Shri Dilip N.Vyas, Mehsana V. The Dy.CIT.,Cent.Circle-2(2), Ahmedabad

ITSSA 55/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1029 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: S N DIVETIA
• Keywords: Search and seizure; Deemed dividend
• Section: 153A; 132

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ IT(SS)A NO.55/AHD/2011 /BLOCK ASSTT. YEAR: 2003-2004 DILIP N. VYAS 19, SURAMYA SOCIETY OPP: RANGOLI HOTEL MEHSANA 384 002. PAN : AAMPV 4699 N VS DCIT, CENT.CIR.2(2) AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA REVENUE BY : SMT. VIBHA BHALLA, CIT-DR / DATE OF HEARING : 16/11/2015 / DATE OF PRONOUNCEMENT: 17/11/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD.CIT(A)- III, AHMEDABAD DATED 18.10.2010 PASSED FOR THE ASST T.YEAR 2003-04. 2. THE ASSESSEE HAS RAISED THREE GROUNDS OF APPEALS , WHICH HAVE FURTHER SUB-GROUNDS. THE MAIN GRIEVANCE OF THE ASS ESSEE IS THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS .5 LAKHS WHICH WAS MADE BY THE AO WITH THE AID OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. IN GROUND NO.2.1 THE ASSESSEE HAS PLEADED TH AT THE LD.FIRST APPELLATE AUTHORITY OUGHT TO HAVE APPRECIATED THAT THE NOTICE ISSUED UNDER SECTION 153A BY THE AO WAS ILLEGAL, UNLAWFUL AND WITHOUT JURISDICTION. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, IT(SS)A NO.55/AHD/2011 2 SUBMITTED THAT THIS GROUND OF APPEAL WAS NOT SPECIF ICALLY RAISED BEFORE THE LD.FIRST APPELLATE AUTHORITY. THIS GROUND HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. IT IS THE GROUND W HEREBY THE ASSESSEE HAS CHALLENGED VERY JURISDICTION OF THE AO FOR ASSU MING THE JURISDICTION UNDER SECTION 153A OF THE INCOME TAX ACT. THEREFOR E, IT MAY BE TAKEN UP AT ANY STAGE. 3. BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASES OF JOHN GROUP ON 23.10 .2007. A SEARCH WARRANT OF AUTHORISATION UNDER SECTION 132 WAS ISSU ED IN THE NAME OF THE ASSESSEE ALSO. THE AO HAD ISSUED A NOTICE UNDE R SECTION 153A ON 24.7.2009. IN RESPONSE TO THE NOTICE, THE RETURN WAS FILED ON 10.11.2009 DECLARING TOTAL INCOME OF RS.765,690/- A ND AGRICULTURAL INCOME FOR RATE PURPOSE OF RS.1,86,966/-. NOTICE U NDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE ON 13.11.20 09. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASS ESSEE HAS BEEN PAID LOAN/ADVANCE OF RS.5,00,000/- BY M/S.JOHN OIL & GAS LTD. WHICH IS A COMPANY WHERE THE ASSESSEE WAS HOLDING MORE THAN 10 % OF SHARE HOLDING. THUS, ACCORDING TO THE AO, THIS AMOUNT WA S TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE LD.AO HAS ACCORDINGLY MADE ADDITION OF RS.5,00,000/- TO THE I NCOME OF THE ASSESSEE UNDER SECTION 2(22) OF THE ACT. 4. ON APPEAL, THE LD.FIRST APPELLATE AUTHORITY HAS CONFIRMED THIS ADDITION. 5. BEFORE US, ON THE STRENGTH OF THE ORDER OF THE S PECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL-CARGO GLOBAL LOGISTIC L TD, WHICH HAS BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT REPORTED IN 374 ITR 645, THE LD COUNSEL FOR THE ASSESSEE CONTENDED THAT IF N O MATERIAL WAS FOUND DURING THE COURSE OF SEARCH EXHIBITING THE UNDISCLO SED INCOME, THEN THE AO IS PRECLUDED TO ASSUME JURISDICTION UNDER SECTIO N 153A. IN THE PRESENT CASE, NO EVIDENCE WAS FOUND DURING THE COUR SE OF SEARCH. THE IT(SS)A NO.55/AHD/2011 3 ADDITION OF RS.5.00 LAKHS HAS BEEN MADE ONLY ON RE- APPRECIATION OF RECORD ALREADY AVAILABLE WITH THE DEPARTMENT. HE P RAYED THAT SINCE THIS ISSUE HAS NOT BEEN EXAMINED BY THE LD.FIRST APPELLA TE AUTHORITY WITH THIS ANGLE, IT BE SET ASIDE TO THE FILE OF THE CIT( A) FOR DECIDING THE ISSUE WHETHER THE AO HAS RIGHTLY ISSUED NOTICE UNDER SECT ION 153A OR NOT. 6. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE DID NOT RAISE THIS PLEA BEFORE THE FIRST APPELLATE AUTH ORITY, THEREFORE, THERE WAS NO OCCASION FOR THE CIT(A) TO MAKE ANY COMMENT ON THIS ASPECT. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE ISSUE BEFORE US IS WHETHER TH E AO HAS RIGHTLY ASSUMED JURISDICTION UNDER SECTION 153A OR NOT, IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF ALL-CARGO GLOBAL LOGISTIC LTD, (SUPRA). IT IS AN ISSUE WHICH GOES TO THE ROOT OF THE DETERMINATION OF TAXABLE INCOME OF THE ASSESSEE. I T IS THE JURISDICTIONAL ISSUE AND GOES TO EFFECT THE DETERMINATION OF TAXAB LE INCOME OF THE ASSESSEE. THEREFORE, IT CAN BE RAISED EVEN AT THE SECOND APPELLATE STAGE. WE ADMIT THIS GROUND OF APPEAL AND PERMIT T HE ASSESSEE TO RAISE THIS PLEA. 8. SINCE THERE IS NO FINDING AT THE END OF BOTH THE AUTHORITIES, IT IS QUITE DIFFICULT TO ASCERTAIN THE NATURE OF MATERIAL FOUND DURING THE COURSE OF SEARCH, WHICH WILL EMPOWER THE AO TO ASSU ME JURISDICTION UNDER SECTION 153A OF THE ACT FOR ISSUANCE OF NOTIC E UPON THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE FIRST APPE LLATE AUTHORITY AND RESTORE THE ISSUE TO THE FILE OF THE CIT(A) FOR ADJ UDICATION. LD. CIT(A) SHALL CONSIDER THE STAND OF ASSESSEE KEEPING IN MIN D THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL WHICH HAS BEEN CONFIR MED BY THE HONBLE BOMBAY HIGH COURT. IN CASE THE LD.FIRST APPELLATE AUTHORITY REACHES ON THE CONCLUSION THAT THE NOTICE UNDER SECTION 153A H AS BEEN RIGHTLY ISSUED UPON THE ASSESSEE, AND THERE WAS SOME SEIZED MATERIAL, THEN THE LD.FIRST APPELLATE AUTHORITY WILL NEED NOT TO G O IN OTHER ISSUES. THE IT(SS)A NO.55/AHD/2011 4 ASSESSEE WILL BE AT LIBERTY TO CHALLENGE THE ORDER OF THE CIT(A) ON THE ISSUE OF VALIDITY OF NOTICE UNDER SECTION 153A ALON G WITH THE ADDITION OF RS.5.00 LAKHS ON MERITS BEFORE THE TRIBUNAL. THIS OBSERVATION, WE HAVE MADE ONLY IN ORDER TO AVOID REPETITION OF FINDING O N THE MERIT OF THE CASE, BECAUSE WE HAD NOT CONSIDERED THE OTHER GROUN DS ON MERIT OF THE ADDITION. OUR OBSERVATIONS, OTHERWISE, WILL NOT IM PAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENSE/ EXPLANATION OF THE ASSESSEE ON THE LEGAL ISSUES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 17 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/11/2015