A.C.I.T.CC-1(2), Kolkata V. M/s Inland World Logistics Pvt. Ltd., Kolkata

ITSSA 80/KOL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5931 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN KISHORE
• Assessee Lawyers: RAKESH JAIN
• Keywords: Assessment record
• Section: 143(3); 153A; 250; 191; 73; 13; 147; 148; 68

Judgement Text

1 IT(SS)A NO. 80/KOL/2019 M/S. INLAND WORLD LOGISTICS PVT. LTD., AY 2011-12 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, HONBLE JUDICIAL MEMBE R AND DR. M. L. MEENA, HONBLE ACCOUNTANT MEMBER] I.T.(SS)A. NO. 80/KOL/2019 ASSESSMENT YEAR: 2011-12 ACIT, CENTRAL CIRCLE 1(2), KOLKATA VS . M/S. INLAND WORLD LOGISTICS PVT. LTD. [PAN: AAACI 5607 C] APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 03.08.2021 DATE OF PRONOUNCEMENT 15.09.2021 FOR THE APPELLANT SHRI PRAVEEN KISHORE, CIT FOR THE RESPONDENT SHRI RAKESH JAIN, AR ORDER PER A.T. VARKEY, JM: THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-20, KOLKATA DATED 09.08.2019 FOR AY 2011-12. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS UNDER: 1. THE LD. CIT(A)-20, KOLKATA ERRED BY NOT CONSIDER ING THE FACT THAT THE ADDITION OF RS. 24,10,00,000/- U/S 68 OF THE INCOME TAX ACT, 1961 W AS DELETED BY LD. CIT(A)-20, KOLKATA IN EARLIER OCCASION WAS NOT BASED ON FACT RATHER APPLI CATION OF RATIOS LAID DOWN IN THE CASE OF CIT, KOL-III VS. VEERPRABHU MARKETING (HC CAL) AND CIT VS. KABUL CHAWLA (HC DELHI) AS UPHELD BY HONBLE ITAT IN ABSENCE OF LINK TO THE IN CRIMINATING MATERIAL FOR SAID ADDIITON FOR BOGUS SHARE PREMIUM. 2. THE LD. CIT(A)-20, KOLKATA ERRED BY NOT CONSIDER ING THE FACT THAT THE ADDITION IN THE INSTANT CASE WAS MADE BASED ON A SEPARATE INFORMATI ON LEADING TO SEPARATE PROCEEDINGS THAN THE PROCEEDINGS THAT WAS ADJUDICATED BY HONBL E ITAT KOLKATA EARLIER AS REFERRED IN THE ORDER. 3. THE LD. CIT(A)-20, KOLKATA ERRED BY RELYING ON T HE JUDGMENTS OF CHIKA OVERSEAS (P) LTD. VS. ITO, METRO AUTO CORPORATION VS. ITO (2006) 206 CTR 581 (BOM), ADOR TECHNOPACK LTD. VS. DR. ZAKIR HUSSEIN, DY. CIT (2004) 191 CTR 500 ( BOM) IN DELETING THE ADDITION. 2 IT(SS)A NO. 80/KOL/2019 M/S. INLAND WORLD LOGISTICS PVT. LTD., AY 2011-12 4.THE APPELLANT CRAVE LEAVES TO ADD OR AMEND ANY ON E OR MORE OF THE GROUNDS OF APPEALS, AS STATED ABOVE, AS AND WHEN NEED TO DOING SO ARISES W ITH PRIOR PERMISSION OF THE COURT. 3. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN ALLOWING THE APPEAL OF THE ASSESSEE AGAINST THE ACTION OF AO IN REOPENING THE ASSESSMENT BY ISSUANCE OF NOTICE DATED 31.03.2018 U/S 148 OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ALLEGING ESCAPEMENT OF INCOME TO THE TUNE OF R S. 24,10,00,000/- WHEN THE VERY SAME ISSUE LIS WAS ASSAILED BY THE REVENUE BY FILING AN APPEAL A ND PENDING BEFORE THE TRIBUNAL WHICH WAS IN TURN EMANATING FROM SEARCH PROCEEDINGS WHICH CULMINATED IN AO MAKING AN ADDITION U/S 153A OF THE ACT OF RS. 24.10 CRORES WH ICH WAS DELETED BY THE LD. CIT(A) ON THE BASIS THAT SINCE AY 2011-12 WAS NOT PENDING ON THE DATE OF SEARCH, NO ADDITION WAS POSSIBLE U/S 68 OF THE ACT WITHOUT INCRIMINATING MATERIAL AN D THEREBY GIVING RELIEF TO THE ASSESSEE. 4. FACTS AS NOTED BY THE AO IS THAT THE ASSESSEE HA D FILED THE RETURN OF INCOME (ORIGINAL) DECLARING TOTAL INCOME OF RS. 9,79,92,809/- WHICH W AS FILED ON 29.09.2011. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY U/S 143(3) OF THE AC T AND LATER ASSESSED AT TOTAL INCOME OF RS. 12,33,53,383/-. THEREAFTER THE AO NOTES THAT PURSUA NT TO SEARCH CONDUCTED U/S 153A OF THE ACT THE ASSESSEE FILED RETURN ON 06.07.2016 DISCLOS ING AN INCOME OF RS. 10,39,56,623/-. THEREAFTER THE AO NOTES THAT THE REASSESSMENT ORDER WAS PASSED U/S 153A/143(3) OF THE ACT DATED 31.12.2016 COMPUTING TOTAL INCOME AT RS. 56,0 2,71,070/-. ON APPEAL THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE VIDE ORDER DATED 27. 04.2017. THEREAFTER THE AO NOTES THAT CONSEQUENT TO THE APPELLATE ORDER PASSED BY THE LD. CIT(A) U/S 250 OF THE ACT, THE INCOME WAS REVISED TO RS. 10,41,06,623/-. AND SIMULTANEOU SLY THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) GIVING RELIEF TO THE ASSESSEE DATED 27.0 4.2017 BEFORE THE TRIBUNAL ON 16.06.2017 [ REFER PAGE 74 TO 77 OF PB ] AND IT WAS BROUGHT TO OUR NOTICE THAT THIS APPEAL WAS DISMISSED BY THE TRIBUNAL BY ORDER DATED 15.02.2019 ( PAGE 155 TO 161 OF PB )]. WHEN THE APPEAL FILED BY REVENUE/AO AGAINST THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE VIDE ORDER DATED 27.04.2017 WAS PENDING BEFORE THE TRIBUNAL, THE AO ISSUED NOTICE U/S 148 OF THE ACT ON 31.03.2018 [ LATER TRIBUNAL DISMISSED THE REVENUES APPEAL ON 15 .02.2019 ]. THEREFORE IT IS CRYSTAL CLEAR THAT WHEN THE REASSESSMENT OF THE ASS ESSEE PURSUANT TO SEARCH FOR AY 2011-12 WAS PENDING BEFORE THE TRIBUNAL, THE AO HAD ISSUED NOTICE U/S. 148 OF THE ACT CONVEYING TO THE ASSESSEE, HIS DESIRE TO REOPEN THE ASSESSMENT, WHICH ACTION THE AO OUGHT NOT TO HAVE 3 IT(SS)A NO. 80/KOL/2019 M/S. INLAND WORLD LOGISTICS PVT. LTD., AY 2011-12 MADE SINCE THE ISSUE IN RESPECT OF THE SHARE TRANSA CTION OF RS. 24.10 CRORES WAS SUB- JUDICE/LIS-PENDENS BEFORE THIS TRIBUNAL. THEREFORE, AT THE SAME TIME THE AO OUGHT NOT TO HAVE ISSUED NOTICE U/S 148 OF THE ACT IN RESPECT OF VERY SAME ISSUE PERTAINING TO THE SHARE TRANSACTION OF RS. 24.10 CRORES U/S 147 OF THE ACT WHICH EMPOWERS THE AO TO REOPEN THE ASSESSMENT CLEARLY PROHIBITS THE AO FROM REASSESSIN G SUCH INCOME WHICH ARE SUBJECT MATTER OF AN APPEAL AS PROVIDED UNDER THE 3 RD PROVISO WHICH READS AS UNDER: SECTION 147 OF THE ACT: INCOME ESCAPING ASSESSMENT PROVIDED ALSO THAT THE AO MAY ASSESS OR REASSESS SU CH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT.[EMPHASIS SUPPLIED BY US] SO THEREFORE ACCORDING TO THE ASSESSEE THE AO OUGHT NOT TO HAVE ISSUED NOTICE U/S 148 OF THE ACT WHILE THE SUBJECT MATTER ( SHARE TRANSACTION OF RS. 24.10 CRORES ) WAS PENDING FOR ADJUDICATION BEFORE THE TRIBUNAL [ APPEAL PENDING IN THE TRIBUNAL FROM 6.6.2017 TILL I T WAS DISPOSED OFF ON 15.02.2019] AND, THEREFORE, ERRONEOUSLY ASSUMED INVOKED JURISD ICTION TO REOPEN THE ASSESSMENT ON 31.03.2018. EVEN THOUGH THE ASSESSEE OBJECTED TO THE REOPENING, THE A.O DID NOT ACCEPT THE ASSESSEES CONTENTION AN D MADE AN ADDITION OF RS. 24.10 CRORES. ON APPEAL THE LD. CIT(A) UPHELD THE CONTENTION OF T HE ASSESSEE AND DIRECTED THE DELETION OF THE ADDITION BY HOLDING AS UNDER: I HAVE GONE THROUGH THE ELABORATE WRITTEN AND ORAL SUBMISSIONS, VOLUMINOUS PAPER BOOK AS WELL AS PAPER BOOK OF CASE LAWS SUBMITTED BY THE A.R DURIN G THE COURSE OF HEARING. IT IS SEEN FROM THE ASSESSMENT RECORDS THAT THE ORIGINAL ASSESSMENT WA S COMPLETED U/S 143(3) DATED 19.04.2013 AND THAT A SEARCH HAD TAKEN PLACE ON THE APPELLANT AS P ER COPY OF PANCHANAMA DATED 17.03.2015 AND APART FROM OTHER ADDITIONS U/S 153A/143(3), ADDITIO NS WERE MADE ALSO FOR SHARE CAPITAL/SHARE PREMIUM OF RS. 24.10 CRORES. (A) ON LOOKING INTO THE GROUNDS OF APPEAL TAKEN BY THE APPELLANT AGAINST THE ORDER U/S 153A/143(3) AT PAPER BOOK PG. NO. 74-77 IT IS SEEN THAT THE GROUNDS OF APEAL COVERS THE ADDITIONS MADE BY THE LD. A.O IN HIS REOPENING ASSE SSMENT ORDER FOR SHARE CAPITAL AND SHARE PREMIUM OF RS. 24.10 CRORES AT GROUND NO. 13 & 14 W HICH IS ANNEXED THE PAPER BOOK PAGE NO. 74-77. (B) I ALSO FIND THAT LD. CIT(A) HAS PASSED THE ORDER AL LOWING THE GROUNDS OF APPEAL AND SUCH APPEAL ORDER IS PLACED IN PAPER BOOK PAGE NO. 78-11 4. THEREFORE, IT IS CRYSTAL CLEAR THAT THEORY OF MERGER IS APPLICABLE, WHICH MEANS THAT TH E ORDER OF THE A.O IS FULLY MERGED WITH THE ORDER OF THE LD. CIT(A). (C) I ALSO FIND THAT THE APPEAL WAS FILED BY THE DEPART MENT AGAINST SUCH ORDER BEFORE HONBLE ITAT ON 16.06.2017 (PAPER BOOK PAGE NO. 74-77) AND NOTICE U/S 148 WAS ISSUED ON 4 IT(SS)A NO. 80/KOL/2019 M/S. INLAND WORLD LOGISTICS PVT. LTD., AY 2011-12 31.03.2018 (PAPER BOOK PG NO. 118). SO IT IS CRYSTA L CLEAR THAT DURING THE PENDENCY OF PAPEAL FILED BY THE DEPARTMENT BEFORE THE ITAT ON THE SAME ISSUE, THE A.O HAD ISSUED NOTICE U/S 148 ON THE SAME ISSUE. (D) I FIND FORCE IN THE SUBMISSION OF THE LD. A.R AND F ROM THE BODY OF THE ASSESSMENT ORDER AND FROM THE PAPER BOOK IT IS CLEAR THAT ORDER OF AO HA S MERGED WITH THE ORDER OF LD. CIT(A) AND THAT DURING THE PENDENCY OF APPEAL BEFORE THE ITAT ON THE SAME ISSUE WHEREIN THE APPEAL HAS BEEN FILED BY THE DEPARTMENT, THE DEPARTMENT HAS IS SUED NTOICE U/S 148 ON THE SAME ISSUE AND THE ADDITIONS HAVE BEEN MADE FOR SHARE CAPTIAL AND SHARE PREMIUM OF RS. 24.10 CRORES WHICH IS TOTALLY AGAINST THE SPIRIT OF LAW AS DECIDED IN CHIKA OVERSEAS (P) LTD. VS. ITO, METRO AUTO CORPORATION VS. ITO (2006) 206 CTR 581 (BOM), ADOR TECHNOPACK LTD. VS. DR. ZAKIR HUSSEIN, DY. CIT (2004) 191 CTR 500 (BOM). THEREFOR E, GROUND NO. 1 AND 3 RAISED BY THE ASSESSEE IS ALLOWED. SINCE THE ASSESSEE HAS GOT FUL L RELIEF AS A RESULT OF ADJUDICATION OF GROUND NO. 1 AND 3 THEREFORE THERE IS NO NEED TO AD JUDICATE GROUND NO. 2 AND 4. (E) SINCE THE APPEAL IS BEING ALLOWED ON TECHNICAL GROU ND, THE ADDITIONAL GROUND BECOMES INFRUCTUOUS AND IS NOT ADMITTED AND THEREFORE NOT A DJUDICATED UPON. 5. AGGRIEVED BY THE AFORESAID ACTION OF THE LD. CIT (A) THE REVENUE IS BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE FACTS NARRATED ABOVE ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE FACTS REG ARDING FILING OF RETURN/ORIGINAL ASSESSMENT ORDER U/S 143(3) / SEARCH ASSESSMENT U/S 153A MAKIN G AN ADDITION OF RS. 56.02 CRORES/ THE RELIEF GIVEN BY THE LD. CIT(A) BY ORDER DATED 27.04 .2017 DELETING, INTER ALIA , THE ADDITION REGARDING THE IMPUGNED AMOUNT OF RS. 24.10 CRORES O N THE GROUND THAT ASSESSMENT IN RESPECT OF AY 2011-12 WAS NOT PENDING ON THE DATE OF SEARCH , SO WITHOUT THE AID OF INCRIMINATING MATERIAL NO ADDITION WAS WARRANTED ON THE RATIO LAI D BY THE HONBLE DELHI HIGH COURT WHICH WAS CONFIRMED BY THE HONBLE SUPREME COURT IN CIT V S. KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) AND ALSO THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. VEERPRABHU MARKETING LTD. (2016) 73 TAXMANN.COM 149 (CAL). THIS DECISION OF THE LD. CIT(A) DATED 27.04.2017 WAS CHALLENGED BY THE REVEN UE/A.O BEFORE THE TRIBUNAL ON 16.06.2017 AND WHEN THE IMPUGNED ISSUE WAS PENDING BEFORE THE TRIBUNAL AND WITHOUT AWAITING THE DECISION OF THE TRIBUNAL ON THE ISSUE OF SHARE TRANSACTION OF RS. 24.10 CRORES WHICH WAS ALSO INVOLVED IN THAT APPEAL, THE A.O HAD ISSUED NOTICE U/S 148 OF THE ACT ON 31.03.2018 ON THE SAME SUBJECT MATTER (SHARE TRANSA CTION OF 24.10 CRORES) AND THEREAFTER REOPENED THE ASSESSMENT OF THE ASSESSEE WHEN THE 3 RD PROVISO TO SECTION 147 OF THE ACT CLEARLY FORBIDS THE A.O TO TAKE SUCH COURSE OF ACTI ON. A PERUSAL OF THE 3 RD PROVISO (SUPRA) WOULD CLEARLY SHOW THAT A.O COULD NOT HAVE INVOKED THE REASSESSMENT JURISDICTION ON 5 IT(SS)A NO. 80/KOL/2019 M/S. INLAND WORLD LOGISTICS PVT. LTD., AY 2011-12 MATTERS WHICH WAS THE SUBJECT MATTER TO THE APPEAL BEFORE HIGHER FORUM. IT IS NOT DISPUTED THAT ON THE DATE OF ISSUE OF NOTICE U/S 148 OF THE ACT I.E. ON 31.03.2018 THE SUBJECT MATTER I.E. ABOUT SHARE TRANSACTION OF RS.24.10 CR. WAS BEFORE THE TRIBUNAL FROM 16.06.2017 TILL IT WAS DECIDED ON 15.02.2019. THEREFORE THE ISSUE OF NOTIC E U/S 148 OF THE ACT BY AO, WHEN THE SUBJECT MATTER OF THE APPEAL WAS PENDING BEFORE THE TRIBUNAL WAS BAD IN LAW AND THEREFORE THE LD. CIT(A) HAS RIGHTLY GIVEN THE RELIEF TO THE ASSESSEE AND WE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2021. SD/- SD/- (DR. M. L. MEENA) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 15 TH SEPTEMBER, 2021 SB, SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- ACIT, CENTRAL CIRCLE 1(2), KOLKATA. 2. RESPONDENT M/S. INLAND WORLD LOGISTICS PVT. LTD., P-221/2, STRAND BANK ROAD, KOLKATA 700 001. 3. THE CIT(A)-20, KOLKATA (SENT THROUGH E-MAIL) 4. CIT- KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY/DDO ITAT, KOLKATA BENCHES, KOLKATA