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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER VIKAS AWASTHY, JM :
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-11, Pune dated 28-09-2015 common for various assessment years. However, by way of this appeal, the Revenue has assailed the findings of Commissioner of Income Tax (Appeals)- in assessment year 2008-09 only by raising following grounds : “1. On the facts and the circumstances of the case and in law, the ld.CIT(A) was not justified in deleting the addition made on account of sale of agricultural land ignoring the fact that the said venture of the
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assessee falls in the category of business as defined in sec.2(13) of the Income Tax Act, 1961. 2. On the facts and the circumstances of the case and in law, the ld.CIT(A) was not justified in deleting the addition made on account of sale of agricultural land overlooking the activities undertaken by the assessee and his partners in converting the said land into a Resort for commercial use and earning income by carrying out business. 3. On the facts and the circumstances of the case and in law, the ld.CIT(A) has erred in allowing the assessee’s ground by holding that Rule 8D was not applicable to the assessee for computing disallowance u/s.14A of the Income Tax Act, 1961. 4. The order of the ld. CIT(A) may be vacated and the Assessing Officer be restored. 5. The appellant craves leave to add, alter, amend and modify any of the above grounds of appeal.”
The assessee has filed application under Rule 27 of the IT(AT)
Rules, 1963 on the ground that the addition made by the Assessing
Officer under section 153A was beyond jurisdiction as no
incriminating material was found with respect to the additions made.
Shri Nilesh More appearing on behalf of the assessee submitted
at the outset that the additions made by Assessing Officer (in short
AO’) in assessment order 27-03-2014 passed u/s.153A r.w.s. 143(3) of
the Act are not sustainable as no incriminating material was found
during the course of search and the assessment for assessment year
2008-09 had not abated. The ld. AR submitted that the search and
seizure action was carried out in the case of Poonawalla group on
21-06-2011. The assessee was also covered in the search. Notice
under section 153A dated 27-09-2012 was issued to the assessee. The
assessee had filed regular return of income for the impugned
assessment year on 15-07-2009 declaring income of Rs.1,02,82,260/-.
In response to notice u/s.153A, the assessee filed return on
04-12-2013 declaring the same income as was returned in original
return of income. In assessment proceedings, consequent to search
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action u/s.153A, the AO made addition of Rs.69,07,500/- on account
of sale of land apart from disallowance u/s.14A amounting to
Rs.32,674/- and payment of subscription fees towards Pegasus Trust,
etc. Rs.2,95,200/-.
3.1 The ld. AR submitted that during the course of search, no
incriminating material whatsoever was found and it is a case of
concluded assessment. The Ld. AR submitted that the Hon’ble
Bombay High Court in the case of CIT Vs. Gurinder Singh Bawa
reported as 386 ITR 0483 (Bom.) has held that where no assessment is
pending at the time of initiation of proceedings u/s.153A no addition
can be made on merits in the absence of any incriminating material.
The ld. AR submitted that the CIT(A) in Para No.9.12 of the impugned
order has observed that the assessments for all the assessment years
from 2008-09 to 2011-12 except for assessment year 2012-13 were
accepted u/s.143(1). The ld. AR pointed that the Special Bench of the
Tribunal in the case of All Cargo Global Logistics Ltd. Vs. DCIT 18 ITR
106 (SB) has made no distinction between the assessment completed
u/s.143(1) and 143(3) of the Act. The ld. AR further submitted that
the Special Bench has categorically held that it is in assessments that
are abated, the AO retains original jurisdiction as well as jurisdiction
conferred u/s.153A of the Act.
In sofaras the issue of disallowance u/s.14A r.w. Rule 8D is
concerned, the ld. AR submitted that the provisions of Rule 8D does
not apply as no expenditure was incurred for earning exempt income.
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On the other hand, Shri Pankaj Garg representing the
Department vehemently defended the assessment order and prayed for
reversing the finding of CIT(A). The ld. DR submitted that the assessee
had sold the land after obtaining permission for construction of Resort
and hence, the sale of land is adventure in the nature of trade. The
AO has rightly assessed the same as ‘business income’ in the hands of
the assessee.
We have heard the submissions made by representatives of rival
sides and have perused the orders of the authorities below. In the
present appeal, the Revenue has assailed the findings of CIT(A) in
deleting the addition made on account of sale of land by the assessee
and deleting the disallowance u/s.14A of the Act.
In the present appeal by the Department, the assessee has filed
an application under Rule 27 of the ITAT Rules, 1963 raising objection
that the addition made by the AO u/s.153A was beyond jurisdiction as
no incriminating material was found with respect to the additions
made. It is an undisputed fact that the assessment for the assessment
year 2008-09 was completed u/s.143(1). Thus, on the date of search
the assessment for A.Y. 2008-09 was not pending. In search
proceedings, no incriminating material was found. However, the
addition was made by the AO on merits. The said additions were
deleted by the First Appellate Authority against which Department is
in appeal. Before adverting to the merits of addition, we will first
decide the jurisdictional issue.
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A perusal of the assessment order dated 27-03-2014 passed
u/s.153A read with section 143(3) of the Act reveal that there is no
reference to any incriminating material found during the course of
search leading to the additions in the assessment order. The additions
have been made on the re-appreciation of the material already on
record. It is a well settled law that where no assessments are pending
at the time of initiation of proceedings u/s.153A, no addition on merits
are unsustainable. The Hon’ble Bombay High Court in the case of CIT
Vs. Gurinder Singh Bawa (supra) on the issue of assuming jurisdiction
to make additions in proceedings u/s.153A without there being
incriminating material and without there being any pending
assessment has held as under :
“6. Mr. Kotangale, the learned Counsel for the revenue very fairly states that the decision of the Special Bench of the Tribunal in AICargo Global Logistics Ltd. was a subject matter of challenge before this Court as a part of the group of appeals disposed of as CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., 374 ITR 645 upholding the view of the Special Bench of the Tribunal in AI Cargo Global Logistics Ltd. Consequently, once an assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings under Section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under Section 153A of the Act which are contrary to and/or not disclosed during regular assessment proceedings.
In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessment were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard to finding in the impugned order on the merits of the individual claim regarding gifts and deemed dividend. However once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic.”
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The ld. DR has not been able to show any material on record to
contend that the additions were based on incriminating material found during search action. Thus, in view of our above observations,
we hold that the assessment order dated 27-03-2014 passed by the AO
is without jurisdiction and hence, void.
In the result, the appeal of Revenue is dismissed.
Order pronounced on Monday, the 31st day of December, 2018.
Sd/- Sd/- (D. KARUNAKARA RAO) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 31st December, 2018 Satish
आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. आयकर आयु� (अपील) / The CIT(A)-11, Pune 3. आयकर आयु� / The CIT Central, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
//स�यािपत �ित // आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary, आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune
ITA No. 1624/PUN/2015 Mr/ Pesi Shroff
Date 1. Draft dictated on 26-12-18 Sr.PS 2. Draft placed before author 27-12-18 Sr.PS 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.