DCIT- CC- 8(4), MUMBAI, MUMBAI vs. PIRAMAL AGASTYA OFFICES PRIVATE LIMITED, MUMBAI

In all these appeals, the Revenue has raised the following almost identical grounds, except for the figures:

Ld. Counsel submitted that before the learned CIT(A), the assessee contended that the disallowances made by the Assessing Officer while completing the assessments u/s. 143(3) read with section 153A of the Act, were not based on any incriminating material seized by the Revenue in the course of search and therefore, the disallowance of various expenses debited by the assessee to its profit and loss account and recorded in the books of account and forming part of work in progress from year to year cannot be the subject matter of disallowance in the unabated assessments. Ld. Counsel submitted that the assessee contended before the learned CIT(A) that in view of the decision of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell reported in (2023) 454 ITR 212 (SC), in the absence of any incriminating material found in the course of search, in the unabated assessments, the Assessing Officer cannot re-examine the details in respect of expenses which were recorded in the books of account by the assessee. 6. Ld. Counsel submitted that the learned CIT(A) following the decision of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell Private Limited (supra), deleted the disallowance of expenses made by the Assessing Officer in the absence of any incriminating materials found in the course of search. 7. Ld. Counsel for the assessee further submitted that the learned CIT(A) also gave a finding that in spite of the learned CIT(A) specifically asking the Assessing Officer by letter dated 24.12.2024 with respect to incriminating material found in the course of search and the basis of disallowances made, the Assessing Officer did not send his comments. 8. Ld. Counsel for the assessee submitted that the learned CIT(A) not only deleted the additions for the reason that there was no incriminating material based on which the additions were made, but the learned CIT(A) has also gone into the merits of the disallowance of expenses after examining the evidence furnished by the assessee with respect to the parties from which the assessee had procured the materials for construction by way of agreements with the parties, copies of sample invoices, details of the PAN, details and addresses of the parties, copies of bank statements highlighting the payments made to the said parties, confirmations furnished by the parties, correspondence between the assessee and the parties for obtaining the confirmations and various details furnished by the assessee in the course of the assessment proceedings, deleted the disallowances as the assessee had discharged the burden to prove the genuineness of the expenses incurred by adducing primary and relevant documents/materials in the course of assessment proceedings.

Coming to the cross-objections filed by the assessee, Ld. Counsel for the assessee submitted that insofar as challenging the validity of approval u/s. 153D is concerned, the same is not pressed. In view of the submissions of Ld. Counsel, this ground is dismissed as not pressed.

Coming to Ground No. 1 of the cross-objections, Ld. Counsel for the assessee submitted that the assessment framed by the Assessing Officer u/s. 143(3) read with section 153A of the Act for these assessment years is beyond the time limit prescribed u/s. 153B of the Act and barred by limitation.

Ld. Counsel for the assessee submitted that in the case of the assessee, the time limit for passing the order u/s. 153A was within 21 months from the end of the financial year in which the search was concluded and the date of the said conclusion of search was recorded in the last panchnama drawn, and accordingly, the last date for completion of the assessment u/s. 153A of the Act was 31st December, 2016. However, the Assessing Officer passed the order in the case of the assessee on 22.12.2017. Ld. Counsel for the assessee submitted that since no order was passed up to 31st December, 2016, the assessee inquired about it and was informed that the matter had been referred to the Foreign Tax and Tax Research (FT & TR). However, till now, the assessee has neither been provided with the reasons for the reference to FT & TR nor has been served with a copy of the reference made to FT & TR, by the AO. 12. Ld. Counsel for the assessee referring to pages 64 to 66 of the paper book submitted that on 18th January, 2017, the assessee filed a letter before the Assessing Officer bringing to the notice of the Assessing Officer that as per the provisions of section 153B of the Act, the assessment orders were to be passed by 31st December, 2016 and the assessee was given to understand that the matter had been referred to FT & TR and, therefore, requested the Assessing Officer to provide a copy of the reference made to FT & TR at the earliest. Ld. Counsel for the assessee submitted that in spite of the request made by the assessee, the Assessing Officer never provided any reference said to have been made to FT & TR till date. Therefore, Ld. Counsel for the assessee submitted that in the absence of any reference provided by the Assessing Officer, the due date for completion of assessment u/s. 143(3) read with section 153A of the Act is 31st December, 2016, and the assessment order passed on 22.12.2017 is barred by limitation and, therefore, the same is null and void.

On the other hand, the Ld. DR strongly supported the orders of the authorities below.

We have heard the rival contentions, perused the orders of the authorities below and the material placed before us. Undisputedly, the assessments for the assessment years 2009-10 to 2013-14 in the case of the assessee are unabated assessments.

We also observed that the learned CIT(A) deleted the disallowance of expenses even on merits, on appreciation of the evidence furnished by the assessee in the course of assessment proceedings as well as appellate proceedings. Thus, we see no infirmity in the order passed by the learned CIT(A) in holding so. Accordingly, we sustain the order of the learned CIT(A) for the assessment years 2009-10 to 2014-15 and reject the grounds raised by the Revenue.

Coming to the cross-objections filed by the assessee, the reason for the learned CIT(A) in rejecting the ground of time- barring assessments was only that by letter dated 07.11.2016, the DDIT (Inv.) Unit-4(3), Mumbai, had informed that information in respect of FT & TR, was pending on 07.11.2016 in the case of the assessee and, therefore, the limitation for completion of assessment, which originally was 31st December, 2016, got extended to 31st December, 2017 in view of Explanation to section 153B(1) of the Act. Thus, the Ld. CIT(A) held that since the assessment order was passed on 22.12.2017, the same was well before the period of limitation, i.e., 31st December, 2017. However, we observed that in spite of a request made by the assessee, vide letter dated 18.01.2017, seeking for a copy of the reference made to FT & TR, no such reference said to have been made was provided to the assessee by the Assessing Officer. Even before us no such copy of the reference to FT & TR was furnished by the Revenue to prove that there was a reference made to FT & TR. Therefore, in the absence of any evidence on record, the mere assertion that there was a reference to FT & TR by the DDIT (Inv.) Unit-4(3), Mumbai is of no help to hold that the assessment order was passed within the stipulated time period as provided in Explanation to section 153B(1) of the Act. Therefore, on this ground also, the assessments are liable to be quashed.

In view of the above, we set aside the assessments framed by the Assessing Officer u/s. 143(3) read with section 153A of the Act, as bad in law and void ab initio. Grounds of Cross Objection No.1 is allowed for A.Y. 2009-10 to 2014-15

In the result, the appeals of the Revenue are dismissed and the cross-objections filed by the assessee are partly allowed.