DCIT CEN CIR 8(1), MUMBAI vs. KORPUS FINANCIAL SERVICES P.LTD, MUMBAI

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ITA 7679/MUM/2016Status: DisposedITAT Mumbai21 September 2017AY 2005-064 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, following a previous decision on identical issues, restored the matter to the CIT(A). The CIT(A) was directed to re-examine whether the assessment was unabated and if incriminating material was found during the search, considering the Bombay High Court's decision in Continental Warehousing Corporation.

What were the facts?

The Revenue appealed against the CIT(A)'s order for AY 2005-06. The assessee argued that additions were made without incriminating material in an unabated assessment. A similar issue in sister concerns' cases was restored to the CIT(A) for fresh adjudication.

What were the issues?

Whether the Assessing Officer validly assumed jurisdiction under Section 153C in an unabated assessment without incriminating material found during a search. The completeness of records and the nature of seized material were also key concerns.

Which sections of the Income-tax Act were involved?

Section 153C

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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)

For Appellant: Shri Nithi Patel
For Respondent: Shri Ram Tiwari
Hearing: 21.9.2017Pronounced: 21.9.2017

The appeal filed by the Revenue is directed against the order passed by the learned CIT(A)-50, Mumbai and it relates to the A.Y. 2005-06.

2.

The learned AR submitted that the assessment year under consideration falls under the category of unabated assessment and the Assessing Officer has made impugned additions without making reference to any of the incriminating material. He submitted that the AO could make addition in the case of unabated assessments only on the basis of incriminating materials found during the course of search. Learned AR further submitted that identical issue was considered by the Division Bench in the case of sister concerns of the assessee named M/s. I.A & I.C Pvt. Ltd. (ITA Nos. 7481/Mum/2016 and Others), and the Tribunal vide its order dated 30.8.2007, restored the matter to the file of the learned CIT(A) with the direction to follow the decision rendered by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (374 ITR 645)

2 M/s. Korpus Financial Services Pvt. Ltd.

3.

I heard learned Departmental Representative. I noticed that the division bench of the Tribunal has restored an identical issue to the file of the Ld CIT(A) with following observations:-

7.

We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have given a thoughtful consideration to the facts of the case and are not impressed by the manner in which the CIT(A) had proceeded with and disposed of the appeal of the assessee. We find that it remains as a matter of fact that the case records of the assessee as were there before the CIT(A), as conceded by the latter, were found to he incomplete. We are unable to comprehend that as to how the CIT(A) in the absence of complete records had concluded that no incriminating material belonging to the assessee was found and seized during the course of the search & seizure proceedings conducted under Sec. 132 on M/s 31K Industries Ltd and its promoter Shri R.G. Parikh. We also find it beyond our comprehension that in the absence of the complete records how the CIT(A) had observed that the assessment in the case of the assessee for the year under consideration, viz. A.Y. 2007-08 was unabated. We are of the considered view that a correct factual position in context of the aforesaid issues not only had a material bearing, but rather was indispensably required for fair adjudication on the validity of the assumption of jurisdiction by the A.O under Sec. 153C in the case of the assessee. We are unable to persuade ourselves to be in agreement with the aforesaid view arrived at by the CIT(A) in respect of the validity of the assumption of jurisdiction by the A.O under Sec. 153C on the aforesaid count, as the same can safely be held to have been arrived at by the CIT(A) on the basis of an half hearted approach adopted by him while recording the facts on the basis of incomplete r ec or d s. We f urth er f in d th a t even oth er wis e th e af or esai d observations of the CIT(A) that no incriminating material was seized during the course of search & seizure proceedings conducted on M/s JIK Industries Ltd and its promoter Shri R.G. Parikh, is itself found to militate and is in serious conflict with his observation that it was not the case of the assessee that only acknowledgement of return and copies of the final account of the assessee were seized during the course of the aforesaid search & seizure proceedings. The aforesaid observations of the CIT(A) though rendered in context of the claim of the assessee that no incriminating material was found and seized during the course of the search & seizure proceedings, therefore, the A.O could not have assumed jurisdiction under Sec. 153C, thus raises doubts as regards

3 M/s. Korpus Financial Services Pvt. Ltd. the true state of affairs in respect of the nature of the material belonging to the assessee, as was seized during the course of the search & seizure proceedings conducted M/s JIK In d u s tr i es L t d a n d i ts p r o m o t er S h r i R . G . P a r i k h . W e th u s i n th e backdrop of our aforesaid observations, thus in all fairness and in the interest of justice restore the matter to the file of the CIT(A) for fresh adjudication on the issue as to whether the assessment in the case of the assessee for the year under consideration, viz. A.Y. 2007-08 was a b a t e d or n o t , a n d a s t o wh e t h e r a n y i n c r i m i n a t i n g d oc u m e n t/material belonging to the assessee was found during the course of the search & seizure proceedings conducted as on 04.02.2011 on M/s JIK Industries Ltd and its promoter Shri R.G. Parikh. The CIT(A) is directed to proceed with the fresh adjudication during the course of the 'set aside' proceedings only after summoning the complete case records of the assessee. The CIT(A) shall after perusing the complete case records of the assessee adjudicate the validity of the additions made by the A.O in the hands of the assessee, in the backdrop of the judgment of the Hon'ble High Court of Bombay in the case of CIT-I!, Thane Vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Born). Needles to say, the CIT(A) shall during the course of the set aside proceedings afford sufficient opportunity of being heard to both the parties, who shall remain at a liberty to substantiate their respective contentions during the course of the set aside proceedings. We further direct the CIT(A) to complete the set aside proceedings within a period of six months from the date of receipt of this order. The effective Grounds of appeal No(s). 1 to 4 are allowed for statistical purposes in terms of our aforesaid observations.

4. Following the decision rendered by the Division Bench, I also restore all the matters to the file of learned CIT(A) with identical directions.

5.

In the result, appeal filed by the Revenue is treated as allowed for statistical purposes. Order has been pronounced in the Court on 21.9.2017.

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