DCIT, C.C. - 1(3), Kolkata V. M/s. Kalindi Merchandise Pvt. Ltd., , Kolkata

ITSSA 41/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6235 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IMOKABA JAMIR
• Keywords: Question of law; Assessment record; Documents seized
• Section: 143(3); 153A; 13; 22; 153C; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA BEFORE: SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER IT(SS)A NO. 41/KOL/2019 (ASSESSMENT YEAR: 2010-11) DCIT, CC 1(3), KOLKATA APPELLANT VS M/S. KALINDI MERCHANDISE PVT. LTD. RESPONDENT [PAN:AADCK 8082 G] C.O. NO. 37/KOL/2019 (ARISING OUT OF IT(SS)A NO. 41/KOL/2019 (ASSESSMENT YEAR: 2010-11) M/S. KALINDI MERCHANDISE PVT. LTD. CROSS-OBJECTOR [PAN:AADCK 8082 G] VS DCIT, CC 1(3), KOLKATA RESPONDENT FOR THE REVENUE : MR. IMOKABA JAMIR, CIT DR FOR THE ASSESSEE : MR. SUNIL SURANA, ADVOCATE DATE OF HEARING : 05.02.2020 DATE OF PRONOUNCEMENT : 12.02.2020 ORDER PER S.S. VISWANETHRA RAVI, JM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST COMMON ORDER DATED 11.04.2019 PASSED BY THE LD. CIT(A) 20, KOLKATA FOR A.Y. 2010-11. 2. WE NOTE THAT THE APPELLANT REVENUE FILED APPEAL WITH THE DELAY OF 22 DAYS. UPON HEARING BOTH THE PARTIES AND AFTER PERUSAL OF THE RECORD, WE DEEM IT PROPER TO CONDONE THE DELAY OF 22 DAYS. HENCE THE DELAY OF 22 DAYS ARE CONDONED. 3. FIRST, WE SHALL TAKE UP APPEAL IN IT(SS)A 41/KOL/2019 OF REVENUE. 2 IT(SS)A NO.41/KOL/2019 & C.O. 37/KOL/2019 M/S. KALINDI MERCHANDISE PVT. LTD. 4. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) IS JUSTIFIED IN HOLDING THE ASSESSMENT FRAMED U/S 153C IS BARRED BY LIMITATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. BRIEF FACTS OF THE CASE RELEVANT TO THE ISSUE ON HAND, THAT THE ASSESSEE IS A COMPANY DERIVES INCOME FROM BUSINESS, PROFESSION AND OTHER SOURCES. A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THE MAPLE GROUP OF CASES ON 09.12.2015. IN THE COURSE OF SEARCH OPERATION, IT WAS FOUND THAT THE ASSESSEE SAID TO BE A GROUP COMPANY OF MAPLE GROUP HAS ALLOTTED 6,00,000 SHARES AT A PREMIUM OF RS. 250/- AND RAISED CAPITAL TO THE TUNE OF RS. 12,75,00,000/-. THEREFORE, PROCEEDINGS U/S 153C OF THE ACT HAS BEEN INITIATED FOR A BLOCK PERIOD OF 2010-11 TO 2016-17. THE AO ADDED THE SAID AMOUNT UNDER CASH CREDIT FOR FAILURE TO EXPLAIN THE SOURCE OF CASH CREDIT IN TERMS OF SECTION 68 OF THE ACT VIDE ASSESSMENT ORDER DATED 31.12.2017 U/S 153C/143(3) OF THE INCOME TAX ACT, 1961. 6. BEFORE CIT(A), A CONTENTION WAS RAISED BY THE ASSESSEE, THE DATE OF RECORDING OF SATISFACTION NOTE I.E. (29.05.2017) IS TO BE RECKONED FOR DETERMINATION OF BLOCK AYS AS PRESCRIBED U/S 153C(1) OF THE ACT AND CONTENDED THAT THE ASSESSMENT MADE UNDER BLOCK PERIOD FOR A.Y. 2010-11 IS BARRED BY LIMITATION. THE CIT(A) CONSIDER THE SAME AND BY PLACING RELIANCE IN THE CASE OF RRJ SECURITIES LTD. 380 ITR 612 (DELHI) HELD THE NOTICE DATED 30.05.2017 ISSUED U/S 153C FOR A.Y. 2010-11 IS BARRED BY LIMITATION AND QUASHED THE ASSESSMENT MADE U/S 153C R.W.S. 143(3) OF THE ACT FOR A.Y. 2010-11. FOR READY REFERENCE, THE RELEVANT PORTION OF CIT(A) IS REPRODUCED HEREIN BELOW: I HAVE CONSIDERED THE ASSESSMENT RECORDS, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE AR AS WELL AS THE FACTS OF THE CASE AND THE POSITION OF LAW. IN THIS CASE, THE CHRONOLOGY OF EVENTS IS AS UNDER: DATE OF SEARCH 09.12.2015 RECORD OF SATISFACTION 29.05.2017 NOTICE U/S 153C RECEIVED ON 30.05.2017 ASSESSMENT YEAR RELEVANT TO THE RECORDING OF SATISFACTION AND ISSUE OF NOTICE 2018 - 19 6 YEARS PRIOR TO ABOVE FOR WHICH NOTICE U/S 153C COULD BE ISSUED FOR 2012 - 13 TO 2017 - 18 3 IT(SS)A NO.41/KOL/2019 & C.O. 37/KOL/2019 M/S. KALINDI MERCHANDISE PVT. LTD. THE ASSESSMENT YEARS NOTICE ACTUALLY ISSUED BY THE AO FOR THE ASSESSMENT YEARS 2010 - 11 TO 2015 - 16 U/S 153C AND AY 2016-17 U/S 143(3) IN THE CASE OF RRJ SECURITIES 380 ITR 612 (DELHI) FOLLOWING PRINCIPLES OF LAW HAVE BEEN HELD HEAD NOTES WHETHER IT IS DATE ON WHICH ASSESSING OFFICER OF ASSESSEE, I.E., PERSON OTHER THAN ONE SEARCHED, ASSUMES POSSESSION OF SEIZED ASSETS / DOCUMENTS, WOULD BE RELEVANT DATE FOR APPLYING PROVISIONS OF SECTION 153A HELD, YES. THE PROVISO TO SECTION 153C(1) EXPRESSLY INDICATES THAT REFERENCE TO THE DATE OF INITIATION OF SEARCH FOR THE PURPOSES OF SECOND PROVISO TO SECTION 153A, SHALL BE CONSTRUED AS A REFERENCE TO THE DATE ON WHICH VALUABLE ASSETS OR DOCUMENTS ARE RECEIVED BY THE ASSESSING OFFICER OF AN ASSESSEE (OTHER THAN A SEARCHED PERSON). THUS, BY VIRTUE OF THE SECOND PROVISO TO SECTION 153C, THE ASSESSMENTS/REASSESSMENTS THAT WERE PENDING ON THE DATE OF RECEIVING SUCH ASSETS, BOOKS OF ACCOUNT OR DOCUMENTS WOULD ABATE. (PARA 14). THE RECORDING OF A SATISFACTION THAT THE ASSETS/DOCUMENTS SEIZED BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED IS NECESSARILY THE FIRST STEP TOWARDS INITIATION OF PROCEEDINGS UNDER SECTION 153C. IN THE CASE WHERE THE ASSESSING OFFICER OF THE SEARCHED PERSON AS WELL AS THE OTHER PERSON IS ONE AND THE SAME, THE DATE ON WHICH SUCH SATISFACTION IS RECORDED WOULD BE THE DATE ON WHICH THE ASSESSING OFFICER ASSUMES POSSESSION OF THE SEIZED ASSETS/DOCUMENTS IN HIS CAPACITY AS AN ASSESSING OFFICER OF THE PERSON OTHER THAN THE ONE SEARCHED (PARA 18) ONCE THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED ASSETS / DOCUMENTS BELONG TO ANOTHER PERSON AND THE SAID ASSETS / DOCUMENTS HAVE BEEN TRANSFERRED TO THE ASSESSING OFFICER OF SUCH OTHER PERSON, THE PROCEEDINGS FOR ASSESSMENT / REASSESSMENT OF INCOME OF THE OTHER PERSON HAS TO PROCEED IN ACCORDANCE WITH PROVISIONS OF SECTION 153A. SECTION 153A REQUIRES THAT WHERE A SEARCH HAS BEEN INITIATED UNDER SECTION 132 OF THE ACT, ASSESSING OFFICER IS REQUIRED TO ISSUE NOTICE REQUIRING THE NOTICE TO FURNISH RETURNS OF INCOME IN RESPECT OF SIX ASSESSMENT YEARS RELEVANT TO THE SIX PREVIOUS YEARS PRECEDING THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED. BY VIRTUE OF SECOND PROVISO TO SECTION 153A, THE ASSESSMENT / REASSESSMENT PENDING ON THE DATE OF INITIATION OF SEARCH ABATE. IN THE CONTEXT OF PROCEEDINGS UNDER SECTION 153C OF THE