The ACIT, central Circle-1(2), Ahmedabad V. Smt. Amita Arvindbhai Patel, Ahmedabad

ITSSA 71/AHD/2021

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had allowed the assessee's rectification application and deleted an addition of Rs.1,52,14,018. This addition was initially made by the Assessing Officer (AO) based on information from the AIR, alleging undisclosed sale proceeds from two properties. The CIT(A) found that the addition was not based on any incriminating material found during the search and thus was not sustainable. The Tribunal upheld the CIT(A)'s decision, referencing the absence of incriminating material and the legal precedent that additions cannot be made in the absence of such material.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133565 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-08-2023
• Appeal Filed By: Department
• Order Result: DismissedDismissed
• Bench Allotted: C
• Next Hearing Date: 22-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 03-06-2021
• Other Referred Cases: CIT Vs. Abhisar Buildwell Pvt. Ltd., Saumya Construction, Pr.CIT vs Desai Construction P. Ltd, CIT v/s. Kabul Chawla, Canara Housing Development Co. v/s Dy.CIT, CIT v/s. Jayaben RatilalSorthia, Pr.CIT.Central-4 v/s. Jignesh P. Shah, Pr.CIT(Central) v/s. Meeta Gutugia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Set aside
• Section: 132; 154; 153A; 69A

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER IT(SS)A No.71/Ahd/2021 Assessment Year :2012-13 ACIT, Cent.Cir.1(2) Ahmedabad. Smt. Amita Arvindbhai Patel A-901, Suryaketu Tower Premchandnagar Bodakdev, Ahmedabad. PAN : AQZPP 8316 M (Applicant) (Responent) Assessee by : Shri Biren Shah, AR Revenue by : Shri Kamlesh Makwana, CIT-DR स ु नवाई क तार ख/Date of Hearing : 23/08/2023 घोषणा क तार ख /Date of Pronouncement: 29/08/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present appeal has been filed by the Revenue against the order of ld.Commissioner of Income-tax (Appeals)-11, Ahmedabad [hereinafter referred to as “ld.CIT(A)”] dated 02.03.2021 passed under section 250(6)of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the assessment year 2012-13, whereby the ld.CIT(A) allowed the assessee’s application seeking rectification in his order passed in the appellate proceedings for the impugned year. IT(SS)A No.71/Ahd/2021 2 2. The facts relating to the issue being that the assessee filed a rectification application against the order passed by the ld.CIT(A) in appeal against the assessment framed under section143(3) read with section 153A(1)(b) of the Act, pointing out that ground no.4 raised in his appeal challenging the addition made in his case on merits, had not been disposed of by the ld.CIT(A) in his order. Theld.CIT(A), noted that the assessee in ground no.1 raised before him had challenged the validity of the assessment framed under section 153A of the Act, in the absence of any incriminating material found, which ground had been allowed by him noting that in the search action conducted on the assessee under section132 of the Act no incriminating material had been found, and the addition made in thepresent case amounting to Rs.1,52,14,018/- under section 69A of the Act on account of undisclosed sale proceeds received by the assessee from two properties sold during the year, was passed solely on the basis of AIR information available with the AO. He accordingly noted that he had set aside the assessment framed in the present case as being invalid, and therefore, he dealt with the ground no.4 raised by the assessee on merits, allowing the same, holding that the addition was unsustainable in law, since, it was not based on any material found during the search. The facts of the case and finding of the ld.CIT(A) at para 2 -2.7 of the order are as under: “2. I have gone through the facts and the rectification application filed by the appellant in respect of the appellate order of this office passed in appeal No.CIT(A)-11/CC-1(2)/519-A/2016-17 dated 01.07.2019 in appellant's own case. It has been noticed that in this case the appellant has filed the appeal on 27.01.2017 against the assessment order u/s.143(3) r.w.s153A(1)(b) of IT Act dated 26.12.2016 passed by the AO. In the aforesaid appeal the appellant has raised seven grounds of appeal and the CIT(A) has decided all the grounds of appeal except to the ground of appeal No.4 on merits. 2.1 Here it is worth to mention that vide ground of appeal No.1 the appellant has raised objection that the impugned assessment made by the AO was IT(SS)A No.71/Ahd/2021 3 illegal. After discussing the facts, the CIT(A) vide its order referred above has rendered his decision in para No.5.2 of the appellate order whereby it was held that no addition could be made without any incriminating documents found during the course of search by making reliance upon the various judgments/ decisions of Hon'ble Courts and following the same he decided that the additions made by the AO are not found legally sustainable and hence the same were deleted. For ready reference the relevant extract of the decision is reproduced as under: "5.2 The appellant's other contention is that the appellant herself was covered u/s. 132 of the Act on 4.12.2014 alongwith Shri Pradeep Birewar, middleman and thus, assessment has been made u/s.153A of the Act. But during the course of search, no incriminating material was found at the premises of the appellant and there is no such mention in the assessment order about the finding of any incriminating material for making these additions. Rather the AO admitted on page 67 of the assessment order stating that " since the transaction had been completed long way back, why the assesses would retain any incriminating material with her" which makes it clear that there was no incriminating material found during the course of search at the premises which warrants additions, as made by the AO. The appellant cited several case laws of higher judicial authorities, in which it has been held that additions in the assessment made u/s.153A of the Act cannot be made, if there is no incriminating material found during the course of search. The Hon'ble Jurisdictional High Court of Gujarat, Ahmedabad has held as under in the case of Saumya Construction report in (2017) 81 Taxmann.com-292 (Gui).- "Section 153A bears the heading assessment in case the heading of search of requisition' Form the heading of section 153, the intention of the Legislature is clear, Viz., to provide for assessment in case of search and requisition'. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition'. Thus, while in view of the mandate of sub-section (I) of section 153A in every case where • there is a search of requisition the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition' is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition'. In case no incriminating material is found, the earlier assessment would have to be reiterated." Hon'ble High Court of Gujarat, Ahmedabad has held in the case of Pr.CIT vs Desai Construction P. Ltd reported at (2017) 81 Taxmann.com 271 (Gui) as under :- In absence of any incriminating material found during search, the Assessing Officer, in, the assessment under section 153A would not be entitled to interfere with the assessee's claim for deduction under section 80-IA. Which was part of original assessment proceedings and such assessment had abate." IT(SS)A No.71/Ahd/2021 4 The same decision has been given or upheld by several high courts in the following cases :- i) CIT v/s. Kabul Chawla (2015) 81 Taxman. com 412/234 (Delhi) ii) Canara Housing Development Co. v/s Dy.CIT(2014) 49 Taxman.com 98 (Kar). Hi) CIT v/s. Jayaben RatilalSorthia (2013) 40 Taxman. com 436 (2014) (Guj) iv) Pr.CIT.Central-4 v/s. Jignesh P. Shah in appeal No.554 & 555 of 2016 reported at (2018)99 Taxman.com lll(Bom). v) Pr.CIT(Central) v/s. Meeta Gutugia in SLP reported at (2018) 96 Taxman.com 468 (SC) The appellant contended that keeping in view the above mentioned case laws, the additions made by the AO in absence of any incriminating material found during the search at the premises of the appellant is not justified, hence, may be deleted. On qoing through the assessment order, it is an undisputed fact that no incriminating material was found at the premises of the appellant during the course of search u/s. 132 and there is no mention of such material in the assessment order. Hence, by respectfully following the binding judgments of several higher judicial authorities, as stated above, the additions made by the AO are not found legally sustainable, hence, additions are deleted. This ground of appeal is allowed. " 2.2 Thus from the above reading of the findings of the CIT(A) on ground of appeal No.1 it is apparent that the additions made in the assessment order were deleted for want of incriminating documents found during the course of search. With this finding it is implied that the addition made by the AO on account of the unaccounted receipts towards sale proceeds is also not sustained. 2.3 However, while giving appeal effect, the AO has objected to grant the relief to the appellant on this ground of appeal No.4 by saying that the issue has not been decided by the CIT(A). On going through the facts as mentioned above the decision of the AO is found not correct for the reason that the decision given in the ground of appeal No.1 as referred above also covers the decision on ground of appeal No.4. So the AO ought to have given the appeal effect by reducing the assessed income to the extent of the above addition but he has not granted so, may be due to the confusion in his mind for the reason that the CIT(A) in the aforesaid order has also decided the other issues/grounds of appeal on merits excluding this issue raised vide ground of appeal No.4 apart from the legal/technical ground vide ground of appeal No.1. Therefore, the appellant vide rectification application filed has requested this office to decide the grounds of appeal No.4 also. 2.4 It is worth here to mention that the AO has made the addition of Rs.1,52,14,018/-towards unaccounted receipts from sale of the immovable properties. On going through the facts it was found that there were sales of two immovable properties for the consideration of Rs.81,67,468/- and Rs.66,99,548/- respectively which has not been recorded in the books of accounts of the appellant for the reason that these properties were shown/owned by M/s.Vimla Developers as the funds of purchases of the IT(SS)A No.71/Ahd/2021 5 properties and other expenses of conversion etc. have been paid by M/s. Vimla Developers only. So the appellant was not the owner of the properties and hence no question of showing the same in its books of accounts/return of income has arisen. 2.5 Further from the reading of the AO's observation in para-8 at page 67 of the assessment order it is noticed that this issue has not emerged from any incriminating documents/records found/seized during the course of search but the same has come out from the records i.e. AIR information in the assessment proceedings itself. Thus, this beingthe unabated assessment year and the assessments in this case have already attained the finality therefore no addition without the incriminating documents found during the course of search could be made by the AO in the assessment so completed for the year under consideration. However7~on^going through the observations of the AO it is apparent that this issue has not come out from any seized records/incriminating documents found as a result of search therefore respectfully following the decisions of Hon'ble Gujarat High Court and other courts as discussed by the then CIT(A) in the appellate order referred above this addition is not sustainable on facts and law and hence the same is deleted. 2.6 Without prejudice to the above, it is also the fact that the source of acquisition and further expenses incurred towards conversion etc. have been accounted for and sources explained from the books of M/s. Vimla Developers who was the actual owner of the said properties. In support the ledger account copy from books of M/s, Vimla Developers, the final sale deed in favour of M/s. Vimla Developers for transfer of the legal title by the appellant in favour of M/s. Vimla Developers were produced and the genuineness of these documents has not been doubted by the AO. Even an affidavit of M/s. Vimla Developers was also submitted to this effect. Moreover, there was no record/evidence available with the AO to say that the appellant and not M/s. Vimla Developers was the actual owner of the properties, therefore any capital gain arised on account of the said transactions could not be taxed in the hands of the appellant. Even the AO has not rebutted the details/documents submitted by the appellant before him during the course of assessment proceedings. Merely the documents/properties have been in the name of the appellant would not made the appellant the actual owner of the properties and liable for the capital gain tax when the details and documents in support of the ownership of M/s. Vimla Developers of the said properties have been submitted and same have not been adversely commented upon by the AO. Thus on merits also there is no case for making the addition of the entire sale proceeds of the properties in the hands of the appellant. Even the AO has made the addition of the entire sale proceeds of the properties without granting the deduction of cost of acquisition, other expenses etc. and indexation thereof which is also not legally correct. It is worth here to mention here that vide written submission , the appellant has given the working of the Long Term Capital Loss and according to the 50% share of the appellant the long term capital loss on sale of properties have been worked out at Rs.10,60,900/-. So no tax liability arises even otherwise in the hands of the appellant. IT(SS)A No.71/Ahd/2021 6 2.7 In view of the above discussion, the addition made by the AO on account of the unaccounted receipts on sale of properties at Rs.1,52,14,018/- is deleted.” 3. The Revenue is challenging this order of the ld.CIT(A) before us, by raising the following ground: “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.1,52,14,018/- made u/s.69 of the Act on account of sale proceeds of land not reflected in return of income.” 4. Before us, the ld.DR fairly admitted that the addition made of Rs.1,52,14,018/- in the present case was based on information available with the AO from the AIR and was not based on any incriminating material found during the search. He was also unable to point out any infirmity in the legal proposition followed by the ld.CIT(A) for deleting the addition that in the absence of any incriminating material, no addition could have been made in the hands of the assessee, in assessment framed in consequence to search action in terms of section 153A of the Act in the assessment year where the assessment was unabated. Moreover, we are aware that this proposition of lawhas attained finality by the decision of the Hon’ble Apex Court in the case CIT Vs. Abhisar Buildwell Pvt. Ltd.[2023] 149 taxmann.com 399. “13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) ...... IT(SS)A No.71/Ahd/2021 7 ii) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.” 5. In view of the above fact noted by us above that the ld.DR was unable to point out any infirmity either on facts or on law in the finding of the ld.CIT(A), we see no reasons to interfere in the order of the ld.CIT(A) allowing the rectification application filed by the assessee under section 154 of the Act and deleting the additionmade of Rs.1,52,14,018/- under section 69A of the Act. The ground raised by the Revenue is rejected. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 29 th August, 2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 29/08/2023 vk*