENDS THE TIME BARRING DATE (TO ONE YEAR FROM THE END OF FINANCIAL YEA R IN WHICH SUCH MATERIAL WAS RECEIVED BY THE AO FROM ANOTHER AO) WOULD HAVE NO APPLICATION TO THE FACTS OF THE INSTANT CASE. IN THIS VIEW OF THE MATTER, EVEN IF IT WAS TO BE HELD THAT PROCEEDINGS U/S 153C HAD BEEN CORRECTLY INITIATED, THE ASSESSMENTS SHOUL D HAVE BEEN COMPLETED AS PER CLAUSE (A)/(B) OF SECTION 153B, WHICH WOULD MAKE THE TIME BARRING DATES FOR THESE ORDER AS 31.03.2006, WHEREAS IN THE INSTANT CASE THE ASSESSMENTS HAVE BEEN COMPLETED ONLY ON 26.12.2006. 5.1 IN VIEW OF THE DISCUSSION ABOVE, I AM OF THE CONSIDERED VIEW THAT: (I) IN VIEW OF THE APPELLANT BEING THE PRINCIPAL SEARCH PARTY, INVOKING OF PROVISIONS OF 153C WAS BAD IN LAW; THE ASSESSMENT SHOULD HAVE BEEN COMPLETED UNDER SECTION 153A OF THE ACT. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : (II) THAT THERE IS NO MATERIAL AVAILAB LE ON RECORD WHICH COULD PROMPT THE AO IN TAKING ACTION U/S 153C OF THE I.T. ACT. (III) SINCE ALL THE MATERIAL (BASED ON WHICH ACTION U/S 153C HAS BEEN INITIATED) WAS AVAILABLE WITH THE AO RIGHT FROM THE VERY BEGINNING, THE ASSESSMENTS IN THE INSTANT CASE U/S 153C READ WITH SECTION 153A/143(3) HAD BEEN TIME BARRED ON 31.03.2006 . 5.1.1 THUS ON ALL THESE COUNTS, THE ASSESSMENT ORDERS ARE LIABLE TO BE ANNULLED, WHICH I DO SO. 5.2 SINCE I HAVE ALREADY GIVEN RELIEF TO THE APPELLANT AS AFORESAID, I AM OF THE OPIN ION THAT NO USEFUL PURPOSE SHALL BE SERVED IN ADJUDICATING ON THE MERITS OF SPECIFIC ADDITIONS MADE. 5 . AGGRIEVED, THE REVENUE HAS PREFERRED APPEALS BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ASSESSMENT ORDER. 6 . THE LD. COUNSEL FOR THE ASSESSEE EMPHATICALLY ARGUED THAT ONCE THE ASSESSEE WAS SUBJECTED TO SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, THE ASSESSMENT CAN ONLY BE FRAMED UNDER SECTION 153A OF THE ACT AND NOT UNDER SECTION 153C OF THE ACT. HE HAS ALSO INVITED OUR ATTENTION TO THE COPY OF PANCHNAMA APPEARING AT PAGE 1 OF THE COMPILATION OF THE ASSESSEE TO SHOW THAT THE ASSESSEE WAS SUBJECTED TO SEARCH UNDER SECTION 132(1) OF THE ACT. IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 153A(A) OF THE ACT , BU T NO ACTION WAS TAKEN BY THE ASSESSING OFFICER EITHER TO WITHDRAW NOTICE OR TO COMPLETE THE ASSESSMENT UNDER SECTION 153A OF THE ACT. WHEN THE ASSESSMENT WAS TIME BARRED, HE RESORTED TO TAKE ACTION UNDER SECTION 153C OF THE ACT FOR COMPLETING THE ASSESSME NT. THEREFORE, THE ASSESSMENT FRAMED UNDER SECTION 153C OF THE ACT IS TOTALLY ILLEGAL AND DESERVES TO BE ANNULLED. 7 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE ASSESSEE WAS SUBJECTED TO SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, THEREFORE, THE ASSESSMENT CAN ONLY BE FRAMED UPON THE ASSESSEE UNDER SECTION 153A OF THE ACT. THE ASSESSMENT UNDER SECTION 153C OF THE ACT CAN ONLY BE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : DONE IN THOSE CASES WHERE THE ASSESSING OFFICER , DURING THE COURSE OF ASSESSMENT UPON SEARCHED PERSON , HAS FOUND SOME INCRIMINATING MATERIAL RELATING TO SOME OTHER PERSON UPON WHOM SEARCH WAS NOT CONDUCTED. HAVING RECORDED HIS SATISFACTION , THE ASSESSING OFFICER OF THE SEARCHED PERSON MAY REFER THE MATERIAL ALONG WITH SATISFACTION NOTE TO THE ASSESSING OFFICER OF THE PERSON UPON WHOM ACTION UNDER SECTION 153C OF THE ACT IS REQUIRED TO BE TAKEN. BUT IN THE INSTANT CASE, THE ASSESSEE HIMSELF HAS BEEN SUBJECTED TO SEARCH ACTION, THEREFORE, THE ASS ESSMENT UNDER SECTION 153C OF THE ACT IS NOT POSSIBLE. THE RIGHT COURSE WOULD BE TO COMPLETE THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) , WHO HAS EXAMINED THE ISSUE IN THE LIGHT OF THE RELEVANT PROVISIONS OF LAW AND FINALLY ANNULLED THE ASSESSMENT. WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEALS OF THE REVENUE. 8 . SINCE THE APPEALS OF THE REVENUE HAVE BEEN DISMISSED, THE CROSS OBJECTIONS OF THE ASSESSEE HAVE BECOME INFRUCTUOUS AND ACCORDINGLY WE DISMISS THE SAME. 9 . IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.5.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADA V ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH MAY , 2014 JJ: 1505 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )