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Income Tax Appellate Tribunal, “G” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Ravish Sood(JM)
Both the appeals, filed at the instance of the revenue, are directed against the common order dated 23-05-2016 passed by Ld CIT(A)-49, Mumbai and they relate to the assessment year 2007-08 and 2008-09. The assessments were completed u/s 143(3) r.w.s. 153A of the Act consequent to search operations. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition relating to Income from house property and disallowance made u/s 14A of the Act on the ground that the impugned assessment years are unabated assessments and no incriminating material relating thereto was found during the course of search operations.
We heard the parties and perused the record. The assessee was subjected to search operations on 29-08-2011 and consequently the present assessments were completed u/s 143(3) r.w.s. 153A of the Act. It is pertinent to note that the assessments u/s 143(3) of the Act was completed on 05-10- 2009 for assessment year 2007-08 and on 22.12.2010 for assessment year
2 Shri Rakesh Jhunjhunwala 2008-09, i.e., regular assessments were completed before the commencement of search operations, meaning thereby, the regular assessments would not abate as per the provisions of sec. 153A of the Act.
The assessing officer determined income from house property for a property located at Lonavala at Rs.10,32,152/- in both the years and assessed the same. The AO also computed disallowance u/s 14A of the Act at Rs.1,00,50,477/- and Rs.2,38,64,632/- respectively in AY 2007-08 and 2008- 09. Before Ld CIT(A), the assessee raised a legal ground, i.e., the assessing officer could not have made these additions without any incriminating materials, since the original assessment orders passed for these two years would not abate as per the provisions of sec. 153A and hence the additions could be made in these two years only on the basis of incriminating materials found during the course of search. The assessee placed reliance on the decision rendered by the Hon’ble Bombay High Court in the case of Continental warehousing (Nhava Shewa) & All Cargo logistics (374 ITR 645) in support of his contentions. The Ld CIT(A) called for a remand report from the assessing officer, wherein the AO also confirmed that no incriminating materials relating to the additions made in these two years were found during the course of search. Accordingly the Ld CIT(A) deleted the additions by following the decision rendered by the Hon’ble jurisdictional Bombay High Court in the case of Continental warehousing (Nhava Shewa) (supra). For the sake of convenience, we extract below the operative portion of the order passed by Ld CIT(A):- 7.0 I have carefully examined the facts of the case, the stand taken by the A.O in the assessment order and in the remand report, the grounds of appeal, the written submissions and further rejoinder filed by the appellant during the hearing proceedings.
7.1 I find that the original return of income was filed in this case on 31.10.2007 for AN 2007-08 and on 30.9.2008 for A.Y 2008-09 at total income of Rs. 8,4279,293/- for A.Y 2007-08 and Rs. 5,17,57,795/- for AN 2008-09. Assessment u/s 143(3) was 22.12.2010 respectively. Thus, assessment in both the cases were no pending and did not abate on the date of search i.e on 29.08.2011.
3 Shri Rakesh Jhunjhunwala
7.1.1 Thus, it is a case where the assessment for A.Y.2007-08 and 2008-09 were completed u/s.143(3)and no assessment was pending that could abate as per second proviso to sub-section (1) of section 153A. As per the decision of the special bench of ITAT, Mumbai in the case of All Cargo Global Logistics Ltd., assessment in the case which had not abated has to be made in the following manner : "In addition to the income that has already been assessed the assessment u/s.153A will be made on the basis of incriminating material, which in the context of relevant provisions means books of account, other documents, found in the course of search, but not produced in the course of original assessment, and undisclosed income or property disclosed in the course of search." This decision of the ITAT Special bench, Mumbai has been approved by the Hon'ble High Court of Mumbai in the case of All cargo Global Logistics Ltd 374 ITR 645(BOM).
7.2. The A.O. while making the assessment order has discussed the addition on account of disallowance of Rs.100,50,4771- u/s.14A for A.Y 2007-08 in para 5, 6.1 to 6.5 of the assessment order and Rs. 238,64,632/- u/s.14A for A.Y 2008-09 in para 5, 6.1 to 6.5 & 5.8 of the assessment order and income from house property at Lonavala of Rs.10,32,1521- in para 7 of the assessment order for A.Y 2007-08 and para 6 for A.Y 2008-09. From the perusal of the above said paras, it is evident that there is no reference to incriminating document or undisclosed income emanating from the search dated 29.08.2011. Further, in the remand report, the A.0 has submitted that no incriminating material was found in respect of Lonavala property and investment in said property was disclosed in the balance sheet. Therefore, relying on the decision of All Cargo Global Logistics Ltd., it is held that the additions of Rs.100,50,4771- for AN 2007- 08 and Rs.238,64,632/- for A.Y 2008-09 u/s.14A and of Rs.10,32,152/- under the head income from house property at Lonavala for A.Ys. 2007-08 and 2008-09 are without jurisdiction. Accordingly, these two additions are directed to be deleted on this legal ground for both the assessment years. Thus, ground No. 2 & 7 are allowed.”
Since the assessing officer has reported in his remand report that no incriminating material relating to the two additions made in these two years was found during the course of search operations, there is no dispute with regard to the factual aspects. On these factual aspects, we notice that the Ld CIT(A) has applied the law relating to section 153A explained by the jurisdictional Hon’ble Bombay High Court in the case referred supra, wherein it was held that the additions could be made in the case of unabated assessment years only on the basis of incriminating materials. Since there
4 Shri Rakesh Jhunjhunwala was no incriminating material relating to these two additions was found during the course of search, the ld CIT(A) has deleted the additions by following the decision rendered by Hon’ble Bombay High Court. Since the Ld CIT(A) has followed the binding decision of the jurisdictional High Court, we do not find any reason to interfere with the order passed by Ld CIT(A).
In the result, both the appeals filed by the revenue are dismissed. Order has been pronounced in the Court on 31.10.2017.