DCIT CC 7(2) , MUMBAI vs. SHRI NITESH SHAHRA, MUMBAI
Facts
A search and seizure operation was conducted on the Ruchi Soya Group. The Assessing Officer (AO) reassessed the assessee's income under section 143(3) r.w.s 153A, making additions for Long-term Capital Gain and perquisite on interest-free loan. The CIT(A) deleted these additions.
Held
The Tribunal observed that for Ground No. 1, the issue regarding the sale of shares had already been decided in favour of the assessee by the ITAT and was pending before the High Court, with no incriminating material found. For Ground No. 2, it was held that no addition could be made without incriminating material found during the search.
Key Issues
Whether the Long-term Capital Gain on sale of shares should be treated as business income, and whether interest-free loans constitute a perquisite, in the absence of incriminating material found during search.
Sections Cited
132(1), 143(3), 153A, 260-A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI ABY T VARKEY, HON’BLE & SHRI S. RIFAUR RAHMAN, HONBLEShri Nitesh Shahra Dr. P. Daniel Shri S. Srinivasu
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B”, MUMBAI
BEFORE SHRI ABY T VARKEY, HON’BLE JUDICIAL MEMBER AND
SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER
ITA NO. 474/MUM/2022 (A.Y: 2010-11) DCIT – Central Circle – 7(2) v. Shri Nitesh Shahra Room NO. 655, Aayakar Bhavan Flat No. 102, 1st Floor 10 M.K. Road, Mumbai - 400020 Sharda Building, A-Road Churchgate, Mumbai - 400020 PAN: ABJPS2642E (Appellant) (Respondent) Assessee Represented by : Dr. P. Daniel Department Represented by : Shri S. Srinivasu
Date of conclusion of Hearing : 28.02.2024 Date of Pronouncement : 29.02.2024 O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the revenue against order of Learned Commissioner of Income-Tax (Appeals)-49, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 09.12.2021 for the A.Y.2010-11.
ITA NO. 474/MUM/2022 (A.Y: 2010-11) Shri Nitesh Shahra 2. Revenue has raised following grounds in its appeal: -
“i. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deciding the issue regarding treatment of Long-term Capital gain as business income of Rs. 17,47,41,080/- in favour of assessee and directed the AO to delete the addition of Rs. 17,47,41,080/- made in the impugned assessment order u/s 143(3) r.w.s 153A of the Act dated 09.03.2015 based on the decision of Hon'ble ITAT in ITA No. 624/Mum/2017, dated 17.10.2018 (in respect of the original assessment order u/s 143(3) dated 29.03.2013 in assessee's own case) ignoring the facts that the appeal of the revenue against the order of the Hon'ble ITAT in ITA No. 624/Mum/2017 was filed before Hon'ble Bombay High Court on the following substantial questions of law under section 260-A of the Income Tax Act, 1961 and the same is pending for adjudication: "Whether on the facts and the circumstances of the case, the Hon'ble ITAT was right in deleting the addition of Rs 18,53,69,866 from business income and treating the same as Long Term Capital Gain without appreciating the fact that the profit on sale of shares of RIL is out of manipulated transactions by the assessee and his associates and should be treated as Income from business or profession?" ii) On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deciding the issue regarding treatment of interest free loan as a perquisite amounting to Rs. 4,13,658/-in favour of assessee and directed the AO to delete the addition of Rs. 4,13,658/ made in the impugned assessment order u/s 143(3) r.w.s 153A of the Act dated 09.03.2015 ignoring the fact that the scope of assessment proceedings under section 153A of the Act is not limited to the incriminating material found during the search.
With regard to Ground No. 1 the relevant facts brought on record by both the parties are a search and seizure operation under section 132(1) of Income-tax Act, 1961 (in short “Act”) was conducted in the
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ITA NO. 474/MUM/2022 (A.Y: 2010-11) Shri Nitesh Shahra group case of Ruchi Soya Group on 29.01.2013. During the course of search the family members of the Directors of the group were also covered. Therefore, the assessee is one of the Directors in the group of companies was also covered during the search under section 132(1) of the Act and warrant of search was executed on the assessee also. After centralization of the case under section 127(2) of the Act, the case was assigned to the present Assessing Officer DCIT – Central Circle – 7(2) Mumbai. Accordingly, notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. In response, Authorised Representative of the assessee attended and submitted the relevant information as called for.
The Assessing Officer reassessed the income of the assessee under section 143(3) r.w.s. 153A of the Act and discussed the issue of surplus received on account of sale of 48 Lac shares of Ruchi Soya Industries Limited at ₹.17,47,41,080/-. After discussing the above transaction, he proceeded to conclude the assessment by considering the addition made under section 143(3) of the Act dated 29.03.2013 from the computation of total income, the Assessing Officer computed the total income as under: -
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ITA NO. 474/MUM/2022 (A.Y: 2010-11) Shri Nitesh Shahra Sr.NO. Heads of income Amount in ₹. Amount in ₹. 1. Income assessed as per order under ₹.18,68,82,140/- section 143(3) dated 29.03.2013 2. Add. Perquisite on loan as discussed ₹.4,13,658/- above Net Total Income ₹.18,72,95,798/- Rounded Off ₹.18,72,95,800/-
From the above, we observe that Assessing Officer has not made any fresh addition relating to sale of shares of Ruchi Soya Industries Limited. Since there is no incriminating material brought on record and the original assessment passed under section 143(3) is not abated and at the time of revised assessment proceedings under section 153A the issue of surplus received on account of sales of shares of Ruchi soya Industries Limited was pending before Ld. CIT(A) and subsequently Ld.CIT(A) upheld the order of the assessment order. Subsequently assessee preferred appeal before ITAT and ITAT has decided the issue in respect of original assessment in favour of assessee directing the Assessing Officer to treat the profit derived from sale of shares as Long Term Capital Gain as claimed by the assessee. Therefore, as far as the issue under consideration is already decided in favour of assessee and as of now pending before Hon’ble High Court. This fact was also brought on record in the grounds of appeal filed by the revenue. Therefore, as far as the additions made in Ground No. 1 is already
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ITA NO. 474/MUM/2022 (A.Y: 2010-11) Shri Nitesh Shahra decided and there is no incriminating material brought on record by the Assessing Officer. It is the same addition which was reconfirmed in the present revised assessment order. Therefore, Ground No. 1 raised by the revenue is Accordingly, dismissed.
With regard to Ground No. 2 which is in respect of treatment of interest-free loans as a perquisite amounting to ₹.4,13,658/-, we observe that the Ld. CIT(A) has observed that there is no incriminating material brought on record in this case and also no other incriminating material was brought on record even before us that certain incriminating materials were found in the search proceedings initiated in the case of the assessee. It is a settled positon of law that unless there is an incriminating material brought on record, no addition can be made in the assessment passed under section 143(3) r.w.s. 153A of the Act. Therefore, we do not see any reason to disturb the findings of the Ld.CIT(A) that where no incriminating material is found during the course of search the assessment under section 153 of the Act is to be made on original assessed / returned income and no addition or disallowance can be made de hors the incriminating evidences recovered during the course of search. Accordingly, we sustain the findings made by the Ld. CIT(A) in directing the Assessing Officer to delete the
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ITA NO. 474/MUM/2022 (A.Y: 2010-11) Shri Nitesh Shahra additions made in respect of interest-free loans as perquisite which was emanating from the return of income filed by the assessee. Accordingly, Ground No. 2 raised by the revenue is dismissed.
In the result, appeal filed by the revenue is dismissed.
Order pronounced in the open court on 29th February, 2024.
Sd/- Sd/- (ABY T VARKEY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 29/02/2024 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.
//True Copy// BY ORDER
(Asstt. Registrar) ITAT, Mum
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