DCIT CC 7(2), MUMBAI vs. RUCHI SOYA INDUSTRIES LTD, MUMBAI

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ITA 7022/MUM/2016Status: DisposedITAT Mumbai18 April 2018AY 2009-103 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 upheld the CIT(A)'s decision to delete the addition. The addition was made in an unabated assessment year without any incriminating material found during the search, which is contrary to the Bombay High Court's ruling.

What were the facts?

The Revenue conducted a search and seizure operation on the assessee, leading to an assessment under Section 153A. The Assessing Officer added notional interest on interest-free advances given by the assessee.

What were the issues?

Whether additions can be made in an unabated assessment year under Section 153A without incriminating material seized during a search.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132

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, “D” Bench, Mumbai

For Appellant: Shri Malav P. Sheth
For Respondent: Shri Ram Tiwari
Hearing: 18.4.2018Pronounced: 18.4.2018

O R D E R Per B.R. Baskaran (AM) :-

The appeal filed by the Revenue is directed against the order dated 1.9.2016 passed by the learned CIT(A)-49, Mumbai and it relates to A.Y. 2009- 10. The Revenue is aggrieved by the decision of the learned CIT(A) in holding that no addition can be made in the hands of the assessee in the assessment made u/s. 153A of the Act for the year under consideration in the absence of incriminating material supporting the said addition.

2.

We have heard the parties and perused the record. The assessee- company is engaged in the business of manufacture and sale of edible oil Vanaspati and allied products. The Revenue carried out search and seizure operation u/s. 132 of the Act in the hands of the assessee on 29.1.2013. Consequently, assessment of the year under consideration was reopened and completed u/s. 153A of the Act. The Assessing Officer added notional interest expenditure on the advances given by the assessee interest free to three parties.

3. In the appellate proceedings, the learned CIT(A) noticed that there was no incriminating material with regard to addition made by the Assessing Officer

2 M/s. Ruchi Soya Industries Limited and the Hon'ble Bombay High Court has held in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. 374 ITR 645 that addition can be made in the case of assessment years, which are not abated, only on the basis of incriminating material seized during the course of search. Since the year under consideration was unabated assessment year and since no incriminating material was found supporting the disallowance made by the Assessing Officer, the learned CIT(A) held that notional interest of ` 149.48 lakhs made by the Assessing Officer is liable to be deleted. The Revenue is aggrieved by the decision so rendered by the learned CIT(A).

3.

We have heard the parties and perused the record. There is no dispute with regard to the fact that the year under consideration falls under the category of unabated assessment and hence as per decision rendered by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), addition could be made only on the basis of incriminating material found during the course of search. Admittedly, no incriminating was found to support the addition of notional interest of ` 149.48 lakhs referred supra. Under these set of facts, the learned CIT(A) has deleted the addition by following the decision rendered by Hon'ble Bombay High Court in the above said case.

4.

Since, the learned CIT(A) has followed binding decision rendered by Hon'ble Bombay High Court, we do not find any reason to interfere with the order passed by him.

5.

In the result, appeal filed by the Revenue is dismissed. Order has been pronounced in the Court on 18.4.2018.

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