Sunil H.Tharwani, Ulhasnagar V. Deputy Commissioner of Income tax, Thane

ITSSA 11/PUN/2017

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1943 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: GEETAA
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 133A; 153A

Judgement Text

आयकरअपीलीयअिधकरण“ए”᭠यायपीठपुणेमᱶ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.VISWANETHRA RAVI, JM AND DR. DIPAK P. RIPOTE, AM आयकरअपीलसं. / IT(SS)A No’s.11, 62 & 63/PUN/2017 िनधाᭅरणवषᭅ / Assessment Years/Block Period : 2005-06, 03-04 & 04-05 Sunil H. Tharwani, Tharwani Bunglow, Royal Residency, Near New Telephone Exchange, Ulhasnagar – 421001. PAN: AAJPT 5107 C Vs The DCIT, Central Circle-2, Thane. Appellant/ Revenue Respondent/ Assessee Assessee by Shri Vijay Mehta & Ms. Geetaa Guwalanii – AR Revenue by Shri S P Walimbe – DR Date of hearing 02/05/2022 Date of pronouncement 03/05/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: 1. These Three(03) appeals filed by theassessee are directed against the separate orders of ld.Commissioner of Income Tax(Appeals)-11 & 13, Pune dated 06.06.2017 for the A.Y’s. 2003-04 & 2004-05 and dated 17.11.2016 for the A.Y. 2005-06 respectively. 2. In Sunil H.Tharwani group of Three(03) appeals, the assessee have raised certain common grounds of appeal, facts in all cases are almost similar, except variation of additions, therefore, all appeals were clubbed, heard and are decided by consolidated order. For appreciation of facts, the facts in IT(SS)A No.62/PUN/2017 is treated as lead case. The assessee has raised the following grounds of appeal: “1. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the proceedings Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 2 initiated under Section 153A of Income Tax Act 1961 ("Act" in short), which is bad in law in the absence any incriminating material belonging to the assessee being found during the course of search. 2. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding that the Assessing Officer can dwell into the issues already examined while framing the Assessment Order u/s 143(3) dated 10 th October, 2005 Originally, therefore closed assessment prior to search conducted on 16 th October, 2008 for which no incriminating material seized during the course of search and seizure action. 3. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the action and procedure followed by the Assessing officer during the proceeding u/s 153A of the Act, which is invalid in eyes of law being based on incorrect postulate that search assessment u/s 153A is de novo in nature, whereas the same is to be based and confined to incriminating material unearthed during search operations. 4. That on facts and circumstances of the case the learned the Commissioner ofIncome Tax (Appeals) has erred in not considering our submissions and concurred to decision of Assessing Officer for adding to the return of Income the amount of Rs 12,00,000/- Gift received from NRI through Banking channels, which was claimed by the Assessee as not taxable u/s 68 of the Act. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3. Brief Facts : Original Return filed u/s 139 on : 28/11/2003 Assessment Order u/s 143(3) :10/10/2005 Date of Search u/s 132 :16/10/2008 Assessment Order u/s 153rws 143(3) :29/12/2010 Brief facts of the case are that the search and seizure action under section 132 of the Act was carried out in the case of Tharwani Group of Cases on 16.10.2008. The appellant assessee Mr.Sunil Tharwani is one of them. In the case of Sunil Tharwani, the Assessment Order under section 153A r.w.section143(3) of the Act was passed on 29.12.2010 after giving due opportunity to the assessee. In the said assessment order, amount of Rs.12 lakhs were added under section 68 of the Act which was so-called NRI gift from Mr.Ramesh Lulla and Kishore Kundwani( Rs.6 lacs each). The assessee Mr.Sunil Tharwani had filed original return of income for the Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 3 A.Y. 2003-04 on 28.11.2003, subsequently, the Assessment Order under section 143(3) of the Act was passed on 10.10.2005 accepting the returned income of Rs.11,87,000/-. 4. The Ground No.1 to 3 are related to proceedings initiated under section 153A of the Act. The ld.Authorised Representative(ld.AR) of the assessee submitted that no incriminating material were found during the search in support of the addition of impugned Rs.6 lakhs of NRI Gift from Mr.Ramesh Lulla. The ld.AR specifically invited our attention to the Assessment Order framed under section 153A of the Act, and explained that nowhere in the assessment order there is any mention of any incriminating material found during the search related to the NRI Gift received from Mr.Ramesh Lulla. The ld.AR relied on the Hon’ble Bombay High Court decision in the case of CIT vs. S.K.S ISPAT & Power Limited [2018] 99 taxmann.com 424 (Bombay), the Hon’ble Bombay High Court decision in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd., [2015] 58 taxmann.com 78 (Bombay), CIT V/s Deepak Kumar Agarwal 5. Per contra, the ld.Departmental Representative of the Revenue(ld.DR) relied on the order of Lower Authorities. The ld.DR also submitted that during the earlier hearing the Hon’ble ITAT Pune “A” Bench had directed the ld.DR to inform whether statement under section 132(4) of the Act were recorded with reference to impugned Gift. The ld.DR submitted Report dated 09.03.2022 along with Assessing Officer’s report dated 25.02.2022. The relevant portion of the said report is reproduced here as under: Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 4 “It is learnt that the then ACIT/DCIT Central Circle-2, Thane, who was the A.O. of the group cases had sent a report on this issue to your office through letter dated 03.02.2021 (copy enclosed) stating therein that his office could not able to give any authentic comments on the issued of Gift whether it was raised while recording the statements u/s 132(4)/133A of the Act. Thereafter, through letter dated 09/11/2021 (copy enclosed) addressed to your office, the DCTI Central Circle-2, Thane had reiterated the contents of the earlier letter dated 03.02.2021. From perusal of the material available, i.e. copies of statements of Shri Mohan H.Tharwani dated 17/10/2008, Shri Hardas Tharwani dated 15/12/2008 u/s 132(4) as well as statement of Shri Sunil Tharwani u/s 133A dated 17/10/2008 (received from ITO Ward-1, Panvel), no addition to the information already supplied to your office by DCIT, CC-2, Thane through letters dated 03/02/2021 & 09/11/2021 is possible. Copies of statements of Shri Mohan H.Tharwani, Shri Hardas Tharwani and Shri Sunil Tharwani recorded u/s 132(4)/133A as mentioned above, are enclosed herewith for ready reference. This may please be treat as compliance to your letters/correspondences on the above subject.” 6. We have heard both the parties, perused the material available on record and have gone through the orders of Lower Authorities. The appellant assessee Mr.SunilHardasmal Tharwani had filed return of income for the A.Y. 2003-04 on 28.11.2003 along with Capital Account, Balance Sheet, Copy of the Gift declaration [Page No.1, 2 and 3 of the Paper Book]. The assessment order under section 143(3) for the A.Y. 2003-04 was passed on 10.10.2005 accepting the returned income of Rs.11,87,000/- [Page No.7 and 8 of the paper book]. The ld.AR submitted copies of reply filed by assessee Sunil H.Tharwani dated 17.01.2005 during the assessment proceedings for A.Y. 2003-04 to the Assessing Officer i.e. Assistant Commissioner of Income Tax - Panvel Circle. In the said letter, point no.7 is related to the NRI Gift of Rs.6 lakhs from Mr.Ramesh Lulla and Rs.6 lakhs from Mr.KishoreKundwani. Along with the said letter, the assessee filed the copies of declaration and copies of passport. During the Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 5 proceedings before this Tribunal, the ld.DR has not rebutted or objected to this fact. It means, assessee Sunil H.Tharwani had filed details related to the Gift received from NRI during the assessment proceedings u/s 143(3). The said NRI Gift also appears in the capital account of the assessee. These facts have not been disputed by the ld.DR for the Revenue. It is also a fact that nowhere in the assessment order, passed under section 153A of the Act after the search, the Assessing Officer has mentioned about the incriminating material found during the search. The ld.CIT(A) has also not mentioned about any incriminating material found during the search related to the impugned NRI Gifts. The ld.CIT(A) has merely reproduced the sentence mentioned in the assessment order that “it was noticed during the search proceedings that different individuals of the appellant group had received gifts and lottery winning prizes”. Other than this, solitary sentence, there is no mention of any document found during the search. During the proceedings before this Tribunal, the ld.DR was specifically asked to show the documents/material found during the search related to the impugned NRI Gift. However, the ld.DR for the Revenue could not file any document or produce any material. The ld.DR merely relied on the report submitted by the Assessing Officer. The Report of the Assessing Officer dated 25.02.2022, is silent about any incriminating material found during the search about impugned NRI Gift. We have gone through the statement recorded during the search and nowhere there is a mention of impugned NRI Gift. The Question No.39 and its Answer are reproduced here as under, from the statement of Mr.SunilH.Tharwani recorded during the search on 17.10.2008. Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 6 Question No.39: Please furnish the details of moveable and immoveable assets owned by you and the other family members. Please also furnish the details of foreign tours conducted by you and other family members and also the details of gifts received by you and other family members from one 01.04.2002 to till date? Answer: I shall verify my records and make the submission in due course. 6.1 This Question and its Answer does not explain that any incriminating materials were found during the search about the impugned NRI Gifts. 3 7. The Hon’ble Bombay High Court in the decision of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., (supra) has approved the findings of Special Bench in para 31 of the said order. The Hon’ble Bombay High Court has approved the findings of the Special Bench that “in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search”. Similar view is expressed by the Hon’ble Delhi High Court in the case of PCIT vs. Best Infrastructure (India) (P.) Ltd., [2017] 84 taxmann.com 287 (Delhi). Hon’ble Bomaby High Court in the case of CIT vs. Deepak Agrawal 398 ITR 586 has held in para 33 & 34 a as under : Quote , “ 33. Even with regard to the unexplained gifts received by the assessee allegedly and the additions made under Section 68 of the Act, the Tribunal has relied upon its order in the case of Govind Agarwal (HUF) v. Dy. CIT [IT Appeal No.8917 (Mum.) of 2010, dated 16-5-2013] for the assessment year 2005-2006. 34. There as well, reliance was placed on All Cargo Global Logistic Ltd. (supra) and equally, the conclusion that has been reached that once there is no incriminating material in support of the addition and brought on record by the Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 7 Revenue, then, the earlier view of this Court binds the Revenue even on this addition. Thus, even this question cannot be termed as substantial question of law in the light of the two judgments of this Court in Continental Warehousing Corpn. and All Cargo Global Logistics Ltd. (supra) followed by SKS Ispat& Power Ltd. (supra)” Unquote. Further in the recent decision in the case of Pr. Commissioner of Income- taxvs.Vimal Kumar Rathi,ITA NO.160 of 2017 order dated 26/3/2019 Hon’ble Bombay High Court held as under: Quote “Whether on the facts and in the circumstances of the case the Hon. ITAT is correct in law in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income that comes to the notice of the AO?" 3. The issues are squarely covered by Judgment of this Court in the case of CIT v. Deepak Kumar Agarwal [2017] 86 taxmann.com 3/251 Taxman 22/398 ITR 586 in which it is held that assessment under section 153A of the Income-tax Act, 1961 can be made only on the basis of incriminating material found during a search ” Unquote 8. It is a fact that in the case of appellant assessee Sunil H.Tharwani for A.Y. 2003-04, the Assessment Order under section 143(3) of the Act was passed on 10.10.2005, i.e. much before the Search[Date of Search 16.10.2008]. Thus, no assessment was pending for A.Y. 2003-04 at the time of Search. It is also a fact that NRI Gift has been disclosed by the appellant assessee Sunil H.Tharwani in the Capital Account filed along with the return of income much before the Search. There is no mention of any incriminating material in the Assessment Order related to the impugned NRI Gifts. Based on these facts, since there was no incriminating material found during the Search related to the impugned NRI Gift, therefore, respectfully following the ratio led down by Hon’ble Bomaby High Court, it is held that the addition made under section 68 of the Act in the assessment order under section 153A r.w.s 143(3) is bad in law. Accordingly, Ground No’s. 1 to 3 of appellant assessee Sunil H.Tharwani for AY 2003-04 inIT(SS)A No.62/PUN/2017 are allowed. Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 8 9. The Ground No.4 of the appellant assessee Sunil H.Tharwani is related to merits of the addition made under section 68 of impugned NRI Gifts. Since Ground No’s: 1 to 3 have been held as allowed above, therefore, the Ground No.4 becomes academic in nature, therefore, it is not adjudicated. 10. In the result, appeal of the assessee is Partly Allowed. IT(SS)A No.63/PUN/2017 for A.Y. 2004-05: 11. Brief facts: Original Return filed u/s.139 on : 31/10/2004 Assessment Order u/s.143(3) :31/03/2006 Date of Search u/s.132 :16/10/2008 Assessment Order u/s.153 rws143(3) : 29/12/2010 12. As we have noted above that the assessee has raised identical ground of appeal and the facts of this appeal under consideration are almost identical to the facts for the A.Y. 2003-04. In the assessment order passed u/s 153A rws143(3), for AY 2004-05 there is no mention of any incrementing material. Thus, our decision in IT(SS)A No.62/PUN/2017 would apply mutatis-mutandis in this appeal as well. In the result, this appeal of assessee in IT(SS)A No.63/PUN/2017 is also Partly Allowed. IT(SS)A No.11/PUN/2017 for A.Y. 2005-06: 13. Brief facts: Original Return filed u/s.139 :Date not visible Assessment Order u/s.143(3) :No order Date of Search u/s.132 :16/10/2008 Assessment Order u/s.153 rws143(3) : 29/12/2010 NRI Gift : Rs.20,00,000/- Sunil H.Tharwani (A) For the A.Y. 2003-04 & 04-05 & 05-06 9 Lottery Receipt : Rs.6,31,858/- 14. As we have noted above that the assessee has raised identical ground of appeal and the facts of this appeal under consideration are almost identical to the facts for the A.Y. 2003-04. However, there is only one difference, that is in AY 2005-06, there was no assessment order u/s 143(3) of the Act. In the assessment order passed u/s 153A rws 143(3) there is no mention about the incriminating material found during the search about the impugned NRI Gifts and Lottery receipts. The appellant assessee has shown NRI Gift and Lottery winning in the Capital account. Thus, our decision in IT(SS)A No.62/PUN/2017 would apply mutatis-mutandis in this appeal as well. In the result, this appeal of assessee in IT(SS)A No.11/PUN/2017 for the A.Y.2005-06 is also Partly Allowed. 15. In the result, appeal of the assessee is Partly Allowed. Order pronounced in the open Court on 3 rd May, 2022. Sd/- Sd/- (S.S.VISWANETHRA RAVI) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 3 rd May, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellan t. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), Pune concerned. 4. The Pr. CIT, Pune concerned. 5. िवभागीयᮧितिनिध,आयकरअपीलीयअिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT,Pune. S.No Details Date Initials Designation 1 Draft dictated on Sr. PS/PS 2 Draft placed before author Sr. PS/PS