Vildirect: IncomeTax-caselaws-2014-VIL-899-ITAT-RPR

2014-VIL-899-ITAT-RPR

Income Tax Appellate Tribunal RAIPUR

ITA Nos. 87, 88, 89, 90 and 91/Blpr/2009 and IT(SS)A No. 11/Nag/2009 (Assessment Year: 2000-2001)

Date: 22.12.2014

RAWAL DAS JASWANI AND ORS.

ASSISTANT COMMISSIONER OF INCOME TAX

For the Appellant: P.C. Jain Maloo
For the Respondent: S.K. Meena

BENCH

H.L. Karwa, President and Rajendra, Member (A)

JUDGMENT

H.L. Karwa, President

1. These six appeals by the assessees belonging to Jaswani group of cases were heard together and are being disposed of by this common order for the sake of convenience. Firstly, we will lake up ITA No. 87/Blpr/2009 relating to asst. yr. 2000-01.

2. This appeal is directed against the order of learned CIT(A), Raipur dt. 15th May, 2009 relating to asst. yr. 2000-2001. The original ground raised by the assessee reads as under :

"On the facts and in the circumstances of the case the learned CIT(A) has erred in sustaining the addition made by the AO on account of gift received at Rs. 1,80,000 as unexplained gift under s. 69A of IT Act, 1961. The addition is unjustified, unwarranted and uncalled for."

3. The assessee vide his application dt. 14th Sept., 2009 has raised additional ground of appeal, which reads as under :

"On the facts and in the circumstances of the case, the reassessment proceedings under s. 153A of the IT Act, 1961 should confine to the material in possession of the AO detected during the course of search and entire assessment is not open before him. As such, the addition made under s. 69A of IT Act, 1961 and sustained by the CIT(A) at Rs. 1,80,000 is without there being any material found in course of search and is beyond the scope of reassessment proceedings under s. 153A. The addition made by the AO and sustained by the learned CIT(A) deserves to he cancelled."

4. As regards the admission of additional ground of appeal, we are of the view that this ground of appeal is purely a legal issue and the relevant facts are already on record and, therefore, we admit this ground of appeal, keeping in view the decision of the Hon'ble Supreme Court in the case of National Thermal Power Ltd. v. CIT: (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC).

5. Briefly stated, the facts of the case are that the assessee is an individual, earning interest income and income from hiring charges. A search and seizure operation under s. 132 of the IT Act, 1961 (in short 'the Act') was carried out at various business and residential premises of the Jaswani Group of Companies on 10th Nov., 2005 including residential premises of the assessee. The notice under s. 153A dt. 31st Jan., 2007 was served on the assessee on 6th Feb., 2007 for the asst. yRs. 2000-01 to 2005-06. In response to the said notice, the assessee filed his return of income for asst. yr. 2000-2001 on 8th Aug., 2007 declaring total income at Rs. 95,820 and agricultural income of Rs. 60,000. The AO framed assessment under s. 153A r/w s. 143(3) of the Act, vide his order dt. 20th Dec, 2007 determining total income at Rs. 6,17,917 and agricultural income of Rs. 60,000 after making certain additions/disallowances. The AO made an addition of Rs. 1,80,000 under s. 69A of the Act. The assessee disclosed total cash gifts of Rs. 1,80,000 during the year as under :

"(1) Shri Madhav Singh, S/o Shri Janak Singh, Bhatapara on 5th April, 1999 Rs. 30,000.

(2) Shri Laxman Das, S/o Shri Narumal, Bhatapara on 15th July, 1999 Rs. 30,000.

(3) Shri Gokul Yadav, S/o Shri Umrao, Bhatapara on 1st April, 1999 Rs. 30,000.

(4) Shri Ramavtar Gupta, S/o Shri Ramashray Gupta on 15th March, 2000 Rs. 25,000.

(5) Shri Raju Yadav, S/o Shri Shyamlal Yadav, Bhatapara on 15th Sept., 1999 Rs. 35,000.

(6) Shri Ramkishun, S/o Shri Hirau Bhatapara on 15th April, 1999 Rs. 30,000."

6. According to the AO no details of confirmation of gifts were filed neither with the original return nor during the course of assessment proceedings. The assessee failed to prove creditworthiness of the donors. The assessee did not maintain any capital account and even in the course of assessment proceedings, it was not filed. The AO observed that the assessee failed to satisfactorily explain the alleged gifts and, therefore, he made the addition of Rs. 1,80,000 to the total income of the assessee under s. 69A of the Act.

7. On appeal, the learned CIT(A) confirmed the addition for the reasons stated in paragraph No. 5.3 of the impugned order and, hence, the assessee is in appeal before the Tribunal.

8. Before us, Shri P.C. Jain Maloo, learned counsel for the assessee submitted that during the course of search at the residential premises of the assessee, no document or incriminating material was found and seized. He further submitted that original return under s. 139 of the Act was submitted on 22nd March, 2001. The return was filed prior to search in normal course, suo motu, disclosing particulars of income, which stood accepted by the ITO-l(3), Raipur. The learned counsel for the assessee submitted that the AO has not issued any notice under s. 143(2) of the Act and the time-limit for completion of assessment under s. 143(3) of the Act was upto 31st March, 2003. Therefore, the time-limit for issue of notice under s. 143(2) of the Act and the time-limit for completion of assessment under s. 143(3) had expired before the date of search. Therefore, there was no assessment pending in this case and, as such, in this case, there was no question of abatement. Therefore, addition could be made only on incriminating material found during the search.

9. In view of the above, Shri P.C. Jain Maloo, learned counsel for the assessee submitted that where AO has not referred to any incriminating material found during the search based on which addition was made, the AO has no jurisdiction to make addition in the assessment framed under s. 153A of the Act.

10. In support of the above contention, Shri P.C. Jain Maloo, learned counsel for the assessee relied on the following decisions :

"(1) CIT v. Murli Agro Products Ltd. (IT Appeal No. 36 of 2009 dt. 29th Oct., 2010 (Bombay High Court, Nagpur Bench).

(2) Jai Steel (India) v. Asstt CIT (2013) 259 CTR (Raj) 281 : (2013) 88 DTR (Raj) 1.

(3) Gurinder Singh Bawa v. Dy. CIT (2014) 150 ITD 40 (Mumbai).

(4) All Cargo Global Logistics Ltd. v. Dy. CIT: (2012) 147 TTJ (Mumbai) 513 : (2012) 74 DTR (Mumbai) 89 (SB): (2012) 137 ITD 287 (Mumbai)(SB).

(5) Deepak Agrawal v. Asstt. CIT (2014) (Mumbai)(Trib).

(6) Atul Barot v. Dy. CIT (2014) (Mumbai)(Trib).

(7) Natwar Parikh & Co. (P) Ltd. v. Dy. CIT (2014) (Mumbai)(Trib).

(8) Meghmani Organic Ltd. v. Dy. CIT (2010) 129 TTJ (Ahd) 255 : (2010) 36 DTR (Ahd) 187

(9) Suncity Alloys (P) Ltd. v. Asstt. CIT (2009) 124 TTJ (Jd) 674 : (2009) 27 DTR (Jd) 139"

11. Shri S.K. Meena, learned Departmental Representative stoutly defended the orders of the lower authorities. He further submitted that once the proceedings under s. 153A of the Act are initiated, then the assessment order already passed in the assessment year covered under s. 153A of the Act stands abated and the AO is obliged to pass a fresh assessment or reassessment order and determine the total income afresh for those assessment years. He, therefore, submitted that the addition made by the AO and confirmed by the learned CIT(A) was justified. He further submitted that the assessee has miserably failed to prove the creditworthiness of the donors. No confirmations from alleged six donors were filed during the course of assessment proceedings and, therefore, in the absence of evidence, the receipt of gifts remained unexplained and therefore, the addition may be confirmed.

12. We have considered the rival submissions and have also perused the materials available on record. It is observed that in the present case, the assessment for the assessment year under consideration has attained finality before the search which was conducted on 10th Nov., 2005. In the case of Gurinder Singh Bawa (supra), the Tribunal, Mumbai Bench held that in case assessment is abated, the AO retains the original jurisdiction as well as jurisdiction under s. 153A of the Act, for which assessment shall be made for each assessment year separately. Thus, in case where assessment has abated, the AO can make additions in assessment, even if no incriminating material has been found. But in other cases the Bench held that the assessment under s. 153A can be made on the basis of incriminating material which in the context of relevant provisions means books of account including other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search. In the instant case, the assessment has been completed under s. 143(1) of the Act and the time-limit for issue of notice under s. 143(2) has expired before the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during the course of search.

13. In the case of CIT v. Murli Agro Products Ltd. (supra), the Hon'ble High Court of judicature at Bombay (Nagpur Bench, Nagpur) held as under :

"Once it is held that the assessment finalized on 29th Dec, 2000 has attained finality, then the deduction allowed under s. 80HHC of the IT Act as well as the loss computed under the assessment dt. 29th Dec, 2000 would attain finality. In such a case, the AO while passing the independent assessment order under s. 153A r/w s. 143(3) of the IT Act could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under sexton 153A of the IT Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of s. 153A proceedings.

(13) In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the s. 153A proceedings which would show that the relief under s. 80HHC was erroneous. In such a case, the AO while passing the assessment order under s. 153A r/w s. 143(3) could not have disturbed the assessment order finalized on 29th Dec, 2000 relating to s. 80HHC deduction and consequently the CIT could not have invoked jurisdiction under s. 263 of the Act."

14. From the above, it can safely be held that where AO had not referred to any incriminating material found during the course of search based on which addition was made, then the AO had no jurisdiction to make addition in the assessment framed under s. 153A of the Act.

15. In the case of Jai Steel (India) v. CIT (supra), the Hon'ble High Court of Rajasthan held that the requirement of assessment or reassessment under s. 153A has to be read in the context of s. 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is to be reassessed.

16. In number of cases, the Tribunal Benches have consistently taken the view that when no assessment is abated, question of making any addition or making disallowance which are not based on material found during search is bad in law.

17. In view of the above, we hold that the addition of Rs. 1,80,000 made by the AO and confirmed by the learned CIT(A) is bad in law. We, therefore, allow original ground as well as additional ground of the appeal.

ITA Nos. 89 & 90/Blpr/2009 & IT(SS)A No. 11/Nag/2009

18. The facts of these cases are similar to that of ITA No. 87/Blpr/2009. In these appeals also the assessees have raised an identical additional ground.

19. In the case of Shri Sunil Kumar Jaswani, ITA Nos. 89/Blpr/2009 and 90/Blpr/2009, the CIT(A) confirmed the additions of Rs. 1,20,000 (wrongly-mentioned Rs. 2,65,000 in the ground of appeal) and Rs. 95,000 for the asst. yRs. 2000-01 and 2001-02 respectively under s. 68 of the Act being the amount of gifts received as unexplained. For the asst. yr. 2000-01 and 2001-02, the assessee filed returns of income with ITO, Ward-1(3), Raipur on 22nd Dec, 2000 and 21st March, 2002 respectively. Limitation under s. 153 of the Act for completion of assessments for these two years expired on 31st March, 2003 and 31st March, 2004 respectively. The search was conducted thereafter on 10th Nov., 2005.

20. In the case of Shri Anil Kumar Jaswani, the AO made addition of Rs. 12,25,000 under s. 68 of the Act on account of unexplained cash credit. The assessee filed the return of income for the asst. yr. 2001-02 on 18th March, 2002 under s. 139 of the Act. The return of income was processed under s. 143(1) of the Act. No notice under s. 143(2) of the Act was issued and the limitation for completion of the assessment expired on 31st March, 2004. Thereafter, search was conducted on 10th Nov., 2005.

21. In these cases also, the AO had not referred to any incriminating material found during the search based on which addition was made. Therefore, the AO had no jurisdiction to make addition in the assessment framed under s. 153A of the Act. The decision given in the case of Rawal Das Jaswani in ITA No. 87/Blpr/2009 (supra) shall apply to these appeals also with equal force. Accordingly, we allow these appeals.

ITA No. 91/Blpr/2009

22. This appeal filed by the assessee is directed against the order of learned CIT(A) Raipur dt. 14th May, 2009 relating to asst. yr. 2004-05.

23. The only ground raised by the assessee in this appeal reads as under :

"On the facts and in the circumstances of the case, the learned CIT(A) has erred in sustaining the addition made by the AO at Rs. 1,00,000 under s. 68 of IT Act, 1961 being the amount of gift received treated as unexplained. The addition is unjustified, unwarranted and uncalled for."

24. Briefly stated, the facts of the case are that a search and seizure operation was carried out at various business and residential premises of Jasvani Group on 10th Nov., 2005. Assessee's case was also covered by search and seizure operation. During the assessment year under consideration, the assessee received gift of Rs. 1,00,000 from Shri Vicki Raghwani. The assessee failed to prove the genuineness of transaction and creditworthiness of the donor. The assessee failed to file the confirmation of gilt from the alleged donor. The assessee also failed to produce the donor for examination. The AO treated the alleged gift as income of the assessee from undisclosed sources and made addition under s. 69A of the Act.

25. On appeal, the learned CIT(A) confirmed the addition stating that the assessee has failed to prove the creditworthiness of the donor and, therefore, capacity of the donor cannot be accepted.

26. We have heard the rival submissions. Both the authorities below have categorically held that the assessee failed to prove the genuineness of transaction and creditworthiness of the donor. No confirmation of gift was filed along with the return of income of the assessee. It is claimed that the alleged gift of Rs. 1,00,000 was made in cash but the donor was not produced before the AO for examination. At this stage also, the assessee could not prove the genuineness of the transaction and creditworthiness of the donor. No additional evidence, whatsoever, was filed before us. in the absence of any supporting evidence, we are of the view that the addition is fully justified. Therefore, we dismiss the appeal being devoid of any merit.

ITA No. 88/Blpr/2009

27. This appeal filed by the assessee is directed against the order of learned CIT(A), Raipur dt. 15th May, 2009 relating to asst. yr. 2002-03.

28. In this appeal, the assessee has raised the following grounds-

"On the facts and in the circumstances of the case disallowance of Rs. 2,50,000 on account of forfeiture of EMD made by the AO is beyond the scope of s. 153A of IT Act. 1961. The assessment should confine to material gathered during the course of search and therefore, the learned CIT(A) erred in sustaining the disallowance made by the AO. The disallowance is unjustified, unwarranted and uncalled for."

29. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of manufacturing of various items from MC Wax. Search and seizure operation under s. 132 of the Act was carried out at the business and residential premises of Jaswani group on 10th Nov., 2005 including the residential premises of partners of the firm. The AO has noted that the assessee has claimed Rs. 2,50,000 as deduction on account of forfeiture of EMD. In this regard, no supporting evidence was furnished by the assessee. The AO observed that under the provisions of s. 37 of the Act, the onus was on the assessee to bring all material facts on record to substantiate his claim. The assessee failed to discharge the onus and, therefore, the AO disallowed the amount of Rs. 2,50,000 claimed on account of forfeiture of EMD by BPCL and added the same to the total income of the assessee.

30. On appeal, the learned CIT(A) confirmed the addition observing as under :

"I have gone through the order of the AO and the written submission of the appellant and remand report. The AO has disallowed the claim of forfeiture of EMD for the reason that no supporting evidences were produced to justify the deducted claim and the onus of bringing the materials effect on record, lies on the assessee. In course of appellate proceeding also the assessee did not brought any material on record to prove that the EMD amount of Rs. 2,50,000 has been forfeited by BPCL. Although the assessee has relied on the judgement of CIT v. S.A. Builders (P) Ltd. (2007) 211 CTR (P&H) 473 wherein the forfeiture of security deposit has been treated as allowable deduction. However, in absence of any document evidencing forfeiture of EMD, the claim of the appellant cannot be allowed and therefore the action of AO is hereby confirmed."

31. After hearing the learned Representatives of both the parties, we do not find any merit in this appeal. Both the authorities below have categorically stated that the assessee did not bring any material on record to prove that the EMD amount of Rs. 2,50,000 has been forfeited by BPCL. In the absence of any documentary, evidence regarding forfeiture of EMD, the claim of the assessee cannot be accepted. At this stage also, the assessee has not brought any evidence to demonstrate that the claim made by it was justifiable. It is settled law that where an assessee claims deduction, the onus lies on him to bring all material facts on record to substantiate his claim. In view of the above, we do not find any merit in the appeal filed by the assessee. Accordingly, we dismiss the same. In the result, ITA Nos. 87, 89 & 90/Blpr/2009 and (T(SS)A No. 11/Nag/2009 are allowed while ITA Nos. 91/Blpr/2009 and 88/Blpr/2009 are dismissed.

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