Sh. Mahesh Jain through Legal Heir Sh. Yashinder Jain, Malerkotla V. ACIT, Ludhiana

ITA 830/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6523 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Search and seizure
• Section: 143(3); 142(1); 153A; 147; 148; 132; 15; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 830/CHD/2017 ASSESSMENT YEAR: 2007-08 SH. MAHESH JAIN, THROUGH VS. THE ACIT, LEGAL HEIR SH. YASHINDER JAIN, CENTRAL CIRCLE-1, PATEL STREET, CLUB CHOWK, LUDHIANA MALERKOTLA PAN NO.AAPPJ9977Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI KUMAR RESPONDENT BY : SH. RAVI SARANGAL DATE OF HEARING : 21.09.2017 DATE OF PRONOUNCEMENT : 11.12.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS CIT(A)], BHATINDA DATED 07.03.2017 . 2. THE ASSESSEE IN THIS APPEAL HAS AGITATED THE ACT ION OF THE CIT(A) IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MA KING ADDITION OF RS. 12,98,484/-, OUT OF WHICH AN ADDITION OF RS. 9,41,5 84/ WAS MADE ON ACCOUNT OF SHORT TERM CAPITAL GAIN RELATING TO THE SALE CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION OF RS. 4 LACS, AS SHOWN BY THE ASSESSEE IN 2 HIS RETURN OF INCOME OF THE HOUSE LOCATED AT OSWAL STREET, LUDHIANA AND FURTHER ADDITION OF RS. 3,56,900/- WAS MADE ON ACCO UNT OF EXCESS JEWELLERY FOUND DURING SEARCH ACTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION UNDER THE PROVISIONS OF SECTION 132 OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT') WAS CONDUCTED ON THE PREMISES OF THE ASS ESSEE ON 12.10.2006. PURSUANT TO THE AFORESAID SEARCH AND SEIZURE ACTION , NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE FOR THE SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE RELEVANT ASSESSMENT YEAR 2007-08. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN OF ASSESSMENT FOR THE ASSESSM ENT YEARS 2001-02 TO 2006-07. THE ASSESSMENT PROCEEDINGS FOR THE ASSESSM ENT YEAR 2007-08 WERE ALSO FRAMED BY THE ASSESSING OFFICER U/S 153A OF THE ACT. THE ASSESSING OFFICER ASSESSED THE INCOME OF THE ASSESS EE AT RS. 15,06,160/- AS AGAINST DECLARED INCOME OF RS. 2,07,676/-, THUS, T HE ADDITION OF RS. 9,41,584/- WAS MADE BY THE ASSESSING OFFICER ON ACC OUNT OF SHORT TERM CAPITAL GAIN ARISING OUT OF SALE OF PROPERTY LOCAT ED AT OSWAL STREET, LUDHIANA. THE SECOND ADDITION WAS MADE BY THE ASSES SING OFFICER ON ACCOUNT OF EXCESS JEWELLERY FOUND DURING THE COURSE OF SEARCH ACTION. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE ABOVE SAID AD DITIONS BEFORE THE CIT(A). 4. BEFORE US, THE ASSESSEE APART FROM AGITATING THE ADDITIONS ON MERITS, HAS TAKEN THE ADDITIONAL LEGAL GROUND, WHICH READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ASSESSMENT FRAMED U/S 153A DESERVES TO BE QUASHED AS ASSESSMENT FOR ASSESSMENT YEAR 2007-08 FRAMED U/S 153A WAS NOT VALID AND VOID ABINITIO. 3 THE LD. AR HAS CONTENDED THAT THE ASSESSMENT IN THI S CASE WAS FRAMED U/S 153A OF THE ACT WHEREAS AS PER THE CLAUSE (B) OF SU B SECTION (1) TO SECTION 153A, THE ASSESSING OFFICER WOULD ASSESS OR RE-ASS ESS TOTAL INCOME OF 06 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR, RELEVANT TO PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. HE HAS FURTHERED CONTENDED THAT THE SEARCH IN THIS CAS E WAS CONDUCTED ON 12.10.2006 AND, THEREFORE, THE ASSESSMENT U/S 153A OF THE ACT COULD HAVE BEEN MADE ONLY FOR 06 ASSESSMENT YEAR IMMEDIATELY P RECEDING THE ASSESSMENT YEAR RELEVANT TO SEARCHED YEAR I.E. FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07 ONLY AND NOT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007-08. HE, TH EREFORE, HAS CONTENDED THAT THE ASSESSMENT FRAMED U/S 153A FOR ASSESSMENT YEAR 2007-08 WAS NOT VALID AND WAS VOID ABINITIO. HE IN THIS RESPECT HA S RELIED UPON THE DECISION OF THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF RAJIV KUMAR VS. ACIT (2017) 152 DTR (CHD) (TRIB.) 233 AN D OF THE HON'BLE ALLAHABAD HIGH COURT, LUCKNOW BENCH IN THE CASE OF CIT (CENTRAL) VS. SRI RAJ KUMAR JAISWAL, SMT. REKHA JAISWAL AND SRI RAM DAYAL JAISWAL, INCOME TAX APPEAL NOS. 25 TO 27 OF 2010 DECIDED VID E ORDER DATED 28.2.2017. 5. ON THE OTHER HAND, LD. DR HAS POINTED OUT THAT M ENTIONING OF SECTION 153A IN THE ASSESSMENT ORDER WAS JUST A CLERICAL MI STAKE AND THAT MERE MENTIONING WRONG SECTION WILL NOT INVALIDATE THE AS SESSMENT PROCEEDINGS CARRIED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FIN D THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RA JIV KUMAR VS. ACIT 4 AND OF THE HON'BLE ALLAHABAD HIGH COURT, LUCKNOW BE NCH IN THE CASE OF CIT (CENTRAL) VS. RAJ KUMAR JAISWAL AND OTHERS (S UPRA) IN ITA NOS. 25, 26, & 27 OF 2010. THE HON'BLE ALLAHABAD HIGH COURT (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE ON FRAMING OF ASSESSME NT U/S 153A OF THE ACT FOR THE ASSESSMENT YEAR RELEVANT TO THE SEARCH YEAR HAS OBSERVED THAT WHEN A POWER IS EXERCISED UNDER A PARTICULAR PROVISION A ND IN THE MANNER, IT IS SO CONTEMPLATED IN SUCH SUBSTANTIVE PROVISION, THEN TH IS DEFENCE IS NOT OPEN THAT IT MAY BE TREATED AS A MERE MISTAKE OF WRONG P ROVISION OF STATUTE. THE RELEVANT PART OF THE OBSERVATIONS MADE BY THE HON'B LE ALLAHABAD HIGH COURT IS REPRODUCED AS UNDER:- 16. HOWEVER THE ABOVE PROPOSITION HAS NO APPLICATI ON FOR THE REASON, WHEN A POWER IS EXERCISED UNDER A PARTICULA R PROVISION AND IN THE MANNER, IT IS SO CONTEMPLATED IN SUCH SU BSTANTIVE PROVISION, THEN THIS DEFENCE IS NOT OPEN THAT IT MA Y BE TREATED AS A MERE MISTAKE OF WRONG PROVISION OF THE STATUTE. N OTICE WAS SPECIFICALLY SERVED UNDER SECTION 153A. ASSESSMENT ORDER CLEARLY SAYS THAT IT IS BEING PASSED UNDER SECTION 153A. MO REOVER, JURISDICTION FOR MAKING ASSESSMENT UNDER SECTION 15 3A READ WITH SECTION 153C APPARENTLY IS QUITE DIFFERENT THAN REQ UIREMENT OF NOTICE UNDER SECTION 143(2) OF ACT, 1961 AND ASSESS MENT MADE UNDER SECTION 143(3). 17. WE FIND THAT THIS ASPECT HAS ALSO BEEN DISCUSS ED BY TRIBUNAL AND IT HAS OBSERVED AS UNDER:- '16................THE PROVISIONS OF SECTION 153A R EAD WITH SECTION 153C EMPOWER THE AO TO PROCEED WITH THE ASSESSMENT IN SEARCH CASES MENTIONED THEREIN MEANIN G THEREBY THAT THE AO GETS JURISDICTION TO PRO CEED FOR 5 MAKING ASSESSMENT IN SEARCH CASES COVERED BY THESE PROVISIONS, WHEREAS PROVISIONS OF SECTION 143(2) SU BJECT TO LIMITATION PROVIDED UNDER PROVISO TO THE SUB-SEC TION REQUIRE THE AO TO GIVE THE ASSESSEE AN OPPORTUNITY TO SUPPORT ITS RETURN, BEFORE MAKING OF ASSESSMENT UND ER SECTION 143(3) / 144 AS THE CASE MAY BE. IN OTHER W ORDS JURISDICTION TO MAKE ASSESSMENT UNDER SECTION 143(3 ) IS GATHERED BY THE AO JUST AFTER FURNISHING THE RETURN OF INCOME BY THE ASSESSEE UNDER SECTION 139 OR ON ISSU ANCE AND SERVICE OF NOTICE UNDER SECTION 142(1) REQUIRIN G THE ASSESSEE TO FURNISH THE RETURN OF INCOME OR ON NOTI CE ISSUED UNDER SECTION 148 OF THE ACT, MEANING THEREB Y THAT PROVISIONS OF SECTION 143(2) OF THE ACT DID NO T GIVE JURISDICTION TO MAKE AN ASSESSMENT UNDER SECTION 14 3(3) BUT MAKE IT OBLIGATORY TO COMPLY WITH THESE PROVISI ONS BEFORE MAKING ASSESSMENT UNDER SECTION 143(3) OR SECTION 144 AS THE CASE MAY BE. IN VIEW OF THIS DIF FERENCE BETWEEN THE PURPOSE AND THE RESULT OF TAKING RECOUR SE TO PROVISIONS OF SECTION 153A READ WITH SECTION 153C O N ONE HAND AND ISSUANCE OF NOTICE UNDER SECTION 143(2 ) OF THE ACT ON THE OTHER HAND, WE ARE UNABLE TO ACCEPT THE PLEA ADVANCED BY THE LD. D.R. 17. COMING TO THE MERITS OF THE CASE, WE, AFTER HA VING CONSIDERED THE PROVISIONS OF SECTION 153A, 153B AND 153C, ARE OF THE OPINION THAT THOUGH THE PROVISIONS 153B(1) (B) PROVIDE THE LIMITATION FOR COMPLETING T HE ASSESSMENT FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SE CTION 132 OR REQUISITION IS MADE UNDER SECTION 132A OF TH E ACT, BUT THERE BEING NO PROVISION AS TO UNDER WHICH PROV ISION OF LAW, THE ASSESSEE CAN BE CALLED UPON TO FURNISH ITS RETURN FOR THAT ASSESSMENT YEAR ONLY UNDER THE PROV ISIONS OF SECTION 139 AND IT IS ONLY IN CASE OF FAILURE OF THE ASSESSEE TO FURNISH THE RETURN UNDER SECTION 139 TH AT THE AO CAN CALL FOR RETURN OF INCOME FOR THE PREVIOUS Y EAR EITHER UNDER SECTION 142(1) OR UNDER SECTION 147 OF THE ACT, AS THE CASE MAY BE, AND IF IT IS SO, THEN THE ASSESSMENT FOR ASSESSMENT YEAR RELEVANT TO THAT PRE VIOUS YEAR CAN BE MADE ONLY UNDER SECTION 143(1) OR 143(3 ) OR 144 OR 147 OF THE ACT BUT CANNOT BE MADE UNDER SECT ION 153A OF THE ACT. 18. IN VIEW OF THE ABOVE DISCUSSION AND THE REASON S STATED BY THE CIT(A), WE ARE OF THE OPINION THAT T HE CIT(A) WAS QUITE JUSTIFIED IN HOLDING THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AO HAD NO 6 JURISDICTION TO PASS AN ORDER UNDER SECTION 153A OF THE ACT. THE ORDER OF THE CIT (A) IS, THEREFORE, UPHELD .' 18. WE FIND OURSELVES IN AGREEMENT WITH THE VIEW TA KEN BY TRIBUNAL ON THIS ASPECT, IN ABSENCE OF ANY OTHERWIS E SUSTAINABLE ARGUMENT ADVANCED ON BEHALF OF APPELLANT OR BINDING AUTHORITY TAKING OTHERWISE VIEW. 19. QUESTION NO.1 IS THEREFORE ANSWERED BY HOLDING THAT MERE MENTION OF A WRONG PROVISION WILL NOT DENY JURISDIC TION TO THE AUTHORITY, IF IT OTHERWISE HAS, BUT THIS ASPECT HAS NO APPLICATION TO THE PRESENT CASE. QUESTION NO.2 IS ANSWERED AGAI NST APPELLANT. 7. IN VIEW OF THE ABOVE, SINCE THE LEGAL ISSUE RAIS ED IN THIS APPEAL IS SQUARELY COVERED BY THE ABOVE REFERRED TO DECISIONS , HENCE, RESPECTFULLY FOLLOWING THE SAME, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THE ASSESSMENT FRAMED FOR THE YEAR UNDER CONSIDERATION IS ACCORDINGLY HELD TO BE VOID AND THE CONSEQUENT ADDITIONS MADE THERETO A RE ACCORDINGLY ORDERED TO BE DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11.12.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR