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Income Tax Appellate Tribunal, F Bench, Mumbai
Before: Shri Jason P. Boaz & Shri Sandeep Gosain
These appeals by the assessee are directed against the orders of the CIT(A)-36, Mumbai dated 19.03.2013 for A.Y. 2006-07 and of the CIT(A)- 41, Mumbai dated 21.12.2011 for A.Y. 2007-08. These appeals of the assessee having certain common issues were heard together and are being disposed off by way of this common order.
2. In these appeals, the assessee has raised the following original/ revised grounds: - 2.1 For A.Y. 2006-07 “1) On the facts and in the circumstances of the case, the Learned Assessing Officer erred in assuming jurisdiction U/s.153A of the Income Tax Act and consequently passing the Order U/s 143(3) read with Section 153A. 2) On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the 2 ITA 1455/M/2012 & 4929/M/2013 Shri Fazal Abdul Wahab Sarang addition of Rs.5,43,000/- U/s. 68 without appreciating that the same was duly explained by the Cash Book filed during the assessment proceedings.” 2.2.1 For A.Y. 2007-08 (Revised) “1. On the facts and in the circumstances of the case, the learned assessing officer erred in assuming jurisdiction U/s.153A of the Income Tax Act and consequently passing the Order u/s 143(3) r.w.s. 153A.
On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.13,78,500/- u/s. 68, without appreciating that the same was duly explained by the Cash Book filed during the assessment proceedings.
3. On the facts and in the circumstances of the case, the learned assessing officer erred in making an addition of Rs.58,846/- as undisclosed income. Without appreciating that the profit earned on Mutual Funds were long term and hence exempt from tax.” 2.2.2 By letter dated 17.08.2015, the assessee submits that ground No. 1 of the revised grounds (supra) has been raised for the first time and has prayed for admission of the same for consideration, since it is a legal ground and goes to the very root of the jurisdictional issue therein. The assessee’s petition for admission of above ground [i.e. Ground No. 1 of revised grounds (supra)] has been duly considered. We are of the view that it is in the interest of equity and justice that this ground be admitted for hearing, being a legal ground which goes to the root of the matter in respect of the assessee’s challenging the Assessing Officer’s (AO) assumption of jurisdiction under section 153A of the Income Tax Act, 1961 (in short 'the Act') and passing the order of assessment under section 143(3) r.w.s. 153A of the Act. This ground is accordingly admitted for consideration and adjudication in this appeal. We have accordingly heard these appeals on this ground No. 1.
Ground No. 1 (for both assessment years 200607 and 2007-08) – Validity of AO’s assumption of jurisdiction under section 153A of the Act and consequent passing of orders of Assessment under section 143(3) r.w.s. 153A 3.1 In this ground, for both assessment years 2006-07 and 2007-08, the assessee has challenged the validity of the AO’s assumption of jurisdiction under section 153A and consequent passing of orders of assessment under 3 ITA 1455/M/2012 & 4929/M/2013 Shri Fazal Abdul Wahab Sarang section 143(3) r.w.s. 153A of the Act dated 27.12.2010. According to the learned A.R. of the assessee, it is evident from page 1 of the orders of assessment that the AO initiated the assessment proceedings on a factually erroneous basis i.e. that a search and seizure action was carried out, among others, on the assessee also on 24.02.2009. It is submitted that no search under section 132 of the Act that was carried out at the assessee’s premises on 24.02.2009, but a survey under section 133A of the Act was conducted. It is contended by the assessee that in view of the above facts on record, the Assessing Officer’s assumption of assessment jurisdiction by issue of notice under section 153A of the Act was invalid and therefore the consequent orders of assessment for assessment years 2006-07 and 2007-08 passed under section 143(3) r.w.s. 153A of the Act are void ab-initio. Further, inspite of directions by the Bench, Revenue was not able to produce a copy of the warrant of authorisation for search under section 132 of the Act in the assessee’s case to establish that the assessee was searched on 24.02.2009. In fact the letter of the AO dated 30.11.2016 clearly acknowledges the inability of the Department to produce the warrant of authorization for search and only confirms that a survey under section 133A of the Act was conducted at the assessee’s premises on 24.02.2009. In support of the proposition, that in the absence of a search warrant of authorisation under section 132 of the Act in the case of the assessee, the prerequisite conditions for issue of notice under section 153A of the Act were absent and consequently valid orders of assessment could not have been passed under section 153A of the Act, the learned A.R. of the assessee, inter alia, placed reliance on the decision of the Hon'ble High Court of Gujarat in the case of CIT vs. Ramesh D. Patel (2014) 42 taxmann.com 540 (Gujarat), which is stated to be on similar facts and issues. It is prayed that in the light of the facts that there being no search under section 132 of the Act in the case on hand, the notices issued under section 153A of the Act lacking legal sanction, were invalid and orders of assessment passed under section 153A of the Act passed consequent thereto for both assessment years are invalid and are to be quashed.
4 ITA 1455/M/2012 & 4929/M/2013 Shri Fazal Abdul Wahab Sarang 3.2 Per contra, the learned D.R. for Revenue placed reliance on the orders of the AO. 3.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. The facts of the matter as emanate from the record are that a survey under section 133A of the Act was conducted at the assessee’s premises on 24.02.2009. The AO, however, in the orders of assessment for assessment years 2006-07 and 2007-08 stated that a search was carried out in the case of Hicons & Pranay Group of cases; including the assessee in the case on hand. These statements of the AO were contradicted by the AO himself later in the order of assessment when he mentions that during the survey under section 133A of the Act at the business premises of the assessee on 24.02.2009, the assessee had deposed on oath in survey proceedings. It is the contention of the assessee that no search proceedings under section 132 of the Act were carried out in his case on 24.02.2009 and therefore the AO had no legal sanction or jurisdiction to issue notice under section 153A of the Act in his case and pass orders of assessment under section 153A of the Act subsequent thereto; which were invalid and required to be quashed or cancelled. 3.3.2 In order to clear this confusion, the Bench gave Revenue ample/ sufficient opportunities to produce the warrant of authorisation for search under section 132 of the Act in the assessee’s case as stated by the AO. Despite these opportunities, Revenue could not produce the same and in report dated 30.11.2016, the AO has stated that as per the appraisal report, survey action under section 133A of the Act was carried out at the assessee’s business premises on 24.02.2009 and a statement of the assessee was recorded on that day. In this factual matrix of the case, as discussed above, we conclude that there was no search warrant authorising search under section 132 of the Act in the assessee’s case on 24.02.2009. Revenue was unable to controvert this view as expressed by us. 3.3.3 Section 153A of the Act pertains to assessments to be carried out in case of search under section 132 or requisition under section 132A of the 5 ITA 1455/M/2012 & 4929/M/2013 Shri Fazal Abdul Wahab Sarang Act. Subsection (1) of section 153A provides that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 143 of the Act, in the case of a person in whose case search is initiated under section 132 of the Act or books of account, other documents or any assets are requisitioned under section 132A of the Act after 31.05.2003, the AO shall issue notice requiring such person to furnish the returns of income for and assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search was conducted or requisition is made. In our considered view, in the light of the factual matrix of the case as discussed from para 3.1 to 3.3.2, we record the finding that there was no warrant of authorisation issued to search the assessee’s premises on 24.02.2009 and Revenue was unable to produce the same, if any, to controvert our finding. This was specifically required in the light of the contradictory statements made by the AO in the order of assessment which led to the confusion of whether the assessee was subjected to search or not. In the absence of any warrant of authorisation to search the assessee’s premises under section 132 of the Act, on 24.02.2009, the AO had no jurisdiction to issue the notices under section 153A of the Act dated 05.10.2009 issued by him; thereby rendering them invalid and consequently the orders of assessment under section 153A of the Act for assessment years 2006-07 and 2007-08 subsequent to the issue of those notices under section 153A of the Act could not have been passed and the same are also held to be void abnitio and accordingly cancelled. In coming to this finding we draw support from the decisions of the Hon'ble Gujarat High Court in the case of CIT vs. Ramesh D. Patel (2014) 42 taxmann.com 540 (Gujarat), which is on similar facts and is squarely applicable to the case on hand. Ground No. 1 of assessee’s appeal for both assessment years 2006-07 and 2007-08 are allowed.
In view of our finding in ground No. 1 allowing the assessee’s appeals for both assessment years 2006-07 and 2007-08 (supra), the other grounds of appeal raised by the assessee on merits are not being adjudicated at this juncture.