Mohan H. Tharwani, Ulhasnagar V. Deputy Commissioner of Income tax, Thane

ITSSA 15/PUN/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3861 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Gift; Search and seizure
• Section: 68; 132; 143(3); 133A; 153A

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणे मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.VISWANETHRA RAVI, JM AND DR. DIPAK P. RIPOTE, AM आयकरअपीलसं. / IT(SS)A No’s.15, 60 & 61/PUN/2017 िनधाᭅरणवषᭅ /Assessment Years/Block Period: 2005-06, 03-04& 2004-05 Mohan Hardasmal Tharwani, Tharwani Bunglow, Royal Residency, Near New Telephone Exchange, Ulhasnagar – 421 001. PAN: AAOPT7033Q Vs The DCIT, Central Circle-2, Thane. Appellant/ Assessee Respondent/ Revenue आयकरअपीलसं. / IT(SS)A No’s.16 & 17/PUN/2017 िनधाᭅरणवषᭅ / Assessment Years/Block Period : 2004-05 & 05-06 Hardasmal Tharwani, Tharwani Bunglow, Royal Residency, Near New Telephone Exchange, Ulhasnagar – 421001. PAN: AAJPT 5131 C Vs The DCIT, Central Circle-2, Thane. Appellant/ Revenue Respondent/ Assessee Assessee by Shri Jitendra Jain – AR Revenue by Shri S P Walimbe – DR Date of hearing 02/05/2022 Date of pronouncement 20/06/2022 आदेश/ ORDER PER BENCH: In this bunch of Five(05) appeals, Three(03) appeals filed by Mohan Hardasmal Tharwani is directed against the separate orders of ld.Commissioner of Income Tax(Appeals)-11, Pune dated 07/06/2017 for A.Y.2003-04 & 2004-05 & ld.CIT(A)-13, Pune dated IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 2 17.11.2016 for the A.Y.2005-06 and the remaining Two(02) appeals filed by the Hardasmal Tharwani is directed against the common order of ld.Commissioner of Income Tax(Appeals)- 13, Pune dated 17.11.2016 for the Assessment Years 2004-05 & 2005-06. 2. In Mohan H.Tharwani group of Three(03) appeals, the assessee has raised certain common grounds of appeal, facts in all cases are almost similar, except variation of additions, therefore, all appeals were clubbed, heard and are decided by consolidated order. For appreciation of facts, the facts in IT(SS)A No.60/PUN/2017 is treated as lead case. The assessee has raised the following grounds of appeal: “1. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the proceedings initiated under Section 153A of Income Tax Act 1961 ("Act" in short), which is bad in law in the absence any incriminating material belonging to the assessee being found during the course of search. 2. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding that the Assessing Officer can dwell into the issues already examined while framing the Assessment Order u/s 143(3) originally, therefore closed assessment prior to search conducted on 16 th October, 2008 for which no incriminating material seized during the course of search and seizure action. IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 3 3. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the action and procedure followed by the Assessing officer during the proceeding u/s 153A of the Act, which is invalid in eyes of law being based on incorrect postulate that search assessment u/s 153A is de novo in nature, whereas the same is to be based and confined to incriminating material unearthed during search operations. 4. That on facts and circumstances of the case the learned the Commissioner of Income Tax (Appeals) has erred in not considering our submissions and concurred to decision of Assessing Officer for adding to the return of Income the amount of Rs 12,00,000/- Gift received from NRI through Banking channels, which was claimed by the Assessee as not taxable u/s 68 of the Act. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3. Brief facts of the case are that search and seizure action under section 132 of the Act was carried out in the case of Tharwani Group of Cases on 16.10.2008. The appellant assessee Mr.Mohan Tharwani is one of them. In the case of Mohan Tharwani, the Assessment Order under section 153A r.w.section143(3) of the Act was passed on 29.12.2010 after giving due opportunity to the assessee. In the said assessment order, amount of Rs.12 lakhs was added under section 68 of the Act which was so-called NRI gift from Ramesh Lulla. The assessee Mr.Mohan Tharwani had filed original return of IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 4 income for the A.Y. 2003-04 on 28.11.2003, subsequently, the Assessment Order under section 143(3) of the Act, was passed on 10.10.2005 vide which the Assessing Officer accepted the returned income of the assessee. Copy of the Assessment Order dated 10/10/2005 has been filed by the Assessee in the paper book page 21-22. 4. The Ground No.2and 3 are related to proceedings initiated under section 153A of the Act. The ld.Authorised Representative(ld.AR) of the assessee submitted that no incriminating material were found during the search in support of the addition of impugned Rs.12 lakhs of NRI Gift from Mr.Ramesh Lulla. The ld.AR specifically invited our attention to the Assessment Order framed under section 153A of the Act, and explained that nowhere in the assessment order there is any mention of any incriminating material found during the search related to the NRI Gift received. The ld.AR relied on the Hon’ble Bombay High Court decision in the case of CIT vs. S.K.S ISPAT & Power Limited [2018] 99 taxmann.com 424 (Bombay), the Hon’ble Bombay High Court decision in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd., [2015] 58 taxmann.com 78 (Bombay), CIT V/s Deepak Kumar Agarwal. IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 5 5. Per contra, the ld.Departmental Representative of the Revenue(ld.DR) relied on the order of Lower Authorities. The ld.DR also submitted that during the earlier hearing the Hon’ble ITAT Pune “A” Bench had directed the ld.DR to inform whether statement under section 132(4) of the Act were recorded with reference to impugned Gift. The ld.DR submitted Report dated 09.03.2022 along with Assessing Officer’s report dated 25.02.2022. The relevant portion of the said report is reproduced here as under: “It is learnt that the then ACIT/DCIT Central Circle-2, Thane, who was the A.O. of the group cases had sent a report on this issue to your office through letter dated 03.02.2021 (copy enclosed) stating therein that his office could not able to give any authentic comments on the issue of Gift whether it was raised while recording the statements u/s 132(4)/133A of the Act. Therafter, through letter dated 09/11/2021 (copy enclosed) addressed to your office, the DCTI Central Circle-2, Thane had reiterated the contents of the earlier letter dated 03.02.2021. From perusal of the material available, i.e. copies of statements of Shri Mohan H.Tharwani dated 17/10/2008, Shri Hardas Tharwani dated 15/12/2008 u/s 132(4) as well as statement of Shri Sunil Tharwani u/s 133A dated 17/10/2008 (received from ITO Ward-1, Panvel), no addition to the information already supplied to your office by DCIT, CC-2, Thane through letters dated 03/02/2021 & 09/11/2021 is possible. Copies of statements of Shri Mohan H.Tharwani, Shri Hardas Tharwani and Shri Sunil Tharwani recorded u/s 132(4)/133A as mentioned above, are enclosed herewith for ready IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 6 reference. This may please be treat as compliance to your letters/correspondences on the above subject.” 6. We have heard both the parties, perused the material available on record and have gone through the orders of Lower Authorities. The appellant assessee Mr.Mohan Hardasmal Tharwani had filed return of income for the A.Y. 2003-04 on 28.11.2003 along with Capital Account, Balance Sheet, [Page No.1, 2 ,3 & 4 of the Paper Book]. The assessment order under section 143(3) for the A.Y. 2003-04 was passed on 10.10.2005. The ld.AR submitted that at the time of original assessment details of the NRI gifts were submitted along with copy of Gift Declaration, Copy of passport. 7. During the proceedings before this Tribunal, the ld.DR has not rebutted or objected to this fact. It means, assessee Mohan H.Tharwani had filed details related to the Gift received from NRI. The said NRI Gift also appears in the capital account of the assessee which assessee has filed in the paper book. These facts have not been disputed by the ld.DR for the Revenue. It is also a fact that nowhere in the assessment order, passed under section 153A of the Act after the search, the Assessing Officer has mentioned about the incriminating material found during the search about the NRI Gift. The ld.CIT(A) has also not mentioned about any incriminating material found during the search related to the impugned NRI Gifts. IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 7 During the proceedings before this Tribunal, the ld.DR was specifically asked to show the documents/material found during the search related to the impugned NRI Gift. However, the ld.DR for the Revenue could not file any document or produce any material. We have gone through the statement recorded during the search and nowhere there is any mention of impugned NRI Gift. The Hon’ble Bombay High Court in the decision of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., (supra) has approved the findings of Special Bench in para 31 of the said order. The Hon’ble Bombay High Court has approved the findings of the Special Bench that “in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search”. Similar view is expressed by the Hon’ble Delhi High Court in the case of PCIT vs. Best Infrastructure (India) (P.) Ltd., [2017] 84 taxmann.com 287 (Delhi). The Hon’ble Bombay High Court in the case of CIT vs Deepak Agrawal 398 ITR 586 has held in para 33 & 34 a as under : Quote, “33. Even with regard to the unexplained gifts received by the assessee allegedly and the additions made under Section 68 of the Act, the Tribunal has relied upon its order in the case of Govind Agarwal (HUF) v. Dy. CIT [IT Appeal No.8917 (Mum.) of 2010, dated 16-5-2013] for the assessment year 2005-2006. IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 8 34. There as well, reliance was placed on All Cargo Global Logistic Ltd. (supra) and equally, the conclusion that has been reached that once there is no incriminating material in support of the addition and brought on record by the Revenue, then, the earlier view of this Court binds the Revenue even on this addition. Thus, even this question cannot be termed as substantial question of law in the light of the two judgments of this Court in Continental Warehousing Corpn. and All Cargo Global Logistics Ltd. (supra) followed by SKS Ispat& Power Ltd. (supra)” Unquote. 7.1 Further in the recent decision in the case of Pr.Commissioner of Income-tax v. Vimal Kumar Rathi, ITA No.160 of 2017 order dated 26/3/2019 the Hon’ble Bombay High Court held as under: Quote, “Whether on the facts and in the circumstances of the case the Hon. ITAT is correct in law in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income that comes to the notice of the AO?" 3. The issues are squarely covered by Judgment of this Court in the case of CIT v. Deepak Kumar Agarwal [2017] 86 taxmann.com 3/251 Taxman 22/398 ITR 586 in which it is held that assessment under section 153A of the Income-tax Act, 1961 can be made only on the basis of incriminating material found during a search ” Unquote. 8. It is a fact that in the case of appellant assessee Mohan Hardasmal Tharwani for A.Y. 2003-04, the Assessment Order under section 143(3) of the Act was passed on 10.10.2005, i.e. much before the Search[Date of Search 16.10.2008]. Thus, no assessment was IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 9 pending for A.Y. 2003-04 at the time of Search. It is also a fact that NRI Gift has been disclosed by the appellant assessee Mohan H.Tharwani in the Capital Account filed along with the return of income much before the Search. There is no mention of any incriminating material in the Assessment Order related to the impugned NRI Gifts. Based on these facts, since there was no incriminating material found during the Search related to the impugned NRI Gift, therefore, respectfully following the ratio led down by the Hon’ble Bombay High Court, it is held that the addition made under section 68 of the Act in the assessment order under section 153A r.w.s 143(3) is bad in law. Accordingly, Ground No’s. 2 & 3 of appellant assessee Mohan H.Tharwani for AY 2003-04 in IT(SS)A No.60/PUN/2017 are allowed. 9. The Ground No.4 of the appellant assessee Mohan H.Tharwani is related to merits of the addition made under section 68 of impugned NRI Gift. Since Ground No’s: 2 & 3 have been held as allowed above, the Ground No.4 becomes academic in nature, and therefore, it is not adjudicated. 10. The Ground No.1: Since we have decided the Ground No.2 & 3 of the appellant assessee elaborately in favour of assessee, the IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 10 Ground No.1 becomes academic in nature, and hence, not adjudicated. 11. Thus, the appeal of the assessee in IT(SS)A No.60/PUN/2017 is partly allowed. IT(SS)A No.61/PUN/2017& IT(SS)A No.15/PUN/2017: 12. The Assessee’s appeal Number IT(SS)A.No.61/PUN/2017 for A.Y.2004-05 and IT(SS)A No.15/PUN/2017 for A.Y.2005-06 have identical issue. Basic facts are reproduced here as under: Date of ROI Original Assessment order date IT(SS)A.No.61/PUN/2017 31.10.2004 31.03.2006 IT(SS)A.No.15/PUN/2017 31.10.2005 No 143(3) order  Additions in AY 2004-05 in the Assessment Order u/s 153A rws143(3)  Gift u/s 68 Rs.16,00,000/-  Additions in AY 2005-06 in the assessment order u/s 153A rws 143(3)  Gift u/s 68 Rs.20,00,000/-  Lottery receipt Rs.2,00,000/- 13. As mentioned above, since the facts of all these three appeals are identical, our findings in IT(SS)A No.60/PUN/2017 for A.Y.2003-04 will apply mutatis-mutandis to the assessee’s appeal IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 11 Number IT(SS)A No.61/PUN/2017 for A.Y.2004-05 and IT(SS)A No.15/PUN/2017 for A.Y.2005-06. 14. Therefore, assessee’s appeal in IT(SS)A No.61/PUN/2017 & IT(SS)A No.15/PUN/2017 are partly allowed. II. IT(SS)A No.17/PUN/2017 for A.Y. 2005-06 (Hardasmal Tharwani): 15. The IT(SS)A No.17/PUN/2017 for Y 2005-06 has been filed by the appellant assessee Hardasmal Tharwani . The facts of the case are that the appellant assessee filed Return of Income for AY 2005- 06 on 30.10.2005 in Form 2D SARAL. There was no order u/s 143(3) for AY 2005-06 in the case of the assessee Hardasmal Tharwani. Search took place in this group on 16.10.2008. The Assessee filed return in response to notice u/s 153A on 02.09.2009 declaring total income of Rs.91,41,080/-. Order u/s153A rws 143(3) was passed on 29.12.2010 vide which only following additions have been made to the returned income of Rs.91,41,080/-: Gift : Rs.20,00,000/- Lottery Receipt : Rs.3,00,000/- 16. The facts of the case are similar to the facts discussed in IT(SS)A No.60/PUN/2017 for AY 2003-04 of Mohan Tharwani, our findings will apply mutatis mutandis to this appeal number IT(SS)A No.17/PUN/2017 for AY 2005-06 in the case of Hardasmal IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 12 Tharwani, accordingly Ground No.2 & 3 are allowed. The Assessee has not pressed the Ground No’s.4, 5, 6 and 7, hence, dismissed as not pressed. 17. The Ground No’s: 8 & 9 are related to additions of Gift and Lottery becomes academic as we have allowed the Legal Ground No. 2 & 3 of the assessee. 18. Accordingly Appeal Number IT(SS)A No.17/PUN/2017 is partly allowed. IT(SS)A.No.16/PUN/2017 for AY 2004-05 (Hardasmal Tharwani): 19. The LD AR submitted that he is not pressing for this appeal. Accordingly all the grounds of the assessee in appeal number IT(SS)16/PUN/2017 are dismissed as not pressed. 20. To sum up, Three(03) appeals of Mohan H.Tharwani in IT(SS)A No.15, 60 &61/PUN/2017 are Partly Allowed and Two(02) appeals of Hardasmal Tharwani in IT(SS)A No.16 & 17/PUN/2017 are Partly Allowed. Order pronounced in the open Court on 20 th June, 2022. Sd/- Sd/- (S S VISWANETHRA RAVI) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 20 th June, 2022/ SGR* IT(SS)A No’s.15, 60 & 61/PUN/2017 for Block Period:2005-06, 03-04 & 2004- 05andIT(SS)A No’s.16 & 17/PUN/2017 for Block Period:2004-05 & 05-06 Mohan H. Tharwani(03 Appeals) &Hardasmal Tharwani (02 Appeals) 13 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध,आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.