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IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN,AM AND LALIT KUMAR, JM
./I.T.A. No.3266/Mum/2015
( / Assessment Year :2006-07)
Sheetal Abhinandan Lodha, / Dy. Commissioner of Income Tax,
412,4th Floor, 17G, Vs.
Cen Cir-7(3) (Erstwhile Central
Vardhaman Chamber, Circle 42), Room No.655,
Cawasji Patel Road, Aayakar Bhavan,
Horniman Circle, Fort, M K Road,
Mumbai-400001 Mumbai-400020.
( /Appellant) .. ( / Respondent)
./ ./PAN/GIR No. :BDCPS7295H
./I.T.A. No.3267/Mum/2015
( / Assessment Year : 2006-2007)
Vinti Abhishek Lodha, / Dy. Commissioner of Income Tax,
412,4th Floor, 17G, Vs.
CC-7(3) (Erstwhile Central Circle
Vardhaman Chamber, 42), Room No.655,
Cawasji Patel Road, Aayakar Bhavan,
Horniman Circle, Fort, M K Road,
Mumbai-400001 Mumbai-400020
( /Appellant) .. ( / Respondent)
./ ./PAN/GIR No. :ACYPL1772G
/ Appellants by Shri Vijay Mehta
/Rspondent by Shri T Shashi Kumar
/ Date of Hearing
: 12.8.2015
/Date of Pronouncement: 21.8.2015
/ O R D E R
Per B R Baskaran, AM:
The appeals filed by the assessees cited above are directed against
the orders passed by the ld. CIT(A)-48, Mumbai in their respective hands
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and both relate to the assessment year 2006-07. Since identical issue is
urged in both the appeals, they were heard together and are being
disposed of by this common order for the sake of convenience.
2. Both the assessees are questioning the validity of addition made by
the AO in the assessment proceedings framed under section 143(3) r.w.s.
153A of the Act consequent to the search operations.
3. The facts of the case are stated in brief. The Revenue carried out
search and seizure operations in the hands of Lodha Group of cases on
10.1.2011. The assessees herein also fall in Lodha group and hence they
were also subjected to search. Consequently, the AO issued notices u/s
153A to both the assessees. The assessee named as Smt.Sheetal
Abhinandan Lodha declared a total income of Rs.42,056/- and assessee
named as Vinti Abhishekh Lodha declared a total income of Rs.1,21,300/-
in the return of income filed for AY 2006-07 in response to the notice
issued u/s 153A of the Act. From the return of income filed by these
assessees, the AO noticed that both the assessees had claimed receipt of
gifts as detailed below:-
(a) Mrs.Sheetal Abhinandan Lodha - Rs. 2,10,200/-
(b) Ms.Vinti Lodha - Rs. 1,04,100/-.
The AO sought explanation with regard to the gifts received by both the
parties. Mrs.Sheetal Abinandan Lodha stated that she received the gift at
the time of her marriage on 22.1.2006 from her relatives and friends.
However, she could not provide the details of the persons from whom the
gifts were received. Hence, the AO assessed the gift amount of
Rs.2,10,200/- as her income. Ms. Vinti Abhishek Lodha also could not
furnish the details relating to the gift receipt of Rs.1,04,100/- and hence
the AO assessed the same as her income.
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4. Before the ld. CIT(A), both the assessees contested the validity of
addition of gift receipts by raising a legal ground, viz., the AO could not
have made the additions, since the revenue did not unearth any
incriminating materials relating to the gift receipts. According to the
assessees, the assessment relating to the assessment year 2006-07 falls
under the category of concluded proceedings and hence it would not abate
as per the provisions of sec. 153A of the Act. In the following cases, it
has been held that the AO is entitled to make any addition in the case of
concluded proceedings only on the basis of incriminating material only.
a) JAI STEEL (INDIA) V/s ACIT- [2013] 259 CTR 281 (Raj)
b) ACIT V/s PRATIBHA INDUSTRIES LTD.-
[2013] 141 ITD 151 (ITAT[MUM])
c) ALL CARGO GLOBAL LOGISTICS LTD. V/s DCIT-
[2012] 137 ITD 287(ITAT[Mum])(SB)
Since there was no incriminating material relating to the gifts was
stumbled upon by the revenue, it was contended that the AO was not right
in law in assessing the gift receipts in the hands of the assessees herein.
