GRASIM INDUSTRIES LTD,MUMBAI vs. DCIT CENT. CIR. - 1(4), MUMBAI

These cross appeals by the assessee and Revenue are directed These cross appeals by the assessee and Revenue are directed These cross appeals by the assessee and Revenue are directed against separate orders, each dated 27.04.2016 against separate orders, each dated 27.04.2016, passed by the Ld. passed by the Ld. Commissioner of Income Commissioner of Income-tax (Appeals)-47, Mumbai [in short ‘the 47, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2008 Ld. CIT(A)’] for assessment year 2008-09, 2009-10 and 2010 10 and 2010-11 respectively. As common grounds are involved in these appeals, respectively. As common grounds are involved in these appeals, respectively. As common grounds are involved in these appeals, therefore same were heard together and disposed o therefore same were heard together and disposed off by way of this ff by way of this consolidated order for convenience and avoid repetition of facts. consolidated order for convenience and avoid repetition of facts. consolidated order for convenience and avoid repetition of facts.

by the 09. The grounds raised by the assessee are reproduced as under: assessee are reproduced as under:

2. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of law, the learned CIT(A) erred in upholding the action of law, the learned CIT(A) erred in upholding the action of the AO in issuing notice u/s 148 of the Act and holding the AO in issuing notice u/s 148 of the Act and holding the AO in issuing notice u/s 148 of the Act and holding that the payment of Rs. 10,53,83, 193/ that the payment of Rs. 10,53,83, 193/- made by the Appellant on account of capit Appellant on account of capital work in progress was an al work in progress was an accommodation entry and no depreciation allowance is accommodation entry and no depreciation allowance is accommodation entry and no depreciation allowance is allowable on the said amount in the subsequent years. allowable on the said amount in the subsequent years. allowable on the said amount in the subsequent years. 3. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of law, the learned CIT(A) erred in upholding the action of law, the learned CIT(A) erred in upholding the action of the AO i the AO in rejecting the claim of the Appellant to treat the n rejecting the claim of the Appellant to treat the subsidy of Rs.8,12,15,141/ subsidy of Rs.8,12,15,141/- under Technology Up under Technology Up-

Grasim Industries Ltd. 3 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. gradation Fund Scheme as capital in nature and not gradation Fund Scheme as capital in nature and not gradation Fund Scheme as capital in nature and not chargeable to tax. chargeable to tax.

4. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the learned CIT(A) erred law, the learned CIT(A) erred in upholding the action of in upholding the action of the AO in rejecting the claim of the Appellant to treat the AO in rejecting the claim of the Appellant to treat the AO in rejecting the claim of the Appellant to treat dividend income of Rs. 1,16,24,021/ dividend income of Rs. 1,16,24,021/- received from M/s received from M/s Alexandria Carbon Black Limited, Egypt as not taxable in Alexandria Carbon Black Limited, Egypt as not taxable in Alexandria Carbon Black Limited, Egypt as not taxable in India and exclude the same from taxable income. India and exclude the same from taxable income. India and exclude the same from taxable income. 2.1 The grounds raised by the Revenue are reproduced as under: nds raised by the Revenue are reproduced as under: nds raised by the Revenue are reproduced as under:

1. On the facts and the circumstances of the case and in On the facts and the circumstances of the case and in On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in granting relief to the assessee law the Ld. CIT(A) erred in granting relief to the assessee law the Ld. CIT(A) erred in granting relief to the assessee stating that no disallowance us 153C of the Act is called stating that no disallowance us 153C of the Act is called stating that no disallowance us 153C of the Act is called for as there are no incriminating for as there are no incriminating materials found during materials found during the search and the assessment has reached its finality the search and the assessment has reached its finality the search and the assessment has reached its finality and was not abated at the initiation proceedings us. and was not abated at the initiation proceedings us. and was not abated at the initiation proceedings us. 132(1) of the Income Tax Act, 1961 (1) of the Income Tax Act, 1961' 2. 2 "On the facts and in the circumstances of the case and 2 "On the facts and in the circumstances of the case and 2 "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, i in law, the Ld. CIT(A) erred, in holding that no addition n holding that no addition can be made u/s 153C of the Act, once the assessment can be made u/s 153C of the Act, once the assessment can be made u/s 153C of the Act, once the assessment has reached to finality us 143(3) of the Act, and no has reached to finality us 143(3) of the Act, and no has reached to finality us 143(3) of the Act, and no incriminating documents have been found and seized in incriminating documents have been found and seized in incriminating documents have been found and seized in the case of the assessee during the course of search and the case of the assessee during the course of search and the case of the assessee during the course of search and seizure seizure acti action on relying relying upon upon the the decision decision of of the the jurisdictional Bombay high Court decision in the case of jurisdictional Bombay high Court decision in the case of jurisdictional Bombay high Court decision in the case of Continental Warehousing Corn. and M/s Murli Agro Continental Warehousing Corn. and M/s Murli Agro Continental Warehousing Corn. and M/s Murli Agro Products without appreciating that the revenue has not Products without appreciating that the revenue has not Products without appreciating that the revenue has not accepted the decision and has filed SLP in the Hon'ble accepted the decision and has filed SLP in the Hon'ble accepted the decision and has filed SLP in the Hon'ble Apex Court" Court" 3. 3. "On the facts and circumstances of the case and in law 3. "On the facts and circumstances of the case and in law 3. "On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the disallowance of Rs. the Ld. CIT(A) erred in deleting the disallowance of Rs. the Ld. CIT(A) erred in deleting the disallowance of Rs. 24,35,82,219/ 24,35,82,219/- on account of additional Spill Over on account of additional Spill Over Depreciation by treating the assessment as flawed in Depreciation by treating the assessment as flawed in Depreciation by treating the assessment as flawed in light of the judgements which light of the judgements which are subjudice before Apex are subjudice before Apex and Bombay High Court. Besides this issue has not been and Bombay High Court. Besides this issue has not been and Bombay High Court. Besides this issue has not been examined and tested in the assessment and/or the examined and tested in the assessment and/or the examined and tested in the assessment and/or the Appellate Authorities.» Appellate Authorities.» 4. 4. "On the facts and circumstances of the case and in law 4. "On the facts and circumstances of the case and in law 4. "On the facts and circumstances of the case and in law the Ld. CIT(A) erred in allowing the additi the Ld. CIT(A) erred in allowing the additional Spill Over onal Spill Over Depreciation relying upon the judicial pronouncement in Depreciation relying upon the judicial pronouncement in Depreciation relying upon the judicial pronouncement in the case of CIT vs Continental Warehousing Corn. [374 the case of CIT vs Continental Warehousing Corn. [374 the case of CIT vs Continental Warehousing Corn. [374 ITR 6451 ITR 6451- Hon'ble Mumbai HC, without appreciating that Hon'ble Mumbai HC, without appreciating that Grasim Industries Ltd. 4 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

the revenue has not accepted the aforesaid judicial the revenue has not accepted the aforesaid judicial the revenue has not accepted the aforesaid judicial pronouncement and SLP i pronouncement and SLP is pending before the Hon'ble s pending before the Hon'ble Supreme Court for adjudication" Supreme Court for adjudication"

3.1 Thereafter, consequent to the search action u/s 132 of the consequent to the search action u/s 132 of the Act consequent to the search action u/s 132 of the at the premises of M/s Aditya Birla Management Corporation Pvt. at the premises of M/s Aditya Birla Management Corporation Pvt. at the premises of M/s Aditya Birla Management Corporation Pvt. Ltd. (ABMCPL) i.e. a group concern , i.e. a group concern , on 16th October 2013 October 2013, certain incriminating material pertaining to the assessee was found and incriminating material pertaining to the assessee was found and incriminating material pertaining to the assessee was found and seized by the Assessing Officer of the searched person the Assessing Officer of the searched person the Assessing Officer of the searched person. Accordingly, he intimated to the Assessing Officer of the assessee. Thereafter, the the Assessing Officer of the assessee. Thereafter, the the Assessing Officer of the assessee. Thereafter, the Assessing Officer treated the reassessment proceedings as got treated the reassessment proceedings as got treated the reassessment proceedings as got abated and he issued notice u/s 153C r.w.s. 153A of the Act, on issued notice u/s 153C r.w.s. 153A of the Act, on issued notice u/s 153C r.w.s. 153A of the Act, on Grasim Industries Ltd. 5 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

26.11.2014 requiring the assessee to file return of income for the 26.11.2014 requiring the assessee to file return of 26.11.2014 requiring the assessee to file return of assessment year under consideration along with other assessment assessment year under consideration along with other assessment assessment year under consideration along with other assessment years falling in the search period. The assessment proceedings u/s years falling in the search period. The assessment proceedings u/s years falling in the search period. The assessment proceedings u/s 153C of the Act were concluded by the Assessing Officer on 153C of the Act were concluded by the Assessing Officer on 153C of the Act were concluded by the Assessing Officer on 29.03.2016, wherein the Assessing Officer withdraw wherein the Assessing Officer withdrawn the claim of wherein the Assessing Officer withdraw the additional depreciati the additional depreciation of the assessee. The Assessing officer The Assessing officer also on the basis of information from investigation wing of the also on the basis of information from investigation wing of the also on the basis of information from investigation wing of the Income-tax department, which was received prior to proceedings tax department, which was received prior to proceedings tax department, which was received prior to proceedings u/s 153C of the Act, rejected the claim of capi u/s 153C of the Act, rejected the claim of capital work tal work-in-progress debited in books of account in respect of Cement Plant at Kotputali, debited in books of account in respect of Cement Plant at Kotputali, debited in books of account in respect of Cement Plant at Kotputali, Rajasthan. On further appeal, the assessee challenged validity of On further appeal, the assessee challenged validity of On further appeal, the assessee challenged validity of the assessment proceedings the assessment proceedings u/s 153C of the Act u/s 153C of the Act as well as challenged the merit of the additions. The challenged the merit of the additions. The Ld. CIT(A) upheld the Ld. CIT(A) upheld the validity of the assessment proceedings u/s 153C of the Act. The Ld. validity of the assessment proceedings u/s 153C of the Act. The Ld. validity of the assessment proceedings u/s 153C of the Act. The Ld. CIT(A) however, held that CIT(A) however, held that assessment was unabated , assessment was unabated , therefore, the Assessing Officer wa Assessing Officer was not authorized to disturb the completed proceedings except the aid of the in proceedings except the aid of the incriminating material. The Ld. criminating material. The Ld. CIT(A) accordingly directed the Assessing Officer to withdraw the CIT(A) accordingly directed the Assessing Officer to withdraw the CIT(A) accordingly directed the Assessing Officer to withdraw the disallowance of additional additional spill over depreciation allowance. On the depreciation allowance. On the issue of rejection of capital work in progress amounting to of capital work in progress amounting to Rs.10,53,83,193/-, t , the Ld. CIT(A) upheld the action of the A) upheld the action of the Assessing Officer.

impugned order of Ld. CIT(A) on merit of the addition as well as on impugned order of Ld. CIT(A) on merit of the addition as well as on impugned order of Ld. CIT(A) on merit of the addition as well as on legality of the assessment order. On merit, the assessee has filed an assessment order. On merit, the assessee has filed an assessment order. On merit, the assessee has filed an application for admitting additional evidence. application for admitting additional evidence. Therefore, Therefore, firstly, we are taking the grounds of the assessee related to merit of the are taking the grounds of the assessee related to merit of the are taking the grounds of the assessee related to merit of the addition for adjudication. addition for adjudication.

Grasim Industries Ltd. 7 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. was claimed by the a was claimed by the assessee that the transaction w ssessee that the transaction was genuine and properly disclosed in the books of accounts. The assessee company properly disclosed in the books of accounts. The assessee company properly disclosed in the books of accounts. The assessee company further submitted that there was no failure on the part of the further submitted that there was no failure on the part of the further submitted that there was no failure on the part of the assessee company to disclose all material facts necessary for assessee company to disclose all material facts necessary for assessee company to disclose all material facts necessary for assessment fully and assessment fully and truly. The assessee company contended that truly. The assessee company contended that proviso to section 147 is applicable in the case of the assessee and proviso to section 147 is applicable in the case of the assessee and proviso to section 147 is applicable in the case of the assessee and therefore notice under section 148 of the Act is bad in law. The therefore notice under section 148 of the Act is bad in law. The therefore notice under section 148 of the Act is bad in law. The objections raised by the assessee company against the notice under objections raised by the assessee company against the notice under objections raised by the assessee company against the notice under section 148 of the Act of the Act were disposed off by the Assessing Officer on by the Assessing Officer on 17/06/2014, wherein he stated that the fact of entry of professional 17/06/2014, wherein he stated that the fact of entry of professional 17/06/2014, wherein he stated that the fact of entry of professional work being bogus entry was not available with the Assessing Officer work being bogus entry was not available with the Assessing Officer work being bogus entry was not available with the Assessing Officer at the time of the completion of the assessment and it was received at the time of the completion of the assessment and it was re at the time of the completion of the assessment and it was re subsequently. As per the information no work was carried out by subsequently. As per the information no work was carried out by subsequently. As per the information no work was carried out by M/s Taral, as the said entity had no resources and manpower , as the said entity had no resources and manpower , as the said entity had no resources and manpower except for issuing bogus bills. Relevant part of the statement of Mr except for issuing bogus bills. Relevant part of the statement of Mr except for issuing bogus bills. Relevant part of the statement of Mr Praveen Agrawal was provided along with the reasons recorded to Praveen Agrawal was provided along with the reasons reco Praveen Agrawal was provided along with the reasons reco the assessee company. In this manner the Assessing Officer the assessee company. In this manner the Assessing Officer the assessee company. In this manner the Assessing Officer rejected the objection of the assessee that there was no failure on rejected the objection of the assessee that there was no failure on rejected the objection of the assessee that there was no failure on the part of the assessee company to disclose all material facts truly the part of the assessee company to disclose all material facts truly the part of the assessee company to disclose all material facts truly and fully.

5.1 Subsequently, the Assessing Officer Subsequently, the Assessing Officer issued notice under issued notice under section 133(6) of the Act to M/s Tara section 133(6) of the Act to M/s Taral for verifying whether actual for verifying whether actual work was carried out, however the notice returned unserved with work was carried out, however the notice returned unserved with work was carried out, however the notice returned unserved with the remark ‘ not known’. Accordingly the Assessing Officer the remark ‘ not known’. Accordingly the Assessing Officer the remark ‘ not known’. Accordingly the Assessing Officer

Grasim Industries Ltd. 8 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. requested the assessee company on 18/06/2014 requested the assessee company on 18/06/2014 to produce the said party alongwith the books of accounts as witness of the party alongwith the books of accounts as witness of the party alongwith the books of accounts as witness of the assessee company and explain the genuineness of the transaction. assessee company and explain the genuineness of the transaction. assessee company and explain the genuineness of the transaction. However no compliance was made on the part of the assessee. On However no compliance was made on the part of the assessee. On However no compliance was made on the part of the assessee. On the other hand, the assessee submitted that the obj the assessee submitted that the obj the assessee submitted that the object clause of ‘memorandum of association memorandum of association’ of M/s Taral include the business of include the business of development of sites. It was submitted by the assessee, the development of sites. It was submitted by the development of sites. It was submitted by the department had no documents department had no documents or evidences or any corroborating or any corroborating material, therefore, bald statement of sh Praveen Agraw bald statement of sh Praveen Agrawal might be bald statement of sh Praveen Agraw ignored. The assessee company furnished certificate from an ignored. The assessee company furnished certificate from an ignored. The assessee company furnished certificate from an independent structural engineer to support that actual work was independent structural engineer to support that actual work was independent structural engineer to support that actual work was carried out by the said party. The assessee requested the Assessing carried out by the said party. The assessee requested the Assessing carried out by the said party. The assessee requested the Assessing Officer to produce sh Praveen Agrawal or any authorised person of Officer to produce sh Praveen Agrawal or any authori Officer to produce sh Praveen Agrawal or any authori M/s Taral for cross examination for cross examination.

5.2 During the process of the reassessment proceedin During the process of the reassessment proceedin During the process of the reassessment proceedings under section 147 of the Act section 147 of the Act, the Assessing Officer of the assessee received , the Assessing Officer of the assessee received information from the Assessing Officer of the ‘ABMPCL’ that information from the Assessing Officer of the information from the Assessing Officer of the material pertaining to the assessee was found and seized in the material pertaining to the assessee was found and seized in the material pertaining to the assessee was found and seized in the search of ‘ABMPCL ABMPCL’. The Assessing Officer of the assessee . The Assessing Officer of the assessee accordingly, following due procedure of following due procedure of law, issued notice u/s 153C issued notice u/s 153C of the Act, 5.3 Thereafter, vide letter dated 23/11/2015, the ass Thereafter, vide letter dated 23/11/2015, the ass Thereafter, vide letter dated 23/11/2015, the assessee submitted that the reassessment proceeding commenced under submitted that the reassessment proceeding commenced under submitted that the reassessment proceeding commenced under notice under section 148 of the Act dated 3/01/2014 got abetted in notice under section 148 of the Act dated 3/01/2014 got abetted in notice under section 148 of the Act dated 3/01/2014 got abetted in Grasim Industries Ltd. 9 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. view of the second provisio to the section 153A(1) of the Act. It was view of the second provisio to the section 153A(1) of the Act. It was view of the second provisio to the section 153A(1) of the Act. It was submitted that the reassessment proceeding are no more the reassessment proceeding are no more the reassessment proceeding are no more valid and any order passed with reference to notice under section 148 of the any order passed with reference to notice under section 148 of the any order passed with reference to notice under section 148 of the Act would be bad in law. be bad in law.

5.4 The Assessing Officer accordingly The Assessing Officer accordingly, treated the proceedings u/s proceedings u/s 147 of the Act as got abatedunder second provisio of section abatedunder second provisio of section 153A(1) of the Act. Thereafter, during proceedings under section , during proceedings under section 153C of the Act, the Assessing Officer 153C of the Act, the Assessing Officer again again questioned the assesseevide notice under section 142(1) dated 29/12//2015 ide notice under section 142(1) dated 29/12//2015, as ide notice under section 142(1) dated 29/12//2015 why the alleged professional fee of why the alleged professional fee of ₹10,53,83,193/ 193/-shown to have been paid to M/s Tara aral is treated as bogus expenditure and is treated as bogus expenditure and why the same should not be disallowed. The assessee same should not be disallowed. The assessee vide submission dated ide submission dated 18/01/2016 relied on its submissions made 18/01/2016 relied on its submissions made earlier earlierand further submitted that payment of submitted that payment of ₹10,53,83,193/- to M/a to M/a Taral was accounted in the books of accounted in the books of account under the head “ Capital Work account under the head “ Capital Work- in-Progress” and disclosed as a Progress” and disclosed as asset in the balance sheet for set in the balance sheet for financial year 2007-08, thus there 08, thus there was no impact on the profit of no impact on the profit of the assessee company for the assessment year under consideration the assessee company for the assessment year under consideration the assessee company for the assessment year under consideration on account of that transa transaction. The Assessing Officer rejected the ction. The Assessing Officer rejected the contention of the assessee observing as under: contention of the assessee observing as under:

(i) The notice issued under section 133(6) of the Act issued to The notice issued under section 133(6) of the Act issued to The notice issued under section 133(6) of the Act issued to M/s Taral returned unserved with the remark ‘ not known’ returned unserved with the remark ‘ not known’ returned unserved with the remark ‘ not known’ and thereafter the assessee was asked to produce t and thereafter the assessee was asked to produce t and thereafter the assessee was asked to produce the said party, however the assessee failed in producing so. party, however the assessee failed in producing so. party, however the assessee failed in producing so.

Grasim Industries Ltd. 10 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

(ii) The evidence The evidences gathered by the Investigation wing of the nvestigation wing of the Kolkata established that said party had no resources to Kolkata established that said party had no resources to Kolkata established that said party had no resources to carry out the professional work carry out the professional work, for which bills of for which bills of accommodation entry were issued accommodation entry were issued to the assessee. to the assessee. (iii) Sh Praveen Kumar Agrawal admitted that he was engaged Sh Praveen Kumar Agrawal admitted that he was engaged Sh Praveen Kumar Agrawal admitted that he was engaged in issuing accommodation entry bills through M/s Tara in issuing accommodation entry bills through M/s Tara in issuing accommodation entry bills through M/s Taral. (iv) Making payment through banking channel was in itself not aking payment through banking channel was in itself not aking payment through banking channel was in itself not sufficient that actually work was carried out sufficient that actually work was carried out 5.5 The Assessing The Assessing Officer accordingly reduced the amount of Officer accordingly reduced the amount of capital work-in-progress by progress by ₹10,53,83,193/-and held that the and held that the assessee company would not be entitled to claim depreciation of the assessee company would not be entitled to claim depreciation of the assessee company would not be entitled to claim depreciation of the said amount in subsequent years said amount in subsequent years, observing as under: observing as under:

“35.9 It is therefore held that 35.9 It is therefore held that the payment of professional fee the payment of professional fee of Rs. 10,53,83, 193/ of Rs. 10,53,83, 193/- by the Assessee Company to M/s Taral by the Assessee Company to M/s Taral is an accommodation entry and no actual work was carried is an accommodation entry and no actual work was carried is an accommodation entry and no actual work was carried out by M/s Taral. The Assessee Company has not claimed out by M/s Taral. The Assessee Company has not claimed out by M/s Taral. The Assessee Company has not claimed this payment as deduction in the AY 2008 this payment as deduction in the AY 2008-09 and is c 09 and is carrying the payment as "capital work in progress" in its Balance the payment as "capital work in progress" in its Balance the payment as "capital work in progress" in its Balance Sheet. In subsequent years when this amount is capitalized it Sheet. In subsequent years when this amount is capitalized it Sheet. In subsequent years when this amount is capitalized it is added to the block of assets which has resulted in higher is added to the block of assets which has resulted in higher is added to the block of assets which has resulted in higher depreciation allowance to the Assessee Company. Therefore depreciation allowance to the Assessee Company. Therefore depreciation allowance to the Assessee Company. Therefore the amount of "capital work in progress" incurred and carried of "capital work in progress" incurred and carried of "capital work in progress" incurred and carried forward to next year is reduced by the amount of Rs. forward to next year is reduced by the amount of Rs. forward to next year is reduced by the amount of Rs. 10,53,83,193/ 10,53,83,193/- and the Assessee Company will not be and the Assessee Company will not be entitled to claim depreciation allowance in the said amount or entitled to claim depreciation allowance in the said amount or entitled to claim depreciation allowance in the said amount or part of it in the subsequent years. part of it in the subsequent years.”

Grasim Industries Ltd. 11 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

“22.17 In Para 35.4 of the assessment order, the A.O. has 22.17 In Para 35.4 of the assessment order, the A.O. has 22.17 In Para 35.4 of the assessment order, the A.O. has clearly noted that a notice u/s 133(6) of the Act was issued to oted that a notice u/s 133(6) of the Act was issued to oted that a notice u/s 133(6) of the Act was issued to M/s Taral Vincom P. Ltd. / Link Infrastructure P.Ltd. to verify, M/s Taral Vincom P. Ltd. / Link Infrastructure P.Ltd. to verify, M/s Taral Vincom P. Ltd. / Link Infrastructure P.Ltd. to verify, whether any actually work was carried out or not. However, whether any actually work was carried out or not. However, whether any actually work was carried out or not. However, the Notice was received un the Notice was received un-served with remarks "not known". served with remarks "not known". Accordingly, the Accordingly, the Appellant Company was requested by the Appellant Company was requested by the A.O., vide letter ref. DCIT6(3) /Mumbai/ notice/2014 A.O., vide letter ref. DCIT6(3) /Mumbai/ notice/2014 A.O., vide letter ref. DCIT6(3) /Mumbai/ notice/2014-15 dated 18.06.2014 to produce the said Party along with books of 18.06.2014 to produce the said Party along with books of 18.06.2014 to produce the said Party along with books of account to explain the genuineness of the transaction. account to explain the genuineness of the transaction. account to explain the genuineness of the transaction. However, the Appellant Company has failed t However, the Appellant Company has failed toSea o produce, oSea o produce, the said party the said party for examination, before the A.O. 22.18 Also, the findings of the AO are duly buttressed by the Also, the findings of the AO are duly buttressed by the Also, the findings of the AO are duly buttressed by the statement of Mr. m Praveen Aggarwal recorded by the statement of Mr. m Praveen Aggarwal recorded by the statement of Mr. m Praveen Aggarwal recorded by the Investigation Wing, which revealed that thetransaction was Investigation Wing, which revealed that thetransaction was Investigation Wing, which revealed that thetransaction was just an accommodati just an accommodation entry. It is also noted that the copy of on entry. It is also noted that the copy of the saidstatement of Mr. Praveen Aggarwal was duly provided the saidstatement of Mr. Praveen Aggarwal was duly provided the saidstatement of Mr. Praveen Aggarwal was duly provided to the Appellant along with the reasons recorded for to the Appellant along with the reasons recorded for to the Appellant along with the reasons recorded for comments. Hence, there is no violation of the principles of comments. Hence, there is no violation of the principles of comments. Hence, there is no violation of the principles of natural natural justice during the course justice during the course of the of th e assessment assessment proceedings, on this issue. proceedings, on this issue. 22.19 In view of these facts and circumstances of the case, In view of these facts and circumstances of the case, In view of these facts and circumstances of the case, this ground of appeal is decided in favour of Revenue and this ground of appeal is decided in favour of Revenue and this ground of appeal is decided in favour of Revenue and thus, the action of the AO is upheld. Accordingly, the Ground thus, the action of the AO is upheld. Accordingly, the Ground thus, the action of the AO is upheld. Accordingly, the Ground of Appeal No. 3 of the Appellant Co of Appeal No. 3 of the Appellant Company is dismissed. mpany is dismissed.”

7. Before us, the Ld. Counsel of the assessee referred to the Before us, the Ld. Counsel of the assessee referred to the Before us, the Ld. Counsel of the assessee referred to the details/documents filed during the course of the assessment details/documents filed during the course of the assessment details/documents filed during the course of the assessment proceedings, a copy of which is available on page 92 to 464 of the copy of which is available on page 92 to 464 of the copy of which is available on page 92 to 464 of the factual paper book. A copy of the statement of A copy of the statement of Mr. Pravin Aggarwal Mr. Pravin Aggarwal was also referred in the reason referred in the reason recorded, available on page 85 of the on page 85 of the factual paper book. The Ld. Counsel of the assessee submitted that factual paper book. The Ld. Counsel of the assessee submitted that factual paper book. The Ld. Counsel of the assessee submitted that the assessee sought cross examination of Mr. Pravin Aggarwal, the assessee sought cross examination of Mr. Pravin the assessee sought cross examination of Mr. Pravin however, no such cross examination w , no such cross examination was provided as provided to the assessee and therefore, no addition could survive in absence of opportunity and therefore, no addition could survive in absence of opportunity and therefore, no addition could survive in absence of opportunity for cross examination. Further, the Ld. Counsel of the assessee for cross examination. Further, the Ld. Counsel of the assessee for cross examination. Further, the Ld. Counsel of the assessee

Grasim Industries Ltd. 12 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. submitted that the reopening was resorted submitted that the reopening was resorted based on the statement based on the statement of sh Praveen Agarwal, h Agarwal, however, except the statement, no statement, no other material/evidence has been provided to the assessee. Regarding the material/evidence has been provided to the assessee. Regarding the material/evidence has been provided to the assessee. Regarding the contention of the Assessing Officer in the form of notice u/s 133(6) contention of the Assessing Officer in the form of notice u/s 133(6) contention of the Assessing Officer in the form of notice u/s 133(6) of the Act issued of the Act issued to concerned company M/s Tara o concerned company M/s Taral retuned unserved, the Ld. Counsel of the assessee submitted that producing he Ld. Counsel of the assessee submitted that producing he Ld. Counsel of the assessee submitted that producing Mr. Pravin Aggarwal Mr. Pravin Aggarwal was onus of the Department, since he was the since he was the witness of the Department. The Ld. Counsel further relied on the witness of the Department. The Ld. Counsel further relied witness of the Department. The Ld. Counsel further relied following decisions in support of preposition that additions cannot following decisions in support of preposition that additions cannot following decisions in support of preposition that additions cannot be made merely on the basis of notices u/s 133(6) made merely on the basis of notices u/s 133(6) made merely on the basis of notices u/s 133(6) returned unserved:

(a) Tribunal decision in the case of ITO V Shri Sanjay V Dhruv (ITA (a) Tribunal decision in the case of ITO V Shri Sanjay V Dhruv (ITA (a) Tribunal decision in the case of ITO V Shri Sanjay V Dhruv (ITA No. 5089/Mum/2014) No. 5089/Mum/2014)

(b) Tribunal Decision in the case of M/s Singhal Exim P Ltd Vs ITO ( (b) Tribunal Decision in the case of M/s Singhal Exim P Ltd Vs ITO ( (b) Tribunal Decision in the case of M/s Singhal Exim P Ltd Vs ITO ( ITA No. 6520/De/2018)

7.1 In support of the proposition that failure to produce parties ort of the proposition that failure to produce parties ort of the proposition that failure to produce parties cannot be fatal to the assessee, the learne cannot be fatal to the assessee, the learned cou unsel relied on following decisions:

(a) CIT Vs Nikunj Eximp Enterprises P Ltd 372 ITR 619 (Bom HC) CIT Vs Nikunj Eximp Enterprises P Ltd 372 ITR 619 (Bom HC) CIT Vs Nikunj Eximp Enterprises P Ltd 372 ITR 619 (Bom HC) (b) CIT Vs M/s Nangalia Fabrics P Ltd (ITA No. 689 of 2010) (G CIT Vs M/s Nangalia Fabrics P Ltd (ITA No. 689 of 2010) (Guj CIT Vs M/s Nangalia Fabrics P Ltd (ITA No. 689 of 2010) (G HC) (c) ITO Vs Shri TakhtmalBhuralalPiccholiya (ITA No. 4525 to Shri TakhtmalBhuralalPiccholiya (ITA No. 4525 to Shri TakhtmalBhuralalPiccholiya (ITA No. 4525 to 4528 /Mum/2014) Tribunal 4528 /Mum/2014) Tribunal

Grasim Industries Ltd. 13 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

(d) DCIT Vs M/s CMI PPE Ltd ( ITANo. 2316/Mum/2019) DCIT Vs M/s CMI PPE Ltd ( ITANo. 2316/Mum/2019) DCIT Vs M/s CMI PPE Ltd ( ITANo. 2316/Mum/2019) Mumbai Tribunal. Mumbai Tribunal.

