RJD Impex Pvt. Ltd., Mehsana V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 119/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5887 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: S N DIVATIA
• Keywords: Additional evidence
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) IT(SS)A. NO: 119/AHD/2017 (ASSESSMENT YEAR: 2008-09) RJD IMPEX PVT. LTD. 5 ASHOKNAGAR SOCIETY, RADHANPUR ROAD, MEHSANA V/S THE DCIT, CENTRAL CIRCLE- 2(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACFR 2804C APPELLANT BY : SHRI S. N. DIVATIA, AR RESPONDENT BY : SHRI O.P. SHARMA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 27 -11-201 8 DATE OF PRONOUNCEMENT : 15 -01-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-7, AHMEDABAD DATED 20.12.2016 PERTAINING TO A.Y. 2008-09 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: IT(SS)A NO. 119/AHD/2017 . A.Y. 2008-0 9 2 1.1 THE ORDER PASSED U/S.250 ON 20.12.2016 FOR A.Y.2008-09 BY CIT(A)-7, ABAD UPHOLDING THE VALIDITY OF PROCEEDINGS U/S.153A OF T HE ACT AS WELL AS THE DISALLOWANCE OF RS.63,70,070/- AS CIRCULAR TRADING MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENC E PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITIONS. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN CONFIRMING THE VALIDITY OF PROCEEDINGS AS WELL AS NOTICE U/S.153A DATED 19.11.2013 FOR A.Y.2008- 09, THOUGH THE CONDITIONS PRECEDENTS WERE NOT FULFI LLED. THEREFORE, THE NOTICE AS WELL AS PROCEEDINGS U/S.153A(1) WERE WHOLLY ILLEGAL AND UNLAWFUL IN VIEW OF NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH FOR THIS YEAR. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE VALIDITY OF PROCEEDINGS AS WELL AS NOTICE U/S.153A DATED 19.11.2013 FOR A.Y.2008-09. 3.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.63,70,0707- AS CIRCULAR TRADING IN RESPECT OF GOLD BARS. 3.2 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN HOLDING THAT THE APPELLANT HAD FAILED TO EXPLAIN SATISFACTORILY THE IMPUGNED AMOUNT AS WELL AS MAKE REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE. IT IS, THEREFORE, PRAYED THAT THE DISALLOWANCE OF R S.63,70,070/-AND VALIDITY U/S.153A(1) UPHELD BY THE CIT(A) MAY KINDLY BE DELE TED. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A PPELLANT IS A CLOSELY HELD COMPANY AND ENGAGED IN MULTIPLE BUSINESS ACTIVITIES SUCH AS TRADING IN BULLION, GOLD, SILVER ETC. AND SHARE TRADING ETC.LT HAD FILE D ITS RETURN OF INCOME FOR A.Y.2008-09 ON 05.05.2014 DECLARING TOTAL INCOME OF RS.22,12,440/- IN RESPONSE TO NOTICE U/S 153A. 3. BRIEFLY STATED THE FACTS OF THE APPEAL ARE THAT A S EARCH & SEIZURE OPERATION WAS CARRIED OUT ON 3-1-2013 AT THE BUSINESS AND RESIDEN TIAL PREMISES OF THIS GROUP WHEREIN GOLD JEWELLERY, CASH AND LOOSE PAPER FILE W ERE FOUND & SEIZED. HENCE THE AO HAD ISSUED NOTICE U/S 153A ON 19-11-2013 FOR A.Y. 2007-08 TO 2012- 13. THE APPELLANT FILED RETURN DECLARING THE SAME I NCOME IN RESPONSE TO THIS IT(SS)A NO. 119/AHD/2017 . A.Y. 2008-0 9 3 NOTICE. THEREAFTER, THE AO HAS COMPLETED ASSESSMENT U/S. 143(3) R.W.S. 153A ON 31.03.2015 AFTER MAKING VARIOUS ADDITIONS / DISA LLOWANCE INCLUDING THE ADDITION OF RS.63,70,070/- ON ACCOUNT OF CIRCULAR T RADING. DURING THE COURSE OF ASST. PROCEEDINGS, THE AO NOTED THAT THE APPELLANT HAD PURCHASED GOLD BARS FROM ONE - HARSHADJEWELLERS AND SOLD TO ONE ARYAVAR TLMPEXPVT LTD. INCURRING A LOSS OF RS.63,70,070/-. HENCE, THE AO MADE ADDITI ON ALLEGING THAT THE ENTIRE TRANSACTIONS WERE NOT BONA FIDE AND THEREFORE, HE M ADE ADDITION RS.63,70,070/ 4. BEING AGGRIEVED, THE APPELLANT PREFERRED APPEAL BEF ORE CIT(A) WHEREIN A LEGAL GROUND AS TO THE VALIDITY OF NOTICE AS WELL AS PROC EEDINGS U/S.153A WAS RAISED. IT WAS CONTENDED BY THE APPELLANT THAT IN VIEW OF N O INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO THE Y EAR UNDER APPEAL, THE NOTICE U/S.153A WAS ILLEGAL AND UNLAWFUL. IT WAS CONTENDED THAT THE PROCEEDINGS U/S.153A COULD BE INITIATED ONLY IF SOME THE ASSESS MENT FOR THE RELEVANT YEAR IS PENDING AND SOME INCRIMINATING MATERIAL WAS UNEARTH ED DURING THE COURSE OF SEARCH. THE APPELLANT RELIED UPON VARIOUS CASE LAWS . HOWEVER, THE LD. CIT(A) HAS REJECTED THIS CONTENTION MAINLY ON THE GROUND T HAT ONCE A SEARCH HAS TAKEN PLACE U/S.132, THE PROCEEDINGS BY ISSUANCE OF NOTIC E U/S.153A(1) ARE MANDATORY REGARDLESS OF THE MATERIAL NOT FOUND DURI NG THE COURSE OF SEARCH. 5. THE LD. CIT(A) HAS UPHELD THE ADDITION OF RS.63,70, 0707-. THE APPELLANT HAD EXPLAINED THAT ALL THE TRANSACTIONS WERE DULY RECOR DED IN BOOKS OF ACCOUNTS AND WERE DULY ACCEPTED BY THE AO IN THE ORIGINAL ASST. PROCEEDINGS U/S 143(3). NO DISALLOWANCE WAS MADE IN THE ORIGINAL ASST. PROCEED INGS TOWARDS THE SAME WHICH IMPLIES THAT THE AO HAS VERIFIED ALL THE DETA ILS AND APPROVED THE BOOKS OF ACCOUNTS OF THE APPELLANT. THEREFORE, NO FURTHER DISALLOWANCE SHOULD BE MADE UNDER THE GARB OF PROCEEDINGS U/S 153A WHEN NO INCRIMINATING MATERIAL IT(SS)A NO. 119/AHD/2017 . A.Y. 2008-0 9 4 HAS BEEN FOUND. HOWEVER, THE CIT(A) HAS UPHELD THE DISALLOWANCE ON THE GROUND THAT NO EXPLANATION WAS FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND NO APPLICATION WAS MADE FOR ADDITIONAL EVIDENCE . 6. NOW APPELLANT HAS COME BEFORE US. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. THE ASSESSEE IS ENGAGED IN MULTIPLE BUSINESS ACTIVITIES SUCH AS TRA DING IN BULLION, GOLD, SILVER ETC., AND SHARE TRADING. ON 03.01.2013 SEARCH AND S EIZURE OPERATION CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS AND RESIDENTIAL P REMISES OF RJD IMPEX GROUP WHEREIN GOLD JEWELLERY, CASH AND LOOSE PAPER FILE WERE FOUND AND SEIZED. THEREAFTER, A.O. HAD ISSUED NOTICE U/S. 143(3) R.W. S. 153A AND MADE ADDITION OF RS. 63,70,070/-. 8. AS WE CAN SEE, NOTHING INCRIMINATING DOCUMENT/EVIDE NCE WAS FOUND FROM THE BUSINESS AND RESIDENTIAL PREMISES OF THE GROUP COMP ANY AND APPELLANT HAS MADE ALL PURCHASE AND SALES OF GOLD MADE DURING THE YEAR WERE DULY RECORDED IN ITS BOOKS OF ACCOUNTS, SAME ARE PART OF PAPER BOOK AT PAGE NOS. 39, 40 & 43. 9. THE GROUND RELATING TO INCRIMINATING DOCUMENT WAS A LSO RAISED BEFORE THE LD. CIT(A). LD. CIT(A) WAS OF THE OPINION ONCE SEARCH A CTION HAS BEEN CARRIED OUT IN THE CASE OF APPELLANT, A.O. HAD NO OPTION BUT TO ISSUE NOTICE U/S. 153A OF THE ACT AND COMPLETE THE PROCEEDING UNDER THAT SECT ION. 10. ASSESSEE CITED SEVERAL CASE LAWS SUCH AS SAUMYA CON STRUCTION AND KABUL CHAWALA WHEREIN IN THESE CASES IT HAS BEEN HELD THA T IF ANY INCRIMINATING IT(SS)A NO. 119/AHD/2017 . A.Y. 2008-0 9 5 MATERIAL FOUND DURING SEARCH OR DISCOVERED DURING T HE COURSE OF SEARCH ONLY THEN ASSESSMENT CAN BE MADE U/S. 143(3) R.W.S. 153A . 11. AS WE CAN SEE, NOTHING INCRIMINATING WAS FOUND FROM THE BUSINESS AND RESIDENTIAL PREMISES OF THE GROUP. IN SUCH CASE, NO ADDITION CAN BE MADE. IN VIEW OF THE ABOVE OBSERVATION, WE ALLOW THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON 15- 01- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 15/01/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD