M/s Westwood Marketing Pvt. Ltd., Kolkata V. DCIT, CC-2(1), KOLKATA, Kolkata

ITSSA 10/KOL/2016

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3360 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2016
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: ASHOK KUMAR TULSIYAN
• Section: 153A; 68; 132

Judgement Text

1 IT(SS)A NO.10/KOL/2016 WESTWOOD MARKETING PVT. LTD.AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T(SS).A. NO. 10/KOL/2016 ASSESSMENT YEAR: 2010-11 M/S. WESTWOOD MARKETING PVT. LTD. (PAN: AAACW5290K) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 08.05.2017 DATE OF PRONOUNCEMENT 01.06.2017 FOR THE APPELLANT SHRI ASHOK KUMAR TULSIYAN, FCA FOR THE RESPONDENT SHRI NIRAJ KUMAR, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-20, KOLKATA DATED 24.02.2016 FOR AY 2010-11. 2. AT THE OUTSET ITSELF, THE LD.AR FOR THE ASSESSEE POINTED OUT THAT THIS IS A CASE PURSUANT TO A SEARCH AND PROCEEDINGS INITIATED AGAI NST THE ASSESSEE U/S. 153A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). ACCORDING TO THE LD.AR, THE SEARCH TOOK PLACE ON 13.12.2012 AND THE RELEVAN T ASSESSMENT YEAR BEFORE US IS 2010-11 AND THE ASSESSEE HAD FILED THE ORIGINAL RET URN ON 23.09.2010 AND THE LAST DATE OF ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT WAS 30 .09.2011 AND ADMITTEDLY NO NOTICE U/S. 143(2) OF THE ACT WAS ISSUED BEFORE THAT DATE BY THE AO AGAINST THE ASSESSEE AND, THEREFORE, ACCORDING TO LD.AR, THE PRESENT ASSESSME NT YEAR UNDER CONSIDERATION IS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH I.E. O N 13.12.2012. SO, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IT IS WELL SETTLED THAT THE ASSESSMENTS WHICH ARE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH, ADDITION CAN B E MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL, IF ANY, FOUND DURING THE SE ARCH. FOR THE SAID PROPOSITION, THE LD. 2 IT(SS)A NO.10/KOL/2016 WESTWOOD MARKETING PVT. LTD.AY 2010-11 COUNSEL RELIED ON THE ORDER OF HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS . KABUL CHAWLA (2016) 380 ITR 573 (DEL), WHEREIN THEIR LORDSHIPS HAVE HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONE D DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SE ARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR REL EVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH B OTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT AN Y RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PEND ING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS O F THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRI MINATING MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. 3. THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT I N ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWER COULD HAVE B EEN EXERCISED U/S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DI SALLOWANCE OF THE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BU T SUCH DISALLOWANCES MADE BY THE AO WERE UPHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL D ELETED THESE DISALLOWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUN AL. THE APPEAL IS, THEREFORE, DISMISSED. 3 IT(SS)A NO.10/KOL/2016 WESTWOOD MARKETING PVT. LTD.AY 2010-11 4. WE NOTE THAT THE AO HAS MADE THE ADDITION OF RS. 20 LACS U/S. 68 OF THE ACT IN RESPECT TO THE SHARE CAPITAL/PREMIUM IN ITS BOOKS O F ACCOUNT. WE NOTE THAT THERE IS NO WHISPER OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH WHICH WAS THE BASIS ON WHICH THE AO HAS MADE THE SAID ADDITION. WE NOTE T HAT THE ASSESSEE HAD FILED THE ORIGINAL RETURN ON 23.09.2010 AND THE LAST DATE OF ISSUE OF NOTICE U/S. 143(2) OF THE ACT ON 30.09.2011 AND, THEREFORE, ON THE DATE OF SEARCH I.E. 13.12.2012 THE PRESENT ASSESSMENT WAS NOT PENDING BEFORE THE AO, THEREFORE , AS PER THE WELL SETTLED DECISION OF LAW, THE AO COULD HAVE MADE ADDITION ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. HERE, WE FIND THAT THE AO HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOR MAKING THE ADDITION OF RS. 20 LACS OR THE LD. CIT(A) HAS BEEN ABLE TO STATE ANY INCRIMINATING MATERIAL FOUND DURING SEARCH TO J USTIFY THE IMPUGNED ADDITION OF RS. 20 LACS. THE LD. CIT, DR WAS CALLED UPON TO BRING TO OUR NOTICE OF ANY INCRIMINATING MATERIALS IF ANY FOUND DURING SEARCH TO CONNECT THE IMPUGNED ADDITION, BUT COULD NOT DO SO. THEREFORE, WE FIND FORCE IN THE ARGUMENT OF THE LD. AR FOR THE ASSESSEE THAT SINCE THE PRESENT ASSESSMENT YEAR IS NON-PENDING BE FORE THE AO ON THE DATE OF SEARCH, HE COULD HAVE MADE ADDITION ONLY ON THE BASIS OF IN CRIMINATING MATERIAL UNEARTHED DURING SEARCH. SINCE THERE IS NO MENTION OF ANY IN CRIMINATING MATERIAL TO JUSTIFY THE ADDITION OF RS. 20 LACS, WE ALLOW THE APPEAL OF THE ASSESSEE ON THE LEGAL ISSUE RAISED AND DIRECT THE DELETION OF THE ADDITION/DISALLOWANCES M ADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 01.06.2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 ST JUNE, 2017 JD.(SR.P.S.) 4 IT(SS)A NO.10/KOL/2016 WESTWOOD MARKETING PVT. LTD.AY 2010-11 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. WESTWOOD MARKETING PVT. LTD., 17B & C, EVEREST HOUSE, 46C, CHOWRINGHEE ROAD, KOLKATA-700 071. 2 RESPONDENT DCIT, CENTRAL CIRCLE-2(1), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKA TA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .