Sri Ashoke Surana, Kolkata V. DCIT, Cen. Cir-XVIII, Kolkata, Kolkata

ITSSA 76/KOL/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2594 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-10-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURANA SHRI R
• Assessee Lawyers: EPASS KOLKATA
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER IT(SS)A NO.76-78/KOL/2014 ASSESSMENT YEARS:2004-05, 2006-07 & 2007-08 SRI ASHOKE SURANA 126A, SARAT BOSE ROAD, LANSDOWNE, KOLKATA-700 029 [ PAN NO.AKOPS 6722 K ] / V/S . DCIT, CENTRAL CIRCLE- XVIII, SHANTI PALLY, 110, E.M.BYE PASS, KOLKATA-700 107 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.M.SURANA, ADVOCATE /BY REVENUE SHRI R.S.BISWAS, CIT-DR /DATE OF HEARING 06-10-2016 /DATE OF PRONOUNCEMENT 26-10-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THE ASSESSEE HAS FILED THREE APPEALS DISPUTING THE ORDER OF COMMISSIONER OF INCOME TAX CENTRAL-II KOLKATA PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 27.03. 2014 BY WHICH THE LD. CIT HAS SET ASIDE THE ASSESSMENT ORDERS OF EVEN DATED I.E. 30.1 2.2011 PASSED U/S 153C/143(3) OF THE ACT FOR ASSESSMENT YEARS 2004-05, 2006-07 & 200 7-08 WITH A DIRECTION TO REDO THE ASSESSMENT IN RESPECT OF THE ISSUE MENTIONED THEREI N. SHRI S.M. SURANA, LD. ADVOCATE APPEARED ON BEHALF O F ASSESSEE AND SHRI R.S. BISWAS LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. IT(SS)A NO.76-78/KOL/2014 A.YS 04 -05, 06-07 & 07-08 SH ASHOKE SURANA VS. DCIT, CC-XVIII, K OL. PAGE 2 2. ALL THESE APPEALS ARE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. EXCEPT FI GURE ALL THE GROUNDS OF APPEAL ARE COMMON, THEREFORE WE ARE TAKING THE FACTS OF THE CA SE FOR THE AY 2004-05 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE AND TO PASS A CONS OLIDATED ORDER FOR ALL THE APPEALS. 3. THE ONLY INTER-CONNECTED ISSUE RAISED BY ASSESSE E IN THIS APPEAL IS THAT LD. CIT ERRED IN HOLDING THE ORDER OF ASSESSING OFFICER PAS SED U/S. 153C/143(3) OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 4. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPE RATIONS WAS CONDUCTED AT THE OFFICE AND RESIDENTIAL PREMISES OF SHRI AJIT KUMAR & OTHERS ON 23.02.2010. THE DOCUMENTS PERTAINING TO THE PRESENT ASSESSEE WERE A LSO FOUND AT THE TIME OF SEARCH. ACCORDINGLY, THE ASSESSMENT WAS FRAMED U/S. 153C/14 3(3) OF THE ACT AT A TOTAL INCOME OF 43,18,840/- AFTER MAKING CERTAIN ADDITIONS / DISALL OWANCES. SUBSEQUENT TO THE COMPLETION OF ASSESSMENT, THE CIT ISSUED NOTICE UND ER SECTION 263 OF THE ACT, PROPOSING TO REVISE THE ASSESSMENT ORDER PASSED UND ER SECTION 143(3) OF THE ACT ON ACCOUNT OF FOLLOWING POINTS:- 1) THE AO ARBITRARILY DISALLOWED 1% DIVIDEND INCOM E U/S. 14A OF THE ACT. THE AO SHOULD HAVE MADE THE DISALLOWANCE ON PROPORT IONATE BASIS I.E., AMOUNT OF DIVIDEND INCOME + AMOUNT OF LONG TERM CAP ITAL GAINS INTO TOTAL EXPENSE DIVIDED BY TOTAL INCOME. 2) THE PROVE OF DONATIONS / SUBSCRIPTIONS PAID DUR ING THE YEAR FOR 2,73,613/- WERE NOT PLACED ON RECORD. THE ASSESSMEN T ORDER ALSO DOES NOT SPEAK ABOUT THE ISSUE. ACCORDINGLY THE EXCESSIV E CLAIM HAS BEEN ALLOWED WHICH RESULTED UNDER STATEMENT OF INCOME. 3) THE EXCESSIVE DEPRECIATION HAS BEEN CLAIMED BY ASSESSEE OF 54,177/- WHICH RESULTED UNDER STATEMENT OF INCOME. IT(SS)A NO.76-78/KOL/2014 A.YS 04 -05, 06-07 & 07-08 SH ASHOKE SURANA VS. DCIT, CC-XVIII, K OL. PAGE 3 IN VIEW OF ABOVE, THE ORDER OF AO WAS HELD AS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS WELL AND ACCORDINGLY, LD. CIT DIRECTE D THE AO TO EXAMINE THE AFORESAID FACT AFRESH AS PER LAW AFTER GIVING PROPER OPPORTUN ITY OF BEING HEARD TO ASSESSEE. AGGRIEVED, BY THIS ORDER OF LD. CIT ASSESSEE CAME I N APPEAL BEFORE US. 5. BEFORE US LD. LEARNED COUNSEL FOR THE ASSESSEE A SSAILED THE ORDER UNDER S. 263 ON VARIOUS GROUNDS AND SUPPORTED ALL THE GROUNDS OF APPEAL, WHICH HAVE BEEN REPRODUCED ABOVE. HIS FIRST CONTENTION WAS THAT THE ORDER PASSED U/S 263 OF THE ACT WAS ITSELF AN INVALID ORDER BECAUSE OF NO JURISDICT ION TO PASS ORDER UNDER SECTION 263 OF THE ACT ON THE BASIS OF MATERIAL BEFORE HIM. IN THIS REGARD, IT WAS SUBMITTED BY HIM THAT THERE WAS NO INCRIMINATING MATERIAL FOUND AT T HE TIME OF SEARCH. THE LAST CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT EVEN ASSUMING THE ORDER PASSED UNDER SECTION 263 OF THE ACT TO BE A V ALID ORDER BUT STILL ON MERIT THE ORDER OF THE AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE LEARNED CIT (DEPARTMENTAL REPRESENTATIVE), ON T HE OTHER HAND, STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT UNDER S. 263. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT AO HAS GIVEN VE RY CLEAR FINDING THAT NO INCRIMINATING MATERIALS WERE FOUND PERTAINING TO TH E YEARS UNDER CONSIDERATION. THE OBSERVATION OF AO IS REPRODUCED BELOW:- IN RESPONSE, SRI B.L. GANG, CA & A/R OF THE ASSESS EE, APPEARED FROM TIME TO TIME, FILED / PRODUCED REQUIRED DETAILS, EXPLAINED THE ISSUE AND THE CASE WAS HEARD AND DISCUSSED. SO FAR AS THE VARIOUS FIGURES OF SEIZED DOCUMENTS AKS/OFF/15 & AKS/OFF/17 ARE CONCERNED, AS MENTIONED IN PARA-2 OF THIS ORDER (BEING THE REASON FOR SELECTION OF THIS CASE FOR SC RUTINY U/S 153C), THEY HAVE BEEN CHECKED AND FOUND TO BE PART OF REGULAR BOOKS OF THE ASSESSEE, EXCEPT FOR PAGES 1 TO 12 OF AKS/OFF/17, ON THE BASIS OF WHICH ADDITION OF AN AMOUNT OF RS.30,000/- HAS BEEN MADE IN THE ASSESSMENT FOR A.Y 2009-10. IT(SS)A NO.76-78/KOL/2014 A.YS 04 -05, 06-07 & 07-08 SH ASHOKE SURANA VS. DCIT, CC-XVIII, K OL. PAGE 4 AS THERE WAS NO INCRIMINATING MATERIALS PERTAINING TO THE ASSESSEE FOUND AT THE TIME OF SEARCH OPERATION CONDUCTED AT AJIT KR SURANA AND OT HERS ON 23.02.2010. THEREFORE, WE DO NOT FIND ANY DEFECT IN ASSESSMENT ORDER PASSED B Y AO AND IN OUR CONSIDERED VIEW ASSESSMENT PROCEEDINGS U/S 153C/143(3) IN ITSELF IS NOT SUSTAINABLE AS THERE WAS NO INCREMENTING MATERIALS FOUND AT THE TIME OF SEARCH OPERATION. IN THIS CONNECTION, WE RELY IN THE CASE OF CIT VS. VEERPRAABHU MARKETING LTD. IN ITA NO. 661/2008 DATED 04-08-2016, WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER:- WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY TH E KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFO RE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A . IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PRO VISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWAN CES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED T RIBUNAL DELETED THOSE DISALLOWANCES. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LE ARNED TRIBUNAL. THE APPEAL IS, THEREFORE, DISMISSED. THE OTHER ISSUE ALSO ARISES FOR OUR CONSIDERATION A S TO WHETHER THE ASSESSEE CAN CHALLENGE THE ASSESSMENT PROCEEDING OF SEC. 153C OF THE ACT BEFORE THE LD. CIT U/S. 263 OF THE ACT. IN THIS CONNECTION WE FIND THAT THE AO HAS NOT MADE ANY ADDITION IN THE PROCEEDINGS UNDER SECTION 153A OF THE ACT ON TH E GROUND OF NOT HAVING FOUND ANY INCRIMINATING MATERIAL AT THE TIME OF SEARCH PERTAI NING TO THE ASSESSEE. WE CONCUR WITH THE ARGUMENT OF THE LD. AR. IN OUR CONSIDERED VIEW FOR HOLDING THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E, THERE SHOULD BE SUFFICIENT MATERIAL BEFORE THE LD. CIT UNDER SECTION 263 OF TH E ACT SUGGESTING THE DEFECTS IN THE ORDER OF AO. IN THE INSTANT CASE THE LD. AO HAS GIV EN CLEAR FINDING THAT THERE IS NO INCRIMINATING MATERIAL WHICH SHOWS THAT THE AO HAS APPLIED HIS MIND IN THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. FOR HOLD ING SO WE ALSO RELY IN THE ORDER OF HONBLE TRIBUNAL OF LUCKNOW BENCH IN THE CASE OF IN DER KUMAR BACHANI VS. ITO 101 TTJ 450 WHERE IT WAS HELD AS UNDER : IT(SS)A NO.76-78/KOL/2014 A.YS 04 -05, 06-07 & 07-08 SH ASHOKE SURANA VS. DCIT, CC-XVIII, K OL. PAGE 5 8.6 IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPI NION THAT ACTION TAKEN UNDER S. 148/147 WAS WHOLLY ILLEGAL BECAUSE THERE W AS NO BASIS FOR REOPENING OF ASSESSMENT AS HAS BEEN DONE IN THIS CASE. THE OR DER WAS, THEREFORE, WITHOUT ANY JURISDICTION AND THUS VOID. 8.7 SINCE THE ASSESSMENT ORDER PASSED UNDER S. 147/143 (3) WAS ITSELF ILLEGAL AND VOID, LEARNED CIT WAS HAVING NO JUSTIFICATION T O INVOKE JURISDICTION UNDER S. 263 AGAINST SUCH VOID OR NON EST ORDER. IN THE C ASE OF PAUL JOHN, DELICIOUS CASHEW CO. (SUPRA), THE COCHIN BENCH OF THE TRIBUNA L HAD CONSIDERED THE SIMILAR MATTER AND HAS OBSERVED AS UNDER : '9. SEC. 263 EMPOWERS THE CIT TO CALL FOR THE RECOR DS AND EXAMINE OF ANY PERSON AND ON EXAMINING IF HE FORMS AN OPINION THAT THE ORDER PASSED BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDERS THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, E NHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTI NG A FRESH ASSESSMENT. FROM THE ABOVE IT IS VERY CLEAR THAT FIRST OF ALL T HE ORDER PASSED BY THE AO SHOULD BE ERRONEOUS AND ALSO IT SHOULD BE PREJUDICI AL TO THE INTEREST OF REVENUE. IF THE ORDER IS NOT ERRONEOUS, EVEN IF IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, THE CIT HAS NO REVISIONARY POWER. IF THE A O HAS NO JURISDICTION TO PASS AN ORDER, IT IS NOT AN ORDER AT ALL. IT IS NUL L AND VOID. IN THE INSTANT CASE IT IS VERY CLEAR THAT ON THE BASIS OF THE POLICY DECIS ION TAKEN BY THE BOARD, THE AOS POWER IS TAKEN AWAY TO REOPEN THE ASSESSMENT U NDER S. 147. IF THE AO HAS NO POWER, THE CIT ALSO HAS NO POWER.' 8.8 THUS, OUR VIEW FINDS FULLY FORTIFIED BY THE DECISI ON OF COCHIN BENCH REFERRED TO ABOVE. WE HOLD THAT AS THE ORDER OF THE AO PASSE D UNDER S. 147/143(3) WAS ITSELF VOID, THE ORDER OF CIT PASSED UNDER S. 263 F OR QUASHING THIS ORDER WAS WITHOUT JURISDICTION. HENCE, THE SAME IS LIABLE TO BE QUASHED. WE, THEREFORE, QUASH THE ORDER OF THE LEARNED CIT PASSED UNDER S. 263. 8.9 IN VIEW OF THE ABOVE, WE QUASH THE IMPUGNED ORDER OF LEARNED CIT PASSED UNDER S. 263. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE CO NCLUDE THAT THE IMPUGNED ORDER PASSED BY LD. CIT U/S 263 IS NOT SUSTAINABLE IN LAW . ACCORDINGLY, WE QUASH THE SAME. AO IS DIRECTED ACCORDINGLY. HENCE, THIS GROUND OF A SSESSEES APPEAL IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. IT(SS)A NO.76-78/KOL/2014 A.YS 04 -05, 06-07 & 07-08 SH ASHOKE SURANA VS. DCIT, CC-XVIII, K OL. PAGE 6 COMING TO IT(SS)A NO.77-78/KOL/2014 FOR A.Y.06-07 & 07-08 . 8. THE FACTS AND ISSUE ARE SAME AS IN IT(SS)A NO.76 /KOL/2014 FOR A.Y. 2004-05 OF ASSESSEES APPEAL FOLLOWING OUR DECISION ON THIS ISSUE AS EMBODIED IN PARA-5 & 6 OF THIS ORDER, THE APPEALS OF ASSESSEE ARE ALLOWED. WE HOLD ACCORDINGLY. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. 10. IN COMBINED RESULT, ALL THE THREE APPEALS OF ASSESS EE STAND ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26/10/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S '#$ - 26/10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SRI ASHOKE SURANA 126A, SARAT BOSE ROAD, LANSDOWNE, KOL-29 2. /REVENUE-DCIT, CC-XVIII, SHANTI PALLY, 110, EM BYE PASS, KOL-107 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORDER/ , /TRUE COPY/ / # %&,