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Income Tax Appellate Tribunal, KOLKATA BENCH ‘C’, KOLKATA
Before: Shri J. Sudhakar Reddy, AM & Shri S.S. Viswanethra Ravi, JM
Per S.S. Viswanethra Ravi, JM
This appeal is preferred by the assessee against the order dated 11.11.2013 passed by the Ld. CIT(Appeals) – VIII, Kolkata for Assessment Year 2004-05 wherein he confirmed the order passed by the A.O. under section 153A/153C of the Act.
2. The assessee filed an application dated 17.10.2016 seeking permission to file revised grounds of appeal
which are read as under:
1. For that in view of the facts and circumstances of the case the Ld. CIT(A) erred in holding the proceeding u/s 153C and the consequent order thereof as valid and in view of the facts and in the circumstances such order was liable to be treated as void abinitio and in view of the facts and in the circumstances it may kindly be held accordingly.
Assessment Year: 2004-05 M/s. Ajanta Rubber (India) Pvt. LTd.
2. Without prejudice to Ground No. 1 above, the Ld CIT(A) failed to appreciate the fact that there being no incriminating material, the proceeding u/s 153C did not lie in the matter and it may kindly be held accordingly.
3. Without prejudice to Grounds No. 1 & 2 above, there being no satisfaction recorded by the A.O. of searched person or even by the A.O. of the appellant, the proceeding and the order so passed u/s 153C is void abinitio and it may kindly be held accordingly. 4. For that in view of the facts and circumstances of the case the Ld. CIT(A) erred in treating the sale of agricultural land as taxable capital gain u/s 45 without considering the facts and circumstances that it was not a capital asset u/s 2(14) and hence not chargeable to tax under the head capital gain. The Ld. CIT(A) erred in confirming the action of the A.O. and in view of the facts and in the circumstances it may kindly be held accordingly. 5. For that in view of the facts and circumstances of the case the Ld. CIT(A) erred in treating income of Rs. 45,598/- as income from other sources instead of treating the same as business income in view of the facts and in the circumstances it may kindly be held accordingly. 6. For that your petitioner craves the right to put additional grounds and / or alter / amend / modify the present grounds before or at the time of hearing.”
3. The learned AR submits that there was no satisfaction as required under law by the Assessing Officer having jurisdiction over the searched person relating to other person. The learned DR sought time to verify the assessment record whether there is satisfaction recorded by the A.O. of searched person. Accordingly this tribunal directed learned DR to verify whether there is any satisfaction recorded by the A.O. of searched person. From 19.10.2016 onwards, the appeal is being adjourned from time to time and finally on 02.05.2018, the learned DR filed copy of correspondence dated 01.05.2018 stating that the relevant records could not be traced. The relevant portion of which is reproduced herein below: “OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7(1), KOLKATA, 5TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA – 700 069. No. DCIT Cir 7(1)/Kol/Judicial/2018-19 Date 01.05.2018
Assessment Year: 2004-05 M/s. Ajanta Rubber (India) Pvt. LTd.
To The Income Tax Office (HQ), ITAT, C Bench, Kolkata 225/C, A.J.C. Bose Road, Kolkata – 700 020. Sub: Furnishing of report in the case of M/s. Ajanta Rubber (India) Pvt. Ltd. in appeal no ITA 332/Kol/2014 matter regarding. Ref: Your Office Letter of Even No. 3610 dated 05.02.2018. Please refer to the above. “1. You have directed to furnish the certified copies of reasons recorded along with the assessment records of the above mentioned assessee in which search had been conducted. You have also directed to furnish documents containing recording of reason for initiation of assessment u/s 153C of the IT Act, 1961. In this regard, this office wants to intimate you that the jurisdiction of the above mentioned assessee presently lies in this charge. However when the assessment u/s 153C of the IT Act of A.Y. 2004-05 was completed, the jurisdiction of the assessee was under the office of ITO Ward 7(1) Kolkata.
On receiving your letter under reference which was originally written to ITO Ward 7(1) Kolkata, this office searched out records thoroughly but could not trace out anyhow. Thereafter the undersigned contacted ITO Ward 7(1), Kolkata who has stated that there must be a folder related to assessment u/s 153C of the IT Act, however the matter being very old, the same is not traceable in the office of ITO Ward 7(1) Kolkata. However they are still trying to locate it.
As per this office record, this office has sent an assessment folder of the above mentioned assessee of A.Y. 2004-05 (copy of movement register enclosed) in your office on 29.08.2016. In view of the above circumstances, the undersigned requests you to kindly allow some more time so that the folder of assessment record containing the documents of proceedings u/s 153C of the IT Act may be traced out and as directed by you certified copies of reasons recorded along with the assessment records of the above mentioned assessee could be furnished.”
Supporting the above mentioned correspondence, the ITO representing DR’s office filed a letter dated 01.05.2018 reiterating the contents of correspondence.
After hearing both the parties as the revenue has failed to produce the records we draw adverse inference and conclude that Assessment Year: 2004-05 M/s. Ajanta Rubber (India) Pvt. LTd.
there was no satisfaction recorded by the A.O. having jurisdiction over the searched person as required under section 153C of the Act. Section 153C of the Act mandates that satisfaction is required to be recorded by the A.O. having jurisdiction of the searched person if certain material belonging to some other than the person referred to in Section 153A, which relates to any money, bullion, jewellery or other valuable article or thing seized or requisitioned or any books of account or documents seized are requisitioned pertains to or pertained to or any information contained therein. But however we find no satisfaction was recorded by the A.O. as discussed above. In the absence of such satisfction, in our opinion, the impugned order passed by the CIT(A) confirming the order of A.O. passed under section 153A/153C of the Act is not sustainable. Therefore, ground no: 3 raised by the assessee in the revised grounds of appeal is allowed. In view of the finding recorded by us in ground no 3, the other grounds raised in ground no 1, 2, 4 and 5 requires no adjudication and becomes academic and are dismissed.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 27th July, 2018.