The DCIT, Central Circle-1(3), Ahmedabad V. Shri Sunil Prahladbhai Sewani, Ahmedabad

ITSSA 177/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4125 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: NISHIT SHAH; S N SOPARKAR
• Keywords: Search and seizure
• Section: 153A

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T(SS).A. NOS. 177 & 178/AHD/2015 WITH CROSS OBJECTION NOS. 132 & 133/AHD/2015 ( ASSESSMENT YEARS : 2008-09 & 2009-10) DCIT CENTRAL CIRCLE 1(3), ROOM NO.304, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD - 380009 / VS. SHRI SUNIL PRAHLADBHAI SEWANI 45, ASHWAMEGH BUNGALOW- 3, NR. SOMESHWAR DERASAR, SATELLITE RING ROAD, AHMEDABAD 380015 / / PAN/GIR NO. : AFSPS5475C ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) / REVENUE BY : SHRI O. P. SHARMA, SR. D.R. / ASSESSEE BY : SHRI S. N. SOPARKAR, SR. ADVOCATE WITH SHRI NISHIT SHAH DATE OF HEARING 04/02/2019 ! / DATE OF PRONOUNCEMENT 11/02/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE REVENU E CONCERNING ASSESSMENT YEARS (AYS) 2008-09 & 2009-10 AGAINST TH E RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD [CIT(A)] DATED 18/03/2015 ARISING IN THE MATTER OF RESPECTIVE ASSESSMENT ORDERS PASSE D BY THE ASSESSING OFFICER (AO) UNDER S. 153A R.W.S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). THE ASSESSEE HAS ALSO FILED CROSS OBJ ECTIONS IN THE RESPECTIVE APPEALS ALLEGING JURISDICTIONAL DEFECT IN THE ASSESSMENT OR DER SO PASSED. IT(SS)A NOS. 177 & 178/AHD/15 WITH CO NOS. 132 & 13 3/AHD/2015 [SHRI SUNIL P. SEWANI] A.YS. 2008-09 & 2009-10 - 2 - 2. IN THE REVENUES APPEALS, THE ASSESSEE HAS RAISE D A COMMON GROUND IN ITS CROSS OBJECTION MEMO WHEREBY THE ASSESSEE HAS CHALL ENGED THE JURISDICTION USURPED BY THE AO UNDER S.153A OF THE ACT TOWARDS ADDITIONS /DISALLOWANCES MADE IN THE CONSEQUENT ASSESSMENT PROCEEDINGS OWING TO SEARCH O PERATIONS. IN VIEW OF THE PRELIMINARY OBJECTION OF THE ASSESSEE WHICH SEEKS T O PUT QUESTION MARK OVER THE LEGITIMACY OF THE ADDITIONS/DISALLOWANCES MADE UNDE R S.153A OF THE ACT, WE DEEM IT EXPEDIENT TO DISPOSE OF THE AFORESAID PRELIMINARY G ROUND AS IT STRIKES TO THE ROOT OF THE MATTER. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD .AR FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ADDITIONS/DISALLOWANCES MADE IN BOTH THE APPEALS HAS NO RATIONAL CONNECTION OR LIVE LINK WITH MATERIAL FOUN D IN THE COURSE OF SEARCH ACTION CARRIED OUT UNDER S.132 OF THE I.T.ACT ON 28/12/201 1 IN SEWANI GROUP CASES INCLUDING ASSESSEE. THE LD.AR SUBMITTED THAT IN P URSUANCE OF A NOTICE UNDER S.153A OF THE ACT FOR THESE ASSESSMENT YEARS IN APP EALS, THE ASSESSMENT WAS INTER ALIA COMPLETED FOR AYS 2008-09 & 2009-10. THE ASSESSMEN T ORDER WAS FRAMED MAKING CERTAIN ADDITIONS AND DISALLOWANCES ON RE-AP PRECIATION OF FACTS ALREADY DISCLOSED/AVAILABLE WITH THE DEPARTMENT PRIOR TO SE ARCH. IT WAS FURTHER VEHEMENTLY ASSERTED THAT THE ADJUSTMENTS MADE IN THE SEARCH AS SESSMENTS ARE POSSIBLY SUBJECT MATTER OF REGULAR ASSESSMENT AND DO NOT RESONATE WI TH THE SCHEME OF SEARCH ASSESSMENT UNDER S.153A OF THE ACT DE HORS REFERENCE TO ANY INCRIMINATING MATERIAL IN THIS REGARD. THE LD.AR FURTHER EMPHASIZED THAT BOTH THESE ASSESSMENTS STOOD CONCLUDED ON THE DATE OF SEARCH AND WERE NOT PENDIN G FOR ASSESSMENT AND HENCE IN THE ABSENCE OF INCRIMINATING MATERIAL, NO ADJUSTMEN T IN THE RETURNED INCOME IS PERMISSIBLE UNDER SECTION 153A OF THE ACT. THE LEA RNED AR THEREAFTER SUBMITTED THAT THE LAW IS WELL SETTLED IN THIS REGARD. A REF ERENCE WAS MADE TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CI T VS. DEVANGI [2017] 394 ITR 184 (GUJ.) FOR THE PROPOSITION THAT ONLY UNDISCLOSE D INCOME AND UNDISCLOSED ASSETS DETECTED DURING SEARCH CAN BE BROUGHT TO TAX UNDER S. 153A OF THE ACT. THE REVENUE IS NOT ENTITLED TO MAKE ADDITIONS/DISALLOWA NCES UNRELATED TO OR UNCONNECTED WITH INCRIMINATING MATERIAL FOUND IN TH E COURSE OF SEARCH WHERE THE IT(SS)A NOS. 177 & 178/AHD/15 WITH CO NOS. 132 & 13 3/AHD/2015 [SHRI SUNIL P. SEWANI] A.YS. 2008-09 & 2009-10 - 3 - ASSESSMENTS WERE NOT PENDING AND STOOD COMPLETED ON THE DATE OF SEARCH. THE LEARNED AR FURTHER SUBMITTED THAT THE NARROWER SWEE P OF PROCEEDINGS UNDER S.153A OF THE ACT HAS ALSO BEEN FORTIFIED BY THE CO-ORDINA TE BENCH OF AHMEDABAD TRIBUNAL IN CASE OF PRIYA HOLDING (P.) LTD. VS. ASSISTANT C OMMISSIONER OF INCOME TAX [2018] 90 TAXMANN.COM 408 (AHMEDABAD-TRIB.). THE L EARNED AR THUS SUBMITTED IN CONCLUSION THAT IN VIEW OF THE INHERENT LACK OF JUR ISDICTION IN CARRYING OUT THE ADDITIONS/DISALLOWANCES AS MADE BY THE AO IN SECTIO N 153A PROCEEDINGS, THE CONTROVERSY RAISED BY THE REVENUE ON MERITS FLOWING FROM THE ORDERS OF THE CIT(A) AND AO HAS NO LEGS TO STAND AT THE THRESHOLD. 4. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ACTION OF THE AO. ON A SPECIFIC QUERY FROM THE BENCH, THE LE ARNED DR COULD NOT CONTROVERT ASSERTIONS MADE ON BEHALF OF THE ASSESSEE ABOUT THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH WHICH HAS ANY BEARING ON THE ADDITIONS/DISALLOWANCES IN CONTROVERSY. 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS. THE FIRST AND FOREMOST CONTROVERSY THAT ARISES FOR ADJUDICATION IS ON THE SCOPE AND AMBIT OF ASSESSMENT PROCEEDINGS UNDER S.153A OF THE ACT. THE CASE PROP OUNDED ON BEHALF OF THE ASSESSEE THAT ADDITIONS/DISALLOWANCES MADE IN SECT ION 153A PROCEEDINGS HAS NO RATIONAL CONNECTION WITH INCRIMINATING MATERIAL, IF ANY, FOUND AS A RESULT OF SEARCH REMAINS UNDISPUTED. IT IS ALSO NOT DISPUTE THAT AS SESSMENT PERTAINING TO THE ASSESSMENT YEARS IN QUESTION VIZ. AYS. 2008-09 & 20 09-10 STOOD CONCLUDED EITHER UNDER S.143(1) OR UNDER S.143(3) OF THE ACT AND WER E NOT PENDING AT THE TIME OF SEARCH. IN THE BACKDROP OF THESE FACTS, WE STRAIGH TWAY NOTICE THAT THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT IN RESPECT OF CO MPLETED ASSESSMENT IS CIRCUMSCRIBED BY THE CONDITION THAT THE ADDITIONS/D ISALLOWANCES MUST HAVE SOME BEARING WITH THE INCRIMINATING MATERIAL DETECTED IN THE COURSE OF SEARCH. THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT IN RESPECT OF CONCLUDED ASSESSMENT IS THUS NARROWER IN ITS SWEEP AS HELD IN LONG LINE OF JUDIC IAL PRECEDENTS INCLUDING THE DECISION RENDERED BY THE HONBLE GUJARAT HIGH COURT IN DEVANGI (SUPRA). THE IT(SS)A NOS. 177 & 178/AHD/15 WITH CO NOS. 132 & 13 3/AHD/2015 [SHRI SUNIL P. SEWANI] A.YS. 2008-09 & 2009-10 - 4 - NARROWER SPECTRUM OF ASSESSMENT UNDER S.153A OF THE ACT WAS ALSO NARRATED BY CO- ORDINATE BENCH IN PRIYA HOLDING (SUPRA). IT WILL B E APT TO REPRODUCE THE RELEVANT OPERATIVE PARA OF THE DECISION OF THE CO-ORDINATE B ENCH IN PRIYA HOLDING (P.) LTD. (SUPRA): 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW AND EXAMINED THE MERITS OF LEGAL CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT ADDITIONS/DISALLOWANCES COULD NOT BE MADE IN THE ASSESSMENT FRAMED UNDER S.153A OF THE ACT DE HORSE REFERENCE TO ANY I NCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH IN THIS REGARD. IT IS FURTHER CAS E OF THE ASSESSEE THAT THE ADDITIONS/DISALLOWANCES MADE HAVE NO NEXUS WHATSOEV ER WITH ANY MATERIAL OF INCRIMINATING NATURE FOUND IN THE COURSE OF SEARCH WHICH IS GENESIS OF PROCEEDINGS UNDER S.153A OF THE ACT IN THE INSTANT CASE. THE APPEAL OF THE ASSESSEE THUS HINGES AROUND ONE PERTAINING LEGAL POINT AS TO WHETHER, WH ILE MAKING ASSESSMENT UNDER S.153A, THE REVENUE IS ENTITLED TO INTERFERE WITH T HE ASSESSMENT CONCLUDED EITHER UNDER S.143(1) OR UNDER S.143(3) AND NOT PENDING AT THE T IME OF SEARCH IN THE ABSENCE OF ANY INCRIMINATING MATERIAL UNEARTHED AS A RESULT OF SEA RCH. 6.1. ON A BARE PERUSAL OF ASSESSMENT YEARS IN APPEA LS AND THE COMPOSITE ORDER OF THE CIT(A) DISCUSSING ISSUES CONNECTED WITH VARIOUS ADDITIONS/DISALLOWANCES, WE FIND TOTAL ABSENCE OF REFERENCE TO ANY INCRIMINATING MAT ERIAL WHICH MAY HAVE ANY BEARING TO IMPUGNED ADDITIONS/DISALLOWANCES. AS A COROLLAR Y, IT IS MANIFEST THAT ADDITIONS/DISALLOWANCES HAVE BEEN MADE WITHOUT REFE RENCE TO ANY SPECIFIC INCRIMINATING MATERIAL/DOCUMENT FOUND AS A RESULT O F SEARCH AND SEIZURE ACTION UNDER S.132 OF THE ACT AND IS BASED ON RE-APPRECIATION OF FACTS UNCONNECTED TO SEARCH. 6.2. WE ALSO NOTE THAT THE INCOME-TAX RETURN FOR TH E RELEVANT ASSESSMENT YEARS WERE FILED PRIOR TO THE SEARCH IN THE NORMAL COURSE SUO MOTU INCORPORATING THE ITEMS OF INCOME/EXPENDITURE WHICH ARE SUBJECT MATTER OF CONS IDERATIONS IN THE ASSESSMENT FRAMED UNDER S.153A OF THE ACT. THE RETURNS FOR VA RIOUS ASSESSMENT ORDERS IN QUESTION SO FILED IN ORDINARY COURSE WERE ACCEPTED UNDER S.1 43(1) OF THE ACT AND/OR ASSESSED UNDER S.143(3) OF THE ACT AND AS SUCH NO ASSESSMENT WAS EVENTUALLY PENDING ON THE DATE OF INITIATION OF SEARCH WHICH MAY GET ABATED I N CONSEQUENCE OF SEARCH. ACCORDINGLY, WE ARE OF THE VIEW THAT VARIOUS ADDITI ONS/DISALLOWANCES MADE BY THE AO ARE CLEARLY BEYOND THE SCOPE OF AUTHORITY VESTED UN DER S.153A OF THE ACT OWING TO ABSENCE OF ANY INCRIMINATING MATERIAL OR EVIDENCE D EDUCTED AS A RESULT OF SEARCH. NO REFERENCE OF SUCH INCRIMINATING MATERIAL, IF ANY, I S FOUND IN ANY OF THE ASSESSMENT ORDERS FOR THE PURPOSES OF MAKING VARIOUS ADDITIONS /DISALLOWANCES. 6.3. THE LEGAL ISSUE EMANATING ON SUCH FACTS THAT I N THE ABSENCE OF ANY INCRIMINATING MATERIAL/EVIDENCE, NO ADDITION CAN BE SUSTAINED UNDER S.153A IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION (P.) LTD. AND DEVAN GI ALIAS ROOPA IN TAX APPEAL NO.54 AND ORS OF 2017 ORDER DATED 02/02/2017. SIMI LAR VIEW WAS EARLIER TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA). 6.4. IN VIEW OF LONG LINE OF JUDICIAL PRECEDENTS G OVERNING THE FIELD, WE HOLD THAT ADDITIONS/DISALLOWANCES MADE WITHOUT ANY NEXUS TO I NCRIMINATING MATERIAL FOUND, IF ANY, AS A RESULT OF SEARCH OPERATIONS ARE NOT SUSTA INABLE IN THE EYES OF LAW IN SECTION 153A OF THE PROCEEDINGS. HENCE, THE ADDITIONS/DISA LLOWANCES MADE BY THE AO IN ALL IT(SS)A NOS. 177 & 178/AHD/15 WITH CO NOS. 132 & 13 3/AHD/2015 [SHRI SUNIL P. SEWANI] A.YS. 2008-09 & 2009-10 - 5 - THE CAPTIONED APPEALS REQUIRE TO BE QUASHED. THUS, WE FIND MERIT IN THE LEGAL GROUND RAISED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER , WE DO NOT INTEND TO ADJUDICATE VARIOUS ADDITIONS/DISALLOWANCES ON MERITS. 6. IN THE LIGHT OF THE JUDICIAL FIAT, THE POSITION OF LAW IS EXPLICITLY CLEAR. IN THE ABSENCE OF ANY CONNECTION WITH THE INCRIMINATING MA TERIAL, THE ADDITIONS/DISALLOWANCES IN RESPECT OF CONCLUDED ASS ESSMENTS ARE NOT PERMISSIBLE IN LAW. THUS, IN THE ABSENCE OF INCRIMINATING MATERIA LS FOUND IN SEARCH, THE ACTION OF THE AO IS CONTRARY TO THE POSITION OF LAW JUDICIALL Y ENUMERATED. THEREFORE, WHERE THE ADDITIONS/DISALLOWANCES ITSELF ARE UNSUSTAINABL E AND BAD IN LAW, THE CONTROVERSY CROPPED UP IN THE REVENUES APPEAL ON MERITS OF ADD ITIONS/DISALLOWANCES IS RENDERED NON EST . THEREFORE, THE APPEAL OF THE REVENUE REQUIRES TO BE DISMISSED AT THE THRESHOLD AS THE ACTION OF THE AO ITSELF SUFFER S FROM LACK OF JURISDICTION. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE IN THE REVENUES APPEALS ARE ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 11/02/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- $ / REVENUE 2 / ASSESSEE & ' () * / CONCERNED CIT 4 *- / CIT (A) - ./0 122()3 ()!3 45' / DR, ITAT, AHMEDABAD 6 078 9 / GUARD FILE. BY ORDER / 3 / 4 ()!3 45' THIS ORDER PRONOUNCED IN OPEN COURT ON 11/02/20 19