Girish B. Chaudhari, L/o. of Late Shri Bhagwat N. Chaudhari, Jalgaon V. Income-tax Officer, Nashik

ITSSA 28/PUN/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5235 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Tax effect
• Section: 132; 143(3); 153A; 153

Judgement Text

आयकर अपीलीय अधधकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE (Through Virtual Court) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITSS)A Nos.27, 28 & 29/PUN/2017 Assessment Years : 2006-07, 2007-08 & 2008-09 Shri Bhagwat N. Chaudhari, 11, Swed Bindu, Shanti Nagar, Yawat Road, Bhusawal, Jalgaon – 425201 PAN : AALPC0512G ......अपीलाथी / Appellant बनाम / V/s. The Income Tax Officer, (Central) – 1, Nashik ......प्रत्यथी / Respondent ITSS)A No.41/PUN/2017 Assessment Year : 2006-07 Asstt. Commissioner of Income Tax, Central Circle – 2, Nashik ......अपीलार्थी / Appellant बनाम / V/s. Shri Bhagwat N. Chaudhari, 11, Swed Bindu, Shanti Nagar, Yawat Road, Bhusawal, Jalgaon – 425201 PAN : AALPC0512G ......प्रत्यर्थी / Respondent Assessee by : Shri Nikhil Pathak Revenue by : Shri J.P. Chandraker सुनवाई की तारीख / Date of Hearing : 30-11-2021 घोषणा की तारीख / Date of Pronouncement : 09-02-2022 2 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : These are four appeals. ITA Nos. 27, 28 and 29/PUN/2017 filed by the assessee against the common order dated 14-02-2017 passed by the Commissioner of Income Tax (Appeals)-12, Pune [„CIT(A)‟] for assessment years 2006-07, 2007-08 and 2008-09, respectively. ITA No. 41/PUN/2017 filed by the Revenue against the order dated 14-02-2017 passed by the Commissioner of Income Tax (Appeals)-12, Pune [„CIT(A)‟] for assessment years 2006-07. 2. We note that the issues raised in all the four appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear all these four appeals together and to pass a consolidated order for the sake of convenience. 3. First, we shall take up appeal in IT(SS)A No.27/PUN/2017 for A.Y. 2006-07 filed by the assessee. 4. The ld. AR submits that the assessee is not interested to prosecute ground Nos. 1, 2.2, 3, 3.1, 4 and 4.1. Accordingly, the same are dismissed as not pressed. 5. In ground Nos. 2 and 2.1 raised by the assessee, the only issue emanates for our consideration is as to whether the CIT(A) is justified in confirming the addition made by the AO on account of deemed rent in the 3 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 absence of incriminating material in the facts and circumstances of the case. 6. Heard both the parties and perused the material available on record. We note that the assessee is an individual and engaged in the business of undertaking contracts of high voltage transmission line. The assessee filed return of income declaring a total income at Rs.1,01,00,948/-. The AO completed the assessment by intimation u/s. 143(1)(a) of the Act. Thereafter, a search and seizure action u/s. 132 of the Act was conducted in Chaudhari Group of cases on 04-10-2011. According to the ld. AR there was no incriminating material found during the course of said search operation relating to the assessment year under consideration i.e. A.Y. 2006-07 and having nothing on record as incriminating material the AO completed assessment u/s. 153A of the Act determining the total income of the assessee at Rs.2,22,83,075/-. We note that the AO made disallowances/additions on different heads which is evident from Page No. 22 of the assessment made u/s. 153A of the Act. A contention was made before the CIT(A) that the AO failed to appreciate that the original assessment was completed u/s. 143(3)/143(1)(a) of the Act which is much before the date of search and the additions made thereon by the AO u/s. 153A of the Act could not have been made if incriminating material was not found during the search. 7. Coming to the issue on hand arising out of ground Nos. 2 and 2.1 challenging the addition made on account of deemed rent. We note that the AO discussed the said issue in Page No. 6 at Para No. 10, wherein it is observed that the AO assessed income from house property to an extent of 4 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 Rs.3,09,357/-. The AO noted that the description of properties in Sr. No. 1 to 6 in the assessment order, whereas, it is observed that the assessee disclosed the same in Balance sheet as on 01-04-2005 to 31-03-2006 relevant to the assessment year under consideration under Scheduled F on fixed assets in the original proceeding itself. The details of Scheduled F are at Page No. 25 of the paper book. On perusal of the description of property as noted by the AO in its order at Page No. 6 be that of Scheduled F at Page No. 25 of the paper book, we note that the details regarding the said fixed assets were furnished by the assessee during the course of original proceedings and no addition was made. Admittedly, no incriminating material found during the course of search regarding those properties and the AO only made the addition on account of deemed rent on the basis of material as furnished by the assessee during the course of original assessment proceedings which clearly shows that having no incriminating material the AO proceeded to make addition on account of deemed rent in the assessment which was completed. 8. The time limit for completion of A.Y. 2006-07 relevant to F.Y. 2005- 06 is 31-12-2008. The said time limit is provided u/s. 153 of the Act wherein the proviso explains that in case the assessment year in which the income was first assessable is the assessment year commencing on or after 01-04-2004 but before 01-04-2010 no order of assessment shall be made at any time after the expiry of twenty-one months. In the present case, the A.Y. being 2006-07 and twenty-one months is to be reckoned from the end of the assessment year in which the income first assessable i.e. from 01- 04-2007 twenty-one months i.e. by the end of 31-12-2008. As discussed above original assessment was completed u/s. 143(3)/143(1)(a) of the Act 5 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 much before the search i.e. 04-10-2011 which mean the assessment was attained finality. There is no dispute in this regard by the ld. DR. The Hon‟ble High Court of Bombay in the case of SKS Ispat & Power Ltd. reported in 99 taxmann.com 424 (Bom.) held that the scope of assessment after search u/s. 153A would be limited to the incriminating evidence found during the search. Admittedly, there was no reference to incriminating material by both the authorities below. Taking support from the ratio laid down by the Hon‟ble High Court of Bombay in the case of SKS Ispat & Power Ltd. (supra) we hold that having no incriminating material found during the course of search relating to the issue on hand and the AO proceeded to make addition on account of deemed rent only on the basis of material furnished during the course of original assessment proceeded. Therefore, it is clear the AO proceeded to make addition on the account of deemed rent without there being any incriminating material found during the course of search. Thus, in our opinion, the ratio laid down by the Hon‟ble High Court of Bombay in the case of SKS Ispat & Power Ltd. (supra) is applicable to the facts on hand and ground Nos. 2 and 2.1 raised by the assessee are allowed, accordingly. 9. In the result, the appeal of assessee is allowed. IT(SS)A No. 28/PUN/2017, A.Y. 2007-08 filed by the assessee. 10. The ld. AR submits that the assessee is not interested to prosecute ground No. 2. Accordingly, the same is dismissed as not pressed. 6 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 11. In respect of ground Nos. 1, 1.1 and 1.2 raised by the assessee, the only issue emanates for our consideration is as to whether the CIT(A) is justified in confirming the additions made by the AO on account of deemed rent in the absence of incriminating material in the facts and circumstances of the case. 12. Heard both the parties and perused the material available on record. In this appeal also we note that the AO made addition on account of deemed rent in the absence of incriminating material. The AO discussed the same at Para No. 8 at Page No. 5 of the assessment order u/s. 143(3)/ 153A of the Act. The CIT(A) discussed the issue vide Para No. 23 of the impugned order. We find the addition of amount is identical to the addition made in A.Y. 2006-07. The original assessment was completed on 20-11-2009 u/s. 143(3) of the Act is well before the date of search. Therefore, the view taken by us while deciding the appeal of assessee in IT(SS)A No. 27/PUN/2017 for A.Y. 2006-07 in the aforementioned paragraphs would mutatis mutandis apply to IT(SS)A No. 28/PUN/2017 for A.Y. 2007-08, as well. The appeal of assessee is allowed, accordingly. IT(SS)A No. 29/PUN/2017, A.Y. 2008-09 filed by the assessee. 13. The ld. AR submits that the assessee is not interested to prosecute ground Nos. 1.2, 2, 2.1 and 3. Accordingly, the same are dismissed as not pressed. 14. In respect of ground Nos. 1 and 1.1 raised by the assessee, the only issue emanates for our consideration is as to whether the CIT(A) is justified in confirming the additions made by the AO on account of deemed rent in 7 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 the absence of incriminating material in the facts and circumstances of the case. 15. Heard both the parties and perused the material available on record. We note that the AO discussed the issue in Para No. 9 of the assessment order wherein an identical amount was added to the income of the assessee on account of deemed rent to the addition made under A.Ys. 2006-07 and 2007-08. The CIT(A) also observed that the issue is similar on same identical facts for A.Y. 2006-07 and in view of discussion made in A.Y. 2006-07 confirmed the view of AO for the year under consideration vide Para No. 38 of the impugned order. In A.Y. 2006-07 in IT(SS)A No. 27/PUN/2017 in the aforementioned paragraphs we held that the AO proceeded to make addition on deemed rent on the basis of material furnished by the assessee during the original assessment proceedings meaning thereby, that there was no incriminating material before the AO found during the search operation and no addition is maintainable. The ld. DR did not dispute the issue raised in this appeal are similar to A.Y. 2006-07 on identical facts. Therefore, we hold that there was no incriminating material found during the course of search operation nor any reference made by the AO in 153A proceedings that this addition made on the basis of incriminating material found. Thus, it is clear addition made by the AO as confirmed by the CIT(A) fails and the grounds raised by the assessee are allowed. IT(SS)A No. 41/PUN/2017, A.Y. 2006-07 filed by the Revenue. 16. Admittedly, the tax effect involved in this appeal is below monetary limit fixed by the CBDT Circular vide its latest Circular No. 17/2019, dated 8 IT(SS)A Nos.27, 28, 29 & 41/PUN/2017 08-08-2019. Thus, grounds raised by the Revenue fail and the appeal is not maintainable. Therefore, the appeal of Revenue is dismissed as withdrawn in terms of CBDT Circular mentioned here-in-above. 17. In the result, the appeal of Revenue is dismissed. 18. To sum up, all the three appeals of the assessee are allowed and the appeal by the Revenue is dismissed. Order pronounced in the open court on 09 th February, 2022. Sd/- Sd/- (R.S. Syal) (S.S. Viswanethra Ravi) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ददनाांक / Dated : 09 th February, 2022. रधव आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-12, Pune 4. The Pr. CIT Central, Nagpur 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गार्ड फ़ाइल / Guard File. //सत्याधपत प्रधत// True Copy// आदेशानुसार / BY ORDER, वररष्ठ धनजी सधचव / Sr. Private Secretary आयकर अपीलीय अधधकरण ,पुणे / ITAT, Pune