M/s Ramgarh Sponge Iron Pvt. Ltd., Kolkata V. ACIT Cen. Cir.-3(1), Kolkata, Kolkata

ITSSA 72/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7352 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 14-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Keywords: Unexplained cash credit; Document seized; Deemed dividend; Documents seized
• Section: 143(3); 153A; 73; 72; 153C; 68; 148; 263

Judgement Text

, , 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. 72 / KOL / 2019 ASSESSMENT YEAR :2014-15 M/S RAMGARH SPONGE IRON PVT. LTD., 8, 17 TH FLOOR, 33A, JAWAHARLAL NEHRU ROAD, CHATTERJEE INTERNATIONAL, KOLKATA-71 [ PAN NO.AACCR 8706 R ] V/S . ACIT, CENTRAL CIRCLE- 3(1), 4 TH FLOOR, ROOM NO.411, 110, SHANTI PALLI, AAYAKAR BHAWAN, POORVA, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SHRI RAM BILASH MEENA,CIT-DR /DATE OF HEARING 24-12-2019 /DATE OF PRONOUNCEMENT 29-01-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-21 KOLKATAS O RDER DATED 19.09.2019 PASSED IN CASE NO,. 11180/CCC-3(1)/KOL/CIT(A)-AY :2 014-15 INVOLVING PROCEEDINGS U/S 153C R.W.S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD SHRI PODDAR, LEARNED AUTHORIZED REPRESENTATIV E REPRESENTING ASSESSEE AND SHRI MEENA, CIT-DR APPEARING AT THE RE VENUES BEHEST. 2. A PERUSAL OF THE ASSESSEES PLEADINGS RAISED IN THE INSTANT APPEAL SUGGESTS THAT WE NEED NOT DELVE MUCH DEEPER IN THE FACTS OF THE INSTANT CASE. SUFFICE TO SAY, THERE IS NO DISPUTE BETWEEN THE PAR TIES THAT THE ASSESSING OFFICER HAD INITIATED THE IMPUGNED SEC. 153C PROCEE DINGS AGAINST THIS IT(SS)A NO.72/KOL/2019 A.Y.2014-1 5 M/S RAMGARH SPONGE IRON PVT. LTD. VS. ACIT, CC-3 (1), KOL PA GE 2 ASSESSEE ON THE GROUND THAT THE SEARCH / SEIZURE CA RRIED OUT IN M/S RUNGTA GROUP OF COMPANIES DATED 25.08.2015 HAD LED TO SEIZ URE OF THE ALLEGED INCRIMINATING MATERIAL BELONGING / RELATING TO THIS TAXPAYER AND THEREFORE, THE SAME LEAD TO ISSUANCE OF THE CORRESPONDING NOTICE D ATED 14.08.2017. THE ASSESSING OFFICER THEREAFTER COMPLETED THE SEARCH A SSESSMENT IN QUESTION TREATING AMOUNTS OF 48,00,03,726/- AND 75,69,66,764/- EVIDENT FROM THE CASH BOOKS TOTALLING TO 123,69,70,490/- AS UNEXPLAINED CASH CREDITS LIABLE TO BE ADDED SEC. 68 OF THE ACT ON ACCOUNT OF THE ASSE SSEES FAILURE IN PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS THEREAFT ER. 3. THE ASSESSEE FILED ITS APPEAL. CASE FILE REVEALS THAT ALTHOUGH THE CIT(A) HAS QUASHED SEC. 153C PROCEEDINGS TO BE NOT SUSTAIN ABLE IN THE EYES OF LAW, HE HAS DIRECTED THE ASSESSING OFFICER TO PROCEED U/ S 148 AS FOLLOWS:- 4.3. I HAVE PERUSED THE ASSESSMENT ORDER SUBMISSION OF THE LD. A/R REMAND REPORT. IT IS SEEN THAT EVEN THOUGH 153C PROCEEDINGS WERE I NITIATED ON THE BASIS OF PAGE-10, 21, 31 & 32 OF SEIZED DOCUMENTS MARKED ASL/1 SEIZED FROM PREMISES OF ANANDITA STEEL PROJECT LTD., RUNGTA PROJECT LTD., ETC., (RAN CHI). HOWEVER, IT IS SEEN THAT NO ADDITION HAS BEEN MADE ON THE BASIS OF THESE DOCUME NTS IN THE ASSESSMENT MADE IN RAMGARH SPONGE IRON PVT. LTD., THEREFORE, I AGREE W ITH THE LD. A/R THAT PROCEEDINGS U/S.153C CANNOT BE DONE ON THE ASSESSEE AS THE MATE RIAL SEIZED THOUGH RELATED TO THE ASSESSEE. THERE WAS NO INCRIMINATING MATERIAL I N THESE DOCUMENTS SEIZED. THE MATTER ON THE BASIS OF WHICH ADDITIONS HAVE BEEN MA DE IN THE ASSESSMENT ORDER WERE FOUND DURING THE COURSE OF SURVEY AT THE PREMI SES OF RUNGTA IRRIGATION LTD. THIS MATERIAL WHICH ARE DISCUSSED IN SUBSEQUENT PARA OF THIS ORDER ARE DEFINITELY INCRIMINATING AND CLEARLY SHOWS ESCAPEMENT OF INCOM E. THE AO CAN IF DEEMED FIT BRING THIS INCOME UNDER TAXATION BY INVOKING PROVIS ION OF SECTION 148. HOWEVER, AS PER THE CASE LAWS PREVALENT AS ON TODAY THESE INCOMES CANNOT BE BROUGHT TO TAXATION BY RESORTING TO PROVISION OF SE CTION 153C. FOLLOWING CASE LAWS SUPPORT THE CASE OF THE ASSESSEE: (I) ONLY THOSE ASSESSMENT U/S. 153C CAN BE DONE W.R .T. WHICH INCRIMINATING MATERIAL HAS BEEN FOUND. -397 ITR 344 (SC) SINGHAD TECHNICAL EDUCATION SOCIE TY. (II) CIT, KOLKATA-III VS. VEERPRABHU MARKETING LIM ITED [2016] 73 TAXMANN.COM 149 (CALCUTTA): IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT EXPRES SED THE FOLLOWING VIEWS: WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAK A HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFORE PO WER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A . IN THE CASE OF BEFORE US, THE ASSESSING OFFICE HAS MADE DISALLOWAN CES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 153C READ WITH S ECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UP HELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISAL LOWANCES. (III) CIT V. IBC KNOWLEDGE PARK (P) LTD. [2016] 69 TQAXMANN.COM 108 (KAR.):- IT(SS)A NO.72/KOL/2019 A.Y.2014-1 5 M/S RAMGARH SPONGE IRON PVT. LTD. VS. ACIT, CC-3 (1), KOL PA GE 3 SECTION 153C, READ WITH SECTION 153A, OF THE INCOME -TAX ACT, 1961- ASSESSMENT OF INCOME OF ANY OTHER PERSON (RECORDING OF SATISFACTION) ASSESSMENT YEARS 2004-05 TO 2006-07 WHETHER WHERE NO MATERIAL BELONGING TO A THIRD PARTY WAS FUND DURING A SEARCH , BUT ONLY AN INFERENCE OF UNDISCLOSED INCOME WAS DRAWN, SECTION 153C WOULD HA VE NO APPLICATION HELD, YES WHETHER WERE TRIBUNAL HELD THAT ASSESSMENT UNDER SECTION 153C WAS VALID DESPITE THERE BEING NO SATISFACTION RECOR DED THAT DOCUMENTS FOUND DURING SEARCH WERE INCRIMINATING IN NATURE AND PRIM A FACIE REPRESENTED UNDISCLOSED INCOME, ORDER OF TRIBUNAL WAS NOT JUSTI FIED HELD, YES [ PARAS, 49, 50, 56 & 57 ] (IV) JURISDICTIONAL TRIBUNAL IN THE CASE OF M/S TAN UJ HOLDINGS PVT. LTD., VS. DCIT CC-1(2),KOLKATA VIDE ITAT NO. 360 TO 363/KOL/2015 DATED 20.01.2016. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDE R: 5.5 WE ALSO FIND THAT NO INCRIMINATING MATERIALS WE RE FOUND DURING THE SEARCH IN THE RESPECT OF THE ISSUE OF DEEMED DIVIDEND. HEN CE IT CANNOT BE THE SUBJECT AFTER OF ADDITION IN 153C PROCEEDINGS IN RESPECT OF COMPLETED ASSESSMENTS. WE HOLD THAT WHEN AN ADDITION COULD NOT BE MADE AS PER LAW IN SECTION 153C PROCEEDINGS, THEN THE SAID ORDER CANNOT BE CONSTRUE D AS ERRONEOUS WARRANTING REVISION JURISDICTION U/S 263 OF THE ACT . THE AO MAY TAKE APPROPRIATE ACTION AS HE DEEMS FIT FOR TAXING THE INCOME ESCAPING ASSESSMENT AS THE TIME LIMIT FOR INVOKING SECTION 148 HAS STILL NOT EXPIRED . IN VIEW OF THE ABOVE DISCUSSION GROUND NO.1 AND 2 OF THE ASSESSMENT ARE ALLOWED. THIS LEAVES THE ASSESSEE AGGRIEVED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS AGAINST AND IN SUPPORT OF THE CIT(A) ACTION. MR. PODDAR VE HEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ALLOWING ASSESSEES APPEAL IN ENTIRETY ON MERITS AS WELL DESPITE THE FACT THAT THE IMPUGNED PROCEEDINGS INITIATED U/S.153C OF THE ACT HAVE BEEN DECLARED AS INVALID. HIS FURTHER CASE IS THAT ONCE THE FOUNDATI ON IN THE NATURE OF THE IMPUGNED PROCEEDINGS 153C PROCEEDINGS DOES NOT EXIS T, THE REMAINING SUPERSTRUCTURE CLAIM IN THE NATURE OF ADDITION ON A CCOUNT OF MUST ALSO FOLLOW SUIT AND THE IMPUGNED ADDITION ON MERITS MADE BY TH E ASSESSING OFFICER (SUPRA) DESERVES TO BE DELETED AS WELL. THE REVENU ES CASE ON THE OTHER HAND IS THAT SINCE THE CIT(A) HAS DIRECTED THE ASSE SSING OFFICER TO PROCEED U/S.148 OF THE ACT IN VIEW OF THE CORRESPONDING TIM E LIMITATION STILL AVAILABLE, HIS LOWER APPELLATE ORDER UNDER CHALLENGE OUGHT TO BE U PHELD. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FOREGOING RIVAL CONTENTIONS. THEE CAN HARDLY BE ANY DISPUTE THAT TH E CIT(A) ORDER UNDER CHALLENGE EXTRACTED IN THE PRECEDING PARAGRAPHS HAS CONCLUDED THAT THE FACTS IT(SS)A NO.72/KOL/2019 A.Y.2014-1 5 M/S RAMGARH SPONGE IRON PVT. LTD. VS. ACIT, CC-3 (1), KOL PA GE 4 OF THE INSTANT CASE DO NOT WARRANT INITIATION OF SE C.153C PROCEEDINGS SINCE IT IS AN INSTANCE OF NO INCRIMINATING MATERIAL FOUND OR S EIZED DURING THE COURSE OF SEARCH (SUPRA). HE HAS; HOWEVER, FALLEN SHORT OF GR ANTING FULL RELIEF TO THE ASSESSEE BY NOT DELETING THE ENTIRE FOREGOING ADDIT ION OF UNEXPLAINED CASH CREDITS ON MERITS. THAT BEING THE CASE, WE CONCLUDE THAT ALL OTHER ASPECTS ON MERITS HAVE NO LEGS TO STAND SINCE THE FOUNDATION O F SEC.153C PROCEEDINGS ITSELF STANDS DECLARED NOT SUBSTANTIATE IN THE EYES OF LAW. WE THEREFORE ACCEPT THE ASSESSEES PRIMARY CONTENTION THAT THE CIT(A) O UGHT TO HAVE GRANTED FULL RELIEF TO THE TAXPAYER ON ALL ASPECTS ONCE HE ACCEP TED ITS LEGAL CHALLENGE TO CORRECTNESS OF SEC. 153C PROCEEDINGS. WE ORDER ACCO RDINGLY. THE IMPUGNED ADDITION OF UNEXPLAINED CASH CREDITS ADDITION OF 123,69,70,490/- IS DIRECTED TO BE DELETED AS A NECESSARY COROLLARY THEREFORE. 6. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT 29/ 01/2020 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP SR.P.S )- 29 / 01 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S RAMGARH SPONGE IRON PVT. LTGD., 8, 1 7 TH FLOOR, 33A, JAWARHARLAL NEHRU ROAD, CHA TTERJEE INTERNATIONAL, KOLKAA-700 071 2. /RESPONDENT-ACIT, CC-3(1), 4 TH FLOOR, ROOMNO.410, 110, SHANTI PALLI, AAYAKAR BHAWAN, POORVA, KOLKATA-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,