M/s. Space Management Ltd., Ahmedabad V. The Dy.CIT.,Cent.Circle-1(2), Ahmedabad

ITSSA 700/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9543 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 29-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI T P KRISHNAKUMA
• Keywords: Opportunity of being heard; Documents seized
• Section: 143(3); 153A

Judgement Text

, , , , , , , , SIN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER APPEAL(S) BY APPELLANT VS. RESPONDENT SL. NO(S) IT(SS)A NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 700/AHD/2010 2002-03 M/S.SPACE MANAGEMENT LTD. 3 RD FLOOR, SPACE HOUSE MITHAKHALI SIX ROADS NR.CROSSWORDS NAVRANGPURA AHMEDABAD PAN:AACCS 7303K DCIT CENTRAL CIRCLE-1(2) AHMEDABAD 2. 701/AHD/2010 2003-04 -DO-ASSESSEE DO-REVENUE 3. 702/AHD/2010 2004-05 ASSESSEE REVENUE %& ' / APPELLANT BY : SHRI TEJ SHAH )*%& + ' / RESPONDENT BY : SHRI T.P.KRISHNAKUMAR,CIT-DR ' , + $- / / / / DATE OF HEARING : 30/10/2013 ./0 + $- / DATE OF PRONOUNCEMENT : 15/11/2013 1 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD.COMMISSIONER OF INCOME TAX(A PPEALS)-I, AHMEDABAD (CIT(A) FOR SHORT) DATED 09/08/2010 PERTAINING TO ASSESSMENT YEARS (AYS) 2002-03, 2003-04 & 2004-05. SINCE COMMON GROUNDS ARE INVOLVED, THESE APPEALS WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. IT(SS)A NOS.700,701 &702 /AHD/2 010 M/S.SPACE MANAGEMENT LTD. VS. DCIT AYS 2002-03, 2003-04 & 2004-05 RESPECTIVELY - 2 - 2. IN ALL THESE THREE APPEALS, THE ASSESSEE HAS RAI SED FOLLOWING COMMON GROUNDS. FOR THE SAKE OF CONVENIENCE, WE EXT RACT THE GROUNDS FROM IT(SS)A NO.700/AHD/2010 FOR AY 2002-03 (LEAD C ASE). 1. THAT THE LD.AO ERRED IN ASSUMING JURISDICTION U/S.1 53C R.W.SECTION 153A OF THE INCOME TAX ACT, 1961. 2. THAT THE LD.CIT ERRED IN SUSTAINING THE DISALLOWANC E MADE BY THE LD.AO IN ASSESSMENT CONTRARY TO THE PROVISIONS OF 1 53C. ADDITIONS U/S.153C CAN BE MADE ONLY ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH BELONGS TO THE APPELLANT AND NOT ON ANY OTHER GROUND. IN THE CASE OF THE ASSESSEE, NO MATE RIAL OR ANY INCRIMINATING DOCUMENTS ARE FOUND OR SEIZED WHICH L INKS THE INVOLVEMENT OF THE PRESENT APPELLANT WITH THE MATER IALS/DOCUMENTS SEIZED. HENCE IT IS NOT IN ACCORDANCE WITH THE PRO VISION OF SEC.153C OF THE ACT. 3. THAT THE LD.CIT ERRED IN SUSTAINING THE DISALLOWANC E MADE BY THE LD.AO OF RS.27,952/- OUT OF MISCELLANEOUS EXPENSES. 4. THAT THE LD.CIT ERRED IN SUSTAINING THE DISALLOWANC E MADE BY THE LD.AO OF RS.1,53,587/- OUT OF COMMISSION EXPENSES. 3. BRIEFLY STATED FACTS ARE THAT A SEARCH OPERAT ION U/S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CONDUCTED IN RADHE GROUP OF CASES ON 04/08/2006. DURING THE CO URSE OF SEARCH ACTION, VARIOUS DOCUMENTS/BOOKS OF ACCOUNT/OTHER VA LUABLE ARTICLES/OTHER THINGS WERE FOUND AND SEIZED FROM THE BUSINESS PREM ISE OF RADHE DEVELOPERS INDIA LTD. AND RADHE INFRASTRUCTURE AND PROJECTS INDIA LTD. AND OTHERS AT AHMEDABAD WHICH IS BELONGED TO THE AS SESSEE-COMPANY. THEREFORE, IN VIEW OF THE PROVISION OF SECTION 153C OF THE ACT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE U/S.15 3C R.W.S.153A OF THE ACT ON 19/08/2008. IN RESPONSE TO NOTICE U/S.153A OF THE ACT ISSUED ON 04/05/2007, THE ASSESSEE HAS FILED RETURN OF INCOME ON 10/09/2008 DECLARING TOTAL INCOME AT RS.2,90,180/-. ORIGINAL RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,90,180/- WAS FILED O N 25/10/2002. NOTICE IT(SS)A NOS.700,701 &702 /AHD/2 010 M/S.SPACE MANAGEMENT LTD. VS. DCIT AYS 2002-03, 2003-04 & 2004-05 RESPECTIVELY - 3 - U/S.143(2) WAS SERVED ON 12/09/2008. NOTICE U/S.1 42(1) ALONG WITH THE QUESTIONNAIRE ISSUED AND SERVED ON 06/10/2008. IN RESPONSE TO THE ABOVE NOTICES, SHRI ASHWIN H.SHAH, C.A. AND AR OF THE ASS ESSEE-COMPANY ALONG WITH SHRI PIYUSHBHAI DEDHIA, MANAGING DIRECTO R OF THE ASSESSEE- COMPANY HAVE ATTENDED AND DISCUSSED THE CASE TIME T O TIME AND FURNISHED THE DETAILS AS REQUIRED. THE AO MADE ASSESSMENT U/ S.153C R.W.S.153A(1)(B) R.W.S. 143(3) OF THE IT ACT. AGA INST THE ASSESSMENT ORDER(S), THE ASSESSEE FILED APPEAL(S) BY TAKING VA RIOUS GROUNDS BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, P ARTLY ALLOWED THE APPEAL(S) OF THE ASSESSEE. 4. NOW, THE ASSESSEE IS IN APPEAL(S) BEFORE THIS TR IBUNAL. THE LD.COUNSEL FOR THE ASSESSEE SHRI TEJ SHAH CONTENTED THAT WHILE MAKING THE ASSESSMENT, NO MATERIAL EVIDENCE WAS UTILIZED B Y THE AO. HE SUBMITTED THAT SINCE THE LD.CIT(A) HAS NOT DECIDED THIS ISSUE AS TO WHETHER THE AO HAS RECORDED HIS SATISFACTION, THERE FORE, THE ORDERS OF THE AUTHORITIES BELOW ARE BAD IN LAW AND VOID AB INITIO . IN SUPPORT OF HIS ARGUMENT, HE PLACED RELIANCE ON THE FOLLOWING CASE- LAWS:- 1. CIT VS. S.R. FRAGRANCE LTD. 270 ITR 560 (DEL) 2. CIT VS. V R SHARMA 275 ITR 303 (DEL) 3. CIT VS. RAM COMMERCIAL ENT.LTD. 246 ITR 568 (D EL) 4. DIWAN ENT. VS. CIT 246 ITRE 571 (DEL). FURTHER, THE LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSEE WAS NOT AFFORDED SUFFICIENT OPPORTUNITY BY THE AO. IT(SS)A NOS.700,701 &702 /AHD/2 010 M/S.SPACE MANAGEMENT LTD. VS. DCIT AYS 2002-03, 2003-04 & 2004-05 RESPECTIVELY - 4 - 4.1. ON THE CONTRARY, CIT-DR SHRI T.P. KRISHNAKUMA R SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ONUS WAS UPON THE ASSESSEE TO APPEAR BEFORE THE AO TO EXPLAIN IN RESP ECT OF ALL THE DOCUMENTS SEIZED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AS WELL AS THE JUDGEMENTS CITED BEFORE US BY THE LD.COUNSEL FO R THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ALL T HESE APPEALS, THE ASSESSEE BEFORE THE LD.CIT(A) HAD SUBMITTED THAT TH E AO HAS NOT RECORDED THE SATISFACTION IN RESPECT OF THE DOCUMEN TS SEIZED. IT IS ALSO CONTENDED BY THE LD.COUNSEL FOR THE ASSESSEE THAT N O MATERIAL EVIDENCE WAS UTILIZED WHILE FRAMING THE ASSESSMENT. HE AL SO SUBMITTED THAT THE LD.CIT(A) HAS NOT DECIDED THIS ISSUE AS TO WHETHER THE AO HAS RECORDED HIS SATISFACTION. WE FIND THAT THE LD.CIT(A) HAS D ECIDED THIS ISSUE IN PARAGRAPH NO.5 OF HIS ORDER, BY OBSERVING AS UNDER: - 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. AS MENTIONED BY THE APPELLANT IN THE STATEMENT OF FACTS, DURING THE COURSE OF SEARCH ACTION IN THE RADHE GROUP OF CASES, PAGE NOS.52, 72 AND 73 OF ANNEXURE-A/1 WERE SEIZED, WHICH PERTAIN TO THE APPE LLANT. IT IS, THEREFORE, APPARENT THAT SOME DOCUMENTS, SEIZED DUR ING THE COURSE OF SEARCH ACTION IN THE RADHE GROUP OF CASES BELONGED TO THE APPELLANT. THE ASSESSING OFFICER ASSUMES JURISDICTION FOR FRAM ING ASSESSMENT U/S.153C OF THE IT ACT WHERE THE AO IS SATISFIED TH AT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUATION ARTICLES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS TO OR BEL ONG TO A PERSON OTHER THAN THE PERSON IN WHOSE CASE SEARCH IS CONDU CTED U/S.132(1) OF THE I.T.ACT. THEREFORE, FOR INITIATING ACTION U/S. 153C OF THE I.T.ACT FOR FRAMING ASSESSMENT U/S.153A OF THE I.T.ACT, THE PRE REQUISITE IS THAT THE SATISFACTION OF THE ASSESSING OFFICER THAT THE MONE Y ETC. AND DOCUMENTS, ETC. BELONGS TO A PERSON OTHER THAN THE PERSON SEAR CHED U/S.132 OF THE I.T.ACT. IN THE PRESENT CASE, THIS CONDITION IS SA TISFIED AND THEREFORE, THE IT(SS)A NOS.700,701 &702 /AHD/2 010 M/S.SPACE MANAGEMENT LTD. VS. DCIT AYS 2002-03, 2003-04 & 2004-05 RESPECTIVELY - 5 - ASSESSING OFFICER IS CONSIDERED JUSTIFIED IN INITIA TING PROCEEDINGS U/S.153C OF THE I.T.ACT IN THE CASE OF THE APPELLAN T. 5.1. AS PER THE PROVISIONS OF SECTION 153-C OF THE ACT, THE AO OF THE SEARCHED PARTY IS REQUIRED TO BE SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELON GS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN T HE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL B E HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THAT AO SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND IS SUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. IN THE PRESEN T CASE, THE AO HAS RECORDED A FINDING THAT A SEARCH OPERATION U/S.132 OF THE ACT WAS CONDUCTED IN RADHE GROUP OF CASES ON 04/08/2006. D URING THE COURSE OF SEARCH ACTION VARIOUS DOCUMENTS/BOOKS OF ACCOUNT/OT HER VALUATION ARTICLES/OTHER THINGS WERE FOUND AND SEIZED VIDE AN NEXURE A/1 (PAGE 52, 72 TO 73) FROM THE BUSINESS PREMISE OF RADHE DEVELO PERS INDIA LTD., AND RADHE INFRASTRUCTURE AND PROJECTS INDIA LTD. AND OT HERS AT AHMEDABAD (DATE OF SEIZURE: 29/09/2006) WHICH IS BELONGED TO THE ASSESSEE- COMPANY. THEREFORE, IN VIEW OF THE PROVISION OF SE C.153C OF THE IT ACT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE U/S.15 3C R.W.S. 153A OF THE ACT ON 19/08/2008. 5.2. IT IS NOT COMING OUT FROM THESE FINDINGS THAT WHETHER THE SATISFACTION AS ENVISAGED U/S.153C OF THE ACT BY TH E CONCERNED AO IS RECORDED OR NOT. WE ALSO FIND THAT THE CONTENTION OF THE ASSESSEE THAT ALL IT(SS)A NOS.700,701 &702 /AHD/2 010 M/S.SPACE MANAGEMENT LTD. VS. DCIT AYS 2002-03, 2003-04 & 2004-05 RESPECTIVELY - 6 - THE TRANSACTIONS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THEREFORE, THE PROVISIONS OF SECTION 153C OF THE ACT CANNOT BE INVOKED IS NOT DEALT WITH BY THE LD.CIT(A). THERE FORE, WE RESTORE THIS ISSUE BACK TO THE FILE OF LD.CIT(A) TO DECIDE THES E APPEALS AFRESH, AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HENCE, THE IMPUGNED ORDERS ARE HEREBY SET ASIDE. 6. REMAINING TWO GROUNDS ARE ALSO BEING RESTORED T O THE FILE OF LD.CIT(A) FOR FRESH DECISION. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 11 /2013 4-.., .../ T.C. NAIR, SR. PS 1 + )$5 650$ 1 + )$5 650$ 1 + )$5 650$ 1 + )$5 650$/ COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. )*%& / THE RESPONDENT. 3. !! $ '7 / CONCERNED CIT 4. '7() / THE CIT(A)-I, AHMEDABAD 5. 5 #8 )$ , , / DR, ITAT, AHMEDABAD 6. 89: ;, / GUARD FILE. 1' 1' 1' 1' / BY ORDER, *5$ )$ //TRUE COPY// < <<