Shri Om Prakash Pandey , Kolkata V. DCIT, Central Circle - 3(3), Kolkata , Kolkata

ITSSA 16/KOL/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5038 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 27-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KAMAT
• Keywords: Salary income
• Section: 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCH “A”, KOLKATA BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER IT(SS)A Nos.11 to 16/Kol/2018 Assessment Year: 2008-09 to 2013-14 Shri OM Prakash Pandey P-214, Block-A, Lake Town, Kolkata – 700 089. PAN: AFUPP3786R Vs. DCIT, Central Circle – 3(3), Kolkata (Appellant) (Respondent) Present for: Appellant by : None Respondent by : Shri Amol Kamat, CIT, DR Date of Hearing : 21.02.2022 Date of Pronouncement : 09.03.2022 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: These six appeals by the assessee have been filed against the order of Ld. CIT(A) – 21, Kolkata (hereinafter referred to as the Ld. CIT(A) against the orders passed u/s 143(3) of the Act even dated 28.12.2017 which in turn arises out of assessment framed by the Assessing Officer (hereinafter referred to as the ‘AO’) u/s 143(3) r.w.s. 153A of the Act. ITA NO. 11/Kol/2018 2. The only issue raised by the assessee in the ground of appeal is against the confirmation of addition of Rs. 5,34,711/- by ld CIT(A) which was made by the AO by rejecting the claim of setting off of business losses against the salary income on the ground the AO has no jurisdiction to reject the claim as there was no incriminating material found during the course of search. IT(SS)A No.11 to 16/KOL/2018 OM Prakash Pandey A.Y. 2008-09 to 2013-14 2 3. At the time of hearing neither the assessee nor his authorized representative of the assessee appeared before us nor any application for adjourned was filed. Therefore, we are deciding the appeal after hearing the Ld. DR and after taking into account the merits of this case. 4. The facts in brief are that a search u/s 132 of the Act was conducted at the residential as well as office / factory premises of Prakash Group on 21/22-11-2013 and accordingly notices u/s 153A of the Act were issued and duly served upon the assessee. In response to the notice, the assessee filed the return of income declaring total income of Rs. 1,40,970/-. During the course of assessment proceedings, the AO observed from the computation of income filed with the return of income, the assessee had claimed the adjustment of interest paid on loans and other expenses amounting to Rs. 5,34,711/- against the salary income received from group companies. The AO noted that director’s remuneration being taxable under the head business or capital gains whereas income from investments in mutual funds, shares and advances in connection with which the interest was paid other expenses incurred are taxable under the heads other than other sources and, therefore, the assessee is not entitled to adjust its loss on account of payment of interest of loan and other expenses against salary income as per provisions of section 71 of the Act. 5. In the appellate proceedings, the assessee challenged the jurisdiction of the AO to make the addition in the assessment framed u/s 143(3) r.w.s. 153A of the Act on the ground that this being unabated assessment year and addition ,if any, can only be made on the basis of incriminating material found during the course of search. The Ld. CIT(A) dismissed the appeal of the assessee on the IT(SS)A No.11 to 16/KOL/2018 OM Prakash Pandey A.Y. 2008-09 to 2013-14 3 ground that the AO has observed from the seized material and issued notices to the assessee in respect of adjustment of loss resulting from the payment of interest and expenses incurred as stated above against the salary income and thus justified the addition by dismissing the legal issue raised by the assessee. Now, the assessee is in appeal before us challenging the order of CIT(A) on this issue. 6. After hearing the Ld. DR and perusing the material on record including the assessment order, we note that in this case a search was conducted on 21/22-11-2013 on the assessee. It is undisputed that the assessment had attained finality on date of search and therefore, in order to make addition in an unabated assessment year on the date of search there has to be incriminating material found during search which is the settled position of law. We observe from the perusal of assessment order that there is no reference to any such material by the AO and in fact, stated in the assessment order itself that on the perusal of computation of income filed by the assessee, the adjustment of loss of interest paid on loans and other expenses could not be allowed against salary income of the assessee as the same is against spirit of division of section 71 of the Act. Similarly, the Ld. CIT(A) also dismissed the appeal of the assessee on this issue without making any reference to any such material. The case of the assessee find support from the following cases namely PCIT vs. Meeta Gutgutia (2018) 96 taxmann.com 478 (SC), CIT vs. Gurinder Singh Bawa (2017) 79 taxmann.com 398 (Bombay), CIT vs. Deepak Kumar Agarwal (2017) 86 taxmann.com 3 (Bombay) and CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 taxmann.com 78 (Bombay). Under these circumstances, we are of the view that the addition has been made without any incriminating material found during the course IT(SS)A No.11 to 16/KOL/2018 OM Prakash Pandey A.Y. 2008-09 to 2013-14 4 and, therefore cannot be sustained. The appeal of the assessee is allowed. ITA NO. 12, 13, 14, 15 & 16/Kol/2018 7. The legal issue raised in these appeals is similar to one as decided by us in ITA No. 11,Kol/2018 (supra), wherein we have allowed the appeal of the assessee. Therefore, our decision in ITA No. 11,Kol/2018 would, mutantis mutandis, applying to these appeals as well. Accordingly these appeals of the assessee are allowed on legal issue. 8. In the result, all the appeals of the assessee are allowed. Order pronounced in the open court on 09.03.2022. Sd/- Sd/- (SANJAY GARG) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 09.03.2022. Biswajit, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Kolkata The CIT (A) Concerned, Kolkata The DR Concerned Bench //True Copy// [ By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata