DCIT, C-III, LUDHIANA vs. M/S SEL MANUFACTURING CO. LTD., LUDHIANA

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ITA 301/CHANDI/2018Status: DisposedITAT Chandigarh28 November 2018AY 2008-096 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the Assessing Officer merely retained additions from the original assessment and the CIT(A) had already restricted the disallowance in the first round, and the Revenue's appeal was dismissed, there was no grievance left for the assessee. The Revenue's appeal was dismissed due to low tax effect.

What were the facts?

The assessee's original assessment involved a disallowance under Section 36(1)(iii). After a search, the AO framed assessment under Section 153A, retaining the original disallowance amount. The CIT(A) had previously restricted this disallowance in the original assessment appeal, and the Revenue's appeal against that order was dismissed.

What were the issues?

Whether the assessment framed under Section 153A was valid when no new additions were made, and the validity of retaining a disallowance that was previously restricted by the CIT(A) and confirmed by the ITAT.

Which sections of the Income-tax Act were involved?

Section 153A,Section 36(1)(iii),Section 143(3)

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Heard together (2 matters)

ITA No. 155/CHD/2018
ITA No. 156/CHD/2018

Read from the judgment's own cause title. This page is filed under one of them.

आदेश/Order

Per Sanjay Garg, Judicial Member:

The captioned cross appeals have been preferred by the assessee and

Revenue against the order of the Commissioner of Income Tax (Appeals),

Jalandhar [hereinafter referred to as CIT(A)]. First, we shall deal with the appeal of the assessee in ITA No. 155/Chd/2018.

ITA No. 155/Chd/2018 2. The assessee in this appeal has taken two grounds. Ground No.1 is

legal ground agitating the action of the CIT(A) in upholding the action of

the Assessing officer in framing assessment u/s 153A of Income-tax Act,

1961 (in short 'the Act'). Ground No.2 is on merits, agitating the action of

the CIT(A) in upholding the disallowance of Rs. 5,52,000/- u/s 36(i)(iii) of

the Income Tax Act which was already disallowed by the assessee in the

return of income filed u/s 153A of the Act.

3.

The brief facts of the case are that the original assessment in this

case was framed u/s 143(3) of the Act, wherein, the Assessing officer has

made disallowance of Rs. 49,00,926/- u/s 36(1)(iii) of the Act. However,

in appeal, the Ld. CIT(A) restricted the said disallowance to Rs.5,52,000/-.

Thereafter, a search action was carried out in the case of the assessee

pursuant to which the assessment was framed by the Assessing officer u/s

153A of the Act. In the fresh assessment u/s 153A of the Act, the

Assessing officer again confirmed the disallowance u/s 36(i)(iii) of the Act

ITA Nos. 155-301-156-C/2018 M/s SEL Manufacturing Co Ltd., Ludhiana 3

at Rs. 49,00,926/- despite the fact that in appeal against the original

assessment framed by the Assessing officer, the Ld. CIT(A) had restricted

the said disallowance to Rs. 5,52,000/-. The Assessing officer observed

that the Department had moved an appeal before the ITAT against the order

of the CIT(A) against the original assessment order, hence he sticked to

the amount of original disallowance made on this issue in the assessment

order.

4.

The Ld. Counsel for the assessee has brought our attention to the

order of the Tribunal passed in the appeal of the Department in respect of

the addition made in the original assessment proceedings, whereby, the

Tribunal vide order dated 7.02.2017 passed in ITA No. 106/Chd/2012

along with other appeals has upheld the order of the CIT(A) in restricting

the disallowance to Rs. 5,52,000/- against the disallowance made by the

Assessing officer of Rs. 49,00,926/-. Since the Assessing officer in the

assessment framed u/s 153A of the Act had reconfirmed the disallowance

made of Rs. 49,00926/-, as was made in the original assessment

proceedings u/s 143(3) of the Act, the assessee preferred appeal before

the CIT(A). However, the Ld. CIT(A) observing that the appeal of the

Revenue against the order of the CIT(A) in respect of original assessment

proceedings has been dismissed, he therefore, restricted the disallowance

as per the order of the CIT(A) in first round at Rs. 5,52000/-.

5.

Now coming to the present appeal of the assessee. So far as the legal

ground that the assessment should not have been framed u/s 153A of the

Act is concerned, we find that no addition has been made by the Assessing

ITA Nos. 155-301-156-C/2018 M/s SEL Manufacturing Co Ltd., Ludhiana 4

officer in this case. That he has simply retained the additions as were

made in the original assessment. So far as the order of the CIT(A) in the

first round restricting the disallowance at Rs. 5,52,000/- as against the

addition made by the Assessing officer at Rs. 49,00,926/- is concerned,

the Ld. CIT(A) in the impugned order has simply retained the disallowance

which was retained by the CIT(A) in the first round. The assessee has

also mentioned in its grounds of appeal that he has also suo moto

disallowed the said amount in the return filed u/s 153A of the Act. Under

these circumstances, there is no grievance left with the assessee in this

case. However, it is clarified that if the assessee has already disallowed

the said amount of Rs. 5,52,000/- in the return filed u/s 153A of the Act,

no further disallowance will be attracted. Subject to the above

observations, the appeal of the assessee is hereby dismissed.

ITA No. 301/Chd/2018 (A.Y.2008-09)

6.

At the outset, the Ld. Counsel of the assessee has submitted that the

tax effect involved in the present case is less than Rs. 20 lacs. The Ld. DR

has also fairly admitted that CBDT Circular No. 3/2018 is applicable to

this appeal, hence, this appeal of the Revenue is liable to be dismissed.

7.

It may be noted that CBDT vide Circular No. 3/2018 dated

11.07.2018 has revised the monetary limit upto Rs.20 lacs for filing

appeals by the Department before the Tribunal and further vide para 13 of

the said Circular it has been clarified that said circular is applicable

retrospectively to the pending appeals also. The Hon’ble Punjab &

Haryana High Court in the case of “Principal CIT of Income Tax Vs.

Surinder Kumar Singhal” ITA No 406-2016 (O&M) vide order dated

30.1.2017 while further relying upon the decision of the Hon'ble Supreme

ITA Nos. 155-301-156-C/2018 M/s SEL Manufacturing Co Ltd., Ludhiana 5

Court in the case of “CIT Vs. Dhanalekshmi Bank Ltd.” (2015) 373 ITR

526 (SC), has dismissed the appeal of the Revenue without going into the

merits due to low tax effect leaving the question of law open. In view of

the CBDT Circular No. 03/2018 (supra) and in the light of the above

referred to decision of the Hon'ble Jurisdictional Punjab & Haryana High

Court (supra), the present appeal of the Revenue is dismissed due to low

tax effect.

It is, however, clarified that the dismissal of the above appeal shall

not be taken to be affirmation of the order of the CIT(A) on merits. The

legal issue raised by the Revenue is being left open to be adjudicated in an

appropriate case.

ITA No. 156/Chd/2018 (A.Y.2009-10)

8.

At the outset, Ld. Counsel for the assessee has submitted in

writing that the assessee is not interested in pursuing the appeal, as

such, he intends to withdraw the present appeal. The Ld. DR has no

objection for the said withdrawal.

In view of the above, we grant permission to the assessee to

withdraw the appeal. Consequently, the appeal of the assessee is hereby

dismissed as ‘Withdrawn’.

In the result, the appeals filed by the assessee and Revenue are

hereby, dismissed.

Order pronounced in the Open Court on 28.11.2018.

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member

ITA Nos. 155-301-156-C/2018 M/s SEL Manufacturing Co Ltd., Ludhiana 6

Dated : 28.11.2018 “आर.के.”

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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