J.B. BODA BROTHERS P. LTD, MUMBAI V. ACIT 17& 28, MUMBAI

ITSSA 45/MUM/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8941 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 16-09-2010
• Assessment Year: misc
• Appeal Filed On: 08-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: INDRA ANAND
• Keywords: Search and seizure; Document seized; Retrospective amendment; Wrong claim; Block assessment; Documents seized; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR,(AM) IT(SS)A NO.45/MUM/2009 ASSESSMENT YEAR : BLOCK PERIOD :1.4.1995 TO 7.11.2 001 M/S. J.B. BODA BROTHERS PVT. LTD. MAKER BHAVAN, 1 SIR V.T. MARG MUMBAI-400 020. ..( APPELLANT ) P.A. NO. (AAACJ 1956 B) VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 17 & 28 AAYAKAR BHAVAN MUMBAI. ..( RESPONDENT ) APPELLANT BY : MS.I NDRA ANAND RESPONDENT BY : SHRI S UMEET KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 5.1.2009 PASSED BY THE LD. CIT(A) FOR THE ASS ESSMENT YEAR PERTAINING TO BLOCK ASSESSMENT PERIOD 1.4.1995 TO 7.11.2001. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THAT T HE ASSESSEE COMPANY IS ENGAGED IN TRADING OF ELECTRONIC GOODS, INDUSTRIAL VARNISH AND THINNER AND INSTALLATION OF GAS MONITORING SYSTEM. SEARCH AND SEIZURE ACTION U/S.132(1) OF THE INCOME TAX ACT, 1961(THE ACT) WAS CARRIED OU T IN THE CASE OF J.B. BODA AND CO. LTD. GROUP OF CASES ON 7.11.2001 AND ON SUB SEQUENT DATES. AFTER PERUSAL OF SEIZED DOCUMENTS AND COMPUTER RECORDS IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEES CLAIM FOR DED UCTION U/S.80-O IS INCORRECT IN RESPECT OF ASSESSMENT YEARS 1996-97 AND 1997-98. ACCORDINGLY A NOTICE U/S.158BD OF THE ACT WAS ISSUED. IN RESPONSE, THE ASSESSEE FILED RETURN FOR IT(SS)A NO.45/M/09 A.Y:BP 2 THE BLOCK PERIOD DECLARING TOTAL UNDISCLOSED INCOME OF RS.NIL. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEE'S SUBMISSION AND THE MATERIAL AVAILABLE ON RECORD RECOMPUTED THE DEDUCTION U/S.80-O AT RS.1 ,08,878/- AND RS.21,830/- AS AGAINST RS.4,47,277/- AND RS.4,14,58 5/- CLAIMED BY THE ASSESSEE FOR ASSESSMENT YEARS 1996-97 AND 1997-98 RESPECTIVELY. THE ASSESSING OFFICER TREATED THE DIFFERENCE ARISING ON RECOMPUTATION OF DEDUCTION U/S.80-O AS UNDISCLOSED INCOME OF THE ASS ESSEE FOR THE BLOCK PERIOD, VIDE ORDER DATED 25.10.2005 PASSED U/S.158 BD OF THE ACT. ON APPEAL THE LD. CIT(A) WHILE AGREEING WITH THE REASO NING OF THE ASSESSING OFFICER UPHELD THE ADDITION MADE BY THE ASSESSING O FFICER AND DISMISSED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE VALIDITY OF THE ORDER PASSED U/S.158BD OF THE ACT ON THE GROUND THAT THER E IS NO UNDISCLOSED INCOME WITHIN THE MEANING OF SEC.158 B(B) OF THE AC T AND AGAINST THE RE- WORKING OF COMPUTATION OF DEDUCTION U/S.80-O BY THE ASSESSING OFFICER, CONFIRMED BY THE LD. CIT(A) . 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE AT THE OUTSET SUBMITS THAT THE IMPUGNED ISSUES ARE COVERED IN FAV OUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE SISTER CONCERN OF THE ASSESSEE IN ACIT VS. J.B. BODA SURVEYORS PVT. LTD. IN IT(SS)A NO.579/MUM /2004 BLOCK ASSESSMENT 1.4.1995 TO 7.11.2001 DATED 22.2.2008 H OLDING THAT NO ASSESSMENT CAN BE MADE IN THE BLOCK ASSESSMENT SINC E NO ADVERSE MATERIAL WAS FOUND IN THE COURSE OF SEARCH AND THEREBY UPHEL D THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSI NG OFFICER. SHE FURTHER SUBMITS THAT THE ABOVE ORDER OF THE TRIBUNAL HAS BE EN FOLLOWED BY THE TRIBUNAL IN SISTER CONCERNS OF THE ASSESSEE NAMELY ACIT VS. M/S. J.B. BODA OFFSHORE SURVEYORS AND ADJUSTORS P. LTD. IN ITA NO. 578/MUM/04 AND IN ACIT VS. J.B. BODA & CO. PVT. LTD. IN 580/MUM/04 PERTAIN ING TO BLOCK PERIOD IT(SS)A NO.45/M/09 A.Y:BP 3 1.4.1995 TO 7.11.2001 ORDER DATED 9.4.2008 AND IN M/S. CROWE BODA & CO. P. LTD. VS. ACIT IN IT(SS)A NO.46/MUM/2009 PERTAINI NG TO BLOCK PERIOD 1.4.1995 TO 7.11.2001 ORDER DATED 12.1.2010. SHE A LSO PLACED ON RECORD THE COPY OF THE SAID ORDERS OF THE TRIBUNAL. 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE ASSESSING OFFICER AND THE LD. CITA). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE PRESENT CASE DECIDE D BY THE TRIBUNAL IN THE SISTER CONCERNS OF THE ASSESSEE SUPRA. RECENTLY, I N CROWE BODA & CO. P. LTD. SUPRA, IT HAS BEEN OBSERVED AND HELD BY THE TRIBUNAL VIDE PARA 4,5, AND 6 OF THE ORDER DATED 12.1.2010 AS UNDER :- 4. WE HAVE CONSIDERED THE ISSUE. FIRST OF ALL A PE RUSAL OF THE ASSESSMENT ORDER INDICATES THAT THE A.O. HAS NO T CONSIDERED ANY SEIZED MATERIAL OR ANY INCRIMINATING DOCUMENTS EITHER IN INITIATING THE PROCEEDINGS OR IN FINALIZI NG THE PROCEEDINGS. IT MAY BE TRUE THAT MR. C.V. SETH HAS GIVEN A STATEMENT THAT THERE IS EXCESS CLAIM OF 80-O BUT TH E SAID STATEMENT WAS RETRACTED AS MENTIONED BY THE A.O. AS WELL AS BY THE CIT(A). AS SEEN FROM THE ORDER THE DEDUCTION UN DER SEC 80- O WAS REWORKED OUT EVENAFTER THE SAME ISSUE WAS CON SIDERED UNDER SECTION 143 R.W.S. 147 IN THE REASSESSMENT PR OCEEDINGS DATED 18.01.2000 AND THE ASSESSEES ORIGINAL CLAIM WAS RESTRICTED BY MAKING THE CLAIM ON NET BASIS ONLY AS PER THE ORDERS OF ITAT ON THIS ISSUE AND NOT ON GROSS BASIS . WHAT THE A.O. PRESENTLY DID IN THE BLOCK ASSESSMENT ORDER WA S TO FURTHER ALLOCATE CERTAIN EXPENDITURE IDENTIFIED VIDE PARA 9 OF THE ORDER, WHICH WAS ON THE BASIS OF AUDIT REPORT, BALANCE SHE ET AND P & L ACCOUNT AND NOT ON ANY SEARCH MATERIAL. ACCORDINGLY , WE ARE OF THE VIEW THAT THE DEDUCTION UNDER SECTION 80-O HAVI NG BEEN FINALISED IN THE REASSESSMENT PROCEEDINGS CANNOT BE MODIFIED UNLESS THERE IS ANY INCRIMINATING MATERIAL IN THE C OURSE OF SEARCH. NOTHING WAS ON RECORD THAT THE ASSESSEE HAS MADE ANY FALSE CLAIM ORIGINALLY. IT IS ONLY THE ASSESSING OF FICERS OPINION OF REALLOCATING CERTAIN EXPENDITURE TOWARDS EARNING OF FOREIGN COMMISSION BASIS ON THE AUDITED BOOKS OF ACCOUNT WH ICH RESULTED IN DETERMINING THE UNDISCLOSED INCOME TO T HE EXTENT OF EXCESS ALLOWANCE WORKED OUT NOW. IT(SS)A NO.45/M/09 A.Y:BP 4 5. IN THE SISTER CONCERNS CASE IN IT(SS) 579/MUM/2 004 THE CIT(A) HIMSELF HAS ACCEPTED ASSESSEES CONTENTI ONS AND GAVE RELIEF HOLDING THAT NO ASSESSMENT CAN BE MADE IN THE BLOCK ASSESSMENT SINCE NO ADVERSE MATERIAL WAS FOUN D IN THE COURSE OF SEARCH. THE SAID ORDER WAS CONFIRMED BY T HE ITAT BY HOLDING AS UNDER: - 4. AFTER HEARING THE LEARNED COUNSEL FOR THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THE GROUNDS RAISED BY THE REVENUE. NO DOUBT, SECTION 158B(D) WAS AMENDED BY FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 1 ST JULY, 1995 BY WHICH THE SCOPE OF THE EXPRESSION, UNDISCLOSED INCOME WAS ENLARGED SO AS TO BRING THE CASE WITHIN THE NET OF UNDISCLOSED INC OME WHERE IN EXCESS DEDUCTION OR ALLOWANCE CLAIMED UNDE R THE ACT IS FOUND TO BE FALSE. HOWEVER, COMPUTATION OF UNDISCLOSED INCOME HAS TO BE MADE U/S. 158BD WHICH PROVIDES THAT UNDISCLOSED INCOME SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT ON THE BA SIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISIT ION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS AND INFORMATION WHICH ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. THEREFORE, BOTH THE PROVISIONS HAVE TO BE READ TOGETHER. IF BOTH THE PROVISIONS ARE READ TOGETHER, THEN THE ASSESSMENT CAN BE MADE ON ACCOUNT OF UNDISCLOSED INCOME ONLY ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH OR OTHER EVIDENCE RELATED TO THE EVIDENCE FOUND IN THE COURS E OF SEARCH. CONSEQUENTLY, THE FALSITY OF THE CLAIM O F THE ASSESSEE MUST HAVE NEXUS WITH THE EVIDENCE FOUND IN THE COURSE OF SEARCH. IN THE PRESENT CASE, NO MATER IAL WHATSOEVER WAS FOUND IN THE COURSE OF SEARCH WHICH CAN INDICATE THE FALSITY OF THE CLAIM OF THE ASSESS EE. THE WORD FALSE PRESUPPOSES THE FRAUDULENT ACT ON THE PART OF THE ASSESSEE. THE PERUSAL OF THE RECORD SHO WS THAT THE CLAIM OF THE ASSESSEE WAS BASED ON THE EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF J.B . BODA AND COMPANY PVT. LTD. AND THE ASSESSING OFFICER HAS ALSO ALLOWED SUCH CLAIM U/S. 143(3) AS IS APPARENT FROM THE ORIGINAL ORDER OF ASSESSMENT PERTAINING TO ASSESSMENT YEAR 1996-97. THE COMPUTATION OF INCOME ALSO SHOWS THAT ASSESSEE HAD SPECIFICALLY MENTIONED THAT THE CLAIM OF THE ASSESSEE WAS BASED ON THE DECISION OF THE TRIBUNAL. THEREFORE, THE CLAIM OF T HE ASSESSEE WAS BONAFIDE AND CANNOT BE CONSIDERED AS FALSE. THEREFORE, IN OUR OPINION, THE LEARNED CIT(A ) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER. THE ORDER OF THE LEARNED CIT(A) IS THEREFORE UPHELD. 6. EVEN THOUGH THE ASSESSEE RELIED ON THE ORDER OF THE ITAT BEFORE THE CIT(A) AND SUBMITTED THAT SIMILAR F ACTS EXISTED IT(SS)A NO.45/M/09 A.Y:BP 5 IN ASSESSEES CASE BEING 158BD PROCEEDINGS THE LEAR NED CIT(A) CHOOSE TO IGNORE AND CONFIRMED THE ORDER DIFFERING FROM THE OTHER CIT(A)S OPINION IN THE SISTER CONCERNS CASE . SINCE THE FACTS ARE SIMILAR AND THE ISSUES ARE SIMILAR, WE AR E OF THE OPINION THAT NO ASSESSMENT CAN BE MADE UNDER SECTIO N 158BD WHEN THERE IS NO INCRIMINATING MATERIAL AND ASSESSI NG OFFICERS ACTION IN REWORKING OUT 80-O DEDUCTION IN THE 158BD PROCEEDINGS CANNOT BE UPHELD. ACCORDINGLY WE CANCEL THE ORDERS OF THE A.O. AND THE CIT(A). IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE LD. DR WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF TH E TRIBUNAL HOLD THAT NO ASSESSMENT CAN BE MADE U/S.158BD WHEN NO INCRIMINAT ING MATERIAL WAS FOUND AND CONSEQUENTLY THE ASSESSING OFFICERS ACTI ON IN RE-WORKING OUT DEDUCTION U/S.80-O IN THE PROCEEDING U/S.158BD IS N OT VALID IN LAW. ACCORDINGLY WE CANCEL THE ORDER PASSED BY THE ASSES SING OFFICER AND THE LD. CIT(A). THE GROUNDS TAKEN BY THE ASSESSEE ARE THER EFORE ALLOWED. 7. IN THE RESULT, ASSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.9.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22.9.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.