Shri Ashwin D. Patel, Ahmedabad V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 159/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9603 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Set aside
• Section: 143(3); 142(1); 153A; 143(1); 32; 6; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A.NO.158, 159 AND 160/AHD/2017 ASSTT.YEAR 2010-2011, 2011-12 AND 2012-13 SHRI ASHWIN D. PATEL A-14, SHANTIDAYAL APARTMENT NR. H.B. KAPADIA SCHOOL GURUKUL ROAD MEMNAGAR, AHMEDABAD. PAN : AATPP 8255 B VS DCIT, CENT.CIR.2(1) AHMEDABAD. / (APPELLANT) ! / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SHRI O.P. VAISHNAV,CIT-DR / DATE OF HEARING : 11/06/2019 / DATE OF PRONOUNCEMENT: 02/07/2019 '#$/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD.CIT(A)-6, AHMEDABAD DATED 30.1.2017 PASSED IN THE ASSTT.YEARS 2010-11 TO 2012-13. FIRST, WE TAKE IT( SS)A.NO.158 AND 159/AHD/2017. 2. FIRST COMMON ISSUE IN BOTH THESE ASSESSMENT YEAR S IS, WHETHER THE LD.AO HAS RIGHTLY INVOKED JURISDICTION TO PASS ASSE SSMENT ORDERS UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 IN B OTH THE YEARS. 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT A JOINT AUTHORIZATION FOR CONDUCTING SEARCH UNDER SECTION 1 32 OF THE INCOME TAX ACT IT(SS)A NO.158 TO 160/AHD/2019 2 WAS ISSUED IN THE NAME OF ASSESSEE, AND MRS.GITA AS HWIN PATEL. THIS AUTHORIZATION WAS EXECUTED ON 28.1.2013 AND 29.1.20 13. THE LAST WARRANT WAS EXECUTED ON 4.2.2013 WHEN LOCKERS WHICH WERE SEALED AT THE TIME OF SEARCH WERE OPENED. IN ORDER TO GIVE LOGICAL END TO THE PROCEEDINGS, THE LD.AO HAS ISSUED NOTICE UNDER SECTION 153A IN BOTH THE YEARS ON 5.3.2015 WHICH WERE SERVED UPON THE ASSESSEE ON 8.3.2015. THE ASSESSEE HAS FILED RETURN OF INCOME IN RESPONSE OF SUCH NOTICE ON 23.3.2015 DECLARING T OTAL INCOME AT RS.3,02,650/- AND RS.13,56,553/-. THE LD.COUNSEL F OR THE ASSESSEE FURTHER CONTENDED THAT SINCE NO MATERIAL WAS FOUND WHICH CO ULD GOAD THE AO TO MAKE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. HE P OINTED OUT THAT UNLESS THERE IS INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH, THE ASSESSMENTS WHICH OTHERWISE ATTAINED FINALITY COULD NOT BE UNDE RTAKEN AFRESH. FOR BUTTRESSING HIS CONTENTIONS, HE RELIED UPON THE FOL LOWING DECISIONS: I) CIT VS. KABUL CHARWALA, 380 ITR 0183 (DEL) II) CIT VS. KURELE PAPERS, 380 ITR 571 (DEL) III) CIT VS. LATA JAIN, 384 ITR 543 (DEL) IV) CIT VS. SOMAYA CONSTRUCTION LTD. 387 ITR 529 (GUJ) IN BOTH THESE YEARS, THE ASSESSEE HAS EARLIER FILED RETURN UNDER SECTION 139(1) AND NOTICE UNDER SECTION 143(2) COULD BE ISSUED AND SERVED UPON THE ASSESSEE UPTO 30.9.2011 AND 30.9.2012 I.E. PRIOR TO THE DATE OF SEARCH. NO SUCH NOTICE WAS ISSUED HENCE ASSESSMENTS ATTAINED FINALITY. TH IS COULD BE OPENED, IF FRESH INCRIMINATING MATERIAL WAS FOUND EXHIBITING ESCAPEM ENT OF INCOME ON WHOSE BASIS ADDITION COULD BE MADE UNDER SECTION 153A OF THE ACT. SINCE THE AO HAS NOT MADE REFERENCE TO ANY SUCH MATERIAL IN THE IMPUGNED ORDERS, HIS ORDERS ARE WITHOUT JURISDICTION. THE LD.CIT-DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. HE F AILED TO POINT OUT ANY IT(SS)A NO.158 TO 160/AHD/2019 3 INCRIMINATING MATERIAL WHICH HAS BEEN USED BY THE A O FOR MAKING ADDITION IN BOTH THE YEARS. 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS. THE ASSESSMENTS IN BOTH THE YEARS HAVE BEEN PASSED BY THE AO UNDER SECTION 143(3) R.W.S. 153A. JURISDICTION IN THE AO FOR FRAMING ASSESSMENT UNDER SECTION 153A HAS BEEN INFUSED BY VIRTUE OF SEARCH CARRIED OUT AT THE PREM ISES OF THE ASSESSEE ON 28 TH AND 29 TH JAN. 2013. THUS, THE ISSUE WHETHER THE AO COULD TAKE COGNIZANCE OF SECTION 153A IN THESE YEARS OR NOT, IS A LEGAL ISSU E WHICH ON THE BASIS OF THE INTERPRETATION GIVEN BY THE HONBLE DELHI HIGH COUR T AND HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SU PRA) AND CIT VS. SOMAYA CONSTRUCTION LTD., 387 ITR 529 (GUJ) REQUIRE S TO BE TAKEN INTO CONSIDERATION. HONBLE DELHI HIGH COURT WHILE CONS IDERING THE ISSUE HAS EXAMINED SCOPE OF SECTION 153A. AFTER A DETAILED A NALYSIS, HONBLE COURT HAS SUMMARIZED LEGAL PROPOSITION EMERGED FOR APPLICATIO N OF SECTION 153A. SUCH PROPOSITION READS AS UNDER: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSO N SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AY S IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REA SSESS THE IT(SS)A NO.158 TO 160/AHD/2019 4 'TOT AL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPAR ATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UN DISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVID ENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR M ADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PEND ING ON THE DATE OF SEARCH) AND THE WORD 'REASSES S' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT S HALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINAT ING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED I NCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IT IS ALSO PERTINENT TO NOTE THAT IN THE CASE OF C IT VS. KABUL CHAWLA (SUPRA) HONBLE COURT HAS OBSERVED THAT RETU RN FOR ASSTT.YEARS IT(SS)A NO.158 TO 160/AHD/2019 5 2002-03, 2005-06 AND 2006-07 WERE ACCEPTED UNDER SE CTION 143(1) OF THE ACT. THUS, HONBLE COURT HAS CONSIDERED THIS ACCEP TANCE OF RETURN AS AN ASSESSMENT MADE UNDER SECTION 143(1). IN CONCLU DING PARAGRAPH, THE HONBLE COURT HAS HELD THAT ON THE DATE OF SEAR CH, ASSESSMENTS FOR A.YS. 2002-03, 2005-06 AND 2006-07 ALREADY STOOD CO MPLETED AND NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, THEREFORE, NO ADDITION SHOULD HAVE BEEN MADE TO THE INCOME OF THE ASSESSEE. 5. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FAC TS OF THE PRESENT CASE, THEN IN BOTH THE YEARS, THE LD.AO HAS NOT MADE REFE RENCE TO ANY INCRIMINATING MATERIAL FOR MAKING ADDITION UNDER SECTION 153A. T IME LIMIT TO ISSUE NOTICE UNDER SECTION 143(2) ON THE RETURN FILED UNDER SECT ION 139(1) HAS ALREADY EXPIRED BEFORE THE DATE OF SEARCH. ACTION UNDER SE CTION 153A COULD BE TAKEN IF DURING THE COURSE OF SEARCH ANY INCRIMINATING MA TERIAL FOUND WHICH CAN GOAD THE AO TO MAKE ADDITIONS IN THESE TWO YEARS. HONBLE JURISDICTIONAL HIGH COURT HAS ALSO PROPOUNDED SIMILAR PRINCIPLE IN THE CASE OF SOMAYA CONSTRUCTION (SUPRA). THEREFORE, RESPECTFULLY FOLL OWING THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDERS ARE N OT SUSTAINABLE IN BOTH THE YEARS. THEY ARE QUASHED. BOTH THE APPEALS ARE ALL OWED. 6. AS FAR AS IT(SS)A.NO160/AHD/2017 FOR THE ASSTT.Y EAR 2012-13 IS CONCERNED, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTE D THAT APPEAL OF THE ASSESSEE HAS BEEN DISMISSED BY THE LD.CIT(A) EX PAR TE. HE EMPHASISED THAT OPPORTUNITY OF HEARING WAS NOT GRANTED BY THE AO BE FORE PASSING THE ASSESSMENT ORDER. THE LD.DR WAS UNABLE TO CONTROVE RT THIS ASPECT. 7. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE ASSESSMENT ORDE R WOULD INDICATE THAT NOTICE IT(SS)A NO.158 TO 160/AHD/2019 6 UNDER SECTION 153A WAS ISSUED ON 5.3.2015 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 8.3.2015. THE ASSESSEE HAS FILED HIS R ETURN OF INCOME ON 23.3.2015 DECLARING TOTAL INCOME AT RS.12,33,041/-. ORIGINAL RETURN FOR THIS ASSESSMENT YEAR WAS FILED ON30.3.2014 FOR THE SAME INCOME. THE AO HAS ISSUED NOTICE UNDER SECTION 143(2) ON 23.5.2015. T HEREAFTER, HE ISSUED A QUESTIONNAIRE UNDER SECTION 142(1) ON 24.3.2015. H E PASSED ASSESSMENT ORDER ON 31.3.2015 DETERMINING TAXABLE INCOME OF THE ASSE SSEE AT RS.6,94,41,770/-. A PERUSAL OF THE ABOVE CHRONOLOGY OF EVENTS WOULD I NDICATE THAT TIME LAG BETWEEN THE COMPLETION OF THE ASSESSMENT AND ISSUAN CE OF A QUESTIONNAIRE IS ONLY SIX DAYS. IN OTHER WORDS, INQUIRY WAS COMMENC ED ON 24.3.2015 AND THE ASSESSMENT ORDER WAS PASSED ON 31.3.2015. DURING S HORT SPAN OF SIX DAYS, THE AO ALLEGED TO HAVE CONDUCTED THE INQUIRY. BASICALL Y HE HAS NOT CARRIED OUT ANY INQUIRY, BUT JUST NARRATED VARIOUS SEIZED MATER IAL, WHOSE COPIES HAVE BEEN EXTRACTED AND WITHOUT GIVING SUFFICIENT TIME TO THE ASSESSEE CONCLUDED THAT AN ADDITION OF RS.6,82,08,730/- DESERVES TO BE MADE IN THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) HAS COMMENCED THE HEARING ON 20.10.2016 AND DECIDED THE APPEAL ON 30.1.2017. IN BETWEEN THE APPEAL WAS LISTED ON FOUR OCCASIONS. THE ASSESSEE HAS SUBMITT ED PARTIAL DETAILS AND SOUGHT ADJOURNMENT ON TWO OCCASIONS. TO OUR MIND B OTH THE AUTHORITIES HAVE NOT GRANTED SUFFICIENT TIME TO THE ASSESSEE FOR EXP LAINING HIS POSITION. THE OPPORTUNITIES ARE NOT TO BE COUNTED FROM THE DATE O N WHICH HEARING WAS LISTED, BUT TIME SPAN IN BETWEEN THAT PERIOD DURING WHICH T HE ASSESSEE COULD COLLECT DETAILS FOR HIS DEFENCE. IF THE AO HAS FIXED THE H EARING IN A SHORT SPAN OF SIX DAYS ON DAILY BASIS, THEN THIS TIME LIMIT IS NOT SU FFICIENT TO COLLECT ALL INFORMATION REQUIRED BY THE AO AND SUBMIT THEM AS D EFENCE. THUS, ORDERS OF THE REVENUE AUTHORITIES ARE NOT SUSTAINABLE. IN VIE W OF THE ABOVE DECISION, WE DEEM IT APPROPRIATE TO SET ASIDE BOTH THE ORDERS AN D REMIT THIS ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE LD.AO IS DIRECT ED TO COMMENCE THE IT(SS)A NO.158 TO 160/AHD/2019 7 PROCEEDINGS WELL IN ADVANCE SO THAT SUFFICIENT TIME COULD BE GRANTED TO THE ASSESSEE. OBSERVATION MADE BY US WILL NOT IMPAIR OR INJURE T HE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXP LANATION OF THE ASSESSEE. THE LD.AO SHALL FRAME THE ASSESSMENT ORDER IN THIS ASSESSMENT YEAR IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEALS OF THE ASSESSEE FOR THE A SSTT.YEAR 2010-11 AND 2011-12 ARE ALLOWED AND APPEAL FOR THE ASSTT.YEAR 2 012-13 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 2 ND JULY, 2019 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER