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Facts
The appeals relate to assessment years 2013-14 and 2014-15, arising from a search action conducted in 2012. The Assessing Officer framed regular assessments disallowing selling charges. The assessee's case was centralized based on this search action.
Held
The tribunal held that the assessment framed u/s 143(3) was invalid because the proceedings should have been under section 153C, as it was a third-party case related to a search. Consequently, the appeal for AY 2013-14 was allowed. For AY 2014-15, regarding the disallowance of selling expenses, the tribunal allowed 10% of the claimed expenses, stating that complete denial was not justified.
Key Issues
Whether the assessment framed under Section 143(3) was valid when the conditions for Section 153C were met? Whether the complete disallowance of selling expenses was justified.
Sections Cited
143(3), 153B, 153C
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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. M. Balaganesh
Asstt. Year : 2014-15 Frontier Commercial Co. Ltd. Vs DCIT, (merged with Sucon India Ltd. later Central Circle-II, merged with M/s Akriti Global Faridabad Traders Ltd.), RRA Taxindia, D-28, South Extension, Part-1, New Delhi-110049 (APPELLANT) (RESPONDENT) PAN No. AABCF1424D Assessee by : Sh. Somil Aggarwal, Adv. & Sh. Deepesh Garg, Adv. Revenue by : Sh. Surender Pal Singh, CIT-DR Date of Hearing: 09.04.2025 Date of Pronouncement: 09.04.2025 ORDER Per Satbeer Singh Godara, Judicial Member: These twin assessee’s as many appeals i.e. and Assessment Years 2013-14 & 2014-15 arise against the CIT(A), Karnal’s in case No. IT/75/GGN/2015-16 and CIT(A)-3, Gurgaon’s in case No. 550/CIT(A)-3/GGN/2016-17 dated 07.09.2017 and
Heard both the parties at length. Case files perused.
It emerges during the course of hearing that there arises the first and foremost legal issue of the validity of section 143(3) assessment dated 31.03.2015 itself in the former assessment year 2013-14. This is for the precise reason that the departmental authorities had carried out a search action dated 09.09.2012 in M/s SRS Group of cases leading the Assessing Officer to frame the above regular assessment in the assessee’s hands thereby disallowing selling charges of Rs.56,23,615/-.
Learned CIT-DR could hardly dispute that the assessee’s case was centralized in furtherance to the said search action and both the learned lower authorities thereafter proceeded as per the search record only. That being the case, we are of the considered view that once there already exists a specific provision of framing assessment in case of such a third person u/s 153C of the Act which is self-contained correctness itself wherein the date of search is taken as the date of recording of satisfaction under first proviso thereto, in light of CIT Vs. RRJ Securities Ltd. (2016) 380 ITR 0612, PCIT vs. Jasjit Singh Frontier Commercial Co. Ltd. (2024) 336 CTR 634 (Delhi) and PCIT vs. Ojjus Medicare Pvt. Ltd. (2024) 465 ITR 101 (Del.), the assessment herein framed u/s 143(3) of the Act hardly satisfied the test of law. The same stands quashed in very terms. All other pleadings on merits herein stand rendered academic. The assessee’s instant former appeal is accepted therefore.
Next comes the assessee’s latter appeal raising it’s sole substantive ground that both the learned lower authorities have erred in law and on facts in disallowing the entire selling expenses of Rs.76,11,414/- claimed at it’s behest. The Revenue draws strong support from both the lower authorities’ action that once the assessee had fails to plead and prove all the relevant facts, the impugned selling expenditure could hardly be accepted.
The assessee’s case on the other hand is that it was engaged in the business of trading of building material items, share & securities and real estate etc. wherein such selling expenses representing commission and miscellaneous items could not be all together ruled out.
Be that as it may, we are of the considered view in these peculiar facts that denial of entire selling expenses in such an instance could not be concurred with and, therefore, it is Frontier Commercial Co. Ltd. deemed appropriate in the larger interest of justice to restrict the same @ 10% only with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.
No other ground or arguments has been pressed before us.
To sum up, the assessee’s instant appeal is allowed and it’s latter case