Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned orders dated 26/09/2013 for the Assessment Year 2004-05, 2005-06 and dated 24/11/2015 for Assessment Year 2006-07 of the Ld. First Appellate Authority, Mumbai, challenging imposition/confirmation of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, Shri Girish Dave, ld. Counsel for the assessee, contended that the quantum addition on the basis of which, penalty was imposed has been decided in favour of the assessee vide order dated 14/01/2016 (ITA No.7282 to 7284 and 7405/Mum/2013). The ld. Counsel also filed the copy of the aforesaid order dated 14/01/2016. This factual assertion of the assessee was not controverted by the ld. DR, Shri Rajesh Kumar Yadav.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 14/01/2016 for ready reference and analysis:-
“7. There are four appeals under consideration pertaining to the assessee (Shri Prakash P. Mali) involving the assessment years 2001-02 to 2004-05. Since, the assessee identical issues in all the appeals under consideration, except the figures, therefore, for the sake of adjudication and reference, the grounds raised in the appeal for the AY 2001-2002 are reproduced as under: “1. The Ld CIT (A) has erred in law and on the facts & in the circumstances of the case in holding notice issued under section 153C of the Act as valid and consequential erred in law in holding the assessment made under section 153C of the Act as valid. Without prejudice to the above,
2. The Ld CIT (A) has erred in law and on the facts and in the circumstances of the case, in upholding the order of the AO making addition of Rs. 1 lakh by treating the gift received as income of the appellant ignoring all the details submitted to him relating to the ‘gift’ including the order passed in regular assessment by the predecessor AO.
3. The Ld CIT (A) has erred in not granting rebate of Rs. 506 u/s 88 for the life insurance premium of Rs. 2,530/- paid on the life of the assessee.”
In all these AYs, the additions made by the end the fate of these additions in the first appellate proceedings are tabulated as under:-
Ld Counsel for the assessee brought our attention to each of the Assessment Year and submitted that none of these additions were made based on the ‘seized material’. Further, he submitted that the Shri Prakash P. Mali was not covered u/s 132 of the Act by drawing an assessee’s specific. There was survey action u/s 133 of the Act. Further, he informed that in all these assessment years, AO made assessments u/s 143(3) r.w.s 153C of the Act without having seized any documents from the premises of the search person implicating the assessee on the issue of unaccounted income. Referring to the documents seized namely the ‘gift’ relating transaction between Mr. Shivlal and the assessee and the statement showing payment for purchase of plot (para ‘c’ of page ‘7’ of the CIT (A)’s order is relevant), which are seized from the search premises, ld Counsel for the assessee demonstrated that the ‘gift’ in question was an accounted one, duly declared in the return of income. Referring to the other papers relating to the transaction between Mr. Shivlal and assessee, Ld Counsel for the assessee submitted that the said transaction is not between Mr. Shivlal and the assessee. They mistakenly communicated these papers to the assessee. Para 10 of the CIT (A)’s order is relevant in this regard. Referring to the other papers also, Ld Counsel for the assessee mentioned that no addition was eventually made on this account as they are all found to be accounted transactions. Therefore, for all the four years under consideration, the transactions appeared on the papers seized, allegedly connected to the assessee, are found to be either accounted or not found worthy for making any additions. In such case, the unabated assessments could not have been re-opened. He relied on various in support of the same including the decision of Tribunal in the case of Shri Vimal Kumar Rathi vs. DCIT in ITA Nos. and others, dated 16.10.2015, wherein one of us (AM) is a party to the said order and demonstrated that as and when the assessments involved are non- abated assessment (either regular assessments are completed u/s 143(3) and the quantum proceedings are not pending or the due date for issue of notice us 143(2) has expired), the additions, if any, in the search assessment can be made basing on any incriminating material seized u/s 132 of the Act and forwarded to the concerned AO as per the procedure laid down in the Act. Drawing our attention to each of the assessment order and the additions made by the AO, Ld Counsel for the assessee demonstrated that there is no reference to the seized material in any of the additions made by the AO. In support of his contention that when there is finding or discussion about the any incriminating material seized during the search, the assessment order passed u/s 153A r.w.s 143(3) of the Act is not tenable in law, Ld Counsel for the assessee filed written submissions and also relied on following decisions viz., (i) CIT vs. Smt Shaila Agarwal, 346 ITR 130; (ii) All Cargo Global Logistics Ltd vs. DCIT [18 ITR 106] (Mum.) (SB); (iii) Spacewood Furnishers Pvt Ltd Ors vs. DGIT & Ors. [340 ITR 393 (Bom)] (iv) Shri Govind Agarwal v. ACIT being ITA No: 3389/Mum/2011 dated 10.01.2014; (v) SKS Ispat and Power Limited vs. DCIT l (vi) Sinhgad Technical Education Society vs. ACIT [2011] 140 TTJ 233 and others.
On the other hand, Ld DR relied on the order of the AO and the CIT (A). Further, on the legal propositions, Ld DR has nothing to controvert except relying on the decisions of the Revenue Authorities. He further mentioned that the event of survey action is unsustainable as the issue of notice u/s 153C is based on the conditions specified in the said provisions of section 153C and not on the outcome of the survey action. In this regard, Ld DR filed written submissions referring to the facts concerning the event of survey action on the assessee.
We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited decision of the Tribunal in the case of Shri Govind Agarwal v. ACIT being ITA No: 3389/Mum/2011 dated 10.01.2014 (supra); All Cargo Global Logistics v. Addl.CIT (supra); SKS Ispat and Power Limited vs. DCIT CC 45 (ITA 8746/M/12 and ITA 8747/M/12) (supra) as well as the judgment of the Hon’ble Bombay High Court in the cases of CIT v. All Cargo Global Logistic (374 ITR 645) (supra), copies of which are placed on record. On perusal of the said decisions, we find they are relevant for the proposition that “when no assessment has abated, the question of making any addition or making disallowance which are not based on only material found during the search is bad in law”. Considering the factual matrix of the case as well considering the above settled legal position of the issue that in the absence of any incriminating material found during search, additions made on the assessed income are unsustainable in law, we are of the considered opinion that the additions made in the instant case are not sustainable and accordingly, we delete the same.” 2.2. We find that the Tribunal, in the aforesaid order, on quantum addition, quashed the notices issued u/s 153/153C of the Act were held to be invalid, resultantly the assessment orders passed u/s 143(3) r.w.s 153C dated 29/12/2008 were cancelled. Identically, for Assessment Year 2001-02 and 2003-04 in the case of assessee itself, the Tribunal vide order dated 02/01/2017 (ITA No.2179 and 2180/Mum/2016) deleted the penalty. In view of this factual matrix, we are of the view that penalty imposed u/s 271(1)(c) will not survive.
Our view find support from the decision in K.C. Builders vs ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs when addition on the basis of which the penalty was imposed remains no more in existence, thus, the appeal of the assessee is allowed and the ld. Assessing Officer is directed to delete the penalty.
Finally, the appeals of the assessee are allowed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 11/04/2017.