M/s. Raunak Infrastructures Ltd., , Kolkata V. DCIT, C.C. - 4(3), Kolkata , Kolkata

ITSSA 9/KOL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9882 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 20-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: MIRAJ D. SHAH
• Section: 143(3); 153A; 68; 6; 132

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS: 2009-10 TO 2011-12 & 2013-14 M/S RAUNAK INFRASTRUCTURES LTD. FE-83, NORTH FACE SECTOR-III, SALT LAKE CITY,KOLKATA-106 [ PAN NO.AABCR 6140 E ] / V/S . DCIT, CENTRAL CIRCLE-4(3), 8 TH FLOOR, AAYAKAR BHAVAN POORVA, 110, SHANTI PALLY, KOLKAKTA-107 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI MIRAJ D. SHAH, ADVOCATE ! /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 19-09-2019 /DATE OF PRONOUNCEMENT 20-09-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE FOUR ASSESSEES APPEALS FOR ASSESSMENT YEAR S 2009-10 TO 2011-12 AND 2013-14 AROSE FROM THE COMMISSIONER OF INCOME TAX ( APPEALS)-21, KOLKATAS SEPARATE ORDERS; ALL DATED 22.02.2018 PASSED IN CAS E NOS.11160, 11161, 11162 & 11163/DCIT, CC-4(3)/CIT(A)-21/KOL/2016-17 RESPECTIV ELY INVOLVING PROCEEDINGS 153C R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT ALL THE INSTANT ALL FOUR ASSESSEES APPEAL(S) HAVE ARISEN FROM SEARCH SEIZURE OPERATION CARRIED OUT IN THE CASE OF M/S SAROJINI GROUP ON 06.03.2014. THE DEPARTMENT HAD ALSO CARRIED OUT A S URVEY IN ASSESSEES CASE ON IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS 09-10 TO 11-12 & 13-14 M/S RAUNAK INFRASTRUCTURES. LTD. VS DCIT, CC- 4(3), KOL. PAGE 2 06.03.2014. ALL THIS CULMINATED INITIATION SEC. 153 C PROCEEDINGS AGAINST THE ASSESSEE GIVING RISE TO VARIOUS DISALLOWANCE(S) / ADDITION(S ) TO BE DEALT WITH IN SUCCEEDING PARAGRAPHS. 3. COMING TO FORMER TWO ASSESSMENT YEAR(S) 2009-10 AND 2010-11, LEARNED AUTHORIZED REPRESENTATIVE REFERS TO THE ASSESSING O FFICERS ORDER-SHEET FORMING PART OF THE CASE RECORDS MAKING IT CLEAR THAT HE HAD PROCEE DED TO ISSUE / INITIATE SEC. 153C PROCEEDINGS ON 25.08.2016 AFTER RECORDING THE CORRE SPONDING SATISFACTION NOTE. HE APPEARS TO HAVE BEEN RECORDED HIS SATISFACTION AFTE R CIT (CENTRAL), KOLKATA-1S ORDER DATED 02.08.2016 TRANSFERRING JURISDICTION TO HIM U /S 127 OF THE ACT. MR. SHAH INVITES OUR ATTENTION TO SEC. 153C(1) (FIRST PROVISO) READI NG AS UNDER:- ASSESSMENT OF INCOME OF ANY OTHER PERSON . 153C. [(1)] [NOTWITHSTANDING ANYTHING CONTAINED IN SECTI ON 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHER E THE ASSESSING OFFICER IS SATISFIED THAT,- [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO [SUB-SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON :] MR. SHAH THEN QUOTES HON'BLE DELHI HIGH COURTS DEC ISION IN COMMISSIONER OF INCOME- TAX VS. RRJ SECURITIES LTD . (2016) 380 ITR 612 (DEL) AND SSP AVIATION LTD. VS. DCIT (2012) 346 ITR 177 (DEL) THAT THE RELEVANT REFERE NCE TO THE CLINCHING EXPRESSION DATE OF INITIATION OF THE SEARCH STIPULATED IN THE ABOVE PROVISO R.W.S. SEC. 153A( 1) (A) & (B) MAKES IT CLEAR THAT THE CORRESPONDING SIX ASSESSMENT YEAR(S) IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE IMPUGNED SEARCH GO UPTO ASSESSMENT YEAR 2011-12 ONLY. HIS CA SE ACCORDINGLY IS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN FACTS AS WELL AS ON LAW IN ASSESSING THIS TAXPAYER U/S 153C R.W.S. 143(3) OF THE ACT IN ASSESSMENT YEAR 20 09-10 AND 2010-11. 4. LEARNED CIT-DR STRONGLY SUPPORTED VALIDITY OF T HE IMPUGNED ASSESSMENT(S). HE TOOK US TO 153B(2)(1) (FIRST PROVISO) THAT THE A SSESSING OFFICER HAS FRAMED THE IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS 09-10 TO 11-12 & 13-14 M/S RAUNAK INFRASTRUCTURES. LTD. VS DCIT, CC- 4(3), KOL. PAGE 3 IMPUGNED ASSESSMENT IN THESE FORMER TWO ASSESSMENT YEAR(S) STRICTLY AS PER LAW AND THEREFORE, THE SAME ARE LIABLE TO BE UPHELD. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS. RELEVANT CASE RECORD(S) STAND PERUSED. THERE CAN HARDLY BE ANY DI SPUTE THAT THE ASSESSEE IS NOT THE SEARCHED PERSON SINCE PROCEEDED U/S 153C OF THE ACT . AND ALSO THAT THE JURISDICTIONAL COMMISSIONER HAD PASSED HIS SEC. 127 ORDER TO THE A SSESSING OFFICER ONLY ON 02.08.2016. THE ASSESSING OFFICER THEREAFTER RECORD ED HIS SATISFACTION THAT THE SEARCH IN ISSUE HAD LED THE DEPARTMENTS TO SOME INCRIMINA TING MATERIAL AGAINST IT AND THEREFORE, IT WAS LIABLE TO BE PROCEEDED U/S 153C O F THE ACT. THE QUESTION THAT ARISES FOR OUR APT ADJUDICATION IS AS TO WHETHER THE IMPUG NED ASSESSMENT(S) IN FORMER TWO ASSESSMENT YEARS 2009-10 AND 2010-11 CAN BE HELD TO BE COVERED UNDER THE STATUTORY EXPRESSION SIX ASSESSMENT YEAR(S) IMMEDIATELY PRECEDING THE AS SESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CO NDUCTED OR REQUISITIONED IS MADE . THIS QUESTION DESERVES TO BE DECIDED IN ASSESSEES FAVOUR AND AGAINST THE DEPARTMENT. WE FIRST OF ALL QUOTE FIRST PROVISO TO SEC. 153C (1 ) OF THE ACT THAT THE REFERENCE TO THE DATE OF SEARCH IN CASE OF THE PERSON SOUGHT TO BE PROCEEDED AGAINST IS TO BE CONSTRUED AS TO DATE OF RECEIPT OF BOOKS OF ACCOUNT OR DOCUME NT OR ASSET SEIZED OR REQUISITIONED. WE REPEAT THAT THE ASSESSEES ASSESSING OFFICER REC EIVED THE SAID MATERIAL AFTER 02.08.2016 ONLY. WE ARE OF THE VIEW THAT GOING BY SEC. 153A (1)(B) APPLICABLE IN SUCH A SCENARIO EXCEPT THAT TO THE EXTENT OF ITS EXCLUS ION IN VIEW OF THE FIRST PROVISO TO SEC. 153C(1), THE SIX ASSESSMENT YEARS IN THIS TAXPAYER S CASE PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH IS CONDUCED (AY 2017-18 HEREIN SINCE THE REFERENCE TO DATE OF SEARCH BRINGS US TO AUGUST, 2016) ARE 2016-17, 2015-16, 2014-15, 2013-14 2012-13 ASSESSMENT YEAR 2011-12 A ND NOT BEYOND THAT. HON'BLE DELHI HIGH COURTS TWIN DECISIONS RRJ SECURITIES LTD AND SSP AVIATION LTD . (SUPRA) DECIDE THE VERY QUESTION IN ASSESSEES FAVOUR GOING BY THE VERY REASONING. WE CONCLUDE IN THESE FACTS THAT THE IMPUGNED ASSESSMEN TS IN ASSESSMENT YEARS 2009-10 AND 2010-11 NOT SUSTAINABLE IN LAW. THE SAME STAND QUASHED. THE ASSESSEES OTHER PLEADINGS ON MERITS ARE RENDERED INFRUCTUOUS. ITS F ORMER TWO APPEALS IT(SS)A 06 & 07/KOL/2018 ARE ALLOWED. IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS 09-10 TO 11-12 & 13-14 M/S RAUNAK INFRASTRUCTURES. LTD. VS DCIT, CC- 4(3), KOL. PAGE 4 6. NEXT COME THE LATTER TWO ASSESSMENT YEAR(S) 2011 -12 AND 2013-14 INVOLVING IT(SS)A NO.08 & 09/KOL/2018 . THE ASSESSEES ONLY GRIEVANCE IN THESE TWO APPEAL (S) IS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LA W AND ON FACTS IN MAKING SEC. 68 ADDITION(S) OF UNEXPLAINED CASH DEPOSIT IN BANK AMO UNTING TO 3,05,000 AND 20,45,000/-; RESPECTIVELY. THE ASSESSEES CASE IS T HAT THE SAME ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE C URSE OF SEARCH IN ISSUE. 7. LEARNED CIT-DRS CASE ON THE OTHER HAND IS THAT THE PURPOSE OF IMPUGNED ASSESSMENTS U/S 153A AND 153C OF THE ACT IN CASE OF SEARCHED ASSESSEE AND A THIRD PERSON IS TO ASSESS THEIR TOTAL INCOME AND NOT THAT MERELY BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE CURSE OF SEARCH . HE QUOTES HON'BLE KERALA HIGH COURT IN E.N.GOPA KUMAR VS. CIT (2017) 390 ITR 131 (KER) AND CIT VS. KESARWANI ZARDA BHANDAR TAX APPEAL NO. 270 OF 2014 DATED 06.09.2016 (ALLAHABAD) TO UPHOLD VALIDITY OF IMPUGNED ASSESSMENT IN BOTH LATTER ASSE SSMENT YEARS. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS QUA THE INSTANT ISSUE OF VALIDITY OF THE IMPUGNED ASSESSMENT IN CAS E OF THE ASSESSEE / THIRD PERSON U/S 153C OF THE ACT. THERE IS NO DENIAL TO THE CLINCHIN G FACT THAT BOTH THE IMPUGNED SEC. 68 ADDITION(S) OF UNEXPLAINED BANK DEPOSIT (SUPRA) ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF THE I MPUGNED SEARCH. WE NOTICE IN THIS BACKDROP THAT HON'BLE JURISDICTIONAL HIGH COURTS D ECISION IN PCIT VS. M/S SALASAR STOCK BROKING LTD. GA NO.1929 OF 2016 ITAT NO.264/2016 DATED 24.08.2016, CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL) AND PCIT VS. DIPAK JASHVANTAL PANCHAL (2017) 397 ITR 153(GUJ) DECIDE THE INSTANT LEGAL IS SUE IN ASSESSEES FAVOUR AND AGAINST THE REVENUE THAT SEARCH ASSESSMENT(S) HAVE TO BE BASED ON INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARC H. THEIR LORDSHIP OF HON'BLE DELHI HIGH COURT HAVE FURTHER SUMMARIZED THE LEGAL PROVIS ION AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISO THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED N THE AFOREME NTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS 09-10 TO 11-12 & 13-14 M/S RAUNAK INFRASTRUCTURES. LTD. VS DCIT, CC- 4(3), KOL. PAGE 5 HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENT AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWER IN RES PECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX . IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS S HOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE CURSE OF THE SEA RCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE BATED ASSESSMENTS OR REASSESSMEN T CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABATED PROCEEDING S ( I.E. THOSE PENDING ON THE DATE OF SEARCH ) AND THE WORDS REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. WE OBSERVE IN THIS BACKDROP THAT THE ASSESSEES CAS E IS COVERED UNDER (IV) THAT ALTHOUGH THE SEARCH ASSESSMENT PROVISION NOWHERE CO NTEMPLATES THAT ADDITION SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A SSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THA T AN ASSESSMENT CAN BE ARBITRARILY MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. THEIR LORDSHIPS FURTHER CLARIFY THAT SUCH AN ASSESSMENT UNDER THIS PROVISIO N HAS TO BE MADE ONLY ON THE BASIS OF SEIZED MATERIAL. LEARNED CIT-DR FAILS TO DISPUTE THAT THERE IS NO SUCH INCRIMINATING IT(SS)A NO.06-09/KOL/2018 ASSESSMENT YEARS 09-10 TO 11-12 & 13-14 M/S RAUNAK INFRASTRUCTURES. LTD. VS DCIT, CC- 4(3), KOL. PAGE 6 MATERIAL SO FAR AS THE TWIN SEC. 68 ADDITION(S) OF CASH DEPOSITS IN QUESTION OF 3,05,000/- AND 20.45,000/- (SUPRA) ARE CONCERNED. WE ACCORDINGLY H OLD THAT THE IMPUGNED ASSESSMENT(S) DESERVE TO BE QUASHED FOR TH IS PRECISE REASON ALONE SINCE THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND O R SEIZED DURING THE COURSE OF SEARCH. WE ORDER ACCORDINGLY. THE ASSESSEE SUCCEEDS IN ITS LATTER TWO APPEALS IT(SS) 08-09/KOL/2018 AS WELL. ITS OTHER PLEADINGS ON MERI TS ARE RENDERED INFRUCTUOUS. 9. THE ASSESSEES FOUR APPEAL(S) IT(SS)A NO. 06-09/ KOL/2018 ARE ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 20/09/2019 SD/- SD/- ( !) () !) (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 20/09/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S RAUNAK INFRASTRUCTURES LTD. FE-83,NO RTH FACE SECTOR-III SALK LAKE CITY KOLK TGKA-700106 2. ! /REVENUE-DCIT CC-4(3), 8 TH FLOOR, AAYAKAR BHAVAN POORVA, 110, SHANTI PALLY, KOLKATA -107 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,