R.Sarath, Krishnagiri V. DCIT, Coimbatore

MA 70/CHNY/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2281 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Rectification of order; Loose papers; Deemed dividend; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER M.P. NO. ASSESSMENT YEAR APPELLANT RESPONDENT 70/MDS/2014 (IN ITA NO. 2322/MDS/2013) 2007-08 SHRI R. SARATH, 4 TH FLOOR, JR PLAZA, TANK STREET, HOSUR, KRISHNAGIRI [PAN: BFXPS 1501 K] DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, COIMBATORE 71, 72 & 73/MDS/2014 (IN ITA NOS. 2325, 2326 & 2327/MDS/2013) 2005-06, 2006-07 & 2007-08 SHRI R. SUBASH CHANDRU, 104-106, VENKATESWARA LAY OUT, OPP. DSP BUNGLOW, HOSUR-635 109 [PAN: AFMPC 8542 C] DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, COIMBATORE 74, 75, 76, 77, 78, 79 & 80/MDS/2014 (IN ITA NOS. 2335, 2336, 2337, 2338, 2339, 2340 & 2341/MDS/2013) 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10 SMT. JAYA RAMAMURTHY, 104-106, VENKATESWARA LAY OUT, OPP. DSP BUNGLOW, HOSUR-635 109 [PAN: ABLPR 1585 M] DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, COIMBATORE PETITIONER BY : MR.T. BANUSEKAR , CA., RESPONDENT BY : MR. SHAJI P.JACOB, ADDL. CIT DATE OF HEARING : 1 3 - 0 6 - 2014 DATE OF PRONOUNCEMENT : 22-08-2014 O R D E R PER VIKAS AWASTHY, J.M: THE MISCELLANEOUS PETITIONS HAVE BEEN FILED BY THE ASSESSEES FOR RECTIFICATION OF MISTAKE IN THE ORDER OF THE TRIBUNAL DT.25-03-2014 VIDE WHICH THE APPEALS OF THE ASSESSE ES/PETITIONERS WERE ALLOWED FOR STATISTICAL PURPOSE/DISMISSED. TH E LD.AR HAS M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 2 SUBMITTED THAT IN THE CASE OF ASSESSEES-PETITIONERS , NOTICE U/S.153C OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED IN PURSUANT TO SEARCH ACTION ON SHRI M.RAMAMURTHY, WHO IS THE FATHER OF SHRI R.SARATH AN D R.SUBASH CHANDRU AND HUSBAND OF SMT.JAYA RAMAMURTHY. IN RES PONSE TO THE NOTICE U/S.153C, THE ASSESSEES/PETITIONERS FILE D THEIR RESPECTIVE RETURNS OF INCOME. ADDITIONS WERE MADE IN THE INCO ME RETURNED BY THE ASSESSEES DURING THE COURSE OF ASSESSMENT PROCE EDINGS. HOWEVER, NO ADVERSE MATERIAL WHAT-SO-EVER WAS SEIZE D DURING SEARCH IN RESPECT OF ASSESSEES/PETITIONERS. IN THE ABSENCE OF ANY MATERIAL DURING SEARCH, THE PROCEEDINGS U/S.153C AG AINST ASSESSEES-PETITIONERS ARE BEYOND JURISDICTION. THE LD.AR CONTENDED THAT RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT REPORTED AS 333 ITR 436 (GUJ) IN SUPPORT OF HIS SUBMISSIONS. THE BENCH WHILE ADJUDICATING THE APPEALS DID NOT TAKE I NTO CONSIDERATION THE JUDGMENT OF HON'BLE GUJARAT HIGH C OURT IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT (SUPRA). THE APPEALS OF THE ASSESSEE/PETITIONER JAYA RAMAMURTHY FOR THE AYS .2003-04, 2004-05 & 2005-06 WERE DISMISSED AND THE APPEALS FO R THE AYS.2007-08, 2008-09 & 2009-10 WERE ALLOWED FOR STA TISTICAL PURPOSES. THE APPEALS OF THE ASSESSEE/PETITIONER S HRI R.SARATH M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 3 AND SHRI R.SUBASH CHANDRU FOR THE AYS.2005-06, 2006 -07 & 2007-08 WERE DISMISSED. 2. SHRI SHAJI P. JACOB, APPEARING ON BEHALF OF THE REVENUE ADMITTED THAT THE JUDGMENT OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT (SUPRA) WAS REFERRED TO BY THE LD.AR AT THE TIME OF MAKING SUBMISSIONS. 3. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. THE MAIN CONTEN TION OF THE LD.AR OF THE ASSESSEE IS THAT SINCE NO MATERIALS WE RE FOUND AGAINST THE PETITIONERS DURING THE COURSE OF SEARCH CONDUCTED AT THE PREMISES OF SHRI M.RAMAMURTHY, THE PROCEEDINGS U/S.153C ARE BAD IN LAW. THE LD.AR HAS PLACED RELIANCE ON T HE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT (SUPRA). THE HON'BLE HIGH COURT HAS INTERPRETED THE PROVISIONS OF SECTION 153C OF THE A CT IN THE SAID CASE. THE RELEVANT EXTRACT OF THE JUDGMENT IS RE-P RODUCED HEREIN BELOW: ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SS. 153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMEN T IN CASE OF SEARCH AND REQUISITION. SEC. 153A DEALS WITH PROCED URE FOR ISSUANCE OF NOTICE AND ASSESSMENT OR REASSESSMENT IN CASE OF TH E PERSON WHERE A SEARCH IS INITIATED UNDER S. 132 OR BOOKS OF ACCOUN T, OTHER DOCUMENTS OR M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 4 ASSETS ARE REQUISITIONED UNDER S. 132A AFTER THE 31 ST DAY OF MAY, 2003. SEC. 153B LAYS DOWN THE TIME-LIMIT FOR COMPLETION O F ASSESSMENT UNDER S. 153A. SEC. 153C WHICH IS SIMILARLY WORDED TO S.1 58BD OF THE ACT, PROVIDES THAT WHERE THE AO IS SATISFIED THAT ANY MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN S. 153A HE SHALL PRO CEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTIC E AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON. HOWEVER, THER E IS A DISTINCTION BETWEEN THE TWO PROVISIONS IN AS MUCH AS UNDER S. 1 53C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER S. 158BD IF THE AO IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO AN Y PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UND ER S. 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER S. 132A, HE SHALL PROCEED AGAIN ST SUCH OTHER PERSON UNDER S. 158BC. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE UNDER S. 153C AND ASSESSING OR REASSESSING INCOME OF SUCH OTHER PERSO N, IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED, R ESORT CANNOT BE HAD TO THE PROVISIONS OF S. 153C OF THE ACT. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THE AFORESAID STATUTORY SCHEME, IT IS AN ADMITTED POSITION AS EME RGING FROM THE RECORD OF THE CASE, THAT THE DOCUMENTS IN QUESTION, NAMELY THE THREE LOOSE PAPERS RECOVERED DURING THE SEARCH PROCEEDINGS DO N OT BELONG TO THE PETITIONER. IT MAY BE THAT THERE IS A REFERENCE TO THE PETITIONER IN AS MUCH AS HIS NAME IS REFLECTED IN THE LIST UNDER THE HEAD ING 'SAMUTKARSH M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 5 MEMBERS DETAILS' AND CERTAIN DETAILS ARE GIVEN UNDE R DIFFERENT COLUMNS AGAINST THE NAME OF THE PETITIONER ALONG WITH OTHER MEMBERS, HOWEVER, IT IS NOBODYS CASE THAT THE SAID DOCUMENTS BELONG TO THE PETITIONER. IT IS NOT EVEN THE CASE OF REVENUE THAT THE SAID THREE DO CUMENTS ARE IN THE HANDWRITING OF THE PETITIONER. IN THE CIRCUMSTANCES , WHEN THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED A NY ACTION TAKEN UNDER S. 153C OF THE ACT STANDS VITIATED. FOR THE FOREGOING REASONS, THE PETITION SUCCEEDS AN D IS ACCORDINGLY ALLOWED. THE IMPUGNED NOTICES DT. 7 TH OCT., 2009 ISSUED BY THE RESPONDENT UNDER S. 153C OF THE ACT ARE HEREBY QUAS HED AND SET ASIDE. RULE IS MADE ABSOLUTE ACCORDINGLY WITH NO ORDER AS TO COSTS. THE HON'BLE HIGH COURT WHILE EXPLAINING THE PROVISI ONS OF SECTION 153C HELD, THAT IN CASE NO INCRIMINATE DOCUMENT IN RESPECT OF OTHER PERSONS AS REFERRED IN SECTION 153C IS FOUND DURING THE COURSE OF SEARCH, THE PROCEEDINGS U/S.153C AGAINST THE SAID PERSONS STAND VITIATED. 4. IN THE CASE OF SMT. JAYA RAMAMURTHY, IN ITA NOS. 2335 TO 2341 ADDITIONS HAVE BEEN MADE ON ACCOUNT OF OPENING CASH BALANCES, UN-PROVED CREDITS AND DEEMED DIVIDEND. A PERUSAL OF ASSESSMENT ORDERS FOR THE IMPUGNED ASSESSMENT YEARS SHOW THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF RETURN S FILED BY THE ASSESSEES IN PURSUANT TO NOTICE ISSUED U/S.153C. N OWHERE IT IS EMANATING FROM THE RECORDS THAT ANY INCRIMINATE MAT ERIAL WAS SEIZED IN RESPECT OF THE ASSESSEE DURING THE SEARCH PROCEEDINGS AT M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 6 THE PREMISES OF SHRI RAMAMURTHY. IN THE APPEAL FIL ED BY SHRI R.SARATH I.E., IN ITA NO.2322 AND SHRI R.SUBASH CHA NDRU IN ITA NOS.2325, 2326 & 2327, THE ADDITIONS HAVE BEEN MADE ON ACCOUNT OF UN-PROVED CASH CREDITS IN CASH FLOW STATEMENTS. IT IS NOT THE CASE OF REVENUE THAT THE ADDITIONS HAVE BEEN MADE O N THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH AGAIN ST THE ASSESSEES/PETITIONERS. 5. THE TRIBUNAL IN ITS ORDER DT.25-03-2014 HAS PASS ED ORDER ON MERITS BY ONLY CONSIDERING THE ADDITIONS MADE AND T HE DOCUMENTS PLACED ON RECORD BY THE ASSESSEES TO REBUT THE ADDI TIONS. HOWEVER, THE APPLICABILITY OF PROVISIONS OF SECTION 153C OF THE ACT IN THE ABSENCE OF ANY MATERIAL DURING SEARCH AND TH E RATIO LAID DOWN IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT (SUPRA) WAS NOT LOOKED INTO. IN OUR CONSIDERED OPINION, THE CA SE OF THE ASSESSEE IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N.CHANDRANI VS. ACIT (SUPRA). ACCORDINGLY, WE SET ASIDE THE IMPUGNED OR DERS OF THE CIT(APPEALS) IN THE APPEALS OF THE ASSESSEES/PETITI ONERS AND ALLOW THE APPEALS. 6. THERE IS A MISTAKE IN THE FINDINGS OF THE TRIBUN AL AS IS APPARENT FROM RECORDS. THE REVENUE HAS NOT BROUGHT TO OUR M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 7 NOTICE ANY JUDGMENT OF THE HON'BLE APEX COURT OR TH E HON'BLE JURISDICTIONAL HIGH COURT OR ANY OTHER HIGH COURT WITH A CONTRARY VIEW. SINCE, THERE ARE NO CONFLICTING DECISIONS ON THE SAME ISSUE, THE TRIBUNAL IS BOUND TO FOLLOW THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT. 7. WE ARE WELL AWARE OF THE FACT THAT U/S.254(2) OF THE ACT, THE TRIBUNAL HAS GOT VERY LIMITED SCOPE TO INTERFERE WI TH ITS OWN ORDER. THE HON'BLE SUPREME COURT OF INDIA AND THE HON'BLE H IGH COURTS HAVE TIME AND AGAIN HELD THAT RECTIFICATION CAN BE MADE ONLY WHEN A GLARING MISTAKE OF FACT OR LAW IS COMMITTED WHICH IS APPARENT FROM THE RECORDS. THE MISTAKE HAS TO BE SUCH FOR W HICH NO ELABORATE REASONS OR ENQUIRY IS NECESSARY. WHERE T WO OPINIONS ARE POSSIBLE THEN IT CANNOT BE SAID TO BE A MISTAKE APPARENT ON THE RECORD. THE RECTIFICATION IS NOT POSSIBLE IF THE Q UESTION IS DEBATABLE. 8. IN THE PRESENT CASE, THE JUDGMENT ON WHICH THE L D.AR OF THE ASSESSEE HAD PLACED RELIANCE AT THE TIME OF MAKING SUBMISSION IN MAIN CASE WAS NOT CONSIDERED AT ALL. THE RATIO LAI D DOWN BY THE HON'BLE HIGH COURT IN THE SAID JUDGMENT HAD DIRECT B EARING ON THE ISSUE IN APPEALS. THUS, IN ORDER TO BRING THE ORDE R IN CONFORMITY WITH THE DECISION OF THE HON'BLE HIGH COURT, RECTIFI CATION IN THE M.P. NOS.70, 71, 72, 73, 74, 75 76, 77, 78, 79 & 80/MDS/14 8 ORDER IS MANDATORY, ESPECIALLY WHEN THE JUDGMENT WA S CITED AT THE TIME OF ORIGINAL HEARING OF THE CASE. IN THE RESULT, ITA NO.2322/MDS/2013 FOR THE AY.200 7-08, I.T.A.NOS. 2325, 2326 & 2327/MDS/2013 FOR THE AYS. 2005-06, 2006-07 & 2007-08 & I.T.A.NOS. 2335, 2336, 2337, 2338, 2339, 2340 & 2341/MDS/2013 FOR THE AYS. 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10 ARE ALLOWED. RESULTANTLY, THE MISCELLANEOUS PETITIONS 70, 71, 7 2, 73, 74, 75, 76, 77, 78, 79 & 80/MDS/2014 ARE ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND AUGUST, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 22 ND AUGUST, 2014 TNMM COPY TO: (1) PETITIONER (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.