Santosh Subhashappa Mukta, Latur V. Assistant Commissioner of Income-tax, Central Circle - 2, , Aurangabad

ITSSA 14/PUN/2021

AI Insights

The case involves an appeal by Shri Santosh Subhashappa Mukta against the assessment order for the year 2008-2009, which was conducted under sections 143(3) read with 153A of the Income Tax Act following a search operation. The primary contention was that the assessment was not based on any incriminating material found during the search. The assessee argued that the additions made to his income were not supported by any incriminating evidence, and thus the assessment was invalid. The Tribunal examined whether the materials used for the assessment were found during the search or were merely discovered during a subsequent survey, which does not qualify as incriminating material under the law. The Tribunal concluded that the assessment was not sustainable as no incriminating material was found during the search operation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137305 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2021
• Other Referred Cases: CIT v. Kabul Chawla, PCIT vs. Abhisar Buildwell P. Ltd., CIT vs. M/s. J.M. Trading Corporation, MDLR Resorts (P.) Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Block assessment; Set aside
• Section: 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER I.T.(S.S.)A.No.14/PUN./2021 Assessment Year 2008-2009 Shri Santosh Subhashappa Mukta, 1, Omerga Road, Ujani Corner, Ausa, Latur. PIN – 413 520. Maharashtra. PAN AJRPM7166R vs. The ACIT, Central Circle-2, Aurangabad. (Appellant) (Respondent) For Assessee : Shri Somnath Ghosh, Shri M.K. Kulkarni, And Smt. J.R. Chandekar For Revenue : Shri Sardar Singh Meena, CIT And Shri M.G. Jasnani Date of Hearing : 27.04.2023 Date of Pronouncement : 24.07.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal, for assessment year 2008- 2009, arises against the CIT(A), Pune-12, Pune’s Din and Order No. ITBA/APL/S/250/2021-22/1037393677(1), dated 30.11.2021, involving proceedings u/s. 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short “the Act”). Heard Both the parties. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal : 2 I.T.(S.S.)A.No.14/PUN./2021 1. “On the facts and in the circumstances of the case and in law the assessment made under S.153A of the Act is not sustainable in law as no incriminating material was found and seized during the course of search conducted against assessee and assessment u/s.153A is not completed using any seized incriminating material. The assessmet be quashed. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in not passing any 'speaking order' before dismissing the appeal of the assessee as mandatory approval as required by S.153D was not obtained prior to assessment completed. The assessment, therefore, vitiated in law. It be quashed. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in sustaining the addition of Rs.4,49,257/- being difference between purchases of petroleum products and sales thereof. The addition be deleted. This difference of Rs.4,49,257/- is due to inclusion of oil purchases of Rs.3,84,269/- and which is not correct. The oil is never purchased from IOCL. The addition be deleted. There is no finding that the addition is based on any incriminating material on the basis of which proceedings under S.153A could have been initiated. It be held accordingly. 3 I.T.(S.S.)A.No.14/PUN./2021 4. On the facts and in the circumstances of the case and in law the exercise under S.153A is to be undertaken mechanically. There was no obligation to initiate the assessment proceedings under S.153A of the Act only because a search has been conducted even though, no incriminatory material whatsoever has been found during search. The addition be deleted. 5. On the facts and in the circumstances of the case and in law it does not matter that the original assessment was not completed under S.143(3) for that purpose. Even when there is no justification for initiation of assessment proceedings under S.153A. On this ground this appeal has to succeed. Therefore, the appeal be allowed. 6. On the facts and in the circumstances of the case and in law the reliance is placed on the decision of the Hon'ble Delhi High Court in CIT v. Kabul Chawla (2015) 126 DTR (Delhi) 130 and host of other judicial precedents for the proposition. The addition being not sustainable in law be deleted. 7. On the facts and in the circumstances of the case and in law the additional ground of appeal raised before CIT(A) being a legal ground has not been taken cognizance of nor dismissed by a 'speaking order'. The assessment completed beyond limitation u/s.153B of the Act. The assessment be set aside. 4 I.T.(S.S.)A.No.14/PUN./2021 8. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in restoring the matter of levy of interest u/s 234A/234B/234C of the Act after admitting the same for adjudication, It was a pure legal issue based on Supreme Court decision. The same should not have been remanded. It was expected the Ld. CIT(A) to give the Institutional Respect following Supreme Court verdicts. The interest levied be cancelled without remanding the issue to A.O. 9. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.” 3. We advert to the first and foremost issue of validity of the impugned sec.153A r.w.s.143(3) assessment dated 22.03.2016 itself wherein the assessee has vehemently argued that the same deserves to be quashed since not based on any incriminating material found or seized during the course of search in question dated 27.09.2013 conducted at the business and residential premises of different members/associate concerns of M/s. Mukta Group of Ausa, District Latur. Mr. Ghosh sought to buttress the point that the additions made by the Assessing Officer in the impugned assessment i.e., three fixed deposits of Rs.2,25,182/-, agricultural income of Rs.3,67,095/- and estimation of the “undisclosed” gross profits of Rs.6,53,636/- are nowhere 5 I.T.(S.S.)A.No.14/PUN./2021 based on any incriminating material found or seized during the course of above stated search. He quoted hon’ble apex court’s landmark decision in PCIT vs., Abhisar Buildwell P. Ltd., Civil Appeal No.6580 of 2021 dated 24.04.2023 settling the very issue against the department as under : “13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under : i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/ unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed 6 I.T.(S.S.)A.No.14/PUN./2021 during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.” 4. Learned CIT-DR drew vehement support from the CIT(A)'s reasoning that this assessee has all along been a “non-filer” and therefore, everything found/seized during the course of above stated search followed by sec.133 “survey” amounts to incriminating material only. 5. A perusal of the instant case file reveals that we had taken-up this clinching issue of the assessee being a “filer” or 7 I.T.(S.S.)A.No.14/PUN./2021 not; way back on 07.02.2023. Learned counsel appears to have filed his return for the assessment year in issue i.e., assessment year 2008-2009 carrying receipt no.“4444” dated 30.09.2008. Mr. Ghosh had submitted therefore, that both the lower authorities have wrongly held the assessee to be a non- filer. It is in this factual backdrop that the “Bench” had directed the Revenue to place on record this clinching return. 5.1. When the case was taken-up today i.e., on 27.04.2023, learned CIT-DR filed the above stated receipt- acknowledgment which pertained to some other taxpayer than the assessee. His case is that both the lower authorities have rightly treated the assessee as a “non-filer” only. Coming to the incriminating material issue found or seized during the course of search, Mr. Meena’s stand is that the above stated survey u/sec.133A of the Act also forms part of the search only and therefore, the impugned assessment deserves to be upheld as validly framed. 5.2. We find no merit in Revenue’s stand. This is inter alia for the precise reason that the department has nowhere been able to controvert the assessee’s return dated 30.09.2008 having receipt no.“4444”. We are therefore constrained to observe that the assessee was never a “non-filer” for the impugned assessment year 2008-2009 before us involving “unabated” assessment as on the clinching dated 27.09.2013. 8 I.T.(S.S.)A.No.14/PUN./2021 That being the case and in light of the fact that no incriminating material had been admittedly found or seized during the course of search u/sec.132 leading to any addition framed under the foregoing three heads (supra), the impugned assessment is not sustainable in law. So far as the learned CIT-DR’s vehement arguments that the above stated material had been found during the course of survey which deserves to be treated as part of search only, we are of the opinion that sec.153A; starting with non-obstante clause “Notwithstanding .........where a search is initiated u/sec.132 or books of account, other documents or any assets or acquisition u/sec.132A” nowhere includes Sec.133 survey action going by the stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB). 5.3. We further take note of hon’ble jurisdictional high court’s decision in Income Tax Appeal No.589 of 2009 dated 29.06.2009 CIT vs. M/s. J.M. Trading Corporation as well as [2013] 40 taxmann.com 365 (Del.) MDLR Resorts (P.) Ltd. vs. CIT also holds that a “search” in itself only triggers sec.153A proceedings. We thus conclude in this factual backdrop of facts that the impugned assessment dated 22.03.2016 deserves to be quashed since framed in absence of any 9 I.T.(S.S.)A.No.14/PUN./2021 incriminating material found or seized during the course of search. Ordered accordingly. 5.4. All other pleadings on facts as well as law stand rendered academic. 6. This assessee’s appeal is allowed in above terms. Order pronounced in the open Court on 24.07.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 24 th July, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The CIT(A), Pune-12, Pune. Maharashtra. 4. The Pr. CIT, Central, Nagpur. 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.