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IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM)
.. , ,
./I.T.A. No.8918 & 8919/Mum/2010
( / Assessment Years : 2004-05 & 2003-04)
Shri Devesh Agarwal / Assistant Commissioner of Income
C/o M/s Ravi and Dev, Chartered Vs. Tax, Central Circle -32,Mumbai.
Accountant, 377-B, First Floor,
Jagannath Shankar Seth Marg,
Chira Bazar, Mumbai-400002.
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AEKPA7464G
/ Appellant by : Shri Devendera A Mehta
/Respondent by : Shri Santosh Kumar
/ Date of Hearing
: 11.7.2014
/Date of Pronouncement : 31.7.2014
/ O R D E R
Per B.R.BASKARAN, Accountant Member:
Both the appeals filed by the Assessee are directed against the common
order dated 25.11.2010 passed by the ld. CIT(A)-41, Mumbai and they relate to
the assessment years 2003-04 and 2004-05.
2. Since identical issues are urged in both the appeals, they were heard
together and are being decided by this common order, for the sake of
convenience.
I.T.A. No.8918 & 8919/Mum/2010
2 I I T I T A
3. The Assessee, inter-alia, has raised a legal issue, viz., whether the
additions made in the assessment order passed u/s 143(3) r.w.s.153A of the
Income Tax Act, 1961(the Act) for both the years under consideration is
sustainable in the absence of any incriminating material found in the search
proceedings for these two years, particularly in view of the fact that these two
years fall in the category of completed assessments and hence the previous
assessment orders do not abate.
4. We prefer to adjudicate this legal issue first. The facts relating thereto are
stated in brief. The search and seizure operation u/s 132(1) of the Act was
conducted on 3.1.2008 in the case of Evershine Group. The assessee was also
subjected to search in connection thereof. Subsequent to the search and seizure
operation, the AO issued notice u/s 153A of the Act for both the years under
consideration. In the proceedings re-opened u/s 153A of the Act, the AO
assessed gifts received by the Assessee in both the years as the income of the
assessee by invoking the provisions of sec. 68 of the Act. The AO also made
disallowance u/s 14A of the Act in both the years.
5. The contentions of the assessee are that the assessment for both the
years under consideration fall in the category of "completed assessment" and
hence the earlier assessment orders do not get abated by the provisions of
section 153A. It is also submitted that the search team did not unearth any
incriminating material during the course of search which would warrant the
impugned additions made by the AO in both the years. Accordingly, by placing
reliance on the decision rendered by the Mumbai Special Bench in the case of All
I.T.A. No.8918 & 8919/Mum/2010
3 I I T I T A
Cargo Global Logistic Ltd V/s DCIT (2012) 137 ITR (SB) (Mum), ld. AR contended
that the impugned additions are liable to be deleted.
6. On the contrary, the ld. DR submitted that the AO has made a reference
to seized documents marked as "A-1" in the assessment order. Accordingly, he
submitted that there is a possibility that the impugned additions are based on
the incriminating materials. However, ld. AR submitted that seized documents
contained in "A-1" contained only financial statements which were already
available with the AO. He submitted that the Ld D.R should have brought the
seized materials marked as "A-1", if he wanted to place reliance on it. Hence,
the Ld D.R was asked to produce the above said seized materials. However, the
Ld D.R submitted that he cannot bring it immediately, but agreed to examine the
copies of the same, if it is furnished by the Ld A.R. In reply thereto, the Ld A.R
agreed to produce copies of seized material marked as "A-1" and accordingly
produced the same. During the course of hearing, the ld. DR scrutinized the
copies of the seized materials marked as "A-1" and fairly admitted that it does
not contain any incriminating material supporting the additions made in both the
years.
