SUDESH KAPOOR, MUMBAI V. DCIT CEN CIR 30, MUMBAI

ITA 8113/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78961 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-11-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 24-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C P PATNAIK
• Keywords: Search and seizure
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NOS. 8108 TO 8113/MUM/2010 ASSESSMENT YEARS: 2001-02 TO 2006-07 SHRI SUDESH KAPOOR 153, MAKER TOWER-B, CUFFE PARADE, MUMBAI- 400 005 PAN: AABPK 1571 F VS. DCIT CEN CIR-30 MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHARMESH SHAH REVENUE BY SHRI K.C.P. PATNAIK DATE OF HEARING : 08.05.2014 DATE OF PRONOUNCEMENT : 21.05.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: ALL THESE APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST SIX SEPARATE ORDERS OF THE LD.CIT(A)-39, MUMBAI, ALL DATED 29.09 .2010 IN RESPECT OF THE ASSESSMENT YEARS FROM 2001-02 TO 2006-07. ALL THE I MPUGNED ASSESSMENTS HAVE BEEN FRAMED U/S 153 A READ WITH SECTION 143(3) OF T HE INCOME TAX ACT, 1961. 2. THE ONLY ISSUE INVOLVED IN ALL THESE APPEALS IS PERTAINING TO THE DISALLOWANCE OF SUB-BROKERAGE PAID BY THE ASSESSEE. THE RELEVANT FACTS ARE THAT THE ASSESSEE, AN INDIVIDUAL DERIVING INCOME FROM RENT, ESTATE AGENCY AND INCOME FROM OTHER SOURCES IN RESPECT OF WHOM SEARCH AND SEIZURE ACTION U/S 13 2(1) WAS CONDUCTED ON 06.11.2006. IN THE ASSESSMENT FRAMED U/S 143(3) REA D WITH SECTION 153A, THE AO MADE THE DISALLOWANCE/ADDITION IN RELATION TO THE S UB-BROKERAGE PAID BY THE ASSESSEE IN ALL THE ASSESSMENT YEARS AND ADDED THE SAME TO THE TOTAL INCOME. ON APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE AO A ND AGGRIEVED BY THE IMPUGNED DECISION THE ASSESSEE IS IN APPEAL BEFORE US. ITA NOS. 8108 TO 8113/MUM/2010 SHRI SUDESH KAPOOR ASSESSMENT YEARS: 2001-02 TO 2006-07 2 3. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS A MATTER OF FACT THAT SEARCH AND SEIZURE ACTION HAS BEEN CAR RIED OUT IN THE CASE OF THE ASSESSEE ON 06.11.2006. IT IS OBSERVED THAT IN RESP ECT OF THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA RS FROM 2001-02 TO 2005-06, THE INTIMATION U/S 143(1) OF THE ACT HAS BEEN ISSUED HO WEVER, NO NOTICE U/S 143(2) OF THE ACT HAS BEEN SERVED BY THE AO. IT IS PERTINENT TO MENTION THAT THE ASSESSMENTS FOR THE SAID ASSESSMENT YEARS HAVE ATTAINED FINALIT Y BEFORE THE DATE OF SEARCH HENCE THE ASSESSMENTS IN THESE CASES DO NOT ABATE. IT IS PERTINENT TO MENTION THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. VS. DCIT 137 ITD 287 (MUM)(SB) HAS HELD THAT THE CRUCIAL FACTS TO BE RECORDED IN SUCH CASES IS THAT WHETHER ASSESSMENT OR RE-ASSESSMENT HAS BEE N PENDING AT THE TIME OF SEARCH CARRIED OUT OR IN THE COURSE OF ASSESSMENT PROCEEDI NGS INITIATED U/S 153A. APPLYING THE SAID TEST TO THE CASE IN HAND, THE ASSESSMENTS FOR THE ASSESSMENT YEARS FROM 2001-02 TO 2005-06 HAVE ATTAINED FINALITY AND THERE FORE THE AO DOES NOT HAVE ANY JURISDICTION TO REVIEW THE ASSESSMENTS WHICH HAVE A TTAINED FINALITY. FURTHER, THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT 88 DTR (RAJ) HAS HELD THAT IN CASE NOTHING INCRIMINATING IS FOUND ON ACCO UNT OF SEARCH OR REQUISITION, THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMEN T DOES NOT ARISE. IT HAS FURTHER BEEN HELD THAT THE UNDERLYING PURPOSE OF MAKING ASS ESSMENT OF TOTAL INCOME U/S 153A IS TO ASSESS INCOME WHICH IS NOT DISCLOSED OR WOULD NOT HAVE BEEN DISCLOSED. SECOND PROVISO TO SECTION 153A PROVIDING FOR ABATEM ENT OF ASSESSMENT OR REASSESSMENT, WHICH IS APPLICABLE ONLY IN PROCEEDIN GS PENDING ON THE DATE OF SEARCH OR REQUISITION FOR THE REASON THAT THERE CANNOT BE TWO ASSESSMENTS FOR A SINGLE ASSESSMENT YEAR. IT IS ALSO A SETTLED POSITION OF L AW THAT REASSESSMENT IS PERMITTED IN AN ASSESSMENT U/S 153A ONLY IF INCRIMINATING MATERI AL IS FOUND IN THE COURSE OF SEARCH. IN THE CASE IN HAND, THE QUESTION IS WHETHE R ANY INCRIMINATING MATERIALS HAVE BEEN FOUND IN THE COURSE OF SEARCH. THE DETAIL S FILED BY THE ASSESSEE CLEARLY SHOW THAT THE ASSESSEE HAS FILED THE RELEVANT DETAI LS OF THE SUB-BROKERAGE PAID BY THE ASSESSEE AND THEREFORE, THERE IS NO QUESTION TH AT THE INTIMATION OF THE EXPENSES HAS NOT BEEN DISCLOSED BY THE ASSESSEE. ALSO, WE FI ND THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND IN THE COURSE OF SEARCH WHICH IS IN FACT FILED ALONG WITH THE RETURN OF INCOME IN RESPECT OF WHICH THE ASSESSMENTS ALREADY COMPLETED. THEREFORE, WE ARE OF ITA NOS. 8108 TO 8113/MUM/2010 SHRI SUDESH KAPOOR ASSESSMENT YEARS: 2001-02 TO 2006-07 3 THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATI ON FOR THE AUTHORITIES BELOW TO CONSIDER THE ISSUES IN THE ASSESSMENTS PASSED U/S 1 53A WHICH IN FACT IS CONTEMPLATING A REVIEW OF THE ASSESSMENTS ALREADY M ADE BY THE AO PRIOR TO THE DATE OF SEARCH, WHICH IS NOT LEGALLY TENABLE UNDER THE S TATUTE. IN VIEW OF THAT MATTER, THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE VALIDIT Y OF THE ASSESSMENT FRAMED BY THE AO U/S 143(3) READ WITH SECTION 153A IS NOT JUSTIFI ED AND HENCE THE SAME IS QUASHED IN RESPECT OF THE ASSESSMENT YEARS 2001-02 TO 2005- 06. CONSEQUENTLY, THE DISALLOWANCES MADE IN RESPECT OF THESE ASSESSMENT Y EARS STAND DELETED. 4. AS REGARDS THE DISALLOWANCE/ADDITION ON ACCOUNT OF SUB-BROKERAGE AMOUNTING TO RS.30,000/- MADE BY THE AO AND CONFIRMED BY THE LD.CIT(A) FOR THE ASSESSMENT YEAR 2006-07, IT IS PERTINENT TO MENTION THAT THE A O HAS THE JURISDICTION FOR MAKING ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE INCOME-TAX ACT AS THE ASSESSMENT FOR THE SAID YEAR IS PENDING SINCE THE T IME LIMIT TO ISSUE THE NOTICE U/S 143(2) OF THE ACT IS NOT BARRED. ON MERITS, IT IS P ERTINENT TO MENTION THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCE FOR THE PAYMENT OF SUB-BROKERAGE AND FURNISH ADDRESSES OF S UB-BROKERS TO WHOM THE AMOUNTS HAVE BEEN PAID. IT IS THE CONTENTION OF THE ASSESSEE THAT IT IS A COMMON PRACTICE IN THE BUSINESS TO OFFER SUB-BROKERAGE TO PERSON WHO BRINGS THE INFORMATION FOR BUYING/SELLING FLAT ETC. TO THE BROKERS FOR NEG OTIATIONS. FURTHER, IT IS THE ARGUMENTS OF THE ASSESSEE THAT SINCE THE ASSESSEE H AS PAID THE SUB-BROKERAGE BY WAY OF CHEQUE, THE EXPENDITURE IS TO BE ALLOWED. TH E PERUSAL OF THE DETAILS AVAILABLE AT PAGE NO. 41-42 OF THE PAPER BOOK REVEALS THAT TH E ASSESSEE HAS PAID A SUM OF RS.20,000/- TO MR. ARUN PAWAR BY CHEQUE NO. 751848 DRAWN ON INDIAN BANK DATED 06.12.2005 AS SUB BROKERAGE WHICH HAS ALSO BEEN ACC EPTED BY MR. ARUN PAWAR. HOWEVER, AS REGARDS THE PAYMENT OF RS.10,000/- ALLE GEDLY PAID TO MR. ANIL, THE ASSESSEE IS NOT IN A POSITION TO PROVIDE THE DETAIL S OR CONFIRMATION BY THE SAID PARTY. IN VIEW OF THE MATTER, WE DELETE THE DISALLOWANCE/A DDITION OF RS.20,000/- AND SUSTAIN THE DISALLOWANCE OF REMAINING RS.10,000/-. WE DIRECT AND ORDER ACCORDINGLY. ITA NOS. 8108 TO 8113/MUM/2010 SHRI SUDESH KAPOOR ASSESSMENT YEARS: 2001-02 TO 2006-07 4 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 ARE ALLOWED AND THAT FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MAY, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.05.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.