ACIT, CC-3(1), Kolkata, Kolkata V. M/s Visa Bao Ltd., Kolkata

ITSSA 43/KOL/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3284 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: SHIKHA AGA RWAL ACA
• Keywords: Search and seizure
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM IT(SS)A NO.43KOL/2015 ( / ASSESSMENT YEAR : 2009-10) ACIT, CC-3(1), KOLKATA AAYAKAR BHAWAN POORVA, 110-SHANTIPALLY, KOLKATA- 700107 VS. M/S VISA BAO LIMITED, VISA HOUSE, 8/10,ALIPORE ROAD, KOLKATA-700027 ./ ./PAN/GIR NO. : AACCV 6970 H ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NIRAJ KUMAR, CIT(DR) /ASSESSEE BY :MS. SHIKHA AGARWAL, ACA / DATE OF HEARING : 10/04/2017 /DATE OF PRONOUNCEMENT 19/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAIN ING TO ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST AN ORD ER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLKATA, I N APPEAL NO.442/CC-3(1)/CIT(A)-21/14-15, DATED 05.12.2014, W HICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S .153A/143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS TH E ACT), DATED 28.03.2013. 2. BRIEF FACTS OF THE CASE QUA THE ISSUE RAISED BY THE REVENUE IS THAT THE REVENUE HAS IN THIS APPEAL CONTESTED THE ACTION OF LD. CIT(A) IN DELETING THE EXPENSES AMOUNTING TO RS.33,90,841/-. IN ASSESSEES CASE A SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT WAS CONDUCTED IN VISA GROUP OF CASES ON 11.11.2010. THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF VISA GROUP. CONSEQUENT UPON THE S EARCH OPERATION, IT(SS)A NO.43/15 M/S VISA BAO LTD. 2 THE AO ISSUED NOTICE U/S.153A OF THE ACT AND IN RES PONSE TO THE NOTICE THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2009-2010 U/S.153A OF THE ACT DATED 19.4.2012 DECLARING TOTAL INCOME OF RS.2,14,91,071/-. THE ORIGINAL RETURN OF INCOME U/S .139(1) OF THE ACT WAS FILED ON 30.9.2009 DECLARING THE SAME INCOME AS FI LED U/S.153A. THE RETURN OF INCOME FILED ON 30.9.2009 U/S.139(1) WAS PROCESSED U/S.143(1) OF THE ACT. THE NOTICE U/S.143(2) OF THE ACT WAS NO T ISSUED TO THE ASSESSEE AND THE TIME LIMIT FOR ISSUE OF NOTICE U/S .143(2) OF THE ACT WAS ALREADY EXPIRED ON 30.9.2010 I.E. BEFORE THE DATE O F INITIATION OF SEARCH OPERATION U/S.132 OF THE ACT DATED 11.11.2010. THER EFORE, THE ASSESSEE STATED BEFORE THE AO THAT THE ASSESSMENT ORDER PASS ED U/S.143(1) OF THE ACT HAD BECOME FINAL MUCH BEFORE THE SEARCH OPERATI ON, AND THE ASSESSING OFFICER SHOULD NOT MAKE ADDITION ON ACCOU NT OF REGULAR ITEMS, WHICH HAVE ALREADY DISCLOSED BY THE ASSESSEE, IN TH E RETURN OF INCOME FILED U/S 139 (1) OF THE ACT. HOWEVER, IGNORING THE SUBMISSIONS OF THE ASSESSEE THE AO PASSED THE ASSESSMENT ORDER U/S.153 A/143(3) OF THE ACT ON DATED 28.3.2013 MAKING DISALLOWANCE OF EXPEN SES OF RS.33,90,841/-. THE AO OBSERVED THAT RS.33,90,841/- IS EXPENDITURE OF CAPITAL IN NATURE, THEREFORE, ALTHOUGH NO INCRIMINA TING MATERIAL WAS FOUND OR SEIZED IN THE COURSE OF SEARCH IN THIS REGARD, I N SPITE OF THIS THE AO MADE THE ADDITION. THE ASSESSING OFFICER PRESUMED T HAT IT IS NOT NECESSARY THAT THERE SHOULD BE ANY INCRIMINATING MA TERIAL FOR SUCH TYPE OF EXPENSES WHICH ARE CAPITAL IN NATURE. THEREFORE, TH E AO ADDED RS.33,90,841/-. IT(SS)A NO.43/15 M/S VISA BAO LTD. 3 3. AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICE R, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A), WHO HAS DELET ED THE ADDITIONS MADE BY THE AO AT RS.33,90,841/-. LD. CIT(A) OBSERVED TH AT THERE WAS NO ANY INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH RELA TING TO THE ASSESSEE, THEREFORE, THOSE ASSESSMENTS WHICH HAVE ALREADY BEE N COMPLETED CANNOT BE DISTURBED. THEREFORE, IF THE REVENUE HAS ACCEPTE D THE RETURN OF ASSESSEE ALREADY THEN THAT RETURN OF INCOME CANNOT BE DISTURBED IN ASSESSMENT U/S.153A EXCEPT ON THE BASIS OF INCRIMIN ATING MATERIAL FOUND IN THE SEARCH. IN VIEW OF THE ABOVE, THE LD. CIT(A) HELD THAT ASSESSMENT WHICH HAD ATTAINED FINALITY BEFORE THE INITIATION O F THE SEARCH CANNOT BE DISTURBED OR ALTERED IN THE SEARCH ASSESSMENT MADE U/S.153A EXCEPT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND IN TH E SEARCH. THE AO HAD NO JURISDICTION TO MAKE ADDITION ON ISSUES OF REGUL AR ASSESSMENT WHICH HAD ALREADY ATTAINED FINALITY AS ON THE DATE OF THE SEARCH. BASED ON THESE OBSERVATIONS, LD. CIT(A) DELETED THE ADDITIONS OF R S.33,90,841/-. 4. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US, AND HAS TAKEN THE FOLLOWING GROUN DS OF APPEAL :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN TAKING INTO ACCOUNT THAT T HE AO HAD NO JURISDICTION AND LEGAL POWER TO MAKE ADDITION ON IS SUES OF REGULAR ASSESSMENT WHICH HAD ALREADY ATTAINED FINAL ITY AS ON THE DATE OF SEARCH AND THUS LIMITING THE SCOPE OF L AW I.E. SECTION 153A OF THE INCOME TAX ACT, 1961 AND HELD THAT A.O IS LEGALLY INCOMPETENT TO MAKE RE-ASSESSMENT OF PARTICULAR ISS UE OVERLOOKED BY PREVIOUS A.O UNDER SECTION 153 A OF T HE INCOMETAX ACT 1961 AND IGNORING FACT OF THIS CASE A ND DIRECTING THAT DISALLOWANCE MADE TO BE DELETED. 2. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUNDS OF APPEAL AND/OR ADDUCE ADDITIONAL EVID ENCE AT THE TIME-OF HEARING OF THE CASE. IT(SS)A NO.43/15 M/S VISA BAO LTD. 4 5. LD. DR FOR THE REVENUE HAS STATED BEFORE US THAT THE AO HAD JURISDICTION AND LEGAL POWER TO MAKE ADDITION IN IS SUES OF REGULAR ASSESSMENT WHICH HAS ALREADY ATTAINED FINALITY AS O N THE DATE OF SEARCH. IF THE AO DID NOT ALLOW TO DO SO THEN IT WILL BE DEEME D THAT THE LEGISLATURE IS LIMITING THE SCOPE OF LAW. IN ADDITION TO THIS, LD. DR FOR THE REVENUE ALSO STATED THAT SECTION 132 AND SECTION 133 OF THE ACT DOES NOT TALK ABOUT INCRIMINATING MATERIAL, THEREFORE, CONCEPT OF INCRI MINATING MATERIAL SHOULD NOT BE APPLIED HERE. 6. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE HAS S UBMITTED BEFORE US THAT THE INCOME WHICH HAD ALREADY ASSESSED U/S.143 (1)/143(3) OF THE ACT CANNOT BE RECOMPUTED IN THE PROCEEDINGS U/S 153A OF THE ACT. THE FACTS OF THE CASE ARE THAT THE SEARCH OPERATION U/S 132 O F THE ACT WAS CONDUCTED IN 'VISA GROUP' OF CASES ON 11.11.2010. T HE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF VISA GROUP. CONSEQUENT UPON THE SEARCH OPERATION THE AO ISSUED NOTICE U/S 153A OF THE ACT AND IN RESPONSE THE ASSESSEE COMPANY FILED ITS RETURN OF I NCOME FOR THE A.Y. 2009-10, U/S 153A OF THE ACT ON 19.04.2012 DECLARIN G TOTAL INCOME OF RS.2,14,91,071/-. THE ORIGINAL RETURN OF INCOME U/S 139(1) OF THE ACT WAS FILED ON 30.09.2009 DECLARING THE SAME INCOME AS IN THE RETURN FILED U/S 153A. THE RETURN OF INCOME FILED ON 30.09.2009 WAS PROCESSED U/S 143(1) OF THE ACT. THE NOTICE U/S 143(2) OF THE ACT WAS NO T ISSUED TO THE ASSESSEE AND THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT WAS ALREADY EXPIRED ON 30.09.2010 I.E. BEFORE THE DATE OF INITIATION OF SEARCH IT(SS)A NO.43/15 M/S VISA BAO LTD. 5 OPERATION U/S 132 OF THE ACT ON 11.11.2010. THUS, T HE ASSESSMENT ORDER PASSED U/S 143(1) OF THE ACT HAS BECOME FINAL. HOWE VER, IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) OF THE ACT DATED 28.03.2013 THE AO HAS MADE THE DISALLOWANCE OF EXPENSES OF RS. 33,90,841/- HOLDING THE SAME AS CAPITAL IN NATURE, THOUGH, NO INCRIMINA TING MATERIAL WAS FOUND OR SEIZED IN THE COURSE OF SEARCH IN THIS REGARD. B EFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF EXPENSES OF RS.33,90,841/- IN THE O RDER PASSED U/S 153A OF THE ACT, BECAUSE THE ISSUES FORMING THE PART OF THE ITEMS OF THE REGULAR ASSESSMENT, WERE BEYOND THE SCOPE OF SEARCH ASSESSM ENT UNDER SECTION 153A OF THE ACT, WHERE THE ASSESSMENT HAS NOT BEEN ABATED. IN SUCH ASSESSMENT YEAR(S) THE AO HAS NO JURISDICTION TO MA KE ADDITIONS/DISALLOWANCES OTHERWISE THAN ON THE BASIS OF INCRIMINATING MATERIAL OR UNDISCLOSED ASSETS FOUND IN THE COURSE OF SEARCH. IT IS ARGUED BY THE ASSESSEE THAT IN THE INSTANT APPEAL, THE ASS ESSMENT YEAR INVOLVED IS A.Y. 2009-10 FOR WHICH THE ORIGINAL RETURN OF IN COME WAS FILED U/S.139(1) OF THE ACT ON 30.09.2009. NO NOTICE U/S.143(2) OF T HE ACT WAS ISSUED WITHIN THE TIME ALLOWED I.E. UP TO 30.09.2010 AND T HE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT. THUS, THE INCOME A SSESSED U/S 143(1) HAD ATTAINED FINALITY BEFORE THE DATE OF INITIATION OF SEARCH AND, THEREFORE, NOT ABATED. IT IS CONTENDED BY THE APPELLANT THAT O N PERUSAL OF THE ASSESSMENT ORDER IT MAY BE OBSERVED THAT NO INCRIMI NATING MATERIAL OR DOCUMENTS ETC. WERE FOUND IN THE COURSE OF SEARCH R ELATING TO THE YEAR UNDER APPEAL. THEREFORE, IN THE PROCEEDINGS U/S 153 A OF THE ACT, THE AO IT(SS)A NO.43/15 M/S VISA BAO LTD. 6 HAD NO JURISDICTION TO ADJUDICATE THE ITEMS OF REGU LAR ASSESSMENT WHEN THE ASSESSMENT WAS NOT ABATED AND ALREADY ATTAINED FINA LITY. THE LD. AR FOR THE ASSESSEE HAD ALSO SUBMITTED THE FOLLOWING JUDGM ENTS BEFORE THE LD CIT(A): I) LMJ INTRNATIONAL LTD. VS. DCIT, 119 TTJ 214 (KOL KATA) II) ABHAY KUMAR 5HROFF VS. CIT, 290 ITR 114 (JHARKH AND) III) MEGHMANI ORGANICS LTD. VS. DCIT, 129 TTJ 225 ( AHMEDABAD) IV) CIT VS. 5HAILA AGARWAL, 346 ITR 130 (ALLAHABAD) V) SUNCITY ALLOYS (P) LTD. VS. ACIT, 124 TTJ 674 (J ODHPUR) THE SUM AND SUBSTANCE OF THE JUDGMENTS ARE THAT IF NO INCRIMINATING / ADVERSE MATERIAL WAS FOUND IN THE COURSE OF SEARCH; AND SO, THE RETURN ALREADY ACCEPTED BY THE DEPARTMENT, COULD NOT BE RE VIEWED IN THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT. 7. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE, AS THE PROPOSITIONS CANVASSED BY THE LD A R FOR THE ASSESSEE ARE SUPPORTED BY THE JUDGMENTS CITED ABOVE AND THE FACTS NARRATED BY HIM ABOVE. IN THE ASSESSEES CASE UNDER CONSIDERATION T HE SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS INITIATED BY THE DEPARTMENT ON 11.11.2010. THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 139 (1) OF THE I.T.ACT ON DATED 30.09.2009. THE RETURN ON I NCOME FILED BY THE ASSESEE WAS PROCESSED UNDER SECTION 143(1) OF THE A CT MUCH BEFORE THE SEARCH AND SEIZURE ACTION. THE NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED TO THE ASSESSEE AND THE TIME LIMIT FOR ISSUE OF NOT ICE U/S 143(2) OF THE ACT IT(SS)A NO.43/15 M/S VISA BAO LTD. 7 WAS ALREADY EXPIRED ON 30.09.2010 I.E. BEFORE THE D ATE OF INITIATION OF SEARCH OPERATION U/S 132 OF THE ACT ON 11.11.2010. THUS, THE ASSESSMENT ORDER PASSED U/S 143(1) OF THE ACT HAS BECOME FINAL AND THE AO CANNOT DISTURB THE SAME U/S.153A OF THE ACT, UNLESS THERE ARE MATERIAL FOUND IN THE COURSE OF SEARCH FOR DOING SO. THEREFORE, CONSI DERING THE FACTUAL POSITION WE ARE OF THE VIEW THAT THERE IS NO ANY IN FIRMITY IN THE ORDER PASSED BY LD. CIT(A), THEREFORE, WE CONFIRM THE ORD ER PASSED BY LD. CIT(A). 8. IN THE RESULT, APPEAL FILED BY THE REVENUE, IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/04/ 2017. SD/ - (N.V.VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; %& DATED 19/04/2017 ' ()*/PRAKASH MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) % & , / ITAT, KOLKATA 1. / THE APPELLANT-ACIT, CC-3(1), KOLKATA 2. / THE RESPONDENT.-M/S VISA BAO LTD. 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 567 8 , 8 , / DR, ITAT, KOLKATA 6. 79 / GUARD FILE. 5 //TRUE COPY//