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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri R C Sharma & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “B”, MUMBAI Before Shri R C Sharma, Accountant Member & Shri Amarjit Singh, Judicial Member ITA No.4971/Mum/2015 Assessment Year : 2012-13 Dy CIT Central Circle 2(3), Shri Bidhichand K Bansal, Mumbai 109, Reti Bunder, Darukhana, Vs. Mumbai 400 010 PAN AAEPB8990N (Appellant) (Respondent)
Appellant By : Shri Lalit Krishan Singh Dehiyu Respondent By : Shri Ketan L Vajani
Date of Hearing : 02.07.2018 Date of Pronouncement 27/08/2018
O R D E R Per R C Sharma, Accountant Member: This appeal has been filed by Revenue against the order of CIT(A)-48, Mumbai, dated 30.07.2015, for A.Y.2012-13, in the matter of assessment order passed u/s. 143(3) r.w.s.148 of the Income Tax Act, 1961.
The Revenue has raised the following Grounds of appeal : “(i) "On facts facts and circumstances of the case and in law, the learned CIT(A) erred in deleting addition of Rs.56,00,000/- on account of unexplained cash seized from the assessee, made on protective basis, in view of contention of the assessee that said cash is offered to tax by the other person without appreciating the fact that in appeal the assessee changed its stand and contended that no substantive assessment of the said cash is made in the case of other person and, therefore, protective assessment does not survive." (ii) "On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that in absence of substantive
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assessment, protective assessment does not survive, without appreciating the fact that under the Income Tax Act both the assessments are assessments as per provisions of the I.T. Act, as held by the Hon'ble Supreme Court in the case of Lalji Haridas V. ITO (43 ITR 387) and ought to have decided the appeal on merits." 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is in the business of ship breaking. An action u/s. 132 of the Act was carried out on the assessee on 17.02.2012. During the search an amount of Rs58,09,020/- was found in the assessee’s premises. Out of the same an amount of Rs. 56,00,000/- was seized in the hands of the assessee. No other papers/documents were seized in the hands of the assessee. Assessee has e-filed return of income for A.Y. 202-13 on 28.02.212 declaring total income of Rs. 40,44,020/-. Notices u/s. 153A dated 19.03.2014 were issued to the assessee for A.Y. 2006-07 to A.Y. 2011-12. In response to the said notices assessee had submitted that original return of income filed may be considered as having been filed in response to you notices. Assessment for A.Y. 2006-07 to A.Y. 2011-12 were completed u/s. 53A r.w.s. 143(3) vide orders dated 31.03.2014, accepting returned income. The Assessing Officer had not issued any notice u/s. 143(2) of the Act for A.Y. 2012-13 within the statutory time limit allowed i.e. 30.09.2013. The assessment for A.Y. 2012- 13 was reopened vide notice u/s. 148 of the Act, dated 20.03.2014 and notices u/s. 143(2) and 142(1) of the Act dated 20.03.2014 were served on the assessee for the first time on 20.03.2014. 4. In the course of re-assessment proceedings, the Assessing Officer added Rs. 56 lacs in the hands of the assessee on protective basis. Vide the impugned order the learned CIT(A) deleted the same observing as under: “8.1 I have given my careful consideration to the submissions made by appellant, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position.
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8.2 With regard to first ground of appeal appellant submits that As AO failed to issue notice us 143(2) within specified time and when subsequently when it came to his notice that there was a search in relevant previous year at appellant's residential premises and there was seizure of cash of Rs 56 lac, the AO is issued notice u/s 148 as he had reason to believe that income had escaped the assessment. 8.3 Appellant submits that notice us 148 cannot be issued in lieu of notice us 143(2) of the I T Act. The above information was available at the time, when notice us 143(2) could have been issued. In absence of fresh tangible material or in absence of any new or additional information notice issued us 148 is bad in law. 8.4 The contention of appellant is not acceptable in view of the decision of Apex Court in case of ACIT vs Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500. In this case it is held that processing of return us 143(1) (a) is not an assessment order and if AO notices subsequently that income has escaped the assessment, still he can issue notice us 148 of the IT Act. The Hon'ble S.C. in above case has observed as under: "18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued." Following the decision of Hon'ble S.C. in case of ACIT vs Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 in my considered view a case can be reopened us 147 of the I T Act. Accordingly this ground of appeal is dismissed. 9. In relation to second ground of appellant, it is submitted that appellant has objected to the issue of notice us 148 vide letter dated 24-03-2014. However, AO failed to reject objections raised by appellant before passing assessment order or even same has not been dealt with in assessment order. Thus, AO has not followed the ruling of Hon'ble S.C. in case of GKN Driveshafts (India) Ltd. vs ITO and Others (2003) 259 ITR 19(SC). As a result, reassessment order passed by AO is bad in law. 9.1 The Hon'ble jurisdictional High Court in following cases has held that if objections raised by assessee are not rejected by AO, then assessment order is to be set aside and matte to be restored to file of AO for dealing
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with objections raised by assessee and thereafter assessment order has to be passed by AO. a. IOT Infrastructure and Engineering Sevices Ltd. vs ACIT (2010) 329 ITR 547 (Bom) b. Allana Cold Storage vs ITO (2006) 287 ITR 1 (Bom)
Since CIT(A) has no power to set aside the matter, it cannot be restored to file of AO . But as has coterminous powers as that of AO and appellant has raised the objections for issue u/s 148 in ground No. 1 of appeal and same having been disposed off on meri, this raised by appellant does not survive and is accordingly dismissed. 10. The third ground of appeal is relatable to passing of protective assessment order without prior passing of substantive assessment order in case of other person. 10.1 In this case in the course of search on 23/03/2012 at the appellant's residence unaccounted cash of Rs 56 lac was seized and same was stated by appellant that i belonging to his brother, Mr Vijay Kumar Bansal and Mr Vijay Bansal admitted the ownership of such cash seized and stated that unaccounted cash of Rs 67,47,234/- found "in premises of Mf Bidhichand K Bansal (which includes seized cash of Rs 56 lacs) represented unaccounted income from his ship breaking business which was by way of sale of ropes, cabin goods etc. and offered such uncounted income for taxation . 10.2 Thus it is clear that said seized cash has to be assessed substantively in hands of Mr Vjjay Bansal or in hands of concerns ie M/s Bansal Infracon Ltd. or M/s Bansal International Ltd. engaged in ship breaking activity, if same is not offered for taxation. The appellant has filed copies of assessment order for AY 2012-13 in cases of (a) Mr Vijay Kumar K Bansal dated 24/3/2014 (b) M/s Bansal Infracon Ltd. dated 27/3/2014 and (c) M/s Bansal International Ltd. dated 18/03/2014 . All these assessment orders were passed under sec 143(3) by DCIT CC1 (3) Ahmedabad. In these orders nowhere AO has made addition of seized cash or related to such seized cash of Rs 56 lac on substantive basis nor there is any finding given by AO that same has to be taxed on protective basis in hands of some other person including assessee. Hence, AO is not justified in making addition of Rs 56 lac on protective basis.
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10.3 For this I rely on principles laid down by Mumbai Tribunal in case of M.P. Ramchandran vs DCIT (2011) 8 ITR (Trib.) 655,
The relevant paragraph is reproduced hereunder for ready reference. (Para 23) "Protective assessment cannot be independent of substantive assessment. Thus protective assessment is always successive to the substantive assessment. There may be a substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. In simple words there has to be some substantive assessment/addition first which enables the Assessing Officer to make a protective assessment/addition. Substantive addition/assessment is made in the hands of the person in whose hands the Assessing Officer prima facie holds the opinion that the income is rightly taxable. Having done so and with a view to protect the interest of the revenue, if the Assessing Officer is not sure that the person in whose hands he had made the substantive addition rightly, he embarks upon the protective, assessment. Thus the protective assessment is basically based on the doubt of the Assessing Officer as distinct from his belief which is there in the substantive assessment. Obviously there is no place for 'doubt' in the scheme of reassessment, as it has to be belief of the Assessing Officer about the escapement of income, which is the foundation for assessment or reassessment under section 147. " In present case of appellant there is no finding given by ACIT CC-1(3) Ahmedabad in assessment order that unaccounted seized cash of Rs 56,00,000/- is to be taxed substantively in AY 2012-13 in hands of Mr Vijay Kumar Bansal or in hands of any other sister concerns of appellant ie M/s Bansal Infracon Ltd. or M/s Bansal International Ltd."
As a result, I delete the addition of Rs 56,00,000/- made by AO on protective basis 5. Against the above order of the CIT(A), the Revenue is in further appeal before us. 6. At the outset, we have gone through the orders of the authorities below and found that tax effect in the appeal filed by the Revenue is below Rs.20 lakhs. Under the power vested by sec. 268A(1) of the I T. Act, CBDT
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has recently issued Circular No. 3/2018 dated 11.07.2018 instructing the authorities below that departmental appeal should not be filed before 1TAT where the demand/tax effect does not exceed Rs. 20 lakhs. The circular specifically mentions that the instructions are applicable to all pending appeals also.
Subject to some exceptions, it is further directed by CBDT that all the departmental appeals pending before ITAT where the demand/tax effect is less than 20 lakhs should be either withdrawn or not pressed by the Departmental representative.
The present appeal is not covered by any exceptions mentioned in the said CBDT circular. Since the tax demand in dispute in this departmental appeal does not exceed the limit of Rs. 20 lakhs as set out by CBDT, such appeal is not maintainable in view of fore goings. Accordingly the appeal of the Department is dismissed as not pressed/withdrawn and hence infructuous.
In the result, the appeal of revenue is dismissed.
Order pronounced in the open court on 27/08/2018. Sd/- Sd/- (Amarjit Singh) (R C Sharma) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 27/08/2018 SA
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Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A),Mumbai 4. The CIT 5. DR, ‘B’ Bench, ITAT, Mumbai BY ORDER, #True Copy # Assistant Registrar Income Tax Appellate Tribunal, Mumbai