Ratnaraj Sarees Pvt.Ltd., Nadiad V. The Dy.CIT.,Cent.Circle-12, Baroda

ITSSA 18/AHD/2012

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1074 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SHAH
• Assessee Lawyers: DHIRENDRA TRIVEDI
• Keywords: Procedural lapse; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ IT(SS)A NO.18/AHD/2012 / ASSTT. YEAR: 2004-2005 RATNARAJ SAREES PVT. LTD. BHAVSARVAD NR.SWAMINARAYAN TEMPLE AMBAWADI BAZAR, NADIAD. PAN : AABCR 1050 R VS DCIT, CENT.CIR.2 BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI DHIRENDRA TRIVEDI REVENUE BY : SHRI JAGDISH SHAH, CIT-DR ! / DATE OF HEARING : 15/10/2015 '#$ ! / DATE OF PRONOUNCEMENT: 15/10/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST ORDER OF THE LD.CIT(A)- IV, AHMEDABAD DATED 24.11.2011 PASSED FOR THE ASSTT .YEAR 2004-05. 2. THE ASSESSEE HAS TAKEN SIX GROUNDS OF APPEAL, BU T ITS GRIEVANCE REVOLVES AROUND TWO ISSUES, WHEREBY, IT HAS PLEADED THAT THE LD.AO HAS ERRED IN TAKING COGNIZANCE OF SECTION 153C BY IGNOR ING THAT NO SATISFACTION WAS RECORDED BY THE AO OF THE SEARCHED PERSONS AUTHORIZING THE AO OF THE ASSESSEE TO ISSUE NOTICE UNDER SECTIO N 153C. IN ITS SECOND FOLD OF GRIEVANCE, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.8,23,298/-. THE L D. COUNSEL FOR THE IT(SS)A NO.18 /AHD/2012 2 ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ISSU E IN DISPUTE IS SQUARELY COVERED BY THE ORDER OF THE ITAT PASSED IN IT(SS)A.NO.68/AHD/2012 AND OTHERS. HE POINTED THAT THE TRIBUNAL HAS DISPOSED OF 45 APPEALS VIDE ITS ORDER DATED 11.09.2 015. THE CORE ISSUE BEFORE THE TRIBUNAL WAS WHETHER THE ALLEGED SATISFA CTION NOTE RECORDED BY THE AO OF THE SEARCHED PERSON IS A SATISFACTION NOTE WITHIN THE MEANING OF SECTION 153C AUTHORIZING THE AO OF THE A SSESSEE TO ISSUE NOTICE UNDER SECTION 153C OF THE INCOME TAX ACT. H E PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. 3. THE LD.DR ON THE OTHER HAND CONTENDED THAT THE A SSISTANT COMMISSIONER OF INCOME-TAX, CENT.CIR.2, BARODA HAS MADE REFERENCE TO THE BOOKS OF ACCOUNTS, DOCUMENTS ETC. WHILE SATISFY ING HERSELF TO THE FACT THAT THE INCOME HAS ESCAPED ASSESSMENT FOR THE PERSON UPON WHOM NO SEARCH WAS CONDUCTED. 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT ON 1.11.2004 DECLARING TOTAL INCOME OF RS.5,41,320/-. AN ASSESS MENT WAS FRAMED UNDER SECTION 143(3) ON 28.12.2006 AND THE INCOME W AS DETERMINED AT RS.20,41,320/-. A SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF SHRI RAMESHBHAI B. SHAH AND GROUP CA SES ON 3.4.2008. ACCORDING TO THE AO, DURING THE COURSE OF SEARCH IN CRIMINATING MATERIAL EXHIBITING THE ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE WAS FOUND AND THE AO OF THE SEARCHED PERSON HAS RECORDE D A SATISFACTION FOR TAKING ACTION AGAINST THE ASSESSEE. HE, THEREFORE, ISSUED A NOTICE UNDER SECTION 153C OF THE ACT. IN RESPONSE TO THE NOTICE , THE ASSESSEE HAS CONTENDED THAT THE RETURN FILED ON 1.1.2004 DECLARI NG INCOME AT RS.5,41,320/- BE TREATED AS FILED IN RESPONSE TO TH E NOTICE ISSUED UNDER SECTION 153C. IN OTHER WORDS, THE ASSESSEE HAS SUB MITTED RETURN ON 29.12.2006 DECLARING THE SAME INCOME WHICH WAS RETU RNED UNDER IT(SS)A NO.18 /AHD/2012 3 SECTION 139(1) OF THE ACT. THE LD.AO HAS PASSED TH E ASSESSMENT ORDER ON 16.12.2010 AND DETERMINED THE TAXABLE INCOME OF THE ASSESSEE FOR THE ASSTT.YEAR 2004-05 AT RS.13,64,620/-. 5. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. THE LD.COUNSEL FOR THE ASSESSEE HAS PRODUCED COP Y OF THE ALLEGED SATISFACTION NOTE WHICH READS AS UNDER: NOTICE UNDER SECTION 153 R.W.S. 153A OF THE INCOME TAX ACT, 1961 DATE : 29/08/2008 PAN : AABCR 1050 R A.Y. : 2003-04 TO M/S. RATNARAJ SAREES PVT. LTD. BHARSAVAD, NR.SWAMINARAYAN TEMPLE AMDAVADI BAZAR NADIAD-387 001. A SEARCH U/S 132 OF THE INCOME-TAX ACT WAS CONDUCTE D/REQUISITION MADE U/S 132A OF THE INCOME-TAX ACT IN THE GROUP CA SES OF RAMESHBHAI BABUBHAI SHAH & OTHER GROUP OF CASES ON 03.04.2008. I AM SATISFIED THAT THE MONEY/BULLION/J EWELLERY/OTHER VALUABLE ARTICLES OR THINGS/BOOKS OF ACCOUNT/DOCUME NTS SEIZED BELONG(S) TO YOU. THEREFORE, YOUR INCOME OF SIX ASS ESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE AFORESAID SEARCH WAS CONDUCTED WA S MADE I.E., FROM A.YS. 2003-04 TO 2008-09 IS REQUIRED TO BE ASS ESSED/RE- ASSESSED, IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 153A R.W.S. 153C OF THE ACT. YOU ARE, THEREFORE, REQUIRED TO FU RNISH HOUR RETURN OF INCOME UNDER SECTION 153C OF THE INCOME-T AX ACT, 1961 FOR A.Y. 2003-04 BEING ONE OUT OF THE ABOVE SIX ASS ESSMENT YEARS IN RESPECT OF WHICH YOU ARE ASSESSABLE UNDER THE IN COME-TAX ACT, 1961. THE RETURN SHOULD BE FILED IN THE APPROPRIATE FORM AS PRESCRIBED IN RULE 12 OF THE INCOME-TAX RULES, 1962 . IT SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PRO VISIONS OF SECTION 140 OF THE SAID ACT AND DELIVERED AT MY OFF ICE AS MENTIONED ABOVE WITHIN FORTY FIVE DAYS FROM THE SER VICE OF THIS NOTICE. IT(SS)A NO.18 /AHD/2012 4 SD/- (ILA PARMAR) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, BARODA 7. WE FIND THAT IDENTICAL SATISFACTION NOTE RECORDE D IN THE CASE OF OTHER ASSESSEES WAS CONSIDERED BY THE ITAT ALONG WI TH IT(SS)A.NO.68/AHD/2012 AND OTHERS. THE TRIBUNAL HA S REPRODUCED THE SATISFACTION NOTE. THE FINDING OF THE TRIBUNAL ON THIS ISSUE READS AS UNDER: NOTICE UNDER SECTION 153 R.W.S. 153A OF THE INCOM ETAX ACT, 1961 DATE : 29.08.2008 PAN : AACFP 3995 R AY 2003-04 TO M/S. PARSHWA CORPORATION JALDHARA APARTMENT OPP. MAHA GUJARAT HOSPITAL, COLLEGE ROAD, NADIAD A SEARCH U/S 132 OF THE INCOME-TAX ACT WAS CONDUCTED/REQUISITION MADE U/S 132A OF THE INCOME-T AX ACT IN THE GROUP CASES OF RAMESHBHAI BABUBHAI SHAH & OTHER GRO UP OF CASES ON 03.04.2008. I AM SATISFIED THAT THE MONEY/BULLION/JEWELLERY/OTHER VALUABLE ARTICLES OR THINGS/BOOKS OF ACCOUNT/DOCUMENTS SEIZED BELONG(S) TO YOU. THEREFOR E, YOUR INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE AFORESAID SEARCH WAS CONDUCTED WAS MADE I.E., FROM A.YS. 2003 -04 TO 2008-09 IS REQUIRED TO BE ASSESSED/RE-ASSESSED, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A R.W.S. 153C OF THE ACT. YOU ARE, THEREFORE, REQUIRED TO FURNISH HOUR RETURN OF INCOME UNDER SECTION 153C OF THE INCOME-TAX ACT, 1961 FOR A.Y. 2 003-04 BEING ONE OUT OF THE ABOVE SIX ASSESSMENT YEARS IN RESPEC T OF WHICH YOU ARE ASSESSABLE UNDER THE INCOME-TAX ACT, 1961. THE RETURN SHOULD BE FILED IN THE APPROPRIATE FORM AS PRESCRIBED IN R ULE 12 OF THE INCOME-TAX RULES, 1962. IT SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF TH E SAID ACT AND DELIVERED AT MY OFFICE AS MENTIONED ABOVE WITHIN FO RTY FIVE DAYS FROM THE SERVICE OF THIS NOTICE. SD/- (ILA PARMAR) ASSTT. COMMISSIONER OF INCOME TAX, IT(SS)A NO.18 /AHD/2012 5 CENTRAL CIRCLE 2, BARODA 18. FROM THE ABOVE, IT IS CLEAR NO SATISFACTION IS RECORDED BY THE ASSESSING OFFICER OF PERSON SEARCHED. THE ASSESSING OFFICER OF ASSESSEE DID NOT RECORD ANY SATISFACTION PRIOR TO I SSUE OF NOTICE U/S 153C. THE SO-CALLED SATISFACTION RECORDED IN TH E NOTICE U/S 153C IS TOTALLY VAGUE. IT HAS NOT SPECIFIED WHICH V ALUABLE ARTICLES/THINGS/BOOKS OF ACCOUNTS/DOCUMENTS WERE FO UND FROM SHRI RAMESHBHAI B. SHAH WHICH BELONGS TO THE ASSESS EE. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONE D THAT IN THE LAPTOP OF SHRI RAMESHBHAI B. SHAH THE DATA PERTAINI NG TO THE ASSESSEE WERE FOUND AND ON THAT BASIS NOTICES U/S 1 53C HAVE BEEN ISSUED. HOWEVER, IN THE NOTICE U/S 153C, WHERE IN THE ASSESSING OFFICER IS CLAIMED TO HAVE BEEN RECORDED THE SATISFACTION FOR ISSUE OF THE NOTICE, THERE IS NO M ENTION ABOUT SUCH LAPTOP OR THE ALLEGED DATA IN SUCH LAPTOP WHICH IS CLAIMED TO BE BELONGED TO THE ASSESSEE. IN VIEW OF ABOVE, WE HAVE NO HESITATION TO HOLD THAT THE BASIC CONDITION FOR ISSUE OF NOTIC E U/S 153C HAS NOT BEEN SATISFIED. 19. THE LD. CIT-DR HAS CLAIMED THAT ANY PROCEDURAL IRREGULARITY IN THE ISSUANCE OF NOTICE U/S 153C IS A CURABLE DEFECT AS PROVIDED IN SECTION 292B OF THE INCOME-TAX ACT. WE ARE UNABLE T O AGREE WITH THIS CONTENTION OF THE LD. DEPARTMENTAL REPRESENTAT IVE. SECTION 292B READS AS UNDER:- 292B. NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUM MONS OR OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSU ED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN O F INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. 20. FROM THE ABOVE, IT IS EVIDENT THAT AS PER SECTI ON 292B, ANY NOTICE, SUMMONS OR OTHER PROCEEDING WOULD NOT BE IN VALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUC H RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEE DING PROVIDED SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONF ORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. HO WEVER, BEFORE ISSUING OF NOTICE U/S 153C, THE SATISFACTION OF THE ASSESSING OFFICER OF THE PERSON SEARCHED IS ESSENTIAL FOR ASS UMING THE IT(SS)A NO.18 /AHD/2012 6 JURISDICTION U/S 153C BY THE ASSESSING OFFICER OF S UCH OTHER PERSON. THEREFORE, IN THE ABSENCE OF SATISFACTION B Y THE ASSESSING OFFICER OF THE PERSON SEARCHED, THE ASSESSING OFFIC ER OF THE PRESENT ASSESSEE DOES NOT GET ANY JURISDICTION TO I SSUE SUCH NOTICE. ACCORDINGLY, NOTICE U/S 153C ISSUED BY THE ASSESSING OFFICER OF THE PERSON SEARCHED LACKS JURISDICTION W HICH IS NOT CURABLE BY VIRTUE OF PROVISION OF SECTION 292B. IN VIEW OF ABOVE, WE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE A PEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AND DECISION OF H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LALITKUMAR M. PATEL (SUPRA), HOLD THAT THE NOTICES ISSUED U/S 153C WERE INVALID; ACCORDINGLY THE SAME ARE QUASHED. CONSEQUENTLY, THE ASSESSMENT ORDERS FRAMED U/S 153C R.W.S. 153A ARE ALSO QUASHED . SINCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE OTHER GROUNDS OF THE ASSESSEES APPEAL WHICH IS WITH REGARD TO DETER MINATION OF THE INCOME OF THE ASSESSEE NEEDS NO ADJUDICATION. 8. WE FIND THAT THE SATISFACTION NOTE IN OTHER CASE S AS WELL AS RECORDED IN THE CASE OF ASSESSEE ARE VERBATIM SAME EXCEPT THE ASSESSMENT YEARS. A PERUSAL OF THE SATISFACTION NOTE WOULD INDICATE THAT IT IS TOTALLY VAGUE. IT DOES NOT DISCLOSE WHA T IS THE MATERIAL FOUND DURING THE COURSE OF SEARCH, WHICH BELONGED TO THE ASSESSEE. THERE IS NO REFERENCE TO ANY SUCH DOCUMENTARY EVIDENCE. THE REFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH CITED SUPRA, WE ALLOW APPEAL OF THE ASSESSEE AND QUASH ASSESSMEN T ORDER. 9. SINCE, WE QUASHED THE ASSESSMENT ORDER, THEREFOR E, THERE IS NO NEED TO ADJUDICATE OTHER ISSUES RAISED BY THE ASSES SEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 15 TH OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 15/10/2015