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Facts
A search and seizure action under Section 132 was conducted on 23.01.2019, leading to the initiation of assessment proceedings under Section 153C for multiple assessment years, including reopening for AY 2012-13 under the 4th proviso to Section 153A. The Assessing Officer made an addition of Rs. 35,37,725/- for interest expenditure on leasehold land, treating it as capital expenditure, which was challenged by the assessee.
Held
The Tribunal held that the extended reassessment for AY 2012-13 was without jurisdiction as the condition for invoking the 4th proviso to Section 153A (escaped income of Rs. 50 lakhs or more related to an asset) was not met, as the AO did not hold the alleged income as escaped assessment. For other unabated assessment years, following the Supreme Court's decision in Abhisar Buildwell, no additions could be made without incriminating material, and since no such material was found for the additions, all additions were deleted.
Key Issues
Whether the assessment years beyond six years (specifically AY 2012-13) were validly reopened under the 4th proviso to Section 153A; whether additions could be made in unabated assessment years without any incriminating material found during the search; and the treatment of interest on leasehold land as revenue or capital expenditure.
Sections Cited
Section 132, Section 153C, Section 153A, 4th proviso to Section 153A, Section 143(3), Section 270A, Section 274, Section 36(1)(iii)
AI-generated summary — verify with the full judgment below
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
Assessee by : Shri. Mandar Vaidya Revenue by : Smt. Sanyogita Nagpal Date of Hearing 05.12.2024 Date of Pronouncement 11.12.2024 आदेश / O R D E R PER OM PRAKASH KANT [A.M.] :- The captioned appeals by the assessee are directed against separate orders passed by the Learned Commissioner of Income-tax (Appeals), Mumbai- 54 [hereinafter referred to as “CIT(A)”] for respective assessment 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. years in relation to search assessments n relation to search assessments. As common issue and issue and dispute is involved in these six appeal in these six appeals, therefore, same were heard were heard together and disposed off together by way of this common order for convenience and avoid together by way of this common order for convenience and avoid together by way of this common order for convenience and avoid repetition of facts.
Briefly stated facts of the case are that Briefly stated facts of the case are that a search and seizure action u/s search and seizure action u/s 132 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] tax Act, 1961 [hereinafter referred to as “Act”] tax Act, 1961 [hereinafter referred to as “Act”] was carried out at the premises of “Shri Uday Shetty and others Shri Uday Shetty and others” on 23.01.2019. In on 23.01.2019. In said search and seizure action, certain documents belonging search and seizure action, certain documents belonging/related to assessee related to assessee were seized. The AO of the search . The AO of the searched person i.e. Shri Uday Shetty group Uday Shetty group & others and the AO of assesse assessed person i.e. the assessee Shri Ram person i.e. the assessee Shri Ramee Hotels Pvt. Ltd., being the same officer, h being the same officer, he recorded satisfaction on 06.12.2021 satisfaction on 06.12.2021 under the provisions of section 153C of the Act to the effect section 153C of the Act to the effect section 153C of the Act to the effect that certain documents/information received documents/information received in search of ‘Udai shetty group tty group’ were related to assessee and having bearing bearing on the determination of the total income in the determination of the total income in the case of the assessee. Accordingly, the AO issued notice u/s 1 case of the assessee. Accordingly, the AO issued notice u/s 153C 53C r.w.s 153A for six assessment years proceeding proceeding to the assessment year in which search which search was carried out i.e. AY 2018-19 to 2013 19 to 2013-14. The AO, further, invoked 4 14. The AO, further, invoked 4th proviso to section 153A of the Act, which provide section 153A of the Act, which provided reopening the assessment beyond six reopening the assessment beyond six assessment years but within 10 assessment years assessment years but within 10 assessment years subject to fulfillment fulfillment of the condition that the AO AO had in his possession incriminating evidence in his possession incriminating evidence represented in the form of asset represented in the form of asset which revealed income which revealed income of value Rs. 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. 50,00,000/- or more and had escaped assessment. In view of this proviso, the or more and had escaped assessment. In view of this proviso, the or more and had escaped assessment. In view of this proviso, the AO also reopened AY 2012 AO also reopened AY 2012-13 and issued notice u/s 153C r.w.s 1 13 and issued notice u/s 153C r.w.s 157A of the Act.
