Income Tax Appellate Tribunal - Chandigarh
Sh. Mahesh Jain Through Legal Heir Sh. ... vs Acit, Ludhiana on 11 December, 2017
1
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B', CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER &
Dr. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No. 830/Chd/2017
Assessment Year: 2007-08
Sh. Mahesh Jain, through Vs. The ACIT,
Legal Heir Sh. Yashinder Jain, Central Circle-1,
Patel Street, Club Chowk, Ludhiana
Malerkotla
PAN No.AAPPJ9977Q
(Appellant) (Respondent)
Appellant By : Sh. Ashwani Kumar
Respondent By : Sh. Ravi Sarangal
Date of hearing : 21.09.2017
Date of Pronouncement : 11.12.2017
ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)], Bhatinda dated 07.03.2017.
2. The assessee in this appeal has agitated the action of the CIT(A) in upholding the action of the Assessing officer in making addition of Rs. 12,98,484/-, out of which an addition of Rs. 9,41,584/ was made on account of Short Term Capital Gain relating to the sale consideration over and above the sale consideration of Rs. 4 lacs, as shown by the assessee in 2 his return of income of the house located at Oswal Street, Ludhiana and further addition of Rs. 3,56,900/- was made on account of excess jeweller y found during search action.
3. The brief facts of the case are that a search and seizure operation under the provisions of section 132 of the Income-tax Act, 1961 (in short 'the Act') was conducted on the premises of the assessee on 12.10.2006. Pursuant to the aforesaid search and seizure action, notice u/s 153A of the Act was issued to the assessee for the six assessment years immediatel y preceding the relevant assessment year 2007-08. In response thereto, the assessee filed return of assessment for the assessment years 2001-02 to 2006-07. The assessment proceedings for the assessment year 2007-08 were also framed by the Assessing officer u/s 153A of the Act. The Assessing officer assessed the income of the assessee at Rs. 15,06,160/- as against declared income of Rs. 2,07,676/-, thus, the addition of Rs. 9,41,584/- was made by the Assessing officer on account of Short Term Capital Gain arising out of sale of property located at Oswal Street, Ludhiana. The second addition was made by the Assessing officer on account of excess jewellery found during the course of search action. The assessee unsuccessfully contested the above said additions before the CIT(A).
4. Before us, the assessee apart from agitating the additions on merits, has taken the additional legal ground, which reads as under:-
"On the facts and circumstances of the case, the impugned assessment framed u/s 153A deserves to be quashed as assessment for assessment year 2007-08 framed u/s 153A was not valid and void abinitio."3
The Ld. AR has contended that the assessment in this case was framed u/s 153A of the Act whereas as per the clause (b) of sub section (1) to section 153A, the Assessing officer would assess or re-assess total income of 06 assessment years immediately preceding the assessment year, relevant to previous year in which such search is conducted or requisition is made. He has furthered contended that the search in this case was conducted on 12.10.2006 and, therefore, the assessment u/s 153A of the Act could have been made only for 06 assessment year immediately preceding the assessment year relevant to searched year i.e. for the assessment years 2001-02 to 2006-07 only and not for the assessment year under consideration i.e. assessment year 2007-08. He, therefore, has contended that the assessment framed u/s 153A for assessment year 2007-08 was not valid and was void abinitio. He in this respect has relied upon the decision of the Coordinate Chandigarh Bench of the Tribunal in the case of 'Rajiv Kumar Vs. ACIT' (2017) 152 DTR (Chd) (Trib.) 233 and of the Hon'ble Allahabad High Court, Lucknow Bench in the case of 'CIT (Central) Vs. Sri Raj Kumar Jaiswal, Smt. Rekha Jaiswal and Sri Ram Dayal Jaiswal, Income Tax Appeal Nos. 25 to 27 of 2010 decided vide order dated 28.2.2017.
5. On the other hand, Ld. DR has pointed out that mentioning of section 153A in the assessment order was just a clerical mistake and that mere mentioning wrong section will not invalidate the assessment proceedings carried by the Assessing officer in the case of the assessee.
6. We have considered the rival contentions. We find that the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in the case of 'Rajiv Kumar Vs. ACIT' 4 and of the Hon'ble Allahabad High Court, Lucknow Bench in the case of 'CIT (Central) Vs. Raj Kumar Jaiswal and others' (supra) in ITA Nos. 25, 26, & 27 of 2010. The Hon'ble Allahabad High Court (supra) while deciding the identical issue on framing of assessment u/s 153A of the Act for the assessment year relevant to the search year has observed that when a power is exercised under a particular provision and in the manner, it is so contemplated in such substantive provision, then this defence is not open that it may be treated as a mere mistake of wrong provision of statute. The relevant part of the observations made by the Hon'ble Allahabad High Court is reproduced as under:-
"16. However the above proposition has no application for the reason, when a power is exercised under a particular provision and in the manner, it is so contemplated in such substantive provision, then this defence is not open that it may be treated as a mere mistake of wrong provision of the statute. Notice was specifically served under Section 153A. Assessment order clearly says that it is being passed under Section 153A. Moreover, jurisdiction for making assessment under Section 153A read with Section 153C apparently is quite different than requirement of notice under Section 143(2) of Act, 1961 and assessment made under Section 143(3).
17. We find that this aspect has also been discussed by Tribunal and it has observed as under:-
"16................The provisions of section 153A read with section 153C empower the AO to proceed with the assessment in search cases mentioned therein meaning thereby that the AO gets jurisdiction to proceed for 5 making assessment in search cases covered by these provisions, whereas provisions of section 143(2) subject to limitation provided under proviso to the sub-section require the AO to give the assessee an opportunity to support its return, before making of assessment under section 143(3) / 144 as the case may be. In other words jurisdiction to make assessment under section 143(3) is gathered by the AO just after furnishing the return of income by the assessee under section 139 or on issuance and service of notice under section 142(1) requiring the assessee to furnish the return of income or on notice issued under section 148 of the Act, meaning thereby that provisions of section 143(2) of the Act did not give jurisdiction to make an assessment under section 143(3) but make it obligatory to comply with these provisions before making assessment under section 143(3) or section 144 as the case may be. In view of this difference between the purpose and the result of taking recourse to provisions of section 153A read with section 153C on one hand and issuance of notice under section 143(2) of the Act on the other hand, we are unable to accept the plea advanced by the Ld. D.R.
17. Coming to the merits of the case, we, after having considered the provisions of section 153A, 153B and 153C, are of the opinion that though the provisions 153B(1) (b) provide the limitation for completing the assessment for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A of the Act, but there being no provision as to under which provision of law, the assessee can be called upon to furnish its return for that assessment year only under the provisions of section 139 and it is only in case of failure of the assessee to furnish the return under section 139 that the AO can call for return of income for the previous year either under section 142(1) or under section 147 of the Act, as the case may be, and if it is so, then the assessment for assessment year relevant to that previous year can be made only under section 143(1) or 143(3) or 144 or 147 of the Act but cannot be made under section 153A of the Act.
18. In view of the above discussion and the reasons stated by the CIT(A), we are of the opinion that the CIT(A) was quite justified in holding that for the assessment year under consideration, the AO had no 6 jurisdiction to pass an order under section 153A of the Act. The order of the CIT (A) is, therefore, upheld."
18. We find ourselves in agreement with the view taken by Tribunal on this aspect, in absence of any otherwise sustainable argument advanced on behalf of appellant or binding authority taking otherwise view.
19. Question no.1 is therefore answered by holding that mere mention of a wrong provision will not deny jurisdiction to the authority, if it otherwise has, but this aspect has no application to the present case. Question no.2 is answered against appellant."
7. In view of the above, since the legal issue raised in this appeal is squarely covered by the above referred to decisions, hence, respectfully following the same, this issue is decided in favour of the assessee. The assessment framed for the year under consideration is accordingly held to be void and the consequent additions made thereto are accordingly ordered to be deleted.
8. In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the Open Court on 11.12.2017 Sd/- Sd/-
(Dr. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 11.12.2017 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR