COMMISSIONER OF INCOME TAX Vs. M/S MECHMEN

JUDGEMENT

(1.) These appeals are filed by the Department qua single assessee regarding seven separate assessment years i.e. 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, bearing I.T.A. Nos. 53,48,50,54,45, 44 and 56 of 2011 respectively. Moreover, these appeals emanate from a common order passed by the Income Tax Appellate Tribunal, Indore Bench, at Indore dated 29.12.2010. Since common substantial questions of law have been framed in these appeals, the same were heard analogously and, therefore, are being disposed of by this common judgment. The respondent is a partnership firm carrying on the business of Hi. Tech Heavy Steel Fabricators and manufacturer for last more than 25 years. It is stated that the respondent has been maintaining regular books of account, which were duly audited under Section 44AB of the Income-tax Act (hereinafter referred to as the IT Act). Further, it had filed returns under Section 139(1) of the IT Act regularly. A search was conducted against the partners of respondent firm under Section 132(1) of the IT Act on 16.9.2005. A survey under Section 133A was conducted at the business premises of the respondent firm and no papers were impounded during the course of that survey. However, the Assessing Officer [ACIT-1(2)] issued notice under section 153C on 22.3.2006, calling upon the respondent to file returns for the AYs 2000-01 to 2005-06 within 30 days from the date of receipt of the said notice. The respondent filed returns within the prescribed time on 24.4.2006 for the respective assessment years. The respondent also filed return for the Assessment Year 2006-07 under Section 139(1) on 30.10.2006. Besides, a response was also filed to the notice under Section 142(1) dated 1.9.2007 on 28.9.2007. The Assessing Officer vide order dated 31.12.2007, passed under Section 153C/143(3) of the IT Act, made identical additions towards disallowances of purchase amounts and fabrication charges for all the assessment years and by making further addition towards excess stock in the Assessment Year 2006-07. Being aggrieved, the respondent filed seven appeals before the Commissioner of Income-tax (Appeals)-I, Bhopal, (M.P.), bearing Appeal Nos. CIT(A)-I/BPL/IT-275 to 281/2007-08. These appeals were decided by a common order passed by the First Appellate Authority dated 15.7.2008. Before the Appellate Authority, amongst other grounds, the principal grievance was about the inappropriate assumption of jurisdiction under Section 153C. With regard to that ground, the Appellate Authority relied on the decision of CIT(A), Jabalpur in the case of Hotel Sonam and Smart Bar, Sagar [appeal No. J/CIT (A)-1/ACIT/SAGAR/116 to 122/06-07] and extracted the relevant portion of Paragraph No. 6.1 of that decision, which reads thus:--

(2.) The First Appellate Authority found as of fact that, in the present case, no incriminating material attributable to the respondent was seized during the course of search at the premises of the searched person and there was no satisfaction or even the basis for satisfaction to issue a notice under Section 153C of the IT Act. It further held that no satisfaction has been recorded by the Assessing Officer even before issuance of notice under Section 153C. On these findings, the Appellate Authority concluded that the action of the Assessing Officer was illegal and invalid; and quashed the same for the concerned assessment years. The First Appellate Authority accordingly allowed the appeals filed by the respondents. The First Appellate Authority also considered other grounds raised by the respondent in the said appeals about denial of adequate opportunity, book of A/cs. finding of the Assessing Officer regarding undisclosed sales of Rs. 9,73,541/-, bogus purchases for concerned assessment year, disallowances of fabrication expenses, levy of interest under Section 234A, 234B, 234C, credit for prepaid taxes for the concerned assessment years. However, those aspects are not the relevant for the present appeals.

(3.) The Department carried the matter in appeal before the Income Tax Appellate Tribunal, Indore Bench at Indore by filing separate appeals which were numbered as I.T.(SS) A. Nos. 182 to 188/Ind/2008 for the concerned assessment years. The respondent assessee also filed cross objection numbered as C.O. No. 126/Ind/2008 for A.Ys. 2003-04. All the above numbered appeals and cross objection were disposed of together by a common judgment by the Tribunal. The Tribunal, in turn, relied on its decision in the case of Chirchind Hydro Power Ltd. [IT(SS) A. No. 171, 172 and 174/Ind/2008, dated 29-12-2010] and also ACIT v. Gwalior Tanks & Vessels Ltd. [IT(SS) A. No. 175 to 181/Ind/2008, dated 29-12-2010] Paragraph Nos. 78 to 82 of the said decision has been reproduced by the Tribunal for dealing with the question about the scope of Section 153C of the IT Act and the efficacy of notices issued by the Assessing Officer against the respondent therein. The same reads thus:--