SRIKRISHNA SECURITY SERVICES ( SINCE DISSOLVED) THROUGH ITS EX-PARTNER MR. HEMENDRA R. MERCHANT, MUMBAI V. ACIT CEN CIR 35, MUMBAI

ITA 5671/MUM/2010

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4717 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2001-2002
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS; JATHILAKSHMI NAYAK
• Assessee Lawyers: D V LAKHANI
• Section: 153A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE S HRI M. BALAGANESH (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 5671/MUM/2010 ASSESSMENT YEAR: 2001 - 2002 ITA NO. 5672/MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5673/MUM/2010 ASSESSMENT Y EAR: 2003 - 2004 ITA NO. 5674/MUM/2010 ASSESSMENT YEAR: 2004 - 2005 M/S SRIKRISHNA SECURITY SERVICES, THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT , 211/219, 2 ND FLOOR, BHARTI BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AAMFS7297K VS. THE ASST. COM MISSIONER OF INCOME TAX - CENTRAL CIRCLE - 35, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 56 59 /MUM/2010 ASSESSMENT YEAR: 2001 - 2002 ITA NO. 5660 /MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5661 /MUM/2010 ASSESSMENT YEAR: 2003 - 2004 ITA NO. 56 62 /MUM/2010 ASSE SSMENT YEAR: 2004 - 2005 M/S SRI RAM KRISHNA SECURITY SERVICES, THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT , 211/219, 2 ND FLOOR, BHARTI BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AANFS2023E VS. THE ASST. COMMISSIONER OF INCOME TAX - CENTRAL CIR CLE - 35, MUMBAI (APPELLANT) (RESPONDENT) 2 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 ITA NO. 5656/MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5657/MUM/2010 ASSESSMENT YEAR: 2003 - 2004 ITA NO. 5658/MUM/2010 ASSESSMENT YEAR: 2004 - 2005 M/S SRIRAM MAINTENANCE SERVICES, THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT, 211/219, 2 ND FLOOR, BHARTI BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AARFS6445G VS. THE ASST. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 35, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 5663/MUM/2010 ASSESSMENT YEAR: 200 1 - 2002 ITA NO. 5664/MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5665/MUM/2010 ASSESSMENT YEAR: 2003 - 2004 ITA NO. 5666/MUM/2010 ASSESSMENT YEAR: 2004 - 2005 M/S SRIRAM SECURITY AGENCY, THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT, 211/219, 2 ND FLOOR, BHART I BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AAMFS9296J VS. THE ASST. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 35, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 5667 /MUM/2010 ASSESSMENT YEAR: 2001 - 2002 ITA NO. 566 8 /MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5669 /MUM/2010 ASSESSMENT YEAR: 2003 - 2004 ITA NO. 56 70 /MUM/2010 ASSESSMENT YEAR: 2004 - 2005 3 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 M/S SRIRAM SECURITY & CONSULTANCY SERVICES , THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT, 211/219, 2 ND FLOOR, BHARTI BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AAOFS9271R VS. THE ASST. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 35, MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 5652/MUM/2010 ASSESSMENT YEAR: 2001 - 2002 ITA NO. 5653/MUM/2010 ASSESSMENT YEAR: 2002 - 2003 ITA NO. 5654/MUM/20 10 ASSESSMENT YEAR: 2003 - 2004 ITA NO. 5655/MUM/2010 ASSESSMENT YEAR: 2004 - 2005 M/S SRIRAM WAREHOUSING CORPORATION, THROUGH ITS EX - PARTNER MR. HEMENDRA R MERCHANT, 211/219, 2 ND FLOOR, BHARTI BHAVAN, P DMELLO ROAD FORT, MUMBAI - 400001 PAN: AAOFS8812N VS. THE ASST. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 35, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.V. LAKHANI (A R) REVENUE BY : SHRI B. SRINIVAS & MS. JATHILAKSHMI NAYAK (D R S ) DATE OF HEARING: 0 7/02 /201 9 DATE OF PRONOUNCEMENT: 22 / 02 /201 9 4 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 O R D E R PER BENCH THE ASSESSEE HAS APPROACH ED THIS TRIBUNAL ON THE BASIS OF ORDER DATED 23.02.2018 AND 28.09.2018 PASSED BY THE CO - ORDINATE BENCH IN MA NO. 165/MUM/2016 (ARISING OUT OF ITA NO. 5667/MUM/2010 FOR A.Y. 2001 - 02), MA NO. 166/MUM/2016 (ARISING OUT OF ITA NO. 5668/MUM/2010 FOR A.Y. 2002 - 03), MA NO. 167/MUM/2016 (ARISING OUT OF ITA NO. 5669/MUM/2010 FOR A.Y. 2003 - 04), MA NO. 168/MUM/2016 (ARISING OUT OF ITA NO. 5670/MUM/2010 FOR A.Y. 2004 - 05), MA NO. 169/MUM/2016 (ARISING OUT OF ITA NO. 5652/MUM/2010 FOR A.Y. 2001 - 02), MA NO. 170/MUM/2016 (ARISING OUT OF ITA NO. 5653/MUM/2010 FOR A.Y. 2002 - 03), MA NO. 171/MUM/2016 (ARISING OUT OF ITA NO. 5654/MUM/2010 FOR A.Y. 2003 - 04), MA NO. 17 2/MUM/2016 (ARISING OUT OF ITA NO. 5655/MUM/2010 FOR A.Y. 2004 - 05), MA NO. 173/MUM/2016 (ARISING OUT OF ITA NO. 5659/MUM/2010 FOR A.Y. 2001 - 02), MA NO. 174/MUM/2016 (ARISING OUT OF ITA NO. 5660/MUM/2010 FOR A.Y. 2002 - 03), MA NO. 175/MUM/2016 (ARISING OUT O F ITA NO. 5661/MUM/2010 FOR A.Y. 2003 - 04), MA NO. 176/MUM/2016 (ARISING OUT OF ITA NO. 5662/MUM/2010 FOR A.Y. 2004 - 05), MA NO. 177/MUM/2016 (ARISING OUT OF ITA NO. 5663/MUM/2010 FOR A.Y. 2001 - 02), MA NO. 178/MUM/2016 (ARISING OUT OF ITA NO. 5664/MUM/2010 F OR A.Y. 2002 - 03), MA NO. 179/MUM/2016 (ARISING OUT OF ITA NO. 5665/MUM/2010 FOR A.Y. 2003 - 04), MA NO. 180/MUM/2016 (ARISING OUT OF ITA NO. 5666/MUM/2010 FOR A.Y. 2004 - 05), MA NO. 181/MUM/2016 (ARISING OUT OF ITA NO. 5671/MUM/2010 FOR A.Y. 2001 - 02), MA NO. 182/MUM/2016 (ARISING OUT OF ITA NO. 5672/MUM/2010 FOR A.Y. 2002 - 03), MA NO. 183/MUM/2016 (ARISING OUT OF ITA NO. 5673/MUM/2010 FOR A.Y. 2003 - 04) MA NO. 184/MUM/2016 (ARISING OUT OF ITA NO. 5674/MUM/2010 FOR A.Y. 2004 - 05) AND MA NO. 185/MUM/2016 (ARISING O UT OF ITA NO. 5656/MUM/2010 FOR A.Y. 2002 - 03), MA NO. 5 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 186/MUM/2016 (ARISING OUT OF ITA NO. 5657/MUM/2010 FOR A.Y. 2003 - 04), MA NO. 187/MUM/2016 (ARISING OUT OF ITA NO. 5658/MUM/2010 FOR A.Y. 2004 - 05) WHEREBY THE CO - ORDINATE BENCH HAS RECALLED THE TRIBUNAL ORDERS PASSED IN THE AFORESAID APPEALS IN TERMS OF THE DIRECTIONS GIVEN BY THE HONBLE SUPREME COURT IN SLP CIVIL NO. 29309 OF 2012 DATED 05.11.2014 TO THE TRIBUNAL TO PERMIT THE ASSESSEE TO RAISE THE CONTENTION AS TO WHETHER THE INCOME TAX AUTHORITIES CAN PROCEED TO ISSUE A WARRANT OF AUTHORIZATION UNDER SECTION 132(1) OF THE ACT AGAINST THE FIRM, ADMITTEDLY, DISSOLVED AS ON THE DATE OF THE ISSUANCE OF AUTHORIZATION WITH A DIRECTION TO THE TRIBUNAL TO CONSIDER THE SAID QUESTION INDEPENDENTLY IN ACCORDANC E WITH LAW, IF NOT RAISED ALREADY IN THE MEMORANDUM OF APPEAL BY THE ASSESSEE. 