G.S.AUTO INTERNATIONAL LIMITED,LUDHIANA vs. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, LUDHIANA, LUDHIANA

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ITA 391/CHANDI/2023Status: DisposedITAT Chandigarh17 May 2024AY 2012-2013Bench: SHRI SANJAY GARG (Judicial Member), SHRI VIKRAM SINGH YADAV (Accountant Member)6 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that in cases of non-abated or completed assessments, additions under Section 153A are not permissible without incriminating material found during a search. Since no such material was found, the additions were deleted.

What were the facts?

A search was conducted on the assessee's premises, leading to a reassessment under Section 153A. The assessee argued that no incriminating material was found during the search and the assessment year was not abated. The Assessing Officer made additions which were upheld by the CIT(A).

What were the issues?

Whether additions under Section 153A are valid when no incriminating material is found during a search and the assessment is not abated. Whether the assessee discharged the burden under Section 68.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 143(2),Section 68,Section 69

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Income Tax Appellate Tribunal, DIVISION BENCH, “A” CHANDIGARH

Before: SHRI SANJAY GARG & SHRI VIKRAM SINGH YADAV

For Appellant: Shri P. K. Goel, CA and Shri Sunil
Hearing: 01.04.2024Pronounced: 21.05.2024

ORDER

Per Sanjay Garg, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 05.04.2023 of the Commissioner of Income Tax (Appeals)-5, Ludhiana [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: Assessment Year : 2012

13. G.S. Auto International Limited Page 2 of 6

1. That the order of the Ld. CiT(A)-5 in sustaining addition amounting to Rs.4,14,59,500/- is against the law and facts of the case.

2. That the order of the Ld. CIT(A)-5 sustaining addition is against the law as laid down by the Hon'ble Supreme Court in case of Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell Pvt. Ltd. and various other judicial pronouncements which held that no additions can be made incompleted/unabated assessment U/s 153A in the absence of any incriminating material unearthed during the search/seizure operations. 3. The Ld. CIT(A)-5 while sustaining the addition failed to appreciate that the appellant being a listed company with Bombay Stock Exchange has received the Warrant/Share Application Money in pursuance of a scheme as per the rules/regulations and guidelines of the SEBI and as per listing agreement with Stock Exchanges after recovering the approval from Bombay Stock Exchange and other statutory approvals. 4. The Ld. CIT(A)-5 while sustaining the addition failed to appreciate that all the documents proving the identity and creditworthiness of the Investors and genuineness of the transactions as required U/s 68 of the Income Tax Act. 1961 has been submitted before him and the appellant has adequately/ completely discharged the burden enjoined upon him U/s 68 of the Act.

5. The Ld. CIT(A)-5 by deleting the addition of Rs. 193.50 Lacs out of Rs.244.92 Lacs received from G.J. Holding Pvt. Limited, a company under the same management, has admitted the identity and creditworthiness of the Investor and genuineness the transactions and hence sustaining the part addition of Rs. 51.42 Lacs from the same investor is contrary to the admitted position of law.

6. That the Ld. CIT(A)-5 has grossly erred in law and on facts in heavily relying upon the statement of Sh. Satish Monga which was neither made during assessment/ appellate proceedings nor made before the Ld. A.0./CIT(A)-5and never confronted to the appellant and was made at the back of the appellant. Further, no opportunity for cross examination was provided to the appellant in gross violation of principles of natural justice and hence inadmissible in law as held by various judicial pronouncements.

Assessment Year : 2012-13 G.S. Auto International Limited Page 3 of 6

7. That the Ld. CIT(A)-5 while sustaining the addition failed to appreciate that the appellant being a company in which public are substantially interested1S not required to prove the source of source as per provisions of Sec. 68 of the Act.

8. That the Ld. CIT(A)-5 while sustaining the addition on account of Warrant/Application Money received from Harwin Exports Pvt Limited amounting to Rs. 1.38 Crore failed to appreciate that same amount i.e. Rs. 1.38 Crore has already been added in the hands of Investor Company U/s 69 on account of investment made in the appellant company resulting in multiple addition both in the hands of Investor Company and Investee Company which is against the law and principles of natural justice. 9. That the Ld. CIT(A)-5 while sustaining the addition on account of Warrant/Application Money received from Disha Commercial Pvt. Limited amounting to Rs. 80.37 Lacs and Pioneer Power Tower Limited amounting to Rs.143.90 Lacs failed to appreciate that same amount i.e. Rs. 80.37 Lacs and Rs.143.90 has already been added in the hands of Investors Company U/s 69 on account of investment made in the appellant company resulting in multiple addition both in the hands of Investors Company and Investee Company which is against the law and principles of natural justice. 10. That each ground of appeal

is a separate ground and without prejudice to each other.

11. That the appellant craves permission to add/alter or to take fresh grounds of appeal either before or during the course of hearing.”

3. A perusal of the above grounds of appeal would show that the assessee, inter alia, vide Ground No.2 has pleaded that no additions in this case were warranted in an assessment carried out u/s 153A of the Act in the absence of any incriminating material found during the course of search action, the assessment being not abated/completed on the date of search action in the case of the assessee.

Assessment Year : 2012-13 G.S. Auto International Limited Page 4 of 6 This legal ground since goes to the root of the case, the same is being taken first for adjudication.

4.

The brief facts of the case are that a search action was carried out at the premises of the assessee 03.12.2014. Pursuant to the said action, the assessment for the assessment year under consideration i.e. A.Y 2012-13 was reopened and carried out u/s 153A r.w.s. 143(3) of the Act vide order dated 31.12.2016. The Assessing Officer made the impugned additions which have been further confirmed by the CIT(A).

5.

At the outset, the ld. Counsel for the assessee has submitted that no incriminating material was found during the course of search action carried out on 03.12.2014 in the case of the assessee. He has further submitted that the assessment year involved in this case is assessment year 2012-13. He has further invited our attention to the opening para of the assessment order dated 31.12.2016 passed u/s 153A r.w.s. 143(3) of the Act to submit that it has been mentioned in the assessment order itself that the return of income was filed by the assessee on 29.09.2012. He referring to the relevant provisions of section 143(2) of the Act has submitted that the last date to issue notice to the assessee u/s 143(2) of the Act was on 30.09.2013. That the search action was carried out on 03.12.2014 and hence on the date of search, there was no pending/abated assessment. He, therefore, relying upon the latest decision Assessment Year : 2012-13 G.S. Auto International Limited Page 5 of 6 of the Hon’ble Supreme Court in the case of ‘PCIT vs. Abhisar Buildwell Pvt. Ltd.’ reported in [2023] 149 taxmann.com 399 (SC), has submitted that the Assessing Officer was not justified in making the impugned additions in the assessment proceedings carried out u/s 153A of the Act in the absence of any incriminating material found during the course of search action.

6.

The ld. DR, on the other hand, could not rebut the above contention of the ld. Counsel for the assessee that no incriminating material was found during the course of search action.

7.

It is pertinent to mention here that the Hon’ble Supreme Court in the case of ‘PCIT vs. Abhisar Buildwell Pvt. Ltd.’ (supra) has held that in case of non-abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s 153A of the Act in the absence of any incriminating material found during the search action. The above ratio laid down by the Hon’ble Supreme Court is squarely applicable in the case of the assessee.

8.

In view of the above, the impugned additions made by the Assessing Officer are not sustainable in the eyes of law and the same are ordered to be deleted. Since, we have allowed the appeal of the assessee on the legal ground Assessment Year : 2012-13 G.S. Auto International Limited Page 6 of 6 taken by the assessee, therefore, any discussion on merits of the case would be rendered academic in nature.

9.

In the result, the appeal of the assessee stands allowed. Order pronounced in the Open Court on 21st May, 2024.

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