ACIT, Bhubaneswar V. Late Famida Serajuddin, Bhubaneswar

ITA 646/CTK/2012

• Counselvise Citation: 64622114 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Keywords: Unexplained investment; Document seized; Principle of natural justice; Documents seized
• Section: 142(1); 153A; 132; 12; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI P.K.BANSAL (AM) AND D.T.GARASIA (JM) I.T.A. NO. 646 /CTK/2012 ASSESSMENT YEAR: 2008-09 ACIT, C - 1(2), BHUBANESWAR LATE FAMIDA SERAJUDDHIN, L/H MERAJ YUSHA, N/4/135, IRC VILLAGE, NAYAPALI, BHUBANESWAR PA NO.AIEPK 4759 L APPELLANT RESPONDENT C.O.19/CTK/2013 (ARISING OUT OF I.T.A. NO. 646 /CTK/2012) ASSESSMENT YEAR: 2008-09 LATE FAMIDA SERAJUDDHIN, L/H MERAJ YUSHA BHUBANESWAR PA NO.AIEPK 4759 L ACIT, C - 1(2), BHUBANESWAR APPELLANT RESPONDENT FOR THE APPELLANT:SHRI K. AJAY KUMAR FOR THE CROSS OBJECTOR: SHRI SUNIL MISHRA DATE OF HEARING: 24. 4.2014 DATE OF PRONOUNCEMENT: 2 /5/2014 ORDER PER BENCH: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECT ION FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 25.10.2012 OF LD CIT(A)-1, B HUBANESWAR FOR THE ASSESSMENT YEAR 2008- 09. 2 I. T.A. NO. 646 /CTK/2012 C.O.19/CTK/2013 ASSESSMENT YEAR: 2008-09 2. THE REVENUE IN ITS APPEAL HAS TAKEN THE FOLLOWIN G GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO TAKE SALARY RECEIV ED FROM SERAJUDDIN ST CO. (P) LTD. AT RS.25,00,000/- IN PLACE OF RS.30,00,000/- A S PER THE ASSESSMENT ORDER WITHOUT GIVING THE AO AN OPPORTUNITY IN THIS REGARD . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO TAKE THE RECEIPTS FROM SAROSH YAZDANI AT RS.30.00 LAKH IN PLACE OF RS.40.00 LAKH AS PER THE ASSTT. ORDER WITHOUT GIVING THE AO AN OPPORTUNITY IN THIS REGARD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.80.00 LAKH IN UNEXPLAINED INVESTMENT IN JEWELLERY WITHOUT GIVING THE AO ANY OPPORTUNITY IN THIS REGARD, WHEN THE ASSESSEE DID NOT FURNISH ANY EXPLANATION BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. 3. ALTHOUGH IN CROSS OBJECTIONS, ASSESSEE HAS TAKEN SO MANY GROUNDS, BUT AFTER GOING THROUGH THE GROUNDS, WE FEEL IT PROPER TO ADJUDICAT E GROUND NOS.1 & 2 OF CROSS OBJECTION, WHICH READ AS UNDER: 1. THAT THE LD CIT(A) HAS COMMITTED SERIOUS ERROR IN NOT QUASHING AND/OR ANNULLING THE ASSESSMENT ORDER OF THE ACIT, BHUBANE SWAR AS THE ACIT DOES NOT HAVE THE JURISDICTION IN ACCORDANCE WITH SECTION 12 7 OF THE INCOME TAX ACT,1961. 2. THAT THE LD CIT(A) HAS COMMITTED SERIOUS ERROR I N NOT QUASHING AND/OR ANNULLING THE ASSESSMENT ORDER WHICH HAS BEEN PASSE D U/S.153A OF THE ACT AS NO SEARCH U/S.132 OF THE ACT HAS BEEN INITIATED AGAINS T THE APPELLANT. 