TMI Blog2023 (11) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... . sec. 153C of the Act is bad in law and deserves to be annulled. The assessee accepted the assessment framed under section 153C read with section 143(3) of the Act despite the fact that the procedures as specified under section 153D of the Act were not complied with by the AO - As decided in M/s Atlanta Electricals Pvt. Ltd. [ 2019 (9) TMI 1235 - ITAT AHMEDABAD] wherein as held in such like non-descript and innocuous situation, where the quantum assessment itself is susceptible, the consequences in form of penalty under s.271(1)(c) of the Act would not, in our view, be justified - Decided in favour of assessee. - Shri Waseem Ahmed, Accountant Member And Ms Madhumita Roy, Judicial Member For the Assessee : Shri P.C Yadav, A.R For the Revenue : Shri Shramdeep Sinha, Sr.D.R ORDER PER BENCH: The captioned appeals have been filed at the instance of the Assessee against the separate orders of the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, (in short Ld. CIT(A) ) arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act 1961 (here-in-after referred to as the Act ) relevant to the Assessment Years 2011-12 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide delay and hence the same may kindly be condoned. 8. It is also settled position of law that limitation of additional ground would relate backs to original grounds as held in the following cases. a. Shilpa Associates VS ITO -263 ITR 0317(Raj):- b. Madad Lal Ansari Vs DCIT-272 ITR 560(Raj)- 9. The appellant shall be highly grateful if the aforesaid grounds are permitted to be urged which had not been raised due to inadequate information, which was subsequently obtained under RTI. 4. The learned AR for the assessee, at the outset, submitted that the additional ground raised by the assessee vide letter dated 26-10-2020 goes to the root of the matter and all the facts related to the additional ground are available on the record. Therefore, the same needs to be admitted in view of the judgment of the Hon ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383 where it was held as under: Under section 254, the Tribunal may after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is, thus, expressed in the widest possible terms. The purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm, is engaged in the business of real estate. A search under section 132 of the Act was carried out at the office premises in the case of M/s Reva Infrastructure Incorporation dated 16 October 2014. As a result of the search, various documents of an incriminating nature were seized which belonged to the search person as well as the assessee. Accordingly, the proceedings under section 153C of the Act were initiated in the name of the assessee. The AO during the proceeding under section 153C of the Act found that there was difference in profit and capital balance reported in books of account maintained for income tax return purpose viz-a-viz books of account seized during the search. On question by the AO, the assessee has accepted the differential amount of ₹ 2,02,459/- as income. The AO accordingly made an addition of ₹ 2,02,459/- to the total income of the assessee in the assessment framed under section 153C read with section 143(3) of the Act vide order dated 27 December 2016. The AO in the assessment order initiated the penalty under section 271(1)(c) of the Act on the charge of concealment of income which came to be confirmed by the AO in the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first stage, are jointly acquainted with the appraisal report / scized material as well as the issues involved in a particular case based on which additions are going to be made in assessment order, As regards maintenance of note sheet/ documentary evidence for discussions between range head and AO, it is submitted that the same is not required by the CBDT instructions as mentioned above. Also, given the continuous and regular nature of deliberations and discussion between the range head and overline AO it is not feasible to maintain such records and accordingly such documents are not maintained as a general practice. 3.4 In view of the above, without going into the particular of the instant case it is submitted that range head is generally well-aware about the facts / issues of the search assessment cases. Thus, the approval granted by him u / s 153D of the Act, in short time span, with respect to search assessment can't be regarded as mechanical' and without due application of mind. 4. As far as note sheets/communications/ documents maintained during assessment proceeding of the above assessee, it is to mention that the above case has been decentralized from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 153A. Section 153B talks about time limit for completion of assessment under section 153A, whereas section 153D talks about necessity of prior approval for framing assessment in case of search or requisition. Thus the provisions laid down under section 153D are very much applicable in case of assessment of income of any other person (i.e., the person other than the person searched). 13.2 Admittedly, the assessment under section 153C read with section 143(3) of the Act has been framed by the ACIT after obtaining the approval from the Joint Commissioner as provided under section 153D of the Act. This fact can be verified from the para 11 of order of the AO which is reproduced as under: 11. This order is passed after obtaining approval of the Joint Commissioner of Income tax, Central Range, Rajkot, which was conveyed, vide his approval letter no. JCIT/CR.RJT/Asstt Apprl./ 2016-17/60 dated 27/12/2016. 13.3 However, regarding the approval granted under section 153D of the Act we note certain facts which are detailed as under: 14.3 To decide the issue on hand, it is important to note certain facts which are listed below: I. The ACIT has forwarded the draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 3. Applicability- These amendments will take effect from the 1st day of June, 2007. 13.7 The Legislative intent is clear in as much as prior to the insertion of Sec. 153D, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their mind on the materials based on which the officer is making the assessment and after due application of mind and based on seized materials, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An argument has been advanced to the effect that by making such a nomination, approval will be deemed to have been granted. The answer to the said contention must be rendered in the negative. The Chief Commissioner of Income-tax before granting such approval must have before him the materials on the basis whereof an opinion had been formed. A prior approval can be granted only when the materials for appointment of the extraordinary procedure is required to be taken by the Assessing Officer. The Assessing Officer, therefore, was required to place all materials before the Commissioner of Incometax or the Chief Commissioner of Income-tax, as the case may be, to show that he intends to take recourse to the said provision having regard to the nature and complexity of the accounts of the assessee and the interests of the Revenue. No such materials had been placed before the Chief Commissioner of Income-tax. 13.12 Another section relevant to the facts in issue is Sec. 158BG which read as under: 158BG. The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner in granting previous approval requires an enquiry and judicial approach on the entire facts, materials and evidence. It has been further observed that in law where any act or function requires application of mind and judicial discretion or approach by any authority, it partakes and assumes the character and status of a judicial or at least quasi-judicial act, particularly because their act, function, is likely to affect the rights of affected persons. 13.15 Coming to the facts of the case on hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, we find that the ACIT has granted approval under section 153D of the Act in a mechanical manner and without the application of mind and without considering the materials on record. Furthermore, the approval was granted on the very same day. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the JCIT Commissioner before granting the approval. Therefore, we have no hesitation holding that the assessment order made u/s 143(3) of the Act r.w. sec. 153C of the Act is bad in law and deserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Delhi High Court that Section 153C of the Act cannot be invoked unless the AO of the searched person is satisfied for cogent reasons that seized documents do not belong to the searched person. The distinction between expression belongs to and relates to or refers to must be borne in mind by AO. It was observed by the Hon ble Court that AO should not confuse the expression belongs to with expression relates to or refers to . The Hon'ble Court went on to explain the purport of the expression by giving illustration of a registered sale deed which essentially implied something more than a casual connection. In the wake of the aforesaid judgment, merely because a document/loose paper was found in the possession of a searched person showing reference to certain entries relatable to a third person, the said documents/loose paper by itself would not tantamount to be belonging to the third person. Similar view has been expressed in the case of Renu Constructions Pvt. Ltd. (Delhi) 399 ITR 262 (Del.) and Kamleshbhai Dharamshibhai Patel 263 CTR 362 (Guj). The co-ordinate bench Tribunal in Shailesh S Patel vs. ITO (2018) 97 taxmann.com 570 (Ahmedabad Trib.) has also re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
