SUMANLATA BANSAL, MUMBAI V. ASST CIT CEN CIR 8, MUMBAI

ITA 6541/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8607 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-12-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 30-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Revision of order; Audit objection; Period of limitation; Tangible material; Difference of opinion; Validity of assessment; Time period of passing order; Revised return; Reason to believe
• Section: 143(3); 153A; 139(5); 147; 68; 148; 132; 11; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NOS.6541 TO 6546/MUM/2012 ASSESSMENT YEARS: 1999-2000 TO 2004-05 SMT. SUMANLATA BANSAL, 101, NAMAN CENTER, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. ACIT-17(1), 113, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 ( !'# $ /ASSESSEE) ( / REVENUE) PAN. NO . AAHPB0141N % & $ ' / DATE OF HEARING : 08/02/2017 & $ ' / DATE OF ORDER: 14/02/2017 !'# $ ! / ASSESSEE BY NONE ! / REVENUE BY MS. ANUPAMA SINGLA-DR ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THIS BUNCH OF SIX APPEALS IS BY THE ASSESSEE AGAINS T THE IMPUGNED ORDERS ALL DATED 30/08/2012 OF THE FIR ST APPELLATE AUTHORITY, MUMBAI. 2. DURING HEARING OF THIS APPEAL, NOBODY WAS PRESENT FOR THE ASSESSEE, WHEREAS, MS. ANUPAMA SINGLA, LD. DR, WAS PRESENT FOR THE REVENUE. WE FIND THAT THE TRIBUNAL VIDE ORDER DATED 28/09/2016, WHILE ADJUDICATING THE APPE ALS OF THE ASSESSEE ON QUANTUM ADDITION ALLOWED THE APPEAL S FOR ASSESSMENT YEARS 1999-2000, 2000-01 AND 2001-02, WHEREAS, THE REMAINING APPEALS FOR ASSESSMENT YEARS 2002- 03, 2003-04 AND 2004-05 RESTORED TO THE FILE OF THE ASSESSING OFFICER. THIS FACTUAL MATRIX WAS NOT CONT ROVERTED BY THE REVENUE. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE TRIBUNAL VIDE ORDER DATED 28/09/2016 (ITA NOS.5 25 TO 530/MUM/2008) DECIDED THE APPEALS WITH RESPECT TO ADDITION/PROCEEDINGS CARRIED OUT U/S 153A OF THE IN COME TAX ACT, 1961 (HEREINAFTER THE ACT), ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE. THE RELEVANT PORTION FROM THE AFORESAID ORDER OF THE TRIBUNAL IS REPRODUCED HEREU NDER FOR READY REFERENCE AND ANALYSIS:- PRESENT IS A BUNCH OF APPEALS PREFERRED BY THE AS SESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS) ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 3 [HEREINAFTER REFERRED TO AS THE CIT(A)] OF EVEN DAT ED 26.09.2007 IN RELATION TO THE ADDITIONS MADE BY THE AO IN THE ASS ESSMENT PROCEEDINGS CARRIED OUT U/S 153A OF THE INCOME TAX ACT ON ACCOU NT OF GIFTS RECEIVED BY THE ASSESSEE, DETAILED AS UNDER: S.NO. ASST. YEAR AMOUNT OF GIFT PARA NO. OF THE A SSESSMENT ORDER 1 1999-2000 RS.2,04,000/- PARA NO.5 2 2000-01 RS.4,55,000/- PARA NO.5 3 2001-02 RS.6,52,000/- PARA NO.5 4 2002-03 RS.4,55,000/- PARA NO.5 2. THE ASSESSEE IS AN INDIVIDUAL DOING BUSINESS OF DEALING IN SHARES AND SECURITIES AND ALSO DIRECTOR IN THE COMPANY M/S. B ANSAL SHAREVEST SERVICES PVT. LTD. A SEARCH ACTION WAS CARRIED OUT IN THE P REMISES OF THE SAID COMPANY, BUT NO INCRIMINATING MATERIAL WAS FOUND. D URING THE ASSESSMENT PROCEEDINGS FOR THE BLOCK OF 6 ASSESSMENT YEARS AS PER THE PROVISIONS OF SECTION 153A OF THE ACT, THE AO NOTICED THAT AS PER CERTAIN GIFT DEEDS THE ASSESSEE HAD RECEIVED THE AMOUNTS AS STATED IN THE TABLE ABOVE. THE AO ASKED THE ASSESSEE TO PRODUCE THE CONCERNED DONORS TO PROVE THE GENUINENESS OF THE GIFT AND FINANCIAL CAPACITY OF T HE DONORS. IN REPLY DATED 17.02.2006, THE ASSESSEE SUBMITTED THAT THE GIFTS W ERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE ALSO FILED CONF IRMATIONS OF THE DONORS IN THIS RESPECT. HOWEVER, THE CONFIRMATIONS FILED B Y THE ASSESSEE WERE REJECTED BY THE A.O. ON THE GROUND THAT THE AFFIDAV ITS FILED BY THE DONORS WERE DATE 28.03.2006 WHEREAS THE COVERING LETTER TO THESE AFFIDAVITS WAS DATED 27.3.2006 I.E. ONE DAY PRIOR TO THE DATE OF A FFIDAVITS. FURTHER THAT ALL THE DONORS WERE IDENTIFIED BY ONLY ONE PERSON. THE A.O., THEREFORE, TREATED THE GIFTS SHOWN TO HAVE BEEN RECEIVED BY THE ASSESS EE AS UNEXPLAINED CREDITS UNDER SECTION 68 AND ADDED THE GIFT AMOUNTS INTO TH E INCOME OF THE ASSESSEE. 3. IN HER APPEALS BEFORE THE CIT(A), THE ASSESSEE TOOK A LEGAL PLEA CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDERS ON THE GROUND THAT THE NOTICES U/S 143(2) OF THE ACT WERE NOT ISSUED TO TH E ASSESSEE BY THE AO BEFORE PASSING THE ASSESSMENT ORDERS. HOWEVER, THE ASSESSEE DID NOT ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 4 SUCCEED ON THE ISSUE OF LEGALITY AND VALIDITY OF TH E ASSESSMENTS AS THE LEARNED CIT(A) WAS OF THE OPINION THAT THE REQUIREM ENT OF ISSUE OF NOTICE U/S. 143(2) TO MAKE ASSESSMENT, AS IN THE CASE OF N ORMAL PROCEDURE, WAS NOT REQUIRED AT ALL IN RESPECT OF THE ASSESSMENTS FRAME D U/SS. 153A OR 153C OF THE ACT. FURTHER, THE LD. CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE ISSUED A QUESTIONNAIRE AND ASKED THE ASSESSEE TO PR ODUCE DOCUMENTARY EVIDENCES OR THE DONORS /SOURCES FOR HIS EXAMINATIO N IN ORDER TO ASCERTAIN THE FINANCIAL POSITION OF THE ALLEGED DONORS TO MAKE TH E GIFTS. AFTER EXAMINING THE EVIDENCE SO FURNISHED BY THE ASSESSEE, THE LEAR NED CIT(A) CONCLUDED THAT THE GIFTS COULD NOT BE ACCEPTED AS GENUINE GIF TS VIDE PARA 2.3.10 OF HIS ORDER WHICH READ AS UNDER: - 2.3.10 THEREFORE, IN VIEW OF THIS DETAILED DISCUSS ION HELD ABOVE, THESE GIFTS CANNOT BE ACCEPTED AS A GENUINE GIFTS FOR THE FOLLO WING REASONS SUMMARIZED BELOW:- (I) ONLY AFFIDAVITS FROM THE DONORS FILED. (II) DONORS WERE NOT PRODUCED BEFORE THE ASSESSING OFFIC ER. (III) IN MANY CASES, NO DETAILS OF THE ASSESSING OFFICER AND THE STATION OF ASSESSING OFFICER OF THE ALLEGED DONORS WERE THEY W ERE ASSESSED HAVE BEEN GIVEN ENABLING THIS ASSESSING OFFICER TO EXAMINE TH E RECORDS OF THE ALLEGED DONORS. ONLY GIR NOS. HAVE BEEN GIVEN. (IV) NO DOCUMENTARY EVIDENCES OTHER THAN AFFIDAVITS WERE PRODUCED BEFORE THE ASSESSING OFFICER TO PROVE THE FINANCIAL COMPETENCE OF THE ALLEGED DONORS. (V) EVEN IN THE APPELLATE PROCEEDINGS WHEN I SPECIFICAL LY ASKED THE ASSESSEE TO PRODUCE THE PERSONS OR TO FURNISH THE DOCUMENTARY E VIDENCES FOR THE PURPOSE OF VERIFYING THE FINANCIAL COMPETENCE OF TH E ALLEGED DONORS, THE ASSESSEE EXPRESSED HIS INABILITY TO COMPLY WITH MY REQUEST. (VI) THUS, THE ASSESSEE HAS FAILED TO ESTABLISH THE FINA NCIAL CAPABILITY OF THE DONORS TO ADVANCE THESE GIFTS. (VII) THE PECULIAR FACT OF A GROUP OF DONORS MAKING GIFTS TO A GROUP OF PERSONS OF THE ASSESSEE'S AND HIS FAMILY MEMBERS IS UNTHINKABL E AND HENCE IT FALLS OUTSIDE THE REALM OF HUMAN PROBABILITY. THEREFORE, SINCE THE ASSESSEE HAS NOT EXPLAINED PRO PERTY THE SOURCE OF THE INVESTMENT OF DEPOSITS IN THE BANK ACCOUNT WHICH SH E HAS ATTEMPTED TO EXPLAIN BY WAY OF ALLEGED RECEIPT OF GIFTS, WHICH S TANDS UNPROVED, THE CASH DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE A S REFLECTED IN THE BALANCE-SHEET FILED BY THE ASSESSEE IS TO BE TREATE D AS THE UNEXPLAINED INVESTMENT U/S. 69B OF THE ACT, AND HENCE, UNDISCLO SED INCOME OF THE ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 5 ASSESSEE. THUS, THE ADDITION OF RS.2,04,000/- IS CO NFIRMED AS THE UNDISCLOSED INCOME U/S. 69B AND NOT U/S. 68 AS HAS BEEN DONE BY THE ASSESSING OFFICER.' SIMILARLY HE CONFIRMED THE GIFTS IN OTHER YEARS ALS O. 4. IN A.Y. 2001-02, 2002-03 AND 2003-04 ONE MORE IS SUE WAS CONSIDERED BY THE A.O. FOR ADDITION, I.E. THE DEPOS ITS MADE IN THE HDFC ACCOUNT IN FORT BRANCH MUMBAI OF SHRI SANTOSH PURAN MAL PUROHIT WHO WAS INTRODUCED BY THE ASSESSEE. THE A.O. MADE THE FOLLO WING ADDITIONS IN THE RESPECTIVE ASSESSMENT YEARS. S.NO. ASST. YEAR AMOUNT OF UNEXPLAINED CASH DEPOSITS PARA NO. OF THE ASSESSMENT ORDER 1 2001-02 RS.8,20,000/- PARA NO.13 2 2002-03 RS.11,24,000/- PARA NO.13 3 2003-04 RS.4,95,000/- PARA NO.5 4 2004-05 RS.40,000/- PARA NO.5 THE ASSESSEE CONTENDED THAT SHE MIGHT HAVE INTRODUC ED THE ACCOUNT BUT SHE WAS NOT AT ALL CONCERNED WITH THE OPERATION OF THE BANK ACCOUNT. THE A.O ASKED THE ASSESSEE FOR PRODUCTION OF SHRI S .P. PUROHIT BEFORE HIM, BUT ON FAILURE OF THE ASSESSEE TO DO SO, THE AO TRE ATED THE DEPOSITS IN THE BANK ACCOUNT AS ASSESSEE'S OWN UNDISCLOSED DEPOSITS UNDER SECTION 69B OF THE I.T. ACT. THE ASSESSEE'S CONTENTIONS BEFORE THE LD. CIT(A) WE RE ALSO NOT ACCEPTED. THE CIT(A) CONFIRMED THE ADDITION HOLDING AS UNDER: - 'THE ASSESSEE HAS OFFERED NO EXPLANATION AS TO WHY THIS SHOULD NOT BE TREATED AS HER INCOME AND THUS HAS FAILED TO REBUT THE PRESUMPTION BY PRODUCING NECESSARY EVIDENCES OR BY GETTING ANY CON FIRMATION LETTER FROM THE OTHER THIRD PARTY NAMELY SHRI SANTOSH PURNAMAL PUROHIT WHETHER HE WAS ASSESSED TO TAX, OR WHETHER HE HAS DISCLOSED AL L THESE FACTS IN HIS RETURNS OF INCOME FILED OR WHETHER HE HAS GOT ANY S OURCE FOR THE DEPOSITS MADE IN THE BANK ACCOUNTS, THE STATEMENT OF WHICH W AS FOUND IN THE ASSESSEE'S PREMISES ETC. UNLESS THE ASSESSEE PRODUCES THE CONFIRMATION LETTER FROM THE SAID PUROHIT, THE PRESUMPTION WOULD STAND UNREBUTTED BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS NOT EXPLA INED SATISFACTORILY AS TO WHY THIS BANK ACCOUNT OF THE DEPOSITS IN THE BAN K ACCOUNT SHOULD NOT BE TREATED AS HER OWN. HENCE, AS PER THE PRESUMPTIO N ENSHRINED IN SECTION 292C OF THE LT. ACT, THIS BANK ACCOUNT IS T O BE TREATED AS HER OWN DEPOSITS. AND, SINCE THESE DEPOSITS WERE NOT ACCOUN TED FOR IN THE BOOKS ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 6 OF THE APPELLANT AND SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THESE DEPOSITS THEY ARE TO BE TREATED AS UNEXPLAINE D INVESTMENT U/S. 69B OF THE INCOME-TAX ACT.' HE ACCORDINGLY CONFIRMED THE ADDITIONS IN RESPECTIV E YEARS. 5. BEING AGGRIEVED BY THE ABOVE FINDINGS OF THE LD. CIT(A), THE ASSESSEE PREFERRED THE PRESENT APPEALS BEFORE THE T RIBUNAL. LENGTHY ARGUMENTS WERE ADVANCED BEFORE THE TRIBUNAL ON THE LEGAL ISSUE REGARDING THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT WITHOUT ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. A DIFFERENCE OF OPINION AROSE BETWEEN THE MEMBERS OF THE TRIBUNAL O N THIS ISSUE. THE LD. JUDICIAL MEMBER OPINED THAT THE ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS NECESSARY FOR THE ASSESSING OFFICER (HE REINAFTER REFERRED TO AS THE AO) TO ASSUME JURISDICTION TO MAKE ASSESSMENT U NDER SECTION 153A OR 153C OF THE ACT. HE, THEREFORE, HELD THAT SINCE NO TICE UNDER SECTION 143(2) WAS NOT ISSUED IN THIS CASE BEFORE THE FRAMING OF T HE ASSESSMENT UNDER SECTION 153A OF THE ACT, HENCE THE ASSESSMENTS FRAM ED BY THE AO IN ALL THESE YEARS WERE BAD IN LAW. HOWEVER, THE LD. ACCO UNTANT MEMBER WAS OF THE VIEW THAT THE ISSUANCE OF NOTICE UNDER SECTI ON 143(2) WAS NOT MANDATORY IN RELATION TO ASSESSMENTS FRAMED UNDER S ECTION 153A OF THE ACT. THE MATTER WAS, THUS, REFERRED TO THE THIRD M EMBER. THE HONBLE PRESIDENT OF THE TRIBUNAL ACTING AS THIRD MEMBER, V IDE ORDER DATED 20.05.15, HAS DECIDED THE ISSUE IN FAVOUR OF THE RE VENUE HOLDING THAT THE ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT MANDATORY IN RELATION TO THE FRAMING OF ASSESSMENT UNDER SECTION 153A OF THE ACT. AFTER THE DECISION ON THIS LEGAL ISSUE, THE MATTER HAS BE EN REFERRED BACK TO THIS REGULAR BENCH TO DECIDE THE APPEAL IN THE LIGHT OF THIRD MEMBER DECISION ON THE LEGAL ISSUE. 6. THE ASSESSEE, DURING THE HEARINGS BEFORE US HAS RAISED ADDITIONAL LEGAL PLEA THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION IN RELATION TO THE GIFT DEEDS IN QUESTION, H ENCE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTI ON, THE AO WAS NOT ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 7 JUSTIFIED IN MAKING ADDITIONS IN RELATION TO THE GI FTS RECEIVED BY THE ASSESSEE DURING ALL THE RELEVANT YEARS. THE ASSESSE E HAS RAISED THIS PLEA BY WAY OF AN ADDITIONAL LEGAL GROUND BEFORE US. IT IS SETTLED LAW THAT THE LEGAL ISSUE CAN BE RAISED OR AGITATED AT ANY STAGE OF THE CASE. SINCE THE PURELY LEGAL ISSUE RAISED BY THE ASSESSEE GOES TO THE ROOT OF THE CASE AND THE FINDING ARRIVED ON THAT ISSUE WILL BE DETERMINATIVE OF THE VALIDITY OF THE ASSESSMENTS WHICH ALREADY STOOD COMPLETED AND NOT A BATED ON THE DATE OF SEARCH, HENCE WE DEEM IT FIT TO ADMIT THE LEGAL ISS UE. 7. THE LD. D.R., IN REBUTTAL TO THIS LEGAL PLEA RAI SED BY THE ASSESSEE HAS STRONGLY CONTENDED THAT EVEN IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION, THE AO IS EMPOWERED TO LOOK INTO, CONSIDER AND MAKE ADDITIONS IN RELATION TO THE ISSU ES REGARDING WHICH NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION AS IT WAS OPEN TO THE AO TO PASS FRESH ASSESSMENT ORDERS UNDER SECTIO N 153A OF THE ACT LOOKING INTO ALL THE ASPECTS OF THE MATTER IRRESPEC TIVE OF THE FACT WHETHER OR NOT THE ORIGINAL ASSESSMENTS HAVE BEEN COMPLETED AN D NOT PENDING OR ABATED ON THE DATE OF SEARCH ACTION. HE HAS FURTHE R CONTENDED THAT EVEN OTHERWISE THE ORIGINAL ASSESSMENT PROCEEDINGS WERE NOT 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. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. ADMITTEDLY, FOR A.Y. 1999-2000, A.Y. 2000-01 & A.Y. 2001- 02, THE ASSESSMENT STOOD COMPLETED ON THE DATE OF S EARCH. THE SAME WERE NOT PENDING AND EVEN THE LIMITATION PERIOD FOR ISSU ANCE OF NOTICE U/S 143(2) FOR INITIATION OF SCRUTINY ASSESSMENT PROCEE DINGS HAD EXPIRED. THE CONTENTION OF THE LD. A.R. HAS BEEN THAT IN CASE OF COMPLETED ASSESSMENTS, NO ADDITION CAN BE MADE UNDER SECTION 153A IN THE A BSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARC H ACTION. THE LD. A.R. ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 8 HAS FURTHER CONTENDED THAT AS DIRECTED BY THIS BENC H THIS FACT HAS BEEN VERIFIED FROM THE RECORD AND AS PER THE AOS LETTER DATED 20.08.15, THE AO HAS ACCEPTED THAT THE GIFT DEEDS WERE NOT RECOVERED IN THE COURSE OF SEARCH. HE FURTHER, IN THIS RESPECT, HAS RELIED UPON THE DE CISION OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF AL L CARGO GLOBAL LOGISTICS LTD. 120 DTR 89. 9. ON THE OTHER HAND, THE LD. D.R. HAS CONTENDED TH AT THE ASSESSMENT FOR THE ABOVE STATED YEARS WERE COMPLETED UNDER SEC TION 143(1) OF THE ACT WHICH MEANS THAT THE ONLY RETURNS WERE PROCESSED AN D THERE WAS NO APPLICATION OF THE MIND BY THE AO TO THE RETURNS FI LED BY THE ASSESSEE. HE, WHILE CITING THE PROVISIONS OF SECTION 147 OF THE A CT, HAS STATED THAT WHERE THE INITIAL RETURN IS PROCESSED UNDER SECTION 143(1 ) OF THE ACT, THE AO CAN FORM REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASS ESSMENT BY EXAMINING THE VERY RETURN OR THE DOCUMENTS ACCOMPANYING THE R ETURN AND THAT IT WAS NOT NECESSARY IN SUCH A CASE BY THE AO TO COME ACRO SS SOME FRESH TANGIBLE MATERIAL TO FORM REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. HE, IN THIS RESPECT, HAS RELIED UPON THE FOLLOWING DECISIONS: 1. HONBLE SUPREME COURT IN ZUARI ESTATE [2015] 37 3 ITR 661 (SC) 2. HONBLE DELHI HIGH COURT IN INDU LATA RANGWALA V S. DY. CIT [2016] 384 ITR 337. THE LD. DR HAS FURTHER SUBMITTED THAT SIMILAR PROPO SITION CAN BE APPLIED IN THE CASE OF ASSESSMENT MADE UNDER SECTION 153A OF T HE ACT AND THAT IT IS NOT NECESSARY FOR THE AO TO COME ACROSS SOME FRESH TANGIBLE MATERIAL DURING THE SEARCH ACTION. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE ISSUE RELATING TO THE VALIDITY OF ASSESSMENT MADE UNDER SECTION 153A WITH OUT HAVING ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTI ON U/S 132 OF THE ACT IN CASE WHERE THE ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT HAS COME INTO CONSIDERATION BEFORE THE CO-ORDIN ATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ACIT CENT. CIR. 33, MU MBAI VS. SHRI JAYENDRA P. JHAVERI ITA NOS.2141, 2142, 2143 & 214 4/M/2012 & CO ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 9 NOS.248, 249, 250 & 251/M/2013 DECIDED ON 20.02.201 4 (ONE OF US BEING PARTY TO THAT ORDER). THE TRIBUNAL HAS DISCUSSED TH E 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) CANNOT BE SAI D TO BE AN ASSESSMENT BUT A MERE INTIMATION, HE HAS RELIED UPON THE JUDGM ENT OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (2007) 291 ITR 500 (SC). HIS CONTENTION HAS BEEN THAT IN T HE CASE IN HAND THE ASSESSMENT WAS NOT DONE ORIGINALLY U/S. 143(3) HENC E THE ESTIMATION IN QUESTION HAS BEEN RIGHTLY MADE U/S. 153A OF THE ACT BY THE AO. HE HAS FURTHER CONTENDED THAT THE PRINCIPAL LAID DOWN BY T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGIS TICS LTD. 137 ITD 287 CAN BE APPLIED TO THE CASE WHERE THE ORIGINAL ASSES SMENT WAS COMPLETED U/S. 143(3) OF THE ACT AND NOT TO THE CASE WHERE TH E 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 RAJESH JHAVE RI STOCK BROKERS P. LTD. (SUPRA) IS CONCERNED, WE MAY OBSERVE THAT THE ISSUE BEFORE THE HONBLE SUPREME COURT IN THAT CASE WAS REGARDING THE REOPEN ING 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 I TR 224 (GUJ) WAS NOT APPLICABLE IN THAT CASE. IN THE CASE OF ADANI EXPO RTS (SUPRA), WHERE THE ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT, AND THE AO DID NOT HOLD ANY BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON ACCOUN T OF ERRONEOUS COMPUTATION, THE RE-OPENING U/S. 147 MADE MERELY ON THE BASIS OF AUDIT OBJECTIONS WAS HELD TO BE BAD IN LAW BY THE HONBLE HIGH COURT. IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUP RA), THE HONBLE SUPREME COURT WHILE INTERPRETING THE PROVISIONS OF SECTION 143(1) AND SECTION 143(3) (AS WERE IN FORCE DURING THE RELEVAN T TIME PERIOD) HAS HELD THAT IN CASE OF ASSESSMENT MADE U/S. 143(3), THE AS SESSMENT IS MADE BY THE AO BY APPLYING HIS MIND WHEREAS IN CASE OF PROC ESSING OF RETURN U/S. 143(1) OF THE ACT, THERE IS NO APPLICATION OF MIND BY THE AO AND AS SUCH, IF A NEW MATERIAL COMES INTO THE KNOWLEDGE OF THE AO A ND THE REQUIREMENTS OF SECTION 147 OF THE ACT ARE FULFILLE D, THE AO IS FREE TO INITIATE PROCEEDINGS U/S. 147 AND THE FAILURE TO TA KE STEPS U/S. 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE RE-ASSESSME NT PROCEEDINGS EVEN WHEN INTIMATION U/S. 143(1) HAD BEEN ISSUED. SO THE PROPOSITION OF LAW ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 10 LAID DOWN IN THE CASE OF RAJESH JHAVERI STOCK BROK ERS P. LTD. (SUPRA) RELATES TO THE POWERS OF THE AO FOR RE-OPENING OF A SSESSMENT U/S. 147IN RELATION TO THE ASSESSMENT PROCEEDINGS CONDUCTED UN DER 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 BEEN FURTHER AMENDED VIDE FINANCE ACT 2008 W.E.F 01.04.2008.) IT IS TO BE NOTED THAT POWE RS OF THE AO TO RE-OPEN AN ASSESSMENT U/S. 147 IS SUBJECT TO LIMITATION OF TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT. SO THE REASONABLE C ONCLUSION WILL BE THAT WHETHER 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 T AX HAS ESCAPED ASSESSMENT, HE CAN RE-OPEN THE ASSESSMENT U/S. 147 BY ISSUING NOTICE U/S. 148 BUT WITHIN THE TIME LIMIT AS PRESCRIBED U/S. 14 9 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 CONCERNED, IT MA Y FURTHER BE OBSERVED THAT AFTER PROCESSING OF RETURN U/S. 143(1) THE SAM E CAN BE ASSESSED U/S. 143(3) BY ISSUE OF NOTICE U/S. 143(2) SUBJECT TO IT S ISSUANCE WITHIN THE LIMITATION PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FURNISHED AS PER THE PROVISO TO CLAUSE (II) OF S ECTION 143(2) [AS WAS EXISTING AT THE TIME OF RELEVANT ASSESSMENT YEAR]. ONCE THE LIMITATION PERIOD AS PRESCRIBED VIDE PROVISO TO CLAUSE (II) OF SUB SECTION (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 ASSESSEE U/S. 1 39 IS DEEMED TO BE ACCEPTED, WHICH HOWEVER, CAN BE RE-OPENED U/S. 147 OF THE ACT SUBJECT TO THE FULFILLMENT OF INGREDIENTS OF SECTION 147 AND W ITHIN THE TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT, AS DISCUSSED IN THE PRECEDING PARA. SO UNDER SUCH CIRCUMSTANCES IF THE RETURN IS PROCESSED U/S. 143(1) AND NOT U/S. 143(3) AND AFTER THE PRESCRIBED PERIOD OF LIMI TATION, THE SAME CANNOT BE ASSESSED U/S. 143(3) THOUGH IT MAY BE INTERPRETE D AS MERE INTIMATION ASSESSMENT OR OTHERWISE, BUT THE SAME SHALL BE DEEM ED TO BE ACCEPTED BY THE AO AND IT WILL NOT HAVE ANY DIFFERENT COLOUR OTHER THAN THE RETURN WHICH IS PROCESSED U/S. 143(3) OF THE ACT. THE ONLY DISTINGUISHING FEATURE AS HELD BY THE HONBLE SUPREME 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 W AS 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 BAS IS OF SAME FACTS AND CIRCUMSTANCES, TO SAY THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. WHEREAS IN CASE OF RETURNS PROCESSED ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 11 U/S. 143(1), SINCE THE AO DOES NOT APPLY HIS MIND, SUCH A DEFENSE IS NOT AVAILABLE TO THE ASSESSEE. HOWEVER, THAT PROPOSITIO N 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 FINALITY DUE T O THE EXPIRY OF LIMITATION PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED. HENCE, THE ASSESSMENT IS DEE MED TO BE COMPLETED AND NOT PENDING ON THE DATE OF SEARCH ON 14.08.2008 . ADMITTEDLY, NO INCRIMINATING MATERIAL WAS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE SEARCH U/S. 132 OF THE ACT. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA ), HAS HELD THAT ASSESSMENT U/S. 153A CAN BE MADE ON THE BASIS OF IN CRIMINATING MATERIAL 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 REQU ISITION, THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENT DOES NOT A RISE. UNDER SUCH CIRCUMSTANCES, IT IS NOT OPEN TO THE ASSESSEE TO SE EK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN THE ORIGI NAL AND ALREADY CONCLUDED ASSESSMENT, IN THE CASE OF ASSESSMENT U/S . 153A IN PURSUANCE OF SEARCH ACTION. HONBLE HIGH COURT REJECTED THE A RGUMENT OF THE LEARNED COUNSEL FOR ASSESSEE TO THE EFFECT THAT ONCE THE NO TICE U/S. 153A IS ISSUED, THE ASSESSMENTS FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND THE ASSESSEE. IT HAS BEEN FURTHER HELD BY THE HONBLE H IGH COURT THAT THE PROVISIONS OF SECTION 153A TO 153C CANNOT BE INTERP RETED TO BE FURTHER INNINGS TO THE AO AND/OR ASSESSEE BEYOND THE PROVIS IONS OF SECTION 139(RETURN OF INCOME), 139(5) (REVISED RETURN OF IN COME), 147 (INCOME ESCAPING ASSESSMENT) AND 263(REVISION OF ORDERS) OF THE ACT. THE HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THE WORDS ASS ESS OR RE-ASSESS HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTIO N AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLE TED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITIO N AND WHICH WOULD 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 ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 12 DOCUMENTS. THE HONBLE HIGH COURT WHILE REPRODUCING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE C ASE OF K P VARGHESE V. ITO (1981) 24 CTR 358 THAT IT IS RECOGNIZED RU LE OF CONSTRUCTION THAT A STATUTORY PROVISO MUST BE SO CONSTRUED, IF POSSIBLE , THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED HAS OBSERVED THAT IF THE A RGUMENT OF THE COUNSEL FOR THE ASSESSEE WAS TO BE ACCEPTED, IT WOU LD MEAN THAT EVEN IN CASE WHERE THE APPEAL ARISES OUT OF THE COMPLETED A SSESSMENT HAS BEEN DECIDED BY THE CIT(A) OR TRIBUNAL AND THE HIGH COUR T, ON A NOTICE ISSUES U/S. 153A OF THE ACT, THE AO WOULD HAVE POWER TO UN DO WHAT HAS BEEN CONCLUDED BY THE HIGH COURT. ANY INTERPRETATION WHI CH LEADS TO SUCH CONCLUSION HAS TO BE REPELLED AND/OR AVOIDED AS HEL D BY THE HONBLE SUPREME 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 TRIBUNA L IN THE CASE OF M/S DEEPA RESTAURANT & BAR P. LTD. IN ITA NO.1336/M/20 12 DECIDED ON 05.02.2014 (ONE OF US BEING THE PARTY OF THE SAID O RDER) WHEREIN, IT HAS BEEN OBSERVED THAT WHERE THE SCRUTINY ASSESSMENT OR DER U/S. 143(3) OF THE ACT WAS SET ASIDE BY THE HIGHER AUTHORITIES THA T, ITSELF, CANNOT BE A GROUND FOR RE-OPENING THE ASSESSMENT U/S. 147 OF TH E ACT ON THE PLEA THAT SINCE SCRUTINY ASSESSMENT HAS BEEN ANNULLED ON THE LEGALITY OF NOTICE U/S. 143(2) OF THE ACT AND THE CASE HAS NOT BEEN HEARD A T ANY OF THE STAGE HENCE, THERE WAS A REASON TO BELIEVE THAT THE INCOM E ASSESSED IN THIS CASE HAS ESCAPED ASSESSMENT. THE CO-ORDINATE BENCH IN TH E ABOVE SAID CASE HAS FURTHER HELD THAT SUCH AN ACTION CANNOT BE ALLO WED UNDER THE LAW AS IT MAY AMOUNT TO DEFEATING ONE OF THE STATUTORY PROVIS IONS IN THE GRAB OF ACTING UNDER OTHER PROVISIONS OF THE STATUTE. ONCE ASSESSMENT U/S. 143(3) HAD BEEN ANNULLED BY HIGHER AUTHORITIES ON THE GROU ND OF LEGALITY 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 REAS ON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND IT WAS OPEN TO TH E AO TO REASSESS THE INCOME U/S. 153A, EVEN WITHOUT ANY INCRIMINATIN G MATERIAL FOUND DURING THE SEARCH ACTION, IS NOT TENABLE. 12. THE LEARNED DR HAS FURTHER RELIED ON THE JUDGME NT OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BADRUKA VS. DCIT, 346 ITR 106 (AP) TO STRESS THE POINT THAT THE AO CA N USE EVIDENCE OTHER ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 13 THAN THAT FOUND DURING THE COURSE OF SEARCH WHILE F RAMING THE ASSESSMENT U/S. 153A OF THE ACT. THE SAID JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT HAS BEEN DULY DISCUSSED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), HOLDING THAT THE SAME WAS DISTINGUISHABLE ON THE FACTS. IN THE CASE OF GOPAL LAL BADRUKA VS. DCIT (SUPRA), INCRIMINATING EVIDENCE WAS FOUND IN RELATI ON TO EIGHT PLOTS OF LAND BUT NO EVIDENCE WAS FOUND IN RESPECT OF 24 PLOTS. S INCE INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF EIGHT PLOTS, HONB LE COURT HELD THAT THE AO CAN ESTIMATE THE INCOME IN RESPECT OF ALL 32 PLO TS. THE FACT WAS THAT INCRIMINATING MATERIAL WAS FOUND IN THAT CASE. THE OTHER JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETAN DASS LACHMAN DASS [2012] 211 TAXMA NN 61, STRONGLY RELIED UPON BY THE LEARNED DR, IS ALSO OF NO HELP T O THE REVENUE BUT TO THE ASSESSEE ONLY. IN THE SAID CASE THE HONBLE DELHI H IGH COURT, IN PARA 11 OF THE ORDER, THOUGH HAS HELD THAT THERE IS NO CONDITI ON IN SECTION153A THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF E VIDENCE FOUND DURING THE COURSE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND AND THAT THE SEIZED MATERIAL CAN BE RELIED UPON TO ALSO DRAW INFERENCE THAT THERE CAN BE SIMILAR TRANSACTIONS THROUGHOUT THE RE LEVANT PERIOD, YET, AT THE SAME TIME IT HAS BEEN FURTHER OBSERVED THAT THI S HOWEVER, DOES NOT MEAN THAT ASSESSMENT U/S 153 A CAN BE ARBITRARILY M ADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. THE PROPOSITION OF LAW WHICH EMERGES OUT IN THE LIG HT OF THE LAW LAID DOWN BY THE RAJASTHAN HIGH COURT IN THE CASE O F JAI STEEL (INDIA) (SUPRA), HONBLE GUJARAT HIGH COURT IN THE CASE OF GOPAL LAL BADRUKA (SUPRA) AND ALSO BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHETAN DASS LACHMAN DASS IS THAT WHERE INCRIMINATING MATE RIAL IS FOUND DURING THE SEARCH ACTION, THE AO WHILE MAKING ASSESSMENT U /S. 153A CAN TAKE NOTE OF OTHER MATERIALS ON RECORD, WHICH ARE RELEVA NT AND CONNECTED TO THE MATERIAL FOUND DURING THE SEARCH AND INFERENCE CAN BE DRAWN RELATING TO OTHER TRANSACTIONS OF SIMILAR NATURE. HOWEVER, W HEN NO INCRIMINATING EVIDENCE IS FOUND DURING SEARCH, IT IS NOT OPEN TO THE AO TO MAKE RE- ASSESSMENT OF CONCLUDED ASSESSMENT IN THE GARB OF I NVOKING THE PROVISIONS OF SECTION 153A. AS OBSERVED ABOVE, SUCH AN ACTION WILL DEFEAT THE OTHER RELEVANT PROVISIONS OF THE ACT AND ALSO T HE RIGHTS OF THE ASSESSEE ACCRUED THEREIN. ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 14 11. THE ABOVE DECISION HAS ALSO BEEN FOLLOWED BY A NOTHER CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ATUL BAROT (H UF) VS. DCIT IN ITA NO.2889/M/2011 & ORS. DECIDED ON 26.02.2014. WE AGR EE WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF SHRI JAYENDRA P JHAVERI (SUPRA). WITH UTMOST RESPECT, W E ARE OF THE VIEW THAT THE CASE LAWS CITED BY THE LD. DR ARE NOT APPLICABL E TO THE FACTS OF THE CASE IN HAND. FURTHER, THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) AND HAS NOW BEEN APPROVED B Y THE HONBLE BOMBAY HIGH COURT IN THE CASES OF ALL CARGO LOGIST ICS ITA NO.1969 OF 2013 AND CONTINENTAL WAREHOUSING CORPORATION ITA NO. 523 OF 2013 REPORTED IN (2015) 279 CTR 0389 (BOMBAY) DECIDED BY COMMON ORDER WHEREIN IT HAS BEEN HELD THAT IN RELATION TO THE AS SESSMENTS WHICH HAVE ALREADY BEEN CONCLUDED, THE AO WAS PRECLUDED FROM MAKING ADDITIONS ON ANY OTHER ISSUE EXCEPT RELATING OR CONCERNING TO TH E INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION. THE AO CANNOT DIST URB THE ASSESSMENT ORDER OR REASSESSMENT ORDER WHICH HAS ATTAINED FINA LITY, UNLESS THE MATERIAL GATHERED IN THE COURSE OF PROCEEDINGS U/S 153A OF T HE ACT ESTABLISHES THAT RELIEF GRANTED UNDER THE FINAL ASSESSMENT/REASSESSM ENT WAS CONTRARY TO THE FACT UNEARTHED DURING THE COURSE OF 153A PROCEEDING S. IDENTICAL VIEW HAS BEEN TAKEN BY THE JURISDICTIONAL HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS LTD. ITA NO.36 OF 2009 DECIDED VIDE ORDER DATED 29-10-2010. IN VIEW OF THE ABOVE DISCUSSION, THIS LEGAL ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. ADMITTEDLY THE SEARCH ACTION WAS CARRIED OUT ON 27. 7.2003. THE LD. AR OF THE ASSESSEE HAS GIVEN A CHART TO SHOW THAT THE LIM ITATION PERIOD FOR ISSUING THE NOTICE U/S 143(2) IN RELATION TO AY 1999-2000 A ND AY 2000-01 HAD EXPIRED ON 30.9.2001 AND IN RELATION TO AY 2001-02 ON 30.09.2002. THE ASSESSMENT IN RELATION TO ABOVE MENTIONED ASSESSMEN T YEARS STOOD COMPLETED/NOT ABATED ON THE DATE OF SEARCH. IN VIEW OF OUR FINDINGS GIVEN ABOVE ON THE LEGAL PLEA RAISED BY THE ASSESSEE, ADD ITIONS MADE BY THE AO U/S 153A IN RELATION TO THE ALREADY COMPLETED ASSES SMENTS WAS ILLEGAL AND ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 15 THE SAME ARE QUASHED FOR AY 1999-2000, AY 2000-01 A ND AY 2001-02. HOWEVER FOR THE REMAINING THREE AYS, THE ASSESSMENT PROCEEDINGS STOOD ABATED ON THE DATE OF SEARCH AND THE AO THEREFORE W AS JUSTIFIED IN EXAMINING ALL THE MATERIAL FACTS COMING INTO HIS KN OWLEDGE DURING THE FRAMING OF THE ASSESSMENT PROCEEDINGS U/S 153A OF T HE ACT. 12. NOW COMING TO THE QUESTION AS TO THE VALIDITY O F THE ADDITIONS ON MERITS IN RELATION TO THREE ASSESSMENT YEARS I.E. A Y 2002-03, AY 2003-04 & AY 2004-05 IN RELATION TO WHICH THE ASSESSMENT PR OCEEDINGS STOOD ABATED ON THE DATE OF SEARCH. THE ISSUE OF GIFT IS INVOLVED IN AY 2002-03, IN RESPECT OF WHICH THE LD. A.R. HAS SUBMITTED THAT THE ASSESSEE WAS SUPPOSED TO PROVE THE IDENTITY OF THE DONOR, THE GE NUINENESS OF THE TRANSACTION AND THE FINANCIAL CAPACITY OF THE DONOR . THE ASSESSEE HAD ALREADY FILED THE GIFT DECLARATION IN THE SHAPE OF AFFIDAVITS FROM THE DONORS STATING THAT THE GIFTS WERE GIVEN FROM THEIR OWN FU NDS. HOWEVER, BOTH THE LOWER AUTHORITIES IGNORED THESE FACTS. THOUGH THE ASSESSEE HAD STATED THAT SHE WAS UNABLE TO BRING THE DONORS TO THE INCOME TA X DEPARTMENT BUT THE AO WAS NOT SUPPOSED TO MAKE ADDITIONS ONLY ON THIS GROUND. THE AO AND THE LD. CIT(A) HAD GOT VAST POWERS UNDER THE ACT TO SUMMON THE DONORS AND VERIFY THE GENUINENESS OF THE TRANSACTIONS. RE GARDING THE ANOTHER ISSUE OF DEPOSITS FOUND IN THE ACCOUNT OF SHRI S.P. PUROHIT , THE LD. A.R. HAS ALSO VEHEMENTLY SUBMITTED THAT NO PRESUMPTION C AN BE DRAWN THAT THE SAID ACCOUNT BELONGED TO THE ASSESSEE. IF THE ASSES SEE WAS UNABLE TO PRODUCE SAID MR. PUROHIT, THE AO WAS NOT SUPPOSED T O MAKE ADDITIONS ONLY ON THIS GROUND. THE AO COULD HAVE SUMMONED THE SAI D PERSON. HE HAS FURTHER SUBMITTED THAT EVEN OTHERWISE THE ASSESSEE HAS NOT BEEN GIVEN PROPER OPPORTUNITY BY THE AO TO PROVE HER CASE AND THAT THE ASSESSEE WAS ASKED TO SUBSTANTIATE HER CONTENTIONS AFTER A SUBST ANTIAL LAPSE OF TIME. 13. ON THE OTHER HAND, THE LD. D.R. HAS RELIED UPON THE FINDING OF THE LOWER AUTHORITIES. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE LOWER AUTHORITIES HAVE NOT PROPERTY APPRECIATED THE CONTENTIONS OF THE ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 16 ASSESSEE. THE CLAIM OF THE ASSESSEE HAS MERELY BEE N REJECTED BECAUSE THE COVERING LETTER WAS BEARING THE DATE PRIOR TO THAT OF EXECUTION OF AFFIDAVITS AND THAT ITSELF CANNOT BE A GROUND TO HOLD THAT THE AFFIDAVITS WERE FORGED OR FICTITIOUS. THE LOWER AUTHORITIES HAVE NOT EXAMINE D THE VERACITY OF THE AFFIDAVITS AND WHETHER THE GIFT TRANSACTIONS OTHERW ISE WERE GENUINE OR NOT. EVEN THE ISSUE RELATING TO FINDING OF DEPOSITS WHER EIN THE ASSESSEE WAS AN INTRODUCER HAS NOT BEEN EXAMINED PROPERLY BY THE LO WER AUTHORITIES. WE, THEREFORE, DEEM IT FIT TO RESTORE THE MATTER ON MER ITS TO THE FILE OF THE AO FOR DECISION AFRESH ON THE ABOVE ISSUES IN RELATION TO THE ASSESSMENTS WHICH STOOD ABATED ON THE DATE OF SEARCH I.E. ITA NOS. 5 28, 529 & 530/M/2008 FOR AY 2002-03, AY 2003-04 & AY 2004-05 RESPECTIVEL Y. NEEDLESS TO SAY THAT THE AO WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT HER CASE AND SUBMIT THE NECESSARY DOCUMENTS AND THEN TO DECIDE THE ISSUES AS PER LAW AND FACTS AVAILABLE BEFORE HIM. 15. IN THE RESULT APPEALS BEARING NO. ITA NOS.525, 526, 527/M/2008 FOR AYS 1999-2000, 2000-01, 2001-02 RESPECTIVELY AR E HERE BY ALLOWED; WHEREAS ITA NOS. 528, 529 & 530/M/2008 FOR AYS 200 2-03, 2003-04 & 2004-05 RESPECTIVELY ARE RESTORED TO THE FILE OF TH E AO AND HENCE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 2.2. WE FIND THAT THE TRIBUNAL, IN THE AFORESAID O RDER, ON QUANTUM ADDITION, VIDE DATED 28/09/2016, FOR THR EE ASSESSMENT YEARS, DELETED THE ADDITION ON THE BASIS OF WHICH PENALTY WAS IMPOSED AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), WHEREAS, FOR REMAINING THREE ASSESSMENT YEARS (AS DISCUSSED ABOV E) WAS RESTORED TO THE FILE OF THE LD. ASSESSING OFFICER. IN VIEW OF THIS FACTUAL MATRIX, WE ARE OF THE VIEW THAT PENALT Y IMPOSED U/S 271(1)(C) WILL NOT SURVIVE. OUR VIEW FIND SUPPO RT FROM THE DECISION IN K.C. BUILDERS VS ACIT (2004) 265 IT R 562 (SC) AND THE RATIO LAID DOWN IN CIT VS S.P. VIZ, 17 6 ITR 76 ITA NO.6541 TO 6546/MUM/2012 SMT. SUMANLATA BANSAL 17 (PATNA). EVEN OTHERWISE, WHEN THE QUANTUM ADDITION IS DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT OR FURNISHING INACCURATE PARTICULAR S. THE PENALTY CANNOT STAND ON ITS LEGS WHEN ADDITION ON T HE BASIS OF WHICH THE PENALTY WAS IMPOSED REMAINS NO MORE IN EXISTENCE, THUS, THE APPEALS OF THE ASSESSEE ARE AL LOWED AND THE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY. FINALLY, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 08/02/2017. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUBAI; ) DATED 14 /02/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$! , 0 +' ! 5 , % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. ! / BY ORDER, /3+$ .$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI