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Income Tax Appellate Tribunal, “E” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Shri Pawan Singh (JM)
O R D E R Per B.R. Baskaran (AM) :-
All these appeals filed by the Revenue are directed against the orders passed by the learned CIT(A)-37, Mumbai and they relates to A.Y. 2005-06 to 2007-08. All these appeals were heard together and are being disposed of by this common order, for the sake of convenience.
In all these appeals the Revenue is aggrieved by the decision of the learned CIT(A) in deleting the additions made by the Assessing Officer by rejecting books of account.
Facts relating to the case are stated in brief. The assessee is engaged in the business of diamond trading and export. The assessee was subjected to search u/s. 132 and survey action u/s. 133A of the Act on 29.10.2010. Consequent thereto, present assessments were completed by the Assessing Officer u/s. 143(3) read with section 153A of the Act. During these years the assessee had local as well as export sale of diamonds. In respect of local sales,
2 Surendra C. Chaplot (Pro. of Siddhi Implex) the Assessing Officer asked the assessee to produce parties from whom the diamonds were purchased. Since the assessee could not produce the suppliers of diamonds or employees who had taken delivery of diamonds, the Assessing Officer took the view that the assessee has accounted for bogus sales by providing accommodation bills to its customers. Accordingly he rejected the books of accounts. He also took the view that the assessee might have earned commission income by giving accommodation entries to the customers, which he estimated at 0.5% of the local sales made. The Assessing Officer also disallowed part of expenses claimed by the assessee. After giving set off of gross profit declared by the assessee on the transactions of local sales, the Assessing Officer made net addition of ` 49.80 lakhs, ` 107.11 lakhs & ` 53.11 lakhs respectively in A.Ys. 2005-6, 2006-07 & 2007-08.
Aggrieved by the orders passed by the Assessing Officer in all these three years, the assessee filed appeals challenging the additions before the learned CIT(A).
The first appellate authority set aside the rejections of books of account and also deleted the additions made towards commission and disallowance of expenses. Aggrieved, the Revenue has filed these appeals before us.
At the time of hearing learned AR raised a legal ground under Rule 27 of the ITAT Rules, by placing reliance on the decision rendered by Hon'ble Jurisdictional Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (374 ITR 645). The learned AR submitted that the Assessing Officer could not have made impugned additions in these three years, since these three years fall under the category of unabated assessment years as per the provisions of sec. 153A and further no incriminating material relating to the impugned additions was found during the course of search. When the legal ground was put to learned Departmental Representative, he sought time to seek a report in this regard from the Assessing Officer. Accordingly, CIT-DR obtained report dated 06-02-2017 from 3 Surendra C. Chaplot (Pro. of Siddhi Implex)
the Assessing Officer, wherein he has submitted that there were no incriminating documents found during the search relating to additions made in these three years.
The Assessing Officer has also reported that there is no requirement of any incriminating materials for making additions in 153A assessment proceedings and further reported that the Department has challenged the decision of Hon'ble Bombay High Court rendered in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). In our view, the above said observations of AO are beyond the scope of query raised by the Bench and hence we ignore them in view of the binding decision of Hon’ble Bombay High Court, referred above.
We heard the parties on this legal issue and perused the record. In view of the report submitted by the Assessing Officer, there is no dispute with regard to the fact that impugned assessment years fall under the category of unabated assessment years. Since the Department did not unearth any incriminating material relating to additions made by the Assessing Officer in these three years in the assessments completed u/s. 153A of the Act, the said additions are liable to be deleted as per the decision rendered by Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein it was held that addition can be made in the case of unabated assessment years only on the basis of incriminating material found during the course of search. We notice that the Ld CIT(A) has deleted the additions on merit. In view of the above, we affirm the orders passed by the learned CIT(A) on legal ground by following the decision rendered by the Bombay High Court in the case referred supra.
4 Surendra C. Chaplot (Pro. of Siddhi Implex)
In the result, all three appeals filed by the Revenue are dismissed.
Order has been pronounced in the Court on 8.11.2017.