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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI GAGAN GOYAL, AM
per section 153A(1). "Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143(3) could not have disturbed the assessment / reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment / reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order.” 17. Ld. Representative of the assessee also relied upon the case titled as All Cargo Global Logistic [374 ITR 645 (2015) (BOM)], wherein the Hon'ble Bombay High Court held that that no addition can be made in respect of completed assessment u/s.153A without incriminating materials found during the search. We are of the view that the original assessment for the Assessment Year 2008-2009 was completed u/s.143(3) and for the assessment years 2009-2010 to 2012-2013, the period for issuing the notice u/s 143(2) has elapsed on the date of search i.e. 10.12.2013 and no notices were issued u/s 143(2) for the aforesaid years. Therefore, the assessment for the assessment years 2008-2009 to 2012-2013 are non abated and no additions can be made in respect of the non abated assessment years without referring to any incriminating materials found during the search. It is apparent that no incriminating material was found during the search. 18. In other words, the reference is to those assessments in whose case assessment under section 143(3) cannot now be done. It is not at all the case of the revenue that in the appeals which have been claimed as unabated here there was time for assessment under section 143(3). In this view of the matter, in our considered opinion, the submission of the ITA No.4384 to 4390/Mum/2019 A.Ys. 2008-09 to 2014-15 Kamlashmi Realties learned counsel of the assessee succeeds that addition in the case of unabated assessment without reference to incriminating seized material for assessment u/s.153A is not sustainable on the touchstone of above said Hon'ble Jurisdictional High Court decisions. Here, we also like to mention the decision of the Hon’ble ITAT in the case of Smt. Kalpana Mukesh Ruia Vs. DCIT, CC-2(2). The relevant finding as under: “39. We have carefully considered the submissions and perused the records. Firstly issue in appeal is that in assessment framed under section 153(A) in case of the unabated assessment addition without reference to incriminating material is not sustainable. This issue has been clearly spelt out and affirmed by honourable jurisdictional High Court in the Catena of case laws including that of continental warehousing (supra).
The learned departmental representative and the learned CIT appeals have tried to distinguish this decision from Hon’ble Bombay High Court by referring to Hon’ble Delhi High Court decision in the case of Kabul Chawla (supra).
In this regard we are of the considered opinion that the decision from honourable jurisdictional High Court in Continental Warehousing (supra) is clear and unambiguous. It was clearly held in that case that assessments which are not pending and which have attained finality, addition under section 153(A) cannot be done without reference to incriminating seized material. We may gainfully refer to the relevant order of the honourable High Court as under: …….
As regards the issue of seized material it is clear that in the appeals which have remained unabated the addition is without reference to any seized material. The materials referred are only the statement obtained of the assessee under section 132 (4). These have been duly to 4390/Mum/2019 A.Ys. 2008-09 to 2014-15 Kamlashmi Realties retracted. Hence without corroborative material addition only based upon the retracted statement is not sustainable. For this proposition following case laws are germane: • CIT Vs. Sunil Agarwal (379 ITR 367) • CIT Vs. Naresh Kumar Agarwal (369 ITR 171) • DCIT Vs. Narendra Garg & Ashok Garg (AOP) (ITA No. 1531 & 1532 of 2007 dated 28.7.2016) • DCIT Vs. Marathon Fiscal Pvt. Ltd. (ITA no. 5783 & 5784/Mum/2017 dated 28.8.2019) • TribhuvandasBhimji Zaveri (ITA 2250 & 2251/Mum/2013 dt. 4.11.2015) 48. It may also be pertinent to note here that no seized material said to be incriminating was produced before us. In light of above said case laws the observation of learned CIT(A) that incriminating material need not be specific has no legs to stand. This very observation by the learned CIT(A) itself is an admission that no specific incriminating material has been seized and referred in the assessment order Hence, in all cases of unabated assessment the assessment fails on defect. No. 6519/MUM/2019, jurisdictional Thus, ITA 6520/MUM/2019, 6515/MUM/2019, 6516/MUM/2019, 6513/MUM/2019 & 6514/Mum/2019 are dismissed on account of jurisdictional defect.
