M/S. PODAR LITERACY AND EDUCATION TRUST,BANGALORE vs. DY CIT, CC--1(4), MUMBAI

This appeal in A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-47, Mumbai in appeal No.CIT(A)-47/10302/19-20 dated 03/11/2020 (ld. CIT(A) in short) against the order of assessment passed u/s.153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2019 by the ld. Dy. Commissioner of Income Tax, Central Circle- 1(4), Mumbai (hereinafter referred to as ld. AO).

The assessee has raised a legal ground challenging the jurisdiction of the ld. AO to make disallowance on account of provision for gratuity made on actuarial valuation in the assessment framed u/s.143(3) r.w.s. 153A of the Act without any incriminating material found during the course of search. Apart from this, assessee has also challenged the said disallowance on merits.

We have heard rival submission and perused the materials available on record. Admittedly, there was a search and seizure action u/s.132(1) of the Act on 09/01/2018 in the premises of the assessee group, pursuant to which proceedings u/s.153A of the Act were initiated on the assessee. The original return of income was filed by the assessee for the A.Y.2014- 15 on 27/09/2014 which was duly processed u/s.143(1) of the Act. Hence, as on the date of search, the assessment for the A.Y.2014-15 was unabated / concluded. The law is very well settled that in respect of concluded assessments on the date of search, the same could be disturbed only if there is some incriminating material found during the course of search. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645(Bom) and the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla reported in 234 Taxman 300. We find from the perusal of the assessment order, the ld. AO had resorted to make disallowance on account of provision for gratuity which was made on the basis of actuarial valuation, without making any reference to seized / incriminating material found during the course of search. Hence, respectfully placing reliance on the aforesaid decisions and more especially the fact that assessment for A.Y.2014-15 had been concluded assessment, the disallowance made on account of provision for gratuity on an actuarial valuation basis in the absence of any M/s. Podar Literacy and Education Trust incriminating material found during the course of search is hereby quashed. Accordingly, the legal ground raised by the assessee challenging the jurisdiction to disturb the concluded assessment is hereby allowed.