LESHARK GLOBAL LLP ,MUMBAI vs. DCIT CC 4(1), MUMBAI

ITA 3181/MUM/2025Status: DisposedITAT Mumbai31 July 2025AY 2016-1775 pages
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What did the Tribunal hold?

The Tribunal held that the MEIS 'reward' received by the assessee for AY 2020-21 is a capital receipt and not taxable under section 2(24) of the Act, directing the AO to delete the addition. The reasoning was that the MEIS scheme was a policy instrument to reward exports and not a profit-linked assistance or cost reimbursement. The tradable duty credit scrips are calculated as a fixed percentage of FOB value of eligible exports, not based on cost or loss, thus partaking in the nature of capital accretion. The Tribunal also noted the strict construction principle for charging provisions and the legislative omission of 'reward' in section 2(24)(xviii) despite its use in the MEIS framework. For AY 2017-18 and 2018-19, similar claims regarding export incentives were allowed, treating them as capital receipts. For AY 2012-13 to 2016-17, where the claim was raised for the first time before the CIT(A), the matter was restored to the AO to examine the claim on merits, following the principle laid down in NTPC Ltd. The Tribunal did not adjudicate other grounds as they were not argued and dismissed them as infructuous. The issue regarding additions under sections 69 and 56 based on third-party search material was not explicitly decided in the provided extract, but the overall outcome suggests a partial allowance.

What were the facts?

The assessee, Leshark Global LLP, filed appeals against the orders of the CIT(A)-52, Mumbai, for assessment years (AY) 2012-13 to 2018-19 and 2020-21. The appeals were consolidated as they involved common issues and facts. The primary dispute revolved around additions made by the Assessing Officer (AO) under sections 69 and 56 of the Income Tax Act, 1961, concerning alleged cash loans advanced by the assessee and estimated interest earned thereon. These additions were based on documents seized during an independent search on Mr. Nilesh Bharani and Evergreen Enterprises, not from the assessee's premises. The assessee contended that no incriminating material was found during its own search. The assessee also raised grounds regarding the taxability of Focus Product Scheme (FPS) incentives, the validity of the assessment proceedings under section 153A, the absence of DIN, and the approval under section 153D.

What were the issues?

1. Whether the addition of Rs 2,20,00,000/- as unexplained investment under section 69, and Rs 16,35,558/- as estimated interest under section 56, made in completed assessments under section 153A, are valid when no incriminating material was found during the assessee's search, and the additions are based on material from a third-party search? (Assessee argues for deletion, relying on PCIT v Abhisar Buildwell Pvt Ltd. Revenue's arguments are not recorded). 2. Whether the Focus Product Scheme (FPS) incentive of Rs 82,98,227/- received under the Foreign Trade Policy for AY 2020-21 is a capital receipt and not taxable, as claimed by the assessee by raising an additional ground before the CIT(A)? (Assessee argues for exclusion as capital receipt. Revenue's arguments are not recorded). 3. Whether the assessment order passed under section 153A is void ab initio because the material relied upon was found during a search on Mr. Nilesh Bharani/Evergreen Enterprises and should have been assessed under section 153C? (Assessee argues for voiding the order, relying on Vikram Sujitkumar Bhatia, Nilesh Bharani, S S Con Build Pvt Ltd, and Kanwar Singh Saini. Revenue's arguments are not recorded). 4. Whether the assessment order is invalid due to the lack of a Document Identification Number (DIN) as required by CBDT Circulars 19/2019 and 27/2019? (Assessee argues for invalidity. Revenue's arguments are not recorded). 5. Whether the approval granted under section 153D by the Addl. CIT was mechanical and invalid, rendering the assessment illegal? (Assessee argues for illegality. Revenue's arguments are not recorded). 6. Whether the additions made under sections 69 and 56, based on Mr. Nilesh Bharani's statement and personal ledgers, are sustainable given the alleged retraction of statements, denial of loans by Mr. Bharani, and denial of inspection of original seized material? (Assessee argues for deletion based on infirmities in evidence. Revenue's arguments are not recorded).

Which sections of the Income-tax Act were involved?

Section 69,Section 56,Section 153A,Section 153C,Section 153D,Section 132(4)

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Income Tax Appellate Tribunal, ‘A’ BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

For Appellant: Shri Vinod Kumar Bindal, Shri Satish Kumar
For Respondent: Shri Rajesh Kumar Yadav, CIR DR
Hearing: 25/06/2025Pronounced: 31/07/2025

Heard together (2 matters)

ITA No.3177/Mum/2025
ITA No. 3184/Mum/2025

Read from the judgment's own cause title. This page is filed under one of them.

PER AMIT SHUKLA (J.M): The aforesaid appeals have been filed by the assessee against order of ld. CIT(A)-52, Mumbai for the quantum of assessment passed u/s.143(3) r.w.s.153A for the A.Y.2012- 13 to 2018-19. 2. Since all the appeals involve common issue and are based on identical facts therefore, same were heard together and have been disposed of by way of this consolidated order.

3.

Both the parties agreed that if the appeal for the A.Y.2012- 13 is decided, the same finding will apply mutatis mutandis in other years also. Accordingly, the appeal for A.Y.2012-13 in ITA No. No.3177/Mum/2025 is taken as a lead c

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