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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
Consolidated Appeals (2)
आदेश / O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeals have been filed at the instance of the Revenue relevant to Assessment Years (AYs) 2005-06 & 2006-07
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 2 - against separate orders of the Commissioner of Income Tax(Appeals)- XIV, Ahmedabad [CIT(A) in short] both dated 03/06/2014 arising in the matter of assessment orders passed under s.143(3) r.w.s. 153C r.w.s. 263 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 11/12/2012 & 13/12/2012 for AYs 2005-06 & 2006-07 respectively.
The assessee has also filed cross-objections in the respective appeals of the Revenue wherein the assessee has challenged the validity of proceedings itself in invoking section 153C of the Act.
As the cross-objections of the assessee seeks to strike the very bais of assumption of jurisdiction under s.153C by asserting that the assumption of jurisdiction itself is void ab initio and thus subsequent assessment proceedings are without authority of law, it is desirable to adjudicate the cross-objections of the assessee first.
For the sake of convenience, we shall take up Cross Objection of the assessee relevant to AY 2006-07 as mentioned by the assessee which is reproduced hereunder for sake of convenience.
The Ld.CIT(Appeals) has failed to appreciate the factual & legal position of the case & thereby erred in rejecting the ground of validity of proceedings u/s.153C of the Act by wrongly relying on Sec.292B of the Act.
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 3 -
When the matter was called for hearing, the Ld.AR for the assessee, at the outset, submitted that the return of income relevant to AY 2006-07 was originally filed at Rs.1,32,070/- on 27/12/2006. The assessment was finalized vide order under s.143(3) of the Act dated 27/11/2008. Thereafter, a search operation was carried out in Asian Group of cases on 07/02/2008. Consequently, the case of the assessee was covered under s.153C of the Act. In response to proceedings initiated under s.153C, the assessment was finalized under s.153C r.w.s.143(3) of the Act vide order dated 24/12/2009 wherein the total income declared by the assessee- company was accepted. Subsequent thereto, the CIT concerned, set aside the aforesaid assessment order passed under s.153C r.w.s. 143(3) of the Act in exercise of power conferred upon him under s.263 of the Act. In pursuance of directions of the order of the CIT under s.263 of the Act, a fresh assessment was passed under s.143(3) r.w.s.153C r.w.s.263 of the Act dated 13/12/2012 which is subject matter of controversy. The Ld.AR submitted that the aforesaid order passed in pursuance of direction under s.263 of the Act was challenged before the CIT(A) wherein the jurisdiction exercised under s.153C of the Act was inter alia agitated. It was inter alia contended before the CIT(A) that no incriminating material relating to the assessee was found for invoking provisions of section 153C of the Act in the case of the assessee herein. It was further contended before the CIT(A) that no ‘satisfaction’ was recorded by the
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 4 - Assessing Officer (AO) of the searched party as contemplated under s.153C of the Act. It was submitted by the Ld.AR that the CIT(A) did not pay heed to the aforesaid challenge concerning jurisdictional defect and dismissed it summarily. The Ld.AR thereafter referred to the copy of the ‘Inspection Report’ obtained from the AO on 18/09/2017. Pursuant to inspection of record for AYs 2005-06 & 2006-07, the Ld.AR pointed out that the AO himself has admitted the fact that no specific name or other details of the searched person was found or available on record on the basis of which notice under s.153C of the dated 05/10/2009 was issued for AY 2005-06 & 2006-07. It was contended that the identity of searched person itself is vague and non-descript. It was further observed that no information relating to incriminating material belonging to assessee-company seized as a result of search carried out in the case of ‘Asian Group of cases’ on 07/01/2008 is found or available in the case records. It was further admitted by the AO in the foresaid inspection report that no satisfaction note as required for issuance of notice under s.153C dated 05/10/2009 is available on record. The Ld.AR thereafter invited our attention to an application made under Rule-6 of the RTI Act, 2005 dated 18/08/2017 addressed to Central Information Officer on 21/08/2017. With reference thereto, the Ld.AR further invited our attention to the reply thereof dated 12/09/2017 whereby an inability was expressed on availability of information sought towards specific name of the searched person, incriminating material belonging to the
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 5 - assessee and satisfaction note recorded by the AO of searched person among others. The Ld.AR thus submitted that it is ostensible from case record of the AO that even the AO is not privy to the specific name of the searched person which ultimately triggered section 153C of the Act in the hands of the assessee concerning AY 2005-06 as well as AY 2006- 07. It is also manifest that no incriminating material belonging to the assessee was found and seized which is belonging to the assessee per se. The AO has failed to discharge its onus for bringing incriminating material on record. The Ld.AR thereafter contended that no satisfaction note recorded by the AO of searched person, if any, is also available on record for assumption of jurisdiction for assessment under s.153C of the Act. The Ld.AR accordingly submitted that the basic ingredients for assumption of jurisdiction itself are conspicuously absent in the present appeals. The Ld.AR accordingly submitted that, without adverting on facts any further, the assessment order passed under s.153C itself is required to be declared null and void ab initio. The consequent assessment proceedings is thus rendered infructuous. The order passed by the AO in consequence of such illegal notice under s.153C is required to be quashed at the threshold in view of the aforesaid facts. The Ld.AR thereafter referred to the decision of the Coordinate Bench of Tribunal in ITA No.2483/Ahd/2014 order dated 21/062017 where in identical set of facts, the issue pertaining to legality proceedings under s.153 was decided in favour of assessee. The Ld.AR thereafter referred to the
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 6 - decision of Hon’ble Delhi High Court in the case of Pr.CIT vs. Indus Securities Pvt.Ltd. & Ors. in Tax Appeal No.566 & Ors/2007 order dated 04/09/2017 and contended that possession of incriminating material belonging to other person (assessee herein) is paramount for invoking provisions of section 153C of the Act. The incriminating material being absent as demonstrated, the entire proceedings is bad in law. The Ld.AR thereafter submitted that the order under s.153C r.w.s.263 has been passed without statutory approval of Jt.CIT under 153D and is thus vitiated. To support this contention, he referred to a decision rendered by the Hon’ble Bombay High Court in the case of CIT vs. Akil Gulamali Somji in Tax Appeal No.1416 of 2012 and Ors. order dated 15/01/2013 for the proposition that in the absence of prior approval of the competent authority (JCIT) contemplated under s.153D of the Act, the assessment order passed cannot be sustained. The Ld.AR accordingly urged that either the assessment order giving rise to the present appeal requires to be quashed in view of the substantive multiple legal infirmities as pointed out above.
Per contra, the Ld.DR relied upon the orders of the authorities below.
We have carefully considered the rival submissions and the orders of the authorities below, case-laws cited and material placed on record.
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 7 - The predominant question for determination in the present appeal is towards validity of the assessment order passed under s.153C r.w.s.143(3) of the Act alleging lack of jurisdiction by the assessee.
To address the issue, we take note of the plea on behalf of the assessee that the action against the assessee has been taken under s.153C of the Act on the ground of some search initiated ‘Asian group of cases’ on 07/02/2008. It is the case of assessee that ‘Asian group’ is a very generic and vague term. The inspection report duly signed by the AO dated 18/09/2017 makes it abundantly clear that most elementary information towards specific name of the searched person itself is not available on record. The proceedings under s.153C emanates from a valid proceedings under s.153A of the Act. The AO is apparently not privy to the details of searched person. The assumption of power for a non-descript and unintelligible entity is beyond comprehension.
8.1. We also take note of the another plea of the assessee as demonstrated from the inspection report that no incriminating material belonging to the assessee-company purportedly seized as a result of search carried out in ‘Asian Group of cases’ was found available on the case records. We find considerable merit in this plea of the assessee as well predominantly for the reason that the Revenue has failed to demonstrate possession of any incriminating material. Coupled with this,
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 8 - we also take note of the fact that in the first round of proceedings before the AO under s.153C of the Act, no reference to incriminating material was made and the returned income filed in pursuance of notice under s.153C of the Act was fully accepted and assessed as such which clearly reinforces the allegation of absence of any incriminating material.
8.2. The AO of searched person, as a jurisdictional requirement, must record his satisfaction that incriminating material found as a result of search belongs to assessee herein. In this regard, we take note of the plea of the assessee that no satisfaction note has been found recorded by the AO of the searched person to show that any money, bullion, jewelery or other valuablearticles or things or books of accounts or documents seized etc. belongs to the assessee-company which has any bearing on the determination of total income of assessee herein. It goes without saying that substantive action under s.153C is not permissible for an empty cause without corroboration of incriminating material.
8.3. Thus, it is obvious that Revenue has grossly failed to substantiate legal foundation of action undertaken by invoking s.153C and further failed to controvert any of the aforesaid formidable pleas raised on behalf of the assessee in support of its cross-objection. This being so, it is crystal clear that the prerequisites for invoking jurisdiction conferred on the AO under s.153C of the Act are not satisfied and the proceedings
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 9 - under s.153C is a complete non-starter. Thus, the notice issued under s.153C of the Act is clearly without sanction of law and thus void ab initio. The consequent proceedings and the assessment framed based on such illegal notice issued without authority of law is thus null and void. Therefore, the very edifice for framing the assessment order in appeal is crumbled. The revenue has totally failed to satisfy us about regularity of proceedings under s.153C of the Act. Consequently, the orders passed under s.153C are quashed.
In the result, both the Cross Objections for AYs 2005-06 & 2006- 07 filed by the assessee are allowed, whereas both the appeals of the Revenue for AYs 2005-06 & 2006-07 are dismissed.
This Order pronounced in Open Court on 21/ 12 /2017
Sd/- Sd/- (महावीर �साद) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 21/ 12 /2017
ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
ITA No.2481,2482/Ahd/2014 (By Revenue) & CO Nos.284& 285/Ahd/2014 Income Tax Officer vs. Shantisuri Securities P.Ltd. Asst.Years – 2005-06 & 2006-07 - 10 -
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-XIV, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 6.12.17(dictation-pad 23-pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …7.12.17 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….21.12.17 7. Date on which the file goes to the Bench Clerk…………………21.12.17 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………