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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI C.N. PRASAD
सुनवाई की तायीख / Date of Hearing : 16.06.2016 घोषणा की तायीख /Date of Pronouncement : 20.07.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:
The captioned appeal is filed by the Revenue and the Cross Objection is filed by the assessee for the assessment year 2005-06. Since, the issues raised in these appeals are inter-connected, therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed of in this consolidated order. Appeal wise adjudication is given in the following paragraphs of this order.
ITA No.5474/M/2014 (By Revenue)
This appeal filed by the Revenue on 28.8.2014 is against the order of the CIT (A)-39, Mumbai dated 24.6.2014 for the AY 2005-06. In this appeal, Revenue raised the following grounds which read as under:-
“1. Whether on the facts and circumstances of the case and in law, the Ld CIT (A) erred in holding that initiation of the assessment proceedings and completion of the assessment u/s 143(3) r.w.s 153A by the Assessing Officer as bad in law and without jurisdiction.
2. Whether on the facts and circumstances of the case and in law, the Ld CIT (A) erred in not deciding the issue on merit and allowing the appeal of the assessee without appreciating that the AO rightly added back the sum of Rs. 49,73,391/- on account of disallowance u/s 14A.
3. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in not deciding the issue on merit and allowing the appeal of the assessee without appreciating that the AO rightly added back the addition of Rs. 52,23,391/- to the book profit.
Whether on the facts and circumstances of the case and in law, the Ld CIT (A) erred in restricting carry forward of unabsorbed allowances.”
The core issue involved in this appeal is the validity of the additions made u/s 14A of the Act, unrelated to the searched material when it is a case of assessment u/s 153A of the Act in the context of un-abated assessment. In the present case, the assessment was completed u/s 143(3) of the Act before the action u/s 132 of the Act. In this regard, at the outset, Ld Counsel for the assessee mentioned that the CO becomes infructuous and academic if the order of the CIT (A) is confirmed dismissing the grounds raised
by the Revenue. Therefore, we take up the Revenue’s appeal on the issue of additions made u/s 14A of the Act.
4. This is the case of assessment u/s 143(3) of the Act. Earlier, the scrutiny assessment was completed in regular course. In the re-assessment made u/s 153A of the Act, Assessing Officer made a disallowance u/s 14A of the Act amounting to Rs. 49,73,391/-. It is an admitted fact that no incriminating material was cited by the AO in the assessment order to back up the above disallowance. Considering these facts, CIT (A) granted relief as per the discussion given in para 9 of her order dated 24.6.2014.
5. After hearing both the parties, we have perused the orders of the Revenue Authorities in general and the said para 9 of the CIT (A)’s order in particular. We find, the same is relevant here. Considering the significance of the said para 9 of the CIT (A)’s order for the sake of completeness of this order, the same is extracted as under:- “9. In view of the above discussion, following the decision of the Special Bench of the Hon’ble Mumbai Tribunal in case of All Cargo Global Logistics Ltd vs. Deputy CIT (18 ITR 106) (SB) it is held that in the instant case, the Assessing Officer did not have power to make any addition or restriction in absence of incriminating material. Therefore, it follows that both the additions made by the Assessing Officer to the income and book profit and