M/s. Somnath Enterprise, Rajkot V. The Assistant Commissioner of Income Tax, Central Circle-1, Rajkot

ITSSA 136/RJT/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3387 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 06-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Assessee Lawyers: MJ RANPURA
• Keywords: Invalid notice; Opportunity of being heard; Peak credit
• Section: 133A; 153A; 201; 43; 13; 153; 22; 147; 148; 15; 139

Judgement Text

. , , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED , ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER SR. NO. IT (SS) A NO. ASSTT. YEAR NAME OF APPELLANT NAME OF RESPONDENT 1 - 2 13 6 & 13 7 /RJT /201 7 2011 - 12 & 2012 - 13 M/S SOMNATH ENTERPRISE, AUTO POINT , 3 RD FLOOR. NR. LODHAVAD POLICY CHOWKY, GONDAL ROAD, RAJKOT PAN: ABTFS1934R A.C.I.T. CENTRAL CIRCLE - 1, RAJKOT. 3 . 122 /RJT /201 7 2012 - 1 3 DCIT, CIRCLE - 1 , RAJKOT M/S SOMNATH ENTERPRISE, RAJKOT 4 . 438 / RJT /201 7 2013 - 1 4 M/S SOMNATH RAJKOT ACIT, CIRCLE - 1 , RAJKOT 5 - 6. 121 & 424/RJT/2017 2011 - 12 & 2013 - 14 D.C.I.T, CENTRAL CIRCLE - 1, RAJKOT M/S SOMNATH ENTERPRISE 7 - 8 132 & 133/RJT/2017 2011 - 12 & 2012 - 13 M/S.G URUKRUPA ENTERPRISE, AUTO POINT, 3 RD FLOOR, NR. LODHAVAD POLICY CHOWKY, GONDAL ROAD, RAJKOT. PAN: AAJFG2191D A.C.I.T. CENTRAL CIRCLE - 1, RAJKOT. 9 - 10 135 & 437/RJT/2017 2011 - 12 & 2013 - 14 M/S.VASUKI ENTERPRISE, AUTO POINT, 3 RD FLOOR, NR. LODHAVAD POLICY CHOWKY, GONDAL ROAD, RAJKOT PAN : AAIFV0788J A.C.I.T. CENTRAL CIRCLE - 1, RAJKOT. 11 - 12 115 & 421/RJT/2017 2011 - 12 & 2013 - 14 D.C.I.T. CENTRAL CIRCLE - 1, RAJKOT. M/S.VASUKI ENTERPRISE, AUTO POINT, 3 RD FLOOR, NR. LODHAVAD POLICY CHOWKY, GONDAL ROAD, RAJKOT PAN : AAIFV0788J IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 2 - ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.J. RANPURA , A .R / RESPONDENT BY : SHRI M.N. MAURYA, CIT. D .R / DATE OF HEARING 26 /02 /20 20 / DATE OF PRONOUNCEMENT 28 / 0 2 /20 20 / O R D E R PER BENCH : THE ABOVE APPEALS AND CROSS APPEALS HAVE BEEN FILED BY THE REVENUE AND THE DIFFERENT ASSESSEE AGAINST THE ORDERS OF THE L D. COMMISSIONER OF INCOME - TAX (APPEALS) - AHMEDABAD INVOLVING RESPECTIVE ASSESSMENT Y EARS. SINCE ISSUE S INVOLVE IN ALL THESE APPEALS ARE IDENTICAL, WE PROCEED TO DISPOSE OF ALL THE APPEALS BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY 2. FIRST WE TAKE IT(SS)A NO.137/RJT/2017 FOR A.Y. 2012 - 13 AS THE LEAD CASE FOR ADJUDICATION AND THE FINDINGS OF THE SAID APPEAL WILL BE APPLICABLE TO OTHER APPEALS ALSO. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE INITIATION OF THE PROCEEDINGS U/S. 153A OF THE ACT AND ISSUE OF NOTICE U/S 153A OF THE ACT IS TOTALLY INVALID AND BAD IN LAW AND THE ASSESSMENT COMPLETED ON SUC H INVALID NOTICE IS ALSO VOID - AB - INITIO AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE ORDER OF THE ID. AO IN SO FAR AS SHE ASSESSED THE TOTAL INCOME AT RS.76,27,06,788/ - AS AGAINST THE RETURNED INCOME OF RS. 8,73,560/ - IS TOTALLY BAD ON FACTS AS ALSO IN LAW. 4.0 THE LEARNED AO GRIEVOUSLY ERRED IN LAW IN FINALIZING THE ASSESSMENT U/S. 153A OF THE ACT WITHOUT PROVIDING AN OPPORTUNITY OF BEING HEARD AGAINST PROPOSED ADDITION OF RS. 76,18,33,228/ - ON THE ALLEGED GROUND OF UNEXPLAINED CASH D EPOSITED IN THE BANK ACCOUNTS. 5.0 THE LEARNED AO GRIEVOUSLY ERRED ON FACTS AS ALSO IN LAW IN ALLEGING THAT THE APPELLANT FAILED TO PROVE THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS AND THEREBY MAKING ADDITION OF RS. 76,18,33,228/ - AS UNEXPLAINED CA SH DEPOSITS OF THE APPELLANT. THE ADDITION MADE IS IN TOTAL DISREGARDS OF THE FACTS AND CIRCUMSTANCES AND SUBMISSION MADE DURING' THE ASSESSMENT PROCEEDINGS. THE ADDITION MADE DESERVES TO BE DELETED AND THEREFORE MAY KINDLY BE DELETED. IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 3 - 5.1 THE LEARNED AO OUGHT TO APPLY THE PERCENTAGE OF COMMISSION INCOME EARNED BY THE APPELLANT FIRM ON TOTAL CASH DEPOSITED AND TO WORK OUT NET - COMMISSION INCOME. 5.2 ALTERNATIVELY, THE AO OUGHT TO WORK OUT THE PEAK BALANCE IN THE BANK ACCOUNTS AS THERE IS SUBSTANTIAL C ASH WITHDRAWAL FROM THE BANK ACCOUNTS. 6.0 THE LEARNED AO ERRED IN CHARGING INTEREST U/S. 234A, 2348 AND 234C. 7.0 THE LEARNED AO ERRED IN INITIATING PENALTY PROCEEDINGS U/S 271 (1 )(C) OF ACT. YOUR HONOUR'S APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 3 . T HE ASSESSEE IN THE 1 ST GROUND OF APPEAL HAS CHALLENGED THE VALIDITY OF THE ASSE SSMENT FRAMED UNDER SECTION 153(A) READ WITH SECTION 143( 3 ) OF THE ACT ON THE GROUND THAT THERE WAS NO SEARCH CARRIED OUT ON IT. 4 . THE LEARNED AR AT THE OUTSET SUBMITTED THAT THERE WAS NO SUCH CARRIED OUT ON THE ASSESSEE UNDER SECTION 132/132A OF THE ACT. THEREFORE THE QUESTION OF FRAMING THE ASSESSMENT UNDER S ECTION 153A OF THE ACT DOES NOT ARISE. 4 .1 THE LEARNED AR FURTHER SUBMITTED THAT THERE WAS THE SUR VEY OPERATION UNDER SECTION 133(A) OF THE ACT DATE D 17/01/ 2013 AS EVIDENT BY THE ORDER PLACED ON PAGE 29 OF THE PAPER BOOK. ACCORDINGLY THE LEARNED AR FOR T HE ASSESSEE CLAIMED THAT THERE CANNOT BE A NY ASSESSMENT UNDER SECTION 153(A) READ WITH SECTION 143( 3 ) OF THE ACT. 5 . ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 6 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOT H THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. UNDISPUTEDLY, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS FRAMED BY THE AO UNDER SECTION 153(A) READ WITH SECTION 143( 3 ) OF THE ACT WHICH IS P OSSIBLE ONLY IN PURSUANCE TO THE SEARCH PROCE EDINGS CARR IED OUT IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 4 - UNDER SECTION 132/132A OF THE ACT. THE RELEVANT EXTRACT OF THE PROVISIONS OF SECTION 153A READS AS UNDER: 18 [ ASSESSMENT IN CASE OF SEARCH OR REQUISITION. 19 20 153A. 21 [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 1 53 , IN THE CASE OF A PERSON 22 WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS 23 [AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS] REFERRED TO IN CLAUSE ( B ) , IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, 22 SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WER E A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE 23 [AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS] : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS 23 [AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS] : 6 .1 N OW THE ISSUE ARISES WHETHER THE ASSE SSMENT FRAMED UNDER SECTION 153A READ WITH SECTION 143( 3 ) OF THE ACT IS