The DCIT, Central Circle-2, Vadodara V. The Rise Infra, Vadodara

ITSSA 556/AHD/2019

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8988 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-11-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-10-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers
• Section: 131; 143(3); 153A; 143(2); 153C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri P.M. Jagtap, Vice President And Shri Siddhartha Nautiyal, Judicial Member Th e Dy. CIT, Central Circle-2, 608, 6 t h F lo or, Aayakar Bh avan, Race Co urse Circle, Vadodara-39000 7 (Appellant) Vs The Rise Infra, 6, Janakpuri Society, Near Dawat Ho tel, Manjalpur, Baroda-3 90011 PAN: AAH FT6 945L (Resp ondent) Asses see b y : Shri M ukund Bak shi, A.R. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 31-10 -2 022 Date of pronouncement : 04-11 -2 022 आदेश /ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad in Appeal no. CIT(A)-12/248, 249, 250, & 251/CC-2/2017-18 vide order dated 28/09/2019 passed for the assessment year 2013-14. 2. The Revenue has taken the following grounds of appeal:- IT(SS)A No. 556/Ahd/2019 Assessment Year 2013-14 I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 2 “1. On the facts and in the circumstances of the case and in law, the ld, CIT(A) has erred in admitting additional ground without providing an opportunity to the AO under Rule 46A of the I.T. Rule, 1962. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.6,78,30,000/- without appreciating that the documentary evidences regarding receipt of on money was impounded from the business premises of the assessee. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.6,78,30,000/- without appreciating that the assessee failed to substantiate the claim and genuineness of extra work which was claimed to be received in cash. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.6,78,30,000/- without appreciating that the sister concerned/associated group of the assessee made application before Hon'ble Settlement Commission, where they have admitted the receipt of on money from the construction business activity. I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 3 5. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 6. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. The brief facts of the case are that the assessee firm is engaged in the business of construction and development of housing projects. A search was conducted on Akshar Group of cases of Baroda on 22.09.2015 during which certain documents belonging/pertaining/relating to the assessee were seized from the premises of Shri Dharmesh J. Patel at Baroda. Separately survey proceedings were carried out at the site office of assessee firm on 22-09- 2015 in which certain loose papers/registers/diaries etc. were impounded on 24-09-2015. On the basis of such material impounded during the course of survey proceedings carried out at the premises of the assessee firm, the ld. Assessing Officer held that the papers give evidence about cash received by the assessee firm on each unit of the project. Accordingly, the ld. Assessing Officer concluded that the assessee firm has accepted unaccounted cash of Rs. 3.99 lakhs for each unit sold. Accordingly, the ld. Assessing Officer made additions for unaccounted on-money received amounting to Rs. 6,78,30,000/- for assessment year 2013-14 ( and similarly additions were also made for assessment year 2014-15, 2015-16 and 2016-17). I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 4 4. The assessee filed appeal against the additions of Rs. 6,38,30,000/- for the impugned assessment year. The ld. CIT(A) allowed the assessee’s appeal, interalia on the basis that the impugned assessment year 2013-14 is unabated assessment year since there was no time for issue of notice u/s. 143(2) of the Act and there was no assessment/reassessment proceedings pending on the date of search. Since the assessment order was not passed on the basis of any incriminating material found during the course of search at the premises of Shri Dharmesh J. Patel, the additions cannot be sustained in case of any unabated assessment year. Accordingly, ld. CIT(A) allowed the assessee’s appeal on jurisdiction itself with the following observations:- “5.6 In the various case laws cited by the appellant it has been held that in the assessment proceedings u/s 153A the additions have to be only on the basis of incriminating materials found during the course of search having live link with the issue and the amount of such additions. Any addition in the unabated assessment years if not on the basis of incriminating material found during the course of search would be illegal and void ab initio and such additions have to be quashed. Any submission on the merits of the issues in such cases would be mere academic and not required to be adjudicated upon. If the addition in the assessment order is based on incriminating material, the same has to be adjudicted on the merits of the facts and the law related to such addition. In this connection I am of the considered view that the decisions related to proceedings u/s 153A would also apply to the proceedings u/s 153C. With reference to the date of search, A.Y. 2013-14 is unabated because there remained no I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 5 time for issue of notice u/s 143(2) and there was no assessment / re- assessment proceeding pending on the date of search. 5.7 From the perusal of the assessment order it is seen that neither any material found during at the residence of Shri Dharmesh J. Patel (some which were alleged to be pertaining to the appellant firm and made the basis for initiating proceeding u/s 153C) nor any material found during search in the Akshar Group has been mentioned in the assessment order let alone such seized incriminating materials being relied upon and made the basis for the addition to the total income in the assessment order. On this account the addition of Rs. 6,78,30,000/- for A.Y. 2013-14 suffer the discussed legal infirmity and the addition becomes unsustainable.” 5. The Department is in appeal against the aforesaid order passed by ld. CIT(A). On a perusal of the order passed by ld. CIT(A), we observed that the ld. CIT(A) has specifically noted that impugned assessment year was unabated assessment year and in absence of any incriminating material found during the course of search at the premises of Shri Dharmesh J. Patel, additions cannot be sustained in the case of unabated assessment year. 6. In the case of CIT v. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC), Supreme Court held that where loose papers found and seized from residence of President of assessee, an educational institution, indicating capitation fees received by various institutions run by assessee did not establish co-relation document-wise with assessment years I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 6 in question, notice issued under section 153C had rightly been quashed and set aside. In the case of PCIT v. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC), Supreme Court held that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. In the case of Pr. CIT v. Saumya Constructions 81 Taxman.com 292 (Gujarat), the Gujarat High Court held that under section 153A, an assessment has to be made in relation to search or acquisition, namely, in relation to material disclosed during search requisitioned. If no incriminating material was found during search, no addition can be made on basis of material collected after the search. The Delhi High Court in the case of Kabul Chabla (2015) 380 ITR 573 (Delhi High Court) has held that completed assessment can be interfered by the Assessing Officer while making assessment u/s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which ware not produced or not already disclosed or made in the course of original assessment. The SLP filed by the Revenue against the above decision of Delhi High Court was dismissed by the Hon'ble Supreme Court vide SLP(C)No.018651/2016.The Gujarat High Court in the case of Pr. CIT v. Sunrise Finlease 89 Taxman.com 1 (Gujarat) has held that where no incriminating evidence against assessee was found or seized during the course of search so as to attract provisions of section 153A proceedings, no additions could be made on the basis of statement of director of assessee company which were recorded under section 131 much later after search. The Gujarat High Court in the case I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 7 of PCIT v. Dipak Jashvantlal Panchal [2017] 88 taxmann.com 611 (Gujarat) held that only undisclosed income and undisclosed assets detected during search can be brought to tax in assessment under section 153A of the Act. In the case of PCIT v. Desai Construction (P.) Ltd. [2017] 81 taxmann.com 271 (Gujarat), the Gujarat High Court held that in absence of any incriminating material found during search, Assessing Officer, in assessment under section 153A, would not be entitled to interfere with assessee's claim for deduction under section 80-IA, which was part of original assessment proceedings and such assessment had abated. The ITAT Rajkot Bench in the case of a Rajat Minerals v. DCIT 114 Taxman.com 536 (Ranchi-Trib) held that where no incriminating evidence against the assessee was found or seized during course of search, invocation of provisions of section 153A and making additions/disallowances on basis of tax evasion petition found much after search was unjustified. The Delhi High Court in the case of Pr. CIT v. Jaypee financial services Ltd 127 Taxman.com 419 (Delhi), held that where AO during the course of post search proceedings under section 153A against assessee-share trader found certain evidences showing client code modification done by assessee which were not for genuine reasons and, accordingly, made addition on account of such client code modification, since impugned addition was not made by AO based on any incriminating material found during search against assessee and assessment was not pending on date of search, impugned addition was unjustified and same was to be deleted. I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 8 7. It is observed that the assessment order was passed u/s 143(3) r.w.s. 153C of the Act and while passing the assessment order, Ld. Assessing Officer has not referred to any loose paper/ material found during the course of search at the premises of the searched party. The contention raised by the assessee that addition made in Assessment Order is not based upon incriminating material found during the course of search is accepted by Ld. CIT(A) at para 5.7 of order of appellate order. The AO has not made additions in the impugned assessment year based upon any incriminating material found during the course of search. Therefore, in view of settled proposition of law that completed assessment can be interfered by the Assessing Officer while making assessment u/s. 153A / 153C of the Act only on the basis of some incriminating material unearthed during the course of search documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made in the course of original assessment, we are of the considered view that in the instant facts, the Ld. CIT(A) has not erred in facts and in law in deleting the additions for assessment year 2013-14 by relying on various decisions on this issue. 8. In the result, the appeal of the Department is dismissed for assessment year 2013-14. Order pronounced in the open court on 04-11-2022 Sd/- Sd/- (P.M. JAGTAP) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 04/11/2022 I.T(SS)A No. 556/Ahd/2019 A.Y. 2013-04 Page No. DCIT vs. The Rise Infra 9 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद