Renaisance Buildcon Company (P) Ltd., New Delhi V. DCIT Central Circle-1, Chandigarh

ITA 613/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6865 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Assessee Lawyers: P N MONGA
• Keywords: Business income; Revision of order; Rectification of order; Audit objection; Period of limitation; Assessment record; Time period of passing order; Revised return; Reason to believe
• Section: 143(3); 133A; 153A; 139(5); 32; 147; 148; 132; 10; 154; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 610 TO 614/CHD/2016 ASSESSMENT YEARS: 2009-10, 2010-11, 2011-12 & 2012- 13 M/S RENAISSANCE BUILDCON COMPANY (P) LTD., VS. TH E DCIT, CHANDIGARH CC-1, CHANDIGARH PAN NO. AACCR9784R (APPELLANT) (RESPONDENT) ITA NO. 612/CHD/2016 ASSESSMENT YEAS: 2010-11 M/S RENAISSANCE BUILDCON COMPANY (P) LTD., VS. TH E DCIT, CHANDIGARH CC-1, CHANDIGARH PAN NO. AACCR9784R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.N. MONGA & SH. MANU MONGA RESPONDENT BY : SH. RAVI SARANGAL DATE OF HEARING : 20.09.2017 DATE OF PRONOUNCEMENT : 26.09.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS RELATING TO THE SAME AS SESSEE FOR DIFFERENT ASSESSMENT YEARS HAVE ARISEN FROM THE SEPARATE ORDE RS OF THE COMMISSIONER 2 OF INCOME TAX (APPEALS)-3, [HEREINAFTER REFERRED TO AS CIT(A)], GURGAON DATED 29.02.2016 WHICH ARE IN RELATION TO THE ASSES SMENT PROCEEDINGS CARRIED OUT IN RESPECT OF ISSUANCE OF NOTICE U/S 153A OF TH E INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. AS PER THE ASSESSING OFFICER, A SEARCH ACTION U/ S 132(1) OF THE ACT WAS CONDUCTED ON CHINAR GROUP OF CASES ON 08.09.2011 BY THE INVESTIGATION WING (INCOME TAX), CHANDIGARH. SINCE THE ASSESSEE WAS ALSO ONE OF THE CONCERNS COVERED UNDER THE SAID SEARCH ACTION U/S 1 32 OF THE ACT, HENCE, THE ASSESSEE WAS ALSO ASKED TO FILE ITS RETURN U/S 153A OF THE ACT FOR THE YEARS FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRE CEDING THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH SEARCH ACTI ON WAS CARRIED OUT. THE ASSESSEE FILED OBJECTIONS AGAINST THE SAID NOTICES ISSUED U/S 153A OF THE ACT BY THE ASSESSING OFFICER STATING THEREIN THAT NO SE ARCH ACTION WAS EVER CARRIED OUT IN THE PREMISES OF THE ASSESSEE U/S 132 OF THE ACT. HOWEVER, ONLY A SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT. SINCE THE PROVISIONS OF SECTION 153A ARE APPLICABLE ONLY IN RESPECT OF SEAR CH ACTION U/S 132 OF THE ACT, HENCE, THE ASSESSEE WAS NOT COVERED AND, THER EFORE, THE NOTICE WAS LIABLE TO BE VACATED. SINCE THE ASSESSING OFFICER D ID NOT WITHDRAW THE NOTICES U/S 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME. THE ASSESSING OFFICER CARRIED OUT THE ASSESSMENT PROCEEDINGS AND MADE ADDITIONS. THE MAIN ADDITION MADE BY THE ASSESSING OFFICER WAS IN RESPE CT OF THE INTEREST INCOME BY TREATING THE SAME AS INCOME FROM OTHER SOURCES AS AGAINST THE BUSINESS INCOME DECLARED BY THE ASSESSEE. 3. MR. MONGA, LD. COUNSEL FOR THE ASSESSEE AT THE O UTSET HAS RAISED THREE MAIN CONTENTIONS:- 3 I) THAT NO SEARCH ACTION U/S 132 OF THE ACT HAS BEEN C ARRIED OUT AT THE PREMISES OF THE ASSESSEE, HENCE, THE ASS ESSMENT CARRIED OUT U/S 153A OF THE ACT WAS ILLEGAL AND VOI D ABINITIO. II) SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING TH E SEARCH ACTION, HENCE, NO ADDITIONS WERE WARRANTED U /S 153A OF THE ACT. III) THE INTEREST INCOME FROM FDRS HAS RIGHTLY BEEN OFFE RED BY THE ASSESSEE AS ITS BUSINESS INCOME AND THERE WAS N O MERIT IN THE ACTION OF THE ASSESSING OFFICER IN TREATING THE SAID INCOME AS INCOME FROM OTHER SOURCES. 4. FIRSTLY WE TAKE UP THE LEGAL ISSUES RAISED BY TH E COUNSEL FOR THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, ITA NO. 610 /CHD/2016 FOR ASSESSMENT YEAR 2009-10 IS TAKEN AS THE LEAD CASE. (I) WHETHER ANY SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OU R ATTENTION TO THE OPENING LINES OF THE ASSESSMENT ORDER DATED 28.3.20 14 WHEREIN IT HAS BEEN MENTIONED THAT A SEARCH U/S 132(1) OF THE ACT WAS C ONDUCTED AT CHINAR GROUP OF CASES ON 8.9.2011 BY THE INVESTIGATION WING (INC OME TAX), CHANDIGARH. HE THEREAFTER HAS INVITED OUR ATTENTION TO THE PAPE R BOOK PAGES 1 TO 5. PAGES NO.1 & 2 CONSTITUTES, A LETTER DATED 18.11.2016 ADD RESSED BY THE DY. CIT TO THE LD. CIT (DR-1) WHICH REVEALS THAT AN INFORMATIO N WAS SOUGHT BY THE LD. DR FROM THE CONCERNED ASSESSING OFFICER AS TO WHET HER ANY SEARCH ACTION U/S 132(1) WAS CARRIED OUT IN THE PREMISES OF THE A SSESSEE AND WHETHER ANY 4 INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION?. IN REPLY TO THE SAID LETTER, THE ASSESSING OFFICER SENT A LETTER DA TED 18.11.2016 ALONGWITH COPIES OF WARRANTS OF AUTHORIZATION U/S 132 (1), P ANCHNAMA DRAWN IN THE CASE OF THE ASSESSEE ALONG WITH APPRAISAL REPORT AN D ASSESSMENT RECORDS FOR ASSESSMENT YEARS 2009-10 TO 2012-13. IT HAS BEEN STATED THEREIN THAT FROM THE ABOVE DOCUMENTS, IT WAS CLEAR THAT THE ASSESSEE COMPANY WAS ALSO COVERED IN SEARCH ACTION CARRIED OUT U/S 132(1) OF THE ACT. IN RESPECT OF SECOND QUERY, IT HAS BEEN STATED THAT AS PER THE PR OVISIONS OF SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN ASSESS AND RE -ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE A SSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED AND THAT A SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE AND VARIOUS INCRIMINATING EVIDENCES WERE FOUND. 6. NOW COMING TO THE DOCUMENTS RELIED UPON BY THE A SSESSING OFFICER, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR AT TENTION TO THE AUTHORIZATION LETTER DATED 8.9.2011 WHEREIN THE NAME OF THREE PER SONS HAVE BEEN MENTIONED I.E. SANJAY GAMBIR, REENA GAMBIR AND M/S RENAISSANC E BUILDCON COMPANY PVT. LTD.(ASSESSEE). THE ADDRESS OF THE PLACE WHERE THE SEARCH ACTION HAS TO BE / HAS BEEN CARRIED OUT IS MENTIONED AS N-56, PA NCHSHEEL PARK, NEW DELHI. THE NEXT DOCUMENT IS COPY OF PANCHNAMA DATE D 4.10.2011 RELATED TO THE AFORESAID SEARCH, WHEREIN, THE NAME OF THE SE ARCHED PERSONS AND ADDRESS OF THE PERSONS SEARCHED IS SAME AS MENTIONED ABOVE . THE THIRD DOCUMENT IS COPY OF THE AUTHORIZATION U/S 132(1) OF THE ACT WHE REIN THE NAME OF THE SEARCHED PERSONS HAVE BEEN MENTIONED AS B.C.L. HOME S LTD, M/S RENAISSANCE BUILDCON COMPANY PVT. LTD.(ASSESSEE) AN D N.K. GUPTA BUILDERS PVT LTD. THE ADDRESS OF THE PREMISES TO BE SEARCH I S MENTIONED AS 5 KISHANPURA, ADJOINING SECTOR 20, PANCHKULA. THE NE XT DOCUMENT IS THE PANCHNAMA RELATED TO THE AFORESAID SEARCH ACTION WH ICH IS IN THE NAME OF M/S BCL HOMES LTD, KISHANPURA ADJOINING SECTOR 20, PANCHKULA. THE NAME OF THE ASSESSEE IS MISSING IN THE SAID PANCHNAMA DA TED 9.9.2011. THE NEXT DOCUMENT IS AGAIN AN AUTHORIZATION LETTER DATED 6.9 .2011 U/S 132(1) OF THE ACT WHICH IS IN THE NAME OF BALDEV CHAND BANSAL, T ARJINDER BANSAL, BCL HOMES LTD AND M/S RENAISSANCE BUILDCON COMPANY PVT. LTD.(ASSESSEE) AND THE PLACE OF SEARCH HAS BEEN MENTIONED AS H. NO. 25 3, SECTOR 7, PANCHKULA. THEREAFTER IS PLACED A COPY OF THE PANCHNAMA DATED 16.9.2011 RELATED TO BE ABOVE STATED SEARCH ACTION WHICH IS IN THE NAME OF SHRI BALDEV CHAND BANSAL, H.NO. 253, SECTOR 7, PANCHKULA. THEREAFTER IS PLACE D A COPY OF AUTHORIZATION LETTER DATED 7.9.2011 U/S 133A OF THE ACT WHICH IS IN THE NAME OF THE ASSESSEE COMPANY M/S RENAISSANCE BUILDCON COMPANY PVT. LTD. AND M/S DDS GLOHAT CAPITAL LTD. PURSUANT TO WHICH A SURVEY ACTION U/S 133A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS CARRIED OUT AT T HE PREMISES OF THE ASSESSEE. THE ADDRESS OF THE ASSESSEE IN THE SAID AUTHORIZAT ION U/S 133A OF THE ACT HAS BEEN MENTIONED AS F-1/9, OKHLA INDUSTRIAL AREA , PHASE-1, NEW DELHI. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THIS STAGE HAS INVITED OUR ATTENTION TO THE VARIOUS LETTERS ISSUED BY THE ASSESSING OFFI CER TO THE ASSESSEE INCLUDING THE NOTICE ISSUED U/S 153A OF THE ACT, WH ICH HAVE BEEN PLACED AT PAGES 5 TO 12 OF THE PAPER BOOK FILED BY THE ASSESS EE. IN THE AFORESAID NOTICE DATED 3.9.2013 ISSUED U/S 153A OF THE ACT TO THE AS SESSE, THE ADDRESS OF THE ASSESSEE HAS NEEM MENTIONED AS UNDER:- M/S RENAISSANACE BUILDCON COMPANY PVT LTD., F-1/9, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI 6 THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER EXPLAI NED THAT THE ADDRESS MENTIONED IN THE FIRST AUTHORIZATION AND PANCHNAMA AS DISCUSSED ABOVE I.E. N-56, PACNHSHEEL PARK, NEW DELHI IS THE RESIDENTI AL ADDRESS OF THE DIRECTORS OF THE ASSESSEE COMPANY NAMELY SANJAY GA MBHIR AND RENNA GAMBHIR. THE LD. COUNSEL SUBMITTED THAT NONE OF THE DOCUMENTS RELIED UPON BY THE DEPARTMENT SHOWS THE FACTUM OF ANY SEARCH AC TION CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE WHICH IS AT F-1/ 9, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI THE ONLY DOCUMENT IN THIS RE SPECT IS THE SURVEY ACTION U/S 133A OF THE ACT. AT THIS STAGE, WE DEEM IT APP ROPRIATE TO MENTION HERE THAT DURING THE EARLIER HEARING, THE LD. DR HAD REQ UESTED FOR AN ADJOURNMENT SO AS TO VERIFY FROM THE ASSESSMENT RECORD AND OTHE R MATERIAL ON RECORD AS TO WHETHER ANY SEARCH ACTION WAS CARRIED OUT AT THE BU SINESS PREMISES OF THE ASSESSEE. ON BEING ASKED AS TO WHETHER THE LD. DR H AS GOT ACCESS TO ASSESSMENT RECORDS?; HE HAS STATED THAT THE ASSESSM ENT RECORDS HAVE BEEN AVAILABLE WITH HIM. THE LD. DR COULD NOT POINT OUT FROM THE RECORDS ANY EVIDENCE TO SHOW THAT THE ADDRESS OF THE PREMISES O F THE ASSESSEE WAS NOT THAT OF OKHLA INDUSTRIAL AREA, NEW DELHI BUT WAS THE ONE WHICH HAS BEEN MENTIONED IN ANY OF THE AUTHORIZATION LETTER / PANC HNAMA ETC. RELIED UPON BY THE REVENUE. FROM THE ABOVE EVIDENCES ON THE FILE, IT HAS BEEN PROVED BEYOND DOUBT THAT NO SEARCH ACTION U/S 132(1) OF T HE ACT HAS EVER BEEN CARRIED OUT IN THE PREEMIES OF THE ASSESSEE AT F- 1/9, OKHLA INDUSTRIAL AREA, PHASE -1, NEW DELHI. IT IS ALSO PERTINENT TO MENT ION HERE THAT THE ASSESSEE ALSO FILED OBJECTIONS PURSUANT TO THE ISSUE OF NOT ICE U/S 153A OF THE ACT STATING THAT NO SEARCH ACTION WAS CARRIED OUT AT I T PREMISES, BUT THE ASSESSING OFFICER CONVENIENTLY IGNORED THE SAID OBJECTIONS AN D PROCEEDED TO FRAME THE ASSESSMENT U/S 153A OF THE ACT. THE ASSESSING OFFIC ER EVEN HAS NOT DISCUSSED 7 IN THE ASSESSMENT ORDER ABOUT THE AFORESAID OBJECTI ONS RAISED BY THE ASSESSEE VIDE HIS LETTER DATED 16.9.2013. THE ASSESSING OFFI CER, HOWEVER, PLAYING SMART, MENTIONED THE ADDRESS OF THE ASSESSEE COMPAN Y IN THE ASSESSMENT ORDER AS N-56, PANCHSHEEL PARK, NEW DELHI. WHEN A SKED TO EXPLAIN, THE LD. DR COULD NOT SUBSTANTIATE THAT THE ADDRESS OF T HE ASSESSEE WAS THAT OF N-56, PANCHSHEEL PARK, NEW DELHI RATHER, THE ADDR ESS OF THE ASSESSEE WAS CONFIRMED TO BE THAT OF F-1/9, OKHLA INDUSTRIAL AR EA, PHASE-1 NEW DELHI. SINCE NO SEARCH ACTION U/S 132 OF THE ACT HAS BEEN CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE, ONLY A SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT, HENCE, THE ASSESSMENT CARRIED OUT IN T HE CASE OF THE ASSESSEE U/S 153A OF THE ACT WAS ILLEGAL AND VOID ABINITIO. THUS , ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. (II) NO INCRIMINATING MATERIAL FOUND DURING SEARCH ACTIO N 8. THOUGH, AS DISCUSSED ABOVE, WE HAVE ALREADY HELD THAT NO SEARCH ACTION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE, YE T THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSUMING, FOR THE SAKE OF ARGUMENTS, THAT A SEARCH ACTION WAS CARRIED OUT IN THE CASE OF ASSESS EE, STILL THE REVENUE HAS NOT POINTED OUT ANY INCRIMINATING MATERIAL FOUND DU RING THE SEARCH ACTION. HE HAS FURTHER SUBMITTED THAT THE ORIGINAL ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HAD ALREADY ATT AINED FINALITY AS ON THE DATE OF SEARCH. THAT EVEN THE LIMITATION PERIOD FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR INITIATION OF SCRUTINY ASSESS MENT PROCEEDINGS HAD EXPIRED AND FURTHER THAT SINCE NO INCRIMINATING MAT ERIAL WAS FOUND DURING THE SEARCH ACTION, HENCE, NO ADDITIONS WERE WARRANT ED U/S 153A OF THE ACT. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH 8 COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LT D. 120 DTR 89 AND OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 234 TAXMAN 300 ( DELHI) AND IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS, ITA 306/2017 AND OTHERS DECIDED VIDE ORDER DATED 25.5.2017. 9. THE LD. D.R., IN REBUTTAL TO THIS LEGAL PLEA HAS SUBMITTED THAT THE ORIGINAL ASSESSMENT PROCEEDINGS IN THIS CASE WERE N OT COMPLETED UNDER SECTION 143(3) OF THE ACT RATHER THE RETURNS FILED BY THE ASSESSEE WERE PROCESSED UNDER SECTION 143(1) OF THE ACT AND UNDER THE CIRCUMSTANCES THE AO WAS EMPOWERED TO EXAMINE AND LOOK INTO THE ISSUE S AS THE SAME WERE NOT LOOKED INTO WHILE PROCESSING THE RETURN UNDER S ECTION 143(1) OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE L D. AR HAS SUBMITTED THAT THE ISSUE RELATING TO THE VALIDITY OF ASSESSME NT MADE UNDER SECTION 153A WITHOUT HAVING ANY INCRIMINATING MATERIAL FOUND DUR ING THE SEARCH ACTION U/S 132 OF THE ACT IN CASE OF COMPLETED ASSESSMENTS, EV EN WHERE THE ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE AC T, HAS COME INTO CONSIDERATION BEFORE THE CO-ORDINATE MUMBAI BENCH O F THE TRIBUNAL IN THE CASE OF THE ACIT CENT. CIR. 33, MUMBAI VS. SHRI JA YENDRA P. JHAVERI ITA NOS.2141, 2142, 2143 & 2144/M/2012 & CO NOS.248, 24 9, 250 & 251/M/2013 DECIDED ON 20.02.2014 (ONE OF US BEING P ARTY TO THAT ORDER). THE TRIBUNAL HAS DISCUSSED THE ISSUE IN DETAIL AND HAS MADE THE FOLLOWING OBSERVATIONS: 8. THE LEARNED DR HAS ALSO FILED WRITTEN SUBMISSIO NS. TO STRESS HIS POINT THAT THE RETURN PROCESSED U/S. 143(1) CAN NOT BE SAID TO BE AN ASSESSMENT BUT A MERE INTIMATION, HE HAS RELI ED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF R AJESH JHAVERI STOCK BROKERS P. LTD. (2007) 291 ITR 500 ( SC). HIS CONTENTION HAS BEEN THAT IN THE CASE IN HAND THE AS SESSMENT WAS 9 NOT DONE ORIGINALLY U/S. 143(3) HENCE THE ESTIMATIO N IN QUESTION HAS BEEN RIGHTLY MADE U/S. 153A OF THE ACT BY THE A O. HE HAS FURTHER CONTENDED THAT THE PRINCIPAL LAID DOWN BY T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLO BAL LOGISTICS LTD. 137 ITD 287 CAN BE APPLIED TO THE CASE WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT AND NOT TO THE CASE WHERE THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR. SO FAR SO THE RELIANCE PLACED BY HIM IN THE CASE OF RAJES H JHAVERI STOCK BROKERS P. LTD. (SUPRA) IS CONCERNED, WE MAY OBSER VE THAT THE ISSUE BEFORE THE HONBLE SUPREME COURT IN THAT CASE WAS REGARDING THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. THE HONBLE SUPREME COURT HELD THAT THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ADANI EXPORTS V. DEPUTY CIT, (1999) 240 ITR 224 (GUJ) WA S NOT APPLICABLE IN THAT CASE. IN THE CASE OF ADANI EXPO RTS (SUPRA), WHERE THE ASSESSMENT WAS MADE U/S. 143(3) OF THE AC T, AND THE AO DID NOT HOLD ANY BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF ERRONEOUS COMPUTATION, THE RE-OPENING U/S. 147 MADE MERELY ON THE BASIS OF AUDIT OBJECTIONS WAS HE LD TO BE BAD IN LAW BY THE HONBLE HIGH COURT. IN THE CASE OF R AJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA), THE HONBLE SUPREME COURT WHILE INTERPRETING THE PROVISIONS OF SECTION 143(1) AND S ECTION 143(3) (AS WERE IN FORCE DURING THE RELEVANT TIME PERIOD) HAS HELD THAT IN CASE OF ASSESSMENT MADE U/S. 143(3), THE ASSESSM ENT IS MADE BY THE AO BY APPLYING HIS MIND WHEREAS IN CASE OF P ROCESSING OF RETURN U/S. 143(1) OF THE ACT, THERE IS NO APPLICAT ION OF MIND BY THE AO AND AS SUCH, IF A NEW MATERIAL COMES INTO TH E KNOWLEDGE OF THE AO AND THE REQUIREMENTS OF SECTION 147 OF TH E ACT ARE FULFILLED, THE AO IS FREE TO INITIATE PROCEEDINGS U /S. 147 AND THE FAILURE TO TAKE STEPS U/S. 143(3) WILL NOT RENDER T HE AO POWERLESS TO INITIATE RE-ASSESSMENT PROCEEDINGS EVEN WHEN INT IMATION U/S. 143(1) HAD BEEN ISSUED. SO THE PROPOSITION OF LAW L AID DOWN IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) RELATES TO THE POWERS OF THE AO FOR RE-OPENING OF A SSESSMENT U/S. 147IN RELATION TO THE ASSESSMENT PROCEEDINGS CONDUC TED UNDER SECTION 143(1) VIZ-A-VIZ U/S 143(3) OF THE ACT. (AS WERE IN FORCE DURING THE RELEVANT PERIOD, SINCE SECTION 143 HAS B EEN FURTHER AMENDED VIDE FINANCE ACT 2008 W.E.F 01.04.2008.) IT IS TO BE NOTED THAT POWERS OF THE AO TO RE-OPEN AN ASSESSMEN T U/S. 147 IS SUBJECT TO LIMITATION OF TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT. SO THE REASONABLE CONCLUSION WILL BE THAT WHET HER THE RETURN WAS PROCESSED U/S. 143(1) OR U/S. 143(3), IF THE AO HAS A REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT, HE CAN RE-OPEN THE ASSESSMENT U/S. 147 BY ISSUING 10 NOTICE U/S. 148 BUT WITHIN THE TIME LIMIT AS PRESCR IBED U/S. 149 OF THE ACT. 10. SO FAR SO, THE QUESTION AS TO THE PROCESSING OF RETURN U/S. 143(1) VIZ-A-VIZ ASSESSMENT MADE U/S. 143(3) IS CON CERNED, IT MAY FURTHER BE OBSERVED THAT AFTER PROCESSING OF RETURN U/S. 143(1) THE SAME CAN BE ASSESSED U/S. 143(3) BY ISSUE OF NOTICE U/S. 143(2) SUBJECT TO ITS ISSUANCE WITHIN THE LIMITATION PERIO D OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FURNIS HED AS PER THE PROVISO TO CLAUSE (II) OF SECTION 143(2) [AS WAS EX ISTING AT THE TIME OF RELEVANT ASSESSMENT YEAR]. ONCE THE LIMITAT ION PERIOD AS PRESCRIBED VIDE PROVISO TO CLAUSE (II) OF SUB SECTI ON (2) OF SECTION 143 IS EXPIRED, IT IS NOT OPEN TO THE AO TO ASSESS THE INCOME U/S. 143(3) OF THE ACT AND THE RETURN FILED BY THE ASSES SEE U/S. 139 IS DEEMED TO BE ACCEPTED, WHICH HOWEVER, CAN BE RE-OPE NED U/S. 147 OF THE ACT SUBJECT TO THE FULFILLMENT OF INGREDIENT S OF SECTION 147 AND WITHIN THE TIME PERIOD AS PRESCRIBED U/S. 149 O F THE ACT, AS DISCUSSED IN THE PRECEDING PARA. SO UNDER SUCH CIRC UMSTANCES IF THE RETURN IS PROCESSED U/S. 143(1) AND NOT U/S. 14 3(3) AND AFTER THE PRESCRIBED PERIOD OF LIMITATION, THE SAME CANNO T BE ASSESSED U/S. 143(3) THOUGH IT MAY BE INTERPRETED AS MERE IN TIMATION ASSESSMENT OR OTHERWISE, BUT THE SAME SHALL BE DEEM ED TO BE ACCEPTED BY THE AO AND IT WILL NOT HAVE ANY DIFFERE NT COLOUR OTHER THAN THE RETURN WHICH IS PROCESSED U/S. 143(3) OF T HE ACT. THE ONLY DISTINGUISHING FEATURE AS HELD BY THE HONBLE SUPRE ME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA), WOULD BE THAT IF TO A SET OF FACTS AND CIRCUMSTANCES, THE AO HAS APPLIED HIS MIND AND HE WAS OF THE BELIEF THAT THERE WAS NO ESCAPEMENT OF INCOME THEN FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT, HE IS PRECLUDED, ON THE BASIS OF SAME FACTS AND CIR CUMSTANCES, TO SAY THAT HE HAS REASON TO BELIEVE THAT INCOME OF TH E ASSESSEE HAS ESCAPED ASSESSMENT. WHEREAS IN CASE OF RETURNS PROC ESSED U/S. 143(1), SINCE THE AO DOES NOT APPLY HIS MIND, SUCH A DEFENSE IS NOT AVAILABLE TO THE ASSESSEE. HOWEVER, THAT PROPOS ITION OF LAW DOES NOT HELP THE REVENUE IN THE PRESENT CASE WHICH IS A CASE OF ASSESSMENT/RE-ASSESSMENT U/S. 153A OF THE ACT. 11. ADMITTEDLY, IN THE CASE IN HAND, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT BUT THE SAME HAS ATTAINED FINALIT Y DUE TO THE EXPIRY OF LIMITATION PERIOD OF TWELVE MONTHS FROM T HE END OF THE MONTH IN WHICH THE RETURN WAS FILED. HENCE, THE AS SESSMENT IS DEEMED TO BE COMPLETED AND NOT PENDING ON THE DATE OF SEARCH ON 14.08.2008. ADMITTEDLY, NO INCRIMINATING MATERIAL W AS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE SEARCH U/S. 132 OF THE ACT. THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA), HAS HELD THAT ASSESSMENT U/S. 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL 11 FOUND DURING THE SEARCH. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ACIT (2013) 259 CTR 281 HAS HELD THAT IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENT DOES NOT ARISE. UNDER SUCH CIR CUMSTANCES, IT IS NOT OPEN TO THE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN THE ORIGI NAL AND ALREADY CONCLUDED ASSESSMENT, IN THE CASE OF ASSESS MENT U/S. 153A IN PURSUANCE OF SEARCH ACTION. HONBLE HIGH CO URT REJECTED THE ARGUMENT OF THE LEARNED COUNSEL FOR ASSESSEE TO THE EFFECT THAT ONCE THE NOTICE U/S. 153A IS ISSUED, THE ASSESSMENT S FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND THE ASSESSEE. IT H AS BEEN FURTHER HELD BY THE HONBLE HIGH COURT THAT THE PROVISIONS OF SECTION 153A TO 153C CANNOT BE INTERPRETED TO BE FURTHER IN NINGS TO THE AO AND/OR ASSESSEE BEYOND THE PROVISIONS OF SECTION 139(RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 263(REVISION OF ORDERS) OF THE ACT. THE HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THE WO RDS ASSESS OR RE-ASSESS HAVE BEEN USED AT MORE THAN ONE PLAC E IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE W ORD ASSESS HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WO ULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY ON THE B ASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS. THE HONBLE HIGH COURT WH ILE REPRODUCING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF K P VARGHESE V. ITO (1981) 24 CTR 358 THAT IT IS RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISO MUST BE SO CONSTRUED, IF POSSIBLE , THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED HAS OBSERVED THAT IF T HE ARGUMENT OF THE COUNSEL FOR THE ASSESSEE WAS TO BE ACCEPTED, IT WOULD MEAN THAT EVEN IN CASE WHERE THE APPEAL ARISES OUT OF TH E COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A) OR TRIBUN AL AND THE HIGH COURT, ON A NOTICE ISSUES U/S. 153A OF THE ACT , THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED BY THE H IGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION H AS TO BE REPELLED AND/OR AVOIDED AS HELD BY THE HONBLE SUPR EME COURT IN THE CASE OF K P VARGHESE (SUPRA). ALMOST SIMILAR PROPOSITION OF LAW HAS BEEN LAID DOW N BY THE CO-ORDINATE BENCH OF THE TRIBUNAL BENCH OF THE TRIB UNAL IN THE CASE OF M/S DEEPA RESTAURANT & BAR P. LTD. IN ITA 12 NO.1336/M/2012 DECIDED ON 05.02.2014 (ONE OF US BEI NG THE PARTY OF THE SAID ORDER) WHEREIN, IT HAS BEEN OBSERVED TH AT WHERE THE SCRUTINY ASSESSMENT ORDER U/S. 143(3) OF THE ACT WA S SET ASIDE BY THE HIGHER AUTHORITIES THAT, ITSELF, CANNOT BE A GR OUND FOR RE- OPENING THE ASSESSMENT U/S. 147 OF THE ACT ON THE P LEA THAT SINCE SCRUTINY ASSESSMENT HAS BEEN ANNULLED ON THE LEGALI TY OF NOTICE U/S. 143(2) OF THE ACT AND THE CASE HAS NOT BEEN HE ARD AT ANY OF THE STAGE HENCE, THERE WAS A REASON TO BELIEVE THAT THE INCOME ASSESSED IN THIS CASE HAS ESCAPED ASSESSMENT. THE C O-ORDINATE BENCH IN THE ABOVE SAID CASE HAS FURTHER HELD THAT SUCH AN ACTION CANNOT BE ALLOWED UNDER THE LAW AS IT MAY AMOUNT TO DEFEATING ONE OF THE STATUTORY PROVISIONS IN THE GRAB OF ACTI NG UNDER OTHER PROVISIONS OF THE STATUTE. ONCE ASSESSMENT U/S. 143 (3) HAD BEEN ANNULLED BY HIGHER AUTHORITIES ON THE GROUND OF LEG ALITY OF NOTICE U/S. 143(2) OF THE ACT, RE-OPENING U/S. 147 ON THAT VERY GROUND WOULD MEAN NOTHING ELSE BUT THE ABUSE OF PROCESS OF LAW. HENCE, THE CONTENTION OF THE LEARNED DR THAT AS THE RETURN WAS PROCESSED U/S. 143(1) AND IT WAS A MERE INTIMATION HENCE, THE AO HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND I T WAS OPEN TO THE AO TO REASSESS THE INCOME U/S. 153A, EVEN WITHO UT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTI ON, IS NOT TENABLE. 11. THE ABOVE DECISION HAS ALSO BEEN FOLLOWED BY ANOTHER CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ATUL BAROT ( HUF) VS. DCIT IN ITA NO.2889/M/2011 & ORS. DECIDED ON 26.02.2014. FURTH ER, THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAS NOW BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT IN T HE CASES OF ALL CARGO LOGISTICS ITA NO.1969 OF 2013 AND CONTINENTAL WA REHOUSING CORPORATION ITA NO. 523 OF 2013 REPORTED IN (2015) 279 CTR 0389 (BOMBAY) DECIDED BY COMMON ORDER, WHEREIN, IT HAS B EEN HELD THAT IN RELATION TO THE ASSESSMENTS WHICH HAVE ALREADY BEEN CONCLUDED, THE AO WAS PRECLUDED FROM MAKING ADDITIONS ON ANY OTHER ISSUE EXCEPT RELATING OR CONCERNING TO THE INCRIMINATING MATERIAL FOUND DURI NG THE SEARCH ACTION. THE AO CANNOT DISTURB THE ASSESSMENT ORDER OR REASSESSM ENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIAL GATHERED IN THE COURSE OF PROCEEDINGS 13 U/S 153A OF THE ACT ESTABLISHES THAT RELIEF GRANTED UNDER THE FINAL ASSESSMENT/REASSESSMENT WAS CONTRARY TO THE FACT UN EARTHED DURING THE COURSE OF 153A PROCEEDINGS. IDENTICAL VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS LTD. ITA NO.36 OF 2009 DECIDED VIDE ORDER DATED 29-10-2010 A ND BY THE HON'BLE DELHI HIGH COURT IN THE RECENT DECISION IN THE CASE OF P RINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS (SUPRA) . WE MAY MENTION HERE THAT THE HON'BLE DELHI HIGH COURT HAS ALSO DISCUSSED AND DIS TINGUISHED THE CASE OF SMT. DAYAWANTI VS. CIT IN ITA 357/2015 & OTHERS DATED 27.10.2016, WHICH AUTHORITY HAS BEEN RELIED UPON BY THE LD. DR. IT HAS BEEN HELD THAT IN THE CASE OF SMT. DAYAWANTI VS. CIT, INCRIMINATI NG MATERIAL WAS FOUND DURING THE SEARCH ACTION, HOWEVER, IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS (SUPRA), NO INC RIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION, HENCE, THE ADDITIO NS MADE BY THE ASSESSING OFFICER WERE NOT JUSTIFIED. THOUGH WE HAVE ALREADY HELD THAT NO SEARCH ACTION U /S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE, HO WEVER, EVEN IF IT IS ASSUMED FOR THE SAKE OF ARGUMENTS THAT A SEARCH ACT ION WAS CARRIED OUT IN THE CASE OF ASSESSEE, STILL THE REVENUE HAS NOT POINTED OUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION. IN VIEW OF THE ABOVE DISCUSSION, THIS ISSUE IS ALSO FOUND COVERED IN FAVOUR OF THE A SSESSEE BY THE VARIOUS DECISIONS OF THE HIGH COURTS OF BOMBAY & DELHI AS D ISCUSSED ABOVE, AND IS DECIDED ACCORDINGLY. 12. SINCE NOT ONLY THE ASSESSMENT PROCEEDINGS CARRI ED OUT U/S 153 OF THE ACT HAS BEEN HELD ILLEGAL AND VOID ABINITIO BUT ALS O THE ADDITIONS MADE ARE HELD TO BE NOT JUSTIFIED IN VIEW OF OUR ADJUDICATIO N ON THE SECOND LEGAL ISSUE 14 RAISED BY THE ASSESSEE, HENCE, WE DO NOT DEEM IT F IT IT NECESSARY TO ADJUDICATE ON THE MERITS OF THE ISSUE AS TO WHETHER THE INTERE ST INCOME EARNED BY THE ASSESSEE WAS RIGHTLY OFFERED BY THE ASSESSEE AS BU SINESS INCOME OR THE SAME IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AS H AS BEEN DONE BY THE ASSESSING OFFICER, THE SAME BEING RENDERED ONLY ACA DEMIC IN NATURE. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE APPEALS FOR ASSESSMENT YEARS 2009-10, 2010-11, 2011-12 AND 2012-13 ARE ALL OWED IN FAVOUR OF THE ASSESSEE. ITA NO. 612/CHD/2016 (ASSESSMENT YEAR 2010-11) 13. THIS APPEAL PREFERRED BY THE ASSESSEE IS IN REL ATION TO THE ADDITIONS MADE BY THE ASSESSING OFFICER PURSUANT TO THE RECTI FICATION ORDER DATED 12.2.2015 PASSED U/S 154 OF THE ACT. THE ASSESSING OFFICER OBSERVED FROM THE RECORDS THAT AS PER THE FORM 26AS, THE ASSESSEE DURING THE YEAR HAD RECEIVED INTEREST OF RS. 1,83,21,384/- FROM THE BAN K AND INTEREST OF RS. 20,39,960/- FROM M/S JAGAT OVERSEAS. IN THIS WAY TO TAL INTEREST RECEIVED BY THE ASSESSEE STOOD AT RS. 2,03,61,344/-. HOWEVER, T HE ASSESSEE HAD SHOWN IN ITS RETURN OF INCOME THE TOTAL INTEREST OF RS. 1,64 ,97,624/-. THE ASSESSING OFFICER ADDED THE BALANCE AMOUNT OF RS. 38,63,720/- INTO THE INCOME OF THE ASSESSEE. 14. BEFORE LD. CIT(A), THE ASSESSEE SUBMITTED THAT IN FACT THE ASSESSEE HAD RECEIVED THE TOTAL INTEREST FROM THE BANK OF RS . 1,44,57,664/- AND FROM THE JAGAT OVERSEAS OF RS. 20,39,960/-. THE BANK HAD DEDUCTED CHARGES ON PRE-MATURE ENCASHMENT OF FDR AT RS. 38,63,720/-. IT HAS BENE SUBMITTED THAT AS PER THE PREVAILING PRACTICE OF THE BANK, THE INT EREST ACCRUED WAS CREDITED IN FULL TO THE FDR ACCOUNT AND CHARGES ARE DEDUCTED IN PAYMENTS. THUS, THE 15 DIFFERENT OF RS. 38,63,720/- WAS EXPLAINED. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER, OBSERVED THAT THE BANK CHARGES DEDUCTED OF RS. 36,83,720/- AGAINST PRE MATURE WITHDRAWAL OF THE FDRS PARTAKES THE CHAR ACTER OF EXPENSES. WE DO NOT AGREE WITH THE ABOVE FINDINGS OF THE LD. CIT (A). THE INCOME TAX AUTHORITIES HAVE TO ASSESS THE REAL INCOME OF THE A SSESSEE. IF THE ASSESSEE HAD GOT PRE-MATURE WITHDRAWALS OF ITS FDRS, THE BANK CH ARGES DEDUCTED OUT OF THE INTEREST ON SUCH WITHDRAWALS ARE TO BE SET OFF AND ONLY THE ACTUAL INTEREST INCOME OF THE ASSESSEE IS REQUIRED TO BE ASSESSED. HOWEVER, SINCE WE HAVE ALREADY SET ASIDE THE ASSESSMENT PROCEEDINGS CARRIE D OUT U/S 153 A OF THE ACT PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDE RATION ALSO AND HAVE ALSO ORDERED THE DELETION OF THE ADDITION MADE IN THE AS SESSMENT CARRIED OUT U/S 153A OF THE ACT, HENCE, ACCORDINGLY ANY ADDITION MA DE BY THE ASSESSING OFFICER IN THE RECTIFICATION ORDER PASSED U/S 154 O F THE ACT IN RELATION TO THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT HAS NO LEGS TO STAND AND THE SAME IS ACCORDINGLY DELETED. 15. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS H EREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 .09.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 16