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Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘D’
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH ‘D’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.1734/Ahd/2017 �नधा�रण वष�/Asstt. Year: 2008-2009
Smt. Bharatiben Prahladbhai Vs. DCIT, Cent.Cir.1(3) Ahmedabad. Sewani 45, Ashwamegh Bungalow-3 Nr. Someshwar Derasar Satellite Road Ahmedabad 380 015. PAN : ACSPS 6476 L
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Assessee by : Shri Biren Shah, AR Revenue by : Shri Ranjan Kumar Singh, Sr.DR
सुनवाई क� तार�ख/Date of Hearing : 09/01/2019 घोषणा क� तार�ख /Date of Pronouncement: 11 /01/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal before the Tribunal against order of ld.CIT(A)-11, Ahmedabad dated 6.4.2017 passed for the Asstt.Year 2008-09.
Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.1,53,420/- which was imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961.
ITA No.1734/Ahd/2017 2 3. Brief facts of the case are that the assessee has filed her return of income on 28.9.2008 declaring total income at Rs.12,50,860/-. A search under section 132 of the Income Tax Act was conducted in the case of Sewani Group on 20.12.2011. Notice under section 153A was issued and served upon the assessee. In response to the notice, the assessee has filed her return income on 28.1.2013 declaring total income atRs.12,66,480/-. The AO found that the assessee has wrongly deducted income tax expenses and refund from the total income instead of adding back the same to the total income. When this fact was brought to the assessee, she admitted the same and addition of Rs.4,34,488/- was made. The assessee realized her mistake and did not challenge this addition. The AO has initiated penalty proceedings under section 271(1)(c) of the Act and ultimately imposed penalty of Rs.1,53,420/- on account of furnishing inaccurate particulars of her income. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
Before us, the ld.counsel for the assessee has raised two fold submissions. In the first fold of contentions, he pleaded that bona fide mistake was committed at the end of the assessee. Two amounts i.e. income tax refund and expenses ought to have been added back instead of claiming deduction. This was done inadvertently. There was no deliberate attempt in this act. In the second fold of contentions, he submitted that during the course of search no incriminating material was found, which can authorise the AO to pass assessment order under section 153A in the present assessment year. He pointed out that the assessment year involved here is A.Y.2008-09. Return was filed on 28.9.2008 and notice could be issued upon the assessee on or before 30.9.2009. No such notice was issued, hence proceedings attained finality. This could be disturbed, if some incriminating material was found and assessment was being made. It is immaterial that the assessee has not challenged this addition in quantum appeal, but she
ITA No.1734/Ahd/2017 3 absolved herself from the vigour of penalty by taking this legal defence. In support of his contention, he relied upon the judgments:
i) CIT Vs. Kabul Charwala, 380 ITR 0183 (Del) ii) CIT Vs. Kurele Papers, 380 ITR 571 (Del) iii) CIT Vs. Lata Jain, 384 ITR 543 (Del)
On the other hand, the ld.DR relied upon the orders of the Revenue authorities. He contended that both the items which have been claimed as deduction were inadmissible to the assessee. There is no demonstrative evidence, how this mistake has happened. It is very difficult to accept that it was a human error. It can be a deliberate act for claiming undue benefit. With regard to second fold of contention, he submitted that the assessee has not taken any such plea before the Revenue authorities, and therefore, she is precluded from taking such plea.
We have considered rival submissions and gone through the record. Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra) has examined scope of section 153A. After a detailed analysis Hon’ble Court has summarized legal proposition emerging out for application of section 153A. Such proposition reads as under: “37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search
ITA No.1734/Ahd/2017 4
takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.”
It is also pertinent to note that in the case of CIT Vs. Kabul Chawla (supra) Hon’ble Court has observed that return for Asstt.Years 2002-03, 2005-06 and 2006-07 were accepted under section 143(1) of the Act. Thus, Hon’ble Court has considered this acceptance of return as an assessment made under section 143(1). In concluding paragraph, the Hon’ble Court has held that on the date of search, assessments for A.Ys. 2002-03, 2005-06 and 2006-07 already stood
ITA No.1734/Ahd/2017 5 completed and no incriminating material was unearthed during the search, therefore, no addition should have been made to the income of the assessee.
At this stage, it is pertinent to take note of the finding of the Hon’ble jurisdictional High Court in the case of CIT Vs. Somaya construction Ltd., 387 ITR 529 (Guj). It reads as under:
“18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be
ITA No.1734/Ahd/2017 6 made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.” 9. We are conscious of the fact that we are dealing with penalty imposed for addition of Rs.4,34,488/-. In the present proceedings we cannot disturb and/or we are not disturbing the addition made by the AO which attained finality. The assessee has to pay tax on this addition. Issue before us is, if a specific defense was not taken by the assessee in the quantum proceedings, whether that defense now be taken for absolving herself from levy of penalty ? To our mind, quantum proceedings as well as penalty proceedings are independent to each other. Even if in the quantum proceedings assessee has agreed to for an addition. If she has some legal defense available, then on the basis of that defense she can absolve herself form the levy of penalty. It is a fundamental rule that jurisdiction cannot be infused by virtue of the consent of the assessee. Jurisdiction in any authority could be assigned by virtue of provisions in the Income Tax Act. Interpretation of scope of section 153A has come up after assessment order. All these decisions referred above are subsequent to the assessment order passed by the AO. It is pertinent to observe that the well settled proposition of law in such a situation would be that courts used to decide a dispute between the parties, because it involves decisions on facts. It can also involve decision on point of law. Both may have bearing on the ultimate result of decision. When a court interprets a provision, it decides as to what is the meaning of provision and effect of the words used by the
ITA No.1734/Ahd/2017 7 legislature. It is a declaration regarding the statute. In other words, judgment declares as to what is the legislative intent at the time of proclamation of law. The declaration is …. “This was the law, this is the law and this is how provision shall construe.” Four decisions referred by the ld.counsel for the assessee (supra) are subsequent to the orders of the ld.CIT(A). Scope of section 153A has been explained in these four decisions therefore, it is incumbent upon us to take cognizance all these decisions and take note of additional legal point raised in appeal.
In the light of the above judgments, if facts are being examined, then it would reveal that had the assessee challenged quantum addition, then that addition could have been deleted. But since the assessee has not challenged that does not mean that the AO has got jurisdiction to visit the assessee with penalty also. Once no incriminating material was found and time limit to issue notice under section 143(2)had already expired, no action could have been taken against the assessee even in quantum. If no action could have been taken in the quantum proceedings, then how penalty which is to be computed on the basis of quantum addition could be levied upon the assessee ? Considering the above facts and circumstances, and in the light of the above four decisions, we are of the view that penalty is not sustainable in the case of the assessee. It is deleted.
In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 11th January, 2019 at Ahmedabad.
Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/01/2019