DCIT- CC- 3(1), MUMBAI vs. NIRMAL LIFSTYLE (PUNE) PVT. LTD., MUMBAI

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ITA 3087/MUM/2018Status: DisposedITAT Mumbai25 August 2021AY 2012-134 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 an assessment under section 153A in a non-abated case cannot be made without reference to seized material. The CIT(A) was correct in quashing the additions made by the AO.

What were the facts?

A search and survey action was conducted on the assessee and its associated concerns. Subsequently, the Assessing Officer made additions on account of deemed notional interest income and loan processing fees without reference to any seized material. The CIT(A) quashed these additions, finding the assessment invalid.

What were the issues?

Whether additions under section 153A are valid in a non-abated assessment without incriminating material. Whether the assessment made under section 143(3) r.w.s. 153A was invalid due to lack of abetment or incriminating material.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “B” Bench, Mumbai

For Respondent: Shri Rahul Raman
Hearing: 24.08.2021Pronounced: 25.08.2021

O R D E R Per Shamim Yahya (AM) :- This appeal by the Revenue is directed against the order of learned CIT(A) dated 13.2.2018 and pertains to assessment year 2012-13.

2.

Grounds of appeal read as under : 1. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition made by the AO on account of deemed notional interest income and disallowance made on account of loan processing fee by holding that no incriminating material was available in respect of the said addition and the said disallowance". 2. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deciding that the assessment u/s 143(3) rws 153A as invalid by holding that the assessment was non-abetted and no incriminating material unearthed during search action to make the re-assessment without appreciating the incriminating circumstances and incriminating material collected during the Nirmal Group Search" The appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal, if need be.

2 M/s. Nirmal Life Style (Pune) Pvt. Ltd.

The appellant, therefore, prays that on the ground stated above, the order of the Ld.CIT(A)-51, Mumbai, may be set aside and that of the Assessing Officer restored.”

3.

Brief facts of the case are as under :

A search & survey action under section 132&133A of the Income-tax Act, 1961 was carried out on 23rd October, 2013 in the case of M/s. Nirmal Lifestyle Ltd and its associated concerns at office address i.e. 3rd Floor, Multiplex Building, Nirmal Lifestyle Mall, L.B.S. Marg, Mulund (West), Mumbai- 400080, its branch offices, site offices, office of the subsidiaries and associate concerns and residences of main persons. Some of the related entities were also covered under section 133A of the Income-tax Act, 1961.Consequent to search assessment, the case of assessee was centralized with this office vide order No. Pr. CIT-15/Juris-127/Transfer/2015-16 dated 26-11-2015. Since the warrant of search authorization was issued in the name of assessee-company, assessment in this case is required to be made in manner laid out in chapter XIV of the I.T. Act, 1961 to be précised under section 153A of the I.T. Act. Accordingly notice under section 153A of the Act for the A.Y. 2008-09 to 2013-14 and notice under section 143(2) for A.Y. 2014- 15 were issued on 30.11.2015.

4.

In the assessment order for this assessment year, the Assessing Officer proceeded to make addition amounting to Rs. 7,30,72,000/- on account of disallowance of loan processing fees and interest. The above addition was made without reference to any seized material found during the search.

5.

Upon assessee’s appeal learned CIT(A) quashed the assessment by giving a finding that this assessment order was non-abated and has attained finality. Hence, assessment under section 153A of the Act without based upon anything found in search is untenable. He held as under :- “From the aforesaid, it can be observed that a non-abated assessment can be interfered with by the AO while making assessment u/s 143(3) r.w.s. 153A only on the basis of some incriminating material unearthed during the search action. In the instant case, the assessee had received intimation u/s 3 M/s. Nirmal Life Style (Pune) Pvt. Ltd.

143(1) and the time limit available for selection of the case for scrutiny had lapsed when the search action took place. Therefore, the assessment for the relevant year was non-abated which had attained finality. It is further observed that no incriminating material was found to make the said addition on account of deemed notional interest income and the said disallowance of loan processing fee. Therefore, the action of the AO of making the said addition and the said disallowance in absence of seized material is clearly incorrect. Accordingly, the additional ground of appeal raised by the assessee is allowed.”

6.

Against this order the Revenue is in appeal before us.

7.

We have heard learned Departmental Representative and perused the record. None appeared on behalf of the assessee. learned Departmental Representative relied upon the grounds of appeal.

8. Upon careful consideration, we are of the considered opinion that the issue is squarely covered in favour of the assessee. learned CIT(A) has taken correct view of the matter. Assessment under section 153A of the Act in the case of non-abated assessment cannot be made without any reference of seized material. This provision is duly covered by Hon'ble Bombay High Court in the case of M/s. All Cargo Global Logistics Ltd (137 ITD 287). Accordingly we uphold the order of learned CIT(A).

9.

In the result, this appeal filed by the Revenue is dismissed.

Pronounced in the open court on 25.8.2021.

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