D.C.I.T., Central Circle - 3(4), Kolkata, Kolkata V. Rahul Saraf, Kolkata

ITSSA 116/KOL/2022

AI Insights

The case involves appeals by the Revenue against the orders of the Learned Commissioner of Income-tax (Appeals)-21, Kolkata, which had deleted the additions made to the income of Rahul Saraf for the assessment years 2008-09 and 2009-10. The additions were initially made by the Assessing Officer following a search operation under Section 132 of the Income Tax Act. The main legal issue revolved around whether the additions could be sustained in the absence of any incriminating material found during the search, particularly concerning the claim under Section 54F, which allows exemption for long-term capital gains if invested in a residential property. The Tribunal, referencing a recent Supreme Court decision, concluded that in the case of unabated assessments, the Assessing Officer's jurisdiction is limited to the discovery of incriminating material, and in its absence, no additions can be made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128766 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-06-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 12-12-2022
• Other Referred Cases: PCIT Vs. Abhisar Buildwell P. Ltd., CIT Vs Kabul Chawla, CIT Vs Meeta Gutgutia
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Documents seized
• Section: 132; 143(3); 54F; 153A

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री राज े श क ु मार, ल े खा सदस्य एवं श्री संजय शमा ा , न्याधयक सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 Assessment Years: 2008-09 & 2009-10 DCIT, Central Circle-3(4), Kolkata............................Appellant Vs. Rahul Saraf..........................................................Respondent [PAN: AKOPS 6728 D] C.O. Nos.: 8 & 9/KOL/2023 Along with I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 Assessment Years: 2008-09 & 2009-10 Rahul Saraf.............................................................Appellant [PAN: AKOPS 6728 D] Vs. DCIT, Central Circle-3(4), Kolkata.........................Respondent Appearances by: Sh. Abhijit Kundu, CIT D/R, appeared on behalf of the Revenue. Sh. Soumitra Choudhury, Adv., appeared on behalf of the Assessee. Date of concluding the hearing : June 28 th , 2023 Date of pronouncing the order : July 20 th , 2023 I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 2 of 8 ORDER Per Rajesh Kumar, Accountant Member: Both these appeals preferred by the Revenue as well as the cross objections filed by the assessee are against separate orders passed by Learned Commissioner of Income-tax (Appeals)-21, Kolkata [hereinafter referred to Ld. ‘CIT(A)’] for the Assessment Years (in short “AY”) 2008-09 & 2009-10, respectively. 2. At the outset, it was pointed out that the appeals of the Revenue in ITA No. 116/KOL/2022 for AY 2008-09 is delayed by 37 days and ITA No. 117/KOL/2022 for AY 2009-10 is delayed by 3 days. After hearing rival parties and considering the fact that the delay by the Revenue in filing these appeals of 37 days & 3 days, respectively, was stated to have happened due to administrative reasons. We note that the Revenue is a Government Department manned by officers of Indian Revenue Services and the files & records are subject to various checks and balances and have to pass through several stages. Considering the fact, the minor delay of 37 days & 3 days are condoned and the appeals are admitted for adjudication. 3. The Revenue has challenged the order of Ld. CIT(A) for deletion of addition on merit whereas the assessee has filed the cross objection supporting the order of Ld. CIT(A) on legal issue as well as on merits. Therefore, first of all we would adjudicate the cross objection filed by the assessee for AY 2008-09. 4. The only legal and jurisdictional issue raised by the assessee in the cross objection no. 1 and 2 is in support of the order of Ld. I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 3 of 8 CIT(A) and against the assessment order which has been passed on the ground that the assessment being unabated assessment on the date of search and there was no incriminating material found during the course of search qua the addition made by Assessing Officer (in short ld. 'AO') and Ld. CIT(A) rightly decided that the addition made by the AO is without jurisdiction and has to be deleted. 5. Facts in brief are that search action u/s 132 of the Act was conducted on the assessee on 24.01.2012. Thereafter, notice u/s 153A of the Act was issued by the AO on 25.04.2013 which was complied to by the assessee by submitting that the return filed originally on 29.07.2008 disclosing total income of Rs. 1,04,64,762/- may be treated as the return filed in response to the notice issued u/s 153A of the Act. Ld. Assessing Officer (in short ld. 'AO'), during the course of assessment proceedings observed on the basis of return of income, profit and loss account and balance sheet for the impugned assessment order that assessee has earned long term capital gain of Rs. 2,80,91,301/- from sale of equity shares on which STT was not payable. The said gain was claimed as exempt u/s 54F of the Act against the investment in acquisition of land for construction of residential house. Finally, Ld. AO made the addition of Rs. 2,80,91,301/- to the income of the assessee by rejecting the claim u/s 54F of the Act in the assessment framed u/s 153A/143(3) of the Act dated 28.03.2014. 6. The assessee assailed the order of Ld. AO before Ld. CIT(A) and Ld. CIT(A) allowed the appeal of the assessee by holding that there is nothing in the seized material that would indicate any I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 4 of 8 doubt or suspicion about the construction being taking place and Ld. CIT(A) further, observed that the balance sheet itself showed the investment on the piece of land and clearly stated the purpose for which it was acquired. Ld. CIT(A) finally held that there was no incriminating material found during the course of search indicating any wrong doing on the part of the assessee. The Ld. CIT(A), thus, allowed the claim u/s 54F of the Act on the ground that in absence of any incriminating material seized during the search, the claim cannot be rejected. 7. Ld. A/R submitted before the Bench that the issue is squarely covered by the recent decision of the Hon'ble Apex Court in the case of PCIT Vs. Abhisar Buildwell P. Ltd. in Civil Appeal No. 6580 of 2021 order dated 24.04.2023. Ld. A/R contended that during the course of search no incriminating material was found qua the claim u/s 54F of the Act and therefore, Ld. CIT(A) has rightly appreciated the issue after going into the facts of the case in detail and clearly coming to the conclusion that no such incriminating material was found during the course of search. Ld. A/R referred to the observation of the Ld. CIT(A) appended in the appellate order from page no. 53 to 54 and submitted that during the appellate proceedings, Ld. CIT(A) has considered the contentions of Ld. AO as regards the seized documents SS/2 page 9 and observed that in the said documents the appraisal report mentioned that seized documents in itself states that this belongs to Mr. Rahul Saraf containing details of Ballygunge house under construction as on 31.12.2011 and thus, the appraisal report accepted that there was a construction of residential house going on the said impugned I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 5 of 8 land at Ballygunge Place. Ld. A/R stated that during the course of appellate proceedings, a remand was called for from Ld. AO to provide the incriminating/seized material based on which Ld. AO rejected the claim u/s 54F of the Act which was responded by Ld. AO vide letter dated 26.04.2022 but he has not been able to provide any such material despite specific query having been asked in this regard. It’s only on that basis that Ld. CIT(A) has arrived at a conclusion that there was no incriminating material found during the course of search and after following the decisions of Hon'ble Delhi High court CIT Vs Kabul Chawla 380 ITR 573(Del) and CIT Vs Meeta Gutgutia 395 ITR 526(Del) and various other decisions allowed the appeal of the assessee by holding that the AO has no jurisdiction to revisit the issue of claim u/s 54F of the Act in absence of any incriminating material found and seized during search. Ld. A/R submitted that now the issue has been settled once and for all by the Hon'ble Apex Court in the case of Abhisar Buildwell P. Ltd. (supra) wherein the Court has held that in case of unabated assessment on the date of search Ld. AO’s jurisdiction is confined to the discovery of searched incriminating material and in absence of which no addition can be made to the unabated assessment. 8. Ld. D/R on the other hand, requested the Bench that Ld. CIT(A) has passed the order without looking into the facts of the case though a remand was called for and Ld. AO has not replied to the specific query raised as regards furnishing of the incriminating seized material. However, the Ld. DR requested for some time to verify whether there was any incriminating materials or not qua I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 6 of 8 the claim u/s 54F of the Act. Though the Bench was of the unanimous view that on the basis of facts available on the record that there was no need to give time to Ld. CIT D/R, however, on his persistent prayer before the Bench by the Ld. CIT(DR) he was allowed four weeks’ time with the direction to file his reply on the issue within 30 days preferably before the first week of August failing which these cases would be decided on merits. 9. We have heard rival contentions and perused the material available on record. Undisputedly, this is a case of search and search was conducted on 24.01.2012 in the business as well as residential premises of the assessee Sh. Rahul Saraf. The assessee has filed the return of income originally on 29.07.2008 and assessment was also framed u/s 143(3) of the Act assessing total income at Rs. 1,10,19,120/-. We note that on the date of search the assessment has already attained finality and therefore it is an assessment which is unabated in terms of provisions of Section 153A of the Act. During the course of search, the search team has found a document termed as SS/2 which in the appraisal report stated to be belonged to Sh. Rahul Saraf and contained the details of Ballygunge house under construction as on 31.12.2011. We note that during the course of appellate proceedings, Ld. CIT(A) has called for a remand report from Ld. AO on the incriminating/seized material, if any, available on the basis of which Ld. AO had made the addition by rejecting the direction u/s 54F of the Act. However, Ld. AO in his letter dated 26.04.2022 has not been able to produce any such material and we note that Ld. CIT(A) has rightly concluded that there is no incriminating material seized during the I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 7 of 8 course of search which justifies the addition as made by Ld. AO. After considering the facts in totality and also the appellate order, we are inclined to uphold the order passed by Ld. CIT(A) which is a very reasoned and speaking order dealing with each and every aspect of the issue by holding that there was no incriminating material seized during search. The case of the assessee is fairly and squarely covered by the decision of Hon'ble Apex Court in the case of PCIT Vs Abhisar Buildwell P. Ltd. (supra) wherein the Court has held that in case of unabated assessment Ld. AO has no jurisdiction to make any addition in absence of any incriminating search material. Accordingly, the cross objection of the assessee for AY 2008-09 is allowed by upholding the order of ld. CIT(A). 10. In view of our decision on the cross objection, the appeal of the Revenue becomes infructuous. Therefore, the cross objection raised by the assessee for AY 2008-09 is allowed and the appeal filed by the Revenue for AY 2008-09 is dismissed. 11. The issue raised in ITA No. 117/KOL/2022 and the CO No.9/KOL/2023 for AY 2009-10 is similar to the issue as has been decided by us in ITA No. 116/KOL/2022 and CO No. 8/KOL/2023 wherein we have allowed the cross objection of the assessee which was filed in support of the order of Ld. CIT(A) and dismissed the appeal of the Revenue as infructuous. Our decision in the above ITA No. 116/KOL/2022 and CO No. 8/KOL/2023 will apply to the Revenue appeal as well as the Cross Objection. Consequently, the cross objection by the assessee is allowed and the appeal filed by the Revenue is dismissed. I.T.(S.S.)A. Nos.: 116 & 117/KOL/2022 C.O. Nos.: 8 & 9/KOL/2023 Assessment Years: 2008-09 & 2009-10 Rahul Saraf. Page 8 of 8 12. In the result, CO Nos. 8 & 9/KOL/2023 raised by the assessee are allowed and the appeals in ITA Nos. 116 & 117/KOL/2022 filed by the Revenue are dismissed. Kolkata, the 20 th July, 2023. Sd/- Sd/- [Sonjoy Sarma] [Rajesh Kumar] Judicial Member Accountant Member Dated: 20.07.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. DCIT, Central Circle-3(4), Kolkata. 2. Rahul Saraf, 4/1, Red Cross Place, Kolkata-700 001. 3. CIT(A)-21, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata