Shri Narendra Naranlal Thakkar, Ahmedabad V. The ACIT.,Cent.Circle-1(2), Ahmedabad

ITSSA 533/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1682 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER NARENDRA NARANLAL THAKKAR, 43, ALOK BUNGLOWS, NR. SURDHARA CIORCLE, OPP. SUN N STEP CLUB, THALTEJ, AHMEDABAD - 380054 PAN: ABCPT9921E (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 1(2), AHMEDABAD (RESPONDENT) REVENUE BY : SMT. USHA SHROTE , SR. D . R. ASSESSEE BY: S H RI TUSHAR HEMANI , A.R. DATE OF HEARING : 17 - 02 - 2 016 DATE OF PRONOUNCEMENT : 26 - 02 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS BATCH OF ASSESSEE S SIX APPEALS FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09, AR ISES FROM SEPARATE ORDER S OF THE CIT(A) - I, AHMEDABAD, ALL DATED 08 - 07 - 2011, IN APPEAL NO S . CIT(A) - I/CC.1(2)/346 , 347, 348, 349, 350, AND 351/2010 - 11 , UPHOLDING I T (SS) A NO S . 525, 533 TO 537 / A H D/20 11 A SSESSMENT YEAR 200 3 - 04 TO 2008 - 09 I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 2 ASSESSING OF FI CER S ACTION MAKING DEEMED ANNUAL LETTING VALUE ADDITIONS U/S. 22 IN INCOME FROM HOUSE PROPERTY AMOUNTING TO RS. 92064, RS. 92820/ - , RS. 93576/ - , RS. 94332/ - , RS. 13564/ - AND RS. 95,844/ - ; RESPECTIVELY, IN PROCEEDI NGS UNDER SECTION 143(3) R.W.S. 153C R.W.S. 153A(1)(B) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. BOTH PARTIES ARE IN AGREEMENT AT THE OUTSET THAT FACTS AND ISSUES INVOLVE IN ALL SIX APPEALS ARE IDENTICAL. THE ASSESSEE STATES THAT ITS TWIN SUBST ANTIVE GROUNDS IN THE SIX IMPUGNED ASSESSMENT YEARS PLEAD THAT THE SOLE ADDITI ON OF DEEMED NET ANNUAL VALUE IN HIS INCOME FROM HOUSE PROPERTY STATED HEREINABOVE OUGHT NOT TO HAVE BEEN MADE IN ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND IN THE COURSE OF SEA RCH IN QUESTION. WE TREAT IT(SS)A 525/AHD/2011 AS THE LEAD CASE IN THIS FACTUAL BACKDROP . 3. THIS ASSESSEE - INDIVIDUAL FLOATED A JOINT CONCERN IN THE NAME OF M/S. CT CORPORATION IN S HROFF AND COMMISSION AGENT BUSINESS. IT FILED ITS REGULAR RETURN ON 25 - 09 - 2003. LD. AUTHORIZED REPRESENTATIVE STA TES THAT THE SAME STOOD PROCESSED. THE DEPARTMENT CARRIED OUT A SEARCH IN M/S. JIGNESH K. THAKKAR GROUP OF CASES ON 05 - 02 - 2009. THIS LED TO SEIZURE OF SOME ALLEGED INCRIMINATING MATERIAL. SOME OF THESE SEIZED DOCUMENTS ARE STATED TO HAVE BEEN BELONGED TO THE ASSESSEE I.E. ANNEXURE A - 01, PAGE NO. 1 TO 31. THIS CULMINATED IN ISSUANCE OF SECTION 153C NOTICE DATED 02 - 08 - 2010. THE ASSESSEE FILED HIS REPLY ON 18 - 08 - 2010 INTER ALIA CHALLENGING ASSUMPTION OF THE IMPU GNED I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 3 PROCEEDINGS WITHOUT THERE BEING ANY JURISDICTION. HE WOULD REITERATE THE INCOME ALREADY RETUNED. THE ASSESSING OFFICER TOOK UP SECU RITY. HE NOTICED FROM ASSESSEE S RETURN THAT T HE ASSESSEE OWNED FOUR HOUSE PROPERTIES. THE ASSESSING OFFICER WENT ON TO CALCULATE THEIR DEEMED LETTING VALUE COMING TO RS. 1,31,520/ - QUA THREE OUT OF FOUR OF THE ABOVE STATED PROPERTIES. HE GRANTED STANDARD DEDUCTION @ 30% U/S. 24(A) TO ARRIVE AT THE IMPUGNED NET FIGURE OF RS. 92 , 064/ - . 4. THE ASSESSEE PREFERRED APPEA L ON LEGALITY OF THE IMPUGNED SECTION 153C PROCEEDINGS AS WELL AS CONTESTED THE ABOVE STATED ADDITION ON MERITS. THE CIT(A) REJECTS BOTH THESE SUBSTANTIVE GROUNDS LEAVING THE ASSESSEE AGGRIEVED. 5. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE INVITES OUR ATTENTION TO THE FACTUAL POSITION NARRATED IN THE PRECEDING PARAGRAPHS. HIS CASE IS THAT THE IMPUGNED ANNUAL LETTING VALUE ADDITION IS IN THE NATURE OF A DEEMING FICTION NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THE ASSESSEE SUBMITS THAT A SEARCH ASSESSMENT FRAMED U/S. 153A OF THE ACT IS TO BE BASED ON INCRIMINATING MATERIAL DISCOVERED DURING SEARCH ONLY. CASE LAW OF HON BLE DELHI HIGH COURT IN (2015) 61 TAXMANN.COM 412 (DEL) CIT VS. KABUL CHABLA IS QUOTED IN SUPPOR T HOLDING AS UNDER: - I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEV ANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 4 II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NOR MAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTL Y MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY REL EVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V . IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, TH E JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECO RD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSE D INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 5 THE ASSESSEE ACCORDINGLY STATES THAT T HIS CASE LAW TAKES INTO ACCOUNT ALL RELEVANT JUDICIAL PREC EDENTS ON THE ISSUE IN HAND. HE PRAYS ACCEPTANCE OF THE INSTANT APPEAL IN LIGHT THEREOF. 6. THE REVENUE DRAWS STRONGLY SUPPORT FROM ACTION OF THE LOWER AUTHORITIES MAKING THE IMPUGNED ADDITION OF ANNUAL LETTING VALUE IN QUESTION. 7. HEARD RIVAL CONT ENTIONS. CASE FILE PERUSED. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION OF RE - COMPUTATION OF ANNUAL LETTING VALUE BY APPLYING DEEMING FICTION WITHOUT ANY INCRIMINATING EVIDENCE DISCOVERED IN THE COURSE OF SEARCH. WE COM E TO SCHEME OF THE ACT IN SEARCH ASSESSMENT GIVEN IN CHAPTER XIV SECTION 153A AND 153C AS ARE RELEVANT FOR THE INSTANT LIS. IT IS AN ADMITTED FAC TUAL POSITION THAT THE ASSESSEE IS NOT THE SEARCHED ASSESSEE U/S. 132 OF THE ACT. WE REITERATE THAT THE ASSES SING OFFICER HAS INVOKED SECTION 153C OF THE ACT APPLICABLE IN CASE THE SEARCH LEADS TO A NY MONEY BULLION, JEWELLERY ETC. FOUND TO BE BELONGING TO A PERSON OTHER T HAN THAT SEARCHED. WE PROCEED FURTHER AND FIND THAT SECTION 153C(1) MAKES IT CLEAR THAT AN ASSESSING OFFICER ASSESSES OR REASSESSES INCOME OF SUCH A SEARCHED PERSON IN THE MANNER AND ACCORDANCE WITH THE CORRESPONDING PROVISION U/S. 153A OF THE ACT. THIS PROVISION IN ITS EXPLANATION AND CLAUSES (I) AND (II) STIPULATES THAT SUBJECT TO SPECIFIC PR OVISION IN SECTION 153A, 153B AND 153C, ALL OTHER PROVISIONS OF THE ACT APPLY. WE STOP HERE AND DEEM IT I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 6 APPROPRIATE TO OBSERVE THAT THIS CLAUSE (I) ENVISAGES THAT AN ASSESSMENT FRAMED U/S. 153A INVOLVES SCRUTINY NOTICES 143(2) OF THE ACT ALIKE IN A CASE O F REGULAR ASSESSMENT. WE OPINE IN THIS FACTUAL AND LEGAL B ACKDROP THAT RELEVANT LAW AS SET T L ED BY HON BLE COURTS RELATING TO AN ASSESSMENT FRAMED U/S. 153A APPLIES TO SECTION 153C PROCEE DINGS AS WELL . 8. WE NOW DEAL WITH THE LEGAL PRINCIPLES PROPOUNDED BY THE HON BLE DELHI HIGH COURT AS EXTRACTED HEREINABOVE AND HOLD THAT AS PER CLAUSE IV, AN ASSESSMENT FRAMED U/S. 153A CANNOT BE ARBITRARILY MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL AND THE SAME HAS TO BE FRAMED ONLY ON THE BASIS OF S EIZED MATERIAL FOUND IN THE COURSE OF SEARCH. WE REVERT BACK TO THE FACTS OF THE INSTANT CASE AND REPEAT THAT THE IMPUGNED ADDITION OF DEEMED ANNUAL LET TING VALUE DOES NOT HAVE RELEVANCE AND NEXUS WITH THE SEIZED MATERIAL IN QUEST ION. WE ACCEPT ASSESEE S ARGUMENTS AND QUASH THE IMPUGNED ASSESSMENT ON THIS LEGAL ISSUE ITSELF. HIS OTHER PLEAS ON MERITS CHALLENGING THE IMPUGNED ADDITION HAVE BEEN RENDERED INFRUCTUOUS. IT(SS) A 525/AHD/2011 SUCCEEDS. 9. SAME ORDER TO FOLLOW IN REMAINING FIVE APPEALS IT(SS) A 533 TO 537/AHD/2011 IN VIEW OF FAIR STAND OF BOTH THE LD. REPRESENTATIVES THAT THERE IS NO DISTINCTION INVOLVED ON FACTS OR LAW SINCE THE SAME CHALLENGES IDENTICAL ADDITION OF DEEMED ANNUAL LETTING VALUE (SUPRA) AS INDICATED HEREINABOVE. I.T(SS) A NO S . 525, 533 TO 537 /AHD /2011 A.Y. 2003 - 0 4 TO 2008 - 09 PAGE NO NARENDRA NARANLAL THAKKAR VS. ACIT 7 10. THESE ASSES SEE S SIX APPEALS ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 02 - 201 6 SD/ - SD/ - ( N. K. BILLAIYA ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 26 /02 /2016 A K / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,