INLAND AUTOMATE PVT. LTD. ,KOLKATA vs. ACIT, CC-1(2),, KOLKATA

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ITSSA 41/KOL/2023Status: HeardITAT Kolkata01 June 2023AY 2012-134 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's alternative plea. It noted that the addition of Rs. 2,28,160/-, which was an ad-hoc disallowance of 25% on business promotion, transportation, and travelling expenses, had already been deleted by the CIT(A) in its order dated 18.04.2019. The Tribunal observed that the CIT(A) had examined the issue in detail and rightly deleted the disallowance on merits. Therefore, since the impugned addition deserved to be deleted on its own merits as an ad-hoc disallowance, the Tribunal allowed the assessee's grievance and deleted the addition of Rs. 2,28,160/-. Other grievances were not adjudicated as they became academic in nature due to the deletion of the main addition. The ratio decidendi is that an addition already deleted by the first appellate authority on merits cannot be sustained in a subsequent proceeding, especially when it is an ad-hoc disallowance.

What were the facts?

The assessee, Inland Automate Pvt. Ltd., is in appeal against the order of the Commissioner of Income-tax (Appeal) [CIT(A)] dated 08.02.2023. This order arose from an assessment framed under Section 153C/143(3) of the Income Tax Act, 1961, by the Assistant Commissioner of Income Tax (ACIT) on 31.12.2016. The assessment year in question is 2012-13. The assessee's sole grievance concerns an addition of Rs. 2,28,160/-. The assessee contends that no incriminating material was found during a search conducted on 07.03.2015, and since the assessment for AY 2012-13 was already completed before the search, no addition should be made. Alternatively, the assessee argues that the addition was already deleted by the CIT(A) in a prior order.

What were the issues?

1. Whether the addition of Rs. 2,28,160/- made under Section 153C read with Section 143(3) of the Income Tax Act, 1961, is valid when no incriminating material was found during the search and the assessment for AY 2012-13 was already completed prior to the search? Assessee's contentions: - The assessment for AY 2012-13 was not completed at the time of the search, thus it abated, and the proceedings under Section 153C should be treated as final. - No incriminating material was found in possession of the assessee during the search, therefore, no addition is warranted. - Alternatively, the addition of Rs. 2,28,160/- made in the assessment order dated 24.03.2015 under Section 143(3) was already deleted by the CIT(A) in its order dated 18.04.2019, and thus the impugned addition should also be deleted. Revenue's contentions: - The revenue's representative heavily relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 250,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: Dr. Manish Borad & Shri Sonjoy Sarma

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA डॉ. मनीष बोरड, लेखा सद�य एवं �ी संजय सरमा, �ाियक सद� के सम� Before Dr. Manish Borad, Accountant Member & Shri Sonjoy Sarma, Judicial Member I.T.(SS).A. No.41/KOL/2023 Assessment Year: 2012-13 Inland Automate Pvt. Ltd. ………. Appellant (PAN: AABCI4066J) Vs. Assistant Commissioner of Income …………….. Respondent Tax, Central Circle-1(2), Kolkata. Appearances by: Shri Rakesh Jain, AR. Appeared for the Appellant Shri Subhrajyoti Bhattacharjee, CIT (DR) appeared for Respondent. Date of concluding the hearing : 18.05.2023 Date of pronouncing the order : 01.06.2023 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by ld. Commissioner of Income-tax (Appeal), Kolkata-20 [in short ld. “CIT(A)”] dated 08.02.2023 arising out of the assessment order framed u/s 153C/143(3) of the Act dated 31.12.2016 by ACIT, Central circle-1(2), Kolkata. 2. The assessee has raised as many as six grounds of appeal but the sole grievance is in respect of addition of Rs. 2,28,160/- made by

I.T.(SS)A. No. 41/Kol/2023 A Y: 2012-13, Inland Automate Pvt Ltd. the AO in the assessment order completed u/s. 153C read with section 143(3) of the Act. Grievance of the assessee is that no incriminating material was found in the course of search and the assessment year under appeal i.e. AY 2012-13 being a completed assessment, therefore, no addition is called for. 3. On the other hand, Ld. CIT, DR heavily relied on the orders of the lower authorities. 4. We have heard rival contentions and perused the material available on record. We note that the assessee is a Private Limited Company engaged in trading of automotive lubricant, bearings and steel chains. Nil income was declared in the return for AY 2012-13 filed on 29.05.2012. The case was selected for scrutiny and the assessment u/s. 143(3) of the Act was completed on 24.03.2015 assessing the income at Rs.2,28,157/-. Assessment proceeding u/s. 143(3) of the Act was completed on 24.03.2015. However, search was conducted u/s. 132 of the Act on 07.03.2015. 5. The contentions of the assessee is that the AY 2012-13 that since the assessment for AY 2012-13 was not completed at the time of search, the same was abated and the assessment proceedings u/s. 153C read with section 143(3) of the Act should be treated as the final assessment proceedings. It is further contended that originally the return of income was filed declaring ‘nil’ income and during the course of search, there was no incriminating material found in the possession of assessee and, therefore, no addition was called for. 6. An alternative submission made by the Ld. Counsel is that the addition made by the AO in the assessment order dated 24.03.2015 u/s. 143(3) of the Act already stands deleted by the Ld. CIT(A) in its earlier order dated 18.04.2019 and, therefore, impugned addition deserves to be deleted. Page 2 of 4

I.T.(SS)A. No. 41/Kol/2023 A Y: 2012-13, Inland Automate Pvt Ltd. 7. After going through the contentions of the Ld. Counsel, we find merit in the alternative plea that the additions which were made in the assessment order u/s. 143(3) of the Act dated 24.03.2015 have already been deleted by Ld. CIT(A) vide order dated 18.04.2019 [a copy of the decision is placed at pages 31 to 36 of the paper book]. We note that the addition of Rs.2,28,160/- was under challenge and the same was made towards ad-hoc disallowance of expenses @ 25% in respect of business promotion, transportation expenses and travelling expenses. The Ld. CIT(A) after examining the issue in detail has thus rightly deleted the disallowance. Therefore, since on merits of the case itself the impugned addition deserves to be deleted being an ad-hoc disallowance, the grievance of the assessee is allowed and the addition of Rs.2,28,160/- is deleted. So far as the other grievances of the assessee, since we have already deleted the impugned addition, the same are not adjudicated being academic in nature. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 01.06. 2023.

Sd/- Sd/- [Sonjoy Sarma] Sd/-[Manish Borad] Judicial Member Accountant Member Dated: 01st June, 2023 J.D. Sr. PS.

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I.T.(SS)A. No. 41/Kol/2023 A Y: 2012-13, Inland Automate Pvt Ltd. Copy of the order forwarded to: 1. Appellant – Inland Automate Pvt. Ltd., P-221/2, Strand Bank Road, Kolkata-700001. 2. Asst. Commissioner of Income Tax, Central Circle-1(2), Kolkata. 3. CIT(A), Kolkata-20, Kolkata 4. CIT- 5. Departmental Representative 6. Guard File. True copy By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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