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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri J.D.Mistry & Satish Mody Department by: Shri H.M. Wanare सुनवाई क" तार"ख / Date of Hearing: 23.09.2016 घोषणा क" तार"ख /Date of Pronouncement: 21.10.2016 आदेश / O R D E R PER BENCH:
The revenue as well as assessee filed the above mentioned appeals and cross objection against the different orders passed by the Commissioner of Income Tax (Appeal) 40 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10. These appeals and cross objections are being taken up together for adjudication being the parties are the same and the matter of controversy is also same which can conveniently be adjudicated by a single order.
ITA NO.4291/M/2012 (A.Y.2003-04):-
The revenue has raised the following grounds:-
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of foreign travel expenses of directors at Rs.8,82,089/- as the I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 same were not incurred wholly and exclusively for the purpose of business.
2. On the facts and the circumstances of the case, the ld. CIT(A) erred in deleting the disallowance of expenditure in respect of VRS paid at Rs.43,43,280/- before the introduction of section 35DDA claimed at the rate of 1/10th for each year by the assessee.
3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition made on account of unaccounted commission expenses paid to Divya Textile Agency at Rs.11,94,852/-.”
The brief facts of the case are that the assessee filed the return of income declaring total loss to the tune (-) Rs.3,02,76,640/- on 01.12.2003. The assessment u/s.143(3) of the Income Tax Act, 1961 ( in short “the Act”) was completed on 28.11.2005 determining total loss to the tune of (-)Rs.3,00,34,350/-. The assessee company was having Textile units at Akola and Mumbai and paper unit at Gondia, Maharashtra. During the F.Y.2004-05 there were vesting of Textile and paper division to other companies and the name of the company was changed to M/s. Simplex Realty Limited w.e.f. 09.11.2005. A search and seizure action u/s.132 of the Act was carried out on 16.10.2008 and on subsequent dates on Simplex Group of Companies and its Associates. The office / residential premises of the company and its directors / connected persons were also covered. The Simplex Group is engaged in the business of reality, paper, textile and finance. The Group is managed by Shri Nandan S. Damani, Chairman and Managing Director of M/s. Simplex Reality Ltd. The allegation I.T.A. No.4291-4297/Mum/2012, I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 against this group was not offering full income for taxation, books of accounts are manipulated by recording lower sales proceeds / inflating expenses, the land property and other assets owned by the group are either not declared or under declared in the books, large sums of unaccounted cash in accepting by showing sale agreements at lower price and Shri Nandan Damani has spent large sums of unaccounted cash in reconstructing of his bungalow at Cuffe Parade and on the interiors. During the course of Search action various incriminating documents / books of account etc., were found and seized.
The search and seizure action u/s.132 of the Act was also conducted at the assessee’s premises 30, Keshav Khadye Marg, Sant Ghadge Maharaj Chowk, Mumbai 400011 vide Warrant of Authorization u/s.132 of the Act bearing No.6390 dated 14.10.2008. During the course of search, following jeweler, cash and documents were found / seized:- -4297/Mum/2012, I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 Sr. Premises Found Seized No. covered Jewellery Cash Documents Jewellery Cash Documents 1. M/s. Simplex Annex A-1 Annex A-1 Realty Ltd., to A4 dtd. to A4 dtd. 30, Keshav 16.10.08 16.10.08 Khadye Marg, A1 – Loose A1 – Loose Sant Ghadge Paper File Paper File Maharaj (containing (containing Chowk, 212 pages) 212 pages) Mumbai A2 – Loose A2 – Loose Nil 51,67,318 Paper File Nil 50,00,000 Paper File (containing (containing 63 pages) 63 pages) A3 – Loose A3 – Loose Paper File Paper File (containing (containing 74 pages) 74 pages) A4- A4- Computer Computer Data Data Backup in Backup in Hard Disk Hard Disk (two main (two main copies & copies & two two working working copy) copy) Annex.A1 Annex.A1 dt.11.12.08 dt.11.12.08 Loose Loose Paper File Paper File (containing (containing 6 pages) 6 pages)
Thereafter, proceeding u/s.153A of the Act was initiated and notice dated 19.01.2009 was also served upon the assessee in this regard. After the service of the said notice, the assessee filed the I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 return of income declaring total loss to the tune of (-)Rs.3,33,20,800/-. Thereafter the notice u/s.143(2) and 142(1) of the Act were also issued and served upon the assessee. After being giving proper opportunity of being heard, the assessment of the assessee was completed by declaring the loss to the tune of (-)Rs.1,70,80,931/-. Thereafter the assessee filed an appeal before the CIT(A) who partly allowed the appeal, therefore the revenue has filed the present appeal before us. However, the assessee has also filed the Cross objection by raising the question of validity of the assessment u/s.153A of the Act.
Under the issues raised by the assessee in his Cross Objection, the assessee has raised the question of the validity of order passed u/s.153A of the Act. However, on the other hand the learned departmental representative has refuted the said contention and argued that the Cross Objection has been filed by the assessee 431 days delay therefore the same is not liable to be entertain and the Cross Objection is liable to be dismissed. The assessee has raised the legal issues in his Cross Objection. Moreover, the appeal of the revenue is pending and we are of the view that on the point of the legal issues the Cross Objection is liable to be decided in the interest of justice. Therefore, the delay has been condoned specifically in the circumstances when the legal issue can be raised without filing the Cross Objection also. In this regard, we also found support of law settled in [2006] 154 Taxman 80 (MP) in case cited as Deputy Commissioner of Income I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 Tax Vs. Turquoise Investments & Finance Ltd. In view of the said circumstances the delay is hereby condoned and before going further we take up the issue in connection with the validity of the order in question passed u/s.153A of the Act. The learned representative of the assessee has argued that the authority has given approval u/s.153D without application of mind by virtue of letter No.Addl.C.I.T./Cen.Rg.-7/Approval 153D/2010-11/397 dated 31.12.2010, therefore in the said circumstances the assessment u/s.153A of the Act is not justifiable in view of the decision of ITAT, Mumbai in ITA No.4061/Mum/2012 titled as Smt. Shreelekha Damani Vs. DCIT(OSD-1) CR-7 dated 19.08.2015 and in ITA No.s136-137/Mum/2013 and 147-151/Mum/2013 in case titled as The Navbharat Refrigeration & Industries Ltd. Vs. DCIT (OSD-1) C.R.-7. On the other hand the learned representative of the department has strongly relied upon the finding of the CIT(A) in question. Before going further it is necessary to advert the contents of the letter on record:- 31st December 2010 To, The DCIT (OSD)-I Mumbai Sub:- Approval u/s.153D of draft order u/s.143(3) r.w.s.153A In the case of M/s. Simplex Realty Ltd. for A.Y.2009-10 I.T.A. No.4291-4297/Mum/2012, I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 Ref: No. DCIT(OSD)-I/CR-7/Appr./2010-11 dated 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s.153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analyze the issues of draft order on merit. Therefore, the draft order is being approved as it is submitted.
Approval to the above said draft order is granted u/s.153D of the I.T.Act, 1961. (Sandeep Kumar) Addl. Commissioner of Income Tax Central Range-7, Mumbai
On appraisal of the above mentioned letter it is quite clear that the approval has been given u/s.153D of the Act without application of mind. In this regard the ITAT, Mumbai has also delivered the order in titled as Smt. Shreelekha Damani Vs. DCIT(OSD-1) CR-7 dated 19.08.2015 and in ITA No.s136- 137/Mum/2013 and 147-151/Mum/2013 in case titled as The Navbharat Refrigeration & Industries Ltd. Vs. DCIT (OSD-1) C.R.-7.
Respectfully following the order of co-ordinate bench, we are of the view that the assessment u/s.153A of the Act is wrong against law and facts and is not liable to be sustained in the eyes of law, therefore the assessment order u/s153A of the Act dated 31.12.2010 is I.T.A. No.4291-4297/Mum/2012, I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 hereby ordered to be set aside. Since this legal issue has been decided in favour of the assessee against the revenue, therefore there is no need to give any finding raised by the revenue mentioned above because the same would be in academic in nature.
Accordingly appeal of the revenue is hereby order to be dismissed TO 4297/M/2012 (A.Y.2004-05 TO 2009-10):-
Under all these revenue’s appeals the brief facts of the cases are the same as mentioned in ITA 4291/Mum/2012, however the figure is quite different. While deciding the for the A.Y.2003-04, we have ordered to set aside the assessment u/s. 153A of the Act on the legal issues, therefore we set aside the assessment u/s.153A of the Act in the said assessment year. Accordingly the all the above mentioned appeals of the revenue are hereby ordered to be Dismissed. to 3830/M/2012 (A.Y.2008-09 TO 2009-10):
In both these assessee’s appeals the brief facts of the cases are the same as mentioned in ITA 4291/Mum/2012, however the figure is quite different. While deciding the for the A.Y.2003-04, we have ordered to set aside the assessment u/s. 153A of the Act on the legal issues, therefore we set aside the assessment I.T.A. No.4291-4297/Mum/2012, I.T.A.No.3829-3830/M/2012 C.O.No.151-155/Mum/2014 A.Y.: 2003-04 To 2009-10 u/s.153A of the Act in the said assessment year. Accordingly the both the appeals of the assessee are hereby ordered to be Dismissed.
C.O.151 TO 155/M/2014 (A.Y.2003-04 TO 2007-08):
In all the Cross objections of the assessee the brief facts of the cases are the same as mentioned in ITA 4291/Mum/2012, however the figure is quite different. While deciding the for the A.Y.2003-04, we have ordered to set aside the assessment u/s. 153A of the Act on the legal issues, therefore we set aside the assessment u/s.153A of the Act in the said assessment year. Accordingly all the Cross Objections of the assessee are hereby ordered to be Allowed.