2. IN THE PRESENT CASE, THE CROSS APPEALS WERE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE IMPUGNED ORDERS OF EVEN DATE 30.03.2010 PASSED BY THE LD. COMMISSIONER OF INCOM E TAX APPEALS ( IN SHORT THE CIT (A)) - 41, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143 (3) READ WITH SECTION 153A FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05. IN ALL THE APPEALS, THE ASSESSEE AND THE REVENUE HAD RAISED THE IDEN TICAL GROUNDS AGAINST THE SAID IMPUGNED ORDERS . THIS TRIBUNAL VIDE ITS ORDER D ATED 16.12.2015 HAD DISPOSED OF THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE ADJUDICATING THE GROUNDS RAISED ON MERITS BY UPHOLDING THE ORDER OF THE L D . CIT ( A ) ESTIMATING T HE NET PROFIT OF THE ASSESSEE TO BE AT 10%. THE LEGAL ISSUES / GROUNDS RAISED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL WERE LEFT OPEN BY THE TRIBUNAL. 3. WE FIND THAT THE PARTNER OF THE ERSTWHILE ASSESSEE FIRMS SHRI HEMENDRA RANCHHODDAS MERCHANT HAD INDEPENDENTLY CHALLENGED THE VALIDITY OF THE SEARCH WARRANT BEING ISSUED IN THE NAME OF DISSOLVED FIRM BY WAY OF A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT WHICH WAS DECIDED AGAINST THE ASSESSEE. SINCE THE ASSESSEE FIRMS HAD BEEN DISSOLVED WAY BA CK ON 31.3.2004 ITSELF, ITS PARTNER SHRI HEMENDRA RANCHHODDAS MERCHANT PREFERRED A SPECIAL 6 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 LEAVE PETITION (SLP IN SHORT) BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISPOSED OFF BY THE HONBLE SUPREME COURT IN SLP (CIVIL) NO. 29309 OF 2012 DATED 5.11 .2014 DIRECTING THE TRIBUNAL TO CONSIDER INDEPENDENTLY IN ACCORDANCE WITH LAW THE ISSUE AS TO WHETHER A WARRANT OF AUTHORIZATION U/S 132(1) OF THE ACT COULD BE ISSUED IN THE NAME OF DISSOLVED FIRM. 4. WE WOULD LIKE TO MENTION HERE THAT THIS ORDER OF T HE HONBLE SUPREME COURT WAS NOT BROUGHT TO THE NOTICE OF THIS TRIBUNAL EITHER BY THE ASSESSEE OR BY THE REVENUE WHILE DECIDING THE APPEALS IN THE FIRST ROUND VIDE ITS ORDER DATED 16.12.2015. HENCE THERE WAS NO OCCASION FOR THE TRIBUNAL TO ADJUDICATE THE SAID LEGAL ISSUE. 5. LATER ON THE ASSESSEE PREFERRED MISCELLANEOUS APPLICATIONS BEFORE THE TRIBUNAL ON THE FOLLOWING ISSUES : - A) THE QUESTION OF VALIDITY OF ISSUANCE OF WARRANT OF AUTHORIZATION U/S 132(1) OF THE ACT IN THE NAME OF DISSOLVED FIRM IS TO BE ADJUDICATED BY THE TRIBUNAL AS DIRECTED BY THE HONBLE SUPREME COURT. B) THE TRIBUNAL HAD NOT CONSIDERED THE GROUND RAISED IN THE FIRST ROUND OF APPELLATE PROCEEDINGS BEFORE IT IN RESPECT OF FRAMING OF SEARCH ASSESSMENTS U/S 153A OF THE ACT IN THE ABSENCE OF INCRIMINATING MATERIALS WHICH ISSUE HAD BEEN ALREADY DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING IN FAVOUR OF THE ASSESSEE. 6. ACCORDINGLY , THE MISCELLANEOUS APPLICATIONS PREFERRED BY THE ASSESSEE WERE DISPOSE D OF BY THIS TRIBUNAL VIDE ITS ORDERS DATED 23.2.2018 AND 28.9.2018 RECALLING THE EARLIER ORDERS PASSED BY THE TRIBUNAL TO ADDRESS THE LIMITED ISSUE OF AFORESAID TWO QUESTIONS. 7 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 7. ACCORDINGLY, THE CASES WERE LISTED FOR FRESH HEARING BEFORE US TO ADJUDICA TE THE AFORESAID TWO ISSUES ONLY. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE L D . DR PRACTICALLY MADE A SUBMISSION THAT THESE TWO ISSUES COULD NOT BE ADJUDICATED BY THE TRIBUNAL AT THIS JUNCTURE AS THEY WERE NOT RAISED BY THE ASSESSEE IN THE ORIGINAL GROUND S OF APPEAL. THE L D . DR ALSO STATED BEFORE US THAT NO APPEAL W AS PREFERRED BY THE REVENUE AGAINST THE MISCELLANEOUS APPLICATIONS DISPOSED OF BY THIS TRIBUNAL VIDE ORDERS DATED 23.2.2018 AND 28.9.2018. IN THIS REGARD, WE FIND THAT THE HONBLE SUPREME COUR T VIDE ITS ORDER DATED 5.11.2014 SUPRA HAD DIRECTED THE T RIBUNAL TO ADJUDICATE THE ISSUE OF WARRANT OF AUTHORIZATION U/S 132(1) OF THE ACT IN THE NAME OF DISSOLVED FIRM , IRRESPECTIVE OF THE FACT AS TO WHETHER THE ASSESSEE HAD RAISED THAT GROUND IN THE MEM ORANDUM OF APPEAL. HENCE THIS TRIBUNAL IS BOUND TO FOLLOW THE SAID DIRECTION OF THE HONBLE SUPREME COURT. HENCE THE OBJECTION OF THE LD DR IN THIS REGARD IS DISMISSED. 8. DURING THE COURSE OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DRE W OUR ATTENTION TO THE COPY OF PANCHANAMA (ENCLOSED IN OLD PAPER BOOK) ISSUED IN THE NAME OF THE ERSTWHILE FIRMS WHICH WERE ALREADY DISSOLVED WAY BACK ON 31.3.2004 , IN SUPPORT OF WHICH, HE DREW OUR ATTENTION TO THE COPY OF DISSOLUTION DEEDS (ENCLOSED IN P APER BOOK) WITH EFFECT FROM 31.3.2004. HE ALSO DREW OUR ATTENTION TO THE PAGES 54 TO 58 OF THE OLD PAPER BOOK CONTAINING THE LETTER S FILED BEFORE THE INCOME TAX OFFICER, WARD NO. 16(1) (4) ON 17.11.2005 DULY INTIMATING THE FACT OF DISSOLUTION OF THE ASSES SEE FIRMS WITH EFFECT FROM 31.3.2004 TOGETHER WITH THE COPY OF RESPECTIVE DISSOLUTION DEEDS. IN THE SAID LETTER S , IT WAS ALSO SPECIFICALLY STATED THAT NO RETURN OF INCOME IN THE NAME OF ASSESSEE FIRMS NEED TO BE FILED FROM ASST YEAR 2005 - 06 ONWARDS. WE FIND THAT THESE DOCUMENTS CONCLUSIVELY GO TO PROVE THAT ALL THE ASSESSEE FIRMS STOOD DISSOLVED WAY BACK ON 31.3.2004 AND THE INCOME TAX DEPARTMENT HAD BEEN DULY INFORMED ABOUT THE SAME. THE TRIBUNAL IN ITS ORDER HAS CATEGORICALLY HELD 8 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 THAT THE FIRMS WERE D ISSOLVED ON 31.3.2004 AND THIS FACTUAL FINDINGS OF THE TRIBUNAL WAS NOT CONTROVERTED BY THE REVENUE. IN THAT SCENARIO, ISSUING A SEARCH WARRANT OF AUTHORIZATION U/S 132(1) OF THE ACT IN THE NAMES OF THOSE DISSOLVED FIRMS AND CONDUCTING SEARCH ON 21.12.2006 WOULD BECOME ILLEGAL AND VOID AB INITIO . CONSEQUENTIALLY ALL ASSESSMENTS FRAMED U/S 153A OF THE ACT PURSUANT TO SUCH ILLEGAL WARRANT OF AUTHORIZATION WOULD ALSO BECOME VOID AB INITIO . THE DIRECTIONS OF THE HONBLE SUPREME COURT IS DISPOSED OFF IN THIS M ANNER ACCORDINGLY. 9. IN VIEW OF OUR AFORESAID FINDING, THE ADJUDICATION OF YET ANOTHER ISSUE , ON THE ASPECT OF FRAMING OF SEARCH ASSESSMENTS U/S 153A OF THE ACT IN RESPECT OF UNABATED ASSESSMENTS WITHOUT THE PRESENCE OF INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH, WHICH ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING, BEC OMES ACADEMIC AND INFRUCTUOUS. THOUGH WE ARE IN AGREEMENT WITH THE PRINCIPLES LAID DOWN BY THE HON BL E JURISDICTIONAL HIGH COURT , WE DEEM IT FIT TO REFRAIN OURSELVES FROM RENDERING ANY OPINION ON THE SAME IN VIEW OF OUR AFORESAID FINDING GIVEN PURSUANT TO DIRECTIONS OF HONBLE SUPREME COURT. HENCE THIS ISSUE RAISED BY THE ASSESSEE IS DISMISSED AS ACADE MIC AND INFRUCTUOUS. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED ON THE AFORESAID LIMITED TWO ISSUES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY , 2019 . SD/ - SD/ - ( M.BALAGANESH ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 22 / 02 / 2019 ALINDRA PS 9 ITA NO S . 5652 - 5673 /MUM/2010 ASSESSMENT YEAR S : 2001 - 02, 2002 - 03, 2003 - 04 AND 2004 - 05 / COPY OF THE ORDER FORWA RDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I