DCIT 9(1)(2), MUMBAI vs. ARTEK SURFIN CHEMICLS P.LTD, MUMBAI
What did the Tribunal hold?
The Tribunal found that the AO's observations regarding the allocation of expenses between sister concerns were not properly substantiated, and the CIT(A) had contradictory findings. Therefore, the Tribunal decided to remand the appeals back to the AO for fresh examination.
What were the facts?
The Revenue appealed against the orders of the CIT(A) concerning two assessees for AY 2011-12. The Revenue contended that the Assessing Officer (AO) made additions without appreciating that expenses booked by one assessee related to another, and that the AO failed to provide adequate opportunity before invoking Section 145(3).
What were the issues?
Whether the AO properly investigated the allocation of expenses between related entities and if adequate opportunity was provided to the assessee before invoking Section 145(3).
Which sections of the Income-tax Act were involved?
Section 145(3),Section 10AA(9),Section 80IA(10)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri JOGINDER SINGH, & Shri G. MANJUNATHA
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
आदेश / O R D E R
Per Joginder Singh (Judicial Member) Both these appeals are by the Revenue with respect of different assessees for A.Y. 2011-12 challenging the orders of the learned first appellate authority, both dated 28.04.2015. by the learned CIT(A) that no inquiries were made during assessment proceedings without appreciating that the assessee booked expenses relating to AEPL.
In the impugned order has been challenged wherein it was held that Assessing Officer failed to provide opportunity to the assessee before invoking the provisions of section 145(3) ignoring that adequate opportunity of hearing was provided to the assessee and further did not appreciate the provisions of section 10AA(9) r.w.s 80IA(10) applicable to the facts of the present appeal and working of the deduction accordingly.
During hearing the learned DR invited our attention to various paras of the assessment order as well as the impugned orders. It was claimed that the assessee company booked various expenses, which actually pertained to AEPL and the details of allocation of expenses of both ASCL and AEPL were not filed. Our attention was invited to the observation made in para 4.3 onwards of the assessment order (ITA No.4415/M/2015). Simultaneously, our attention was invited to the observation made in para 3.5 and 3.7 (page 11) of the impugned order. In reply, the learned counsel for the assessee contended that the learned CIT(A) gave opportunity to the Assessing Officer which was not availed therefore, there is no mistake in the finding of the learned CIT(A) and the claimed relief was denied by the learned Assessing Officer merely on the basis of doubt. It was also claimed that the share holders/ Directors of both the assessees are different therefore the observation made in the assessment order is incorrect.
We have considered the rival submissions and perused the material available on record. It is noted in para 4.3 (ITA No.4415/M/2015) that there is observation by the learned Assessing Officer that both the assessees are sister concern and various expenses claimed in AEPL actually pertained to sister concern and the details of allocation of expenses of both the assessees such as advertisement and sales promotion expenses, Director’s remuneration etc., were not properly booked. In para 4.4 the claim of the assessee was contradicted with respect to employees also by the learned Assessing Officer. There is observation in para 4.4 (b) of the assessment order that there are other 126 employees at the head office of the assessee, who looks after the other departments also and has also compared the turnover.
There is further observation that head office of both the companies is located at same premises whereas in the impugned orders there is contradictory finding and it has been mentioned in para 3.8 that no field inquiries were conducted by the learned Assessing Officer and the addition was made merely on the basis of suspicion. Considering the totality of facts, we deem it appropriate that both the appeals be sent to the file of the learned Assessing Officer to examine the claim of the assessee afresh and decide in accordance with law. The assessee be given opportunity of being heard with further liberty to substantiate its claim with documentary evidence, if any, thus both the appeals of the Revenue are allowed for statistical purposes only.
Finally the appeals of the Revenue are allowed for statistical purposes only.
This Order was pronounced in the open court in the presence of learned representatives from both sides at the conclusion of the hearing on 6th February, 2018.
More judgments on Section 145(3)
- M/S. Sarvesh Mercantile Private Limited… vs DCIT Central Circle 2(1), MumbaiITA 1952/MUM/2026[2015-16]Status: Disposed15 Oct 2026AY 2015-16
- M/S. Sarvesh Mercantile Private Limited… vs Deputy Commissioner of Income Tax, Central…ITA 1951/MUM/2026[2014-15]Status: Disposed15 Oct 2026AY 2014-15
- M/S. Sarvesh Mercantile Private Limited… vs Deputy Commissioner of Income Tax, Central…ITA 1950/MUM/2026[2013-14]Status: Disposed15 Oct 2026AY 2013-14
- Assistant Commissioner of Income-Tax… vs Pacifica India Projects Private Limited…ITA 2336/AHD/2026[2020-21]Status: Disposed13 Oct 2026AY 2020-21
- Assistant Commissioner of Income-Tax… vs Pacifica Builders Private Limited, AhmedabadITA 2335/AHD/2026[2020-21]Status: Disposed13 Oct 2026AY 2020-21
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