Basant Bansal V C I T I T A T Jaipur
CORAM: R. P. Tolani (JM), T. R. Meena (AM) SECTION(S): 143(3), 153A GENRE: Domestic Tax CATCH WORDS: admission of undisclosed income, incriminating material, retraction, search and seizure COUNSEL: Rakesh Gupta DATE: May 29, 2015 (Date of pronouncement) DATE: June 2, 2015 (Date of publication) AY: 2008-09 FILE: Click here to download the file in pdf format CITATION: S. 143(3)/153A: Addition made solely on the basis of a disclosure and without any incriminating material is not sustainable if facts show that disclosure was under duress. CBDT Instruction dated 10.03.2003relied upon
Pursuant to a search and seizure operation u/s 132, the assessee made a disclosure of unaccounted income of Rs. 20 crore. He later claimed that the disclosure was not voluntary but was because the assessee was under tremendous pressure and harassment in the form of repeated search action, survey and freezing of assets. It was also claimed that no incriminating material was found during the search. It was also claimed that the disclosure was "pro tem", meaning tentative and subject to correction. The AO & CIT(A) rejected the claim. On appeal by the assessee to the Tribunal HELD allowing the appeal:
(i) Whether the disclosure was voluntary or given under coercive circumstances. Conclusion: The contentions raised by ld. Counsel for the assessee lead to a clear inference that the disclosure of the assessee cannot be regarded as voluntary. The pressure of restrained DDs. of 31.48 crs. against a disclosure tax liability of about 7 crs is palpable. It has the propensity to derail the business and creating enough pressure for businessmen to somehow avoid the pressure. Besides the chronology of events and attendant circumstances do not convince us that this summary disclosure was voluntary and on the scale of merit it can override the other facts. Consequently we have no hesitation in holding that the solely relied disclosure was involuntary. In these circumstances the desirability of additions is to be judged on other facts and circumstances. Reliance is placed on Hon'ble Rajasthan High Court in the case of CIT v. Ashok Kumar Soni 291 ITR 172 for the proposition that admission in statement during search proceedings is not conclusive proof. Besides Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co.vs. State of Kerala 91 ITR 18 has also held so that such statement can be explained in the light of correct facts.
(ii) Whether in the light of CBDT instruction dtd 10-03-2003, search proceedings and assessment can be based incriminating material and not on such disclosures. Conclusion: A perusal of the CBDT instruction reveals that even Board is aware of such laconic disclosures and expects its officers to rely on incriminating evidence. Thus CBDT also is not in favor of search assessments being based only on such disclosures; it wants them to be based on incriminating material. In view the facts, circumstances, CBDT instruction and various case laws relied on by the assessee we are unable to uphold the additions solely on the basis of disclosure which doesn't meet the eye and have been held by us to involuntary.
(iii) Whether the additions are based on any incriminating material discovered as a result of search in terms of sc. 153A. Conclusion: There is no reference to impugned additions being based on any worthwhile incriminating material or evidence except raising some suspicions. The sole basis of additions in both cases is proposed to be the disclosure. Consequently the additions made are not as a result of any material found during the course of search, in view thereof impugned additions cannot be sustained as they do not conform to mandate of sec. 153A.
(iv) Whether the assessees furnished proper explanation about the bank a/c and and transactions. Conclusion: As the facts emerge the Corporation bank a/c belonged to Raghubir, the proceeds deposited therein came to him through banking channel on account of agreement to sell his share in ancestral land to G P Realtors not connected to assessees….. As the final disclosure remained at 20 crs., assesses to avoid the harassment agreed for its inclusion as it did not take the tax liability any further. Apropos departments contention that why assesses did not tell this in first blush assessee has demonstrated that they requested for some time to verify from parties who cooperated. The affidavits, bank certificates, documents relating to G P Realtors including compromise deed all corroborate the assesses contentions. Therefore no adverse inference or addition can be drawn against assesses in this behalf.
(v) Whether on merits the impugned additions can be made in a search assessment u/s 153A which is meant for assessment of undisclosed income consequent to search proceedings. Conclusion: By detailed observations we have held that neither any worthwhile incriminating material, information, and evidence was discovered as a result of impugned multiple search operations nor the additions sustained are based on any such material. The sole basis of additions is the disclosure which we have held to be involuntary. Consequently the additions do not conform to the mandate of sec. 153A.
Related Judgements
MGF Automobiles Ltd vs. ACIT (ITAT Delhi)S. 153A: In case of completed assessments, addition can be made only if incriminating document found during search
There are three possible circumstances that emerge on the date of initiation of search u/s 132 (1): (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found…
Anil Kumar Bhatia vs. ACIT (ITAT Delhi) S. 153A does not authorize the making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that…
Gurinder Singh Bawa vs. DCIT (ITAT Mumbai) In All Cargo Global Logistics 137 ITD 287 (Mum)(SB), the Special Bench held that in a case where the assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. However, in a case where the assessment has not abated, an…
All Cargo Global Logistics Ltd vs. DCIT (ITAT Mumbai Special Bench) In assessments that are abated, the AO retains the original jurisdiction as well as the jurisdiction conferred on him by s. 153A for which assessments shall be made for each of the 6 assessment years separatelyRead more ›
ACIT vs. Pratibha Industries Ltd (ITAT Mumbai) Three possible circumstances emerge on the date of initiation of search u/s 132(1): (a) proceedings are pending; (b) proceedings are not pending but some incriminating material is found in the course of search, indicating undisclosed income and/or assets and (c) proceedings are not pending and no incriminating material has…
Navinkumar Agarwal C C I T Calcutta High Court
Ordinarily an authorization for search is valid until the same has been executed. In order to avoid any controversy as to when was the authorization executed the legislature has provided in the aforesaid explanation that the authorization shall be deemed to have been executed on conclusion of search as recorded in the last panchnama. Therefore, the law insists upon a panchnama for the purpose of formal recording that the search is at an end. Without such recording the search once initiated does not come to an end. We are unable to find any justification for the view that search comes to an end immediately after the search has been concluded for the day
Calcutta High Court CORAM: Arindam Sinha J, Girish Chandra Gupta J SECTION(S): 158BE GENRE: Domestic Tax CATCH WORDS: limitation period, sear, search and seizure COUNSEL: R. N. Bajoria DATE: May 12, 2015 (Date of pronouncement) DATE: June 2, 2015 (Date of publication) AY: 1990-91 to 2000-01 FILE: Click here to download the file in pdf format CITATION: S. 158BE: The search ends, and the period of limitation begins, only on the drawing up of the formal panchnama to record the ending of the search. The argument that the search is concluded on the date of the search itself if nothing is seized thereafter is not acceptable
A search u/s 132 of the Act was conducted on 8th December, 1999. The restraint order imposed on 8th December, 1999 was vacated on 31st January, 2000. The search party drew the panchnama dated 31st January, 2000 stating that the search commenced at 15:20 hours and was closed at 15:30 hours. The assessee claimed that the search was concluded on 8th December, 1999 and that the search dated 31st January, 2000 was only for the purpose of revocation of the restraint order dated 8th December, 1999 passed under Section 132 (3) of the Income-tax Act. The assessee contended that the period of limitation has to be reckoned from the search dated 8th December, 1999 and the period of limitation expired on 31st December, 2001, whereas the assessment order was passed on 31st January, 2002 which is out of the prescribed period of limitation. The assessee upon the judgement in the case of CIT vs. S. K. Katyal reported in (2009) 308 ITR 168 (Delhi) wherein it was held that the period of limitation has to be reckoned from the date when the search took place and not from the date when the keys were handed back to the assessee. HELD by the High Court rejecting the plea:
(i) The judgement in CIT vs. S. K. Katyal (2009) 308 ITR 168 (Delhi) does not in our opinion, lay down the correct law. In two earlier judgements of the Delhi High Court itself contrary views were taken. See M. B. Lal vs. CIT (2005) 279 ITR 298 (Delhi) and VLS Finance Ltd vs. CIT (2007) 289 ITR 286 (Delhi). Ordinarily an authorization for search is valid until the same has been executed. In order to avoid any controversy as to when was the authorization executed the legislature has provided in the aforesaid explanation that the authorization shall be deemed to have been executed on conclusion of search as recorded in the last panchnama. Therefore, the law insists upon a panchnama for the purpose of formal recording that the search is at an end. Without such recording the search once initiated does not come to an end. We are unable to find any justification for the view that search comes to an end immediately after the search has been concluded for the day. Such an argument may possibly have been advanced in the absence of the deeming provision contained in Explanation 2 (a) to Section 158BE. Law as we can see it is that a search initiated pursuant to a written authorization may be kept in suspended animation so long as the same is not formally brought to an end in writing in the presence of witnesses by drawing a panchnama which is bound to be the last panchnama.
