The ACIT, Central Circle-1(2), Ahmedabad V. Shri Dhruv Narendra Patel, Ahmedabad

ITSSA 284/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9168 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Keywords: Business income
• Section: 153A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR I.T(SS).A. NOS. 282 & 283/AHD/2016 ( ASSESSMENT YEARS : 2007-08 & 2008-09) ACIT CENTRAL CIRCLE 1(2), AHMEDABAD / VS. SHRI NARENDRA M. PATEL DHRUV FARM, NEAR RAILWAY CROSSING, THALTEJ-SILAJ ROAD, AHMEDABAD 380054 / / PAN/GIR NO. : AEAPP9508G ( APPELLANT ) .. ( / RESPONDENT ) & I.T(SS).A. NO. 284/AHD/2016 ( ASSESSMENT YEAR : 2007-08) ACIT CENTRAL CIRCLE 1(2), AHMEDABAD / VS. SHRI DHRUV NARENDRA PATEL DHRUV FARM, NEAR RAILWAY CROSSING, THALTEJ-SILAJ ROAD, AHMEDABAD 380054 / / PAN/GIR NO. : AFXPP6818D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SMT. APARNA AGARWAL, CIT.D.R. / RESPONDENT BY : NONE DATE OF HEARING 12/12/2018 !'# / DATE OF PRONOUNCEMENT 20/12/2018 IT(SS)A NOS. 282 TO 284/AHD/16 (ACIT VS. NARENDRA M PATEL & DHRUV N. PATEL] - 2 - / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE RE SPECTIVE REVENUES NAMED ABOVE FOR DIFFERENT ASSESSMENT YEARS TABULATED HEREIN: SL. NO. ITA NO. NAME OF ASSESSEE AY CIT(A) ORDER DATED ASSESSMENT ORDER PASSED UNDER S.143 (3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (THE ACT) DATED 1 282/AHD/2016 SHRI NARENDRA M. PATEL 2007-08 13.06.2016 24.03.2014 2 283/AHD/2016 SHRI NARENDRA M. PATEL 2008-09 13.06.2016 24.03.2014 3 284/AHD/2016 SHRI DHRUV NARENDRA PATEL 2007-08 15.06.2016 21.03.2014 IT(SS)A NO.282/AHD/2016-A.Y. 2007-08(SHRI NARENDRA M. PATEL) 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE R EAD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN NOT APPRECIATING THE PROVISIONS OF SECTION 153A OF THE I.T.ACT WHICH REQUIRES THE TOTAL INCOME TO BE BROUGHT UNDER TAX WITHOUT ANY RESTRICTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN HOLDING THAT SUCH ASSESSMENT OR RE-ASSESSMENT U/S.153A IS TO BE RESTRICTED ONLY TO THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN NOT ADJUDICATING THE ISSUE INVOLVED ON MERITS. 3. WHEN THE MATTER WAS CALLED FOR HEARING, NONE AP PEARED FOR THE ASSESSEE. ACCORDINGLY, THE MATTER IS PROCEEDED EX PARTE. IT(SS)A NOS. 282 TO 284/AHD/16 (ACIT VS. NARENDRA M PATEL & DHRUV N. PATEL] - 3 - 4. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO AND SUBMITTED IN FURTHERANCE THAT A SEARCH UNDER 13 2 OF THE ACT WAS CONDUCTED IN THE CASE OF MARUTI-SAVVY GROUP OF CASE S ON 27.04.2011 AND SUBSEQUENT DATES. A WARRANT OF AUTHORIZATION U NDER S.132 OF THE ACT WAS ALSO ISSUED IN THE CASE OF THE ASSESSEE. C ONSEQUENTLY, PROCEEDINGS UNDER S.153A OF THE ACT WAS INITIATED A GAINST THE ASSESSEE AND THE ASSESSMENT UNDER S.143(3) R.W.S. 153A OF TH E ACT WAS COMPLETED. ON BEING INQUIRED BY THE BENCH TOWARDS NATURE OF ADDITIONS/ADJUSTMENTS, THE LEARNED DR COULD NOT SUP PORT SUCH ADDITIONS WITH REFERENCE TO ANY INCRIMINATING MATER IAL DISCOVERED DURING SEARCH OPERATIONS IN THE CASE OF THE ASSESSE E. THE ADDITIONS/ADJUSTMENTS MADE ARE IN THE NATURE OF RE- CHARACTERIZATION OF HEAD INCOME FROM CAPITAL GAINS AS DECLARED BY THE ASSESSEE TO BUSINESS INCOME BY THE REVENUE. FOR DOING SO, NO REFERENCE TO INCRIMINATING MATERIAL WAS POINTED OUT. THE LEARNE D DR ALSO COULD NOT REBUT THAT OTHER ADDITIONS ARE ALSO ESSENTIALLY IN THE NATURE OF REAPPRAISAL OF THE TRANSACTIONS ALREADY RECORDED IN THE BOOKS OF ACCOUNTS FOR WHICH THE RETURN WAS FILED PRIOR TO SE ARCH AND THE ASSESSMENT DOES NOT REMAIN PENDING ANY LONGER. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E ON BEHALF OF THE REVENUE AND PERUSED THE ORDERS OF THE AUTHORITI ES BELOW. THE SUBSTANTIVE ISSUE THAT ARISES FOR CONSIDERATION IN THE CAPTIONED APPEALS BY THE REVENUE IS WHETHER PROCEEDINGS UNDERTAKEN IN TERMS OF SECTION 153A/153C SHOULD NECESSARILY BE BASED ON INCRIMINAT ING MATERIAL FOUND IN THE COURSE OF SEARCH WHERE THE REGULAR ASS ESSMENT ALREADY STANDS COMPLETED ARE NO LONGER PENDING. IN THE INS TANT CASE, THE ASSESSMENT WAS FRAMED IN FURTHERANCE OF SEARCH AS C ONTEMPLATED UNDER S.153A OF THE ACT. THE ASSESSMENT SO MADE SEEKS TO ENCOMPASS THE REGULAR ITEMS OF ADDITIONS/DISALLOWANCES INDEPENDEN T OF INCRIMINATING MATERIAL. IT IS ALSO AN ADMITTED POSITION IN THE I NSTANT CASE THAT THE IT(SS)A NOS. 282 TO 284/AHD/16 (ACIT VS. NARENDRA M PATEL & DHRUV N. PATEL] - 4 - ASSESSMENT WAS COMPLETED/DEEMED TO BE CONCLUDED PRI OR TO SEARCH AND THUS DO NOT STAND ABATED IN TERMS OF 2 ND PROVISO TO SUB-SECTION (1) OF SECTION 153A OF THE ACT. IN THE BACKDROP OF AFORES AID FACTS, WE NOTE THAT THE LAW HAS BEEN CLEARLY LAID DOWN ON THE ISSU E BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. SAUMYA CONSTRUCTION PVT. LTD. REPORTED IN 387 ITR 529 (GUJ). THE HONBLE GU JARAT HIGH COURT AFTER MAKING REFERENCE TO HOST OF DECISIONS RENDERE D IN THIS REGARD BY VARIOUS HIGH COURTS AND AFTER MAKING REFERENCE TO T HE PROVISIONS OF THE STATUTE EXPLAINED THE MANDATE OF LAW IN THIS RE GARD. IN ESSENCE, HONBLE GUJARAT HIGH COURT HELD THAT IN EXERCISE OF POWERS OUTLINED UNDER S.153A OF THE ACT TOWARDS CONCLUDED ASSESSMEN TS, ADDITIONS/DISALLOWANCES IN SECTION 153A OF THE ACT PROCEEDINGS OUGHT TO BE MADE WITH REFERENCE TO INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. 6. THE RELEVANT PARA OF THE JUDGMENT IS EXTRACTED F OR READY REFERENCE HEREUNDER: 18. IN THIS CASE, IT IS NOT THE CASE OF THE APPELL ANT THAT ANY INCRIMINATING MATERIAL IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND DURING THE COURSE OF SEARCH . AT THE RELEVANT TIME WHEN THE NOTICE CAME TO BE ISSUED UNDER SECTIO N 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME. MUCH LATE R, AT THE FAG END OF THE PERIOD WITHIN WHICH THE ORDER UNDER SECTION 153 A OF THE ACT WAS TO BE MADE, IN OTHER WORDS, WHEN THE LIMIT FOR FRAMING THE ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS ABOUT TO EXPIRE THE NOTICE HAS BEEN ISSUED IN THE PRESENT CASE SEEKING TO MAKE THE PROP OSED ADDITION OF RS.11,05,51,000/- ON THE BASIS OF THE MATERIAL WHIC H WAS NOT FOUND DURING THE COURSE OF SEARCH, BUT ON THE BASIS OF A STATEMENT OF ANOTHER PERSON IN THE OPINION OF THIS COURT, IN A CASE LIKE THE PRESENT ONE, WHERE AN ASSESSMENT HAS BEEN FRAMED EARLIER AND NO ASSESSMENT OR REASSESSMENT WAS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SE CTION 153A OF THE ACT, ADDITIONS OR DISALLOWANCES CAN BE MADE ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR R EQUISITION IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO IN CRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, HOWEVER, IT IS ON THE BASIS OF SOME MATERIAL COLLECTED BY THE ASSESSING OFFICER MU CH SUBSEQUENT TO THE SEARCH, THAT THE IMPUGNED ADDITIONS CAME TO BE MADE. IT(SS)A NOS. 282 TO 284/AHD/16 (ACIT VS. NARENDRA M PATEL & DHRUV N. PATEL] - 5 - 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING TH AT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE I N RESPECT OF ALL THE SIX ASSESSMENT YEARS. IN THE OPINION OF THIS COURT , THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS, THE ASSESSM ENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION, NAMELY, IN R ELATION TO MATERIAL DISCLOSED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IF FOUND , NO ADDITION OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESS MENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AN D THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS RE GARD, THIS COURT IS IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJ ASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA), JODHPUR V. ASSIST ANT COMMISSIONER OF INCOME TAX (SUPRA). BESIDES, AS RIGHTLY POINTED OU T BY THE LEARNED COUNSEL FOR THE RESPONDENT THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN T HE CASE OF COMMISSIONER OF INCOME-TAX-1, V. JAYABEN RATILAL SO RATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DI SPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/O9R ASSESS THE RETURN WITH RESPECT TO SIX PRECE DING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN TH E PARTICULAR ASSESSMENT YEAR. 7. A PERUSAL OF THE ORDER OF THE CIT(A) SHOWS AN AD MITTED POSITION THAT NO INCRIMINATING MATERIAL WAS FOUND WITH REFER ENCE TO ADDITIONS/DISALLOWANCES WHICH ARE SUBJECT MATTER OF PRESENT APPEAL. THUS, THE ACTION OF THE AO IS DIRECTLY AT ODDS WITH THE JUDICIAL DICTUM WHICH SEEKS TO LIMIT THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT. IN THE CIRCUMSTANCES, WE FIND THAT THE CIT(A) HAS C ORRECTLY APPRECIATED THE LAW IN THE FACTS OF THE CASE AND RI GHTLY HELD THAT VARIOUS ADDITIONS/DISALLOWANCES MADE BY THE AO IN T HE ASSESSMENT UNDER S.153A OF THE ACT ARE CLEARLY BEYOND THE SCOP E OF AUTHORITY VESTED IN STATUTE OWING TO ABSENCE OF ANY PERTINENT MATERIAL OR EVIDENCE DETECTED AS A RESULT OF SEARCH. IN THE AB SENCE OF ANY REFERENCE TO ANY INCRIMINATING MATERIAL FOUND IN TH E ORDER OF THE AO AND OWING TO A POSITIVE FINDING BY THE CIT(A) AFTER EXAMINATION OF CASE RECORDS AND APPRAISAL REPORT THAT THE ADDITION MADE BY THE AO IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SE IZED DURING THE IT(SS)A NOS. 282 TO 284/AHD/16 (ACIT VS. NARENDRA M PATEL & DHRUV N. PATEL] - 6 - COURSE OF SEARCH, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 8. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. 9. THE FACTS AND CIRCUMSTANCES IN IT(SS)A NOS. 283 & 284/AHD/2016 ARE SUBSTANTIALLY SIMILAR. THUS, IN P ARITY WITH THE OBSERVATIONS MADE IN IT(SS)A NO. 282/AHD/2016 (SUPR A), THE OTHER TWO APPEALS FILED BY THE REVENUE ARE ALSO DISMISSED . 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE C APTIONED ABOVE ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 20/12/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- & / REVENUE 2 / ASSESSEE ( ) *+ , / CONCERNED CIT 4 ,- / CIT (A) / 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7 289 : / GUARD FILE. BY ORDER / 4 / 5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 20/12/20 18