DCIT, Central Circle - 2(1), Kolkata, Kolkata V. M/s. Amrit Cement & Industries Ltd., Kolkata

ITSSA 29/KOL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4227 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSIAN
• Keywords: Question of law
• Section: 153A; 143(1); 143(2); 68; 132

Judgement Text

1 IT(SS) NO. 29/KOL/2017 M/S. AMRIT CEMENT & INDUSTRIES LTD., AY 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A.L. SAINI, AM ] I.T(SS) NO. 29/KOL/2017 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(1), KOLKATA. VS. M/S. AMRIT CEMENT & INDUSTRIES LTD. (PAN: AAGCA 9080 R) APPELLANT RESPONDENT DATE OF HEARING 22.01.2019 DATE OF PRONOUNCEMENT 13.03.2019 FOR THE APPELLANT SHRI A.K. SINGH, CIT, DR FOR THE RESPONDENT SHRI A. K. TULSIAN, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-20, KOLKATA DATED 22.03.2017 FOR AY 2009-10. 2. THOUGH THE REVENUE HAS FILED REVISED GROUNDS OF APPEAL, THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN DELE TING THE ADDITIONS BY TAKING NOTE THAT IN SEC. 153A PROCEEDINGS WHEN THE ADMITTED FACT WAS ON THE DATE OF SEARCH, THIS YEARS ASSESSMENT WAS NOT PENDING BEFORE THE AO, THEN NO A DDITION CAN BE MADE WITHOUT THE AID OF INCRIMINATING MATERIAL UNEARTHED DURING SEARCH QUA THE ASSESSMENT YEAR. 3. FOR ADJUDICATING THE ACTION OF THE LD. CIT(A) AS AFORE-STATED, WE NOTE THAT SEARCH WAS CONDUCTED U/S. 132(1) OF THE ACT ON ASSESSEE ON 30. 08.2012. FOR THIS ASSESSMENT YEAR 2009- 10, THE ASSESSEE HAD FILED RETURN OF INCOME ON 29.0 9.2009 AND THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) EXPIRED ON 30.09.2010 AND UNDISP UTEDLY AO HAD NOT ISSUED ANY NOTICE U/S. 143(2) BEFORE THE EXPIRY OF THE SAID DATE, SO THE ASSESSMENT YEAR 2009-10 WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH CONDUCT ED ON 30.08.2012. SO, THE ASSESSMENT 2 IT(SS) NO. 29/KOL/2017 M/S. AMRIT CEMENT & INDUSTRIES LTD., AY 2009-10 UNDER QUESTION WAS AN UNABATED ASSESSMENT BEING NOT PENDING BEFORE AO ON THE DATE OF SEARCH AND THE AO CAN MAKE ANY ADDITION ONLY WITH T HE AID OF INCRIMINATING MATERIAL UNEARTHED DURING SEARCH QUA THIS ASSESSMENT YEAR AN D IN THAT SCENARIO, THE AO HAS TO REITERATE THE ASSESSMENT PASSED U/S. 143(1) OR 143( 3) AND CANNOT DISTURB THE SAME AS HELD BY THE HONBLE DELHI HIGH COURT IN CIT VS . KABUL CHAWLA (2016) 380 ITR 573 (DEL), WHEREIN THEIR LORDSHIPS HAVE HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DE CISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. 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 SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN S EPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. 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 OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO O NE. 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 RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 4. THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT I N ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISE D U/S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DISALLOWANCE OF T HE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO WERE UPHELD BY THE 3 IT(SS) NO. 29/KOL/2017 M/S. AMRIT CEMENT & INDUSTRIES LTD., AY 2009-10 LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DISALL OWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, T HEREFORE, DISMISSED. 5. PCIT VS KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL): SEARCH & SEIZURE ASSESSMENT IN SEARCH CASES SHA RE APPLICATION MONEY NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISS UED FOUND DURING COURSE OF SEARCH DELETION OF ADDITION UNDER SECTION 68 JUSTIFIED I NCOME TAX ACT, 1961, SS. 68, 153A. HELD DISMISSING THE APPEAL, THAT THE ORDER OF COMM ISSIONER (APPEALS) REVEALED THAT THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RE LATED TO SHARE CAPITAL ISSUE WAS FOUND DURING COURSE OF SEARCH AS WAS MANIFEST FROM THE ORDER OF AO. CONSEQUENTLY, IT WAS HELD THAT AO WAS NOT JUSTIFIED IN INVOKING SECTION 68 FOR THE PURPOS ES OF MAKING ADDITION ON ACCOUNT OF SHARE CAPITAL. THERE WAS NOTHING TO SHOW THAT ABOVE FACTU AL DETERMINATION WAS PERVERSE. THE JUDGEMENT OF THE HONBLE HIGH COURT IS REPRODUC ED AS UNDER: '1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORD ER DATED NOVEMBER 14, 2014, PASSED BY THE INCOME -TAX APPELLATE TRIBUNAL (ITAT) IN 3761/DEL/2 011 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUESTION WAS WHETHER THE LEARNED COMMI SSIONER OF INCOME -TAX (APPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDIT ION OF RS. 89 LAKHS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME -TAX ACT, 19 61 ('THE ACT') ON BOGUS SHARE CAPITAL. BUT THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING M ATERIAL WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITIATION OF PROCEEDINGS UNDER S ECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE COMMISSION ER OF INCOME-TAX(APPEALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT ' NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FR OM THE ORDER OF THE ASSESSING OFFICER. CONSEQUENTLY, IT WAS HELD THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS N ACCO UNT OF SHARE CAPITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE I S NOTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL DETERMINATION IS PERVER SE. CONSEQUENTLY, AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS O F THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE IMPUGNED ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL WHICH REQUIRES EXAMINATION. 4. THE APPEAL IS, ACCORDINGLY, DISMISSED.' THE DEPARTMENT HAD FILED SPECIAL LEAVE PETITION BEF ORE THE HONOURABLE APEX COURT AGAINST THE ABOVE JUDGEMENT OF THE DELHI HIGH COURT. (PR CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) NO-34554 OF 2015[ 20161 380 LTR (ST) 64-ED). THE HONOURABLE APEX COURT DISMISSED THE SPECIAL LEA VE PETITION FILED BY THE DEPARTMENT. THE RELEVANT PARA AS MENTIONED IN THE ITR IS REPROD UCED AS UNDER. 'THEIR LORDSHIPS MADAN B.LOKUR AND S.A.BOBDE JJ DIS MISSED THE DEPARTMENT'S SPECIAL LEAVE PETITION AGAINST THE JUDGEMENT DATED JULY 06,2015 O F THE DELHI HIGH COURT IN I.T.A NO 369 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUBSTANTI AL QUESTION OF LAW AROSE SINCE THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELA TED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSE OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL' THE ABOVE JUDGEMENT IS SQUARELY APPLICABLE IN THE C ASE OF THE APPELLANT SINCE THE AO MADE ADDITION ON ACCOUNT OF SHARE CAPITAL U/S 68 OF THE I.T. ACT WITHOUT ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. 4 IT(SS) NO. 29/KOL/2017 M/S. AMRIT CEMENT & INDUSTRIES LTD., AY 2009-10 6. WE NOTE THAT THE LD. CIT(A) HAS MADE A FINDING O F FACT THAT AO HAS NOT MADE THE IMPUGNED ADDITION BASED ON INCRIMINATING MATERIALS SEIZED DURING SEARCH OPERATION, WHICH FINDING OF FACT HAS NOT BEEN ABLE TO BE FIND FAULT WITH AND CANNOT BE CALLED ERRONEOUS OR PERVERSE BY THE DEPARTMENT THOUGH THE LD. CIT, DR T RIED HIS BEST TO CONVINCE US THAT THE CONCEPT OF INCRIMINATING MATERIALS FOUND DURING SEA RCH IS ALIEN TO SECTION 153A PROCEEDINGS. HOWEVER WE ARE NOT PERSUADED TO ACCEPT THE CONTENTION OF THE LD. CIT, DR AND SINCE THE AO HAS NOT MADE EVEN A WHISPER ABOUT ANY INCRIMINATION MATERIALS TO MAKE THE ADDITIONS, AND THIS YEAR BEING UNABATED ASSESSM ENT, THEREFORE, THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE JUDICIAL PRECEDENTS (CITED SUPRA) AND DELETED THE ADDITION, WHICH ACTION OF LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE ON OUR PA RT. THEREFORE, THE APPEAL OF REVENUE IS DISMISSED. 7. SINCE WE HAVE UPHELD THE ACTION OF THE LD. CIT(A ) ON THE AFORESAID REASONS (SUPRA), WE ARE NOT GOING INTO THE MERITS OF THE ADDITION, S INCE IT IS ACADEMIC IN NATURE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13/03/ 2019 SD/- (A.L. SAINI) SD/- (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13TH MARCH, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT DCIT, CENTRAL CIRCLE-2(1), KOLKATA 2 RESPONDENT M/S. AMRIT CEMENT & INDUSTRIES LTD., T RINITY TOWER, 6 TH FLOOR, 226/1, A.J.C. BOSE ROAD, KOLKATA-700 020. 3 4 5 CIT(A) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O ITAT, KOLKATA