M/S. HBM DAIRIES & ALLIED LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 1394/DEL/2013Status: DisposedITAT Delhi24 May 2018AY 2005-066 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, by majority view, held that additions made under section 153A for completed assessment years are not justified if no incriminating material was found during the search relating to those specific years. Consequently, the disallowance of losses and denial of carry forward benefits were incorrect.

What were the facts?

A search and seizure action was conducted on the assessee, leading to assessments under section 153A for assessment years 2004-05, 2005-06, and 2006-07. The Assessing Officer disallowed claims of losses for the first two years, and the CIT(Appeals) upheld these additions.

What were the issues?

Whether additions under section 153A are permissible for completed assessment years without incriminating material found during the search, and if the denial of carry forward of losses is justified in such cases.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 255(4)

AI-generated summary — verify with the full judgment below

ORDER U/S.255(4) OF THE I.T. ACT.

P E R B E N C H :

These three appeals are filed by the assessee against the separate orders of the learned Commissioner of Income Tax (Appeals)-XXXIII, New Delhi, dated 07.12.2012, for assessment years 2004-05, 2005-06 and 2006-07.

ITAs. 1393, 1394 & 1395 (Del) of 2013. 2

2.

The brief facts of the case is that assessee is a company engaged in trading in milk products and milk etc. Search and seizure action under section 132 of the Income Tax Act was carried out on M/s. HBN Group on 20.11.2009. Therefore, notice under section 153A of the Act was issued on 2.06.2011 and consequently the assessment under section 153A was framed for assessment year 2004-05. Similarly the assessments for assessment years 2005-06 and 2006-07 were also framed. The brief fact shows that original return for assessment year 2004-05 was filed on 1.11.2004 showing net loss of Rs.23,05,880/- and for assessment year 2006-07 at Rs.52,49,283/-. For all the assessment years carry forward losses were allowed. In response to the notice under section 153A the assessee submitted those returns wherein the Assessing Officer disallowed claim of losses for assessment years 2004-05 and 2005-06 and determined ‘NIL’ income. The appeals of the assessee before the learned CIT (Appeals) were dismissed. The assessee preferred appeals before the Co-ordinate Bench.

3.

The learned Accountant Member dismissed the appeal of the assessee for assessment year 2004-05. The learned Accountant Member held that even in respect of those assessment years in respect of which no incriminating material was un-earthed during search under section 132 of the act and even if no assessments or re-assessments are pending for those assessment years on the date of search, there is no legal obstacle in making

ITAs. 1393, 1394 & 1395 (Del) of 2013. 3 addition in assessment under section 153 of the Act provided some incriminating material in the case of the assessee for any other assessment years referred to in clause (b) of section 153A(1) is available as a result of search or by way of statement, by way of undisclosed investment or by way of incriminating documents or in any other manner.

4.

However, the learned Judicial Member disagreed with the above view expressed by the learned Accountant Member and held that in absence of incriminating material found during the course of search the authorities below were not justified in invoking section 153A of the Act for making the addition by disallowing the losses and not allowing the set off of brought forward losses.

5.

In view of the above difference of opinion, the matter was referred to the Third Member by the Hon’ble President under section 255(4) of the Act referring the following question :-

“ Whether on the facts and in the circumstances of the case and as per law, the learned CIT (Appeals) was justified in upholding the additions made by the AO for the years of completed assessments, which were not based on any incriminating material found during the course of search relating to such years and consequently denying the benefit of carry forward and set off of the resultant loss in subsequent year? ”

ITAs. 1393, 1394 & 1395 (Del) of 2013. 4

6.

The learned Third Member concurred with the views of the learned Judicial Member vide order dated 25.04.2018 and, therefore, this matter is now listed before us for passing an order in accordance with the majority view.

7.

According to the majority view, it is held that the amount of determined loss for the assessment years 2004-05 and 2005-06 be allowed to be carried forward for set off against the income for the assessment year 2006-07. Therefore, the learned CIT (Appeals) was not justified in upholding the additions made by the learned Assessing Officer for the years of completed assessments which were not based on any incriminating material found during the course of search relating to such year and consequently denying the benefit of carry forward and set off of the resultant loss in subsequent years.

8.

Therefore, in accordance with the majority view, the appeals filed by the assessee for all the three years are allowed.

The order is pronounced in the Open Court on: 24th May, 2018.

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