ASSISTANT COMMISSIONER OF INCOME-TAX vs. LAXMI CIVIL ENGINEER SERVICES PVT. LTD., KOLHAPUR

आदेश / ORDER

PER VIKAS AWASTHY, JM

ITA No.1175/PUN/2015 for the assessment year 2005-06 has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-1 & 2, Kolhapur dated 01.06.2015.

The Department has filed appeals in ITA Nos.1241 to 1243/PUN/2015 against aforesaid order of Commissioner of Income Tax (Appeals)-1 & 2, Kolhapur, common for the assessment years 2005-06, 2006-07 and 2007- 08.

3 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

ITA No.1241/PUN/2015 (By Department) Assessment Year 2005-06

Civil Engineer and Mechanical Contractor. A search and seizure action

u/s.132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was

carried out at the premises of the assessee on 15.06.2010. Notice

u/s.153A(a) of the Act was issued to the assessee on 30.05.2011. The

assessee vide letter dated 19.07.2011 informed that the return already filed

u/s.139 of the Act be treated as return in response to notice u/s.153A(a) of

the Act. During the course of search action, cash aggregating to

Rs.2,73,70,860/- was found. Further, jewellery valued at Rs.46,82,110/-

was also found, out of which jewellery worth Rs.7,97,181/- was seized. The

statement of Shri Vijay Rajaram Shah and Shri Hemant Vijay Shah,

Directors of the assessee company were recorded u/s.132(4) of the Act. Shri

Hemant Vijay Shah admitted unaccounted income of assessee at

Rs.29,15,76,000/- and offered the same as income of the assessee for

assessment years as under:

Assessment year Amount

2009-10 7,00,00,000/-

2010-11 17,90,76,000/-

2011-12 4,25,00,000/- Total 29,15,76,000/-

As regards the assessment year 2005-06, no income was offered.

During the course of assessment proceedings, the Assessing Officer observed

that the assessee has claimed deduction u/s.80IA(4) on various

4 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

miscellaneous receipts which are not eligible for claiming deduction.

Consequently, the Assessing Officer disallowed deduction u/s.80IA(4) in

respect of miscellaneous receipts aggregating to Rs.1,28,59,681/-. Apart

from above disallowance of deduction u/s.80IA(4) of the Act, no other

addition was made in the hands of the assessee for the assessment year

2005-06.

143(3) r.w.s.153A(b) of the Act, the assessee filed appeal before the

Commissioner of Income Tax (Appeals) challenging the addition on two

grounds:

a. No incriminating material was found during the search for the

assessment year 2005-06, therefore, no addition can be made.

b. Original assessment for assessment year 2005-06 was completed

before date of search. Since the assessee had claimed deduction

u/s.80IA(4) in the return of income filed u/s.139 of the Act, the

issue had reached finality, therefore, cannot be raked up again in

assessment proceedings u/s.153A of the Act in the absence of any

incriminating material.

case came to the conclusion that no incriminating material was found during

search and seizure operation for the assessment year 2005-06. The

assessment for assessment year 2005-06 was completed u/s.143(3) of the

Act. The assessee had claimed deduction u/s.80IA(4) in return of income

filed u/s.139 of the Act and after examining assessee’s claim, the same was

allowed by the Commissioner of Income Tax (Appeals). Since at the time of

5 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

search, no assessment was pending, the Assessing Officer could not have

made any addition in proceedings u/s.153A of the Act.

7.1 Dehors, the legal position, the Commissioner of Income Tax (Appeals)

examined alleged miscellaneous receipts on which deduction u/s.80IA(4) was

disallowed by the Assessing Officer and came to the conclusion that assessee

was eligible to claim deduction u/s.80IA(4) of the Act on all such receipts.

Thus, Commissioner of Income Tax (Appeals) allowed the claim of assessee

and deleted the addition.

the Revenue has filed appeal before the Tribunal by raising following

grounds:

“1) On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the AO had not jurisdiction u/s 153A for the impugned Assessment Years once Assessment was completed for those years, when the return of income filed in response to notice u/s 153A can be assessed or reassessed by the AO u/s 153A(b) of the Act. 2) On the facts and the circumstances of the case and in law. the Ld. CIT(A) has erred in propounding that availability of incriminating material was prelude to assess u/s.153A once assessments had been completed for the impugned Assessment Years. 3) On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the assessee’s contention that completed assessments could not be revisited whereas as per Section 153A(2) of the Act has given the mandate to revisit cases annulled by higher judicial authorities. 4) On the facts and the circumstances of the case and in law, the Ld.CIT(A)has erred while allowing the assesses appeal or eligibility of miscellaneous Receipts of Rs.1,28,59,681/- without controverting the facts enumerated by the AO in his order and further erring in treating the said receipts as profits and gains derived from eligible business as required by Section 80IA(4) of the Act.

6 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

Commissioner of Income Tax (Appeals) submitted at the outset that the case

of the assessee is squarely covered by the decision of Hon'ble Bombay High

Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava

Sheva) reported as 374 ITR 645. It is an undisputed fact that assessment for

assessment year 2005-06 was completed at the time of search and seizure

operation. No incriminating material whatsoever was found by the

Department for the impugned assessment year. The assessee in its return of

income filed u/s.139 of the Act had claimed deduction u/s.80IA(4) of the Act.

The return of the assessee was subject to scrutiny and the Assessing Officer

found the claim of the assessee in order and allowed the same. Now the

assessment proceedings consequent to search, Assessing Officer cannot

fiddle with the assessee’s claim of deduction u/s.80IA(4), where assessment

has not abated and no incriminating material is found.

vehemently defended the action of Assessing Officer in disallowing

assessee’s claim u/s.80IA(4) in respect of miscellaneous receipts. The ld. DR

in support of his submissions placed reliance on the decision of Hon'ble

Kerala High Court in the case of E.N.Gopakumar Vs. CIT-Central, 75

taxmann.com 15 (Kerala).

sides and have perused the orders of the Authorities below. The un-rebutted

facts in the instant case are:

7 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

- No incriminating material was found during the course of search and

seizure action carried out by the Department against the assessee for

the assessment year 2005-06.

- In the return of income filed u/s.139 of the Act, the assessee had

claimed deduction u/s.80IA(4) of the Act, hence assessment for

assessment year 2005-06. The assessment under regular provisions

was completed in the case of the assessee and claim of the assessee

was accepted by the Assessing Officer.

- There was no pending assessment when search and seizure action

was carried out by the Department.

addition can be made where original assessments have not abated. The

Hon'ble Jurisdictional High Court in the case of CIT Vs. Continental

Warehousing Corporation (Nhava Sheva) (supra.) has held that no addition

can be made in respect of assessments which have become final if no

incriminating material is found during search.

Products Ltd. reported as 49 taxmann.com 172 has held as under:

“12) Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the I.T. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153 A proceedings.”

8 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

Court in the case of E.N. Gopakumar Vs. CIT- Central (Supra.). We are of

considered view that the aforesaid decision would not support the cause of

Revenue, as there is binding decisions of Hon'ble Jurisdictional High Court

directly on the issue in hand.

In view of the facts of the case and the decisions of the Hon'ble

Bombay High Court, we do not find any infirmity in the order of the

Commissioner of Income Tax (Appeals), resultantly the same is upheld. The

appeal of the Revenue for the assessment year 2005-06 is dismissed

being devoid of any merit.

ITA Nos. 1242 & 1243/PUN/2015 (By Department) Assessment years 2006-07 & 2007-08

Commissioner of Income Tax (Appeals) by raising identical grounds as were

raised in the assessment year 2005-06. Both sides are unanimous in stating

that the facts in assessment years 2006-07 and 2007-08 are identical to the

facts in assessment year 2005-06. Since grounds of appeal in the appeals by

the Department for the assessment years 2006-07 and 2007-08 are identical

to grounds of appeal in assessment year 2005-06 and facts are also

identical, the findings given by us in assessment year 2005-06 would

mutatis-mutandis apply to the appeals of the Revenue for assessment years

2006-07 and 2007-08. Accordingly, both the appeals of the Revenue i.e.

appeals for the assessment years 2006-07 and 2007-08 are dismissed.

9 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

Order pronounced on Wednesday, the 27th day of February, 2019.

Sd/- Sd/- (डी. क�णाकरा राव/D. KARUNAKARA RAO) (�वकास अव�थी /VIKAS AWASTHY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 27th February, 2019 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-1 & 2, Kolhapur. 4. The CIT-I & II, Kolhapur, �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

10 ITA No.1175/PUN/2015 ITA Nos. 1241 to 1243/PUN/2015

Date 1 Draft dictated on 15.02.2019 Sr.PS/PS 2 Draft placed before author 25.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order