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

ITSSA 45/KOL/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2819 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2015
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: A K TULSYAN
• Keywords: Search and seizure
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN & DR. A.L.SAINI, AM IT(SS)A NOS.45&46/KOL/2015 ( / ASSESSMENT YEARS :2007-08 & 2009-10) ACIT, CC-3(1), AAYAKAR BHAWAN POORVA, 110- SHANTIPALLY, KOLKATA-700107 VS. M/S VISA POWER LIMITED, VISA HOUSE, 8/10, ALIPORE ROAD, KOLKATA-700027 ./ ./PAN/GIR NO. : AACCV 1853 D ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI G.MALLIKARJUNA, CIT DR /ASSESSEE BY : SHRI A.K.TULSYAN, FCA / DATE OF HEARING : 29/11/2016 /DATE OF PRONOUNCEMENT 07/12/2016 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED TWO APPEALS FILED BY THE REVENUE, PER TAINING TO THE ASSESSMENT YEAR 2007-08 & 2009-10, ARE DIRECTED AGA INST THE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-21, KOLKATA, IN APPEAL NO.441/CC-3(1)/CIT(A)-21/14-15, AND 446/CC-3 (1)/CIT(A)-21/14- 15, DATED 08.12.2014 AND 17.12.2014 RESPECTIVELY, W HICH IN TURN ARISE OUT OF ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICE R (AO) UNDER SECTION 153A/143(3) OF THE INCOME TAX ACT 1961, (IN SHORT THE ACT), DATED 28.03.2013 & 17.02.2014, RESPECTIVELY. 2. THESE TWO CAPTIONED APPEALS PERTAIN TO SAME ASSE SSEE, DIFFERENT ASSESSMENT YEARS, SAME ISSUES INVOLVED, THEREFORE T HEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. THE REVENUES APPEAL NO.ITA NO.45/KOL/2015 IS TAKEN AS A LEAD CASE. IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 2 3. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE CASE OF VISA GROUP OF ASSESSEES IN ORISSA, WEST BE NGAL AND CHATTISGARH ON 11-11-2010 AND ON SUBSEQUENT DATES. THE COMPANY M/S VISA POWER LTD. IS ONE OF THE ASSESSEES BELONGING TO THE GROU P SEARCHED. IN RESPONSE TO THE NOTICE U/S 153A, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.03.2012 DECLA RING A TOTAL INCOME OF RS.2,54,236/-. THE AO HAS COMPLETED THE SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT BY MAKING THE ADDITION ON ACC OUNT OF INTEREST ON FIXED DEPOSITS AND EXCHANGE FLUCTUATION GAIN. 4. AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FIL ED APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE ORDER PASSED BY THE AO OBSERVING THE FOLLOWINGS :- 12. THUS, IT IS FOUND THAT THE CONSISTENT JUDICIAL OPINION THAT IS BEING EXPRESSED BY THE JUDICIAL FORUMS IS THAT THE ASSESSMENT WHICH HAS ALREADY ATTAINED FINALITY BEFORE THE DATE OF THE INITIATION OF THE SEARCH CANNOT BE DISTURBED IN ASS ESSMENT U/S 153A UNLESS INCRIMINATING MATERIAL' WAS FOUND IN TH E SEARCH. IT IS ALSO OBSERVED THAT NOT ONLY THE ASSESSEES BUT ALSO THE DEPARTMENT HAS CONSISTENTLY TAKEN THIS STAND BEFORE DIFFERENT JUDICIAL FORUMS THAT THE ASSESSMENT WHICH HAS ALREA DY ATTAINED FINALITY BEFORE THE DATE OF INITIATION OF THE SEARC H CANNOT BE DISTURBED IN THE PROCEEDINGS U/S 153A WHEN NO RELAT ED MATERIAL WAS FOUND IN THE SEARCH. THE HON'BLE ALLAHABAD HIGH COURT HAS IN THE CASE OF SHAILA AGARWAL (SUPRA) ACCEPTED THE CONTENTION THAT IN VIEW OF THE SECOND PROVISO TO SECTION 153A, ONLY THE ASSESSMENT WHICH WAS PENDING AS ON THE DATE OF INIT IATION OF THE SEARCH SHALL ABATE AND NOT THOSE WHICH HAVE ALREADY ATTAINED FINALITY. SIMILARLY, IN THE CASE OF THE SUNCITY ALL OYS (P) LTD (SUPRA), THE HON'BLE JODHPUR BENCH OF THE ITAT HAS HELD THAT THE ASSESSMENT PROCEEDINGS WHICH HAD ALREADY BECOME FINAL SHALL NOT ABATE AND CONSEQUENTLY NO FRESH CLAIM CAN BE ALLOWED IN THE PROCEEDINGS U/S 153A. IN THE CASE OF MEGHMAN I ORGANICS LTD (SUPRA), THE HON'BLE AHMEDABAD BENCH OF THE ITA T HELD THAT THE ORIGINAL ASSESSMENT COMPLETED BEFORE THE INITIA TION OF THE SEARCH DID NOT ABATE AND SO THE AO WAS NOT COMPETEN T TO IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 3 ASSUME JURISDICTION U/S 153A WHEN NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH. IN THE CASE OF LMJ INTERNATION AL LTD (SUPRA), THE HON'BLE BENCH OF THE JURISDICTIONAL ITAT HAS HE LD THAT IN CONSEQUENCE TO THE SEARCH U/S 132, THE TOTAL INCOME FOR EACH OF THE SIX PRECEDING YEARS HAS TO BE RECOMPUTED ON THE BASIS OF THE UNDISCLOSED INCOME UNEARTHED IN SEARCH WHICH HA S TO BE ADDED TO THE REGULAR INCOME ASSESSED U/S 143(3) OR COMPUTED U/S 143(1). BUT, WHERE NO INCRIMINATING MATERIAL WA S FOUND IN THE SEARCH RELATING TO ANY ASSESSMENT YEAR(S), THEN THE ASSESSMENT FOR SUCH ASSESSMENT YEAR(S) CANNOT BE DISTURBED. IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD, THE HON'BLE SPECIAL BENCH OF THE ITAT HAS ALSO ECHOED THE SAME LEGAL OPINION THAT AS SESSMENT U/S 153A HAS TO BE MADE ON THE BASIS OF THE INCRIMI NATING MATERIAL FOUND IN THE SEARCH. THE HON'BLE BOMBAY HI GH COURT (NAGPUR BENCH) HAS IN THE CASE OF M/S MURLI AGRO PR ODUCTS LTD (SUPRA) HELD THAT THE RETURN ALREADY ACCEPTED BY TH E DEPARTMENT CANNOT BE DISTURBED IN ASSESSMENT U/S 153A EXCEPT O N THE BASIS OF INCRIMINATING RNATERIAL FOUND IN THE SEARCH. IN VIEW OF THE ABOVE, IT IS TO BE HELD THAT THE ASSESSMENT WHICH H AD ATTAINED FINALITY BEFORE THE INITIATION OF THE SEARCH CANNOT BE DISTURBED OR ALTERED IN THE SEARCH ASSESSMENT MADE U/S 153A EXCE PT ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND IN THE SE ARCH. IN OTHER WORDS, THE AO HAD NO JURISDICTION TO MAKE ADDITION ON ISSUES OF REGULAR ASSESSMENT WHICH HAD ALREADY ATTAINED FINAL ITY AS ON THE DATE OF THE SEARCH. IN VIEW OF THE ABOVE LEGAL POSI TION, I AM OF THE OPINION THAT THE DISALLOWANCES CONTESTED BY THE APPELLANT BEING RELATED TO THE ITEM OF REGULAR ASSESSMENT COU LD NOT BE LAWFULLY MADE BY THE AO WHILE MAKING SEARCH ASSESSM ENT U/S 153A. THEREFORE, THE DISALLOWANCE OF RS.32,34,502/- IS DIRECTED TO BE DELETED. THE GROUND NO. 1 IS ALLOWED. 5. NOT BEING SATISFIED WITH THE ORDER OF CIT(A), TH E REVENUE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S 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 FINALITY AS O N THE DATE OF SEARCH AND THUS LIMITING THE SCOPE OF LAW I.E. SECT ION 153A OF THE INCOME TAX ACT, 1961 AND HELD THAT A.O IS LEGALLY I NCOMPETENT TO MAKE RE-ASSESSMENT OF PARTICULAR ISSUE OVERLOOKED B Y PREVIOUS A.O UNDER SECTION 153 A OF THE INCOME TAX ACT 1961 AND IGNORING FACT OF THIS CASE AND DIRECTING THAT DISALLOWANCE MADE TO B E DELETED 6. LD. DR FOR THE REVENUE HAS SUBMITTED THAT THE A O HAS JURISDICTION AND LEGAL POWER TO MAKE ADDITION ON ISSUES ON REGULAR A SSESSMENT WHICH HAS IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 4 ALREADY ATTAINED THE FINALITY. IF IT IS NOT ALLOWED THEN IT IS TANTAMOUNT TO LIMIT THE SCOPE OF LAW. THE AO MAY RE-EXAMINE THE ISSUE W HICH OVERLOOKED BY THE AO WHILE MAKING THE ORIGINAL ASSESSMENT. THEREF ORE, THE ASSESSMENT U/S.153A DOES NOT LIMIT TO ONLY THE SEARCH MATERIAL FOUND, THE AO MAY EXAMINE THE CONCLUDED MATTERS IN ASSESSMENT U/S 143 (3). THE AO MAY RE-EXAMINE THE ISSUE WHICH WERE OVERLOOKED BY THE P REVIOUS AO. 7. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE HAS V EHEMENTLY SUBMITTED THAT D URING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS S UBMITTED BY THE APPELLANT THAT THE AO WAS NOT JUSTIFIED IN MAKI NG THE DISALLOWANCE OF EXPENSES OF RS.32,34,502/- IN THE ORDER 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 ASSESSMENT UNDER SECTION 153A OF TH E ACT WHERE THE ASSESSMENT HAS NOT BEEN ABATED. IN SUCH ASSESSMENT YEARS THE AO HAS NO JURISDICTION TO MAKE ADDITIONS OTHERWISE THAN ON TH E BASIS OF INCRIMINATING MATERIAL OR UNDISCLOSED ASSETS FOUND IN THE COURSE OF SEARCH. IT IS ARGUED BY THE APPELLANT THAT IN THE INSTANT APPEAL, THE ASSESSMEN T YEAR INVOLVED IS A.Y. 2007- 08 FOR WHICH THE ORIGINAL RETURN OF INCOME WAS FILE D U/S 139(1) OF THE ACT ON 16.10.2007. NO NOTICE U/S 143(2) OF THE ACT WAS ISS UED WITHIN THE TIME ALLOWED I.E. UP TO 30.09.2008 AND THE ASSESSMENT WAS COMPLE TED U/S 143(1) ON 27.02.2009. THUS, THE ASSESSMENT HAD ATTAINED FINAL ITY BEFORE THE DATE OF SEARCH AND, THEREFORE, NOT ABATED. IT IS CONTENDED BY THE APPELLANT THAT ON PERUSAL OF THE ASSESSMENT ORDER IT MAY BE OBSERVED THAT NO INCRIMINATING MATERIAL OR DOCUMENTS ETC. WERE FOUND IN THE COURSE OF SEARCH RELATING TO THE YEAR UNDER APPEAL. THEREFORE, IN THE PROCEEDINGS U/ S 153A THE AO HAD NO JURISDICTION TO ADJUDICATE THE ITEMS OF REGULAR ASS ESSMENT WHEN THE ASSESSMENT IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 5 WAS NOT ABATED AND ATTAINED FINALITY. THE RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL DECISIONS: I) LMJ INTERNATIONAL LTD. VS. DCIT, 119 TTJ 214 (KO LKATA) II) ABHAY KUMAR SHROFF VS. CIT, 290 ITR 114 (JHARKH AND) III) MEGHMANI ORGANICS LTD. VS. DCIT, 129 TTJ 225 ( AHMEDABAD) IV) CIT VS. SHAILA AGARWAL, 346 ITR 130 (ALLAHABAD) V) SUNCITY ALLOYS (P) LTD. VS. ACIT, 124 TTJ 674 (J ODHPUR) VI) ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT, 137 I TD 287 (MUMBAI) (56), AND VII) JAI STEEL (INDIA) VS. ACIT, 259 CTR 281 (RAJ.) IT IS ARGUED BY THE LD AR THAT NO ADVERSE MATERIAL WAS FOUND IN THE COURSE OF SEARCH; AND SO, THE RETURN ALREADY ACCEPTED BY T HE DEPARTMENT COULD NOT BE REVIEWED IN THE ASSESSMENT PROCEEDINGS U/S 1 53A OF THE ACT. HOWEVER, THE AO HAS FAILED TO APPRECIATE THE ARGUME NTS MADE BEFORE HIM AT THE ASSESSMENT STAGE. IT IS SUBMITTED BY THE APP ELLANT THAT IT IS NOT ITS CASE THAT NO ASSESSMENT U/S 153A COULD BE MADE UNLE SS SOME INCRIMINATING MATERIAL WAS FOUND IN SEARCH. THE CON TENTION OF THE APPELLANT IS THAT THE RETURN ALREADY ACCEPTED BY THE DEPARTME NT CANNOT BE DISTURBED IN THE ASSESSMENT U/S 153A UNLESS SOME INCRIMINATIN G MATERIAL WAS FOUND IN THE SEARCH. IT IS FURTHER SUBMITTED BY THE APPEL LANT THAT 'THERE IS NO CHANGE IN THE RELEVANT LEGAL PROVISIONS AND NO NEW FACTS OR MATERIAL OR EVIDENCE IN CONSEQUENCE TO THE SEARCH OR OTHERWISE HAS BEEN BROUGHT ON RECORD; AND CONSEQUENTLY, IT IS THE CONTENTION OF T HE ASSESSEE THAT THE RETURN ALREADY ACCEPTED BY THE DEPARTMENT CANNOT BE REVISITED BY THE AO IN THE ASSESSMENT U/S 153A. IN OTHER WORDS, NO ITEM OF INCOME OR EXPENDITURE DECLARED IN THE ORIGINAL RETURN COULD B E MADE SUBJECT MATTER OF ASSESSMENT U/S 153A WHEN NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH. IN VIEW OF ABOVE FACTS AND JUDICIAL DECISIO NS, THE APPELLANT PLEADED IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 6 THAT THE DISALLOWANCE OF EXPENSES MADE BY THE AO IN THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW. 8. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT I N THE SUBMISSIONS OF THE ASSESSEE, AS THE PROPOSITIONS CANVASSED BY THE LD. AR FOR THE ASSESSEE ARE SUPPORTED BY THE JUDGMENTS CITED (SUPRA) AND TH E FACTS NARRATED BY HIM ABOVE. LD. AR HAS POINTED OUT THAT THE AO DOES NOT HAVE POWER TO DISALLOW THE EXPENSES OF RS.32,34,502/- IN THE ORDE R PASSED U/S.153A OF THE ACT BECAUSE THE ISSUES FORMING PART OF THE ITEM S OF THE REGULAR ASSESSMENT, WERE BEHIND THE SCOPE OF SUCH ASSESSMEN T U/S.153A OF THE ACT, WHERE THE ASSESSMENT HAS NOT BEEN ABATED. IN S UCH ASSESSMENT YEARS, THE AO HAS NO JURISDICTION TO MAKE ADDITION OTHERWISE THAN ON THE BASIS OF INCRIMINATING MATERIAL OR UNDISCLOSED ASSE TS FOUND IN THE COURSE OF SEARCH. THEREFORE, CONSIDERING THE ABOVE STATED FACTUAL POSITION AND THE PRECEDENT CITED BY THE LD. AR, WE DO NOT FIND A NY INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). THEREFORE, WE CONFIRM THE ORD ER OF LD. CIT(A). 9. IN THE RESULT, APPEALS FILED BY THE REVENUE IN I T(SS)A NOS.45&46/KOL/2015 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/12 /2016. S D/ - (N.V.VASUDEVAN) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 07/12/2016 & ()*/PRAKASH MISHRA , . / PS IT(S)A NO.45&46/K/15 M/S VISA POWER LTD. 7 / 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 POWER LTD. 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 567 8 , 8 , / DR, ITAT, KOLKATA 6. 79 / GUARD FILE. 5 //TRUE COPY//