DCIT-14(1)(2), MUMBAI vs. M/S. EKTA EVERGLADE HOMES PVT LTD.,, MUMBAI

ITA 1487/MUM/2023Status: DisposedITAT Mumbai24 November 2025AY 2014-1536 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal decided the issue of pecuniary jurisdiction first. It held that CBDT Instruction No. 1/2011, which deals with pecuniary jurisdiction for normal assessments, is inapplicable to assessments arising from search and seizure operations. Assessments following search and seizure are governed by specific instructions concerning centralization of such cases. The Tribunal relied on the Delhi High Court's decision in Chaudhury Skin Trading Company & Ors. v. PCIT & Ors. and the Gujarat High Court's decision in Kamlesh Rajnikant Shah v. PCIT, which held that transfer orders under Section 127 are administrative in nature and the concept of pecuniary jurisdiction under normal assessment instructions does not apply to search cases. Therefore, the Ld. AO had the jurisdiction to complete the assessment. The Tribunal did not decide the other issues related to Transfer Pricing adjustments and the addition of 'on money' receipts as the appeals were disposed of on the preliminary issue of jurisdiction. The operative direction was to restore the appeals to the file of the Ld. CIT(A) for adjudication on merits.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench heard a consolidated set of four appeals by the revenue and four cross-objections by the assessee, M/s Ekta Everglade Homes Pvt Ltd, for Assessment Years (AY) 2013-14 to 2016-17. These arose from the order of the Commissioner of Income-tax (Appeals)-56, Mumbai, dated 28/02/2023. The impugned order was a combined decision for AY 2012-13 to 2016-17, though appeals and cross-objections were only for AY 2013-14 to 2016-17. The original assessment orders were passed by the Deputy Commissioner of Income-tax, Central Circle-6(2), Mumbai, on 23/01/2019. The appeals and cross-objections were consolidated and heard together, with ITA No.1486/Mum/2023 and C.O. 57/Mum/2023 for AY 2013-14 taken as the lead cases.

What were the issues?

1. (Question of Law) Whether the Ld. CIT(A) erred in deleting the Transfer Pricing adjustment on account of the difference between interest paid by the assessee to its Associated Enterprise (AE) and its Arm's Length Price (ALP)? - Assessee's Contention (via Cross Objection): The Ld. AO erred in making transfer pricing adjustments for AY 2013-14 without incriminating materials found during search, as per settled legal principles for unabated assessments. - Revenue's Contention: The Ld. CIT(A) erred in holding the interest paid was at arm's length, by considering a benchmarking rate of SBI PLR-300bps instead of SBI PLR+75bps determined by the TPO, without providing reasons. The revenue also argued the Ld. CIT(A) misinterpreted the Delhi ITAT judgment in Granite Gate Properties Pvt. Ltd. and the second proviso to Section 92C of the Income Tax Act, 1961, by applying the 5% variance on an absolute basis instead of a percentage basis of the ALP. 2. (Question of Mixed Law and Fact) Whether the Ld. CIT(A) was right in restricting the addition of 'on money' receipt of Rs. 66.68 lakhs to only 15% of the receipts? - Revenue's Contention: The Ld. CIT(A) erred in restricting the addition of 'on money' receipt to 15% and allowing the assessee's appeal on this ground. 3. (Question of Law) Whether the Deputy Commissioner of Income-tax had the pecuniary jurisdiction to complete the assessment, given the assessee declared a loss and CBDT Instruction No. 1/2011? - Assessee's Contention: The Ld. AO lacked pecuniary jurisdiction as per CBDT Instruction No. 1/2011, as the assessee declared a loss. The assessment order is therefore liable to be quashed, relying on Calcutta High Court in PCIT-1, Kolkata v. Shree Shoppers Ltd. and Bombay High Court in Ashok Devichand Jain v. Union of India. - Revenue's Contention: The concept of pecuniary jurisdiction under CBDT Instruction No. 1/2011 is inapplicable to search and seizure cases. Such assessments are governed by CBDT Instruction No. F. No. 286/92/2001-IT (Inv.) dated 21/08/2001. Reliance was placed on Delhi High Court in Chaudhury Skin Trading Company & Ors. v. PCIT & Ors. and Gujarat High Court in Kamlesh Rajnikant Shah v. PCIT.

Which sections of the Income-tax Act were involved?

Section 92C,Section 127,Section 153A,Section 143(3),Section 144C(3),Section 250

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Income Tax Appellate Tribunal, MUMBAI BENCH “K”, MUMBAI

For Appellant: Shri Shobit Mishra
For Respondent: Ms. Neena Jeph (CIT DR)
Hearing: 15/10/2025Pronounced: 24/11/2025

Per Bench: This bunch of four appeals by the revenue and four cross objections by the assessee were filed against the order of the Learned Commissioner of Income-tax (Appea

The order continues below.

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