7.2. Further, before us, the Ld. Counsel of the assessee has filed Further, before us, the Ld. Counsel of the assessee has filed Further, before us, the Ld. Counsel of the assessee has filed additional evidences in the form of data of the company downloaded of data of the company downloaded from the site of the Ministry of Corporate Affairs. The Ld. Counsel site of the Ministry of Corporate Affairs. The Ld. Counsel site of the Ministry of Corporate Affairs. The Ld. Counsel submitted that this document might be admitted as additional submitted that this document might be admitted as additional submitted that this document might be admitted as additional evidence. He submitted that according to the website of Ministry of He submitted that according to the website of Ministry of He submitted that according to the website of Ministry of corporate affairs, the sa corporate affairs, the said party is active and it has filed its balance active and it has filed its balance sheet up to 31/03/2022. sheet up to 31/03/2022.

Grasim Industries Ltd. 14 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

,therefore the documents submitted by the assessee do not therefore the documents submitted by the assessee do not therefore the documents submitted by the assessee do not subscribe to genuineness of the work by the said party. subscribe to genuineness of the work by the said party. subscribe to genuineness of the work by the said party.

Grasim Industries Ltd. 15 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

CIT(A) or the AO in remand proceeding are CIT(A) or the AO in remand proceeding are it liberty to carry out the it liberty to carry out the inquiries as deemed fit for verification of the work done by the said inquiries as deemed fit for verification of the work done by the said inquiries as deemed fit for verification of the work done by the said party. The ground No. 2 No. 2 of appeal of the assessee is according of appeal of the assessee is accordingly allowed for statistical purposes. allowed for statistical purposes.

9.1 Regarding the ground No. 1 of the assessee’s appeal, the Ld. Regarding the ground No. 1 of the assessee’s appeal, the Ld. Regarding the ground No. 1 of the assessee’s appeal, the Ld. Counsel of the assessee submitted that assessment u/s 153C of the Counsel of the assessee submitted that assessment u/s 153C of the Counsel of the assessee submitted that assessment u/s 153C of the Act is in respect of completed assessment because assessment u/s Act is in respect of completed assessment because assessment u/s Act is in respect of completed assessment because assessment u/s 143(3) of the Act was 143(3) of the Act was completed on 25.03.2010, whereas notice u/s completed on 25.03.2010, whereas notice u/s 153C of the Act is dated 26.11.2014. On the contrary, according to 153C of the Act is dated 26.11.2014. On the contrary, according to 153C of the Act is dated 26.11.2014. On the contrary, according to the Revenue this is is case of abated (pending) assessment case of abated (pending) assessment, because reassessment proceedings u/s 14 reassessment proceedings u/s 147 of the Act were initiated by the of the Act were initiated by the Assessing Officer by way of by way of issue of notice u/s 148 of the Act and at issue of notice u/s 148 of the Act and at the time of issue of notice u/s 153C of the the time of issue of notice u/s 153C of the Act, said Act, said reassessment proceedings were pending and same got abated by way of issue of proceedings were pending and same got abated by way of issue of proceedings were pending and same got abated by way of issue of notice u/s 153C of th notice u/s 153C of the Act.

9.2 Before us, the Ld. Counsel of the assessee has contended that Before us, the Ld. Counsel of the assessee has contended that Before us, the Ld. Counsel of the assessee has contended that the notice u/s 148 of the Act issued itself is invalid and the notice u/s 148 of the Act issued itself is invalid and the notice u/s 148 of the Act issued itself is invalid and consequently in view of no valid proceedings u/s 148 of the Act consequently in view of no valid proceedings u/s 148 of the Act consequently in view of no valid proceedings u/s 148 of the Act pending, it was a case of completed assessment. The Ld. Cou it was a case of completed assessment. The Ld. Counsel of it was a case of completed assessment. The Ld. Cou the assessee has given two reasons for above contentions. the assessee has given two reasons for above contentions. the assessee has given two reasons for above contentions.

9.3 Firstly, according to him, the assessee has been requesting according to him, the assessee has been requesting according to him, the assessee has been requesting for a copy of approval granted of the Commissioner of Income-tax for a copy of approval granted of the Commissioner of Income for a copy of approval granted of the Commissioner of Income u/s 151 for issuance of notice u/s 148 of the Act. He submitted u/s 151 for issuance of notice u/s 148 of the Act u/s 151 for issuance of notice u/s 148 of the Act

Grasim Industries Ltd. 16 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. that assessee has request that assessee has requested for the same before the Assessing before the Assessing officer in the course of in the course of 153C proceedings and also before the Ld. proceedings and also before the Ld. CIT(A). He referred to page No. 90, 459, 460 465 631 and 676 of the CIT(A). He referred to page No. 90, 459, 460 465 631 and 676 of the CIT(A). He referred to page No. 90, 459, 460 465 631 and 676 of the factual Paper Book. factual Paper Book. The learned Counsel relied on the decision of the Hon’ble High Court of Allahabad in the case of Deepak Gupta the Hon’ble High Court of Allahabad in the case of the Hon’ble High Court of Allahabad in the case of Vs ACIT reported in (2020) Vs ACIT reported in (2020), 120 taxmann.com 431 (Allahabad) , 120 taxmann.com 431 (Allahabad) , wherein it is held that the assessee is fully entitled to a copy of wherein it is held that the assessee is fully entitled to a copy of wherein it is held that the assessee is fully entitled to a copy of order passed under section 151 of the Actand correspondingly, order passed under section 151 of the Actand correspondingly, order passed under section 151 of the Actand correspondingly, Assessing Officer is obliged to hand over a copy of the same, as and Assessing Officer is obliged to hand over a copy of the same, as and Assessing Officer is obliged to hand over a copy of the same, as and when, the assessee seeksfor it. when, the assessee seeksfor it. He submitted that in a He submitted that in absence of approval u/s 151, the proceedings u/s 147 are invalid and hence approval u/s 151, the proceedings u/s 147 are invalid and hence approval u/s 151, the proceedings u/s 147 are invalid and hence assessment for the year would not abate, thus, no addition could assessment for the year would not abate, thus, no addition could assessment for the year would not abate, thus, no addition could have been made without aid of incriminating material. have been made without aid of incriminating material. have been made without aid of incriminating material.

9.4 Secondly, the Ld. Counsel of the assessee referred to the the Ld. Counsel of the assessee referred to the the Ld. Counsel of the assessee referred to the reasons recorded for issuance of notice u/s 148 of the Act available reasons recorded for issuance of notice u/s 148 of the Act available reasons recorded for issuance of notice u/s 148 of the Act available on page 85 to 86 of the factual paper book and submitted that on page 85 to 86 of the factual paper book and submitted that on page 85 to 86 of the factual paper book and submitted that reopening was resorted pursuant to the search reopening was resorted pursuant to the search conducted at the conducted at the premises of one Mr. Pravin Agarwal and statement recorded by premises of one Mr. Pravin Agarwal and statement recorded by premises of one Mr. Pravin Agarwal and statement recorded by Investigation wing of nvestigation wing of Income-tax department. The Ld. Counsel . The Ld. Counsel submitted that reassessment pursuant to the search conducted on submitted that reassessment pursuant to the search conducted on submitted that reassessment pursuant to the search conducted on the premises of third party can be made only u/s 153C of the Act premises of third party can be made only u/s 153C of the Act premises of third party can be made only u/s 153C of the Act and not u/s 148 of the Act and therefore, the reassessment and not u/s 148 of the Act and therefore, the reassessment and not u/s 148 of the Act and therefore, the reassessment proceedings u/s 148 of the Act u/s 148 of the Act on the basis of a search conducted on the basis of a search conducted at the premises of Shri Pravin Aggarwal is invalid in law. In support at the premises of Shri Pravin Aggarwal is invalid in law. In support at the premises of Shri Pravin Aggarwal is invalid in law. In support

Grasim Industries Ltd. 17 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. of this contention, the Ld. Counsel relied on the following decisions of this contention, the Ld. Counsel relied on the following decisions of this contention, the Ld. Counsel relied on the following decisions of the Tribunal:

 Smt. Samanthapudi Lavanya v. ACIT (189 IT Smt. Samanthapudi Lavanya v. ACIT (189 ITD 401) (Vizac T.) D 401) (Vizac T.)  ITO v. Arun Kumar Kapoor (50 SOT 87) (Amritsar T.) ITO v. Arun Kumar Kapoor (50 SOT 87) (Amritsar T.) ITO v. Arun Kumar Kapoor (50 SOT 87) (Amritsar T.)  Mr. Nilesh Bharani v. DCIT (ITA No. 612/Mum/2020) Mr. Nilesh Bharani v. DCIT (ITA No. 612/Mum/2020) Mr. Nilesh Bharani v. DCIT (ITA No. 612/Mum/2020) 9.5 The Ld. Counsel of the assessee accordingly contended that The Ld. Counsel of the assessee accordingly contended that The Ld. Counsel of the assessee accordingly contended that since notice u/s 148 of the Act is bad in law, the consequent since notice u/s 148 of the Act is bad in law, the consequent since notice u/s 148 of the Act is bad in law, the consequent assessment proceedings u/s 153C of the Act being in respect of a proceedings u/s 153C of the Act being in respect of a proceedings u/s 153C of the Act being in respect of a completed assessment, therefore, no addition could have been made completed assessment, therefore, no addition could have been made completed assessment, therefore, no addition could have been made in the order u/s 153C of the Act on any new issue other than the in the order u/s 153C of the Act on any new issue other than the in the order u/s 153C of the Act on any new issue other than the issue arising out of incriminating material. He submitted that issue arising out of incriminating material. He submitted that issue arising out of incriminating material. He submitted that neither the addition of Rs.10,53,83,193/ the addition of Rs.10,53,83,193/- for disallowance of capital isallowance of capital work in progress nor the disallowance in relation to additional work in progress nor the disallowance in relation to additional work in progress nor the disallowance in relation to additional depreciation depreciation of of Rs.24,35,82,219/- Rs.24,35,82,219/ is is arising arising out out of of any any incriminating material. incriminating material.

9.6 The Ld. Counsel of the assessee assailed the The Ld. Counsel of the assessee assailed the assessment order assessment order on one more groundi.e.third ground or reason.He submitted that on one more ground e submitted that despite several request made by the despite several request made by the assessee, the Department never the Department never furnished a copy of the satisfaction note which is essential for furnished a copy of the satisfaction note which is essential for furnished a copy of the satisfaction note which is essential for invoking the provisions of section 153C of t invoking the provisions of section 153C of the Act. He referred to he Act. He referred to the assessee’s letter dated 17.12.2014 requesting for copy of the assessee’s letter dated 17.12.2014 requesting for copy of the assessee’s letter dated 17.12.2014 requesting for copy of satisfaction and material based on satisfaction and material based on which notice 153C was served 153C was served on the assessee. He also referred to page 64 of the factual Paper . He also referred to page 64 of the factual Paper . He also referred to page 64 of the factual Paper Book, which is a letter dated 10.03.2013 letter dated 10.03.2013 requesting for providing requesting for providing

Grasim Industries Ltd. 18 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. copy of satisfaction note. The Ld. Counsel further referred to page copy of satisfaction note. The Ld. Counsel further referred to page copy of satisfaction note. The Ld. Counsel further referred to page 67 of the factual Paper Book which is letter dated 08.07.2015 of the 67 of the factual Paper Book which is letter dated 08.07.2015 of the 67 of the factual Paper Book which is letter dated 08.07.2015 of the assessee where the same request was reiterated. On the other hand, assessee where the same request was reiterated. On the other hand, assessee where the same request was reiterated. On the other hand, the Assessing Officer in pa the Assessing Officer in para 8 of the impugned assessment order ra 8 of the impugned assessment order observed that there was no requirement in law to provide a copy of observed that there was no requirement in law to provide a copy of observed that there was no requirement in law to provide a copy of satisfactory note to the assessee. The Ld. Counsel of the assessee satisfactory note to the assessee. The Ld. Counsel of satisfactory note to the assessee. The Ld. Counsel of on the other hand, relied on following decisions to support the on the other hand, relied on following decisions to support the on the other hand, relied on following decisions to support the contention that sati contention that satisfaction note ought to be furnished to the sfaction note ought to be furnished to the assessee:

 Karthik Krishna v. DCIT (146 taxmann.com 466) (Kar HC) Karthik Krishna v. DCIT (146 taxmann.com 466) (Kar HC) Karthik Krishna v. DCIT (146 taxmann.com 466) (Kar HC)  M/s Chirchind Hydro Power Ltd. v. ACIT (I.T.(SS).A. Nos. 171, M/s Chirchind Hydro Power Ltd. v. ACIT (I.T.(SS).A. Nos. 171, M/s Chirchind Hydro Power Ltd. v. ACIT (I.T.(SS).A. Nos. 171, 172 and 174/Ind/2008) 172 and 174/Ind/2008)  Janki Exports International v. UOI (278 ITR 296) (Del HC) Janki Exports International v. UOI (278 ITR 296) (Del HC) Janki Exports International v. UOI (278 ITR 296) (Del HC) 9.7 The Ld. Counsel of the assessee submitted that in absence of a The Ld. Counsel of the assessee submitted that in absence of a The Ld. Counsel of the assessee submitted that in absence of a copy of the satisfaction note and a copy of the Commissioner’s copy of the satisfaction note and a copy of the Commissioner’s copy of the satisfaction note and a copy of the Commissioner’s approval being not furnished to the approval being not furnished to the assessee, adverseinference assessee, adverseinference should have been drawn should have been drawn against assessment completed against assessment completed u/s 153C of the Act.

Grasim Industries Ltd. 19 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

Officer to treat the reassessment proceeding under 147 of the Act as Officer to treat the reassessment proceeding under 147 of the Officer to treat the reassessment proceeding under 147 of the abated. The DR also submitted that at the stag of issue of notice The DR also submitted that at the stag of issue of notice The DR also submitted that at the stag of issue of notice u/s 153C of the Act, the proceedings u/s 148 were pending before u/s 153C of the Act, the proceedings u/s 148 were pending before u/s 153C of the Act, the proceedings u/s 148 were pending before the AO and he can’t visualize at that stage it might be challenged as the AO and he can’t visualize at that stage it might be the AO and he can’t visualize at that stage it might be invalid. It was also submitted that validity of It was also submitted that validity of notice u/s 148 of the notice u/s 148 of the Act on issue of approval letter u/s 151 has been challenged for the Act on issue of approval letter u/s 151 has been challenged for the Act on issue of approval letter u/s 151 has been challenged for the first time before the ITAT and not adjudicated by the ld CIT(A), first time before the ITAT and not adjudicated by the ld CIT(A), first time before the ITAT and not adjudicated by the ld CIT(A), therefore, the matter should be sent ba therefore, the matter should be sent back to the ld CIT(A). ck to the ld CIT(A). The Ld. DR without prejudice to the above DR without prejudice to the above, further submitted that he had further submitted that he had requested the field authoritiesfor authoritiesfor tracinga copy of such approval copy of such approval u/s 151 of the Act granted. u/s 151 of the Act granted.

