THE ASSTT. CIT, CEN. Circle-1(3), Ahmedabad V. ARYAMAN SPINNERS PVT. LTD., Ahmedabad

ITSSA 29/AHD/2003

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0523 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-10-2014
• Assessment Year: misc
• Appeal Filed On: 07-02-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: O P VAISHNAV
• Keywords: Unexplained expenditure; Depreciation; Search and seizure; Additional evidence; Question of law; Validity of assessment; Block assessment
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T (SS) . A. NO. 25 / AHD/ 20 02 ( BLOCK PERIOD : 1988 - 89 TO 1998 - 99 & 1.04.1998) ARYAMAN SPINNERS PVT. LTD. H.P. HOUSE, OPP. TOWN HALL ELLIS BRIDGE, AHMEDABAD V/S D.C.I.T, CENTRAL CIRCLE - 1(1), AHMEDABAD (APPELLANT) (RESPONDENT) I.T (SS) . A. NO S . 72 /AHD/20 02 & 29/AHD/2003 (BLOCK PERIOD : 1988 - 89 TO 1998 - 99 & 1.04.1998) D.C.I.T, CENTRAL CIRCLE - 1(1), AHMEDABAD V/S ARYAMAN SPINNERS PVT. LTD. H.P. HOUS E, OPP. TOWN HALL ELLIS BRIDGE, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA8482G APPELLANT BY : SMT. URVASHI SODHAN, A.R. RESPONDENT BY : SHRI O.P. VAISHNAV, CIT/D.R ( )/ ORDER DATE OF HEARING : 30 - 10 - 2014 DATE OF PRONOUNCEMENT : 23 - 01 - 2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 3 APPEALS OF WHICH 2 ARE FI LED BY THE REVENUE AND 1 IS FILED BY THE ASSESSEE , A RE AGAINST THE ORDER OF CIT(A) - I, AHMEDABAD DATED 15.11.2002 & 22.11.2002. IT (SS) A NO S. 27 & 72/AHD/2002 & 29 /A/03 . BLOCK PERIOD . 1988 - 89 TO 1998 - 99 & 1.04.98 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF COTTON YARN. IN THIS CASE A SEARCH AND SEIZURE AC TION WAS CARRIED OUT ON 9.9.1998 AND CERTAIN DOCUMENTS WERE SEIZED. THEREAFTER, PURSUANT TO THE PROVISIONS OF S. 158BC, NOTICE WAS ISSUED AND SERVED ON ASSESSEE ON 25.10.1999 AND IN RESPONSE TO WHICH ASSESSEE ON 22.6.2000 FILED RETURN OF INCOME FOR BLOCK P ERIOD STARTING FROM 1.4.1988 TO 9.9.1998. SUBSEQUENTLY THE ASSESSMENT WAS FRAMED ON 30.11.2000 U/S 158BC AND THE TOTAL INCOME WAS DETERMINED AT RS 1,16,20,669/ - . AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 1 5.1.2002 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE REVENUE READS AS UNDER: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO CANCEL THE PENALTY LEVIED U/S. 158BFA(2) OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET AS IDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. 4. ON THE OTHER HAND THE ORIGINAL GROUNDS RAISED BY THE ASSESSEE READS AS UNDER - 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED CIT(APPEALS) HAS ERRED IN NOT ALLOWING THE GROUND OF APPEAL CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER U/S.158BC DATED 30 - 11 - 2000 PASSED BY THE ASSESSING OFFICER. 1.1 WHILE DISMISSING THIS GROUND OF APPEAL THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE ORDER PASSED BY THE ASS ESSING OFFICER WAS BAD IN LAW INSOFAR AS IT WAS PASSED WITH THE APPROVAL OF THE ADDL. CIT BUT WHILE GIVING HIS APPROVAL THE ADD. CIT DID NOT ALLOW ANY OPPORTUNITY TO THE APPELLANT OF BEING HEARD. 1.2 HAVING REGARD TO THE FACTS OF THE CASE THE HON'BLE ITAT MAY PLEASE HOLD THAT THE ASSESSMENT ORDER WAS NOT VALID. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,13,579 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED EXPENDITURE ON CONSTRUCTION OF FACTORY BUILDING U/S. 69B OF THE I.T. ACT. 2.1 WHILE DECIDING AS ABOVE THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT, (A) THE ADDITION IS MADE ON THE BASIS OF NOTINGS AND JOTTINGS AS PER ANNEXURE A - 2 (PAGE 2 AND 8) FOUND FROM THE RESIDENCE OF ARVIND GOSWAMI AND AS NOTED BY THE ASSESSING OFFICER IT WAS A PROJECT EXPENSES RELATING TO THE COST OF CONSTRUCTION OF FACTORY BUILDING. (B) IT WAS NOTHING BUT INTREST ACCOUNT FOR INCOMING AND OUTGOING . (C) THE NOTTINGS AND JOTT INGS REVEALS BOTH THE SIDES I.E. CREDITS AND DEBITS AND, THEREFORE, THERE WAS NO JUSTIFICATION FOR CONSIDERING ONLY DEBIT SIDE. IT (SS) A NO S. 27 & 72/AHD/2002 & 29 /A/03 . BLOCK PERIOD . 1988 - 89 TO 1998 - 99 & 1.04.98 3 (D) THE PROVISIONS OF SECTION 69B COULD BE INVOKED ONLY IF THE CUMULATIVE CONDITIONS WERE SATISFIED BY THE ASSESSING OFFICER ON THE BASIS OF THE FACTS. HOWEVER, THE LEARNED ASSESSING OFFICER HAD FAILED TO DISCHARGE THE ONUS CAST UPON HIM TO ESTABLISH THAT THE APPELLANT HAD INVESTED THE AMOUNTS IN THE FACTORY BUILDING. (E) NOBODY WOULD UNDERSTATE THE COST OF FACTORY BUILDING WHEN HE WOULD BE ENTITLED TO DEPRECIATION IN RESPECT OF SUCH INVESTMENT. (F) APART FROM THE ABOVE, AS EXPLAINED BEFORE THE CIT(APPEALS) THE DIRECTORS HAD MADE HUGE DISCLOSURE IN THEIR HANDS AND AS SUCH FUNDS WERE AVAILABLE FOR THE ALLEGED INVESTMENT IN THE FACTOR Y BUILDING. 2.2 THE HON'BLE ITAT MAY PLEASE HOLD THAT THERE WAS NO JUSTIFICATION FOR THE ADDITION OF RS.10,13,579. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE THE LEARNED CIT(APPEALS) HAS ERRED IN NOT DELETING THE INTEREST CHARG ED U/S. 158FA(1) OF THE I.T. ACT. 3.1 THE LEARNED CIT(APPEALS) HAS ALSO ERRED IN HOLDING THAT THE RETURN DELAYED AND INTEREST IS CHARGEABLE, AND THAT THE ASSESSEE'S EXPLANATION MAY BE GOOD FOR WAIVER OF INTEREST. 3.2 THE LEARNED CIT(A) HAS WHILE HOLDING A S ABOVE, FAILED TO APPRECIATE THAT DELAY IN FILING THE RETURN OF INCOME U/S,158BC WAS ON ACCOUNT OF DELAY IN PROVIDING XEROX COPIES OF THE SEIZED MATERIALS BY THE DEPARTMENT AND THUS THERE WAS NO FAULT OF THE APPELLANT FOR SUCH DELAY. 3.3 THE HON'BLE ITAT MAY IN VIEW OF THE FACTS OF THE APPELLANT'S CASE ORDER FOR DELETING THE INTEREST CHARGED U/S.158 BFA(1). 4.YOUR APPELLANT CRAVES A LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS AT THE TIME OF HEARING. 5. SUBSEQUENTLY, ASSESSEE HAS RAISED ADDITIONAL GROUNDS ON 24 .11.2010 WHICH READS AS UNDER: - APPELLANT CRAVES LEAVE TO RAISE THIS ADDITIONAL GROUND OF APPEAL BEFORE THE HON'BLE ITAT. THIS IS A LEGAL GROUND AND THEREFORE AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER (229 ITR 383), IT CAN BE RAISED BEFORE THE HON'BLE ITAT. 1. THE ORDER PASSED U/S 158BC IS BAD IN LAW, INVALID AND NOT TENABLE SINCE NO WARRANT AUTHORIZING SEARCH WAS ISSUED SOLELY IN THE NAME OF THE APPELLANT BUT ISSUED IN JOINT NAMES OF M/S SHREENATH SPINNERS LTD. AND THE APPELLANT AT THE ADDRESS - OPP. TOWN HALL, H P HOUSE, ELLISBRIDGE, AHMEDABAD. THE PROVISIONS OF LAW LAYS DOWN THAT ASSESSMENTS FRAMED IN INDIVIDUAL STATUS ARE CLEARLY INVALID AND BAD IN LAW WHEN FRAMED ON THE BASIS OF ISSUANCE OF WARRANT IN JOINT NAMES. 2. T HE ORDER PASSED U/S 158BC ON 30/11/2000 IS BAD IN LAW AND VOID AB INITIO SINCE THE REVOCATION ORDER PASSED ON 07/11/1998 IS IN JOINT NAMES OF SHREENATH SPINNERS LTD., GUJARAT FOILS LTD., ARYAMAN SPINNERS LTD, H PATEL & CO AND ARYAMAN AWAS AT H P HOUSE, ELL ISBRIDGE, AHMEDABAD WHEREAS LAST AUTHORIZATION U/S 132(1) OF THE ACT IN THE NAME OF THE APPELLANT WAS EXECUTED ON 10/09/1998. THUS IN VIEW OF THE FACTS AND PROVISIONS OF S. 158BE, THE IMPUGNED ORDER PASSED U/S 158BC IS BARRED BY TIME THAT OUGHT TO HAVE BEE N PASSED BEFORE 30/09/2000 AND DESERVES TO BE ANNULLED. APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, CHANGE, DELETE AND EDIT THE ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. 6. WITH RESPECT TO THE ADDITIONAL GROUNDS WHICH IS WI TH RESPECT TO CHALLENGING THE VALIDITY OF BLOCK ASSESSMENTS FRAMED U/S 158BC, IT IS SUBMITTED BY THE LD AR THAT THE ASSESSEE IS CHALLENGING THE VALIDITY OF THE ORDER PASSED U/S 158BC OF THE ACT IT (SS) A NO S. 27 & 72/AHD/2002 & 29 /A/03 . BLOCK PERIOD . 1988 - 89 TO 1998 - 99 & 1.04.98 4 INTER ALIA ON THE GROUND THAT ORDER PASSED U/S 158BC IS BARRED BY LIMITATION. IT IS FURTHER SUBMITTED THAT ADDITIONAL GROUNDS BEING LEGAL IN NATURE AND SINCE IT GOES TO THE ROOT OF THE MATTER THE SAME BE ADMITTED AND FOR THIS PROPOSITION RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF NTPC VS CIT 229 ITR 383 (SC) AND JUTE CORPORATION OF INDIA VS CIT 187 ITR 688 (SC). THE LD AR FURTHER SUBMITTED THAT IN THE PRESENT CASE, NO ADDITIONAL EVIDENCE WAS REQUIRED TO EXAMINE ISSUE RELATING TO VALIDITY OF ASSESSMENT AND THEREFORE THE ISSUE BE DECIDED BY THE TRIBUNAL ITSELF A ND THE ISSUE NOT BE REMITTED TO THE LOWER AUTHORITIES AND FOR THIS PROPOSITION SHE RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF J. B. CONSTRUCTION VS ACIT (2014) 45 TAXMANN.COM 401 (GUJ). THE LD DR ON BEHALF OF REVENUE HAS OBJECTED T O THE ADMISSION OF THE ADDITIONAL GROUNDS INTERALIA FOR THE REASONS THAT THE ASSESSEE HAS NOT EXPLAINED THE REASONS OR CAUSES FOR RAISING THE ADDITIONAL GROUNDS FOR THE FIRST TIME BEFORE THE TRIBUNAL AND IN THE ABSENCE OF AFFIDAVIT AS PRESCRIBED UNDER RULE 10 OF THE ITAT RULES, THE ASSESSEE CANNOT BE ALLOWED TO RAISE ADDITIONAL GROUND IN MECHANICAL MANNER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS WITH RESPECT TO THE ADMISSIBILITY OF ADDITIONAL GROUND. THROUGH THE ADDITIONAL GROUNDS, THE ASSESSEE IS CHALLENGING THE VALIDITY OF THE ASSESSMENTS FRAMED U/S 158BC OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE VALIDITY OF ASSESSMENTS WAS NEVER CHALLENGED BY THE ASSESSEE BEFORE THE AO OR CIT(A) BUT IS CHALLENGED BEFORE US FOR THE FIRST TIME. THE QUESTION RAISED BY THE A SSESSEE BEING A QUESTION OF LAW, WE ARE OF THE VIEW THAT THE ADDITIONAL GROUND REQUIRES TO BE ADMITTED. WITH RESPECT TO THE ADDITIONAL GROUND, WE FIND THAT IT IS A SSESSEE 'S CONTENTION THAT THE LAST AUTHORIZATION U/S 132(1) OF THE ACT IN THE NAME OF THE ASS ESSEE WAS EXECUTED ON 10.9.1998 AND THE ORDER PASSED U/S 158BC WAS PASSED ON 30.11.2000 I.E. BEYOND THE TIME PRESCRIBED U/S 158BE(B) OF THE ACT AND THEREFORE THE ORDER WAS VOID. BEFORE US, THERE IS NO MATERIAL ON RECORD TO DEMONSTRATE THAT LAST OF THE AUTH ORIZATION WAS EXECUTED ON 10.9.1998 AND THEREFORE THE ORDER PASSED U/S 158BC WAS BEYOND THE TIME LIMIT PRESCRIBED UNDER THE ACT. WE FURTHER FIND THAT THERE IS NO FINDING WITH RESPECT TO THE AFORESAID BY EITHER AO OR CIT(A). BEFORE US, LD AR HAS RELIED IT (SS) A NO S. 27 & 72/AHD/2002 & 29 /A/03 . BLOCK PERIOD . 1988 - 89 TO 1998 - 99 & 1.04.98 5 ON T HE DECISION OF GUJART HIGH COURT IN THE CASE OF J. B. CONSTRUCTION VS ACIT (2014) 45 TAXMANN.COM 401 (GUJ) IN SUPPORT OF THE CONTENTION THAT THE ISSUE COULD BE DECIDED BY THE TRIBUNAL WITHOUT REMANDING THE MATTER BACK TO CIT(A). WE FIND THAT THE DECISION R ELIED UPON BY THE LD AR IS DISTINGUISHABLE ON FACTS AS IN THAT CASE THE ISSUE COULD HAVE BEEN DECIDED ON THE BASIS OF MATERIAL ON RECORD. HOWEVER, IN THE PRESENT CASE, AS WE HAVE NOTED ABOVE, THERE IS NO MATERIAL ON RECORD TO DEMONSTRATE THAT LAST OF THE A UTHORIZATION U/S 132(1) WAS EXECUTED ON 10.9.1998. WE ARE THEREFORE OF THE VIEW THAT THE AFORESAID CONTENTION NEEDS VERIFICATION AND THEREFORE REMIT THE ISSUE TO THE FILE OF CIT(A) TO VERIFY THE GIVE A FACTUAL FINDING AND THEREAFTER DECIDE THE ISSUE IN ACC ORDANCE WITH LAW. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SINCE THIS GROUND HAS BEEN REMITTED TO THE FILE OF CIT(A) THE OTHER GROUNDS OF R EVENUE AND A SSESSEE ARE ALSO REMITTED TO THE FILE OF CIT(A) TO BE DECIDED ON THE BA SIS OF FACTS AND IN ACCORDANCE WITH LAW. 8. IN THE RESULT THE APPEALS OF THE REVENUE AND ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. IN ITA NO 29/A/2003 REVENUE IS AGGRIEVED ON ACCOUNT OF DELETION OF PENALTY U/S 158BFA(2). 9. WE FIND THAT PENALTY U/S 158B FA(2) OF R S 12,16,285/ - WAS LEVIED ON THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD 7.4.97 TO 98 - 99 WHICH WAS DELETED BY CIT(A). WE HEREINABOVE HAVE REMITTED THE QUANTUM APPEAL OF THE ASSESSEE AND REVENUE TO THE FILE OF CIT(A) WITH DIRECTIONS CONTAINED THERE IN. SINCE THE QUANTUM APPEALS HAVE BEEN REMITTED BACK TO CIT(A) AND SINCE THE PENALTY IN THE PRESENT APPEAL ALSO EMANATES FROM THE QUANTUM APPEALS, THE PRESENT APPEAL IS ALSO REMITTED TO THE FIL E OF CIT(A) FOR HIM TO DECIDE DE NOVO ON THE BASIS OF QUANTUM APPEAL AND IN ACCORDANCE WITH LAW. IN THE RESULT THIS APPEAL OF R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES. IT (SS) A NO S. 27 & 72/AHD/2002 & 29 /A/03 . BLOCK PERIOD . 1988 - 89 TO 1998 - 99 & 1.04.98 6 10. IN THE RESULT THE APPEALS OF R EVENUE AND A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 23 - 01 - 201 5 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLAN T. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD