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Income Tax Appellate Tribunal, ‘’B’’ BENCH, MUMBAI
Before: SHRI WASEEM AHMED & SHRI RAMLAL NEGI
आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-54, Mumbai dated 21/03/2017, (in short “Ld.CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s. 153A of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dt. 07/03/2014 relevant to the Assessment Years ( 2006-2007 to 2009-2010).
ITA nos.4635-4637 & 4641/MUM/2017 Asstt. Years ( 2006-07 to 2009-10) 2
Since, common issues are arising in all the appeals and facts being identical, we dispose of all these appeal by this consolidated order for the sake of convenience.
In ITA No. 4641/MUM/2017 for A.Y. 2006-07, the Grounds of appeal are as follows: 1. The learned Commissioner of Income Tax(Appeals) erred in upholding the jurisdiction of the Assessing Officer to complete the assessment under sec.153A r.w.s 143(3). 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition in proceedings u/s.153A, after having himself given a findings that no incriminating material was found in the course of search, and that the original assessment u/s.143(3) had not abated. 3. The Learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition on the basis of an offer made by the appellant during assessment, ignoring the fact that appellant made a conditional offer, which was not accepted by the Assessing Officer. 4. Without prejudice the learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to adopt the ALV of property at Lonavala at Rs.60,000/- and that of flat in building called Kalpana at Rs.41,000/-. The appellant submits the ALV adopted is excessive and arbitrary. 5. The appellant submits the Assessing Officer be directed to adopt the rateable value fixed by the Municipal Corporation as the Annual Letting Value. The Appellant craves leave to add to, amend, alter modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time,
In ITA No. 4635/MUM/2017 for A.Y. 2007-08 the Grounds of appeal are as follows:
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The Learned Commissioner of Income Tax(Appeals) erred in upholding the jurisdiction of the Assessing Officer to complete the assessment under sec.153A r.w.s 143(3). 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition in proceedings u/s.153A, after having himself given a findings that no incriminating material was found in the course of search, and that the original assessment u/s.143(3) had not abated. 3. The Learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition on the basis of an offer made by the appellant during assessment, ignoring the fact that appellant made a conditional offer, which was not accepted by the Assessing Officer. 4. Without prejudice the learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to adopt the ALV of property at Lonavala at Rs.60,000/- and that of flat in building called Kalpana at Rs.41,000/-. The appellant submits the ALV adopted is excessive and arbitrary. 5. The appellant submits the Assessing Officer be directed to adopt the rateable value fixed by the Municipal Corporation as the Annual Letting Value. The Appellant craves leave to add to, amend, alter modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time,
In ITA No. 4636/MUM/2017 for A.Y. 2008-09 the Grounds of appeal are as follows: 1. The learned Commissioner of Income Tax(Appeals) erred in upholding the jurisdiction of the Assessing Officer to complete the assessment under sec.153A r.w.s 143(3). 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition in proceedings u/s.153A, after having himself given a findings that no incriminating material was found in the course of search, and that the original assessment u/s.143(3) had not abated. 3. The Learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition on the basis of an offer made by the appellant during assessment, ignoring the fact that appellant made a conditional offer, which was not accepted by the Assessing Officer. 4. Without prejudice the learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to adopt the ALV of property at Lonavala at Rs.60,000/- and that of flat in building called Kalpana at Rs.45,000/-. The appellant submits the ALV adopted is excessive and arbitrary.
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The appellant submits the Assessing Officer be directed to adopt the rateable value fixed by the Municipal Corporation as the Annual Letting Value. The Appellant craves leave to add to, amend, alter modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time,
In ITA No. 4637/MUM/2017 for A.Y. 2009-10 the Grounds of appeal are as follows: 1. The learned Commissioner of Income Tax(Appeals) erred in upholding the jurisdiction of the Assessing Officer to complete the assessment under sec.153A r.w.s 143(3). 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition in proceedings u/s.153A, after having himself given a findings that no incriminating material was found in the course of search, and that the original assessment u/s.143(3) had not abated. 3. The Learned Commissioner of Income Tax (Appeals) erred in upholding the jurisdiction of the Assessing Officer to make an addition on the basis of an offer made by the appellant during assessment, ignoring the fact that appellant made a conditional offer, which was not accepted by the Assessing Officer. 4. Without prejudice the learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to adopt the ALV of flat in building called Kalpana at Rs.41,000/-. The appellant submits the ALV adopted is excessive and arbitrary. 5. The appellant submits the Assessing Officer be directed to adopt the rateable value fixed by the Municipal Corporation as the Annual Letting Value. The Appellant craves leave to add to, amend, alter modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time,
The preliminary issue to be decided in all these appeals is as to whether in respect of unabated assessments (no pending proceedings) as on the date of search, the AO could frame the search assessment u/s 153A of the Act by
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making certain additions without any incriminating materials found during the course of search.
The brief facts appearing in this case are that there was a search and seizure operation conducted u/s 132(1) of the Act at J.M. Baxi & co., a partnership firm dated 20-03-2012 in which the assessee was a partner. The assessee was also director in various company of Baxi Group. The assessee was in receipt of salary, remuneration from companies, firm etc. The assessee had originally filed his returns of income for the Assessment Years 2006-07, 2007-08, 2008-09 & 2009-10 on 30.03.2007, 14.08.2008, 30.09.2008 & 29.09.2009 respectively which were assessed u/s 143(3) of the Act dated 07- 02-2008, 30-03-2009, 20-4-2010 and 26-09-2011 respectively. There was also the wealth tax assessment under section 16(3) of the Act dated 24-03-2008, 29-12-2009, 16-12-2010 and 20-12-2011 for all the impugned assessment years. Thus as on the date of search i.e. 20.03.2012, all these four assessment years become unabated.
The ld. AR before us has challenged the assessment proceedings framed under section 153A of the Act in ground no. 1 & 2 on the reasoning that the additions made by the AO in the assessment years 2006-07, 2007-08, 2008-09 & 2009-10 represents the items of the regular assessments being
ITA nos.4635-4637 & 4641/MUM/2017 Asstt. Years ( 2006-07 to 2009-10) 6
deemed rent under section 23(1) of the Act with respect to two properties located at Upper Amarwadi, Lonavala and Flat No. 8, Kalpana, Mumbai respectively. These properties were disclosed in the income tax returns and wealth tax returns.
As per the ld. AR there was no incriminating material found in respect of the unabated proceedings. Therefore no additions can be made. The assessments were framed u/s 153A/143(3) of the Act after making addition on account of deemed rent but the same were reduced by the ld. CIT-A. The details of the amount disputed in different assessment years are as under:
S. No. Assessment Year Addition u/s. Amount (Rs.) Remarks 1 2006-07 23(1) Rs. 1,01,000/- -On account of deemed rent 2 2007-08 23(1) Rs. 1,01,000/- -On account of deemed rent 3 23(1) Rs. 1,05,000/- -On account of 2008-09 deemed rent 4 2009-10 23(1) Rs. 45,000/- -On account of deemed rent
9.1 The Ld. AR accordingly argued in respect of assessment years 2006- 07, 2007-08, 2008-09 & 2009-10 being unabated assessments, the Ld. AO has made the addition, for which absolutely no incriminating materials were found during the course of the search. Hence he prayed for deletion of disallowance made for assessment years 2006-07, 2007-08, 2008-09 & 2009-
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He placed reliance on the decisions of the Hon’ble Bombay High Court in the case of CIT vs. Continental warehousing corporation (Nhava Shiva) Ltd. and All Cargo Global Logistics ltd. reported in 374 ITR 645.
9.2 The ld. AR also argued that the fact that there was no incriminating document found during the search was also admitted by the ld. CIT-A in his order. However, he(CIT(A)) made the addition merely on the reasoning that the assessee admitted that he (Assessee) omitted to offer the deemed rental income with respect to the impugned properties and voluntarily offered the deemed rental income as discussed above. In this regard, the ld. AR contended that the Income tax authorities can levy the tax as per the provision of law and not on the income agreed by the assessee. The ld. AR in support of his contention relied on the judgment of Hon’ble Bombay High Court in the case of Balmukund Acharya Vs. DCIT and others reported in 310 ITR 310.
In view of the above, the learned AR accordingly claimed that there cannot be any addition on account of deemed rental income as there was no incriminating document found during the search.
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The Ld. DR, on the other hand, argued vehemently on the validity of the assessment completed u/s 153A/143(3) of the Act by placing reliance on the orders of the subordinate authorities.
We have perused the case record, analyzed the facts and circumstances of the case and heard the rival contentions. We find that it would be necessary to address the preliminary issue, whether assessment could be framed u/s 153A of the Act in respect of concluded proceeding without the existence of any incriminating materials found during the course of the search. The scheme of the Act provides for abatement of pending proceedings as on date of search. It is not is dispute that the assessment for the assessment year 2006- 07 up to 2009-10 falls under the ambit of unabated assessment as on the date of search. There is no differentiation as found in the intent of the legislature to differentiate whether the assessments were originally framed u/s 143(1) or 143(3) or 147 of the Act. Therefore, if any incriminating material is not found during the course of search related to those concluded years, the Act does not confer any power on the Ld. AO to disturb the finding given thereon and income determined thereon as finality has already been reached and no proceeding was pending on the date of search.
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11.1 We find that the judgment of the Hon’ble Bombay High Court in the case of CIT vs. Continental warehousing corporation (Nhava Shiva) Ltd. and All Cargo Global Logistics ltd. reported in 374 ITR 645 has decided the impugned issue in favor of the assessee. The relevant extract is reproduced below: “Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143 (3) 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 establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order”
11.2 We also place reliance on the judgment of Hon’ble Bombay High Court in the case of CIT vs. Gurinder Singh Bawa reported in 79 taxmann.com 398 wherein it was held as under: “7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessment were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard to finding in the impugned order on the merits of the individual claim regarding gifts and deemed dividend. However once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic.”
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11.3 Once the proceeding u/s 153A of the Act is initiated which are special proceedings, the legislature provides different treatments for abated and unabated assessments. However, in respect of unabated assessments the legislature has conferred powers on the Ld. AO to just follow the assessments already concluded unless incriminating materials are found in the course of search.
11.4 It is also pertinent to note that the tax can be levied as per the provision of the Act. Thus, the tax cannot be charged from the assessee merely on the ground that he agreed for certain addition during the assessment proceedings. In this regard we find support and guidance from the judgment of Hon’ble Bombay High Court in the case of Balmukund Acharya Vs. DCIT and others reported in 310 ITR 310 wherein it was held as under: “31. Having said so, we must observe that the Apex Court and the various High Courts have ruled that the authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconceptions or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected (see S.R. Kosti v. CIT [2005] 276 ITR 165 (Guj.), CPA Yoosuf v. ITO [1970] 77 ITR 237 (Ker.), CIT v. Bharat General Reinsurance Co. Ltd. [1971] 81 ITR 303 (Delhi), CIT v. Archana R. Dhanwatey [1982] 136 ITR 355(Bom.). 32. If particular levy is not permitted under the Act, tax cannot be levied applying the doctrine of estoppel. (See Dy. CST v. Sreeni Printers [1987] 67 SCC 279. 33. This Court in the case of Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 has held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing
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Officer to apply his mind to the facts disclosed in the return and assess the assessee keeping in mind the law holding the field.”
11.5 That for the reasons stated above and on basis of various judicial pronouncements, we hold that the addition made for the Assessment years i.e. 2006-07, 2007-08, 2008-09 & 2008-09, which were unabated/concluded assessments as on date of search cannot be made in the search assessments in the absence of any incriminating material found in the course of search and accordingly all those additions are directed to be deleted. Since the legal issues are addressed, we refrain to give our findings on merits of additions under the provisions of the Act. Accordingly, the grounds raised by the assessee for Assessment Years 2006-07, 2007-08, 2008-09 and 2009-10 are allowed.
In the result, all the appeals of the assessee are partly allowed.
Order pronounced in the Court on 06/11/2019 at Mumbai.
Sd/- Sd/- (RAMLAL NEGI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) मुंबई Mumbai; िदनांक Dated: 06/11/2019 Manish, PS