Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 9663 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 7 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
29-07-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2010-2011
Appeal Filed On
26-12-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (CONDUCTING THROUGH VIRTUAL COURT) BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER IT(SS)A NOS.378&379/AHD/2018 (ASSESSMENT YEARS: 2010-11 & 2011-12) M/S. NEW INDIA ANGADIA SERVICE 413, KHETAR PALNI POLE, MANEKCHOWK, AHMEDABAD- 380001 VS. ITO WARD-1(3)(4), AHMEDABAD [ PAN NO. AAEFN0459N ] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI K. C. THAKER , A R RESPONDENT BY: SHRI O. P. SHARMA, CIT-DR DATE OF HEARING: 27/07/2021 DATE OF PRONOUNCEMENT: 29/07/2021 O R D E R PER MS. MADHUMITA ROY - JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDERS BOTH DATED 25.10.2018 PASSED BY THE LD. CIT(A)-6, AHMEDABAD AR ISING OUT OF THE ORDERS BOTH DATED 30.12.2016 PASSED BY THE ITO, WARD-1(3)(4), A HMEDABAD UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 FOR A.YS. 2 010-11 & 2011-12 RESPECTIVELY. SINCE BOTH THE APPEALS PERTAINS TO THE SAME ASSESSE E AND THE ISSUES INVOLVED ARE COMMON THESE ARE HEARD ANALOGOUSLY AND ARE BEING DI SPOSED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO. 378/AHD/2018 (A.Y. 2010-11):- 2. THE APPELLANT HAS CHALLENGED THE DISALLOWANCE OF INTEREST PAID OF RS. 3,17,664/- IN A SEARCH PROCEEDING WHERE NO INCRIMINATING MATER IAL FOUND. UNDER THE CIRCUMSTANCES THE DISALLOWANCE SO MADE IS INVALID, WITHOUT SANCTION OF LAW AND THE SAME IS LIABLE TO BE DELETED AS THE CASE MADE OUT B Y THE APPELLANT BEFORE US. - 2 - IT(SS)A NOS.378&379/AHD/2018 M/S. NEW INDIA ANGADIA SERVICE VS. ITO A.YS. 2010- 11 & 2011-12 3. THE ASSESSEE FIRM ENGAGED IN THE BUSINESS OF ANG ADIA SERVICES FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 28.06.2010 DECLARING TOTAL INCOME AT RS. 1,74,480/- WHICH WAS DULY PROCESSED UNDER SECTION 143(1) OF TH E ACT. SUBSEQUENTLY, A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE BRANCH OFFICE OF THE ASSESSEE AT KALABURAGI ON 30.03.2015 RELEVANT TO ASSESSMENT YEA R 2015-16. NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED REQUESTING THE A SSESSEE TO FILE ITS RETURN OF INCOME FOR A.Y. 2010-11. IN RESPONSE TO THE SAME ON 25.11 .2006 THE RETURN OF INCOME DECLARING INCOME OF RS. 1,74,480/- WAS FILED BY THE ASSESSEE. NOTICE UNDER SECTION 143(2) R.W.S. 153A AND UNDER SECTION 142(1) OF THE ACT DATED 28.11.2016 WAS ISSUED. 4. THE FACTS PERTAIN TO THE ISSUE IS THIS THAT THE ASSESSEE PAID INTEREST OF RS. 3,17,664/- ON UNSECURED LOANS AT 12%. THE LD. AO T HOUGH ACCEPTED THE UNSECURED LOANS AS GENUINE BUT DISALLOWED INTEREST PAID THERE ON ON ASSUMPTION BASIS ALTHOUGH TO INDEPENDENT AND CORROBORATIVE EVIDENCE WAS RELIED U PON FOR SUCH DISALLOWANCE. ULTIMATELY THE SAME WAS CONFIRMED BY THE FIRST APPE LLATE AUTHORITY. HENCE, THE INSTANT APPEAL BEFORE US. 5. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LD. ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION WAS NOT PENDING AND IS UNABATED. THE TIME OF ISSUANCE OF NOTICE UNDER SECTION 143(2) HAD ALREADY EXPIRED ON THE DATE OF SEARCH. FURTHER THA T IT WAS SUBMITTED BY THE LD. AR THAT VARIOUS ADDITIONS WERE MADE NOT ON THE BASIS O F ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RATHER THE DOCUMENTS SU BMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THE CRUX OF THE ARGUMENT OF THE LD. AR IS THIS THAT THE INTEREST ON LOANS WHICH ARE RECORDED IN THE BOOKS OF ACCOUNTS A ND ITEMS OF CASH CREDIT CANNOT FORM THE BASIS OF ADDITION IN THE RELEVANT ASSESSME NT YEAR WHERE THE ASSESSMENT IS NOT PENDING AND HAS NOT BEEN ABATED SINCE THERE ARE ITE MS OF NORMAL INCOME TAX ASSESSMENT AND CANNOT BE SUBJECT MATTER OF ASSESSME NT UNDER SECTION 153A OR 153C. - 3 - IT(SS)A NOS.378&379/AHD/2018 M/S. NEW INDIA ANGADIA SERVICE VS. ITO A.YS. 2010- 11 & 2011-12 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE ISS UE IS SQUARELY COVERED BY THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF PCIT VS. SAUMYA CONSTRUCTION PVT. LTD., REPORTED IN (2016) 3 87 ITR 0529 WHICH WAS FOLLOWED BY THE LD. CIT(A) IN SUBSEQUENT ASSESSMENT YEARS 20 12-13 AND 2013-14 A COPY OF EACH OF THE SAID ORDERS HAVE BEEN DULY FILED BEFORE US. 6. ON THE CONTRARY THE LD. DR RELIED UPON THE ORDER PASSED BY THE REVENUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AND WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE HAVE FURTHER PERUSED THE ORDER PASSED BY THE LD. CIT(A) IN A.Y. 2012-13 AND 2014-15 IN ASSESSEES OWN CASE. THE RELEVANT PORTION OF THE SAME IS REPRODUC ED HEREINBELOW:- 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E ON BEHALF OF THE APPELLANT AND PERUSED THE ASSESSMENT RECORD SO FAR IT RELATES TO ADDITION ON ACCOUNT OF INTEREST I FIND THAT THERE CANNOT BE ANY DISPUTE ABOUT THE FACT THAT THE DISALLOWANCE OF INTEREST HAS BEEN MADE ON APPRECIATION OF THE ACCOUNTS LIKE BALANCE SHEET FILED WITH THE RETU RN OF INCOME. THE ASSESSING OFFICER HAS NOT REFERRED TO OR INDICATED THAT THERE WAS ANYTHING FO UND DURING THE SEARCH WHICH PROVIDED THE BASIS FOR THE DISALLOWANCE OF INTEREST OF RS.3,63,800/-. THE RETURN OF INCOME WAS FILED ON 25-7-2012, FOLLOWED BY INTIMATION U/S 143(1) AND NO NOTICE U/S 143(2) WAS ISSUED TILL THE DATE OF SEARCH I.E. 30-3-2015 MEANING THEREBY THAT ASSESSMENT HAD BECOM E FINAL AND WAS NOT ABATED. THE APPELLANT HAS CHALLENGED VALIDITY OF ADDITIONS MADE FOR THE Y EAR UNDER CONSIDERATION IN GROUND NO: 1. THUS THE ASSESSMENT WAS NOT PENDING AND DID NOT ABATE. T AKING SUPPORT FROM THE JUDGMENTS INCLUDING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CA SE OF PRINCIPAL CIT VS. SAUMYA CONSTRUCTION (P) LTD [2016] 387 ITR 529, IT WAS CONTENDED THAT I N SUCH A CASE WHERE THE ASSESSMENT IS NOT PENDING ON THE DATE OF SEARCH AND IS UNABATED, ADDI TION COULD NOT BE MADE OF ITEMS OF SUCH INCOME UNLESS THERE IS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. I HAVE CONSIDERED THE FACTS OF THE-CASE AND THE SUBMISSION OF THE APPELLANT AS ALSO, THE LEGAL POSITION EMERGING FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS I NCLUDING THE JUDGMENTS OF THE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF PR. CIT VS SAUMYA CONSTRUCTION (P) LTD [2016] 387 ITR 529 AS ALSO, JUDGMENTS IN THE CASE OF CIT CENTRAL VS KA BUL CHAWLA [2015] 380 ITR 573 (DELHI), CIT VS CONTINENTAL WAREHOUSING CORPORATION LTD [2015] 3 74 ITR 645 (BOM). THE ABOVE JUDGMENTS ARE FOLLOWED IN SEVERAL DECISIONS BY THE VARIOUS IN COME TAX APPELLATE TRIBUNALS. I FIND THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT PENDING AND HENCE DID NOT ABATE BUT BECAME FINAL SINCE TIME FOR ISSUING NOTICE U/S 143(2) HAD ALREADY EXPIRED ON THE DATE OF SEARCH. THE VARIOUS ADDITIONS MADE IN THE ASSESSMENT IS NOT BAS ED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCJ. THIS IS EVIDENT FROM T HE ASSESSMENT ORDER IN WHICH THE AO HAS CONSIDERED THE VARIOUS ISSUES FROM THE DETAILS SUB MITTED BY THE ASSESSEE INCLUDING BALANCE SHEET'. THUS THE INTEREST ON LOANS WHICH ARE RECORD ED IN THE BOOKS OF ACCOUNT AND ITEMS OF CASH CREDIT CANNOT FORM THE BASIS OF ADDITION IN THE YEA R FOR WHICH ASSESSMENT IS NOT PENDING AND HAS NOT BEEN ABATED SINCE THESE ARE ITEMS OF NORMAL INC OME TAX ASSESSMENT AND CANNOT BE SUBJECT MATTER OF ASSESSMENT U/S 153A OR 153C. SIMILAR ISSU E HAS ALSO BEEN DEALT WITH IN THE CASE OF JAYESH STEE! PVT LTD BY CIT(APPEAL)-12 AHMEDABAD VI DE HIS ORDER IN APPEAL NO: CIT(A)- - 4 - IT(SS)A NOS.378&379/AHD/2018 M/S. NEW INDIA ANGADIA SERVICE VS. ITO A.YS. 2010- 11 & 2011-12 12/219,221/DCIT -CC-2(3)/14-15 DATED 2.11.2016 IN W HICH ALSO, FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT, IT IS HELD THAT IN THE F INALLY CONCLUDED ASSESSMENTS FRAMED U/S 153A/153C, THE AO IS NOT AUTHORIZED TO 'INTERFERE' EXCEPT ON THE BASIS OF AND EXCEPT HAVING BEEN PROMPTED BY INCRIMINATING SEIZED DOCUMENTS RELATABL E TO THAT ASSESSMENT YEAR AND THAT ADDITIONS MADE DEHORS ANY INCRIMINATING SEIZED MATERIAL IN CASE OF UNABAT ED ASSESSMENTS ARE WITHOUT REQUISITE AUTHORITY AND ARE DELETED. CERTAIN ORDERS ISSUED BY PRESENT INCUMBENT IN CIT(A)-12, AHMEDABAD HANDLING ASSESSMENTS COMPLETED BY THE CEN TRAL CHARGE WERE BROUGHT TO MY NOTICE WHEREIN A SIMILAR VIEW IS BEING TAKEN EVEN IN YEAR 2018. IN VIEW OF THIS FACTUAL POSITION AND CONSIDERING THE LEGAL POSITION EMERGING FROM THE JU DGMENTS OF HON'BLE GUJARAT HIGH COURT AND THE HIGH COURT OF DELHI AS MENTIONED ABOVE AS ALSO, FROM THE JUDGMENTS OF OTHER HON'BLE HIGH COURTS AND HON'BLE ITAT RELIED ON IN THE SAID JUDGM ENTS, I AM INCLINED TO AGREE WITH THE APPELLANT THAT ADDITIONS MADE BY THE AO IN THE INST ANT CASE OF UNABATED ASSESSMENT IS NOT PERMISSIBLE SINCE THEY ARE NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH . THIS LEGAL GROUND NO.1 IS THUS A LLOWED. THE APPELLANT HAS ALSO MADE SUBMISSIONS ON MERITS A LSO. IT IS CONTENDED, THAT NO ADDITION COULD BE MADE WHEN THE ENTRIES OF INTEREST ON LOANS ARE S UBSTANTIATED FROM THE BOOKS OF ACCOUNT AS BASED ON DETAILS FURNISHED TO THE AO AND SUCH ACCOU NTS ARE NOT REJECTED, BUT SINCE THE ISSUE IS ADJUDICATED ON THE GROUND OF LEGALITY IN FAVOUR OF THE APPELLANT, THE GROUND NO. 2 PERTAINING TO ADDITION DO NOT REQUIRE ADJUDICATION. GROUND NO. 1 & 2, 2A & 2B ARE ALLOWED. 8. IT APPEARS THAT THE LD. CIT(A) IN THE EARLIER YE AR ON THE IDENTICAL FACTS AND DELETED THE ADDITIONS MADE BY THE LD. AO IN THE UNA BATED ASSESSMENT SINCE THE SAME WERE NOT MADE ON THE BASIS OF ANY INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH RELYING UPON THE PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT -VS- SAUMYA CONSTRUCTION PVT. LTD., RE PORTED IN (2016) 387 ITR 529, THE JUDGMENTS PASSED IN THE MATTER OF CIT -VS- KABU L CHAWLA, REPORTED IN (2015) 380 ITR 573 (DELHI) AND CIT -VS- CONTINENTAL WAREHOUSIN G CORPORATION LTD (2015) 374 ITR 645 (BOM.). THE JURISDICTIONAL HIGH COURT IN T HE MATTER OF SAUMYA CONSTRUCTION PVT. LTD. (SUPRA) WHILE LAYING DOWN THE RATIO OBSER VED AS FOLLOWS:- IT WAS NOT CASE OF REVENUE THAT ANY INCRIMINATING MATERIAL IN RESPECT OF AY UNDER CONSIDERATION WAS FOUND DURING COURSE OF SEARCH-AT RELEVANT TIME WHEN NOTICE CAME TO BE ISSUED U/S. 153A, ASSESSEE FILED ITS RETURN OF INCOME-MUCH LATER, AT FAG END OF PERIOD WITHIN WHICH ORDER U/S. 153A WAS TO BE MADE, IN OTHER WORDS, WHEN LIMI T FOR FRAMING ASSESSMENT AS PROVIDED U/S. 153 WAS ABOUT TO EXPIRE, NOTICE HAD BEEN ISSUED SEEKING TO MAKE PROPOSED ADDITION OF RS. 11,05,51,000/- ON BASIS OF THE MATERIAL WHICH WAS N OT FOUND DURING COURSE OF SEARCH, BUT ON BASIS OF STATEMENT OF ANOTHER PERSON-IT WAS ADMITTED POSI TION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING COURSE OF SEARCH, HOWEVER, IT WAS ON BASIS O F SOME MATERIAL COLLECTED BY AO MUCH SUBSEQUENT TO SEARCH, THAT ADDITIONS CAME TO BE MAD EON BEHALF OF REVENUE, IT HAD BEEN SUBMITTED THAT IF ANY INCRIMINATING MATERIAL WAS FO UND, NOTWITHSTANDING THAT IN RELATION TO YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL WAS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF ALL SIX AY S-IN OPINION OF THIS COURT, SAID SUBMISSION DID NOT MERIT ACCEPTANCE, INASMUCH AS, ASSESSMENT IN RE SPECT OF EACH OF SIX AYS WAS SEPARATE AND - 5 - IT(SS)A NOS.378&379/AHD/2018 M/S. NEW INDIA ANGADIA SERVICE VS. ITO A.YS. 2010- 11 & 2011-12 DISTINCT ASSESSMENT-U/S. 153A, ASSESSMENT HAD TO BE MADE IN RELATION TO SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLOSED DURING SE ARCH OR REQUISITION-IF IN RELATION TO ANY AY, NO INCRIMINATING MATERIAL WAS FOUND, NO ADDITION OR DI SALLOWANCE COULD BE MADE IN RELATION TO THAT AY IN EXERCISE OF POWERS U/S. 153A AND EARLIER ASSE SSMENT SHOULD HAVE TO BE REITERATED-IN THIS REGARD, THIS COURT WAS IN COMPLETE AGREEMENT WITH V IEW ADOPTED BY RAJASTHAN HC IN CASE OF JAI STEEL (INDIA), JODHPUR V. ASSISTANT CIT (SUPRA)-BES IDES, AS RIGHTLY POINTED OUT BY ASSESSEE, CONTROVERSY INVOLVED STANDS CONCLUDED BY DECISION O F THIS COURT IN CASE OF CIT-1 V. JAYABEN RATILAL SORATHIA (SUPRA) WHEREIN IT HAD BEEN HELD T HAT WHILE IT COULD NOT BE DISPUTED THAT CONSIDERING SECTION 153A, AO COULD REOPEN AND/OR AS SESS RETURN WITH RESPECT TO SIX PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MA TERIAL AVAILABLE WITH AO WITH RESPECT TO THE SALE TRANSACTIONS IN PARTICULAR AY-IT WAS NOT POSSI BLE TO STATE THAT ORDER PASSED BY TRIBUNAL SUFFERED FROM ANY LEGAL INFIRMITY SO AS TO GIVE RIS E TO QUESTION OF LAW, MUCH LESS, SUBSTANTIAL QUESTION OF LAW, WARRANTING INTERFERENCE-APPEAL, WA S, ACCORDINGLY, DISMISSED 9. THE ADDITION IN THE APPEAL IN HAND INDEED HAS BE EN MADE ON THE BASIS OF THE BOOKS OF ACCOUNTS AND THE DETAILS FURNISHED TO THE LD. AO AND NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. HENCE, RESPECTIVELY RELYING UPON THE JUDGMENT PASSED BY THE DIFFERENT JUDICIAL FORUMS WE DELETE THE ADDITION MADE UNDER SECTION 143(3) R.W.S 153A OF THE ACT. THE AP PEAL PREFERRED BY THE ASSESSEE IS, THUS, ALLOWED. IT(SS)A NO. 379/AHD/2018 (A.Y. 2011-12):- 10. THE IDENTICAL ISSUE INVOLVED IN THE CASE HAS AL READY BEEN DEALT WITH BY US IN IT(SS)A NO.378/AHD/2018 FOR A.Y. 2010-11 AND IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAME SHALL APPLY MUTATIS MUTANDIS . HENCE, THE APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED. 11. IN THE COMBINED RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/07/2021 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/07/2021 TANMAY - 6 - IT(SS)A NOS.378&379/AHD/2018 M/S. NEW INDIA ANGADIA SERVICE VS. ITO A.YS. 2010- 11 & 2011-12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE PCIT- AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 27.07.2021& 28.07.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.07.2021 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29 .07.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.07.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER
