The Dy. Commissioner of Income Tax, Central Circle-1, Surat V. Shri Viren Sureshchandra Shah, Surat

ITSSA 275/AHD/2016

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7962 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: RASESH SHAH
• Keywords: Deemed dividend; Block assessment
• Section: 143(3); 153A; 133(6); 205; 13

Judgement Text

C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 1 OF 6 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T(SS)A NO.274 & 275/AHD/2016 [ [ / ASSESSMENT YEARS: 2008-09 & 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT 395001. V S . VIREN SURESHCHANDRA SHAH, 65, ADARSH SOCIETY, ATHWALINES, SURAT 395001. [PAN: AHHPS 2739 Q] / APPELLANT /RESPONDENT CROSS OBJECTION NOS.205 & 206/AHD/2016 ARISING OUT OF IT(SS)A NO.274 & 275/AHD/2016 [ [ / ASSESSMENT YEARS: 2008-09 & 2009-10 VIREN SURESHCHANDRA SHAH, 65, ADARSH SOCIETY, ATHWALINES, SURAT 395001. [PAN: AHHPS 2739 Q] V S . DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1, SURAT 395001. / APPELLANT /RESPONDENT [ /ASSESSEE BY SHRI RASESH SHAH CA /REVENUE BY SHRI O.P.SINGH CIT-DR / DATE OF HEARING: 12.12.2019 /PRONOUNCEMENT ON: 13.12.2019 /O R D E R PER SANDEEP GOSAIN, JM: 1. THESE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-4, SURAT DATED 08.06.2016 FOR THE ASSESSMENT YEAR 2008- 09 AND 2009-10 RESPECTIVELY. C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 2 OF 6 IT(SS)A NO.274/AHD/2016 FOR A.Y.2008-09 (BY REVENUE): 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS.3,91,36,700/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S.2(22)(E) BY HOLDING THAT COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE AO U/S.153A OF THE ACT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION. 3. THE LD.DEPARTMENTAL REPRESENTATIVE(DR) APPEARING ON BEHALF OF THE REVENUE SUBMITTED BEFORE US THAT THE LD.CIT(A) HAD NOT APPRECIATED THE FACT THAT THERE IS NO MENTION IN SECTION 153A OF THE ACT THAT ANY INCRIMINATING MATERIAL HAD TO BE FOUND DURING THE SEARCH IN ORDER THAT AN ASSESSMENT COULD BE FRAMED IN TERMS OF SECTION 153A OF THE ACT. 4. WHEREAS ON THE CONTRARY, THE LD.AUTHORISED REPRESENTATIVE(AR) RELIED UPON THE ORDER PASSED BY THE LD.CIT(A) AND SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF CO-ORDIANTE BENCH OF ITAT AND ALSO BY THE DECISION OF HON'BLE HIGH COURT AND HON'BLE SUPREME COURT. IN THIS RESPECT THE LD.DR RELIED UPON THESE JUDGMENTS AS UNDER: PCIT VS SAUMYA CONSTRUCTION [ 81 TAXMANN.COM 292] (GUJ HC) CIT VS GURINDER SINGH BAWA [386 !TR 0483] (BOMBAY HC) CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD [58 TAXMANN.COM 78] (BOMBAY HC) CIT VS KABUL CHAWIA [ 93 CCH 0210] (DEL HC) CIT V/S MEETA GUTGUTIA[395 ITR 0298] (DEL HC) CIT V. LANCY CONSTRUCTIONS [383 ITR 168] (KAR. HC) C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 3 OF 6 ID CIT VS KANAHIYALA! B PATE! [502/AHD/2011] (AHD TRIB.) , ACIT VS VIREN SURESHCHANDRA SHAH [SLP NO. 5301 OF 2016] (SC) VIREN SURESHCHANDRA SHAH VS ACIT [ SCA NO. 3862 OF 2015] (GUJ HC) 5. AFTER HAVING HEARD THE PARTIES AT LENGTH, WE FIND THAT THE LD.CIT(A) HAS DEALT THIS GROUND AT PARA NO.7.2.1 WHICH IS REPRODUCED BELOW: 7.2.1 L IN THE PRESENT CASE NOT EVEN A REFERENCE TO FACTS EMANCIPATING FROM SEARCH IS THERE IN THE ASSESSMENT ORDERS. THE FOLLOWING SEQUENCE OF EVENTS IS CLEAR FROM THE ASSESSMENT ORDERS (PARA 4 PAGE 2 OF THE ORDERS): I) ON PERUSAL OF THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FOR A.Y. 2008-09 AND A.Y. 2009-10, IT WAS OBSERVED BY THE, AO THAT THE ASSESSEE IS A SHARE HOLDER IN TWO COMPANIES M/S. JIVRAJ TEA LTD. AS WELL AS VESTA EXIM PVT. LTD. RESPECTIVELY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. II) THE AO NOTED THAT THE ASSESSEE IS HOLDING MORE THAN 10% SHARE HOLDER (VOTING POWER) IN M/S. JIVRAJ TEA LTD. AND A!SO HAVING MORE THAN 20% SHARE HOLDING (VOTING POWER) IN M/S. VESTA EXIM PVT. LTD. IS 46.93% AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF VESTA EXIM FOR A.Y. 2013-14 IT WAS NOTICED ON PERUSAL OF THE AUDIT REPORT OF THE ASSESSEE FIRM THAT AS ON 31.03.2013 IT WAS SHOWING AN AMOUNT OF RS. 2,82,94,680/- AS ADVANCE RECEIVED FROM JIVRAJ TEA LTD. III) THE AO NOTED THAT THE SHARE HOLDING OF THE ASSESSEE IN THIS YEAR IN VESTA EXIM WAS NIL, AND THIS CAUSED HER TO ISSUE NOTICE U/S. 133(6) TO THE JIVRAJ TEA LTD. ASKING FOR SHARE HOLDING PATTERN AS WELL AS THE DETAILS OF THE TRANSACTIONS WITH VESTA EXIM PVT. LTD. FROM A.Y. 2008-09 TO 2014-15 AS THE BLOCK ASSESSMENT U/S.153A IN RESPECT OF THE ASSESSEE MR. VIREN SURESH SHAH WAS PENDING WITH THE UNDERSIGNED. IV) ON THE BASIS OF THE INFORMATION RECEIVED U/S. 133(6) OF THE I J. ACT FROM JIVRAJ TEA LTD. IT WAS OBSERVED THAT THE SAID COMPANY HAD GIVEN LOANS TO VESTA EXIM WHICH WAS REFLECTED AS OUTSTANDING IN THE BOOKS OF ACCOUNTS OF JIVRAJ TEA LTD. AS UNDER: SUBSEQUENTLY, THE CASE WAS EXAMINED FROM THE ANGLE OF POSSIBLE TAXABILITY U/S 2(22) (E) OF THE ACT. ACCUMULATED PROFITS AND RESERVES WERE SEEN AND SHOW CAUSE NOTICE WAS ISSUED. AS ON RUPEES 31.03.2008 9,07,19,018 31.03.2009 14,11,69,852 31.03.2010 20,53,04,884 31.03.2011 22,09,11,953 31.03.2012 24,64,90,661 31.03.2013 28,28,04,680 31.03.2014 31,40,06,753 C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 4 OF 6 CLEARLY, THE ABOVE SEQUENCE AS NARRATED IN THE ASSESSMENT ORDER CLEARLY SHOWS THAT TINE ROVING ENQUIRIES WERE INITIATED FROM THE DETAILS FILED AND THE RETURN ASSESSEE. NOTHING INCRIMINATING WAS WITH THE AO, AGAINST THE APPELLANT WHICH WAS OBSERVED OR FOUND DURING THE COURSE OF SEARCH. IN VIEW OF THE JUDGMENTS DISCUSSED IN PARA 7.2 ABOVE; I HAVE ALREADY DECIDED THAT COMPLETED ASSESSMENTS WHICH HAVE ATTAINED FINALITY CAN ONLY BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. FOLLOWING THE ABOVE JUDGMENTS; IT IS HELD THAT BOTH THESE ASSESSMENTS, I.E., 2008-09, AND 2009-10 (ACTION U/S. 132(1) WAS CARRIED ON 18.02.2014) HAVE ALREADY BECOME FINAL ON THE DATE OF SEARCH. NOT ONLY THIS, ON THE SAME SET OF FACTS, THE ORDER FOR A.Y. 2008-09 HAS BEEN PASSED UNDER SCRUTINY U/S. 143(3) OF THE ACT. THE IMPUGNED ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF FISHING ENQUIRIES IN THE FORM OF VERIFICATION OF A POSSIBILITY, WITHOUT AN IOTA OF INCRIMINATING DOCUMENT, EVIDENCE FOUND AND WITHOUT ANY RELATION TO ANY EVIDENCE OR .INCRIMINATING FACT UNEARTHED DURING THE SEARCH. THIS NOT BEING PERMISSIBLE; THE ADDITIONS MADE ARE DIRECTED TO BE DELETED. THE GROUND NO. 1 AND SUB GROUNDS ARE ALLOWED IN BOTH THE APPEALS. 6. FROM THE PERUSAL OF THE ORDER PASSED BY THE LD.CIT(A), WE FIND THAT IT IS AN UNDISPUTED POSITION IN THIS CASE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND IT IS A SETTLED LAW AS HAS BEEN HELD IN THE CASE OF DCIT VS. KANAHIYALAL B PATEL THAT NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT U/S.153A OF THE I.T.ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. KEEPING IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE INTO OR DEVIATE FROM THE LAWFUL FINDINGS SO RECORDED BY THE LD.CIT(A), ACCORDINGLY WE UPHELD THE SAME BY DISMISSING THIS GROUND OF APPEAL RAISED BY THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. IT(SS)A NO.275/AHD/2016 (BY REVENUE): 8. SINCE, THE GIVEN FACTS AND CIRCUMSTANCES ARE IDENTICAL AS IN THE ASSESSEES OWN CASE ABOVE OF VIREN SURESHCHANDRA SHAH IN C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 5 OF 6 I.T(SS)A.NO.274/AHD/2016 FOR A.Y.2008-09. THEREFORE, OUR FINDINGS AND DIRECTIONS CONTAINED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL OF THE REVENUE. ACCORDINGLY, FOLLOWING THE SAME, GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. CROSS OBJECTION NOS.205 & 206/AHD/2016 FOR A.Y. 2008-09 & 2009-10 (BY ASSESSEE): 10. SINCE WE HAVE ALREADY DELETED THE ADDITION IN THE ABOVE MAIN APPEAL OF REVENUE IN IT(SS)A. NO.274/AHD/2016 & 275/AHD/2016 FOR A.Y. 2008-09 AND 2009-10, CONSEQUENTLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. 11. IN THE RESULT, TWO CROSS OBJECTION APPEALS FILED BY THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS. 12. TO SUM UP, TWO APPEALS FILED BY THE REVENUE ARE DISMISSED AND TWO CROSS OBJECTION APPEALS FILED BY THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 13-12-2019. SD/- SD/- (O.P.MEENA) (SANDEEP GOSAIN) ( /ACCOUNTANT MEMBER) ( /JUDICIAL MEMBER) / SURAT, DATED : 13 TH DECEMBER , 2019/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT C.O.: DCIT, CIRCLE-1(1)(1), SURAT VS. VIREN SURESHCHANDRA SHAH /IT(SS)A NOS.274, 275/AHD/16 OUT OF 205 & 206/AHD/16 PAGE 6 OF 6