The Jt. CIT, Central Circle-2(2), Ahmedabad V. Shri Vyomesh Vinodrai Patel, Ahmedabad

ITSSA 62/AHD/2021

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4279 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-01-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Loose papers; Set aside
• Section: 68; 69; 6; 132; 153A; 69A; 13; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .( SS )A . N o . 6 2 / A h d/ 2 0 21 ( A s se ss m e nt Y e a r : 20 12- 13 ) Jo i nt C o m mi s s io ne r of I nc o me Tax ( OS D ) , C e ntr a l C ir c le - 2 (2 ) , Ah me da ba d V s. S h r i V yo m es h V i no dr a i Pa tel , 1 8, S a t ya m B u n g lo w s , O p p . K a r n a v a t i Cl u b, J o d h pu r, S at e l li te, A h m ed ab a d [ P AN N o. A K GP P2 23 0D ] (Appellant) .. (Respondent) I .T .( SS )A . N o . 6 5 / A h d/ 2 0 21 ( A s se ss m e nt Y e a r : 20 18- 1 9 ) Jo i nt C o m mi s s io ne r of I nc o me Tax ( OS D ) , C e ntr a l C ir c le - 2 (2 ) , Ah me da ba d V s. S h r i K r u n a l H a n ub ha i S an ga n i , 5 5, S a t ya m B u n g lo w s , O p p . K a r n a v a t i Cl u b, B / s Fu n R e pu b li c, S at e llit e , A h m e da ba d [P AN N o. B T K P S1 1 93 L] (Appellant) .. (Respondent) I .T .( SS )A . N o . 6 6 / A h d/ 2 0 21 ( A s se ss m e nt Y e a r : 20 18- 1 9 ) Jo i nt C o m mi s s io ne r of I nc o me Tax ( OS D ) , C e ntr a l C ir c le - 2 (2 ) , Ah me da ba d V s. S h r i Sa n d ip K a n ti la l A n d an i, C - 30 2, Sa ph ir e G re en , O pp . H a r ih ar s h r a y B u ng l ow s, Th al te j , A h m e da b ad [ P AN N o. A J RP A8 5 02 H ] (Appellant) .. (Respondent) Appellant by : Shri Parin S Shah, A.R. Respondent by: Shri Sudhendu Das, CIT D.R. D at e of H ea r i ng 08.01.2024 D at e of P r o no u n ce me nt 17.01.2024 IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 2 - O R D E R PER BENCH: These appeal have been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), Ahmedabad in Appeal No. CIT(A)-12/AHD/10150/CC- 2(2)/2019-20, CIT(A)-12/ABD/10197/CC-2(2)/19-20 & CIT(A)- 12/ABD/10198/CC-2(2)/19-20 vide orders dated 18.03.2021 & 26.03.0221 passed for Assessment Years 2012-13 & 2018-19. Since common facts and issues for consideration are involved for all the years under consideration before us, all appeals are being disposed of by way of a common order. 2. The Department has raised the following grounds of appeal:- IT(SS)A No. 62/Ahd/2021(A.Y. 2012-13) “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s,132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 3 - 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR920(SC). 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating the decisions of Hon'ble Delhi High court in the case of CIT Vs Anil Kumar Bhatia [211 Taxman 453, 352 ITR (493)] & Kerala High Court in the case of E.N. Gopakumar vs. Commissioner of Income-tax (Central) [2016] 75 Taxmann.com 215 (ker.) wherein Courts held that assessments in a search case can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in Law and on facts in deleting the addition of Rs.1,75,00,OOO/- made by the AO u/s. 68 of the IT. Act. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 8. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” IT(SS)A No. 65/Ahd/2021 (A.Y. 2018-19) “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 4 - 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the ld. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC). 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating the decisions of Hon'ble Delhi High court in the case of CIT Vs Anil Kumar Bhatia [211 Taxman 453, 352 ITR (493)] & Kerala High Court in the case of E.N. Gopakumar vs. Commissioner of Income-tax (Central) [2016] 75 Taxmann.com 215 (ker.) wherein Courts held that assessments in a search case can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132. 6. 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.74,38,000/- made by the AO u/s. 68 of the IT. Act. 7. 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.85,35,096/- made by the AO u/s. 68 of the IT. Act. 8. 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.5,92,049/- made by the AO u/s. 68 of the IT. Act. 9. 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.59,79,000/- made by the AO u/s. 69 of the IT. Act. 10. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) ought to have upheld the order of the A.O. IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 5 - 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” IT(SS)A No. 66/Ahd/2021 (A.Y. 2018-19) “1. 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. 69,00,000/- made by the AO u/s. 69A of the I.T. Act. 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. 15,00,000/- made by the AO u/s. 68 of the I.T. Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. We shall first take up the case of Shri Vyomesh Vinodrai Patel (IT(SS)A No. 62/Ahd/2021) and our observations would apply to the balance appeals as well, since the facts and issues for consideration are similar. 4. The brief facts of the case are that the assessee filed it’s regular return of income for Assessment Year under consideration declaring income at Rs. 4,45,428/-. A Search action under Section 132 of the Act was conducted covering various entities, persons and concerns of Satyam Group, Sangani Group and Shaligram Group of entities including the assessee being a part of the Satyam Group. Subsequently, assessee was subject to proceedings under Section 153A of the Act and an order under Section 153A r.w.s. 143(3) dated 31.12.2019 was passed in the case of the assessee, assessing the total income at Rs. 1,79,45,430/- with an addition of Rs. 1,75,00,000/- under Section 68 of the Act. IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 6 - 5. In appeal, Ld. CIT(A) deleted the aforesaid additions, and the Department is in appeal before us against the aforesaid order passed by Ld. CIT(A). 6. Before us, at the outset, the Counsel for the assessee submitted that the impugned additions are not sustainable in the hands of the assessee for the simple reason that similar addition, which have been made on the basis of loose papers found from the Corporate Office of Satyam Developers Ltd. and other group entities, have also been made by the Assessing Officer in the hands of Satyam Developers Ltd. on substantive basis. Accordingly, the Counsel for the assessee submitted that the Ld. Assessing Officer has erred in facts and in law in making additions of the same amount on the basis of loose papers, on substantive basis both in the hands of the assessee and also in the hands of Satyam Developers Ltd., (the assessee is a Director in Satyam Developers Ltd.) and accordingly, it was submitted that the same additions cannot be made both in the hands of the assessee and M/s. Satyam Developers Ltd. on substantive basis on identical set of facts. The Counsel for the assessee submitted that during the course of assessment proceedings, assessee had duly filed a confirmation letter from M/s. Satyam Developers Ltd., wherein M/s. Satyam Developers Ltd. had taken complete ownership of the documents and also had taken the ownership of transactions as detailed in the impugned loose sheets on the basis of which additions have been made. The Assessing officer, on the basis of same transactions and loose sheets, made additions both in the hands of Satyam Developers Ltd. with whom the assessee is a Director and also in the hands of the assessee, on substantive basis. The Counsel for the assessee submitted that once M/s. IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 7 - Satyam Developers Ltd. has owned up the entire transaction, then in that case similar additions cannot be made in the hands of the assessee as well, on substantive basis. Before, the Counsel for the assessee placed reliance on the case of ACIT vs. SRS Mining 154 taxmann.com 346 (SC), wherein the Hon’ble Supreme Court held that where assessment against yard owner was completed under Section 153C of the Act and the AO had assessed income with addition of income in the hands of the yard owner and at same time, same material was used against the assessee firm, though prior to it the Assessing Officer was specified that material found from search belong to yard owners, addition of income in the hands of the assessee firm was not justified. 7. In response, the Ld. D.R. placed reliance on the observation made by the Assessing Officer in the assessment order. 8. On going through the facts of the instant case, the decision of the Hon’ble Supreme Court as referred to above, the matter is being restored to the file of the Assessing Officer with a direction that aforesaid additions on substantive basis can only be made either in the hands of M/s. Satyam Developers Ltd. or in the case of the assessee and addition cannot be made in the hands of both the assessee as well as M/s. Satyam Developers Ltd. on substantive basis. In the instant facts, the assessee has filed a letter from M/s. Satyam Developers Ltd. to the effect that the transaction belongs to the company and M/s. Satyam Developers have also accepted ownership of the said transaction and the resulting income. Accordingly, the assessee has all throughout maintained that the transactions does not belong to the assessee, but to M/s. Satyam Developers. Accordingly, it is directed that once the IT(SS)A Nos. 62,65&66/Ahd/2021 JCIT(OSD) vs. Shri Vyomesh Vinodrai Patel & two others Asst. Years –2012-13 & 2018-19 - 8 - addition has been confirmed in the hands of the M/s. Satyam Developers Ltd. on substantive basis, who has also owned up the transactions by way of a confirmatory letter filed during the course of assessment proceedings the same addition cannot be made in the hands of the assessee again on substantive basis. Accordingly, the matter is being restored to the file of the Assessing Officer with the aforesaid direction. 9. In the result, the appeal of the Department is dismissed. 10. Further, we observe that in the balance of the appeals, the facts and issue for consideration are similar. Accordingly, both the appeals are also restored to the file of the Assessing Officer, with similar directions. 11. In the combined result, all the appeals of the Department are dismissed. This Order pronounced in Open Court on 17/01/2024 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 17/01/2024 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad