Income Tax Appellate Tribunal - Ahmedabad
Smt. Madhu Khurana, Ahmedabad vs The Dy.Cit, (Osd), Range-1, Ahmedabad on 8 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
IT(SS)A Nos. 101 to 103/Ahd/2016
(Assessment Years: 2005-06, 2006-07 & 2008-09)
Smt. Madhu Khurana,
75, Safal Vihan, Nr. Eklavya
School, Sarkhej Sanand Road,
Ahmedabad - 382 210 Appellant
Vs.
DCIT (OSD) Range - 1, Ahmedabad Respondent
PAN: ALYPK2442E
&
IT(SS)A Nos. 104 to 106/Ahd/2016
(Assessment Years: 2003-04, 2004-05 & 2006-07)
Shri Avtarsingh Khurana,
75, Safal Vihan, Nr. Eklavya
School, Sarkhej Sanand Road,
Ahmedabad - 382 210 Appellant
Vs.
DCIT (OSD) Range - 1, Ahmedabad Respondent
PAN: AFHPK5758B
आवेदक क ओर से/By Assessee : Shri P.M. Mehta & Shri Gulab
Thakor, A.R.
राज
व क ओर से/By Revenue : Shri Mudit Nagpal, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 01.02.2018
घोषणा क तार ख/Date of
Pronouncement : 08.02.2018
IT(SS)A Nos. 101 to 106/Ahd/16 [Madhu Khurana & Avtarsingh Khurana] -2-
ORDER
PER BENCH These two assessees have filed their instant three penalty appeals each IT(SS)A Nos. 101 to 106/Ahd/2016 against the CIT(A)-1, Ahmedabad's separate orders; all dated 29.01.2016 except formers's assessment year 2008-09 dated 26.02.2016 in case no. CIT(A)-VI/DCIT(OSD),R-1/188/2014-15, CIT(A)- VI/DCIT(OSD),R-1/187/2014-15, CIT(A)-VI/DCIT(OSD),R-1/185/2014-15, CIT(A)-VI/DCIT(OSD),R-1/175/2014-15, CIT(A)-VI/DCIT(OSD),R-1/176/2014- 15 & CIT(A)-VI/DCIT(OSD),R-1/178/2014-15, affirming Assessing Officer's action levying penalties of Rs.6,46,398/-, Rs.10,92,255/-, Rs.9,70,762/-, Rs. 58,591/-, Rs.1,23,190/- and Rs.1,39,217/-; respectively, involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961; in short "the Act".
Heard both the parties. Case files perused.
2. It emerges from a combined perusal of all the instant case files that these penalties emanate from identical Section 153C assessments framed in two assessees' cases before us. These proceedings arose from a search action in September 2007 carried out in premises of one Dr. Yogiraj Sharma in Madhya Pradesh. The same resulted in various corresponding quantum additions to which both the learned lower authorities have invoked Section 271(1)(c) of the Act for imposing the impugned penalties in the instant assessee's cases.
3. We notice at the outset that both the parties have already come in litigation in assessment year 2008-09 in quantum proceedings. The Revenue's appeal therein qua these two assessees were IT(SS)A No. 157 & 158/Ahd/2013. The latter assessee Shri Avtarsingh Khurana preferred CO No. 173/Ahd/2013. A petition under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 was also filed challenging validity of Section 153C proceedings in both assessees' cases. Learned co-ordinate bench has quashed the quantum proceedings on the ground that the searched assessee's writ petition no. 13833 of 2010 challenging validity of search filed before hon'ble Madhya Pradesh high court stood accepted as under:
IT(SS)A Nos. 101 to 106/Ahd/16 [Madhu Khurana & Avtarsingh Khurana] -3-
"4. A perusal of this rule would indicate that respondent may support the impugned order on the basis of ground which was decided against him by the lower appellate authority despite of the fact that the respondent has not challenged the order of the lower authorities in further appeal. In other words, the assessee who has taken a ground before the ld.CIT(A) and that ground was decided against the assessee, and the order was not challenged by the assessee before the Tribunal, in spite of that, in the appeal of the Revenue, the assessee can plead that appeal of the Revenue deserves to be dismissed on the ground taken by him before the ld.CIT(A), In other words, the assessee could plead for upholding the order of the ld.CIT(A) on the ground raised by him before the ld.CIT(A) though that ground was decided against the assessee. The Tribunal may uphold order of the ld.CIT(A) by re- appreciating the grounds raised by the assessee before the ld.CIT(A) and which was decided against the assessee. On such re-appreciation that ground cart be considered as allowed and can result into upholding of the order of the ld.CIT(A), Therefore, we take cognizance of the ground no.2 raised by the assessee before the ld.CIT(A) which is pan matena to ground raised by Shri Avtarsingh Khurana in his CO. Shri S.N.Soparkar has further contended that a search under 132 of the Income Tax Act was carried out on 30.5.2008 at the premises of Dr. Rajesh Rajora. According to the Revenue some incriminating evidence was found at his premises which satisfied the AO of the searched person to transmit that incriminating material to the AO of these assessees for taking up the proceedings under section 153 C of the Income Tax Act. As far as proposition of law contemplated under section 153C for initiating proceedings against person other than the searched persons is concerned no-one has disputed before us. The dispute raised by the ld.counsel for the assesses is that the searched person has challenged the search by way of writ petition before the Hon'ble Madhya Pradesh High Court in Writ Petition No. 13833 of 2010 i.e. writ petition was allowed by the Hon'ble High Court and search was declared as illegal, A conclusion of the Hon'ble High Court reads as under:
"12. In the present case, in September 2007 the search was carried out in the premises of Dr. Yogi Raj Sharma. The document Annexure RJ-1 was seized by the respondents. At the relevant time petitioner no. 1 was the Chief Health Secretary and this fact was within the knowledge of the respondents, but why the search was conducted on 30.5.2008 after a period of near about 9 months, there is no explanation in this regard. The document Annexure RJ-1 was seized from the premises of Dr. Yogi Raj Sharma but until and unless there is corroborating evidence the respondents could not have formed the basis of issuing warrant of authorization. It appears that because of the allotment of house to respondent no. 4, there was some annoyance of the authorities and as soon as on 20.5.2008 the house was got allotted by Chief Minister, on 28.5.2008 warrant of authorization was issued and on 30.5.2008 search was conducted. If there was some material with the Department that the petitioners had purchased some house or land property, then there could have been definite evidence in this regard, but for a period of 8 months no information was collected and all of a sudden the warrant of authorization was issued. From the perusal of panchnama prepared during seizure it appears that no objectionable document or undisclosed property was found except those which were declared in the earlier return. There is no other IT(SS)A Nos. 101 to 106/Ahd/16 [Madhu Khurana & Avtarsingh Khurana] -4- evidence available on record that the document Annexure RJ-1 relates to the petitioner and the word 'ch' of which correctness is disputed by the petitioner indicates to the petitioner. In absence of any cogent reasons in the present matter warrant of authorization could not have been issued, as has been held by the aforesaid judgments. Issuance of warrant of authorization is & serious action and for this authorization officer should nave recorded his satisfaction. Though normally this Court is not looking to the reasons of satisfaction, but in the present case it appears that the warrant of authorization was issued merely on hypothecated grounds, which is not sustainable under the law.
13. A Division Bench of this Court in Gaya Prasad Pathak Vs. Assistant Commissioner of income Tax and others (2007) 290 ITR 12& (MP) has considered that in the assessment proceedings the authorities have no power to consider the validity of authorization under section 132(1) of /be Act and the remedy available to the petitioners is by way of filing writ petition.
14. In the present case, we have examined the entire proceedings, satisfaction note, the document Annexure RJ-1, which is the basis for issuance of warrant of authorization and ultimately the seizure memo and find that the entire action which was initiated end taken was based on without any sufficient ground or material and it appears that because of dispute in respect of allotment of house, the respondents could get an opportunity to issue warrant of authorization, resultantly search in the premises of petitioners as conducted.
15. In view of aforesaid, the action of the respondents cannot be sustained under the law and accordingly this petition is allowed and the issuance of warrant of authorization and consequent search and seizure proceedings, ere hereby quashed. Considering the facts of the case, there shall b& no order as to costs.
5. On the strength of this order, it has been pleaded before us that once issuance of warrant of authorization and subsequent search and seizure proceedings are quashed, then it will be construed that nothing was recovered from the searched person. In other words, no cognizance can be taken for the purpose of assuming jurisdiction under section 153C of the Income tax Act for initiating proceedings against the assesses, The ld.DR was unable to controvert this decision."
4. Learned Authorized Representative accordingly submits that although these two assessees have not filed their quantum appeals, the fact remains that all these assessments stand on same footing. He therefore seeks to place reliance on tribunal's above order for limited purpose of reversing these penalties subject matter of challenge before us.
IT(SS)A Nos. 101 to 106/Ahd/16 [Madhu Khurana & Avtarsingh Khurana] -5-
5. Learned Departmental Representative fails to dispute the correctness of said quantum developments. We therefore observe that the quantum issues are not altogether free from doubt. We also keep in mind hon'ble apex court's landmark judgment in CIT vs. Reliance Petroproducts 322 ITR 158(SC) that quantum and penalty are distinct proceedings wherein each and every disallowance/addition made in course of the former does not ipso fact attract latter penal provision. We therefore accept assessee's reliance on above tribunal's order for the limited purpose of invalidating the impugned penalties on the ground that the Revenue has already lost in the issue pertaining to validity of Section 153C assessment proceedings. All the impugned penalties in these two assessees' instant appeals are therefore deleted.
6. These two assessees succeed in their respective appeals.
[Pronounced in the open Court on this the 08th day of February, 2018.] Sd/- Sd/-
(AMARJIT SINGH) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 08/02/2018
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज
व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।