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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Before: SH. N.K.BILLAIYA & SH.ANUBHAV SHARMA
Both the appeals have been preferred by the Assessee against the order dated 05/09/2017 & 06/09/2017 of CIT(A)-Karnal (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No. IT/73/GGN/2015-16 & IT/74/GGN/2015-16 respectively arising out of an 7347 & 7348/Del/2017 appeal before it against the order dated 31.03.2015 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle-II, Faridabad (hereinafter referred as the Ld. AO). As they involve common question they are taken up together for disposal.
2. The residential as well as business/ office premises of M/s. SRS Group of cases were subject to search and seizure operation on 09.05.2012. The assessee who was showing income from business and profession was served notice u/s 153C r.w.s. 153A of the Act on 18.09.2014 and based upon same the assessee was asked to file return of income for six assessment years and the assessment was completed by making addition of Rs. 87,74,362/- on account of bogus freight charges in the year 2011-12 and Rs. 85,67,376/- in A.Y. 2012-13. Ld. CIT(A) has confirmed the same and the assessee is in appeal raising following grounds, as reproduced for AY 2011-12:-
“1. That having regard to the fact and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and issuing of notice u/s 153A r.w.s. 153C of the Act, more so when the notice was issued in the name of non-existing entity.
That in any case and in any view of the matter, the assessment framed under section 153A(l)(b) of the Act, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in upholding the action of the Ld. A.O. in making a disallowance of freight charges of Rs. 87,74,362/- u/s 37(1) of the Income Tax Act, 1961, that too in the proceedings u/s 153C of the Act, and more-so by alleging failure of the assessee to produce bills and vouchers.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 87,74,362/- is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned order without giving adequate opportunity of being heard.
7347 & 7348/Del/2017
6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. A.O in making the impugned additions are bad in law and against the facts and circumstances of the case.
7. That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”
Heard and perused the record.
On hearing the Ld. AR and DR it comes up that in assesssee’s own case for A.Y. 2008-09 and 2010-11 ITA no. 7338.Del.2017 and 7346.Del.2017 by order dated 08.09.2020 the additions were deleted by the Co-ordinate Bench primarily for the reason that disallowance on freight charges were made in the absence of any incriminating material found during the course of search. Admittedly, as the notice in the case in hand was issued on 18.06.2014 the relevant A.Y. fall in the category of non-abated assessments and now it is settled by judgment of Hon’ble Supreme Court of India in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 (SC) that in respect of completed assessments/ non-abated assessments no addition can be made in absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132(A).
Ld. DR has relied the findings of Ld. AO in para no. 3 to submit that post search inquiry has revealed that the companies were floated by the assessee group, SRS Group, and these companies have shown purchases/ sales within the group companies without actual work being carried out by these companies and only bills are issued. He has submitted that the post search inquiries arise out of incriminating evidences found during the search. However, the aforesaid contention was duly rebutted on behalf of the assessee by the Ld. AR submitting that first of all Ld. AO has not discussed any incriminating material/ documents which were seized and in any case if post search inquiries and findings are to be 7347 & 7348/Del/2017 relied then too in the light of judgment of Hon’ble Supreme Court in the case of Abhisar Buildwell (P) Ltd. (supra) the course open to the Revenue is by virtue of powers u/s 147/148 of the Act.
The Bench finds the arguments of ld. AR quite sustainable as apparently in the para 3 of the order of ld. AO no such document or evidence is specifically discussed. Furthermore, it comes up that when the assessment orders for A.Y. 2010-11 available at page no. 96 to 98 of the paper book and for A.Y. 2008-09 available at page no. 78 to 80 of the paper book are considered it makes it apparent that Ld. AO has just reproduced the same set of findings in all these assessment orders which being subject matter of appeal before the Tribunal were not sustained by order dated 08.09.2020.
Thus, the Bench is of considered opinion that the jurisdiction to complete assessment u/s 153A(1)(b) r.w.s. 143(3) of the Act was exercised in regard to relevant assessment years without there being any incriminating material and accordingly, the ground no. 1 raised on behalf of the assessee challenge in the assumption of jurisdiction u/s 153A r.w.s. 153C is allowed and the remaining grounds on merits are left with no merits requing adjudication. Consequently, the ground no. 1 of both the appeals is allowed and both the appeals of assessee are allowed. The impugned assessment orders are quashed.
Order pronounced in the open court on 26th July, 2023.