MOEBIUS TRADE P LTD, MUMBAI vs. THE ADDITIONAL CIT , DELHI

This appeal by the Assessee is directed against the order dated 23.02.2023 of Commissioner of Income Tax(Appeal), for Assessment Year 2018-19. The assessee has raised following grounds of appeal:

“1. That the Learned CIT(A) erred in dismissing the appeal filed by the appellant for non-prosecution and thereby confirming the addition made by the Ld. Assessing Officer. That on the facts and in the circumstances of the case, the said dismissal of appeal is wrong and bad in law and it is prayed that the order of the Ld. CIT(A) may very kindly be set aside.

ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. 1.1 As an alternate and without prejudice to above it is prayed that the Ld. CIT(A) may very kindly be directed to give another opportunity of being heard to the appellant and pass the order on merits of the case.

2. That the Learned CIT(A) in effect by dismissal of appeal, erred in upholding the action of the AO of passing the assessment order even when the assessment for this year ought to be abated in view of the search conducted. That on the facts and in the circumstances of the case, the assessment order passed is bad in law and is prayed to be set aside.

7. That the Learned CIT(A) in effect by dismissal of appeal, erred in upholding the action of the AO of disallowing the claim of interest paid to bank of Rs. 45,66,141/-. That on the facts and in the circumstance of the case, the said claim of interest paid by the appellant to the bank is proper and the addition made is wrong and bad in law and is prayed to be deleted.

8. That the Learned CIT(A) in effect by dismissal of appeal, erred in upholding the action of the AO of making addition of Rs. 241,71,80,142/- ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. by treating the advances given as unexplained expenditure u/s 69C of the Act and thereby charging the same to tax u/s 115BBE of the Act. That on the facts and in the circumstance of the case, the addition made is wrong and bad in law and is prayed to be deleted.”

3. On the other hand, Ld. DR has submitted that the CIT(A) has specifically mentioned that the AO has not mentioned anything about search in the assessment order and therefore, it is only a matter of record to be verified. He has relied upon the orders of the authorities below.

4. We have considered rival submissions as well as relevant material on record. The assesse has raised the grounds against the validity of the assessment order passed by the AO firstly that the assessment order is passed against non-existing entity and secondly that the assessment was got abated in view of the search and seizure action u/s 132 of the Act on 18.02.2021 and hit by first proviso to section 153A of the Act. At the outset, we note that the assessee has also raised these objections before the CIT(A) in ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. ground no.1 & 2 which are reproduce in the impugned order as under: “1. On the facts and the circumstances of the appellant's case and in law, the Ld. Assessing Officer erred in passing the assessment order which is illegal, bad- in-law and void ab- initio for want of jurisdiction.

2. On the facts and the circumstances of the appellant's case and in law, the Ld. Assessing Officer erred in passing the assessment order despite the fact that the assessment for the year under consideration stands abated in view of I" Proviso to section 153A of the Act,”

5. Thus, it is clear that the assesse challenged the jurisdiction of the AO to frame the assessment but the CIT(A) has rejected those grounds by observing in para 3.1.2 as under:

“3.1.2 I find that there is no mention of search and seizure proceedings on Daga group on 18.02.2021 in the assessment order. Whether warrant of authorization u/s 132 of the Act was executed on the appellant, the assessment order is silent on this fact. During appellate proceedings, despite several opportunities as elaborated in para 1.2 of this order, the appellant has not submitted copy of panchnama drawn in its case. Therefore, it is not ascertainable that the warrant of authorization u/s 132 of the Act was executed during the search and seizure proceedings on Daga Group of Betul and the appellant. In para 5 of the statement of facts, the appellant itself has stated that 'Thus, vide said letter, the appellant had also stated that to the knowledge of the appellant, his case is also covered under the search and thereby he had requested to drop the assessment proceedings as the said proceedings stands abated in view of the first proviso to section 153A of the Act. On perusal of the above submission, I find that the appellant itself was 7 not sure whether warrant of authorization u/s 132 of the Act was ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. executed in its case. In absence of any conclusive proof, the claim of the appellant that the assessment proceedings were become abated cannot be accepted. The appellant failed to file evidences in this regard in the course of appellate proceedings. In the circumstances, claim of the appellant remains unsubstantiated. Unsubstantiated claim cannot be entertained. Therefore, I find no merit in the above grounds of appeal. Accordingly, appeal on the above grounds is dismissed.”

6. It is pertinent to note that the search and seizure action is a matter of record ought to have been verified by the CIT(A) by calling report from the AO. It is an action taken by tax authorities and particularly investigation wing of the department u/s 132 of the Act which could have been very well verified by the CIT(A) but instead of taking any steps to ascertain the fact of search and seizure action in case of the assesse he has simply dismissed the grounds merely on the basis that the AO has not mentioned in the assessment order about the search. On the directions of the bench Ld. AR of the assesse has filed copy of the assessment order passed u/s 153A of the Act dated 29th September 2022 which establishes that during the pendency of the assessment proceedings u/s 143(3) a search and seizure action was carried out u/s 132 of the Act on 18.02.2021 in case of Moebius Credit & Capital Pvt. Ltd which is an entity after the merger of the assessee on 21st August 2019. The AO

ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. has also recorded the fact about the history of the assesse company in para 3 as under:

“3. The assesse, a Pvt. Ltd company, is into the business of dealing in on its own account or as commission agents or otherwise of all kinds of oils including synthetic, edible, non- edible, refined oils, deodorized and hydrogenated oils, vegetable oils etc. The assesse is also carrying on business of trading in commodities and agricultural products and work as investor and/or hedger in all commodities, commodity derivatives and agricultural products. On 19-01-2018, the company was merged with M/s. Moebius Credit and Capital Private Limited as per NCLT Order.”

ITANo.187/Ind/2023 Moebius Trade Pvt. ltd.

ITANo.187/Ind/2023 Moebius Trade Pvt. ltd. 18.02.2021 and assessment for the year under consideration was pending on that date consequently the same got abated in view of the second proviso to section 153A(1) which reads as under: “Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this[sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate”

Order pronounced in the open court on 21 .12.2023.