D.C.I.T.,CENTRAL CIRCLE-3(1), KOLKATA vs. M/S RAMGARH SPONGE IRON PVT. LTD., KOLKATA

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ITA 2490/KOL/2019Status: DisposedITAT Kolkata19 August 2021AY 2014-153 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 agreed with the revenue that once the CIT(A) found the Section 153C proceedings void, there was no need to decide the merits. The Tribunal upheld that no addition could be made under Section 153C without incriminating material unearthed during a search.

What were the facts?

The revenue appealed against the CIT(A)'s order which decided the merits of the case after holding that proceedings under Section 153C were void ab initio. The assessee had also appealed against the same order, challenging additions made without incriminating material.

What were the issues?

Whether the CIT(A) erred in deciding the merits of the case after holding Section 153C proceedings to be void ab initio. Whether additions under Section 153C are permissible without incriminating material found during a search.

Which sections of the Income-tax Act were involved?

Section 153C

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri P. M. Jagtap & Shri A. T. Varkey]

Pronounced: 19.08.2021

ORDER

Per Shri A. T. Varkey, JM:

1.

This is an appeal preferred by the revenue against the order of the Ld. CIT(A)-21, Kolkata dated 19.09.2019 for AY 2014-15.

2.

The first ground of appeal of the revenue reads as under: “i. That on the facts and circumstances of the case, the Ld. CIT(A) erred in proceeding to decide the merits of the cases, once he held that the proceedings u/s 153C of the Act are void ab initio in this case.”

3.

From the reading of the aforesaid ground of appeal of the revenue, it is clear that the grievance of the revenue/AO is that once the Ld. CIT(A) has found out that the proceedings u/s 153C of the Income Tax Act are void ab initio, then Ld. CIT(A) ought not to have decided the merits of the case. We agree with the ground raised by the revenue that once the Ld. CIT(A) has decided the legal issue in favour of the assessee then there was no necessity as such to look into the merits of the case snce it will be an academic exercise, which will not bear any fruit and would be futile exercise. Further it was bought to our notice that the assessee had preferred an appeal against Ld. CIT(A) – 21 order dated 19.09.2019 (very same impugned order) in IT(SS)A No. 72/Kol/2019 for A.Y. 2014-15 which was decided by this Tribunal on 29.01.2020 (without being aware that the M/s. Ramgarh Sponge Iron Pvt. Ltd., AY 2014-15 department has preferred a cross-appeal) wherein the assessee had challenged the confirmation of addition of unexplained cash credit to the tune of Rs. 123,69,70,490/- which was allowed by the Tribunal on the same principle that once the Ld. CIT(A) has decided the legal issue i.e. without the aid of incriminating material unearthed during search in M/s. Rungta Group of Companies dated 25.08.2015 which led the AO to issue notice u/s 153C against this third party assessee, no addition could have been legally/validly made without the aid of incriminating material qua the assessee qua the assessment year. And since the AO had resorted to addition without the aid of incriminating materials seized during search and seizure operation conducted in the case of M/s. Rungta Group of Companies dated 25.08.2015, the Ld. CIT(A) was pleased to allow the legal issue that no addition was permissible u/s 153C of the Act against the assessee and for that relied on the decision of the Hon’ble Supreme Court in Singhad Technical Education Society 397 ITR 344 (SC), and the Hon’ble Calcutta High Court decision in Veerprabhu Marketing Ltd. (2016) 73 taxmann.com 149 (Calcutta) and the two other judicial precedents.

4. In the light of the aforesaid decision of the Coordinate Bench of this Tribunal in assessee’s own case against the same impugned order of Ld. CIT(A) dated 19.09.2019, we are inclined to accept the plea of the revenue that Ld. CIT(A) erred in sustaining certain addition when he held that the in the proceedings u/s 153C of the Act no addition was permissible u/s 153C of the Act against the assessee without the aid of incriminating material un-earthed during search and seizure operation conducted in the case of M/s. Rungta Group of Companies dated 25.08.2015 qua the assessee qua the assessment year as held by the Hon’ble Supreme Court in Singhad Technical Education Society 397 ITR 344 (SC), and the Hon’ble Calcutta High Court decision in Veerprabhu Marketing Ltd. (2016) 73 taxmann.com 149 (Calcutta). Therefore, taking into consideration, also the decision of this Tribunal in the assessee’s appeal in IT(SS)A No. 72/Kol/2019 dated 29.01.2020 we are inclined to hold that the Ld. CIT(A) rightly held that without aid of incriminating materials unearthed during search qua the assessee

M/s. Ramgarh Sponge Iron Pvt. Ltd., AY 2014-15 qua the assessment year, the AO ought not to have made any addition u/s 153C of the Act and he rightly allowed the legal issue raised by the assessee. Therefore, the Ld. CIT(A) ought not to have proceeded to sustain certain addition when he allowed the legal issue in favour of assessee. Therefore, the revenue’s appeal stand dismissed.

5.

In the result, the appeal of revenue is dismissed.

Order is pronounced in the open court on 19th August, 2021.

Sd/- Sd/- (P. M. Jagtap) (A. T. Varkey) Vice President Judicial Member Dated: 19th August, 2021 Biswajit, Sr. PS Copy of the order forwarded to:

1. 1. Appellant- DCIT, Central Circle-3(1), Kolkata.

2. Respondent – M/s. Ramgarh Sponge Iron Pvt. Ltd., Flat No. 8, 17th Floor, Chatterjee International Centre, 33A Jawaharlal Nehru Road, Kolkata – 700 072.

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