Income Tax Appellate Tribunal - Kolkata
Ramesh Kumar Agarwal, Kolkata vs Dcit, Cir-36, Kolkata, Kolkata on 31 July, 2019
आयकर अपील य अधीकरण, यायपीठ - "A" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "A" KOLKATA
Before Shri S.S.Godara, Judicial Member and
Dr. A.L. Saini, Accountant Member
IT(SS)A No.68-70/Kol/2015
Assessment Years :2003-04 to 2005-06
Ramesh Kumar Agarwal V/s. DCIT, Circle-36, Ayakar
19, Synagogue Street, Bhawan, Poorva, 110,
Kolkata-700001 Shantipally, Kolkata-107
[P AN No. ACXP A 9629 C]
अपीलाथ /Appellant .. यथ /Respondent
आवेदक क ओर से/By Assessee Shri Ankit Jalan, AR
राज व क ओर से/By Respondent Shri Abani Kanta Nayak CIT-DR
सन
ु वाई क तार ख/Date of Hearing 23-07-2019
घोषणा क तार ख/Date of Pronouncement 31-07-2019
आदे श /O R D E R
PER S.S.Godara, Judicial Member:-
These three assessee's appeal(s) for assessment year(s) 2003-04 to 2005-06 arise against the Commissioner of Income Tax (Appeals)-10 Kolkata's common order dated 28.01.2015 passed in case No.s 02,363 & 364/CIT(A)-10/Cir-36/2008-09/Kol affirming identical Assessing Officer's action adding the alleged undisclosed income amounting to ₹28,74,940, ₹10,53,310/- & ₹3,44,450/-; respectively in proceedings u/s 143(3)/153C r.w.s. 264 of the Income Tax Act, 1961; in short 'the Act'.
Heard both the learned representatives. Case file(s) perused.
2. It emerges at the outset that the assessee has raised on identical additional ground in all these cases seeking to challenge validity of the impugned proceedings u/s. 153C of the Act. Learned CIT-DR at this stage vehemently objects admission of assessee's additional ground for the reason IT(SS)A No.68-70/Kol/2015 A.Ys. 03-04 to 05-06 Ramesh Kr. Agarwal Vs. DCIT, Ciri-36,Kol Page 2 that although the former two assessment year(s) 2003-04 and 2003-04 involve sec. 153C proceedings the same is not the case so far as the last assessment year 2005-06 is concerned as the assessment order stated to have been passed u/s. 143(3) r.w.s. 264 of the Act only.
3. We find no merit in Revenue's instant objection as the case record(s) reveal that the instant lis is an offshoot of CIT's sec. 264 order passed in assessee's favour dated 28.03.2008 setting aside the DCIT, Central Circle-22 Mumbai former round of assessment(s) initiated sec. 153C of the Act. The Revenue's instant objection is declined therefore.
4. Next comes an equally important aspect of the tribunal's jurisdiction to entertain such a additional legal plea going to root of the matter. This tribunal's Special Bench decision in All Cargo Global Logistics vs. DCIT (2012) 137 ITD 24 (Mum); after taking into consideration hon'ble apex court's landmark judgment in NTPC vs. CIT (1998) 229 ITR 383 (SC) has settled the law that we can very well allow an assessee's legal ground to be agitated in second appellate proceedings in order to determine the correct tax liability arising from the assessment in question. We therefore accept the assessee's instant legal plea challenging validity of proceedings.
5. Mr. Nayak at this stage made his strongest efforts to contend that the assessee is estopped from raising the instant legal plea regarding correctness of initiation of sec. 153C proceedings as the impugned assessment(s) in Kolkata have been framed in furtherance to the CIT's revision order passed in sec. 264 proceedings thereby to reversing earlier assessment in Mumbai. His case therefore is that that the assessee's instant legal grievance deserves to be declined since he had been shifting the goal post by approbate and reprobate. He also quotes section 264(4) of the Act is support that the appellant had withdrawn earlier appeals filed before the CIT(A) in first round of assessments. We see no reason to accept the Revenue's foregoing plea as an assessee is very well entitled to raise all factual and legal pleas before the tribunal. We are of the view that in case the Revenue's instant argument is accepted, it is bound to curtail tribunal's jurisdiction to decide all issues in a lis IT(SS)A No.68-70/Kol/2015 A.Ys. 03-04 to 05-06 Ramesh Kr. Agarwal Vs. DCIT, Ciri-36,Kol Page 3 in second appellate proceedings. We are of the opinion that assessee has never given up his right to challenge validity of the impugned assessment(s). We also observe that estoppels principle does not apply in income tax proceedings against the statute in Revenue's favour. More so when it is an instance of validity of the proceedings initiated under the Act.
6. We now advert to some basic relevant facts. The department had carried out the impugned search dated 24.11.2004 in case of M/s Pioneer Embroideries Ltd. at Mumbai followed by a survey at assessee's premises. The CIT Kolkata therefore passed his sec. 127 order transferring assessee's case from Kolkata to Mumbai. This followed the DCIT, CC-22 Mumbai's initiation of sec. 153C proceedings against the taxpayer who did not submit any return. He rather preferred civil writ petition No. 1657 of 2002 before hon'ble jurisdictional high court. The above stated Assessing Officer in the meantime framed his first round of sec. 153C assessment(s) on 26.12.2006. Case file(s) suggest that assessee's foregoing writ petition came up for hearing on 22.01.2007. Their lordship quashed the CIT's sec. 127 foregoing order for the reason that the department had not afforded any opportunity of hearing to the taxpayer.
7. We find that the assessee then filed his first round appellate proceedings before CIT(A) and also initiated sec. 264 proceedings before the CIT. He chose to withdraw the former lis. It is in this backdrop of facts that CIT Kolkata's order dated 20.03.2008 set aside all the former assessment(s) in view of hon'ble jurisdictional high court's order and directed the Assessing Officer to frame fresh ones. The Assessing Officer thereafter finalized all these assessment(s) on 31.12.2008 making the impugned identical unexplained income addition (supra) which stand affirmed in the lower appellate proceedings.
8. The assessee's only case before us is that sec. 153 envisages twin rounds of assessment(s) i.e., the Assessing Officer of the searched assessee has to satisfy himself that any money, bullion or jewellery or the specified IT(SS)A No.68-70/Kol/2015 A.Ys. 03-04 to 05-06 Ramesh Kr. Agarwal Vs. DCIT, Ciri-36,Kol Page 4 category of assets provided in the statutory provision does not belong to said assessee but to a third person. He then supposed to transfer foregoing relevant material to the Assessing Officer having jurisdiction over such third person who would satisfy himself that the above material belongs to this latter assessee. We afford sufficient opportunity to Mr. Nayak to clear the air about this twin satisfaction aspect. He is very very fair in informing us at the bar that the Assessing Officer of the searched assessee had nowhere recorded any such satisfaction. He emphasizes that the legal requirement stands applied in the instant case since the Assessing Officer in this assessee's case has duly recorded the corresponding satisfaction. We find no merit in Revenue's instant arguments. We make it clear that CBDT's Circular No. 24/2015 dated 31.12.2015 issue u/s119 of the Act has makes it clear that the above stated twin round of satisfaction is mandatory condition whilst taking recourse to sec. 158BD/153C proceedings even if the Assessing Officer happens to be the same reads as under:-
"CIRCULAR NO.24/2015F.No-279/Misc./140/2015/ITJ Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 31st December, 2015 Subject: Recording of satisfaction note under section 158BD/153C of the Act-reg.- The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation.
2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014 (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s.158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages:
(a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; or (b) in the course for the assessment proceedings undrer section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person."
3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s. 153C of the IT Act, for the purpose of assessment of income of other than the searched person. This view has been accepted by CBDT.
IT(SS)A No.68-70/Kol/2015 A.Ys. 03-04 to 05-06 Ramesh Kr. Agarwal Vs. DCIT, Ciri-36,Kol Page 5
4. The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts.
5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction not endure section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. DCIT (OSD) (ITJ), CBDT, New Delhi."
We therefore conclude in these peculiar facts and circumstances that all the impugned assessments u/s 153C initiated without recording twin rounds of satisfaction in case of the searched and the third party assessees are not liable to be sustained. The same stand quashed. The assessee's other grounds on merits are rendered infructuous.
8. These three assessee's appeals are allowed in above terms.
Order pronounced in the open court 31/07/2019
Sd/- Sd/-
(लेखा सद य) ( या(यक सद य)
( A.L.Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Kolkata,
*Dkp
)दनांकः- 31/07/2019 कोलकाता ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. आवेदक/Assessee-Ramesh Kumar Agarwal, 19, Synagogue Street, Kolkata-001
2. राज व/Revenue-DCIT, Circle-36, Ayakar Bhawan, Poorva, 110, Shantipally, Kol-107
3. संब4ं धत आयकर आय5 ु त / Concerned CIT Kolkata
4. आयकर आय5 ु त- अपील / CIT (A) Kolkata
5. 8वभागीय (त(न4ध, आयकर अपील य अ4धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड= फाइल / Guard file.
By order/आदे श से, /True Copy/ सहायक पंजीकार आयकर अपील य अ4धकरण, कोलकाता ।