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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 22-2-2016 घोषणा क" तार"ख /Date of Pronouncement : 13-05-2016 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 11-03-2015 passed by learned Commissioner of Income Tax (Appeals)- 51, Mumbai (hereinafter called “the CIT(A)” ), for the assessment year 2007-08, the appellate proceedings before the CIT(A) arising from the assessment order dated 28.3.2013 passed by the learned Assessing Officer u/s 153A r.w.s. 143(3) of the Income Tax Act,1961(Hereinafter called “the Act”).
ITA 3873/Mum/2015 2
The grounds raised by the Assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) reads as under:-
“1. On the given facts, circumstances and judicial pronouncements; Hon. CIT (A) erred in confirming the action of the Ld. Assessing Officer on account of unexplained income in regards to the gifts from relative; such addition is bad in law and liable to be deleted.
2. Without prejudice to above, on the given facts, circumstances and judicial pronouncements; Hon. CIT (A) erred in confirming the action of the Ld. Assessing Officer on account of unexplained income in regards to the gifts from relative; such addition is bad in law and liable to be reduced.
3. On the given facts, circumstances and legal propositions; Hon. CIT (A) erred in passing the order in absence of reasonable opportunity of making the submissions to the assessee in principles of natural justice and such under is in violation of principles of natural justice and liable to be quashed.”
3. The assessee has also raised the following additional grounds of appeal:-
On the given facts, circumstances and legal pronouncements, Ld. Commissioner of Income Tax Appeals erred in framing the order without appreciating that this assessment being not pending was not abated under provisions of section 153A and such framing of the order by the Ld. Assessing Officer is bad in law and erroneous in facts and hence liable to be annulled.
2. Without prejudice to above, On the given facts, circumstances and legal pronouncements, Ld. Commissioner of Income Tax Appeals erred in confirming the addition despite the fact that no incriminating material was found during course of search and regular assessment was already completed in case of assessee for the said assessment year and hence such addition made in course of block assessment proceedings is liable to be deleted."
The brief facts of the case are that a search and seizure operation was carried out u/s 132(1) of the Act in the case of Pratibha Industries Group on 10.3.2011 at the office premises as well as residential premises of the persons/entities associated with the group. The assessee is wife of Mr. Rohit ITA 3873/Mum/2015 3 Katyal, one of the Directors of M/s Pratibha Industries Group. The assessee was also covered under the search operations u/s. 132(1) of the Act carried on by the revenue on 10.03.2011. The assessee’s case, consequent upon the search, is covered under the provisions of section 153A of the Act. Notice u/s 153A of the Act was issued to the assessee on 23.2.2012 requiring the assessee to file the return of income u/s. 153A of the Act, and in response the assessee filed the return on 26.3.2012 , declaring total income at Rs. 3,91,954/-. The assessee has filed her original return of income declaring total income of Rs. 3,27,509/- which was assessed u/s 143(3) of the Act on 6.5.2009 by the Revenue, assessing the income at Rs. 3,91,950/-.
During the year under consideration, the assessee had declared the business income and income from other sources . The AO on going through the capital account filed for the relevant assessment year observed that the assessee has shown “Gift received from Ludhiana” of Rs. 5,73,690/-. The assessee was asked to produce the confirmation from the donor along with proof of identity, creditworthiness and copy of return of income of the donor and the relationship with the assessee. But the assessee failed to do so and as such addition were made by the AO u/s 68 of the Act and additions to the total income of the assessee was made by the AO to the tune of Rs.5,73,690/- vide assessment orders dated 28-03-2013 passed u/s 153A read with Section 143(3) of the Act.
4.Aggrieved by the assessment orders dated 28-03-2013 passed u/s 153A read with Section 143(3) of the Act by the A.O., the assessee filed first appeal with the CIT(A).
Before the CIT(A), the assessee submitted that no incriminating material were found and seized during the course of search action u/s 132(1) of the Act with respect to the gift of Rs. 5,73,690/- received from Ludhiana .
ITA 3873/Mum/2015 4 The assessee submitted that the return of income was filed for the assessment year 2007-08 which was processed u/s 143(3) of the Act on 6.5.2009 assessing income at Rs. 3,91,954/- and hence the assessment stood concluded and this assessment for the assessment year 2007-08 is an unabated assessment as defined u/s 153A of the Act, hence, the Revenue cannot make any addition unless some incriminating material is found during the course of search qua this addition. No incriminating material have been found or seized during the course of search conducted by the Revenue on 10.3.2011 with respect to the gift received by the assessee, hence, the addition to the income made by the AO vide assessment orders dated 28-03- 2013 passed u/s 153A read with Section 143(3) of the Act was bad in law. The assessee relied upon the decision of Hon’ble Bombay High Court in the case of CIT v. Murli Agro Products Ltd., 49 Taxmann.com 172 and submitted that this is an unabated assessment and additions can be made only on the basis of incriminating material found or seized during the course of search qua the said additions so made by the Revenue .
The CIT(A) rejected the contentions of the assessee relying upon the decision of Hon’ble Karnataka High Court in the case of Canara Housing Development Co. v. DCIT, 49 Taxmann.com 98 and the CIT(A) confirmed the addition made by the A.O. vide appellate orders dated 11.03.2015 , as the assessee was required to furnish confirmation from the donor along with proof of identity , creditworthiness and copy of return of income of the donor , the relevant material has not been submitted by the assessee to establish the genuineness of the claim made by the assessee and to establish the nature and source of the gift as held by the CIT(A).
6.Aggrieved by the orders dated 11.03.2015 of the CIT(A), the assessee is in second appeal before the Tribunal.
ITA 3873/Mum/2015 5
The ld. Counsel for the assessee submitted that additional ground was raised on 18.12.2015 which needs to be admitted as it is a legal ground and goes to the root of the matter. The ld. Counsel for the assessee submitted that there were a search operation conducted u/s 132(1) of the Act on 10.3.2011 in the case of Pratibha Industries Group and the assessee was also covered under the search operations. Original return of income was filed for the impugned assessment year 2007-08 declaring income at Rs. 3,27,509/- which was processed u/s 143(3) of the Act on 6.5.2009 computing income at Rs. 3,91,950/- . The assessment u/s 143(3) of the Act vide orders dated 06- 05-2009 is the concluded assessment having attained finality and as per section 153A of the Act, it is an unabated assessment. He argued that the Revenue cannot make addition unless there is an incriminating material found or seized during the course of search qua additions made by the Revenue and in this case no incriminating material was found or seized during the course of search operations against the assessee qua the said gift received from Ludhiana. The Revenue has made addition by referring to the capital account of the assessee filed for the assessment year whereby the “Gift received from Ludhiana” of Rs. 5,73,690/- was duly declared and disclosed to the Revenue. The ld. Counsel relied upon the decision of Hon’ble Bombay High Court in the case of Murli Agro Products Ltd. (supra), decision of ITAT, Hyderabad in the case of DCIT v. AMR Indi Limited in 1831/Hyd./2012 dated 23-10-2013 and decision of Mumbai Tribunal, Special Bench in the case of All Cargo Global Logistic Ltd. v. DCIT, (2012)23 taxmann.com(103)(Mum.(SB)
The ld. D.R., on the other hand relied upon the orders of authorities below.
We have considered the rival submission and perused the material available on record including case laws relied upon by the rival parties. The ITA 3873/Mum/2015 6 additional grounds raised by the assessee are legal grounds which goes to the root of the matter and is admitted in the substantial interest of justice and in view of the decision of Hon’ble Supreme Court in the case of CIT v. NTPC Limited (1998) 229 ITR 383(SC) .
We have observed that the assessee was searched by the Revenue u/s 132(1) of the Act on 10-03-2011. The assessee had filed return of income for the assessment year 2007-08 which was processed u/s. 143(3) of the Act by the Revenue , whereby the assessment order u/s 143(3) of the Act dated 6.5.2009 was framed by the Revenue. The search u/s 132(1) of the Act had been conducted on 10-3-2011 and on the date of search, the assessment u/s 143(3) of the Act stood concluded for the assessment year 2007-08 vide orders dated 06-05-2009 and attained finality and it is an unabated assessment as per Section 153A of the Act. No incriminating material was found or seized during the course of search operations u/s 132(1) of the Act qua the additions of gift of Rs. 5,73,690/- received by the assessee from Ludhiana. The additions have been made merely on the basis of capital account filed along with the return of income with the Revenue while framing the original assessment u/s 143(3) of the Act which culminated into the assessment order dated 6.5.2009 u/s 143(3) of the Act, whereby this ‘Gift from Ludhiana’ of Rs.5,73,690/- was duly declared and disclosed. The concluded assessment for the assessment year 2007-08 was unabated assessment as per Section 153A of the Act and the addition can only be made in the case of concluded and finalized assessment as per the provisions of Section 153A of the Act only when incriminating material has been found or seized during the search operations qua the additions made of gift from Ludhiana of Rs.5,73,690/-. In this case, no such incriminating material has been found or seized during the course of search operations u/s 132(1) of the Act qua the additions of Rs.5,73,690/- made for gifts received from Ludhiana, and in our considered view the addition of Rs. 5,73,690/- made by the A.O.
ITA 3873/Mum/2015 7 and confirmed by the CIT(A) is not sustainable in law and is ordered to be deleted.
Our view is consistent with the view of the decision of Hon’ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation(Nheva Sheva) Limited, (2015) 58 taxmann.com 78(Bombay) and also by the decision of Hon’ble Delhi High Court in the case of CIT v. Kabul Chawla, (2015) 61 taxmann.com 412(Delhi) . Thus, in our considered view, this addition of Rs.5,73,690/-made by the AO and as confirmed by the CIT(A) is not sustainable and is ordered to be deleted as per our reasoning and discussions as set out above. We order accordingly.
In the result, the appeal filed by the assessee in ITA N0. 3873/Mum/2015, for the assessment year 2007-08 is allowed.