Smt. Madhu Khurana, Ahmedabad V. The Dy.CIT, (OSD), Range-1, Ahmedabad

ITSSA 101/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3618 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA; GULAB THAKOR
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT(SS)A NOS. 101 TO 103/AHD/2016 (ASSESSMENT YEAR S: 2005-06, 2006-07 & 2008-09) SMT. MADHU KHURANA, 75, SAFAL VIHAN, NR. EKLAVYA SCHOOL, SARKHEJ SANAND ROAD, AHMEDABAD 382 210 APPELLANT VS. DCIT (OSD) RANGE 1, AHMEDABAD RESPONDENT PAN: ALYPK2442E & IT(SS)A NOS. 104 TO 106/AHD/2016 (ASSESSMENT YEAR S: 2003-04, 2004-05 & 2006-07) SHRI AVTARSINGH KHURANA, 75, SAFAL VIHAN, NR. EKLAVYA SCHOOL, SARKHEJ SANAND ROAD, AHMEDABAD 382 210 APPELLANT VS. DCIT (OSD) RANGE 1, AHMEDABAD RESPONDENT PAN: AFHPK5758B /BY ASSESSEE : SHRI P.M. MEHTA & SHRI GULAB THAKOR, A.R. /BY REVENUE : SHRI MUDIT NAGPAL, SR. D.R. /DATE OF HEARING : 01.02.2018 /DATE OF PRONOUNCEMENT : 08.02.2018 IT(SS)A NOS. 101 TO 106/AHD/16 [MADHU KHURANA & AVT ARSINGH KHURANA] - 2 - ORDER PER BENCH THESE TWO ASSESSEES HAVE FILED THEIR INSTANT THREE PENALTY APPEALS EACH IT(SS)A NOS. 101 TO 106/AHD/2016 AGAINST THE CIT(A) -1, AHMEDABADS SEPARATE ORDERS; ALL DATED 29.01.2016 EXCEPT FORMERSS ASSES SMENT YEAR 2008-09 DATED 26.02.2016 IN CASE NO. CIT(A)-VI/DCIT(OSD),R-1/188/ 2014-15, CIT(A)- VI/DCIT(OSD),R-1/187/2014-15, CIT(A)-VI/DCIT(OSD),R -1/185/2014-15, CIT(A)-VI/DCIT(OSD),R-1/175/2014-15, CIT(A)-VI/DCIT (OSD),R-1/176/2014- 15 & CIT(A)-VI/DCIT(OSD),R-1/178/2014-15, AFFIRMING ASSESSING OFFICERS ACTION LEVYING PENALTIES OF RS.6,46,398/-, RS.10,92 ,255/-, RS.9,70,762/-, RS. 58,591/-, RS.1,23,190/- AND RS.1,39,217/-; RESPECTI VELY, INVOLVING PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT TH E ACT. HEARD BOTH THE PARTIES. CASE FILES PERUSED. 2. IT EMERGES FROM A COMBINED PERUSAL OF ALL THE IN STANT CASE FILES THAT THESE PENALTIES EMANATE FROM IDENTICAL SECTION 153C ASSES SMENTS FRAMED IN TWO ASSESSEES CASES BEFORE US. THESE PROCEEDINGS AROS E FROM A SEARCH ACTION IN SEPTEMBER 2007 CARRIED OUT IN PREMISES OF ONE DR. Y OGIRAJ SHARMA IN MADHYA PRADESH. THE SAME RESULTED IN VARIOUS CORRESPONDIN G QUANTUM ADDITIONS TO WHICH BOTH THE LEARNED LOWER AUTHORITIES HAVE INVOKED SEC TION 271(1)(C) OF THE ACT FOR IMPOSING THE IMPUGNED PENALTIES IN THE INSTANT ASSE SSEES CASES. 3. WE NOTICE AT THE OUTSET THAT BOTH THE PARTIES HA VE ALREADY COME IN LITIGATION IN ASSESSMENT YEAR 2008-09 IN QUANTUM PROCEEDINGS. TH E REVENUES APPEAL THEREIN QUA THESE TWO ASSESSEES WERE IT(SS)A NO. 157 & 158/ AHD/2013. THE LATTER ASSESSEE SHRI AVTARSINGH KHURANA PREFERRED CO NO. 1 73/AHD/2013. A PETITION UNDER RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 WAS ALSO FILED CHALLENGING VALIDITY OF SECTION 153C PROCEEDINGS IN BOTH ASSESSEES CASES. LEARNED CO-ORDINATE BENCH HAS QUASHED THE QUANTUM PROCEEDIN GS ON THE GROUND THAT THE SEARCHED ASSESSEES WRIT PETITION NO. 13833 OF 2010 CHALLENGING VALIDITY OF SEARCH FILED BEFORE HONBLE MADHYA PRADESH HIGH COURT STOO D ACCEPTED AS UNDER: IT(SS)A NOS. 101 TO 106/AHD/16 [MADHU KHURANA & AVT ARSINGH KHURANA] - 3 - 4. A PERUSAL OF THIS RULE WOULD INDICATE THAT RESP ONDENT MAY SUPPORT THE IMPUGNED ORDER ON THE BASIS OF GROUND WHICH WAS DEC IDED AGAINST HIM BY THE LOWER APPELLATE AUTHORITY DESPITE OF THE FACT THAT THE RE SPONDENT HAS NOT CHALLENGED THE ORDER OF THE LOWER AUTHORITIES IN FURTHER APPEAL. I N OTHER WORDS, THE ASSESSEE WHO HAS TAKEN A GROUND BEFORE THE LD.CIT(A) AND THAT GR OUND WAS DECIDED AGAINST THE ASSESSEE, AND THE ORDER WAS NOT CHALLENGED BY THE A SSESSEE BEFORE THE TRIBUNAL, IN SPITE OF THAT, IN THE APPEAL OF THE REVENUE, THE AS SESSEE CAN PLEAD THAT APPEAL OF THE REVENUE DESERVES TO BE DISMISSED ON THE GROUND TAKE N BY HIM BEFORE THE LD.CIT(A), IN OTHER WORDS, THE ASSESSEE COULD PLEAD FOR UPHOLD ING THE ORDER OF THE LD.CIT(A) ON THE GROUND RAISED BY HIM BEFORE THE LD.CIT(A) TH OUGH THAT GROUND WAS DECIDED AGAINST THE ASSESSEE. THE TRIBUNAL MAY UPHOLD ORDER OF THE LD.CIT(A) BY RE- APPRECIATING THE GROUNDS RAISED BY THE ASSESSEE BEF ORE THE LD.CIT(A) AND WHICH WAS DECIDED AGAINST THE ASSESSEE. ON SUCH RE-APPREC IATION THAT GROUND CART BE CONSIDERED AS ALLOWED AND CAN RESULT INTO UPHOLDING OF THE ORDER OF THE LD.CIT(A), THEREFORE, WE TAKE COGNIZANCE OF THE GROUND NO.2 RA ISED BY THE ASSESSEE BEFORE THE LD.CIT(A) WHICH IS PAN MATENA TO GROUND RAISED BY S HRI AVTARSINGH KHURANA IN HIS CO. SHRI S.N.SOPARKAR HAS FURTHER CONTENDED THAT A SEARCH UNDER 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 30.5.2008 AT THE PREMISES OF DR. RAJESH RAJORA. ACCORDING TO THE REVENUE SOME INCRIMINATING EVIDENC E WAS FOUND AT HIS PREMISES WHICH SATISFIED THE AO OF THE SEARCHED PERSON TO TR ANSMIT THAT INCRIMINATING MATERIAL TO THE AO OF THESE ASSESSEES FOR TAKING UP THE PROCEEDINGS UNDER SECTION 153 C OF THE INCOME TAX ACT. AS FAR AS PROPOSITION OF LAW CONTEMPLATED UNDER SECTION 153C FOR INITIATING PROCEEDINGS AGAINST PER SON OTHER THAN THE SEARCHED PERSONS IS CONCERNED NO-ONE HAS DISPUTED BEFORE US. THE DISPUTE RAISED BY THE LD.COUNSEL FOR THE ASSESSES IS THAT THE SEARCHED PE RSON HAS CHALLENGED THE SEARCH BY WAY OF WRIT PETITION BEFORE THE HON'BLE MADHYA PRAD ESH HIGH COURT IN WRIT PETITION NO. 13833 OF 2010 I.E. WRIT PETITION WAS A LLOWED BY THE HON'BLE HIGH COURT AND SEARCH WAS DECLARED AS ILLEGAL, A CONCLUS ION OF THE HON'BLE HIGH COURT READS AS UNDER: '12. IN THE PRESENT CASE, IN SEPTEMBER 2007 THE SEA RCH WAS CARRIED OUT IN THE PREMISES OF DR. YOGI RAJ SHARMA. THE DOCUMENT A NNEXURE RJ-1 WAS SEIZED BY THE RESPONDENTS. AT THE RELEVANT TIME PET ITIONER NO. 1 WAS THE CHIEF HEALTH SECRETARY AND THIS FACT WAS WITHIN THE KNOWLEDGE OF THE RESPONDENTS, BUT WHY THE SEARCH WAS CONDUCTED ON 30 .5.2008 AFTER A PERIOD OF NEAR ABOUT 9 MONTHS, THERE IS NO EXPLANATION IN THIS REGARD. THE DOCUMENT ANNEXURE RJ-1 WAS SEIZED FROM THE PREMISES OF DR. YOGI RAJ SHARMA BUT UNTIL AND UNLESS THERE IS CORROBORATING EVIDENCE THE RESPONDENTS COULD NOT HAVE FORMED THE BASIS OF ISSU ING WARRANT OF AUTHORIZATION. IT APPEARS THAT BECAUSE OF THE ALLOT MENT OF HOUSE TO RESPONDENT NO. 4, THERE WAS SOME ANNOYANCE OF THE A UTHORITIES AND AS SOON AS ON 20.5.2008 THE HOUSE WAS GOT ALLOTTED BY CHIEF MINISTER, ON 28.5.2008 WARRANT OF AUTHORIZATION WAS ISSUED AND ON 30.5.200 8 SEARCH WAS CONDUCTED. IF THERE WAS SOME MATERIAL WITH THE DEPA RTMENT THAT THE PETITIONERS HAD PURCHASED SOME HOUSE OR LAND PROPER TY, THEN THERE COULD HAVE BEEN DEFINITE EVIDENCE IN THIS REGARD, BUT FOR A PERIOD OF 8 MONTHS NO INFORMATION WAS COLLECTED AND ALL OF A SUDDEN THE W ARRANT OF AUTHORIZATION WAS ISSUED. FROM THE PERUSAL OF PANCHNAMA PREPARED DURING SEIZURE IT APPEARS THAT NO OBJECTIONABLE DOCUMENT OR UNDISCLOS ED PROPERTY WAS FOUND EXCEPT THOSE WHICH WERE DECLARED IN THE EARLIER RET URN. THERE IS NO OTHER IT(SS)A NOS. 101 TO 106/AHD/16 [MADHU KHURANA & AVT ARSINGH KHURANA] - 4 - EVIDENCE AVAILABLE ON RECORD THAT THE DOCUMENT ANNE XURE RJ-1 RELATES TO THE PETITIONER AND THE WORD CH OF WHICH CORRECTN ESS IS DISPUTED BY THE PETITIONER INDICATES TO THE PETITIONER. IN ABSENCE OF ANY COGENT REASONS IN THE PRESENT MATTER WARRANT OF AUTHORIZATION COULD N OT HAVE BEEN ISSUED, AS HAS BEEN HELD BY THE AFORESAID JUDGMENTS. ISSUANCE OF WARRANT OF AUTHORIZATION IS & SERIOUS ACTION AND FOR THIS AUTH ORIZATION OFFICER SHOULD NAVE RECORDED HIS SATISFACTION. THOUGH NORMALLY THI S COURT IS NOT LOOKING TO THE REASONS OF SATISFACTION, BUT IN THE PRESENT CAS E IT APPEARS THAT THE WARRANT OF AUTHORIZATION WAS ISSUED MERELY ON HYPOT HECATED GROUNDS, WHICH IS NOT SUSTAINABLE UNDER THE LAW. 13. A DIVISION BENCH OF THIS COURT IN GAYA PRASAD P ATHAK VS. ASSISTANT COMMISSIONER OF INCOME TAX AND OTHERS (2007) 290 IT R 12& (MP) HAS CONSIDERED THAT IN THE ASSESSMENT PROCEEDINGS THE A UTHORITIES HAVE NO POWER TO CONSIDER THE VALIDITY OF AUTHORIZATION UND ER SECTION 132(1) OF /BE ACT AND THE REMEDY AVAILABLE TO THE PETITIONERS IS BY WAY OF FILING WRIT PETITION. 14. IN THE PRESENT CASE, WE HAVE EXAMINED THE ENTIR E PROCEEDINGS, SATISFACTION NOTE, THE DOCUMENT ANNEXURE RJ-1, WHIC H IS THE BASIS FOR ISSUANCE OF WARRANT OF AUTHORIZATION AND ULTIMATELY THE SEIZURE MEMO AND FIND THAT THE ENTIRE ACTION WHICH WAS INITIATED END TAKEN WAS BASED ON WITHOUT ANY SUFFICIENT GROUND OR MATERIAL AND IT AP PEARS THAT BECAUSE OF DISPUTE IN RESPECT OF ALLOTMENT OF HOUSE, THE RESPO NDENTS COULD GET AN OPPORTUNITY TO ISSUE WARRANT OF AUTHORIZATION, RESU LTANTLY SEARCH IN THE PREMISES OF PETITIONERS AS CONDUCTED. 15. IN VIEW OF AFORESAID, THE ACTION OF THE RESPOND ENTS CANNOT BE SUSTAINED UNDER THE LAW AND ACCORDINGLY THIS PETITION IS ALLO WED AND THE ISSUANCE OF WARRANT OF AUTHORIZATION AND CONSEQUENT SEARCH AND SEIZURE PROCEEDINGS, ERE HEREBY QUASHED. CONSIDERING THE FACTS OF THE CA SE, THERE SHALL B& NO ORDER AS TO COSTS. 5. ON THE STRENGTH OF THIS ORDER, IT HAS BEEN PLEAD ED BEFORE US THAT ONCE ISSUANCE OF WARRANT OF AUTHORIZATION AND SUBSEQUENT SEARCH AND SEIZURE PROCEEDINGS ARE QUASHED, THEN IT WILL BE CONSTRUED THAT NOTHING WAS RECOVERED FROM THE SEARCHED PERSON. IN OTHER WORDS, NO COGNIZANCE CAN BE TAKEN FOR THE PURPOSE OF ASSUMING JURISDICTION UNDER SECTION 153C OF THE INC OME TAX ACT FOR INITIATING PROCEEDINGS AGAINST THE ASSESSES, THE LD.DR WAS UNA BLE TO CONTROVERT THIS DECISION. 4. LEARNED AUTHORIZED REPRESENTATIVE ACCORDINGLY SU BMITS THAT ALTHOUGH THESE TWO ASSESSEES HAVE NOT FILED THEIR QUANTUM APPEALS, THE FACT REMAINS THAT ALL THESE ASSESSMENTS STAND ON SAME FOOTING. HE THEREFORE SE EKS TO PLACE RELIANCE ON TRIBUNALS ABOVE ORDER FOR LIMITED PURPOSE OF REVER SING THESE PENALTIES SUBJECT MATTER OF CHALLENGE BEFORE US. IT(SS)A NOS. 101 TO 106/AHD/16 [MADHU KHURANA & AVT ARSINGH KHURANA] - 5 - 5. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DIS PUTE THE CORRECTNESS OF SAID QUANTUM DEVELOPMENTS. WE THEREFORE OBSERVE THAT TH E QUANTUM ISSUES ARE NOT ALTOGETHER FREE FROM DOUBT. WE ALSO KEEP IN MIND HO NBLE APEX COURTS LANDMARK JUDGMENT IN CIT VS. RELIANCE PETROPRODUCTS 322 ITR 158(SC) THAT QUANTUM AND PENALTY ARE DISTINCT PROCEEDINGS WHEREIN EACH AND E VERY DISALLOWANCE/ADDITION MADE IN COURSE OF THE FORMER DOES NOT IPSO FACT ATT RACT LATTER PENAL PROVISION. WE THEREFORE ACCEPT ASSESSEES RELIANCE ON ABOVE TRIBU NALS ORDER FOR THE LIMITED PURPOSE OF INVALIDATING THE IMPUGNED PENALTIES ON T HE GROUND THAT THE REVENUE HAS ALREADY LOST IN THE ISSUE PERTAINING TO VALIDITY OF SECTION 153C ASSESSMENT PROCEEDINGS. ALL THE IMPUGNED PENALTIES IN THESE T WO ASSESSEES INSTANT APPEALS ARE THEREFORE DELETED. 6. THESE TWO ASSESSEES SUCCEED IN THEIR RESPECTIVE APPEALS. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 08 TH DAY OF FEBRUARY, 2018.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 08/02/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 4 5 / GUARD FILE. BY ORDER / . // . /0