VINAY CHHADWA, MUMBAI V. ACIT CEN CIR 8, MUMBAI

ITA 8578/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71921 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 09-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Gift; Search and seizure; Principle of natural justice
• Section: 68; 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , , BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 8578 / MUM./ 2010 ( / ASSESSMENT YEAR : 20 03 04 ) MR. VINAY CHHADWA 602/B, CAPTAIN HOUSE DR. AMBEDKAR ROAD MATUNGA (CR) MUMBAI 400 019 .. / APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CEN TRAL CIRCLE 8, MUMBAI .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER ABTPC7599J / ASSESSEE BY : MR. VIJAY MEHTA / REVENUE BY : MR. RAJESH RANJAN PRASAD / DATE OF HEARING 04 . 1 2 .2013 / DATE OF ORDER 11.12.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 4 TH DECEMBER 2009, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 37 , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/W SECTION 153A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 03 04 , INTER ALIA, ON THE FOLLOWING GROUNDS OF APPEAL: MR. VINAY CHHAD WA 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S. 250 OF THE ACT. 2 . THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ASSESSMENT ORDER IN GROSS VI OLATIONS OF PRINCIPLES OF NATURAL JUSTICE. 3 . THE LEARNED CI T (A) HAS ERRED IN LAW AND IN FACTS IN NOT HOLDING THAT THE ADDITION AMOUNTING TO RS.5 , 90 , 538/ - CANNOT BE MADE IN THE PROCEEDINGS U/S. 143 (3) R.W.S. 153A OF THE ACT AS THE SAME IS NOT ON THE BA SIS OF EVIDENCE FOUND DURING THE COURSE OF SEARCH AND HENCE BEYOND JURISDICTION. 4 . THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS. 5 , 9 0, 538/ U/S. 68 OF THE INCOME TAX ACT ON ACCOUNT OF GIFT OF S BI RESURGENT INDIA BOND S RECEIVED FROM MR. MINESH SHAH. 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL WHO HAD FILED HIS RETURN OF INCOME ON 31 ST OCTOBER 2003, AT AN INCOME OF ` 6,12,296. THEREAFTER, SUCH A RETURN OF INCOME WAS SUBJECT MATTER OF SCRUTINY UNDER SECTION 143(2) A ND , THE REFORE, ASSESSMENT WAS COMPLETED , VIDE ORDER DATED 15 TH MARCH 2005 UNDER SECTION 143(3). AS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE RELATING TO GIFT FROM NRI SBI RESURGE NT INDIA BOND AND CONSIDERED THE SAME IN DETAIL. THEREAFTER, ON 11 TH APRIL 2007, A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CARRIED OUT IN CASE OF THE ASSESSEE AND, ACCORDINGLY, NOTICE UNDER SECTION 153A WAS ISSUED AND IN PURSUANCE THERE OF IN TH E ORDER UNDER SECTION 153A, AN ADDITION OF ` 5,90,538 WAS MADE ON ACCOUNT OF GIFT IN THE FORM OF SBI RESURGENT INDIA BOND RECEIVED FROM NRI WHICH HAS ALSO BEEN CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 3 . AT THE OUTSET, THE LEARNED COUNSEL, MR. VIJA Y MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT DURING THE COURSE OF SEARCH AND SEIZURE, NO MATERIAL WHATSOEVER RELATING TO NRI GIFT OF SBI RESURGENT INDIA BOND WAS FOUND AND, THEREFORE, SUCH AN ADDITION CANNOT BE SUSTAINED IN THE ORDER PASSED UNDER S ECTION 153A. HE SUBMITTED THAT FROM A BARE PERUSAL OF THE ASSESSMENT ORDER PASSED UNDER SECTION 153A, IT CAN BE SEEN THAT IT WAS FROM THE DETAILS SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS ADDED THE GIFT. ONCE THE ISSUE OF GIFT HAS ALREADY BE EN SUBJECT MATTER OF MR. VINAY CHHAD WA 3 SCRUTINY IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3), THEN NO ADDITION CAN BE MADE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A , WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH I N CONNECTION WITH SU CH AN ISSUE AND, HENCE, NO ADDITION CAN BE SUSTAINED. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN JAYSTEEL INDIA V/S ACIT, [2003] 259 CTR (RAJ.) 281 AND SPECIAL BENCH DECISION OF THE TRIBUNAL, MUMBIA, IN ALL CARGO GLOBAL LOGISTICS LTD. V/S DCIT, ITA NO.5108 TO 5022/MUM./2010, VIDE ORDER DATED 6 TH JULY 2012. 4 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION S OF HONBLE DELHI HIGH COURT IN MADUGULA VENU V/S DIT, [2013] 29 TAXM AN.COM 200 AND IN CIT V/S ANIL KUMAR BHATIA, [2012] 211 TAXMAN 453 (DEL.) AND SUBMITTED THAT EVEN THOUGH NO SEIZED MATERIAL HAS BEEN FOUND, THE ASSESSING OFFICER IS REQUIRED TO COMPLETE THE ASSESSMENT UNDER SECTION 153A. 5 . WE HAVE HEARD THE RIVAL CONTENTION S, PERUSED THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AS WELL AS THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED , VIDE ORDER DATED 15 TH M ARCH 2005, WHICH WAS MUCH PRIOR TO THE DATE OF SEARCH I.E., 11 TH APRIL 2007. IN THE SAID ASSESSMENT ORDRE, THE ASSESSING OFFICER HAS EXAMINED THE ISSUE OF NRI GIFT OF SBI RESURGENT INDIA BOND OF US$ 10,000 . T HE ASSESSING OFFICER, AFTER EXAMINING THE SAME , HAS ACCEPTED THE SAID GIFT. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, NO SUCH MATERIAL WAS FOUND OR SEIZED QUA THIS GIFT , WHICH IS EVIDENT FROM THE FACT DISCUSSED BY THE ASSESSING OFFICER IN PARA 5.1. ONCE NO MATERIAL HAS BEEN FOUND AT THE TIME OF SEARCH AND THE EARLIER ASSESSMENT ORDER HAS ATTAINED FINALITY, THEN NO ADDITION CAN BE MADE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A. THIS PROPOSITION IS CLEAR FROM THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO (SUPRA) , WHEREIN IT HAS BEEN HELD THAT WHERE ANY ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED , THE ASSESSMENT UNDER SECTION 153A, WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT . IN OTHER MR. VINAY CHHAD WA 4 WORDS, IF THE MATERIAL HAS BEEN CONSIDERED IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THEN WITHOUT ANY FURTHER INCRIMINATING MATERIAL, ADDITION CANNOT BE MADE IN THE ASSESSME NT ORDER PASSED UNDER SECTION 1 5 3A. THIS PROPOSITION HAS BEEN INDEPEN DENTLY DISCUSSED AND ANALYSED BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF JAY STEEL (SUPRA) ALSO, WHEREIN THE HONBLE HIGH COURT CAME TO THE FOLLOWING CONCLUSION: 25. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH T HE PURPOSE AND PURPORT OF THE SAID PROVISION WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SS. 132 AND 132A OF THE ACT, IT IS APPARENT THAT: (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATED IN TERMS OF SECOND PROVISO TO S. 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND ( C) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR RE ASSESSMENT CAN BE MADE . THUS, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE SPECIAL BENCH AND THE HONBLE HIGH COURT, WE HOLD THAT NO ADDITION CAN BE MADE ON THE ISSUE OF SOME GIFT IN THE ORDER PASSED UNDER SECTION 153A, ONCE THE SAME HAS BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH HAS ATTAINED FINALITY AND NO INCRIMINATING MATERIAL WHATSOEVE R HAS BEEN FOUND RELATING TO SUCH ADDITION. THUS, THE ADDITION OF ` 5,90,538 CANNOT BE SUSTAINED. 6 . NOW COMING TO THE DECISION S AS RELIED UPON BY THE LEAR NED DEPARTMENTAL REPRESENTATIVE. FROM THE ISSUES AND RATIO DISCUSSED IN THESE JUDGMENTS, IT IS SEEN THA T THE HONBLE DELHI HIGH COURT HAS HELD THAT ONCE THERE IS A SEARCH, THE ASSESSING OFFICER IS REQUIRED TO CALL UPON THE ASSESSEE TO FILE RETURN OF INCOME FOR EARLIER SIX YEARS , IN RESPONSE TO THE NOTICE UNDER SECTION 153A AND THE ASSESSMENT HAS TO BE COMPL ETED FOR THESE SIX YEARS. I N THE PRESENT CASE, THE ISSUE IS ENTIRELY DIFFERENT AS THERE IS NO DISPUTE THAT NOTICE UNDER SECTION 153A CANNOT BE ISSUED OR NO ASSESSMENT CAN BE MADE. MR. VINAY CHHAD WA 5 THE MAIN ISSUE INVOLVED IS , WHETHER THE ADDITION CAN BE MADE IN THE ORDER PA SSED UNDER SECTION 153A ONCE THE SUBJECT MATTER OF ADDITION HAS ALREADY BEEN DISCUSSED AND INCOME HAS BEEN ASSESSED UNDER SECTION 143(3) THEN THE SAME CANNOT BE ROPED IN AGAIN UNDER SECTION 153A , WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THUS, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. 7 . 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED. 11 TH DECEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER 2013 SD / - . . P.M. JAGTAP ACC OUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 11 TH DECEMBER 2013 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT (A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI