Satish Kumar Keshri, V. ACIT,

ITSSA 9/PAT/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3295 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 30-04-2013
• Court: TRIBUNAL
• Department Lawyers: A K RASTOGI; RAKESH KUMAR ADVOCA
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Reassessment proceedings
• Section: 143(3); 153A; 263; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH:P ATNA BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A NO. 09/PAT/2013 ASSESSMENT YEAR:2002-03 SATISH KUMAR KESHRI M/S. HIRA PANNA JEWELLERS, HIRA PLACE, DAK BUNGLOW ROAD, PATNA PAN: ABXPK3726D / V/S . ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, PATNA. /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI A. K. RASTOGI & SHRI RAKESH KUMAR, ADVOCATES /BY RESPONDENT SMT. ARCHANA SINHA, SR. S.C /DATE OF HEARING 04-04-2017 /DATE OF PRONOUNCEMENT 07-04-2017 /O R D E R PER BENCH: THIS APPEAL FILED BY THE ASSESSEE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME- TAX(APPEAL), PATNA DATED 26-02-2013 FOR AY 2002-03 . 2. THE FIRST TWO GROUNDS ASSAILED BY THE ASSESSEE A RE AGAINST THE ORDER OF CIT(A) WHO DISMISSED THE PLEA OF THE ASSESSEE THAT THE ORDER PASSED U/S. 153A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) HAS BEE N HIT BY LIMITATION, WHICH GROUND HAS NOT BEEN PRESSED BEFORE US, SO WE TREAT IT AS DISMISSED . 3. THEREAFTER, THE LD. COUNSEL SHRI A. K. RASTOGI A SSAILED IN THE GROUNDS OF APPEAL NO. 11 TO 14, WHEREIN THE ASSESSEE HAS CHALLENGED THE D ECISION OF THE AO IN TREATING THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2002-03 AS PENDING BEFORE HIM ON THE DATE OF 2 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 SEARCH (I.E. ON 15.12.2004) AND SO ABATED FOR THE P URPOSE OF SECTION 153A ASSESSMENT PROCEEDINGS. 4. BRIEF FACTS OF THE CASE PERTAINING TO AY 2002-03 IS THAT THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT WAS PASSED BY THE AO ON 06.06.200 3 WHICH WAS SET ASIDE SUBSEQUENTLY BY THE LD. CIT U/S.263 OF THE ACT VIDE ORDER DATED 24.11.2004 AND REMANDED BACK TO THE FILE OF THE AO FOR FRESH ASSESSMENT. ON 15.12.2004 SEARCH U/S. 132 OF THE ACT TOOK PLACE AT THE ASSESSEES PREMISES. THEREAFTER, DURING THE 15 3A PROCEEDINGS, THE ASSESSEE CONTENDED BEFORE THE AO THAT THE ASSESSMENT PERTAINING TO AY 2002-03 IS NOT PENDING BEFORE THE AO AND THEREFORE, IS NOT ABATED. HOWEVER, THE SAID CO NTENTION OF THE ASSESSEE WAS TURNED DOWN BY THE AO WHO WAS OF THE OPINION THAT SINCE THE ASS ESSMENT OF ASSESSMENT YEAR 2002-03 HAS BEEN SET ASIDE BY THE LD. CIT VIDE HIS ORDER DA TED 24.11.2004 BACK TO THE AO FOR FRESH ASSESSMENT, THEREFORE, THE ASSESSMENT WAS VERY MUCH PENDING BEFORE HIM ON THE DATE OF SEARCH ON 15.12.2004 AND THEREAFTER, TREATED THE AS SESSMENT FOR AY 2002-03 AS ABATED AND PROCEEDED AGAINST THE ASSESSEE AND PASSED THE ASSES SMENT ORDER U/S. 153A/143(3) OF THE ACT VIDE ORDER DATED 29.12.2006. WHEN THE ASSESSMENT PR OCEEDING U/S. 153A O THE ACT WAS GOING ON, THE CHALLENGE OF THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT SETTING ASIDE THE ORIGINAL ORDER OF THE AO DATED 06.06.2003 WAS QUASH ED BY THE TRIBUNAL VIDE ORDER DATED 28.04.2006. THE IMPUGNED ORDER OF THE AO U/S. 153A DATED 29.12.2006 WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A), WHO WAS PLEASED TO TURN DOWN THE PLEA OF THE ASSESSEE THAT THE ASSESSMENT IN RESPECT TO ASSESSMENT YEAR 2 002-03 WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH (I.E. ON 15.12.2004) AND SO, IT IS UNABATED. ACCORDING TO LD. CIT(A), THE ORDER U/S. 263 WAS PASSED BY CIT-2, PATNA ON 2 2.11.2004 SET ASIDE THE ORDER OF THE AO U/S.143(3) DATED 16.03.2003, DIRECTING FRESH ASS ESSMENT. THE HONBLE TRIBUNALS ORDER WAS PASSED ON 28.04.2006 QUASHING THE ORDER OF THE CIT U/S. 263. THE SEARCH WAS CONDUCTED IN THE CASE OF THE APPELLANT ON 15.12.200 4 AND HENCE, ON THE DATE OF THE SEARCH, CONSEQUENT TO THE ORDER U/S. 263, THE ASSESSMENT OR DER U/S. 143(3) SET ASIDE AND FRESH ASSESSMENT PROCEEDINGS WERE TO BE INITIATED IN PURS UANCE TO THE ORDER U/S. 263 OF THE ACT. THERE ARE THUS PENDING ASSESSMENT PROCEEDINGS AND N OT CONCLUDED ASSESSMENT PROCEEDINGS 3 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 AS ON THE DATE OF SEARCH, WHICH GOT ABATED PURSUANT TO THE SEARCH OPERATION AND BECAUSE OF WHICH THE PROCEEDINGS FOR ASSESSMENT U/S. 153 WAS O RIGINALLY INITIATED BY THE AO BY ISSUING OF NOTICE U/S. 153A BEFORE THE HONBLE TRIBUNAL QUA SHED THE ORDER U/S. 263 PASSED BY THE CIT. THE SUBMISSION OF THE APPELLANT THAT THERE WE RE NO LIVE ASSESSMENT/REASSESSMENT PROCEEDINGS PENDING ON THE DATE OF SEARCH FOR ABATE MENT U/S. 153A IS COMPLETELY MISPLACED AND MISCONCEIVED. ON THE AFORESAID FACTUAL MATRIX, THE LD. CIT(A) D ID NOT AGREE WITH THE CONTENTION RAISED BY THE ASSESSEE. AGGRIEVED, THE A SSESSEE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ORIGINAL ASSESSMENT U/S . 143(3) OF THE ACT WAS PASSED IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR UNDER CONSIDERA TION I.E. AY 2002-03 ON 06.06.2003. HOWEVER, THE LD. CIT-2, PATNA ON 24.11.2004 PASSED A REVISION ORDER U/S. 263 OF THE ACT SETTING ASIDE THE ORDER OF THE AO U/S. 143(3) OF TH E ACT DATED 06.06.2003 AND FURTHER DIRECTING THE AO TO PASS FRESH ASSESSMENT. WE NOTE THAT THE SEARCH TOOK PLACE AT ASSESSEES PLACE ON 15.12.2004. AFTER RECEIPT OF NOTICE U/S. 153A OF THE ACT, THE ASSESSEE PLEADED BEFORE THE AO THAT THE ASSESSMENT PERTAINING TO AY 2002-03 IS NOT PENDING AND SO IT SHOULD NOT BE TREATED AS ABATED ASSESSMENT. HOWEVER, ACCOR DING TO AO, THE ORIGINAL ASSESSMENT PASSED ON 06.06.2003 HAS BEEN SET ASIDE BY LD. CIT U/S. 263 OF THE ACT VIDE ORDER DATED 24.11.2004 AND SINCE SEARCH TOOK PLACE ON 15.12.20 04, THE ASSESSMENT PERTAINING TO AY 2002-03 IS VERY WELL PENDING BEFORE HIM, AS HE HAS NOT PASSED ANY FRESH ASSESSMENT PURSUANT TO LD CIT ORDER DATED 24.11.2004 FOR A.Y 2 002-03 BEFORE THE DATE OF SEARCH ON 15.12.2004 AND SO IT IS AN ABATED ASSESSMENT AND TR EATED IT SO AND MADE ADDITIONS ACCORDINGLY AND THUS REJECTED THE PLEA OF THE ASSES SEE, WHICH ISSUE WAS APPEALED BEFORE THE LD. CIT(A) BY THE ASSESSEE, WHO REJECTED THE SAME A ND CONFIRMED THE ACTION ASSESSEE, WITH THE OBSERVATION WE HAVE REPRODUCED (SUPRA) 6. WE NOTE THAT THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT PASSED ON 06.06.2003, WHICH WAS LATER ON SET ASIDE FOR FRESH ASSESSMENT T O THE AO VIDE ORDER DATED 24.11.2004 BY CIT-2, PATNA EXERCISING JURISDICTION OF REVISION U/ S. 263 OF THE ACT. THE SAID ACTION OF THE LD. CIT-2, PATNA WAS CHALLENGED BY THE ASSESSEE BEF ORE THE TRIBUNAL. THE TRIBUNAL VIDE 4 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 ORDER DATED 28.04.2016 WAS PLEASED TO QUASH THE ORD ER OF THE LD. CIT-2 PASSED ON 24.11.2004 WHICH ORDER IN TURN WAS CHALLENGED BY TH E REVENUE UNSUCCESSFULLY BEFORE THE JURISDICTIONAL HONBLE PATNA HIGH COURT. VIDE ORDE R DATED 06.04.2016 THE HONBLE PATNA HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL QUASHIN G THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT ON 24.11.2004. WE NOTE THAT SECTION 153A STIPULATES THE ISSUE OF NOTICE FOR FILING OF RETURN IN RESPECT SIX ASSESSMENT YEARS IM MEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PRECEDING YEAR IN WHICH THE SEARCH IS CONDUCTED. THE SECOND PROVISO TO THE SECTION PRESCRIBES THAT IN CASE ANY ASSESSMENT FALL ING WITHIN THE PERIOD OF SUCH SIX ASSESSMENT YEARS IS PENDING ON THE DATE OF SEARCH, THE SAME SHALL ABATE. THE QUESTION BEFORE US IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT FOR AY 2002-03 WAS PENDING BEFORE THE AO IN THE EYES OF LAW ON THE DATE OF SEARCH. 7. WE NOTE THAT THE ORIGINAL ASSESSMENT ORDER FOR A Y 2002-03 WAS PASSED BY THE AO U/S. 143(3) OF THE ACT ON 06.04.2003. LATER, THE L D. CIT-2, EXERCISED HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT AND PASSED ORDER O N 24.11.2004 SETTING ASIDE THE ORDER OF THE AO AND DIRECTED THE AO TO PASS FRESH ASSESSMENT ORD ER. THOUGH THE SEARCH HAPPENED ON 15.12.2004, THE ASSESSMENT FOR THE YEAR UNDER CONSI DERATION (AY 2002-03) CANNOT BE HELD TO BE PENDING BEFORE THE AO ON THE DATE OF SEARCH B ECAUSE THE ORDER OF THE LD. CIT-2 SETTING ASIDE THE ORDER AND DIRECTING THE AO TO PAS S FRESH ASSESSMENT ORDER DATED 24.11.2004 WAS QUASHED BY THE TRIBUNAL VIDE ORDER D ATED 28.04.2006 . WHEN THE AO PASSED THE 153A ORDER IN RESPECT TO THE AY 2002-03 ON 29.12.2006 THE ORDER PASSED BY THE LD. CIT U/S. 263 OF THE ACT DATED 24.11.2004 WAS NULL IN THE EYES OF LAW. THEREFORE, THE ORDER OF THE LD. CIT-2 SETTING ASIDE AND DIRECT ING THE AO TO PASS THE FRESH ASSESSMENT ORDER WAS NON-EST IN THE EYES OF LAW . THEREFORE, THERE WAS NO ORDER DATED 24.11.2004 ( CIT- 2S 263 ORDER) WAS EXISTING IN THE EYES OF LAW. CO NSEQUENTIALLY, THE ORIGINAL ASSESSMENT ORDER DATED 06.06.2003 REVIVES AND IS IN FULL VIGOR. THEREFORE, ON THE DATE OF SE ARCH I.E. ON 15.12.2004 THERE WAS NO PENDING ASSESSMENT IN RESPE CT TO AY 2002-03 BEFORE THE AO, THEREFORE, THE CONTENTION OF THE ASSESSEE WAS CORRE CT AND VALID IN THE EYES OF LAW THAT ON THE DATE OF SEARCH THERE WAS NO ASSESSMENT PENDING BEFO RE THE AO ON THE DATE OF SEARCH. 5 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 THEREFORE, AS PER THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL), WHEREIN THEIR LORDSHIPS H AVE HELD THAT IN RESPECT TO UNABATED/FINALIZED ASSESSMENT PROCEEDINGS ON THE DA TE OF SEARCH, THE ADDITION CAN BE MADE FOR THOSE YEARS ONLY QUA INCRIMINATING MATERIALS SE IZED DURING SEARCH. 8. FACTS OF THE AFORESAID CASE I.E. KABUL CHAWLA (S UPRA) IS THAT A SEARCH WAS CARRIED OUT U/S. 132 OF THE ACT ON 15.11.2007 ON BPTP LTD.. A SEARCH WAS ALSO CARRIED OUT ON THE PREMISES OF THE ASSESSEE. AS ON THE DATE OF SEARCH , NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THE AY 2002-03, 2005-06 AND 2006-07. F OR THE SAID ASSESSMENT YEARS ASSESSMENTS HAD ALREADY BEEN MADE U/S. 143(1) OF TH E ACT. THEREAFTER, THE AO MADE ASSESSMENT AGAINST THE ASSESSEE WHEREIN THE ASSESSE E CONTENDED THAT AGAINST THE ASSESSMENTS COMPLETED/FINALIZED AND WHEREIN THE LIMITATION PERI OD HAS BECOME TIME BARRED FOR ISSUE OF NOTICE U/S. 143(2), THE ASSESSMENT CANNOT BE HELD T O BE PENDING BEFORE THE AO ON THE DATE OF SEARCH, WHICH WAS NOT AGREED UPON BY THE AO. T HE HONBLE HIGH COURT ON THIS ISSUE HAS HELD AS UNDER: SUMMARY OF THE LEGAL POSITION ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISION S, 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 PERSON SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (II) ASSES S MEN T S AND REASSESSMENTS PENDING ON THE DATE O F THE S EAR C H SHA L L ABATE . THE TOTAL INCOME FOR SUCH ASSESSMENT Y EARS WILL HA V E TO B E COMPUTED B Y THE ASSESSING OFFICERS AS A FRESH EXERCISE . (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSME NT PO W ER S I N RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT Y EAR IN W HI C H THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSES S AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTION ED SIX Y EARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS . IN OTHER WORDS, THERE W ILL B E ONL Y ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASS E SSMENT Y EAR S ' IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX' . (IV) ALTHOUGH SECTION 153A DOES NOT SA Y THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH , OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE R ELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT ' CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR N EXUS W ITH THE 6 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL. ' (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL , THE C O MPLET E D ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS S ES S MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E . , THOSE PENDING ON THE DATE OF SEARCH) AND THE WO RD ' REASSESS' TO THE COMPLETED ASSESSMENT PROCEEDINGS. (VI) IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE . ONLY ONE ASSESSMENT SHALL BE MADE SEPARATEL Y F OR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDING S OF THE SEARCH AND AN Y OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFIC E R . (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE ASSESSING OF FI CER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONL Y ON THE BA S IS O F SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUM ENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED I N THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR N OT A LREAD Y DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT . 9. THEREFORE, IN THE LIGHT OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF TH E AO FOR DE NOVO ASSESSMENT TREATING THE ASSESSMENT YEAR 2002-03 AS UNABATED/NON-PENDING BEFORE THE AO ON THE DATE OF SEARCH AND DIRECT THE AO TO DE NOVO PASS ASSESSMENT ORDER KEEPING IN MIND THAT ADDITION CAN BE MADE IN THIS AY ONLY QUA THE INCRIMINATING MATERIAL S SEIZED DURING SEARCH AS HELD BY THE HONBLE DELHI HIGH COURT (SUPRA) IN ACCORDANCE TO L AW. NEEDLESS TO SAY, PROPER OPPORTUNITY TO BE GRANTED TO THE ASSESSEE BEFORE PA SSING THE ORDER. 10. SINCE WE HAVE REMANDED THE ASSESSMENT ORDER ITS ELF FOR DE NOVO ASSESSMENT, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE NEED NOT BE ADJUDICATED. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS DIRECTED ABOVE FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN OPEN COURT ON 07.04.2017 SD/- SD/- (WASEEM AHMED) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 7 TH APRIL, 2017 JD. SR. PS 7 IT(SS)A NO. 09/PAT/2013 SATISH KUMAR KESHRI., AY 2002-03 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ' / CONCERNED CIT 4. ' - / CIT (A) 5. # && , / DR, ITAT, PATNA 6. ( / GUARD FILE. BY ORD ER/ , ASSISTANT REGI STRAR, ITAT, PATNA,