Ramesh Kumar Agarwal, Kolkata V. DCIT, CIR-36, KOLKATA, Kolkata

ITSSA 68/KOL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6707 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANKIT JALAN
• Keywords: Set aside
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER IT (SS) A NO. 68 - 70 / KOL / 2015 ASSESSMENT YEARS :2003-04 TO 2005-06 RAMESH KUMAR AGARWAL 19, SYNAGOGUE STREET, KOLKATA-700001 [ PAN NO. ACXPA 9629 C ] V/S . DCIT, CIRCLE-36, AYAKAR BHAWAN, POORVA, 110, SHANTIPALLY, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI ANKIT JALAN, AR /BY RESPONDENT SHRI ABANI KANTA NAYAK CIT-DR /DATE OF HEARING 23-07-2019 /DATE OF PRONOUNCEMENT 31-07-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE THREE ASSESSEES APPEAL(S) FOR ASSESSMENT YE AR(S) 2003-04 TO 2005-06 ARISE AGAINST THE COMMISSIONER OF INCOME TA X (APPEALS)-10 KOLKATAS COMMON ORDER DATED 28.01.2015 PASSED IN C ASE NO.S 02,363 & 364/CIT(A)-10/CIR-36/2008-09/KOL AFFIRMING IDENTICA L ASSESSING OFFICERS ACTION ADDING THE ALLEGED UNDISCLOSED INCOME AMOUNT ING TO 28,74,940, 10,53,310/- & 3,44,450/-; RESPECTIVELY IN PROCEEDINGS U/S 143(3)/ 153C R.W.S. 264 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . HEARD BOTH THE LEARNED REPRESENTATIVES. CASE FILE( S) PERUSED. 2. IT EMERGES AT THE OUTSET THAT THE ASSESSEE HAS R AISED ON IDENTICAL ADDITIONAL GROUND IN ALL THESE CASES SEEKING TO CHA LLENGE VALIDITY OF THE IMPUGNED PROCEEDINGS U/S. 153C OF THE ACT. LEARNED CIT-DR AT THIS STAGE VEHEMENTLY OBJECTS ADMISSION OF ASSESSEES ADDITION AL GROUND FOR THE REASON IT(SS)A NO.68-70/KOL/2015 A.YS. 03-04 TO 05-06 RAMESH KR. AGARWAL VS. DCIT, CIRI-36,KOL PAGE 2 THAT ALTHOUGH THE FORMER TWO ASSESSMENT YEAR(S) 200 3-04 AND 2003-04 INVOLVE SEC. 153C PROCEEDINGS THE SAME IS NOT THE CASE SO F AR AS THE LAST ASSESSMENT YEAR 2005-06 IS CONCERNED AS THE ASSESSMENT ORDER S TATED TO HAVE BEEN PASSED U/S. 143(3) R.W.S. 264 OF THE ACT ONLY. 3. WE FIND NO MERIT IN REVENUES INSTANT OBJECTION AS THE CASE RECORD(S) REVEAL THAT THE INSTANT LIS IS AN OFFSHOOT OF CITS SEC. 264 ORDER PASSED IN ASSESSEES FAVOUR DATED 28.03.2008 SETTING ASIDE TH E DCIT, CENTRAL CIRCLE-22 MUMBAI FORMER ROUND OF ASSESSMENT(S) INITIATED SEC. 153C OF THE ACT. THE REVENUES INSTANT OBJECTION IS DECLINED THEREFORE. 4. NEXT COMES AN EQUALLY IMPORTANT ASPECT OF THE TR IBUNALS JURISDICTION TO ENTERTAIN SUCH A ADDITIONAL LEGAL PLEA GOING TO ROO T OF THE MATTER. THIS TRIBUNALS SPECIAL BENCH DECISION IN ALL CARGO GLOBAL LOGISTICS VS. DCIT (2012) 137 ITD 24 (MUM); AFTER TAKING INTO CONSIDERATION HON'BLE A PEX COURTS LANDMARK JUDGMENT IN NTPC VS. CIT (1998) 229 ITR 383 (SC) HAS SETTLED THE LAW THAT WE CAN VERY WELL ALLOW AN ASSESSEES LEGAL GROUND T O BE AGITATED IN SECOND APPELLATE PROCEEDINGS IN ORDER TO DETERMINE THE COR RECT TAX LIABILITY ARISING FROM THE ASSESSMENT IN QUESTION. WE THEREFORE ACCEPT TH E ASSESSEES INSTANT LEGAL PLEA CHALLENGING VALIDITY OF PROCEEDINGS. 5. MR. NAYAK AT THIS STAGE MADE HIS STRONGEST EFFOR TS TO CONTEND THAT THE ASSESSEE IS ESTOPPED FROM RAISING THE INSTANT LEGAL PLEA REGARDING CORRECTNESS OF INITIATION OF SEC. 153C PROCEEDINGS AS THE IMPUG NED ASSESSMENT(S) IN KOLKATA HAVE BEEN FRAMED IN FURTHERANCE TO THE CIT S REVISION ORDER PASSED IN SEC. 264 PROCEEDINGS THEREBY TO REVERSING EARLIER A SSESSMENT IN MUMBAI. HIS CASE THEREFORE IS THAT THAT THE ASSESSEES INSTANT LEGAL GRIEVANCE DESERVES TO BE DECLINED SINCE HE HAD BEEN SHIFTING THE GOAL POS T BY APPROBATE AND REPROBATE. HE ALSO QUOTES SECTION 264(4) OF THE ACT IS SUPPORT THAT THE APPELLANT HAD WITHDRAWN EARLIER APPEALS FILED BEFOR E THE CIT(A) IN FIRST ROUND OF ASSESSMENTS. WE SEE NO REASON TO ACCEPT THE REVE NUES FOREGOING PLEA AS AN ASSESSEE IS VERY WELL ENTITLED TO RAISE ALL FACT UAL AND LEGAL PLEAS BEFORE THE TRIBUNAL. WE ARE OF THE VIEW THAT IN CASE THE REVEN UES INSTANT ARGUMENT IS ACCEPTED, IT IS BOUND TO CURTAIL TRIBUNALS JURISDI CTION TO DECIDE ALL ISSUES IN A LIS IT(SS)A NO.68-70/KOL/2015 A.YS. 03-04 TO 05-06 RAMESH KR. AGARWAL VS. DCIT, CIRI-36,KOL PAGE 3 IN SECOND APPELLATE PROCEEDINGS. WE ARE OF THE OPIN ION THAT ASSESSEE HAS NEVER GIVEN UP HIS RIGHT TO CHALLENGE VALIDITY OF T HE IMPUGNED ASSESSMENT(S). WE ALSO OBSERVE THAT ESTOPPELS PRINCIPLE DOES NOT A PPLY IN INCOME TAX PROCEEDINGS AGAINST THE STATUTE IN REVENUES FAVOUR . MORE SO WHEN IT IS AN INSTANCE OF VALIDITY OF THE PROCEEDINGS INITIATED UNDER THE ACT. 6. WE NOW ADVERT TO SOME BASIC RELEVANT FACTS. THE DEPARTMENT HAD CARRIED OUT THE IMPUGNED SEARCH DATED 24.11.2004 IN CASE OF M/S PIONEER EMBROIDERIES LTD. AT MUMBAI FOLLOWED BY A SURVEY AT ASSESSEES PREMISES. THE CIT KOLKATA THEREFORE PASSED HIS SEC. 127 ORDER TRANSFERRING ASSESSEES CASE FROM KOLKATA TO MUMBAI. THIS FOLLOWED THE DCIT , CC-22 MUMBAIS INITIATION OF SEC. 153C PROCEEDINGS AGAINST THE TAX PAYER WHO DID NOT SUBMIT ANY RETURN. HE RATHER PREFERRED CIVIL WRIT PETITION NO. 1657 OF 2002 BEFORE HON'BLE JURISDICTIONAL HIGH COURT. THE ABOVE STATED ASSESSING OFFICER IN THE MEANTIME FRAMED HIS FIRST ROUND OF SEC. 153C ASSESS MENT(S) ON 26.12.2006. CASE FILE(S) SUGGEST THAT ASSESSEES FOREGOING WRIT PETITION CAME UP FOR HEARING ON 22.01.2007. THEIR LORDSHIP QUASHED THE C ITS SEC. 127 FOREGOING ORDER FOR THE REASON THAT THE DEPARTMENT HAD NOT AF FORDED ANY OPPORTUNITY OF HEARING TO THE TAXPAYER. 7. WE FIND THAT THE ASSESSEE THEN FILED HIS FIRST R OUND APPELLATE PROCEEDINGS BEFORE CIT(A) AND ALSO INITIATED SEC. 2 64 PROCEEDINGS BEFORE THE CIT. HE CHOSE TO WITHDRAW THE FORMER LIS. IT IS IN THIS BACKDROP OF FACTS THAT CIT KOLKATAS ORDER DATED 20.03.2008 SET ASIDE ALL THE FORMER ASSESSMENT(S) IN VIEW OF HON'BLE JURISDICTIONAL HIGH COURTS ORDER A ND DIRECTED THE ASSESSING OFFICER TO FRAME FRESH ONES. THE ASSESSING OFFICER THEREAFTER FINALIZED ALL THESE ASSESSMENT(S) ON 31.12.2008 MAKING THE IMPUGNED IDE NTICAL UNEXPLAINED INCOME ADDITION (SUPRA) WHICH STAND AFFIRMED IN THE LOWER APPELLATE PROCEEDINGS. 8. THE ASSESSEES ONLY CASE BEFORE US IS THAT SEC. 153 ENVISAGES TWIN ROUNDS OF ASSESSMENT(S) I.E., THE ASSESSING OFFICER OF THE SEARCHED ASSESSEE HAS TO SATISFY HIMSELF THAT ANY MONEY, BULLION OR J EWELLERY OR THE SPECIFIED IT(SS)A NO.68-70/KOL/2015 A.YS. 03-04 TO 05-06 RAMESH KR. AGARWAL VS. DCIT, CIRI-36,KOL PAGE 4 CATEGORY OF ASSETS PROVIDED IN THE STATUTORY PROVIS ION DOES NOT BELONG TO SAID ASSESSEE BUT TO A THIRD PERSON. HE THEN SUPPOSED TO TRANSFER FOREGOING RELEVANT MATERIAL TO THE ASSESSING OFFICER HAVING J URISDICTION OVER SUCH THIRD PERSON WHO WOULD SATISFY HIMSELF THAT THE ABOVE MAT ERIAL BELONGS TO THIS LATTER ASSESSEE. WE AFFORD SUFFICIENT OPPORTUNITY TO MR. N AYAK TO CLEAR THE AIR ABOUT THIS TWIN SATISFACTION ASPECT. HE IS VERY VERY FAIR IN INFORMING US AT THE BAR THAT THE ASSESSING OFFICER OF THE SEARCHED ASSESSEE HAD NOWHERE RECORDED ANY SUCH SATISFACTION. HE EMPHASIZES THAT THE LEGAL REQ UIREMENT STANDS APPLIED IN THE INSTANT CASE SINCE THE ASSESSING OFFICER IN THI S ASSESSEES CASE HAS DULY RECORDED THE CORRESPONDING SATISFACTION. WE FIND NO MERIT IN REVENUES INSTANT ARGUMENTS. WE MAKE IT CLEAR THAT CBDTS CIRCULAR NO. 24/2015 DATED 31.12.2015 ISSUE U/S119 OF THE ACT HAS MAKES IT CLE AR THAT THE ABOVE STATED TWIN ROUND OF SATISFACTION IS MANDATORY CONDITION W HILST TAKING RECOURSE TO SEC. 158BD/153C PROCEEDINGS EVEN IF THE ASSESSING OFFICE R HAPPENS TO BE THE SAME READS AS UNDER:- CIRCULAR NO.24/2015 F.NO-279/MISC./140/2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, 31 ST DECEMBER, 2015 SUBJECT: RECORDING OF SATISFACTION NOTE UNDER SECTI ON 158BD/153C OF THE ACT-REG.- THE ISSUE OF RECORDING OF SATISFACTION FOR THE PURP OSES OF SECTION 158BD/153C HAS BEEN SUBJECT MATTER OF LITIGATION. 2. THE HON'BLE SUPREME COURT IN THE CASE OF M/S CA LCUTTA KNITWEARS IN ITS DETAILED JUDGMENT IN CIVIL APPEAL NO.3958 OF 2014 DATED 12.3 .2014 (AVAILABLE IN NJRS AT 2014-LL-0312-51) HAS LAID DOWN THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT, RECORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATISFACTION NOTE MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD T O THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON U/S.158BD. THE HON'BLE COURT HELD THAT THE SATISFACTION NOTE COULD BE PREPARED AT ANY OF THE F OLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; OR (B) IN TH E COURSE FOR THE ASSESSMENT PROCEEDINGS UNDRER SECTION 158BC OF THE ACT; OR (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PROVISION S OF SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMILAR/PARI-MATERIA TO THE PROVISION S OF SECTION 158BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINES OF THE HON'BLE SC, APPLY TO PROCEEDINGS U/S. 153C OF THE IT ACT, FOR THE PURPOSE OF ASSESSMENT OF INCOME OF OTHER THAN THE SEARCHED PERSON. THIS VIEW HAS BEEN ACCEPTED BY CBDT. IT(SS)A NO.68-70/KOL/2015 A.YS. 03-04 TO 05-06 RAMESH KR. AGARWAL VS. DCIT, CIRI-36,KOL PAGE 5 4. THE GUIDELINES OF THE HON'BLE SUPREME COURT AS R EFERRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOTE, MAY BE BR OUGHT TO THE NOTICE OF ALL FOR STRICT COMPLIANCE. IT IS FURTHER CLARIFIED THAT EVEN IF TH E AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME, THEN ALSO HE IS REQUIRED TO RECORD HIS SATISFACTION AS HAS BEEN HELD BY THE COURTS . 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE I SSUE OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIGHT OF THE ABOVE JU DGEMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOT ENDURE SECTION 158BD/153C SHOULD BE WITHDRAWN/NOT P RESSED IF IT DOES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. DCIT (OSD) (ITJ), CBDT, NEW DELHI. WE THEREFORE CONCLUDE IN THESE PECULIAR FACTS AND C IRCUMSTANCES THAT ALL THE IMPUGNED ASSESSMENTS U/S 153C INITIATED WITHOUT REC ORDING TWIN ROUNDS OF SATISFACTION IN CASE OF THE SEARCHED AND THE THIRD PARTY ASSESSEES ARE NOT LIABLE TO BE SUSTAINED. THE SAME STAND QUASHED. THE ASSESSEES OTHER GROUNDS ON MERITS ARE RENDERED INFRUCTUOUS. 8. THESE THREE ASSESSEES APPEALS ARE ALLOWED IN AB OVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT 31/ 07/2019 SD/- SD/- ( ) (( ) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP )- 31 / 07 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-RAMESH KUMAR AGARWAL, 19, SYNAGOGUE STREE T, KOLKATA-001 2. /REVENUE-DCIT, CIRCLE-36, AYAKAR BHAWAN, POORVA, 11 0, SHANTIPALLY, KOL-107 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,