Assistant Commissioner of Income-Tax Central Circle, Akola V. Shri. Shivaji Education Society, Amaravati

ITSSA 2/NAG/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0357 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYANK PRIYADARSHI
• Keywords: Depreciation; Loose papers; Document seized; Difference of opinion; Documents seized; Change of opinion
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./IT(SS) NO.01/NAG/2012 (AY:2002 - 2003 ) ./IT(SS) NO.02/NAG/2012 (AY:2003 - 2004 ) ./IT(SS) NO.03/NAG/2012 (AY:2004 - 2005 ) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE , AKOLA . / VS. SHRI SHIVAJI EDUCATION SOCIETY, SHIVAJI NAGAR, AMRAVATI. ( / APPELLANT) .. ( / RESPONDENT ) C.O. NO.01/NAG/2012 (ARISING OUT OF IT(SS) NO.01/NAG/2012 (AY:2002 - 2003 ) C.O. NO.02/NAG/2012 (ARISING OUT OF IT(SS) NO.02/NAG/2012 (AY:2003 - 2004 ) C.O. NO.03/NAG/2012 (ARISING OUT OF IT(SS) NO.03/NAG/2012 (AY:2004 - 2005 ) SHRI SHIVAJI EDUCATION SOCIETY, SHIVAJI NAGAR, AMRAVATI. / VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE , AKOLA . ./ PAN: AAETS1500P ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI K.P. DEWANI / REVENUEBY : SHRI MAYANK PRIYADARSHI, SR. DR / DA TE OF HEARING : 11 .09.2014 / DATE OF PRONOUNCEMENT : 12 .09.2014 / O R D E R PER BENCH: THERE ARE 6 APPEALS UNDER CONSIDERATION. OUT THEM, 3 APPEALS ARE FILED BY THE REVENUE AND 3 CROSS OBJECTIONS ARE FILED BY THE ASSESSEE S . SINCE, THE ISSUES RAISED IN ALL THE APPEALS AND CROSS OBJECTIONS ARE CONNECTED, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS OF THIS ORDER. 2. FIRSTLY, WE SHALL TAKE UP THE CROSS OBJECTION RAISED BY THE ASSESSEE FOR THE AY 2002 - 03. IN THIS CROSS OBJECTION, THE ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 2 1. THE NOTICE ISSUED U/S 153C OF THE IT ACT, 1961 IS ILLEGAL, INVALID AND BAD IN LAW AND CONSEQUENT ASSESSMENT FRAMED THEREUPON IS LIABLE TO BE CANCELLED. THE LD CIT (A) OUGHT TO HAVE CANCELLED THE ASSESSMENT FRAMED AS NOTICE ISSUED U/S 153C OF THE ACT WAS BAD IN LAW. 2. THE LD CIT (A) OUGHT TO HAVE ALLOWED DEPRECIATION AS CLAIMED BY ASSESSEE. 3. THE CIT (A) OUGHT TO HAVE HELD THAT INCOME FROM HOUSE PROPERTY IS NOT CHARGEABLE TO TAX AT THE HANDS OF THE ASSESSEE. 3. AT THE OUTSET, SHRI K.P. DEWANI, LD COUNS EL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT ALL THE CROSS OBJECTIONS ARE FILED BY THE ASSESSEE AND THE ONLY LEGAL ISSUE INVOLVED IN THE INSTANT CROSS OBJECTIONS IS THE VALIDITY OF NOTICE ISSUED U/S 153C OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL RELEVANT TO THE ASSESSEE FOR THE AY UNDER CONSIDERATION WHICH IS TO BE ADJUDICATED. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE AO AND MENTIONED THAT THE ADDITIONS MADE BY THE AO ARE WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEA RCH IS THE SUBJECT MATTER IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF M/S. KUMAR COMPANY VIDE ITA NO. ITA NO.463/PN/08 (A.Y.2000 - 01) AND ANOTHER DECISION OF THE PUNE BENCH IN THE CASE OF SINHGAD TECHNICAL EDUCATION VS. ACIT VIDE ITA NO.119/PN/2010 , WHEREIN THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY QUASHING THE ASSESSMENTS. FURTHER, LD COUNSEL READ OUT THE RELEVANT PORTIONS OF THE SAID ORDERS OF THE TRIBUNAL AND PRAYED THAT THE ISSUE UNDER CONSIDERATION MAY BE DECIDED IN THE SAME LINES. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL AND THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND THE ISSUE UNDER CONSIDERATION IS SETTLED AND THERE CANNOT BE ANY ISS UE OF NOTICE U/S 153C OF THE ACT WHEN THERE IS NO ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL AND THE SAME IS HELD BY THE KOLKATA BENCH OF ITAT IN THE CASE OF LMJ INTERNATIONAL LTD (2008) 119 TTJ (KOL) 214 . THE SAID DECISION IS RELEVANT FOR THE POSITI ON THAT W HERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR S UCH YEARS CANNOT BE DISTRIBUTED. FURTHER, ON THE 3 PERUSAL OF THE SAID ORDERS OF THE ITAT, PUNE BENCH IN THE CASE OF M/S. KUMAR COMPANY (SUPRA)AND ANOTHER DECISION IN THE CASE OF SINHGAD TECHNICAL EDUCATION (SUPRA), WHEREIN OF US (AM) IS PARTY TO THE SAID ORDERS, WE FIND THE FINDING OF THE TRIBUNAL IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT POR TIONS FROM THE SAID ORDERS OF THE TRIBUNAL ARE REPRODUCED HERE UNDER: ITA NO.463/PN/08 (A.Y.2000 - 01) - M/S. KUMAR COMPANY 25. THUS, WE FIND THAT THE SEIZED DOCUMENTS BELONG TO THE ASSESSEE BY WAY OF LIMITED OWNERSHIP AND THEY ARE NOT DUMB DOCUMENTS AS ADVOCATED BY THE LD COUNSEL FOR THE REASON MENTIONED ABOVE. HOWEVER, THEY ARE NOT FOUND TO BE INCRIMINATING DOCUMENTS FOR THE AY 2000 - 01. THE DOCUMENT MAY NOT BE A DUMB DOCUMENT AND THEREFORE A SPEAKING ONE, BUT THEY MUST BE THE DOCUMENT WITH PRIMA FACIE INCRIMINATING INFORMATION TOO. SUCH INCRIMINATING NATURE OF THE SEIZED DOCUMENT IS AN ESSENTIAL FACTOR FOR SWITCHING ON THE PROCEEDING U/S 153C. IN OTHER WORDS, THE DOCUMENT SEIZED MUST NOT ONLY BE A SPEAKING ONE BUT ALSO BE PRIMA FACIE INCRIMINATING ON E FOR IGNITING THE PROCEEDINGS U/S153C. UNLIKE OTHER AYS, THERE IS NOTHING MADE OUT BY THE AO WHAT IS CALLED INCRIMINATING FOR THE CURRENT AY UNDER CONSIDERATION. WHEN THE IMPUGNED DOCUMENTS MERELY CONTAINS THE NOTINGS OF ENTRIES, WHICH ARE ALREADY FOUND PLACE IN THE BOOKS OF ACCOUNTS OR SUBJECTED TO SCRUTINY OF THE AO IN THE PAST IN REGULAR ASSESSMENT U/S 143(3) OF THE ACT, SUCH DOCUMENT CANNOT BE SAID TO BE CONTAINING THE INCRIMINATING INFORMATION. WHAT IS THE POINT IN DISTURBING THE SETTLED ASSESSMENT W HEN THE REVENUE DOES NOT HAVE INCRIMINATING INFORMATION FOR AN AY AND THE INFORMATION WHAT IS AVAILABLE IS ONLY ROUTINE ONE AND WHEN THE AO MERELY MAKES AN ADDITION IN THE ASSESSMENT U/S 153C BASED ON CHANGE OF OPINION AND WHEN SUCH ADDITIONS ARE LIKELY TO BE DELETED IN VIEW OF THE SETTLED NATURE OF THE ISSUES? INCOME TAX PROVISIONS ARE NOT MERELY FOR THE ISSUE OF NOTICE U/S 153C BUT IT IS ESSENTIALLY FOR TAXING THE INCOME OF THE PERSON. WHAT IS POINT IN ISSUING NOTICE U/S 153C ON FLIMSY GROUNDS AND FINALLY TAX NOTHING? SUCH PROCEEDINGS ONLY CREATES AVOIDABLE NUISANCE BOTH TO THE OVER - BURDENED TAXMAN AND THE MUCH HAZZLED TAXPAYERS. IN THE INSTANT CASE, PROVISIONS OF SECTION 153C ARE INVOKED MERELY TO APPLY THE PROVISIONS OF SECTION 45(4) IN THIS YEAR, THE IS SUE WHICH WAS ALREADY EXAMINED AND CONCLUDED AS INAPPLICABLE TO THE FACTS OF THE CASE. SUCH ISSUE OF NOTICE IS UNWARRANTED AND SUCH REOPENING OF THE ASSESSMENT FOR THE AY 2000 - 01 IS UNCALLED FOR . 26. THEREFORE, THE PROCEEDINGS INITIATED U/S 153C IS NOT V ALID IN VIEW OF THE DECISION IN THE CASE OF LMJ INTERNATIONAL (SUPRA). UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION, THE AO HAS INVALIDLY ISSUED THE NOTICE U/S 153C FOR THE AY 2000 - 01 ON THE WRONG PRESUMPTION THAT AO CAN ASSUME JURISDICTIONAL IN RESPEC T ALL THE SIX AYS AUTOMATICALLY EVEN WITH OUT ANY INCRIMINATING DOCUMENTS IN RESPECT OF THE CONCLUDED ISSUES TOO. ACCORDINGLY, THE RELEVANT GROU NDS OF THE ASSESSEE ARE ALLOWED. 27. IN THE RESULT, APPEAL OF THE ASSESSEE ISALLOWED SINHGAD TECHNICAL EDUCATIO N VS. ACIT VIDE ITA NO.119/PN/2010 11. WE HAVE TAKEN STOCK OF THE LATEST DECISIONS CITED BY BOTH THE PARTIES IN CONNECTION WITH AN IDENTICAL ISSUE RAISED AND ADJUDICATED NOT ONLY IN CONNECTION WITH THE ASSESSEES OWN CASE FOR EARLIER ORDERS BUT ALSO IN THE CASE OF M/S. KUMAR & CO. (SUPRA). WE H AVE ALSO EXAMINED THE MISC APPLICATIONS FILED BY THE REVENUE AND OUR ORDER OF DISMISSAL OF THE SAID MAS. CONSIDERING THE ORDERS PASSED BY US IN THIS TRIBUNAL IN NUMBER OF APPEALS IN VOLVING VARIOUS ASSESSEES INCLUDING THE ASSESSEES OWN CASE, WE FIND THAT IT IS A SETTLED PROPOSITION OF THIS TRIBUNAL THAT THE AO CANNOT ASSUME JURISDICTION U/S 153C R W S 153A OF THE ACT AUTOMATICALLY IN RESPECT OF SIX AYS SPECIFIED IN THESE PROVISIONS UNLESS THERE IS EXIST THE DISCOVERY AND SEIZURE OF AY SPECIFIC INCRIMINATIN G MATERIAL OR SPECIFIED ITEMS AND BELONGING TO THE ASSESSEE, THIRD PARTY AND HAND THEM OVER TO THE AO OF SUCH THIRD PARTY. OF COURSE, 4 EXPRESSION OF THE SATISFACTION IN WRITING WHILE FORWARDING/HANDING THE SAID INCRIMINATING ITEMS OVER TO THE AO OF THE THIR D PARTY, IF AO IS DIFFERENT, IS ALSO THE REQUIREMENT. 12. REGARDING THE ISSUE AT (II) ABOVE, WE FIND THAT THERE TWO SETS OF DOCUMENTS NAMELY (A) PAGES 11 TO 15 RELATING TO ACQUISITION OF LANDS; AND (B) PAGES 58 AND 60 RELATING TO DINNER EXPENSES IN HOTEL ARORA. REGARDING THE FIRST SET OF PAGES, IT IS ADEQUATELY DEMONSTRATED THAT THEY BELONG TO THE TRANSACTIONS OF SRI M N NAVALE AND NOT OF THE ASSESSEE - TRUST. PRIMA FACEI, WE FIND THEY ARE ACCOUNTED ONES NOT IN THE ACCOUNTS OF THIS ASSESSEE BUT IN THE ACCOUN TS OF SRI M N NAVALE. IN ANY CASE, IT IS NOT THE STAND OF THE REVENUE THAT THEY ARE INCRIMINATING ONES THAT TOO IN THE ASSESSEES CASE. EVEN IF THERE EXIST ANY INCRIMINATION WITH REFERENCE THESE PAGES, IT SHOULD BE IN THE CASE OF SRI M N NAVALE ONLY. 13. REGARDING THE PAGES 58 TO 60 AND THEIR INCRIMINATING NATURE, WE FIND THAT THEY UNDISPUTEDLY RELATE TO THE DINNER EXPENDITURE BORNE BY SRI M N NAVALE AND NOT TO THE TRUST. THE ASSESSEE HAS BEEN CONSISTENTLY ASSERTING THE SAME RIGHT FROM THE TIME OF SEARCH P ROCEEDINGS. THE SAME HAS NOT BEEN CONTROVERTED BY THE REVENUE. WE HAVE EXAMINED IF SRI M N NAVALE HAS ADEQUATE WITHDRAWALS TO EXPLAIN THE SAID SUM OF RS. 55,811.94/ - ON 29.12.2004 AND FIND THERE EXIST ADEQUATE WITHDRAWALS FROM THE CAPITAL ACCOUNT OF SRI M N NAVALE. REGARDING THE APPEARANCE OF ASSESSEES NAME APPEARING ON THE SEIZED DOCUMENTS IE PAGES 58 TO 60, WE HAVE CONSIDERED THE ACCOUNTANT - CENTRIC - EXPLANATION OF THE ASSESSEE AND FIND WHAT IS THERE IN NAME AND FIND IMPORTANT THING IS WHO BORE THE EX PENDITURE AND HOW THEY ARE ACCOUNTED IN THE BOOKS. IN THIS CASE, THE EXPENDITURE IS ACCOUNTED IN THE BOOKS OF SRI M N NAVALE AND THE INSTANT ASSESSEE - TRUST. THEREFORE, WE EXAMINED, WHEN THE ENTRIES IN THE SEIZED PAGES ARE UNCONNECTED WITH THE FINANCIAL TRA NSACTIONS OF THE ASSESSEE BUT ACCOUNTED IN THE ACCOUNTS OF SRI M N NAVALE, IF THE ASSESSING OFFICER BE ALLOWED TO ASSUME JURISDICTION U/S 153C OF THE ACT OR NOT? IN OUR OPINION, THESE QUESTIONS ARE ANSWERED BY US WHILE ADJUDICATING THE APPEALS IN THE CASE OF ASSESSEES OWN CASE, IN THE CASE OF KUMAR & CO (SUPRA) AND THE GROUP CASES OF BHARATHI VIDHYAPEETH. WE HAVE CONSIDERED PLENTY OF LEGAL CITATION RELIED UPON BY THE REVENUE FOR THE REASONS MENTIONED IN THE RELEVANT ORDERS OF THOSE APPEALS. IN FACT, THE M ISCELLANEOUS APPLICATIONS FILED BY THE REVENUE WERE ALSO DISMISSED ON THIS ISSUE. 14. FROM THE ABOVE, IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL INVOLVING UNCONNEC TED IN THE REGULAR BOOKS OF ACCOUNTS IS UNWARRANTED. THE PAGES 58 & 60 WHICH ARE ONLY THE DOCUMENTS SEIZED BY THE REVENUE BELONGING TO THE ASSESSEE WERE TRANSFERRED TO THE ASSESSING OFFICER OF THE ASSESSEE WHICH ARE MERELY ACADEMIC NOTIFICATIONS FOR THE P URPOSE OF STES COLLEGE APPLICANTS. WE ARE OF THE OPINION THAT THE REVENUE WRONGLY ASSUMED JURISDICTION U/S 153C OF THE ACT. THEREFORE THE ADDITIONAL GROUND NO.1 RAISED BY THE ASSESSEE SHOULD BE ADMITTED AND ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ADDITIONAL GROUND 1 AS REVISED IS ALLOWED . 6. FROM THE ABOVE, IT IS A SETTLED PROPOSITION THAT THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, WHICH IS NOT RELEVANT TO THE ASSESSEES BOOKS OF ACCOUNTS, IN UNWARRANTED AND UNCALLED FOR. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE PROCEEDINGS INITIATED U/S 153C OF THE ACT IN THE INSTANT APPEALS IN INVALID. ACCORDINGLY, CROSS OBJECTION NO.1 RAISED BY THE ASSESSEE IN ALL THE THREE CROSS OBJECTIONS I S ALLOWED . 7. CONSIDERING THE ABOVE QUASHING OF THE ASSESSMENTS, WE FIND THE ADJUDICATION OF THE OTHER CROSS OBJECTIONS RAISED BY THE ASSESSEE AS WELL AS THE GROUNDS RAISED BY THE REVENUE IN ITS APPEALS BECOME ACADEMIC EXERCISE. ACCORDINGLY, THEY ARE DIS MISSED AS ACADEMIC. 5 8. IN THE RESULT, CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED AND THE THREE APPEALS OF THE REVENUE I..E, APPEAL IT(SS) NOS.01, 02 & 03/NAG/2012 ARE TREATED AS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2014. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; 12 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , / DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) / ITAT, NAGPUR