Income Tax Appellate Tribunal - Cochin
Kk Tourist Home, Kannur vs Dcit Central Circle 2, Kozhikode on 30 January, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri Sanjay Arora, Accountant Member and
Shri Manomohan Das, Judicial Member
SA No. 131/Coch/2023
(Arising out of ITA No. 504/Coch/2023)
(Assessment Year: 2009-10)
K.K. Tourist Home Dy. CIT, Central Circle-2
PP VI 617C, KK Plaza 7th Floor, Aayakar Bhavan
vs.
Peravoor, Kannur 670673 Mananchira
[PAN:AACFK8452C] Kozhikode 673001
(Applicant) (Respondent)
Applicant by: Shri Paven Ved, Advocate
Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R.
Date of Hearing: 24.01.2024
Date of Pronouncement: 30.01.2024
ORDER
Per: Sanjay Arora, AM This is a Stay Application (SA) by the Assessee in respect of it's captioned appeal, seeking stay of an outstanding demand of Rs.55.61 lakhs qua it's assessment under section 153A of the Income Tax Act, 1961 (the Act) pursuant to a search u/s. 132(1) of the Acton the assessee on 19/9/2012.
2.1 At the outset, it was submitted by Shri Ved, the learned counsel for the assessee, that the impugned assessment is not maintainable in law inasmuch as the assessee-firm stood dissolved about a year prior to the issue of warrant of authorization on 26/9/2012. Toward this, he would take us to it's Balance-Sheet, forming part of it's paper-book, which stands made out up to 31/10/2011. On a query by the Bench as to if the fact of dissolution was communicated by the assessee to the assessing authority, or otherwise discontinuation of business, as mandated by s. 176 SA No. 131/Coch/2023 (AY : 2009-10) K.K. Tourist Home v. Dy. CIT of the Act, informed, he would admit it to be not so, though submitted that that would not alter the fact that the assessee was not in existence on the date the search was conducted thereon. Notice u/s. 153A of the Act is accordingly bad in law, and so is the ensuing assessment. Smt. Devi, the ld. Sr. DR, would submit that if the assessee's PAN was valid as on the date of search, it was not permissible for the assessee to raise any doubt with regard to it's existence, and question it's assessment on that basis. This issue had in fact not been raised by the assessee at any stage earlier.
2.2 In reply, Shri Ved would submit that this is a legal issue, raised by the assessee per Ground No. 1 of it's appeal before the Tribunal, reading out the same, as under:
"The ld. CIT(A) erred in upholding the validity of the proceedings u/s. 153A which was illegal for various reasons."
On another query/s by the Bench, Shri Ved would clarify that all the properties of the assessee-firm had since been distributed amongst the erstwhile partners. Further, though it has not paid 20% of the demand for which stay is being sought, it shall provide security to the Revenue to that extent.
3. We have heard the parties, and perused the material on record. 3.1 If, as claimed, the assessee is not in existence at the time of search, it could not be subject to search, which is the basis of an assessment u/s. 153A of the Act where material in relation to it's income for the relevant years is found, as recently clarified in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC). Whether this would stand modified to any extent considering the assessee's conduct in having admittedly not communicated the fact of it's dissolution, or of discontinuance of it's business, to the Revenue; rather; having a valid PAN and, in fact, even not objected to the conduct of search, is the question. Be that as it may, it cannot be denied that the assessee has, prima facie, a strong case. In JM Trading Corporation v. Asst. CIT [2008] 20 SOT 489 (Mum)(PB-3, pgs. 2-20), it stands held by the Tribunal that an assessment u/s. 153A could only follow a valid search. Appeal there-against stands 2 SA No. 131/Coch/2023 (AY : 2009-10) K.K. Tourist Home v. Dy. CIT dismissed by the Hon'ble High Court per it's order in ITA No. 598/2009, dated 29.06.2009 (PB-3, pg. 1), which we though observe as bearing a caveat as to the appeal not raising any substantial question of law.
3.2 We, accordingly, consider it to be a fit case for grant of stay of the outstanding demand, subject to the following:
(a) provision of security in favour of the Revenue to the satisfaction of the Assessing Officer to the extent of twenty per cent. of the outstanding demand; and
(b) an early hearing of the appeal by the Tribunal, for which we post the case for February 13, 2024.
We may though clarify that our acceptance of the instant petition on the legal ground afore-said may not be construed as an expression of any opinion in the matter. All contentions in its respect, including qua admission thereof, being a legal plea, liable to be decided in accordance with law, consistent with the facts and circumstances of the case, are open.
3.3 We decide accordingly.
4. In the result, the assessee's stay application is allowed on the afore-said terms. Order pronounced on January 30, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963 Sd/- Sd/-
(Manomohan Das) (Sanjay Arora)
Judicial Member Accountant Member
Cochin, Dated: January 30, 2024
n.p.
Copy to:
1. The Applicant
2. The Respondent
3. The Pr. CIT concerned
4. The Sr. DR, ITAT, Cochin
5. Guard File By Order
Assistant Registrar
ITAT, Cochin
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