M/s Padam Chand Jain & Co., Sirsa V. ACIT, Chandigarh

ITA 913/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86208 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Income from undisclosed sources; Search and seizure; Documents seized
• Section: 143(3); 133A; 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 913/CHD/2014 (ASSESSMENT YEAR : 2008-09) PADAM CHAND JAIN & CO., VS. THE A.C.I.T., #E-125, NEW ANAJ MANDI, CENTRAL CIRCLE I, SIRSA. CHANDIGARH. PAN: AAGFP1263J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 23.03.2015 DATE OF PRONOUNCEMENT : 25.03.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)(CENTRAL), GURGAON DATED 8.9.2014, FOR ASSESSMENT YEAR 2008-09. 2. BRIEFLY, THE FACTS ARE THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON M/ S OM COMMODITY GROUP OF CASES ON 25.3.2008. FOLLOWING P REMISES WERE COVERED UNDER SECTION 132(1) OF THE ACT : I) M/S OM COMMODITY BROKERS II) SHRI PANKAJ KHEMKA III) SHRI RAJ KUMAR JALLAN 2 IV) SHRI RAJ KUMAR JALLAN, LOCKER NO.55, CENTRAL BANK OF PUNJAB, SIRSA 3. FURTHER ON 25.3.2008, AN ACTION UNDER SECTION 1 33A OF THE ACT WAS ALSO CARRIED OUT ON BY THE INVESTIGA TION WING AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM, M/S PAD AM CHAND JAIN & CO. AND SHRI PANKAJ KHEMKA IS ONE OF THE PAR TNERS IN THE ASSESSEE FIRM. ALL THE ABOVE CASES ARE INTERL INKED GROUP OF CASES WITH THE CASE OF M/S OM COMMODITY BROKERS GROUP OF CASES. NOTICE UNDER SECTION 153C OF THE ACT WAS I SSUED, IN RESPONSE TO WHICH, THE ASSESSEE STATED THAT THE RET URN ALREADY FILED MAY BE TREATED AS RETURN FILED UNDER SECTION 153C OF THE ACT. THE ASSESSEE IS ENGAGED IN THE T RADING OF GRAINS AND ALSO IN RECEIPT OF COMMISSION ON TRADING . IT IS NOTED IN THE ASSESSMENT ORDER THAT DURING THE COURS E OF SURVEY UNDER SECTION 133A OF THE ACT IN THE CASE OF THE ASSESSEE FIRM CASH OF RS.6,76,110/- WAS FOUND. SH RI PANKAJ KHEMKA, PARTNER OF THE ASSESSEE FIRM WAS CONFRONTED WITH THE SAME AND HE STATED THAT AS PER THE CASH BOOK, CASH AVAILABLE AS ON DATE WAS RS.6,09,547/-. IT WAS STATED REGAR DING EXCESS CASH THAT THE SAME MIGHT BE BELONGING TO ANOTHER PA RTNER SMT.SHAKUNTLA DEVI. THE CASH BOOK WAS ALSO EXAMIN ED TO CONSIDER THE ISSUE OF EXCESS CASH FOUND DURING THE SURVEY. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND SATIS FACTORY WITH REGARD TO EXCESS CASH. NO EVIDENCE WAS PRODU CED TO SHOW THAT THE MONEY BELONGED TO SMT.SHAKUNTLA DEVI. THEREFORE, THE AMOUNT OF RS.66,563/- WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES AND WAS ADDED TO THE INCOM E OF THE ASSESSEE. 3 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BE FORE THE LEARNED CIT (APPEALS) AND IT WAS STATED THAT TH E SURVEY UNDER SECTION 133A OF THE ACT CANNOT BE THE BASIS F OR FRAMING ASSESSMENT UNDER SECTION 153C OF THE ACT AND THAT T HE ASSESSING OFFICER HAS ERRED IN MAKING THE ADDITION OF RS.66,563/-. IT WAS ALSO CLAIMED THAT NO INCRIMIN ATING DOCUMENTS OR VALUABLE WERE FOUND DURING THE COURSE OF SEARCH. THEREFORE, PROCEEDINGS INITIATED UNDER SEC TION 153C OF THE ACT BEING VOID ARE LIABLE TO BE CANCELLED. THE LEARNED CIT (APPEALS), HOWEVER, NOTED THAT THE SEARCH AND S EIZURE OPERATIONS WERE CONDUCTED ON THE SAME DATE OF 25.3. 2008. IN OTHER WORDS, THE SURVEY OPERATION ON THE BUSINESS P REMISES OF THE ASSESSEE EMANATED FROM THE SEARCH OPERATION ON SHRI PANKAJ KHEMKA, PARTNER OF THE ASSESSEE FIRM. IT WA S ALSO NOTED THAT INTRINSIC RELATIONSHIP BETWEEN A FIRM AN D ITS PARTNERS NEED NO ELABORATION AND CONSEQUENTLY, THE PROCEEDINGS UNDER SECTION 153C OF THE ACT ARE HELD TO BE VALID. AS REGARDS ADDITION ON MERIT, THE LEARNED CIT (APPEALS) CONFIRMED THE ADDITION OF RS.66,563/- BEI NG EXCESS CASH AS NO SATISFACTORY EXPLANATION WAS FILED. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSED. 4. THE ASSESSEE IN THE ORIGINAL FORM NO.36 FILED F OR THE PURPOSE TO CHALLENGE THE IMPUGNED ORDER RAISED THE GROUNDS OF APPEAL CHALLENGING THE ASSESSMENT FRAMED UNDER S ECTION 153C AS A RESULT OF ACTION UNDER SECTION 133A OF TH E ACT. IT IS, THEREFORE, PLEADED THAT THE ASSESSMENT ORDER UN DER SECTION 153C MAY BE CANCELLED. IT WAS ALSO CLAIMED THAT N O 4 INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASSESS EE DURING THE COURSE OF SEARCH UNDER SECTION 132(1) OF THE AC T. THEREFORE, THE ASSESSMENT ORDER UNDER SECTION 153C OF THE ACT NEEDS TO BE CANCELLED. THE ASSESSEE, HOWEVER, LAT ER ON FILED REVISED FORM NO.36 RAISING ALTOGETHER DIFFERENT GRO UNDS OF APPEAL CLAIMING THAT NO SATISFACTION UNDER SECTION 153C OF THE ACT HAVE BEEN RECORDED FOR FRAMING THE ASSESSMENT A ND THAT THE ADDITION OF RS.66,563/- IS BAD IN LAW. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. 6. THE LEARNED COUNSEL FOR ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY HE HAS CHANGED THE GROUNDS OF APP EAL AS RAISED ORIGINALLY IN THE REVISED GROUNDS OF APPEAL WITHOUT LEAVE TO THE TRIBUNAL. THE LEARNED COUNSEL FOR ASS ESSEE WAS NOT ABLE TO ANSWER ANYTHING SATISFACTORILY. HE HAS ALSO NOT ABLE TO EXPLAIN THAT WHEN THE ISSUE OF SATISFACTION UNDER SECTION 153C OF THE ACT WAS NOT RAISED BEFORE THE L EARNED CIT (APPEALS) OR IN THE ORIGINAL GROUNDS OF APPEAL, WHY THE ASSESSEE WITHOUT LEAVE TO THE TRIBUNAL CHANGED THE GROUNDS OF APPEAL IN THE REVISED FORM NO.36. THE LEARNED COU NSEL FOR ASSESSEE WAS NOT ABLE TO ANSWER ANYTHING. FURTHER THE ADDITION OF RS.66,563/- WAS NOT CHALLENGED IN THE O RIGINAL GROUNDS OF APPEAL AND THE LEARNED COUNSEL FOR ASSES SEE WAS NOT ABLE TO ANSWER HOW HE COULD CHANGE THE GROUNDS OF APPEAL WITHOUT RAISING ANY ADDITIONAL GROUND OF APPEAL IN THE MANNER AS DONE BY THE ASSESSEE. 5 7. WE MAY NOTE HERE THAT THE GROUNDS OF APPEAL RA ISED IN THE REVISED FORM NO.36 WERE NOT RAISED IN THE OR IGINAL GROUNDS OF APPEAL. NO APPLICATION HAS BEEN FILED B Y THE ASSESSEE SEEKING PERMISSION TO RAISE THE ADDITIONAL GROUNDS OF APPEAL. FURTHER THE ISSUE OF SATISFACTION UNDER S ECTION 153C OF THE ACT WAS NOT RAISED OR DECIDED BY THE LEARNED CIT (APPEALS). THEREFORE, THESE REVISED GROUNDS CANNOT BE RAISED IN THE GROUNDS OF APPEAL. FURTHER ADDITION ON MER ITS WAS ALSO NOT CHALLENGED IN THE ORIGINAL GROUNDS OF APPE AL. THEREFORE, WITHOUT MAKING APPLICATION FOR RAISING A DDITIONAL GROUNDS OF APPEAL, SUCH COURSE TAKEN BY THE ASSESSE E IS NOT PERMISSIBLE. BOTH THESE GROUNDS RAISED IN REVISED FORM NO.36 ARE ACCORDINGLY REJECTED. 8. NOW WE ARE LEFT WITH THE ORIGINAL GROUNDS OF AP PEAL FOR CONSIDERATION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE SPECIFICALLY RAISED THE ISSUE BEFORE THE L EARNED CIT (APPEALS) THAT AS A RESULT OF SURVEY UNDER SECTION 133A OF THE ACT, THE ASSESSMENT ORDER UNDER SECTION 153C OF THE ACT IS LIABLE TO BE CANCELLED. FURTHER IT WAS CHALLENGED THAT SINCE NO MATERIAL WAS FOUND AGAINST THE ASSESSEE IN SEARC H, THEREFORE, NO ASSESSMENT COULD BE FRAMED UNDER SECT ION 153C OF THE ACT. THE IMPUGNED ORDER CLEARLY SHOWS THAT THE SEARCH UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON 25 .3.2008 IN THE CASE OF M/S OM COMMODITY BROKERS, SHRI PANK AJ KHEMKA, SHRI RAJ KUMAR JALLAN AND HIS LOCKER. NO INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASSESS EE DURING 6 THE COURSE OF SEARCH UNDER SECTION 132(1) OF THE AC T IN THIS GROUP OF CASES. HOWEVER, ON THE SAME DATE ON 25.3. 2008, SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OU T BY INVESTIGATION WING AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND EXCESS CASH OF RS.66,563/- WAS FOUND, FOR WHICH ADDITION WAS MADE IN THE CASE OF THE ASSESSEE FIRM UNDER SECTION 153C R.W.S. 143(3) OF THE ACT VIDE ASSESSME NT ORDER DATED 30.12.2009. ACCORDING TO SECTION 153C OF THE ACT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR OTHER DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SE CTION 153A OF THE ACT, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES S OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. ACCORDING TO SECTION 153A OF THE ACT, WHERE THE SEARCH IS INITIATED UNDE R SECTION 132 OF THE ACT OR BOOKS OF ACCOUNT, DOCUMENTS OR OT HER ASSETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT, TH E ASSESSING OFFICER SHALL ISSUE NOTICE UNDER SECTION 153A OF TH E ACT TO ASSESS OR REASSESS INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING TO ASSESSMENT YEAR RELEVANT T O PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE COMBINED READING OF THESE PROVISIONS WOULD CLEARLY SHOW THAT THERE SHOULD BE SEARCH CONDUCTED UNDER SECTION 132 OF THE 7 ACT OR REQUISITION MADE UNDER SECTION 132A OF THE A CT AND WHERE THE ASSESSING OFFICER IS SATISFIED THAT THE M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, ETC. BELONG TO SUCH PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, SHALL HAND OVER SUCH INCRIMINATING MATERIAL TO THE ASSESSING OFFICER TO PROCEED AGAINST SUCH PERSON UNDER SECTIO N 153C OF THE ACT. THEREFORE, THE REQUIREMENT OF LAW FOR PR OCEEDINGS UNDER SECTION 153C OF THE ACT HAS BEEN THAT THERE S HOULD BE SEARCH UNDER SECTION 132 OF THE ACT OR REQUISITION UNDER SECTION 132A OF THE ACT AND DURING THE COURSE OF SE ARCH SOME INCRIMINATING MATERIAL SHOULD BE FOUND AGAINST SOME OTHER PERSON OTHER THAN THE PERSON SEARCHED OR REQUISITIO N MADE UNDER SECTION 132A OF THE ACT. IN THE CASE OF TH E PRESENT ASSESSEE FIRM, IT APPEARS THAT NO INCRIMINATING MAT ERIAL WAS FOUND IN THE CASE OF THE PERSON SEARCHED AGAINST T HE ASSESSEE FIRM. THE EXCESS CASH WAS FOUND IN THE CASE OF TH E ASSESSEE FIRM IN THE SURVEY UNDER SECTION 133A OF THE ACT ON LY. THEREFORE, THE ASSESSEE WAS JUSTIFIED IN CONTENDING BEFORE THE LEARNED CIT (APPEALS) THAT THE SURVEY UNDER SECTION 133A OF THE ACT COULD BE MADE THE BASIS FOR ASSESSMENT FRAM ED UNDER SECTION 153C OF THE ACT. 10. THIS POINT WAS NOT ADDRESSED TO BY THE LEARNED CIT (APPEALS) WHILE DISMISSING THE APPEAL OF THE ASSESS EE. SINCE IT IS A LEGAL ISSUE AND GOES TO THE ROOT OF THE MAT TER AND REQUIRES CONSIDERATION OF THE ENTIRE SEIZED MATERIA L, THEREFORE, IN OUR VIEW, THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LEARNED CIT (APPEALS). WE ACCORDINGLY SET ASI DE THE 8 IMPUGNED ORDER AND RESTORE THE MATTER IN ISSUE TO T HE FILE OF THE LEARNED CIT (APPEALS) WITH DIRECTION TO REDECID E THE ISSUE STRICTLY IN ACCORDANCE WITH LAW BY GIVING REASONABL E SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH MARCH, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH