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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAVISH SOOD
clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
In all the appeals, the sum and substance of the dispute arises from the decision of the CIT(A) in holding that in the absence of any incriminating material found in the course of search, no additions are permissible in the assessments made u/s 153C of the Income Tax Act, 1961 (in short ‘the Act’) in years where the original assessments do not abate, following the ratio of the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva Ltd) (374 ITR 645).
In this background, the rival counsels have been heard. It was a common point between the parties that in all the appeals, the fact-situation is more or less identical and, therefore, we may first take-up six appeals pertaining to Assessment Years 2004-05 to 2009-10 in the case of M/s. Speciality Paper Ltd. These appeals are directed against a common order dated 01.09.2016 passed by the CIT(A)-48, Mumbai, which in turn has arisen from the respective orders of assessment passed u/s 144 r.w.s. 153 of the Act, all dated 28.03.2013.
Before we proceed to adjudicate the specific Grounds raised by the Revenue, a brief background of the dispute can be summarised as follows. There was a search and seizure action conducted in the case of one, M/s. Reliable Paper (India) Ltd. and its group concerns in and around 23.02.2010 upto 20.04.2010. It is noted by the Assessing Officer that in the course of search, certain documents pertaining to the assessee were found and simultaneous action u/s 132 of the Act was also carried out at the premises of the assessee at 27, Kerman Building, 3rd floor, D.N. Road, Opp. Citi Bank, Fort, Mumbai. Be that as it may, it is emerging from the assessment order that ultimately the Assessing Officer has assumed jurisdiction to make the impugned assessments by issuing notices for each of the captioned assessment years u/s 153C of the Act dated 19.11.2012. So far as Assessment Year 2004-05 is concerned, it is noticed that assessee filed its return of income on 29.01.2013 declaring a total income of Rs.77,67,250/-. In the ensuing assessment finalised u/s 153C r.w.s. 144 of the Act, the total income has been assessed at Rs.13,23,97,260/-, inter-alia, making additions under various heads, namely, ‘Unexplained Creditors’, ‘ Unexplained Share Capital’, ‘Unexplained Cash Credits’ as well as ‘Estimation of Business Profits’. All the additions were assailed by the assessee before the CIT(A) on various Grounds on facts and in law. One of the pertinent points sought to be raised by the assessee was that none of the additions were based on any incriminating material found in the course of search and, thus the same could not be made in an assessment u/s 153A/153C of the Act, as the original assessment did not abate. A Remand report was also called for by the CIT(A) on this aspect. In such Remand report, which has been noted by the CIT(A) in his order in para 2.12, the Assessing Officer, inter-alia, contended that there was “no requirement of any incriminating material for making any additions or disallowance” in the impugned assessment.
In this background, the CIT(A) deemed it fit to delete the additions following the ratio of the judgment of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva Ltd) (supra). The CIT(A) noted that as on the relevant date, the original assessments were not pending inasmuch as the time limit permissible to issue notice u/s 143(2) of the Act had lapsed and, therefore, the original assessments were unabated. This aspect, in the context of an assessment u/s 153C of the Act, is to be examined with reference to the date of receiving of the books of account or other seized material by the Assessing Officer having jurisdiction over the assessee from the Assessing Officer of the person searched. When the CIT(A) sought the Remand report on this aspect, the Assessing Officer, inter-alia, expressed his inability to produce the relevant material, and the stand of the Assessing Officer has been recorded by the CIT(A) as under :-
“The various folders of the assessee are not traceable due to the shifting of office from 8th floor to 11th floor and back to 8th floor in this building. Therefore, I am not in position to comment when the records were actually received in this office. However, the assessee’s assumption that the records were received only 19th Nov 2012 is absolutely not correct.”
In this background, the CIT(A) proceeded to assume such date to be the date on which the Assessing Officer issued notice u/s 153C of the Act, which is 19.11.2012.
In this background, the ld. DR reiterated the stand of the Assessing Officer and sought to rely on the decision of the Hon'ble Kerala High Court in the case of CIT vs. St. Francis Clay Decor Tiles, 385 ITR 624 (Kerala), CIT vs. Dr. P. Sasikumar, 387 ITR 8 (Kerala) and E.N. Gopakumar vs. CIT, 390 ITR 131 (Kerala) to contend that the assessments generated by issuance of a notice u/s 153A(1) of the Act can be concluded against the assessee by making additions even without any incriminating material being available against the assessee.
On the other hand, the learned representative for the assessee furnished a year-wise chart of additions made and contended that the finding of the CIT(A) that none of the additions were based on any incriminating material found during the course of search is fair and proper and, therefore, the ratio of the judgment of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva Ltd) (supra) has been aptly applied. Even with regard to the adoption of date of 19.11.2012, the learned representative asserted that the action of CIT(A) is correct in law inasmuch as it was for the Assessing Officer to demonstrate if the date was not correct.
We have carefully considered the rival submissions. Insofar as the legal position is concerned, it is quite well-settled by the judgment of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva Ltd) (supra). Presently, we are dealing with an assessee whose assessment has been made by invoking Sec. 153C of the Act, i.e. a person other than the person searched and referred to in Sec. 153A of the Act. In the case of such a person, the proviso to Sec. 153C of the Act provides as under :-
“Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person”
Notably, second proviso to Sec. 153A(1) of the Act prescribes the guide as to under which circumstances the original assessment or reassessment for the prescribed six assessment years shall abate. With respect to an assessee covered u/s 153C of the Act, the prescription of second proviso to Sec. 153A(1) of the Act has to be applied taking into account the first proviso to Sec. 153C of the Act, which we have reproduced above.
In terms of the aforesaid proviso, it is prescribed that for the purposes of examining the efficacy of the second proviso to Sec. 153A(1) of the Act, the reference to the date of initiation of search or making of requisition contained therein, shall be construed as reference to the date of receiving of books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the other person from the Assessing Officer of the searched person. In the present case, it transpires that the Assessing Officer of the searched person, as also the Assessing Officer of the captioned assessee, who is the ‘other person’, are the same. Therefore, the onus was on the Assessing Officer to canvass as to what is the date on which he formed a satisfaction that the material found in the search of M/s. Reliable Paper (India) Ltd. related to the captioned assessee. The said onus obviously has not been discharged by the Assessing Officer inasmuch as it has been canvassed before the CIT(A) that he was unable to do so. Be that as it may, under these circumstances, the only option left to the CIT(A) was to take the date of issuance of notice u/s 153C of the Act as the date referred to in the first proviso to Sec. 153C(1) of the Act. Considered on that basis, CIT(A) concluded that the original assessments for the captioned assessment years did not abate, as the same were not pending on that date.
We have also perused the additions which have been made to the returned income and find that none of them contain any averment by the Assessing Officer that the same flow out of any incriminating material found in the course of search. This finding has also been arrived at by the CIT(A), and in the absence of any rebuttal by the Revenue, we hereby affirm the same. In this fact-situation, the ratio of the judgment of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva Ltd) (supra) is squarely attracted, and the CIT(A) made no mistake in deleting the additions. The order of CIT(A) is hereby affirmed. Thus, the appeals of the Revenue in the case of M/s. Speciality Paper Ltd. for Assessment Years 2004-05 to 2009-10 are dismissed as above.
Before parting, we may mention that insofar as the reliance placed by the Revenue on the judgments of the Hon'ble Kerala High Court in the case of CIT vs. St. Francis Clay Decor Tiles, 385 ITR 624 (Kerala); CIT vs. Dr. P. Sasikumar, 387 ITR 8 (Kerala) and E.N. Gopakumar vs. CIT, 390 ITR 131 (Kerala) are concerned, in our view, the same are untenable since the judgment of the Hon'ble Jurisdictional High Court is directly available on the point and the same has been justifiably invoked by the CIT(A) to delete the impugned additions, which is hereby affirmed.
Insofar as the other five appeals in the case of M/s. Global Paper Impex Pvt. Ltd. for Assessment Years 2005-06 to 2009-10 are concerned, therein also it was a common point between the parties that the facts and circumstances in the said five appeals are identical to that in the case of M/s.
Speciality Paper Ltd. discussed hereinabove and, therefore, our decision therein shall apply mutatis mutandis to the said appeals also.
Resultantly, all the appeals of the Revenue are dismissed.
Order pronounced in the open court on 21st March, 2018.