DCIT, Central Circle - 2(1), Kolkata, Kolkata V. M/s. Shree Shakambari Vastu Nirman Pvt. Ltd., Kolkata

ITSSA 33/KOL/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3882 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING CIT LD
• Assessee Lawyers: D S DAML E FCA LD
• Keywords: Search and seizure
• Section: 143(3); 142(1); 153A; 132; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA BEFORE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM I.T (SS) A NO. 33 /KOL/201 7 A.Y 20 0 7 - 08 D.C.I.T, C .C 2(1) , KOLKATA - VS - M/S. SHREE SHAKAMBARI VASTU PVT. LTD. PAN: AAGCS 5008R (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI G. HANGSHING, CIT, LD.DR FOR THE RESPONDENT : SHRI D.S DAMLE, FCA, LD.AR DATE OF HEARING : 2 8.0 6 .2018 DATE OF PRONOUNCEMENT : 21 .08.2018 ORDER SHRI S.S. VISWANETHRA RAVI, JM: THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DT. 22 - 03 - 2017 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) , 20 , KOLKATA FOR THE A.Y 200 7 - 08 . 2. AT THE OUTSET, IT IS NOTICED THAT THE APPEAL FILED BY APPELLANT REVENUE IS BARRED BY 04 DAYS. FOR WHICH, THE APPELLANT REVENUE HAS NOT FILED ANY PETITION/APPLICATION FOR CONDONATION OF SUCH DELAY OF 04 DAYS. AFTER HEARING THE LD.AR AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND IN THE INTEREST OF JUSTICE, WE CONDONE THE SAID DELAY AND DECIDED TO DISPOSE OF THE APPEAL O N MERITS ON THE BASIS OF MATERIAL AS AVAILABLE ON RECORD . 3. AMONGST GROUNDS OF APPEAL RAISED BY REVENUE IN NOS. (I) TO (IV) , THE ONLY EFFECTIVE ISSUE IS TO BE DECIDED AS TO WHETHER THE CIT - A IS JUSTIFIED IN DELETING THE ADDITION OF RS.62,09,903/ - MADE U/ S. 68 OF 2 IT (SS) A NO. 33/ KOL/2017 M/S. SHREE SHAKAMBRAI VASTU NIRMAN P.LTD. 2 THE ACT BY THE AO ON ACCOUNT OF UNSECURED LOAN IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF REAL ESTATE. RETURN OF INCOME FOR THE A.Y UNDER CONSIDERATION WAS FILED U/S. 139 DECLARING TOTAL INCOME OF RS. NIL ON 25 - 10 - 2007 . ACCORDING TO AO, A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF ASSESSE. DURING SUCH OPERATION SOME VALUABLES AND DOCUMENTS WERE FOUND AND SEIZED B Y THE SEARCH TEAM. THEREAFTER, A NOTICE U/S. 153A OF THE ACT WAS ISSUED ON 26 - 09 - 2013. IN RESPONSE TO WHICH, THE ASSESSE DECLARED THE INCOME AS SAME I.E. RS. NIL. NOTICE US/. 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO WHICH, THE A/R OF THE ASSESSE APPEARED. ON PERUSAL OF AUDITED BALANCE SHEET OF ASSESSE COMPANY, THE AO FOUND UNSECURED LOAN OF RS. 62,06,903/ - AND ASKED THE ASSESSE T O FURNISH DETAILS OF UNSECURED LOANS INC LUDING NAME, POSTAL ADDRESS AND PAN OF THE LOAN CREDITOR. BUT, HOWEVER, THE ASSESSE FAILED TO FURNISH THE SAME. THEREFORE, NECESSARY VERIFICATION OF THE SAME COULD NOT BE DONE AND AS SUCH, THE AO ADDED A SUM OF RS.62,09,903/ - U/S. 68 OF THE ACT TO THE TOT AL INCOME OF ASSESSE BY PASSING AN ORDER U/S. 143(3) R.W.S 153A OF THE ACT DT. 26 - 03 - 2015. 