5. However, the ld. CIT(A) did not agree with the said contentions of
the assessees. The L.d CIT(A), on the contrary, placed reliance on the
decision rendered by the Hon'ble Delhi High Court in the c ase of CIT V/s
Anil Kumar Bhatia (2012) (82 CCH 113) and held that the decisions relied
by the assessee are not applicable to the facts of the present case, since
these assessees have not filed returns of income under regular provisions
of the Act earlier to the date of initiation of search and hence there exists
no intimation u/s 143(1) or assessment order under section 143(3) of the
Act. Accordingly, he held that the AO was justified in making additions on
the scrutiny of return of income. On merits, the Ld CIT(A) upheld the
addition, since the assessees have failed to furnish relevant details relating
to gift receipts. Aggrieved, the assessees have filed these appeals before
us.
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6. The ld. AR submitted that the assessment relating to the AY 2006-
07 would fall in the category of concluded assessment, since no
proceeding relating to the same is pending as on the date of search. He
submitted that the Special Bench of the Tribunal has held in the case of
ALL CARGO GLOBAL LOGISTICS LTD. V/s DCIT-(supra) that the additions,
if any, can be made in the case of concluded assessments only on the
basis of incriminating materials, if any, found during the course of search.
He further submitted that the decision of Special bench, referred above,
has since been approved by the Hon'ble Jurisdictional Bombay High Court
by its order dated 21-04-2015 passed in ITA No.1969 of 2013 along with
the appeal of another assessee named Continental warehousing
corporation (ITA No. 523 of 2013) and also reported in the name of later.
He further submitted that the department did not unearth any material
with regard to the receipt of gifts and hence the AO was not justified in
assessing the gift receipts as income of the assessees herein.
7. The assessee was specifically asked by the Bench as to whether
these assesses had filed return of income earlier u/s 139 of the Act for the
assessment year under consideration, the ld. AR fairly admitted that they
have not filed return of income u/s 139 of the Act. He also conceded that
the return of income filed in response to the notice issued u/s 153A of the
Act is the first return of income filed by the assessees. It is also pertinent
to note that the AO had also not initiated any proceeding on his own to
assess the income of the assessees for the year under consideration. He
also submitted that there was no necessity for the assessees to file return
of income, since the total income of these assessees was less than the non
taxable limit prescribed for the relevant year. He submitted that non-filing
of the return due to lower income level will not disentitle the assessee
from applying the ratio laid down by the Special Bench of the Tribunal in
the case of ALL CARGO GLOBAL LOGISTICS LTD(supra). He invited our
attention to the second proviso to sec. 153A(1) of the Act and submitted
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that the said proviso provides for abatement of assessments pending on
the date of search. He submitted that the assessment pertaining to the AY
2006-07 was not pending as on the date of search and hence the same
shall not abate. Accordingly he submitted that the ratio laid down by the
Special bench in the case of All Cargo Global logistics Ltd (supra) shall be
applied to the instant cases also, even though these assessees have not
filed return of income u/s 139 of the Act prior to the date of initiation of
search.
8. On the contrary, the ld. DR submitted that these assessees have not
filed return of income prior to the date of search and hence there was no
necessity for passing any assessment order for the year under
consideration in the hands of the assessees. He further submitted that
the second proviso to sec. 153A(1) provides that the assessment or
reassessment pending as on the date of initiation of search shall abate. He
submitted that the provisions of sec. 153A do not provide anything about
the assessment years, where the assessees have failed to file original
return of income. Accordingly he submitted that the assessment
pertaining to AY 2006-07 cannot be considered to be concluded in the
instant cases in the absence of either an intimation u/s 143(1)(a) of the
Act or an assessment order u/s section 143(3) of the Act or even the
original returns of income. Accordingly, he submitted that the assessees
cannot take support of ratio laid down by the Special Bench of the Tribunal
in the case of ALL CARGO GLOBAL LOGISTICS LTD (supra).
9. We have heard the rival contentions and carefully perused the
record. Admittedly, these assessees have not filed original returns of
income prior to the date of initiation of search under the regular provisions
of the Act. The return of income filed by them under section 153A of the
Act for the assessment year under consideration was the first return of
income filed by the assessees. The second proviso to section 153A states
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that the assessment or re-assessment, if any, relating to any assessment
year falling within the period of six assessment years referred to in section
153A(1) pending on the date of initiation of search shall abate. The
assessment year under consideration, viz., AY 2006-07 falls within the six
assessment years referred to in sec. 153A(1), but the same is not pending
as on the date of initiation of search. Hence, the question of abatement of
assessment does not arise in the instant cases.
10. The next question that arises is whether the assessment year under
consideration would fall in the category of unabated assessments or not?
In the instant cases, we have noticed earlier that both the assessees have
not filed the return of income for the year under consideration under
regular provisions of the Act. There should not be any dispute that the
question of assessment shall arise only if the assessees have filed returns
of income or if the assessing officer passes any assessment order to the
best of his judgement u/s 144 of the Act. Hence, in the absence of return
of income filed for the year under consideration and also in the absence of
any other proceeding leading to passing of the assessment order, in our
view, it cannot be said that there was any proceeding
concluded/completed by the revenue for the year under consideration. In
the absence of any proceeding, the question of the same becoming
concluded also does not arise. In that view of the matter, the question of
abatement or otherwise of the proceeding relating to AY 2006-07 also
does not arise.
11. If the assessees had filed any return of income under regular
provisions of the Act prior to the date of initiation of search and if the time
limit prescribed for issuing notice u/s 143(2) had also expired by the date
of initiation of search, then also it can be held that the assessment has
become concluded by operation of law. In this regard, we may refer to
the decision rendered by the Mumbai bench of Tribunal in the case of
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Gurinder Singh Bawa Vs. DCIT (2014)(150 ITD 40), wherein the Tribunal
has observed that after the expiry of time limit prescribed for issuing
notice u/s 143(2) of the Act, the assessment cannot be considered to be
pending if no notice under that section was issued. In the instant cases,
the assessees have not filed returns of income under regular provisions of
the Act prior to the date of initiation of search and hence the proposition
laid down in the case of Gurinder singh Bawa (supra) also does not apply
to them.
12. The assessee has placed strong reliance on the decision rendered by
the Special bench in the case of All Cargo Global logistics Ltd (supra). The
scope of proceedings u/s 153A of the Act has been summarised by the
Special Bench of the Tribunal in the case of ALL CARGO GLOBAL
LOGISTICS LTD. V/s DCIT-(supra) as under:
"58. Thus, question No.1 before us is answered as under:
(a) In assessments that are abated, the AO retains the original
jurisdiction as well as jurisdiction conferred on him u/s 153A for
which assessments shall be made for each of the six assessment
years separately;
(b) In other cases, in addition to the income that has already been
assessed, the assessment u/s 153A will be made on the basis of
incriminating material, which in the context of relevant provisions
means (i) books of account, other documents, found in the course of
search but not produced in the course of original assessment, and
(ii) undisclosed income or property discovered in the course of
search."
We have already noticed that the assessment or reassessment pertaining
to the year under consideration was not pending as on the date of
initiation of search. Hence the answer given by the Special bench in (a)
above does not apply to the assessee. Since the assessees have not filed
any return of income for the year under consideration under regular
provisions of the Act prior to the date of initiation of search, any item of
receipt/income disclosed in the return of income filed in response to the
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notice issued u/s 153A of the Act cannot be considered to have been
assessed prior to the date of initiation of search. Hence, in our view, the
question of application of answer (b) given by the Special bench also is not
applicable to the facts of the instant cases.
13. Accordingly, we are of the view that the assessees could not place
reliance on the decision rendered by the Special bench, referred above, in
the absence of any proceeding concluded prior to the date of initiation of
search. In that case, in our view, the assessing officer is entitled to
scrutinize the return of income filed for the first time in pursuance to the
notice issued u/s 153A of the Act, since none of the issues arising out of
that return of income can be considered to have been concluded as on the
date of initiation of search.
14. In view of the foregoing discussions, we are unable to agree with
the contentions of the assessees on the legal issue urged by them.
Accordingly we uphold the conclusion reached by the Ld CIT(A) that the
ratio of the Special bench, referred above, shall not apply to the facts
prevailing in the instant cases.
15. On merits, we notice that both the assessees have failed to furnish
the details relating to the gifts received by them. The gift receipts fall
under the category of cash credits falling within the purview of the
provisions of sec. 68 of the Act. There should not be any dispute that the
initial burden of proof is placed upon the assessees under sec. 68 of the
Act to prove the nature and source of cash credit, i.e., the assessees have
to prove the three main ingredients in respect of cash credits, viz., the
identity of the creditor, the credit worthiness of the creditor and the
genuineness of the transactions. In case of gifts, the assessees have also
required to prove the nature of receipts. In the instant cases, both the
assessees have failed to discharge the initial burden of proof placed upon
them u/s 68 of the Act. Hence, we do not find any infirmity in the decision
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of Ld CIT(A) in confirming the assessment of gift receipts in the hands of
both the assessees.
16. In the result, both the appeals of the assessees are dismissed.
Pronounced accordingly on 21st August 2015.
21st August, 2015
Sd sd
(LALIT KUMAR) ( B.R. BASKARAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai: 21st Aug, 2015.
.../ 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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