DCIT - CC- 5(2), MUMBAI vs. SUDAR INUSTRIES LTD., MUMBAI

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ITA 2724/MUM/2018Status: DisposedITAT Mumbai25 October 2021AY 2008-095 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the assessments for the impugned years had not abated on the date of the search, additions under section 153C could only be made if based on incriminating material found during the search. As no such material was identified, the deletion of additions by the CIT(A) was upheld.

What were the facts?

The assessee's returns for assessment years 2008-09, 2011-12, and 2012-13 were processed under section 143(1). Subsequently, proceedings under section 153C were initiated based on information from a search in another company, leading to additions by the Assessing Officer. The Commissioner (Appeals) deleted these additions.

What were the issues?

Whether additions under section 153C are permissible without incriminating material when assessments have not abated. Whether the CIT(A) correctly deleted additions made without reference to incriminating material.

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI M. BALAGANESH

For Appellant: Shri Prabhat Kumar Gupta [CIT, (DR)]

Date of hearing 07-10-2021 Date of pronouncement 25-10-2021 O R D E R Per Saktijit Dey (JM) Captioned appeals by the revenue concerning the same assessee arise out of three separate orders, all dated 02-02-2018 of learned Commissioner of Income Tax (Appeals)-53, Mumbai for the assessment years 2008-09, 2011-12 and 2012-13.

2.

When the appeals were called for hearing, none appeared on behalf of the assessee. Even, the assessee has not filed any application seeking adjournment. Considering the above, we proceed to dispose of the appeals ex parte qua the 2 ITAs 2724 to 2726/Mum/2018 assessee after hearing the learned departmental representative and based on materials available on record.

3.

Briefly the facts, more or less common, in all these appeals are, the assessee is a resident company engaged in job work of ready-made garments and intermediate chemicals. For the assessment years under dispute, assessee had filed its returns of income under section 139(1) of the Income Tax Act, 1961 and the returns so filed were processed under section 143(1) of the Act. Subsequently, on 24-09-2013 a search and seizure operation under section 132(1) of the Act was conducted in case of Anjaneya Healthcare Ltd. Based on information received from the said search and seizure operation, proceedings under section 153C of the Act were initiated in case of the present assessee. In response to the notices issued under section 153C of the Act for the assessment years under consideration, the assessee filed its returns of income. Assessments under section 153C r.w.s. 143(3) of the Act were completed for the assessment years under dispute by making various additions as under:- A.Y. 2008-09 1. Unexplained cash credits Rs. 2,07,50,000/- 2. Unexplained expenditure Rs. 1,55,625/- A.Y. 2011-12 1. Disallowance of depreciation on bogus Capital expenditure Rs. 1,95,97,601/- 2. Disallowance u/s 14A Rs. 1,49,358/- 3. Disallowance u/s 36(1)(iii) Rs. 20,66,899/- 4. Disallowance of depreciation on buses Rs. 2,75,888/- 5. Incidental charges Rs. 14,98,894/- 3 ITAs 2724 to 2726/Mum/2018 A.Y. 2012-13 1. Exceptional item Rs.1,60,00,000/- 2. Disallowance u/s 14A r.w.s. 8D Rs. 14,73,424/- 3. Disallowance of EPF contribution Rs. 86, 749/- 4. Bogus charity expenses Rs. 7,99,505/- 5. Bogus sale and promotion expenses Rs. 18,03,726/- 6. Disallowance of interest Rs. 20,18,925/- 7. Disallowance on non deduction of TDS Rs. 13,83,375/- 8. Excess depreciation on buses Rs. 1,51,254/- 9. Depreciation on fictitious assets Rs. 8,63,38,511/- 10. Incidental charges Rs. 47,04,208/-

4.

Against the assessment orders passed under section 153C r.w.s. 143(3) of the Act, assessee preferred appeals before learned Commissioner (Appeals) inter alia on the ground that in a proceeding initiated under section 153C of the Act, no addition/disallowance can be made in absence of any incriminating material found as a result of search and seizure operation. Accepting the submission of the assessee learned Commissioner (Appeals) held that, since the assessments for the impugned assessment years have not abated, additions, if any, can be made only with reference to incriminating material found as a result of search and seizure operation. Thus, he held that no addition could have been made by the assessing officer in absence of incriminating material found during search. Accordingly, he deleted the additions made by the assessing officer in different assessment years under appeal.

4 ITAs 2724 to 2726/Mum/2018 5. We have heard Shri Prabhat Kumar Gupta, learned Departmental Representative and perused materials on record. Undisputed facts emanating from record clearly reveal that on the date of search and seizure operation on 24- 09-2013, there was no assessment pending before the assessing officer pertaining to the assessment years under appeal. In fact, prior to the date of search and seizure operation, the returns of income filed for the impugned assessment years were processed under section 143(1) of the Act. Therefore, it is very much clear that on the date of search and seizure operation, assessments for the impugned assessment years have not abated. A perusal of the assessment orders would reveal that the various additions/disallowance made by assessing officer, such as, disallowance of depreciation, cash credits, 14A disallowance, etc. are not based on any incriminating material found as a result of search. At least, in the body of the assessment orders the assessing officer has not made any observation to demonstrate that the additions/disallowances made are with reference to incriminating material found as a result of search. On a specific query from the bench, learned departmental representative while accepting that the assessing officer has not referred to any incriminating material for making additions also could not bring to our notice any incriminating material on record which can be even remotely connected to the additions made by the assessing officer. As per the ratio laid down by the Hon’ble jurisdictional High Court in case of CIT vs Continental Warehousing Corporation and Another 374 ITR 645 (Bom), in a case where on the date of search and seizure proceedings the assessment has not abated, no addition can be made in absence of any incriminating material. There are number of other decisions of different High Courts as well as various benches of the Tribunal expressing similar view. While deleting disputed additions, learned 5 ITAs 2724 to 2726/Mum/2018 Commissioner (Appeals) has only followed the ratio laid down in the judicial precedents cited before him. Therefore, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the additions made by the assessing officer. Grounds are rejected.

6.

In the result, appeals are dismissed. Order pronounced on 22/10/2021. Sd/- sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dt : 22/10/2021 Pavanan Copy to : 1. Appellant 2. Respondent 3. The CIT concerned 4. The CIT(A) 5. The DR, ITAT, Mumbai 6. Guard File /True copy/ By Order

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