DCIT, Trichur V. M/s/E.T.Devassy &Sons, Trichur

MA 160/COCH/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4763 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2020
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JOSE KAPPEN
• Keywords: Search and seizure; Audit objection; Retrospective amendment; Competent authority; Tax effect; Reason to believe; Set aside
• Section: 143(3); 142(1); 153A; 115JB; 268A; 254(2); 13; 153; 22; 153C; 131; 37; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE MATHAN, JM M.P. NOS. 158 TO 161/COCH/2019 (ARSG. OUT OF I.T.A. NOS. 532 TO 535/COCH/2013 ASSESSMENT YEARS : 2002-03 TO 2005-06 THE INCOME TAX OFFICER, WARD-2(1), THRISSUR . VS. E.T. DEVASSY & SONS, EDASSERY JEWELLERS, R.S. ROAD, CHALAKUDY, THRISSUR-680 697. [PAN:AABFE 0977B (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) M.P. NOS.162 TO 166/COCH/2019 (ARSG. OUT OF I.T.A. NOS. 539 TO 543/COCH/2013) ASSESSMENT YEARS : 2002-03 TO 2006-07 THE INCOME TAX OFFICER, WARD-2(3), THRISSUR. VS. M/S. NEW KERALA INVESTMENTS, ANNAMANADA, PALAYAMPARAMBU P.O., THRISSUR-680 741. [PAN:AAEFN 0017C] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) M.P. NOS. 167 TO 170/COCH/2019 (ARSG. OUT OF I.T.A. NOS. 594 TO 597/COCH/2013) ASSESSMENT YEARS : 2002 - 03 TO 2005 - 06 THE INCOME TAX OFFICER, WARD-2(1), THRISSUR. . VS. M/S. EDASSERY CERAMICS, PALAYAMPARAMBU P.O., THRISSUR-680 741. [PAN: AAAFE 9254G] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) 2 M.P. NOS. 158 TO 161/COCH/2019 & ORS. M.P. NOS. 171 TO 175/COCH/2019 (ARSG. OUT OF I .T.A. NOS.525 TO 529/COCH/2013 ) ASSESSMENT YEARS : 2002-03 TO 2006-07 THE INCOME TAX OFFICER, WARD-2(1), THRISSUR VS. ST. FRANCIS CLAY WORKS, PALAYAMPARAMBU P.O., THRISSUR-680 307. [PAN: AAFLS 1105M] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) M.P. NOS. 176 TO 178/2019 (ARSG. OUT OF I.T.A. NOS. 587 TO 589/COCH/2013) ASSESSMENT YEARS : 2004-05 TO 2006-07 THE INCOME TAX OFFICER, WARD-2(1), THRISSUR THE INCOME TAX OFFICER, WARD-2(5), THRISSUR VS. M/S. ST. FRANCIS CLAY DCOR TILES, THEKKUMURI, CHERUVALOOR P.O., THRISSUR-680 321. [PAN: ABKFS 6632H] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY SHRI B. SAJJIVE/SHRI MRITUNJAYA SHARMA. SR. DRS. ASSESSEE BY SHRI JOSE KAPPEN, CA DATE OF HEARING 09/10/2020 DATE OF PRONOUNCEMENT 09/10/2020 O R D E R PER CHANDRA POOJARI, AM: THESE MISCELLANEOUS APPEALS ARE FILED BY THE DEPARTMENT SEEKING RECALL OF THE COMMON ORDER OF THE TRIBUNAL DATED 26/06/2019 IN THE CASE OF DIFFERENT ASSESSEES IN ITA NOS. 532 TO 535/COCH/2013, 539 TO 543/COCH/2013, 595 TO 597/COCH/2013, 3 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 525 TO 529/COCH/2013 AND 587 TO 589/COCH/2013. THE RELEVANT ASSESSMENT YEARS ARE 2002-03 TO 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S, 132 OF THE INCOME TAX ACT WAS CONDUCTED ON 26.03.2008 IN THE PREMISES OF THE FIRMS AND IN THE RESIDENCE OF THE PARTNERS OF E T DEVASSY GROUP. 2.1 CONSEQUENT TO THE SEARCH THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 153A OF THE INCOME TAX ACT FOR THE ASST. YEARS 2002-03 TO 2007-08 AND ISSUED NOTICE UNDER SECTION 142(1) FOR THE ASSESSMENT YEAR 2008-09. 2.2 THE ASSESSEES FILED RETURNS OF INCOME AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS UNDER SECTION 153A VIDE ORDER DATED 29.12.2009 IN RESPECT OF THE ASST. YEARS 2002-03 TO 2007-08 AND U/S. 143(3) RELATING TO ASST. YEAR 2008-09 IN RESPECT OF THE FOLLOWING 84 CASES IN RESPECT OF 13 ASSESSEES. 1. M/S NEW KERALA INVESTMENTS ( ASST YEARS 2002-03 TO 2008-09) 2. M/S E T DEVASSY & SONS, EDASSERY (ASST YEARS 2002-03 TO 2008-09) 3. ST. FRANCIS TILE INDUSTRIES ( ASST YEARS 2007-08 TO 2008-09) 4. ST. FRANCIS CLAY DECOR TILES (ASST YEARS 2004-05 TO2008-09) 5. ST. FRANCIS CLAY WORKS (ASST YEARS 2002-03 TO 2008-09) 6. EDASSERY CERAMICS (ASST YEARS 2002-03 TO 2008-09) 7. E.T. DEVASSY (ASST YEARS 2002-03 TO 2008-09) 8. E.D.JAISON (ASST YEARS 2002-03 TO 2008-09) 9. E.D. SABU ASST YEARS 2002-03 TO 2008-09) 10.E.D BENNY (ASST YEARS 2002-03 TO 2008-09) 1I. K.D LILLY (ASST YEARS 2002-03 TO 2008-09 12.E.D. SHAJU (ASST YEARS 2002-03 TO 2008-09) 13.E. D. SALU (ASST YEARS 2002-03 TO 2008-09) 4 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 2.3 AGAINST THE ABOVE ORDERS , APPEALS WERE FILED BY THE ASSESSEES BEFORE THE CIT(A), KOCHI. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE APPEALS, BY ACCEPTING FRESH/ NEW EVIDENCES. AGAINST THE ORDER OF THE CIT(A), DEPARTMENT FILED 84 APPEALS BEFORE THE TRIBUNAL. THE RESPONDENTS ALSO FILED CROSS OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE COMMON ORDER DATED 10.10.2014 DISMISSED THE ENTIRE APPEALS. 2.4 AGAINST THE ABOVE ORDER, THE DEPARTMENT AGAIN FILED APPEALS, BEFORE THE KERALA HIGH COURT. THE HIGH COURT VIDE JUDGMENT IN ITA 169/2015 DATED 17/08/2015 DECIDED THE CASE IN FAVOUR OF THE ASSESSEES AND AGAINST THE DEPARTMENT. 2.5 SUBSEQUENTLY THE DEPARTMENT FILED A REVIEW PETITION BEFORE THE HIGH COURT IN RESPECT OF 21 CASES OUT OF 84 CASES, MENTIONED BELOW, ON THE ONLY GROUND THAT QUESTIONS OF LAW REGARDING 'THE APPRECIATION OF DOCUMENTS UNDER SEC.153A OF THE I.T. ACT' WERE NOT CONSIDERED IN THE ABOVE ORDER. DETAILS OF CASES FOR WHICH DEPARTMENT FILED REVIEW PETITIONS ARE : SL NO. NAME OF ASSESSEES ASST. YEARS ITA NOS. 1. M/S. NEW KERALA INVESTMENTS 2002-03 TO 2006-07 169,223,194, 2. M/S. E.T. DEVASSY AND SONS, EDASSERY JEWELLERS 2003 TO 2005-06 141,171,216, 110,103,150 3. M/S. ST. FRANCIS CLAY WORKS 2002-03 TO 2006-07 134,222,211 5 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 4. M/S. EDASSERY CERAMICS 2002-03 TO 2005-06 240,210,148 5. M/S. ST. FRANCIS CLAY DCOR TILES 2004-05 TO 2006-07 234,193,104, 239 AND 157/2015 2.6 THE HIGH COURT ADMITTED THE REVIEW PETITION IN R.P. NO. 1123/2015 AND REMANDED BACK THE ABOVE 21 CASES OUT OF 84 CASES TO THE TRIBUNAL FOR FRESH CONSIDERATION, VIDE ORDER DATED 22.03.2016, WITH THE FOLLOWING OBSERVATION: 'THEREFORE WE SET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN THE ABOVE APPEALS AND REMAND THE CASES TO THE TRIBUNAL TO RE-CONSIDER THE QUESTION RAISED IN THESE APPEALS BY TAKING INTO ACCOUNT THE PRINCIPLES LAID DOWN IN THE JUDGMENT CITED BY THE REVENUE AS WELL AS THE ASSESSEE OR ANY OTHER PRINCIPLES OF LAW LAID DOWN BY COMPETENT COURTS OF LAW AND TAKE A DECISION ON MERITS IN ACCORDANCE WITH LAW. THE QUESTION FRAMED IS ANSWERED IN FAVOUR OF REVENUE TO THE EXTENT INDICATED ABOVE. HOWEVER WE MAKE IT CLEAR THAT THE COMMON QUESTION WITH REGARD TO THE POWER OF THE APPELLATE AUTHORITY WITH RESPECT TO RECEIPT OF EVIDENCE IN APPEAL AND ITS APPLICATION CONCLUDED BY THE TRIBUNAL IN 84 CASES AND UPHELD BY THIS COURT, WILL REMAIN UNDISTURBED' 3. WHILE ADJUDICATING THE ABOVE ISSUE, THE TRIBUNAL DISMISSED THE APPEALS OF THE REVENUE BY OBSERVING AS FOLLOWS: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN OUR OPINION, THERE IS MERIT IN THE ARGUMENT OF THE LD. AR. WE DEEM IT APPROPRIATE TO FIRST REFER TO SECTION 268A OF THE INCOME TAX ACT, 1961 WHICH WAS INSERTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/1999 WHICH READS AS UNDER: 268A (1) THE BOARD MAY, FROM TIME TO TIME ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO OTHER INCOME TAX AUTHORITIES FIXING SUCH MONETARY LIMITS AS IT MAY DEEM FIT FOR THE PURPOSE OF REGULATING FILING OF APPEAL OR APPLICATION FOR REFERENCE BY ANY INCOME TAX AUTHORITIES UNDER THE PROVISIONS OF THIS CHAPTER. 6 M.P. NOS. 158 TO 161/COCH/2019 & ORS. (2) WHERE, IN PURSUANCE OF THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1), AN INCOME TAX AUTHORITY HAS NOT FILED ANY APPEAL OR APPLICATION FOR REFERENCE ON ANY ISSUE IN THE CASE OF AN ASSESSEE FOR ANY ASSESSMENT YEAR IT SHALL NOT PRECLUDE SUCH AUTHORITY FROM FILING AN APPEAL OR APPLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF (A) THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR (B) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR. (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION FOR REFERENCE HAS BEEN FILED BY AN INCOME-TAX AUTHORITY PURSUANT TO THE ORDERS OR INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION(1), IT SHALL NOT BE LAWFUL FOR THE ASSESSEE, BEING A PARTY IN ANY APPEAL OR REFERENCE, TO CONTEND THAT THE INCOME-TAX AUTHORITY HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENCE IN ANY CASE. (4) THE APPELLATE TRIBUNAL OR COURT HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB- SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NO FILED IN RESPECT OF ANY CASE. (5) EVERY ORDER, INSTRUCTION OR DIRECTION WHICH HAS BEEN ISSUED BY THE BOARD FIXING MONETARY LIMITS FOR FILING AN APPEAL OR APPLICATION FOR REFERENCE SHALL BE DEEMED TO HAVE BEEN ISSUED UNDER SUB-SECTION (1) AND THE PROVISIONS OF SUB- SECTION (2), (3) AND (4) SHALL APPLY ACCORDINGLY. 