5. BEFORE THE CIT - A, IT WAS CONTENDED THAT THE ADDITION MADE BY THE AO DURING 153A PROCEEDING WAS NOT BASED ON ANY INCRIMINATING MATERIAL/DOCUMENTS FOUND/SEIZED DUR ING THE SEARCH OPERATION. THE CIT - A CONSIDERING VARIOUS CASE LAWS AND SLP ( C ) NO. 34554 OF 2015 DT. 07 - 12 - 2015 BY THE HONBLE SUPREME COURT IN THE CASE OF PR. CIT VS. KURELE PAPER MILLS PVT. LTD ON SIMILAR ISSUE AND BY PLACING RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF 3 IT (SS) A NO. 33/ KOL/2017 M/S. SHREE SHAKAMBRAI VASTU NIRMAN P.LTD. 3 VEER PRABHU MARKETING LTD REPORTED IN 73 TAXMAN N 149( KOL ) DELETED THE IMPUGNED ADDITION. RELEVANT PORTION OF ORDER OF THE CIT - A IN THIS REGARD IS REPRODUCED HEREIN BELOW: - 7. THE AR HAS ALSO BROUGHT ON RECORD THE CASE LAW OF CIT, KOLKATA III VS VEERPRABHU MARKETING LTD [2016] 73 TAXMANN 149 KOLKATA IN THIS CASE THE HONORABLE CALCUTTA HIGH COURT EXPRESSED THE FOLLOWING VIEWS: 'WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MADE DISALLO WANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE U PHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES.' THE HONBLE KOLKATA HIGH COURT IN THE ABOVE CASES RELIED ON THE FOLLOWING JUDGMENTS. CIT VS KABUL CHAWLA (2016) 380 ITR 0573( DEL) SEARCH AND SEIZURE NEW SCHEME OF ASSESSMENT IN SEARCH CASES SEARCH WAS CARRIED OUT U/S 132 ON A LEADING REAL ESTATE DEVELOPER OPERATING ALL OVER INDIA AND SOME OF ITS GROUP COMPANIES SEARCH WAS ALSO CARRIED OUT IN THE PREMISES OF THE ASSESSEE PURSUANT TO THE SEARCH A NOTICE U/S 153A(1) WAS ISSUED TO ASSESSEE AND THEREAFTER HE FILED RETURNS AS ON THE DATE OF THE SEARCH, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR RELEVANT AYS AND FOR SAID AYS, ASSESSMENTS WAS ALREADY MADE U/S 143(1),ASSESSEE FIL ED AN APPLICATION U/S 154 SEEKING RECTIFICATION OF THE ASSESSMENTS ON THE GROUND THAT THE ACCUMULATED PROFITS OF THE COMPANIES PAYING THE DIVIDEND WERE LESS THAN THE AMOUNT OF LOAN OR ADVANCE GIVEN BY THEM TO THE RECIPIENT COMPANIES DECLINED TO RECTIFY THE ASSESSMENTS CIT ALSO HELD THAT ADDITION NEED NOT BE RESTRICTED ONLY TO THE SEIZED MATERIAL ITAT ON APPEAL HOWEVER DELETED ADDITION ON GROUNDS THAT THE ADDITIONS MADE FOR RELEVANT AY'S U/S 2(22)(E) WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION AND SAME WAS NOT SUSTAINABLE IN LAW ISSUE WAS WHETHER THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE FOR THE SAID AYS U/S. 2(22)(E) WAS NOT SUSTAINABLE BECAUSE NO INCRIMINATING MATERIAL CONCERNING SUCH ADDITIONS WERE FOUND DURING THE CO URSE OF SEARCH AND FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH HELD, PRESENT APPEALS CONCERNED AYS,2002 03, 2005 06 AND 2006 07 O N THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED SINCE NO INCRIMINATING MATER IAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED QUESTION FRAMED BY THE COURT WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE REVENUE'S APPEAL DISMISSED IT WAS ALSO INFORMED/BROUGHT ON R ECORD THAT THE ORDER PASSED BY THE HON'BLE CALCUTTA HIGH COURT HAS ATTAINED FINALITY AS THE CBDT IN IT'S LETTER NO. ADG(L&R) II/EZ/PR.CIT( C ) 1 /KOLKATA/ 1184/2016/729 DT.07/08 02 2017 HAS INTIMATED THAT THE PROPOSAL TO FILE SLP IN ABOVE CASE HAS NOT BEEN APPROVED BY THE BOARD'. APART FROM ABOVE MENTIONED CASE LAWS BROUGHT ON RECORD, THE AR HAS ALSO FILED COPIES OF APPEAL ORDERS IN DIFFERENT CASES PASSED BY MY THREE ESTEEMED PREDECESSORS ON THE SAME ISSUE WHEREIN THEY HAVE DISCUSSED IN LENGTH AND ARRIVED AT CONCLUSION THAT ADDITIONS IN SEARCH ASSESSMENTS U/S 153A / 153C CANNOT BE MADE EXCEPT ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND IN THE SEARCH. (REFERENCE A) APPEAL NO.442/CC 3(1)/CIT(A) 21/14 15, DATE OF ORDER 05 12 2014, B) APPEAL NO.440/CC 3(1 )/CIT(A) 21/ 14 15, DATE OF ORDER 15 01 2015 C) APPEAL NO.547/CC 3(1)/CIT(A) 21/14 15, DATE OF ORDER 10 04 2015 D) APPEAL NO.129 /CC XVII/CIT(A) I/09 10, DATE OF ORDER 23 09 2010 E) APPEAL NO.292/CC VI/CIT(A) C VI/ 11 12, DATE OF ORDER 23 10 2013. 4 IT (SS) A NO. 33/ KOL/2017 M/S. SHREE SHAKAMBRAI VASTU NIRMAN P.LTD. 4 I H AVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER, DIFFERENT CASE LAWS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PREDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DURING THE SEARCH AND SEIZURE OPERATIONS CONDUCTED U /S 132 OF THE IT ACT, 1961, INCRIMINATING DOCUMENTS/PAPERS WERE NOT SEIZED. AT LEAST, ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCUMENTS/PAPERS SEIZED DURING THE SEARCH OPERATION. IT WOULD A LSO NOT BE OUT OF CONTEXT TO MENTION HERE THAT IN THIS CASE, ON THE DATE OF SEARCH, NO ASSESSMENT FOR THIS YEAR WAS PENDING. THEREFORE, KEEPING IN VIEW THE RATIO DECIDED BY THE JURISDICTIONAL BENCH OF KOLKATA TRIBUNAL IN CASES REFERRED ABOVE AND THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA) IN THE LIGHT OF CBDTS DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COURTS DECISION TO DISMISS SLP ON ISSUE IN THE CA SE OF PR.CIT VS. KURELE PAPER MILLS PVT. LTD : SLP ( C ) NO. 34554 OF 2015 DT. 07 12 2015, I AM OF THIS VIEW THAT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD ( SUPRA), ASSESSEES APPEAL ON GROUND NO. 1 IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON GROUND NO. 2 ON MERIT. 6. AFTER HEARING BOTH THE PARTIES, WE FIND NO REFERENCE OR WHATSOEVER WAS MADE BY AO REGARDING THE ADDITION MADE ON ACCOUNT OF UNSECURED LOAN RELATABLE TO ANY DOCUMENTS SAID TO HAVE BEEN FOUND/SEIZED DURING SEARCH OPERATION. IT IS NOTICED THAT NON SUBMISSIO NS OF DETAILS I.E NAME, POSTAL ADDRESS, PAN IN RESPECT OF LOAN CREDITOR(S) BY THE ASSESSE THE AO ADDED THE SUM OF RS. 62,09,903/ - TO THE TOTAL INCOME OF ASSESSE AND THE SAME WERE SUBMITTED BEFORE CIT - A , WHICH WAS REPRODUCED AT PAGE - 4 OF HIS ORDER. I T I S CLEAR FROM THE RECORDS THAT THERE WAS NO INCRIMINATING MATERIAL REFERRED INVOLVING THE IMPUGNED ADDITION BY BOTH THE LOWER AUTHORITIES, WITHOUT THERE BEING SUCH MATERIAL, IN OUR OPINION, THE ADDITION MADE BY THE AO IS BAD UNDER LAW. THE CIT - A PLACED RELI ANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF CALCUTTA IN THE CASE OF VEER PRABHU MARKETING LTD SUPRA , WHICH HELD THAT INCRIMINATING MATERIAL IS PRE - REQUISITE FOR EXERCISING POWER U/S. 153A R.W.S 153 OF THE ACT. THEREFORE, WE FIND NO INF IRMITY IN THE IMPUGNED ORDER OF THE CIT - A AND IT IS JUSTIFIED . THEREFORE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5 IT (SS) A NO. 33/ KOL/2017 M/S. SHREE SHAKAMBRAI VASTU NIRMAN P.LTD. 5 7 . IN THE RESULT, THE APPEAL OF REVENUE IN IT (SS) A NO. 33/KOL/2017 FOR THE A.Y 200 7 - 08 IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 .08.2018 SD/ - SD/ - M. BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 - 08 - 2018 1. APPELLANT DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE - 2(1), 3 RD FLOOR, AAYKAR BHAWAN POOR VA E.M BYE PASS, 11 0, SHANTI PALLY, KOLKATA - 700 107. 2 RESPONDENT M/S. SHREE SHAKAMBARI VASTU NIRMAN PVT. LTD., TRINITY TOWER, 6 TH FLOOR, 226/1 AJC BOSE ROAD, KOLKATA - 700 020. 3. THE CIT(A), 20 , KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA // TRUE COPY// BY ORDER, SR.PS/H.O.O ITAT, KOLKATA