Income Tax Appellate Tribunal - Ahmedabad
Priya Holding Pvt..Ltd.,, Bhavnagar vs The Acit.,Cent.Circle-2(1),, ... on 5 January, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'एस. एम. सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC " BENCH, AHMEDABAD सव ी राजपाल यादव, या यक सद य एवं द प कुमार के डया, लेखा सद य के सम ।
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER Sl. IT(ss)A No(s) Assessment Appeal(s) by Nos. Year (s) Appellant vs. Respondent Appellant Respondent
1. 366/Ahd/2012 2004-2005 Priya Holding The ACIT Pvt.Ltd. Central Circle-
1563/A, Ashirwad 2(1)
Op.Panna Tower Ahmedabad
Rupani Sardarnagar
Road
Bhavnagar-364 001
PAN:AAACP 0974 F
2. 367/Ahd/2012 2005-2006 -do-Assessee -do-Revenue
3. 368/Ahd/2012 2006-2007 -do-Assessee -do-Revenue
4. 369/Ahd/2012 2007-2008 -do-Assessee -do-Revenue
5. 370/Ahd/2012 2008-2009 -do-Assessee -do-Revenue
Assessee by : Shri Bandish S.Soparkar, AR
Revenue by : Shri Rajesh Meena, Sr.DR
ु वाई क" तार ख /
सन Date of Hearing 03/01/2018
घोषणा क" तार ख /Date of Pronounce ment 05/01/2018
आदे श / O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeals have been filed by the Assessee concerning Assessment Years (AYs) 2004-05, 2005-06, 2006-07, 2007-08 & 2008- 09 against the composite order of the Commissioner of Income IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -2- Tax(Appeals)-III, Ahmedabad [CIT(A) in short] dated 19/06/2012 arising in the matter of respective assessment orders passed under s. 153A r.w.s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
2. In all the five appeals, the assessee has raised a common ground whereby the assessee has challenged the jurisdiction usurped by the Assessing Officer (AO) under s.153A of the Act towards additions/disallowances made. In view of the preliminary objection of the assessee which seeks to put question mark over the legitimacy of the additions/disallowances made under s.153A of the Act, we deem it expedient to dispose of the aforesaid preliminary ground as it strikes to the root of the matter.
3. When the matter was called for hearing, the ld.AR for the assessee, at the outset, submitted that the additions/disallowances made in all the five appeals has no rational connection or live link with material found in the course of search action carried out under s.132 of the I.T.Act on 12/01/2010 in the case of assessee. The Ld.AR submitted that in pursuance of a notice under s.153A of the Act for various assessment years in appeals, the assessment was completed for AYs 2004-05 to 2008-09 by allowing only proportionate expenses of depreciation, insurance expenses and repairs and maintenance expenses. It was also pointed out on behalf of the assessee that the assessee had let out its IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -3- office and other premises to M/s.Priya Blue Industries Pvt.Ltd. a sister- concern of the assessee. During the course of the assessments, u.s.153A, the AO refused to accept the claim of composite rent income under the head "profit and gains of business" and instead, sought to assess the same under a different head of income i.e. income from other house property and/or income from other sources etc. 3.1. The Ld.AR asserted that this kind of adjustments are subject matter of regular assessment and do not resonate with the scheme of search assessment under s.153A of the Act de horse reference to any incriminating material in this regard. The Ld.AR further emphasized that in the absence of incriminating material, no adjustment in the returned income is permissible under section 153A of the Act.
3.2. The Ld.AR next submitted that all the five returns of respective assessment years have become time barred and were not pending for assessment at the time of search. Therefore, the regular assessment/deemed assessment stands concluded at the time of search relating to various assessment years in question survives and do not get abated. The Ld.AR submitted that in these facts, it is not permissible for the AO to invoke authority vested under s.153A of the Act to indulge in making routine examination of various items of income and expenditure filed and declared in the respective returns which has no correlation to IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -4- incriminating material found in the course of search if any. For this proposition, the Ld.AR relied upon the decision(s) of the Hon'ble Gujarat High Court in the case of Saumya Construction (P.) Ltd. 387 ITR 529 (Guj.), Desai Construction (P.) Ltd. 387 ITR 552 (Guj), Deepak Kumar Agarwal (2017) 86 Taxmann.com 3 (Bom), Gurinder Singh Bawa 386 ITR 483 (Bom.) and decision of Hon'ble Delhi High Court in the case of Kabul Chawla 380 ITR 573 (Delhi). The Ld.AR placing reliance upon the aforesaid decisions submitted that additions/disallowances in the assessment framed under s.153A of the Act could be made having regard to the incriminating material alone as found in the course of search. No incriminating material has been demonstrated by the Revenue concerning the various additions/disallwoances. The Ld.AR accordingly urged that the additions/disallowances made are outside the ambit of section 153A of the Act and thus bad in law.
5. The Ld.DR, on the other hand, relied upon the orders of the authorities below.
6. We have carefully perused the orders of the authorities below and examined the merits of legal contentions raised on behalf of the assessee. It is the case of the assessee that additions/disallowances could not be made in the assessment framed under s.153A of the Act de horse reference to any incriminating material found in the course of search in IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -5- this regard. It is further case of the assessee that the additions/disallowances made have no nexus whatsoever with any material of incriminating nature found in the course of search which is genesis of proceedings under s.153A of the Act in the instant case. The appeal of the assessee thus hinges around one pertaining legal point as to whether, while making assessment under s.153A, the Revenue is entitled to interfere with the assessment concluded either under s.143(1) or under s.143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search.
6.1. On a bare perusal of assessment years in appeals and the composite order of the CIT(A) discussing issues connected with various additions/disallowances, we find total absence of reference to any incriminating material which may have any bearing to impugned additions/disallowances. As a corollary, it is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under s.132 of the Act and is based on re-appreciation of facts unconnected to search.
6.2. We also note that the income-tax return for the relevant assessment years were filed prior to the search in the normal course suo motu incorporating the items of income/expenditure which are subject matter IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -6- of considerations in the assessment framed under s.153A of the Act. The returns for various assessment orders in question so filed in ordinary course were accepted under s.143(1) of the Act and/or assessed under s.143(3) of the Act and as such no assessment was eventually pending on the date of initiation of search which may get abated in consequence of search. Accordingly, we are of the view that various additions/disallowances made by the AO are clearly beyond the scope of authority vested under s.153A of the Act owing to absence of any incriminating material or evidence deducted as a result of search. No reference of such incriminating material, if any, is found in any of the assessment orders for the purposes of making various additions/disallowances.
6.3. The legal issue emanating on such facts that in the absence of any incriminating material/evidence, no addition can be sustained under s.153A is no longer res integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Saumya Construction (P.) Ltd. and Devangi alias Roopa in Tax Appeal No.54 and Ors of 2017 order dated 02/02/2017. Similar view was earlier taken by the Hon'ble Delhi High Court in the case of Kabul Chawla (supra).
6.4. In view of long line of judicial precedents governing the field, we hold that additions/disallowances made without any nexus to IT(ss)A Nos. 366 to 370/Ahd/2012 Priya Holding Pvt.Ltd. vs. ACIT Asst.Years - 22004-05 to 2008-09 -7- incriminating material found, if any, as a result of search operations are not sustainable in the eyes of law in section 153A of the proceedings. Hence, the additions/disallowances made by the AO in all the captioned appeals require to be quashed. Thus, we find merit in the legal ground raised by the assessee. In this view of the matter, we do not intend to adjudicate various additions/disallowances on merits.
7. In the result, all the captioned appeals of the assessee are allowed.
This Order pronounced in Open Court on 05/ 01/2018
Sd/- Sd/-
(राजपाल यादव) ( द प कुमार के डया)
या यक सद य लेखा सद य
(RAJPAL YADAV) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 05/ 01 /2018
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ0 / The Appellant
2. 1यथ0 / The Respondent.
3. संबं3धत आयकर आयु5त / Concerned CIT
4. आयकर आयु5त(अपील) / The CIT(A)-III, Ahmedabad
5. 6वभागीय त न3ध, आयकर अपील य अ3धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स1या6पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad