ACIT, Central Circle, Cuttack V. M/s. Grewal Associates Pvt. Ltd., Kolkata

ITSSA 52/CTK/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3912 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Documents seized; Set aside
• Section: 153A; 158BC

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समऺ । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अऩीऱ (तऱाशियाां और अशिग्रहण) सं./IT(SS)A No.52/CTK/2018 (नििाारण वषा / Asses s m ent Year :2010-2 011) ACIT , Cent ral Ci rc l e, Cuttack-753008 ............ ...... Re ven ue Versus M/s G re wa l As soc i ates (P ) Ltd., 11, Dec res Lane,E spianade(Ea st), Kolkata-700069 P AN No. AAB C G 3 980 H ... ......... ..... A ssessee AN D प्रत्याऺेऩ सं./Cross Objection No.23/CTK/2021 (नििाारण वषा / Asses s m ent Year :2010-2 011) M/s G re wa l As soc i ates (P ) Ltd., 11, Dec res Lane, E spianade(Ea st), Kolkata-700069 P AN No.AAB C G 3 980 H ... ......... ..... A ssessee Versus ACIT , Cent ral Ci rc l e, Cuttack-753008 ............ ...... Re ven ue Shri M.K.Gautam, CIT-DR for the Revenue Shri P.K.Mishra, AR for the assessee Date of Hearing : 16/06/2022 Date of Pronouncement : 16/06/2022 आदेश / O R D E R Per Bench : The revenue has filed IT(SS)A No.52/CTK/2018 against the order of ld. CIT(A)-2, Bhubaneswar in IT Appeal No.0677/2016-17, dated IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 2 14.02.2018 for A.Y.2010-2011. The assessee has also filed cross objections being CO. No.23/CTK/2021 against the appeal of revenue. 2. The revenue in its appeal has raised the following grounds :- (i) On the facts and point of law involved in the case, Ld. CIT(Appeals) erred in accepting the assesees claim of Rs.3,01,86,004/- towards loss of coal due to fire and rejecting the Assessing Officer's decision for deleting 80% of such claim due to insufficient evidence. (ii) On the points of law involved in the case, Ld. CIT(Appeals) erred in admitting fresh evidence in the form of FIR filed before fire department without the Assessing Officer to examine the same in violation of Rule 46A of the I.T. Rules. (iii) On the facts of the case ld. CIT(Appeals) erred in observing that no materials were found during the course of search so as to doubt the extent of the loss claimed due to the simple reason that no trader will keep and maintain with him any record in respect of any incorrect and ingenuine claim. (iv) On the facts of the case, l.d. CIT(Appeals) erred in observing that the loss of the same amount was accepted in the normal assessment order due to the reason that once proceedings u/s. 153A are initiated, all earlier assessments become invalid and the proceedings u/s. 153A become fresh proceedings. (v) Any other ground that may be urged during the time of hearing. 3. The assessee in its cross objection has raised the following grounds :- 1. For that, the learned C.I.T(A) has committed gross error in not quashing the impugned order of Assessment passed U/s.153A of the Act, particularly when, the impugned order of Assessment was passes without having any incriminating material. The validity of the impugned order of Assessment confirmed by the learned C.I.T(A), being not sustainable in the eye of law is liable to be quashed in the interest of justice. 2. For that, the Ground NO.2 taken by the learned A.O. in his Appeal regarding violation of Rule 46A is wrong and contrary to the facts on record, as such, this ground taken by the learned A.D. being devoid of any merit, needs to be dismissed in the interest of justice. IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 3 3. For that, when the loss of coal due to fire was already assessed and accepted in the regular Assessment completed much prior to the date of search, the learned A.O. has no power to disturb the same without having any incriminating material in hand. The learned C.I.T(A) is fully justified in deleting the addition on this ground. 4. For that, the learned C.I.T(A) is fully justified in deleting the estimated/ad hoc disallowance of 80% of loss of coal due to fire as the same was not backed by any cogent reason. As such, the order passed by the learned C.I.T(A) on this issue, needs to be confirmed in the interest of justice. 5. For that, the Respondent craves leave of this Hon'ble Tribunal to urge any other grounds of appeal, if any, at the time of hearing. 4. As the cross objection filed by the assessee involves the legal issue insofar as the claim is that there was no incriminating material found in the course of search or unearthed and used in the course of assessment completed u/s.153A of the Act, therefore, the assessment order passed u/s.153A of the Act, dated 29.12.2016 is bad in law and liable to be annulled. 5. It was submitted by the ld. AR on behalf of the assessee that the issue is now squarely covered by the decision of the Hon’ble Jurisdictional High Court of Orissa in the case of Smt. Jami Nirmala, in W.P.(C) No.2857 of 2018, order dated 10.08.2021, wherein the Hon’ble High Court has held as follows :- 13. In the present case, the impugned assessment order does not refer to any document unearthed during the course of the search on 26 th February, 2016. Therefore, the assumption of jurisdiction under Section 153A of the Act for reopening the assessment for the AY 2015-16 was without legal basis. The impugned assessment order refers only to the cash book found during the survey purportedly conducted on 12th February, 2016 i.e. two weeks prior to the date of search. The Panchanama of the search proceedings unambiguously shows that nothing incriminating was recovered in IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 4 the course of the search. Even in the counter affidavit of the Opposite Parties does not dispute this position. 6. It was the submission that in assessee’s case also the impugned assessment order does not record any document unearthed during the course of search on 19.02.2015 and, therefore, the assumption of jurisdiction u/s.153A of the Act for reopening of the assessment for the assessment year 2010-2011 was without any legal basis and without jurisdiction and consequently the same is liable to be annulled. 7. In reply, the ld. CIT-DR vehemently supported the order of the AO. It was his submission that there was no requirement of any incriminating material to be found in the course of search for the purpose of doing an assessment u/s.153A of the Act. It was his further submission that once the search has been done then the consequential assessment has to be done u/s,.153A of the Act and in that assessment all the provisions of the Act could apply and it would act as a regular assessment. Ld. CIT-DR has filed his written submission which is as follows :- In this ground of appeal, it has been argued that no incriminating documents showing undisclosed income had been found during the course of search which is sine qua-non for making the assessments u/s.153A of the Act. As a result, the AO could not have made any addition in the concluded assessment. In this regard, it is submitted that Section 158BC (which is similarly worded to Section 153A of the Act), provides that where the A.O. is satisfied that any money, bullion, jewellery or other valuable article or thing or any books of account or documents has been seized or requisitioned under section 132A, he shall proceed against such person and issue such person a notice and assess or reassess undisclosed income of such other person. However, there is a distinction between the two provisions inasmuch as under Section 153A, the Assessing Officer is required to issue notice to such person in whose case search has been initiated u/s.132 or books of account, other documents or any assets are requisitioned under section 132A after 31.05.2003, IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 5 requiring him to furnish the returns of income for six assessment years and assess or re-assess the total income of the assessee in respect of six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. Thus there is no mention of undisclosed income in Section 153A unlike that in Section 158BC There is no law that assessment order u/s.153A can be passed only on the basis of incriminating documents. The Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (24 Taxmann.com 98) held that there is no law that assessment has to be referrable to the incriminating material found during the search. In the case of Anil Bhatia, the Hon'ble Delhi High Court being very conscious that the job of the judiciary is to interpret the law and never to write it, held that restricting the additions u/s 153A/153C only in reference to incriminating material would amount to writing the law. The Hon'ble Delhi High Court further held in para 15 that there is a significant departure from the earlier Block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under section 153A, however, the Assessing Officer has the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the. disclosed and the undisclosed income would be brought to tax. The Hon'ble Delhi High Court in the case of SSP Aviations Ltd. vs. DCIT (346 ITR 177) held in para-15 that in view of provisions of section 153C, satisfaction that is required to be reached by A.O. having jurisdiction over searched person is that valuable article or books of account or documents seized during search should belong to a person other than a searched person. However. there was no requirement in section 153C(1) that Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to other person must conclusively reflect or disclose any undisclosed income. The above view-is also supported by the following judgements wherein it was held that for assessments u/s.153A, there is no requirement of incriminating material being found during the course of search: 1) Hon'ble Kerala High Court in the case of E. N. Gopakumar vs. CIT (75 taxmann.com 215) (para-8) 2) Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (52 taxmann.com 172) (para-11) 3) Hon'ble Allahabad High Court in the case of Savesh Kumar Agarwal vs. Union of India (35 taxmann.com B5) (para-22 & 23) IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 6 4) Hon'ble Kerala High Court in the case of CIT vs. St. Frands Clay Decor Tiles (70 taxmann.com 234) (para-21) 5) Hon'ble Delhi High Court in the case of Filatex India Ltd. vs.CIT (49 taxmann.com 465) (para-2) 6) Hon'ble Indore ITAT in the case of Rajat Tradecom India (P.) Ltd. vs. DCIT (120 ITD 48) (para-8) In view of above judicial precedents and facts, this ground of appeal is required to be dismissed. Violation of Rule-46A As seen from the appellate order of Id. CIT(Appeals), fresh evidences have been taken on record by him without recording any reasons for the same. It is a settled law that a litigant has to demonstrate that it was prevented by sufficient cause to lead such evidence before the A.O. i.e. Whether the AO refused to take such evidence or the assessee failed to submit these for sufficient reasons or the AO did not provide him sufficient opportunity. As per sub-rule 1, 2 and 3 of Rule-46A, firstly the CIT(A) has to record his reasons for taking such evidences on record. Secondly reasonable opportunity has to be given to the AO to verify/refute such evidences. In this regard, reliance is placed on following decisions: 1) Hon'ble Gauhati High Court in the case of CIT vs. Ranjit Kumar Choudhury (288 ITR 179). 2) Hon'ble Kerala High Court in the case of C. Unnikrisnan vs. CIT (233 ITR 485) 3) Hon'ble Mumbai HighCourt in the case of Prabhavati S. Shah vs. CIT (231 ITR 1) Therefore in the present case, there has been gross violation of principles of Natural Justice as the Id. CIT(A) has not allowed any opportunity to the AO to verify such evidences. Rule-46A(3) is mandatory and indispensable and non- compliance of same will require re-adjudication of the matter by the CIT(A). In this regard, reliance is placed on following decisions: 1) Hon'ble Himachal Pradesh High Court in the case of CIT vs. Shree Kangra Steel (P) Ltd. (320 ITR 691) (para-B) 2) Hon'ble Madras High Court in the case of CIT vs. Subbu Shashank (327 ITR 577) (para-6) 3) Hon'ble Delhi High Court in the case of CIT vs. United Towers (P) Ltd. (296 ITR 106) IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 7 4) Hon'ble Delhi High Court in the case of Manish Build Well (P) Ltd. (16 taxmann.com 27) In view of above facts and circumstances, the matter is required to be remitted back to the A.O. to verify these fresh evidences. 8. It was the further submission of the ld. CIT-DR that the order of the CIT(A) deserves to be set aside and the order of AO is liable to be upheld. 9. We have considered rival submissions. 10. A perusal of the assessment order in the present case clearly shows that no document found in the course of search has been relied upon for the purpose of making assessment much less initiating proceedings u/s.153A of the Act. The only issue in the assessment is regarding disallowance of the coal loss. A perusal of the assessment order also shows that the AO has accepted the coal loss to an extent of 20% and disallowed 80%. Without going into merits, as it is noticed that no document or incriminating material has been found or unearthed in the course of search, which has been used for the purpose of assessment u/s.153A of the Act in the assessment year 2010-2011, the issue stands squarely covered by the decision of the Hon’ble Jurisdictional high Court in the case of Smt. Jami Nirmala (supra). In such circumstances, respectfully in obedience to the principles laid down by the Hon’ble Jurisdictional High Court of Orissa, as no document has been unearthed in the course of search for the relevant assessment year, for the purpose of invoking provisions of Section 153A of the Act, the assessment order passed u/s.153A of the Act on 29.12.2016 is held to be without jurisdiction IT(SS)A No.52/CTK/2018 & CO No.23/CTK/2021 8 and the same is annulled. Accordingly, we allow the legal ground taken by the assessee in its cross objection. 11. As we have annulled the assessment framed by the AO u/s.153A of the Act by following the principles laid down by the Hon’ble Jurisdictional High Court of Orissa in the case of Smt. Jami Nirmala (supra), the appeal of the revenue in IT(SS)A No.52/CTK/2018 no more survives and consequently the same stands dismissed. 12. In the result, appeal of the revenue in IT(SS)A No.52/CTK/2018 is dismissed and CO No.23/CTK/2021 filed by the assessee is allowed. Order dictated and pronounced in the open court on 16/06/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 16/06/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पििागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//