Balasore Alloys Ltd, Balasore V. ACIT Central Circle, Cuttack

ITSSA 73/CTK/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6291 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 19-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 06-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Opportunity of being heard; Block assessment; Set aside
• Section: 132

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER आयकर अऩीऱ (तऱाशियाां और अशिग्रहण)सं/IT(SS)A Nos.72 to 74/C TK/2023 (ननधाारण वषा / A.Ys : 2 015-2016 & 2017-2 018 & 2018-2019) Balasore Alloys Ltd., Balgopalpur, Balasore-756020 Vs ACIT, Central Circle, Cuttack PAN No. :AAACI 3967 P TAN No. :BBNB 00256 E AND रोक आवेदन सं/Stay Petition Nos.09 & 10/CTK/2023 ( Ar i s i n g o u t o f I T ( S S ) A N o s .7 2 & 7 4 / C T K / 2 0 2 3 ) (ननधाारण वषा / A.Ys : 2 015-2016 & 2018-2 019) Balasore Alloys Ltd., Balgopalpur, Balasore-756020 Vs ACIT, Central Circle, Cuttack PAN No. :AAACI 3967 P TAN No. :BBNB 00256 E (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Ms. Soumya Singh, Advocate राजस्व की ओर से /Revenue by : Dr. Abani Kanta Nayak, CIT-DR स ु नवाई की तारीख / Date of Hearing : 20/10/2023 घोषणा की तारीख/Date of Pronouncement : 20/10/2023 आदेश / O R D E R Per Bench : The assessee has filed appeals against the separate orders of the ld.CIT(A)-2, Bhubaneswar, all dated 31.03.2023 for the assessment years 2015-2016, 2017-2018 & 2018-2019, respectively. The assessee has also filed stay petitions being SP No.09&10/CTK/2023 against the demand raised for the assessment years 2015-2016 & 2018-2019. IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 2 IT(SS)A No.72/CTK/2023 (AY: 2015-2016): 2. In this appeal, ld. AR submitted that the assessee is a public limited company, engaged in the business of raising of chrome ore from its captive mines located in Odisha and manufacturing and selling of Ferro Alloys of various grades. It was the submission that there was a search and seizure operation on the assessee and its group on 06.02.2019. For the year under consideration i.e. A.Y.2015-2016, it was submitted by the ld. AR that notice u/s.148 of the Act had been issued on the assessee before the date of search. However, as the search and seizure operation has been conducted on the assessee, the proceedings so initiated got abated and notice u/s.153A of the Act was issued on the assessee. It was the submission that the assessee had filed its return of income in response to notice u/s.153A of the Act disclosing an income of Rs.11,12,08,646/- as against the total income of Rs.66,36,93,480/- disclosed in the original return filed u/s.139 of the Act. It was the submission that in the return filed u/s.153A of the Act, the assessee had thereby reduced the total income disclosed by an amount of Rs.55,24,84,830/-. It was the submission that as there was reduction in the total income disclosed by the assessee in the return in response to the notice issued u/s.153A of the Act as against the income disclosed in the regular return of income u/s.139 of the Act, the AO had made addition of Rs.55,24,84,830/-. Besides that, further additions had been made on account of understatement of income, unexplained expenditure u/s.69C of the Act. It was submitted that on appeal before the ld. CIT(A), the ld. IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 3 CIT(A) had not given opportunity of being heard personally. The ld. AR drew our attention to various paragraphs of the order of the ld.CIT(A) to submit that though written submissions had been submitted by the assessee and remand report had also been called from the AO and on such remand report the assessee had also given reply to such remand report, no opportunity of personal hearing had been granted to the assessee and, thus, there was a violation of Section 250(2) of the Act. It was further submitted that the ld. CIT(A) further went on to take a view that in search assessment the assessee could not reduced its income below what has been disclosed by the assessee in regular return insofar as the search proceedings are for the benefit of the revenue and the assessee cannot be granted any benefit in regard to a search assessment insofar as reduction from the income returned u/s.139 of the Act could not be done. It was further submitted that the assessee had produced substantial evidence before the ld.CIT(A) and the same have also not been considered while adjudicating the appeal of the assessee. It was the prayer that the issues in this appeal must be restored to the file of ld.CIT(A) to readjudicate the appeal. 3. Ld. AR further placed reliance on the decision of Hon’ble Bombay High Court in the case of M/s JSW Steel Ltd., passed in Income Tax Appeal No.1934 of 2017, dated 05.02.2020 to submit that once an assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) of the Act, which was not claimed IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 4 in his regular return of income, because assessment was never made/finalized in the case of the assessee in such a situation. 4. In reply, ld. CIT-DR vehemently supported the order of the AO and ld. CIT(A). It was the submission that the substantial opportunities have been given to the assessee to represent its appeal. It was the submission that in view of the decision of the Hon’ble Supreme Court in the case of Sun Engineering Works (P) Ltd., reported in 198 ITR 297 (SC), the assessee could not make fresh claim u/s.153A of the Act. It was the further submission that the assessee has not produced any details before the AO or the ld. CIT(A) to substantiate its claim. It was the prayer that the order of the ld. CIT(A) is liable to be upheld. 5. We have considered the rival submissions. A perusal of the facts of the present case show that the assessee has filed its written submission before the ld. CIT(A) and the ld. CIT(A) was also called for the remand report on the submissions of the assessee on 28.09.2022 and the remand report was submitted by the AO on 06.01.2023. In the course of remand proceedings, the assessee has filed submissions before the AO on 11.11.2022 and in response to the remand report the assessee has filed rejoinder before the ld. CIT(A) on 16.02.2023. The assessee in the remand proceedings before the AO has also submitted letters before the AO on 09.11.2022. Again another remand report has been submitted by the AO on 15.01.2023 and in response to that remand report the assessee has filed its reply on 16.02.2023. Again the assessee has filed submissions on 10.03.2023. Ld. CIT(A) passed the order on 31.03.2023. IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 5 6. A perusal of the provision of Section 250(2) of the Act shows that the assessee either in person or by an authorized representative has the right to be heard at the hearing of the appeal. The notice of hearing was issued u/s.250(1) of the Act. The ld. CIT(A) u/s.250(4) of the Act may make such further enquiries as he thinks fit or may direct the AO to make further enquiries and report the result of the same to the CIT. The fact that the assessee has been issued a notice u/s.250(1) of the Act is not disputed. The assessee has chosen to file written submissions before the ld. CIT(A). The ld.CIT(A) has called for remand reports in respect of various written submissions made by the assessee, the ld. CIT(A) has put the remand report so obtained for the rebuttal of the assessee. The assessee has responded to the remand report and filed their replies. Whether the assessee chooses to represent their case in person or by an authorized representative or by filing the written submissions is the opportunity granted to the assessee. What is to be now seen is as to whether the assessee has cooperated in the proceedings. A perusal of the assessment order clearly shows that in the assessment proceedings show cause notice have been issued on multiple occasions and the assessee has chosen to respond to the same at its own convenience without providing all the details. A perusal of the para 6.5 of the assessment order, the AO specified the details called for from the assessee. The assessee was asked to produce the details in para 6.6 at the specified date and time. The assessee did not comply and it is mentioned in para 6.7 another opportunity was given by a show cause IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 6 notice dated 23.0.3.2021. In para 6.8 the AO has mentioned that no compliance was made by the assessee. Then in para 6.10, the assessee has filed a written submission on 05.04.2021, wherein he mentions that all the details would be produced on 06.04.2021 but again there was no compliance. Left with no other alternative, the AO has made the assessment making the additions as proposed in the show cause notice. The assessee has not given any reason for the non-compliance of the notice and the show cause notice issued by the AO but the assessee has been very vociferous in its claim that it has not been given a personal opportunity of being heard. This clearly shows the lackadaisical attitude of the assessee. The assessee having not produced any evidence before the AO, could not have produce any evidence before the ld. CIT(A) and the ld. CIT(A) would not have been able to admit the evidences without justifiable cause being shown, in view of the provision of Rule 46A of I.T.Rules, 1962. The assessee having not produced any evidence before the AO or the ld. CIT(A), admittedly, cannot produce any evidence before the Tribunal also which have not been produced before the lower authorities. 7. Under normal circumstances, this is an appeal which ought to be dismissed on account of latches on the side of the assessee to substantiate its claim but considering the fact that justice must be done and must be seen to be done, in the interest of justice, we are of the view that the issue must be restored to the file of AO, so that the assessee IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 7 could get another opportunity to correct its mistakes and cooperate in the assessment proceedings and we do so. 8. In these circumstances, in the interest of justice, the issues in this appeal are restored to the file of ld. AO for readjudication after granting the assessee adequate opportunity of being heard. Should the assessee not cooperate in the assessment proceedings, liberty is granted to the AO to draw adverse inference. The assessee shall produce all such evidences as called for by the AO in the set aside proceedings. It is also hereby directed that in view of the decision of the Hon’ble Bombay High Court in the case of M/s JSW Steel Ltd., referred to supra, the AO should consider the new claims of the assessee in the proceedings u/s.153A of the Act, which has not been claimed in the regular return of income. The AO is at liberty to call for all such evidences that are required for justifying the new claims alleged by the assessee. 9. Thus, appeal of the assessee in IT(SS)A No.72/CTK/2023 for A.Y.2015-2016 is partly allowed for statistical purposes. IT(SS)A No.73&74/CTK/2023 (AY : 2017-2018 & 2018-2019) 10. In regard to the above appeals, it was submitted by the ld. AR that for the assessment year 2017-2018, the return of income of the assessee has been filed on 29.03.2018 and revised return on 29.03.2018 itself. Another return was filed declaring the same total income of Rs.62,84,20,870/- but showing the tax payable at Nil. It was the submission that no notice u/s.143(2) of the Act had been issued to the assessee. No proceedings were pending as on the date of search on IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 8 06.02.2019. It was the submission that after the search notice u/s.153A of the Act was issued to the assessee and in response to that notice return came to be filed disclosing total income at Rs.140,02,31,460/-. In the return in response to notice u/s.153A of the Act, the assessee has also shown new claims. It was the submission that a perusal of the assessment order clearly showed that there was no incriminating material used in the assessment much less having been found in the course of search. It was the submission that the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd., reported in [2023] 149 taxmann.com 399(SC)/[2023] 454 ITR 212(SC) squarely applies to the assessee’s case. 11. For the assessment year 2018-2019, it was submitted by the ld. AR that no return of income had been admittedly filed by the assessee and in response to notice issued u/s.153A of the Act, the return was filed disclosing an income of Rs.86,13,63,890/-. It was the submission that for the assessment year 2018-2019, also no incriminating material was found much less used in the course of assessment when passing the order u/s.153A of the Act. It was the submission that in regard to the assessment year 2018-2019, the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) would also squarely applies. 12. In reply, ld.CIT-DR vehemently supported the order of the AO and CIT(A). It was submitted that there was absolutely non-cooperation from the side of the assessee in the course of assessment and no evidence had been produced before the AO or the CIT(A). IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 9 13. We have considered the rival submissions. A perusal of the facts of the present case clearly show that in the assessment order passed u/s.153A of the Act, in both the assessment orders for A.Y.2017-2018 & 2018-2019, admittedly, no incriminating material has been referred to, which has been found in the course of search on the assessee for the two impugned assessment years. Thus, clearly as rightly pointed out by the ld.AR the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) would squarely apply to the facts of the assessee’s case. The Hon’ble Supreme Court in para 14 in the above case has categorically held as follows :- 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) 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 IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 10 Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 14. In these circumstances, respectfully following the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd., referred to supra, as no incriminating material has been unearthed during the course of search for the relevant assessment years, no addition can be made by the AO in the assessment. Consequently, the assessment orders passed for the impugned two assessment years i.e. A.Y.2017- 2018 & 2018-2019 stand quashed. 15. However, in view of the direction given by the Hon’ble Supreme Court in para 14(iv) in the above case, on identical directions, liberty is granted to the AO to exercise 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. 16. Thus, the appeals of the assessee in IT(SS)A Nos.73&74/CTK/2023 are allowed. 17. In regard to the stay petitions filed by the assessee in SP Nos.09&10/CTK/2023 arising out of the IT(SS)A Nos.73&74/CTK/2023 for A.Y.2015-2016 & 2018-2019, as we have already disposed off both the appeals of the assessee for the relevant assessment years, the stay petitions filed by the assessee becomes infructuous and the same stand dismissed. IT(SS)A Nos.72-74/CTK/2023 & SP Nos.09&10/CTK/2023 11 18. In the result, appeals of the assessee in IT(SS)A No.72/CTK/2023 is partly allowed for statistical purposes and IT(SS)A Nos.73&74/CTK/2023 are allowed. Both the stay petitions filed by the assessee are dismissed. Order dictated and pronounced in the open court on 20/10/2023. Sd/- (GIRISH AGRAWAL) Sd/- (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 20/10/2023 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Balasore Alloys Ltd., Balgopalpur, Balasore-756020 2. प्रत्यथी / The Respondent- ACIT, Central Circle, Cuttack 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. वविागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ड पाईऱ / Guard file. सत्यावऩत प्रतत //True Copy//