DEVESH AGARWAL, MUMBAI V. ACIT CEN CIR 32, MUMBAI

ITA 8918/MUM/2010

• Counselvise Citation: 891819914 RSA 2010
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 21-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDERA A MEHTA
• Keywords: Gift; Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 14A; 68; 132; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) .. , , ./I.T.A. NO.8918 & 8919/MUM/2010 ( / ASSESSMENT YEARS : 2004-05 & 2003-04) SHRI DEVESH AGARWAL C/O M/S RAVI AND DEV, CHARTERED ACCOUNTANT, 377-B, FIRST FLOOR, JAGANNATH SHANKAR SETH MARG, CHIRA BAZAR, MUMBAI-400002. / VS. ASSISTA NT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -32,MUMBAI. ( !' / APPELLANT) .. ( #$!' / RESPONDENT) ! ./ %& ./PAN/GIR NO. :AEKPA7464G !' ' / APPELLANT BY : SHRI DEVENDERA A MEHTA #$!' ( ' /RESPONDENT BY : SHRI SANTOSH KUMAR ) * ( +, / DATE OF HEARING : 11.7.2014 -. ( +, /DATE OF PRONOUNCEMENT : 31.7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE COMMON ORDER DATED 25.11.2010 PASSED BY THE LD. CIT(A)-41, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEARS 2003-04 AND 2004-05. 2. SINCE IDENTICAL ISSUES ARE URGED IN BOTH THE AP PEALS, THEY WERE HEARD TOGETHER AND ARE BEING DECIDED BY THIS COMMON ORDER , FOR THE SAKE OF CONVENIENCE. I.T.A. NO.8918 & 8919/MUM/2010 I I T I T A 2 3. THE ASSESSEE, INTER-ALIA, HAS RAISED A LEGAL ISS UE, VIZ., WHETHER THE ADDITIONS MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S.153A OF THE INCOME TAX ACT, 1961(THE ACT) FOR BOTH THE YEARS UN DER CONSIDERATION IS SUSTAINABLE IN THE ABSENCE OF ANY INCRIMINATING MAT ERIAL FOUND IN THE SEARCH PROCEEDINGS FOR THESE TWO YEARS, PARTICULARLY IN VI EW OF THE FACT THAT THESE TWO YEARS FALL IN THE CATEGORY OF COMPLETED ASSESSMENTS AND HENCE THE PREVIOUS ASSESSMENT ORDERS DO NOT ABATE. 4. WE PREFER TO ADJUDICATE THIS LEGAL ISSUE FIRST. THE FACTS RELATING THERETO ARE STATED IN BRIEF. THE SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED ON 3.1.2008 IN THE CASE OF EVERSHINE GRO UP. THE ASSESSEE WAS ALSO SUBJECTED TO SEARCH IN CONNECTION THEREOF. SUBSEQU ENT TO THE SEARCH AND SEIZURE OPERATION, THE AO ISSUED NOTICE U/S 153A OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE PROCEEDINGS RE-OPENED U/S 15 3A OF THE ACT, THE AO ASSESSED GIFTS RECEIVED BY THE ASSESSEE IN BOTH THE YEARS AS THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SEC. 68 OF T HE ACT. THE AO ALSO MADE DISALLOWANCE U/S 14A OF THE ACT IN BOTH THE YEARS. 5. THE CONTENTIONS OF THE ASSESSEE ARE THAT THE ASS ESSMENT FOR BOTH THE YEARS UNDER CONSIDERATION FALL IN THE CATEGORY OF COMPLETED ASSESSMENT AND HENCE THE EARLIER ASSESSMENT ORDERS DO NOT GET ABAT ED BY THE PROVISIONS OF SECTION 153A. IT IS ALSO SUBMITTED THAT THE SEARC H TEAM DID NOT UNEARTH ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH WHICH WOULD WARRANT THE IMPUGNED ADDITIONS MADE BY THE AO IN BOTH THE YEARS . ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION RENDERED BY THE MUMBAI SPE CIAL BENCH IN THE CASE OF ALL I.T.A. NO.8918 & 8919/MUM/2010 I I T I T A 3 CARGO GLOBAL LOGISTIC LTD V/S DCIT (2012) 137 ITR ( SB) (MUM), LD. AR CONTENDED THAT THE IMPUGNED ADDITIONS ARE LIABLE TO BE DELET ED. 6. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE AO HAS MADE A REFERENCE TO SEIZED DOCUMENTS MARKED AS A-1 IN THE ASSESSM ENT ORDER. ACCORDINGLY, HE SUBMITTED THAT THERE IS A POSSIBILITY THAT THE IMPU GNED ADDITIONS ARE BASED ON THE INCRIMINATING MATERIALS. HOWEVER, LD. AR SUBMI TTED THAT SEIZED DOCUMENTS CONTAINED IN A-1 CONTAINED ONLY FINANCIAL STATEME NTS WHICH WERE ALREADY AVAILABLE WITH THE AO. HE SUBMITTED THAT THE LD D. R SHOULD HAVE BROUGHT THE SEIZED MATERIALS MARKED AS A-1, IF HE WANTED TO P LACE RELIANCE ON IT. HENCE, THE LD D.R WAS ASKED TO PRODUCE THE ABOVE SAID SEIZ ED MATERIALS. HOWEVER, THE LD D.R SUBMITTED THAT HE CANNOT BRING IT IMMEDIATEL Y, BUT AGREED TO EXAMINE THE COPIES OF THE SAME, IF IT IS FURNISHED BY THE LD A. R. IN REPLY THERETO, THE LD A.R AGREED TO PRODUCE COPIES OF SEIZED MATERIAL MARKED AS A-1 AND ACCORDINGLY PRODUCED THE SAME. DURING THE COURSE OF HEARING, T HE LD. DR SCRUTINIZED THE COPIES OF THE SEIZED MATERIALS MARKED AS A-1 AND FAIRLY ADMITTED THAT IT DOES NOT CONTAIN ANY INCRIMINATING MATERIAL SUPPORTING T HE ADDITIONS MADE IN BOTH THE YEARS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED F ACT THAT BOTH THE YEARS UNDER CONSIDERATION ARE FALLING IN THE CATEGORY OF COMPL ETED ASSESSMENTS. THE HONBLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F ALL CARGO GLOBAL LOGISTIC LTD (SUPRA) HAS HELD THAT IN THE ASSESSMENT ORDERS FALL ING IN THE CATEGORY OF COMPLETED ASSESSMENTS DO NOT ABATE AND HENCE THE AD DITIONS CAN BE MADE IN THOSE YEARS ONLY ON THE BASIS OF INCRIMINATING MATE RIAL FOUND DURING THE COURSE I.T.A. NO.8918 & 8919/MUM/2010 I I T I T A 4 OF SEARCH. WE NOTICE THAT THE CO-ORDINATE BENCH O F THE TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN ONE OF THE GROUP CASES OF THE ASSESSEE VIZ., M/S GOVIND AGARWAL (HUF) V/S DCIT IN ITA NO.8917/MUM/2010 (AY- 2005-06) AND THE TRIBUNAL, IN ITS ORDER DATED 16.5.2013, HAS HELD AS UNDER BY FOLLOWING THE DECISION RENDERED BY THE SPECIAL BENCH:- 7. IN THIS CASE, THE QUESTION ANSWERED IN CLAUSE (B) WOULD BE APPLICABLE AS THE ADDITION IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A, CAN BE MADE ONLY ON THE BASIS OF INCRIMINATIN G MATERIAL FOUND IN THE COURSE OF SEARCH IN CASE WHERE THE ASSESSMENT H AS ALREADY BEEN FINALIZED. THUS, IN THIS CASE, NO ADDITION CAN BE M ADE OVER AND ABOVE THE RETURNED INCOME WHICH HAS BECOME FINAL PRIOR TO THE DATE OF SEARCH AND THERE IS NO MATERIAL FOUND AT THE TIME OF SEARCH. T HE AFORESAID MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) HAS ALSO BEEN REAFFIRMED AND APPLIED BY THE CO-ORDINATE BENCH IN GURINDER SINGH BAWA (SUPRA). THE RELEVANT OBSERVATI ON OF THE TRIBUNAL IS REPRODUCED HEREIN BELOW:- '6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARD ING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF THE AC T. UNDER THE PROVISIONS OF SECTION 153A, IN ALL CASES, WHERE SEA RCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO AS SESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECE DING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN PERIOD OF SIX ASSESS MENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL A BATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS F OUND INDICATING ANY UNDISCLOSED INCOME. SOME OF THE TRIBUNAL BENCHE S HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT JURISDICTIO N UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECED ING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER A NY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDIC TION UNDER SECTION 153A, ADDITION CAN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUN D. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF T HE TRIBUNAL IN I.T.A. NO.8918 & 8919/MUM/2010 I I T I T A 5 CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BEEN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A C OME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED A FTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE R ETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEA RCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABAT ED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISD ICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH AS SESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO IN CRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPE CIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF R ELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINA L ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEE N COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEME NT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMI NATING MATERIAL FOUND DURING SEARCH.' THUS, ON THE FACTS OF THE CASE, WE HOLD THAT THE AD DITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO UNEXPLAINED GIFT O F `10,00,000, MADE UNDER SECTION 68 AND DISALLOWANCE OF `1,01,300 UNDE R SECTION 14A, ARE BEYOND THE SCOPE OF SECTION 153A / 153C. CONSEQUEN TLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER ( APPEALS) AND ON THE PRELIMINARY GROUND ITSELF, BOTH THE ADDITIONS A RE DELETED. THUS, THE ISSUES ARISING OUT OF THE GROUND ARE TREATED AS ALL OWED. 8. CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE ABOVE SAID CASE, WE ALSO HOLD THAT THE IMPUGNED ADDITIONS MADE IN BOTH THE YEARS UNDER CONSIDERATION ARE LIABLE TO BE DELETED, SINCE THERE WAS NO INCRIMINATING MATERIAL WHICH SUPPORTED THE SAID ADDITIONS. ACCORDINGLY, W E SET ASIDE THE ORDER PASSED I.T.A. NO.8918 & 8919/MUM/2010 I I T I T A 6 BY LD. CIT(A) ON THE ISSUES CONTESTED BEFORE US AN D DIRECT THE AO TO DELETE THE IMPUGNED ADDITIONS IN BOTH THE YEARS. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31ST JULY , 2014. -. ) / 0 1 31ST JULY, 2014 . ( 2* 3 SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) * MUMBAI: 31ST JULY,2014. . . ./ SRL , SR. PS !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. ) 5+ ( ) / THE CIT(A)- CONCERNED 4. ) 5+ / CIT CONCERNED 5. 62 #+ 7 , , 7 , ) * / DR, ITAT, MUMBAI CONCERNED 6. 2 8* / GUARD FILE. 9 ) / BY ORDER, TRUE COPY : % (ASSTT. REGISTRAR) , 7 , ) * /ITAT, MUMBAI