Income Tax Appellate Tribunal - Ahmedabad
Rajuldevi Ganpatraj Chowdhary,, ... vs The Acit, Central Circle-2(4),, ... on 1 February, 2018
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ, अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
Sr. IT(SS)A No. & Appellant Respondent
No. Asstt.Year
1. 25/AHD/2015 Smt.Parvati S. Chowdhary ACIT, Cent.Cir.2(4)
Asstt.Year: C/o. Mehta Lodha & Co. Ahmedabad.
2009-2010 105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AIWPC 1094 N
2. 26/AHD/2015 Archana Shrenik Chowdhary ACIT, Cent.Cir.2(4)
Asstt.Year: C/o. Mehta Lodha & Co. Ahmedabad.
2009-2010 105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AGXPA 0311 P
3. 30/AHD/2015 Shankarlal Lalchand ACIT, Cent.Cir.2(4)
Asstt.Year: Chowdhary Ahmedabad.
2009-2010 C/o. Mehta Lodha & Co.
105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AHUPJ 0482 E
4. 31/AHD/2015 Shrenikkumar S. Lalchand ACIT, Cent.Cir.2(4)
Asstt.Year: Chowdhary Ahmedabad.
2009-2010 C/o. Mehta Lodha & Co.
105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AVOPS 6115 M
5. 34/AHD/2015 Smt.Pushpadevi Sampatraj ACIT, Cent.Cir.2(4)
Asstt.Year: Chowdhary Ahmedabad.
2009-2010 C/o. Mehta Lodha & Co.
105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AGXPC 5489 J
6. 35/AHD/2015 Rajuldevi Ganpatraj ACIT, Cent.Cir.2(4)
Asstt.Year: Chowdhary Ahmedabad.
2009-2010 C/o. Mehta Lodha & Co.
IT(SS)A No.25/AHD/2015 and 5 Others
2
105, Sakar-I
Opp: Gandhigram Rly.Station
Ashram Road
Ahmedabad 380009.
PAN : AGEPR 8667 A
अपीलाथ / (Appellant) यथ / (Respondent)
Assessee by : Shri Prakash D. Shah, CA
Revenue by : Aparna Agrawal, CIT-DR
सन
ु वाई क तार ख/ Dateof Hearing : 16/01/2018
घोषणा क तार ख / Date of Pronouncement: 01/02/2018
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
Present appeals are directed at the instance of different assessees against common order of the ld.CIT(A)-12, Ahmedabad dated 22.12.2014 passed for the assessment year 2009-10.
2. Solitary grievance of the assessees is that the ld.CIT(A) has erred in confirming additions in respective hands of the assessees on account of alleged investment in jewellery.
3. With the assistance of the ld.representatives, we have gone through the record carefully. It emerges out from the record that the ld.CIT(A) has decided the appeals of ten assessees by impugned common order. Out of those ten, four appeals of the assessees have already been decided by the Tribunal i.e. IT(SS)A.Nos.28, 29, 32 and 33/Ahd/2015 in the cases of Shripal Sampatraj Chowdhary, Yamini Shripal Chowdhary and Sampatraj Lalchand Chowdhary.
4. Brief facts of the case are that a search and seizure operation was carried out at the residential premises of all the assessees under section 132 of the Income Tax Act on 21.9.2011 and 22.9.2011. In order to give logical end to the proceedings, the ld.AO has issued notices under section 153A of the IT(SS)A No.25/AHD/2015 and 5 Others 3 Act on 29.11.2013 requesting all the assesses to file their returns of income. The ld.AO thereafter issued a notice under section 142(1) along with annexures. He observed that during the scours of search gold jewellery, diamond jewellery and silver articles were found from the residence as well as from the lockers. Therefore, the ld.AO has directed the assessee to submit copy of their wealth-tax returns, supporting evidences, date of acquisition of jewellery along with details of jewellery including weight, nature etc., confirmation from donors who have gifted to the assessees, source of purchase of jwellery. All these assessees have filed detailed replies which have been reproduced by the AO in the respective assessment orders. In short, the case of the assessee is that they have filed their returns of wealth-tax showing possession of jewellery. There is a minor variation in the details of jewellery shown in the wealth-tax returns vis-à-vis found during the course of search. With regard to such variation, it was contended that excess in gold jewellery was mainly on account of re-making of the jewellery from time to time. Similar explanation was given with regard to any shortage in the silver items. The ld.AO was not satisfied with explanation of the assessee and made additions.
5. On appeal, the ld.CIT(A) has confirmed additions by discussing the facts from the case of Ganpatraj Lalchand Chowdhary. The ld.CIT(A) has observed facts with regard to the details of jewellery which are identical in other cases.
6. The ld.counsel for the assessee submitted that the Tribunal has considered identical issue in the case of Shripal Sampatraj Chowdhary whose appeal was also decided by the ld.CIT(A) with the impugned order. His name appeared at Sr.No.3 of the case title in the order of the ld.CIT(A). The ld.DR was unable to controvert the above facts.
IT(SS)A No.25/AHD/2015 and 5 Others 4
7. Order of the ITAT in the case of Sampatraj Lalchand Chowdhary, in ITA No.32 and 33/Ahd/2015 reads as under:
1. IT(SS)A Nos. 32 & 33/Ahd/2015 are appeals by two different Assessees preferred against the very same order of the Ld. CIT(A)-12, Ahmedabad dated 22.12.2014 pertaining to A.Y. 2009-10.
2. Since the First Appellate Authority has disposed of these appeals by a common order, therefore, both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
3. At the very outset, we would like to state that the grievance is common in both these appeals and which relates to the order framed u/s. 153A of the Act when no incriminating material was found during the course of the search proceedings.
4. Briefly stated the facts of the case are that a search and seizure operation was conducted at the premises of the assessees on 22.09.2011. During the search proceedings, gold, jewellery and other valuable items were found from the residence & bank lockers of the assessees.
5. During the course of the assessment proceedings, the assessee was asked to furnish details with respect to jewellery found during search proceedings. The assessee filed a detailed reply which reads as under:-
"6. Cash and Jewellary:
Gold and Diamond Silver
Jewellery
Particulars Panchnama Gross Net (Gram) Cart Kg
date (Gram) Wt
58 Basant 22.09.2011 801.90 308.90 47.74 81.26
Bahar-Bopal
Kalupur Co- 31.10.2011 2736.60 1680.40 64.60 -
operative Bank-
Anand nagar
locker no. 1412
Kalupur Co- 31.10.2011 2858.75 21 77.30 130.30 -
operative Bank-
Anand nagar
locker no. 11
434
Tamilnad bank- 09.11.2011 3295.50 2640.35 16.78
Locker no. 39 --
IT(SS)A No.25/AHD/2015 and 5 Others
5
Sub Total 9792.75 6806.95 259.42 81.26
Kalupur Co- 14.11.2011 728.30 565.30 2.76 -
operative Bank-
Anand nagar
locker no. 243
Total 10521.05 7372.25 262.18 81.26
a. Firstly, it is submitted that during the course of proceedings under section 132, the follower jewellary / ornaments and valuable of my family were found at our residence and bank locker.
b. Following persons of the family have filed wealth tax return and as per the latest wealth tax return at the time of search the quantity declared in the wealth tax return is as under:-
Name of the Gold Gold Diamond Silver
Assessee Quantity- Quantity-Net Jewellary Quantity
. Gross (Gram) (Ct.) (KG)
(gram)
Sampatraj Lalchand 1679.2 1606.97 38.98 10.5
Chowdhary
Pushpadevi 2412.35 1756.5 8.08 0
Chowdhary
Shreepal Chowdhary 498.12 498.12 26.62. 37.8
Yamini 1588.3 1714,918 53.13 0
Shrenik Chowdhary 1542.9 1293.6 21.4 24.3
Archana Chowdhary 2137.4 1685.2 13.13 4.5
Sampatraj 827.2 781.7 44.119 43.5
L.Chowdhary-HUF
Total 10685.47 9337.008 205.459 120.6
c. It is submitted that I have purchase gold Jewellary of 25,30 gms consisting of 17.030 ct of diamonds on 10.03.2011, which was not covered in wealth tax return filed till date of search. The copy of invoice is enclosed and marked as Annexure -
5. The payment is made out of internal accruals.
d. After considering the Wealth-Tax Return, Jewellary purchased during the year under consideration, total Jewellary is as under:
Name of the Gold Gold Diamond Silver
Assessee Quantity- Quantity-Net Jewellary Quantity
Gross (Gram) (Ct) (KGs)
IT(SS)A No.25/AHD/2015 and 5 Others
6
(gram)
Sampatraj L. 1704.5 1632.27 56.01 10.5
Chowdhary
Pushpadevi 2412.35 1756.5 8.08 0
Chowdhary
Shreepal 498.1 498.12 26.62 37.8
Chowdhary
Yamini 1588.3 1714.918 53.13 0
Shrenik Chowdhary 1542.9 1293.6 21.4 24.3
Archana 2137.4 1685.2 13.13 4.5
Chowdhary
Sampatraj L. 827.2 781.7 44.119 43.5
Chowdhary -HUP
Total 10710.75 9362.308 222 A 89 120.6
e. Reconciliation
Particulars Gold Quantity- Diamond Silver
Gross-(Grams) Jewellary Quantity
(Ct) JKGsl
Jewellary found during 10521.05 262.18 81.26
search proceedings
Jewellary as per para d 10710.75 222.49 120.6
Excess {Short) found -189.70 39.69 -39.34
Value of Excess found 1389185
f. From the above you may observe that there was excess diamond of 32.69 ct in possession comparison with the wealth tax return filed by all the members of the family. The excess diamond found was seized by your office along-with gold Jewellary as diamond was mounted to gold Jewellary. g. Excess diamond found was disclosed in Assessment Year 2012-13 as a part of disclosure given by Shri Shankarlal Chowdhary related to Shri Sampatraj L. Chowdhary."
