M/s Malhar Hotels Pvt. Ltd., Indore V. The ACIT-3(1), Indore

ITSSA 220/IND/2012

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0370 (ITAT-INDORE)
• Duration Of Justice: 7 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: SHREYA JAIN CAS
• Section: 143(3); 153A; 68; 132

Judgement Text

[IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.220/IND/2012 ASSESSMENT YEAR: 2008-09 M/S. MALHAR HOTELS PVT. LTD. CHHABRA HOUSE 1-AD SCHEME NO.74C-VIJAY NAGAR INDORE / VS. ACIT - 3(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAECM5745R APPELLANT BY SHRI PRAKASH JAIN & SMT. SHREYA JAIN, CAS RESPONDENT BY SMT. ASHIMA GUPTA, CIT - DR DATE OF HEARING: 22.07.2019 DATE OF PRONOUNCEMENT: 06.09.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-1, INDORE DATED 30.3.2012 PERTAINING TO T HE [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 2 ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSMENT FRAMED IS ILLEGAL AND BAD IN LAW. SINCE NO INCRIMINATING PAPERS WERE FOUND DURING THE COURSE O F SEARCH, THE NOTICE U/S 153C COULD NOT BE ISSUED. 2. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.75,00,000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM FOUR COMPANIES. 3. IT WAS PROVED BEFORE THE LD. CIT(A) AND THE LD. A.O . THAT THE TRANSACTIONS ARE GENUINE AND THE SHAREHOLDERS HAVE CONFIRMED THE SAID TRANSACTIONS AND ARE REGULAR I. TAX PAYER. IT WAS ALSO PROVED THAT THE AMOUNT HAS BEEN SHOWN IN THE RESPECTIVE BA LANCE SHEETS OF THE CREDITORS. 4. THE IDENTITY OF THE SHARE HOLDERS ARE PROVED SINCE THEY ARE REGISTERED COMPANIES AND THE AMOUNTS HAVE BEEN RECE IVED THROUGH BANKING CHANNELS. THE ADDITIONS ARE MADE WITHOUT C ONSIDERING THE CASE LAWS CITED ON THE POINT AND QUOTING THE CASES WHICH ARE NOT APPLICABLE. THE ADDITION MADE IS UNCALLED FOR AND HENCE BE DELETED. 5. THE GENERAL REMARK BY THE LD. CIT(A) IS BAD IN LAW AND THE CONCLUSION THAT THE INVESTORS ARE ENTRY PROVIDERS I S ALSO UNWARRANTED FOR. THE ADDITION OF RS.75,00,000/- IS UNCALLED FOR AND HENCE BE DELETED. 2. BRIEFLY STATED FACTS ARE THAT A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS CARRIED OUT AT THE BUSINESS-CUM-RESIDENTIAL PREMISES OF SHRI GURJEET SINGH CHAWDA SITUATED AT AD-1, SCHEME NO.74C, INDORE ON 10.4.2007. SUBSEQUENTLY, THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 153C OF THE A CT, [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 3 THEREBY THE A.O. MADE ADDITION IN RESPECT OF UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT AMOUNTING TO RS.75 LAKH S. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD . CIT(A), WHO AFTER CONSIDERING THE SUBMISSION CONFIRM ED THE ADDITION. AGGRIEVED BY THIS, THE ASSESSEE IS IN THE PRESENT APPEAL. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE PROCEEDINGS ARE WITHOUT JURISDICTION AS THE REQUISITE SATISFACTION U/S 153C OF THE ACT WAS NOT RECORDED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN THIS FACT HAS BEEN ADMITTED BY THE REVENUE IN ITS LETTER DATED 15.5.2018. LD. D.R. CON CEDED THE FACT OF THE LETTER DATED 15.5.2018 FURTHER RELIED ON THE ORDER OF THE AUTHORITIES BELOW. THE LD. COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WR ITTEN SUBMISSIONS. LD. COUNSEL FOR THE ASSESSEE ALSO RELIE D ON THE JUDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT OF [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 4 MADHYA PRADESH RENDERED IN THE CASE OF MECHMEN (2015 ) 60 TAXMANN.COM 484 DATED 10.7.2015. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FOR THE SAKE OF CLARITY, TH E PROCEEDINGS U/S 153C OF THE ACT ARE REPRODUCED AS UND ER: 153C(1) [NOT WITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE ASSESSING OFFICER IS SATISFIED THAT,-- (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING, SEIZED OR REQUISITIONED, BELONGS TO; OR (B) ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUIS ITIONED PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN , RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTI ON 153A, THEN, THE BOOKS OF A PERSON OTHER THAN THE PERSON REFERRED TO IN SE CTION 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON] [AND THAT ASSESSING OFFICER SHALL PROCEED A GAINST EACH SUCH OTHER PERSON AND 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 AC COUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON TH E DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB-SECTION (1) OF SECTION 153 A]:] [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKIN G OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO [SUB-SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON:] [ PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLASS OR CLASSES OF CASES [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 5 IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSES SING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSI NG THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED O R REQUISITION IS MADE EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMEN T HAS ABATED.] 