ACIT, Central Circle - 1(2), Kolkata, Kolkata V. Inland Cement Company Pvt. Ltd., Kolkata

ITSSA 94/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1177 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B C JAIN; RAKESH JAIN
• Keywords: Search and seizure
• Section: 143(3); 153A; 143(1); 68; 132

Judgement Text

1 IT(SS)A NO. 92 TO 94/KOL/2017 M/S. INLAND CEMENT COMPANY PVT. LTD. , AYS 2010-11, 2012-13 & 2013-14 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T(SS)A NOS. 92 TO 94/KOL/2017 ASSESSMENT YEARS: 2010-11, 2012-13 & 2013-14 ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(2), KOLKATA. VS. M/S. INLAND CEMENT CO. PVT. LTD. (PAN: AABCR 2338 E) APPELLANT RESPONDENT DATE OF HEARING 07.03.2019 DATE OF PRONOUNCEMENT 03.06.2019 FOR THE APPELLANT SHRI A. K. SINGH, CIT, DR FOR THE RESPONDENT SHRI B. C. JAIN, FCA & SHRI RAK ESH JAIN, FCA ORDER PER SHRI A.T.VARKEY, JM THESE ARE THREE APPEALS OF THE REVENUE AGAINST THE ORDER OF THE CIT(A) 20, KOLKATA DATED 27.04.2017 FOR ASSESSMENT YEARS 2010-11, 2012 -13 & 2013-14. 2. APPEALS OF REVENUE ARE TIME BARRED BY 17 DAYS AN D A CONDONATION APPLICATION DATED 17.07.2017 HAS BEEN FILED BY THE REVENUE EXPLAINING THE REASONS FOR CONDONATION OF DELAY. AFTER PERUSING THE CONDONATION APPLICATION AND HEAR ING BOTH THE SIDES, WE CONDONE THE DELAY IN FILING THE APPEAL OF THE REVENUE. 3. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THIS CASE IS COVERED IN ASSESSEES OWN GROUP CASES FOR AYS 2009-10 TO 2015- 16 BY THIS TRIBUNAL. ACCORDING TO LD. AR, THERE WAS A SEARCH U/S. 132 OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH WAS SEARCH CONDUCTED ON 17.03.2015 AT THE RESIDENCE, OFFICES, FACTORIES AND OTHER BUSINESS CONCERNS OF THE M/S. INLAND GROUP AN D THE ASSESSMENT FOR THESE YEARS WERE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH. S INCE IT WAS NOT AN ABATED ASSESSMENT, THE 2 IT(SS)A NO. 92 TO 94/KOL/2017 M/S. INLAND CEMENT COMPANY PVT. LTD. , AYS 2010-11, 2012-13 & 2013-14 AO COULD NOT HAVE MADE ANY ADDITION WITHOUT THE AID OF ANY INCRIMINATING MATERIAL AND THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE TAKING NOTE OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT VS . KABUL CHAWLA (2016) 380 ITR 573 (DEL), THE DECIS ION OF HON'BLE CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSI ONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. AND HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS BEEN UP HELD BY HONBLE SUPREME COURT REPORTED IN (2016) 380 ITR (ST.) 69-ED. WE NOTE TH AT THE LD. CIT, DR ASSAILED THE DECISION OF THE LD. CIT(A) AND CONTENDED THAT IN SEC. 153A P ROCEEDINGS THERE IS NO NECESSITY OF ANY INCRIMINATING MATERIALS AND THE VERY CONCEPT OF INC RIMINATING MATERIALS IS ALIEN TO THE SCHEME OF THE SEARCH PROCEEDINGS U/S. 153A OF THE A CT. HOWEVER, DURING THE HEARING BEFORE US, WE ASKED TO LD. CIT DR THE POINTED QUESTION AS TO WHETHER THE AO HAS MADE ANY ADDITION ON THE BASIS OF INCRIMINATING MATERIALS AN D THE LD. CIT, DR COULD NOT POINT OUT FROM THE ASSESSMENT ORDER ANY INCRIMINATING MATERIA L UNEARTHED DURING SEARCH ON THE BASIS OF WHICH THE ASSESSMENT WAS FRAMED BY THE AO. THUS WE TAKE NOTE THAT THE AO DID NOT TAKE THE AID OF ANY INCRIMINATING MATERIALS UNEARTHED DU RING SEARCH QUA THESE ASSESSMENT YEARS TO MAKE THE ADDITION. WE NOTE THAT UNDISPUTEDLY THESE ASSESSMENT YEARS WERE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH AND SO IT IS AN UNABATED ASSESSMENT. SO AS PER THE SETTLED LAW, IN SEC. 153A ASSESSMENT PURSUANT TO SE ARCH U/S 132 OF THE ACT, FOR ASSESSMENT YEARS WHICH ARE UNABATED ASSESSMENTS AS IN THE PRES ENT CASES BEFORE US, NO ADDITION/DISALLOWANCE CAN BE MADE WITHOUT THE AID O F INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THESE ASSESSMENT YEARS. IN SUCH A SCENARIO, TAKING NOTE OF SIMILAR FACTS AND LAW, WE NOTE THAT IN ASSESSEES OWN CASE IN IT( SS)A NOS. 56 TO 62/KOL/2017 FOR AYS 2009-10 AND 2015-16 ACIT VS M/S. INLAND WORLD LOGIS TICS PVT. LTD. ORDER DATED 15.02.2019, THE TRIBUNAL HAS UPHELD THE ACTION OF LD. CIT(A) FOR AY 2009-10 TO 2013-14 WHEREIN SIMILAR FACTS & CIRCUMSTANCES, THE TRIBUNAL DECIDED AS UNDER: 2. AT THE OUTSET ITSELF, WE NOTE THAT THIS MATTER WAS FIXED FOR HEARING ON 29.01.2019 WHEREIN WE UNDERSTOOD THAT THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ON THE GROUND THAT SINCE THESE ARE ADDITIONS BASED ON SECT ION 153A PROCEEDING AFTER (SEARCH AND SEIZURE) AND SINCE THERE IS NO INCRIMINATING MA TERIALS UN-EARTHED DURING SEARCH WARRANTING ANY ADDITION QUA THESE ASSESSMENT YEARS [EXCEPT THAT OF A.Y. 2014-15 AND 3 IT(SS)A NO. 92 TO 94/KOL/2017 M/S. INLAND CEMENT COMPANY PVT. LTD. , AYS 2010-11, 2012-13 & 2013-14 2015-16, SINCE THESE WERE ABATED PROCEEDINGS]. SINC E THIS WAS MAIN REASON FOR THE LD. CIT(A) TO DECIDE AS TO THE ASSESSMENT YEARS 2009-10 TO 2013-14 THAT IN 153A PROCEEDING, WHEN THE ASSESSMENT WAS NOT PENDING FOR THESE YEARS BEFORE THE AO ON THE DATE OF SEARCH, THERE BEING NO INCRIMINATING MATERI ALS UNEARTHED DURING SEARCH QUA THESE ASSESSMENT YEARS, THE AO COULD HAVE ONLY REIT ERATED THE RETURN FILED / ASSESSMENT MADE UNDER 143(1) / 143(3) OF THE ACT. IN THE LIGHT OF THE AFORESAID FACTS, WE REQUESTED THE LD. CIT DR TO CAREFULLY GO THROUGH THE ASSESSM ENT ORDERS QUA THOSE RESPECTIVE ASSESSMENT YEARS TO FIND OUT AS TO WHETHER THE AO H AS MADE ANY ADDITION WITH THE AID OF ANY INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THOSE ASSESSMENT YEARS AND FIXED THE APPEAL ON 31.01.2019. 3. WITH THE AFORESAID BACKGROUND, ON 31.01.2019 WE ASKED THE LD. CIT DR AS TO WHETHER THE ASSESSMENT YEARS 2009-10 TO 2013-14 WAS PENDING BEFORE THE AO ON THE DATE OF SEARCH WHICH HE ANSWERED AS NOT PENDING BEF ORE THE AO ON THE DATE OF SEARCH. ON OUR NEXT QUERY AS TO WHETHER THE ASSESSING OFFIC ER TOOK THE AID OF ANY INCRIMINATING MATERIALS TO MAKE ANY ADDITIONS/DISALLOWANCES, THE LD. CIT-DR FAIRLY ADMITS THAT THERE WERE NO INCRIMINATING MATERIALS THE ASSESSING OFFIC ER REFERRED IN HIS ORDER TO MAKE THE ADDITIONS/DISALLOWANCES. IN THIS BACKGROUND, WE AFT ER HAVING CAREFULLY EXAMINED EACH ASSESSMENT ORDERS FROM ASSESSMENT YEAR 2009-10 TO 2 013-14 AND TAKING NOTE THAT THESE ASSESSMENT YEARS WERE NOT PENDING BEFORE THE ASSESS ING OFFICER ON THE DATE OF SEARCH, SO WE CONCUR WITH LD CIT(A) THAT THESE ASSESSMENT Y EARS WERE UNABATED ASSESSMENTS AND THEREFORE THE LD. CIT(A) WAS CORRECT TO HOLD TH AT ADDITIONS/DISALLOWANCES CANNOT BE MADE WITHOUT THE AID OF ANY INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THESE ASSESSMENT YEARS. THEREFORE, IN FURTHERANCE TO SECT ION 153A PROCEEDINGS, THE AO HAS TO REITERATE THE RETURNED INCOME / INCOME INTIMATED UN DER 143(1) / SCRUTINY ASSESSMENT MADE UNDER 143(3) / 144OF THE ACT / REASSESSMENT DO NE UNDER 147. THEREFORE THE LD. CIT(A) HAS RIGHTLY ORDERED DELETION OF THE ADDITION MADE BY THE AO U/S 153A FOR ASSESSMENT YEARS 2009-10 TO 2013-14 RELYING UPON TH E ORDERS OF THE HONBLE DELHI HIGH COURT IN KABUL CHAWLA, HONBLE KOLKATA HIGH CO URT IN VEERPRABHU MARKETING LTD. AND HONBLE DELHI HIGH COURT IN KURELE PAPER M ILLS PVT. LTD. AS IN ACCORDANCE TO LAW AND DOES NOT REQUIRE ANY INTERFERENCE FROM OUR PART. WE NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE KABUL CHAWLA HAS HELD AS UNDER: SO, SINCE BOTH THE AYS BEFORE US WERE NOT PENDING S O WITHOUT INCRIMINATING MATERIALS UNEARTHED DURING SEARCH, NO ADDITION CAN BE MADE AS HELD BY HONBLE DELHI HIGH COURT IN KABUL CHAWLA (SUPRA) WHEREIN TH EIR LORDSHIPS HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONE D DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: 4 IT(SS)A NO. 92 TO 94/KOL/2017 M/S. INLAND CEMENT COMPANY PVT. LTD. , AYS 2010-11, 2012-13 & 2013-14 I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERS ON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT 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 AFORE MENTIONED SIX YEARS IN SEPARATE 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 153 A DOES NOT SAY 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 AO WHICH CAN BE RELA TED 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 ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I .E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PRO CEEDINGS. 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 EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEERPRAB HU MARKETING LTD. HAS HELD AS UNDER: THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT IN I TA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWE R COULD HAVE BEEN EXERCISED U/S 153(C) R.W SECTION 153(A). IN THE CAS E BEFORE US, THE AO HAS MADE A DISALLOWANCE OF THE EXPENDITURE, WHICH WAS H ELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO WERE UPHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DI SALLOWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, THEREFORE, DISMISSED. HONBLE DELHI HIGH COURT IN THE CASE OF KURELE PAPE R MILLS PVT. LTD. HAS HELD AS UNDER: IN A SIMILAR CASE M/S. KURELE PAPER MILLS PVT. LTD. ADDITION WAS MADE BY THE AO (IN SEC. 153A PROCEEDINGS) WITHOUT INCRIMINATING MA TERIAL UNEARTHED DURING 5 IT(SS)A NO. 92 TO 94/KOL/2017 M/S. INLAND CEMENT COMPANY PVT. LTD. , AYS 2010-11, 2012-13 & 2013-14 SEARCH, THE SHARE CAPITAL RECEIVED BY THE ASSESSEE U/S. 68 OF THE ACT WAS DELETED BY THE TRIBUNAL, WHICH ORDER HAS BEEN UPHELD BY HON BLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS BEEN UPHELD BY HONBLE SUPREME COURT (2016) 380 ITR (ST.) 69-ED. THEREFORE, IN THE LIGHT OF THE AFORESAID ORDER OF T HE HONBLE HIGH COURTS, WE NOTE THAT THE LD. CIT(A) HAS ORDERED DELETION BY THE ADDITION MADE BY THE AO IS IN ACCORDANCE TO LAW AND THEREFORE, THE ORDER OF THE LD. CIT(A) IS C ONFIRMED AND THE APPEAL OF THE REVENUE FROM 2009-10 TO 2013-14 STANDS DISMISSED. 4. SINCE FACTS ARE IDENTICAL AND THERE IS NO CHANGE IN LAW AND/OR IN FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL DATED 05.12.2018 IN ASSESSEES OWN GROUP CASE FOR AYS 2009-10 TO 2015-16 PARTICULARLY TAKING INTO ACCOUNT FACTS & LAW FOR AY 2009-10 TO 2013- 14, WE CONFIRM THE ACTION OF LD. CIT(A) FOR THE IMP UGNED APPEALS BEFORE US AND DISMISS THE REVENUES APPEAL. 5. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE D ISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD JUNE, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ACIT, C. C. 1(2), KOLKATA. 2 RESPONDENT M/S. INLAND CEMENT COMPANY PVT. LTD., P-221/2, STRAND BANK ROAD, KOLKATA 700 001. 3 4 5 CIT(A) -20, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA