Income Tax Appellate Tribunal - Kolkata
M/S. Sethia Fiscal Pvt. Ltd., , Kolkata vs Acit, Central Circle - 3(3), Kolkata , ... on 26 March, 2018
1
SA Nos. 38&39/Kol/2018
Sethia Fiscal Pvt. Ltd., AY- 2009-10 & 2010-11
आयकर अपील
य अधीकरण, यायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
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[Before Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
SA Nos.38 & 39/Kol/2018
In I.T(SS).A. Nos.1&2/Kol/2018
Assessment Years: 2009-10 & 2010-11
Sethia Fiscal Pvt. Limited Vs. Assistant Commissioner of Income-tax,
(PAN: AADCS6654A) Central Circle-3(3), Kolkata.
Applicant Respondent
Date of Hearing 26.03.2018
Date of Pronouncement 26.03.2018
For the Applicant Shri S. M. Surana, Advocate
For the Respondent Shri Saurabh Kumar, Addl. CIT, Sr. DR
ORDER
Per Shri A.T.Varkey, JM
These are stay applications preferred by the assessee against the order of Ld. CIT(A)- 21, Kolkata dated 18.01.2018 for AYs 2009-10 and 2010-11 praying for stay of outstanding demand of tax. This is the second round. In the first round, stay was not granted however, early hearing for 27.03.2018 was granted. Meanwhile on 20.03.2018 again the AO has threatened coercive action against assessee. So, these Stay applications are filed.
2. At the outset itself, the Ld. counsel appearing for the assessee company pointed out that the assessee was proceeded against by the AO under section 153C proceedings and has drawn our attention to the Hon'ble Calcutta High Court's order in ITA No. 661 of 2008 CIT Vs. Veerprabhu Marketing Ltd. wherein the Hon'ble jurisdictional High court has held that when section 153C assessments are framed against the assessee, there should be incriminating material qua the year of assessment. According to Ld. Counsel, there is no such incriminating material mentioned by the AO/Ld. CIT(A) against the assessee company to make the impugned additions. And it has also been brought to our notice that the assessment in respect to the searched person also has been answered in favour of the 2 SA Nos. 38&39/Kol/2018 Sethia Fiscal Pvt. Ltd., AY- 2009-10 & 2010-11 assessee by taking note of the fact that there was no incriminating material against the searched person in this case (M/s. Sethia Oil Industries Ltd.). The Ld. Counsel also drew our attention to the fact that the satisfaction which is mandatory for assuming jurisdiction u/s. 153C of the Income-tax Act, 1961 (hereinafter referred to as the "Act") by the AO has also not been recorded in accordance to law. According to Ld. Counsel, to invoke section 153C proceedings against a third party like assessee in the instant case, the AO has to record two satisfaction. First in the file of searched party that materials belonging to third party like assessee has been found and therefore, it has to be segregated and satisfaction in searched person's file should be first recorded. Thereafter the materials unearthed belonging to the assessee must be forwarded to the AO of the third party like assessee in this case and the AO of the assessee has to record is satisfaction for proceeding against the assessee, which is sine qua non for assuming jurisdiction which is absent in this case and, therefore, according to the Ld. Counsel, there is a prima facie case made out and balance of convenience is also in favour of assessee and if stay is not granted irreparable damages will be caused to the assessee. The Ld. DR, on the other hand, vehemently opposes this grant of blanket stay in favour of the assessee. According to Ld. DR the satisfaction of the AO to be recorded as per law can be appreciated only on perusal of the assessment records. The Ld. DR pointed out that the Ld. CIT(A) has not accepted the very same plea of the assessee in respect to the legal issue that has been raised. So, according to Ld. DR, prima facie case has not been made out in respect to the legal issue. However, he has not been able to show from the AO's order which may throw light to any incriminating material which was unearthed by the AO to make the addition against the assessee in this case. However, he does not want us to pass any interim stay in favour of the assessee and he pressed for at least 50% of the amount to be remitted by the assessee.
3. We have heard rival submissions and gone through the facts and circumstances of the case. We take note that the total tax demand in this case is approximately Rs. 80 lacs for both the years and assessee has remitted Rs. 15 lacs which comes approximately to 18%. From a reading of the assessment order prima facie, we do not see any incriminating material being referred to by the AO to saddle any addition in these assessment years. The Hon'ble jurisdictional High Court in Veeraprabhu Marketing Ltd. (supra) has settled the position of law in respect to assessment framed u/s. 153C proceeding wherein the Hon'ble 3 SA Nos. 38&39/Kol/2018 Sethia Fiscal Pvt. Ltd., AY- 2009-10 & 2010-11 High Court has taken note of the case of CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del) and has concurred with the view given by the Hon'ble Delhi High Court and upheld the order of the Tribunal that no addition can be made without incriminating material unearthed during search qua the assessment year under consideration. The assessee has been able to show prima facie case and taking note of the Hon'ble jurisdictional High Court in Veeraprabhu Marketing Ltd. (supra) balance of convenience is in favour of assessee, therefore, we are inclined to grant stay provided the assessee is able to deposit Rs. 5 lacs before 31st March, 2018 and if the sum is paid then no coercive action shall be taken against the assessee. Therefore, we grant stay in favour of the assessee for a period of six months or till the disposal of the appeals, whichever is earlier. In case, the assessee defaults in making the payment the stay shall stand vacated. The assessee shall not seek any adjournment without just cause.
4. In the result, both the Stay Applications of assessee are allowed in terms of above.
Order is pronounced in the open court.
Sd/- Sd/-
(Dr. A. L. Saini) (Aby. T. Varkey)
Accountant Member Judicial Member
Dated : 23rd March, 2018
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1. Appellant - Sethia fiscal Pvt. Ltd., 143, Cotton Street, Kolkata-700 007..
2 Respondent - ACIT, Central Circle-3(3), Kolkata.
3. The CIT(A) Kolkata
4. CIT Kolkata
5. DR, ITAT, Kolkata.
/True Copy, By order,
Sr. Pvt. Secretary