ACIT CC 22 & 30 CEN RF 5, MUMBAI V. WELSPUN POWER & STEEL LTD, MUMBAI

ITA 6303/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2874 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIDISHA KALRA
• Assessee Lawyers: MITHESH SHAH
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 153A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I .T.A. NO.6303/MUM/2014 ( / ASSESSMENT YEAR: 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 22 & 30 CENTRAL RANGE 5 ROOM NO.404, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 / VS. M/S. WELSPUN POWER & STEEL LTD. (NOW KNOWN AS M/S. WELSPUN STEEL LTD.) WELSPUN HOUSE, 4 TH FLOOR, B-WING, KAMALA CITY, S.B.MARG, LOWER PAREL (W) MUMBAI - 400013 C.O. NO.51/MUM/2016 (I.T.A. NO. 6303/MUM/2014) ( / ASSESSMENT YEAR: 2005-06) M/S. WELSPUN POWER & STEEL LTD. (NOW KNOWN AS M/S. WELSPUN STEEL LTD.) WELSPUN HOUSE, 4 TH FLOOR, B- WING, KAMALA CITY, S.B.MARG, LOWER PAREL (W) MUMBAI - 400013 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 22 & 30 CENTRAL RANGE 5 ROOM NO.404, 4 TH FLOOR, AAYAKAR BH AVAN, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACW5308G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI MITHESH SHAH DEPARTMENT BY: MRS. VIDISHA KALRA (CIT-DR) / DATE OF HEARING: 23.06.2016 /DATE OF PRONOUNCEMENT: 05.10.2016 ! / O R D E R ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 2 PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 21.07.2014 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-39, MUMBAI [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO THE A.Y.2005-06. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION. ITA NO.6303/MUM/2014:- 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.5,00,00,000/- TO THE INCOME OF THE ASSESSEE ON A CCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DECIDING THAT COMPLETION OF ASS ESSMENT U/S.143(3) R.W.S. 153A IS WITHOUT JURISDICTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH OPERATION U/S.132 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) WAS CONDUCTED ON 13.10.2010 IN WELSPUN GROUP OF CASES. THE ASSESSEE COMPANY WAS, INTER ALIA, COVERED IN THE SA ID SEARCH OPERATIONS. THESE CASES WERE CENTRALIZED IN THIS C IRCLE. A NOTICE U/S.153A OF THE ACT WAS ISSUED ON 04.08.2011 AND SE RVED UPON THE ASSESSEE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 09.09.2011 DECLARING TOTAL LOSS TO THE TUNE OF RS.5,60,83,847/ -. THE INCOME AS PER ORIGINAL RETURN AND THAT OF RETURN U/S.153A OF THE ACT REMAINED THE SAME. THEREAFTER, THE NOTICE U/S.143(2) AND 14 2(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THEREAFT ER BY GIVING AN ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 3 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE THE INCO ME IN THE NATURE OF LOSS OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.(-)60,83,847/. FEELING AGGRIEVED THE ASSESSEE HAS FILED THE APPEAL BEFORE THE CIT(A) WHO SET ASIDE THE ORDER PASSED U/S.143(3) R. W.S.153A OF THE ACT. THEREFORE, FEELING AGGRIEVED THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D. THE LEARNED REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE C IT(A) WAS ERRED IN DECLARING THE ASSESSMENT U/S.143(3) R.W.S.153A O F THE ACT WITHOUT JURISDICTION AND WAS ALSO ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS.5,0 0,00,000/-. THEREFORE, IN THE SAID CIRCUMSTANCES THE ORDER DATE D 21.07.2014 PASSED BY THE CIT(A)-39 IS WRONG AGAINST LAW AND FA CTS AND IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. 5. IT IS SPECIFICALLY ARGUED THAT THE ASSESSING OFF ICER INVOKED THE POWER U/S.153A OF THE ACT BY REOPENING THE ASSE SSMENT WHEREAS NO MATERIAL OF ANY KIND WAS FOUND DURING TH E SEARCH CONDUCTED ON 13.10.2010. THEREFORE, IN THE SAID CI RCUMSTANCES THE CIT(A) HAS RIGHTLY PASSED THE ORDER DATED 25.03.201 3 WHICH IS NOT LIABLE TO BE INTERFERED WITH AT THIS APPELLATE STAG E. THE ORDER DATED 25.03.2013 PERUSED WHICH SPEAKS ABOUT THE SEARCH UP ON THE ASSESSEE ON 13.10.2010, THE SAID ORDER NOWHERE SPEA KS ABOUT THE ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 4 MATERIAL FOUND FOR THE RE-ASSESSMENT U/S.153A OF TH E ACT. AFTER THE SEARCH, THE ASSESSING OFFICER INVOKED THE PROVISION U/S.153A OF THE ACT AND DEALT THE MATTER ON MERITS AND HELD THAT TH E ASSESSEE HAD ISSUED 50,00,000 SHARES WORTH RS.5,00,00,000/- TO N EXTGEN FAR EAST LTD. THE ASSESSEE HAD ALSO SUBMITTED THE ADDR ESS OF NEXTGEN FAR EAST LTD. WHICH WAS FOREIGN ENTITY. THE ASSES SEE ALSO RECEIVED USS $ 1150000 EQUIVALENT TO RS.5,02,92,375 TOWARDS SHARE APPLICATION MONEY AND THEY WERE ALLOTTED 5,00,000 EQUITY SHARES OF RS.10 EACH. THE IDENTITY OF THE FOREIGN COMPANY WAS NOT ESTABLISHED, THEREFORE THE SHARE APPLICATION MONEY TREATED AS EXPLAINED CASH CREDIT AND TREATED THE INCOME OF THE ASSESSEE. ON PERUSAL OF THE SAID ORDER NOTHING CAME TO THE NOTIC E THAT ANY MATERIAL FOUND DURING THE SEARCH WAS TAKEN INTO CON SIDERATION WHILE REOPENING THIS ISSUE. IT IS NOT IN DISPUTE T HAT THE SEARCH WAS CONDUCTED ON 13.10.2010 WHEREAS ASSESSEE HAD ALREAD Y FILED THE RETURN OF INCOME ON 28.10.2005. IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD TO KNOW ABOUT THE F ACT THAT HOW THIS ISSUE WAS DEALT:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE, THE AS SESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND THE CONTENTIONS AS RAISED BY THE APPELLANT. ADMITTEDLY IN MAKING THE REGULAR ASSESSMENT UNDER S.143(3) DATED 13.12.2007, THE ASSESSING OFFICER HAD ENQUIRED INTO THE GENUINENESS OF THE SHARE APPLICATION MONEY AND AFTER TAKING INTO CONSIDERATION THE DETAILS AS FURN ISHED ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 5 BEFORE THE ASSESSING OFFICER, THE CLAIM HAD BEEN ACCEPTED. THE LAW REQUIRES THAT ONLY PENDING ASSESSMENT PROCEEDINGS ABATE. IN THE CASE OF THE APPELLANT, THE ADDITION AS MADE WITH RESPECT TO THE SHARE APPLICATION MONEY IS NOT TENABLE SINCE REGULA R RETURN HAD BEEN FILED AND THE PARTICULARS PERTAININ G TO THE SAID ADDITION HAD BEEN DISCLOSED AND THE SAME H AD BEEN ACCEPTED IN THE ASSESSMENT MADE UNDER S. 143(3 ). AS PER LAW, COMPLETED ASSESSMENTS DO NOT ABATE. IT IS A FACT THAT IN THE IMPUGNED CASE, THE ASSESSMENT HA D BEEN COMPLETED UNDER S. 143(3); NO PROCEEDINGS WERE PENDING ON THE DATE OF SEARCH AND NO MATERIAL WITH REGARD TO THE SHARE APPLICATION MONEY THAT WAS DISCOVERED DURING THE SEARCH, IF ANY, HAS BEEN BROU GHT ON RECORD SO AS TO JUSTIFY THE SAID ADDITION. WHER E THE TRANSACTIONS ARE DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO SEARCH AND NO INCRIMINATING DOCUMENTS HAVE BEEN FOUND DISCOVERED DURING THE COURSE OF SEARCH AND IF NO PROCEEDINGS ARE PENDING AS ON DATE OF SEARCH, SUCH MATTER IS BEYOND THE SCOPE OF ASSESSMENT TO BE MADE UNDER S. 153A. SECTION 153A PROVIDES THAT WHERE A SEARCH IS INITIATED UNDER S. 132, THE ASSESSING OFFICER SHALL ASSESS OR REASSESS TH E TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISITIO N IS ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 6 MADE. THE 1 ST PROVISO STATES THAT THE ASSESSMENT OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITH SUCH S IX ASSESSMENT YEARS WHILE THE 2 ND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATIO N OF THE SEARCH UNDER 132 SHALL ABATE. WHILE UNDER TH E 1 ST PROVISO, THE ASSESSING OFFICER IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE 2 ND PROVISO, ONLY THE ASSESSMENT HAD BEEN COMPLETED UNDER S. 143(3); NO PROCEEDINGS WERE PENDING ON THE DATE O F SEARCH AND NO MATERIAL WAS FOUND DURING THE SEARCH AS REGARDS SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT. 5.1 THE HONBLE MUMBAI ITAT SPECIAL BENCH IN THE CA SE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT 137 ITD 287 HAS HELD, ON THE SUBJECT MATTER AS UNDER: A) IN THE ASSESSMENTS THAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER S. 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEAR SEPARATELY; B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER S. 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL , ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 7 WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS ( I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 5.2 RECENTLY IN THE CASE OF JAI STEEL (INDIA) V/S. ASST. CIT 219 TAXMAN 223 (RAJ) IT IS HELD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED. 5.3 IN VIEW OF THE ABOVE DISCUSSION, FOLLOWING THE DECISION OF THE SPECIAL BENCH OF HONBLE MUMBAI TRIBUNAL IN CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DEPUTY CIT 18 ITR 106 (MUMBAI)(SB) IT IS HELD THAT IN THE INSTANT CASE THE ASSESSING OFFICER DID NOT HAVE POWER TO MAKE ANY ADDITION IN ABSENCE OF INCRIMINATING MATERIAL. THEREFORE, IT FOLLOWS THAT THE ADDITION MADE BY THE ASSESSING OFFICER TO THE INCOM E ON ACCOUNT OF CASH CREDIT IS BEYOND THE SCOPE OF SECTION 153A. GROUND 1 IS DECIDED IN THE FAVOUR OF THE APPELLANT. HAVING DECIDED ON THE VALIDITY OF T HE ASSESSMENT, IF AM NOT ADJUDICATING ON THE REST OF GROUNDS I.E. GROUNDS 3, 4 AND 5. 6. ON APPRAISAL OF THE ORDER PASSED BY THE ASSESSIN G OFFICER DATED 25.03.2013 WE ARE OF THE VIEW THAT NO MATERIA L WAS FOUND WITH REGARD TO THE SHARE APPLICATION MONEY DURING S EARCH. THE ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 8 PROVISION OF LAW HAS DULY BEEN DISCUSSED BY THE CIT (A) IN HIS ORDER WHICH IS NOT REQUIRED TO BE DISCUSSED AGAIN. SINCE NO MATERIAL OF ANY KIND WAS FOUND DURING THE SEARCH, T HEREFORE IN THE SAID CIRCUMSTANCES THE CIT(A) HAS PASSED THE ORDER IN QUESTION JUDICIOUSLY AND CORRECTLY WHICH DOES NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THE DECISION BY THE SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAS IN FACT BEEN SUBSEQUENTLY APPLIED BY THE HONBLE JURISDICTIONAL HIGH COURT. THEREFORE IN THE SAID CIRCUMSTANCES THE APPEAL OF T HE REVENUE IS DISMISSED C.O.51/M/2016 7. SINCE THE APPEAL FILED BY THE REVENUE HAS BEEN D ISMISSED WHILE DECIDING THE APPEAL NO.6303/M/2014, THEREFORE , THERE IS NO NEED TO DECIDE THE C.O. RAISED BY THE ASSESSEE, BEC AUSE THE SAME WOULD BE ACADEMIC IN NATURE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS HERE BY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2016 SD/- SD/- (SANJAY ARORA) (AMARJIT SINGH) / ACCOUNTANT MEMBER #$ /JUDICIAL MEMBER % & MUMBAI; ' DATED : 5 TH OCTOBER, 2016 MP MP MP MP ITA NO.6303/MUM/2014 & CO.51/M/16 ASSESSMENT YEAR: 2005-06 9 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ( ) / THE CIT(A)- 4. ( / CIT 5. )*+ $$,- , ,- , % & / DR, ITAT, MUMBAI 6. +./ 0 / GUARD FILE. / BY ORDER, ) $ //TRUE COPY// / ! ' (DY./ASSTT. REGISTRAR) # $ , % & / ITAT, MUMBAI