DCIT CC 5(1), MUMBAI V. ANAND RATHI GLOBAL FINANCE LTD, MUMBAI

ITA 7465/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8239 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Keywords: Search and seizure; Opportunity of being heard; Earning of tax free income
• Section: 143(3); 153A; 14A; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER ITA NOS. 7465 /MUM/2016 TO 7468/MUM/2016 : A.YS : 2009 - 10, 2008 - 09, 2010 - 11 & 2011 - 12 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 5(1), MUMBAI (APPELLANT) VS. ANAND RATHI GLOBAL FINANCE LIMITED, 4 TH FLOOR, SILVER METROPOLIS BUILDING, WESTERN EXPRESS HIGHWAY, GOREGAON (E), MUMBAI 400 063 (RESPONDENT) PAN : AABCR1136N APPELLANT BY : SMT. VIDISHA KALRA (CIT - DR) RESPONDENT BY : SHRI VIJAY MEHTA DATE OF HEARING : 14 /11/2017 DATE OF PRONOUNCEMENT : 30 /11/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED ARE FOUR APPEALS BY THE REVENUE RELATING TO THE SAME ASSESSEE FOR ASSESSMENT YEARS 2008 - 09 TO 2011 - 12 AND SINCE COMMON ISSUES ARE INVOLVED, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE CAPTIONED PROCEEDINGS ARE AS A RESULT OF A SEARCH AND SEIZURE ACTION CARRIED OUT IN THE ANAND RATHI GROUP OF CASES, WHICH INCLUDE D THE 2 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 ASSESSEE COMPANY ALSO . APPEAL IN ITA NO. 7465/MUM/2016 FOR ASSESSMENT YEAR 2009 - 10 IS TAKEN AS THE LEAD CASE. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 53, MUMBAI DATED 31.08.2016 PERTAINING TO THE ASSESSMENT YEAR 2009 - 10 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 28 .0 3 .201 6 U/S 143(3) R.W.S 1 53A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. IN ORDER TO APPRECIATE THE CONTROVERSY, THE RELEVANT FACTS CAN BE SUMMARISED AS FOLLOWS. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS PART OF ANAND RATHI GROUP OF CASES WHEREIN A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE D EPARTMENT U/S 132(1) OF THE ACT ON 2 8 .09.2013 . SUBSEQUENTLY, NOTICE U/S 153A OF THE ACT WAS ISSUED ON 02.02.2015 IN RESPONSE TO WHICH ASSESSEE FILED A RETURN OF INCOME DECLARING AN INCOME OF RS.46,30,323/ - . NOTABLY, THE ASSESSEE HAD ORIGINALLY FILED A RE TURN OF INCOME U/S 139(1) OF THE ACT ON 30.09.2008 AS A CONSEQUENCE OF WHICH, ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 29.11.2011. IN THE ASSESSMENT FINALISED U/S 143(3) R.W.S. 153A OF THE ACT ON 28.03.2016, THE TOTAL INCOME WAS DETERMINED AT RS. 1,19,12,970/ - AFTER ENHANCING THE DISALLOWANCE U/S 14A OF THE ACT BY AN AMOUNT OF RS.72,82,652/ - . THIS ADDITION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A) ON VARIOUS GROUNDS. ONE OF THE POINTS RAISED BY THE ASSESSEE WAS THAT THE ADDITION WAS LACKING IN J URISDICTION INASMUCH AS THERE WAS NO INCRIMINATING MATERIAL FOUND CONNECTED TO THE SAID ADDITION AND THE ORIGINAL ASSESSMENT WAS NOT PENDING ON THE DATE OF THE SEARCH ; T HUS, THE ORIGINAL ASSESSMENT HAVING NOT ABATED, NO ADDITION COULD BE MADE IN THE IMPUGN ED ASSESSMENT WITHOUT RECOURSE TO THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THE CIT(A) FOUND IT EXPEDIENT TO ACCEPT THE PLEA OF THE 3 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 ASSESSEE ON FACTS AS WELL AS IN LAW AND FOUND SUPPORT FROM THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT, 137 ITD 287 , WHICH HAS BEEN APPROVED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ALL CARGO GLOBAL LOGISTICS LTD. , 374 ITR 645 (BOM.) . ACCORDINGLY, THE CIT(A) HAS DELETED THE ADDITION AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. CIT - DR APPEARING FOR THE REVENUE HAS NOT CONTROVERTED THE FACTUAL FINDING ARRIVED AT BY THE CIT(A). SO HOWEVER, IT HAS BEEN CANVASSED BY HIM THAT THE JUDGMENT RELIED UPON BY THE CIT(A) H AS NOT ATTAINED FINALITY INASMUCH AS THE DEPARTMENT HAS PREFERRED AN APPEAL AGAINST THE SAME. 5. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE DEFENDED THE DECISION OF THE CIT(A) BY PLACING RELIANCE ON THE SAME. 6. WE HAVE CAREFULLY CONS IDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, THE ONLY DISALLOWANCE IN DISPUTE IS THE SUM OF RS.72,82,652/ - MADE BY THE ASSESSING OFFICER BY INVOKING SEC. 14A OF THE ACT. PERTINENTLY, ON THE DATE OF THE SEARCH, THE ASSESSMENT FOR THE INSTANT YEAR STO OD COMPLETED U/S 143(3) OF THE ACT DATED 29.11.2011 AND, THEREFORE, IN TERMS OF THE SECOND PROVISO TO SEC. 153A(1) OF THE ACT, SUCH AN ASSESSMENT DID NOT ABATE. IN THIS BACKGROUND, THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLO BAL LOGISTICS LTD. (SUPRA) COMES INTO PLAY. AS PER THE HON'BLE HIGH COURT, IN CASES WHERE NO ASSESSMENT WAS PENDING ON THE DATE OF SEARCH, NO ADDITION COULD BE MADE IN AN ASSESSMENT FINALISED U/S 153A(1) R.W.S. 143(3) OF THE ACT UNLESS IT IS BASED ON ANY INCRIMINATING MATERIAL FOUND 4 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 IN THE COURSE OF SEARCH. THE FINDING OF CIT(A) IN THE INSTANT CASE IS THAT THE DISALLOWANCE ENHANCED BY THE ASSESSING OFFICER U/S 14A OF THE ACT IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. WE FIN D THAT THE AFORESAID FINDING OF THE CIT(A) IS CLEARLY BORNE OUT OF RECORD AND THERE IS NO DISCUSSION IN THE ORDER OF THE ASSESSING OFFICER WHICH WOULD SHOW THAT ANY INCRIMINATING MATERIAL WAS INDEED FOUND IN THE COURSE OF SEARCH WHICH COULD BE RELATABLE TO THE IMPUGNED DISALLOWANCE . THEREFORE, UNDER THESE CIRCUMSTANCES, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN DELETING THE ADDITION, WHICH IS HEREBY AFFIRMED. 7. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009 - 10 IS DISMISSED. 8. INSOF AR AS THE FACTS AND CIRCUMSTANCES IN THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 IS CONCERNED, THEY ARE PARI MATERIA TO THE FACTS AND CIRCUMSTANCES IN APPEAL FOR ASSESSMENT YEAR 2009 - 10 INASMUCH AS IN THIS YEAR ALSO, THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WAS FINALISED ON 24.03.2013, I.E. BEFORE THE DATE OF SEARCH AND, THEREFORE, OUR DECISION IN THE APPEAL FOR ASSESSMENT YEAR 2009 - 10 SHALL APPL Y MUTATIS MUTANDIS TO THE SAID APPEAL ALSO. 9. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. 10. WE MAY NOW TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 WHEREIN ALSO THE ONLY ADDITION IN DISPUTE IS ON ACCOUNT OF APPLICATION OF SEC. 14A OF THE ACT. IN THIS YEAR, THE RESPONDENT - ASSESSEE HAD 5 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 FILED ITS RETURN OF INCOME ORIGINALLY U/S 139 OF THE ACT ON 29.09.2008 . IT HAS BEEN NOTED BY THE CIT(A) THAT NO NOTICE U/S 143( 2 ) OF THE ACT WAS ISSUED FOR THE INSTANT YEAR WITHIN THE PERIOD PRESCRIBED IN LAW AND, THEREFORE, AS ON THE DATE OF SEARCH, I.E. 28.09.2013, NO ASSESSMENT COULD BE SAID TO H AVE BEEN PENDING AS THE PERIOD PERMISSIBLE TO PICK - UP THE RETURN OF INCOME FOR SCRUTINY ASSESSMENT BY ISSUANCE OF A NOTICE U/S 143(2) OF THE ACT HAD LAPSED. ON THIS BASIS, THE CIT(A) HAS CONCLUDED THAT THE ASSESSMENT WAS NOT PENDING AS ON THE DATE OF SEAR CH AND, THEREFORE, HE HAS TESTED THE EFFICACY OF THE DISALLOWANCE MADE U/S 14A OF THE ACT ON THE BASIS OF THE PROPOSITION LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) , WHICH WE HAVE DEALT WITH IN THE EAR LIER PARAGRAPHS. WE FIND NO REASONS TO DISTRACT FROM THE FINDINGS OF THE CIT(A), WHICH ARE FACTUALLY AS WELL AS ON POINT OF LAW IN COMPLIANCE WITH THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). ACCORDINGLY, THE DECISION OF THE CIT(A) IN THIS YEAR IS ALSO AFFIRMED , AND REVENUE FAILS . 11. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 IS DISMISSED . 12. NOW, WE MAY TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2011 - 12 WHEREIN ALSO THE ONLY ADDITION IN DISPUTE IS THE DISALLOWANCE ENHANCED U/S 14A OF THE ACT BY RS.86,15,780/ - . THE CIT(A) HAS DELETED THE ADDITION FOLLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) . 6 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 13. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE QUITE FAIRLY POINTED OUT THAT THE FACT - SITUATION IN THE INSTANT APPEAL IS NOT COVERED BY THE R ATIO OF THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) . IT IS SEEN THAT THE ORIGINAL RETURN U/S 139(1) OF THE ACT WAS FILED BY THE ASSESSEE ON 30.09.2011 AND A NOTICE U/S 143(2) OF THE ACT WAS ISSUED O N 31.07.2012, AND AS ON THE DATE OF SEARCH, I.E. 28.09.2013, THE ASSESSMENT WAS PENDING. AS A CONSEQUENCE, IN TERMS OF THE SECOND PROVISO TO SEC. 153A(1), THE ORIGINAL ASSESSMENT ABATED. THUS, IN SUCH A FACT - SITUATION, THE RATIO OF THE JUDGMENT OF THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) IS NOT ATTRACTED. QUITE CLEARLY, THE CIT(A) WAS WRONG IN DELETING THE DISALLOWANCE BY RELYING ON THE LEGAL POSITION LAID DOWN IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SU PRA) . 14. IN THIS BACKGROUND, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IT IS QUITE WELL - SETTLED THAT THE DISALLOWANCE U/S 14A OF THE ACT SHOULD BE LIMITED TO THE EXTENT OF AVAILABLE EXEMPT INCOME WHEREAS IN THE INSTANT CASE, THE DISALL OWANCE HAS BEEN WORKED OUT U/S 14A OF THE ACT EVEN IN EXCESS OF THE EXEMPT INCOME. SINCE THE AFORESAID PLEA HAS NOT BEEN EXAMINED BY ANY INCOME - TAX AUTHORITIES , WE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) WHO SHALL ADJUD ICATE THE APPEAL AFRESH IN ACCORDANCE WITH THE LAW. NEEDLESS TO MENTION , THE CIT(A) SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND ONLY THEREAFTER SHALL PASS AN ORDER AFRESH IN ACCORDANCE WITH LAW. 15. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED, AS ABOVE. 7 ANAND RATHI GLOBAL FINANCE LTD. ITA NOS. 7465 TO 7468/MUM/2016 16. RESULTANTLY, WHEREAS THE APPEAL S OF THE REVENUE FOR ASSESSMENT YEARS 2008 - 09, 2009 - 10 AND 2010 - 11 ARE DISMISSED, THAT OF ASSESSMENT YEAR 2011 - 12 IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H NOVEMBER, 2017 SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H NOVEMBER , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, B BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI