,

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI

BEFORE SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM

./I.T.A. Nos.1287 to 1290/Mum/2015

( / Assessment Years : 2006-07 to 2009-10)

Dy. Commissioner of Income Vs. Shri Ramakant Gaggar

tax- Central Circle-8(1), 302, Gaurav Aprt,
Room No.656, 6th floor, Gokuldham,
Aayakar Bhavan, Goreaon (E),
M K Road, Mumbai-400063
Mumbai-400020
/Appellant .. /Respondent

./PAN :ABKPG9952C

/ Appellant by : Santanu KR.Saikia

/Respondent by : Shri Vijay Mehta

/Date of Hearing : 8.11.2016

/Date of Pronouncement : 21.12.2016

/O R D E R

Per RAJESH KUMAR, Accountant Member:

These are four appeals filed by the revenue and directed against the

orders dated 12.12.2014 for the assessment year 2006-07 and order dated

02.12.2014 for the assessment years 2007-08 to 2009-10 respectively passed

by the ld.CIT(A), Mumbai. Since these appeals are filed against the same

assessee and the issues involved therein are common and therefore for the

sake of convenience and brevity, these appeals were clubbed together, heard

together and are being decided by this consolidated order.

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I.T.A. Nos.1287 to 1290/Mum/2015

2. At the outset the ld.AR drew our attention to a jurisdictional issue that

the AO has no jurisdiction to make the additions except on the basis of seized

materials because the assessment in all the four years had attained finality

on the date of search and therefore ,the AO had no authority under the

provisions of section 153A/153C of the Act to disturb the assessment which

had attained finality on the date of search. The ld counsel drew our attention

to application dated 25.10.2016 wherein the assessee raised a ground

under rule 27 of the Income Tax Appellate Tribunal Rules, 1963

(hereinafter called as the Rules) . The Ld counsel of the assessee stated

that the issue is purely of legal nature which will go to the root of the

matter and has been raised before ld CIT(A) also but the same has been

decided against the assessee. It was explained that same was not challenged

by the assessee as relief has been granted on merit of the case by the

CIT(A). The ld counsel drew our attention to the para 3 and 3.1 of the

appellate order wherein the issue has been decided by the FAA against the

assessee.

3. Referring to the above , the ld counsel for the assessee stated that the

AO had no jurisdiction u/s 153A/153C of the Act to make any additions by

disturbing the assessment order which had attained finality on the date of

search without any incriminating material being found by the search team

during the course of search. The ld counsel drew our attention to the

provisions of section 153C r.w.s. 153A of the Act which provides that all the
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I.T.A. Nos.1287 to 1290/Mum/2015

assessments which are pending on the date of search shall abate and the AO

has same jurisdiction to frame the assessment as u/s 143(3) of the Act and

assessment which have attained finality on the date of search cannot be

disturbed except on the basis of seized materials and not otherwise. The Ld

counsel of the assessee vehemently submitted that in respect of assessments

which are complete and attained finality on the date of search, the

jurisdiction of AO is confined to make additions based on the search

materials.

4. The DR. vehemently argued against taking up of this issue under rule

27 of the Rules for the reason that by taking up and deciding this ground,

tribunal cannot put the revenue in worst position than what it was before

CIT(A). The ld DR argued that the powers of the tribunal are confined to

section 254(1) of the Act wherein it has to pass orders on the subject matter

of the issue before it and the tribunal cannot go beyond it or pass orders or

give directions which do not fall within the subject matter of the appeal for

which the ld DR relied upon the decision of Honble Bombay High Court in the

case of New India Insurance Company Ltd Vs CIT (1957) 31 ITR 844 (Bom)

wherein it has been held as under :

3. Before we look at the authorities and before we look at the

section and the relevant rules, it is desirable to consider on general
principles what are the powers of an appellate Court. When an
appellant comes before a Court of appeal, he comes there because he
is dissatisfied with the decision of the trial Court and he challenges that
decision; and he challenges that decision on certain grounds which are
set out in the grounds of appeal or in the memo of appeal. The
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I.T.A. Nos.1287 to 1290/Mum/2015

respondent, if he has not appealed or has not cross-objected, is

satisfied with the decision of the trial Court and he is before the Court
of appeal to support the judgment of the trial Court. The appellant may
challenge the decision of the trial Court even on grounds not contained
in the grounds of appeal if the Court of appeal grants him leave to do
so. Undoubtedly in granting leave the Court of appeal would consider
various factors : whether the question raised would involve questions
of fact which may necessitate a remand; whether the conduct of the
appellant is such as to disentitle him to raise the new ground; and so
on. But if leave is granted and if the other side has notice of the new
ground which the appellant seeks to urge, there does not seem to be
any reason why the Court of appeal should not permit the appellant to
challenge the decision of the trial Court on a ground other than those
taken in the grounds of appeal. The position with regard to the
respondent is different: it is not open to him to urge before the Court
of appeal and get a relief which would adversely affect the appellant. If
the respondent wanted to challenge the decision of the trial Court, it
was open to him to file a cross-appeal or cross-objections. But the very
fact that he has not done so shows that he is quite content with the
decision given by the trial Court. Therefore, under these circumstances,
his only right is to support the decision of the trial Court. It is true that
he may support the decision of the trial Court, not only on the grounds
contained in the judgment of the trial Court, but on any other ground.
In appreciating the question that arises before us, one must clearly
bear in mind the fundamental difference in the positions of the
appellant and the respondent. The appellant is the party who is
dissatisfied with the judgment; the respondent is the party who is
satisfied with the judgment. Now what we have just said is nothing
more than really a summary of the provisions with regard to appeals
and cross-objections contained in Order XLI of the Civil Procedure Code
; and, as we shall presently point out, the position of the Appellate
Tribunal is the same as a Court of appeal under the Civil Procedure
Code and the powers of the Appellate Tribunal are identical with the
powers enjoyed by an appellate Court under the Code.

5. We have heard the rival contentions and perused the relevant

materials including the issue of additions without being based upon the

seized materials in those assessment years which had attained finality on the

date of search as raised by the ld.AR under rule 27 of the Rules. The facts of

the case reveal that this issue was taken up by the assessee before CIT(A)
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I.T.A. Nos.1287 to 1290/Mum/2015

and he adjudicated the same d against the assessee. However, the CIT(A)

allowed the appeal of the assessee on merits, hence, assessee was not

aggrieved by the order of the CIT(A). Here first of all, we have to refer to

Rule 27 of the Rules, which reads as under:-

27. Respondent may support order on grounds decided against him.-

The respondent, though he may not have appealed, may support the
order appealed against on any of the grounds decided against him.

6. We find from this rule that respondent may support an order on the

ground decided against him even though he has not appealed against an

order deciding one of the grounds against him. We further find that Hon'ble

Supreme Court in the case of CIT vs. Manick Sons, 74 ITR 1(SC) has

interpreted the provisions of section 254(1) of the Act and not that the rule

27 of Appellate Tribunal, wherein respondent has been allowed to support

the order appealed against on any other ground decided against him even

tthough he may not have appealed against. It was explained by the Hon'ble

Supreme Court that the powers conferred by this sub-section is wide but still

it is a judicial power which may be exercised in respect of matter that arise in

the appeal and according to law. The Tribunal in deciding an appeal before it

must deal with question of law and fact, which arises out of an order of

Assessing Officer and that of the CIT(A). It cannot assume powers which are

inconsistent with the express provisions of the Act or its scheme. Honble

Allahabad High Court in the case of Kanpur Industrial Works vs. CIT, 59 ITR

407 (AL) has held that in case the assessee not liable to be assessed at all is
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I.T.A. Nos.1287 to 1290/Mum/2015

also a ground for showing that there should be no further increase and

assessee may resist the appeal on this ground also. In the present case

before us, the CIT(A) has allowed the appeal of the assessee on merits and

relief has been granted by deleting all the additions. The only ground

dismissed by CIT(A) was with regard to assumption of jurisdiction by AO to

make addition without based on searched materials as nothing was found

during the search proceedings. In view of the above facts we admit this

additional ground of the assessee under Rule-27 and will adjudicate the

same.

7. The ground taken by the assessee under rule 27 of the Rules dated

25.10.2016 reads as under:-

RESPONDENT'S GROUNDS UNDER RULE 27 OF THE APPELLATE

TRIBUNAL RULES, 1963.

1. On the facts and circumstances of the case and in law, the

ld.CIT(A) has erred in affirming the action of the AO in confirming the
addition mAde u/s 143(3) r.w.s 153C of the Act in absence of any
incriminating material found during the course of search qua the
additions, and hence, the additions made by the AO are bad in law.

2. The appellant craves leave to add to, amend or alter, the

foregoing ground of appeal

8. Brief facts of the case are that there was a search action conducted on

6.10.2010 in the case of M/s ARSS Infrastructure Project Limited and group

concerns and in the said search action the case of the assessee was also

covered under section 132 of the Act. Notice under section 153C of the Act

was issued to the assessee on 17.1.2013 calling upon the assessee to file
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I.T.A. Nos.1287 to 1290/Mum/2015

return of income which was complied with by the assessee by filing return of

income on 29.1.2013 declaring total income of Rs.3,22,609/- after claiming

deduction under chapter VI-A amounting to Rs.1 lakh thereby declaring the

net income of Rs.2,22,609/-. The assessee filed original return of income for

the assessment year 2007-08 on 30.10.2006 along with the computation of

total income and balance-sheet, profit and loss account declaring an income

of Rs.2,67,840/-. The AO ultimately completed the assessment under section

143(3) read with section 153C of the Act vide order dated 30.3.2013 by

assessing the income of Rs.67,20,840/- by making addition of Rs. 64 lakhs

on account of various unsecured loans raised by the assessee from various

parties as detailed in para 6.2 of the assessment order. Aggrieved by the

order of the AO, the assessee filed appeal before the ld.CIT(A) challenging

the order of the AO by raising specific ground that the assessment in the

current year was not pending on the date of search and therefore not

abated and consequently the additions made by the AO without reference in

seized material were legally unlawful and without jurisdiction. However, the

ld. CIT(A) dismissed the appeal after considering the submissions of the

assessee by giving detailed finding and holding as under:

6. After carefully examining the facts of the case and the above
contentions of the appellant in the appellate proceedings and referring
to the case laws relied upon by the appellant, the facts clearly indicate
that some incriminating materials were found during the course of
search u/s 132 of the Act.
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I.T.A. Nos.1287 to 1290/Mum/2015

The issue of notice u/s 153C of the Act in case of the appellant is in
accordance with the provisions of Sec-ion 132 and 153C of the Act as
the incriminating materials had been seized during the course of
Search conducted on the Gaggar Group on 06.10.2010.

Further, on going through the case laws relied upon by the appellant, it
has come to the notice that in the case of CIT vs. Murli Agro Products
Ltd (August 9th, 2014 ), (Bombay High Court) the order para No.12
and 13) the following was observed by the Honble High Court

12. Once it is held that the assessment finalized on 29.12.2000 has

attained finality, then the deduction allowed under section 80 HHC of
the Income-tax Act as well as the loss computed under the assessment
dated 29-12-2000 would attain finality. In such a case, the A.O. while
passing the independent assessment order under Section 153A read
with Section 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 Section
153A of the Income-tax Act establish that the reliefs granted under the
finalised assessment/reassessment were contrary to the facts
unearthed during the course of 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 153A
proceedings which would show that the relief under Section 80HHC
was erroneous. In such a case, the A.O. while passing the assessment
order under Section 153A read with Section 143(3) could not have
disturbed the assessment order finalized on 29.12.2000 relating to
Section 80HHC deduction and consequently the C.I.T. could not have
invoked jurisdiction under Section 263 of the Act.

Thus it is implied from the above clear observations of the Honble

Bombay High Court that if there is material found/unearthed during the
search or 153A proceedings, the assessment completed earlier has
not attained finality and hence would get abated. In view thereof, the
AO was well within his powers under the Act to conclude the
assessment on the basis of the material gathered even during the
course of proceedings u/s 153C.

In the case under reference, the material gathered during the course
of proceedings u/s 153C, the AO has gathered certain
material/information which has lead him to make additions to the
returned income and thus, the assessment done u/s 153C r.w. 143(3)
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I.T.A. Nos.1287 to 1290/Mum/2015

is valid and the contentions of the appellant regarding the objection to

the conclusion of the assessment u/s 153C needs to be dismissed

9. The ld. AR vehemently argued before us that the addition made by the

AO was without any jurisdiction as the same was not based upon any

incriminating documents /material found during the course of search. While

drawing our attention the provisions of section 153A/153C of the Act , the ld

counsel argued that in respect of those assessments which were not pending

on the date of search, the AO could make addition only on the basis of or

with reference to the seized material and not otherwise. The ld AR stated

that during the course of search, no incriminating material was found and

seized and therefore the upholding the jurisdiction of the AO to make

additions without reference to seized materials was against the provisions of

section 153C of the Act. The ld. AR in defence of his argument heavily relied

on the decision in the case of CIT V/s Murli Agro Products Ltd [2014] 49

taxmann.com 172 (Bombay) and All cargo Global Logistics Ltd. Vs. DCIT

(2012) 137 ITD 287 (Mum) Special Bench. Finally, the ld. AR submitted that

since no incriminating material was found and seized during the course of

search proceedings and therefore the addition made by the AO in respect of

unsecured loans aggregating to Rs.64 lakhs was without jurisdiction as the

assessment in the instant year had attained finality on the date of search.

10. The ld. DR on the other hand, heavily relied on the orders of

authorities below and submitted that the material was gathered by the AO
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I.T.A. Nos.1287 to 1290/Mum/2015

during the course of assessment proceedings under section 153C and

therefore the AO had the material on the basis of which he rightly made

additions in respect of five unsecured loans/creditors on the grounds of

creditworthiness, genuineness of transactions and identity of the creditors

not being proved.

11. We have carefully considered the rival contentions and perused the

material placed before us including the orders of authorities below and the

case laws relied upon by the parties. We find that on the date of search the

assessment for the instant year had already attained finality as the return

was filed on 30.9.2006 whereas the search was conducted on 6.10.2010. We

also find from the perusal of provision of section 153C of the Act that the

AO shall assess the income in respect of six assessment years prior to the

year in which the search was conducted. It has also been provided in the

section that the assessment which are pending on the date of search shall be

abated and assessment shall be made by the AO under section 153C in the

same manner as assessment u/s 143(3) of the Act whereas in respect of

those assessment years out of six years which are not pending on the date

of search and have attained the finality, the AO has limited jurisdiction to

make addition based upon the material seized during the course of search

and not otherwise. The Honble Bombay High Court in the case of Murli Agro

Product Limited (supra) and All cargo Global Logistics Ltd (supra) as

affirmed by the Jurisdictional High Court an identical issue has been decided
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I.T.A. Nos.1287 to 1290/Mum/2015

by holding that in respect of assessments which has attained finality on the

date of search the additions can only be made based on the search materials.

We accordingly, find merit in the contention of the ld. AR and hold that the

order of the ld.CIT(A) is wrong and cannot be sustained qua upholding the

additions made in the assessment year by the AO without seized material.

We accordingly, set aside the order of ld.CIT(A) and hold that the addition of

Rs.64 lakhs by the AO t is without jurisdiction under section 153C of the Act.

Accordingly, the ground raised by the assessee under rule 27 of the ITAT

Rules, 1963 is allowed.

ITA No 1288/Mum/2015 to 1290/Mum/2015

12. For assessment year 2007-08,2008-09 and 2009-10 , the returns were

filed on 26.11.2007 , 14.11.2008 and 31.10.2009 whereas the search was

conducted on 6.10.2010. It is clear from the above dates of filing return and

date of search that the assessments for three years had attained finality on

the date of search and therefore any additions can only be based upon the

seized materials and not otherwise. In all these years the assessee has raised

same ground under rule 27 of ITAT Rules as has been decided by us

hereinabove. Since we have already decided the identical issue as raised by

the assessee under rule 27 in these three appeals in ITA No 1287/Mum/2015

in favour of the assessee, therefore, our decision in ITA No 1287/Mum/2015

would, mutatis mutandis, apply to these appeals as well. Accordingly we

need not to go into the grievances raised by the revenue in its appeals.
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I.T.A. Nos.1287 to 1290/Mum/2015

Hence, appeals of the revenue becomes infructuous and therefore,

dismissed accordingly.

13. In the result, the appeals of the revenue are dismissed.

The above order was pronounced in the open court on 21st Dec,2016.

Sd sd

(MAHAVIR SINGH) (RAJESH KUMAR)

/ Judicial Member / Accountant Member

Mumbai; Dated : 21.12.2016

SRL,Sr.PS

/Copy of the Order forwarded to :

1. / The Appellant
2. / The Respondent
3.
() / The CIT(A)
4.
/ CIT concerned
5. , ,
/ DR, ITAT, Mumbai
6. / Guard File

/ BY ORDER,

True copy
/ (Dy./Asstt. Registrar)
,
/ ITAT, Mumbai