Where material was collected by Assessing Officer during course of survey, and not during search proceedings, Tribunal was justified in setting aside assessment made under section 158BC
HIGH COURT OF GUJARAT
Commissioner of Income-tax
Parmar Builders & Developers
TAX APPEAL NOS.112 & 113 OF 2015
APRIL 8, 2015
Sudhir M. Mehta, Advocate for the Appellant. Manish J. Shah, Advocate for the Respondent.
M.R. Shah, J. – As common question of law and facts arise in both these appeals and as such they arise out of the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal “D” Bench, Ahmedabad passed in Appeal IT (SS)A No. 110/AHD/2005 and Appeal No. IT(SS) A. No. 158/AHD/2005, by which, the learned Tribunal has allowed the said appeals preferred by the assessee by quashing and setting aside the respective two assessment for block assessment periods 1996-97 to 1.2.2002 and upto 17.7.2002 and block assessment period 1996-97 to 1.2.2002 and upto 17.7.2002, the Revenue has preferred present Tax Appeal with the following proposed substantial questions of law:
“A. Whether on the facts and in the circumstances of the case and in law, the ITAT is justified in setting aside the assessment as invalid relying upon the judgment in the case of CIT v. Senniappan (2006) 284 ITR 220 (Mad.) without considering the fact that the Assessing Officer has taken into consideration various seized documents for the computation of the undisclosed income, which is clearly evident from the body of the assessment order?
B. Whether on the facts and circumstances of the case and in law the ITAT is justified in setting aside the assessment as invalid, without considering the decision in the case of Shri Laxmi Finance v. Dy. CIT (2011) 13 taxmann.com 134 (mad.)?”
2. That the assessee is a partnership firm engaged in the business of civil construction and development. A search/seizer/survey was carried out at the office premise of the assessee at 11, Gurudev Complex, Silvassa Road, Vapi on 17.7.2002. That on the basis of material seized, a notice under Section 158 BC of the Income Tax Act was issued to the assessee, asking assessee to file its return of income for the block period ending on 17.7.2002 on 24.4.2003 declaring undisclosed income at Rs. NIL. That thereafter, the notice under Section 143(2) of the Act was issued on 19.5.2002 and notice under Section 142(1) of the Act was also issued on 20.5.2003, the assessee replied to the same. That while finalizing the assessment, the AO made two additions on account of undisclosed profit on sale of shops of Rs. 30,84,600/- and undisclosed income on sale of flats of Rs. 53,79,300/-.
2.1 Feeling aggrieved and dissatisfied with the order of the AO, the assessee preferred appeal before the learned CIT(A). The assessee challenged the very initiation of assessment proceedings/proceedings under Section 158 BC of the Act. It appears that vide order dated 28.2.2005, the learned CIT (A) partly allowed the appeal of the assessee. Regarding the additions made by the AO on account of undisclosed provide on sale of shops of Rs. 30,84,600/-, the learned CIT(A) restricted two addition of Rs. 7,39,800/- and granted relief to the assessee for Rs. 23,44,800/-. Regarding the income for sale of flats amounting to Rs. 53,79,800/-, the learned CIT(A) allowed the reduction of Rs. 27,36,000/- out of Rs. 53,79,300/- and sustained remaining out of Rs. 26,43,300/-.
2.2 Feeling aggrieved and dissatisfied with the orders passed by the learned CIT(A), the assessee challenged the validity of the assessment proceedings under Section 158 BC of the Act and submitted that material used for making addition under Section 158 BC of the Act was gathered during the survey action and therefore, the assessment made under Section 158 BC of the Act and the addition made by the AO on the basis of material collected during the survey action cannot be sustained. Accepting the submissions on behalf of assessee and having found that the AO has made additions in the assessment under Section 158 BC of the Act on the material gathered during the survey and therefore, same was not permissible by impugned judgment and order, the learned Tribunal has allowed the aforesaid appeals and has quashed and set aside the assessment made for block periods in question, made under Section 158BC of the Act.
2.3 Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Tribunal, the Revenue has preferred present Tax Appeals with the aforesaid proposed substantial questions of law.
3. We have heard Shri Sudhir Mehta, learned advocate for the Revenue and Shri J.P. Shah, learned counsel for the respondent -assessee and perused the impugned common judgment and order passed by the Tribunal as well as orders passed by the AO as well as learned CIT. To satisfy ourselves, whether in fact there was any search proceedings under Section 132 of the Act or not and whether the material collected and which was used while framing assessment under Section 158BC of the Act was collected during the search in a proceedings under Section 132 of the Act or during the survey, we have called upon Shri Mehta, learned advocate for the Revenue to place before us for perusal, the appraisal report prepared by the ADIT(INV), Valsad and from the appraisal report in the case of Parmar Group prepared by ADIT (INV), Valsad, which was submitted through additional DIT(INV), Surat, and on perusal it appears that it was a case of survey and there was no search of the premises of the assessee under Section 132 of the Income Tax Act. Whatever the material was collected, was/were during the course of survey at the site office of the Parmar Builders and Developers, Emperor Building, Vapi. Under the circumstances, the material used for framing assessment under Section 158BC was collected during the survey and not search proceedings under Section 132 of the Income Tax Act. In view of the above, it cannot be said that the learned Tribunal has committed any error in holding the assessment proceedings under Section 158BC of the Act has invalid. The learned Tribunal has rightly quashed and set aside the assessment under Section 158BC of the Act on the ground that material collector during the survey was used while framing the assessment under Section 158BC of the Act. No substantial question of law arise in the present appeals. On the contrary, we affirm the view taken by the learned Tribunal. Consequently, both these appeals deserve to be dismissed and are accordingly dismissed.