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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & MS. S. PADMAVATHY
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND MS. S. PADMAVATHY, ACCOUNTANT MEMBER ITA Nos.494 to 497/Bang/2021 Assessment Years : 2011-12, 2013-14 to 2015-16 DCIT, M/s. Chaitanya Properties Pvt. Ltd., Vs. Central Circle – 2(1), No.17, Sankey Road, Bengaluru-560 020. Bengaluru. PAN : AAACC 5900 A APPELLANT RESPONDENT
Revenue by : Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru. Assessee by : Shri. V. Chandrashekar, Advocate Date of hearing : 05.04.2022 Date of Pronouncement : 19.04.2022 O R D E R Per Bench
These are 4 appeals by the Revenue against the common order dated 31.03.2021 of CIT(A)-11, Bengaluru, relating to Assessment Years 2011- 12, 2013-14, 2014-15, 2015-16. 2. The grounds of appeal raised by the Revenue in all these appeals are identical. For the sake of ready reference, we give below the grounds of appeal for Assessment Year 2011-12, which reads as follows: The order of the CIT(A) is opposed to law and facts of the case. 1. The CIT(A) has erred in holding that there is no incriminating 2. material to support initiation of proceedings u/s 153C of the I.T. Act.
ITA Nos.494 to 497/Bang/2021 Page 2 of 9 3. The CIT(A) has failed to appreciate the fact that the reassessment proceedings were initiated consequent to separate search action on 23.9.2016 in the group case of M/s Srinivasa Trust at the office of M/s KBD Sugars and Distilleries during which incriminating evidences were found against the assessee which were seized. The CIT(A) failed to appreciate that satisfaction was recorded 4. in the case of the assessee on 14.9.2018 in pursuance to the provisions of Section 153C of the I.T. Act. The CIT(A) has failed to consider the decision of Hon'ble High 5. Court of Karnataka in the case of M/s Canara Housing Development Co. Ltd. Vs. DCIT 48 Taxmann.com 98 wherein it is held that the assessing authority can take note of the income disclosed in the earlier return or which is not unearthed before the search in order to find out what is the total income of the year. For these and other grounds that may be urged upon, the order 6. of the CIT(A) may be reversed and that assessment order to be restored. 3. The assessee is a company. It carries on business as property developers. The following table gives the details of return of income filed for 2011-12, 2013-14, 2014-15, 2015-16:
Sl. No. AY Date of filing of return of Date of assessment and income u/s 139(1) Section 1. 2011-12 30.09.2011 declaring loss 10.01.2012 u/s. 143(1) of Rs.1,39,83,703/- 2. 2013-14 22.03.2014 total income of 10.03.2015 u/s. 143(1) Rs.89,93,76,720/- 3. 2014-15 25.10.2014 total income of u/s. 143(1) on 09.06.2015 Rs.64,18,62,790/- and later assessed u/s. 143(3) on 31.12.2016 on income of Rs.73,64,1,740/- 4. 2015-16 27.10.2015 total income of 25.03.2016 u/s. 143(1) Rs.38,25,51,390/-
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There was a search action in the case of M/s. Srinivasa Trust on 23.09.2016. As per the information received from the AO of the searched person, the following documents relating to the assessee were found : S1. No. Annexures Page No. 129-133, 213-242 1 A/DAS/01 2 A2/SUN/133A 2-6 3 A2/SUN/133A 16-42 4 Statement of Shri. D A Srinivas Recorded on 26.09.2016 at the office premises of M/s KBD Sugars and Distilleries.
The Assessing Officer of M/s. Srinivasa Trust after recording satisfaction that the seized documents mentioned above belongs to the assessee and has a bearing on the total income of the assessee handed over the above seized material to the AO of the assessee. Upon receipt of the seized material, the AO of the assessee proceeded to make an assessment in accordance with the provisions of section 153C of the Income-Tax Act, 1961 for A.Y.2011-12, 2013-14 to 2015-16.
It is also worthwhile to mention that prior to search in the case of M/s. Srinivasa Trust on 23.09.2016, there was another search on 06.08.2012 and in pursuance of the said search as assessment under section 153C of the Act was also passed for all these 4 Assessment Years in the case of the assessee. In all these 4 AYs the AO passed order under section 143(3) r.w.s. 153C of the Act in which he adopted the total income as was computed as per the original return filed under section 139(1) of the Act. The total income computed for each of the Assessment Year in the order
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under section 143(1), first order under section 153C and second order under section 153C of the Act (which is the order under appeal) has been tabulated by the AO in each of the order of Assessment for each Assessment Year and it reads as follows:
For Assessment Year 2011-12:
As per R.I. Assessed u/s.153C Income as As per R.I. Income/ (In Rs.) per 143(3) u/s.139 Deductions r.w.s 153C (In Rs.) (In Rs.) Income from Business -1,39,83,703 -1,39,83,703 -1,39,83;703 Income from house property 1,18,300 1,18,300 1,18,300 Income from other - - - Sources Losses of current year to be 1,18,300 1,18,300 1,18,300 set off against Gross Income -1,28,00,703 -1,28,00,703 -1 28,00,703 Less: Chapter VIA - - - Deduction Total Income -1,28,00,703 -1,28,00,703 -1,28,00,703 For Assessment Year 2013-14:
As per Section As per order As per R.I. Assessed 143(1) u/s.143(3) u/s.153C As per R.I. Income as per (In Rs. ) Income/ u/s.139 143(3) r.w.s Deductions (In Rs.) 153C (In Rs.) Income from 66,28,46,971/- 66,28,46,971 66,28,46,971/- 66,28,46,971/ 66,28,46,971/- Business Income from 3,90,73,187/- 3,90,73,187/- 3,90,73,187 3,90,73,187/- 3,90,73,I87/- house property Long-term 19,74,56,561/- 19,74,56,561/- 19,74,56,561 19,74,56,561/- 19,74,56,561/ with - indexation
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Income from - - 9,37,052 - 937052/- other Sources Gross 89,93,76,719/- 89,93,76,719/- 90,03,13,771 89,93,76,719/- 900313771/- Income - - Less: - - - Chapter VIA Deduction Total 89,93,76,720/- 89,93,76,720/- 90,03,13,771 89,93,76,720 90,03,13,771 Income
For Assessment Year 2014-15:
Assessed As per As per As per R.I. As per R.I. Income as Section Section u/s.153C u/s.139 per 143(3) 143(1) 143(3) (In Income/ (In Rs.) (In Rs.) r.w.s 153C Deductions Rs.) Iln Rs.) 39,99,76,522/- 39,99,76,522/- 39,99,76,522/ Income 39,99,76,522/ from Business Income from 9,43,00,296/- 9,43,00,296/- 73,63,76,690 399976522 94300296 house property Long-term 14,76,10,973/- 14,76,10,973/- - 14,76,10,973/ 14,76,10,973/- chargeable (a 20% Income from - - - - 94513899 other Sources Gross Income 64,18,87,791/- 64,18,87,791/- 73,63,76,690 64,18,87,791/ 736401690 Less: 25,000/- 25,000/- 25,000/- 25,000/- Chapter VIA Deduction Total Income 64,18,62,790 64,18,62,790 736376687 64,18,62,790 73,63,76,690
For Assessment Year 2015-16:
As per Section As per order As per RI. Assessed 143(1) n/s.143(3) u/s.153C As per RI. Income as per (In Rs.) Income/ u/s.139 143(3) r.w.s Deductions (In Rs.) 153C (In Rs.) Income from 24,31,78,876/- - - 24,31,78,876/- 24,31,78,876/- Business
ITA Nos.494 to 497/Bang/2021 Page 6 of 9 Income from 6,14,15,490/- - - 6,14,15,490/- 6,14,15,490/- house property 4,51,22,973/- - - 4,51,22,973/- 4,51,22,973/- Long-term chargeable @ 20% Income from 3,37,34,054/- - 3,37,34,054/- other Sources 87134251 435951590 Gross Income 38,34,51,393/- - - 38,34,51,393f - 43685159, 11 9,00,000/- - 9,00,000/- Less: Chapter 9,00,000/- VIA Deduction Total Income 38,25,51,390/- 38,25,51,390/- 43,59,51,590 38,25,51,390/- 43,69,51,690
It can be seen from the above charts that the same income adopted in first assessment order under section 153C or the total income declared under section 139(1) or assessed in an earlier order under section 143(3) or under section 153C of the Act has again been assessed for these 4 Assessment Years. The submission of the assessee before CIT(A) was that the assessment orders framed for all these 4 Assessment Years are not based on any incriminating material found during the course of search and therefore the determination of total income in these 4 orders of assessment have to be deleted and quashed.
On the above submission, the learned CIT(A) found that income returned and income assessed and reasons for addition were as per the table below:- A.Y Reasons for addition Income Income Addition returned assessed made As Per original assessment 2011-12 13983703 13983703 Nil order 2013-14 899376719 900313771 937052 As Per original assessment order
ITA Nos.494 to 497/Bang/2021 Page 7 of 9 2014-15 641862791 736376690 94513899 As Per original assessment order 2015-16 384351393 435951592 51600199 As Per original assessment order
The CIT(A) held that presence of incriminating material is a sine qua non for invoking the provisions of section 153C in respect of any assessment year, more so in the case of an Assessment Year in respect of which assessment has been completed under sections 143(3) / 143(3) r.w.s. 147 / 143(3) r.w.s. 153A/153C of the Act earlier to the date of initiation of proceedings under section 153C of the Act. The CIT(A) referred to the decision the Hon'ble High Court of Karnataka in the case of CIT Vs IBC Knowledge Park [P] Ltd. reported in 384 ITR 346, wherein it was held that “where no material belonging to a third party is found during a search, but only an inference of an undisclosed income is drawn during the course of enquiry, during search or during post-search enquiry, Section 153C of the Act would have no application. Thus, the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of Section 153C of the Act".
The CIT(A) also referred to decision of Bangalore Bench of the Income Tax Appellate Tribunal in ITA Nos. 272 to 274/Bang/2018, order dated 16/05/2019, in the case of ACIT Central Circle 2(3) Bangalore vs Smt. Pallavi Ravi wherein it was held that if no additions to income / undisclosed income have been made in the orders of assessment based on seized materials then they cannot be considered as undisclosed income.
It was also held that where additions which were made in earlier assessment proceedings were being repeated and the same has resulted in
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duplicity of additions and duplicity of demand, the interest of the department is not in any way disturbed as the original assessments are in various stages of appeal for the respective assessment years.
The CIT(A), following the said decisions, deleted additions made to the total income which were already made in the orders under section 143(3) of the Act.
Aggrieved by the order of CIT(A), the Revenue has preferred the present appeals before the Tribunal.
We have heard the submissions of the learned DR who reiterated the stand of the Revenue contained in the grounds of appeal filed before the Tribunal. Learned Counsel for the assessee relied on the order of the CIT(A). Considering the rival submissions, we are of the view that the order of the CIT(A) does not call for any interference. Admittedly, none of the additions made in these 4 appeals are based on any incriminating material found in the course of search in the case of M/s. Srinivasa Trust on 23.09.2016. In such a scenario, the additions made in the order of Assessment cannot be sustained. As far as the decision on the Hon’ble Karnataka High Court in the case of Canara Housing Development Co. Ltd., 48 taxmann.com 98 (Karn.), the Hon’ble Karnataka High Court in the decision rendered in the case of M/s. Delhi International Airport Pvt. Ltd. ITA No.322/2018 order dated 29.9.2021, wherein the law was explained that in an unabated assessments completed prior to search, there can be no addition in an Assessment under section 153C of the Act without material having been found in the course of search. The earlier decisions rendered by the Hon’ble Karnataka High Court and other High Courts were duly
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considered and there is no dispute on this aspect and the fact that the said decision is the law as of today on the subject rendered by the Hon’ble Karnataka High Court.
In view of the above we find no grounds to interfere in the order of the CIT(A). Consequently, these appeals by the Revenue are dismissed. In view of the above conclusions, we do not deem it necessary to examine whether the initiation of proceedings under section 153C of the Act were valid.
In the result, the appeals by the Revenue are dismissed.
Pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (S. PADMAVATHY) (N.V. VASUDEVAN) Accountant Member Vice President Bangalore, Dated: 19.04.2022. /NS/*
Copy to: 1. Appellants 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard file By order
Assistant Registrar, ITAT, Bangalore.