ESSEL MINING & INDUSTRIES LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE 1(4), MUMBAI
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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI ABY T VARKEY & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM
All above appeals being connected with one assessee, same All above appeals being connected with one assessee, same All above appeals being connected with one assessee, same were heard together and disposed of were heard together and disposed off by way of this consolidated by way of this consolidated order for convenience and avoid repetition of facts. order for convenience and avoid repetition of facts.
Firstly, we take up the cross take up the cross-appeals of the Revenue and the appeals of the Revenue and the assessee for assessment year 2011 assessee for assessment year 2011-12. The grounds raised by the 12. The grounds raised by the Revenue for assessment year 2011 Revenue for assessment year 2011-12 are reproduced as under: 12 are reproduced as under:
"On the facts and the circumstances of the case and in law 1. "On the facts and the circumstances of the case and in law 1. "On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in granting relief to the assessee stating the Ld. CIT(A) erred in granting relief to the assessee stating the Ld. CIT(A) erred in granting relief to the assessee stating that no disallowance u/s 153C of the Act is called for as that no disallowance u/s 153C of the Act is called for as that no disallowance u/s 153C of the Act is called for as there are no incriminating materials found during the search there are no incriminating materials found during the search there are no incriminating materials found during the search and the ass and the assessment has reached its finality and was not essment has reached its finality and was not
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abated at the initiation proceedings u/s. 132(1) of the Income abated at the initiation proceedings u/s. 132(1) of the Income abated at the initiation proceedings u/s. 132(1) of the Income Tax Act, 1961". Tax Act, 1961".
"On the facts and in the circumstances of the case and in 2. "On the facts and in the circumstances of the case and in 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, in holding that no addition can be law, the Ld. CIT(A) erred, in holding that no addition can be law, the Ld. CIT(A) erred, in holding that no addition can be made u/s 153C of the Act, once the assessment has reached 153C of the Act, once the assessment has reached 153C of the Act, once the assessment has reached to finality us 143(3) of the Act, and no incriminating to finality us 143(3) of the Act, and no incriminating to finality us 143(3) of the Act, and no incriminating documents have been found and seized in the case of the documents have been found and seized in the case of the documents have been found and seized in the case of the assessee during the course of search and seizure action assessee during the course of search and seizure action assessee during the course of search and seizure action relying upon the decision of the jurisdi relying upon the decision of the jurisdictional Bombay high ctional Bombay high Court decision in the case of Continental Warehousing Corp. Court decision in the case of Continental Warehousing Corp. Court decision in the case of Continental Warehousing Corp. and M/s Murli Agro Products without appreciating that the and M/s Murli Agro Products without appreciating that the and M/s Murli Agro Products without appreciating that the revenue has not accepted the decision and has filed SLP in revenue has not accepted the decision and has filed SLP in revenue has not accepted the decision and has filed SLP in the Hon'ble Apex Court". the Hon'ble Apex Court".
On the facts and the circumstan 3. On the facts and the circumstances of the case and in law ces of the case and in law the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the Act, of Rs. 133,51,57,574/ Act, of Rs. 133,51,57,574/- in respect of rail system relying in respect of rail system relying upon the decision of the Hon'ble ITAT in the case of M/s. upon the decision of the Hon'ble ITAT in the case of M/s. upon the decision of the Hon'ble ITAT in the case of M/s.
Ultratech Cement Ltd. For A.Y. 2010 Ultratech Cement Ltd. For A.Y. 2010-11 without ap 11 without appreciating the decision of the Hon'ble ITAT has not been accepted by the the decision of the Hon'ble ITAT has not been accepted by the the decision of the Hon'ble ITAT has not been accepted by the department and further appeal has been filed." department and further appeal has been filed."
On the facts and the circumstances of the case and in law 4. On the facts and the circumstances of the case and in law 4. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in directing to hold the sum of Rs. the Ld. CIT(A) erred in directing to hold the sum of Rs. the Ld. CIT(A) erred in directing to hold the sum of Rs. 5,56,45,576/ 5,56,45,576/- received on transfer of Carbon Credit as ived on transfer of Carbon Credit as capital receipt and stating that no addition can be made in capital receipt and stating that no addition can be made in capital receipt and stating that no addition can be made in proceedings u/s 153C r.w.s 153A without any incriminating proceedings u/s 153C r.w.s 153A without any incriminating proceedings u/s 153C r.w.s 153A without any incriminating
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material found during the course of search u/s. 132(1) of the material found during the course of search u/s. 132(1) of the material found during the course of search u/s. 132(1) of the Income Tax Act, 1961. Income Tax Act, 1961.
On the facts a 5. On the facts and the circumstances of the case and in law nd the circumstances of the case and in law the Ld. CIT(A) erred in directing to hold the sum of Rs. the Ld. CIT(A) erred in directing to hold the sum of Rs. the Ld. CIT(A) erred in directing to hold the sum of Rs. 5,56,45,576/ 5,56,45,576/- received on transfer of Carbon Credit as received on transfer of Carbon Credit as capital receiptrelying on the decision of the Hon'ble ITAT in capital receiptrelying on the decision of the Hon'ble ITAT in capital receiptrelying on the decision of the Hon'ble ITAT in case case of Ultratech Cement Ltd. for 2010 of Ultratech Cement Ltd. for 2010-11 11 without without appreciating that the said decision has not been accepted by appreciating that the said decision has not been accepted by appreciating that the said decision has not been accepted by the department and further appeal has been filed in the the department and further appeal has been filed in the the department and further appeal has been filed in the Hon'ble Bombay High Court" Hon'ble Bombay High Court"
2.1 The grounds raised by the assessee for assessment year 2011 The grounds raised by the assessee for assessment year 2011 The grounds raised by the assessee for assessment year 2011- 12 are reproduced as under: 12 are reproduced as under:
That on the facts and in the circumstances of the case and on the facts and in the circumstances of the case and on the facts and in the circumstances of the case and in in in law, law, law, the the the Commissioner Commissioner Commissioner of of of Income Income Income Tax Tax Tax (Appeals) (Appeals) (Appeals) (hereinafter referred to as the CIT(A)) erred in holding that the (hereinafter referred to as the CIT(A)) erred in holding that the (hereinafter referred to as the CIT(A)) erred in holding that the proceedings us 153C r.w.s. 153A of the Income Tax Act 1961 proceedings us 153C r.w.s. 153A of the Income Tax Act 1961 proceedings us 153C r.w.s. 153A of the Income Tax Act 1961 (hereinafter referred to as (hereinafter referred to as the Act) has been validly initiated the Act) has been validly initiated by the Assessing Officer (hereinafter referred to as AO). by the Assessing Officer (hereinafter referred to as AO). by the Assessing Officer (hereinafter referred to as AO).
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, the CIT(A) erred in dismissing appellant's claim that in law, the CIT(A) erred in dismissing appellant's claim that in law, the CIT(A) erred in dismissing appellant's claim that re-examination of issues / genuine cla examination of issues / genuine claims, which had ims, which had obtained finality as per Order w/s 143(3) of the Act, are obtained finality as per Order w/s 143(3) of the Act, are obtained finality as per Order w/s 143(3) of the Act, are beyond the scope of assessment u/s 153C of the Act. beyond the scope of assessment u/s 153C of the Act. beyond the scope of assessment u/s 153C of the Act.
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not considering and dismissing the in law, the CIT(A) erred in not considering and dismissing the in law, the CIT(A) erred in not considering and dismissing the
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appellant's main Ground of Appeal No. 3 (before the CIT(A)} appellant's main Ground of Appeal No. 3 (before the CIT(A)} appellant's main Ground of Appeal No. 3 (before the CIT(A)} which was a question of law as to whether AO can re which was a question of law as to whether AO can re which was a question of law as to whether AO can re- examine the claims which had obtained finality as per Order examine the claims which had obtained finality as per Order examine the claims which had obtained finality as per Order us 143(3) of the Act and did not abate as per the provisions us 143(3) of the Act and did not abate as per the provisions us 143(3) of the Act and did not abate as per the provisions of section 153C r.w.s. of section 153C r.w.s. 153A of the Act.
3.1. That on the facts and in the circumstances of the case 3.1. That on the facts and in the circumstances of the case 3.1. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not considering and and in law, the CIT(A) erred in not considering and and in law, the CIT(A) erred in not considering and dismissing the appellant's main Ground of Appeal No. 3 dismissing the appellant's main Ground of Appeal No. 3 dismissing the appellant's main Ground of Appeal No. 3 {before the CIT(A)} without appreciating the fact that in the {before the CIT(A)} without appreciating the fact that in the {before the CIT(A)} without appreciating the fact that in the case of as case of assessments which do abate, the addition / sessments which do abate, the addition / disallowances can solely be made on the basis of only disallowances can solely be made on the basis of only disallowances can solely be made on the basis of only incriminating materials which admittedly, in the case of incriminating materials which admittedly, in the case of incriminating materials which admittedly, in the case of appellant, is not available. appellant, is not available.
3.2. That the CIT(A) erred in deciding Alternate Grounds 3.2. That the CIT(A) erred in deciding Alternate Grounds 3.2. That the CIT(A) erred in deciding Alternate Grounds {Ground Nos. 7 to {Ground Nos. 7 to 9 beforeCIT(A)} without considering and 9 beforeCIT(A)} without considering and hence dismissing the Main Ground {Ground No. 3 before hence dismissing the Main Ground {Ground No. 3 before hence dismissing the Main Ground {Ground No. 3 before CIT(A)).
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. in law, the CIT(A) erred in confirming the addition of Rs. in law, the CIT(A) erred in confirming the addition of Rs. 20,96,89,187/ 20,96,89,187/- on account of alleged illegal mining without eged illegal mining without appreciating the fact that the issue of mining production was appreciating the fact that the issue of mining production was appreciating the fact that the issue of mining production was fully verified in course of assessment proceeding us 143(3) of fully verified in course of assessment proceeding us 143(3) of fully verified in course of assessment proceeding us 143(3) of the Act.
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, and without prejudice to in law, and without prejudice to Ground No. 4, the CIT(A) Ground No. 4, the CIT(A) erred in not considering the appellant's Ground No. 8 {before erred in not considering the appellant's Ground No. 8 {before erred in not considering the appellant's Ground No. 8 {before
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the CIT(A)} which was against the action of the AO in valuing the CIT(A)} which was against the action of the AO in valuing the CIT(A)} which was against the action of the AO in valuing the closing stock of sub the closing stock of sub-grade Iron Ore after including grade Iron Ore after including Royalty.
5.1 That the CIT(A) failed to appreciate 5.1 That the CIT(A) failed to appreciate that Royalty cannot that Royalty cannot be included in the valuation of closing stock of sub be included in the valuation of closing stock of sub be included in the valuation of closing stock of sub-grade Iron Ore which was lying in the premises of the appellant. Ore which was lying in the premises of the appellant. Ore which was lying in the premises of the appellant. Royalty is applicable only on actual despatches from the Royalty is applicable only on actual despatches from the Royalty is applicable only on actual despatches from the mines.
That on the facts and in the circumstances of the c That on the facts and in the circumstances of the c That on the facts and in the circumstances of the case and in law, and without prejudice to Ground No. 4, the CIT(A) in law, and without prejudice to Ground No. 4, the CIT(A) in law, and without prejudice to Ground No. 4, the CIT(A) erred in not considering the appellant's Ground No. 9 {before erred in not considering the appellant's Ground No. 9 {before erred in not considering the appellant's Ground No. 9 {before the CIT(A)) in which appellant had claimed that in case of the CIT(A)) in which appellant had claimed that in case of the CIT(A)) in which appellant had claimed that in case of addition on account of non addition on account of non-reporting of sub-grade production grade production in particular assessment year, than impact of the same cular assessment year, than impact of the same cular assessment year, than impact of the same should be given in successive assessment years till the should be given in successive assessment years till the should be given in successive assessment years till the assessment in which such production was reported as assessment in which such production was reported as assessment in which such production was reported as saleable production due to available market. saleable production due to available market.
2.2 The assessee has also raised addition ground, vide l The assessee has also raised addition ground, vide l The assessee has also raised addition ground, vide letter dated 23.08.2021 same are reproduced as under: 23.08.2021 same are reproduced as under:
ADDITIONAL GROUND NO. 1: DEPUTY COMMISSIONER OF ADDITIONAL GROUND NO. 1: DEPUTY COMMISSIONER OF ADDITIONAL GROUND NO. 1: DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4) DID NOT HAVE THE INCOME TAX, CENTRAL CIRCLE 1(4) DID NOT HAVE THE INCOME TAX, CENTRAL CIRCLE 1(4) DID NOT HAVE THE JURISDICTION TO PASS THE ORDER UNDER SECTION JURISDICTION TO PASS THE ORDER UNDER SECTION JURISDICTION TO PASS THE ORDER UNDER SECTION 143(3) READ WITH SECTION 153C 143(3) READ WITH SECTION 153C
On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the Ld. AO erred in issuing notice under section 153C of the Act AO erred in issuing notice under section 153C of the Act AO erred in issuing notice under section 153C of the Act
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and passing order under section 143(3) read with section and passing order under section 143(3) read with section and passing order under section 143(3) read with section 153C of the Act. 153C of the Act.
ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF EDUCATION CESS EDUCATION CESS
On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, the learned AO erred in not allowing deduction of education the learned AO erred in not allowing deduction of education the learned AO erred in not allowing deduction of education cess and secondary and higher education cess (collectively cess and secondary and higher education cess (collectively cess and secondary and higher education cess (collectively called as "Education Cess") while computing the total taxable called as "Education Cess") while computing the total taxable called as "Education Cess") while computing the total taxable income under the income under the Act.
The Appellant prays that the learned AO be directed to allow The Appellant prays that the learned AO be directed to allow The Appellant prays that the learned AO be directed to allow deduction of EducationCess while computing the total deduction of EducationCess while computing the total deduction of EducationCess while computing the total taxable income of the Appellant. taxable income of the Appellant.
Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee-company is a public limited company engaged in the business of mining of is a public limited company engaged in the business of is a public limited company engaged in the business of ore, manufacturing ore, manufacturing and trading of Iron Ore & ferro alloys trading of Iron Ore & ferro alloys, generation of electricity (Wind Power Mill) & Railway siding for generation of electricity (Wind Power Mill) & Railway siding for generation of electricity (Wind Power Mill) & Railway siding for captive use.
3.1 For the year under consideration, the assessee e For the year under consideration, the assessee e For the year under consideration, the assessee e-filed its return of income on 30.09.2011 declaring total income of return of income on 30.09.2011 declaring total income of return of income on 30.09.2011 declaring total income of ₹739,69,17,320/-. The return of income filed by the assessee was . The return of income filed by the assessee was . The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income-tax selected for scrutiny and statutory notices under the Income selected for scrutiny and statutory notices under the Income Act, 1961 (in short ‘the Act’) Act, 1961 (in short ‘the Act’) were issued and complied with. The issued and complied with. The assessment u/s 143(3) of the Act was completed on 24.01.2014 by assessment u/s 143(3) of the Act was completed on 24.01.2014 by assessment u/s 143(3) of the Act was completed on 24.01.2014 by the Dy. Commissioner of Income the Dy. Commissioner of Income-tax, Circle 5, Kolkata, determining tax, Circle 5, Kolkata, determining
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total income of the assesseecompany at total income of the assesseecompany at ₹760,32,32,330/ 760,32,32,330/-. While completing the assessment u/s 143(3) of the Act, the Assessing completing the assessment u/s 143(3) of the Act, the Assessing completing the assessment u/s 143(3) of the Act, the Assessing Officer interalia made following made following disallowance/ addition : disallowance/ addition : (i) expenses related to exempt income related to exempt income u/s 10B of the Act (ii) disallowance u/s (ii) disallowance u/s 14A r.w. Rules 8D of Income of Income-tax Rules, 1962, (iii) penalty charges, ii) penalty charges, (iv) club expenses, (v) excess depreciation on electrical equipment (iv) club expenses, (v) excess depreciation on electrical equipment (iv) club expenses, (v) excess depreciation on electrical equipment and (vi) expenses related to exempt income u/s 80IA of the Act. and (vi) expenses related to exempt income u/s 80IA and (vi) expenses related to exempt income u/s 80IA
3.2 Subsequently, consequent to the search action by the Central consequent to the search action by the Central consequent to the search action by the Central Bureau of Investigation (CBI) at the p Bureau of Investigation (CBI) at the premises of M/s Aditya Birla remises of M/s Aditya Birla Management Corporation Private Limited, a Management Corporation Private Limited, a search and seizure search and seizure action u/s 132 of the Act was carried out on at the premises of said action u/s 132 of the Act was carried out on at the premises of action u/s 132 of the Act was carried out on at the premises of company on 16.10.2013 on 16.10.2013. Simultaneously, search . Simultaneously, search and seizure action u/s 132 of the Act was also carr action u/s 132 of the Act was also carried out on the residential ied out on the residential premises of Shri Subhendu Amitabh, an individual on 16.10.2013. premises of Shri Subhendu Amitabh, an individual on 16.10.2013. premises of Shri Subhendu Amitabh, an individual on 16.10.2013. Due to centralization of the cases of the Aditya Birla Group at Due to centralization of the cases of the Aditya Birla Group at Due to centralization of the cases of the Aditya Birla Group at Mumbai, the case of the assessee was also transferred from Kolkata Mumbai, the case of the assessee was also transferred from Ko Mumbai, the case of the assessee was also transferred from Ko to Mumbai. In view of Material bel to Mumbai. In view of Material belonging to the assessee seized onging to the assessee seized during the course of search action at the premises of M/s Aditya during the course of search action at the premises of M/s Aditya during the course of search action at the premises of M/s Aditya Birla Management Corporation Private Limited Birla Management Corporation Private Limited, t , the assessment proceedings u/s 153C r.w.s. 153A of the Act were initiated in the proceedings u/s 153C r.w.s. 153A of the Act were initiated proceedings u/s 153C r.w.s. 153A of the Act were initiated case of the assessee case of the assessee by way of issue of notice dated 26.11.2014. ue of notice dated 26.11.2014. After considering the submission/objection of the assessee, the After considering the submission/objection of the assessee, the After considering the submission/objection of the assessee, the Assessing Officer passed the assessment order u/s 153C r.w.s. Assessing Officer passed the assessment order u/s 153C r.w.s. Assessing Officer passed the assessment order u/s 153C r.w.s. 143(3) of the Act on 29.03.2016 determining total income at 143(3) of the Act on 29.03.2016 determining total income at 143(3) of the Act on 29.03.2016 determining total income at
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₹918,85,81,780/-. In . In the assessment order, the Assessing Officer er, the Assessing Officer made various additions/disallowance which can be categorized in made various additions/disallowance which can be categorized in made various additions/disallowance which can be categorized in two categories, the first category first category of additions/disallowance of additions/disallowances which were already made in the assessment order passed u/s 143(3) of already made in the assessment order passed u/s 143(3) of already made in the assessment order passed u/s 143(3) of the Act and the Assessing Officer h the Act and the Assessing Officer has only repeated all those repeated all those additions in the present assessment order additions in the present assessment order, which includes which includes expenses related to exempt income u/s 10B of ₹24,871/- expenses related to exempt income u/s 10B of expenses related to exempt income u/s 10B of disallowance u/s 14A r.w.r. 8D (₹16,94,10,474/-) ; penalty charges disallowance u/s 14A r.w.r. 8D ( ) ; penalty charges (₹16,13,694/-) ; club club expenses (₹58,374/-) ; excess depreciation on excess depreciation on electrical equipment (₹92,831/-) and expenses related to exempt electrical equipment ( ) and expenses related to exempt income u/s 80IA (₹60,63,759/ 60,63,759/-). The second category second category of additions, which have been made for the first time in search assessment which have been made for the first time in search assessment which have been made for the first time in search assessment proceedings, interalia interalia include claim u/s 80IA in respect of rail 80IA in respect of rail siding system (₹133,51,57,574/ 133,51,57,574/-) ; illegal mining/ore production ) ; illegal mining/ore production (₹20,96,89,187); 20,96,89,187); 20,96,89,187); Carbon Carbon Carbon credit credit credit treated treated treated as as as revenue revenue revenue receipt receipt receipt (₹5,56,45,576/-) and addition for unaccounted cash transactions ) and addition for unaccounted cash transactions ) and addition for unaccounted cash transactions (₹1,35,00,000/-).
On further appeal, the L On further appeal, the Ld. CIT(A) though upheld the validity of d. CIT(A) though upheld the validity of proceedings u/s 153C of the Act, however allowed relief to the proceedings u/s 153C of the Act, however allowed relief to the proceedings u/s 153C of the Act, however allowed relief to the assessee on all issues on all issues except on the issue of illegal mining. except on the issue of illegal mining.
Aggrieved, both the Revenue and the assessee are before us, both the Revenue and the assessee are before us, both the Revenue and the assessee are before us, by way of raising grounds a by way of raising grounds as reproduced above.
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In ground No. 1 and 2 of the appeal, the Revenue is aggrieved In ground No. 1 and 2 of the appeal, the Revenue is aggrieved In ground No. 1 and 2 of the appeal, the Revenue is aggrieved with the additions deleted with the additions deleted by the ld CIT(A) on the ground on the ground that in absence of any incriminating material in case of completed absence of any incriminating material in case of completed absence of any incriminating material in case of completed assessments, no addition could have been made , no addition could have been made , no addition could have been made. These two grounds raised are are in respect of additions which were made in in respect of additions which were made in original assessment proceedings as well as new additions made by original assessment proceedings as well as new additions made by original assessment proceedings as well as new additions made by the Assessing Officer. In respect of new additions, the assessee has the Assessing Officer. In respect of new additions, the assessee has the Assessing Officer. In respect of new additions, the assessee has also raised separate grounds No. 3 to 5 of the a also raised separate grounds No. 3 to 5 of the appeal. ppeal.
As far as additions which have been repeated by the Assessing As far as additions which have been repeated by the Assessing As far as additions which have been repeated by the Assessing Officer in the present assessment order which were made in the Officer in the present assessment order which were made in the Officer in the present assessment order which were made in the original assessment order u/s 143(3) dated 24.01.2014, the Ld. original assessment order u/s 143(3) dated 24.01.2014 original assessment order u/s 143(3) dated 24.01.2014 CIT(A) has deleted the additions observing that the assessment for CIT(A) has deleted the additions observing that the asses CIT(A) has deleted the additions observing that the asses the the the assessment assessment assessment year year year under under under consideration consideration consideration was was was completed completed completed assessment as on the date of the search and therefore, it is in the assessment as on the date of the search and therefore, it is in the assessment as on the date of the search and therefore, it is in the nature of unabated assessment. The Ld. CIT(A) following the finding nature of unabated assessment. The Ld. CIT(A) following the finding nature of unabated assessment. The Ld. CIT(A) following the finding of the Hon’ble Jurisdictional High Court in the case of Continental of the Hon’ble Jurisdictional High Court in the case of of the Hon’ble Jurisdictional High Court in the case of Warehousing Corporation Warehousing Corporation (2015) 374 ITR 0645 (Bom) (2015) 374 ITR 0645 (Bom)and other decisions held that those additions could not have been made in the decisions held that those additions could not have been made in the decisions held that those additions could not have been made in the present search assessment proceedings. The relevant finding of the present search assessment proceedings. The relevant finding of the present search assessment proceedings. The relevant finding of the Ld. CIT(A) is reproduced as under: Ld. CIT(A) is reproduced as under:
“20.0 I have 20.0 I have gone through the assessment order, the gone through the assessment order, the submissions of the appellant company and various other submissions of the appellant company and various other submissions of the appellant company and various other material on record, on this issue. material on record, on this issue.
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20.1 The facts are that the original assessment in the case of 20.1 The facts are that the original assessment in the case of 20.1 The facts are that the original assessment in the case of appellant company had been completed w/s 143 of the Act appellant company had been completed w/s 143 of the Act appellant company had been completed w/s 143 of the Act on 24.01.2014. Against this order passed us 143(3) of the .2014. Against this order passed us 143(3) of the .2014. Against this order passed us 143(3) of the Act, the appellant has filed an appeal before the Ld. CIT(A), Act, the appellant has filed an appeal before the Ld. CIT(A), Act, the appellant has filed an appeal before the Ld. CIT(A), Kolkata. The appeal was decided by the Ld. CIT(A), in Kolkata. The appeal was decided by the Ld. CIT(A), in Kolkata. The appeal was decided by the Ld. CIT(A), in Appeal No. 223/13 Appeal No. 223/13-14/CIT(A)-VI/ Cir-5/Kol, vide order 5/Kol, vide order dated 31/10/2014. The A.0. has, vide dated 31/10/2014. The A.0. has, vide order dated order dated 05/02/2015 given appeal effect to this order of Ld.CIT(A), 05/02/2015 given appeal effect to this order of Ld.CIT(A), 05/02/2015 given appeal effect to this order of Ld.CIT(A), granting part reliefs on certain issues which are stated as granting part reliefs on certain issues which are stated as granting part reliefs on certain issues which are stated as under:-
(a) Disallowance u/s 14A Rs. 3,25,01,249/ (a) Disallowance u/s 14A Rs. 3,25,01,249/-
(b) Club Expenses Rs. 58,347/ (b) Club Expenses Rs. 58,347/-
(c) Penalty Expenses Rs. 16,13,694/ (c) Penalty Expenses Rs. 16,13,694/
(d) Depreciation Rs. 92,381/ preciation Rs. 92,381/-
(e) Common Expenses related to EOU unit Rs. 1,86,424/ (e) Common Expenses related to EOU unit Rs. 1,86,424/ (e) Common Expenses related to EOU unit Rs. 1,86,424/-(f)
Common Expenses related to 80IA units Rs 69,02,061/ Common Expenses related to 80IA units Rs 69,02,061/ Common Expenses related to 80IA units Rs 69,02,061/-.
20.2 Further, the Appellant has stated during the course of 20.2 Further, the Appellant has stated during the course of 20.2 Further, the Appellant has stated during the course of the appellate proceedings that both the appellant and the the appellate proceedings that both the appellant and the the appellate proceedings that both the appellant and the department had preferred second appeal before the Income partment had preferred second appeal before the Income partment had preferred second appeal before the Income Tax Appellate Tribunal. Tax Appellate Tribunal.
20.3 It has been noted that the AO has withdrawn these 20.3 It has been noted that the AO has withdrawn these 20.3 It has been noted that the AO has withdrawn these reliefs in the Order passed us 143(3) r.w.s. 153C of the Act. reliefs in the Order passed us 143(3) r.w.s. 153C of the Act. reliefs in the Order passed us 143(3) r.w.s. 153C of the Act. Thus, the question for adjudication for ols whether the 10 Thus, the question for adjudication for ols whether the 10 Thus, the question for adjudication for ols whether the 10 was justified in making the impugned additions, which has as justified in making the impugned additions, which has as justified in making the impugned additions, which has
Essel Mining & Industries Ltd. 12 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
already been made in the original assessment passed w/s already been made in the original assessment passed w/s already been made in the original assessment passed w/s 143(3) of theAct, by invoking the provisions of section 153C 143(3) of theAct, by invoking the provisions of section 153C 143(3) of theAct, by invoking the provisions of section 153C of the Act. Further, it needs to be adjudicated as to whether of the Act. Further, it needs to be adjudicated as to whether of the Act. Further, it needs to be adjudicated as to whether in the absence of an in the absence of any incriminating material found during the y incriminating material found during the course of search, the AO could made the impugned course of search, the AO could made the impugned course of search, the AO could made the impugned disallowances / additions. disallowances / additions.
20.2 From the assessment order, it is evident that AO has 20.2 From the assessment order, it is evident that AO has 20.2 From the assessment order, it is evident that AO has referred to Annexures A referred to Annexures A-1, A-2, A-8, A-9 & A-21, which have 21, which have been seized during t been seized during the course of search & seizure action on he course of search & seizure action on M/S ABMCPL on 16.10.2013. From the perusal and detailed M/S ABMCPL on 16.10.2013. From the perusal and detailed M/S ABMCPL on 16.10.2013. From the perusal and detailed discussion in assessment order, it is evident that these discussion in assessment order, it is evident that these discussion in assessment order, it is evident that these seized documents have no relation with the additions / seized documents have no relation with the additions / seized documents have no relation with the additions / disallowances stated above. Thus, the factual po disallowances stated above. Thus, the factual position is that sition is that there is no incriminating seized material in relation to the there is no incriminating seized material in relation to the there is no incriminating seized material in relation to the issues, mentioned above. issues, mentioned above.
20.3 It is noticed that the original assessment in case of the 20.3 It is noticed that the original assessment in case of the 20.3 It is noticed that the original assessment in case of the appellant for the AY. under consideration had already been appellant for the AY. under consideration had already been appellant for the AY. under consideration had already been completed u/s.143(3) on completed u/s.143(3) on 24.01.2014, passed by the then AO. 24.01.2014, passed by the then AO. In other words, the assessment for the current assessment In other words, the assessment for the current assessment In other words, the assessment for the current assessment year under consideration had already been concluded much year under consideration had already been concluded much year under consideration had already been concluded much before the initiation of search action us 132 of the Act. In the before the initiation of search action us 132 of the Act. In the before the initiation of search action us 132 of the Act. In the case of completed , where no incriminatin case of completed , where no incriminating material is found g material is found during the course of search, the assessment u/s.153C has to during the course of search, the assessment u/s.153C has to during the course of search, the assessment u/s.153C has to be made on originally assessed income only and no addition be made on originally assessed income only and no addition be made on originally assessed income only and no addition or disallowance can be made de hors the incriminating or disallowance can be made de hors the incriminating or disallowance can be made de hors the incriminating evidences recovered during the course of search. evidences recovered during the course of search.
Essel Mining & Industries Ltd. 13 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
20.4 In the ca 20.4 In the case of All Cargo Global Logistics Ltd. Vs. DCIT, se of All Cargo Global Logistics Ltd. Vs. DCIT, (2012) 147TTJ 0513 (SB): (2012) 74 DTR 0089 (SB): (2012) (2012) 147TTJ 0513 (SB): (2012) 74 DTR 0089 (SB): (2012) (2012) 147TTJ 0513 (SB): (2012) 74 DTR 0089 (SB): (2012) 137 ITD 0287 (SB): (2012)18 ITR 0106 (SB), the Hon'ble ITAT, 137 ITD 0287 (SB): (2012)18 ITR 0106 (SB), the Hon'ble ITAT, 137 ITD 0287 (SB): (2012)18 ITR 0106 (SB), the Hon'ble ITAT, Bombay has concluded as under: Bombay has concluded as under:-
Thus, question No. 1 before us is answered as under: 58. Thus, question No. 1 before us is answered as under: 58. Thus, question No. 1 before us is answered as under:
a) In assessments that are abated, the AO retains the ) In assessments that are abated, the AO retains the ) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him original jurisdiction as well as jurisdiction conferred on him original jurisdiction as well as jurisdiction conferred on him us 153A for which assessments shall be made for each of us 153A for which assessments shall be made for each of us 153A for which assessments shall be made for each of the six assessment years separately; the six assessment years separately;
b) In other cases, in addition to the income th b) In other cases, in addition to the income that has already at has already been assessed, the assessment us 153A will be made on the been assessed, the assessment us 153A will be made on the been assessed, the assessment us 153A will be made on the basis of incriminating material, which in the context of basis of incriminating material, which in the context of basis of incriminating material, which in the context of relevant provisions means relevant provisions means - (i) books of account, other (i) books of account, other documents, found in the course of search but not produced in documents, found in the course of search but not produced in documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed e of original assessment, and (ii) undisclosed e of original assessment, and (ii) undisclosed income or property discovered in the course of search." income or property discovered in the course of search." income or property discovered in the course of search."
20.5 The Hon'ble Bombay High Court has examined this 20.5 The Hon'ble Bombay High Court has examined this 20.5 The Hon'ble Bombay High Court has examined this issue in great detail in a recent judgement in case of CIT Vs. issue in great detail in a recent judgement in case of CIT Vs. issue in great detail in a recent judgement in case of CIT Vs. Continental Warehousing Continental Warehousing Corporation 2015) 279 CTR 0389 015) 279 CTR 0389 (Bom): (2015) 120 DTR 0089 (Bom):(2015) 374 ITR 0645 (Bom): (2015) 120 DTR 0089 (Bom):(2015) 374 ITR 0645 (Bom): (2015) 120 DTR 0089 (Bom):(2015) 374 ITR 0645 (Bom): (2015) 232 TAXMAN 0270 (Bombay), wherein it has (Bom): (2015) 232 TAXMAN 0270 (Bombay), wherein it has (Bom): (2015) 232 TAXMAN 0270 (Bombay), wherein it has upheld the findings of Hon'ble ITAT, Bombay in the case of upheld the findings of Hon'ble ITAT, Bombay in the case of upheld the findings of Hon'ble ITAT, Bombay in the case of All Cargo Global Logistics Ltd., referred supra. All Cargo Global Logistics Ltd., referred supra.
20.6 It has thus been 20.6 It has thus been held that in case of completed held that in case of completed assessments, the assessment us.153C has to be made on assessments, the assessment us.153C has to be made on assessments, the assessment us.153C has to be made on the basis of incriminating material only, i.e. undisclosed the basis of incriminating material only, i.e. undisclosed the basis of incriminating material only, i.e. undisclosed
Essel Mining & Industries Ltd. 14 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
income/ property/ books of accounts/ documents. In other income/ property/ books of accounts/ documents. In other income/ property/ books of accounts/ documents. In other words, where nothing incriminating is found during the words, where nothing incriminating is found during the words, where nothing incriminating is found during the course of the search operation, relating to any of the course of the search operation, relating to any of the course of the search operation, relating to any of the assessment years covered us. 153C of the Act, the assessment years covered us. 153C of the Act, the assessment years covered us. 153C of the Act, the assessment for such AYs. can't be disturbed. It has also assessment for such AYs. can't be disturbed. It has also assessment for such AYs. can't be disturbed. It has also been held that in the absence of any incriminating material, been held that in the absence of any incriminating material, been held that in the absence of any incriminating material, the completed assessment has only the completed assessment has only to be reiterated. to be reiterated.
20.7 A similar view has been taken by the Hon'ble Bombay 20.7 A similar view has been taken by the Hon'ble Bombay 20.7 A similar view has been taken by the Hon'ble Bombay High Court (Nagpur Bench) in case of Murli Agro Products Ltd High Court (Nagpur Bench) in case of Murli Agro Products Ltd High Court (Nagpur Bench) in case of Murli Agro Products Ltd Vs. CIT 49 Taxman.com172 in ITA No 36 of 2009, vide order Vs. CIT 49 Taxman.com172 in ITA No 36 of 2009, vide order Vs. CIT 49 Taxman.com172 in ITA No 36 of 2009, vide order dated 29/10/2010, the relevant excerpts of which are dated 29/10/2010, the relevant excerpts of which are dated 29/10/2010, the relevant excerpts of which are reproduced hereunder: ed hereunder:-
"9. "9. "9. What What What Section Section Section 153A 153A 153A contemplates contemplates contemplates is is is that, that, that, notwithstanding notwithstanding notwithstanding the the the regular regular regular provisions provisions provisions for for for assessment/ reassessment contained in the IT Act, assessment/ reassessment contained in the IT Act, assessment/ reassessment contained in the IT Act, where search is conducted under Section 132 or where search is conducted under Section 132 or where search is conducted under Section 132 or requisition is made under Section 132A on or after requisition is made under Section 132A on or after requisition is made under Section 132A on or after 31/5/2 31/5/2003 in the case of any person, the Assessing 003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him Officer shall issue notice to such person requiring him Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated to furnish return of income within the time stipulated to furnish return of income within the time stipulated therein, therein, therein, in in in respect respect respect of of of six six six assessment assessment assessment years years years immediately preceding the assessment year relevant immediately preceding the assessment year relevant immediately preceding the assessment year relevant to the previous year in which the search is conducted e previous year in which the search is conducted e previous year in which the search is conducted or requisition is made and thereafter assess or or requisition is made and thereafter assess or or requisition is made and thereafter assess or reassess the total income for those assessment years. reassess the total income for those assessment years. reassess the total income for those assessment years. The second proviso to Section 153A provides for The second proviso to Section 153A provides for The second proviso to Section 153A provides for abatement of assessment/reassessment proceedings abatement of assessment/reassessment proceedings abatement of assessment/reassessment proceedings
Essel Mining & Industries Ltd. 15 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
which which are ar e pending pending on on the the date date of of search search requisition.Section 153A(2) provides that when the requisition.Section 153A(2) provides that when the requisition.Section 153A(2) provides that when the assessment made under Section 153A(1) is annulled, assessment made under Section 153A(1) is annulled, assessment made under Section 153A(1) is annulled, the assessment or reassessment that stood abated the assessment or reassessment that stood abated the assessment or reassessment that stood abated shall stand revived. shall stand revived.
Thus on a plain reading of Section 153A of the 10. Thus on a plain reading of Section 153A of the 10. Thus on a plain reading of Section 153A of the Income Tax Act, it becomes clear that on initiation of ncome Tax Act, it becomes clear that on initiation of ncome Tax Act, it becomes clear that on initiation of proceedings under Section 153A, it is only the proceedings under Section 153A, it is only the proceedings under Section 153A, it is only the assessment/reassessment assessment/reassessment assessment/reassessment proceedings proceedings proceedings that that that are are are pending on the date of conducting search under pending on the date of conducting search under pending on the date of conducting search under Section 132 or making requisition under Section 132A Section 132 or making requisition under Section 132A Section 132 or making requisition under Section 132A of of the the Act Act stand stand abated abated and and not not the the assessment/reassessments already finalized for those assessment/reassessments already finalized for those assessment/reassessments already finalized for those assessment years covered under Section 153A of the assessment years covered under Section 153A of the assessment years covered under Section 153A of the Act. By a circular No.8 of 2003 dated 18 Act. By a circular No.8 of 2003 dated 18-9 9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on 263 ITR (St) 61 at 107) the CBDT has clarified that on 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proc initiation of proceedings under Section 153A, the eedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings pending in appeal, revision or rectification proceedings pending in appeal, revision or rectification proceedings proceedings agai against nst finalized finalized assessment/reassessment shall not abate. It is only assessment/reassessment shall not abate. It is only assessment/reassessment shall not abate. It is only because, the finalized assessments/reassessments do because, the finalized assessments/reassessments do because, the finalized assessments/reassessments do not abate, and the appeal, revisi not abate, and the appeal, revision or rectification on or rectification pending pending pending against against against finalized finalized finalized assessments/reassessments assessments/reassessments assessments/reassessments would would would not not not abate. abate. abate. Therefore, the Therefore, the argument of the revenue that on argument of the revenue that on initiation of proceedings under Section 153A, the initiation of proceedings under Section 153A, the initiation of proceedings under Section 153A, the assessments assessments assessments / / / reassessments finalized for reassessments reassessments finalized for finalized for the the the assessment years covered under Section 153A of the assessment years covered under Section 153A of the assessment years covered under Section 153A of the
Essel Mining & Industries Ltd. 16 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Income Income-tax Act stand abated cannot be accepted. tax Act stand abated cannot be accepted. Similarly on annulment of Similarly on annulment of assessment made under essment made under Section 153A(1) what stands revived is the pending Section 153A(1) what stands revived is the pending Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood assessment/reassessment proceedings which stood assessment/reassessment proceedings which stood abated as per section 153A(1). abated as per section 153A(1).
In the present case, as contended by Shri Mani, 11. In the present case, as contended by Shri Mani, 11. In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for learned counsel for the assessee, the assessment for learned counsel for the assessee, the assessment for the assessment year 1998 e assessment year 1998-99 was finalized on 29 99 was finalized on 29-12- 2000 and search was conducted thereafter on 3-12- 2000 and search was conducted thereafter on 3 2000 and search was conducted thereafter on 3 2003. Therefore, in the facts of the present case, 2003. Therefore, in the facts of the present case, 2003. Therefore, in the facts of the present case, initiation of proceedings under Section 153A would not initiation of proceedings under Section 153A would not initiation of proceedings under Section 153A would not affect the assessment finalized on 29 affect the assessment finalized on 29-12-2000. 2000.
Once it is held that the assessment finalized on nce it is held that the assessment finalized on nce it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction 29.12.2000 has attained finality, then the deduction 29.12.2000 has attained finality, then the deduction allowed under section 80HHC of the Income-tax Act as allowed under section 80HHC of the Income allowed under section 80HHC of the Income well as the loss computed under the assessment dated well as the loss computed under the assessment dated well as the loss computed under the assessment dated 29-12- -2000 would attain finality. In such a case, 2000 would attain finality. In such a case, the A.O. while passing the independent assessment order A.O. while passing the independent assessment order A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. under Section 153A read with Section 143(3) of the IT. under Section 153A read with Section 143(3) of the IT. Act Act Act could could could not not not have have have disturbed disturbed disturbed the the the assessment/reassessment order which has attained assessment/reassessment order which has attained assessment/reassessment order which has attained finality, unless the materials gathered in the course of finality, unless the materials gathered in the course of finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income roceedings under Section 153A of the Income-tax roceedings under Section 153A of the Income Act establish that the reliefs granted under the Act establish that the reliefs granted under the Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to finalized assessment/reassessment were contrary to finalized assessment/reassessment were contrary to the the the facts facts facts unearthed unearthed unearthed during during during the the the course course course of of of 153Aproceedings. 153Aproceedings.
Essel Mining & Industries Ltd. 17 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
13)In the present case, there is nothing on record to 13)In the present case, there is nothing on record 13)In the present case, there is nothing on record suggest that any material was unearthed during the suggest that any material was unearthed during the suggest that any material was unearthed during the search or during the 1534 proceedings which would search or during the 1534 proceedings which would search or during the 1534 proceedings which would show that the relief under Section 80 HHC was show that the relief under Section 80 HHC was show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing the erroneous. In such a case, the A.O. while passing the erroneous. In such a case, the A.O. while passing the assessment order under Section 153A read with assessment order under Section 153A read with assessment order under Section 153A read with Section on on 143(3) 143(3) 143(3) could could could not not not have have have disturbed disturbed disturbed the the the assessment order finalised on 29.12.2000 relating to assessment order finalised on 29.12.2000 relating to assessment order finalised on 29.12.2000 relating to Section 80 HHC deduction and consequently the C.I.T. Section 80 HHC deduction and consequently the C.I.T. Section 80 HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 could not have invoked jurisdiction under Section 263 could not have invoked jurisdiction under Section 263 of the Act." of the Act."
20.8 The Hon'ble Bombay High Court in the ab 20.8 The Hon'ble Bombay High Court in the above referred ove referred case has clearly held that no addition can be made in case has clearly held that no addition can be made in case has clearly held that no addition can be made in respect of assessments which have become final, if no respect of assessments which have become final, if no respect of assessments which have become final, if no incriminating material is found during the search. It has been incriminating material is found during the search. It has been incriminating material is found during the search. It has been held that once the original assessment has attained finality, held that once the original assessment has attained finality, held that once the original assessment has attained finality, then the Assessing Officer while passing the assessment ssessing Officer while passing the assessment ssessing Officer while passing the assessment order order order u/s. u/s. u/s. 153A 153A 153A r.w.s. r.w.s. r.w.s. 143(3) 143(3) 143(3) cannot cannot cannot disturb disturb disturb the the the assessment/reassessment order which has attained finality, assessment/reassessment order which has attained finality, assessment/reassessment order which has attained finality, unless the material gathered during the course of the search unless the material gathered during the course of the search unless the material gathered during the course of the search proceedings establishes something contrar proceedings establishes something contrary to it. If there is y to it. If there is nothing on record to suggest that any incriminating material nothing on record to suggest that any incriminating material nothing on record to suggest that any incriminating material was unearthed during the search, the AO, while passing was unearthed during the search, the AO, while passing was unearthed during the search, the AO, while passing order u/s.153A r.w.s. 143(3) cannot disturb the original order u/s.153A r.w.s. 143(3) cannot disturb the original order u/s.153A r.w.s. 143(3) cannot disturb the original assessment order passed us 143(3) of the Act. assessment order passed us 143(3) of the Act.
20.9 The Hon'ble 20.9 The Hon'ble Bombay High Court again in the latest Bombay High Court again in the latest decision dated11.09.2017 in the case of CIT decision dated11.09.2017 in the case of CIT-20 Vs. Shri 20 Vs. Shri
Essel Mining & Industries Ltd. 18 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Deepak Kumar Agarwal (2017 Deepak Kumar Agarwal (2017-TOL-1902-HC-MUM MUM-IT) had dismissed, the Revenue's following question of law: dismissed, the Revenue's following question of law: dismissed, the Revenue's following question of law:
"6.1 Whether on the facts and in the circumstance of "6.1 Whether on the facts and in the circumstance of "6.1 Whether on the facts and in the circumstance of the case and in law, the Hon'ble ITAT was justified in ase and in law, the Hon'ble ITAT was justified in ase and in law, the Hon'ble ITAT was justified in holding that assessment us.153A can be made only on holding that assessment us.153A can be made only on holding that assessment us.153A can be made only on the basis of incriminating material found in the search the basis of incriminating material found in the search the basis of incriminating material found in the search and no other issue can be taken following the Special and no other issue can be taken following the Special and no other issue can be taken following the Special Bench order in the case of "All Cargo Global Logistics Bench order in the case of "All Cargo Global Bench order in the case of "All Cargo Global Ltd.", when the SB decision of Hon'ble ITAT, Mumbai Ltd.", when the SB decision of Hon'ble ITAT, Mumbai Ltd.", when the SB decision of Hon'ble ITAT, Mumbai has been disapproved by Hon'ble Karnataka High has been disapproved by Hon'ble Karnataka High has been disapproved by Hon'ble Karnataka High Court in the case of Canara Housing Development Court in the case of Canara Housing Development Court in the case of Canara Housing Development Co.S. Co.S. DCIT DCIT = = 2014 2014-TIOL-1396 1396-HC-KAR-IT (unreported) unreported)?"
20.10 On this issue, the Honb'le Bombay High On this issue, the Honb'le Bombay High Court had On this issue, the Honb'le Bombay High held as under: held as under:
"26. The argument before the Income Tax Appellate "26. The argument before the Income Tax Appellate "26. The argument before the Income Tax Appellate Tribunal in this case was that the order passed by the Tribunal in this case was that the order passed by the Tribunal in this case was that the order passed by the Commissioner of Income Tax, Mumbai, confirming the Commissioner of Income Tax, Mumbai, confirming the Commissioner of Income Tax, Mumbai, confirming the assessment order under Section 143(3) read with assessment order under Section 143(3) read with assessment order under Section 143(3) read with Section 153A of the IT Act Section 153A of the IT Act is both, bad in law and on is both, bad in law and on facts. No addition could have been made while facts. No addition could have been made while facts. No addition could have been made while completing assessment under Section 153A of the IT completing assessment under Section 153A of the IT completing assessment under Section 153A of the IT Act in the case of completed assessment if no Act in the case of completed assessment if no Act in the case of completed assessment if no undisclosed income undisclosed income undisclosed income was determinable from the was determinable from the was determinable from the material found as a result of search. material found as a result of search.
Essel Mining & Industries Ltd. 19 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
As far as the addition under Section 68 on account As far as the addition under Section 68 on account As far as the addition under Section 68 on account of unexplained gifts received from the family members of unexplained gifts received from the family members of unexplained gifts received from the family members of Mr. B. R. Agarwal, the arguments have been noted. of Mr. B. R. Agarwal, the arguments have been noted. of Mr. B. R. Agarwal, the arguments have been noted.
The Special Bench order in the case of All Cargo 28. The Special Bench order in the case of All Cargo 28. The Special Bench order in the case of All Cargo Global Logistics Ltd. (supra) has been referred in the Global Logistics Ltd. (supra) has been refer Global Logistics Ltd. (supra) has been refer impugned order at the internal page 8 (running page impugned order at the internal page 8 (running page impugned order at the internal page 8 (running page 70 of the paper book). 70 of the paper book).
The relevant paragraphs of the same have been 29. The relevant paragraphs of the same have been 29. The relevant paragraphs of the same have been reproduced. reproduced.
The Tribunal concluded that the arguments 30. The Tribunal concluded that the arguments 30. The Tribunal concluded that the arguments relating to the validity of the notice under Section 153A relating to the validity of the notice under Section 153A relating to the validity of the notice under Section 153A and though that provision could have been invoked in though that provision could have been invoked in though that provision could have been invoked in the given facts and circumstances, but the additions the given facts and circumstances, but the additions the given facts and circumstances, but the additions made by the Assessing Officer were in the absence of made by the Assessing Officer were in the absence of made by the Assessing Officer were in the absence of any incriminating material. Therefore, they are not any incriminating material. Therefore, they are not any incriminating material. Therefore, they are not sustainable and they came to be deleted. sustainable and they came to be deleted.
We 31. We do not think that any view other than the one do not think that any view other than the one taken by the Division Bench of this Court in the case of taken by the Division Bench of this Court in the case of taken by the Division Bench of this Court in the case of The Commissioner of Income Tax, Centrall vs. M/s. The Commissioner of Income Tax, Centrall vs. M/s. The Commissioner of Income Tax, Centrall vs. M/s. SKS Ispat & Power Limited [Income Tax Appeal Nos. SKS Ispat & Power Limited [Income Tax Appeal Nos. SKS Ispat & Power Limited [Income Tax Appeal Nos. 1874 of 2014 and 58 of 2015] dated 12th July, 2017 1874 of 2014 and 58 of 2015] dated 12th July, 2017 1874 of 2014 and 58 of 2015] dated 12th July, 2017 or the reported judgment in Continental Warehousing the reported judgment in Continental Warehousing the reported judgment in Continental Warehousing Corporation and All Cargo Global Logistics (supra) can Corporation and All Cargo Global Logistics (supra) can Corporation and All Cargo Global Logistics (supra) can be taken. be taken.
Once we are of the firm view that the question no.1 32. Once we are of the firm view that the question no.1 32. Once we are of the firm view that the question no.1 proposed by the Revenue is already answered by this proposed by the Revenue is already answered by this proposed by the Revenue is already answered by this
Essel Mining & Industries Ltd. 20 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Court in a series of judgments, a Court in a series of judgments, and particularly nd particularly referred above, then we do not think that we should referred above, then we do not think that we should referred above, then we do not think that we should allow Mr. Ahuja to argue that these judgments are allow Mr. Ahuja to argue that these judgments are allow Mr. Ahuja to argue that these judgments are rendered in ignorance of the binding judgment of the rendered in ignorance of the binding judgment of the rendered in ignorance of the binding judgment of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Hon'ble Supreme Court in the case of Rajesh Jhaveri Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Private Limited (su Stock Brokers Private Limited (supra). After pra). After having noted the context and the factual backdrop in which noted the context and the factual backdrop in which noted the context and the factual backdrop in which the decision the decision the case of Rajesh haver was delivered the case of Rajesh haver was delivered and having distinguished it, we do not see how the and having distinguished it, we do not see how the and having distinguished it, we do not see how the question can be proposed by the Revenue as a question can be proposed by the Revenue as a question can be proposed by the Revenue as a substantial question of law. It is no substantial question of law. It is not a substantial t a substantial question of law as the issue is already answered by question of law as the issue is already answered by question of law as the issue is already answered by this Court." this Court."
20.11 Accordingly, in the present case at hand, I am of the 20.11 Accordingly, in the present case at hand, I am of the 20.11 Accordingly, in the present case at hand, I am of the considered opinion that the disallowances which have been considered opinion that the disallowances which have been considered opinion that the disallowances which have been repeated by the A.O. in the order u/s 153C of the Act nee repeated by the A.O. in the order u/s 153C of the Act nee repeated by the A.O. in the order u/s 153C of the Act need not be adjudicated upon, again. I am of the view that the not be adjudicated upon, again. I am of the view that the not be adjudicated upon, again. I am of the view that the A.O. has erred in making two assessments on the same A.O. has erred in making two assessments on the same A.O. has erred in making two assessments on the same issues, viz. one in original assessment us 143(3) of the Act & issues, viz. one in original assessment us 143(3) of the Act & issues, viz. one in original assessment us 143(3) of the Act & another u/s 153C of the Act. Thus, where nothing another u/s 153C of the Act. Thus, where nothing another u/s 153C of the Act. Thus, where nothing incriminating has been found du incriminating has been found during the course of the search ring the course of the search operation relating to a particular issue, the original operation relating to a particular issue, the original operation relating to a particular issue, the original assessment u/s 143(3) get revived and the same needs to be assessment u/s 143(3) get revived and the same needs to be assessment u/s 143(3) get revived and the same needs to be reiterated, subject to modification in light of subsequent reiterated, subject to modification in light of subsequent reiterated, subject to modification in light of subsequent appellate orders. In other words, the assessed income appellate orders. In other words, the assessed income appellate orders. In other words, the assessed income for the AY under consideration will be the same, as already AY under consideration will be the same, as already AY under consideration will be the same, as already determined in the original assessment order, subject to the determined in the original assessment order, subject to the determined in the original assessment order, subject to the order of the appellate authorities. order of the appellate authorities.
Essel Mining & Industries Ltd. 21 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
20.12 Hence, the AO is directed to restore the reliefs allowed 20.12 Hence, the AO is directed to restore the reliefs allowed 20.12 Hence, the AO is directed to restore the reliefs allowed by CIT(A)-VI, Kolkata vide Order dat VI, Kolkata vide Order dated 31.10.2014 on all the ed 31.10.2014 on all the impugned additions / disallowances. To sum up, the AO is impugned additions / disallowances. To sum up, the AO is impugned additions / disallowances. To sum up, the AO is directed to compute the taxable income starting from latest directed to compute the taxable income starting from latest directed to compute the taxable income starting from latest assessed income as per Order us 143(3) r.w.s. 251 of the Act assessed income as per Order us 143(3) r.w.s. 251 of the Act assessed income as per Order us 143(3) r.w.s. 251 of the Act and also to give effect to the appellate orders passe and also to give effect to the appellate orders passe and also to give effect to the appellate orders passed by higher appellate authorities, subsequent there higher appellate authorities, subsequent there higher appellate authorities, subsequent there-to. In the present appellate proceedings, no decision on merits is being present appellate proceedings, no decision on merits is being present appellate proceedings, no decision on merits is being given on the regular assessment issues, which are not given on the regular assessment issues, which are not given on the regular assessment issues, which are not emanating from any search material. emanating from any search material.
20.13 In view of these facts and circumst 20.13 In view of these facts and circumstances, the Ground ances, the Ground of Appeal No. 4 is fully allowed & Ground Nos. 10 to 15 are of Appeal No. 4 is fully allowed & Ground Nos. 10 to 15 are of Appeal No. 4 is fully allowed & Ground Nos. 10 to 15 are partly allowed to the extent of relief already granted by my partly allowed to the extent of relief already granted by my partly allowed to the extent of relief already granted by my Ld. Predecessor CIT (A). Ld. Predecessor CIT (A).”
We have heard rival submission of the parties on the We have heard rival submission of the parties on the We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. As far as dispute and perused the relevant material on record. dispute and perused the relevant material on record. finding of the Ld. CIT(A) is concerned, we do not agree with the finding of the Ld. CIT(A) is concerned, we do not agree with the finding of the Ld. CIT(A) is concerned, we do not agree with the same because under the proceedings u/s 153C r.w.s. 153A of the same because under the proceedings u/s 153C r.w.s. 153A of the same because under the proceedings u/s 153C r.w.s. 153A of the Act, the Assessing Officer was required to start the computation of Act, the Assessing Officer was required to start the computat Act, the Assessing Officer was required to start the computat the income from the last assessed income or last income upheld in the income from the last assessed income or last income upheld in the income from the last assessed income or last income upheld in appellate proceedings. Since, those additions under reference were appellate proceedings. Since, those additions under reference were appellate proceedings. Since, those additions under reference were already made in original assessment order u/s 143(3) dated original assessment order u/s 143(3) dated original assessment order u/s 143(3) dated 24.01.2014, therefore, the Assessing Officer was required herefore, the Assessing Officer was required herefore, the Assessing Officer was required to start the computation of the income for the purpose of section 153C the computation of the income for the purpose of the computation of the income for the purpose of r.w.s. 153A of the Act after including those additions/disallowance ct after including those additions/disallowance ct after including those additions/disallowance
Essel Mining & Industries Ltd. 22 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
to the returned income under original assessment. Since, in the to the returned income under original assessment. Since, to the returned income under original assessment. Since, return of income u/s 153C/153A of the Act, return of income u/s 153C/153A of the Act, the asses the assessee has simply repeated the income which was filed in the regular return of repeated the income which was filed in the regular return of repeated the income which was filed in the regular return of income, the Assessing Officer was having two options he Assessing Officer was having two options: first option he Assessing Officer was having two options was to start the computation of income under section 153C r.w.s. was to start the computation of income under section 153 was to start the computation of income under section 153 153A with the last assessed income or last income upheld in 153A with the last assessed income or last incom 153A with the last assessed income or last incom appellate proceedings appellate proceedings and then add the disallowance or addition and then add the disallowance or addition made in order u/s 153C read with section 153A of the Act. The made in order u/s 153C read with section 153A of the Act. made in order u/s 153C read with section 153A of the Act. second option was that was that to repeat the additions which were made in to repeat the additions which were made in the original assessment the original assessment proceedings, in the body of proceedings, in the body of the assessment order passed u/s 153C read with 153A and also make new addition order passed u/s 153C read with 153A and also make new addition order passed u/s 153C read with 153A and also make new addition if any and then, compute the total income beginning from the if any and then, compute the total income beginning from the if any and then, compute the total income beginning from the income returned by the income returned by the assessee for the purpose of section 153C for the purpose of section 153C r.w.s. 153A of the Act. Though, the most preferred action should r.w.s. 153A of the Act. Though, the most preferred a r.w.s. 153A of the Act. Though, the most preferred a have been the option one. However, the Assessing Officer has have been the option one. However, the Assessing Officer has have been the option one. However, the Assessing Officer has followed the option two but both the actions followed the option two but both the actions reach at the same total at the same total income which finally finally should have been assessed for purpose assessed for purpose of the computation income u/s 153C r.w.s. 153A of the computation income u/s 153C r.w.s. 153A of the Act. Therefore, the Act. Therefore, the action of the Ld. CIT(A) in deleting those additions merely on the action of the Ld. CIT(A) in deleting those additions merely on the action of the Ld. CIT(A) in deleting those additions merely on the ground that same have been made without the aid of the ground that same have been made without the aid of the ground that same have been made without the aid of the incriminating material material is not justified.
8.1 However, before us, the Ld. Counsel of the assessee has However, before us, the Ld. Counsel of the assessee has However, before us, the Ld. Counsel of the assessee has pointed out that all these additions that all these additions/disallowance have /disallowance have already been deleted by the Income deleted by the Income-tax Appellate Tribunal tax Appellate Tribunal in appeals
Essel Mining & Industries Ltd. 23 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
corresponding to regular assessment proceedings regular assessment proceedings [ i.e. U/s 143(3) of [ i.e. U/s 143(3) of the Act ] for assessment year 2008 for assessment year 2008-09, 2009-10 and 2010 10 and 2010-11 and therefore, similar addition deserves to be deleted in consequent similar addition deserves to be deleted in consequent similar addition deserves to be deleted in consequent search proceedings [ u/s 153C read with section 153A of the Act] [ u/s 153C read with section 153A of the Act] for the year under consideration also. for the year under consideration also.
8.1.1 Regarding the additions of expenses related to exempt Regarding the additions of expenses related to exempt Regarding the additions of expenses related to exempt income u/s 10B of the Act amounting to ₹2,04,871/ income u/s 10B of the Act amounting 2,04,871/-, the Ld. Counsel of the assessee has referred to the order of the Tribunal in Counsel of the assessee has referred to the order of the Tribunal in Counsel of the assessee has referred to the order of the Tribunal in ITA No. 1023 and 1554/M/2018 for assessment year 2009-10. The ITA No. 1023 and 1554/M/2018 for assessment year 2009 ITA No. 1023 and 1554/M/2018 for assessment year 2009 relevant part of the said decision is reproduced as under: relevant part of the said decision is reproduced as under: relevant part of the said decision is reproduced as under:
“G. Apportionment of common expenses and its impact “G. Apportionment of common expenses and its impact “G. Apportionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act on claim of deduction u/s 80IA and u/s 10B of the Act on claim of deduction u/s 80IA and u/s 10B of the Act – ₹ 2,62,53,000/ 2,62,53,000/- We find that this is only concerned with workings for We find that this is only concerned with workings for We find that this is only concerned with workings for allowability of deduction u/s 80IA and w/s 10B of the Act allowability of deduction u/s 80IA and w/s 10B of the Act allowability of deduction u/s 80IA and w/s 10B of the Act with regard to appor with regard to apportionment of common expenses. It is only tionment of common expenses. It is only a computational issue. There cannot be obviously any a computational issue. There cannot be obviously any a computational issue. There cannot be obviously any reference to incriminating material found during search reference to incriminating material found during search reference to incriminating material found during search regarding this issue. Hence there cannot be any reliance that regarding this issue. Hence there cannot be any reliance that regarding this issue. Hence there cannot be any reliance that could be placed on any search material for re could be placed on any search material for reworking the working the claim of deduction u/s 80IA and us 10B of the claim of deduction u/s 80IA and us 10B of the Act. Act.” 8.1.2 Further, he has also referred to the order of the Tribunal Further, he has also referred to the order of the Tribunal Further, he has also referred to the order of the Tribunal in ITA No. 1021 & 1551/M/2018 for assessment year 2010-11. The in ITA No. 1021 & 1551/M/2018 for assessment year 2010 in ITA No. 1021 & 1551/M/2018 for assessment year 2010 relevant finding of the Tribunal is reproduced as under: relevant finding of the Tribunal is reproduced as under: relevant finding of the Tribunal is reproduced as under:
“Apportionment of common expenses and its impact on tionment of common expenses and its impact on tionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act claim of deduction u/s 80IA and u/s 10B of the Act claim of deduction u/s 80IA and u/s 10B of the Act - Rs 5,39,65,517/ 5,39,65,517/-
Essel Mining & Industries Ltd. 24 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
We find that this is only concerned with workings for We find that this is only concerned with workings for We find that this is only concerned with workings for allowability of deduction u/s 80IA and u/s 10B of the Act allowability of deduction u/s 80IA and u/s 10B of the Act allowability of deduction u/s 80IA and u/s 10B of the Act with regard to apportionment with regard to apportionment of common expenses. It is only of common expenses. It is only a computational issue. There cannot be obviously any a computational issue. There cannot be obviously any a computational issue. There cannot be obviously any reference to incriminating material found during search reference to incriminating material found during search reference to incriminating material found during search regarding this issue. Hence there cannot be any reliance that regarding this issue. Hence there cannot be any reliance that regarding this issue. Hence there cannot be any reliance that could be placed on any search material for reworking could be placed on any search material for reworking could be placed on any search material for reworking the claim of deduction u/s 80IA and us 10B of the Act. claim of deduction u/s 80IA and us 10B of the Act. claim of deduction u/s 80IA and us 10B of the Act. “8.5. The Id. DR argued that the term 'evidence' is to be used “8.5. The Id. DR argued that the term 'evidence' is to be used “8.5. The Id. DR argued that the term 'evidence' is to be used as per the Indian Evidence Act, 1872. He argued that the as per the Indian Evidence Act, 1872. He argued that the as per the Indian Evidence Act, 1872. He argued that the expressions 'incriminating material' and 'evidence' cannot be expressions 'incriminating material' and 'evidence' cannot be expressions 'incriminating material' and 'evidence' cannot be used interchangeabl used interchangeably as the term 'evidence' has got a wider y as the term 'evidence' has got a wider amplitude and meaning and confined only to seized material, amplitude and meaning and confined only to seized material, amplitude and meaning and confined only to seized material, whereas the expression 'incriminating material' has got a whereas the expression 'incriminating material' has got a whereas the expression 'incriminating material' has got a very narrow scope confined to search proceedings. He very narrow scope confined to search proceedings. He very narrow scope confined to search proceedings. He vehemently vehemently vehemently argued argued argued that that that the the the expression expression expression 'incriminating 'incri 'incri material' is not found in the provisions of the Act and it is material' is not found in the provisions of the Act and it is material' is not found in the provisions of the Act and it is only the Hon'ble Higher Courts which had given the said only the Hon'ble Higher Courts which had given the said only the Hon'ble Higher Courts which had given the said interpretation while deciding the appeals in respect of interpretation while deciding the appeals in respect of interpretation while deciding the appeals in respect of concluded assessments. Per Contra, the Id.AR in this regard concluded assessments. Per Contra, the Id.AR in this regard concluded assessments. Per Contra, the Id.AR in this regard argued that e argued that evidence should also emanate from the seized vidence should also emanate from the seized materials found during the course of search. In respect of materials found during the course of search. In respect of materials found during the course of search. In respect of Justice M B Shah Commission Report, the Hon ble Justice M B Shah Commission Report, the Hon ble Justice M B Shah Commission Report, the Hon ble Jurisdictional High Court in the case of Sesa Sterlite Ltd vs Jurisdictional High Court in the case of Sesa Sterlite Ltd vs Jurisdictional High Court in the case of Sesa Sterlite Ltd vs ACIT reported in 417 IT 334 (Bom) had categ ACIT reported in 417 IT 334 (Bom) had categorically held orically held that in the absence of any independent material on record, that in the absence of any independent material on record, that in the absence of any independent material on record, assessment could not be reopened merely on the basis of assessment could not be reopened merely on the basis of assessment could not be reopened merely on the basis of opinion formed by Commission appointed by Central opinion formed by Commission appointed by Central opinion formed by Commission appointed by Central Government that there was under invoicing of exports by Government that there was under invoicing of exports by Government that there was under invoicing of exports by assessee, as conclusi assessee, as conclusion drawn by the Commission was only on drawn by the Commission was only its opinion and cannot be treated as primary facts.” its opinion and cannot be treated as primary facts.” its opinion and cannot be treated as primary facts.” 8.1.3 As regard to disallowance u/s 14A r.w.r. 8D is concerned As regard to disallowance u/s 14A r.w.r. 8D is concerned As regard to disallowance u/s 14A r.w.r. 8D is concerned the Ld. Counsel has referred to the decision of the Tribunal in ITA has referred to the decision of the Tribunal in ITA has referred to the decision of the Tribunal in ITA No. 1017 and 1552/M/2018 for assess No. 1017 and 1552/M/2018 for assessment year 2008 ment year 2008-09. The relevant part of the order of the Tribunal is reproduced as under: relevant part of the order of the Tribunal is reproduced as under: relevant part of the order of the Tribunal is reproduced as under:
A. Disallowance u/s.14A of the Act A. Disallowance u/s.14A of the Act - Rs. 17,15,98,000/ Rs. 17,15,98,000/-
Essel Mining & Industries Ltd. 25 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
We find that this disallowance was made already in the We find that this disallowance was made already in the We find that this disallowance was made already in the regular assessment framed us. 143(3) of the Act for the regular assessment framed us. 143(3) of the Act for the regular assessment framed us. 143(3) of the Act for the A.Y.2008-09 on 22/12/2010. Hence, there cannot be any 09 on 22/12/2010. Hence, there cannot be any 09 on 22/12/2010. Hence, there cannot be any reliance that could be placed on any search material. reliance that could be placed on any search material. reliance that could be placed on any search material.
8.1.4 The Ld. Counsel has further referred to the decision of the The Ld. Counsel has further referred to the decision of the The Ld. Counsel has further referred to the decision of the Tribunal in ITA No. 1023 & 1554/M/2018 for assessment year Tribunal in ITA No. 1023 & 1554/M/2018 for assessment year Tribunal in ITA No. 1023 & 1554/M/2018 for assessment year 2009-10 and ITA No. 10 10 and ITA No. 1021 and 1551/M/2018 for assessment year 21 and 1551/M/2018 for assessment year 2010-11.
As regards to the penalty charges of ₹16,13,694/ 8.1.5 As regards to the penalty charges of 16,13,694/-, the Ld. Counsel has referred to the decision of the Tribunal in assessee’s Counsel has referred to the decision of the Tribunal in assessee’s Counsel has referred to the decision of the Tribunal in assessee’s own case in ITA No. 1023 & 1554/M/2018 for assessment year own case in ITA No. 1023 & 1554/M/2018 for assessment year own case in ITA No. 1023 & 1554/M/2018 for assessment year 2009-10. The relevant part of the same is reproduced as under: evant part of the same is reproduced as under: evant part of the same is reproduced as under:
“C. Disallowance of Penalty Charges C. Disallowance of Penalty Charges - Rs 9,36,000/ Rs 9,36,000/-
We find that this disallowance was made already in the We find that this disallowance was made already in the We find that this disallowance was made already in the regular regular regular assessment order u/s.143(3) of the Act assessment assessment order u/s.143(3) of the Act order u/s.143(3) of the Act on on on 30/12/2011 for the 30/12/2011 for the AY 2009-10. Hence, there cannot b 10. Hence, there cannot be any reliance that could be placed on any search material.” reliance that could be placed on any search material.” reliance that could be placed on any search material.”
8.1. 6 Further, the Tribunal has followed the same decision in Further, the Tribunal has followed the same decision in Further, the Tribunal has followed the same decision in assessment year 2010 assessment year 2010-11 in ITA No. 1021 and 1551/M/2018. 11 in ITA No. 1021 and 1551/M/2018.
8.1.7. Regarding club expenses of Regarding club expenses of ₹58,374/- the Ld. Counsel the Ld. Counsel has referred to the decision of the Tribunal in assessee’s own case to the decision of the Tribunal in assessee’s own case to the decision of the Tribunal in assessee’s own case for assessment year 2010 for assessment year 2010-11 in ITA No. 1021 and 1551/M/2018. 11 in ITA No. 1021 and 1551/M/2018. The relevant part of the said decision is reproduced as under: The relevant part of the said decision is reproduced as under: The relevant part of the said decision is reproduced as under:
Essel Mining & Industries Ltd. 26 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
“8.4. The Id. AR before us submitted that none of the 8.4. The Id. AR before us submitted that none of the 8.4. The Id. AR before us submitted that none of the aforesaid additions wer aforesaid additions were made based on the incriminating e made based on the incriminating material in the form of petty cash book vide Annexure material in the form of petty cash book vide Annexure material in the form of petty cash book vide Annexure-A-8 received from the Assessing Officer of ABMCPL(being the received from the Assessing Officer of ABMCPL(being the received from the Assessing Officer of ABMCPL(being the searched person /s.132 of the Act). The Id. AR submitted searched person /s.132 of the Act). The Id. AR submitted searched person /s.132 of the Act). The Id. AR submitted that the A..2010 that the A..2010-11 was a concluded assessment as o 11 was a concluded assessment as on the date of assumption of jurisdiction us 153C of the Act by the date of assumption of jurisdiction us 153C of the Act by the date of assumption of jurisdiction us 153C of the Act by the Id. AO and hence, no addition or disallowance could be Id. AO and hence, no addition or disallowance could be Id. AO and hence, no addition or disallowance could be made in the search assessments framed either u/s.153C of made in the search assessments framed either u/s.153C of made in the search assessments framed either u/s.153C of the Act without existence of any incriminating material the Act without existence of any incriminating material the Act without existence of any incriminating material relatable to such ass relatable to such assessment year. To address this aspect of essment year. To address this aspect of the issue, it is pertinent to get into the fact as to whether the the issue, it is pertinent to get into the fact as to whether the the issue, it is pertinent to get into the fact as to whether the Id.AO had relied upon any incriminating material received Id.AO had relied upon any incriminating material received Id.AO had relied upon any incriminating material received from the Assessing Officer of the search person to make from the Assessing Officer of the search person to make from the Assessing Officer of the search person to make additions, additions, disallowances disallowances in in the the assessment asse ssment framed framed u/s.153C of the Act for A.Y.2010 u/s.153C of the Act for A.Y.2010-11 in the hands of the 11 in the hands of the assessee. Let us examine the same in respect of each assessee. Let us examine the same in respect of each assessee. Let us examine the same in respect of each disallowance / addition made in the assessment as under: disallowance / addition made in the assessment as under: disallowance / addition made in the assessment as under:-
Disallowance u/s.14A of the Act Disallowance u/s.14A of the Act - Rs.21,74,09,077 / Rs.21,74,09,077 /-
…………..
Disallowance of Disallowance of Club expenses - Rs 37,152/-
………………. ……………….
Disallowance of Penalty Charges Disallowance of Penalty Charges - Rs 4,59,000/ Rs 4,59,000/-
………………. ……………….
Essel Mining & Industries Ltd. 27 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Addition made on account of illegal unaccounted Addition made on account of illegal unaccounted Addition made on account of illegal unaccounted provision Rs.22,54,01,541/ provision Rs.22,54,01,541/-
…………..
Denial of deduction us 80IA of the Act with respect to Denial of deduction us 80IA of the Act with respect to Denial of deduction us 80IA of the Act with respect to Rail System Rail System - Rs 78,43,89,265/-
……….
Apportionment of common expenses and its impact on Apportionment of common expenses and its impact on Apportionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act claim of deduction u/s 80IA and u/s 10B of the Act claim of deduction u/s 80IA and u/s 10B of the Act - Rs 5,39,65,517/ 5,39,65,517/-
………..
8.2 Regarding excess depreciation on electrical equipment, the Ld. Regarding excess depreciation on electrical equipment, the Ld. Regarding excess depreciation on electrical equipment, the Ld. CIT(A) directed the Assessing Officer to CIT(A) directed the Assessing Officer to restore the relief given by restore the relief given by the Ld. CIT(A) in his order dated 31.10.2014. Regarding the the Ld. CIT(A) in his order dated 31.10.2014. Regarding the the Ld. CIT(A) in his order dated 31.10.2014. Regarding the expenses related to exempt income u/s 80IA, the Ld. Counsel relied expenses related to exempt income u/s 80IA, the Ld. Counsel relied expenses related to exempt income u/s 80IA, the Ld. Counsel relied on the assessment order of the Tribunal in assessee’s own case for on the assessment order of the Tribunal in assessee’s own case for on the assessment order of the Tribunal in assessee’s own case for assessment year 2009 assessment year 2009-10 in ITA No. 1023 & 1554/M/2018. The 1023 & 1554/M/2018. The relevant para of the said decision is reproduced as under: relevant para of the said decision is reproduced as under: relevant para of the said decision is reproduced as under:
“G. Apportionment of common expenses and its impact G. Apportionment of common expenses and its impact G. Apportionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act on claim of deduction u/s 80IA and u/s 10B of the Act on claim of deduction u/s 80IA and u/s 10B of the Act – Rs 2,62,53,000/ Rs 2,62,53,000/-
We find that this is only concerned with workin We find that this is only concerned with workin We find that this is only concerned with workings for allowability of deduction us 80IA and us 10B of the Act with allowability of deduction us 80IA and us 10B of the Act with allowability of deduction us 80IA and us 10B of the Act with regard to apportionment of common expenses. It is only a regard to apportionment of common expenses. It is only a regard to apportionment of common expenses. It is only a
Essel Mining & Industries Ltd. 28 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
computational issue. There cannot be obviously any computational issue. There cannot be obviously any computational issue. There cannot be obviously any reference to incriminating material found during search reference to incriminating material found during search reference to incriminating material found during search regarding this issue. He regarding this issue. Hence there cannot be any reliance that nce there cannot be any reliance that could be placed on any search material for reworking the could be placed on any search material for reworking the could be placed on any search material for reworking the claim of deduction us 80IA and u/s 10B of the Act. claim of deduction us 80IA and u/s 10B of the Act. claim of deduction us 80IA and u/s 10B of the Act.”
8.3 In view of the finding of the Tribunal in assessee’s own case as In view of the finding of the Tribunal in assessee’s own case as In view of the finding of the Tribunal in assessee’s own case as reproduced above, we are of the opinion that these additions made reproduced above, we are of the opinion that these additions made reproduced above, we are of the opinion that these additions made by the Assessing Officer in present proceedings also deserved to the by the Assessing Officer in present proceedings also deserved to the by the Assessing Officer in present proceedings also deserved to the deleted. Therefore, the ground No. 1 and 2 of the appeal of the deleted. Therefore, the ground No. 1 and 2 of the appeal deleted. Therefore, the ground No. 1 and 2 of the appeal Revenue to the extent of old additions are dismissed. Revenue to the extent of old additions are dismissed. Revenue to the extent of old additions are dismissed.
In ground No. 3, the Revenue is aggrieved with the deletion of In ground No. 3, the Revenue is aggrieved with the deletion of In ground No. 3, the Revenue is aggrieved with the deletion of disallowance of deduction u/s 80IA of the Act amounting to disallowance of deduction u/s 80IA of the Act amounting to disallowance of deduction u/s 80IA of the Act amounting to ₹133,51,574/- in respect of rail in respect of rail siding systems.
The brief facts qua the issue s qua the issue-in-dispute are that the assessee dispute are that the assessee had developed and operated railway siding for operated railway siding for carrying out carrying out their business requirement. The assessee entered into an agreement with business requirement. The assessee entered into an agreement with business requirement. The assessee entered into an agreement with Railway authorities for construction of private siding private siding (rail track). The assessee claimed deduction u/s 80IA(4) of the Act essee claimed deduction u/s 80IA(4) of the Actfor said essee claimed deduction u/s 80IA(4) of the Act railway siding owned and operated as rail system. The said railway siding owned and operated as rail system railway siding owned and operated as rail system deduction u/s 80IA claimed by the assessee was disallowed by the deduction u/s 80IA claimed by the assessee was disallowed by the deduction u/s 80IA claimed by the assessee was disallowed by the Assessing Officer as according to him this was not Assessing Officer as according to him this was not an infrastructure n infrastructure facility of public utility and it was merely for the purpose of own of public utility and it was merely for the purpose of own of public utility and it was merely for the purpose of own transportation of mineral/ore. The Ld. CIT(A) deleted this addition transportation of mineral/ore. The Ld. CIT(A) deleted this addition transportation of mineral/ore. The Ld. CIT(A) deleted this addition not only on the ground that there was no incriminating material not only on the ground that there was no incriminating material not only on the ground that there was no incriminating material
Essel Mining & Industries Ltd. 29 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
found during the course of the search related to the issue-in- found during the course of the search related to the issue found during the course of the search related to the issue dispute but also deleted on the merit of the addition following the spute but also deleted on the merit of the addition following the spute but also deleted on the merit of the addition following the finding of the Tribunal in the case of M/s Ultatech System Ltd. in finding of the Tribunal in the case of M/s Ultatech System Ltd. in finding of the Tribunal in the case of M/s Ultatech System Ltd. in ITA No. 7631/M/2014. ITA No. 7631/M/2014.
We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue-in- dispute and perused the relevant ma dispute and perused the relevant material on record. terial on record. It is undisputed that no incriminating material has been found qua the undisputed that no incriminating material has been found qua the undisputed that no incriminating material has been found qua the issue-in-dispute in the search proceedings carried out at the dispute in the search proceedings carried out at the dispute in the search proceedings carried out at the premises of M/s Aditya Birla Management Corporation Private premises of M/s Aditya Birla Management Corporation Private premises of M/s Aditya Birla Management Corporation Private Limited i.e. on the basis of initiation of pr Limited i.e. on the basis of initiation of proceedings u/s 153C in the oceedings u/s 153C in the case of the assessee. The present assessment year, being year of case of the assessee. The present assessment year, being case of the assessee. The present assessment year, being unabated assessment, unabated assessment, no addition could not have been the assessee no addition could not have been the assessee without aid of the incriminating material, as held by the Hon’ble without aid of the incriminating material, as held by the Hon’ble without aid of the incriminating material, as held by the Hon’ble Bombay High Court in the case of Bombay High Court in the case of Continental Warehousing Continental Warehousing Corporation and therefore, the addition made by the Assessing Corporation and therefore, the addition made by the Assessing Corporation and therefore, the addition made by the Assessing Officer, not justified legally. As far as merit is concerned the Ld. Officer, not justified legally. As far as merit is concerned the Ld. Officer, not justified legally. As far as merit is concerned the Ld. CIT(A) has followed the binding precedent of the Tribunal Mumbai CIT(A) has followed the binding precedent of the Tribunal Mumbai CIT(A) has followed the binding precedent of the Tribunal Mumbai in the case of the assessee in the c in the case of the assessee in the case of M/s Ultatech System M/s Ultatech System Ltd(supra). Further, the Ld. Counsel of the assessee has referred to (supra). Further, the Ld. Counsel of the assessee has referred to (supra). Further, the Ld. Counsel of the assessee has referred to the decision of the Tribunal in assessee’s own case for assessment the decision of the Tribunal in assessee’s own case for assessment the decision of the Tribunal in assessee’s own case for assessment year 2009-10 in ITA No. 1023 & 1554/M/2018 wherein identical 10 in ITA No. 1023 & 1554/M/2018 wherein identical 10 in ITA No. 1023 & 1554/M/2018 wherein identical addition has been deleted on mer addition has been deleted on merit. The relevant finding of the it. The relevant finding of the Tribunal(supra) is reproduced as under: is reproduced as under:
Essel Mining & Industries Ltd. 30 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
“F. Denial of deduction u/ 80IA of the Act with respect F. Denial of deduction u/ 80IA of the Act with respect F. Denial of deduction u/ 80IA of the Act with respect to Rail System to Rail System - Rs 112,12,25,027/-
We find that this disallowance was made based on the We find that this disallowance was made based on the We find that this disallowance was made based on the Mumbai Tribunal decision rendered in th Mumbai Tribunal decision rendered in the case of Ultratech e case of Ultratech Cement Ltd,which cannot be construed as incriminating Cement Ltd,which cannot be construed as incriminating Cement Ltd,which cannot be construed as incriminating material found during the course of search.In any case, this material found during the course of search.In any case, this material found during the course of search.In any case, this decision of tribunal hasbeen reversed and in later decisions, decision of tribunal hasbeen reversed and in later decisions, decision of tribunal hasbeen reversed and in later decisions, the Mumbai Tribunal had granted deduction us 80IA of the the Mumbai Tribunal had granted deduction us 80IA of the the Mumbai Tribunal had granted deduction us 80IA of the Act for the rail system itself.Hence, there cannot be any t for the rail system itself.Hence, there cannot be any t for the rail system itself.Hence, there cannot be any reliance that could be placed on any search material for reliance that could be placed on any search material for reliance that could be placed on any search material for denying this deduction us 80IA of the Act. denying this deduction us 80IA of the Act.”
11.1 Further, the Tribunal in assessment year 2010 Further, the Tribunal in assessment year 2010 Further, the Tribunal in assessment year 2010-11 in ITA No. 1021 & 1551/M/2018 has also deleted the identical disallowance 1551/M/2018 has also deleted the identical disallowance 1551/M/2018 has also deleted the identical disallowance made by the Assessing Officer. In view of the above discussion, the made by the Assessing Officer. In view of the above discussion, the made by the Assessing Officer. In view of the above discussion, the ground No. 3 of the appeal of the Revenue is dismissed. ground No. 3 of the appeal of the Revenue is dismissed. ground No. 3 of the appeal of the Revenue is dismissed.
In ground No. 4 In ground No. 4& 5, the Revenue has challenged deletion of , the Revenue has challenged deletion of n made in respect of Carbon credit of ₹556,45,576/- the addition made in respect of Carbon credit of n made in respect of Carbon credit of which were treated by the Assessing Officer as revenue receipt. The which were treated by the Assessing Officer as revenue receipt. The which were treated by the Assessing Officer as revenue receipt. The Brief facts qua, the issue Brief facts qua, the issue-in-dispute are that in the process of dispute are that in the process of generation of ore and distribution of wind power, the assessee generation of ore and distribution of wind power generation of ore and distribution of wind power claimed to have reduced the initiation of to have reduced the initiation of Carbon dioxide Carbon dioxide and therefore, certified emission reduction/carbon credit was given to therefore, certified emission reduction/carbon credit was given to therefore, certified emission reduction/carbon credit was given to the assessee by the United Nations framework convention on the assessee by the United Nations framework convention on the assessee by the United Nations framework convention on climate change. The entitlement or privilege which accrued to the climate change. The entitlement or privilege which accrued to the climate change. The entitlement or privilege which accrued to the
Essel Mining & Industries Ltd. 31 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
assessee in the course of generation of the power was treated by the the course of generation of the power was treated by the the course of generation of the power was treated by the assessee in the nature in the nature of the capital receipt, which the Assessing which the Assessing Officer rejected and according to him this was a revenue receipt. Officer rejected and according to him this was a revenue receipt. Officer rejected and according to him this was a revenue receipt. Accordingly, the receipt on account of sale carbon credit was held Accordingly, the receipt on account of sale carbon credit was hel Accordingly, the receipt on account of sale carbon credit was hel by the Assessing Officer by the Assessing Officer as taxable income. The Ld. CIT(A) deleted taxable income. The Ld. CIT(A) deleted the addition on legal ground that in case of completed assessment the addition on legal ground that in case of completed assessment the addition on legal ground that in case of completed assessment no addition could have been made without aid of the incriminating no addition could have been made without aid of the incriminating no addition could have been made without aid of the incriminating material. The relevant finding of the Ld. CIT(A) is reproduced as material. The relevant finding of the Ld. CIT(A) is rep material. The relevant finding of the Ld. CIT(A) is rep under:
“28.2 It is pertinent to note here that there is no incriminating 28.2 It is pertinent to note here that there is no incriminating 28.2 It is pertinent to note here that there is no incriminating material relating to this issue, which has been found during material relating to this issue, which has been found during material relating to this issue, which has been found during the course of the search operation conducted on the Group on the course of the search operation conducted on the Group on the course of the search operation conducted on the Group on 16.10.2013. In these circumstances, this issue can 16.10.2013. In these circumstances, this issue can 16.10.2013. In these circumstances, this issue can't be considered in the proceedings us 153C of the Act. get considered in the proceedings us 153C of the Act. get considered in the proceedings us 153C of the Act. get However, this issue is also being considered on merits in the However, this issue is also being considered on merits in the However, this issue is also being considered on merits in the foregoingparagraphs.” foregoingparagraphs.
12.1 On the issue of merit of the addition, the Ld. CIT(A) following n the issue of merit of the addition, the Ld. CIT(A) following n the issue of merit of the addition, the Ld. CIT(A) following the binding precedent on the issue the binding precedent on the issue-in-dispute deleted the addition te deleted the addition observing as under:
“28.3 The AO has disallowed the claim of appellant relying 28.3 The AO has disallowed the claim of appellant relying 28.3 The AO has disallowed the claim of appellant relying on decision of Hon'ble ITAT, Cochin in the case of Apollo on decision of Hon'ble ITAT, Cochin in the case of Apollo on decision of Hon'ble ITAT, Cochin in the case of Apollo Tyres Ltd. vs. ACIT (2014) reported in 149 ITD 756. Tyres Ltd. vs. ACIT (2014) reported in 149 ITD 756. Tyres Ltd. vs. ACIT (2014) reported in 149 ITD 756.
28.4 The appellant has relied on the decision of Hon'ble 28.4 The appellant has relied on the decision of Hon'ble 28.4 The appellant has relied on the decision of Hon'ble Andhra Pradesh High Court in the case of the Commissioner Andhra Pradesh High Court in the case of the Commissioner Andhra Pradesh High Court in the case of the Commissioner
Essel Mining & Industries Ltd. 32 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
of Income Tax Vs. My Home Power Ltd. (ITA No. 60 of 2014) of Income Tax Vs. My Home Power Ltd. (ITA No. 60 of 2014) of Income Tax Vs. My Home Power Ltd. (ITA No. 60 of 2014) and the decision of Hon'ble ITAT Chennai in the case of India and the decision of Hon'ble ITAT Chennai in the case of India and the decision of Hon'ble ITAT Chennai in the case of India Dyeing Mills Pvt. Ltd Dyeing Mills Pvt. Ltd. vs. ACIT in ITA No.498/MDS/2014 . vs. ACIT in ITA No.498/MDS/2014 pronounced on 08.10.2014. pronounced on 08.10.2014.
28.5 The Appellant Company has also relied on the decision 28.5 The Appellant Company has also relied on the decision 28.5 The Appellant Company has also relied on the decision of jurisdictional Mumbai ITAT in the case of Ultra Tech of jurisdictional Mumbai ITAT in the case of Ultra Tech of jurisdictional Mumbai ITAT in the case of Ultra Tech Cement Cement Ltd. Ltd. Vs. Vs. Addl.CIT Addl.CIT (2015-TIOL-989- (2015 -ITAT-MUM), wherein it was held as under: wherein it was held as under:-
"42. The first additional ground relates to the claim of "42. The first additional ground relates to the claim of "42. The first additional ground relates to the claim of Proceeds realized from sale of Certified Emission Proceeds realized from sale of Certified Emission Proceeds realized from sale of Certified Emission Reduction (CERs)amounting to Rs.7,64,56,908/- as Reduction (CERs)amounting to Rs.7,64,56,908/ Reduction (CERs)amounting to Rs.7,64,56,908/ capital receipts. capital receipts.
We find that the assessee has shown the sale 43. We find that the assessee has shown the sale 43. We find that the assessee has shown the sale consideration out of sale procee consideration out of sale proceeds of Carbon Credit ds of Carbon Credit under the head' other income' as revenue receipts under the head' other income' as revenue receipts under the head' other income' as revenue receipts which now it wants to claim as capital receipts in the which now it wants to claim as capital receipts in the which now it wants to claim as capital receipts in the light of the decision of the Tribunal. Since no new facts light of the decision of the Tribunal. Since no new facts light of the decision of the Tribunal. Since no new facts have to be verified so far as this claim is concerned have to be verified so far as this claim is concerned have to be verified so far as this claim is concerned realization of Carb realization of Carbon Credit are already shown under on Credit are already shown under the head' other income' Respectfully following the the head' other income' Respectfully following the the head' other income' Respectfully following the decision of the Tribunal cited hereunder: decision of the Tribunal cited hereunder:
(1) ITAT Hyderabad Bench in the case of My Home ITAT Hyderabad Bench in the case of My Home ITAT Hyderabad Bench in the case of My Home Power Ltd. VsDCIT in ITA No. 1114/Hyd/2009 = Power Ltd. VsDCIT in ITA No. 1114/Hyd/2009 = Power Ltd. VsDCIT in ITA No. 1114/Hyd/2009 = 2012-TIOL TIOL-637-ITAT-HYD
Essel Mining & Industries Ltd. 33 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
2) 2) ITAT ITAT Chenn Chennai ai Bench Bench in in the the case case of of Sri Sri Velayudaswamy Spinning Velayudaswamy Spinning Mills (P) Ltd. Vs DCIT in ITA Mills (P) Ltd. Vs DCIT in ITA No. 582/Mds/2013 No. 582/Mds/2013
3) ITAT Chennai Bench in the case of Ambika Cotton 3) ITAT Chennai Bench in the case of Ambika Cotton 3) ITAT Chennai Bench in the case of Ambika Cotton Mills Ltd. Vs DCIT in ITA No. 1836/Mds/2012; Mills Ltd. Vs DCIT in ITA No. 1836/Mds/2012; Mills Ltd. Vs DCIT in ITA No. 1836/Mds/2012;
we direct the AO to treat the Proceeds realized from we direct the AO to treat the Proceeds realized from we direct the AO to treat the Proceeds realized from sale of C sale of Certified Emission Reduction (CERs) generated ertified Emission Reduction (CERs) generated out of Capital Projects registered with UNFCCC as out of Capital Projects registered with UNFCCC as out of Capital Projects registered with UNFCCC as capital receipts. Additional ground No. 1 is accordingly capital receipts. Additional ground No. 1 is accordingly capital receipts. Additional ground No. 1 is accordingly allowed. allowed.
28.6 It has also been noted that in a latest decision the 28.6 It has also been noted that in a latest decision the 28.6 It has also been noted that in a latest decision the jurisdictional Mumbai ITAT in the cas jurisdictional Mumbai ITAT in the case of Aditya Birla Nuvo e of Aditya Birla Nuvo Ltd. Vs. DCIT in ITA No.3033/M/2012 (2016 Ltd. Vs. DCIT in ITA No.3033/M/2012 (2016-TIOL TIOL-25-ITAT- MUM), the Hon'ble Mumbai ITAT has concluded as under: MUM), the Hon'ble Mumbai ITAT has concluded as under: MUM), the Hon'ble Mumbai ITAT has concluded as under:-
"9. Ground No. 10 is with regard to sale of certified "9. Ground No. 10 is with regard to sale of certified "9. Ground No. 10 is with regard to sale of certified emission reduction (CER) Rs.6,95,29, 718/ emission reduction (CER) Rs.6,95,29, 718/- - treated as revenue receipt revenue receipts and liable to tax and to treat the s and liable to tax and to treat the same as capital receipt not chargeable to tax. same as capital receipt not chargeable to tax. same as capital receipt not chargeable to tax.
9.1. During the assessment proceedings vide its letter 9.1. During the assessment proceedings vide its letter 9.1. During the assessment proceedings vide its letter dt.25.3.2009 the assessee submitted it had received dt.25.3.2009 the assessee submitted it had received dt.25.3.2009 the assessee submitted it had received Rs.6.95crores on sale of CER, that out of abundant Rs.6.95crores on sale of CER, that out of abundant Rs.6.95crores on sale of CER, that out of abundant caution it had caution it had offered the amount as taxable income, offered the amount as taxable income, that the amount in question was in the nature of that the amount in question was in the nature of that the amount in question was in the nature of capital receipt and was not liable to tax. The AO capital receipt and was not liable to tax. The AO capital receipt and was not liable to tax. The AO rejecting the claim of the assessee held that CER was rejecting the claim of the assessee held that CER was rejecting the claim of the assessee held that CER was
Essel Mining & Industries Ltd. 34 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
generated in the process of business, that it was not a generated in the process of business, that it was not a generated in the process of business, that it was not a capital capital receipt, that same was liable to tax.
9.2. During the appellate proceedings before the FAA, 9.2. During the appellate proceedings before the FAA, 9.2. During the appellate proceedings before the FAA, the assessee contended that CER were a type of the assessee contended that CER were a type of the assessee contended that CER were a type of emission unit issued by the clean development emission unit issued by the clean development emission unit issued by the clean development mechanism executive board for emission reduction, mechanism executive board for emission reduction, mechanism executive board for emission reduction, that carbon credit wa that carbon credit was generated by using advanced s generated by using advanced technology that reduced the carbon emission in technology that reduced the carbon emission in technology that reduced the carbon emission in environment, that the income was generated by the co. environment, that the income was generated by the co. environment, that the income was generated by the co. by selling the points in the market, that it was capital by selling the points in the market, that it was capital by selling the points in the market, that it was capital receipt and was not chargeable to tax. The FAA held receipt and was not chargeable to tax. The FAA held receipt and was not chargeable to tax. The FAA held that the assesse that the assessee had shown the income as revenue e had shown the income as revenue receipt in the books of account, that it did not file receipt in the books of account, that it did not file receipt in the books of account, that it did not file revised return, that the amount received by it was revised return, that the amount received by it was revised return, that the amount received by it was directly linked with running of the business. Upholding directly linked with running of the business. Upholding directly linked with running of the business. Upholding the order of the AO, he rejected the appeal filed by the the order of the AO, he rejected the appeal filed by the the order of the AO, he rejected the appeal filed by the assessee. ssee.
9.3.Before us, the AR contended that the issue of CER 9.3.Before us, the AR contended that the issue of CER 9.3.Before us, the AR contended that the issue of CER had been dealt and decided by the Tribunal/Courts in had been dealt and decided by the Tribunal/Courts in had been dealt and decided by the Tribunal/Courts in favour of the assessee Hereferred to the cases of My favour of the assessee Hereferred to the cases of My favour of the assessee Hereferred to the cases of My Home Power Ltd. (365[TR82) = 2014 Home Power Ltd. (365[TR82) = 2014-TIOL-978 978-HC-AP- IT; My Home Power Ltd.(63 SOT 227) = 2012-TIOL- IT; My Home Power Ltd.(63 SOT 227) = 2012 IT; My Home Power Ltd.(63 SOT 227) = 2012 637-ITAT ITAT-HYD ;M/s. Shree Cements Limited(TA / 503/ HYD ;M/s. Shree Cements Limited(TA / 503/ JP/2012) JP/2012) =2014-TIOL-1233-ITAT-JAIPUR; =2014 JAIPUR; BEST BEST Corporation Corporation Corporation Pvt. Pvt. Pvt. Ltd. Ltd. Ltd. ITA1958/Mds/2014 ITA1958/Mds/2014 ITA1958/Mds/2014 dt.20.05.2015) = 2015 dt.20.05.2015) = 2015-TIOL-829-ITAT-MAD andM/s. MAD andM/s. Subhash Subhash Subhash Kabini Kabini Kabini Power Power Power Corporation Corporation Corporation Ltd.(ITA Ltd.(ITA Ltd.(ITA
Essel Mining & Industries Ltd. 35 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
No.258/Bang/2014) dt.28/11/ No.258/Bang/2014) dt.28/11/2014) = 2015 2014) = 2015-TIOL-44- ITAT-BANG. The DRsupported the order of FAA.We BANG. The DRsupported the order of FAA.We BANG. The DRsupported the order of FAA.We have heard the rival submissions and perused the have heard the rival submissions and perused the have heard the rival submissions and perused the material. In the case of My Home Power the Hon'ble material. In the case of My Home Power the Hon'ble material. In the case of My Home Power the Hon'ble Andhra Pradesh High Court has decided the issue as Andhra Pradesh High Court has decided the issue as Andhra Pradesh High Court has decided the issue as under
We have considered the afore 3. We have considered the aforesaid submission and said submission and we are unable to accept the same, as the learned we are unable to accept the same, as the learned we are unable to accept the same, as the learned Tribunal has factually found that"carbon credit is not Tribunal has factually found that"carbon credit is not Tribunal has factually found that"carbon credit is not an an an offshoot offshoot offshoot of of of business business business but but but an an an offshoot offshoot offshoot of of of environmental concerns. No asset is generated in the environmental concerns. No asset is generated in the environmental concerns. No asset is generated in the course of business but it is generat course of business but it is generated due to ed due to environmental concerns". We agree with this factual environmental concerns". We agree with this factual environmental concerns". We agree with this factual analysis as the assessee is carrying on the business analysis as the assessee is carrying on the business analysis as the assessee is carrying on the business of power generation. The carbon credit is not even of power generation. The carbon credit is not even of power generation. The carbon credit is not even directly linked with power generation. On the sale of directly linked with power generation. On the sale of directly linked with power generation. On the sale of excess carbon credits the income was excess carbon credits the income was received and received and hence as correctly held by the Tribunal it is capital hence as correctly held by the Tribunal it is capital hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. In receipt and it cannot be business receipt or income. In receipt and it cannot be business receipt or income. In the circumstances, we do not find any element of law the circumstances, we do not find any element of law the circumstances, we do not find any element of law in this appeal." in this appeal."
Respectfully following the above judgment, Ground No. Respectfully following the above judgment, Ground No. Respectfully following the above judgment, Ground No. 10 is de 10 is decide in favour of the assessee.
28.7 In view of these facts and circumstances and the 28.7 In view of these facts and circumstances and the 28.7 In view of these facts and circumstances and the various judicial pronouncements, the AO is directed to delete various judicial pronouncements, the AO is directed to delete various judicial pronouncements, the AO is directed to delete the addition made on account of Carbon Credit Income. the addition made on account of Carbon Credit Income. the addition made on account of Carbon Credit Income.”
Essel Mining & Industries Ltd. 36 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
We have heard rival submission of the parties on We have heard rival submission of the parties on We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. As far as dispute and perused the relevant material on record. As far as dispute and perused the relevant material on record. As far as finding of the Ld. CIT(A) on the deletion in view of no incriminating finding of the Ld. CIT(A) on the deletion in view of no incriminating finding of the Ld. CIT(A) on the deletion in view of no incriminating material, we do not find any infirmity in the order of the Ld. CIT(A) material, we do not find any infirmity in the order of the Ld. CIT(A) material, we do not find any infirmity in the order of the Ld. CIT(A) in the issue-in-dispute. On the deletion dispute. On the deletion on merit is concerned, we on merit is concerned, we find that the Ld. CIT(A) has followed binding precedent on the find that the Ld. CIT(A) has followed binding precedent on the find that the Ld. CIT(A) has followed binding precedent on the issue-in-dispute and therefore, we do not find any error in the order dispute and therefore, we do not find any error in the order dispute and therefore, we do not find any error in the order of the Ld. CIT(A) on the issue of the Ld. CIT(A) on the issue-in-dispute. Accordingly, we uphold dispute. Accordingly, we uphold the finding of the Ld. CIT(A) the finding of the Ld. CIT(A) on the issue-in-dispute and the dispute and the grounds No. 4 & 5 of appeal of the Revenue grounds No. 4 & 5 of appeal of the Revenue are dismissed. dismissed.
13.1 As far as appeal of the assessee is concerned, the ground No. 2 As far as appeal of the assessee is concerned, the ground No. 2 As far as appeal of the assessee is concerned, the ground No. 2 to 6 of the appeal relates to the issue of addition for illegal to 6 of the appeal relates to the issue of addition for illegal to 6 of the appeal relates to the issue of addition for illegal mining/ore production made on th production made on the basis of Justice M.B. Shah e basis of Justice M.B. Shah Commission Report. The relevant finding of the Ld. CIT(A) on the Commission Report. The relevant finding of the Ld. CIT(A) on the Commission Report. The relevant finding of the Ld. CIT(A) on the issue-in-dispute is reproduce as under: dispute is reproduce as under:
“34. I have considered the observations of the AO in the I have considered the observations of the AO in the I have considered the observations of the AO in the assessment order, the submission of the appellant company assessment order, the submission of the appellant company assessment order, the submission of the appellant company and perused the materials used the materialsavailable on record. The appellant available on record. The appellant has taken this Ground, as an alternate to the Ground No. 3, has taken this Ground, as an alternate to the Ground No. 3, has taken this Ground, as an alternate to the Ground No. 3, discussed above. discussed above.
34.1 The facts of the case are that the CBI had conducted 34.1 The facts of the case are that the CBI had conducted 34.1 The facts of the case are that the CBI had conducted search operations on 15.10.2013 at the business premises of search operations on 15.10.2013 at the business premises of search operations on 15.10.2013 at the business premises of M/s Aditya Birla Management Corporation Pvt. Ltd. (M/s M/s Aditya Birla Management Corporation Pvt. Ltd. (M/s M/s Aditya Birla Management Corporation Pvt. Ltd. (M/s ABMCPL), a group concern at UCO Bank Building, 4" Floor, ABMCPL), a group concern at UCO Bank Building, 4" Floor, ABMCPL), a group concern at UCO Bank Building, 4" Floor,
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Parliament Street, New Del Parliament Street, New Delhi. During the said search hi. During the said search operation, cash of approximately Rs. 25 Crores was found at operation, cash of approximately Rs. 25 Crores was found at operation, cash of approximately Rs. 25 Crores was found at the above mentioned premises of M/s. ABMCPL. Accordingly, the above mentioned premises of M/s. ABMCPL. Accordingly, the above mentioned premises of M/s. ABMCPL. Accordingly, the Income Tax Department was informed by CBI and the the Income Tax Department was informed by CBI and the the Income Tax Department was informed by CBI and the DDIT(In), New Delhi, conducted a survey action w/s. 133A DDIT(In), New Delhi, conducted a survey action w/s. 133A DDIT(In), New Delhi, conducted a survey action w/s. 133A of the Act at the premises of M/s ABMCPL, which was the Act at the premises of M/s ABMCPL, which was the Act at the premises of M/s ABMCPL, which was subsequently converted into a search operation w/s. 132 of subsequently converted into a search operation w/s. 132 of subsequently converted into a search operation w/s. 132 of the Act. It has been noted that these searches were the Act. It has been noted that these searches were the Act. It has been noted that these searches were conducted in relation to coal scam. conducted in relation to coal scam.
34.2 It is also noted that as a result of the search oper 34.2 It is also noted that as a result of the search oper 34.2 It is also noted that as a result of the search operation on the Group, one of the group concern, namely, M/s on the Group, one of the group concern, namely, M/s on the Group, one of the group concern, namely, M/s Sunbeam Trading & Inv. P Ltd. (M/s STIPL) has filed a Sunbeam Trading & Inv. P Ltd. (M/s STIPL) has filed a Sunbeam Trading & Inv. P Ltd. (M/s STIPL) has filed a settlement application before the Hon'ble ITSC, Mumbai settlement application before the Hon'ble ITSC, Mumbai settlement application before the Hon'ble ITSC, Mumbai wherein, cash unaccounted transactions have been accepted wherein, cash unaccounted transactions have been accepted wherein, cash unaccounted transactions have been accepted by M/s STIPL in relation to the by M/s STIPL in relation to the sale of iron ore. It has also sale of iron ore. It has also been noted that there are transactions of iron ore between been noted that there are transactions of iron ore between been noted that there are transactions of iron ore between the appellant company and M/s STIPL. the appellant company and M/s STIPL.
34.3 In these circumstances, I am of the considered opinion 34.3 In these circumstances, I am of the considered opinion 34.3 In these circumstances, I am of the considered opinion that this issue is emanating out of the search operation that this issue is emanating out of the search operation that this issue is emanating out of the search operation conducted on conducted on the Group and hence, the A.O. has rightly the Group and hence, the A.O. has rightly made additions us 153C of the Act on the issue of illegal made additions us 153C of the Act on the issue of illegal made additions us 153C of the Act on the issue of illegal mining.
34.4 It is also a fact on record that Justice M. B. Shah 34.4 It is also a fact on record that Justice M. B. Shah 34.4 It is also a fact on record that Justice M. B. Shah Commission was set up on illegal mining of Iron Ore and Commission was set up on illegal mining of Iron Ore and Commission was set up on illegal mining of Iron Ore and Manganese ore in the States of Ori Manganese ore in the States of Orissa, Jharkhand & Goa ssa, Jharkhand & Goa and the Hon'ble Shah Commission has filed its report before and the Hon'ble Shah Commission has filed its report before and the Hon'ble Shah Commission has filed its report before the Hon'ble Supreme Court of India. The facts of the present the Hon'ble Supreme Court of India. The facts of the present the Hon'ble Supreme Court of India. The facts of the present
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case at hand are that the report of Hon'ble Justice M. B. case at hand are that the report of Hon'ble Justice M. B. case at hand are that the report of Hon'ble Justice M. B. Shah Commission has been received py the A.O. from Shah Commission has been received py the A.O. from Shah Commission has been received py the A.O. from DDIT(v.), Bhubaneswar and also from DDITC v.), Bhubaneswar and also from DDITC(In (Inv.),Tech-II, Kolkata regarding illegal mining activities of the Appellant Kolkata regarding illegal mining activities of the Appellant Kolkata regarding illegal mining activities of the Appellant Company, in respect of three mines at Jilling, Kasia and Company, in respect of three mines at Jilling, Kasia and Company, in respect of three mines at Jilling, Kasia and Koira Mines, which revealed that the appellant has shown Koira Mines, which revealed that the appellant has shown Koira Mines, which revealed that the appellant has shown lower production in it's book lower production in it's books of account for the various s of account for the various assessment years. assessment years.
34.5 In view of these circumstances, the A 34.5 In view of these circumstances, the A.O. has called for .O. has called for information u information u/s133(6) of the Act from the Regional Controller /s133(6) of the Act from the Regional Controller of Mines, Bhubaneswar, thereby calling for the Annual of Mines, Bhubaneswar, thereby calling for the Annual of Mines, Bhubaneswar, thereby calling for the Annual Mining Returns filed by the appe Mining Returns filed by the appellant in requisite Form No. H llant in requisite Form No. H- 1. For the sake of clarity, the figures of production as per H 1. For the sake of clarity, the figures of production as per H 1. For the sake of clarity, the figures of production as per H-1 Form, M.B. Shah Commission Report and as per Audit Form, M.B. Shah Commission Report and as per Audit Form, M.B. Shah Commission Report and as per Audit Report, the differences and its valuation, for the various Report, the differences and its valuation, for the various Report, the differences and its valuation, for the various assessment years, is tabulated as under: assessment years, is tabulated as under:
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34.6 For the current year under consideration, the production the current year under consideration, the production the current year under consideration, the production of Iron Ore is37,18,910 M.T., as per the HI Report, whereas of Iron Ore is37,18,910 M.T., as per the HI Report, whereas of Iron Ore is37,18,910 M.T., as per the HI Report, whereas as per the Books of Accounts of the appellant company, the as per the Books of Accounts of the appellant company, the as per the Books of Accounts of the appellant company, the total production is shown at 34,27,554 M.T.Thus, there is a total production is shown at 34,27,554 M.T.Thus, there is a total production is shown at 34,27,554 M.T.Thus, there is a suppression of producti suppression of production to the tune of 2,91,356 M.T. for the on to the tune of 2,91,356 M.T. for the year under consideration. The cost of production as year under consideration. The cost of production as year under consideration. The cost of production as evidenced by HI form is Rs. 719.70 per M.T. for the year evidenced by HI form is Rs. 719.70 per M.T. for the year evidenced by HI form is Rs. 719.70 per M.T. for the year under consideration. Accordingly, the value of suppressed under consideration. Accordingly, the value of suppressed under consideration. Accordingly, the value of suppressed production production production has has has been been been worked worked worked out out out by by by the the the A.O. A.O. A.O. at at at Rs.20,96,89,187/ 20,96,89,187/-.
34.7 On this issue it may be noted that for the F.Y. 2007 34.7 On this issue it may be noted that for the F.Y. 2007 34.7 On this issue it may be noted that for the F.Y. 2007-08 and F.Y. 2008 and F.Y. 2008-09 reporting of sub grade / Mineral Rejects 09 reporting of sub grade / Mineral Rejects (Below 55% Fe) was not required, for the purposes of Form H (Below 55% Fe) was not required, for the purposes of Form H (Below 55% Fe) was not required, for the purposes of Form H- 1. However, the format of Form H 1. However, the format of Form H-1 was changed in F.Y. 1 was changed in F.Y. 2009-10 to incorporate these details. It is clarified that the 0 to incorporate these details. It is clarified that the 0 to incorporate these details. It is clarified that the Sub-Grade Ore (SGO) is that part of the ore excavated from Grade Ore (SGO) is that part of the ore excavated from Grade Ore (SGO) is that part of the ore excavated from the mines, which contain metal content (Fe) less than the mines, which contain metal content (Fe) less than the mines, which contain metal content (Fe) less than required for marketable grades i.e. Below 55% Fe. required for marketable grades i.e. Below 55% Fe. required for marketable grades i.e. Below 55% Fe.
34.8 On this issue, the appellant ha 34.8 On this issue, the appellant has also submitted that the s also submitted that the sales of the sub sales of the sub-grade material has been recorded in the grade material has been recorded in the books of account in the year in which it has been sold, so if books of account in the year in which it has been sold, so if books of account in the year in which it has been sold, so if there is any suppression in the year under consideration there is any suppression in the year under consideration there is any suppression in the year under consideration than that is of stock only and the stock has to be val than that is of stock only and the stock has to be val than that is of stock only and the stock has to be valued at cost or market price, whichever is less. It is further submitted cost or market price, whichever is less. It is further submitted cost or market price, whichever is less. It is further submitted that there will be no change in profit/real taxable income, that there will be no change in profit/real taxable income, that there will be no change in profit/real taxable income, even if the appellant company had started reporting SO even if the appellant company had started reporting SO even if the appellant company had started reporting SO production in Income Tax Return. As there was no sale of production in Income Tax Return. As there was no sale of production in Income Tax Return. As there was no sale of
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SGO producti SGO production in A.Y. 2011-12, question of taxable revenue 12, question of taxable revenue does notarise. does notarise.
34.9 On the above contention of the appellant company, it is 34.9 On the above contention of the appellant company, it is 34.9 On the above contention of the appellant company, it is stated that the income is to be taxed, in the year to which it stated that the income is to be taxed, in the year to which it stated that the income is to be taxed, in the year to which it actually belongs. Firstly, it is an undisputed fact that for the actually belongs. Firstly, it is an undisputed fact that for the actually belongs. Firstly, it is an undisputed fact that for the current year under consideration, the appellant company has ent year under consideration, the appellant company has ent year under consideration, the appellant company has not shown the Sub not shown the Sub-Grade Iron Ore in the closing stock Grade Iron Ore in the closing stock reflected in the books of account. Thus, the closing stock has reflected in the books of account. Thus, the closing stock has reflected in the books of account. Thus, the closing stock has been undervalued by the Appellant Company to that extent been undervalued by the Appellant Company to that extent been undervalued by the Appellant Company to that extent and hence, there will unpa and hence, there will unpact on the taxable profit of the ct on the taxable profit of the current assessment year under onsideration, contrary to current assessment year under onsideration, contrary to current assessment year under onsideration, contrary to what has been claimed by the Appellant Company. what has been claimed by the Appellant Company. what has been claimed by the Appellant Company.
34.10 Further, it is to be noted that in the year of sale, only 34.10 Further, it is to be noted that in the year of sale, only 34.10 Further, it is to be noted that in the year of sale, only the profit element i.e. (Sale Price, credited in the boo the profit element i.e. (Sale Price, credited in the boo the profit element i.e. (Sale Price, credited in the books - Cost Price, as appearing in books) needs to be taxed. Thus, the Price, as appearing in books) needs to be taxed. Thus, the Price, as appearing in books) needs to be taxed. Thus, the claim of the appellant that the suppression of production on claim of the appellant that the suppression of production on claim of the appellant that the suppression of production on account of Sub account of Sub-Grade Iron Ore needs to be taxed in the year Grade Iron Ore needs to be taxed in the year in which it is sold is against the accounting principles and is in which it is sold is against the accounting principles and is in which it is sold is against the accounting principles and is also an incorrect proposition both on law & facts. so an incorrect proposition both on law & facts.
34.11 The fact that the appellant company has subsequently 34.11 The fact that the appellant company has subsequently 34.11 The fact that the appellant company has subsequently sold the sub sold the sub-Grade Iron Ore at a substantial price, clearly Grade Iron Ore at a substantial price, clearly shows that the value of the closing stock of Sub shows that the value of the closing stock of Sub shows that the value of the closing stock of Sub-Grade Iron Ore can't be taken at 'Nil', Ore can't be taken at 'Nil', as has been done by the Appellant as has been done by the Appellant company, in the books of account for the year under company, in the books of account for the year under company, in the books of account for the year under consideration. consideration.
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34.12 From the assessment order, it is evident that the AO 34.12 From the assessment order, it is evident that the AO 34.12 From the assessment order, it is evident that the AO had made the addition, by following the instruction No. had made the addition, by following the instruction No. had made the addition, by following the instruction No. 14/2015 dated 14.10.2015 issued by Cent 14/2015 dated 14.10.2015 issued by Central Board of ral Board of Direct Taxes (CBDT). The CBDT instruction, being important Direct Taxes (CBDT). The CBDT instruction, being important Direct Taxes (CBDT). The CBDT instruction, being important on this issue is reproduced, as under: on this issue is reproduced, as under:-
Instruction No. 14/2015 Instruction No. 14/2015
Government of India Government of India
Ministry of Finance Ministry of Finance
Department of Revenue Department of Revenue
Central Board of Direct Taxes Central Board of Direct Taxes
North-Block, New Block, New-Delhi, dated the 14th of October, 2015 d the 14th of October, 2015
To,
All All Pr. Pr. Chief-Commissioners Chief Commissioners of of Income Income-tax/Chief- Commissioners ofIncome Commissioners ofIncome-tax
All Pr. Directors All Pr. Directors-General of Income-tax/Directors tax/Directors-General of Income-tax
Sir/Madam
Subject:- Framing of scrutiny assessments in cases of Framing of scrutiny assessments in cases of Framing of scrutiny assessments in cases of assessees eng assessees engaged in the business of Mining-regarding regarding
The assessees engaged in the business of mining are The assessees engaged in the business of mining are The assessees engaged in the business of mining are required to file a Annual Return with Indian Bureau of Mines required to file a Annual Return with Indian Bureau of Mines required to file a Annual Return with Indian Bureau of Mines
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(IBM'\Form H Form H-1 in case of Iron Ore mining and Form H 1 in case of Iron Ore mining and Form H-2 to H-8 in case of mining in other Ores). 8 in case of mining in other Ores).
Follow-up enquiries, in regard to some of the companies up enquiries, in regard to some of the companies up enquiries, in regard to some of the companies which find mention in the report of the Justice M.B. Shah which find mention in the report of the Justice M.B. Shah which find mention in the report of the Justice M.B. Shah Commission of Enquiry, which was constituted by the Commission of Enquiry, which was constituted by the Commission of Enquiry, which was constituted by the Government to probe illegal Iron and Manganese Ore mining, Government to probe illegal Iron and Manganese Ore mining, Government to probe illegal Iron and Manganese Ore mining, shows that in some cases there wer shows that in some cases there were significant differences e significant differences in figures regarding production and closing stock, as reported in figures regarding production and closing stock, as reported in figures regarding production and closing stock, as reported in the Annual Return filed with IBM vis in the Annual Return filed with IBM vis-a-vis the details vis the details furnished in the Income furnished in the Income-tax Return.
In this context, I am directed to convey that while 3. In this context, I am directed to convey that while 3. In this context, I am directed to convey that while scrutinizing the c scrutinizing the cases of entities engaged in the business of ases of entities engaged in the business of mining, the Annual Returns filed with IBM by the respective mining, the Annual Returns filed with IBM by the respective mining, the Annual Returns filed with IBM by the respective assessees should invariably be obtained and compared with assessees should invariably be obtained and compared with assessees should invariably be obtained and compared with the details submitted to the Income the details submitted to the Income-tax Devartment so as to tax Devartment so as to ascertain whether any suppression ascertain whether any suppression of productionand of productionand
discrepancy in stock exists and further necessary action as discrepancy in stock exists and further necessary action as discrepancy in stock exists and further necessary action as per provisions of law may be taken. per provisions of law may be taken.
If significant discrepancies between the figures furnished 4. If significant discrepancies between the figures furnished 4. If significant discrepancies between the figures furnished to the mining authorities and the Income to the mining authorities and the Income-tax Department for tax Department for other vears also come other vears also come to the notice, then, necessary remedial to the notice, then, necessary remedial measures may be taken for all the years concerned. measures may be taken for all the years concerned. measures may be taken for all the years concerned.
This may be brought to the notice of all concerned for 5. This may be brought to the notice of all concerned for 5. This may be brought to the notice of all concerned for necessary compliance necessary compliance
(Ankita Pandey) (Ankita Pandey)
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DCIT (OSD) IT(A DCIT (OSD) IT(A-11)
E.No.225/259/2015 E.No.225/259/2015-ITA.I
34.13 The above instructi 34.13 The above instruction clearly indicates that according on clearly indicates that according to the JusticeM.B. Shah Commission of Enquiry, in some to the JusticeM.B. Shah Commission of Enquiry, in some to the JusticeM.B. Shah Commission of Enquiry, in some mining cases, there were significant differences in figures mining cases, there were significant differences in figures mining cases, there were significant differences in figures regarding production and closing stock, as reported in the regarding production and closing stock, as reported in the regarding production and closing stock, as reported in the Annual Return filed with Indian Bureau of Mine Annual Return filed with Indian Bureau of Mines (IBM) vis s (IBM) vis-a- go vis the details furnished in the Income go vis the details furnished in the Income-tax Return. tax Return. Accordingly, Accordingly, Accordingly, the the the concerned concerned concerned AOs AOs AOs were were were directed directed directed that that that assessment of such mining companiesshould invariably be assessment of such mining companiesshould invariably be assessment of such mining companiesshould invariably be made based on the basis of a comparison of the Annual made based on the basis of a comparison of the Annual made based on the basis of a comparison of the Annual Returns filed with IBM and Returns filed with IBM and Tax Audit Report.
34.14 In these circumstances, I am of the considered opinion 34.14 In these circumstances, I am of the considered opinion 34.14 In these circumstances, I am of the considered opinion that the AO has rightly followed the binding instruction of the that the AO has rightly followed the binding instruction of the that the AO has rightly followed the binding instruction of the CBDT on this issue and correctly made an addition on illegal CBDT on this issue and correctly made an addition on illegal CBDT on this issue and correctly made an addition on illegal mining based on difference in between the H mining based on difference in between the H-1 Return 1 Return / M.B. Shah Commission Report and the Tax Audit Report. It needs Shah Commission Report and the Tax Audit Report. It needs Shah Commission Report and the Tax Audit Report. It needs to be emphasized here that the A.O. is duty bound to follow to be emphasized here that the A.O. is duty bound to follow to be emphasized here that the A.O. is duty bound to follow the CBDT instructions / circulars, while framing the the CBDT instructions / circulars, while framing the the CBDT instructions / circulars, while framing the assessment orders. assessment orders.
34.15 In the case of Commissioner of Central Excise Vs. 34.15 In the case of Commissioner of Central Excise Vs. 34.15 In the case of Commissioner of Central Excise Vs. Ratan Melting & Wire Industries, (2008) 220 CTR 0098 : tan Melting & Wire Industries, (2008) 220 CTR 0098 : tan Melting & Wire Industries, (2008) 220 CTR 0098 : (2008) 14 DTR 0324 (SC), the Hon'ble Supreme Court has (2008) 14 DTR 0324 (SC), the Hon'ble Supreme Court has (2008) 14 DTR 0324 (SC), the Hon'ble Supreme Court has held that instructions / circulars issued by the Board are held that instructions / circulars issued by the Board are held that instructions / circulars issued by the Board are binding in law on the authorities under the respective binding in law on the authorities under the respective binding in law on the authorities under the respective statutes.The Bombay High Court has statutes.The Bombay High Court has taken a vie taken a view in CWT.
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v. Gammon India (P) Lt v. Gammon India (P) Ltd.(1981) 130 ITR 471 (Bom) that if a d.(1981) 130 ITR 471 (Bom) that if a circular is relied upon for the first time in the High Court in circular is relied upon for the first time in the High Court in circular is relied upon for the first time in the High Court in the course of the hearing of a reference under the Income Tax the course of the hearing of a reference under the Income Tax the course of the hearing of a reference under the Income Tax Act, it must be given effect to by the Court, bec Act, it must be given effect to by the Court, bec Act, it must be given effect to by the Court, because the circulars instructions issued by the CBDT are binding on the circulars instructions issued by the CBDT are binding on the circulars instructions issued by the CBDT are binding on the Income Tax Officer. Income Tax Officer.
34.16 The Kerala High Court in CIT v. Malayala Manorama 34.16 The Kerala High Court in CIT v. Malayala Manorama 34.16 The Kerala High Court in CIT v. Malayala Manorama & Co Ltd.(1983) 143 ITR 29 (Ker) has observed that circulars & Co Ltd.(1983) 143 ITR 29 (Ker) has observed that circulars & Co Ltd.(1983) 143 ITR 29 (Ker) has observed that circulars of general directions issued by the CBDT are bind of general directions issued by the CBDT are bind of general directions issued by the CBDT are binding under section 119 of the Act on all officers and persons employed in section 119 of the Act on all officers and persons employed in section 119 of the Act on all officers and persons employed in the execution of the Act. The Delhi High Court in Addl. CIT v. the execution of the Act. The Delhi High Court in Addl. CIT v. the execution of the Act. The Delhi High Court in Addl. CIT v. Mrs. Avtar Mohan Singh (1982) 136 IT 645 (Del) has Mrs. Avtar Mohan Singh (1982) 136 IT 645 (Del) has Mrs. Avtar Mohan Singh (1982) 136 IT 645 (Del) has observed that though the circulars of the Central Board are observed that though the circulars of the Central Board are observed that though the circulars of the Central Board are not binding on the court, yet general circulars are binding on ng on the court, yet general circulars are binding on ng on the court, yet general circulars are binding on the Income Tax Authorities. It was held in the case of Tata the Income Tax Authorities. It was held in the case of Tata the Income Tax Authorities. It was held in the case of Tata Iron & Steel Co. Ltd. v. N.C. Upadhyaya (1974)96 ITR I Iron & Steel Co. Ltd. v. N.C. Upadhyaya (1974)96 ITR I Iron & Steel Co. Ltd. v. N.C. Upadhyaya (1974)96 ITR I (Bom), that circulars issued by the Central Board of Direct (Bom), that circulars issued by the Central Board of Direct (Bom), that circulars issued by the Central Board of Direct Taxes would be binding on t Taxes would be binding on the Income Tax Officers and must he Income Tax Officers and must be given effect to by the Court [See Navnitlal Ambalal v. CIT be given effect to by the Court [See Navnitlal Ambalal v. CIT be given effect to by the Court [See Navnitlal Ambalal v. CIT (1976) 105 ITR 735 (Bom)]. (1976) 105 ITR 735 (Bom)].
34.17 An Catholic Syrian Bank Ltd. v/s. CIT 2012(3) SCC 17 An Catholic Syrian Bank Ltd. v/s. CIT 2012(3) SCC 17 An Catholic Syrian Bank Ltd. v/s. CIT 2012(3) SCC 784, the Supreme examined the effect of the circulars / 784, the Supreme examined the effect of the circulars / 784, the Supreme examined the effect of the circulars / instructions which are instructions which are in forceand are issued by the Central in forceand are issued by the Central Board of Direct Taxes in exercise of the power vested in it, Board of Direct Taxes in exercise of the power vested in it, Board of Direct Taxes in exercise of the power vested in it, under Section 119 of the Act. It was held that the circulars under Section 119 of the Act. It was held that the circulars under Section 119 of the Act. It was held that the circulars have the force of law and are binding on the income tax have the force of law and are binding on the income tax have the force of law and are binding on the income tax authorities. So long as the circular is authorities. So long as the circular is in force, it aids the in force, it aids the
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uniform and proper administration and application of the uniform and proper administration and application of the uniform and proper administration and application of the provisions of the Act. provisions of the Act.
34.18 So long as instruction / circular issued under section 34.18 So long as instruction / circular issued under section 34.18 So long as instruction / circular issued under section 119 is in force, it would be binding on the departmental 119 is in force, it would be binding on the departmental 119 is in force, it would be binding on the departmental authorities to ensure a uniform and authorities to ensure a uniform and proper administration proper administration and application of the Income Tax Act (UCO Bank vs.CIT and application of the Income Tax Act (UCO Bank vs.CIT and application of the Income Tax Act (UCO Bank vs.CIT (1999) 11 SITC 415 (SC). The Hon'ble Supreme Court in CIT (1999) 11 SITC 415 (SC). The Hon'ble Supreme Court in CIT (1999) 11 SITC 415 (SC). The Hon'ble Supreme Court in CIT vs. AnjumM. H. Ghaswala & Ors. (2002) 166 Taxation 586 vs. AnjumM. H. Ghaswala & Ors. (2002) 166 Taxation 586 vs. AnjumM. H. Ghaswala & Ors. (2002) 166 Taxation 586 has held that circular issued by CBDT is legally binding on has held that circular issued by CBDT is legally binding on has held that circular issued by CBDT is legally binding on the Revenue. venue.
34.19 The Supreme Court in K. P. Varghese v. ITO (1981) 131 34.19 The Supreme Court in K. P. Varghese v. ITO (1981) 131 34.19 The Supreme Court in K. P. Varghese v. ITO (1981) 131 IT 597 (SC) has observed that it is now well settled as a IT 597 (SC) has observed that it is now well settled as a IT 597 (SC) has observed that it is now well settled as a result of two decisions of this court, one in NavnitLal C. result of two decisions of this court, one in NavnitLal C. result of two decisions of this court, one in NavnitLal C. Javeri v. K.K. Sen, AAC (1965) AAC (1965) 56ITR 198 (SC) Javeri v. K.K. Sen, AAC (1965) AAC (1965) 56ITR 198 (SC) Javeri v. K.K. Sen, AAC (1965) AAC (1965) 56ITR 198 (SC) and the other i and the other in Ellerman Lines Ltd. v. CIT (1971) 82 ITR 913 n Ellerman Lines Ltd. v. CIT (1971) 82 ITR 913 (SC) that circulars / instructions issued by the CBDT under (SC) that circulars / instructions issued by the CBDT under (SC) that circulars / instructions issued by the CBDT under section 119 of the Act are binding on all officers and persons section 119 of the Act are binding on all officers and persons section 119 of the Act are binding on all officers and persons employed in the execution of the Act, even if they deviate employed in the execution of the Act, even if they deviate employed in the execution of the Act, even if they deviate from the provisions of the from the provisions of the Act.
34.20 In view of the above facts and circumstances of the 34.20 In view of the above facts and circumstances of the 34.20 In view of the above facts and circumstances of the case and the various judicial pronouncements, the action of case and the various judicial pronouncements, the action of case and the various judicial pronouncements, the action of the A.O. in taxing the suppressed production of Sub the A.O. in taxing the suppressed production of Sub the A.O. in taxing the suppressed production of Sub-Grade Iron Ore us 153C of the Act is upheld. Iron Ore us 153C of the Act is upheld.
34.21 Accordingly, the Ground of App 34.21 Accordingly, the Ground of Appeal Nos. 7, 8 and 9 of eal Nos. 7, 8 and 9 of the appellant company are dismissed. the appellant company are dismissed.”
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13.2 Before us, the Ld. Counsel of the assessee submitted that this Before us, the Ld. Counsel of the assessee submitted that this Before us, the Ld. Counsel of the assessee submitted that this addition was made purely on the basis of M.B. Shah Commission addition was made purely on the basis of M.B. Shah Commission addition was made purely on the basis of M.B. Shah Commission Report and it was not based on any incriminating material and Report and it was not based on any incriminating material and Report and it was not based on any incriminating material and therefore, following the finding of the Hon’ble Bombay High Court in refore, following the finding of the Hon’ble Bombay High Court in refore, following the finding of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (supra), the the case of Continental Warehousing Corporation (supra), the the case of Continental Warehousing Corporation (supra), the addition deserved to be deleted. He further submitted that identical addition deserved to be deleted. He further submitted that identical addition deserved to be deleted. He further submitted that identical addition has been deleted by the Tribunal in assessee’s own case for addition has been deleted by the Tribunal in assessee’s own addition has been deleted by the Tribunal in assessee’s own assessment year 2008 assessment year 2008-09, 2009-10 and 2010-11. The relevant 11. The relevant finding of the Tribunal in ITA No. 1017 and 1552/M/2018 for finding of the Tribunal in ITA No. 1017 and 1552/M/2018 for finding of the Tribunal in ITA No. 1017 and 1552/M/2018 for assessment year 2008 assessment year 2008-09 is reproduced as under:
“D. Addition made on account of illegal unaccounted D. Addition made on account of illegal unaccounted D. Addition made on account of illegal unaccounted provision Rs.4,65,56,163/ provision Rs.4,65,56,163/-
We find that the Id. AO in page 27 para 15.1 had addressed e find that the Id. AO in page 27 para 15.1 had addressed e find that the Id. AO in page 27 para 15.1 had addressed this issue wherein he had made this addition by placing this issue wherein he had made this addition by placing this issue wherein he had made this addition by placing reliance on Justice M.B.Shah Commission report submitted reliance on Justice M.B.Shah Commission report submitted reliance on Justice M.B.Shah Commission report submitted before the Hon'ble Supreme Court pointing out discrepancy in before the Hon'ble Supreme Court pointing out discrepancy in before the Hon'ble Supreme Court pointing out discrepancy in production data of the a production data of the assessee. It is pertinent to note that ssessee. It is pertinent to note that Justice M B Shah Commission was setup on illegal mining of Justice M B Shah Commission was setup on illegal mining of Justice M B Shah Commission was setup on illegal mining of Iron Ore and Manganese Ore in the states of Orissa, Iron Ore and Manganese Ore in the states of Orissa, Iron Ore and Manganese Ore in the states of Orissa, Jharkhand and Goa. The Id. AO had observed in para 15.3 Jharkhand and Goa. The Id. AO had observed in para 15.3 Jharkhand and Goa. The Id. AO had observed in para 15.3 of his order that as per the said report, the asses of his order that as per the said report, the asses of his order that as per the said report, the assessee was found to be involved in illegal mining activity of Iron ore. After found to be involved in illegal mining activity of Iron ore. After found to be involved in illegal mining activity of Iron ore. After calculating discrepancy in the production data, the Id. AO calculating discrepancy in the production data, the Id. AO calculating discrepancy in the production data, the Id. AO worked out the addition on account of suppressed production worked out the addition on account of suppressed production worked out the addition on account of suppressed production of Rs.4,65,56,162/ of Rs.4,65,56,162/- (1,26,501 MTS x Rs.368.03 per MT) and (1,26,501 MTS x Rs.368.03 per MT) and
Essel Mining & Industries Ltd. 47 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
made an addition for the same in the search assessment an addition for the same in the search assessment an addition for the same in the search assessment concluded u/s. 153C of the Act. concluded u/s. 153C of the Act.
From the aforesaid narration of facts and the manner in From the aforesaid narration of facts and the manner in From the aforesaid narration of facts and the manner in which this addition has been made by the Id. AO, it could be which this addition has been made by the Id. AO, it could be which this addition has been made by the Id. AO, it could be safely concluded that the Id. AO had not relied upon any safely concluded that the Id. AO had not relied upon any safely concluded that the Id. AO had not relied upon any search material that has been handed over by the Assessing search material that has been handed over by the Assessing search material that has been handed over by the Assessing Officer of ABMCPL (being the searched person us.132 of the Officer of ABMCPL (being the searched person us.132 of the Officer of ABMCPL (being the searched person us.132 of the Act) and that this addition had been made by merely placing Act) and that this addition had been made by merely placing Act) and that this addition had been made by merely placing reliance on the Justice M B Shah commission report. The only reliance on the Justice M B Shah commission report. The only reliance on the Justice M B Shah commission report. The only incriminating ma incriminating material which was handed over to the terial which was handed over to the Assessing Officer of the assessee herein was Annexure A Assessing Officer of the assessee herein was Annexure A Assessing Officer of the assessee herein was Annexure A-8 containing petty cash book. No additions have beenmade for containing petty cash book. No additions have beenmade for containing petty cash book. No additions have beenmade for A.Y.2008-09 in the impugned search assessment u/s. 153C 09 in the impugned search assessment u/s. 153C 09 in the impugned search assessment u/s. 153C of the Act by placing reliance on the said pett of the Act by placing reliance on the said petty cash book. y cash book. Hence, it could be safely concluded that the addition made Hence, it could be safely concluded that the addition made Hence, it could be safely concluded that the addition made on account of illegal unaccounted production does not come on account of illegal unaccounted production does not come on account of illegal unaccounted production does not come out of any seized material received from the Assessing out of any seized material received from the Assessing out of any seized material received from the Assessing Officer of the searched person relatable to A.Y.2008 Officer of the searched person relatable to A.Y.2008 Officer of the searched person relatable to A.Y.2008-09. In fact the Id. AR even took us to the said petty cash book d. AR even took us to the said petty cash book d. AR even took us to the said petty cash book Annexure A Annexure A-8, wherein it is seen that the entries found 8, wherein it is seen that the entries found thereon relate only to A.Y. 2011 thereon relate only to A.Y. 2011-12 for which a separate 12 for which a separate addition has been made in the sum of Rs. 1.35 Crores by the addition has been made in the sum of Rs. 1.35 Crores by the addition has been made in the sum of Rs. 1.35 Crores by the Id. AO for A.Y.2011 Id. AO for A.Y.2011-12. This itself categorically goes to prove categorically goes to prove that no reliance has been placed by the Id. AO on the said that no reliance has been placed by the Id. AO on the said that no reliance has been placed by the Id. AO on the said petty cash book Annexure A petty cash book Annexure A-8 for making this addition for A. 8 for making this addition for A. Y.2008-09.”
Essel Mining & Industries Ltd. 48 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
13.3 Further, the Tribunal in assessment year 2010 Further, the Tribunal in assessment year 2010 Further, the Tribunal in assessment year 2010-11 in ITA No. 1021 and 1531/M/2018 has 1021 and 1531/M/2018 has deleted the addition observing as deleted the addition observing as under:
“8.4. The Id. AR before us submitted that none of the 8.4. The Id. AR before us submitted that none of the 8.4. The Id. AR before us submitted that none of the aforesaid additions were made based on the incriminating aforesaid additions were made based on the incriminating aforesaid additions were made based on the incriminating material in the form of petty cash book vide Annexure material in the form of petty cash book vide Annexure material in the form of petty cash book vide Annexure-A-8 received from the Assessing Officer of received from the Assessing Officer of ABMCPL(being the ABMCPL(being the searched person /s.132 of the Act). The Id. AR submitted searched person /s.132 of the Act). The Id. AR submitted searched person /s.132 of the Act). The Id. AR submitted that the A..2010 that the A..2010-11 was a concluded assessment as on the 11 was a concluded assessment as on the date of assumption of jurisdiction us 153C of the Act by the date of assumption of jurisdiction us 153C of the Act by the date of assumption of jurisdiction us 153C of the Act by the Id. AO and hence, no addition or disallowance could be Id. AO and hence, no addition or disallowance could be Id. AO and hence, no addition or disallowance could be made in the search assessments framed either u/s.153C of he search assessments framed either u/s.153C of he search assessments framed either u/s.153C of the Act without existence of any incriminating material the Act without existence of any incriminating material the Act without existence of any incriminating material relatable to such assessment year. To address this aspect of relatable to such assessment year. To address this aspect of relatable to such assessment year. To address this aspect of the issue, it is pertinent to get into the fact as to whether the the issue, it is pertinent to get into the fact as to whether the the issue, it is pertinent to get into the fact as to whether the Id.AO had relied upon any Id.AO had relied upon any incriminating material received incriminating material received from the Assessing Officer of the search person to make from the Assessing Officer of the search person to make from the Assessing Officer of the search person to make additions, additions, additions, disallowances disallowances disallowances in in in the the the assessment assessment assessment framed framed framed u/s.153C of the Act for A.Y.2010 u/s.153C of the Act for A.Y.2010-11 in the hands of the 11 in the hands of the assessee. Let us examine the same in respect of each assessee. Let us examine the same in respect of each assessee. Let us examine the same in respect of each disallowance / addition made in the assessment as under: ance / addition made in the assessment as under:- ance / addition made in the assessment as under:
Disallowance u/s.14A of the Act Disallowance u/s.14A of the Act - Rs.21,74,09,077 / Rs.21,74,09,077 /-
……………… ………………
Disallowance of Club expenses Disallowance of Club expenses - Rs 37,152/-
…………………….. ……………………..
Essel Mining & Industries Ltd. 49 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Disallowance of Penalty Charges Disallowance of Penalty Charges - Rs 4,59,000/ Rs 4,59,000/-
……………………………. …………………………….
Addition made on account of il Addition made on account of illegal unaccounted legal unaccounted provision Rs.22,54,01,541/ provision Rs.22,54,01,541/-
We find that the Id. AO in page 19 para 13.1 had addressed We find that the Id. AO in page 19 para 13.1 had addressed We find that the Id. AO in page 19 para 13.1 had addressed this issue wherein he had made this addition by placing this issue wherein he had made this addition by placing this issue wherein he had made this addition by placing reliance on Justice M.B.Shah Commission report submitted reliance on Justice M.B.Shah Commission report submitted reliance on Justice M.B.Shah Commission report submitted before the Hon'ble Supreme Court point before the Hon'ble Supreme Court pointing out discrepancy in ing out discrepancy in production data of the assessee. It is pertinent to note that production data of the assessee. It is pertinent to note that production data of the assessee. It is pertinent to note that Justice M B Shah Commission was setup on illegal mining of Justice M B Shah Commission was setup on illegal mining of Justice M B Shah Commission was setup on illegal mining of Iron Ore and Manganese Ore in the states of Orissa, Iron Ore and Manganese Ore in the states of Orissa, Iron Ore and Manganese Ore in the states of Orissa, Jharkhand and Goa. Jharkhand and Goa. The Id. AO had observed in para 13.4 The Id. AO had observed in para 13.4 of his order that as per the said report, the assessee was his order that as per the said report, the assessee was his order that as per the said report, the assessee was found to be involved in illegal mining activity of Iron ore. After found to be involved in illegal mining activity of Iron ore. After found to be involved in illegal mining activity of Iron ore. After calculating discrepancy in the production data, the Id. AO calculating discrepancy in the production data, the Id. AO calculating discrepancy in the production data, the Id. AO worked out the addition on account of suppressed production worked out the addition on account of suppressed production worked out the addition on account of suppressed production of Rs.22,54,01 of Rs.22,54,01,541/- (404620 MTS × Rs.557.07 per MT) and (404620 MTS × Rs.557.07 per MT) and made an addition for the same in the search assessment made an addition for the same in the search assessment made an addition for the same in the search assessment concluded us. 153C of the Act. concluded us. 153C of the Act.
From the aforesaid narration of facts and the manner in From the aforesaid narration of facts and the manner in From the aforesaid narration of facts and the manner in which this addition has been made by the Id. AO, it could be which this addition has been made by the Id. AO, it could be which this addition has been made by the Id. AO, it could be safely concluded that the Id. AO had not relied upon any cluded that the Id. AO had not relied upon any cluded that the Id. AO had not relied upon any search material that has been handed over by the Assessing search material that has been handed over by the Assessing search material that has been handed over by the Assessing Officer of ABMCPL (being the searched personU/S.132 of the Officer of ABMCPL (being the searched personU/S.132 of the Officer of ABMCPL (being the searched personU/S.132 of the Act) and that this addition had been made by merely placing Act) and that this addition had been made by merely placing Act) and that this addition had been made by merely placing reliance on the Justice M B Sha reliance on the Justice M B Shah commission report. The only h commission report. The only
Essel Mining & Industries Ltd. 50 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
incriminating material which was handed over to the incriminating material which was handed over to the incriminating material which was handed over to the Assessing Officer of the assessee herein was Annexure A Assessing Officer of the assessee herein was Annexure A Assessing Officer of the assessee herein was Annexure A-8 containing petty cash book. No additions have been made for containing petty cash book. No additions have been made for containing petty cash book. No additions have been made for A..2010-11 in the impugned search assessment u/s. 153C o 11 in the impugned search assessment u/s. 153C o 11 in the impugned search assessment u/s. 153C of the Act by placing reliance on the said petty cash book. the Act by placing reliance on the said petty cash book. the Act by placing reliance on the said petty cash book. Hence, it could be safely concluded that the addition made Hence, it could be safely concluded that the addition made Hence, it could be safely concluded that the addition made on account of illegal unaccounted production does not come on account of illegal unaccounted production does not come on account of illegal unaccounted production does not come out of any seized material received from the Assessing out of any seized material received from the Assessing out of any seized material received from the Assessing Officer of the searched Officer of the searched person relatable to A.Y.2010 person relatable to A.Y.2010-11. In fact the Id. AR even took us to the said petty cash book fact the Id. AR even took us to the said petty cash book fact the Id. AR even took us to the said petty cash book Annexure A Annexure A-8, wherein it is seen that the entries found 8, wherein it is seen that the entries found thereon relate only to A.Y. 2011 thereon relate only to A.Y. 2011-12 for which a separate 12 for which a separate addition has been made in the sum of Rs.1.35 Crore addition has been made in the sum of Rs.1.35 Crore addition has been made in the sum of Rs.1.35 Crores by the Id. AO for A.Y.2011 Id. AO for A.Y.2011-12. This itself categorically goes to prove 12. This itself categorically goes to prove that no reliance has been placed by the Id. AO on the said that no reliance has been placed by the Id. AO on the said that no reliance has been placed by the Id. AO on the said petty cash book Annexure A petty cash book Annexure A-8 for making this addition for 8 for making this addition for A.Y.2010-11. 11.”
13.4 Though the Ld DR submitted that addition in dis Though the Ld DR submitted that addition in dis Though the Ld DR submitted that addition in dispute has been made in consequent to the search action , which led to been made in consequent to the search action , which led to been made in consequent to the search action , which led to formation of MB shah Commission and thus the addition was formation of MB shah Commission and thus the addition was formation of MB shah Commission and thus the addition was based on incriminating material found during the course of search, based on incriminating material found during the course of search, based on incriminating material found during the course of search, but in view of contrary finding of the Tribunal (supra) , respectfully but in view of contrary finding of the Tribunal (supra) , r but in view of contrary finding of the Tribunal (supra) , r following the same, the finding of the Ld. CIT(A) on the issue , the finding of the Ld. CIT(A) on the issue-in- , the finding of the Ld. CIT(A) on the issue dispute is deleted. The dispute is set aside and the addition issue dispute is set aside and the addition issue-in-dispute is deleted. The grounds of appeal of the assessee are accordingly allowed. of appeal of the assessee are accordingly allowed. of appeal of the assessee are accordingly allowed.
Essel Mining & Industries Ltd. 51 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
The ground No. 1 of the appeal of the assesse The ground No. 1 of the appeal of the assessee challenging the e challenging the validity of proceedings u/s 153C r.w.s. 153A of the Act, is validity of proceedings u/s 153C r.w.s. 153A of the validity of proceedings u/s 153C r.w.s. 153A of the concerned, the Ld Counsel submitted that notice u/s 153C has the Ld Counsel submitted that notice u/s 153C has the Ld Counsel submitted that notice u/s 153C has been issued by one officer and order has been issued by one officer and order has been passed by another been passed by another officer. He submitted that no order u/s 127 of the Ac . He submitted that no order u/s 127 of the Act was passed . He submitted that no order u/s 127 of the Ac for transfer of jurisdiction from one officer for transfer of jurisdiction from one officer [ i.e. DCIT Central Circle [ i.e. DCIT Central Circle- I(2), Mumbai] to another officer [ to another officer [i.e. DCIT Cent i.e. DCIT Central Circle I(4), Mumbai], thus the order passed finally by the DCIT Central Circle , thus the order passed finally by the DCIT Central Circle , thus the order passed finally by the DCIT Central Circle I(4) is invalid. The Ld. Ld. DR on the hand filed a copy of the order filed a copy of the order 127(1) of the Act dated 5/08/2014 issued by The Commissioner of 127(1) of the Act dated 5/08/2014 issued by The Commissioner of 127(1) of the Act dated 5/08/2014 issued by The Commissioner of Income-tax (Central)- -I, Mumbai, where in cases of M/s M/s Aditya Birla Group of cases including the case of the assessee have been Group of cases including the case of the assessee have been Group of cases including the case of the assessee have been transferred from DCIT Central transferred from DCIT Central Circle -2 (i.e. later on renamed as DCIT Central Circle DCIT Central Circle -I(2) , Mumbai ] to DCIT Central Circle I(2) , Mumbai ] to DCIT Central Circle- 5 (i.e. later on renamed as DCIT Central Circle I(4), Mumbai ] . later on renamed as DCIT Central Circle I(4), Mumbai ] later on renamed as DCIT Central Circle I(4), Mumbai ]
14.1 We have heard submission of the parties on the issue in We have heard submission of the parties on the issue in We have heard submission of the parties on the issue in dispute. The Ld. Counsel in rejoinder dispute. The Ld. Counsel in rejoinder admitted that he was not admitted that he was not aware of the said order u/s 127(1) of the Act aware of the said order u/s 127(1) of the Act and s and subsequent change in name of the circles. In view of the order of concerned change in name of the circles. In view of the order of concerned change in name of the circles. In view of the order of concerned Commissioner of Income ommissioner of Income-tax u/s 127(1) of the Act, the order u/s tax u/s 127(1) of the Act, the order u/s 153C has been passed by the officer havin 153C has been passed by the officer having valid jurisdiction. g valid jurisdiction. Accordingly, the ground no. of the appeal of the assessee is Accordingly, the ground no. of the appeal of the assessee is Accordingly, the ground no. of the appeal of the assessee is dismissed. The additional ground additional ground No. 2 of the appeal was not No. 2 of the appeal was not pressed, hence same is dismissed as infructuous. The additional pressed, hence same is dismissed as infructuous. The additional pressed, hence same is dismissed as infructuous. The additional
Essel Mining & Industries Ltd. 52 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
ground No. 1, raised is similar to ground no. 1 raised is similar to ground no. 1 of the appeal. Further, additions in the case of the assessee have already been in the case of the assessee have already been in the case of the assessee have already been deleted by us, the additional ground No. 1 , the additional ground No. 1 raised isrendered raised isrendered merely academic, hence same same is dismissed as infructuous.
Now, we take up cross Now, we take up cross-appeals of the Revenue and ass appeals of the Revenue and assessee for assessment year 2012 for assessment year 2012-13. The grounds raised by the Revenue 13. The grounds raised by the Revenue are reproduced as under: are reproduced as under:
"On the facts and the circumstances of the case and in law 1. "On the facts and the circumstances of the case and in law 1. "On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in granting relief to the assessee stating the Ld. CIT(A) erred in granting relief to the assessee stating the Ld. CIT(A) erred in granting relief to the assessee stating that no disallowance u/s 153C of the that no disallowance u/s 153C of the Act is called for as Act is called for as there are no incriminating materials found during the search there are no incriminating materials found during the search there are no incriminating materials found during the search and the assessment has reached its finality and was not and the assessment has reached its finality and was not and the assessment has reached its finality and was not abated at the initiation proceedings u/s. 132(1) of the Income abated at the initiation proceedings u/s. 132(1) of the Income abated at the initiation proceedings u/s. 132(1) of the Income Tax Act, 1961". Tax Act, 1961".
"On the facts and in the circumstances "On the facts and in the circumstances of the case and in of the case and in law, the Ld. CIT(A) erred, in holding that no addition can be law, the Ld. CIT(A) erred, in holding that no addition can be law, the Ld. CIT(A) erred, in holding that no addition can be made us 153C of the Act, once the assessment has reached made us 153C of the Act, once the assessment has reached made us 153C of the Act, once the assessment has reached to finality us 143(3) of the Act, and no incriminating to finality us 143(3) of the Act, and no incriminating to finality us 143(3) of the Act, and no incriminating documents have been found and seized in the case of the documents have been found and seized in the case of the documents have been found and seized in the case of the assessee during the course of search and seizure action ee during the course of search and seizure action ee during the course of search and seizure action relying upon the decision of the jurisdictional Bombay high relying upon the decision of the jurisdictional Bombay high relying upon the decision of the jurisdictional Bombay high Court decision in the case of Continental Warehousing Corpn. Court decision in the case of Continental Warehousing Corpn. Court decision in the case of Continental Warehousing Corpn. and M/s Murli Agro Products without appreciating that the and M/s Murli Agro Products without appreciating that the and M/s Murli Agro Products without appreciating that the revenue has not accepted th revenue has not accepted the decision and has filed SLP in e decision and has filed SLP in the Hon'ble Apex Court". the Hon'ble Apex Court".
Essel Mining & Industries Ltd. 53 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
On the facts and the circumstances of the case and in law 3. On the facts and the circumstances of the case and in law 3. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the the Ld. CIT(A) erred in allowing deduction u/s. 80IA of the Act, of Rs. 11,95,87,312/ Act, of Rs. 11,95,87,312/- in respect of rail system relying in respect of rail system relying upon the decision upon the decision of the Hon'ble ITAT in the case of M/s. of the Hon'ble ITAT in the case of M/s. Ultratech Cement Ltd. For A. Y. 2010 Ultratech Cement Ltd. For A. Y. 2010-11 without appreciating 11 without appreciating the decision of the Hon'ble ITAT has not been accepted by the the decision of the Hon'ble ITAT has not been accepted by the the decision of the Hon'ble ITAT has not been accepted by the department and further appeal has been filed." department and further appeal has been filed."
On the facts and the circumstances of the 4. On the facts and the circumstances of the case and in law case and in law the Id. CIT(A) erred in directing to hold the sum of the Id. CIT(A) erred in directing to hold the sum of the Id. CIT(A) erred in directing to hold the sum of Rs11,23,61,487/ Rs11,23,61,487/- received on transfer of Carbon Credit as received on transfer of Carbon Credit as capital receipt and stating that no addition can be made in capital receipt and stating that no addition can be made in capital receipt and stating that no addition can be made in proceedings u/s 153C r.w.s 153A without any incriminating proceedings u/s 153C r.w.s 153A without any incriminating proceedings u/s 153C r.w.s 153A without any incriminating material found during the course of search u/s. 132(1) of the und during the course of search u/s. 132(1) of the und during the course of search u/s. 132(1) of the Income Tax Act, 1961. Income Tax Act, 1961.
On the facts and the circumstances of the case and in law 5. On the facts and the circumstances of the case and in law 5. On the facts and the circumstances of the case and in law the Id. CIT(A) erred in directing to hold the sum of Rs. the Id. CIT(A) erred in directing to hold the sum of Rs. the Id. CIT(A) erred in directing to hold the sum of Rs. 11,23,61,487/ 11,23,61,487/- received on transfer of Carbon Credit as received on transfer of Carbon Credit as capital receiptrelying on the decision of the Hon'ble ITAT in eceiptrelying on the decision of the Hon'ble ITAT in eceiptrelying on the decision of the Hon'ble ITAT in case case of Ultratech Cement Ltd. for 2010 of Ultratech Cement Ltd. for 2010-11 11 without without appreciating that the said decision has not been accepted by appreciating that the said decision has not been accepted by appreciating that the said decision has not been accepted by the department and further appeal has been filed in the the department and further appeal has been filed in the the department and further appeal has been filed in the Hon'ble Bombay High Court" Hon'ble Bombay High Court"
15.1 The grounds raised by the assessee are reproduced as under: grounds raised by the assessee are reproduced as under: grounds raised by the assessee are reproduced as under:
“1. That on the facts and in the circumstances of the case That on the facts and in the circumstances of the case That on the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) and in law, the Commissioner of Income Tax (Appeals) and in law, the Commissioner of Income Tax (Appeals) (hereinafter referred to as the CIT(A)) erred in holding that the (hereinafter referred to as the CIT(A)) erred in holding that the (hereinafter referred to as the CIT(A)) erred in holding that the
Essel Mining & Industries Ltd. 54 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
proceedings us 153C proceedings us 153C r.w.s. 153A of the Income Tax Act 1961 r.w.s. 153A of the Income Tax Act 1961 (hereinafter referred to as the Act) has been validly initiated (hereinafter referred to as the Act) has been validly initiated (hereinafter referred to as the Act) has been validly initiated by the Assessing Officer (hereinafter referred to as AO). by the Assessing Officer (hereinafter referred to as AO). by the Assessing Officer (hereinafter referred to as AO).
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, the CIT(A) erred in dismi in law, the CIT(A) erred in dismissing appellant's claim that ssing appellant's claim that re-examination of issues / genuine claims, which had examination of issues / genuine claims, which had examination of issues / genuine claims, which had obtained finality as per Order w/s 143(3) of the Act, are obtained finality as per Order w/s 143(3) of the Act, are obtained finality as per Order w/s 143(3) of the Act, are beyond the scope of assessment u/s 153C of the Act. beyond the scope of assessment u/s 153C of the Act. beyond the scope of assessment u/s 153C of the Act.
That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not allowing a deduction of Rs. law, the CIT(A) erred in not allowing a deduction of Rs. law, the CIT(A) erred in not allowing a deduction of Rs. 25,97,32,609/ 25,97,32,609/- against the additions made in AYs2008 against the additions made in AYs2008-09 to 2011-12 on account of alleged illegal mining. 12 on account of alleged illegal mining.
4.1 That the CIT(A) erred in confirming the action of AO of That the CIT(A) erred in confirming the action of AO of That the CIT(A) erred in confirming the action of AO of double taxation on the same produ double taxation on the same production quantity once in the ction quantity once in the year in which production was shown in mining returns and year in which production was shown in mining returns and year in which production was shown in mining returns and secondly when the same production was shown in the Tax secondly when the same production was shown in the Tax secondly when the same production was shown in the Tax Audit Report. Audit Report.
4.2 That the CIT(A) erred in not appreciating the fact that That the CIT(A) erred in not appreciating the fact that That the CIT(A) erred in not appreciating the fact that appellant is not seeking any benefit of appellant is not seeking any benefit of Revenue in the Revenue in the proceeding us 153A / 153C of the Act. He failed to proceeding us 153A / 153C of the Act. He failed to proceeding us 153A / 153C of the Act. He failed to appreciate that the appellant's alternate claim of deduction of appreciate that the appellant's alternate claim of deduction of appreciate that the appellant's alternate claim of deduction of Rs. 25.97.32,609/ Rs. 25.97.32,609/- in AY 2012-13 is consequential to 13 is consequential to additions made in proceeding u/s 153A / 153C in AYs 2008 additions made in proceeding u/s 153A / 153C in AYs 2008 additions made in proceeding u/s 153A / 153C in AYs 2008- 09 to 2011-12. 12.
That without prejudice to the contention raised in Ground That without prejudice to the contention raised in Ground That without prejudice to the contention raised in Ground No. 4 above, the CIT(A) failed to appreciate that the Supreme No. 4 above, the CIT(A) failed to appreciate that the Supreme No. 4 above, the CIT(A) failed to appreciate that the Supreme
Essel Mining & Industries Ltd. 55 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
Court decision in the case of Goetz (India) Ltd. was relevant Court decision in the case of Goetz (India) Ltd. was relevant Court decision in the case of Goetz (India) Ltd. was relevant only in relation to the Assessing Officer's power and not in only in relation to the Assessing Officer's power and not in only in relation to the Assessing Officer's power and not in respect of the power of an Appellate authority and thus he the power of an Appellate authority and thus he the power of an Appellate authority and thus he erred in applying the said decision in relation to the claim erred in applying the said decision in relation to the claim erred in applying the said decision in relation to the claim made by the appellant at the Appeal stage. made by the appellant at the Appeal stage.”
15.2 The assessee has also filed an additional ground which is The assessee has also filed an additional ground which is The assessee has also filed an additional ground which is reproduced as under: reproduced as under:
ADDITIONAL GROUND N ADDITIONAL GROUND NO. 1: DEPUTY COMMISSIONER OF O. 1: DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) DID NOT HAVE THE INCOME TAX CENTRAL CIRCLE 1(4) DID NOT HAVE THE INCOME TAX CENTRAL CIRCLE 1(4) DID NOT HAVE THE JURISDICTION TO PASS THE CRDER UNDER SECTION JURISDICTION TO PASS THE CRDER UNDER SECTION JURISDICTION TO PASS THE CRDER UNDER SECTION 143(3) READ WITH SECTION 153C 143(3) READ WITH SECTION 153C
On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the learned AO erred in issuing notice under sect learned AO erred in issuing notice under section 153C of the ion 153C of the Act and passing order under section 143(3) read with section Act and passing order under section 143(3) read with section Act and passing order under section 143(3) read with section 153C of the Act. 153C of the Act.
ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF ADDITIONAL GROUND NO. 2: CLAIM OF DEDUCTION OF EDUCATION CESS EDUCATION CESS
On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, On the facts and the circumstances of the case and in law, the learned AO erred in not allowing dedu the learned AO erred in not allowing deduction of education ction of education cess and secondary and higher education cess (collectively cess and secondary and higher education cess (collectively cess and secondary and higher education cess (collectively called as "Education Cess") while computing the total taxable called as "Education Cess") while computing the total taxable called as "Education Cess") while computing the total taxable income under the Act. income under the Act.
The Appellant prays that the learned AO be directed to allow The Appellant prays that the learned AO be directed to allow The Appellant prays that the learned AO be directed to allow deduction of Education deduction of Education Cess while computing the total computing the total taxable income of the Appellant. taxable income of the Appellant.
Essel Mining & Industries Ltd. 56 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
As far as ground No. 1 & 2 of the appeal is concerned same As far as ground No. 1 & 2 of the appeal is concerned same As far as ground No. 1 & 2 of the appeal is concerned same are identical to ground No. 1 & 2 of the appeal of Revenue for are identical to ground No. 1 & 2 of the appeal of Revenue for are identical to ground No. 1 & 2 of the appeal of Revenue for assessment year 2011 assessment year 2011-12. In the year under consideration, only 12. In the year under consideration, only three additions interalia disallowance u/s 14A r.w.r. 8D amounting ns interalia disallowance u/s 14A r.w.r. 8D amounting ns interalia disallowance u/s 14A r.w.r. 8D amounting to ₹18,03,86,542/- ; club expenses of ; club expenses of ₹1,03,960/ 1,03,960/- and expenses related to exempt income u/s 80IA of the Act amounting to related to exempt income u/s 80IA of the Act amounting to related to exempt income u/s 80IA of the Act amounting to ₹35,27,814/- were made. All these additions were also made in were made. All these additions were also made in were made. All these additions were also made in assessment year 201 assessment year 2011-12 based on the addition made in the 12 based on the addition made in the assessment proceedings u/s 143(3) of the Act. Therefore, following assessment proceedings u/s 143(3) of the Act. Therefore, following assessment proceedings u/s 143(3) of the Act. Therefore, following our finding on the issue our finding on the issue-in-dispute in assessment year 2011 dispute in assessment year 2011-12, the ground No. 1 and 2 of the appeal of the Revenue are dismissed. ground No. 1 and 2 of the appeal of the Revenue are dismissed. ground No. 1 and 2 of the appeal of the Revenue are dismissed.
As far as ground Nos. 3, 4 & 5 of the appeal of the Revenue are nd Nos. 3, 4 & 5 of the appeal of the Revenue are nd Nos. 3, 4 & 5 of the appeal of the Revenue are concerned same are identical to the ground No. 3 to 5 raised by the concerned same are identical to the ground No. 3 to 5 raised by the concerned same are identical to the ground No. 3 to 5 raised by the Revenue in assessment year 2011 Revenue in assessment year 2011-12 except change of amount and 12 except change of amount and therefore, following our finding in assessment year 2011-12 these therefore, following our finding in assessment year 2011 therefore, following our finding in assessment year 2011 grounds of appeal of the Revenue are accordingly dismissed. f appeal of the Revenue are accordingly dismissed. f appeal of the Revenue are accordingly dismissed.
As far as ground of appeal of the assessee are concerned the As far as ground of appeal of the assessee are concerned the As far as ground of appeal of the assessee are concerned the issue relates to allowing deduction of ₹25,97,32,609/ issue relates to allowing deduction of 25,97,32,609/- against additions which were made in earlier assessment year 2008-09 to additions which were made in earlier assessment year 2008 additions which were made in earlier assessment year 2008 2011-12 on account of alleged illegal mining. The facts qua the count of alleged illegal mining. The facts qua the count of alleged illegal mining. The facts qua the issue-in-dispute are that in the case of the assessee certain dispute are that in the case of the assessee certain dispute are that in the case of the assessee certain sub standard ore was produced in the process of ore manufacturing ore was produced in the process of ore manufacturing ore was produced in the process of ore manufacturing which was claimed by the assessee which was claimed by the assessee of no use and having no value of no use and having no value
Essel Mining & Industries Ltd. 57 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
however, due to change in the standard of reporting by the to change in the standard of reporting by the Bureau to change in the standard of reporting by the of mining, the assessee was also required to report the said of mining, the assessee was also required to report the said of mining, the assessee was also required to report the said production of substandard of substandard ore ( having low percentage of Iron) ( having low percentage of Iron) . There was a difference in the ore production as reported to Bureau There was a difference in the ore production as reported to There was a difference in the ore production as reported to of mining and reported under the tax audit report for the purpose of ng and reported under the tax audit report for the purpose of ng and reported under the tax audit report for the purpose of income-tax and therefore, in earlier years additions were made by tax and therefore, in earlier years additions were made by tax and therefore, in earlier years additions were made by the Assessing Officer for assessment year 2008 the Assessing Officer for assessment year 2008-09 to 2011 09 to 2011-12.
Before us, the Ld. Counsel of the assessee has submitted that Before us, the Ld. Counsel of the assessee has submitted that Before us, the Ld. Counsel of the assessee has submitted that those additions have already been deleted by the Tribunal in those additions have already been deleted by the Tribunal in those additions have already been deleted by the Tribunal in assessment year 2008 assessment year 2008-09 to 2010-11. We also note that in 11. We also note that in assessment year 2011 assessment year 2011-12, we have also deleted the addition for 12, we have also deleted the addition for illegal mining in ore production following finding of the Tribunal in illegal mining in ore production following finding of the Tribunal in illegal mining in ore production following finding of the Tribunal in earlier years and therefore, addition made in all the earlier er years and therefore, addition made in all the earlier er years and therefore, addition made in all the earlier assessment year 2008 assessment year 2008-09 to 2011-12 stands deleted and therefore 12 stands deleted and therefore this claim of deduction cannot survive. The ground of appeal of the this claim of deduction cannot survive. The ground of appeal of the this claim of deduction cannot survive. The ground of appeal of the assessee is accordingly dismissed. assessee is accordingly dismissed.
The additional ground as we The additional ground as well as ground No. 1 challenging the ll as ground No. 1 challenging the validity of the proceeding proceeding u/s 153C of the Act are identical to are identical to relevant grounds raised in AY 2011 relevant grounds raised in AY 2011-12 , and thus following our 12 , and thus following our finding in AY 2011-12, these grounds are dismissed. 12, these grounds are dismissed. 12, these grounds are dismissed..
Now we take up the appeal of the assessee in ITA No. Now we take up the appeal of the assessee in ITA No. Now we take up the appeal of the assessee in ITA No. 1970/M/2022 for assessment year 2011 1970/M/2022 for assessment year 2011-12. In the grounds raised, 12. In the grounds raised, the assessee is aggrieved with the levy of penalty u/s 271(1)(c) of the assessee is aggrieved with the levy of penalty u/s 271(1)(c) of the assessee is aggrieved with the levy of penalty u/s 271(1)(c) of
Essel Mining & Industries Ltd. 58 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
the Act. The relevant finding of the Ld. CIT(A) on the issue-in- the Act. The relevant finding of the Ld. CIT(A) on the issue the Act. The relevant finding of the Ld. CIT(A) on the issue dispute is reproduced as under: is reproduced as under:
“17. The appellant has made identical submissions as that 17. The appellant has made identical submissions as that 17. The appellant has made identical submissions as that made in Appeal No.CIT(A) made in Appeal No.CIT(A)-47/10087/2019-20 for A.Y. 2008 20 for A.Y. 2008- 09, as reproduced above. Other facts and backgrounds of the 09, as reproduced above. Other facts and backgrounds of the 09, as reproduced above. Other facts and backgrounds of the case remain the same. Since all the six grounds involved case remain the same. Since all the six grounds involved case remain the same. Since all the six grounds involved in Appeal No. CIT(A) 47/10090/2019 Appeal No. CIT(A) 47/10090/2019-20 for A.Y. 2011 20 for A.Y. 2011-12 are identical to the one that is discussed above in Appeal No. identical to the one that is discussed above in Appeal No. identical to the one that is discussed above in Appeal No. CIT(A)-47/10087/2019 47/10087/2019-20 for A.Y. 2008-09, the undersigned 09, the undersigned findings for A.Y. 2008 findings for A.Y. 2008-09 with respect to these six grounds 09 with respect to these six grounds would mutatis mutand mutatis mutandis apply to this appeal for AY 2011 is apply to this appeal for AY 2011-12 as well. Hence, the appeal for AY 2011 as well. Hence, the appeal for AY 2011-12 is dismissed.” 12 is dismissed.”
We find that the Ld. CIT(A) has followed his finding in We find that the Ld. CIT(A) has followed his finding in We find that the Ld. CIT(A) has followed his finding in assessment year 2008 assessment year 2008-09. Before us, the Ld. Counsel of the 09. Before us, the Ld. Counsel of the assessee has relied on the order of the T assessee has relied on the order of the Tribunal for assessment year ribunal for assessment year 2008-09 where the Tribunal has deleted penalty observing as 09 where the Tribunal has deleted penalty observing as 09 where the Tribunal has deleted penalty observing as under:
“2. Shri Yogesh Thar appearing on behalf of the assessee 2. Shri Yogesh Thar appearing on behalf of the assessee 2. Shri Yogesh Thar appearing on behalf of the assessee submitted that the addition on account of suppressed submitted that the addition on account of suppressed submitted that the addition on account of suppressed production was made in assessment order passed production was made in assessment order passed production was made in assessment order passed u/s153C of the Act for the respective Assessment Years. In respect of of the Act for the respective Assessment Years. In respect of of the Act for the respective Assessment Years. In respect of said addition penalty proceedings u/s. 271(1)(c) of the Act said addition penalty proceedings u/s. 271(1)(c) of the Act said addition penalty proceedings u/s. 271(1)(c) of the Act were also initiated. The Assessing Officer vide separate were also initiated. The Assessing Officer vide separate were also initiated. The Assessing Officer vide separate orders of even date i.e. 28/03/2019 levied penalty of orders of even date i.e. 28/03/2019 levied penalty of orders of even date i.e. 28/03/2019 levied penalty of Rs.6,81,18,520/ Rs.6,81,18,520/- for the Assessment Year 2009 for the Assessment Year 2009-10 and penalty of Rs.7,66,13,980/ penalty of Rs.7,66,13,980/- in the Assessment Year 2010 in the Assessment Year 2010-
Essel Mining & Industries Ltd. 59 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
The Id. Authorized Representative for the assessee 11. The Id. Authorized Representative for the assessee 11. The Id. Authorized Representative for the assessee pointed that the additions made in assessment proceedings pointed that the additions made in assessment proceedings pointed that the additions made in assessment proceedings were deleted by the Tribunal in IT No.1021/Mum/20 were deleted by the Tribunal in IT No.1021/Mum/20 were deleted by the Tribunal in IT No.1021/Mum/2018 for Assessment Year 2010 Assessment Year 2010-11 and ITA No.1023/Mum/2018 for 11 and ITA No.1023/Mum/2018 for Assessment Year 2009 Assessment Year 2009-10 vide common order dated 10 vide common order dated 15/11/2022. 15/11/2022.
Shri Ashish Heliwal representing the Department fairly 3. Shri Ashish Heliwal representing the Department fairly 3. Shri Ashish Heliwal representing the Department fairly admitted that the additions made in the assessment order on admitted that the additions made in the assessment order on admitted that the additions made in the assessment order on which penalty u/s which penalty u/s 271(1)(c) of the Actwas levied has been 271(1)(c) of the Actwas levied has been deleted by the Tribunal. deleted by the Tribunal.
Both sides heard. Both sides are unanimous in stating 4. Both sides heard. Both sides are unanimous in stating 4. Both sides heard. Both sides are unanimous in stating that the addition on which penalty us. 271(1)(c) of the Act that the addition on which penalty us. 271(1)(c) of the Act that the addition on which penalty us. 271(1)(c) of the Act was levied has been deleted by the Tribunal vide order was levied has been deleted by the Tribunal vide order was levied has been deleted by the Tribunal vide order dated 15/11/2022(su dated 15/11/2022(supra) . Once substratum for levy of pra) . Once substratum for levy of penalty has eroded, the penalty proceedings does not penalty has eroded, the penalty proceedings does not penalty has eroded, the penalty proceedings does not survive. In the light of undisputed facts, the impugned order survive. In the light of undisputed facts, the impugned order survive. In the light of undisputed facts, the impugned order confirming penalty us. 271(1)(c) of the Act for Assessment confirming penalty us. 271(1)(c) of the Act for Assessment confirming penalty us. 271(1)(c) of the Act for Assessment Year2009-10 and 2010 10 and 2010-11 is quashed and the appe 11 is quashed and the appeals of the assessee are allowed. assessee are allowed.”
22.1 As the penalty in the year under consideration has been As the penalty in the year under consideration has been As the penalty in the year under consideration has been upheld by the Ld. CIT(A) following his finding in assessment year upheld by the Ld. CIT(A) following his finding in assessment year upheld by the Ld. CIT(A) following his finding in assessment year 2008-09 which the Tribunal has already deleted. Therefore, 09 which the Tribunal has already deleted. Therefore, 09 which the Tribunal has already deleted. Therefore, respectfully following the finding o respectfully following the finding of the Tribunal (supra) the penalty f the Tribunal (supra) the penalty levied u/s 271(1)(c) of the Act for the year under consideration is levied u/s 271(1)(c) of the Act for the year under consideration is levied u/s 271(1)(c) of the Act for the year under consideration is also deleted. The order of the Ld. CIT(A) on the issue-in-dispute is also deleted. The order of the Ld. CIT(A) on the issue also deleted. The order of the Ld. CIT(A) on the issue
Essel Mining & Industries Ltd. 60 ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & ITA Nos. 1020, 1019, 1550 & 1548/M/2018 & 1970/M/2022
set aside and the ground of appeal of the assessee are accordingly set aside and the ground of appeal of the assessee are accordingly set aside and the ground of appeal of the assessee are accordingly allowed.
In the result, the appeal of the Revenue for assessment year the result, the appeal of the Revenue for assessment year the result, the appeal of the Revenue for assessment year 2011-12 and 2012-13 13 are dismissed whereas the appeal are dismissed whereas the appeal of the assessee for assessment year 2011 for assessment year 2011-12 and 2012 and 2012-13 are partly allowed. The appeal of assessee in relation to penalty u/s 271(1)(c) penalty u/s 271(1)(c) of the Act for AY 2011 for AY 2011-12 is allowed.
Order pronounced Order pronounced under Rule 34(4) of the ITAT Rules, of the ITAT Rules, 1963 on 31/01/2023. 01/2023. Sd/- Sd/ Sd/- (ABY T VARKEY) (ABY T VARKEY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/01/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai
