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M/s Barnala Steel Industries Ltd., Merrut Road, Muzaffarnagar Vs. ACIT, Circle-2, Muzaffarnagar
September, 06th 2019

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.
                                         2


      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
                                        3


             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
                                 4


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
                                 5


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.
                                6


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
                               7


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
                                 8


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
                                9


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
                                       10


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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