ACT, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH IN THE SECOND PROVISO TO SECTION 153A HAS TO BE CONSTRUED AS THE DATE ON WHICH THE ASSESSING OFFICER RECEIVES THE DOCUMENTS OR ASSETS FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON. (PARA 21) THEREFORE AS PER THIS DECISION OF DELHI HIGH COURT DATE OF INITIATION OF SEARCH SHALL BE THE DATE OF RECEIVING OF SEIZED MATERIAL OR ASSETS SEIZED (I.E. DATE OF RECORDING OF SATISFACTION). AND SIX ASSESSMENT YEARS PRIOR TO THE DATE OF SEARCH WOULD BE COUNTED AS SIX ASSESSMENT YEAR FROM THE DATE OF RECEIVING OF SEIZED MATERIAL (RECORDING OF SATISFACTION). FOLLOWING OTHER DECISIONS ARE SQUARELY ON THIS ISSUE AND SUPPORT THE CASE OF THE ASSESSEE. 4 IT(SS)A NO.41/KOL/2019 & C.O. 37/KOL/2019 M/S. KALINDI MERCHANDISE PVT. LTD. I. DELHI HIGH COURT IN CASE OF SARWAR AGENCY 397 ITR 400 HAS FOLLOWED THE DECISION OF RRJ SECURITIES 380 ITR 612 (DELHI). II. ITAT, DELHI, F-BENCH, DELHI IN THE CASE OF M/S. BNB INVESTMENT & PROPERTIES LTD., GURGAON, HARYANA VS THE DCIT, CENTRAL CIRCLE -1, FARIDABAD IN ITA NOS. 504 & 503/DEL/2015, DATED 27.06.2018. III. EMPIRE CASTING PVT. LTD., NEW DELHI VS ACIT, CC-2, NEW DELHI. IV. PAVITRA REALCON PVT. LTD., NEW DELHI VS ACIT, CC-32, NEW DELHI. THEREFORE AS PER THIS DECISION OF DELHI HIGH COURT DATE OF INITIATION OF SEARCH SHALL BE THE DATE OF RECEIVING OF SEIZED MATERIAL OR ASSETS SEIZED (I.E. DATE OF RECORDING OF SATISFACTION). AND SIX ASSESSMENT YEARS PRIOR TO THE DATE OF SEARCH WOULD BE COUNTED AS SIX ASSESSMENT YEAR FROM THE DATE OF RECEIVING OF SEIZED MATERIAL (RECORDING OF SATISFACTION). IN CASE UNDER CONSIDERATION, THE RELEVANT DATE OF HANDING OVER OF DOCUMENT IS THE DATE ON WHICH THE SATISFACTION NOTE IS RECORDED I.E. 29.05.2017 AND, THUS, RELEVANT YEAR IS ASSESSMENT YEAR 2018-19. SIX PRECEDING PREVIOUS YEARS AND RELEVANT ASSESSMENT YEARS WOULD BE AS UNDER: AY FY 2017-18 2016-17 2016-17 2015-16 2015-16 2014-15 2014-15 2013-14 2013-14 2012-13 2012-13 2011-12 IN VIEW OF THE ABOVE, I AM INCLINED TO HOLD THAT THE NOTICE DATED 30.05.2017 FOR THE ASSESSMENT YEAR 2010-11 IS BARRED BY LIMITATION. THEREFORE, THE ISSUE OF NOTICE CONDITION LAID DOWN FOR VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT HAS NOT BEEN FULFILLED AND THE SAME IS BARRED BY LIMITATION. IN VIEW OF THE ABOVE, NOTICE ISSUED U/S 153C OF THE ACT FOR THE ASSESSMENT YEAR 2010-11 STANDS QUASHED AND CONSEQUENTLY THE ASSESSMENT COMPLETED IN PURSUANCE OF SUCH NOTICE IS ALSO QUASHED. THEREFORE GROUND NO 1 RAISED BY THE ASSESSEE ALLOWED. 7. BEFORE US, THE LD. DR SUBMITS THAT THE CIT(A) ERRED IN LAW IN HOLDING THAT THE ISSUANCE OF NOTICE U/S 153C IS BARRED BY LIMITATION AND THE AO ISSUED THE NOTICE WITHIN PRESCRIBED TIME PERIOD IN ACCORDANCE WITH LAW. THE CIT(A) ERRED IN CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY MAKING INCORRECT INTERPRETATION OF SECTION 153C OF THE ACT ALLOWED THE APPEAL OF THE ASSESSEE. THE LD. DR ARGUED THAT THE AO ISSUED THE NOTICE WITHIN TIME AND OPPOSED VEHEMENTLY THE ORDER OF CIT(A). HE PRAYED TO ALLOW GROUNDS OF APPEAL RAISED BY THE REVENUE. 8. THE LD. AR REITERATED THE SAME CONTENTION AS MADE BEFORE THE CIT(A) AND PLACED ON RECORD THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF RRJ SECURITIES LTD. REPORTED IN 380 ITR 612 AND SARWAR AGENCY 5 IT(SS)A NO.41/KOL/2019 & C.O. 37/KOL/2019 M/S. KALINDI MERCHANDISE PVT. LTD. PVT. LTD. REPORTED IN 397 ITR 400. HE PRAYED TO DISMISS GROUNDS OF APPEAL RAISED BY THE REVENUE. 9. ACCORDING TO LD. AR THE DATE OF ISSUANCE OF NOTICE U/S 153C IS TO BE TAKEN INTO CONSIDERATION FOR INITIATION OF PROCEEDINGS U/S 153C OF THE ACT FOR BLOCK PERIOD. ACCORDING TO HIM SATISFACTION WAS RECORDED ON 29.05.2017 AND THE RELEVANT PREVIOUS YEAR IS ASSESSMENT YEAR 2018-19. THE BLOCK PERIOD FOR INITIATION OF PROCEEDINGS UNDER 153C IS 2012-13 TO 2017-18, BUT IN THE PRESENT CASE THE ASSESSING OFFICER TAKEN THE DATE OF SEARCH IN THE CASE OF SEARCHED PERSON U/S 153A OF THE ACT AS INITIATION OF PROCEEDINGS U/S 153C OF THE ACT AND MADE BLOCK PERIOD FROM 2010-11 TO 2016-17. 10. THE HONBLE HIGH COURT OF DELHI HAS PLACED RELIANCE BY THE CIT(A) HELD VIDE PARA 24 THE DATE OF SEARCH UNDER THE SECOND PROVISO TO SECTION 153A OF THE ACT HAS TO BE CONSTRUED AS THE DATE OF HANDING OVER OF ASSETS/DOCUMENTS BELONGING TO THE ASSESSEE BEING A PERSON OTHER THAN SEARCHED PERSON TO THE AO HAVING JURISDICTION TO ASSESS THE SAID ASSESSEE. THEREFORE, AS DISCUSSED ABOVE THE AO RECORDED SATISFACTION ON 29.05.2017 AND DETERMINED THE BLOCK PERIOD AS 2010-11 TO 2015-16 TAKING INTO CONSIDERATION THE DATE OF SEARCH. IN OUR OPINION, AS IN TERMS OF THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF RRJ SECURITIES LTD., THE DATE OF RECORDING OF SATISFACTION IS TO BE CONSTRUED AS THE AO HAVING JURISDICTION TO ASSESS THE SEARCHED PERSON U/S 153C OF THE ACT. 11. FURTHER THE HONBLE HIGH COURT OF DELHI IN THE CASE OF SARWAR AGENCY PVT. LTD. (SUPRA) DECLINE TO ADMIT THE SUBSTANTIAL QUESTION OF LAW RAISED BY THE REVENUE CHALLENGING THE DECISION IN THE CASE OF RRJ SECURITIES PVT. LTD. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED AND WE COMPLETELY AGREE WITH THE REASONS RECORDED BY THE CIT(A) IN HIS ORDER IN PARA NO 6 WHICH IS REPRODUCED HEREIN ABOVE. THUS GROUND NOS. 1 AND 2 RAISED BY THE REVENUE ARE DISMISSED. 6 IT(SS)A NO.41/KOL/2019 & C.O. 37/KOL/2019 M/S. KALINDI MERCHANDISE PVT. LTD. CROSS-OBJECTION OF ASSESSEE IN C.O. NO. 37/KOL/2019 11. WE FIND THAT THE ASSESSEE RAISED GROUNDS OF APPEAL IN SUPPORT OF ORDER PASSED BY THE CIT(A). IN THE AFOREMENTIONED PARAGRAPH, WE HAVE TAKEN A DECISION TO UPHOLD THE ORDER OF CIT(A) AND THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION BECOMES ACADEMIC REQUIRING NO ADJUDICATION. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS- OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2020. SD/- SD/- [P.M JAGTAP] [S.S. VISWANETHRA RAVI] VICE-PRESIDENT JUDICIAL MEMBER DATED: 12/02/2020 BISWAJIT, SR.PS COPY OF ORDER FORWARDED TO: 1. DCIT, CC 1(3), KOLKATA. 2. M/S. KALINDI MERCHANDISE PVT. LTD., 13/1, MAHENDRA ROY LANE, KOLKATA 700 046. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA