DCIT, Central Circle-3, Vadodara V. M/s. Tash Investment Pvt. Ltd, Vadodara

ITSSA 105/AHD/2018

AI Insights

The case involves multiple appeals and cross objections filed by the revenue and the assessee, M/s Tash Investment Pvt. Ltd., against the orders of the Learned Commissioner of Income Tax (Appeals)-12, Ahmedabad. The appeals were related to the assessment years 2010-11 to 2012-13 and 2013-14, following a search operation under section 132 of the Income Tax Act. The primary legal issue was whether additions could be made to the assessee's income for unabated assessment years under section 153A in the absence of incriminating material. The Tribunal's decision was influenced by precedents that clarified the conditions under which assessments can be reopened following a search.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135997 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-07-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2018
• Other Referred Cases: Babasaheb Raosaheb Kobarne & ANR Vs. Pyrotek India Private Limited, Saumya Construction Pvt. Ltd., PCIT, Central-3 Vs. Abhisar Buildwell Pvt. Ltd., S.R. Koshti Vs. CIT, Vareli Textile Industry Vs. CIT
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEEANDTHECONCESSIONEXTENDEDBYTHELEARNEDDROFTHE
• Assessee Lawyers: SHRIBHAVINMARFATIA

Judgement Text

आयकरअपीलीयअधिकरण,अहमदाबादनायपीप INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं ./IT(SS)ANos.105to107/AHD/2018 With C.O.Nos.30to32/Ahd/2021 निर्धररवरध/Asstt.Year:2010-11to2012-13 D.C.I.T, CentralCircle-3, Vadodara. Vs. M/sTashInvestmentPvt.Ltd., 9 th Floor,ABSTower, OldPadraRoad, Vadodara. PAN:AAACT6737A And आयकरअपीलसं ./IT(SS)ANo.108/AHD/2018 निर्धररवरध/Asstt.Year:2013-14 D.C.I.T, CentralCircle-3, Vadodara. Vs. M/sTashInvestmentPvt.Ltd., 9 th Floor,ABSTower, OldPadraRoad, Vadodara. PAN:AAACT6737A (Applicant)(Respondent) Revenueby:ShriKamleshMakwana,CIT.D.R Assesseeby:ShriBhavinMarfatia,A.R सुिव्ईकीत्रीख /DateofHearing:26/07/2023 घोरर्कीत्रीख /DateofPronouncement:28/07/2023 IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 2 आदेश/ORDER PERBENCH: ThecaptionedappealsandCOshavebeenfiledattheinstanceofthe RevenueandtheassesseeagainsttheseparateorderoftheLearned CommissionerofIncomeTax(Appeals)-12,Ahmedabad,(inshort“Ld.CIT(A)”) arisinginthematterofassessmentorderpassedunders.153Ar.w.s.143(3)of theIncomeTaxAct1961(here-in-afterreferredtoas"theAct").Theassessee hasfiledtheCrossObjectionintheRevenue’sappealbearingIT(SS)ANo.105to 107/Ahd/2018fortheAssessmentYears2010-2011to2012-13. CrossObjectionbearingNos.30to32/AHD/2021inRevenue’sappealin IT(SS)ANos.105to107/AHD/2018forAYs2010-11to2012-13. 2.First,weproceedtoadjudicatetheobjectionraisedbytheassesseeinthe CObearingNos.30to32/AHD/2021inRevenue’sappealinIT(SS)ANos.105to 107/AHD/2018correspondingtotheAYs2010-11to2012-13.Attheoutset,we notethatthegroundraisedbytheassesseeinallthe3crossobjectionsas mentionedaboveiscommon.Therefore,forthesakeofbrevityandconvenience, weproceedtoadjudicatethegroundraisedinCO.No.30/AHD/2021only. However,thefindinggiventhereinwillbeapplicableforallthe3crossobjections. 3.Beforegoingintothespecificgroundofobjectionraisedbytheassessee, wenotetherewasadelayof2years3monthsand21daysinfilingofcross objection.Theassesseehasfiledthecondonationpetitionforthedelayinfiling theCO.ItwasexplainedthattheassesseewastofileCOby5July2019butthe samehasbeenfileddated22October2021belatedly.ThedelayinfilingtheCO bytheassesseewasdividedintoparts.Firstly,thedelaybeginningfrom5 th July IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 3 2019toMarch2020andsecondlythedelayafterMarch2020tillthedateoffiling theCO.AspertheassesseethedelayoccurredduringCovid-19hasbeen condonedbytheHon’bleSupremeCourtvideorderdated09/05/2022intheSLP bearingNo.2522/2022inthecaseofBabasahebRaosahebKobarne&ANRVs. PyrotekIndiaPrivateLimitedbydirectingtoexcludetheperiodfrom15-03-2020 till31-05-2022forthepurposeoflimitation.Thus,theeffectivedelayinfilingthe appealisonlyforlessthanayear.Accordingly,theeffectivedelayinfilingtheCO isfromJuly2019tillMarch2020forwhichtheassesseeprayedtocondonethe same.ItwassubmittedbythelearnedARthatsincetheissueonmeritwas decidedbythelearnedCIT-Ainfavouroftheassessee,accordinglytheassessee wasoftheviewthatheisnotaggrievedbytheorderoflearnedCIT-A.However, uponconsultingtheprofessional,itwasrealizedthatitgotastrongontechnical groundi.e.noaddition/assessmentofincomecanbemadeintheproceeding undersection153AoftheActforunabated/completedassessmentyearsin absenceofincriminatingmaterialbutthesameomittedtoberaisedbeforethe ITAT.Accordingly,theassesseefiledtheCObelatedlychallengingtheadditions madebytheAOintheabsenceofincriminatingdocuments.Accordingly,the learnedcounseloftheassesseefurthersubmittedthattheobjectionsraisedinthe COwerepurelegalclaimsandthereforethesameshouldbeadmittedforthe purposeofadjudication.Onthecontrary,thelearnedDRdidnotraiseany objectionifthedelayiscondoned.Consideringtheargumentsofthelearned counselfortheassesseeandtheconcessionextendedbythelearnedDRofthe revenue,weherebycondonethedelayandproceedtoadjudicatetheissueon merit. 4.Theonlyissueraisedbytheassesseevidethecrossobjectionisthatno addition/assessmentofincomecanbemadeintheproceedingundersection153A oftheActforunabated/completedassessmentyearsinabsenceofincriminating material. IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 4 5.Thenecessaryfactsarethattheassessee,aprivatecompany,claimedto beengagedinthebusinessofinvestingactivity.Theassesseewassubjectto searchproceedingundersection132oftheActdated12 th February2015and pursuanttosuchsearch,anoticeundersection153AoftheActwasissuedonthe assesseetofilethereturnofincomefortheyearunderconsiderationi.e.A.Y. 2010-11.Theassessee,inresponsetosuchanoticeundersection153AoftheAct filedreturnofincomedeclaringtotalincomeatRs.1,79,07,110/-only.However, theAOintheassessmentorderdated30-12-2016passedundersection153A r.w.s.143(3)oftheActassessedtheincomeoftheassesseeatRs.5,22,13,861/- afterrecharacterizingtheincomeofferedbytheassesseeunderthehead short/longtermcapitalgainasbusinessincomeandaftermakingadditionofRs. 55,54,019/-undersection14AoftheAct. 6.