VALID IN THE GIVEN FACTS AND CIRCUMSTANCES. THE ANSWER STANDS AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE ORDER OF THE ABOVE TRIBUNAL IN THE CASE OF DR. MANSUKH KANJIBHAI SH AH VS. ACIT REPORTED IN 129 ITD 376 WHEREIN IT HAS HELD AS UNDER: SINCE IN THE INSTANT CASE ONLY SURVEY OPERATION UNDER SECTION 133A WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE S TRUST, IT WOULD NOT SATISFY THE REQUIREMENTS OF SECTION 153A. AS SUCH, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS OR ASSUMING VALID JURISDICTION UNDER SECTION 153A AGAINST THE ASSESSEE. 6 .2 W E ALSO NOTE THAT THERE WAS THE SURVEY PROCEEDINGS CARRIED OUT BY THE REVENUE UNDER S ECTION 133A OF THE ACT AS EVIDENT FROM THE ORDER OF THE REVENUE DATED 18 JANUARY 2013. THE LEARNED DR AT THE TIME OF HEARING FAILED TO CONTROVERT IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 5 - THE ARGUMENTS OF THE LEARNED AR FOR THE ASSESSEE. ACCORDINGLY, W E DO NOT FIND ANY MERIT IN THE ORDERS OF THE AUTHORITIES BELOW AS THE SAME IS NOT MAINTAINABLE. 6.3 ACCORDINGLY WE QUASH THE ASSES SMENT FRAMED UNDER SECTION 153A OF THE ACT. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7 . AS WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON TECHNICAL GROUND, WE REFRAIN OURSELVES FROM ADJUDICATING THE ISSUE RAISED BY THE ASSESSEE ON MERIT. AS SUCH THE GROUNDS RAISED BY THE ASSESSEE ON MERIT BECOME INFRUCTUOUS. ACCORDINGLY, WE DISMISS TH E SAME AS INFRUCTUOUS. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. COMING TO THE REVENUE APPEAL BEARING ITA NO. 122/RJT/2017 FOR THE ASSESSMENT YEAR 2012 - 13 8 . A S WE HAVE QUASHED THE ASSESSMENT PROCEE DINGS FRAMED UNDER SECTION 153A IN THE APPEAL FILED BY THE ASSESSEE BEARING NO. 137/RJT/20 17 FOR A.Y. 2012 - 13 VIDE PARAGRAPH NUMBER 6 OF THIS ORDER. FOR THE DETAILED DISCUSSION, PLEASE REFER THE RELEVANT PARAGRAPH. ACCORDINGLY, WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. IN THE RES ULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. COMING TO THE ITA NO. 136/RJT/2017 AND 438/RJT/2 017 FOR THE ASSESSMENT YEARS 20 11 - 12 AND 2013 - 14, APPEALS FILED BY THE ASSESSEE. 9 . AT THE OUTSET, WE NOTE THAT THE ISSUES RAISED BY THE ASSESSEE IN THE AFORESAID APPEALS ARE IDENTICAL TO THE ISSUES RAISED BY THE ASSESSEE IN ITA NO. 137/RJT/2017 FOR A.Y. 2012 - 13 WHICH WE HAVE DECIDED IN FAVOUR OF THE ASSESSEE HOLDING THAT THE ORDER FRAMED UNDER SECTION 15 3A READ WITH SECTION 143( 3 ) OF THE ACT ARE NOT IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 6 - MAINTAINABLE. FOR THE DETAILED DISCUSSION, PLEASE REFER TO THE RELEVANT PARAGRAPH BEARING NUMBER 6 & 7 OF THIS ORDER. RESPECTFULLY FOLLOWING THE SAME, THE TECHNICAL ISSUE RAISED BY THE ASSESSE E ABOUT THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153A READ WITH SECTION 143( 3 ) OF THE ACT IS ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ISSUE RAISED BY THE ASSESSEE ON MERIT BECOME INFRUCTUOUS AND DO NOT REQUIRE ANY SEPARATE ADJUDICATIO N. HENCE WE DISMISS THE SAME. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. COMING TO THE ITA NO. 121/RJT/2017 AND 424/RJT/ 2017 FOR THE ASSESSMENT YEARS 2 011 - 12 AND 2013 - 14, APPEALS FILED BY THE REVENUE. 1 0 . AT THE OUTSET WE NOTE THAT WE HAVE QUASHED THE ASSESSMENT PROCEEDINGS FRAMED UNDER SECTION 153 A OF THE ACT IN THE APPEAL FILED BY THE ASSESSEE BEARING NO. 13 6 / RJT/2017 AND 4 3 8 / RJT/2017 VIDE PARAGRAPH NUMBER 9 OF THIS ORDER. FOR THE DETAILED DISCUSSION, PLE ASE REFER THE RELEVANT PARAGRAPH. ACCORDINGLY, WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. M/S GURUKRUPA ENTERPRISES COMING TO THE ITA NO. 132 /RJT/ 2017 AND 133 /RJT/2 017 FOR THE ASSESSM ENT YEARS 20 11 - 12 AND 201 2 - 1 3 , APPEALS FILED BY THE ASSESSEE. 11 AT THE OUTSET, WE NOTE THAT THE ISSUES RAISED BY THE ASSESSEE IN THE AFORESAID APPEALS ARE IDENTICAL TO THE ISSUES RAISED BY THE ASSESSEE IN ITA NO. 137/RJT/2017 WHICH WE HAVE DECIDED IN FAVOUR OF THE ASSESSEE HOLDING THAT THE ORDER FRAMED UNDER SECTION 153A READ WITH SECTION 143( 3 ) OF THE ACT ARE NOT MAINTAINABLE. FOR IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 7 - THE DETAILED DISCUSSION, PLEASE REFER TO THE RELEVANT PARAGRAPH BEARING NUMBER 6 & 7 OF THIS ORDER. RESPECTFULLY FOLLOWING THE SAME, THE TECHNICAL ISSUE RAISED BY THE ASSESSEE ABOUT THE VALIDITY OF THE ASSES SMENT FRAMED UNDER SECTION 153A READ WITH SECTION 143( 3 ) OF THE ACT IS ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ISSUE RAISED BY THE ASSESSEE ON MERIT BECOME INF RUCTUOUS AND DO NOT REQUIRE ANY SEPARATE ADJUDICATION. HENCE WE DISMISS THE SAME. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. M/S VASUKI ENTERPRISE COMING TO THE ITA NO. 135 /RJT/ 2017 AND 437 /RJT/2017 FOR THE ASSESSMENT YEARS 2 0011 - 12 AND 2013 - 14, APPEALS FILED BY THE ASSESSEE. 12 . AT THE OUTSET, WE NOTE THAT THE ISSUES RAISED BY THE ASSESSEE IN THE AFORESAID APPEALS ARE IDENTICAL TO THE ISSUES RAISED BY THE ASSESSEE IN ITA NO. 137/RJT/2017 WHICH WE HAVE DECIDED IN FAVOUR OF T HE ASSESSEE HOLDING THAT THE ORDER FRAMED UNDER SECTION 153A READ WITH SECTION 143 ( 3 ) OF THE ACT IS NOT MAINTAINABLE. FOR THE DETAILED DISCUSSION, PLEASE REFER TO THE RELEVANT PARAGRAPH BEARING NUMBER 6 & 7 OF THIS ORDER. RESPECTFULLY FOLLOWING THE SAME, T HE TECHNICAL ISSUE RAISED BY THE ASSESSEE ABOUT THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153 A READ WITH SECTION 1 43 ( 3 ) OF THE ACT IS ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ISSUE RAISED BY THE ASSESSEE ON MERIT BECOME INFRUCTUOUS AND DO NOT REQUIRE ANY SEPARATE ADJUDICATION. HENCE WE DISMISS THE SAME. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. COMING TO THE ITA NO. 115 /RJT/ 2017 AND 421 /RJT/2017 FOR THE ASSESSMENT YEARS 2 011 - 12 AND 2013 - 14, APPEALS FILED BY THE REVENUE. IT (SS) A NO 137 /RJT / 2017 A.Y.2012 - 13 & OTHERS - 8 - 1 3 . AT THE OUTSET WE NOTE THAT WE HAVE QUASHED THE ASSESSMENT PROCEEDINGS FRAMED UNDER SECTION 153 A OF THE ACT IN THE APPEAL FILED BY THE ASSESSEE BEARING NO. 13 6 / RJT/2017 AND 4 3 8 / RJT/2017 VIDE PARAGRAPH NUMBER 12 OF THIS ORDER. FOR THE DETAILED DISCUSSION, PLEASE REFER THE RELEVANT PARAGRAPH. ACCORDINGLY, WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. 14 . IN THE C OMBINED RESULTS, APPEALS FILED BY THE DIFFERENT ASSESSEE ARE PARTLY ALLOWED AND APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 / 02 /20 20 - SD - - SD - (MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DATED 28 /02 /20 20 MANISH