Shri Nileshkumar D. Patel, RAJKOT-GUJARAT V. The Assisant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 31/RJT/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8509 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH SINGH
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Search and seizure
• Section: 143(3); 153A; 14A; 40(a)(ia); 132; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E-COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ IT(SS)A NO. 31/RJT/2017 / ASSTT. YEAR: 2006-2007 & ./ IT(SS)A NO.33/RJT/2017 / ASSTT. YEAR: 2008-2009 SHRI NILESHKUMAR D. PATEL, 307-ADITYA CENTRE, 3 RD FLOOR, PHULCHHAB CHOWK RAJKOT-360001. PAN: ADDPP9880D VS. A.C.I.T., CENTRAL CIRCLE-1, RAJKOT. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI R.D. LALCHANDANI , A.R REVENUE BY : SHRI OM PRAKASH SINGH, CIT. DR /DATE OF HEARING : 03/08/2021 /DATE OF PRONOUNCEMENT: 18/08/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), RAJKOT OF EVEN DATED 13/02/2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER IT(SS)A NOS.31 & 33/AHD/2017 ASSTT. YEARS 2006-07 & 2008-09. 2 S. 153A R.W.S 143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2006-2007 & 2008-09. 2 FIRST WE TAKE UP ITA NO. 31/RJT/2017 FOR AY 2006-07. IT IS A RECALLED MATTER. THE APPEAL WAS RECALLED BY THE ORDER OF THIS TRIBUNAL IN MA 26/RJT/2018 VIDE ORDER DATED 4-5-2021 TO ADJUDICATE THE ISSUE RAISED IN GROUND NO. 4 OF THE ORDER WHICH IS REPRODUCED AS UNDER: 4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 30312/-. BY APPLYING THE PROVISIONS OF SECTION 57 OF THE ACT. THE DISALLOWANCE IS NOT JUSTIFIED 3. AT THE OUTSET THE LD. AR BEFORE US SUBMITTED THAT THERE WAS SEARCH CONDUCTED U/S 132 OF THE ACT, AT THE PREMISES OF THE ASSESSEE DATED 08/09/2011. ACCORDINGLY THE PROCEEDINGS U/S 153A WERE INITIATED BY ISSUING NOTICE DATE 12/06/2012. FINALLY, THE ASSESSMENT WAS FRAMED U/S 153A R.W.S 143(3) OF THE ACT, BY MAKING THE ADDITION OF RS. 30,312/- AND 2,34,602/- RESPECTIVELY BY DISALLOWING THE EXPENSES U/S 57 AND 14A OF THE ACT. 3.1 AS PER THE LD. AR THERE WAS NO INCRIMINATING DOCUMENT FOUND DURING THE SEARCH QUA THE AFORESAID DISALLOWANCES/ ADDITIONS MADE BY THE REVENUE. THEREFORE, THE YEAR UNDER CONSIDERATION BEING UN-EMBEDDED ASSESSMENT YEAR CANNOT BE DISTURBED WITHOUT HAVING FOUND OUT ANY INCRIMINATING MATERIALS DURING THE SEARCH. ACCORDINGLY, THE LD. AR CONTENDED THAT THE ASSESSMENT FRAMED FOR THE YEAR UNDER CONSIDERATION IS NOT SUSTAINABLE AND LIABLE TO BE QUASHED. 4. ON THE OTHER HAND LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS NO DOCUMENT OF INCRIMINATING NATURE FOUND DURING THE COURSE OF SEARCH. THEREFORE THERE CANNOT BE ANY ADDITION IT(SS)A NOS.31 & 33/AHD/2017 ASSTT. YEARS 2006-07 & 2008-09. 3 TO THE TOTAL INCOME OF THE ASSESSEE. IN THIS REGARD WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN ITA NO. 31 TO 37/RJT/2017 FOR THE AYS 2006-07 TO 2012-13 ORDER DATED 7-11-2017 WHEREIN IT WAS HELD AS UNDER: 9. IT IS NOW WELL SETTLED THAT IF NO INCRIMINATING MATERIAL IS FOUND AT THE TIME OF SEARCH, NO DISALLOWANCES CAN BE MADE WHILE COMPLETING THE SEARCH RELATED ASSESSMENT FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HOH'BLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWALA 380 ITR 573 WHEREIN IEHON'BLE HIGH COURT HAS LAID DOWN THE FOLLOWING: THE LEGAL POSITION THAT EMERGES ON A PERUSAL O/ SECTION 353A AND SECTION 132 OF THE INCOME-TAX ACT, 1961 IS AS UNDER: (I) ONCE O SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE.(II) ASSESSMENTS AND REASSESSMENTS PENDING ON DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE, (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE SIX YEARS M SEPARATE ASSESSMENT ORDERS /OR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS ON EVIDENCE FOUND IN THE COURSE O/ THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOCS NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL, (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE, THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDING ON THE DOTE OF SEARCH] AND THE WORD 'REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS.(VI) IN SO FAR AS PENDING ASSESSMENTS ORE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY (OR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER, (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECT/ON 1534 ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 10. AS MENTIONED ELSEWHERE, THE DISALLOWANCE MADE U/S, 14A IS NOT THE OUTCOME OF SEARCH AND SEIZURE PROCEEDINGS NOR THE A.O. HAS REFERRED TO ANY UNDISCLOSED INCOME/INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. ON THE GIVEN FACTS OF THE CASE IN HAND, IN OUR CONSIDERED OPINION, NO DISALLOWANCE CAN BE MADE U/S. ACT WITHOUT ANY REFERENCE TO ANY INCRIMINATING MATERIAL. WE DIRECT THE A.O. TO DELETE ALL THE ADDITIONS/ DISALLOWANCES MADE IN THE (HANDS OF THE APPELLANTS. THESE BUNCH OF APPEALS ARE ACCORDINGLY ALLOWED. IT(SS)A NOS.31 & 33/AHD/2017 ASSTT. YEARS 2006-07 & 2008-09. 4 5.2 IN VIEW OF THE ABOVE, WE HOLD THAT THE ADDITION MADE BY THE AO AS DISCUSSED ABOVE REPRESENTS ITEM OF REGULAR NATURE AND WITHOUT FINDING OUT ANY DOCUMENT OF INCRIMINATING NATURE. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE AO AND CONFIRMED THE ORDER OF THE LD. CIT(A). HENCE THE GROUND OF APPEAL OF ASSESSE IS ALLOWED. 6. NOW COMING TO THE IT(SS)A NO. 33/RJT/2017 FOR AY 2008-09. 6.1 IT IS A RECALLED MATTER. THE APPEAL WAS RECALLED BY THE ORDER OF THIS TRIBUNAL IN M.A 27/RJT/2018 VIDE ORDER DATED 04/05/2021 TO ADJUDICATE THE ISSUE RAISED IN GROUND NO. 4 OF THE ORDER WHICH IS REPRODUCED AS UNDER: 4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE DISALLOWANCE IS NOT JUSTIFIED. 7. AT THE OUTSET WE NOTE SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN IT(SS)A NO. 31/RJT/2017 FOR AY 2006-07 WHICH HAS BEEN DECIDED IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NO 5 OF THIS ORDER. FOR DETAILED DISCUSSION PLEASE REFER TO THE ABOVE PARA. ACCORDINGLY WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS OF THIS ORDER WITH REGARD TO IT(SS)A NO. 31/RJT/2017 FOR A.Y. 2006-07 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. THUS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 8. IN THE COMBINED RESULTS, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED ORDER PRONOUNCED IN THE COURT ON 18/08/2021 AT AHMEDABAD. SD/- SD/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 18/08/2021 MANISH