SHRI AVINASH BHOSALE INFRASTRUCTURE P. LTD.,PUNE vs. DY CIT CC-2(3), MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No.CIT(A)-48/I.T.104/DCCC-2(3)/2019-20 dated 29/01/2021 (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 18/06/2019 by the ld. Dy. Commissioner of Income Tax, Central Circle-2(3), Mumbai (hereinafter referred to as ld. AO).

M/s. Avinash Bhosale Infrastructure P. Ltd.,

2. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.

2. The appellant craves leave to add to, amend or alter, the foregoing ground of appeal

5. We have heard the rival submissions and perused the materials available on record. At the outset we find that issue of disallowance of interest on merits is contested by the assessee by way of original ground. We also find that assessee had raised an additional ground stating that for making such disallowance of interest, there was no incriminating material available with the ld. AO which was fund during the course of M/s. Avinash Bhosale Infrastructure P. Ltd., search and hence, no disallowance of interest could be made in the said unabated assessment year. We find that this additional ground is purely a legal issue and goes to the root of the matter and does not require verification of any fresh facts as all the facts relevant for adjudication of the said additional ground are already on record. Hence, we admit the said additional ground and take up the same for adjudication first.

5.1. We find a search and seizure action u/s.132 of the Act was initiated on ABIL group on 21/07/2017. Shri Avinash Bhosale is the promoter and founder of ABIL group. This group is primarily engaged in infrastructure development, real estate development and hospitality industry. The assessee company is also forming part of ABIL group and was also covered in the said search action u/s. 132 of the Act. Accordingly, notice u/s.153A of the Act was served on the assessee. The return of income for the A.Y.2011-12 which was filed originally was processed u/s.143(1) of the Act and as on the date of search on 21/07/2017, the time limit for issuance of notice u/s.143(2) of the Act for the A.Y.2011-12 in respect of original return filed, had admittedly expired. Hence, as on the date of search, the assessment for the A.Y.2011-12 becomes unabated assessment. The law is now very well settled that in respect of unabated assessment, the assessment completed earlier either u/s.143(1) or u/s.143(3) of the Act could be disturbed only if there is any incriminating material found during the course of search relatable to such assessment year. In the instant case, we find that in the assessment framed u/s.153A r.w.s. 143(3) of the Act, the ld. AO had sought to disallow the interest paid and processing charges on borrowings from India Bulls Housing Finance Ltd., in the total sum of Rs.12,74,850/-. This disallowance was made by the ld. AO without making any reference to seized documents found during the course of search. Infact, the ld. AO himself in para 5 of M/s. Avinash Bhosale Infrastructure P. Ltd., his order admits that “in the course of assessment proceedings, it is observed that assessee has claimed expenses towards interest expenses of Rs.10,54,250/- and loan processing charges of Rs.2,20,600/- on loan borrowed from M/s. India Bulls Housing Finance Ltd.,” This observation clearly goes to prove that the ld. AO had only sought to re-examine the existing material already available on record while framing the search assessment for A.Y.2011-12 (being the unabated assessment year). The law is now very well settled that unless there is incriminating material found during the course of search, an unabated assessment shall not be disturbed in the search assessment. 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 and on the decision of Hon’ble Delhi High Court in the case of Kabul Chawla reported in 234 Taxman 300. In view of the above, we are inclined to allow the additional ground raised by the assessee and direct the ld. AO to delete the disallowance made in respect of interest paid on loan from India Bulls Housing Finance Ltd., Accordingly, the additional ground raised by the assessee is allowed. In view of the same, the adjudication of original ground becomes infructuous.

Order pronounced on 30/11/2021 by way of proper mentioning in the notice board.