Priya Holding Pvt..Ltd., Bhavnagar V. The ACIT.,Cent.Circle-2(1), Ahmedabad

ITSSA 366/AHD/2012

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3575 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Search and seizure
• Section: 153A

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER SL. NOS. IT(SS)A NO(S) ASSESSMENT YEAR (S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 366/AHD/2012 2004-2005 PRIYA HOLDING PVT.LTD. 1563/A, ASHIRWAD OP.PANNA TOWER RUPANI SARDARNAGAR ROAD BHAVNAGAR-364 001 PAN:AAACP 0974 F THE ACIT CENTRAL CIRCLE- 2(1) AHMEDABAD 2. 367/AHD/2012 2005-2006 -DO-ASSESSEE -DO-REVENUE 3. 368/AHD/2012 2006-2007 -DO-ASSESSEE -DO-REVENUE 4. 369/AHD/2012 2007-2008 -DO-ASSESSEE -DO-REVENUE 5. 370/AHD/2012 2008-2009 -DO-ASSESSEE -DO-REVENUE ASSESSEE BY : SHRI BANDISH S.SOPARKAR, AR REVENUE BY : SHRI RAJESH MEENA, SR.DR !' # / DATE OF HEARING 03/01/2018 $%&''# / DATE OF PRONOUNCEMENT 05/01/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE ASS ESSEE CONCERNING ASSESSMENT YEARS (AYS) 2004-05, 2005-06, 2006-07, 2 007-08 & 2008- 09 AGAINST THE COMPOSITE ORDER OF THE COMMISSIONER OF INCOME IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 2 - TAX(APPEALS)-III, AHMEDABAD [CIT(A) IN SHORT] DATED 19/06/2012 ARISING IN THE MATTER OF RESPECTIVE ASSESSMENT ORDERS PASSE D UNDER S. 153A R.W.S.143(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS 'THE ACT'). 2. IN ALL THE FIVE APPEALS, THE ASSESSEE HAS RAIS ED A COMMON GROUND WHEREBY THE ASSESSEE HAS CHALLENGED THE JURISDICTIO N USURPED BY THE ASSESSING OFFICER (AO) UNDER S.153A OF THE ACT TOWA RDS ADDITIONS/DISALLOWANCES MADE. IN VIEW OF THE PRELI MINARY OBJECTION OF THE ASSESSEE WHICH SEEKS TO PUT QUESTION MARK OVER THE LEGITIMACY OF THE ADDITIONS/DISALLOWANCES MADE UNDER S.153A OF THE AC T, WE DEEM IT EXPEDIENT TO DISPOSE OF THE AFORESAID PRELIMINARY G ROUND AS IT STRIKES TO THE ROOT OF THE MATTER. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD. AR FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ADDITI ONS/DISALLOWANCES MADE IN ALL THE FIVE APPEALS HAS NO RATIONAL CONNECTION OR LIVE LINK WITH MATERIAL FOUND IN THE COURSE OF SEARCH ACTION CARRIED OUT UN DER S.132 OF THE I.T.ACT ON 12/01/2010 IN THE CASE OF ASSESSEE. THE LD.AR SUBMITTED THAT IN PURSUANCE OF A NOTICE UNDER S.153A OF THE ACT FOR V ARIOUS ASSESSMENT YEARS IN APPEALS, THE ASSESSMENT WAS COMPLETED FOR AYS 2004-05 TO 2008-09 BY ALLOWING ONLY PROPORTIONATE EXPENSES OF DEPRECIATION, INSURANCE EXPENSES AND REPAIRS AND MAINTENANCE EXPE NSES. IT WAS ALSO POINTED OUT ON BEHALF OF THE ASSESSEE THAT THE ASSE SSEE HAD LET OUT ITS IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 3 - OFFICE AND OTHER PREMISES TO M/S.PRIYA BLUE INDUSTR IES PVT.LTD. A SISTER- CONCERN OF THE ASSESSEE. DURING THE COURSE OF THE ASSESSMENTS, U.S.153A, THE AO REFUSED TO ACCEPT THE CLAIM OF COMPOSITE REN T INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND INSTEAD, SOUGHT TO ASSESS THE SAME UNDER A DIFFERENT HEAD OF INCOME I.E. INCOME F ROM OTHER HOUSE PROPERTY AND/OR INCOME FROM OTHER SOURCES ETC. 3.1. THE LD.AR ASSERTED THAT THIS KIND OF ADJUSTME NTS ARE SUBJECT MATTER OF REGULAR ASSESSMENT AND DO NOT RESONATE WI TH THE SCHEME OF SEARCH ASSESSMENT UNDER S.153A OF THE ACT DE HORSE REFERENCE TO ANY INCRIMINATING MATERIAL IN THIS REGARD. THE LD.AR F URTHER EMPHASIZED THAT IN THE ABSENCE OF INCRIMINATING MATERIAL, NO ADJUST MENT IN THE RETURNED INCOME IS PERMISSIBLE UNDER SECTION 153A OF THE ACT . 3.2. THE LD.AR NEXT SUBMITTED THAT ALL THE FIVE RET URNS OF RESPECTIVE ASSESSMENT YEARS HAVE BECOME TIME BARRED AND WERE N OT PENDING FOR ASSESSMENT AT THE TIME OF SEARCH. THEREFORE, THE R EGULAR ASSESSMENT/DEEMED ASSESSMENT STANDS CONCLUDED AT TH E TIME OF SEARCH RELATING TO VARIOUS ASSESSMENT YEARS IN QUESTION SU RVIVES AND DO NOT GET ABATED. THE LD.AR SUBMITTED THAT IN THESE FACTS, I T IS NOT PERMISSIBLE FOR THE AO TO INVOKE AUTHORITY VESTED UNDER S.153A OF T HE ACT TO INDULGE IN MAKING ROUTINE EXAMINATION OF VARIOUS ITEMS OF INCO ME AND EXPENDITURE FILED AND DECLARED IN THE RESPECTIVE RETURNS WHICH HAS NO CORRELATION TO IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 4 - INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H IF ANY. FOR THIS PROPOSITION, THE LD.AR RELIED UPON THE DECISION(S) OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION (P.) LTD. 387 ITR 529 (GUJ.), DESAI CONSTRUCTION (P.) LTD. 387 ITR 552 (G UJ), DEEPAK KUMAR AGARWAL (2017) 86 TAXMANN.COM 3 (BOM), GURINDER SIN GH BAWA 386 ITR 483 (BOM.) AND DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF KABUL CHAWLA 380 ITR 573 (DELHI). THE LD.AR PLACIN G RELIANCE UPON THE AFORESAID DECISIONS SUBMITTED THAT ADDITIONS/DI SALLOWANCES IN THE ASSESSMENT FRAMED UNDER S.153A OF THE ACT COULD BE MADE HAVING REGARD TO THE INCRIMINATING MATERIAL ALONE AS FOUND IN THE COURSE OF SEARCH. NO INCRIMINATING MATERIAL HAS BEEN DEMONSTRATED BY THE REVENUE CONCERNING THE VARIOUS ADDITIONS/DISALLWOANCES. THE LD.AR ACC ORDINGLY URGED THAT THE ADDITIONS/DISALLOWANCES MADE ARE OUTSIDE THE AM BIT OF SECTION 153A OF THE ACT AND THUS BAD IN LAW. 5. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND EXAMINED THE MERITS OF LEGAL CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT ADDITIONS/DISAL LOWANCES COULD NOT BE MADE IN THE ASSESSMENT FRAMED UNDER S.153A OF THE A CT DE HORSE REFERENCE TO ANY INCRIMINATING MATERIAL FOUND IN TH E COURSE OF SEARCH IN IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 5 - THIS REGARD. IT IS FURTHER CASE OF THE ASSESSEE TH AT THE ADDITIONS/DISALLOWANCES MADE HAVE NO NEXUS WHATSOEV ER WITH ANY MATERIAL OF INCRIMINATING NATURE FOUND IN THE COURS E OF SEARCH WHICH IS GENESIS OF PROCEEDINGS UNDER S.153A OF THE ACT IN T HE INSTANT CASE. THE APPEAL OF THE ASSESSEE THUS HINGES AROUND ONE PERTA INING LEGAL POINT AS TO WHETHER, WHILE MAKING ASSESSMENT UNDER S.153A, THE REVENUE IS ENTITLED TO INTERFERE WITH THE ASSESSMENT CONCLUDED EITHER U NDER S.143(1) OR UNDER S.143(3) AND NOT PENDING AT THE TIME OF SEARCH IN T HE ABSENCE OF ANY INCRIMINATING MATERIAL UNEARTHED AS A RESULT OF SEA RCH. 6.1. ON A BARE PERUSAL OF ASSESSMENT YEARS IN APPEA LS AND THE COMPOSITE ORDER OF THE CIT(A) DISCUSSING ISSUES CON NECTED WITH VARIOUS ADDITIONS/DISALLOWANCES, WE FIND TOTAL ABSENCE OF R EFERENCE TO ANY INCRIMINATING MATERIAL WHICH MAY HAVE ANY BEARING T O IMPUGNED ADDITIONS/DISALLOWANCES. AS A COROLLARY, IT IS MAN IFEST THAT ADDITIONS/DISALLOWANCES HAVE BEEN MADE WITHOUT REFE RENCE TO ANY SPECIFIC INCRIMINATING MATERIAL/DOCUMENT FOUND AS A RESULT OF SEARCH AND SEIZURE ACTION UNDER S.132 OF THE ACT AND IS BASED ON RE-APPRECIATION OF FACTS UNCONNECTED TO SEARCH. 6.2. WE ALSO NOTE THAT THE INCOME-TAX RETURN FOR TH E RELEVANT ASSESSMENT YEARS WERE FILED PRIOR TO THE SEARCH IN THE NORMAL COURSE SUO MOTU INCORPORATING THE ITEMS OF INCOME/EXPENDITURE WHICH ARE SUBJECT MATTER IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 6 - OF CONSIDERATIONS IN THE ASSESSMENT FRAMED UNDER S. 153A OF THE ACT. THE RETURNS FOR VARIOUS ASSESSMENT ORDERS IN QUESTION S O FILED IN ORDINARY COURSE WERE ACCEPTED UNDER S.143(1) OF THE ACT AND/ OR ASSESSED UNDER S.143(3) OF THE ACT AND AS SUCH NO ASSESSMENT WAS E VENTUALLY PENDING ON THE DATE OF INITIATION OF SEARCH WHICH MAY GET ABAT ED IN CONSEQUENCE OF SEARCH. ACCORDINGLY, WE ARE OF THE VIEW THAT VARIO US ADDITIONS/DISALLOWANCES MADE BY THE AO ARE CLEARLY BEYOND THE SCOPE OF AUTHORITY VESTED UNDER S.153A OF THE ACT OWING TO A BSENCE OF ANY INCRIMINATING MATERIAL OR EVIDENCE DEDUCTED AS A RE SULT OF SEARCH. NO REFERENCE OF SUCH INCRIMINATING MATERIAL, IF ANY, I S FOUND IN ANY OF THE ASSESSMENT ORDERS FOR THE PURPOSES OF MAKING VARIOU S ADDITIONS/DISALLOWANCES. 6.3. THE LEGAL ISSUE EMANATING ON SUCH FACTS THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL/EVIDENCE, NO ADDITION CAN BE SUSTAINED UNDER S.153A IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAUMYA CON STRUCTION (P.) LTD. AND DEVANGI ALIAS ROOPA IN TAX APPEAL NO.54 AND ORS OF 2017 ORDER DATED 02/02/2017. SIMILAR VIEW WAS EARLIER TAKEN B Y THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA). 6.4. IN VIEW OF LONG LINE OF JUDICIAL PRECEDENTS G OVERNING THE FIELD, WE HOLD THAT ADDITIONS/DISALLOWANCES MADE WITHOUT ANY NEXUS TO IT(SS)A NOS. 366 TO 370/AHD/20 12 PRIYA HOLDING PVT.LTD. VS. ACIT ASST.YEARS 22004-05 TO 2008-09 - 7 - INCRIMINATING MATERIAL FOUND, IF ANY, AS A RESULT O F SEARCH OPERATIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW IN SECTION 153A OF THE PROCEEDINGS. HENCE, THE ADDITIONS/DISALLOWANCES MADE BY THE AO I N ALL THE CAPTIONED APPEALS REQUIRE TO BE QUASHED. THUS, WE FIND MERIT IN THE LEGAL GROUND RAISED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER , WE DO NOT INTEND TO ADJUDICATE VARIOUS ADDITIONS/DISALLOWANCES ON MERIT S. 7. IN THE RESULT, ALL THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05/ 01/2018 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 05/ 01 /2018 -.. ,. ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ./0 / THE APPELLANT 2. 1/0 / THE RESPONDENT. 3. 234# 5# / CONCERNED CIT 4. 5# ( . ) / THE CIT(A)-III, AHMEDABAD 5. 678# 34 , ..34' , .2 / DR, ITAT, AHMEDABAD 6. 8:! / GUARD FILE. / BY ORDER, 16## //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD