THE ACIT(Central)-1, Indore V. Shri Ashok Kataria, Ratlam

ITSSA 26/IND/2016

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2577 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: P D NAGAR
• Section: 143(3); 153A; 147; 132

Judgement Text

ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER IT(SS) A. NOS.25 & 26/IND/2016 ASSESSMENT YEARS: 2007-08 & 2009-10 ACIT (CENTRAL),I INDORE :: APPELLANT VS ASHOK KATARIA RATLAM ./ PAN: ACFPK 5787R :: RESPONDENT REVENUE BY SHRI LAL CHAND ASSESSEE BY SHRI P.D. NAGAR ! ' #$ DATE OF HEARING 6.10.2016 %&'( #$ DATE OF PRONOUNCEMENT 28.10.2016 * O R D E R PER SHRI D.T. GARASIA, JM THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS DATED 7.12.2015 OF THE LEARNED CIT(A)-III, INDORE ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 2 2. THE COMMON GROUNDS READ AS UNDER :- 1. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE LD. CIT(A) WAS CORRECT IN LAW TO HOLD THAT ADDITIONS BASED ON INCRIMINATING MATERIAL ONLY CAN BE MADE IN ABATED/COMPLETED ASSESSMENT. 2. WHETHER RETURNS PROCESSED U/S 143(1) CAN BE TREATED AS COMPLETED ASSESSMENT DESPITE THE FACT THAT HON'BLE APEX COURT HAS CATEGORICALLY HELD THA T PROCESSING OF RETURN U/S 143(1) DOES NOT AMOUNT TO ASSESSMENT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKER PVT. LTD. CASE NO. 2830 OF 2007. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE LD. CIT(APPEALS) WAS CORRECT IN DELETING THE ADDITION ON ACCOUNT OF LTCG AROSE ON RELINQUISHMENT OF TENANCY RIGHTS WHEREAS THE ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 3 ASSESSEE FAILED TO SUBSTANTIATE THE GENUINENESS OF SAID LTCG. 3. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEPARTMENT HAS FILED TH E APPEAL AGAINST THE ORDER OF THE LEARNED CIT(A) BUT THE I SSUE IN CONTROVERSY IS REGARDING WHETHER THE RETURN PROCE SSED U/S 143 CAN BE TREATED AS COMPLETED ASSESSMENT DESPITE THE FACT THAT HON'BLE APEX COURT HAS CATEGORICALLY HELD THAT PROCESSING OF RETURN U/S 143(1) DOES NOT AMOUNT TO ASSESSMENT AND SECONDLY WHETHER DELETING THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN ON RELINQUISHMENT OF TENANCY RIGHT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAD COME UP BEFORE THE ITA T, INDORE BENCH, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 WHEREIN THE TRIBUNAL HAS DECI DED BOTH THE ISSUES IN DECISION IN IT(SS) A NO. 9/IND/2 016 AND IT(SS) A NO. 11/IND/2016 WHEREIN THE APPEAL OF THE ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 4 REVENUE WAS DISMISSED IN RESPECT OF VALIDITY U/S 153A OF THE ACT AND REGARDING LONG TERM CAPITAL GAIN THE TRIBUNAL HAS ALLOWED THE APPEAL, THEREFORE, BOTH THEN ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE, THEREFORE, THE APPE AL MAY BE DISMISSED. THE LEARNED DR HAD NO OBJECTION IF THE MATTER IS DECIDED ACCORDINGLY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT SIMILAR ISSUE HAD COME UP FOR THE ASSESSME NT YEAR 2010-11 IN THE ASSESSEES OWN CASE IN IT(SS) A NO . 11/IND/2016 WHEREIN THE TRIBUNAL HAS DECIDED BOTH THE ISSUES BY OBSERVING AS UNDER :- 11. WE FIND THAT THE REVENUE COULD NOT BRING ANY POSITIVE MATERIAL ON RECORD BY MAKING VERIFICATION WITH THE DEVELOPER OR THE ORIGINAL TENANT THAT NO TENANC Y RIGHT WAS ACTUALLY ACQUIRED BY THE ASSESSEE OR NO TENANCY RIGHT WAS ACTUALLY SURRENDERED BY THE ASSES SEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R UNDER CONSIDERATION. 20. WE FIND THAT IN THE ORDER PASSED BY THE LEA RNED CIT(A) IN THE CASES OF ALL THESE ASSESSEES HE HAS P LACED RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBU NAL IN ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 5 IT(SS) A NO. 71/IND/2014 IN THE CASE OF KALANI BROT HERS AS ALSO THE DECISION OF THE HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS. KABUL CHAWLA (2015) 61 TAXMAN. 412 (DEL) WHICH IS IN FAVOUR OF THE ASSESSEE ON THE ABOVE PROPOSITION. THE LEARNED DR COULD NOT CITE A NY CONTRARY DECISION BEFORE US. WE FIND THAT THE HON'B LE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA ) TAKING NOTE OF QUESTION POSED IN THE CASE OF ANIL K UMAR BHATIA WHICH READS AS UNDER :- '21. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESP ECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 14 3(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN E XISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF TH E SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDIS CLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO AS SUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, H AVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECTION ( 1) OF SECTION 153A OPENS.' THE HON'BLE HIGH COURT OF DELHI HELD AS UNDER :- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 6 ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MAD E UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELA TABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS CEED INGS. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UN DER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE AO. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME O R PROPERTY DISC OVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODU CED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 7 ASSESSMENT. 21. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHICH IS IN CONFORMITY WITH THE ORDER OF THE HON'BLE DELHI HIGH COURT. THEREFORE, THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEALS. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAND DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 28 OCTOBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER )'* / DATED : 28 OCTOBER, 2016. DN/ ACIT VS. ASHOK KATARIA IT(SS) A NOS. 25 & 26/IND/2016 8