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)on themeritoftheadditionmadebytheAO.ThelearnedCIT(A)allowedtheappeal oftheassesseeonthemeritoftheaddition.However,thelearnedCIT(A)noticed thattheregularassessmentundersection143(3)oftheActforyearconsideration hasbeencompleted,thereforethesameisunabatedassessmentyearforthe purposeofsection153AoftheAct.ThelearnedCIT(A)furthernotedthatincase ofunabatedassessmentyearnoadditionorassessmentofincomecanbemadein theproceedingsundersection153AoftheActintheabsenceofincriminating material,buttheassesseehasnottakenupthisground.Therefore,thelearned CIT(A)precludeshimselffromgivinganyfindingontechnicalgrounds. 7.BeingaggrievedbytheorderofthelearnedCIT(A)therevenuepreferred appealbeforeuswhereastheassesseefiledcrossobjectionchallengingthe sustainabilityoftheadditionontechnicalground. IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 5 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialavailableonrecord.Wenotethattheyearunderconsiderationis unabated/completedassessmentyearandpresentassessmentproceedingunder section153Ar.w.s.143(3)oftheActwasinitiatedinconsequencetosearch proceeding.IthasbeensettledbyvariousHon’bleCourtincludingHon’ble JurisdictionalHighCourtthatthecompletedassessmentcannotbedisturbedin theabsenceofanyincriminatingmaterial/documentswhereastheassessment/ reassessmentcanbedisturbedwithrespecttoabatedassessmentyears.The word'assess'inSection153AoftheActisrelatabletoabatedproceedings (i.e.thosependingonthedateofsearch)andtheword'reassess'tothe completedassessmentproceedings.TheHon’bleGujaratHighCourtinthecaseof SaumyaConstructionPvt.Ltd.reportedin81taxmann.com292,hasheldthat therecannotbeanyadditionofregularitemsshowninthebooksofaccountsuntil andunlesstherewerecertainmaterialsofincriminatingnaturefoundduringthe search.ThewordincriminatinghasnotbeendefinedundertheAct,butitrefersto materials/documents/informationwhichwerecollectedduringthesearch proceedingsandnotproducedintheoriginalassessmentproceeding. Simultaneously,thesedocumentshadbearingonthetotalincomeoftheassessee. 8.1Nowcomingtothefactsofthecaseonhand,wenotethattheAOinthe proceedingundersection153AoftheActhasrecharacterizednatureofincome fromsaleofsharesandsecuritiesfromincomeundertheheadcapitalgainto incomefrombusinessandprofession.Likewise,theAOalsomadeanaddition undersection14AoftheActagainstdividendincomeclaimedasexempted. However,nomaterialofincriminatingnaturewasfoundduringsearchproceedings regardingimpugnedadditionorcharacterizationofnatureofincome.TheAOalso didnotrefertoanyincriminatingmaterialfoundinthisregardwhichwouldhave madebasisfortheadditionintheassessment.ThelearnedCIT(A)alsoobserved thatnomaterialinconnectionwithadditionmadebytheAOwasfound. IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 6 8.2Atthetimeofhearing,thelearnedDRhasnotbroughtanythingonrecord referringtoincriminatingmaterialinconnectionwiththeadditionmadeinthe proceedingsundersection153AoftheAct.Accordingly,weholdthattherecannot beanyadditionoftheregularitemswhichweredisclosedbytheassesseeinthe regularbooksofaccounts.Inholdingso,wedrawsupportandguidancefromthe judgmentofHon’bleGujaratHighCourtincaseofSaumyaConstruction(P.)Ltd (supra)whereinitwasheldasunder: Thus,whileinviewofthemandateofsub-section(1)ofsection153Aineverycasewhere thereisasearchorrequisition,theAssessingOfficerisobligedtoissuenoticetosuch persontofurnishreturnsofincomeforthesixyearsprecedingtheassessmentyear relevanttothepreviousyearinwhichthesearchisconductedorrequisitionismade,any additionordisallowancecanbemadeonlyonthebasisofmaterialcollectedduringthe searchorrequisition.Incasenoincriminatingmaterialisfound,theearlierassessment wouldhavetobereiterated. 8.3ThislegalprepositionisnowsettledbytheHon’bleSupremeCourtby judgementdated24-04-2023holdingthatinrespectofcompleted assessments/unabatedassessmentsnoadditioncanbemadebyAssessingOfficer inabsenceofanyincriminatingmaterialfoundduringcourseofsearchunder section132orrequisitionundersection132AoftheActinthebatchofcases namelyPCIT,Central-3-Vs-AbhisarBuildwellPvt.Ltd.reported[2023] 149taxmann.com399(SC)observingasfollows: “Section153A,readwithsections132and143,oftheIncome-taxAct,1961- Searchandseizure-Assessmentincaseof(Conditionsprecedent)-Whether objectofsection153Aistobringundertaxundisclosedincomewhichis foundduringcourseofsearchorpursuanttosearchorrequisition;therefore, onlyinacasewhereundisclosedincomeisfoundonbasisofincriminating material,AssessingOfficerwouldassumethejurisdictiontoassessor reassesstotalincomeforentiresixyearsblockassessmentperiodevenin caseofcompleted/unabatedassessment-Held,yes-Whetherincaseof searchundersection132orrequisitionundersection132A,AssessingOfficer assumesjurisdictionforblockassessmentundersection153Aandthatall pendingassessments/reassessmentsshallstandabated-Held,yes- Whetherinrespectofcompletedassessments/unabatedassessmentsno IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 7 additioncanbemadebyAssessingOfficerinabsenceofanyincriminating materialfoundduringcourseofsearchundersection132orrequisition undersection132A-Held,yes-Whether,however,completed/unabated assessmentscanbereopenedbyAssessingOfficerinexerciseofpowers undersection147/148subjecttofulfilmentofconditionsas envisaged/mentionedundersection147/148andthosepowersaresaved- Held,yes 8.4TheHon’bleSupremeCourtconsideredJudgementsofvariousHighCourts andconcurredwithoneoftheJudgementoftheGujaratHighCourtinthecaseof SaumyaConstructionandlaiddownthefollowingpointsinanutshell: “......13.Forthereasonsstatedhereinabove,weareincompleteagreement withtheviewtakenbytheDelhiHighCourtinthecaseofKabul Chawla(supra)andtheGujaratHighCourtinthecaseofSaumya Construction(supra)andthedecisionsoftheotherHighCourtstakingthe viewthatnoadditioncanbemadeinrespectofthecompletedassessments inabsenceofanyincriminatingmaterial. 8.5Inviewoftheabove,weholdthattherecannotbeanyadditiontothetotal incomeoftheassesseeoftheregularitemsasmadebytheAOinthepresent case.Thus,thegroundsofobjectionsraisedbytheassesseeinCONo.30to 32/AHD/2021areherebyallowed. 9.Intheresult,alltheCOsfiledbytheassesseeareallowed. IT(SS)ANo.105to107/AHD/2018forA.Y.2010-11to2012-13. 10.ComingtotheRevenue’sappealinIT(SS)ANo.105to107/AHD/2018for A.Y.2010-11to2012-13.Attheoutset,wenotethatwehavealreadygiven findingontechnicalgroundsinthecrossobjectionraisedbytheassesseethat additionmadebytheAOisnotsustainableintheeyesoflawasthesamewas madeinabsenceofanyincriminatingmaterial.Hencethegroundraisedbythe IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 8 revenuebecomesredundantandinfructuous.Therefore,weprecludeourselves fromgivingfindingonthegroundraisedonmeritofthecase.Accordingly,the groundsoftheRevenue’sappealsareherebydismissedasinfructuous. 11.Intheresult,theappealsfiledbytheRevenuearedismissedasinfructuous. Comingtotheapplicationmadebytheassesseeunder27ofITATRulesin IT(SS)ANO.108/AHD/2018,anappealbytheRevenueforA.Y.2013-14. 12.Attheoutset,wenotethattherespondentassesseevideletterdated26 th July2023movedanapplicationunderrule27ofIncomeTax(AppellateTribunal) Rules1963challengingthevalidityoftheadditionintheabsenceofincriminating documents.Rule27oftheIncome-tax(AppellateTribunal)Rules,1963readsas under: "Therespondent,thoughhemaynothaveappealed,maysupporttheorderappealed againstonanyofthegroundsdecidedagainsthim." 13.Admittedly,itappearsthattherewasnospecificgroundraisedbythe assesseebeforethelearnedCIT-Achallengingthevalidityoftheadditionsmade bytheAOintheabsenceofincriminatingdocuments.However,undeniably,the learnedCIT-AhasreferredtothelawlaiddownbytheHon’bleCourtsthatthere cannotbeanyadditioninthesearchproceedingsintheabsenceofincriminating documents.Thus,itisimpliedthatthelearnedCIT-Ahastakenthecognizanceof thelawbutchosenottodecidetheissueintheabsenceofspecificgroundof appealraisedbytheassessee.However,thelearnedARbeforeuscontendedthat therewasagroundraisedbytheassesseewhereinitwasclearlystatedthatthe orderofthelearnedCIT-Aisbadinlawandfacts.Thus,asperthelearnedARthe impugnedgroundwasraisedbytheassesseebeforethelearnedCIT-A. IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 9 14.Bethatasitmaybe,theissueraisedbytheassesseeintheapplication movedunderrule27oftheITATRulesispurealegalgroundwhichhasbeen settledintheseriesofjudgementsthattherecannotbeanyadditioninthe absenceofanyincriminatingdocument.WealsonotethattheHon’bleGujarat HighCourtinthecaseofS.R.KoshtiVs.CITreportedin276ITR165hasheldas under: 18.Thepositionis,therefore,that,regardlessofwhethertherevisedreturnwasfiledor not,onceanassesseeisinapositiontoshowthattheassesseehasbeenover-assessed undertheprovisionsoftheAct,regardlessofwhethertheover-assessmentisasaresultof assessee’sownmistakeorotherwise,theCIThasthepowertocorrectsuchan assessmentundersection264(1)oftheAct.IftheCITrefusestogiverelieftothe assessee,insuchcircumstances,hewouldbeactingdehorsthepowersundertheActand theprovisionsoftheActand,thereforeisduty-boundtogiverelieftoanassessee,where due,inaccordancewiththeprovisionsoftheAct. 19.Inthepresentcase,therespondent-CIThasnowherestatedthatthepetitionerisnot entitledtothereliefundersection10(10C)oftheAct.Infact,thesaidpositionis undisputed.TheAssessingOfficerhimselfhadpassedanorderundersection154ofthe Act,grantingsuchrelief.Inthecircumstances,eventheorderundersection264oftheAct madeon29-3-2004,cannotbesustained. 20.Awordofcaution.TheauthoritiesundertheActareunderanobligationtoactin accordancewithlaw.TaxcanbecollectedonlyasprovidedundertheAct.Ifanassessee, underamistake,misconceptionoronnotbeingproperlyinstructed,isover-assessed,the authoritiesundertheActarerequiredtoassisthimandensurethatonlylegitimatetaxes duearecollected.ThisCourt,inanunreporteddecisionincaseofVinayChandulal Satiav.N.O.Parekh,CIT[Spl.CivilApplicationNo.622of1981dated20-8-1981],haslaid downtheapproachthattheauthoritiesmustadoptinsuchmattersinthefollowingterms: "TheSupremeCourthasobservedinnumerousdecisions,includingRamlalv.Rewa CoalfieldsLtd.AIR1962SC361,StateofWestBengalv.Administrator,Howrah MunicipalityAIR1972SC749andBabutmalRaichandOswalv.LaxmibaiR.TarteAIR 1975SC1297,thattheStateauthoritiesshouldnotraisetechnicalpleasifthecitizens havealawfulrightandthelawfulrightisbeingdeniedtothemmerelyontechnical grounds.TheStateauthoritiescannotadopttheattitudewhichprivatelitigantsmight adopt." 15.Fromtheabove,itisrevealedthattheincomeoftheassesseeshouldnot beoverassessedevenifthereisamistakeoftheassessee.Assuchthelegitimate deductionforwhichtheassesseeisentitledshouldbeallowedwhiledetermining thetaxableincome. IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 10 16.WealsonotethattheHon’bleGujaratHighCourtinthecaseofVareli textileindustryversusCITreportedin154Taxman33whereinitwasheldas under: Itisequallywell-settledthatwhereacauseisconsciouslyabandoned(asinthepresent case)thepartyseekingcondonationhastoshowbycogentevidencesufficientcausein supportofitsclaimofcondonation.Theonusisgreater.Oneofthepropositionsofsettled legalpositionistoensurethatameritoriouscaseisnotthrownoutonthegroundof limitation.Therefore,itisnecessarytoexamine,atleastprimafacie,whethertheassessee hasorhasnotacaseonmerits. 17.Inviewoftheaboveandafterconsideringthefactsintotality,weareof theviewthatitisafitcasewheretheapplicationunderrule27oftheITATrules shouldbeallowedtobeadmitted.Accordingly,weadmitthesameandproceedto adjudicatetheissueonmerit. 18.Regardingtheissueraisedbytheassesseeunderrule27ofITATrules,we notethatasimilarissuewasraisedbytheassesseeintheCObearingnumbers30 to32/AHD/2021whichwehavedecidedinfavouroftheassessee.Forthe detaileddiscussionpleaserefertotherelevantparagraphbearingnumber8of thisorder.Accordingly,theissueraisedbytheassesseeintheapplicationfiled underrule27ofITATrulesisallowed. 19.Intheresult,theapplicationfiledbytheassesseeunderrule27ofITAT ruleisallowed. ComingtotheRevenue’sappealinIT(SS)ANo.108/AHD/2018forA.Y. 2013-14. 20.Attheoutset,wenotethatwehavealreadygivenfindingontechnical groundsintheapplicationunderrule27ofITATrulesfiledbytheassesseethat additionmadebytheAOisnotsustainableintheeyesoflawasthesamewas madeinabsenceofanyincriminatingmaterial.Hence,thegroundraisedbythe IT(SS)Ano.105/AHD/2018 With C.O.No.30/Ahd/2021withothers A.Y.2010-11 11 revenuebecomesredundantandinfructuous.Therefore,weprecludeourselves fromgivingfindingonthegroundraisedonmeritofthecase.Accordingly,the groundsoftheRevenue’sappealsareherebydismissedasinfructuous. 21.Intheresult,theappealfiledbytherevenueisherebydismissedas infructuous. 22.Inthecombinedresult,alltheCOsandtheapplicationfiledunderrule27 ofITATrulesfiledbytheassesseeareallowedwhereasalltheappealsfiledbythe revenueareherebydismissedasinfructuous. OrderpronouncedintheCourton28/07/2023atAhmedabad. Sd/-Sd/- (T.RSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated28/07/2023 Manish आदेशकीपनतनलनपगेनरत/CopyoftheOrderforwardedto: आदेश्िुस्र/BYORDER, उप/सह्यकपंजीक्र(Dy./Asstt.Registrar) आयकरअपीलीयअनरकरर,अहमद्ब्द/ITAT,Ahmedabad 1. अपील्र्/TheAppellant 2. प्यर्/TheRespondent. 3. संबंनरतआयकरआयुक/ConcernedCIT 4. आयकरआयुक(अपील)/TheCIT(A) 5. नवभ्गीयपनतनिनर,आयकरअपीलीयअनरकरर/DR, ITAT, 6. ग्रधफ्ईल/Guardfile.