4.1 RELEVANT EXTRACTS (PARAS 1 TO 13) FROM THE AFORESAID CBDT CIRCULAR NO. 3/2018 DATED 11/07/2018 IS ALSO REPRODUCED HEREUNDER FOR READY REFERENCE: SUBJECT: REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND LPS/APPEALS BEFORE SUPREME COURT-MEASURES FOR REDUCING LITIGATION-REG. REFERENCE IS INVITED TO BOARD'S CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE INCOME TAX 7 M.P. NOS. 158 TO 161/COCH/2019 & ORS. APPELLATE TRIBUNAL AND HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S. NO. APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS) 1. BEFORE APPELLATE TRIBUNAL 20,00,000/ - 2. BEFORE HIGH COURT 50,00,000/- 3. BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT HE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). FURTHER, TAX EFFECT' SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE, THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 8 M.P. NOS. 158 TO 161/COCH/2019 & ORS. TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEARS(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASES WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSES, EACH ASSESSE SHALL BE DEALT WITH SEPARATELY. 6. FURTHER, WHERE INCOME IS COMPUTED UNDER THE PROVISIONS OF SECTION 115JB OR SECTION 115JC, FOR THE PURPOSES OF DETERMINATION OF 'TAX EFFECT', TAX ON THE TOTAL INCOME ASSESSED SHALL BE COMPUTED AS PER THE FOLLOWING FORMULA:- (A B) + (C D) WHERE, A = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABLE HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVISIONS BEEN REDUCED BY THE AMOUNT OF THE DISPUTED ISSUES UNDER GENERAL PROVISIONS; C = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC; D = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABLE HAD THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC WAS REDUCED BY THE AMOUNT OF DISPUTED ISSUES UNDER THE SAID PROVISIONS: HOWEVER, WHERE THE AMOUNT OF DISPUTED ISSUES IS CONSIDERED BOTH UNDER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC AND UNDER GENERAL PROVISIONS, SUCH AMOUNT SHALL NOT HE REDUCED FROM TOTAL INCOME ASSESSED WHILE DETERMINING THE AMOUNT UNDER ITEM D. 7. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISSIONER OF INCOME-TAX/ COMMISSIONER OF INCOME TAX SHALL SPECIFICALLY RECORD THAT 'EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS CIRCULAR'. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 9 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 8. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVEN EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE AND ALSO BRING TO THE NOTICE OF THE TRIBUNAL/ COURT THE PROVISIONS OF SUB SECTION (4) OF SECTION 268A OF THE INCOME-TAX ACT, 1961 WHICH READ AS UNDER : (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NOT FILED IN RESPECT OF ANY CASE. 9. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS CIRCULAR MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF PR.CSIT/ CSLT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER. NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 11. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE AND 10 M.P. NOS. 158 TO 161/COCH/2019 & ORS. RULES. FURTHER, IN CASES WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A/12AA OF THE IT ACT, 1901 ETC., FILING OF APPEAL SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPEALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 12. IT IS CLARIFIED THAT THE MONETARY LIMIT OF RS. 20 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APPLY EQUALLY TO CROSS OBJECTIONS UNDER SECTION 253(4) OF THE ACT. CROSS OBJECTIONS BELOW THIS, MONETARY LIMIT, ALREADY FILED, SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/NOT PRESSED. FILING OF CROSS OBJECTIONS BELOW THE MONETARY LIMIT MAY NOT LIE CONSIDERED HENCEFORTH. SIMILARLY, REFERENCES TO HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT BELOW THE MONETARY LIMIT OF RS. 50 LAKHS AND RS.1 CRORE RESPECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/NOT PRESSED. REFERENCES BEFORE HIGH COURT AND APPEALS BELOW THESE LIMITS MAY NOT BE CONSIDERED HENCEFORTH. 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. 4.2 WE HAVE SEEN THAT THE MONETARY LIMITS HAVE BEEN MADE APPLICABLE RETROSPECTIVELY BY THE CBDT IN THE SAID CIRCULAR AS WOULD BE EVIDENT FROM THE FOLLOWING EXTRACT: 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. 4.3 WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR. THE LD. DR SUBMITTED THAT HE WANTS TO TAKE INSTRUCTIONS FROM THE CONCERNED CIT TO WITHDRAW THE APPEALS. IN OUR CONSIDERED VIEW, THERE IS NO NECESSITY FOR ADJOURNING THE APPEALS AS THE TAX EFFECT INVOLVED IN THE PRESENT APPEALS OF THE REVENUE IS LESS THAN RS.20 LAKHS AND ACCORDINGLY, THE REQUEST FOR ADJOURNMENT IS REJECTED. 4.4 FURTHER, THE LD. DR WAS NOT ABLE TO SHOW THAT THE CASES OF THE ASSESSEES ARE GOVERNED BY ANY OF THE FOLLOWING EXCEPTIONS: 1) WHERE THE CONSTITUTIONAL VALIDITY OF THE ACT OR INCOME TAX RULES, 1962 IS UNDER CHALLENGE, OR. 11 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 2) WHERE THE CBDT ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR 3) WHERE THE REVENUE AUDIT OBJECTIONS IN THE CASE OF THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR 4) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/BANK ACCOUNTS. BEING SO, THE ASSESSEES CASES ARE GOVERNED BY THE ABOVE CBDT CIRCULAR. HENCE, THE DEPARTMENT IS DISENTITLED TO FILE APPEALS BEFORE THE TRIBUNAL IN RESPECT OF THESE ASSESSEES. HOWEVER, BY WAY OF ABUNDANT CAUTION, LIBERTY IS GRANTED TO THE REVENUE TO FILE MISCELLANEOUS PETITION IF THE ASSESSEES CASES FALL UNDER ANY OF THE EXCEPTIONS MENTIONED ABOVE OR IF THE DEPARTMENT IS ABLE TO SHOW THAT THE TAX EFFECT IN THESE CASES IS MORE THAN RS.20 LAKHS AS PRESCRIBED IN ABOVE CBDT CIRCULAR. THUS, THE APPEALS OF THE REVENUE ARE DISMISSED. 4. NOW, THE CONTENTION OF THE DEPARTMENT IS THAT IT HAD FILED THE APPEALS BEFORE THE JURISDICTIONAL HIGH COURT CHALLENGING THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF THE I.T. ACT INSOFAR AS THE ORIGINAL ORDER OF THE TRIBUNAL WAS CONCERNED, SINCE IN THAT ORDER, THE TRIBUNAL HAD HELD THAT ADDITION IN PURSUANCE TO NOTICE ISSUED UNDER SECTION 153A R W S 153C OF THE INCOME-TAX ACT, 1961 CAN BE MADE ONLY IF INCRIMINATING MATERIAL IS FOUND AND SEIZED IN CASE WHERE THERE IS ALSO ABATEMENT OF REGULAR ASSESSMENT PROCEEDINGS. IT WAS THE SUBMISSION OF THE DEPARTMENT THAT THIS IS AN ARTIFICIAL RESTRICTION PLACED ON SECTION 153A R W S 153C, THAT IS NOWHERE ENVISAGED IN THE INCOME-TAX ACT, WHEREIN THE ASSESSING OFFICER HAS BEEN GRANTED THE POWERS TO ASSESS OR REASSESS THE INCOME FOR SIX PREVIOUS ASSESSMENT YEARS, NOTWITHSTANDING THE PROVISIONS OF SECTION 139,147,148,149,151 AND 153 OF THE ACT. 12 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 4.1 IT WAS THE SUBMISSION OF THE REVENUE THAT ON THIS ISSUE THE HIGH COURT OF KERALA HAS REMANDED THE CASE BACK TO THE TRIBUNAL FOR FRESH CONSIDERATION BY TAKING INTO ACCOUNT THE PRINCIPLES LAID DOWN BY COMPETENT COURTS OF LAW AND TAKE A DECISION ON MERITS IN ACCORDANCE WITH LAW. FURTHER, IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED A SPECIAL LEAVE PETITION BEFORE THE SUPREME COURT OF INDIA IN SLP(C) 9164- 9203/2018 ON THIS ISSUE AGAINST THE ORDER OF HIGH COURT OF KERALA IN RP NOS. 1072 OF 2015 IN ITA NO 194/2015 DATED 22/03/2016 AND THE DEPARTMENT HAD FILED COUNTER AFFIDAVIT ON THE SLP FILED BY THE ASSESSEE, WHICH IS PENDING FOR DISPOSAL. AS SUCH, IT WAS THE SUBMISSION OF THE REVENUE THAT THE APPEAL IN THIS CASE WOULD FALL SQUARELY UNDER THE SET OF CASES COVERED UNDER CLAUSE [A] OF PARA 10 OF THE CBDT'S CIRCULAR 3 OF 2018, I.E. CASES 'WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE IS UNDER CHALLENGE'. THEREFORE, THE REVENUE SUBMITTED THAT THERE IS A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL WHEREIN IT WAS DECIDED THAT 'THE DEPARTMENT IS DISENTITLED TO FILE APPEALS BEFORE THE TRIBUNAL IN RESPECT OF THESE ASSESSEES', ESPECIALLY WHEN IT IS EVIDENT THAT THIS PARTICULAR CASE FALLS WITHIN ONE OF THE EXEMPTIONS LAID DOWN IN THE CBDT'S CIRCULAR AND THEREFORE WOULD NOT DISENTITLE THE DEPARTMENT FROM FILING THE APPEAL IN SPITE OF THE TAX EFFECT BEING BELOW THE MONETARY LIMITS SPECIFIED IN THAT CIRCULAR. THEREFORE, IT WAS PRAYED THAT THE MISTAKE APPARENT FROM RECORD IN THE DECISION OF THE TRIBUNAL IN THE ABOVE CASES MAY KINDLY BE RECTIFIED AND APPROPRIATE REMEDIAL ORDERS BE PASSED. 5. IT WAS SUBMITTED BY THE LD. DR THAT SINCE THE DEPARTMENT HAS CHALLENGED THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF SECTION 153A OF THE I.T. ACT, THE TRIBUNAL 13 M.P. NOS. 158 TO 161/COCH/2019 & ORS. IN THE SECOND ROUND OUGHT TO DECIDE THE ISSUE ON MERITS AS PER THE EXCEPTIONS PROVIDED IN CBDT CIRCULAR NO. 3/2018 DATED 11/07/2018. THEREFORE, ACCORDING TO THE LD. DR, THE ORDER OF THE TRIBUNAL IS TO BE RECALLED SO AS TO DECIDE THE APPEALS ON MERIT. 6. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT WHILE FILING MISCELLANEOUS APPLICATIONS, THE DEPARTMENT HAS RAISED A NEW GROUND THAT THE APPEALS FILED BY THEM ARE COVERED BY THE EXEMPTIONS PROVIDED IN CIRCULAR NO. 3/2018, VIZ, 'ADVERSE JUDGMENT RELATING TO AN ISSUE WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE IS UNDER CHALLENGE'. IN THIS RESPECT, THE LD. AR SUBMITTED THAT THE QUESTION OF CONSTITUTIONAL VALIDITY WAS NOT RAISED BY THE RESPONDENT AT ANY STAGE OF APPEAL, AND SIMILARLY DEPARTMENT ALSO HAS NOT RAISED THE GROUND THAT THE RESPONDENT HAS CHALLENGED THE VALIDITY OF THE CONSTITUTION AT ANY STAGE OF APPEAL. IT WAS SUBMITTED THAT EVEN THOUGH THE ASSESSEE QUESTIONED THE ACTION OF THE ASSESSING OFFICER REGARDING THE INITIATION OF PROCEEDINGS U/S 153A, FOR THE ASST. YEARS 2002-03 TO 2006-07 BEFORE THE CIT(A), THE CIT(A) REJECTED THE CLAIM WITH THE FOLLOWING OBSERVATION: 'THEREFORE, THERE IS NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S 153A OF THE ACT FAR THE ASST. YEARS 2002-03 TO 2005-06'.(PARA NO. 22.3 IN PAGE 67 OF ORDER OF THE CIT (A) IN THE CASE OF E T DEVASSY & SONS EDASSERY JEWELLERS) 6.1 THE LD. AR SUBMITTED THAT THE CIT (A), DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE RETURNED INCOME FOR THE ASST YEARS 2002-03 TO 2006-07 ON ESTIMATE BASIS AS IT WAS NOT SUPPORTED WITH ANY INCRIMINATING MATERIALS, I.E. ORAL OR DOCUMENTARY EVIDENCE SUCH AS BOOKS OF ACCOUNTS ETC. THE LD. AR SUBMITTED THAT 14 M.P. NOS. 158 TO 161/COCH/2019 & ORS. THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 22.04.2013 CONFIRMED THAT THERE IS NO INCRIMINATING MATERIALS AVAILABLE FOR THE ASST. YEARS 2002-03 TO 2006-07 (PAGE 69-70 OF C1T(A) ORDER). THE LD. AR RELIED ON THE JUDGMENT OF THE SUPREME COURT IN THE FOLLOWING CASES WHEREIN IT WAS HELD THAT THE ASSESSMENT U/S 153A/153C CANNOT BE DONE ONLY ON THE BASIS OF INCRIMINATING MATERIALS UNEARTHED DURING THE COURSE OF SEARCH: 1. CIT VS SINHGAD TECHNICAL EDUCATION SOCIETY (SC) [CA NO, 11080 OF 2017] ORDER DATED 29/08/2017 2. CIT VS KABUL CHAWLA (SC) [CA NO. 6412/2016, 6408/2016 & 6415/2016] ORDER DATED 17/09/2018 3. CIT VS MEETA GUTGUTIA (SC) [SLP 18121/2018] ORDER DATED 02/07/2018 4. PCIT VS KURELE PAPER MILLS P LTD (SC) [SLP 21186/2015] ORDER DATED 02/07/2015 5. DY. CIT VS MSEB HOLDING CO.(SC) SLP 26373/2019 DATED 16/08/2019 6.2 IN THE PRESENT CASES, THE LD. AR SUBMITTED THAT THE CIT (A) DID NOT ALLOW THE APPEALS ON THE GROUND THAT 'THE PROVISIONS OF SEC. 153A OR 153C UNDER WHICH THE ASSESSMENTS WERE MADE ARE NOT CONSTITUTIONALLY VALID', BUT ALLOWED THE APPEALS ON MERITS AND LEGAL GROUNDS. ACCORDING TO THE LD. AR, THE CIT (A) CANNOT ALLOW AN APPEAL TREATING ANY OF THE PROVISIONS OF THE STATUTE OR RULE AS CONSTITUTIONALLY NOT VALID. FURTHER, IT WAS THE SUBMISSION OF THE LD. AR THAT THE CIT(A) HAD NOT RELIED ON ANY OF THE DECISIONS OF THE HIGH COURTS OR SUPREME COURT IN WHICH IT IS HELD THAT THE PROVISIONS OF SEC. 153A/153C ARE CONSTITUTIONALLY NOT VALID. ACCORDING TO THE LD. 15 M.P. NOS. 158 TO 161/COCH/2019 & ORS. AR THE CIT(A) RELIED ON THE DECISIONS OF THE TRIBUNAL AND SPECIAL BENCH OF THE TRIBUNAL IN WHICH THE PROVISIONS OF SEC. 153A ARE PROPERLY INTERPRETED BY THE TRIBUNAL. IT WAS SUBMITTED THAT IN THIS CASE, THE DEPARTMENT COULD NOT PROVE THAT THE CONSTITUTIONAL VALIDITY OF SEC 153A/C IS CHALLENGED BY THE ASSESSEE AND THE GROUND RAISED BY THE DEPARTMENT IS ONLY FOR ARGUMENT SAKE AND WITHOUT ANY SUPPORT, AND HENCE IT DESERVES NO MERIT. THE LD. AR RELIED ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF PCIT VS M/S NAWANY CONSTRUCTION CO. PVT LTD (ITA NO. 1142 OF 2015) DATED 10.09.2018 WHEREIN IT WAS HELD AS FOLLOWS: 'THE CIRCULARS CONTINUE TO BIND THE REVENUE AND IF THEY CONTAIN ANY CONDITIONS, WHETHER SUCH CONDITIONS ARE ATTRACTED OR NOT WOULD HAVE TO BE PROVED AND ESTABLISHED BY THE REVENUE. ONCE THERE IS NO SUCH RECORD BEFORE US, WE DO NOT COUNTENANCE THE ORAL REQUEST OF MR. PINTO. CONSEQUENTLY, WE DO NOT SEE ANY REASON TO ENTERTAIN THIS APPEAL. IT IS DISMISSED. ' 6.3 THE LD. AR RELIED ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA (2015) (380 ITR 573) WHICH CASE WAS FOLLOWED BY VARIOUS HIGH COURTS AND TRIBUNALS IN DECIDING THE SCOPE OF ASSESSMENT U/S 153 A/ 153C OF THE ACT IN THE ABSENCE OF SPECIFIC INCRIMINATING MATERIALS FOR THAT ASSESSMENT YEAR. ACCORDING TO THE LD. AR, THIS JUDGMENT WAS CHALLENGED BY THE REVENUE IN THE APEX COURT AND THE SLP FILED BY THE DEPARTMENT WAS DISMISSED BY THE APEX COURT [DIARY NO.3267 OF 2016, 5952 OF 2016 AND 6377 OF 2016] VIDE ORDER DATED 17/09/2016 BASED ON THE CBDT CIRCULAR NO. 3/2018 AS THE TAX EFFECT INVOLVED IS BELOW THE PRESCRIBED MONETARY LIMITS, WHICH CLEARLY PROVES THAT THERE IS NO ISSUE OF CONSTITUTIONAL VALIDITY IN THE DECISIONS EXPLAINING THE SCOPE OF ASSESSMENT U/S 153 A/ 153C OF THE ACT. FURTHER, THE LD. AR RELIED ON THE JUDGMENT OF THE SUPREME COURT 16 M.P. NOS. 158 TO 161/COCH/2019 & ORS. IN THE CASE OF DCIT VS MSEB HOLDING COMPANY LTD, SLP (CIVIL) DIARY 26373/2019, DATED 16.08.2019 WHEREIN IT WAS HELD AS UNDER:- 'SINCE THE TAX EFFECT INVOLVED IN THIS MATTER IS LESS THAN RS. 2 CRORES, WE SEE NO REASON TO INTERFERE IN THIS MATTER THE SPECIAL LEAVE PETITION IS DISMISSED'. FROM THE ABOVE, IT IS CLEAR THAT THE ISSUE INVOLVED IN THE PRESENT CASES, DO NOT INVOLVE ANY CHALLENGE TO THE CONSTITUTIONAL VALIDITY OF ANY OF THE PROVISIONS OF THE ACT. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE MISCELLANEOUS PETITIONS FILED BY THE DEPARTMENT ARE DEVOID OF ANY MERIT AND ARE LIABLE TO BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THE PRESENT CASE, ORIGINALLY, THE ISSUE WAS DECIDED BY THE TRIBUNAL BY DISMISSING THE APPEALS OF THE REVENUE ON THE REASON THAT THE ADDITION IN PURSUANCE TO NOTICE ISSUED U/S. 153A OF THE I.T. ACT CAN BE MADE ONLY IF INCRIMINATING MATERIAL IS FOUND AND SEIZED IN CASE WHERE THERE IS ALSO ABATEMENT OF REGULAR ASSESSMENT PROCEEDINGS. AGAINST THIS, THE REVENUE WENT IN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT AND FRAMED THE FOLLOWING QUESTIONS: 1 (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IS NOT THE TRIBUNAL ERRONEOUS IN HOLDING THAT ADDITION IN PURSUANCE TO NOTICE ISSUED UNDER SECTION 153A CAN BE MADE ONLY IF INCRIMINATING MATERIAL IS FOUND AND SEIZED IN CASE WHERE THERE IS ALSO ABATEMENT OF REGULAR ASSESSMENT PROCEEDINGS, AND ARE NOT, SUCH AN APPROACH AND THE RESULTANT CONCLUSION PERVERSE AND UNCALLED FOR? (B) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WHEN THE AO IS EMPOWERED TO ASSESS AND REASSESS INCOME FOR SIX PRIOR PERIOD ASSESSMENT YEARS NOTWITHSTANDING THE PROVISIONS IN SECTIONS 139, 147, 148, 149, 151 AND 153, IS NOT THE ABOVE APPROACH OF THE TRIBUNAL ONE PUTTING AN ARTIFICIAL CAP ON SECTION 153A? 17 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 7.1 THESE QUESTIONS FRAMED BY THE REVENUE WERE ANSWERED BY THE JURISDICTIONAL HIGH COURT VIDE JUDGMENT IN ITA NO.169/2015 & ORS. DATED 22/03/2016 AS FOLLOWS : 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND APPRECIATING AND PERUSING THE PLEADINGS AND DOCUMENTS PRODUCED BY THE REVENUE AND THE WRITTEN SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE FIND THAT THE TRIBUNAL WITHOUT TAKING ANY EFFORTS TO FIND OUT THE FACTS AND CIRCUMSTANCES INVOLVED IN THE CASES ON HAND HAS RELIED ON THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN ALL CARGO LOGISTICS LTD. (SUPRA) AND HAS HELD THAT THERE WAS NO NEED TO INTERFERE WITH THE ORDER PASSED BY THE APPELLATE TRIBUNAL. IN ORDER TO CONSIDER THE ISSUE, WE THINK IT IS PROFITABLE TO EXTRACT SECTION 132(1) AND CLAUSE (A) AND SUB-SECTION (4). 132 SEARCH AND SEIZURE (1) WHERE THE DIRECTOR GENERAL OR DIRECTOR OR THE CHIEF COMMISSIONER OR COMMISSIONER OR ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR JOINT DIRECTOR OR JOINT COMMISSIONER IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT- (A) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME TAX ACT, 1922 (11 OF 1922), OR UNDER SUB- SECTION (1) OF SECTION 131 OF THIS ACT, OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF SECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE, CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED TO OR FAILED TO PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE, OR ETC. ETC. SUB-SECTION(4): THE AUTHORIZED OFFICER, DURING THE COURSE OF THE SEARCH OR SEIZURE EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. 18 M.P. NOS. 158 TO 161/COCH/2019 & ORS. 18. ON GOING THROUGH SECTION 132 OF THE INCOME TAX ACT WHAT WE FIND IS THAT IF THE AUTHORITY SPECIFIED THEREIN HAS REASON TO BELIEVE THAT ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF 131 OF THE 1961 ACT, OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF SECTION 142 OF 1961 ACT WAS ISSUED TO PRODUCE OR CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE ETC. ETC., CAN AUTHORIZE THE OFFICERS REFERRED THEREIN TO ENTER AND SEARCH ANY BUILDING ETC. ETC. SUCH AUTHORIZED OFFICER UNDER SUB-SECTION (4) OF SECTION 132 MAY DURING THE COURSE OF SEARCH OR SEIZURE EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENT, MONEY, BULLION, JEWELLRY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 OR UNDER THE ACT, 1922 OR UNDER THE ACT 1961. THEREFORE, BY GOING BY THE SAID PROVISION NOT ONLY THE BOOKS, DOCUMENTS, DOCUMENTS ETC. ETC. THAT ARE UNEARTHED DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME TAX ACT, 1961. THUS VIEWING THE PROVISION IN SUCH MANNER, IT IS AN ADMITTED FACT THAT THE MANAGING PARTNER OF THE FIRMS IN QUESTION HAS GIVEN A VOLUNTARY STATEMENT TO THE AO THAT THERE IS A UNDISCLOSED INCOME OF RS.2.75 CRORES, WHICH ACCORDING TO THE LEARNED COUNSEL, WAS RETRACTED BY THE MANAGING PARTNER SUBSEQUENTLY. THUS IT CAN BE SEEN THAT EVEN ACCORDING TO THE ASSESSEE, THERE WAS A DISCLOSURE MADE BY GIVING A STATEMENT DURING THE COURSE OF SEARCH AND THEREFORE, THE AO, BY VIRTUE OF THE POWER CONFERRED ON HIM UNDER SECTION 153A WAS COMPETENT TO ISSUE NOTICE UNDER THE SAID PROVISION AND REQUIRE THE ASSESSEE FIRMS TO FURNISH THE RETURNS AS PROVIDED THEREUNDER. NEITHER UNDER SECTION 132 OR UNDER SECTION 153A, THE PHRASEOLOGY INCRIMINATING IS USED BY THE PARLIAMENT. THEREFORE, ANY MATERIAL WHICH WAS UNEARTHED DURING SEARCH OPERATIONS OR ANY STATEMENT MADE DURING THE COURSE OF SEARCH BY THE ASSESSEE IS A VALUABLE PIECE OF EVIDENCE IN ORDER TO INVOKE SECTION 153A OF THE INCOME TAX ACT, 1961. 19. IN ORDER TO APPRECIATE THE PROVISIONS OF SECTION 153A IN A PROPER MANNER, IT IS APPROPRIATE TO EXTRACT THE SAID PROVISION, WHICH READS THUS: 153A(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL 19 M.P. NOS. 158 TO 161/COCH/2019 & ORS. (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, IN RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER. PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. 20 M.P. NOS. 158 TO 161/COCH/2019 & ORS. EXPLANATION.- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT. (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION. II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. 20. ON A PLAIN READING OF SECTION 153A, IT IS CLEAR THAT ONCE SEARCH IS INITIATED UNDER SECTION 132 OR A REQUISITION IS MADE UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY 2003, THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FOLLOWING SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B). IT FURTHER TREATS THE RETURNS SO FILED AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139. SO THAT ON A READING OF SECTION 153A(1) IT IS CATEGORIC AND CLEAR THAT ONCE A NOTICE IS ISSUED AND THE AO HAS REQUIRED THE ASSESSEE TO FURNISH RETURN FOR A PERIOD OF SIX ASSESSMENT YEARS AS CONTEMPLATED UNDER CLAUSE (B) THEN THE ASSESSEE HAS TO FURNISH ALL DETAILS WITH RESPECT TO EACH ASSESSMENT YEAR SINCE THE SAME IS TREATED AS A RETURN FILED UNDER SECTION 139. IT IS TRUE THAT AS PER THE FIRST PROVISO, THE AO IS BOUND TO ASSESS OR REASSESS THE TOTAL INCOME WITH RESPECT TO EACH AY FOLLOWING THE SIX ASSESSMENT YEARS SPECIFIED IN SUB-CLAUSES (A) AND (B) OF SECTION 153A. HOWEVER, EVEN IF NO DOCUMENTS ARE UNEARTHED OR ANY STATEMENT MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 AND NO MATERIALS ARE RECEIVED FOR THE AFORESPECIFIED PERIOD OF SIX YEARS, THE ASSESSEE IS BOUND TO FILE A RETURN, IS THE SCHEME OF THE PROVISION. EVEN THOUGH THE SECOND PROVISO TO SECTION 153A SPEAKS OF ABATEMENT OF ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF THE INITIATION OF SEARCH WITHIN THE PERIOD OF SIX ASSESSMENT YEARS SPECIFIED UNDER THE PROVISION THAT WILL ALSO NOT ABSOLVE THE ASSESSEE FROM HIS LIABILITY TO SUBMIT RETURNS AS PROVIDED UNDER SECTION 153A(1)(A). THIS BEING THE SCHEME OF THE PROVISIONS OF THE ACT, THE APPELLATE TRIBUNAL OUGHT TO HAVE CONSIDERED THE ISSUE WITH SPECIFIC REFERENCE TO THE FACTS INVOLVED IN THE CASE AND AS PROVIDED UNDER SECTION 153A. 21. HOWEVER, WE FIND THAT THE TRIBUNAL WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES HAS PROCEEDED PURELY ON THE BASIS THAT THE CASES AT HAND WERE COVERED UNDER THE SPECIAL BENCH DECISION IN ALL CARGO LOGISTICS LTD. (SUPRA). IN OUR VIEW THE COURSE ADOPTED BY THE TRIBUNAL WAS NOT THE PROPER ONE TO DECIDE THE QUESTION WITH REGARD TO THE SUSTAINABILITY OF THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE TRIBUNAL HAS NOT ADOPTED THE RIGHT METHOD TO DECIDE THE ISSUE WITH REGARD TO 21 M.P. NOS. 158 TO 161/COCH/2019 & ORS. THE QUESTION FRAMED IN THESE APPEALS AND THEREFORE, IT IS ONLY NECESSARY TO REMAND THE MATTER TO THE TRIBUNAL FOR FRESH CONSIDERATION. 22. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN THE ABOVE APPEALS AND REMAND THE CASES TO THE TRIBUNAL TO RE-CONSIDER THE QUESTION RAISED IN THESE APPEALS BY TAKING INTO ACCOUNT THE PRINCIPLES LAID DOWN IN THE JUDGMENT CITED BY THE REVENUE AS WELL AS THE ASSESSEE OR ANY OTHER PRINCIPLES OF LAW LAID DOWN BY COMPETENT COURTS OF LAW AND TAKE A DECISION ON MERITS IN ACCORDANCE WITH LAW. THE QUESTION THUS FRAMED IS ANSWERED IN FAVOUR OF REVENUE TO THE EXTENT INDICATED ABOVE. HOWEVER WE MAKE IT CLEAR THAT THE COMMON QUESTION WITH REGARD TO THE POWER OF THE APPELLATE AUTHORITY WITH RESPECT TO RECEIPT OF EVIDENCE IN APPEAL AND ITS APPLICATION, CONCLUDED BY THE TRIBUNAL IN 84 CASES AND UPHELD BY THIS COURT, WILL REMAIN UNDISTURBED. THE APPEALS ARE DISPOSED OF ACCORDINGLY. 7.2 IN VIEW OF THE ABOVE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, THE ABOVE CASES CAME UP FOR HEARING BEFORE THE TRIBUNAL ON 26/09/2019 AND THE TRIBUNAL VIDE ORDER DATED 26/09/2019 DISMISSED THE ABOVE APPEALS OF THE REVENUE BY PLACING RELIANCE ON THE CBDT CIRCULAR NO. 3/2018 DATED 11/07/2018. NOT BEING SATISFIED WITH THE FINDINGS OF THE TRIBUNAL, THE DEPARTMENT HAS NOW FILED THE MISCELLANEOUS PETITIONS BEFORE US. 7.3 IN OUR HUMBLE OPINION, THE REVENUE HAS NOT AT ALL RAISED THE CONSTITUTIONAL VALIDITY OF THE ASSESSMENT PROCEEDINGS U/S. 153A OF THE I.T. ACT OR PROVISIONS OF OTHER SECTIONS NAMELY, 139, 142, 148, 151 AND 153 OF THE I.T. ACT BEFORE THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION. FURTHER, THIS TRIBUNAL IS NOT A COMPETENT AUTHORITY TO DECIDE THE CONSTITUTIONAL VALIDITY OF ANY PROVISIONS OF THE INCOME TAX ACT AND IT CANNOT BE SAID THAT THE DEPARTMENTS CASE FALLS UNDER THE EXCEPTIONS 22 M.P. NOS. 158 TO 161/COCH/2019 & ORS. PROVIDED IN CBDT CIRCULAR NO.3/2018 DATED 11/07/2018. HENCE, IN OUR HUMBLE OPINION, THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL DATED 26/06/2019 SO AS TO RECALL THE ORDER U/S. 254(2) OF THE I.T. ACT. 8. IN THE RESULT, THE MISCELLANEOUS PETITIONS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH OCTOBER, 2020 SD/- SD/- (GEORGE MATHAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 09 TH OCTOBER, 2020 GJ COPY TO: 1. M/S. NEW KERALA INVESTMENTS, ANAMMANADA, PALAYAMPARAMBU P.O., THRISSUR-680 741. 2. E.T. DEVASSY & SONS, EDASSERY JEWELLERS, R.S. ROAD, CHALAKUDY, THRISSUR-680 697. 3. M/S. EDASSERY CERAMICS, PALAYAMPARAMBU P.O., THRISSUR-680 741. 4. M/S. ST. FRANCIS CLAY DCOR TILES, THEKKUMURI, CHERUVALOOR P.O., THRISSUR-680 321. 5. ST. FRANCIS CLAY WORKS, PALAYAMPARAMBU P.O., THRISSUR-680 307. 6. THE INCOME TAX OFFICER, WARD-2(1), THRISSUR 7. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI. 8. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 9. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 10. GUARD FILE. 11. THE INCOME TAX OFFICER, WARD-2(5), THRISSUR. 12. THE INCOME TAX OFFICER, WARD-2(3), THRISSUR. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN 23 M.P. NOS. 158 TO 161/COCH/2019 & ORS.