Income Tax Appellate Tribunal - Kolkata
M/S. Bhavya Merchandise Pvt. Ltd., , ... vs Dcit, Central Circle - 2(1), Kolkata, ... on 17 May, 2019
आयकर अपील य अधीकरण, यायपीठ - "B" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "B" KOLKATA
Before Shri S.S.Godara, Judicial Member and
Dr. A.L. Saini, Accountant Member
IT(SS)A No.141/Kol/2017 &
C.O. No.11/Kol/2019
(a/o IT(SS)A No.141/Kol/2017)
Assessment Year :2012-13
DCIT, Central Circle- V/s. M/s Bhavya Merchandise
2(1), 3 r d Floor, Aayakar Pvt. Ltd., P-128, Block-B,
Bhawan, Poorva E.M. Lake Town, Kolkata-89
Bye Pass, 110, Shanti [P AN No. AADCB 6137 F]
Pally, Kolkata-107
अपीलाथ /Appellant .. यथ /Respondent/
तया ेपक /Co-objector
IT(SS)A No.140/Kol/2017 &
C.O. No.10/Kol/2018
(a/o IT(SS)A No.140/Kol/2017)
Assessment Year: 2012-13
DCIT, Central Circle- V/s. M/s SRA Merchandise Pvt.
2(1), 3 r d Floor, Aayakar Ltd., 5A, Space Town
Bhawan, Poorva E.M. Housing Complex, VIP
Bye Pass, 110, Shanti Road, Block-1, Kolkata-52
Pally, Kolkata-107 [P AN No. AAMCS 5239 C]
अपीलाथ /Appellant .. यथ /Respondent/
तया ेपक /Co-objector
IT(SS)A No.135-137/Kol/2017 &
C.O. No.4-6/Kol/2018,
(a/o IT(SS)A No.135-137/Kol/2017)
Assessment Years :2011-12, 2013-
14 & 2014-15
DCIT, Central Circle- V/s. M/s SRA Properties Pvt.
2(1), 3 r d Floor, Aayakar Ltd., 5A, Space Town
Bhawan, Poorva E.M. Housing Complex, VIP
IT(SS)A No.135-137 & 140-141/K/17 CO 4-6 & 10/Kol/18 & 11/K/11 DCIT CC-2(1) Kol. Vs. M/s SRA Properties/Merchandies & Bhavya Merchandise P Ltd Page 2 Bye Pass, 110, Shanti Road, Block-1, Kolkata-52 Pally, Kolkata-107 [P AN No. AADCS 7377 M] अपीलाथ /Appellant .. यथ /Respondent/ तया ेपक /Co-objector आवेदक क ओर से/By Assessee Shri R.P. Agarwal, Senior Advocate & Shri Nirav Sheth, FCA राज व क ओर से/By Respondent Shri A.K. Singh, CIT-DR सन ु वाई क तार ख/Date of Hearing 01-05-2019 घोषणा क तार ख/Date of Pronouncement -05-2019 आदे श /O R D E R PER BENCH:-
The instant batch of ten cases pertains to three assessees M/s Bhavya Merchandise Pvt. Ltd., M/s SRA Merchandise Pvt. Ltd. & M/s SRA Properties Pvt. Ltd. hereinafter referred is first, second and third assessees; respectively. The Revenue's appeal IT(SS) 141/Kol/2017 alongwith third assessee's cross objection No. 11/Kol/2019 arise against the Commissioner of Income Tax (Appeals)-20 Kolkata's order dated 14.07.2017 passed in case No.11627/CIT(A)-20/CC-2(1)/16-17. The Revenue's appeal IT(SS)A No.140/Kol/2017 and second assessee's cross objection therein No.10/Kol/2018 are directed against the very CIT(A)'s order dated.18.07.2017 passed in case No.11573/CIT(A)-20/CC-2(1)/16-17. The Revenue's next three appeal(s) IT(SS)A No.135-137/Kol/2017 and assessee's cross objections Nos.4-6/Kol/2018 thereto emanate from this very CIT(A)'s order(s); all dated 18.07.2017 passed in case No.11600, 11579 & 11584/CIT(A)-20/CC-2(1);
respectively. Relevant proceedings in all cases are u/s 153A r.w.s 143(3) of the Income Tax Act, 1961; in short 'the Act'.
Heard all assessees as well as the Revenue.
2. It transpires during the course of hearing that the relevant facts involved in first two assessees' four cases (supra) are identical. The Revenue has challenged correctness of CIT(A)'s identical order(s) quashing the impugned IT(SS)A No.135-137 & 140-141/K/17 CO 4-6 & 10/Kol/18 & 11/K/11 DCIT CC-2(1) Kol. Vs. M/s SRA Properties/Merchandies & Bhavya Merchandise P Ltd Page 3 assessments / proceedings on the ground that the search in issue dated 05.08.2014 had not yielded any incriminating material so as to give rise to the proceedings in issue. It then avers that the CIT(A) has erred in law as well as on facts in declaring the corresponding regular assessments to have already become final whereas same had not abated as o the date of search and therefore, the Assessing Officer had rightly taken recourse to impugned sec. 153A proceedings. The Revenue's last plea is on merits that the Assessing Officer's assessment in issue had rightly added unexplained cash credits in the nature of share capital / premium, unexplained investments followed by u/s 14A r.w.s. 8D disallowance involving varying sums. Learned CIT-DR submits during the course of hearing that CIT(A)'s findings quashing the impugned assessments / proceedings on these legal issues are not sustainable as the impugned search had indeed yielded the assessee's undisclosed income which saw light of the day as per their authorized persons declaration(s) made. He further emphasis the point that the regular assessment(s) in issue had also not abated as on the date of search.
3. Learned senior counsel represents all these assessees in the instant batch of cases. He rises to his seniority to fairly state at the bar that this CIT(A)'s finding on the foregoing legal issues are not sustainable since the search in issue led to incriminating material and assessments in issue had also not abated. His only prayer is that the assessee's corresponding cross- objections in these two Revenue's appeal(s) seek to deal with all the impugned addition(s) on merits and therefore, the instant lis including Revenue's appeal(s) and corresponding cross objections be restored to Assessing Officer for afresh detailed adjudication and verified of assessee's share application / premium on the issues of genuineness on creditworthiness. Our attention is further invited to the CIT(A)'s findings in both cases not adjudicating the three issues (supra) on merits as he has accepted to assessee's legal plea. Learned CIT-DR is fair enough in not disputing the assessee's prayer on merits. We accordingly conclude in these first four cases IT(SS)A No.135-137 & 140-141/K/17 CO 4-6 & 10/Kol/18 & 11/K/11 DCIT CC-2(1) Kol. Vs. M/s SRA Properties/Merchandies & Bhavya Merchandise P Ltd Page 4 that these three identical issues of share application money, unexplained investment and sec. 14A r.w.s. 8D disallowance / addition need to re- examined by the Assessing Officer as per law after affording adequate opportunity of hearing to the taxpayer. We order accordingly. We accept the Revenue's the two appeal(s) IT(SS)A No.141 and 140/Kol/2017 as well as the assessees cross objections 11/Kol/2019 and 10/Kol/2018 for statistical purposes.
4. Next come the third assessee's six cases involving Revenue's three appeal(s) IT(SS)A No.135-137/Kol/2017 and cross objection(s) No.04- 06/Kol/2018. The Revenue's pleadings in this three appeal(s) are also identical in nature as in foregoing cases seeking to reverse the CIT(A)'s findings quashing the impugned assessment / proceedings on twin reasoning (supra). The assessee's cross objections with identical issues of unexplained share capital / premium unexplained investment and sec. 14A r.w.s. 8D disallowance on merits alike in earlier cases.
5. It emerges that the assessee has also filed its additional ground in its cross-objections in all Revenue's three appeal(s) seeking to quash the impugned proceedings on the ground that it had converted itself from a corporate entity to a Limited Liability Partnership "LLP" in the name and style of M/s SRA Properties Pvt. LLP on 17.03.2015 whereas the Assessing Officer had initiated sec. 153A proceedings on 17.07.2015. Mr. Agarwal vehemently pleads therefore that the department had framed the impugned assessment in non-est entite's cases.
6. Learned CIT-DR strongly contends on the other hand that the assessee's instant additional substantive ground in its cross objections does not deserve to be admitted at this belated stage since it had not made the necessary averments in either of the lower proceedings. We find no merit in Revenue's instant technical argument. This tribunal's Special Bench decision in All Cargo Global Logistic Ltd. vs. DCIT (2012) 137 ITD 24 (Mum) (SB) take IT(SS)A No.135-137 & 140-141/K/17 CO 4-6 & 10/Kol/18 & 11/K/11 DCIT CC-2(1) Kol. Vs. M/s SRA Properties/Merchandies & Bhavya Merchandise P Ltd Page 5 into consideration hon'ble apex court's landmark judgment in "NTPC" case 229 ITR 383 (SC) to conclude that we can very well entertain a pure legal question in order to ascertain correct tax liability of an assessee in case all the relevant facts form part of the records. We make it clear that the Revenue is very fair in not disputing the clinching fact of assessee's conversion to an "LLP" on 17.03.2015 i.e. very well before the initiation of sec. 153A proceedings on 27.07.2015. Now coming to the question as to whether such an assessment / proceeding in case of a non-est entity's hold as the following case law make it clear that such assessments are not sustainable in the eyes of law.
a) M/s Pawansut Management Ltd. vs. ITO ITA No.1524/Kol/2016 decided on 14.02.2018;
b)M/s Computer Engineering Services India (P) Ltd. vs. ACIT ITA Nos. 5874-5878/Del/2013 decided on 29.05.2015
c) CIT vs. Intel Technology India (P) Ltd. 380 ITR 272 (SC)
d) Raza Textile Ltd. vs. ITO 87 ITR 539 (SC)
e) Saraswati Industrial Syndicate Ltd. vs. CIT civil Appeal No. 91 of 1976 (1990) 53 Taxmann. 92(SC)
f) Pampasar Distillry Ltd. vs. ACIT, ITA No.304, 558-560 & 1972- 1676/Kol2005
g) DCIT & Anr. vs. Mani Square Ltd. &Anr. 190 TTJ 742 (Kol)
h) CIT vs. Adinarayana Murty 65 ITR 607 SC)
i) ITO vs. Purbanchal Power Co.Ltd. ITA No. 201/Kol/2010 decided on 17.07.2014
j) B.K. Agencies vs. ITO ITGA 255-2552/Kol/2013 decided on 31.01.2017
k) CIT vs. Intel Technology India (P) Ltd. (2015) 57 taxmann.com 159(Kar)
l) Spice Infotainment Ltd. vs. CIT 247 CTR 500 (Del)
k) CIT vs. Spice Infotainment Ltd. Appeal No.285 of 2014 (SC) IT(SS)A No.135-137 & 140-141/K/17 CO 4-6 & 10/Kol/18 & 11/K/11 DCIT CC-2(1) Kol. Vs. M/s SRA Properties/Merchandies & Bhavya Merchandise P Ltd Page 6 We accordingly draw support from the above referred judicial precedents to conclude that impugned assessment / proceedings are not sustainable since framed in case of a non-est entity. Mr Agarwal quotes sec. 170 of the Act at this stage to make it clear that it is very well open for the Assessing Officer to proceed against the successor entity. We therefore make it clear before parting that it shall be very well open for the Assessing Officer to proceed against the successor LLP (supra) as per law. The Revenue's last three appeal(s) IT(SS)A No. 135-137/Kol/2017 are dismissed and assessee's cross objection(s) are allowed in above terms.
7. The Revenue's former two appeal(s) IT(SS)A No.141 and 140/Kol/2017 and two assessees' cross objection(s) No.11/Kol/2019 and 10/Kol/2018 are allowed for statistical purposes. The Revenue's last three appeal(s) IT(SS)A No.135-137/Kol/2017 in case of the third assessee are dismissed and taxpayer's cross objections No.04-06/Kol/2018 are allowed in above terms. Ordered accordingly.
Order pronounced in the open court 17/05/2019
Sd/- Sd/-
(लेखा सद य) ( या)यक सद य)
(Dr.A.L. Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Kolkata,
*Dkp, Sr.P.S
*दनांकः- 17/05/2019 कोलकाता ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. आवेदक/Assessee-M/s SRA Properties Pvt. Ltd./SRA Merchandise Pvt. Ltd. 5A, Space Town Housing Complex, VIP Road, Block-1, Kolkata-52/M/s Bhavya Merchandise Pvt Ltd. P-128, Block-B, Lake Town Kolkat-89 rd
2. राज व/Revenue-DCIT, Central circle-2(1), 3 Floor, Aayakar Bhawan, Poorva E.M.Bye Pass, 110, Shanti Pally, Kolkatka-107
3. संबं5धत आयकर आयु6त / Concerned CIT Kolkata
4. आयकर आय6 ु त- अपील / CIT (A) Kolkata
5. 9वभागीय )त)न5ध, आयकर अपील य अ5धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड> फाइल / Guard file.
By order/आदे श से, सहायक पंजीकार आयकर अपील य अ5धकरण, कोलकाता ।