DCIT - CC- 5(2), MUMBAI V. SUDAR INUSTRIES LTD. , MUMBAI

ITA 2724/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2941 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Depreciation; Search and seizure; Capital expenditure; TDS
• Section: 143(3); 14A; 143(1); 139(1); 153C

Judgement Text

1 ITAS 2724 TO 2726/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI M. BALAGANESH (ACCOUNTANT MEMBER) I.T.A. NOS.2724 TO 2726/MUM/2018 (ASSESSMENT YEARS : 2008-09, 2011-12 & 2012-13) DY.CIT, CENT.CIRCLE-5(2), MUMBAI VS M/S SUDAR INDU STRIES LTD 27/29, PAUD VILLAGE, MAZGAON ROAD TALUKA-KHALAPUR, RAIGAD-410 222 PAN : AAGCS4668D APPELLANT RESPONDENT APPELLANT BY SHRI PRABHAT KUMAR GUPTA [CIT, (DR)] RESPONDENT BY NONE DATE OF HEARING 07-10-2021 DATE OF PRONOUNCEMENT 25-10-2021 O R D E R PER SAKTIJIT DEY (JM) CAPTIONED APPEALS BY THE REVENUE CONCERNING THE SA ME ASSESSEE ARISE OUT OF THREE SEPARATE ORDERS, ALL DATED 02-02-2018 OF L EARNED COMMISSIONER OF INCOME TAX (APPEALS)-53, MUMBAI FOR THE ASSESSMENT YEARS 2008-09, 2011-12 AND 2012-13. 2. WHEN THE APPEALS WERE CALLED FOR HEARING, NONE A PPEARED ON BEHALF OF THE ASSESSEE. EVEN, THE ASSESSEE HAS NOT FILED ANY APPL ICATION SEEKING ADJOURNMENT. CONSIDERING THE ABOVE, WE PROCEED TO DISPOSE OF THE APPEALS EX PARTE QUA THE 2 ITAS 2724 TO 2726/MUM/2018 ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REP RESENTATIVE AND BASED ON MATERIALS AVAILABLE ON RECORD. 3. BRIEFLY THE FACTS, MORE OR LESS COMMON, IN ALL T HESE APPEALS ARE, THE ASSESSEE IS A RESIDENT COMPANY ENGAGED IN JOB WORK O F READY-MADE GARMENTS AND INTERMEDIATE CHEMICALS. FOR THE ASSESSMENT YEARS UN DER DISPUTE, ASSESSEE HAD FILED ITS RETURNS OF INCOME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 AND THE RETURNS SO FILED WERE PROCESSED UNDER SECTION 1 43(1) OF THE ACT. SUBSEQUENTLY, ON 24-09-2013 A SEARCH AND SEIZURE OP ERATION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED IN CASE OF ANJANEYA HEALTHC ARE LTD. BASED ON INFORMATION RECEIVED FROM THE SAID SEARCH AND SEIZU RE OPERATION, PROCEEDINGS UNDER SECTION 153C OF THE ACT WERE INITIATED IN CAS E OF THE PRESENT ASSESSEE. IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 153C O F THE ACT FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE FILED ITS R ETURNS OF INCOME. ASSESSMENTS UNDER SECTION 153C R.W.S. 143(3) OF THE ACT WERE CO MPLETED FOR THE ASSESSMENT YEARS UNDER DISPUTE BY MAKING VARIOUS ADDITIONS AS UNDER:- A.Y. 2008-09 1. UNEXPLAINED CASH CREDITS RS. 2,07,50,000/- 2. UNEXPLAINED EXPENDITURE RS. 1,55,625/- A.Y. 2011-12 1. DISALLOWANCE OF DEPRECIATION ON BOGUS CAPITAL EXPENDITURE RS. 1,95,97,601/- 2. DISALLOWANCE U/S 14A RS. 1,49,358/- 3. DISALLOWANCE U/S 36(1)(III) RS. 20,66,899/ - 4. DISALLOWANCE OF DEPRECIATION ON BUSES RS. 2,75,888/- 5. INCIDENTAL CHARGES RS. 14,98,894/- 3 ITAS 2724 TO 2726/MUM/2018 A.Y. 2012-13 1. EXCEPTIONAL ITEM RS.1,60,00,000/- 2. DISALLOWANCE U/S 14A R.W.S. 8D RS. 14,73,42 4/- 3. DISALLOWANCE OF EPF CONTRIBUTION RS. 86, 749/- 4. BOGUS CHARITY EXPENSES RS. 7,99,505/- 5. BOGUS SALE AND PROMOTION EXPENSES RS. 18,0 3,726/- 6. DISALLOWANCE OF INTEREST RS. 20,18,925/- 7. DISALLOWANCE ON NON DEDUCTION OF TDS RS. 13, 83,375/- 8. EXCESS DEPRECIATION ON BUSES RS. 1,51,2 54/- 9. DEPRECIATION ON FICTITIOUS ASSETS RS. 8,63,38, 511/- 10. INCIDENTAL CHARGES RS. 47,04,208/- 4. AGAINST THE ASSESSMENT ORDERS PASSED UNDER SECTI ON 153C R.W.S. 143(3) OF THE ACT, ASSESSEE PREFERRED APPEALS BEFORE LEARNED COMMISSIONER (APPEALS) INTER ALIA ON THE GROUND THAT IN A PROCEEDING INITIATED U NDER SECTION 153C OF THE ACT, NO ADDITION/DISALLOWANCE CAN BE MADE IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SEIZURE OPERATION. ACCEPTING THE SUBMISSION OF THE ASSESSEE LEARNED COMMISSIONER (APPEALS) HELD THAT, SINCE THE ASSESSMENTS FOR THE IMPUGNED ASSESSMENT YEARS HAVE NOT ABATED, ADDITION S, IF ANY, CAN BE MADE ONLY WITH REFERENCE TO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SEIZURE OPERATION. THUS, HE HELD THAT NO ADDITION COULD HAV E BEEN MADE BY THE ASSESSING OFFICER IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING SEARCH. ACCORDINGLY, HE DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER IN DIFFERENT ASSESSMENT YEARS UNDER APPEAL. 4 ITAS 2724 TO 2726/MUM/2018 5. WE HAVE HEARD SHRI PRABHAT KUMAR GUPTA, LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED MATERIALS ON RECORD. UND ISPUTED FACTS EMANATING FROM RECORD CLEARLY REVEAL THAT ON THE DATE OF SEAR CH AND SEIZURE OPERATION ON 24- 09-2013, THERE WAS NO ASSESSMENT PENDING BEFORE THE ASSESSING OFFICER PERTAINING TO THE ASSESSMENT YEARS UNDER APPEAL. IN FACT, PRIO R TO THE DATE OF SEARCH AND SEIZURE OPERATION, THE RETURNS OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEARS WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. THE REFORE, IT IS VERY MUCH CLEAR THAT ON THE DATE OF SEARCH AND SEIZURE OPERATION, A SSESSMENTS FOR THE IMPUGNED ASSESSMENT YEARS HAVE NOT ABATED. A PERUSAL OF THE ASSESSMENT ORDERS WOULD REVEAL THAT THE VARIOUS ADDITIONS/DISALLOWANCE MADE BY ASSESSING OFFICER, SUCH AS, DISALLOWANCE OF DEPRECIATION, CASH CREDITS, 14A DIS ALLOWANCE, ETC. ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. AT LEAST, IN THE BODY OF THE ASSESSMENT ORDERS THE ASSESSING OFFICER HAS NOT MADE ANY OBSERVATION TO DEMONSTRATE THAT THE ADDITIONS/DISALLOWANCES MADE A RE WITH REFERENCE TO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. ON A SPECIFIC QUERY FROM THE BENCH, LEARNED DEPARTMENTAL REPRESENTATIVE WHILE AC CEPTING THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATER IAL FOR MAKING ADDITIONS ALSO COULD NOT BRING TO OUR NOTICE ANY INCRIMINATING MAT ERIAL ON RECORD WHICH CAN BE EVEN REMOTELY CONNECTED TO THE ADDITIONS MADE BY TH E ASSESSING OFFICER. AS PER THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HI GH COURT IN CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION AND ANOTHER 374 ITR 645 (BOM), IN A CASE WHERE ON THE DATE OF SEARCH AND SEIZURE PROCEEDINGS THE ASSESSMENT HAS NOT ABATED, NO ADDITION CAN BE MADE IN ABSENCE OF ANY I NCRIMINATING MATERIAL. THERE ARE NUMBER OF OTHER DECISIONS OF DIFFERENT HIGH COU RTS AS WELL AS VARIOUS BENCHES OF THE TRIBUNAL EXPRESSING SIMILAR VIEW. WHILE DELE TING DISPUTED ADDITIONS, LEARNED 5 ITAS 2724 TO 2726/MUM/2018 COMMISSIONER (APPEALS) HAS ONLY FOLLOWED THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS CITED BEFORE HIM. THEREFORE, WE DO NOT F IND ANY INFIRMITY IN THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN DELET ING THE ADDITIONS MADE BY THE ASSESSING OFFICER. GROUNDS ARE REJECTED. 6. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 22/10/2021. SD/- SD/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 22/10/2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI