E.SHAMSUDHEEN vs. THE COMMISSIONER OF INCOME TAX

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 26TH DAY OF OCTOBER 2021 / 4TH KARTHIKA, 1943 ITA NO. 90 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 362/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.SHAMSUDEEN KONCHERIL VEGETABLES, EDAPALLYKOTTA, KOLLAM. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CR BUILDINGS, IS PRESS ROAD, ERNAKULAM,KOCHI-682 018. SR ADV. P.K.R MENON AND SC JOSE JOSEPH FOR THE RESPONDENTS THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2021, ALONG WITH ITA.91/2016, 96/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No. 90 of 2016 & Con.cases -2- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 26TH DAY OF OCTOBER 2021 / 4TH KARTHIKA, 1943 ITA NO. 91 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 420/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.SHAMSUDEEN KONCHERIL VEGETABLES, EDAPALLYKOTTA,KOLLAM. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX CR BUILDINGS, IS PRESS ROAD,ERNAKULAM, KOCHI-682018. SR ADV. P.K.R MENON AND SC JOSE JOSEPH FOR THE RESPONDENTS THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2021, ALONG WITH ITA.90/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No. 90 of 2016 & Con.cases -3- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 26TH DAY OF OCTOBER 2021 / 4TH KARTHIKA, 1943 ITA NO. 96 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 419/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.SHAMSUDHEEN, KONCHERIL VEGETABLES, EDAPPALLYKOTA, KOLLAM. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX, C R BUILDINGS, I S PRESS ROAD, ERNAKULAM, KOCHI 682 018 SR ADV. P.K.R MENON AND SC JOSE JOSEPH FOR THE RESPONDENTS THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2021, ALONG WITH ITA.90/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No. 90 of 2016 & Con.cases -4- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 26TH DAY OF OCTOBER 2021 / 4TH KARTHIKA, 1943 ITA NO. 105 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 417/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.SHAMSUDEEN KONCHERIL VEGETABLES, EDAPALLYKOTTA, KOLLAM. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX C.R.BUILDINGS, I.S PRESS ROAD, ERNAKULAM, KOCHI- 682 018. SR ADV. P.K.R MENON AND SC JOSE JOSEPH FOR THE RESPONDENTS THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2021, ALONG WITH ITA.90/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No. 90 of 2016 & Con.cases -5- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 26TH DAY OF OCTOBER 2021 / 4TH KARTHIKA, 1943 ITA NO. 106 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 418/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.SHAMSUDEEN KONCHERIL VEGETABLES, EDAPALLYKOTTA, KOLLAM BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX C.R. BUILDINGS,IS PRESS ROAD, ERNAKULAM, KOCHI- 682 018 SR ADV. P.K.R MENON AND SC JOSE JOSEPH FOR THE RESPONDENTS THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2021, ALONG WITH ITA.90/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No. 90 of 2016 & Con.cases -6- J U D G M E N T [ITA Nos.90/2016, 91/2016, 96/2016, 105/2016, 106/2016] S.V.Bhatti,J. Heard learned counsel Mr.Kuryan Thomas for the appellant and learned Senior counsel Mr.P.K.R. Menon for the respondent. 2. E.Shamsudeen/Assessee is the appellant. The Commissioner of Income Tax, Ernakulam/Revenue is the respondent. The assessee being aggrieved by the common order dated 01.02.2016 of the Income Tax Appellate Tribunal, Cochin Bench, filed the appeals before this Court under Section 260 A of the Income Tax Act, 1961 (for short, 'the Act'). The details of the orders and the appeals therefrom are stated thus: Sl. No. Assessment Year & Date of Assessment Order Order of Commissioner of Income Tax (Appeals) Income Tax Appellate Tribunal ITA No. 1. 2001-02; 30.12.2008 ITA/55/Cent/Kollam/CIT(A)- III/2008-09 dtd 20.03.2015 362/Coch/2015 dtd 01.02.2016 90/2016

ITA No. 90 of 2016 & Con.cases -7- 2. 2003-04; 30.12.2008 ITA/55/Cent/Kollam/CIT(A)- III/2008-09 dtd 20.03.2015 417/Coch/2015 dtd 01.02.2016 105/2016 3. 2004-05; 30.12.2008 ITA/55/Cent/Kollam/CIT(A)- III/2008-09 dtd 20.03.2015 418/Coch/2015 dtd 01.02.2016 106/2016 4. 2005-06; 30.12.2008 ITA/55/Cent/Kollam/CIT(A)- III/2008-09 dtd 20.03.2015 419/Coch/2015 dtd 01.02.2016 96/2016 5. 2006-07; 30.12.2008 ITA/55/Cent/Kollam/CIT(A)- III/2008-09 dtd 20.03.2015 420/Coch/2015 dtd 01.02.2016 91/2016 2.2 The questions of law raised in one of the appeals, are excerpted hereunder: I.T.A No.90 of 2016 “i. Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in holding that Section 143(2) notice is not required to be issued in the case of an assessment under Section 153A of the Act? ii. Whether on the facts and circumstances of the case, the Appellate Tribunal ought to have held that the assessment completed under Section 153A read with Section 143(3) is illegal and void ab initio, since notice under Section 143(2), based on which the assessment was initiated, was issued beyond the time limit stipulated under the proviso to Section 143(2), and hence time-barred? iii. Whether on the facts and circumstances of the case, the Appellate tribunal was justified in relying on the decision in Ashok Chaddha CIT, reported in (2011) 337 ITR 399 (Delhi); which was rendered in a clearly distinguishable set of facts and not applicable to the case of the appellant? iv. Whether on the facts and circumstances of the case, ought

ITA No. 90 of 2016 & Con.cases -8- not the the Appellate Tribunal, erred in interpreting Section 153A and Section 143, more particularly, when the assessing authority completed the assessment by resorting to Section 143, vis-à-vis Section 153A of the Act? v. Whether on the facts and circumstances of the case, ought not the Tribunal erred in passing the order, based on decisions, not supplied at the time of final hearing, and thereby the appellant was denied an effective opportunity to distinguish the said decisions, relied on for passing the impugned order? vi. Is not the finding of fact by the Appellate Tribunal erroneous and perverse, in the light of the factual and legal aspects involved?” 3. On 02.08.2006 search under Section 132 of the Act was carried out at the business premises and the residence of the assessee. On 14.02.2007 notice under Section 153A of the Act was issued covering block assessment years 2001-02 to 2006-07. On 16.03.2007 the assessee filed return for the block assessment years referred to above. On 30.05.2008 notice under Section 143(2) of the Act was issued to the assessee. The revenue accepted the return filed by the assessee for the assessment year 2002-03. Hence the said return is not the subject matter of further proceedings before the Commissioner of Income Tax or the Income Tax Appellate Tribunal.

ITA No. 90 of 2016 & Con.cases -9- 3.1 The Assessing Officer through the assessment order in Annexure-A determined the net total income of the assessee and the balance tax payable by the assessee for each one of the assessment years. The assessee being aggrieved by the assessment order in Annexure-A, filed appeal before the Commissioner of Income Tax (Appeals) (for short, 'CIT(A)'), and CIT(A) allowed the appeals filed by the assessee in Annexure-B order. The CIT(A) while allowing the appeals filed by the assessee, held that the notice dated 30.05.2008 was issued under Section 143(2), beyond the statutory period prescribed in the proviso to Section 143(2) of the Act. The Revenue filed appeal, assailing the order in Annexure-B before the Income Tax Appellate Tribunal (for short, the Tribunal) which resulted in Anneuxre- E order dated 01.02.2016. The Tribunal relied on the judgment reported in Ashok Chaddha v. Income Tax Officer1 and also the view taken by the Income Tax Appellate Tribunal (Lucknow Bench) and allowed the appeal filed by the Revenue. 1 [2011] 337 ITR 399 (Delhi)

ITA No. 90 of 2016 & Con.cases -10- The effect of the above consideration is that the infraction now pointed out by reference to the proviso to Section 143(2) is unavailable to search assessment initiated under Section 153A of the Act. It is contextual to refer at this stage of our judgment that the view taken by the judgment in Ashok Chaddha case was taken in the reported cases in Tarsem Singla v. Deputy Commissioner of Income Tax2 and Commissioner of Income Tax v. Promy Kuriakose3. The matter could have been rested without further consideration by merely referring to the view taken in the aforementioned judgments and dismissing the appeals. 4. Mr.Kuryan Thomas argues that Section 153A(1) contains a non-obstante clause and expressly excludes Sections 139, 147, 149, 159, 151, and 153 of the Act. The exclusion is confined to the Sections referred to above and shall not be understood as excluding all other provisions of the Act. Hence 2 [2016] 385 ITR 138 (P&H) 3 [2016] 386 ITR 597( Ker.)

ITA No. 90 of 2016 & Con.cases -11- in an assessment under Section 153A, which is again on account of the search under Section 132, all provisions meant for assessment of escaped income would be applicable. The explanation appended to Section 153A is yet another indicator in support of the above argument that the notice ought to have been issued within the stipulated period, which could be either, six months or twelve months, however, either way the issued notice is beyond twelve months and therefore, the assessment proceedings are illegal. He argues that the return dated 16.03.2007 is a return furnished under Section 139 and in the assessment initiated thereon notices under Section 143(2) ought to have been issued within the timeline stipulated by the proviso. 5. Learned Senior counsel Mr.P.K.R Menon argues that Section 153A deals with the assessment in case of the search or requisition. Section 153A juxtaposed with the timeline stipulated in Section 143(2) of the Act has been considered by the reported judgments (supra). He argues that the distinction now sought to

ITA No. 90 of 2016 & Con.cases -12- be introduced by the assessee is unsustainable inasmuch as assuming that an explanation is in the nature of clearing up the ambiguity in the main provision or explanation can't add to and widen the scope of the main section. Still, to advance the present contention, the explanation is read in such a manner by the assessee, ignoring the words in explanation (i) namely “save as otherwise provided in this Section” and therefore the applicability of Sections 153B, 153C, all other provision of the Act would apply. Therefore, the constitution placed by the assessee on explanation to Section 153A ignores what is explicitly saved by the very explanation. No meaning much less a meaning available from a plain reading of Section 153A is arrived at by ignoring the words “save as otherwise provided in this Section”. According to learned counsel, Ashok Chaddha case has laid down the correct principles of constitution of Section 153A of the Act and the questions are squarely covered against the assessee by the judgments in Ashok Chaddha, Tarsem Singla and Promy

ITA No. 90 of 2016 & Con.cases -13- Kuriakose cases (supra). 5.1. The learned Senior counsel concludes his arguments that Section 153A as has been held by the decisions referred to above, is an assessment pursuant to search and requisition under Section 132, the procedure is completely dealt with by Section 153A and therefore the argument by referring to the explanation is untenable and unavailable. He prays for dismissing the appeals. 6. We have referred to the arguments advanced on behalf of the assessee and it could briefly be stated that the very argument of the assessee that the explanation to a statutory provision may fulfill the purpose of clearing up the ambiguity or can't add to or widen the scope of the main section, thereby the procedure in the assessment under Section 153A is as otherwise provided in this Section is not a complete legal argument, by applying explanation to Section 153A of the Act. The argument of assessee as pointed out by Mr.P.K.R Menon ignores the

ITA No. 90 of 2016 & Con.cases -14- presence of the words “save as otherwise provided in this Section i.e., Section 153A”. The plain reading of explanation leads to the very same conclusion as reached in the reported cases in Tarsem Singla and Promy Kuriakose (supra). The explanation, in the final analysis of the scheme of Section 153A, does not in any manner expand the meaning, including the requirement of Section 143 (2) of the Act. For the above reasons and discussions, the questions are answered against the assessee and in favour of the revenue. Income Tax Appeals fail, dismissed accordingly. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE JS

ITA No. 90 of 2016 & Con.cases -15- APPENDIX OF ITA 90/2016 APPELLANT'S ANNEXURES ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.12.2008 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM (WHO ASSUMED THE JURISDICTION OF THE ASSESSING AUTHORITY POST SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT) FOR THE ASSESSMENT YEAR 2001-02. ANNEXURE B THE TRUE COPY OF THE COMMON ORDER DATED 20.3.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOCHI. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 5.8.2015 FILED BY THE DEPARTMENT AGAINST ANNEXURE-B ORDER. ANNEXURE D THE TRUE COPY OF THE CROSS OBJECTION DATED 7.9.2015 FILED BY THE APPELLANT BEFORE THE APPELLATE TRIBUNAL, AGAINST ANNEXURE-B ORDER. ANNEXURE E THE TRUE COPY OF THE COMMON ORDER DATED 1.2.2016 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL COCHIN.

ITA No. 90 of 2016 & Con.cases -16- APPENDIX OF ITA 91/2016 APPELLANT'S ANNEXURES: ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.12.2008 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM (WHO ASSUMED THE JURISDICTION OF THE ASSESSING AUTHORITY POST SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT) FOR THE ASSESSMENT YEAR 2006-07 ANNEXURE B THE TRUE COPY OF THE COMMON ORDER DATED 20.03.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) -IV, KOCHI. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 05.08.2015 FILED BY THE DEPARTMENT AGAINST ANNEXURE-B ORDER. ANNEXURE D THE TRUE COPY OF THE CROSS OBJECTION DATED 07.09.2015 FILED BY THE APPELLANT BEFORE THE APPELLATE TRIBUNAL, AGAINST ANNEXURE B ORDER. ANNEXURE E THE TRUE COPY OF THE COMMON ORDER DATED 01.02.2016 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN.

ITA No. 90 of 2016 & Con.cases -17- APPENDIX OF ITA 96/2016 APPELLANT'S ANNEXURES: ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.12.2008 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM (WHO ASSUMED THE JURISDICTION OF THE ASSESSING AUTHORITY POST SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT) FOR THE ASSESSMENT YEAR 2005-06 ANNEXURE B THE TRUE COPY OF THE COMMON ORDER DATED 20.03.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) -IV, KOCHI. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 05.08.2015 FILED BY THE DEPARTMENT AGAINST ANNEXURE-B ORDER. ANNEXURE D THE TRUE COPY OF THE CROSS OBJECTION DATED 07.09.2015 FILED BY THE APPELLANT BEFORE THE APPELLATE TRIBUNAL, AGAINST ANNEXURE B ORDER. ANNEXURE E THE TRUE COPY OF THE COMMON ORDER DATED 01.02.2016 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN.

ITA No. 90 of 2016 & Con.cases -18- APPENDIX OF ITA 105/2016 APPELLANT'S ANNEXURES: ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.12.2008 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM (WHO ASSUMED THE JURISDICTION OF THE ASSESSING AUTHORITY POST SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT) FOR THE ASSESSMENT YEAR 2003-04. ANNEXURE B THE TRUE COPY OF THE COMMON ORDER DATED 20.3.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOCHI. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 5.8.2015 FILED BY THE DEPARTMENT AGAINST ANNEXURE - B ORDER. ANNEXURE D THE TRUE COPY OF THE CROSS OBJECTION DATED 7.9.2015 FILED BY THE APPELLANT BEFORE THE APPELLATE TRIBUNAL, AGAINST ANNEXURE-B ORDER. ANNEXURE E THE TRUE COPY OF THE COMMON ORDER DATED 1.2.2016 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN.

ITA No. 90 of 2016 & Con.cases -19- APPENDIX OF ITA 106/2016 APPELLANT'S ANNEXURES: ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.12.2008 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM (WHO ASSUMED THE JURISDICTION OF THE ASSESSING AUTHORITY POST SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT) FOR THE ASSESSMENT YEAR 2004-05. ANNEXURE B THE TRUE COPY OF THE COMMON ORDER DATED 20.3.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOCHI. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 5.8.2015 FILED BY THE DEPARTMENT AGAINST ANNEXURE-B ORDER. ANNEXURE D THE THE TRUE COPY OF THE CROSS OBJECTION DATED 7.9.2015 FILED BY THE APPELLANT BEFORE THE APPELLATE TRIBUNAL, AGAINST ANNEXURE-B ORDER. ANNEXURE E THE TRUE COPY OF THE COMMON ORDER DATED 1.2.2016 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN.