ACIT CC 3(4) CEN RG 3, MUMBAI V. SHIBANI S. BHOJWANI, MUMBAI

ITA 7365/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2419 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATH SWAMYDR
• Assessee Lawyers: YOGESH A THAR; CHAITANYA D JOSHI
• Keywords: Business income; Depreciation; Search and seizure; Rule of consistency
• Section: 153A

Judgement Text

1 , , , , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/7365/MUM/2014, /ASSESSMENT YEARS: 2008-09 ACIT, CENTRAL CIRCLE-3(4) CENTRAL RANGE-3 MUMBAI. VS. MS. SHIBANI S. BHOJWANI 1 ST FLOOR, SAMIR COMPLEX, ST. ANDREWS ROAD, OPP. HOLY FAMILY HOSPITAL, BADRA (W) , MUMBAI-400 050. PAN:AABPB 6649 R ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI MANJUNATH SWAMY-DR ASSESSEE BY: S/SHRI YOGESH A.THAR & CHAITANYA D. JOSHI / DATE OF HEARING: 12.07.2016 / DATE OF PRONOUNCEMENT : 22.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 05.09.2014, OF THE CIT( A)-39, THE ASSESSING OFFICER (A.O.) HAS FILED THE PRESENT APPEAL FOR THE ASSESSMENT YEAR (A .Y.) 2008-09. BRIEF FACTS: 2. THERE WAS A SEARCH AND SEIZURE ACTION U/S.132 OF TH E ACT ON 30.11.2010 AT THE RESIDENTIAL/ BUSINESS PREMISES OF THE SAMIR BHOJWANI GROUP AND T HE ASSESSEE WAS ALSO COVERED BY THE ACTION.SHE FILED HER RETURN OF INCOME,DECLARING TOT AL INCOME AT RS. NIL.EARLIER,SHE HAD FILED THE RETURN U/S.139(1)OF THE ACT,ON 29.09.2008 AND T HE AO HAD OMPLETED THE ASSESSMENT U/S.143(3),DETERMINING HER INCOME AT RS.NIL. 2.1. DURING THE ASSESSMENT PROCEEDINGS, COMPLETED U/S. 1 43(3) R.W.S. 153 OF THE ACT THE AO HELD THAT THE ASSESSEE WAS ENGAGED IN LETTING OUT FLATS FOR LICENSE FEE UNDER LEAVE AND LICENSE AGREEMENT,THAT THE LICENSE FEE RECEIVED WAS COMPSITE,NO BIFURCATION WAS GIVEN FOR RENT CHARGED FOR THE BUILDING AND THAT CHARGED FOR FURNITURE AND FIXTURE.HE HELD THAT THE INCOME RECEIVED BY HER SHOULD BE ASSESSED AS BUSIN ESS INCOME.HE FURTHER OBSERVED THAT THE PRINCIPLE OF RES-JUDICATA WAS NOT APPLICABLE TO INCOME TAX PROCEEDINGS, THAT REVENUE HAD THE RIGHT TO DEPART FROM ITS EARLIER STAND, THAT THERE COULD NOT BE A WIDE APPLICATION OF THE RULE OF CONSISTENCY, THAT DURING THE COURSE OF ASSESSMENT, DOCUMENTS PERTAINING TO LEAVE AND LICENSE AGREEMENT WERE SEIZED. FINALLY, THE AO HELD THAT TH E LEAVE AND LICENCE INCOME HAD TO BE BROUGHT TO BE TAXED UNDER THE HEAD INCOME FROM HOUS E PROPERTY, THAT THE DEPRECIATION CLAIMED ON THE SAID FLATS HAD TO BE DISALLOWED. 7365/MUM/2014(SHIBANI.S.BHOJWANI ) 2 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND STATED THAT AO WAS AU THORISED TO REASSESS THE REAL INCOME OF THE ASSESSEE FOR EACH AY FALLING WITHIN THE ASSESSM ENT PERIOD, THAT THE SCOPE OF ASSESSMENT U/S. 153(3)(A) WOULD ARISE IN THE CASE OF COMPLETE D ASSESSMENTS WHERE SEIZED MATERIAL COULD LEAD TO A PRIMA FACIE INFERENCE OF LIABILITY, THA T THERE WAS NO MENTION IN THE ASSESSMENT ORDER OF ANY MATERIAL FOUND DURING THE SEARCH, LEADING TO THE INFERENCE THAT INCOME BY WAY OF LICENSE FEE WAS ASSESSABLE UNDER THE HEAD INCOME FR OM HOUSE PROPERTY.THE ASSESSEE REFERRED TO THE CASES OF AL CARGO GLOBAL LOGISTICS LTD. (137 ITD287), PRATIBHA INDUSTRIES LTD. (141 ITD151) AND GURINDER SINGH BAWA (ITA/2075/MUM/2010 DATED 16.11.2012). 4. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE CASES REFERRED TO BY IT THE FAA MADE A REFERENCE TO THE CASE OF CANARA HOUSING DEVE LOPMENT CO. (ITA NO.38 OF 2014, DELIVERED BY THE HONBLE KARNATAKA HIGH COURT). SHE ALSO REFERRED TO THE CASE OF MURLI AGRO PRODUCTS (ITA NO.36 OF 2009 DT.29.10.2010) DELIVERE D BY THE HON'BLE BOMBAY HIGH COURT AND HELD THAT ASSESSMENT COMPLETED BEFORE THE DATE OF SEARCH AND THAT ARE ATTAINING FINALITY COULD BE DISTURBED ONLY IF MATERIAL IS GATHERED IN THE COURSE OF PROCEEDINGS U/S. 153A OF THE ACT, THAT UNEARTHING OF NEW FACTS WAS SINE QUA NO FOR DISTURBING THE COMPLETED ASSESSMENT, THAT IN THE CASE UNDER CONSIDERATION NO MATERIAL WA S SEIZED DURING SEARCH PROCEEDINGS. FINALLY,SHE ALLOWED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) STATED THAT THE MATTER COULD BE DECIDED ON MERITS. THE AUTHORIS ED REPRESENTATIVE (AR) RELIED UPON THE CASES OF CONTINENTAL WAREHOUSING CORPN. (NHAVA SHEV A) LTD. (374ITR645), KABUL CHAWLA (380ITR573), PARAG M. SANGHVI (63 TAXMANN.COM118) E TC. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS BEFORE US. WE FIND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS THAT COULD LEAD TO THE CONCLUSION THAT INCOME ASSESSED U NDER THE HEAD BUSINESS INCOME COULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN ABSENCE OF INCRIMINATING /FRESH MATERIAL FOUND DURING THE ACTION CARRIED OUT UNDER 132(1) OF THE ACT, THE AO IS NOT AUTHORISED TO DISTURB THE FINDINGS OF THE EARLIER YEAR IF ON T HE DATE OF SEARCH ASSESSMENTS OF EARLIER YEARS HAVE BEEN COMPLETED.WE ARE UNABLE TO ENDORSE THE VI EW OF THE AO THAT RULE OF CONSISTENCY IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS. IN OU R OPINION A DIFFERENT STAND CAN BE TAKEN BY 7365/MUM/2014(SHIBANI.S.BHOJWANI ) 3 AN AO ABOUT THE TAX LIABILITY OF AN ASSESSEE DURING THE SUBSEQUENT YEARS ONLY IF HE ESTABLISHES THAT FACTS FOR THAT PARTICULAR YEAR WERE DISTINGUIS HABLE FROM THE FACTS OF THE EARLIER YEARS.IN ABSENCE OF A CATEGORICAL FINDING ABOUT THE DISTINGU ISHING FACT THE AOS CANNOT TAKE A NEW STAND. 6.1. HERE WE WOULD LIKE TO REFER TO THE CASE OF CONTINEN TAL WAREHOUSING CORPN. (NHAVA SHEVA) LTD.(SUPRA)WHEREIN THE ISSUE OF AVAILABILITY /NON AVAILABILITY OF FRESH MATERIAL DURING SEARCH PROCEEDINGS AND RESULTANT ASSESSMENT PROCEED INGS HAVE BEEN DEALT WITH.THE HONBLE COURT HAS HELD AS UNDER: IF THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE POWER UNDER SECTION 153A BEING NOT EXPECTE D TO BE EXERCISED ROUTINELY, SHOULD BE EXERCISED IF THE SEARCH REVEALED ANY INCRIMINATING MATERIAL. IF THAT WAS NOT FOUND THEN IN RELATION TO THE SECOND PHASE OF THREE YEARS, THERE WAS NO WARRANT FOR MAKI NG AN ORDER WITHIN THE MEANING OF THIS PROVISION. FROM THE ABOVE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT, IT IS CLEAR THAT ADDITIONS CAN BE MADE TO THE INCOME OF THE ASSESSEE, WHILE PASSIN G THE 153 ORDERS IF RELIANCE IS PLACED ON INCRIMINATING SEIZED MATERIAL.IN THE CASE BEFORE US ,NOTHING IS ON RECORD TO PROVE THAT ADDITIONS MADE BY THE AO HAD THE BACKING OF THE SEI ZED MATERIAL. THEREFORE, IN OUR OPINION THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.CONFIRMING HER ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY,2016. 22 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22.07.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.