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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAVISH SOOD, JM Smt.
आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the revenue is directed against the order passed by the CIT(A)-49, Mumbai, dated 11.03.2016, which in itself arises from the order passed by the A.O under Sec. 143(3) r.w. Sec. 153A of the Income tax Act, 1961 (for short ‘Act’), dated 30.03.2014. The revenue had assailed before us the order passed by the CIT(A) on the following grounds of appeal:
P a g e | DCIT CC-7(1) Vs. Smt. Rekha Jhunjhunwala “1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in directing the A.O to delete the disallowance u/s 14A of Rs. 68,07,509/- made, relying on the decision of Bombay High Court in the case of All Cargo Logistics Ltd.(374 ITR 645) without appreciating the fact that the decision of the High Court has not been accepted by the department and SLP has been filed and the same is pending. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.”
Briefly stated, the facts of the case are that the assessee had filed her original return of income for A.Y 2008-09 on 30.09.2008, declaring total income of Rs.11,39,18,690/-. That regular assessment under Sec. 143(3) was framed in the case of the assessee on 22.12.2010 and the returned income was accepted.
Search and seizure action under Sec. 132(1) was carried out at the office and residential premises of M/s Maneesh Pharmaceuticals group on 29.08.2011. Being one of the associate members of the above group, the residential premises of the assessee were covered under the search and seizure action. The assessee in response to the notice issued under Sec. 153A requested that her original return of income filed on 30.09.2008 against which its income was assessed at Rs. 11,39,48,490 under Sec. 143(3), may be treated as the return of income filed in response to notice issued under Sec. 153A. The assessee thereafter filed the return of income in response to notice under Sec. 153A, declaring total income at Rs. 11,39,48,490/- on 05.06.2013.
That during the course of the assessment proceedings the A.O observed that the assessee had earned dividend income of Rs.3,89,42,949/- which was claimed as exempt. The A.O called upon the assessee to explain as to why disallowance under Sec. 14A r.w P a g e | DCIT CC-7(1) Vs. Smt. Rekha Jhunjhunwala Rule 8D in respect of expenses incurred for earning of the exempt income may not be made. The assessee submitted before the A.O that as the assessment for the year under consideration, viz. A.Y 2008-09 had been completed in her case prior to the date on which the search and seizure proceedings were initiated, therefore, keeping in view the fact that no incriminating material relating to disallowance under Sec. 14A was found during the course of the search & seizure proceedings, therefore, no addition in respect of such unabated assessment could be made. The assessee in support of her aforesaid contention relied on the order of the ITAT, Special Bench in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (SB) (Mum) and the CBDT Circular No. 7 of 2003, dated 05.09.2003. However, the A.O being of the view that as the decision of the special bench of ITAT, Mumbai had not been accepted by the department and was challenged before the Hon’ble High Court of Bombay, therefore, rejected the contention of the assessee. The A.O also declined to accept the contentions advanced by the assessee on merits and made a disallowance under Sec. 14A of Rs.68,07,509/- in the hands of the assessee.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) was persuaded to be in agreement with the claim of the assessee that as no incriminating material relating to disallowance under Sec. 14A was found during the course of the search & seizure proceedings, therefore, no addition in respect of the unabated assessment of the assessee for the year under consideration could have been made in the hands of the assessee. The CIT(A) while arriving at the aforesaid view observed that the order of the special bench of ITAT, Mumbai in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (SB) (Mum) was further affirmed by the Hon’ble High Court of Bombay in in the P a g e | DCIT CC-7(1) Vs. Smt. Rekha Jhunjhunwala case of CIT Vs. All Cargo Global Logistics Ltd., vide their order dated 27.04.2015 and the appeal of the revenue was dismissed. The CIT(A) on the basis of his aforesaid observations deleted the addition/disallowance of Rs.68,07,509/- made by the A.O under Sec. 14A for the year under consideration.
The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Departmental Representative (for short ‘D.R’) at the very outset of the hearing of the appeal submitted that as the revenue had not accepted the order of the Hon’ble High Court of Bombay in the case of CIT Vs. All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom), and had filed a Special Leave Petition (for short ‘SLP’) against the same, which is pending as on date, therefore, the CIT(A) had erred by loosing site of the said material fact while deleting the disallowance made by the A.O under Sec. 14A of the Act. The ld. Authorized Representative (for short ‘A.R’) relied on the order of the CIT(A) and submitted that as the issue was squarely covered by the judgment of the Hon’ble High Court of Bombay in the case of All Cargo Global Logistics Ltd.(supra), therefore, no infirmity did emerge from the order of the CIT(A) who had followed the judgment of the jurisdictional High Court.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present case has been sought to adjudicate as to whether the CIT(A) was right in law in deleting the disallowance of Rs.68,07,509/- made by the A.O under Sec. 14A by relying on the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom), or not. We find that it remains as a matter of a conceded fact that during the course of the search and seizure action P a g e | DCIT CC-7(1) Vs. Smt. Rekha Jhunjhunwala conducted on the assessee on 29.08.2011, no material whatsoever was found as regards the disallowance under Sec.14A. We find that the Hon’ble High Court of Bombay in the case of CIT Vs. All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom) had upheld the order of the special bench of the Tribunal, wherein it was observed that in the absence of incriminating material seized during the course of the search and seizure proceedings conducted under Sec. 132 of the Act, no addition in respect of an unabated assessment could be made. We are of the considered view that as the CIT(A) in the present case going by the rule of judicial discipline had followed the judgment of the Hon’ble High Court of Bombay in the case of All Cargo Global Logistics Ltd. (supra), therefore, no infirmity emerges from his order. We are of the considered view that though the revenue had not accepted the aforesaid order of the Hon’ble High Court of Bombay and had filed a SLP against the same, however, as the order of the Hon’ble High Court had not been stayed by the Hon’ble Supreme Court, therefore, the same holds the ground as on date. We thus finding ourselves to be in agreement with the view taken by the CIT(A) and finding no reason to dislodge the same, therefore, uphold his order.
The appeal filed by the revenue is dismissed. Order pronounced in the open court on 17.01.2018. Sd/- Sd/- (Rajendra) (Ravish Sood) ACCOUNTANT MEMBER JUDICIAL MEMBER भुंफई Mumbai; ददनांक 17.01.2018 Ps. Rohit Kumar P a g e | DCIT CC-7(1) Vs. Smt. Rekha Jhunjhunwala