6. The detailed submissions (supra) made by the assessee did not find any favour with the A.O. The A.O. was of the opinion that mere filing of Wealth tax Return does IT(SS)A No.25/AHD/2015 and 5 Others 7 not rule out the question of genuineness of sources of acquisition of jewellery in question. The A.O. concluded by making addition of unaccounted gold in the hands of the assessees.
7. Assessee carried the matter before the ld. CIT(A) but without any success.
8. Before us, the ld. counsel for the assessee vehemently stated that the impugned assessment is bad in law inasmuch as no incriminating material was found during the course of the search and seizure operation. It is the say of the ld. counsel that whatever jewellery was found has already explained in the respective hands in their respective Wealth Tax Returns. Therefore, no addition should survive. Per contra, the ld. D.R. strongly supported the findings of the revenue authorities.
9. We have given a thoughtful consideration to the orders of the authorities below. There is no denial that no incriminating material was found at the time of search proceedings. It is also an undisputed fact that prior to the date of search, the assessee had filed Wealth Tax Returns. The only evidence which came to the notice of the search party were the Wealth Tax Returns filed by the assessee. In our considered opinion, the Wealth Tax Returns of the group, by any stretch of imagination, cannot be considered as incriminating material in the hands of the assessees. Except for this, there is nothing on record to suggest any incriminating material/document/evidence.
10. The Hon'ble Bombay High Court in the case of Continental Warehousing Corporation 374 ITR 645 had decided a similar issue in favour of the assessee and against the revenue. The relevant findings read as under:-
" Once it is held that the assessment has attained finality, then the AO while passing the independent assessment order u/s. 153A r.w. s 143(3) of the IT. Act could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s. 153A of the Income Tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the AO while passing order u/s. 153A r.w.s. 143(3) cannot disturb the assessment order."
10.2. The Hon'ble High Court had an occasion to consider the following questions of law:
"1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax?
2. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Sec. 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO.?
IT(SS)A No.25/AHD/2015 and 5 Others 8
3. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in limiting the scope of Sec. 153A only to undisclosed income when as per the section the AO has to assess the total income of the six assessment years?"-
and the Hon'ble High Court of Bombay finally held as under:-
"We, therefore, dismiss the Revenue's appeal and answer the substantial question of law against the Revenue and in favour of assessee."
11. Now, the other issue which has to be decided is whether the time limit of issue of notice u/s. 143(2) if found expired can be construed as completed assessment. To this question, the answer is given by the Co-ordinate Bench of the Tribunal Delhi in the case of PACL India Ltd. in ITA no. 2637/Del/2010 and the same reads as under:-
7.After hearing both the sides on the issue and taking into consideration, records available the following facts emerges as undisputed. The regular return of income was filed on 2.12.2003 and the same was processed u/s 143(1)(a) of the Act. The time period for issuing notice u/s 143(2) of the IT Act for selecting case for security expired on 31.12.2004. The first search was conducted on the premises of assessee on 22.9.2005 and the 2nd search was conducted on 25.8.2006 and in both the searches, no incriminating material, document, unaccounted assets and bogus of accounts were found and seized relating to land development expenses debited in profit and loss account for the year. The both searches on assessee did not yield any incriminating material on the basis of which it can be said that assessee was indulgent in debiting bogus land development expenses in its books of account. There is no reference of any material found in the search for making assessment u/s 153A of the Act. Thus the basic controversy before us remains about the scope of assessment u/s 153(A) when the return has been accepted u/s 143(1)(a) and time period for issuing notice u/s 143(2) has elapsed.
8. In our considered view, there is no dispute with regard to the proposition that A.O has the jurisdiction u/s 153A of the Act to initiate assessment/ reassessment proceedings for all the six years to compute the total income of the assessee including the undisclosed income where action have been taken against the assessee u/s 132(1) of the IT Act. However, the question remains that when return has been processed u/s 143(1)(a) and the time period for issuing notice u/s 143(2) for selecting return for scrutiny has elapsed then what nature of proceedings commenced and concluded u/s 143(1)(a). How these are different from the proceedings commenced and concluded u/s 143(3) of the Act. There is no doubt that once the proceedings u/s 143(3) are completed and concluded then there is nothing which will abate as per provisions of section 153A of the Act.
9. In our considered opinion, section 153A referred to "pending" "assessment"
or "reassessment" and not "assessment orders". The assessment may not be pending even though there is no formal order u/s I43(1)(a). The moment return is filed and acknowledgement or intimation issued, the proceedings initiated by filing the return are closed, unless they are again triggered by issuing notice u/s 143(2) of the IT Act. In the case under consideration, the period for issuing the notice u/s 143(2) elapsed. The process has attained the finality which can only be assailed u/s 148 or 263 of the IT Act. Such IT(SS)A No.25/AHD/2015 and 5 Others 9 proceedings can never be initiated u/s 143(2) when the time period for issuing notice u/s 143(2) has expired. Hon'ble ITAT, Mumbai C Bench in the case of ACIT Vs. Pratibha Industrialist Ltd. reported in 23 ITR Tribunal 766 Mumbai has also held as under :-
"Although by proceedings initiated under section 153A all six years shall become subject matter of assessment under section 153A the Assessing Officer shall have a free-hand, through abatement, only on the proceedings that are pending, to frame the assessments afresh. But in a case where the proceedings have reached finality, assessment under section 153A read with section 143(3) and certain incriminating documents have been found indicating undisclosed income, the addition shall only be restricted to those documents or incriminating material, and clubbed only to the assessment framed originally, as the law does not permit the Assessing Officer to disturb issues already concluded. Where on the date of initiation of search under section 132 or requisition of books, no proceeding is pending, but in the search, material is found indicating incriminating material, the Assessing Officer embarks on a jurisdiction, wherein he has to club the two safe of incomes, the returned income and the unearthed income and arrive at the total income.
12. In the case of Kabul Chawla 380 ITR 573, the Hon'ble High Court has summarized the legal position as under:-
37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(l) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.
ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".
iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post- search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."
v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those IT(SS)A No.25/AHD/2015 and 5 Others 10 pending on the date of search) and the word reassess' to completed assessment proceedings.
vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
13. The aforementioned ratio laid down by the Hon'ble High Court of Delhi has been followed by the Hon'ble High Court of Delhi in the case of Lata Jain in Income Tax Appeal No. 274 & 276 of 2016 wherein the Hon'ble High Court held as under:-
5. The short point involved is whether the ITAT was correct in concluding that there had to be incriminating material recovered during the search qua the Assessee in each of the years for the purposes of framing an assessment under Section 153 A of the Act?
6. It is not in dispute that in respect of the Respondent Assessee for the AYs in question the initial assessment proceedings took place under Section 143(3) of the Act. Thereafter they were sought to be reopened by issuing notice under Section 147 of the Act and re-assessment orders were passed under Section 147 read with Section 143(3) of the Act. During both the aforementioned proceedings the question whether the gold and silver utensils were the capital assets or personal effects of the Assessee was examined. They were held not to be the personal effects.
7. It has been noticed by the ITAT in the impugned order that for the A.Ys in question no incriminating material qua the Assessee was found.
8. In that view of the matter, and in light of the decision of this Court in CIT vs. Kabul Chawla (2016) 380 ITR 573 (Delhi), the Court is of the view that the impugned order of the ITAT suffers from no legal infirmity and no substantial question of law arises for determination.
14. As mentioned elsewhere, there is not a whisper of any incriminating material found at the time of search which could be considered as the basis for framing assessments u/s. 153A of the Act.
15. Drawing support from the judgments mentioned elsewhere, we do not find any legality in the assessment so made by the A.O. We have no hesitation to set aside the findings of the ld. CIT(A) and direct the A.O. to delete the impugned additions. In our considered opinion, the assessments made without any incriminating material is illegal and bad in law and are accordingly quashed.
16. In the result, appeals field by the Assessees are allowed."
IT(SS)A No.25/AHD/2015 and 5 Others 11
8. There is no disparity on facts. The ld.CIT(A) has considered the facts from the case of Shri Ganpatraj Lalchand Chowdhary. We have also considered very facts from that case and variation in the gold jewellery in his case was to the extent of 269.10 grams. Similarly, variation in silver articles was of 13.43 kg. This was excess jewellry found at the time of search than the one disclosed in the wealth-tax returns filed by the assessees viz. Ganapat L. Chowdhary. Similarly, in the case of Smt.Parvati S. Chowdhary variation was of only 41.96 grams of gold jewellery. It suggests that details with regard to possession of jewellery were already disclosed to the department. No incriminating material was found which can justify action under section 153A of the Act. The AO has nothing to expose the assessee on account of jewellery which was already disclosed to the department, and with regard to that no incriminating material was found. This aspect has been considered by us in the order of Shripal Sampatraj Chowdhary extracted (supra). Following order of the Co-ordinate Bench, we allow all these appeals, and direct the AO to delete impugned additions.
9. In the result, all appeals of the Assessees are allowed. Order pronounced in the Court on 1st, February 2018 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER