DCIT, Central Circle-1(2), Ahmedabad V. Shri Pushkar Construction Co., Ahmedabad

ITSSA 192/AHD/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5001 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Documents seized
• Section: 132; 28; 271(1)(c); 2; 143(3); 92; 142(1); 153A; 201; 208; 192; 153; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& Ms. MADHUMITA ROY, JUDICIAL MEMBER I .T .( SS ) A . No s. 2 0 8 t o 21 2 / Ah d/ 20 18 ( A s s e s s me nt Y ea r s : 2 0 10 -1 1 to 2 01 4 - 1 5) Sh re e P us hk a r C on s tr u c tio n C o . 4 0 3, A a s t ha n C o m p le x , O p p . Po l yt ec hn ic , A mb a w a d i, A h m e d a ba d-3 8 0 01 5 V s . A C I T C e ntr al C ir c le - 1 ( 2 ) , A h m e d a b ad [ P A N N o . A B M F S4 28 3N ] (Appellant) .. (Respondent) I .T .( SS ) A . No s. 1 9 2 t o 19 6 / Ah d/ 20 18 ( A s s e s s me nt Y ea r s : 2 0 10 -1 1 to 2 01 4 - 1 5) D C I T , C e ntr al C ir cle - 1 ( 2 ) , A h m e d a ba d V s . S h r i Pu s h k a r C o ns t r uc ti on C o . 4 0 3, Aa st h a n Co mp lex , Op p. P o l yt e c h n ic , A m ba w a di, A h m e d a b ad [ P A N N o . A B M F S4 28 3N ] (Appellant) .. (Respondent) Assessee by : Shri Vartik Chokshi, AR Revenue by : Shri Vijaykumar Jaiswal, CIT DR & Shri Mukesh Jain, Sr. DR D a t e of H ea r i ng 24.02.2022 D a t e of P r o no u n ce me nt 14.03.2022 O R D E R PER BENCH: The bunch of five appeals have been filed by the assessee in IT(SS)A Nos. 208 to 212/Ahd/2018 are directed against the order all dated 28.03.2018 passed by the Ld. CIT(A)-11, Ahmedabad arising out of the order all dated 29.12.2016 passed by the ACIT, Central Circle-1(2), Ahmedabad under Section 143(3) r.w.s. 153C(1)(b) of the Income Tax Act, IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 2 - 1961 (hereinafter referred as to “the Act”) for the Assessment Years (A.Ys.) 2010-11 to 2014-15 respectively and the bunch of five appeals have been filed by the Revenue in IT(SS)A Nos. 192 to 196/Ahd/2018 are directed against the order all dated 28.03.2018 passed by the Ld. CIT(A)-11, Ahmedabad arising out of the order all dated 29.12.2016 passed by the ACIT, Central Circle-1(2), Ahmedabad under Section 143(3) r.w.s. 153C(1)(b) of the Income Tax Act, 1961 (hereinafter referred as to the “the Act”) for the Assessment Years (A.Ys.) 2010-11 to 2014-15 respectively. IT(SS)A No. 208/Ahd/2018(A.Y. 2010-11)(Assessee’s Appeal):- 2. The grounds of appeal raised by the assessee read as under:- “1. In law and in the facts and circumstances of the appellant's case, the Learned Commissioner of Income tax (Appeals)-5, Ahmedabad (hereinafter referred as "CIT(A)"), has erred in not appreciating the fact that the assessment order passed u/s 143(3) r.w.s. 153C(1)(b) of the Income-tax Act, 1961, by the Assistant Commissioner of Income Tax, Central Circle-l(2), Ahmedabad, was void and deserved to be quashed. 2. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in holding that the on-money receipts reflected in the seized material found from the premises of the third party represents undisclosed income of the appellant. 3. Without prejudice to the above, in law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in confirming the addition of Rs.4,55,125/- by estimating the net profit comprised in the alleged undisclosed receipts @20% of such receipts, when he should have applied the net profit rate of 8% . 4. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in dismissing the appellant’s ground of appeal against charging of interest u/s. 234A, 234B, 234C and 234D of the Act, when no such interest is chargeable in the case of the appellant. 5. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in dismissing appellant’s ground of appeal against the initiation of penalty proceedings u/s. 271(1)(c) of the Act. IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 3 - 6. The appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal.” 3. The brief facts leading to the case is this that a search was conducted under Section 132 of the Act in the case of one Ashit Haribhai Vora on 04.12.2014 of Batter Group at his residence wherefrom certain documents marked as Annexure-A-8 containing 37 pages were found and seized which has been alleged to be pertained to assessee before us. Consequently, assessment proceeding under Section 153C of the Act was initiated upon issuance of notice dated 19.02.2016 under Section 153C of the Act whereupon the assessee filed its return of income on 18.06.2016 declaring income at Rs. 68,64,882/-. 4. During the examination and verification of the details filed by the assessee in regard to the documents seized from the said Ashit Haribhai Vora it was noticed that assessee had not reflected certain business transaction being cash receipts and payment in its regular books of accounts. Further that show-cause under Section 142(1) was issued and ultimately the assessment was finalized by making addition of Rs. 4,84,00,847/- as unaccounted on money received in cash which was further confirmed by the Ld. CIT(A). Hence, the instant appeal before us. 5. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the initiation of the proceeding by the issuance of notice under Section 153C is bad in law in view of the fact that before amendment of the provision of Section 153C w.e.f. 01.06.2015 the A.O. cannot assume jurisdiction over the assessee under Section 153C on the basis of the seized material belong to third party Batter Group. Such IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 4 - case made out by the assessee is on the basis of the fact that search was conducted on 04.12.2014 when the prevailing statutory provision under Section 153C specified the documents seized from the third party search should belong to the assessee. As per the satisfaction note appearing at page 1 to 4 of the Paper Book filed before us specifically speaks about the documents seized pertains to and not belongs to assessee as submitted by him. In support of his contention he has relied upon certain judgments including the judgment passed by the Hon’ble Jurisdictional High Court in the case of Anil Kumar Gopikishan Agrawal vs. ACIT, Circle-3(2), Ahmedabad, reported in (2016) 106 taxmann.com 137 (Gujarat) a copy whereof has also been annexed to the Paper Book filed before us. 6. On the contrary, the Ld. DR relied upon the order passed by the authorities below. 7. We have heard the respective parties and we have also perused the relevant materials available on record. 8. The relevant portion of the satisfaction note dated 17.02.2016 is as follows: “1. During the course of search & seizure action u/s. 132 of the Act on 04.12.2014 at the residence of Shri Ashit Haribhai Vora situated at 5-B, Vasupujya Society, Opp. Vitrag Society, P. T. college Road, Paldi, Ahmedabad-380017, Annexure A-B containing 37 pages was seized. The said documents were claimed by Shri Ashit Vora to be belonging to Shri Atul Hiralal Shah. The entries recorded in the said Annexure were confronted to Shri Atul Hiralal Shah during the course of his statement recorded on 03.02.2015. The relevant part of his statement is reproduced hereunder: Q.10 I am showing you Annexure A-8 containing 37 pages seized from the residence of Shri Ashit Harilal Vora during the course of search proceedings on 04.12.2014. You are requested to go through the same and explain the noting on this page and explain the noting made on these pages. IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 5 - Ans. Sir, this annexure contains the record of transactions with regard to financing of “Pushkar-3” and “Pushkar-4” residential projects at Paldi Ahmedabad by us. In this regard I would like to state that as recorded on page No. 1 of this Annexure Rs. 3,60,00,000/- was financed by us in Pushkar-3 project. Amount of Rs. 3,00,00,000/- was paid through cheques from M/s. rajshah Enterprises Private Limited. As far as I can recall Rs. 60,00,000/- lacs was paid in cash on the dates recorded on page 1. In this regard I would also like to state that in lieu of finance extended by us 18 flats in “Pushkar-3” scheme were allotted to us as security. However, the payments received were noted by us as recorded on pages 2 to 21 of this Annexure, but, the same were accounted for in the books of Pushkar Group. Further, out of the funds received back from “pushkar-3” project finance was made in “pushkar-4” project at Paldi Ahmedabad. The details of these transactions are recorded on pages 22 to 37 of this annexure. In this case also allotment of 18 flats was made for security and the sales of the same were recorded in the books of “pushkar-4”. We received back our loan amount along with interest of Rs. 1.75 crores which was duly shown as income in the books of M/s. Rajshah Enterprises Private Limited. I will submit the relevant ledger accounts in the books of REPL and Pushkar group in support of my statement. I would also like to state that Rs. 60,00,000/- paid in cash has not been accounted for in the books of accounts. Q.11 Please provide the details of the persons with whom of Pushkar-3 and Pushkar-4 was done and the name of the concern in whose name cheques were issued by M/s. Rajshah Enterprises Private Limited. Ans. Sir, the deal was done with the partners of M/s. Shree Pushkar Construction and the cheques were also issued in the name of this firm. I will submit the relevant ledger account in 7 days’ time. 4. In view of the above facts, I am satisfied that the documents seized from the residence of Shri Ashit Haribhai Vora situated at 5-B, Vasupujya Society, Opp. Vitrag Society, P. T. College, Road, Paldi, Ahmedabad-380007, Annexure A-8 containing 1-37 pertains and relates to the assessee company M/s. Shree Pushkar Construction Co. Since the assessee company being other than the person referred to in Section 153A of the Act, I have satisfaction to proceed against the assessee company M/s. Shree Pushkar Construction Co. as per the provisions of Section 153C of the Income Tax Act, 1961 as it have bearing on the determination of the total income for the assessment years. Accordingly, the assessment proceedings in the case of the assessee for the A.Y. 2009-10 to A.Y. 2014-15 are hereby initiated u/s. 153C of the Act and notices are being issued.” 9. From the plain reading of the above satisfaction note issued by the ITO we find that the documents seized has been terms as “pertains and IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 6 - relates to the assessee company” and not belongs to the assessee company. Thus, the submissions made by the Ld. Counsel appearing for the assessee on fact is found to be correct taking into consideration the search conducted on 04.12.2014 i.e. prior to the amendment to Section 153C w.e.f. 01.06.2015. On this aspect we have also considered the judgment passed by the Jurisdictional High Court in the case of Anil Kumar Gopikishan Agarwal (supra) where it has been held that it is not permissible for the Assessing Officer to assume jurisdiction under Section 153(c) of the Act when the seized incriminating documents found to be related to the assessee and not belongs to. It was observed as follows: “...While it is true that sections 153A and 153C are machinery provisions, but the same cannot be made applicable retrospectively, when the amendment has expressly been given prospective effect. Besides, though such provisions are machinery provisions, the amend bring into its fold persons who are otherwise not covered by the said provisions and therefore, affects the substantive rights of such person.”... “19.3 Thus, while prior to the amendment in section 153C of the Act, if the Assessing Officer of the searched person was satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to or belongs to a person other than the searched person he was required to hand over the books of account or documents or assets seized or requisitioned to the Assessing Officer having jurisdiction over such other person, and that Assessing Officer required to proceed against such other person in accordance with the provisions of section 153A of the Act and asses or reassess his income. However, by virtue of the amendment in section 153C of the Act which was brought into force with effect from 1 st June, 2015, the scope of the section was widened by providing that if the Assessing Officer of the searched person is satisfied that (a) any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; (b) or books of account for documents or documents pertain to, or any information contained therein, relate to any person other than the searched person he shall hand over the books of account or documents or assets seized to the Assessing Officer having jurisdiction over such other person. The amendment further provided that that Assessing Officer shall issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such person for the relevant assessment year or years referred to in sub-section (1) of section 153A.” IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 7 - Thus, it appears that the first condition to be fulfilled by the AO of the search person in recording a satisfaction in terms of Section 153C of the pre-amended provision is this that any money, bullion, jewellery or other valuable article or things or books of account or documents seized or requisitioned belongs or belong to a person other than the search person as the assessee in the case in hand. However, the satisfaction note dated 17.02.2016 clearly reveals that the Ld. AO was satisfied that documents seized from the residence of Shri Ashit Vora pertains to and ‘relates’ to M/s. Shree Pushkar Construction and not ‘belongs’ to the said company being the assessee before us. Thus the condition stipulated under Section 153C in terms of the pre-amended provision which is to be fulfilled in the instant case since the search was conducted on 04.12.2014 much before the amendment of the relevant provision w.e.f. 01.06.2015 has not been fulfilled. Thus, the provisions has not been applied with its proper perspective instead the word ‘pertains’ to under the amended provision of Section 153 has been sought to be applied by the Ld. AO while exercising jurisdiction which in our considered opinion is not permissible under the law in the light of the observation made by us and the ratio laid down by the Hon’ble Jurisdictional High Court in the case of Anil Kumar Gopikishan Agrawal (supra). In that view of the matter we find that the initiation of the proceeding under Section 153C is not justifiable and hence quashed. Thus, the appeal preferred by the assessee is allowed. IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 8 - IT( SS) A No s. 209 t o 21 2/ Ahd/ 201 8(A. Y. 2010-11 t o 2014 -1 5): - 10. The identical issue involved in the case has already been dealt with by us in IT(SS)A No. 208/Ahd/2018 for A.Y. 2010-11 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the appeals preferred by the assessee are allowed. IT( SS) A No s. 192 t o 19 6/ Ahd/ 201 8(A. Y. 2010-11 t o 2014 -1 5): - 11. Revenue has challenged the order of deletion of additions made by the Ld. CIT(A) in these appeals. 12. However, since all the appeals are outcome of the common proceeding initiated under Section 153C of the Act and similar common proceeding as mentioned in the paragraph hereinabove already quashed on the technical ground of maintainability in favour of the assessee these bunch of appeals preferred by Revenue are also found to be not maintainable on the same technical ground. Since the basic foundation of the proceeding are being quashed the challenge of deletion of additions made by the Revenue become infructuous. Hence, the appeals preferred by the Revenue are found to be devoid of any merit and hence dismissed. 13. In the combined results, the appeals preferred by the assessee in IT(SS)A Nos. 208 to 212/A/2018 are allowed and the appeal preferred by the Revenue in IT(SS)A Nos. 192 to 196/A/2018 are dismissed. This Order pronounced in Open Court on 14/03/2022 Sd/- Sd/- (WASEEM AHMED) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 14/03/2022 TANMAY, Sr. PS TRUE COPY IT(SS)A Nos.208-212/Ahd/2018 & IT(SS)A Nos.192-196/Ahd/2018 Asst. Years –2010-11 to 2014-15 - 9 - आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 24.02.2022 & 28.02.2022 2. Date on which the typed draft is placed before the Dictating Member 25.02.2022 & 28.02.2022 3. Other Member..................... 4. Date on which the approved drft comes to the Sr.P.S./P.S 14.03.2022 5. Date on which the fair order is placed before the Dictating Member for pronouncement 14.03.2022 6. Date on which the fair order comes back to the Sr.P.S./P.S 15 .03.2022 7. Date on which the file goes to the Bench Clerk 15 .03.2022 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Dispatch of the Order..........................................