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Income Tax Appellate Tribunal, DEHRADUN CIRCUIT BENCH: DEHRADUN
This appeal of the assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-Haldwani
[hereinafter referred to as ‘Ld. CIT(A)’] in Appeal
No.52/CIT(A)/HLD/2015-16 dated 30/03/2017 against the order passed by Assistant Commissioner of Income Tax, Circle-1,
Haldwani (hereinafter referred to as the ‘Ld. AO’) u/s 153C/143(3)
M/s Sheel Chand Agroils (P) Ltd. vs. ACIT of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 31/03/2015 for the Assessment Year 2010-11.
The assessee has raised the following grounds of appeal:
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction u/s 153C and further erred in passing the impugned order u/s 153C/143(3) and that too without complying the other mandatory conditions under the law.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction u/s 153C and further erred in passing the impugned order u/s 153C/143(3), is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of deduction u/s 801C amounting to Rs.2,62,722/- on account FDR deposits and more so when no incriminating material was found as a result of search.
That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not allowing the deduction u/s 801C amounting to Rs.2,62,722/-, is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not considering the expenditure against such interest income which were integral part of the business cycle due to the trade practice and finance management of the assessee.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs. 40,00,000/- on account of sundry creditors by treating it as alleged unexplained cash credit u/s 68 and more so when no incriminating material was found as a result of search.
7. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs.40,00,000/- u/s 68, is bad in law and against the facts and circumstances of the case.
M/s Sheel Chand Agroils (P) Ltd. vs. ACIT
That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in dismissing the additional ground raised
by the assessee.
9. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making impugned addition/disallowance and that too by recording incorrect facts and findings and without observing the principles of natural justice.
10. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
2. The first preliminary ground raised by the assessee is challenging the assumption of jurisdiction u/s 153C of the Act for the year under consideration in respect of denial of deduction of interest income u/s 80IC of the Act and making the addition towards share application money in sum of Rs.40,00,000/- as unexplained cash credit.
We have heard the rival submissions and perused the materials available on record. During the period of General Assembly Elections in the State of Uttar Pradesh in the year 2011- 12, the police of District Bareilly seized cash worth Rs.7,75,660/- from Sh. Raghuveer Singh Yadav on 06.01.2012. Accordingly, the requisition u/s 132A of the IT Act was made by ADIT (Inv.),
M/s Sheel Chand Agroils (P) Ltd. vs. ACIT Moradabad on 06/01/2012, pursuant to which section 153A proceedings were initiated in the hands of Sh. Raghuveer Singh Yadav. Sh. Raghuveer Singh Yadav stated that the above seized cash belongs to M/s Sheel Chand Agroils Pvt. Ltd. (assessee herein) and that he was simply carrying the cash belonging to the said company, which was received by him from a party on behalf of the said company. Sh. Mohan Goyal, Managing Director of assessee’s company vide its letter dated 05/02/2014 addressed to ITO, Rudrapur had agreed that the said cash belongs to the assessee company. Based on this, proceedings u/s 153C of the Act stood initiated in the hands of the assessee after due recording of satisfaction note and handing over the seized document by the Assessing Officer of the searched person. It is not in dispute that the Assessing Officer of the assessee received the seized documents from the Assessing Officer of Sh. Raghuveer Sing Yadav on 11/02/2014 i.e., relevant to AY 2014-15. The AO in the search assessment proceedings u/s 153C of the Act proceeded to deny deduction u/s 80IC of the Act in the sum of Rs.2,62,772/- in respect of interest income and proceeded to make addition of M/s Sheel Chand Agroils (P) Ltd. vs. ACIT Rs.40,00,000/- in respect of share capital received from Shri Ram EPC Ltd. as unexplained cash credit.
4. The assessee before the Ld. CIT(A) ultimately stated that there is absolutely no incriminating material for AY 2010-11 qua the additions made in the assessment. Further it was also pointed out that the seized document representing the cash of Rs.7,75,660/- was received only on 11/02/2014, hence, that date would be construed as the date of search in the hands of the assessee and the period of assessments would have to be reckoned based on that date of search i.e., 11/02/2014 in the hands of the assessee. Based on this, assessment year 2010-11 would become an unabated assessment as on 11/02/2014 and in the absence of any incriminating material relatable to AY 2010-11 qua the additions made thereon, the assessment earlier framed cannot be disturbed by the Ld. AO. Apart from this, the assessee also furnished the various details to justify the deletion of addition on merits. The Ld. CIT(A) after seeking remand report of the Assessing Officer upheld the action of the Ld. AO.
M/s Sheel Chand Agroils (P) Ltd. vs. ACIT
We find that the original assessment for AY 2010-11 was completed in the hands of the assessee u/s 143(3) of the Act on 12/06/2012. It is not in dispute that the date of handing over of seized documents by the AO of Raghuveer Singh Yadav (Section 153A assessee) to the AO of the assessee herein (Section 153C) was on 11/02/2014. Hence, the date of search in the hands of the assessee would have to be reckoned as 11/02/2014. Accordingly, as on 11/02/2014, there was no pending assessment proceeding for AY 2010-11 for the assessee. Hence, assessment year 2010-11 becomes an unabated/concluded assessment in the hands of the assessee as on 11/02/2014. There is absolutely no incriminating material found during the course of search regarding the denial of deduction u/s 80IC of the Act for interest income and share capital received. Hence, in the absence of any incriminating material relatable to AY 2010-11 qua the additions made in the hands of the assessee, in respect of concluded assessment, the earlier assessment so framed cannot be disturbed by the Ld. AO. This issue is no longer res-integra in view of the recent decision of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell
M/s Sheel Chand Agroils (P) Ltd. vs. ACIT Pvt. Ltd. in Civil Appeal No.6580 of 2021 (SC) dated 24/04/2023. In any case, we further find that no assessment at all could be made u/s 153C of the Act for AY 2010-11, since, the seized documents representing the seized cash did not pertain to AY 2010-11.
Reliance in this regard is placed on the decision of Hon’ble Supreme Court in the case of CIT vs. Singhad Technical Education Society, reported in 397 ITR 0344 (SC).
In view of the aforesaid observations, the assessment framed in the hands of the assessee u/s 153C of the Act for AY 2010-11 is hereby quashed. Accordingly, grounds raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 17th August, 2023.