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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI D.T. GARASIA & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-49, Mumbai and arises out of the assessment completed u/s 143(3) r.w.s 153A of the Income Tax Act 1961, (the ‘Act’).
2. The only ground filed by the Revenue in this appeal is that the Ld. CIT(A) erred in deleting the addition of Rs.2,41,72,654/- on account of long term capital gain relying on the decision of the Bombay High Court in the case of All Cargo Global Logistic Ltd. without appreciating the facts that the above said decision of the High Court has not been accepted by the department and SLP has been filed in the Supreme Court and the same is pending.
Briefly stated, the facts of the case are that the assessee filed her return of income u/s 139 for the AY 2010-11 on 25.07.2010 declaring total income at Rs.1,63,480/-. A search and seizure action u/s 132(1) was conducted in the Bharti Shipyard group of cases by the Income Tax Department on 24.11.2011. The assessee, being an entity connected to Bharti Shipyard group was also covered in the said search and seizure action. In compliance to the notice u/s 153A (1) (a), the assessee filed her return of income on 16.05.2013 declaring total income of Rs.1,63,480/-. During the year, the assessee had sold her 50% share in residential flat at Pallonji Mansion for consideration of Rs.4,74,00,000/- and computed the capital gains of Rs.2,87,79,106/- after reducing indexed cost of acquisition and cost of improvement. To claim exemption from capital gains tax, the assessee made investment u/s 54 as follows: Sr. Nature of Investment Amount No. Invested Rs.
Amount invested in purchase of Land and 85,00,000/- building a Pangoli Lonavala 2. Amount deposited in SBI capital Gain deposit 2,11,00,000/- Scheme Total amount invested under section 54 2,96,00,000/- In the assessment order, the AO has made the following additions with respect to income from capital gains: 1. In absence of proof of registration and other charges and documents for cost of improvement of the flat sold, the same is disallowed;
In absence of proof of registration and other charges paid for purchase of Land at Pangoli, Lonavala, the same is disallowed. The AO allowed the claim of the assessee made with respect to the amount invested in purchase of land and building at Pangoli, Lonavala but disallowed the claim made on amount invested in purchase of flat at 21, Moti Mahal, Churchgate, Mumbai -400020 on the following grounds:
1. The assessee is entitled for exemption u/s 54 only for one house property.
2. The assessee, by investing in land and building at Pangoli, Lonavala, made her choice of the asset for claiming exemption u/s 54.
3. The amount deposited in capital gain scheme has been utilized for investment in property other than land and building at Pangoli, Lonavala.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). We find the Ld. CIT(A) has held: “I find that the appellant has filed return of income u/s.139 for A.Y. 2010-11 on 25.07.2010 declaring total income of Rs163,480/-. No notice u/s. 143(2) has been issued till the expiry of the time prescribed u/s 143 to issue such notice i.e. upto 30.9.2011. Search was conducted u/s. 132(1) in the case of the appellant on 24/11/2011. Thus, the return of income of the appellant can be treated as having been accepted and attained finality. As a result, no assessment would be pending on the date of search i.e. 24/11/2011 and therefore, the assessment for this assessment year had not abated. Reliance is placed on the decision of the ITAT Delhi ‘F’ Bench in the case of PACL India Ltd vs. ACIT, Central Circle-4, Delhi in wherein it was held that the time period for issuing notice u/s 143(2) was already expired prior to the date of search. Therefore, the proceedings do get abated by virtue of proviso to section 153A.
The appellant has submitted that no incriminating material has been found during the course of search to justify the additions made in the assessment order u/s 153A of the Act. I find that the A.O. has made addition of Rs.241,72,654/-, as noted in para 10.1, 10.2 and 10.3 above, without making reference to any incriminating material, found as a result of the search. The additions and disallowances have been worked out on the basis of details filed by the assessee and AIR information available with the AO. in view of the decision of the Special bench of ITAT, Mumbai, in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287(SB)(Mum), as discussed in para 6.2 above, for A.Y.2009-10, since the assessment had not abated for A.Y.2010-11 there is no justification for making additions amounting to Rs.2,41,72,654/- without the foundation of any incriminating material emanating from these search proceedings. Therefore, I am of the considered opinion that the above said additions of Rs.2,41,72,654/- was not justified and the same are deleted . This ground is allowed.”
Before us, the Ld. DR supports the order passed by the AO whereas the Ld. counsel of the assessee relies on the order passed by the Ld. CIT(A).
We have heard the rival submissions and perused the relevant materials on record. Even in the case of CIT vs. Gurinder Singh Bawa (2016) 386 ITR 483 (Bom), the assessment was u/s 143(1) and the Hon’ble High Court held that the scope of assessment after search u/s 153A would be limited to the incriminating evidence found during the search and no further. The Hon’ble High Court has followed the ratio laid down in CIT vs. Continental Warehousing Corporation (2016) 374 ITR 645 (Bom). Recently, the above position of law has been reiterated by the Hon’ble Bombay High Court in CIT vs. SKS Ispat & Power Ltd. (ITA No. 1874 of 2014 dated 12.07.2017).