10.1 Secondly, on the issue of appropriate remedial action on the Secondly, on the issue of appropriate remedial action on the Secondly, on the issue of appropriate remedial action on the basis of the information received in respect of search at the sis of the information received in respect of search at the sis of the information received in respect of search at the premises of Mr. Pravin Aggarwal, submitted that since no material premises of Mr. Pravin Aggarwal, submitted that since no material premises of Mr. Pravin Aggarwal, submitted that since no material pertaining to the assessee assessee was found during the course of the was found during the course of the search at the third party i.e. Mr. Pravin search at the third party i.e. Mr. Pravin Aggarwal, therefore Aggarwal, therefore, remedial action had had been taken validly invoking section 147 of the been taken validly invoking section 147 of the Act only. He accordingly submitted that proceedings u/s 147 of the Act only. He accordingly submitted that proceedings u/s 147 of the Act only. He accordingly submitted that proceedings u/s 147 of the Act being validly initiated and being pending as on the date of issue Act being validly initiated and being pending as on the date of issue Act being validly initiated and being pending as on the date of issue of notice u/s 153C of the Act, the assessment order passed by the of notice u/s 153C of the Act, the assessment order passe of notice u/s 153C of the Act, the assessment order passe Assessing Officer u/s 153C of the Act is a valid assessment order. Assessing Officer u/s 153C of the Act is a valid assessment order. Assessing Officer u/s 153C of the Act is a valid assessment order. On the issue of copy of the satisfaction note u/s 153C of the Act, On the issue of copy of the satisfaction note u/s 153C of the Act On the issue of copy of the satisfaction note u/s 153C of the Act the Ld. DR produced a photocopy before the Bench and provided the Ld. DR produced a photocopy before the Bench and provided the Ld. DR produced a photocopy before the Bench and provided the same to the Ld. A AR.

Grasim Industries Ltd. 20 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

13.1 As far as the second reason for challenge to validity of As far as the second reason for challenge to validity of As far as the second reason for challenge to validity of assessment proceedings under section 153C of the Act is assessment proceedings under section 153C of the Act is assessment proceedings under section 153C of the Act is concerned, the Ld. Counsel of t concerned, the Ld. Counsel of the assessee submitted that on the he assessee submitted that on the basis basis basis of of of information information information received received received from from from Shri Shri Shri Pravin Pravin Pravin Aggarwal, Aggarwal, Aggarwal, reassessment could have been initiated only u/s 153C of the Act reassessment could have been initiated only u/s 153C of the Act reassessment could have been initiated only u/s 153C of the Act and not u/s 148 of the Act. We find that 153C proceedings could be and not u/s 148 of the Act. We find that 153C proceedings could be and not u/s 148 of the Act. We find that 153C proceedings could be initiated only when during search initiated only when during search at third party, any cash jewellery at third party, any cash jewellery or any valuable article is found to be belonging to assessee or any or any valuable article is found to be belonging to assessee or any or any valuable article is found to be belonging to assessee or any material documentary evidence or other material found to be material documentary evidence or other material found to be material documentary evidence or other material found to be pertaining to the assessee or any information contended therein is pertaining to the assessee or any information contended therein is pertaining to the assessee or any information contended therein is Grasim Industries Ltd. 21 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors. found related to the asses found related to the assessee. The Hon’ble supreme court in the . The Hon’ble supreme court in the case of ITO vs Vikram Sujitkumar Bhatia in Civil Appeal No. 911 of case of ITO vs Vikram Sujitkumar Bhatia in Civil Appeal No. 911 of case of ITO vs Vikram Sujitkumar Bhatia in Civil Appeal No. 911 of 2022 held the amendment brought to section 153C of the Act by 2022 held the amendment brought to section 153C of the Act by 2022 held the amendment brought to section 153C of the Act by way of finance Act, 2015 way of finance Act, 2015 as retrospective. Since, the information Since, the information received from search a received from search at the Shri Pravin Aggarwal was based on his t the Shri Pravin Aggarwal was based on his statement and other material , which were pertaining to Shri Pravin statement and other material , which were pertaining to Shri Pravin statement and other material , which were pertaining to Shri Pravin Aggarwal only and therefore, proceedings u/s 153C of the Act could Aggarwal only and therefore, proceedings u/s 153C of the Act could Aggarwal only and therefore, proceedings u/s 153C of the Act could not have been initiated/invoked in the hands of the assessee on not have been initiated/invoked in the hands of the assessee on not have been initiated/invoked in the hands of the assessee on said material. The challenge of the Ld. Counsel of the assessee for l. The challenge of the Ld. Counsel of the assessee for l. The challenge of the Ld. Counsel of the assessee for invalidating the present proceedings u/s 153C on this reasonis invalidating the present proceedings u/s 153C on this reasonis invalidating the present proceedings u/s 153C on this reasonis accordingly rejected. In our opinion on such information from accordingly rejected. In our opinion on such information from accordingly rejected. In our opinion on such information from Pravin Aggarwal only valid recourse was to issue notice u/s 148 of Pravin Aggarwal only valid recourse was to issue notice u/s 148 of Pravin Aggarwal only valid recourse was to issue notice u/s 148 of the Act. The decisions relied upon by the learn The decisions relied upon by the learn The decisions relied upon by the learned counsel are distinguishable as same are distinguishable as same are on the facts of the specific case where n the facts of the specific case where any asset belonging to an assessee or material pertaining to an any asset belonging to an assessee or material pertaining to an any asset belonging to an assessee or material pertaining to an assessee is found during the search of the third party. assessee is found during the search of the third party. assessee is found during the search of the third party.

14.1. The first reason of challenge reason of challengeis thatin absence of providing copy in absence of providing copy of the approval for reassessment grante of the approval for reassessment granted by the appropriate d by the appropriate authority u/s 151 of the Act, authority u/s 151 of the Act, notice u/s 148 of the Act notice u/s 148 of the Act is invalid, and thus assessment was no longer abated and hence no addition could thus assessment was no longer abated and hence no addition could thus assessment was no longer abated and hence no addition could have been made otherwise than the aid of the incriminating material. have been made otherwise than the aid of the incriminating material have been made otherwise than the aid of the incriminating material

Grasim Industries Ltd. 22 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

In the case dispute is regarding abatement of assessment and not In the case dispute is regarding abatement of assessment and not In the case dispute is regarding abatement of assessment and not on the issue of existence of incriminating material qua the addition. on the issue of existence of incriminating material qua the addition. on the issue of existence of incriminating material qua the addition. We find that the assessee has requested before the lower authorities find that the assessee has requested before the lower authorities find that the assessee has requested before the lower authorities from time to time for providing of copy of such ap from time to time for providing of copy of such approval letter u/s proval letter u/s 151 of the Act. However, assessee has not been provided such copy 151 of the Act. However, assessee has not been provided such copy 151 of the Act. However, assessee has not been provided such copy of the approval. The Bench also of the approval. The Bench also specifically asked the Ld. DR to asked the Ld. DR to provide the copy of the approval granted u/s 151 of the Act. Before provide the copy of the approval granted u/s 151 of the Act. provide the copy of the approval granted u/s 151 of the Act. us, the learned department representati us, the learned department representative submitted that this being ve submitted that this being a very old matter, relevant records of the Department of not at a very old matter, relevant records of the Department of not at a very old matter, relevant records of the Department of not at place, hence some more time was required. He was allowed some more time was required. He was allowed a period some more time was required. He was allowed of more than one month more than one month, still he could not produce copy of such still he could not produce copy of such approval letter. He made an alter approval letter. He made an alternative plea that matter may be native plea that matter may be restored back to the file of the Ld. CIT(A), who may call for a restored back to the file of the Ld. CIT(A), who may call for a restored back to the file of the Ld. CIT(A), who may call for a remand report from the Assessing Officer asking him to produce a remand report from the Assessing Officer asking him to produce a remand report from the Assessing Officer asking him to produce a copy of the approval letter issued under section 151 of the Act. He copy of the approval letter issued under section 151 of the Act. He copy of the approval letter issued under section 151 of the Act. He submitted that assessment ma submitted that assessment may not be knocked out only for the y not be knocked out only for the technical reason that approval granted under section 151 of the Act technical reason that approval granted under section 151 of the Act technical reason that approval granted under section 151 of the Act could not be readily traced due to could not be readily traced due to matter being old and change of old and change of jurisdiction of the case from one Commissioner of income tax to jurisdiction of the case from one Commissioner of income tax to jurisdiction of the case from one Commissioner of income tax to another. He submitted th He submitted that copy of the approval letter might be at copy of the approval letter might be available in the office of the additional Commissioner of income-tax available in the office of the additional Commissioner of income available in the office of the additional Commissioner of income ( i.e Range head) or in the Commissioner of the Income or in the Commissioner of the Income-tax ( Administrative) , which will be traced out and submitted before the , which will be traced out and submitted before the , which will be traced out and submitted before the Ld. CIT(A) , if matter is restored back . atter is restored back . He reiterated that he was He reiterated that he was confident of availability of availability of such approval.

Grasim Industries Ltd. 23 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

14.2 In our opinion, the matter cannot be deferred for a In our opinion, the matter cannot be deferred for a In our opinion, the matter cannot be deferred for an indefinite period before us. This issue of challenge of validity of notice u/s 148 This issue of challenge of validity of notice u/s 148 This issue of challenge of validity of notice u/s 148 of the Act has been raised for the first time before us and not raised of the Act has been raised for the first time before us and not raised of the Act has been raised for the first time before us and not raised before the lower authorities. before the lower authorities. We note that in view of the additional in view of the additional evidence furnished by the assessee evidence furnished by the assesseeon the issue of the merit, w on the issue of the merit, we have restored the matter back to the file of the ld have restored the matter back to the file of the ld.CIT(A CIT(A), therefore in the interest of the substantial justice, we feel it appropriate to in the interest of the substantial justice, we feel it appropriate to in the interest of the substantial justice, we feel it appropriate to restore this issue, which is a matter of restore this issue, which is a matter of determination of determination of fact, to the file of the Ld. CIT(A) for adjudication. He file of the Ld. CIT(A) for adjudication. He may call for may call for a report from the assessing officer and verify copy of the approval granted under the assessing officer and verify copy of the approval granted under the assessing officer and verify copy of the approval granted under section 151 of the Act. If such an approval is found to be in section 151 of the Act. If such an approval is found to be in section 151 of the Act. If such an approval is found to be in existence, then he shall provide a copy of the same to the assessee. existence, then he shall provide a copy of the same to the assessee. existence, then he shall provide a copy of the same to the assessee. If no such approval for issue If no such approval for issue of notice under section 148 of the of notice under section 148 of the Act is found, then Ld. CIT(A) may decide validity of the assessment is found, then Ld. CIT(A) may decide validity of the assessment is found, then Ld. CIT(A) may decide validity of the assessment proceedings under section 153C of the Act in accordance with law. proceedings under section 153C of the Act in accordance with law. proceedings under section 153C of the Act in accordance with law.

Grasim Industries Ltd. 24 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

“18.30 In view of the aforesaid detailed discussion and 18.30 In view of the aforesaid detailed discussion and 18.30 In view of the aforesaid detailed discussion and judicial precedents, I am of the judicial precedents, I am of the view that assessments which view that assessments which are completed Us 1430) do not abate. Further, proceedings U/. are completed Us 1430) do not abate. Further, proceedings U/. are completed Us 1430) do not abate. Further, proceedings U/. 153C r.w.s. 153A do not empower the AO to re 153C r.w.s. 153A do not empower the AO to re-adjudicate the adjudicate the same issues again, unless fresh material is found in the same issues again, unless fresh material is found in the same issues again, unless fresh material is found in the course of search which has some connection with t course of search which has some connection with t course of search which has some connection with the said issues. issues. issues. The The The assessing assessing assessing authority authority authority cannot cannot cannot disturb disturb disturb the the the assessment order which has attained finality, unless the assessment order which has attained finality, unless the assessment order which has attained finality, unless the material gathered during the course of search, establishes material gathered during the course of search, establishes material gathered during the course of search, establishes that the income computed in the finalized assessment was not that the income computed in the finalized assessment was not that the income computed in the finalized assessment was not in accordance with t in accordance with the facts unearthed during the course of he facts unearthed during the course of search. 18.31 Respectfully following these binding decisions, it is held 18.31 Respectfully following these binding decisions, it is held 18.31 Respectfully following these binding decisions, it is held that the completed proceedings us 143(3) will not abate and that the completed proceedings us 143(3) will not abate and that the completed proceedings us 143(3) will not abate and the AQ is directed to follow the order of the CIT(A) and the AQ is directed to follow the order of the CIT(A) and the AQ is directed to follow the order of the CIT(A) and consider the same, while c consider the same, while computing taxable income us 153C. omputing taxable income us 153C. The proceedings u/s 153C are not parallel proceedings and do The proceedings u/s 153C are not parallel proceedings and do The proceedings u/s 153C are not parallel proceedings and do not not give give power power to to the the AO AO to to re-adjudicate re adjudicate the the issues.Accordingly, this ground of appeal is decided in favour issues.Accordingly, this ground of appeal is decided in favour issues.Accordingly, this ground of appeal is decided in favour of the Appellant. of the Appellant.”

18. We have heard rival submission We have heard rival submission of the parties on the issue in of the parties on the issue in dispute and perused the relevant material on record. It is settled dispute and perused the relevant material on record. It is settled dispute and perused the relevant material on record. It is settled law that in case of unabated assessment no addition could have law that in case of unabated assessment no addition could have law that in case of unabated assessment no addition could have been made by the Assessing Officer without aid of the incriminating been made by the Assessing Officer without aid of the incriminating been made by the Assessing Officer without aid of the incriminating material found during the material found during the course of the search as held by the course of the search as held by the Hon’ble Bombay High Court in the case of Continental Warehousing Hon’ble Bombay High Court in the case of Continental Warehousing Hon’ble Bombay High Court in the case of Continental Warehousing Corporation Ltd.(370 ITR 643). (370 ITR 643). Since, the issue Since, the issue in the case of assessment abetted or assessment abetted or not, has been restored back to the file of the has been restored back to the file of the Ld. CIT(A), therefore, Ld. CIT(A), therefore, ground No. 1and 2 and of the appeal of the of the appeal of the Revenue are accordingly accordingly restored back to the file of the Ld. CIT(A) restored back to the file of the Ld. CIT(A) for deciding afresh. The ground No. 1 and 2 of the appeal of the fresh. The ground No. 1 and 2 of the appeal of the fresh. The ground No. 1 and 2 of the appeal of the revenue are accordingly allowed for statistical purposes revenue are accordingly allowed for statistical purposes revenue are accordingly allowed for statistical purposes

Grasim Industries Ltd. 25 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.

Grasim Industries Ltd. 26 ITA Nos. No. 1053 to 1055/M/2018 and ors. 1053 to 1055/M/2018 and ors.