4. FIRST WE TAKE UP GROUND NOS.1 & 2 OF ASSESSEES CROSS OBJECTION FOR ADJUDICATION. 5. THE SHORT FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE OPERATION U/S.132 WAS CONDUCTED ON 28.5.2008 IN THE CASE OF THE ASSESSEE AS WELL AS ON VARIOUS PERSONS AND CONCERNS OF M/S. SERAJUDDIN & CO. AND GROUP CASES. HOWEVER, THE ASS ESSEE PRE-DECEASED ON THE DATE OF SEARCH. THE ASSESSING OFFICER HAS TREATED SRI MERAJ YUSHA A S THE LEGAL REPRESENTATIVE OF THE DECEASED ASSESSEE. NOTICE U/S.153A OF THE ACT WAS ISSUED ON 3.3.2010. HOWEVER, NO RETURN OF INCOME 3 I. T.A. NO. 646 /CTK/2012 C.O.19/CTK/2013 ASSESSMENT YEAR: 2008-09 HAS BEEN FILED BY THE ASSESSEE. NOTICE U/S. 142(1) WAS NOT COMPLIED. ACCORDINGLY, THE AO PASSED THE ORDER U/S.144 R.W.S 153A OF THE ACT. WH ILE COMPUTING THE INCOME, THE ASSESSING OFFICER HAS CONSIDERED THE TDS RETURN FILED BY THE CONCERNS IN WHICH, ASSESSEE WAS A DIRECTOR/MEMBER/PARTNER, BANK STATEMENTS INFORMATIO N REGARDING VARIOUS MUTUAL FUNDS, INSURANCE POLICIES AND SEIZED DOCUMENTS. THE ASSE SSING OFFICER OBSERVED THAT ASSESSEE WAS RECEIVING SALARY OF RS.5,00,000/- PER MONTH FROM M/ S. SERAJUDDIN & CO. (P) LTD., AND ALSO RECEIVED SALARY OF RS.5,00,000/- FROM M/S. KUSUM PO WERMENT (P) LTD., AND RS.2,50,000/- FROM STARLIGHT IRON (P) LTD. DURING THE COURSE OF SEA RCH, JEWELLERY VALUED AT RS.80 LAKHS WAS SEIZED WHICH WAS CONSIDERED BELONGING TO THE ASSESSEE. TH E AO OBSERVED THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS.40 LAKHS FROM SAROSH YAZDANI. THER EFORE, AO HAS COMPUTED THE TOTAL INCOME AT RS.1,57,50,000/-. ON APPEAL, LD CIT(A) CONFIRME D THE ACTION OF THE AO IN FRAMING THE ASSESSMENT UNDER SECTION 144/153A OF THE ACT. HE NCE, THE ASSESSEE HAS FILED CROSS OBJECTIONS ON THE ABOVE GROUNDS. 6. AT THE TIME OF HEARING, LD A.R. SUBMITTED BEFORE US THAT THE ASSESSMENT MADE UNDER SECTION 144/153A IS ILLEGAL, ARBITRARY AND WITHOUT THE JURISDICTION BY THE AO. LD A.R. SUBMITTED THAT NO SEARCH U/S.132 WAS INITIATED IN THE CASE OF LATE FAMIDA SERAJUDDIN SO AS TO ENABLE THE AO TO ASSUME THE JURISDICTION U/S.153A OF THE ACT. BEFORE DECIDING THE FACT OF THE CASE THAT THE SEARCH WAS CARRIED OUT IN THE NAME OF FAMIDA SERAJU DDIN, IT IS NOTED THAT FAMIDA SERAJUDDIN DIED ON 8.9.2007 AND THE SEARCH WAS CONDUCTED ON 28 ,5.2008 IN THE CASE OF THE ASSESSEE AS WELL AS VARIOUS PERSONS AND CONCERN OF M/S. SERAJUD DIN & CO. AND GROUP OF CASES. LD A.R. SUBMITTED THAT NO WARRANT OF AUTHORIZATION HAS BEEN ISSUED IN THE NAME OF FAMIDA SERAJUDDIN BY THE DIRECTOR OF INCOME TAX OR ANY OTHER AUTHORIT Y, COMPETENT TO ISSUE WARRANT OF AUTHORIZATION AS PRIOR TO THE DATE OF SEARCH ON FAM IDA SERAJUDDIN . THERE WAS NO SCOPE ON THE 4 I. T.A. NO. 646 /CTK/2012 C.O.19/CTK/2013 ASSESSMENT YEAR: 2008-09 PART OF THE DECEASED ASSESSEE TO CONCEAL THE PROPE RTY IF A SUMMON U/S.131 OF THE ACT AND NOTICE U/S.142 (1) OF THE ACT WILL BE ISSUED. IN O RDER TO ASSUME THE JURISDICTION U/S.153A OF THE ACT, IT IS INCUMBENT ON THE PART OF THE AO TO ENSUR E THAT ACTION U/S 132(1) OF THE ACT WAS INITIATED IN THE CASE OF FAHMIDA SERAJUDDIN. IN TH E INSTANT CASE, THE AO WITHOUT ENSURING WHETHER THE ACTION U/S.131 OF THE ACT HAS BEEN INI TIATED IN THE CASE OF FAHMIDA SERAJUDDIN, HAS ASSUMED THE JURISDICTION U/S.153A OF THE ACT, WHICH IS NOT ONLY ILLEGAL BUT ALSO NON-APPLICATION OF MIND. LD A.R. SUBMITTED THAT IN VIEW OF THIS, THE ASSESSMENT ORDER PASSED U/S.153A IN THE IMPUGNED CASE IS ILLEGAL, WITHOUT JURISDICTION, ARB ITRARY AND LIABLE TO BE ANNULLED/QUASHED. 7. LD A.R. ALSO RELIED UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAKESH KUMAR, 313 ITR 305 (P&H). H E ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF R.C.JAIN THROUGH L. R. VS CIT AND OTHERS, 190 CTR 34(DEL). 8. LD A.R. RELIED UPON THE ORDER OF THE CIT(A). 9. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GO NE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS AN ADMITTED FACT ON RECORD THAT THE A SSESSEE DECEASED FAHMIDA SERAJUDDIN PASSED AWAY ON 8.9.2007 LEAVING BEHIND HER HUSBAND MD YUSH A AND SON SONS SAROSH YAZDANI, SERAJ YUSHA AND MERAJ YUSHA, WHEREAS THE SEARCH WAS CONDU CTED AT THE RESIDENCE OF DECEASED ASSESSEE ON 28.5.2009 AND NO UNDISCLOSED WEALTH OF THE DECEASED ASSESSEE WAS FOUND IN THE POSSESSION OF MERAJ YUSHA, WHO HAPPENS TO BE THE YO UNGER SON. WE FIND FROM THE ABOVE FACT, IT IS CLEAR THAT ASSESSMENT WAS COMPLETED U/S.153A AND 144 OF THE ACT IN THE NAME OF FAHMIDA SERAJUDDIN THROUGH HER LEGAL HEIRS. WE FIND THAT T HE LEGAL HEIR DID NOT FILE ANY RETURN OF INCOME. AS PER SECTION 153A, TO ASSUME THE JURISDICTION, IT IS INCUMBENT UPON THE ASSESSEE TO ENSURE 5 I. T.A. NO. 646 /CTK/2012 C.O.19/CTK/2013 ASSESSMENT YEAR: 2008-09 THAT ACTION 132(1) OF THE ACT IN THE CASE OF FAHMID A SERAJUDDIN WAS CONDUCTED. IN THE INSTANT CASE, FAHMIDA SERAJUDDIN DIED PRIOR TO THE SEARCH. THEREFORE, IN OUR OPINION, THE AO DID ASSUME JURISDICTION UNDER SECTION 153A OF THE ACT, WHICH IS ILLEGAL AND ALSO THE CASE OF NON- APPLICATION OF MIND. THEREFORE, WE ARE OF THE VIEW THAT THE IMPUGNED ASSESSMENT ORDER IS ILLEGAL, WITHOUT JURISDICTION, ARBITRARY AND IS LIA BLE TO ANNULLED/QUASHED. WE FIND SUPPORT FROM THE DECISION OF HONBLE P&H HIGH COURT, WHEREIN, IT IS HELD AS UNDER: THAT THE FATHER OF THE RESPONDENT DIED PRIOR TO TH E ISSUANCE OF SEARCH AUTHORIZATION AND THUS THE SEARCH WARRANT WAS ISSUE D IN THE NAME OF A DEAD PERSON AND THE PANCHANAMA WAS ALSO PREPARED IN THE NAME OF THE DEAD PERSON. THEREFORE, NOT ONLY WAS THE SEARCH INVALID BUT THE AUTHORIZATION FOR CONDUCTING SEARCH ITSELF WAS INVALID AND VOID AB INITIO. THUS , THE ORDER OF THE AO UNDER SECTION 158BC/144 WAS ILLEGAL AS IT WAS PASSED IN C ONSEQUENCE OF A SEARCH WARRANT ISSUED UNDER SECTION 132 OF THE ACT IN THE NAME OF A DEAD PERSON. SUCH SEARCH WARRANT WAS AGAINST THE LAW OF NATURAL JUSTI CE. NO VALID ASSESSMENT COULD BE MADE ON THE STRENGTH OF SUCH AN INVALID SEARCH W ARRANT. 10. MOREOVER, WE ALSO FIND SUPPORT FROM THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF R.C.JAIN THROUGH L.R (SUPRA), WHEREIN, IT IS HEL D AS UNDER: WHERE THE DEPARTMENT HAS COMMENCED PROCEEDINGS UND ER SECTION 158BC OF THE ACT AGAINST A DEAD PERSON, DESPITE KNOWLEDGE OF HIS DEATH AND THAT TOO BEFORE EXPIRY OF THE PERIOD ALLOWED TO THE ASSESSEE FOR FI LING THE RETURN, THEN THERE WAS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AS W ELL AS THE PROVISIONS CONTAINED IN THE ACT AND, THEREFORE, THE ASSESSMENT IS LIABLE TO BE QUASHED. 11. RESPECTFULLY FOLLOWING THE DECISIONS (SUPRA), W E ARE OF THE VIEW THAT THE ASSESSMENT UNDER SECTION 153A/144 HAS BEEN COMPLETED AGAINST A DEAD PERSON (DECEASED ASSESSEE FAHMIDA SERAJUDDIN) , IS ILLEGAL ALSO A CASE OF NON -APPLICATION OF MIND, WHICH DESERVES TO BE ANNULLED/QUASHED. WE, THEREFORE, QUASHED THE ASSES SMENT U/S.144 R.W.S153A OF THE ACT. HENCE, WE ALLOW CROSS OBJECTION NO.1 & 2 TAKEN BY T HE ASSESSEE. 6 I. T.A. NO. 646 /CTK/2012 C.O.19/CTK/2013 ASSESSMENT YEAR: 2008-09 12. SINCE, WE HAVE QUASHED THE ASSESSMENT CONSIDERI NG THE CROSS OBJECTIONS OF THE ASSESSEE IN GROUND NO.1 & 2, THERE I S NO NEED TO ADJUDICATE OTHER GROUNDS OF CROSS OBJECTION OF THE ASSESSEE AS WELL AS THE APPEAL FILED BY THE REVENUE. 13. IN THE RESULT, CROSS OBJECTION FILED BY THE ASS ESSEE IS ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 /5/2 014 SD/- SD/- (P.K.BANSAL) (D.T.GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, CUTTACK 2 /5/2014 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: ACIT, CIRCLE 1(2), BHUBANESWAR 2. THE RESPONDENT:LATE FAMIDA SERAJUDDIN, LH MERAJ YUA SHA, N-4,/135, IRC VILLAGE, NAYAPALI, BHUBANESWAR-751015. 3. THE CIT, BHUBANESWAR 4. THE CIT(A), BHUB ANESWAR. 5. DR, CUTTACK BENCH 6. GUARD FILE. TRUE COPY// BY ORDER ASST. REGISTRAR, ITAT, CUTTACK