Asstt. Commissioner of Income Tax, Lucknow V. M/s Megha Motors, Lucknow

ITA 581/LKW/2014

• Counselvise Citation: 58123714 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K SINGH
• Assessee Lawyers: P K KAPOOR
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SU DHANSHU SRIVASTAVA , JUDICIAL MEMBER ITA NO. 581 /LKW/2014 ASSESSMENT YEAR:200 5 - 0 6 A.C.I.T., CENTRAL CIRCLE - 1, LUCKNOW. VS. M/S MEGHA MOTORS, SEC.M, C - 13, ALIGANJ, KURSI ROAD, LUCKNOW. PAN:AAKFM7409H (APPELLANT) (RESPONDENT) C.O.NO. 26 /LKW/201 5 (IN ITA NO. ITA NO. 581 /LKW/2014 ) ASSESSMENT YEAR:200 5 - 0 6 A.C.I.T., CENTRAL CIRCLE - 1, LUCKNOW. M/S MEGHA MOTORS, SEC.M, C - 13, ALIGANJ, KURSI ROAD, LUCKNOW. PAN:AAKFM7409H (RESPONDENT) (OBJECTOR) REVENUE BY SHRI DR. A. K. SINGH, CIT, D. R. ASSESSEE BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 02 /0 9 /2015 DATE OF PRONOUNCEMENT 3 0 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS APPEAL IS FILED BY THE REVENUE AND THE C ROSS O BJECTION IS FILED BY THE ASSESSEE , WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - I II , LUCKNOW D ATED 22/02/2014 FOR ASSESSMENT YEAR 200 5 - 0 6 . 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. T HE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 2 1. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN TREATING ASSESSMENT ORDER AS INVALID AND AB INITIO VOID DESPITE THE FACT THAT ASSESSING OFFICER HAS PROPERLY RECORDED HIS SATISFACTION ABOUT THE INITIATION OF P ROCEEDING U/S 153C AS WELL AS ASSESSEE HAD HIMSELF SURRENDERED CERTAIN AMOUNT FOR MEGHA MOTORS WORKSHOP DURING THE SEARCH OPERATION. 2. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN DELETING THE ADDITION OF RS.42,00,000/ - BEING UNEXPLAINED UNSECURED LOANS. 3. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN DELETING THE ADDITION OF RS.3,69,081/ - BEING EXCESS REMUNERATION PAID TO THE PARTNER. 3. REGARDING GROUND NO. 1, LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSES SEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT ON PAGES 24 TO 26 IS THE REMAND REPORT DATED 18/08/2011 SUBMITTED BY THE ASSESSING OFFICER TO CIT(A). HE ALSO SUBMITTED THAT IN THE REMAND REPORT, THE ASSESSING OFFICER HAS PROCEEDED ON TH E BASIS THAT RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCHED PERSON IS NOT REQUIRED AND HENCE, THIS IS ADMITTED POSITION OF FACT THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. HE FURTHER SUBMITTED THA T THIS ASPECT OF THE MATTER IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. GOPI APARTMENT [2014] 365 ITR 411 (ALL). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER TO CIT(A) AS AVAILABLE ON PAGES 24 TO 26 OF THE PAPER BOOK, THIS IS VERY MUCH NOTED BY ASSESSING OFFICER THAT THIS IS THE CLAIM OF THE ASSESSEE THAT SATISFACTION SHOULD HAVE BEEN RECORDED BY THE ASS ESSING OFFICER OF THE SEARCHED PERSON. INSPITE OF THIS, THIS IS NOWHERE STATED BY THE ASSESSING OFFICER IN THE REMAND REPORT THAT SUCH SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE 3 SEARCHED PERSON. THIS IS THE CRUX OF THIS REMAND REPORT THA T RECORDING OF SUCH SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCHED PERSON IS NOT REQUIRED. THERE IS NO MERIT IN THIS OBJECTION OF THE ASSESSING OFFICER BECAUSE AS PER THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF GOPI APARTME NT (SUPRA), RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCHED PERSON IS A CONDITION PRECEDENT FOR MAKING ASSESSMENT U/S 153C IN THE CASE OF A PERSON OTHER THAN THE SEARCHED PERSON. SINCE IN THE PRESENT CASE, THE REVENUE COULD NOT ESTABLISH THAT ANY SUCH SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON, THE ASSESSMENT FRAMED BY THE REVENUE U/S 153C IS NOT VALID. ALTHOUGH THE DECISION OF CIT(A) IN HOLDING THAT THE ASSESSMENT ORDER IS NULL AND VOID IS ON A DIFFERENT B ASIS THAT NO INCRIMINATING MATERIAL WAS FOUND IN COURSE OF SEARCH BUT WE DO NOT ENTER INTO THAT ASPECT BECAUSE THE ASSESSMENT ORDER IS AB INITIO DEVOID FOR THIS REASON THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. THER EFORE, THE ULTIMATE DECISION OF CIT(A) IS UPHELD ALTHOUGH ON A DIFFERENT BASIS. 5. IN VIEW OF OUR DECISION IN ABOVE PARA, THE OTHER GROUNDS RAISED BY REVENUE ON MERIT OF VARIOUS ADDITIONS DELETED BY CIT(A) DO NOT CALL FOR ANY ADJUDICATION. 6. IN THE RESULT , THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. NOW WE TAKE UP THE C.O. OF THE ASSESSEE. THE GROUNDS OF THE C.O. ARE AS UNDER: 1. BECAUSE THE INITIATION OF PROCEEDINGS UNDER SECTION 153C WAS WHOLLY ILLEGAL, AS NO INCRIMINATING MATERIAL PERTAINING TO APPELLANT WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION ON HARSINGAR GROUP OF CASES AND AS SUCH THE ASSESSMENT ORDER PASSED UNDER SECTION 153C/143(3) OF THE ACT WAS IN VALID AND CONSEQUENTLY, CIT(A) SHOULD HAVE HELD THE SAID ASSESSMENT ORDER AS NULL AND VOID. 4 2. BECAUSE THERE EXISTED NO SATISFACTION NOTE, RECORDING OF WHICH IS A CONDITION PRECEDENT FOR INITIATING ACTION UNDER SECTION 153C, THE NOTICE AS WELL AS THE ASSESSMENT ORDER PASSED IN PURSUANCE THEREOF, ARE ILLEGAL, AND AS SUCH ID. CIT(A) SHOULD HAVE QUASHED THE ASSESSMENT ORDER AS BEING VOID AB INITIO. 3. BECAUSE THE ASSESSMENT ON THE BASIS OF RETURN FILED UNDER SECTION 139(1) DID NOT ABATE IN TERMS OF SECOND PROVISO TO SECTION 153A, AS NO ASSESSMENT RELATED PROCEEDINGS WERE PENDING ON T HE DATE OF SEARCH AND CONSEQUENTLY, LD. CIT(A) SHOULD ALSO HAVE HELD THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT DATED 30.12.2010 WAS INVALID, ILLEGAL AND VOID ABINITIO FOR THIS REASON ALSO. 4. BECAUSE ID. CIT(A ) HAS CORRECTLY DELETED THE ADDITION OF RS.42,00,000/ - ON DUE CONSIDERATION OF THE FACT THAT THE ASSESSEE HAD FURNISHED ALL THE REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER AND THUS DISCHARGED THE ONUS THAT LAID UPON IT AND AS SUCH THE ORDER PASSED B Y CIT(A) DELETING THE SAID ADDITION DESERVES TO BE UP - HELD. 5. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) SHOULD HAVE SEPARATELY ADJUDICATED GROUND NO.8 AND SHOULD ALSO HAVE DELETED ON MERITS THE ADDITION OF RS. 3,69,081/ - ON ACCOU NT OF ALLEGED EXCESS REMUNERATION PAID TO THE PARTNERS. 6. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) OUGHT TO HAVE HELD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE BEYOND THE SCOPE OF ASSESSMENT UNDER SECTION 153C AS THE REQUISITE CONDITION FOR THE SAME DID NOT GET SATISFIED. 8. WE HAVE SEEN AND HELD THAT THE ASSESSMENT ORDER IN THE PRESENT CASE IS AB INITIO VOID FOR THE REASON THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THEREFOR E, GROUND NO. 1 TO 3 ARE ALLOWED. 9. REGARDING GROUND NO. 4 & 5 OF THE C.O., WE FIND THAT THESE HAVE BECOME OF ACADEMIC INTEREST ONLY BECAUSE ONCE IT IS HELD THAT THE 5 ASSESSMENT ORDER ITSELF IS VOID AB INITIO, ANY ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) DOES NOT SURVIVE AND THEREFORE, NO ADJUDICATION IS CALLED FOR IN RESPECT OF GROUND NO. 4 & 5 OF THE CROSS OBJECTION. 10. IN THE RESULT, THE C.O. OF THE ASSESSEE STANDS ALLOWED. 11. IN THE COMBINED RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND C.O. OF THE ASSESSEE IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SU DHANSHU SRIVASTAVA ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 /09/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR