M/s. Barnala Steel Industries Ltd., Muzaffarnagar V. ACIT, Muzaffarnagar

ITA 6783/DEL/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1985 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOYAL
• Assessee Lawyers: ANIT GUPTA
• Keywords: Invalid notice; Principle of natural justice; Initiation of penalty proceedings; Block assessment
• Section: 271(1)(c); 133A; 153A; 234B; 143(2); 69A; 148; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER, ITA NOS.3201/DEL/201 AND ITA NO. 6783/DEL/2013 [ASSESSMENT YEAR: 2006-07] M/S BARNALA STEEL INDUSTRIES LTD., MERRUT ROAD, MUZAFFARNAGAR ACIT, CIRCLE-2, MUZAFFARNAGAR PAN-AABCB2772Q ASSESSEE REVENUE ASSESSEE BY SHRI KAPIL GOEL & SHRI ANIT GUPTA ADVOCATE REVENUE BY SHRI SANJAY GOYAL CIT-DR DATE OF HEARING 04/09/2019 DATE OF PRONOUNCEMENT 05/09/2019 ORDER PER SUCHITRA KAMBLE, JUDICIAL MEMBER THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT(A), MUZAFFARNAGAR, DATED 29.03.20 11 AND 23.09.2013 FOR ASSESSMENT YEAR 2006-07. 2. GROUNDS OF APPEAL OF ITA NO.3201/DEL/2011 ARE AS UNDER:- I. THAT THE NOTICE ISSUED BY THE AO U/S 153A (A) R.W.S 153C DT 01.08.2008 AND ASSESSMENT ORDER PASSED U/S 153A ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION HENCE THE ASSESSMENT O RDER PASSED U/S 153A DT 31.12.2009 IS LIABLE TO BE QUASHED. II. THAT THE BLOCK ASSESSMENT ORDER PASSED BY THE AO FO R AYS 2002-03 TO 2.007-08 IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDI CTION AS THERE IS NO POWER / AUTHORITY TO PASS BLOCK ASSESSMENT AFTER 31 .05.2003 AS PROVIDED IN THE PROVISIONS OF SECTION 158BI. 2 III. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING THE ADDITION/DISALLOWANCE WITHOUT THERE BEING ANY INCRI MINATING MATERIAL FOUND DURING THE PROCEEDINGS U/S 132A AND THE CIT(A ) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE SAME. HENCE, THE ADDI TION/DISALLOWANCES MADE ARE BAD IN LAW, WITHOUT JURISDICTION AND NOT W ITHIN THE SCOPE OF PROVISIONS OF SEC 153C. IV. THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED WITHIN TH E PRESCRIBED THE PERIOD HENCE THE ASSESSMENT ORDER PASSED U/S 153A A ND THE ADDITIONS MADE IN THE SAID ASSESSMENT ORDER ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION AND ARE LIABLE TO BE QUASHED / DELETED . V. THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE AS SESSING OFFICER IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND TH E SAME HAS BEEN PASSED WITHOUT AFFORDING REASONABLE AND ADEQUATE OP PORTUNITY OF BEING HEARD. VI. THAT CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE ADDITION OF RS. 75,00,00.00 ON ACCOUNT OF SHORT TER M CAPITAL GAIN AND REJECT THE SUBMISSIONS OF THE APPELLANT SOLELY ON T HE BASIS OF REMAND REPORT SUBMITTED BY THE AO. THE CIT(A) HAS FAILED T O TAKE INTO CONSIDERATION RELEVANT EVIDENCES PUT BEFORE HIM AND IGNORED CIRCUMSTANCES OF THE CASE. VII. THAT THE EVIDENCE AND EXPLANATION GIVEN BY THE APPE LLANT AND THE MATERIAL AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIOUSLY INTERPRETED AND INSTEAD SOLELY RELIED O N REMAND REPORT OF AO VIII. THAT THE ADDITIONS HAVE BEEN MADE ON BASIS OF MERE SURMISES AND CONJECTURES AND CONTRARY TO FACTS AND EVIDENCE ON R ECORD AND CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD. THE ADDITION M ADE IS UNJUST, UNLAWFUL AND IS HIGHLY EXCESSIVE. IX. THAT THE INTERESTS I I/S 234B AND 234C HAVE BEEN WR ONGLY AND ILLEGALLY CHARGED. THE APPELLANT HAS NOT COMMITTED ANY DEFAUL T OF PAYMENT OF ADVANCE TAX AS IT COULD NOT HAVE ANTICIPATED SUCH A DDITIONS WHILE ESTIMATING THE CURRENT INCOME. X. THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NO N-QUASHING OF PENALTY PROCEEDINGS U/S 271(1 )(C) WHICH IS WRONGLY INITIAT ED BY THE AO. 3. GROUNDS OF APPEAL OF ITA NO.6783/DEL/2011ARE AS UNDER:- I. THAT, THE NOTICE ISSUED U/S 271 (1) (C) AND ORDER I MPOSING PENALTY OF RS.25,24,500.00 UNDER SAID SECTION ARE ILLEGAL, BAD IN LAW, AND WITHOUT JURISDICTION. II. THAT, THE A O HAS FAILED TO APPRECIATE THAT NO SATI SFACTION WAS RECORDED BEFORE INITIATION OF PENALTY PROCEEDINGS U /S 271 (L)(C) AND AS SUCH THE NOTICE ISSUED U/S 271 (L)(C) AND THE PE NALTY ORDER PASSED UNDER SAID SECTION ARE WITHOUT JURISDICTION AND LIABLE TO BE 3 QUASHED AS THERE IS NO POWER/AUTHORITY TO PASS BLOC K ASSESSMENT AFTER 31.05.2003 AS PROVIDED IN THE PROVISION OF SE CTION 158 BI. III. THAT, THE A O HAS ERRED IN VIEW OF THE FACTS AND CI RCUMSTANCE OF THE CASE AND IN LAW IN NOT SPECIFYING THE CHARGE AG AINST THE ASSESSEE FOR WHICH THE PENALTY HAS BEEN LEVIED AGAI NST THE ASSESSEE. THE CIT (A) ERRED IN UPHOLDING THE SAME. IV. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCE OF THE C ASE THE A O HAS ERRED IN LAW AND ON FACTS IN IMPOSING THE PENALTY O F RS.25,24,500.00 U/S 271 (1) (C). THE CIT (A) HAS ER RED THE UPHOLDING THE SAME. V. THAT, THE A O, IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE ERRED IN LEVYING PENALTY ON THE GROUND OF ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN AT RS. 1,04,38,715.00 AND R EJECT THE EXPLANATION GIVEN BY THE APPELLANT MERELY ON SURMIS ES AND CONJECTURES. THE ADDITION MADE IS DEBATABLE AND CAN NOT BE TREATED AS CONCEALED INCOME. THE CIT (A) ERRED IN U PHOLDING THE SAME. VI. THAT, THE A O, IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW FAILED TO APPRECIATE THE FACT, THAT, THE EXPLANATION FILED/GIVEN BY THE ASSESSEE IS BONAFIDE. VII. THAT THE INFORMATION FILED AND THE MATERIAL AVAILAB LE ON RECORD ARE NOT PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED. THE PENALTY LEVIED BY THE A O ARE UNJUST, ARBITRARY ARE AGAINST THE FACTS OF THE CASE AND ARE NOT JUSTIFIED BY ANY MATERIAL ON RECOR D. VIII. THE ADDITION/DISALLOWANCE HAS BEEN MADE MERELY ON T HE BASIS OF REJECTION OF EXPLANATION OF THE APPELLANT AND NO MA TERIAL HAS BEEN BROUGHT ON RECORD BY THE AO IN SUPPORT OF SAID ADDI TION / DISALLOWANCE HENCE NO PENALTY U/S 271 (1 )(C) COULD BE LEVIED ON THE BASIS OF SUCH A DISALLOWANCE. IX. THAT, THE SUBMISSIONS FILED HAVE NOT BEEN CONSIDERE D JUDICIALLY. THE IMPUGNED ORDER IS PASSED WITHOUT ANY APPLICATIO N OF MIND. 4. THE ASSESSEE IS LIMITED COMPANY DERIVING INCOME FROM MANUFACTURING OF M.S. BAR, TOR AND TMT. RETURN DECL ARING INCOME OF RS.55,53,620/- WAS FILED ON 29/11/2009. O N THE BASIS OF INFORMATION THAT AN AMOUNT OF RS.92,55,000/- WAS SEIZED BY 4 S.H.O. KAIRANA FROM POSSESSION OF ONE SHRI NAVEEN C HAND JAIN. THE CIT, MUZAFFARNAGAR ISSUED WARRANT U/S 132A FOR REQUISITION OF AMOUNT IN POSSESSION OF S.H.O. KAIRANA. IN THE S TATEMENT RECORDED BY THE POLICE, THE AFORESAID PERSON DEPOSE D THAT THE IMPUGNED SUM BELONGED TO M/S BARNALAL STEEL INDUSTR IES LTD. THE AMOUNT OF RS.92,55,000/- WAS REQUISITIONED U/S 132A OF THE ACT FROM S.H.O. KAIRANA ON 15/02/2008. THE SEIZED M ONEY COULD NOT BE EXPLAINED BY THE ASSESSEE. THE ASSESSI NG OFFICER ISSUED NOTICE U/S 153A OF THE ACT ON 26/03/2008 REQ UIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FALLING WITHI N SIX ASSESSMENT YEARS AS REFERRED TO IN CLAUSE (B) OF SECTION 153A OF THE ACT. A SURVEY U/S 133A WAS CONDUCTED ON THE BUSINESS PREMI SES OF THE ASSESSEE ON 28/03/2008. AT THE TIME OF SURVEY, EXC ESS STOCK OF RAW MATERIAL AND FINISHED GOODS WERE FOUND TO BE SH ORT BY 1.37 CRORES APPROXIMATELY. IN RESPONSE, THE ASSESSEE SUB MITTED THAT THE RETURNS OF INCOME ORIGINALLY FILED MAY BE TREAT ED AS FILED IN COMPLIANCE OF THE NOTICE U/S 153A OF THE ACT. THE A SSESSING OFFICER ASKED THE ASSESSEE TO FURNISH COPIES OF INC OME TAX ASSESSMENT ORDERS FOR ALL THE ASSESSMENT YEARS, COP Y OF BANK ACCOUNTS, WEALTH TAX RETURNS AND THE DETAILS OF UNS ECURED LOANS. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT WAS ASS ESSED TO TAX 5 SINCE LONG TIME AND HAD MAINTAINED REGULAR BOOKS OF ACCOUNT. RAW MATERIAL I.E. MILLED STEEL INGOT AND THE FINISH ED GOODS I.E. SARIA BOTH ARE EXCISABLE AUTHORITIES IN RG-1 AND FO RM-4. THE ASSESSEE FURTHER SUBMITTED THAT COMPLETE VOUCHERS F OR EXPENDITURE AND RECEIPTS OF INCOME HAVE BEEN MAINTA INED. THE ASSESSEE ALSO FURNISHED COPY OF TAX AUDIT REPORT, B ALANCE SHEET AND PROFIT & LOSS ACCOUNT, COPY OF ASSESSMENT ORDER S FOR ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 AND 2006 -07 ALONG WITH DETAILS OF RETURNED AND ASSESSED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED B Y THE ASSESSING OFFICER THAT THE CASH FOUND IN POSSESSION OF ONE SH. NAVEEN KUMAR JAIN ON 15/02/2008 BY THE POLICE COULD NOT BE EXPLAINED BY THE ASSESSEE. IN THE ASSESSMENT PROCEE DINGS, FOR AY 2008-09, THE ASSESSEE SURRENDERED THE SUM OF RS.92, 55,000/- AND THE SAME HAD BEEN ADDED TO THE INCOME OF THE AS SESSEE U/S 69A OF THE ACT AS UNEXPLAINED MONEY. THE ASSESSING OFFICER HELD THAT ACTION U/S 132A OF THE ACT WAS VALIDLY TAKEN B Y THE CIT, MUZAFFARNAGAR AND CONSEQUENTLY THE NOTICES ISSUED U /S 153A R.W.S. 153C ISSUED FOR THE ASSESSMENT YEARS UNDER C ONSIDERATION WERE LEGALLY AND VALIDLY ISSUED. THE ASSESSING OFF ICER FRAMED ASSESSMENT ORDER FOR ASSESSMENT YEARS 2002-03 TO 20 07-08. 6 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. THE LD. AR SUBMITTED THAT THE ASSESSMENT IS BASE D ON VAGUE AND INVALID NOTICE U/S 153A AND 153C DATED 26 /03/2008 WHERE SECTION 148 OF THE ACT IS MENTIONED. THESE F ACTS WERE DULY AND PROMPTLY OBJECTED BY THE ASSESSEE ON 23/04/2008 AND THE SAME OBJECTION WAS NEVER DISPOSED OF BY THE ASSESSI NG OFFICER. THUS, THE PROCEEDINGS BASED ON VAGUE AND INVALID NO TICE CANNOT BE CONTINENCE/CONTESTED. THE LD. AR FURTHER SUBMITT ED THAT NOTICE U/S 143(2) OF THE ACT ISSUED ON 23/11/2009 F OR ALL AYS 2002-03 TO 2007-08 ARE ALSO INVALID AS THE NOTICE H AS TO BE ISSUED SEPARATELY FOR EACH ASSESSMENT YEARS. THE LD . AR SUBMITTED THAT AT NO PLACE, THE ASSESSEE WAS SUBJEC TED TO ANY SEARCH /REQUISITIONED ACTION U/S 132/132A AND NOWHE RE ANY VALID WARRANT HAS BEEN ISSUED AGAINST ASSESSEE. MER E CASH REQUISITIONED WITH ASSESSEE CANNOT CREATE IMAGINARY SEARCH/ REQUISITIONED ACTION AGAINST ASSESSEE AND DESPITE A SSESSEES REPEATED AND CONTINUOUS OBJECTIONS TO THE ASSESSING OFFICER AS WELL AS THE CIT(A) IN THIS REGARD. THE LD. AR SUBMI TTED THAT NOWHERE TILL DATE, IT WAS BROUGHT ON RECORDS AS TO HOW ASSESSEES 7 SUBJECT MATTER OF SEARCH/ REQUISITIONED ACTIONS U/S 132/132A OF THE ACT. THE JURISDICTIONAL NOTICE U/S 153A AND SEC TION 153C WAS ISSUED IN CONSOLIDATED MANNER AND FINAL ASSESSMENT FOR ALL YEARS WAS MADE U/S 153A OF THE ACT, WHICH IS NOT PERMISSI BLE UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. SO ENTIRE P ROCEEDINGS GETS VITIATED AS FOR MAKING VALID ASSESSMENT U/S 15 3A, VALID AUTHORIZATION OF REQUISITIONED PRESCRIBED FORM 45C OF THE ACT AGAINST THE ASSESSEE IS MOST IMPORTANT WHICH MISSI NG IN PRESENT CASE. THE LD. AR FURTHER SUBMITTED THAT WHOLE ADDIT ION IS BASED ON DOCUMENTS FOUND FROM SURVEY ON ASSESSEE ON 28/03 /2008. THIS CANNOT BE MADE U/S 153A OF THE ACT ON THE BASI S OF PURPORTED REQUISITIONED U/S 132A WHICH HAS NO LINKA GE TO THE SOLE ADDITION MADE AND THUS ADDITION MADE IS ULTRAV IRUS TO SECTION 153A OF THE ACT. THE LD. AR SUBMITTED THAT MECHANICAL NOTICE DATED 26/03/2008 NOWHERE MENTIONS ANY ASSESS MENT YEARS, THERE IS NO LINK TO THE DATE OF SEARCH AND A S TO THE ASSESSEES CASE. THE LD. AR RELIED UPON THE VARIOUS CASE LAWS TO THAT EFFECT. 7. THE LD. DR SUBMITTED THAT THE NOTICE IS VALID AS THE ASSESSMENT ORDER HAS ITSELF MENTIONED EACH ASSESSME NT YEARS SEPARATELY. THE ASSESSING OFFICER HAS GIVEN SEPARAT E FINDING TO 8 THAT EFFECT. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE OFFICER AS WELL AS THE CIT(A) HAS RIGHTLY MADE ADDI TIONS ON MERIT. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL ON RECORD. FROM THE PERUSAL OF THE NOTICE ISSUED U/S 153A R.W.S. 153C/143(2) OF THE ACT, IT IS A CLEAR C UT CASE OF OVERLOOKING THE PROCEDURE AND PROVISIONS SET OUT IN THE INCOME TAX ACT, 1961. UNDER THESE SECTIONS, THE ASSESSING OFFICER CANNOT ISSUE CONSOLIDATED NOTICES FOR DIFFERENT ASS ESSMENT YEARS. IT IS STATUTORY REQUIREMENT FOR EACH ASSESSMENT YEA R TO ISSUE STATUTORY NOTICE SEPARATELY. THE ASSESSING OFFICER FAILED TO COMPLY WITH THE STATUTE UNDER WHICH THE PRESCRIBED PROCEDURE IS MANDATORY FOR THE REVENUE TO BE FOLLOWED. THE RELIA NCE OF THE LD. AR IN CASE OF Y NARAYANA CHETTY VS. ITO (35 ITR 388 )(SC) IS RELEVANT IN PRESENT CASE, THEREFORE, THE NOTICE ITS ELF IS BAD IN LAW AND VOID AB-INITIO. THUS, THE ASSESSMENT ORDER DOES NOT SURVIVE. THUS, ITA NO.3201/DEL/2011 IS ALLOWED. THERE IS NO NEED TO GO INTO THE MERITS OF THE CASE. 9. AS REGARDS, THE PENALTY APPEAL BEING ITA NO.6783/DEL/2013. IT IS APPEAL FILED AGAINST PENALT Y ORDER PASSED U/S 271(1)(C) OF THE ACT, WHICH IS CONSEQUEN TIAL OF THE QUANTUM APPEAL. SINCE, THE QUANTUM APPEAL ITSELF HA S BEEN 9 ALLOWED AND THE ASSESSMENT ORDER IS QUASHED, THE PE NALTY DOES NOT SURVIVE. THUS, ITA NO.6783/DEL/2013 IS ALSO ALL OWED. 10. IN THE RESULT, BOTH APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2019. SD/- SD/- SD/- SD/- [N.K. BILLAIYA] [SUCHITRA KAMBLE] ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 05/09/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 10 DATE OF DICTATION 0 4 /09 /2019 DAT E ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 0 4 /09 /2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 05/09/2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 0 5 /09 /2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 0 5 /09 /2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS 0 5 /09 /2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 0 5 /09 /2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 5 /09 /2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER