DCIT CC 7(2) , MUMBAI vs. SHRI NITESH SHAHRA, MUMBAI

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 (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: -

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

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 (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.