19. In the background of aforesaid discussion and following the judgements of the jurisdictional High Court, the addition made in these assessment orders passed by the assessing officer under section 153A without reference to any incriminating material found in search is not sustainable. Hence, we set aside the orders of authorities below and allowed the claim of the assessee and delete the addition. Since we have already directed to delete the addition of loan itself, the addition of to 4390/Mum/2019 A.Ys. 2008-09 to 2014-15 Kamlashmi Realties commission and interest thereon disallowed are also directed to be deleted as the same are also without reference to any material foundering search. The appeal of the assessee for the A.Ys. 2008-2009 to 2012-2013 are allowed.” 14. We note that, the Ld. CIT, DR was unable to point out any change of fact or any change in the position of law. Having regard to the foregoing, the judicial discipline demands that we follow the decision rendered by this Tribunal (supra) on same set of facts and circumstances in the assessee’s sister concern cases. Respectfully following the same, we are of the considered view that, the additions / disallowances made in the unabated AYs by the AO u/s 68 of the Act on account of unsecured loans, interest incurred thereon, and the alleged notional commission expense incurred for procurement of such loan, were not backed by any incriminating material found as a result of search, and therefore the AO is directed to delete the same.
Even in respect of the disallowances made out of several expenses viz., labour charges, professional fees, brokerage etc., it is noted that the same was disallowed only on the premise that the details were not submitted before the AO or they were insufficient. The interest paid on partner’s capital was partially disallowed on the ground that the purpose of excess withdrawal from the capital account to 4390/Mum/2019 A.Ys. 2008-09 to 2014-15 Kamlashmi Realties had not been justified by the partners. It is therefore noted that, none of these additions/disallowances were based on any incriminating material or evidence found in the course of search. The Ld. CIT, DR was also not able to point out the relevant incriminating material or evidence based on which the impugned additions were made by the AO.
Having regard to the above facts, in our considered opinion therefore, the additions impugned before us in the assessment order passed u/s 153A/143(3) of the Act by the AO were not supported or backed by any incriminating material found or seized in the course of search and therefore the additions made in the unabated AY 2009-10 was legally impermissible. Hence, we set aside the order of the lower authorities below and allow this ground of the assessee and direct the AO to delete the additions made in the assessment order.
Since we have deleted the additions impugned before us on the ground that it was not based any incriminating material found in the course of search, all other grounds raised
in the appeal on the merits of these additions have become academic in nature and is therefore dismissed as infructuous. to 4390/Mum/2019 A.Ys. 2008-09 to 2014
15. Kamlashmi Realties
Since the facts and circumstances in the lead case under consideration, being for A.Y. 2009-10 are identical to the other unabated AYs 2008-09, 2010-11, 2011-12 & 2012-13 Nos. 4384/Mum/2019, 4386/Mum/2019, in ITA 4387/Mum/2019 &4388/Mum/2019, our decision in the case of ITA No. 4385/Mum/2019, for A.Y. 2009-10 of the assessee’s appeal shall apply mutatis mutandis to the assessee`s appeals in ITA Nos. 4384/Mum/2019, 4386/Mum/2019, 4387/Mum/2019 & 4388/Mum/2019. Hence, the appeal for the AYs 2008-09, 2010-11, 2011-12 & 2012-13 also stands allowed.
Now we take up the appeals of the assessee for the abated assessments for AYs 2013-14& 2014-15. Having heard both the parties, we find that on similar facts and circumstances, this Tribunal in the batch of cases decided in the matters of the sister concerns, M/s Kamla Landmarc Enterprises Vs DCIT & Others (supra) of the Kamla Group, had set aside the addition/s back to the file of the AO to review and decide the issue afresh, by holding as under: “21. With regard to abated assessments for the A.Y. 2013-14 and A.Y.2014-15 are concerned, we observed that Assessing Officer has made the addition without there being any corroborative piece of evidences except relying on statement recorded u/s. 132(4) of the Act. However, these assessments are abated, we direct Assessing officer to review the issues afresh based on the material available on records and ITA No.4384 to 4390/Mum/2019 A.Ys. 2008-09 to 2014-15 Kamlashmi Realties complete the assessment on merits after providing proper opportunity of being heard to the assessee. Therefore, the assessments for the AY 2013- 14 and 2014-15 are remitted back to the file of Assessing officer and allowed the appeals filed by the assessee for statistical purpose. 20. Respectfully following the same, and in the fitness of matters, we set aside the addition/s made in AYs 2013-14& 2014-15 back to the file of the AO for fresh examination. The appellant is directed to file the relevant details / explanation before the AO in this regard. The AO shall also allow sufficient opportunity of hearing to the appellant and shall pass fresh order in accordance to law after giving due consideration to the submissions put forth by the appellant. The appeals in ITA Nos. 4389/Mum/2019 &4390/Mum/2019 for AYs 2013-14& 2014-15 are therefore allowed for statistical purposes. 21. In the result, the appeals of the assessee for AYs 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 are allowed and the appeals of the assessee for AYs 2013-14& 2014-15 is allowed for statistical purposes. Order pronounced in the open court on 30/08/2022.