The Commissioner Of Income Tax-Central-Ii, Mumbai v. Gurinder Singh Bawa

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1839 OF 2013 The Commissioner of Income Tax-Central-II, Mumbai Vs. Gurinder Singh Bawa ..Appellant ..Respondent .... Mr. Ashok Kotangale a/w Ganesh Lanbade and Mrs. PadmaDivakar, Advocates for Appellant.None for Respondent. .... P.C.: CORAM : M.S. SANKLECHA & G.S. KULKARNI, JJ.DATED : 5 OCTOBER 2015 This appeal under Section 260A of the Income Tax Act,1961 (the 'Act') challenges the order dated 6 November 2012passed by the Income Tax Appellate Tribunal (the 'Tribunal'). TheAssessment Year involved is A.Y. 2005-06. 2.The following questions of law have been urged by therevenue for our consideration: “A)Whether on the facts and in thecircumstances of the case and in law, the Tribunal S.S.DESHPANDE was justified in deleting the addition ofRs.93,72,310/- made by the Assessing Officer andconfirmed by the CIT(A) being gifts received fromfamily members which could not be proved to begenuine by the Assessee, by holding that only incomerelated to incriminating documents found during thesearch u/s 132 could be assessed u/s 153A of the Acteven though the provisions of Section 153Amandatethat the Assessing Officer assess or re-assess the TotalIncome of the Assessee searched u/s 132 of the Act? B)Whether on the facts and in thecircumstance of the case and in law, the Tribunal wasjustified in deleting the addition made by theAssessing Officer of Rs.43,67,999/- as deemeddividend in the hands of the Assessee u/s 2(22)(e) ofthe Act?” 3.For the Assessment Year 2005-06, the respondent-assessee had filed his return of income declaring an income ofRs.9.61 lakhs. The return of income as filed by the respondent-assessee was processed under Section 143(1) of the Act.Admittedly, no notice under Section 143(2) of the Act has beenissued. Thereafter on 5 January 2007, a search was conducted onthe respondent-assessee under Section 132 of the Act. ConsequentS.S.DESHPANDE2 / 7 thereto, proceedings under Section 153A of the Act were initiated.During the assessment proceedings for A.Y. 2005-06, the AssessingOfficer added an amount of Rs.93.72 lakhs (declared as gifts) asbeing covered by Section 68 of the Act and an amount of Rs.43.67lakhs (accumulated profits of the lendor) out of Rs.1.5 croresreceived as loan from one K.P. Developers Pvt. Ltd. as deemeddividend under Section 2(22)(e) of the Act. Undisputedly,respondent-assessee was a shareholder in M/s K.P. Developers (P)Ltd. The aforesaid additions are reflected in an assessment orderdated 31 December 2008 passed under Section 143(3) r/w 153A ofthe Act determining the respondent-assessee's total income atRs.1.47 crores. 4.In appeal, the CIT(A) held that the addition of an amountof Rs.43.67 lakhs as deemed dividend has to be deleted. This onthe ground that there were no accumulated profits available withM/s K.P. Developers (P) Ltd. to distribute amongst it's shareholders.However, so far as the addition in respect of the unexplained giftsaggregating to Rs.93.70 lakhs is concerned, the CIT(A) did notdisturb the finding of the Assessing Officer.S.S.DESHPANDE3 / 7 4.In appeal, the CIT(A) held that the addition of an amountof Rs.43.67 lakhs as deemed dividend has to be deleted. This onthe ground that there were no accumulated profits available withM/s K.P. Developers (P) Ltd. to distribute amongst it's shareholders.However, so far as the addition in respect of the unexplained giftsaggregating to Rs.93.70 lakhs is concerned, the CIT(A) did notdisturb the finding of the Assessing Officer.S.S.DESHPANDE3 / 7 5.On further appeal before the Tribunal, the assesseeinteralia challenged the validity of the assessment made underSection 153A of the Act. This on account of the fact that noassesment in respect of the six assessmetn years were pending so asto have abated. The impugned order accepted the aforesaidsubmission of the respondent-assessee by interalia placing relianceupon the decision of the Special Bench of the Tribunal in Al-CargoGlobal Logistics Ltd. rendered on 6 July 2012. The Tribunal in theimpugned order further held that no incriminating material wasfound during the course of the search. Thus the entire proceedingsunder Section 153A of the Act were without jurisdiction andtherefore the addition made had to be deleted on the aforesaidground. The impugned order also thereafter considered the issueson merits and on it also held in favour of the respondent-assessee. 6.Mr. Kotangale, the learned Counsel for the revenue veryfairly states that the decision of the Special Bench of the Tribunal inAl-Cargo Global Logistics Ltd. was a subject matter of challengebefore this Court as a part of the group of appeals disposed of as 4 / 7 CIT Vs. Continental Warehousing Corporation (Nhava Sheva)Ltd.[1] upholding the view of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. Consequently, once an assessment hasattained finality for a particular year i.e. it is not pending then thesame cannot be subject to tax in proceedings under Section 153A ofthe Act. This of course would not apply if incriminating materialsare gathered in the course of search or during proceedings underSection 153A of the Act which are contrary to and/or not disclosedduring regular assessment proceedings. 7.In view of the above, on issue of jurisdiction itself theissue stands concluded against the revenue by the decision of thisCourt in Continental Warehousing Corporation (Nhava Sheva) Ltd.(supra). In the appeal before us, the revenue has made nogrievance with regard to the impugned order of the Tribunalholding that in law the proceedings under Section 153A of the Actare without jurisdiction. This in view of the fact that no assessmentwere pending, so as to abate nor any incriminating evidence wasfound. The grievance of the revenue is only with regard to finding1. 374 ITR 645 in the impugned order on the merits of the individual claimregarding gifts and deemed dividend. However once it is notdisputed by the revenue that the decision of this Court inContinental Warehousing Corporation (Nhava Sheva) Ltd. (supra)would apply to the present facts and also that there are noassessments pending on the time of the initiation of proceedingsunder Section 153A of the Act. The occasion to consider the issuesraised on merits in the proposed questions becomes academic. 8.In the above view, the questions as framed in the presentfacts being academic in nature, do not give rise to any substantialquestion of law. Thus not be entertained. 9.Accordingly, appeal is dismissed. No order as to costs. [G.S. KULKARNI, J][M.S. SANKLECHA, J.] CERTIFICATE Certified to be true and correct copy of the original signed Order.