(ii) A restraint order under Section 132(3) is in aid of search and is valid for sixty days u/s. 132(8A) unless revoked earlier. During continuance of the restraint order the search itself cannot be said to have come to end. It was contended that on 31st January 2000 no search took place only the restraint order was vacated. From the panchnama dated 31st January 2000 it appears that at 15:30 hours the search finally concluded. The admitted fact that the keys were made over and the restraint order under Section 132(3) was lifted corroborates the fact that the search finally came to an end. The search could not have been at an end on any day prior to 31st January, 2000. The object of withholding the keys was to resume the search if and when it was felt necessary. The return of the keys manifested the intention that the search was at an end. Since the law required formal recording of conclusion of search the panchnama dated 31st January 2000 was drawn up and the business transacted on the day was recorded.
(iii) It is to be noticed that the period of limitation for the purposes of Income Tax Act under Section 158BE is dependent on the conclusion of search and not on the conclusion of the investigation. Investigation includes examination of witnesses which can be done under Section 131 of the Income Tax Act. The Assessing Officer wanted to examine the assessee but he did not turn up after the conclusion of the search as would appear from the assessment order quoted above. Another pertinent question in accordance with Section 465(2) of CRPC shall be "whether by keeping the search pending till 31st January 2000 any failure of justice was occasioned?" Neither in the case of Katyal nor before us any such point was canvassed. The second pertinent question shall be "was the point of limitation raised at the earliest stage before the assessing officer? The assessee by his letter dated 28th January, 2002 addressed to the assessing officer contended that due to his preoccupation he was unable to appear before the latter to record his deposition. When the case of the assessee is that the time prescribed for assessment had expired on 31st December, 2001, he should have raised the point in his letter dated 28th January, 2002 which he did not do. Therefore prolongation of the search did not cause any prejudice to the assessee not to talk of occasioning any failure of justice. It appears from the assessment order that the assessee was served with a notice u/s 131 to appear for recording his deposition. Time to do so was extended on four occasions. The assessee by his letter dated 28th January, 2002 evinced his intention not to appear. In those circumstances the assessment was completed on 31st January, 2002 which otherwise might have been completed on or before 31st December, 2001.
Related Judgements
A. Rakesh Kumar Jain vs. ACIT (Madras High Court)S. 158BE prescribes a time limit of two years from the end of the month in which the last of the authorisations for search u/s 132 was executed. Explanation 2 provides that the authorisation shall be deemed to have been executed on the conclusion of search as recorded in…
ACIT vs. Shree Ram Lime Products Ltd (ITAT Jodhpur Special Bench) S. 158BE (1) prescribes the time limit for completion of the block assessment with reference to the end of the month in which the "last of the authorisations for search" was executed. Explanation 2 provides that the authorisation shall be deemed to have been executed "on the conclusion of…
CIT vs. S. K. Katyal (Delhi High Court) HELD in the context of s. 158BE (1) (b) which imposes a time limit for making a block assessment order with reference to the date of execution of the last of the authorizations for search u/s 132 which in turn is deemed to be the date of the conclusion…
MDLR Resorts Pvt. Ltd vs. CIT (Delhi High Court) S. 132: Copy of search warrant should be given to the searched person. Defects in the panchnama do not invalidate the search or the s. 153A assessment proceedings
S. 153A(1) does not make any reference to panchnama or the date of panchnama. A panchnama is not a pre-condition…
Sunil Kumar Agarwal vs. CIT (Calcutta High Court) S. 50C: If the stamp duty valuation is higher than the consideration received, the AO must refer the valuation to the DVO even if there is no request by the assessee
No inference can be made that the assessee has accepted the price fixed by the District Sub Registrar…
__._,_.___
No comments:
Post a Comment