Referred Sections: Section 158BI. Section 153A of the Act. Section 148 of the Act
Referred Cases / Judgments: Y Narayana Chetty vs. ITO (35 ITR 388)(SC)
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI `A' BENCH,
NEW DELHI
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER,
ITA Nos.3201/Del/201 And ITA No. 6783/DEL/2013
[Assessment Year: 2006-07]
M/s Barnala Steel Industries Ltd., ACIT,
Merrut Road, Circle-2,
Muzaffarnagar Muzaffarnagar
PAN-AABCB2772Q
Assessee Revenue
Assessee by Shri Kapil Goel &
Shri Anit Gupta Advocate
Revenue by Shri Sanjay Goyal CIT-DR
Date of Hearing 04/09/2019
Date of Pronouncement 05/09/2019
ORDER
PER SUCHITRA KAMBLE, JUDICIAL MEMBER
These two appeals are filed by the assessee against the
orders of the CIT(A), Muzaffarnagar, dated 29.03.2011 and
23.09.2013 for Assessment Year 2006-07.
2. Grounds of appeal of ITA No.3201/Del/2011 are as under:-
i. That the notice issued by the AO U/s 153A (a) r.w.s 153C dt
01.08.2008 and assessment order passed U/s 153A are illegal, bad in
law and without jurisdiction hence the assessment order passed u/s
153A dt 31.12.2009 is liable to be quashed.
ii. That the Block Assessment order passed by the AO for AYs 2002-03 to
2.007-08 is illegal, bad in law and without jurisdiction as there is no
power / authority to pass Block Assessment after 31.05.2003 as
provided in the provisions of section 158BI.
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iii. That in view of the facts and circumstances of the case the Assessing
Officer has erred on facts and in law in making the
addition/disallowance without there being any incriminating material
found during the proceedings U/s 132A and the CIT(A) has erred in law
and on facts in upholding the same. Hence, the addition/disallowances
made are bad in law, without jurisdiction and not within the scope of
provisions of sec 153C.
iv. That no notice U/s 143(2) has been issued within the prescribed the
period hence the Assessment order passed U/s 153A and the additions
made in the said assessment order are illegal, bad in law and without
jurisdiction and are liable to be quashed / deleted.
v. That the impugned Assessment Order passed by the Assessing Officer
is against the principles of natural justice and the same has been
passed without affording reasonable and adequate opportunity of being
heard.
vi. That CIT(A) has erred in law and facts of the case in upholding the
addition of Rs. 75,00,00.00 on account of short term capital gain and
reject the submissions of the appellant solely on the basis of remand
report submitted by the AO. The CIT(A) has failed to take into
consideration relevant evidences put before him and ignored
circumstances of the case.
vii. That the evidence and explanation given by the appellant and the
material available on record have not been properly considered and
judiciously interpreted and instead solely relied on remand report of AO
viii. That the additions have been made on basis of mere surmises and
conjectures and contrary to facts and evidence on record and cannot be
justified by any material on record. The addition made is unjust,
unlawful and is highly excessive.
ix. That the interests I I/s 234B and 234C have been wrongly and illegally
charged. The appellant has not committed any default of payment of
Advance tax as it could not have anticipated such additions while
estimating the current income.
x. That the CIT(A) has erred in law and on facts in non-quashing of penalty
proceedings u/s 271(1 )(c) which is wrongly initiated by the AO.
3. Grounds of appeal of ITA No.6783/Del/2011are as under:-
i. That, the notice issued u/s 271 (1) (c) and order imposing penalty
of Rs.25,24,500.00 under said section are illegal, bad in law, and
without jurisdiction.
ii. That, the A O has failed to appreciate that no satisfaction was
recorded before initiation of penalty proceedings U/s 271 (l)(c) and
as such the notice issued U/s 271 (l)(c) and the penalty order
passed under said section are without jurisdiction and liable to be
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quashed as there is no power/authority to pass block assessment
after 31.05.2003 as provided in the provision of section 158 BI.
iii. That, the A O has erred in view of the facts and circumstance of
the case and in law in not specifying the charge against the
assessee for which the penalty has been levied against the
assessee. The CIT (A) erred in upholding the same.
iv. That in view of the facts and circumstance of the case the A O has
erred in law and on facts in imposing the penalty of
Rs.25,24,500.00 U/s 271 (1) (c). The CIT (A) has erred the
upholding the same.
v. That, the A O, in view of the facts and circumstances of the case
erred in levying penalty on the ground of addition on account of
Short Term Capital Gain at Rs. 1,04,38,715.00 and reject the
explanation given by the appellant merely on surmises and
conjectures. The addition made is debatable and cannot be
treated as concealed income. The CIT (A) erred in upholding the
same.
vi. That, the A O, in view of the facts and circumstances of the case
and in law failed to appreciate the fact, that, the explanation
filed/given by the assessee is bonafide.
vii. That the information filed and the material available on record are
not properly considered and judicially interpreted. The penalty
levied by the A O are unjust, arbitrary are against the facts of the
case and are not justified by any material on record.
viii. The addition/disallowance has been made merely on the basis of
rejection of explanation of the appellant and no material has been
brought on record by the AO in support of said addition /
disallowance hence no penalty U/s 271 (1 )(c) could be levied on
the basis of such a disallowance.
ix. That, the submissions filed have not been considered judicially.
The impugned order is passed without any application of mind.
4. The assessee is limited company deriving income from
manufacturing of M.S. Bar, Tor and TMT. Return declaring
income of Rs.55,53,620/- was filed on 29/11/2009. On the basis
of information that an amount of Rs.92,55,000/- was seized by
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S.H.O. Kairana from possession of one Shri Naveen Chand Jain.
The CIT, Muzaffarnagar issued warrant u/s 132A for requisition
of amount in possession of S.H.O. Kairana. In the statement
recorded by the police, the aforesaid person deposed that the
impugned sum belonged to M/s Barnalal Steel Industries Ltd.
The amount of Rs.92,55,000/- was requisitioned u/s 132A of the
Act from S.H.O. Kairana on 15/02/2008. The seized money
could not be explained by the assessee. The Assessing Officer
issued notice u/s 153A of the Act on 26/03/2008 requiring the
assessee to file the return of income falling within six assessment
years as referred to in clause (b) of Section 153A of the Act. A
survey u/s 133A was conducted on the business premises of the
assessee on 28/03/2008. At the time of survey, excess stock of
raw material and finished goods were found to be short by 1.37
crores approximately. In response, the assessee submitted that
the returns of income originally filed may be treated as filed in
compliance of the notice u/s 153A of the Act. The Assessing
Officer asked the assessee to furnish copies of income tax
assessment orders for all the assessment years, copy of bank
accounts, wealth tax returns and the details of unsecured loans.
In response, the assessee submitted that it was assessed to tax
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since long time and had maintained regular books of account.
Raw material i.e. Milled Steel Ingot and the finished goods i.e.
Saria both are excisable authorities in RG-1 and Form-4. The
assessee further submitted that complete vouchers for
expenditure and receipts of income have been maintained. The
assessee also furnished copy of tax audit report, balance sheet
and Profit & Loss Account, copy of assessment orders for
Assessment Years 2003-04, 2004-05, 2005-06 and 2006-07
along with details of returned and assessed income. During the
course of assessment proceedings, it was observed by the
Assessing Officer that the cash found in possession of one Sh.
Naveen Kumar Jain on 15/02/2008 by the police could not be
explained by the assessee. In the assessment proceedings, for AY
2008-09, the assessee surrendered the sum of Rs.92,55,000/-
and the same had been added to the income of the assessee u/s
69A of the Act as unexplained money. The Assessing Officer held
that action u/s 132A of the Act was validly taken by the CIT,
Muzaffarnagar and consequently the notices issued u/s 153A
r.w.s. 153C issued for the assessment years under consideration
were legally and validly issued. The Assessing Officer framed
assessment order for Assessment Years 2002-03 to 2007-08.
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5. Being aggrieved by the assessment order, the assessee filed
appeal before the CIT(A). The CIT(A) partly allowed the appeal of
the assessee.
6. The Ld. AR submitted that the assessment is based on
vague and invalid notice u/s 153A and 153C dated 26/03/2008
where section 148 of the Act is mentioned. These facts were duly
and promptly objected by the assessee on 23/04/2008 and the
same objection was never disposed of by the Assessing Officer.
Thus, the proceedings based on vague and invalid notice cannot
be continence/contested. The Ld. AR further submitted that
notice u/s 143(2) of the Act issued on 23/11/2009 for all AYs
2002-03 to 2007-08 are also invalid as the notice has to be
issued separately for each assessment years. The Ld. AR
submitted that at no place, the assessee was subjected to any
search /requisitioned action u/s 132/132A and nowhere any
valid warrant has been issued against assessee. Mere cash
requisitioned with assessee cannot create imaginary search/
requisitioned action against assessee and despite assessee's
repeated and continuous objections to the Assessing Officer as
well as the CIT(A) in this regard. The Ld. AR submitted that
nowhere till date, it was brought on records as to how assessee's
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subject matter of search/ requisitioned actions u/s 132/132A of
the Act. The jurisdictional notice u/s 153A and section 153C was
issued in consolidated manner and final assessment for all years
was made u/s 153A of the Act, which is not permissible under
the provisions of Income Tax Act, 1961. So entire proceedings
gets vitiated as for making valid assessment u/s 153A, valid
authorization of requisitioned prescribed form 45C of the Act
against the assessee is most important which missing in present
case. The Ld. AR further submitted that whole addition is based
on documents found from survey on assessee on 28/03/2008.
This cannot be made u/s 153A of the Act on the basis of
purported requisitioned u/s 132A which has no linkage to the
sole addition made and thus addition made is ultravirus to
section 153A of the Act. The Ld. AR submitted that mechanical
notice dated 26/03/2008 nowhere mentions any assessment
years, there is no link to the date of search and as to the
assessee's case. The ld. AR relied upon the various case laws to
that effect.
7. The Ld. DR submitted that the notice is valid as the
assessment order has itself mentioned each assessment years
separately. The Assessing Officer has given separate finding to
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that effect. The Ld. DR further submitted that the Assessee
Officer as well as the CIT(A) has rightly made additions on merit.
8. We have heard both the parties and perused all the relevant
material on record. From the perusal of the notice issued u/s
153A r.w.s. 153C/143(2) of the Act, it is a clear cut case of
overlooking the procedure and provisions set out in the Income
Tax Act, 1961. Under these sections, the Assessing Officer
cannot issue consolidated notices for different Assessment Years.
It is statutory requirement for each assessment year to issue
statutory notice separately. The Assessing Officer failed to
comply with the statute under which the prescribed procedure is
mandatory for the Revenue to be followed. The reliance of the Ld.
AR in case of Y Narayana Chetty vs. ITO (35 ITR 388)(SC) is
relevant in present case, therefore, the notice itself is bad in law
and void ab-initio. Thus, the assessment order does not survive.
Thus, ITA No.3201/Del/2011 is allowed. There is no need to go
into the merits of the case.
9. As regards, the penalty appeal being ITA
No.6783/Del/2013. It is appeal filed against penalty order
passed u/s 271(1)(c) of the Act, which is consequential of the
quantum appeal. Since, the quantum appeal itself has been
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allowed and the assessment order is quashed, the penalty does
not survive. Thus, ITA No.6783/Del/2013 is also allowed.
10. In the result, both appeals filed by the assessee are allowed.
Order pronounced in the open court on 05/09/2019.
Sd/- Sd/-
Sd/- Sd/-
[N.K. BILLAIYA] [SUCHITRA KAMBLE]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi; Dated: 05/09/2019.
f{x~{tÜ? fÜA P.S
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
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Date of dictation 04/09/2019
Date on which the typed draft is placed before the 04/09/2019
dictating Member
Date on which the typed draft is placed before the Other 05/09/2019
Member
Date on which the approved draft comes to the Sr.PS/PS 05/09/2019
05/09/2019
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr.PS/PS 05/09/2019
Date on which the final order is uploaded on the website 05/09/2019
of ITAT
Date on which the file goes to the Bench Clerk 05/09/2019
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the Order
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