2017-VIL-1106-ALH-DT

ALLAHABAD HIGH COURT

INCOME TAX APPEAL No. 25 of 2010, INCOME TAX APPEAL No. - 26 of 2010, INCOME TAX APPEAL No. - 27 of 2010

Date: 28.02.2017

COMMISSIONER OF INCOME TAX (CENTRAL)

Vs

SRI RAJ KUMAR JAISWAL AND SMT. REKHA JAISWAL AND SRI RAM DAYAL JAISWAL

For The Appellant : D.D.Chopra,Alok Mathur
For The Respondent : Rakesh Garg, Mudit Agarwal

BENCH

Sudhir Agarwal and Ravindra Nath Mishra-II, JJ.

JUDGMENT

Hon'ble Sudhir Agarwal,J.

Hon'ble Ravindra Nath Mishra-II,J.

1. Heard Sri Alok Mathur, learned counsel for the appellant and Sri Mudit Agarwal for the respondent.

2. All these appeals have been filed under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as the "Act, 1961") arising from a common and composite judgment dated 28.07.2009 passed by Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (herein after referred to as "Tribunal") in three appeals, but all relating to Assessment Year (hereinafter referred to as "A.S.") 2006-07.

3. Appellant has formulated two substantial questions of law, which read as under:

"i. Whether on the facts and circumstances of the case, Income Tax Appellate Tribunal was justified in dismissing appeal of Revenue by ignoring the fact that merely quoting a wrong section will not render assessment order void ab initio and that such mention of a wrong section is a defect curable u/s 292 B of I.T. Act, 1961.

ii. Whether on the facts and circumstances of the case, ITAT was justified in dismissing appeal of Revenue by ignoring relevant provision of Section 153(B) (1) (b) where time limit for completion of search assessment for current year i.e. assessment year relevant for the Previous Year in which search is conducted, is laid down which clearly shows that authority to assess or reassess the total income of current assessment year is also derived from provision of Section 153A of I.T.Act, 1961."

4. The facts in brief are that a search and seizure operation under Section 132 of Act, 1961 was conducted on 10.11.2005 at the premises of Sri Raj Kumar Jaiswal, R.D. Associates, Sri Radhey Shayam Jaiswal, Sri Arun Jaiswal, Sri Ravi Jiaswal and Sri Ram Dayal Jaiswal at 28-Joppling Road,Lucknow. Simultaneously, survey under Section 133A of Act, 1961 was also conducted on 10.11.2005 at the premises of M/s Jaiswal Batteries Services, India Batteries Services and I.B. Services, Lucknow. Sri Raj Kumar Jaiswal is Proprietor of M/s Jaiswal Batteries, who is Assessee in ITA No.25 of 2010.

5. Sri Raj Kumar Jaiswal is son of Sri Ram Dayal Jaiswal and husband of Rekha Jaiswal. Sharvan Kumr Jaiswal, is Proprietor of M/s I.B.Services and real brother of Raj Kumar Jaiswal. Smt. Sangita Jaiswal is wife of Sharavan Kumar Jaiswal. Rekha Jaiswal is Proprietor of R.D. Associates and Ram Dayal Jaiswal is Proprietor of M/S India Batteries Services. Sangita Jaiswal is Proprietor of Brawn Power Technologies.

ITA No. 25 of 2010- Facts taken from leading case

6. Notice dated 17.03.2007 under Section 153A was served upon Assessee, calling for return of income within 30 days. Assessee, Sri Raj Kumar Jaiswal, however, submitted letter dated 18.10.2007 stating that his original return filed on 31.10.2006 may be treated as return in response to notice under Section 153A.

7. Total income in the Assessment Year 2006-07 shown in the return along with computation of income by Assessee is Rs. 4,98,450/- and Agricultural income Rs. 24,500/-. Assessing Officer served a notice under Section 143(2) on 25.10.2007. A questionnaire in the form of notice dated 02.11.2007 under Section 142 (1) was also served upon Assessee on 05.11.2007. Another notice dated 15.11.2007 was issued under Section 142(1) calling for certain further details, which were supplied on 26.11.2007. Thereafter show cause notice was issued on 10.12.2007 as to why additions based on material on record should not be made to the income of Assessee. Thereafter he(Raj Kumar Jaiswal) filed replies dated 04.12.2007, 10.12.2007 and 13.12.2007. Assessment order was passed on 28.12.2007 by Assistant Commissioner of Income-tax, Central Circle, Lucknow (hereinafter referred to as "ACIT") after obtaining approval of Additional Commissioner of Income Tax, Central Range, Lucknow (hereinafter referred to as "Addl. CIT (CR)" ) vide letter dated 28.12.2007 and total income assessed is Rs. 51,65,880/- and agricultural income Rs. 24,500/-.

8. Assessee preferred appeal before Commissioner of Income Tax (hereinafter referred to as "CIT(A)"), which was partly allowed. Addition of Rs. 1,53,171/- on the basis of valuation made by District Valuation Officer (hereinafter referred to as "DVO" ) was deleted. Addition of Rs. 2,17,660/- being difference in cash was also deleted observing that total aggregate amount of cash found during search at different places was at Rs. 8,71,695/-, though as per books of account, aggregate comes to Rs. 8,95,391/-. Since there was a difference of only Rs. 23,696/-, which was a petty amount and it cannot be said that any unaccounted cash was available. In fact, cash as per books of account was more than, found actually during search, hence it was deleted. Then Rs. 3,91,831/- claimed to be paid to labours was also deleted, in the light of capital account of Sri Ram Dayal Jaiswal shown to the authority concerned verifying cash withdrawal of Rs. 3,55,000/-. Forth addition was Rs. 48,502/-, which was also found incorrect and CIT (A) did not approve ACIT's findings that said payments were not verified. It held that the expenditure was recorded in the books of accounts and hence addition was bad. However, addition of Rs. 6832/- was confirmed. Then comes the major amount of Rs. 39,21,435/-, which was added on account of un-explained stock. This addition was also deleted by CIT (A) recording following observations:

"15.3 I have carefully considered the material available on record. Mainly, it has been submitted that-

(i) Total stock shown in the books of accounts of the family concerns are more than the stock found during the search & survey operation from the premises of family concerns.

The submission of the appellant has not been controverted by the Assessing Officer in her remand report.

(ii) It is the practice that the stock belonging to some of the family concerns were kept in the premises of other concerns.

This fact was clearly stated in the statement of the accountant of the appellant Shri Sumit Kumar Agarwal and the appellant recorded u/s. 132(4) during the course of search on 10.11.2005. These statements are filed at page no. 89 to 101 of the paper book.

(iii) This is common accounting practice that stock records are prepared with the help of challan received with the material and in the financial books, entries are made with the help of bills/invoices. Thus, it is not necessary that entry is made in the both the records simultaneously.

In view of the above, particularly in view of the fact that in the statement recorded at the time of the search it was clearly stated that stock belonging to family concerns, who live together and share common kitchen, were kept in the premises of other concerns, and the value of stock in the books of the family concerns is more than that of found during the search/survey action, the addition made by the Assessing Officer is directed to be deleted."

9. CIT(A) also answered a more formidable question that the search having been conducted on 10.11.2005, assessment for A.Y. 2006-07 could not have been made under Section 153A. CIT (A) considered Section 153A in the light of Central Board of Direct Taxes Circular no. 07/03 dated 05th September, 2003, observing that notice under Section 153A is to be issued to Assessee to furnish return of income in respect to each A.Y. falling within 06 Assessment Years referred to in Clause (b). Section 153A (1) (b) of Act, 1961 says that Assessing Officer would assess or re-assess total income of 06 Assessment Years immediately preceding the A.Y., relevant to previous year in which such search is conducted or requisition is made. Therefore, assessment under Section 153A can be made only for 06 Assessment Years immediately preceding the A. Y. relevant to searched year. It held that order passed for A.Y. 2006-07 relevant to the previous year in which search is conducted is liable to be quashed since Assessing Officer has no jurisdiction to pass order under Section 153A of Act,1961.

10. Aggrieved by order passed by CIT (A), Revenue filed three appeals before Tribunal i.e. ITA no. 238/Luc/2009, ITA no. 243/Luc/2009 and 234/Luc/2009, which have been decided by impugned judgment.

11. The basic issue raised before Tribunal was jurisdiction of ACIT to make assessment order with respect to A.Y. 2006-07, whether impermissible under Section 153A or not. Tribunal relying on its earlier decision in ITA no. 232/Luc/2009 for the A.Y. 2006-07 decided on 29.05.2009 upheld the view taken by CIT (A) and dismissed Revenue's appeal.

12. Section 153A, as it was applicable when search was carried out on 10.11.2005, reads as under:

"153A. Assessment in case of search or requisition.- (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-

(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;

(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made :

Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:

Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate.

(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner:

Provided that such revival shall cease to have effect, if such order of annulment is set aside.

Explanation.--For the removal of doubts, it is hereby declared that,--

(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section;

(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year."

(emphasis added)

13. A bare reading of Section 153A shows that search having been conducted on 10.11.2005, financial year is 2005-06 and A.Y. 2006-07. As per Section 153A (1) (b), assessment or re-assessment could have been done in respect to six Assessment Years immediately preceding the assessment year relevant to the preceding year in which such search is conducted or requisition is made. It brings in period from Assessment Years 2000-01 to 2005-06. Earlier, special procedure for assessment of such cases was given in Chapter XIV-B. It is deleted by virtue of Section 158 (BI) inserted by Finance Act, 2003, w.e.f. 01.06.2003. The provisions of Chapter XIV-B have been made inapplicable where search is initiated under Section 132 or books of account, document or any assets are requisitioned under Section 132A after 31.05.2003. Therein concept of ''block assessment' as defined in Section 158B, included the period up to the date of commencement of search or date of requisition in the previous year, the said search was conducted or requisitioned or made, but this is missing in Section 153A. Thus assessment under Section 153A for A.Y. 2006-07 is not sustainable.

14. Learned counsel for appellant is right in saying that mere mention of wrong provision will not take away power, if otherwise vested in authority. In Collector of Central Excise Versus Pradyumna Steel Limited, (1996) 82 ELT 441 (SC) it was said :

"It is settled that mere mention of a wrong provision of law when the power exercised is available even though under a different provision, is by itself not sufficient to invalidate the exercise of that power".

15. This view is reiterated by this Court in Mehboob Versus Zahira and others 2015(110) ALR 437; Jagnnath Versus State of U.P. and others 2011 (6) ADJ 89; Mahendra Yadav Versus Om Prakash and another 2006 (65) ALR 560; Commissioner of Income Tax Versus Kay Kay Family Trust (2005) 278 ITR 620 (Alld); Commissioner of Income Tax Versus Asha Family Trust (2005) 148 Taxman 578 (All); Eric John Singh Versus The District Magistrate and others 1989 AWC 210 (All); Ram Chandra Misra Versus State of U.P. 1982 (8) ACR 419 (All) and Govind Dass and others Versus Prescribed Authority etc and Another 1978 (4) ALR 753.

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 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 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.

20. Appeals lack merit.

21. Dismissed.

 

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