SANTOSH SUBHASHAPPA MUKTA,,LATUR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE - 2, , AURANGABAD

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ITSSA 16/PUN/2021Status: HeardITAT Pune06 October 2023AY 2010-117 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeals, quashing all three impugned assessments. The ITAT followed the Supreme Court's decision in PCIT vs. Abhisar Buildwell P. Ltd., which held that for unabated assessments under section 153A, additions must be based on incriminating material found during the search. The Tribunal found that the assessee had indeed filed regular returns for the assessment years in question, refuting the Revenue's claim of the assessee being a 'non-filer'. The Tribunal further held that a survey action under section 133A cannot be considered as part of a search under section 132 for the purpose of triggering section 153A proceedings, citing a strict interpretation of the law and the decision in Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. & Ors. The Tribunal also noted its own prior order in the assessee's case for assessment year 2008-2009, which had decided the same legal issue in favor of the assessee. The ITAT concluded that since the impugned additions were not based on any incriminating material found or seized during the search, the assessments were not sustainable in law. All other pleadings were rendered academic.

What were the facts?

The assessee, Shri Santosh Subhashappa Mukta, filed three appeals before the Income Tax Appellate Tribunal (ITAT), Pune 'B' Bench, challenging the orders of the CIT(A), Pune-12. These appeals pertain to assessment years 2009-2010, 2010-2011, and 2011-2012. The impugned assessments were framed under section 143(3) read with section 153A of the Income Tax Act, 1961, following a search action on September 27, 2013. The core of the dispute revolves around whether these assessments, for unabated years, were based on incriminating material found during the search. The assessee contended that no such material was found, while the Revenue argued that the assessee was a non-filer and all seized material was incriminating. The ITAT noted that the assessee had filed regular returns for the assessment years in question.

What were the issues?

1. Whether the assessments framed under section 153A read with section 143(3) of the Income Tax Act, 1961, for unabated assessment years are valid in the absence of any incriminating material found or seized during the search initiated under section 132 of the Act? (Question of law) Assessee's Contention: The assessee argued that for unabated assessments under section 153A, additions must be based on incriminating material found during the search. They relied on the Supreme Court's decision in PCIT vs. Abhisar Buildwell P. Ltd. The assessee also contended that they were not 'non-filers' as they had filed regular returns for the assessment years in question. Furthermore, they argued that material collected during a survey under section 133A cannot be considered as part of a search under section 132 for the purpose of section 153A proceedings. Revenue's Contention: The Revenue argued that the assessee was a 'non-filer' throughout, and therefore, all material found and seized during the search must be treated as incriminating, leading to the determination of undisclosed income. The Revenue also contended that a survey action conducted was part of the impugned search, validating the assessments.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 132,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE

Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE

Hearing: 05.10.2023Pronounced: 06.10.2023

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER I.T.(S.S.)A.Nos.15, 16 & 17/PUN./2021 Assessment Years 2009-2010, 2010-2011 & 2011-2012

Shri Santosh Subhashappa Mukta, 1, Omerga Road, The ACIT, Ujani Corner, Ausa, Latur vs. Central Circle-2, PIN – 413 520 Aurangabad. PAN AJRPM7166R Maharashtra. (Appellant) (Respondent) For Assessee : Shri Somnath Ghosh and Shri M.K. Kulkarni For Revenue : Shri Ajay Kumar Kesari Date of Hearing : 05.10.2023 Date of Pronouncement : 06.10.2023

ORDER PER BENCH :

These assessee’s three appeals, for assessment years 2009-2010 to 2011-2012, arise against the CIT(A), Pune-12's as many DINs and orders nos.ITBA/APL/S/250/2021-22/ 1037393685(1); 1037393693(1) and 1037393699(1); all dated 30.11.2021, in proceedings u/sec.143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short "the Act"); respectively.

Heard both the parties at length. Case files perused.

2.

It emerges during the course of hearing that the assessee’s first and foremost identical substantive grievance

2 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 raised in all these three cases seeks to quash the impugned assessments framed u/sec.153A r.w.s.143(3) of the Act for want of any incriminating material found or seized during the course of search dated 27.09.2013. There would be hardly any dispute that we are dealing with “unabated” assessments herein u/sec.153A(1) of the Act since no proceedings pertaining to all these assessment years was pending as on the date of search. And also that so far as the instant legal question is concerned, hon’ble apex court’s recent landmark decision in PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC) has settled the law that any assessment involving additions made during the course thereof in such an unabated assessment; must be based on the corresponding seized material found during the course of search.

3.

Faced with the situation, learned CIT-DR drew vehement support from the learned lower authorities action that the assessee before us Shri Santosh Subhashappa Mukta is a “non-filer” throughout and therefore, all material found and seized during the course of search must be treated as incriminating leading to his “undisclosed” income only. We find no merit in the Revenue’s instant preliminary argument as the assessee had already filed copies of his regular returns of the impugned assessment years dated 30.09.2009, 13.10.2010 and 30.09.2011; respectively, way back on

3 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 07.02.2023. This is indeed coupled with the fact that the learned assessing authority herein is fair enough inter alia in observing in paragraph-6 in assessment year 2009-2010 and paragraph-2 in latter twin assessment years 2010-2011 and 2011-2012 of the assessments that the assessee had duly filed his regular returns. We further wish to observe here that the impugned “search” was followed by a “survey” action as well wherein the department alleges that it had come across various incriminating documents. Learned CIT-DR drew strong support therefrom in all these assessment years that the said survey action was indeed a part of the impugned search only and therefore, these three assessments have to be treated as validly framed.

4.

We have given our thoughtful consideration to the foregoing rival arguments qua the instant legal issue. We first of all observe from a perusal of the case file that this tribunal’s earlier order in assessee’s case itself involving I.T.(S.S.)A.No. 14/PUN./2021 in assessment year 2008-2009 an “unabated” assessment has already allowed the very legal issue vide order dated 24.07.2023 as under :

“4. Learned CIT-DR drew vehement support from the CIT(A)'s reasoning that this assessee has all along been a “non-filer” and therefore, everything found/seized

4 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 during the course of above stated search followed by sec.133 “survey” amounts to incriminating material only.

5.

A perusal of the instant case file reveals that we had taken-up this clinching issue of the assessee being a “filer” or not; way back on 07.02.2023. Learned counsel appears to have filed his return for the assessment year in issue i.e., assessment year 2008-2009 carrying receipt no.“4444” dated 30.09.2008. Mr. Ghosh had submitted therefore, that both the lower authorities have wrongly held the assessee to be a non-filer. It is in this factual backdrop that the “Bench” had directed the Revenue to place on record this clinching return.

5.1. When the case was taken-up today i.e., on 27.04.2023, learned CIT-DR filed the above stated receipt- acknowledgment which pertained to some other taxpayer than the assessee. His case is that both the lower authorities have rightly treated the assessee as a “non- filer” only. Coming to the incriminating material issue found or seized during the course of search, Mr. Meena’s stand is that the above stated survey u/sec.133A of the Act also forms part of the search only and therefore, the impugned assessment deserves to be upheld as validly framed.

5 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 5.2. We find no merit in Revenue’s stand. This is inter alia for the precise reason that the department has nowhere been able to controvert the assessee’s return dated 30.09.2008 having receipt no.“4444”. We are therefore constrained to observe that the assessee was never a “non-filer” for the impugned assessment year 2008-2009 before us involving “unabated” assessment as on the clinching dated 27.09.2013. That being the case and in light of the fact that no incriminating material had been admittedly found or seized during the course of search u/sec.132 leading to any addition framed under the foregoing three heads (supra), the impugned assessment is not sustainable in law. So far as the learned CIT-DR’s vehement arguments that the above stated material had been found during the course of survey which deserves to be treated as part of search only, we are of the opinion that sec.153A; starting with non-obstante clause “Notwithstanding ………where a search is initiated u/sec.132 or books of account, other documents or any assets or acquisition u/sec.132A” nowhere includes Sec.133 survey action going by the stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB).

6 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 5.3. We further take note of hon’ble jurisdictional high court’s decision in Income Tax Appeal No.589 of 2009 dated 29.06.2009 CIT vs. M/s. J.M. Trading Corporation as well as [2013] 40 taxmann.com 365 (Del.) MDLR Resorts (P.) Ltd. vs. CIT also holds that a “search” in itself only triggers sec.153A proceedings. We thus conclude in this factual backdrop of facts that the impugned assessment dated 22.03.2016 deserves to be quashed since framed in absence of any incriminating material found or seized during the course of search. Ordered accordingly.

5.4. All other pleadings on facts as well as law stand rendered academic.”

5.

We now advert to the clinching question as to whether any of the impugned additions in all these three assessment years is based on any incriminating material found or seized during the course of search or not. The answer is in “negative” only as the learned lower authorities have inter alia disallowed/added the assessee’s alleged unexplained fixed deposits investments; his claim of agricultural income; re- estimated the turnovers as per the details collected from “IOCL” [Indian Oil Corporation Limited] and commission income therefrom; as the case may be, and various other heads. Learned CIT-DR could hardly rebut the assessee’s

7 I.T.(S.S.).A.Nos.15, 16 & 17/PUN./2021 arguments that all the foregoing heads had either been declared in the assessee’s regular returns hereinabove or they are based on the corresponding balance-sheets/submissions during assessments and material collected during the course of “survey” only than in the course of search herein dated 27.09.2013. We therefore, adopt judicial consistency to quash all the impugned three assessments as not based on any incriminating material found or seized during the course of search. Ordered accordingly.

All other pleadings on merits stand render academic.

6.

These three assessee’s appeals are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 06.10.2023.

Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 06th October, 2023 VBP/- Copy to 1. The applicant 2. The respondent 3. The CIT(A), Pune-12, Pune. 4. The D.G.I.T. (Inv.), Pune. 5. D.R. ITAT – ‘B’ Bench, Pune. 6. Guard File. //By Order// //True Copy //

Assistant Registrar, ITAT, Pune Benches, Pune.

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