DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCAL-2(2), NAGPUR vs. SMT. ANJU A. SARAF, NAGPUR

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ITA 510/NAG/2016Status: DisposedITAT Nagpur24 January 2024AY 2007-0813 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the validity of the Section 153A assessment was upheld as incriminating documents were found. However, the Revenue's appeal was partly allowed by remanding the issue of cash payment for property back to the AO for verification.

What were the facts?

The Revenue appealed against the CIT(A)'s deletion of disallowances related to Section 80IB deduction, cash payment for property, and other expenses. The assessee filed a cross-objection challenging the validity of the assessment order under Section 153A.

What were the issues?

The key issues were the validity of a Section 153A assessment without incriminating material and the correctness of the CIT(A)'s deletion of various disallowances and additions made by the AO.

Which sections of the Income-tax Act were involved?

Section 80IB,Section 153A,Section 143(3)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, NAGPUR BENCH : NAGPUR

Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE

Hearing: 22.01.2024Pronounced: 24.01.2024

ORDER PER SATBEER SINGH GODARA, J.M. :

This Revenue’s appeal I.T.A No.510/NAG./2016 and assessee’s cross objection C.O.No.6/NAG./2017 for assessment year 2007-08, arises against the CIT(A)-4, Nagpur's Order No.CIT(A)-4/77/13-14, dated 28.06.2016, involving proceedings u/s.143(3) r.w.s.153A of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties at length. Case files perused.

2 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

2.

The Revenue’s appeal I.T.A.No.510/NAG./2016 raises the following substantive grounds :

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of claim of deduction u/s 80IB of Rs.5,50,67,840/-without appreciating the fact that the assessee had not fulfilled the prescribed condition of Explanation 2 of Sec.80IB(2)(11) of the Act as the plant & machinery previously used was transferred to the new business.

2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of claim of deduction u/s 80IB of Rs.5,50,67,840/- without appreciating the fact that the assessee was not engaged in the manufacture or production of article or thing.

3. On the fact and in the circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of claim of deduction u/s 80IB of Rs.5,50,67,840/- relying on the decision of the Supreme Court in the case of Sesa Goa Ltd. (271 ITR 331) without appreciating the fact that the assessee was not engaged in the business of 3 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

extraction and processing of iron and as such the fact of the case were different.

4. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.47,00,000/- being cash paid for purchase of property without appreciating the fact that on being confronted with the seized document, Shri Ajay Saraf had accepted the fact that cash of Rs.94,00,000/- was paid and it was not accounted for in the books of accounts, during the course of the search proceedings and also confirmed the same during the course of the post search proceedings.

5. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of electric expenses of Rs.10,17,959/- and windmill expenses of Rs.13,36,833/- relying on the decision of the ITAT in the assessee's own case without appreciating the fact that the decision of the ITAT has not been accepted by the department and appeal u/s 260A has been filed and the same is pending.

4 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

6. On the facts and circumstances of the case, the Id. CIT(A) has erred in deleting the disallowance of expenses of Rs.92,26,805/- made by the Assessing Officer without appreciating the fact that the onus is on the assessee to prove the genuineness of the expenses which was not done during the assessment proceedings.

7. Any other ground that may be urged at the time of hearing.”

3.

The assessee’s cross objection C.O.No.6/NAG./2017 on the other hand pleads the following substantive grounds :

1.

“That the order passed by the assessing officer u/s 143(3) r.w.s.l53A is bad in law and wrong on facts and the Ld. CIT (A) has erred in confirming the same.

2. That on the facts and circumstances of the case, the Learned CIT (A) has erred both in law and on facts in confirming the validity of impugned assessment order u/s. 153A of the Income Tax Act, 1961 as framed by the AO in respect of completed assessment for which no incriminating material was found during the course of search action. 3. That having regard to the facts and circumstances of the case, Ld CIT (A) has erred both in law and on facts in 5 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 confirming the action of AO in making additions/ disallowances, more so when there was no incriminating material found as a result of search and in any case additions/disallowances made by ld.AO were outside the scope of Section 153A.

4. That the AO erred in law and on facts in making addition of Rs.5,50,67,840/- by disallowing deduction claimed u/s 80IB and the LD. CIT (A) was justified in deleting the addition so made. On facts and circumstances of the case the AO made the addition merely because the same was disallowed in original order passed u/s.143(3) on 31/12/2009 and the Ld. CIT (A) was justified in setting aside the same.

5. That the AO erred in law and on facts in making addition of Rs.47,00,000/- as undisclosed income on account of alleged cash payment made for purchase of property and the LD. CIT(A) was justified in deleting the addition by holding that payment of Rs.94 lacs in respect of the said property was in fact made by account payee cheque which is duly accounted in the audited books of accounts. On facts and circumstances of the case the AO made the addition on conjectures & surmises and the Ld. CIT (A) was justified in setting aside the same.

6. That the AO erred in law and on facts in making addition by disallowing electricity expenses of Rs.10,17,959/- and 6 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 windmill expenses of Rs.13,36,833/ - merely because the same were disallowed in original order passed u s 143(3) on 31/12/2009 and the Ld.CIT (A) was justified in deleting the addition. On facts and circumstances of the case the addition made by the AO was bad in law and on facts and the Ld CIT (A) was justified in setting aside the same.

7. That the AO erred in law and on facts by making adhoc disallowance of expenses of Rs.92,26,805/- merely on the basis of surmises and conjectures and the Ld.CIT (A) was justified in deleting the addition by holding that the genuineness of expenditure has been proved by the assessee. On facts and circumstances of the case the addition made by the AO was not on any sound basis, wholly arbitrary, bad in law and highly unjustified and the Ld CIT (A) was justified in setting aside the same.

8.

The appellant craves leave to add or amend any ground of cross objection with the permission of the Hon’ble members.”

4.

It is in this factual backdrop that we deem it appropriate to deal with the assessee’s second and third substantive grounds in her cross objection challenging validity of the impugned sec.153A r.w.s.143(3) assessment dated 07.03.2013 itself for want of incriminating material found and 7 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 seized during the course of search. Learned counsel has quoted PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC) and inter alia submits that assessee had filed her sec.139(1) return on 31.10.2007 followed by its sec.143(1) processing dated 22.01.2009, sec.143(3) assessment dated 31.12.2009 and the departmental search action dated 24.09.2010; respectively. He next took us to the Assessing Officer’s computation that all these impugned additions/disallowances made in sec.143(3) assessment dated 31.12.2009 which stood repeated in sec.153A assessment as well.

5.

We see no merit in assessee’s instant legal ground. This is for the precise reason that the impugned search action has indeed come across various incriminating documents; including the alleged cash payments made by the assessee. This is indeed coupled with the fact that the Assessing Officer had made four additions over and above repetition of as many heads of disallowances/additions in the regular assessment. Ordered accordingly.

6.

We next come to the Revenue’s three substantive issues seeking to reverse the CIT(A)'s action accepting the assessee’s sec.80IB deduction claim of Rs.5,50,67,840/-; deleting cash payment addition of Rs.47 lakhs at the rate of half share in Rs.94 lakhs; electric and wind-mill expenses of 8 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 Rs.1,07,959/- and Rs.13,36,833/- and sales-wise expenses of Rs.92,26,805/-; respectively. Suffice to say, the Revenue could hardly dispute that sec.80IB as well as electric and wind-mill expenses had formed subject matter of the assessee’s 143(3) cross-appeal ITA.No.16/NAG./2012 preferred against the Revenue’s case ITA.No.6/NAG./2012 which stood decided way back on 04.12.2015. We inter alia observe from a perusal of paras5, 8, 12 and 16 thereof that the assessee’s contentions on the very issues already stand accepted by the learned coordinate bench. We thus find that the Revenue’s 1st to 3rd and 5th substantive grounds are mere repetitive of sec.143(3) additions without involving any distinction of facts or law. We accordingly see no reason to accept these substantive grounds once they have already attained finality in the regular round of assessment for the very assessment year 2007-2008. Rejected accordingly.

7.

Now comes Revenue’s fourth substantive ground that the Assessing Officer had rightly added cash payments of Rs.47 lakhs in assessee’s hands based on the seized material. Learned counsel has reiterated the assessee’s stand in light of her paper book pages 18 to 19 containing the corresponding ledger account of M/s. Sigma Buildcon Pvt. Ltd. Her case in light thereof is that she had duly paid the very sum on 15.05.2008 vide cheque no.097489 in the recipient’s account.

9 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 We note that the Assessing Officer has nowhere examined this clinching fact in the course of assessment whereas the CIT(A) has proceeded to deal with other technical aspects. We thus deem it appropriate to restore the Revenue’s instant 4th substantive ground back to the Assessing Officer to verify the clinching nexus between the alleged cash payment of Rs.94 lakhs [assessee’s share coming to 50% thereof at Rs.47 lakhs] vis-à-vis the foregoing cheque payment of Rs.94,20,800/- made on 15.05.2008 in consequential proceedings. Needful may be done within three effective opportunities of hearing. This Revenue’s 4th substantive ground is accepted for statistical purposes in very terms.

8. This leaves us with the Revenue’s sixth substantive ground that the CIT(A) has erred in law and on facts in deleting expenditure disallowance of Rs.92,26,805/- made by the Assessing Officer vide following detailed discussion :

10 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

11 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

9.

We have considered vehement rival submissions and find no merit in the Revenue’s stand. We make it clear that there is no incriminating material found or seized during the course of search which could pin-point the assessee’s impugned expenditure claim to be bogus or an inflated one. All these makes us to conclude that such a disallowance/addition would hardly be sustainable in an instance involving an “unabated” assessment in sec.153A proceedings as per hon’ble apex court’s recent landmark decision in PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC). We

12 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017 accordingly uphold the CIT(A)'s action deleting the impugned disallowance made by the Assessing Officer on mere conjectures and surmises in very terms. The Revenue fails in it’s instant sixth substantive ground.

No other ground or arguments has been pressed at the Revenue’s behest during the course of hearing. This Revenue’s appeal I.T.A No.510/NAG./2016 is partly accepted for statistical purposes in above terms.

10.

This leaves us with the assessee’s remaining grounds 4th to 7th substantive grounds in her cross objection C.O.No.6/NAG./2017. Suffice to say, we have already decided her 2nd to 3rd legal grounds in preceding paragraphs. Her all remaining grounds are merely supportive of the CIT(A)'s action deleting various disallowances/additions forming subject matter of challenge in Revenue’s appeal I.T.A No.510/NAG./ 2016 and do not need any separate adjudication. Her 4th, 6th and 7th grounds stand rendered infructuous and 5th substantive ground is accepted for statistical purposes. ordered accordingly.

11.

This assessee’s cross objection C.O.No.6/NAG./ 2017 is partly allowed for statistical purposes.

13 ITA.No.510/NAG./2016 & C.O.No.6/NAG./2017

12.

To sum-up, this Revenue’s appeal NAG./2016 and assessee’s cross objection C.O.No.6/NAG./ 2017 are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open Court on 24.01.2024.

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