7. We have heard the rival contentions of the parties and perused the
material available on record. It is an admitted fact that both the years under
consideration are falling in the category of "completed assessments". The
Hon'ble Special Bench of the Tribunal in the case of All Cargo Global Logistic Ltd
(supra) has held that in the assessment orders falling in the category of
completed assessments do not abate and hence the additions can be made in
those years only on the basis of incriminating material found during the course
I.T.A. No.8918 & 8919/Mum/2010
4 I I T I T A
of search. We notice that the Co-ordinate Bench of the Tribunal has considered
an identical issue in one of the Group cases of the assessee viz., M/s Govind
Agarwal (HUF) V/s DCIT in ITA No.8917/Mum/2010 (AY-2005-06) and the
Tribunal, in its order dated 16.5.2013, has held as under by following the
decision rendered by the Special Bench:-
"7. In this case, the question answered in clause (b) would be
applicable as the addition in the assessment order passed under section
153A, can be made only on the basis of incriminating material found in
the course of search in case where the assessment has already been
finalized. Thus, in this case, no addition can be made over and above the
returned income which has become final prior to the date of search and
there is no material found at the time of search. The aforesaid Mumbai
Special Bench decision of the Tribunal in All Cargo Global Logistic Ltd.
(supra) has also been reaffirmed and applied by the co-ordinate bench in
Gurinder Singh Bawa (supra). The relevant observation of the Tribunal is
reproduced herein below:-
"6. We have perused the records and considered the rival
contentions carefully. The dispute raised is regarding legal validity
of addition made by AO under section 153A of the Act. Under the
provisions of section 153A, in all cases, where search is conducted
under section 132 of the Act, AO is empowered to assess or
reassess total income of six assessment years preceding the
assessment year in which search was conducted. The section also
provides that assessment or reassessment relating to any
assessment year falling within period of six assessment year if
pending on the date of initiation of search shall abate. There have
been divergent views regarding scope of application of section
153A in cases where no incriminating material was found indicating
any undisclosed income. Some of the Tribunal Benches had taken
the view that in case no incriminating material was found AO had
no jurisdiction to make assessment or reassessment under section
153A while some other Benches held that jurisdiction under section
153A was automatic to reassess six immediate preceding
assessment years irrespective of the fact whether any incriminating
material was found or not. Another aspect on which there had been
divergent views was whether even if AO had jurisdiction under
section 153A, addition can be made in assessment / reassessment
only when some incriminating material has been found. All these
aspects had been referred to the Special Bench of the Tribunal in
I.T.A. No.8918 & 8919/Mum/2010
5 I I T I T A
case of Alcargo Global Logistics Ltd. and order of Special Bench
dated 6.7.2012 has been referred.
6.1 The Special bench in the case of Alcargo Global Logistics Ltd.
(supra), has held that provisions of section 153A come into
operation if a search or requisition is initiated after 31.5.2003 and
on satisfaction of this condition, the AO is under obligation to issue
notice to the person requiring him to furnish the return of income
for six years immediately preceding the year of search. The Special
Bench further held that in case assessment has abated, the AO
retains the original jurisdiction as well as jurisdiction under section
153A for which assessment shall be made for each assessment
year separately. Thus in case where assessment has abated the AO
can make additions in the assessment, even if no incriminating
material has been found. But in other cases the Special Bench held
that the assessment under section 153A can be made on the basis
of incriminating material which in the context of relevant provisions
means books of account and other documents found in the course
of search but not produced in the course of original assessment
and undisclosed income or property disclosed during the course of
search. In the present case, the assessment had been completed
under summary scheme under section 143(1) and time limit for
issue of notice under section 143(2) had expired on the date of
search. Therefore, there was no assessment pending in this case
and in such a case there was no question of abatement. Therefore,
addition could be made only on the basis of incriminating material
found during search."
Thus, on the facts of the case, we hold that the additions made by the
Assessing Officer with regard to unexplained gift of `10,00,000, made
under section 68 and disallowance of `1,01,300 under section 14A, are
beyond the scope of section 153A / 153C. Consequently, we set aside the
impugned order passed by the learned Commissioner (Appeals) and on
the preliminary ground itself, both the additions are deleted. Thus, the
issues arising out of the ground are treated as allowed.
8. Consistent with the view taken by the Tribunal in the above said case, we
also hold that the impugned additions made in both the years under
consideration are liable to be deleted, since there was no incriminating material
which supported the said additions. Accordingly, we set aside the order passed
I.T.A. No.8918 & 8919/Mum/2010
6 I I T I T A
by ld. CIT(A) on the issues contested before us and direct the AO to delete the
impugned additions in both the years.
9. In the result, both the appeals filed by the Assessee are allowed.
The above order was pronounced in the open court on 31st July, 2014.
31st July, 2014
Sd sd
( / VIVEK VARMA) (.. / B.R. BASKARAN)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai: 31st
July,2014.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
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