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Income Tax Appellate Tribunal, “A” BENCH, PUNE
आदेश / ORDER
PER D. KARUNAKARA RAO, AM :
These two appeals filed by assessee are directed against the order of Commissioner of Income Tax (Appeals)-12, Pune commonly dated 13.05.2016 for assessment years 2007-08 & 2008-09.
2 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
ITA No. 1676/PUN/2016 A.Y.2007-08
In ITA No.1676/PUN/2016, Assessee has raised following grounds:
“1. The learned CIT(A) has erred on facts and in law in confirming the additions made in assessment proceedings the same being beyond the jurisdiction provided in law in view of the fact that there was no incriminating material found during the course of search. 2. The learned CIT(A) has erred on facts and in law in confirming the disallowance of claim for carry forward of losses by treating the assessee as not liable for tax audit in terms of the provisions of section 44AB of the Income Tax Act, 1961. 3. The learned CIT(A) has erred in treating the return of income as belated return as the same was filed on 23.10.2007. 4. The appellant craves leave to alter, amend or delete any of the grounds of appeal or add to the same, if deemed necessary.”
Identical grounds have been raised by Assessee in ITA
No.1677/PUN/2016.
Briefly stated relevant facts include that the assessee is engaged in
the business of Builder & Developers. The assessee filed return of income
for the assessment year 2007-08 on 23.10.2007 declaring total income at
Rs. Nil. Search and seizure action u/s.132 of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’) was conducted by the Department in
Namrata, Pristine and Jalan Group of cases on 12.02.2013. The assessee
belongs to the said group of cases. After search action, notices u/s. 153C
and 143(2) were issued to the assessee and duly served on the assessee.
Assessment in this case was completed u/s.143(3) r.w.s.153C r.w.s.
153B(1)(b) of the Act. In assessment, Assessing Officer did not allow the
claim of carry forward of business loss of Rs.48,12,569/-. As per
contentions of Para 4.2 to 6 of the assessment order, the Assessing Officer
held that, in a case, where there was no sale, no value of work in progress
3 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
etc., the same do not constitute the turn over. Hence, the assessee was
not liable for to get its account audited in terms of section 44AB of the
Act. In the instant case, the due date of filing return of income was 31st
July, 2007 and the assessee filed return of income on 29th October, 2007.
For the reason to failure to file valid return with Audit Report within due
date, the Assessing Officer did not allow carry forward business loss of
Rs.48,12,569/-.
Aggrieved by the assessment order, assessee filed appeal before the
CIT(A). During First Appellate proceedings, the CIT(A) dealt with this issue
vide para 4.4 to 4.8 and discussed/considered various judgments on
which Ld. AR has placed his reliance. Eventually, CIT(A) held that the
assessee was not entitled to carry forward the business loss as return was
filed after the due date u/s.139(1) of the Act and upheld the findings of
Assessing Officer.
Still aggrieved by the order of CIT(A), assessee filed appeal before us
by raising grounds as extracted above.
Before us, Ld. Counsel for the assessee draws out attention to
ground Nos. 1 to 3 of the appeals and submitted that additions made in
assessment proceedings were beyond the jurisdiction provided in law in
view of the fact that there was no incriminating material found during the
course of search. The solitary issue raised in appeal by assessee is
against Assessing Officer’s denial of assessee’s claim of carry forward
business loss. He further stated that this is case of a concluded
assessment (i.e. non abated assessment) as due date for issue of notice
4 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
u/s.143(2) and 153C of the Act expired long before the date of search
action on the assessee. In such circumstances, assessment can only be
re-opened u/s.153C of the Act when there was no incriminating material
against the assessee. The Ld. Counsel further submitted that no such
incriminating evidence has been brought in by the Assessing Officer while
issuing notice u/s. 143(2) and 153C of the Act.
On the other hand, Ld. DR for the Revenue heavily placed reliance
on the orders of Assessing Officer/ CIT(A).
We have heard both the parties on this legal issue and perused the
orders of Revenue as well as the decisions relied on by the Ld. Counsel for
the Assessee. It is an undisputed fact that original assessment constitutes
a non-abated assessment as the due date for due date for issuing notice
u/s.143(2) and 153C of the Act expired long before the event of search
action on the assessee. Further, no specific incriminating evidence was
mentioned on the record or in the assessment order by the Assessing
Officer. In fact, no addition was made by the Assessing Officer to the
income returned by the assessee. There is no reportable discrepancy, was
recorded by the Assessing Officer for the year under consideration
regarding nature of work and method of accounting followed by the
Assessee. Therefore, existence of incriminating evidence suggesting
escapement of income does not arise in the instant case. In this case, we
also perused the binding judgment in the case of CIT Vs. Continental
Warehousing Corporation reported as 374 ITR 645. This judgment
relates for the proposition that the issue of notice u/s.153C of the Act is
5 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
invalid in case no incriminating material has brought in by the Assessing
Officer at the time of reopening of assessment u/s. 153C of the Act.
It is a settled legal proposition that notice u/s.153C of the Act
cannot be issued in respect of a concluded assessment, if there is no
incriminating material in support of altering the income returned by
assessee. Denial of claim of carry forward losses was the solitary issue in
this case and the same is not supported by any incriminating evidences
gathered during the search. In any case, the said denial is linked to the
debatable issue of failure to file the return of income enclosing of the
statutory Audit Report. Therefore, we are of considered view that the
ground No. 1 should be allowed in favour of the assessee. Accordingly,
we hold so. Considering the relief granted to the assessee, adjudication of
other grounds on merits i.e. grounds No. 2 and 3 becomes academic.
Accordingly , they are dismissed as such.
Ground No. 4 raised in appeal by assessee is general in nature and
hence, requires no adjudication.
In the result, appeal of the assessee for assessment year 2007-08 is
partly allowed.
ITA No. 1677/PUN/2016 A.Y.2008-09
The facts, issues, decision of Assessing Officer/CIT(A), arguments
of both the parties are common as that of appeal for Assessment year
2007-08. Therefore, following the same reasoning, we allow the ground
No.1 raised in appeal and ground No. 2 and 3 are dismissed as academic.
6 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
Ground No. 4 raised in appeal by assessee is also general in nature and hence requires no adjudication.
To sum up, both the appeals of the assessee for A.Y. 2007-08 and 2008-09 are partly allowed.
Order pronounced on 12th day of December, 2018.
Sd/- Sd/- (सुषमा चावला / Sushma Chowla ) (डी.क�णाकरा राव/D. Karunakara Rao) �या�यक सद�य /JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER
पुणे / Pune; �दनांक / Dated : 12th December, 2018. 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)-12, Pune. 4. The Pr. CIT, Central, Pune. �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.
7 ITA Nos. 1676 & 1677/PUN/2016 A.Ys. 2007-08 & 2008-09
Date 1 Draft dictated on 29.11.2018 Sr. PS/PS 2 Draft placed before author 03.12.2018 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