DCIT Circle-2(1), Ahmedabad V. Raj Corporation, Mehsana

ITSSA 360/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7479 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Loose papers; Document seized; Documents seized
• Section: 40A(3); 143(3); 153A; 68; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A.NO.357 TO 362/AHD/2017 / ASSTT. YEAR: 2007-08 TO 2012-13 DCIT, CENT.CIR.2(1) AHMEDABAD. VS. RAJ CORPORATION HOTEL RANGOLI 5, ASHOKNAGAR SOCIETY RAHDANPUR ROAD MEHSANA 384 002 PAN : AAFFR 7301 E ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI O.P. SHARMA, CIT-DR ASSESSEE BY : SHRI MEHUL TALERA, AR / DATE OF HEARING : 23/07/2019 / DATE OF PRONOUNCEMENT: 25 /07/2019 +,/ O R D E R PER BENCH: THESE ARE SIX APPEALS BY THE REVENUE AGAINST SEPARA TE ORDERS OF LD.COMMISSIONER OF TAX(APPEALS)-7, AHMEDABAD OF EVE N DATED I.E. 14.4.2017 FOR THE ASSESSMENT YEARS 2007-08 TO 2012-13. 2. IN THESE APPEALS, REVENUE HAS RAISED VARIOUS GRO UNDS, BY WHICH IT HAS CHALLENGED DELETION OF ADDITIONS MADE BY THE AO IN AN ASSESSMENT FRAMED UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961. IN OTHER WORDS, THE PRIMARY ISSUE, WHICH IS COMMON IN ALL TH ESE APPEALS, IS WITH REGARD TO VALIDITY OF ADDITIONS MADE UNDER SECTION 143(3) R.W.S. 153A CONSEQUENT IT(SS)A NO.357 TO 362/AHD/2019 2 UPON A SEARCH CARRIED OUT UNDER SECTION 132 OF THE ACT. THEREFORE, WE TAKE UP THIS ISSUE FOR ADJUDICATION. 3. BRIEFLY STATED FACTS ARE THAT A SEARCH UNDER SEC TION 132 OF THE ACT WAS CARRIED OUT IN THE GROUP CASES OF MASTER GROUP IN F .Y.2012-12 ON 3.1.2013. THE ASSESSEE HEREIN WAS ONE OF THE PERSONS WHICH CO VERED IN THE SEARCH OPERATION. DURING THE COURSE OF SEARCH AT THE PREM ISES OF THE ASSESSEE, CERTAIN CASH AND LOOSE PAPERS WERE FOUND AND SEIZED. BASED ON THIS SEARCH, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASS ESSEE AND THE AO PROCEEDED TO MAKE ADDITIONS. THE AO HAS MADE ADDIT IONS ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN REFLECTED IN THE BOOKS U NDER SECTION 68 OF THE ACT IN ALL THE ASSESSMENT YEARS IN THE INSTANT APPEALS AND ALSO MADE ADDITION UNDER SECTION 40A(3) FOR ASSTT.YEAR 2007-08 AND ASSTT.YEA R 2009-10. DURING THE COURSE OF APPELLATE PROCEEDINGS, BEFORE THE LD.CIT( A), ONE OF THE CORE OBJECTIONS RAISED BY THE ASSESSEE WAS THAT ADDITION S MADE UNDER SECTION 153A WAS NOT BASED ON AND RELATABLE TO ANY INCRIMINATING MATERIAL AND BOOKS OF ACCOUNTS FOUND DURING THE COURSE OF SEARCH BUT ON T HE BASIS OF DETAILS CALLED FOR DURING THE COURSE OF ASSESSMENT. THEREFORE, I MPUGNED ADDITIONS WERE NOT VALID AND SUSTAINABLE. BEFORE THE LD.CIT(A), THE A SSESSEE RELIED UPON VARIOUS JUDGMENTS INCLUDING THE JUDGMENT IN THE CASE OF PR. CIT VS. SAUMYA CONSTRUCTION (TAX APPEAL NO.24/2016 DATED 14.3.2016 . THE LD.CIT(A) AFTER DETAILED DISCUSSION AND RELYING UPON VARIOUS DECISI ONS OF HIGHER AUTHORITIES, DELETED THE IMPUGNED ADDITIONS BY HOLDING THAT THE IMPUGNED ADDITIONS WERE MADE BY THE AO ON THE BASIS OF BOOKS OF ACCOUNTS CA LLED FOR AND EXAMINED DURING THE ASSESSMENT PROCEEDINGS AND NO REFERENCE HAS BEEN MADE BY THE AO TO SEIZED DOCUMENTS OR MATERIAL WHILE MAKING THE AD DITIONS. AGGRIEVED BY THE ACTION OF THE LD.CIT(A), REVENUE IS IN APPEALS BEFORE THE TRIBUNAL. IT(SS)A NO.357 TO 362/AHD/2019 3 4. BEFORE US, BOTH THE PARTIES SUPPORTED THE ORDERS OF THE RESPECTIVE AUTHORITIES, AND REITERATED SUBMISSIONS AS WERE MAD E BEFORE THE LOWER AUTHORITIES. THE LD.AR FURTHER SUBMITTED THAT THE I MPUGNED ORDER OF THE AO CLEARLY SHOWED THAT NO INCRIMINATING MATERIAL OR DO CUMENTS WERE FOUND RELATABLE TO THE ASSESSEE AND WERE NOT MADE BASIS F OR THE IMPUGNED ADDITIONS FOR THE YEARS UNDER CONSIDERATION. THEREFORE, ORDE RS OF THE LD.CIT(A) DESERVE TO BE CONFIRMED. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND THAT THE LD.CIT(A) HAS MADE A C ATEGORICAL FINDING THAT THOUGH A LOOSE PAPER FILE WAS SEIZED FROM THE APPEL LANTS PREMISES DURING THE SEARCH PROCEEDINGS, BUT THE ADDITION HAS BEEN MADE ON THE BASIS OF BOOKS OF ACCOUNTS CALLED FOR AND EXAMINED DURING THE ASSESSM ENT PROCEEDINGS AND NO REFERENCE HAS BEEN MADE BY THE AO TO SEIZED DOCUMEN TS OR MATERIAL WHILE MAKING THE IMPUGNED ADDITION. IN THIS REGARD, IT I S PERTINENT TO TAKE NOTE THE FINDING RECORDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAUMAYA CONSTRUCTION LTD. (SUPRA) IN PARA 18 AND 19 OF THE JUDGMENTS. IT READS AS UNDER: 18. IN THIS CASE, IT IS NOT THE CASE OF THE APPELL ANT THAT ANY INCRIMINATING MATERIAL IN RESPECT OF THE ASSESSMENT YEAR UNDER CO NSIDERATION WAS FOUND DURING THE COURSE OF SEARCH. AT THE RELEVANT TIME W HEN THE NOTICE CAME TO BE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME. MUCH LATER, AT THE FAG END OF THE PERIOD WITHIN WHI CH THE ORDER UNDER SECTION 153A OF THE ACT WAS TO BE MADE, IN OTHER WORDS, WHE N THE LIMIT FOR FRAMING THE ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS AB OUT TO EXPIRE, THE NOTICE HAS BEEN ISSUED IN THE PRESENT CASE SEEKING TO MAKE THE PROPOSED 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 STATEME NT OF ANOTHER PERSON. IN THE OPINION OF THIS COURT, IN A CASE LIKE THE PRESENT O NE, WHERE AN ASSESSMENT HAS BEEN FRAMED EARLIER AND NO ASSESSMENT OR REASSESSME NT WAS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR M AKING OF REQUISITION UNDER SECTION 132A, WHILE COMPUTING THE TOTAL INCOME OF T HE ASSESSEE UNDER SECTION 153A OF THE ACT, ADDITIONS OR DISALLOWANCES CAN BE MADE ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR REQUISITION. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO IN CRIMINATING MATERIAL WAS IT(SS)A NO.357 TO 362/AHD/2019 4 FOUND DURING THE COURSE OF SEARCH, HOWEVER, IT IS O N THE BASIS OF SOME MATERIAL COLLECTED BY THE ASSESSING OFFICER MUCH SU BSEQUENT TO THE SEARCH, THAT THE IMPUGNED ADDITIONS CAME TO BE MADE. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTENDED T HAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING TH AT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS F OUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN R ESPECT OF ALL THE SIX ASSESSMENT YEARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS, THE ASSESSMENT IN RE SPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSM ENT. UNDER SECTION 153A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATIO N TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLO SED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE I N RELATION TO THAT ASSESSMENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJ ASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA), JODHPUR (SUPRA). BES IDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONT ROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF TH IS COURT IN THE CASE OF JAYABEN RATILAL SORATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RE SPECT TO SIX PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MA TERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRAN SACTIONS IN THE PARTICULAR ASSESSMENT YEAR. 6. IT IS SETTLED POSITION OF LAW ON THIS ISSUE THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, AND OBVIOUSLY, ASSESSMENT UNDER SECTION 153A HAS TO BE MADE ONLY ON THE BASIS OF THE SEIZED MATERIAL. A PERUSAL OF THE ASSESSMENT O RDER WOULD INDICATE THAT THE LD.AO HAS NOT MADE REFERENCE TO ANY SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WHILE CONSIDERING THIS ISSUE. THEREFORE, IMPUGNED ADDITIONS MADE BY THE AO ARE BEYOND THE SCOPE OF SECTION 153A AND NOT SUSTAINABLE, BECAUSE NO RELEVANCE OR NEXUS HAS BEEN ESTABLISHED BY THE A O WITH THE SEIZED PAPERS FOUND DURING THE COURSE OF SEARCH. THE LD.CIT(A) HAS RIGHTLY ANALYZED THE ISSUE IN RIGHT PERSPECTIVE AND DEALT WITH LEGAL PRO POSITION EMERGING FROM VARIOUS CASE LAWS CITED ON THIS ISSUE, PARTICULARLY LAW ENUNCIATED BY THE IT(SS)A NO.357 TO 362/AHD/2019 5 HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA UMYA CONSTRUCTION. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDERS O F LD.CIT(A) ON THIS ISSUE. ORDERS OF THE LD.CIT(A) ARE THEREFORE UPHELD IN ALL THESE ASSESSMENT YEARS, AND GROUNDS OF APPEALS OF THE REVENUE ARE REJECTED. 7. IN THE RESULT, ALL SIX APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE COURT ON 25 TH JULY, 2019 AT AHMEDABAD. SD/- SD/- ( MAHAVIR PRASAD ) JUDICIAL MEMBER ( AMARJIT SINGH ) ACCOUNTANT MEMBER AHMEDABAD; DATED 25/07/2019