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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’, NEW DELHI
Before: SH. AMIT SHUKLA & SH. O.P. KANT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘A’, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER Assessment Year: 2009-10 Vs. Abhisar Buildwell (Pvt.) Ltd., DCIT, Central Circle-4, New Delhi 1711, S.P. Mukherjee Marg, Delhi PAN : AAFCA6845D (Appellant) (Respondent) Appellant by Smt. Aparna Karan, CIT(DR) Respondent by None Date of hearing 11.09.2017 Date of pronouncement 04.10.2017 ORDER PER O.P. KANT, A.M.:
This appeal by the Revenue is directed against order dated 25/04/2014 passed by the Commissioner of Income Tax (Appeals) - XXXIII, New Delhi [in short ‘the CIT-(A)’] for assessment year 2009-10 raising following grounds:
“1. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts and committed legal error by not appreciating the facts in its entirety as brought on record in the case of Sh. Anil Bhatia by the jurisdictional High Court.
On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in arriving at the conclusion that the words ‘total income’ as used in section 153A would only mean undisclosed income discovered from seized / incriminating material.
On the facts and in the circumstances of the case, the order of the CIT (A) is perverse inasmuch as it has failed to appreciate the material facts and circumstances of the case as brought out in the assessment order.
4. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153A of the Act. 5. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in arriving at the conclusion that the words ‘total income’ as used in section 153A would only mean income unearthed during search when the decision of the Hon’ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09-08-2014 has held that total income includes income unearthed during search and any other income. 6. The order of the CIT (A) is erroneous and is not tenable on facts and in law. 7. The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal.”
2. Facts in brief of the case are that in the case of the assessee a search and seizure operation under section 132 of the income tax Act, 1961 (in short the Act) was carried out at the premises of the assessee alongwith other cases of M/s Dharampal Satyapal Group. Consequent to search action, notice under section 153A of the Act was issued on 09/01/2012 and in response the assessee filed its return of income on 17/02/2012 declaring loss of Rs.7,19,84,521/-. While computing the taxable income in the return of income filed, the assessee claimed depreciation amounting to Rs.8,39,29,742/-. During assessment proceeding under section 153A of the Act, the Assessing Officer noticed from the report of the special auditor in terms of section 142(2A) of the Act in the case of M/s Dharampal Satyapal Limited that the assessee company was as a result of the demerger of rubber thread unit of M/s Dharampal Satyapal Limited. The Assessing Officer noted from the report of the Special Auditor that assets on which depreciation is claimed by the assessee, were acquired by the demerged company i.e. M/s Dharampal Satyapal limited out of the amount of excise duty exemption accounted as deferred government grants in its books of accounts and therefore in accordance with the provisions of Explanation 10 to section 43(1) of the Act the actual cost of such assets to the demerger company shall be nil as the entire cost of the assets was met out by the Central government. The contention of the assessee was that no portion of the cost of the asset was made out of the grant or subsidy in the hands of assessee company. The Assessing Officer rejected the contention of the assessee and disallowed the depreciation of Rs.8,39,29,742/- claimed by the assessee. 2.1 Before the Ld. CIT-(A), the assessee challenged jurisdiction assumed by the Assessing Officer under section 153A of the Act as well as disputed the addition on merit. 2.2 The Ld. CIT-(A) disposed off the appeals of the assessee for assessment year 2007-08 to 2010-11, through a common order dated 25/04/2014 and examined the issue of assuming jurisdiction under section 153A by the Assessing Officer. The learned CIT-(A) observed that in the assessment year involved disallowance of depreciation has been made without any reference of incriminating material/evidence. In view of the decisions of the Tribunal in the case of Parivar Properties (p) Ltd. versus DCIT (2014) 41 taxmann.com 485 (Delhi-Trib), ACIT Vs. PACL India Ltd in dated 26/06/2013, M/s Merigold Merchandise (Pvt.) Ltd. Vs. DCIT in ITA No. 2666 and 2667/Del/2013 dated 27/12/2013, the learned CIT-(A) held that addition cannot be made under section 153A of the Act in case where the assessment is not abated or closed assessment and no incriminating evidence found as a result of search and seizure action under section 132 of the Act. 2.3 Accordingly, he examined whether the assessment of particular year was closed and arrived at a conclusion that for the assessment year 2009-10 i.e. the year under consideration, the time to issue notice under section 143(2) of the Act had expired and thus as on the date of search no assessment was pending, accordingly, learned CIT-(A) held that no addition could be made in the year under consideration. The relevant finding of the Ld. CIT-(A) is reproduced as under:
“Now, let us analyze, which assessment is closed assessment and which assessment is not closed. The impugned assessment years are from AY 2007-08 to A.Y. 2010-11 and the date of search is 20.01.2011, therefore, till A.Y. 2009-10, the time to issue notice u/s 143(2), has expired. However, for A.Y. 2010-11, the time to issue notice u/s 143(2) has not expired as on date of search i.e. on 20.1.2011. Hence, in my view, search assessment for A.Y. 2010-11 cannot said to be closed and the assessing officer has power to assess total income irrespective of incriminating evidences. For other 3 assessment i.e. A.Y. 2007-08 to 2009-10, as there is no incriminating evidences, no addition can be made I Accordingly, for three A.Ys i.e. for A.Y. 2007-08 to 2009-10, addition made is deleted I without examining the merits of addition on jurisdictional ground itself. For A.Y. 2010-11, the relief on jurisdictional ground cannot be given. Accordingly jurisdictional ground for A.Y. 2007-08 to 2009-10, is allowed and jurisdictional ground for A.Y. 2010-11 is hereby dismissed.
2.4 The learned CIT-(A) dismissed the appeal on the ground of jurisdiction. As far as merit of the issue is concerned, he upheld the disallowance on same ground in assessment year 2010-11. 3. In the grounds raised, the Revenue is aggrieved with the finding of the learned CIT-(A) that no addition could have been made in absence of any incriminating material without any pendency of the assessment.
Before us, Ld. CIT(DR) relied on the order of the Assessing Officer and submitted that under the provisions of section 153A of the Act total income is required to be assessed.
None attended on behalf of the assessee and hence matter was heard ex party qua the assessee. 6. We have heard the submission of the Ld. CIT(DR) and perused the relevant material on record. The ld. CIT(DR) has not disputed the factual position that no incriminating material was found in case of search action and the assessment year under consideration was also not pending as on the date of the search. In view of the factual position, the case of the assessee is covered by the decision of the Hon’ble jurisdictional High Court in the case of Kabul Chawla, (2016) 380 ITR 573 (Del) and no addition could have been made in the instant assessment year. In our opinion, the order of the learned CIT-(A) on the issue in dispute is well reasoned and no interference on our part is required. Accordingly we dismiss the grounds of the appeal. 6. In the result, appeal of the Revenue is dismissed. The decision is pronounced in the open court on 4th Oct., 2017.