The AO completed the reassessment completed the reassessments u/s 153C for the assessment assessment years for which he issued notice u/s 153C of the Act for which he issued notice u/s 153C of the Act, but in those assessment those assessments, he did not make any addition on the basis of not make any addition on the basis of documents for which satisfaction was which satisfaction was recorded while initiating proceedings u/s 153C of the Act. For ready reference, initiating proceedings u/s 153C of the Act. For ready reference, initiating proceedings u/s 153C of the Act. For ready reference, the addition made for disallowance of interest expenditure o the addition made for disallowance of interest expenditure on n lease hold land made ( bold letters) in AY 2018 in AY 2018-19 is reproduced as under:
Accordingly, the total income of the assessee i 6. Accordingly, the total income of the assessee is computed as under: s computed as under: Particulars Amount (in Rs.) Amount (in Rs.) Amount (in Rs.) I. Income from Business and Income from Business and 4,14,13,122/ 4,14,13,122/- Profession Add: Disallowances as per order Disallowances as per order 95,84,996/- u/s. 143(3) dated 23.04.2021 u/s. 143(3) dated 23.04.2021 Add: Interest expenditure on Interest expenditure on 35,37,725/- 5,45,35,843/ 5,45,35,843/- lease hold land (as discussed lease hold land (as discussed in Para 4 above in Para 4 above II Income from Other Sources Income from Other Sources 19,46, 276/ 19,46, 276/- Gross Total Income Gross Total Income 5,64,82,119/ 5,64,82,119/- Set off Brought Forward Loss Set off Brought Forward Loss 41,26,863/- (Ay 2012-13) (1,70,53,245/ 13) (1,70,53,245/- minus 1,29,26,382/ minus 1,29,26,382/-) Set off Brought Forward Loss Set off Brought Forward Loss 5,04,08,980/- 5,45,35,843/ 5,45,35,843/- (AY 2013-14) (only to the 14) (only to the extent of available business extent of available business income after set off loss from income after set off loss from AY 2012-13) Total Income 19,46,276/ 19,46,276/- The discussion Relevant Relevant to the addition for lease hold expenses to the addition for lease hold expenses in the 4. assessment order is also reproduced as under order is also reproduced as under for ready reference reference: “4.1 From the accounts of the assessee it is seen that under the Finance Cost (Note “4.1 From the accounts of the assessee it is seen that under the Finance Cost (Note “4.1 From the accounts of the assessee it is seen that under the Finance Cost (Note 30), the assessee has claimed an amount of Rs. 35,37,725/ 30), the assessee has claimed an amount of Rs. 35,37,725/- being the deferred being the deferred 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. payment. Further, it is reported by payment. Further, it is reported by the assessee that the same is the interest on the the assessee that the same is the interest on the instalments paid to Indore Development Authority (IDA) for purchase of leasehold instalments paid to Indore Development Authority (IDA) for purchase of leasehold instalments paid to Indore Development Authority (IDA) for purchase of leasehold land. Moreover, in the submission made by the assessee, the principal amount paid land. Moreover, in the submission made by the assessee, the principal amount paid land. Moreover, in the submission made by the assessee, the principal amount paid in relation to the purchase of flat was rep in relation to the purchase of flat was reported as capital advances under the head orted as capital advances under the head 'long term advances', however, interest has been claimed under the Revenue. 'long term advances', however, interest has been claimed under the Revenue. 'long term advances', however, interest has been claimed under the Revenue. 4.2 From the above facts it is evident that the interest expenditure has been incurred 4.2 From the above facts it is evident that the interest expenditure has been incurred 4.2 From the above facts it is evident that the interest expenditure has been incurred for acquisition of the property, the possession of w for acquisition of the property, the possession of which has not been received by the hich has not been received by the assessee. Though it has not received the possession, however, claimed the relatable assessee. Though it has not received the possession, however, claimed the relatable assessee. Though it has not received the possession, however, claimed the relatable expenditure under the revenue head i.e., in the profit and loss account. expenditure under the revenue head i.e., in the profit and loss account. expenditure under the revenue head i.e., in the profit and loss account. 4.3 In light of the above, in the course of assessment proceeding 4.3 In light of the above, in the course of assessment proceeding 4.3 In light of the above, in the course of assessment proceedings the assessee has been issued showcause dated 27.02.2023 as to why the interest expenditure of Rs. been issued showcause dated 27.02.2023 as to why the interest expenditure of Rs. been issued showcause dated 27.02.2023 as to why the interest expenditure of Rs. 35,37,725/- shown under 'deferred payment and claimed as revenue should not be shown under 'deferred payment and claimed as revenue should not be shown under 'deferred payment and claimed as revenue should not be disallowed and added to the total income. disallowed and added to the total income. 4.4 In response, the assessee made 4.4 In response, the assessee made its submission through email dated 02.03.2023 its submission through email dated 02.03.2023 citing that the assessee is unable to file its response through the e citing that the assessee is unable to file its response through the e- - proceeding option as it is directing them to the e as it is directing them to the e-filing portal for filing of Return of Income. The filing portal for filing of Return of Income. The submission of the assessee has been re submission of the assessee has been reproduced here for reference: produced here for reference: "The company had bid for a 90 years leasehold land of Indore Development "The company had bid for a 90 years leasehold land of Indore Development "The company had bid for a 90 years leasehold land of Indore Development Authority (IDA) situated at Indore which was awarded to the Company by Authority (IDA) situated at Indore which was awarded to the Company by Authority (IDA) situated at Indore which was awarded to the Company by IDA. The total cost of the leasehold plot was Rs. 8,92,97,600/ IDA. The total cost of the leasehold plot was Rs. 8,92,97,600/ IDA. The total cost of the leasehold plot was Rs. 8,92,97,600/- of which 10% of the cost of the plot was paid by the Company. In cost of the plot was paid by the Company. In terms of the letter of terms of the letter of reservation, out of balance 90% of the total cost of the plot, 15% is payable by reservation, out of balance 90% of the total cost of the plot, 15% is payable by reservation, out of balance 90% of the total cost of the plot, 15% is payable by the company on or before 27th May, 2011 and thereafter the balance 75% is the company on or before 27th May, 2011 and thereafter the balance 75% is the company on or before 27th May, 2011 and thereafter the balance 75% is required to be payable in 40 equ required to be payable in 40 equal instalments with an interest of 10.50% al instalments with an interest of 10.50% annum. As the said plot is being acquired for the purpose of expansion of annum. As the said plot is being acquired for the purpose of expansion of annum. As the said plot is being acquired for the purpose of expansion of business and was to be used solely for business purposes the interest paid on business and was to be used solely for business purposes the interest paid on business and was to be used solely for business purposes the interest paid on the EMis is in the nature of business expense. Further, the in the EMis is in the nature of business expense. Further, the in the EMis is in the nature of business expense. Further, the interest expenses claimed are for the period under consideration." claimed are for the period under consideration." 4.5 The submission of the assessee has been considered, however, there is no merit 4.5 The submission of the assessee has been considered, however, there is no merit 4.5 The submission of the assessee has been considered, however, there is no merit in it. The fact is in relation to interest incurred on the payment made for acquisition in it. The fact is in relation to interest incurred on the payment made for acquisition in it. The fact is in relation to interest incurred on the payment made for acquisition of the property, the possession of which has not been received till date. Since the possession of which has not been received till date. Since the possession of which has not been received till date. Since the assessee has not obtained the possession the expenditure in relation to the same has assessee has not obtained the possession the expenditure in relation to the same has assessee has not obtained the possession the expenditure in relation to the same has to be capitalized and not to be claimed as revenue. Moreover, the assessee has not to be capitalized and not to be claimed as revenue. Moreover, the assessee has not to be capitalized and not to be claimed as revenue. Moreover, the assessee has not given any submission as given any submission as to how the same was allowable specifying the section to how the same was allowable specifying the section under which the same is allowable as business expenditure. As per the records and under which the same is allowable as business expenditure. As per the records and under which the same is allowable as business expenditure. As per the records and the submission given the assessee has given advances for purchase on which it has the submission given the assessee has given advances for purchase on which it has the submission given the assessee has given advances for purchase on which it has incurred interest expenditure and the p incurred interest expenditure and the possession of the same was not received till ossession of the same was not received till date. Therefore the relatable expenditure in relation to the acquisition of the date. Therefore the relatable expenditure in relation to the acquisition of the date. Therefore the relatable expenditure in relation to the acquisition of the property till the complete possession of the asset has to be capitalized. Accordingly, property till the complete possession of the asset has to be capitalized. Accordingly, property till the complete possession of the asset has to be capitalized. Accordingly, the claim of interest expenditure of Rs. 35,3 the claim of interest expenditure of Rs. 35,37,725/- is disallowed. Thus, an addition is disallowed. Thus, an addition of Rs. 35,37,725/- is made to the total income of the assessee. Penalty proceedings is made to the total income of the assessee. Penalty proceedings is made to the total income of the assessee. Penalty proceedings under section 270A r.w.s 274 of the Act is hereby initiated for under under section 270A r.w.s 274 of the Act is hereby initiated for under under section 270A r.w.s 274 of the Act is hereby initiated for under-reporting of Income.”
Aggrieved, the assessee filed the assessee filed appeals before the Ld. CIT(A) and before the Ld. CIT(A) and challenged the additions on merits, however, could not succeed , could not succeed, and thus, is in 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. appeal before Tribunal by way of raising ground by way of raising grounds as reproduced above s as reproduced above. For ready reference, grounds raised
in AY 2018 ready reference, grounds raised in AY 2018-19 are reproduced as under: 19 are reproduced as under:
1. The Ld. CIT(A) fell in error of law in not appreciating that the assessment The Ld. CIT(A) fell in error of law in not appreciating that the assessment The Ld. CIT(A) fell in error of law in not appreciating that the assessment for the Asst.year in question was not pending and hence, had not abated for the Asst.year in question was not pending and hence, had not abated for the Asst.year in question was not pending and hence, had not abated u/s.153A r/w.153C.
2. The Ld. CIT(A) failed to appreciate that the scrutiny assessment u/s. 143(3)
2. The Ld. CIT(A) failed to appreciate that the scrutiny assessment u/s. 143(3)
2. The Ld. CIT(A) failed to appreciate that the scrutiny assessment u/s. 143(3) had been concluded in April 2021 and concluded assessments were beyond the concluded in April 2021 and concluded assessments were beyond the concluded in April 2021 and concluded assessments were beyond the scope of section 153C r/ws. 153A. scope of section 153C r/ws. 153A.
3. The Ld. CIT(A) misdirected himself in ignoring the fact that there was по
3. The Ld. CIT(A) misdirected himself in ignoring the fact that there was по
3. The Ld. CIT(A) misdirected himself in ignoring the fact that there was по undisclosed income found on the basis of any incriminating material and hence undisclosed income found on the basis of any incriminating material and hence undisclosed income found on the basis of any incriminating material and hence the assessment is bad, illegal and without jurisdiction. the assessment is bad, illegal and without jurisdiction.
4. It is submitted that the issue of jurisdiction goes to the root of the cause and 4. It is submitted that the issue of jurisdiction goes to the root of the cause and 4. It is submitted that the issue of jurisdiction goes to the root of the cause and such an issue can be raised at any stage of the such an issue can be raised at any stage of the proceedings.
5. Without prejudice, on merits, the Ld.CIT(A) erred i
5. Without prejudice, on merits, the Ld.CIT(A) erred in not appreciating that n not appreciating that interest paid towards Installment Facility of lease amount would be 'revenue' interest paid towards Installment Facility of lease amount would be 'revenue' interest paid towards Installment Facility of lease amount would be 'revenue' in nature.
6. The Ld. CIT(A) erred in pressing into service, section 36(1)(iii) which has no 6. The Ld. CIT(A) erred in pressing into service, section 36(1)(iii) which has no 6. The Ld. CIT(A) erred in pressing into service, section 36(1)(iii) which has no application to the facts at hand. application to the facts at hand. The appellant craves leave The appellant craves leave to add, alter, amend, modify any grounds of to add, alter, amend, modify any grounds of appeal.”
6. The assessee has also raised additional ground The assessee has also raised additional grounds challenging the validity challenging the validity of the proceedings u/s 153C of the proceedings u/s 153C r.w.s. 153A in all the appeals. For ready reference, . For ready reference, the additional grounds raised in raised in AY 2018-19 are reproduced as under: reproduced as under: “1) no incriminating material was found during the search and hence the 1) no incriminating material was found during the search and hence the 1) no incriminating material was found during the search and hence the assessment u/s. 153C is bad, illegal and without jurisdiction. assessment u/s. 153C is bad, illegal and without jurisdiction. 2) the original assessment u/s. 143(3) had already been completed/concluded and 2) the original assessment u/s. 143(3) had already been completed/concluded and 2) the original assessment u/s. 143(3) had already been completed/concluded and concluded assessments would not abate section 153C r/ws. 153A. assessments would not abate section 153C r/ws. 153A.” ”
7. Before us, Ld. Counsel Before us, Ld. Counsel for the assessee has referred to the additional to the additional ground and submitted that the Ld. AO was not justified in extending the ground and submitted that the Ld. AO was not justified in extending the ground and submitted that the Ld. AO was not justified in extending the reassessment u/s 153C r.w.s reassessment u/s 153C r.w.s. 153A beyond six assessment years rs and initiating reassessment for Ay 2012 reassessment for Ay 2012-13 for the reason that the assessee was not liable for 13 for the reason that the assessee was not liable for such extensions being no no income exceeding Rs. 50,00,000/- representing in the form of the asset which had escaped assessment was found in possession which had escaped assessment was found in possession which had escaped assessment was found in possession of the assessee. He referred to the . He referred to the satisfaction note recorded by note recorded by the AO of the 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. assessee wherein reference assessee wherein reference of document i.e. agreement agreement to sale dated 12.05.2011 between the assessee and the person 12.05.2011 between the assessee and the persons Shri Uday Shetty group Shri Uday Shetty group, has been made. The said agreement to sale is said agreement to sale is regarding immovable property regarding immovable property situated at Pootur village of village of Udupi. As per the agreement to sale, total per the agreement to sale, total consideration of Rs. 3,70,00,000/ consideration of Rs. 3,70,00,000/- is mentioned. Further, . Further, as per the documents at Serial No. 21 to 24 found from the premises of Shri Uday Shetty documents at Serial No. 21 to 24 found from the premises of Shri Uday Shetty documents at Serial No. 21 to 24 found from the premises of Shri Uday Shetty cash component of the transaction of the transaction of purchase of said property of purchase of said property was worked out to Rs. 1,26,78,125/- - and cheque component was worked out to Rs. was worked out to Rs. 4,46,00,000/-. Accordingly, the AO recorded that there was difference of Rs. . Accordingly, the AO recorded that there was difference of Rs. . Accordingly, the AO recorded that there was difference of Rs. 2,02,78,125/- in price paid and recorded i in price paid and recorded in agreement to sale n agreement to sale. The Ld. Counsel, however, emphasized that the AO Counsel, however, emphasized that the AO did not hold the said income as ld the said income as escaped assessment in the escaped assessment in the impugned assessment orders, and therefore, the and therefore, the condition required for extending the assessment u/s 153C r.w.s 153A beyond required for extending the assessment u/s 153C r.w.s 153A beyond required for extending the assessment u/s 153C r.w.s 153A beyond the period of six years was not was not fulfilled. Accordingly, he submitted that the fulfilled. Accordingly, he submitted that the assessment u/s 153C r.w.s 153A assessment u/s 153C r.w.s 153A passed for AY 2012-13 is without jurisdiction 13 is without jurisdiction, and accordingly, need to be quashed and accordingly, need to be quashed ab initio.
8. Further, the Ld. Counsel for the assessee referred Further, the Ld. Counsel for the assessee referred to anoth another additional ground and submitted that in view of ground and submitted that in view of the satisfaction recorded on 06.12.2021 satisfaction recorded on 06.12.2021 , the period of six assessment years assessment years preceding the assessment assessment year in which satisfaction was recorded satisfaction was recorded would be from AY 2021-22 to 2015- -16. Ld. Counsel submitted that in case of 153C proceedings, search submitted that in case of 153C proceedings, search assessment assessment years have to be reckoned from the year in which the satisfaction is recorded as against the the year in which the satisfaction is recorded as against the the year in which the satisfaction is recorded as against the 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. search year in case of proceedings search year in case of proceedings u/s 153A of the Act. He submitted that out of the Act. He submitted that out of the six assessment years x assessment years preceeding to the assessment year in which to the assessment year in which satisfaction was recorded i.e. AY 2015 action was recorded i.e. AY 2015-16 to AY 2020- -21, only three assessment years i.e. AY 2015 assessment years i.e. AY 2015-16, AY 2017-18 & AY 2018-19 are available for 19 are available for consideration in present set of appeals in present set of appeals. He submitted that reopening of reopening of the assessment years beyond the beyond the AY 2015-16 are being without jurisdiction and being without jurisdiction and same need to be quashed as same need to be quashed as ab initio. As regard to AY 2015 AY 2015-16, AY 2017-18 & AY 2018-19, Ld. Counsel for the 19, Ld. Counsel for the 9. assessee submitted that in assessee submitted that in all these cases no assessments were pending as on cases no assessments were pending as on the date of the recording ing the satisfaction, and therefore, same being unabated the satisfaction, and therefore, same being unabated assessment, no addition could have been made otherwise then the aid of assessment, no addition could have been made otherwise then the aid of assessment, no addition could have been made otherwise then the aid of incriminating material. Ld. Counsel for the assessee in incriminating material. Ld. Counsel for the assessee in support, support, relied on the decision of the Hon’ble Supreme Court in the case of of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell Abhisar Buildwell P. Ltd. (2023) 454 ITR 212 (SC) (2023) 454 ITR 212 (SC). The Ld. Counsel for the assessee has also The Ld. Counsel for the assessee has also relied on the decision of the co relied on the decision of the co-ordinate bench in the case of ordinate bench in the case of Hilton Infrastructure v/s DCIT, CC DCIT, CC-4(2) in & 4(2) in ITA No. 3456/Mum/2023 & others. Accordingly, he submitted that in the assessments . Accordingly, he submitted that in the assessments . Accordingly, he submitted that in the assessments in all above assessment years, no addition has been made relying on any incriminating no addition has been made relying on any incriminating no addition has been made relying on any incriminating material, and therefore, in absence of such incriminating material, no material, and therefore, in absence of such incriminating material, no material, and therefore, in absence of such incriminating material, no addition is justified in those assessment years se assessment years. Accordingly, in tho . Accordingly, in those years, the additions need to be deleted additions need to be deleted, following the findings of the Hon’ble Supreme Hon’ble Supreme Court in the case of Abhisar Build Well Abhisar Build WellPvt. Ltd. (Supra).
4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd.
On the contrary, Ld. DR relied , Ld. DR relied on the orders of lower authorities orders of lower authorities and submitted that proceedings u/s 153C submitted that proceedings u/s 153C were validly initiated, in initiated, in view of the agreement to sale of an an assets having value of exceeding Rs. 50,00,000/ assets having value of exceeding Rs. 50,00,000/- referred by the AO of the assessee. referred by the AO of the assessee. We have heard rival submissions of the p We have heard rival submissions of the parties and perused the relevant arties and perused the relevant 11. material on record. As far as, the additional ground challenging far as, the additional ground challenging far as, the additional ground challenging extension of the assessment years for the purpose of reopening u/s 153C is concerned the assessment years for the purpose of reopening u/s 153C is concerned the assessment years for the purpose of reopening u/s 153C is concerned, the Ld. Counsel for the assessee has challenged the action of the AO on t Ld. Counsel for the assessee has challenged the action of the AO on t Ld. Counsel for the assessee has challenged the action of the AO on the ground that the alleged asset in the form of agreement to sale of in the form of agreement to sale of a property is not in property is not in the nature of asset where income escaped has been determined the nature of asset where income escaped has been determined the nature of asset where income escaped has been determined. If for a moment we leave this issue aside and only examine the If for a moment we leave this issue aside and only examine the If for a moment we leave this issue aside and only examine the 12. conditions of the decision of Hon’ble Supreme Couert in the case of conditions of the decision of Hon’ble Supreme Couert in the case of conditions of the decision of Hon’ble Supreme Couert in the case of Abhisar Build Well Pvt. Ltd. (Supra) (Supra), we find that in view of the satisfaction recorded nd that in view of the satisfaction recorded on 06.12.2021 by the AO of the assess on 06.12.2021 by the AO of the assessee, the six years ee, the six years preceding the assessment year in which satisfaction assessment year in which satisfaction is recorded would be from recorded would be from AY 2020-21 to 2015-16. The Ld. Counsel for the assessee submitted that 16. The Ld. Counsel for the assessee submitted that 16. The Ld. Counsel for the assessee submitted that in all the assessment years assessment assessment years assessments were already completed, and therefore, same , and therefore, same being unabated assessment unabated assessments no addition could have been made without no addition could have been made without the aid of the incriminating material. aid of the incriminating material. The ld DR has not disputed that all those The ld DR has not disputed that all those assessment year stand unabated. assessment year stand unabated. In this regard, the ratio of the decision of the In this regard, the ratio of the decision of the Hon’ble Bombay High court in the case of CIT vs Continental CIT vs Continental Hon’ble Bombay High court in th 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. Warehousing Warehousing Warehousing Corporation Corporation Corporation (Nhava (Nhava (Nhava Sheva) Sheva) Sheva) Ltd Ltd Ltd [58 [58 [58 taxmann.com 78] (BombayHC) taxmann.com 78] (BombayHC) is reproduced as under: is reproduced as under:
(i) On a plain reading of Section 153A of the Income (i) On a plain reading of Section 153A of the Income (i) On a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of the proceedings Act, it becomes clear that on initiation of the proceedings Act, it becomes clear that on initiation of the proceedings under Section 153A, it is only the assessment / Section 153A, it is only the assessment / Section 153A, it is only the assessment / reassessment proceedings that are pending on the date of reassessment proceedings that are pending on the date of reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition conducting search under Section 132 or making requisition conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the under Section 132A of the Act stand abated and not the under Section 132A of the Act stand abated and not the assessments/reassessments already finalised assessments/reassessments already finalised assessments/reassessments already finalised for those assessment years covered under Section 153A of the Act. assessment years covered under Section 153A of the Act. assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18 By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR 2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of (St) 61 at 107) the CBDT has clarified that on initiation of (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending proceedings under Section 153A, the proceedings pending proceedings under Section 153A, the proceedings pending in appeal, revis in appeal, revision or rectification proceedings against ion or rectification proceedings against finalised assessment/reassessment shall not abate. It is finalised assessment/reassessment shall not abate. It is finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments only because, the finalised assessments/reassessments only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending do not abate, the appeal revision or rectification pending do not abate, the appeal revision or rectification pending against finalised assessment/reassessments wo against finalised assessment/reassessments wo against finalised assessment/reassessments would not abate. Therefore, the argument of the revenue, that on abate. Therefore, the argument of the revenue, that on abate. Therefore, the argument of the revenue, that on initiation initiation initiation of of of proceedings proceedings proceedings under under under Section Section Section 153A, 153A, 153A, the the the assessments/reassessments finalised for the assessment assessments/reassessments finalised for the assessment assessments/reassessments finalised for the assessment years covered under Section 153A of the Income years covered under Section 153A of the Income years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. stand abated cannot be accepted. Similarly on annulment Similarly on annulment of assessment made under Section 153A (1) what stands of assessment made under Section 153A (1) what stands of assessment made under Section 153A (1) what stands revived is the pending assessment / reassessment revived is the pending assessment / reassessment revived is the pending assessment / reassessment proceedings which stood abated as per section 153A(1); proceedings which stood abated as per section 153A(1); proceedings which stood abated as per section 153A(1); (ii) Once it is held that the assessment has attained (ii) Once it is held that the assessment has attained (ii) Once it is held that the assessment has attained finality, then the AO finality, then the AO while passing the independent while passing the independent assessment order under Section 153A read with Section assessment order under Section 153A read with Section assessment order under Section 153A read with Section 143 (3) of the I.T. Act could not have disturbed the 143 (3) of the I.T. Act could not have disturbed the 143 (3) of the I.T. Act could not have disturbed the assessment / reassessment order which has attained assessment / reassessment order which has attained assessment / reassessment order which has attained finality, unless the materials gathered in the course of the finality, unless the materials gathered in the course of the finality, unless the materials gathered in the course of the 4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. proceedings under Section 153A of the Income dings under Section 153A of the Income dings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised establish that the reliefs granted under the finalised establish that the reliefs granted under the finalised assessment/ reassessment were contrary to the facts assessment/ reassessment were contrary to the facts assessment/ reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there unearthed during the course of 153A proceedings. If there unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any mat is nothing on record to suggest that any mat is nothing on record to suggest that any material was unearthed during the search or during the 153A unearthed during the search or during the 153A proceedings, the AO while passing order under Section proceedings, the AO while passing order under Section proceedings, the AO while passing order under Section 153A read with Section 143(3) cannot disturb the 153A read with Section 143(3) cannot disturb the 153A read with Section 143(3) cannot disturb the assessment order; assessment order;
The ratio of the Hon’ble Hon’ble Bombay High court in the case of Bombay High court in the case of Continental Warehousing Corporation sing Corporation(supra) has been upheld by the Hon’ble Supreme by the Hon’ble Supreme Court in the case of Abhisar Build Abhisar BuildWell P. Ltd. (supra). Thus, in view of . (supra). Thus, in view of the settled principle, no addition could have been made in case of the unabated no addition could have been made in case of the unabated no addition could have been made in case of the unabated assessment years in all the impugned all the impugned assessment years before us as n before us as not a single addition has been made on the basis of single addition has been made on the basis of incriminating material, and incriminating material, and therefore, following the finding of the Hon’ble Bombay High court in Abhisar the finding of the Hon’ble Bombay High court in Abhisar the finding of the Hon’ble Bombay High court in Abhisar Build Well Pvt. Ltd. (Supra) no addition could have been made in the (Supra) no addition could have been made in the (Supra) no addition could have been made in the relevant assessment years contested before us. Accordingly, additions made in all these assessment years contested before us. Accordingly, additions made in all these assessment years contested before us. Accordingly, additions made in all these appeals are hereby deleted and all the appeals are hereby deleted and all the relevant additional ground relevant additional ground raised by the assessee in all the assessments assessments is, accordingly, allowed. Since the additions in Since the additions in the impugned assessment orders already stand deleted, the regular grounds on ugned assessment orders already stand deleted, the regular grounds on ugned assessment orders already stand deleted, the regular grounds on merit are rendered academic and hence we are not required to adjudicate at merit are rendered academic and hence we are not required to adjudicate at merit are rendered academic and hence we are not required to adjudicate at this stage.
4295, 4297, 4298, 4300 & 4302/Mum/2024 4293, 4295, 4297, 4298, 4300 & 4302/Mum/2024 Ramee Hotels Pvt. Ltd. 14. In the result, the appeals of the assessee are allowed. In the result, the appeals of the assessee are allowed. Order pronounced in the open court on nounced in the open court on 11.12.2024.