4. FROM THE ABOVE, IT IS CLEAR THAT THE PROCEEDINGS CAN BE INITIATED AFTER RECORDING OF SATISFACTION BY THE A.O. OF THE SEARCHED PERSON AND THE A.O. OF THE PERSON OTHER THAN THE SEARCHED PERSON I.E. THE ASSESSEE HEREIN. THE REVENU E WAS SPECIFICALLY ASKED TO PRODUCE THE SATISFACTION AS RECORD ED U/S 153C OF THE ACT. IN RESPONSE THERETO, THE REVE NUE HAS SUBMITTED AS UNDER: [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 6 5. IT IS NOTEWORTHY THAT DESPITE GIVING SUFFICIENT T IME, THE REVENUE COULD NOT PRODUCE SATISFACTION NOTE AS RECORDE D BY THE ASSESSING OFFICER BOTH SEARCH PERSON AND THE PERS ON OTHER THAN SEARCH PERSON I.E. ASSESSEE HEREIN. 6. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MECHMEN (2015) 60 TAXMANN.COM 484 DATED 10.7.2015 IN PARA-15 OF THE ORDER HAS HELD AS UNDER: E VEN FOR THE PURPOSE OF SECTION 153C, THE ASSESSING OFFICER BEFORE HANDING OVER THE ITEMS TO THE ASSESSING OFFICER HAVING JURI SDICTION MUST BE 'SATISFIED' THAT THE ITEMS BELONGS OR BELONG TO THE PERSON OTHE R THAN THE PERSON REFERRED TO IN SECTION 153A. THAT SATISFACTION OF THE CONCERNED ASSESSING OFFICE R IS A SINE QUA NON. THE CONSEQUENCES FLOWING FROM THE ACTION T O BE TAKEN ON THE BASIS OF SUCH INFORMATION HANDED OVER TO THE ASSESSING OFFIC ER HAVING JURISDICTION, FOR THE ASSESSEE, WHO IS A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, IS DRASTIC OF ASSESSMENT OR REASSESSMENT OF HIS INC OME FALLING WITHIN SIX ASSESSMENT YEARS. [EMPHASIS SUPPLIED] 7. RESPECTFULLY FOLLOWING THE SAME, WE HEREBY HOLD T HAT THE PROCEEDINGS AS INITIATED ARE BAD IN LAW. HENCE, TH E ASSESSMENT ORDER DESERVES TO BE QUASHED. BEFORE PARTIN G, WE FIND THAT THE ISSUE INVOLVED IN THIS CASE IS RELATE D TO INTRODUCTION OF THE CAPITAL THROUGH SHARE APPLICATION AMOUNTING TO RS.75 LAKHS. THE A.O. HAS PLACED GREAT [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 7 STRESS IN RESPECT OF EVIDENCES COLLECTED BUT FAILED TO PROCEED IN ACCORDANCE WITH LAW. THE LD. CIT(A) HAS RECORDED T HAT REQUIREMENT OF SECTION 153C OF THE ACT HAS BEEN MET. THIS IS NOT CLEAR AS TO HOW THE REQUIREMENT U/S 153C OF TH E ACT IS MET WHEN THERE IS A CLEAR MANDATE OF LAW THAT THE A.O . OF THE SEARCHED PERSON AS WELL AS THE A.O. OF THE PERSON OTHER THAN THE SEARCHED PERSON WOULD RECORD THEIR RESPECTIV E SATISFACTION. IN THE PRESENT CASE, REVENUE HAS CONCEDE D THE FACT THAT THERE IS NO MATERIAL IS AVAILABLE SUGGESTING TH AT THE SATISFACTION WAS RECORDED BY THE A.O. OF THE SEARC HED PERSON AND A.O. OF THE PERSON OTHER THAN SEARCHED PER SON PRIOR TO ISSUANCE OF NOTICE U/S 153C OF THE ACT TO THE ASSESSEE HEREIN. THUS, RECORDING OF SATISFACTION IS CO NDITION PRECEDENT FOR PROCEEDING TO FRAME ASSESSMENT U/S 153C OF THE ACT. NON RECORDING OF SUCH SATISFACTION WOULD RE NDER THE ENTIRE PROCEEDINGS AS ILLEGAL AND WITHOUT AUTHORITY OF LAW. THE ASSESSMENT ORDER, THEREFORE, IS HEREBY QUASHE D [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 8 BEING BAD IN LAW AND GROUND NO.1 OF THE ASSESSEE APPEAL IS ALLOWED. BEFORE PARTING, WE WISH TO MAKE OBSERVATION T HAT THE A.O. SHOULD TAKE EXTRA CARE IN COMPLYING WITH REQUIREMENT OF LAW. THE SUPERVISING SENIOR OFFICER S HOULD ENSURE THAT THE ASSESSING OFFICERS FOLLOW THE PROCESS AS PRESCRIBED UNDER THE LAW TO AVOID LOSS TO REVENUE. T HE GROUND NO.1 OF THE ASSESEES APPEAL IS ALLOWED. SINCE, WE HAVE QUASHED THE ASSESSMENT ORDER ON THE GROUND OF ILLEGALITY ARE NOT EXPRESSING VIEW ON OTHER GROUNDS O N MERITS, AS IT HAS BECOME ACADEMIC INTEREST ONLY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06 .09. 2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 06/09/2019 PATEL/SPS [IT(SS)A NO.220/IND/2012] [M/S. MALHAR HOTELS PVT. LTD., INDORE ] 9 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE