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Income Tax Appellate Tribunal, BENCH, NAGPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश / ORDER PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax (Central) (for short ‘Pr. CIT’), Nagpur, u/s. 263 of the Income-tax Act, 1961 (for short ‘the Act’), dated 25.05.2018, which in turn arises from the order passed by the A.O under Sec. 153A r.w.s 143(3) of the Act, dated 29.12.2016 for assessment year 2009-10. Before us the assessee has assailed the impugned order on the following grounds of appeal:
“1. That the Order U/s.263 is bad in law, arbitrary, without jurisdiction and therefore it is liable to be cancelled.
2. That the Principal CIT erred in law and on facts in holding that the order u/s. 143(3) Dt 29.12.2016 passed by Dy. CIT, Central Circle : I (3) is erroneous and prejudicial to the interest of the revenue and in setting aside the same from framing fresh assessment.
3. That the order u/s 263 is further vitiated in law in as much as the learned CIT while passing order opted to ignore the important facts submitted in letter Dt. 30.01.2018 so as to assume jurisdiction u/s 263.
4. That the Order u/s.263 is not sustainable in as much as the Original assessment was u/s.143(3) Dt. 30.12.2011 by ACIT, Circle-4, Nagpur in which qua the forex loss the A.O. has asked for compliance
3 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3) and Assessee made those compliances by letters Dt. 16.12.2015 and 23.12.2011 alongwith enclosures which are on record, were not considered. Dy CIT in course of assessment u/s 143(3) read with 153A considered the compliances qua the forex loss and was satisfied and therefore accepted the Original Assessment in 153A proceeding and further no incriminating documents were found in searching negating the already allowed claim regarding forex loss of Rs. 2,71,21,250/-. 5.That the order u/s.263 qua the amount of forex loss of Rs.2,71,21,250/- is without jurisdiction and further bad in law as much as the issue was already considered thread bare in original asst. u/s.143(3) dated 30.12.2011 passed by the ACIT, Circle 4, Nagpur and in proceedings u/s.153A no incriminating documents were found qua the forex loss, the matter become final with original Asst. dated 30.12.2011 and CIT wrongly made the base the Asst order u/s.143(3) read with 153A dated 29.12.2016 and set aside the same.
6. That the order u/s.263 is bad in law since the matter relating to forex loss Rs.2,71,21,250/- was considered in original Asst. proceeding which cannot be considered to benon est in law because of 153A proceedings more so when no incriminating documents were found regarding forex loss. Proceedings u/s.263 is beyond limitation and order u/s.263 is therefore liable to be cancelled.”
Succinctly stated, the assessee company had filed its return of income for the assessment year 2009-10 on 26.09.2009, declaring a total income of Rs. Nil. The return of income filed by the assessee was initially processed as such u/s.143(1) of the Act. Original assessment was thereafter framed by the Assessing Officer vide his order passed u/s.143(3) of the Act, dated 30.12.2011.
4 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
Search and seizure proceedings were conducted u/s.132(1) of the Act on 12.02.2015 and the assessee was therein covered. Notice u/s. 153A of the Act was issued to the assessee. In compliance the assessee e-filed its return of income on 05.07.2016, declaring an income of Rs. Nil. After necessary deliberations the Assessing Officer vide his order passed u/s. 153A r.w.s. 143(3) of the Act, dated 29.12.2016 accepted the income returned by the assessee at Rs. Nil.
After culmination of the assessment proceedings the Pr. CIT called for the assessment records of the assessee. Observing, that the Assessing Officer while framing the assessment had failed to verify the forex loss of Rs.7,62,99,365/- that was debited by the assessee in its Profit & loss account, the Pr. CIT called upon the assessee to explain as to why the order passed by the Assessing Officer u/s.143(3) r.w.s. 153A of the Act, dated 30.12.20111 may not be revised. As the reply filed by the assessee did not find favor with the Pr. CIT, therefore, he vide his order passed u/s.263 of the Act dated 25.05.2018 set-aside the order passed by the Assessing Officer by holding the same as 5 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
erroneous in so far it was prejudicial to the interest of the revenue u/s.263 of the Act and directed him to frame a fresh assessment after affording reasonable opportunity of being heard to the assessee.
The assessee being aggrieved with the order of the Pr. CIT u/s.263 of the Act, dated 25.05.2018 has carried the matter in appeal before us.
We have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Before us the Ld. Authorized Representative (for short ‘AR’) for the assessee has assailed the validity of the jurisdiction assumed by the Pr. CIT u/s.263 of the Act on two fold grounds, viz. (i). that now when no incriminating material in the case of the assessee was found during the course of search proceedings conducted u/s.132(1) of the Act, and resultantly, no addition as regards the unabated assessment in its case for the year under 6 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
consideration could have been made by the Assessing Officer, therefore, the Pr. CIT could not have held the order passed by him as erroneous, for the reason, that he had failed to make any such addition which he was otherwise divested of his jurisdiction to make as per the mandate of law; and (ii). that as the Assessing Officer during the course of original assessment proceedings u/s.143(3) of the Act, dated 30.12.2011 had duly verified the assessee’s claim of business loss of Rs.2,71,21,250/-, therefore, qua the said issue the Pr. CIT could not have assumed jurisdiction to revise the assessment order u/s.263 of the Act.
As the assessee has assailed the validity of the jurisdiction assumed by the Pr. CIT u/s.263 of the Act, therefore, we shall first deal with the same. It is the claim of the ld. AR that as no incriminating material in the assessee’s case for the year under consideration was found in the course of the search proceedings conducted u/s 132(1) of the Act on 12.02.2015, therefore, in the absence of any such incriminating material the Assessing Officer could not have made any addition as regards its unabated assessment for 7 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
the said year. We have given a thoughtful consideration to the aforesaid claim of the Ld. AR and find substance in the same. As per the aforesaid claim of the Ld. AR, if in the course of the search proceedings no incriminating material is found, then, in a case of an unabated assessment the Assessing Officer can only reiterate the completed assessment and cannot make any independent addition. Our aforesaid view is fortified by the judgments of the Hon’ble High Court of Bombay in the case of CIT Vs. Gurinder Singh Bawa 384 ITR 483(Bom) and that in the case of CIT Vs. Deepak kumar Agarwal (2017) 251 Taxmann 22 (Bom). Also, a similar view had been taken by the Hon’ble High Court of Delhi in the case of CIT Vs. Kabul Chawla, (2016) 380 ITR 573( Del.). In the aforementioned cases, it had been observed by the Hon’ble High Courts that in case of an unabated assessment the scope of addition/disallowance to be made u/s.153A of the Act would be restricted to the “incriminating material” found during the course of search proceedings. It was further observed that if no incriminating material is found then, the Assessing Officer can only reiterate the completed assessment without making any further
8 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3) addition/disallowances. Our aforesaid view is also supported by the following judicial pronouncements:
(i). Principal CIT Vs. Vikas Gutgutia (2017) 396 ITR 691 (Del.) (ii). Principal CIT Vs. Devangi (2017) 394 ITR 184 (Guj.) (iii). Principal CIT Vs. Ms. Lata Jain (2016) 384 ITR 543 (iv). Abhishek Lodha, Mumbai Vs. Assessee Mumbai ‘G’ Bench (v). Mala Builders (P) Ltd. Vs. Asst. CIT (2016) 51 ITR (Trib) 272 (Chd) (vi). Bishwanath Garodia Vs. Dy CIT (2016) Taxmann.com 81 (Kol-Trib) (vii). Jailokenath Oil Extractions (P) Ltd. Vs. Dy CIT (2017) 83 taxmann.com 369/166 ITO 161 (Kol) (viii). Asst CIT Vs. Layer Exports (P) Ltd. (2017) 181 TTJ 469 (Mum.) (ix) Mahipat Raichand Sharebroking Vs. Deputy I. Tax, Ahmedabad ITA No.323/Ahd/2010
Backed by our aforesaid observations, we are of the considered view that now when no incriminating material in the case of the assessee for the year under consideration was found during the course of search proceedings conducted u/s. 132(1) of the Act, dated
9 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
12.02.2015, thereupon, the Assessing Officer in respect of the unabated assessment of the assessee could have only re-computed its completed assessment and was divested of his jurisdiction of making any independent addition/disallowance. On the basis of our aforesaid observations, we are of the considered view that as the Assessing Officer in the backdrop of his limited scope of jurisdiction could not have drawn any adverse inferences as regards the claim of forex loss, and therein made any independent addition/disallowance in the hands of the assessee, therefore, the order passed by him u/s. 153A r.w.s. 143(3) of the Act, dated 29.12.2016 being in conformity with the view taken by the Hon’ble High Court of jurisdiction in the case of CIT Vs. Gurinder Singh Bawa (supra) and in the case of CIT Vs. Deepak kumar Agarwal (supra) could not be dubbed as erroneous, failing which the same could not have been revised by the Pr. CIT.
On the basis of our aforesaid observations, we are of the considered view that the order passed by the Pr. CIT u/s.263 cannot be sustained. We, thus, in terms of our aforesaid observations set- aside the order passed by the Pr. CIT u/s.263, dated 25.05.2018 and 10 M/s. Shrigopal Rameshkumar Sales Pvt. Ltd. Vs. ACIT, CC 1(3)
restore the order passed by the Assessing Officer u/s. 153A r.w.s.143(3) of the Act, dated 29.12.2016.
As we have quashed the order passed by the Pr. CIT u/s.263 of the Act, dated 25.05.2018 for want of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the other contentions advanced by the Ld. AR qua the validity of the order passed by the Pr. CIT which are left open.
In the result, appeal of the assessee is allowed in terms of our aforesaid observations.
Order pronounced in open court on 06th day of April, 2022.