The Dy. Commissioner of Income Tax, Central Circle-2(3), Ahmedabad V. Oswal Salt & Chemicals Inds., Gandhidham-Kutch

ITSSA 144/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3707 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDERA KUMAR
• Assessee Lawyers: K C THAKAR A R
• Keywords: Document seized; Period of limitation; Non compliance; Competent authority; Assessment record; Documents seized
• Section: 143(3); 153A; 14A; 132

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , EKUHK CKSJM , BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.(SS)A. NOS. 143 & 144/AHD/2016 ( / ASSESSMENT YEARS : 2007-08 & 2008-09) THE DCIT, CENTRAL CIRCLE-2(3), AHMEDABAD. / VS. OSWAL SALT & CHEMICALS INDS. MAITRI BHAVAN, PLOT NO.18, SECTOR NO.8, GANDHIDHAM, KUTCH 370 201 CROSS OBJECTION NOS.103 & 104/AHD/2016 (ARISING OUT OF I.T.(SS)A. NOS.143 & 144/AHD/2016) ( / ASSESSMENT YEARS : 2007-08 & 2008-09) OSWAL SALT & CHEMICALS INDS. MAITRI BHAVAN, PLOT NO.18, SECTOR NO.8, GANDHIDHAM, KUTCH 370 201 / VS. THE DCIT CENTRAL CIRCE-2(3), AHMEDABAD. ./ ./ PAN/GIR NO. : AACKF 1906 F ( !' / APPELLANT ) .. ( #' / RESPONDENT ) REVENUE BY : SHRI SURENDERA KUMAR, CIT-DR ASSESSEE BY : SHRI K.C. THAKAR, A.R. $ %& ' () / DATE OF HEARING 22/02/2018 *+,- ' () / DATE OF PRONOUNCEMENT 04/04/2018 . / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE ARE TWO APPEALS BY THE REVENUE ALONGWITH TW O CROSS OBJECTIONS BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 2 - INCOME TAX (APPEALS)-12, AHMEDABAD, VIDE APPEAL NO. CIT(A)-12/528- 530/CC 2(3)/14-15 DATED 21/01/2016 FOR ASSESSMENT Y EARS (AY) 2007- 08 & 2008-09. 2. SINCE BOTH APPEALS HAVE COMMON GROUNDS AND ASSES SEE IS SAME ONLY AMOUNT AND ASSESSMENT YEARS ARE DIFFERENT THER EFORE, FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO DISPOSE OF BOTH APPEA LS BY WAY OF A COMMON ORDER. IN THESE APPEALS FOLLOWING GROUNDS HA VE TAKEN: 2.1 IN IT(SS)A NO.143/AHD/2016 FOR ASST. YEAR 2007- 08: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELE TING THE ADDITIONS MADE BY THE A.O. BY HOLDING THAT THE ADDITIONS MADE BY THE A.O. DE HORS THE REFERENCE OR FOUNDATION IN INCRIMINATING S EIZED MATERIAL ARE NOT SUSTAINABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELET ING THE ADDITION OF RS.20,65,647/- BEING INTEREST PAYMENT THOUGH THE ASSESSEE HAD MADE INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUNDS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE ADDITION ON ACCOUNT OF WASHING/HANDLING LOSS OF RS.1,70,500/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 2.2 IN IT(SS)A NO.144/AHD/2016 FOR ASST. YEAR 2008- 09: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE ADDITIONS MADE BY THE A.O. BY HOLDING THAT THE ADDITIONS MADE BY T HE A.O. DE HORS THE REFERENCE OR FOUNDATION IN INCRIMINATING SEIZED MAT ERIAL ARE NOT SUSTAINABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE ADDITION OF ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 3 - RS.31,33,414/- BEING INTEREST PAYMENT THOUGH THE AS SESSEE HAD MADE INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUND S. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE ADDITION ON ACCOUNT OF WASHING/HANDLING LOSS OF RS.7,07,322/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE DISALLOWANCE OF EMPLOYEES PROVIDENT FUND U/S.36(1)(VA) AMOUNTING TO RS.9,394/-. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THE CASE OF FRIENDS GROUP, SEARCH OPERATION U/S. 132 OF THE ACT WAS CARRIED OUT ON 15/06/2011. THE ASSESSEE'S CASE WAS ALSO COVERED IN THE SEARCH ACTION. THUS THE ASSESSEE IS GOVERNED BY THE PROVISIONS OF SECTION 153A OF THE ACT. NOTICE U/S.153A ISSUED ON 02/01/2013 AND SERVED UPON THE ASSESSEE. THE ASSESSEE FIELD THE RE TURN OF INCOME IN RESPONSE TO NOTICE U/S.153A FOR A.Y. 2008-09 ON 29/06/2013, DECLARING TOTAL INCOME AT RS.62,23,940/- 4. NOTICE U/S.143(2) WAS ISSUED ON 19/09/2013 AND S ERVED UPON THE ASSESSEE, DUE TO CHANGE IN INCUMBENT, ANOTHER NOTIC E U/S.143(2) WAS ISSUED ON 03/12/2013. NOTICE U/S.142(1) ALONGWITH Q UESTIONNAIRE WAS ISSUED ON 04/12/2013. IN RESPONSE THE NOTICES ISSUE D, SHRI MANISH VORA, A.R. OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND FILED DETAILS CALLED FOR. 5. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF SALT AND TRADING OF GOODS & COMMOD ITIES. ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 4 - 6. CONSIDERING THE COMPLEXITIES, VOLUME, DOUBT ABO UT THE CORRECTNESS OF ACCOUNTS AND THE QUERIES RAISED DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND EVASIVE REPLIES FURNISHED BY THE AS SESSEE ON MOST OF THE POINTS AND IN THE INTEREST OF REVENUE, THE ASSESSIN G OFFICER WAS OF THE OPINION THAT IT IS NECESSARY SO TO DO TO DIRECT THE ASSESSEE TO GET ITS ACCOUNT AUDITED BY AN ACCOUNTANT U/S.142(2A) OF THE I.T. ACT 1961. THEREFORE, AFTER ISSUING A DETAILED SHOW-CAUSE NOTI CE TO THE ASSESSEE ON 14/02/2014 AND AFTER CONSIDERING THE REPLY OF THE A SSESSEE DATED 26/02/2014 & DEALING WITH ITS OBJECTIONS AND AFTER OBTAINING THE PREVIOUS APPROVAL OF THE CIT(CENTRAL)-II, AHMEDABAD CONTAINE D IN HIS LETTER NO.CIT(C)-II/FRIENDS GR. /SPECIAL AUDIT/KSAIPL/2013 -14/3684/ DATED 26/03/2014, THE ASSESSING OFFICER VIDE HIS LETTER D ATED 26/03/2014 WHICH WAS SERVED UPON THE ASSESSEE ON 27/03/2014, DIRECTE D IT TO GET ITS ACCOUNTS AUDITED BY THE SPECIAL AUDITOR, PRAMODKUMA R DAD AND ASSOCIATES, AHMEDABAD AND FURNISH THE SPECIAL AUDIT REPORT IN FORM NO.6B AS MENTIONED IN RULE 14A OF THE I.T. RULES, 1 962 , WITHIN 100 DAYS OF RECEIPT OF THIS COMMUNICATION FROM THE ASSESSING OFFICER. HOWEVER, AS PER THE LETTER OF THE ACCOUNTANT ADDRESSED TO TH E A.O., THE ASSESSEE DID NOT PROVIDE ANY ACCOUNT BOOKS, VOUCHERS, DETAILS ET C. TO HIM IN THE FIRST ABOUT 90 DAYS. THEREFORE, LOOKING TO THE NON CO-OPE RATIVE ATTITUDE OF THE ASSESSEE, ON TWO REQUESTS OF THE ACCOUNTANT, THE A. O., SUO MOTU, WITH THE PREVIOUS APPROVAL OF THE CIT(CENTRAL)-II, AHMEDABAD , EXTENDED THE PERIOD OF AUDIT TO BE COMPLETED IN 180 DAYS WHICH I S THE MAXIMUM PERMISSIBLE TIME LIMIT AS PER PROVISIONS OF SEC. 14 2(2C) OF THE I.T. ACT. ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 5 - THE ACCOUNTANT FURNISHED HIS REPORT ON 22.09.2014, A COPY OF WHICH WAS ALSO RECEIVED FROM THE ASSESSEE ON 26.09. 2014. IN VIEW OF THE OBSERVATIONS OF THE ACCOUNTANT, A SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 29-09-2014 REQUIRING ITS EXPLANATION ON THE DISCREPANCIES NOTICED BY THE ACCOUNTANT. THE ASSESSEE HAS FILED A REPLY LETTER DATED 27/10/2 014 ON 29/10/2014. IN THE SAID REPLY THE ASSESSEE HAS ONCE AGAIN OBJECTED REFERENCE FOR SPECIAL AUDIT U/S.142(2A) ASUNDER:- 'BEFORE WE SUBMIT OUR REPLY TO THE ISSUES RAISED IN THE NOTICE UNDER REPLY WE MAY BRING TO YOUR KIND NOTICE THE FACT THA T THESE ASSESSMENT PROCEEDINGS HAVE, IN OUR CONSIDERED VIEW, BARRED BY LIMITATION FOR THE REASON THAT THE ORDER U/S.142(2A) OF THE ACT WAS PA SSED ONLY TO UNLAWFULLY EXTEND THE LIMITATION BRUSHING ASIDE OUR FACTUAL AND LEGAL OBJECTIONS FILED IN RESPONSE TO THE NOTICE PROPOSIN G THE SAID ACTION. WE THEREFORE REQUEST YOU TO KINDLY GIVE DUE CONSIDERAT ION TO THE FACTUAL AND LEGAL OBJECTIONS RAISED AGAINST THE PROPOSAL FOR PA SSING THE ORDER FOR SPECIAL AUDIT U/S.142(2A) OF THE ACT, AND TO KINDLY DROP THE ASSESSMENT PROCEEDINGS AS THESE HAVING BEEN UNLAWFULLY KEPT IN CONCLUSIVE BEYOND THE PERIOD OF LIMITATION, ARE TIME-BARRED. WE ALSO BRING TO YOUR KIND NOTICE THAT OUR APPEARANCE AND COMPLIANCE IN THESE PROCEEDINGS IS UNDER PROTEST AND WE PLACE ON RECORD OUR OBJECTION TO COMPLETION OF THE ASSESSMENT PROCEEDINGS AS PROVIDED UNDER THE PROVIS ION TO S.292BBOF THE ACT.' 7. THE OBJECTION RAISED BY THE ASSESSEE IS DEVOID O F ANY MERIT AND IS NOT ACCEPTABLE. THIS WAS ALSO RAISED BY THE ASSESSE E BEFORE THE ASSESSING OFFICER VIDE ITS REPLY 26/03/2014 WHICH WAS DULY CO NSIDERED BY HIM AND ALSO BY THE CIT, CENTRAL-II, AHMEDABAD WHILE ACCORD ING APPROVAL FOR SPECIAL AUDIT U/S.142(2A) VIDE HIS LETTER NO.CIT(C) -II/FRIENDS GR./SPECIAL AUDIT/KSAIPL/2013-14/3684/ DATED 26.03. 2014. WHILE ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 6 - ACCORDING APPROVAL THE CIT, CENTRAL-II, AHMEDABAD I N HIS LETTER DATED 26/03/2014 ADDRESSED TO THE A.O. OBSERVED AS UNDER: 'THE REPLY OF THE ASSESSEE DATED 26.02.2014 HAS BEE N CONSIDERED. THE PERUSAL OF THE REPLY REVEALS THAT THE ASSESSEE HAS NOT GIVEN REPLY ON MANY ISSUES OF YOUR SHOW CAUSE NOTICE DATED 14.02.2 014. AFTER GOING THROUGH THE ASSESSMENT RECORDS AND YOUR SHOW CAUSE NOTICE FOR SPECIAL AUDIT. IT CANNOT BE SAID THAT YOU HAVE NOT ATTEMPTE D TO UNDERSTAND THE ACCOUNTS OF THE ASSESSEE IN A FAIR AND HONEST MANNE R. FURTHER, THE COMPLEXITIES, VOLUME, DOUBT ABOUT THE CORRECTNESS O F ACCOUNTS REFERRED TO BY YOU IN YOUR SHOW CAUSE NOTICE FOR SPECIAL AUD IT ARE GENUINE AND THE ASSESSEE HAS NOT BEEN ABLE TO GIVE SATISFACTORY REPLY OF YOUR NOTICE. IN THIS CASE, IT IS TO BE NOTED THAT THE CASE OF TH E ASSESSEE WAS CENTRALIZED WITH YOU VIDE ORDER U/S.127 OF THE ACT ON 09.04.2012. NOTICE U/S.153A OF THE ACT WAS ISSUED IN THIS CASE ON 02.0 1.2013 AND THE ASSESSEE WAS REQUIRED TO FILE ITS RETURN OF INCOME WITHIN 30 DAYS. THE ASSESSEE DID NOT FILE RETURN TILL 29 TH JUNE, 2013. IT IS CLEAR THAT THERE IS CONSIDERABLE DELAY ON THE PART OF THE ASSESSEE TO A VOID THE PROCEEDINGS. EVEN AFTER FILING RETURN OF INCOME, THE ASSESSEE HA S NOT FULLY COMPLIED WITH YOUR NOTICE DATED 03.12.2013. THEREFORE, AT ON CE HAND THE ASSESSEE IS ITSELF USING DILATORY TACTICS ON THE OTHER HAND IT IS ALLEGING THE DEPARTMENT FOR BUYING TIME. IN THE PRESENT CASE, YO U HAVE ISSUED AN ELABORATE SHOW CAUSE NOTICE TO THE ASSESSEE SPECIFY ING THE COMPLEXITIES. VOLUME, DOUBT ABOUT THE CORRECTNESS OF ACCOUNTS AND NON COMPLIANCES OF VARIOUS QUERIES DURING THE ASSESSMENT PROCEEDING S BY THE ASSESSEE. HOWEVER, ASSESSEES REPLY IS CRYPTIC AND NOT TO THE POINT. IT IS TO BE FURTHER OBSERVED THAT WHEN THE ASSESSEE ITSELF IS N OT SUPPLYING INFORMATION, THEN THIS FACT ITSELF REFERS TO THE CO MPLEXITY OF THE ACCOUNTS. THE COURT DECISION QUOTED BY THE ASSESSEE TO THE PO SITION THE AMENDMENT IN THE SECTION 142(2A) WHICH CAME INTO EF FECT FROM 01/06/2013. IN VIEW OF THE FACT LYING ON THE ASSESSMENT RECORDS , I AM SATISFIED THAT IT IS A FIT CASE FOR REFERENCE TO SPECIAL AUDIT U/S.14 2(2A) OF THE ACT, HAVING REGARD TO THE NATURE AND COMPLEXITY, VOLUME, DOUBT AND THE CORRECTNESS OF THE ACCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE. THEREFORE, APPROVAL IS HEREBY ACCORDED U/S.142(2A) OF THE ACT FOR REFERRING THE AFOREMENTIONED CASE FOR SPECIAL AUDIT '. ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 7 - IN VIEW OF THE FACTS MENTIONED ABOVE THE OBJECTION OF THE ASSESSEE IS NOT TENABLE, AS THE REFERENCE WAS MADE AFTER COM PLYING WITH THE DUE PROCEDURE LAID DOWN UNDER THE ACT FOR OBTAINING NEC ESSARY SANCTION OF THE COMPETENT AUTHORITY. THE CONTENTION THAT ONLY T O BUY TIME, THE ACTION WAS TAKEN, CANNOT BE ACCEPTED SINCE NOTICE WAS ISSU ED ON 26/02/2014, WHERE ADMITTEDLY, THE PROCEEDINGS WERE GETTING TIME BARRED ON 31/03/2014. THERE WAS THUS SUFFICIENT TIME TO COMPL ETE THE ASSESSMENT EVEN WITHOUT THE EXTENDED TIME LIMIT. 8. BEFORE THE LOWER AUTHORITIES, ASSESSEE MADE DETA ILED SUBMISSIONS BOTH ON THE LEGALITY OF THE ADDITIONS CHALLENGED. A SSESSEE MADE DETAILED RETURN SUBMISSION AND DREW ATTENTION OF LD. CIT(A) THAT AO AND SPECIAL AUDITOR AVAILABLE IN THE DETAILED PAPER BOOK FILED BY THE APPELLANT. THE CONTENTION OF THE ASSESSEE WAS THAT IT IS EVIDENT F ROM THESE COMMUNICATION THAT THERE IS NEITHER ANY COMPLEXITY IN THE BOOKS OF ACCOUNT ENCOUNTERED BY THE AO, NOR WAS THERE EXISTI NG ANY OTHER PRE- REQUISITE CONDITION FOR DIRECTION U/S.142 AS AO HAD ALREADY ISSUED A SHOW-CAUSE NOTICE DATED 03/03/2014 FOR COMPLETING T HE ASSESSMENT AFTER THE REPLY BY THE APPELLANT 26/02/2014 TO AOS NOTIC E U/S.142(2A) DATED 14/02/2014. IT WAS ARGUED THAT THUS AND THEREFORE, ORDER U/S.142(2A) DATED 26/03/2014 JUST FIVE DAYS BEFORE THE LIMITATI ON DATE IS MANIFESTLY FOR UNLAWFULLY EXTENDING THE TIME LIMIT UNDER THE P URPORTED GARB OF LEGALITY. ASSESSEE HIGHLIGHTED THAT NOT ONLY THERE IS ABSOLUTELY NO EVIDENCE OF NON-COOPERATIVE ATTITUDE OF THE APPELLA NT ON RECORD. THE IMPUTATION ABOUT THE APPELLANTS NON-COOPERATIVE AT TITUDE BY THE AO IS MERELY TO CAMOUFLAGE THE UNREASONABLE DELAY CAUSED BY SPECIAL AUDITOR ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 8 - IN COMPLETING THE AUDIT AS A CONSEQUENCE OF THE FAC T THAT DESPITE FULL COMPLIANCE BY THE APPELLANT, THE AUDITOR STARTED TH E AUDIT WORK VERY LATE. THUS, THE IMPUTATION BE EXPUNGED. WITH REGARD TO G ROUND NO.1, LD. CIT HELD THAT UNDER EXACTLY SIMILAR FACTS IN THE CASE O F THE GROUP CONCERN, NAMELY, M/S. ARVIND V. JOSHI & CO., A.Y.S 2006-07 T O 2008-09 IN CONSOLIDATED APPELLATE ORDER NO.CIT(A) 12/498 TO 50 0/CCIT-CC- 2(3)/14-15 DATED 28/12/2015. HE HOLD IN THESE APPEA LS THAT THE DIRECTIONS U/S.142(2A) BASED ON AND EVIDENCED BY DUE APPROVAL OF THE CIT, AS STATUTORILY PRESCRIBED, IS A CONCLUSIVE EVIDENCE OF DUE PROCESS AS PRESCRIBED, AND FURTHER, THAT THE SAME, BEING PUREL Y ADMINISTRATIVE IN NATURE, WERE NOT AMENABLE TO CHALLENGE IN APPELLATE PROCEEDINGS. THEREAFTER, HE ALSO OBSERVED IN THAT APPELLATE ORDE R, THAT THERE IS NO MATERIAL ON THE ONE HAND AND THERE IS NO PREJUDICE CAUSED TO THE APPELLANT ON THE OTHER HAND REQUIRING INTERFERENCE WITH THE O BSERVATION OF IMPUTATION OF NON-COOPERATIVE ATTITUDE MADE BY THE AO. THEREFORE, AFTER CONSIDERING THE TOTALITY OF THE FACTS, CIRCUMSTANCE S AND MATERIAL AVAILABLE ON RECORD, HE DISMISSED THE GROUND NO.1. 9. SO FAR MAKING OF DISALLOWANCE DE HORS INCRIMINAT ING MATERIAL FOUND DURING THE SEARCH IN MAKING ASSESSMENT THAT H AD ATTAINED FINALITY PRIOR TO SEARCH IS CONCERNED. AO RELIED ON VARIOUS AUTHORITIES TO SUPPORT THE ARGUMENTS THAT NO ADDITION DE HORS THE INCRIMIN ATING MATERIAL SEIZED DURING THE COURSE OF THE SEARCH CAN BE MADE IN THES E UNABATED ASSESSMENTS REFRAMED U/S.153A. LD. AR ARGUED THAT O RIGINAL ASSESSMENT FOR THE ASSESSMENT YEARS UNDER REFERENCE WERE EARLI ER AND BEFORE THE DATE OF THE SEARCH COMPLETED AND CONCLUDED, AS UNDER, AN D THUS, THESE ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 9 - ASSESSMENTS DID NOT ABATE WITHIN THE MEANING OF S ECOND PROVISO TO SECTION 153A(1). SR. NO. A.Y. ORDER U/S. DATE OF ORDER 1. 2006-07 143(3) 22/12/2008 2. 2007-08 143(1) 30/03/2009 3. 2008-09 143(3) 19/11/2010 10. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153A, FOR MAKING VARIOUS ADDITIONS AS TABULATED IN ASSESSMENT ORDER, THE LD. AO SIMPLY RELIED ON THE R EPORT AND COMMENTS OF THE SPECIAL AUDITOR WHICH, IN TURN, IS BASED ON AUD ITED BOOKS OF ACCOUNTS WHICH WERE THE FOUNDATION OF RETURNS FILED U/S.139 AT APPROPRIATE TIME AS ABOVE, AND WERE ALREADY CONSIDERED BY THE AO DURING THE ASSESSMENT PROCEEDINGS COMPLETED AS PER THE TABLE ABOVE. IT WA S ALSO ARGUED THAT PATENTLY, THE ADDITIONS MADE WERE HAVING NO FOUNDAT ION OR REFERENCE IN ANY SEIZED DOCUMENT AT ALL. ON THESE FACTS, THE LD. AR RELIED ON CARGO GLOBAL, 137 ITD 287 (MUM)(SB), KABUL CHAWLA 61 TAXM ANN.COM 412 (DEL), SAUMYA CONSTRUCTION ITA (SS) NO.3/AHD/2014 (AHD TRIB), DESAI CONSTRUCTION ITA (SS) A NO.12 & 13/AHD/2012 (AHD. T RIB) AND VARIOUS OTHER AUTHORITIES TO HIGHLIGHT THE BINDING RATION T HAT IN UNABATED ASSESSMENTS U/S.153A, NO ADDITION/DISALLOWANCE CAN BE MADE DE HORS THE INCRIMINATING SEIZED DOCUMENTS, AND ACCORDINGLY FU RTHER URGED THAT THESE ADDITIONS MADE DE HORS ANY INCRIMINATING MATE RIAL SEIZED DURING THE COURSE OF SEARCH, AND THUS MADE IN CONTRAVENTION OF THE LAW LAID DOWN BY SPECIAL BENCH, JURISDICTIONAL HC AND JURISDICTIONAL TRIBUNAL AND FINALLY AO MADE ADDITION OF RS.20,65,647/-. ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 10 - 11. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED A PPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION. 12. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IM PUGNED ORDER. IN THE ORDER UNDER APPEAL AO HAS REFERRED TO A LETTER OF THE ACCOUNTANT APPOINTED U/S.142(2A) OF THE ACT ADDRESSED TO THE A O AND BASED ON THE SAME THE AO SEEMS TO HAVE CONCLUDED THAT THE APPELL ANT WAS NON- COOPERATIVE AND FOR THAT REASON ON TWO REQUESTS OF THE ACCOUNTANT, THE AO SUO MOTU, EXTENDED THE PERIOD OF AUDIT TO THE MA XIMUM PERMISSIBLE PERIOD OF 180 DAYS. IN THIS CASE, THE AO PASSING TH E ORDER UNDER APPEAL HAS NOT SEE OR CONSIDERED A DETAILED REPLY OF THE A PPELLANT BY TWO LETTERS DT.01/07/2014 [ONE IN REPLY TO AOS LETTER DT 25/06 /2014 AND SECOND REQUESTING AMENDMENT OF ORDERS U/S.142(2A)] AS ALSO LETTER DT. 29/07/2014 AND 25/09/2014, EXPLAINING HOW THE ACCOU NTANT APPOINTED U/S.142(2A) OF THE ACT ACTUALLY PERFORMED DUTIES AS SIGNED TO HIM, PARTICULARLY THE FACT THAT THE ACCOUNTANT FAILED TO EVEN COMMENCE THE SPECIAL AUDIT FOR THE FIRST 60 DAYS AFTER THE APPOI NTMENT ON 26/03/2014 AND DID NOT EVEN SPEND A SINGLE DAY FOR AUDIT WORK. AS A MATTER OF FACT THE ACCOUNTANT FAILED TO SUPPLY THE AUDIT REPORTS T O THE APPELLANT AS MANDATED BY THE PROVISIONS OF S.142(2A) OF THE ACT BEFORE THE DUE DATE AND ACTUALLY SUPPLIED THE SAME AFTER THE DUE DATE, EVEN AFTER AVAILING THE MAXIMUM PERIOD OF 180 DAYS AND IN SPITE OF THE APPE LLANTS AR HAVING ALERTING HIM OF APPROACHING LIMITATION. THESE LETTE RS REFERENCE HAS ALSO BEEN GIVEN IN THE ORDER OF THE LD. CIT(A). IN OUR C ONSIDERED OPINION AO DID NOT HAVE ANY GOOD AND SUFFICIENT REASONS FOR EXTENDING THE PERIOD ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 11 - OF AUDIT SUO MOTU TO THE MAXIMUM PERMISSIBLE EXTENT, AND WAS NOT CORRECT IN CASUALLY ATTACHING THE TAG OF NON-COOPER ATIVE ATTITUDE TO THE APPELLANT. 13. THEREFORE, IN OUR CONSIDERED OPINION, LD. AO HA S EXERCISED BEYOND HIS POWER. WE CAN ALSO SEE FROM THE ORDER OF THE LO WER AUTHORITIES THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE SEARC H AND WHATEVER DOCUMENT WERE FOUND IN EARLIER YEAR FOR COMPLETED T HE ASSESSMENT U/S.143(3) AND 143(1). IN OUR CONSIDERED OPINION, ADDITIONS MADE WERE HAVING NO FOUNDATION OR REFERENCE OF ANY SEIZED DOC UMENT AL ALL. SO WHATEVER ADDITIONS HAVE BEEN MADE BY THE AO WERE ON THE BASIS OF COMMENCED OF SPECIAL AUDITOR. 14. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSE D DETAILED AND REASONED ORDER AND LD. DR COULD NOT POINT OUT ANY AMBIGUITY IN THE ORDER PASSED BY THE LD. CIT(A) AND HE DID NOT CITED ANY C ASE OF LAW BEFORE US ON THE BASIS OF WHICH WE COULD HAVE TAKEN ADVERSE VIEW AGAINST THE ASSESSEE. 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE DE PARTMENT IN ITA NOS. 143 & 144/AHD/2016 FOR ASSESSMENT YEARS 2007-08 & 2 008-09 ARE DISMISSED. 16. SO FAR AS CROSS OBJECTION NOS.103 & 104/AHD/201 6 FOR ASST. YEARS 2007-08 & 2008-09 ARE CONCERNED. BOTH ARE DIS MISSED AS NOT PRESSED. ITA NO.143 & 144/AHD/2016 & CO NOS.103 & 104/AHD/2016 ASST.YEAR 2007-08 & 2008-09 - 12 - 17. IN THE RESULT, BOTH THE DEPARTMENTS APPEALS AR E DISMISSED AND BOTH THE ASSESSEES CROSS OBJECTIONS ARE ALSO DISMISSED AS NOT PRESSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04/04/2018 SD/- SD/- EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YS[KK LNL; U;KF;D LNL; YS[KK LNL; U ;KF;D LNL; YS[KK LNL; U ;KF;D LNL; YS[KK LNL; U ;KF;D LNL; ( MANISH BORAD ) (MAHAVIR PRASA D) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 04/04/2018 PRITI YADAV, SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #' / THE RESPONDENT. 3. /01( $ 2( / CONCERNED CIT 4. $ 2( ( !) / THE CIT(A)-12, AHMEDABAD. 5. 567 (%01 , !) 01- , / / DR, ITAT, AHMEDABAD 6. 78 9& / GUARD FILE. ! ( / BY ORDER, #5!( ( //TRUE COPY// )/ * ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 22/02/2018 (DICTATION-PAD 6 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06/03/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER