Bimla Agrawal, Kolkata V. ACIT, Cen. Cir. 1(2) , Kolkata

ITSSA 19/KOL/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6374 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-05-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 10-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Revision of order; Depreciation; Document seized; Deemed dividend; Assessment record; Documents seized; Set aside
• Section: 147; 148; 263; 132; 143(3); 153A; 2(22)(e); 143(2)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA ी राजेश क ु मार, लेखा सट य एवं ी द प क ु मार चौबे, या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Pradip Kumar Choubey, Judicial Member] I.T.(SS).A. No. 19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal (PAN: ACPPA 7104 A) Vs. ACIT, Central Circle-1(2), Kolkata Appellant / )अपीलाथ#( Respondent /( %यथ#) Date of Hearing / स ु नवाई क( त*थ 29.05.2024 Date of Pronouncement/ आदेश उ-घोषणा क( त*थ 24.06.2024 For the Appellant/ नधा34रती क( ओर से Shri A. K. Tulsiyan, FCA Shri Rohan Agarwal, ACA For the Respondent/ राज व क( ओर से Shri Subhendu Datta, CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Principal Commissioner of Income Tax , (Central)-1, Kolkata (hereinafter referred to as the Ld. PCIT] dated 05.02.2024 passed u/s 263 of the Income Tax Act, 1961 (for short the Act) for the AY 2018-19. 2 I.T.(SS).A. No.19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal 2. The only issue raised by the assessee in the various grounds of appeal is against the revisionary order passed by PCIT u/s 263 of the Act dated 5.2.2024 thereby setting aside the assessment framed u/s 153A of the Act dated 29.09.2021. 3. Facts in brief are that the search action u/s 132 of the Act was conducted on the assessee on 19.02.2020. Pertinent to state that original return of income was filed on 16.07.2018 declaring total income of Rs. 38,58,650/-. Notice u/s 153A of the Act was issued on 10.02.2021 and was complied with by filing return of income on 6.3.2021 declaring the same income as declared in the original return. Finally the assessment was framed accepting the returned income vide order dated 29.09.2021 passed u/s 153A of the Act. The PCIT upon perusal of the assessment record observed that the assessee had taken loan of Rs. 24,00,000/-during the year from M/s Calcast Ferrous Ltd. which was shown as outstanding on 31.03.2018. The Ld. CIT(A) also noted that the assessee is a shareholder having holding more than 20% of the equity shares and thus is having substantial interest in the assessee company. The Ld. CIT(A) noted that since the accumulated profits of the said company was Rs. 8.97,21,029/- as on 31.03.2018 and therefore the amount of loan taken by the assessee from the said company falls within the ambit of deemed dividend u/s 2(22)(e) of the Act and consequently the order passed by the AO u/s 153A of the Act is erroneous and prejudicial to the interest of the revenue. The PCIT accordingly issued show cause notice u/s 263 of the Act on 2.02.2023 calling upon the assessee to explain the same which was replied by the assessee vide written submission dated 13.02.2023 wherein the assessee submitted that the loan taken by the assessee from the said company was out of different source and not out of accumulated profit however the reply did not find favour with the PCIT and he cancelled the assessment by passing the order u/s 263 of the Act dated 29.09.2021 and directing the AO to decide the assessment as per law. 4. The Ld. A.R vehemently argued before us that the assessment in the present case was unabated on the date of search because the time limit for issuance of notice u/s 143(2) had already expired on 30.09.2019. The Ld. A.R further contended that 3 I.T.(SS).A. No.19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal during the course of search operation no incriminating material of any kind was found and seized and therefore this being an unabated assessment on the date of search, no addition could have been made for the want of such incriminating seized materials. The AO framed the assessment u/s 153A of the Act accepting the returned income. The Ld. A.R therefore stated that the assessment framed u/s 153A of the Act dated 29.09.2021 was as per the provisions of the Act and could not be said to be erroneous and prejudicial to the interest of the revenue. The Ld. A.R contended that how the PCIT could set aside the assessment which was validly framed as per the provisions of the Act that too by observing from the balance sheet of the assessee which was part of the record already been filed at the time of assessment. The Ld. A.R stated that even if the mistake was found on the basis of record of the assessee qua which no incriminating material was found during the search, the same could not be added in the unabated assessment as per the provision of the Act. In defense of arguments the Ld. A.R relied on the decision of Co-ordinate Bench in the case of M/s Sona Vets Pvt. Ltd. vs. DCIT in ITA No. 947/Kol/2017 dated 17.10.2017 wherein it has been held that when an addition could not be made as per law in the assessment framed u/s Section 153A of the Act, then the order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the Ld. CIT. The Ld. A.R therefore prayed that the order passed by PCIT may be quashed as without valid jurisdiction. 5. The Ld. D.R on the other hand submitted that though there was no incriminating material found during the survey however the mistake was apparent from the balance sheet of the assessee which ought to be rectified and accordingly the course before the PCIT was either to exercise the revisionary jurisdiction u/s 263 of the Act or direct reopening of assessment u/s 147 of the Act. In the present case, the PCIT chose to exercise the revisionary jurisdiction to correct the which has resulted in the under assessment of income. The Ld. D.R argued that in case the appeal of the assessee is allowed on the ground of unabated assessment on the date of search then it may be directed that the proceedings u/s 148 of the Act may be invoked to assess this under assessment of income. 4 I.T.(SS).A. No.19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal 6. After hearing rival contentions and perusing the material on record, we find that undisputedly the assessment was unabated on the date of search as the time period for issuing notice u/s 143(2) of the Act had already expired on 30.09.2019. The original return was filed on 16.07.2018. This is also undisputed there was no seized incriminating material found during the course of search proceeding and while making the assessment the AO accepted the returned income. We note that PCIT, upon perusal of the balance sheet, found that the assessee has taken loan of Rs. 24,00,000/- from M/s Calcast Ferrous Ltd. during the year which were outstanding as on 31.03.2018 to the tune of RS. 8,97,21,029/-. The amount has to be treated as deemed dividend within the meaning of Section 2(22)(e) of the Act and has to be brought to tax. Consequently the PCIT set aside the order of assessment on the ground of being erroneous and prejudicial to the interest of the revenue. In our opinion, the said invocation of jurisdiction u/s 263 of the Act is invalid as there is no mistake in the assessment order framed by the AO u/s 143(3) of the Act r.w.s. 153A of the Act which is prejudicial to the interest of the revenue because the said assessment has been framed validly as per the provisions of the Act. It is trite law that in case of unabated assessment on the date of search, the addition can only be made on the basis of incriminating material seized during the course of search and not otherwise. In this case, admittedly there was no incriminating material found and seized during the course of assessment proceedings and therefore no addition was made by the AO. Therefore the assessment so framed by the AO was as per the provision of the Act and cannot be said to be erroneous and prejudicial to the interest of the revenue. The case of the assessee finds support from the aforesaid decision the operative part is extracted below: “6. We have heard the rival submissions and perused the materials available on record including the paper books filed by the assessee containing the seized documents and explanations given by the assessee thereon before the ld AO and the ld CIT. It is not in dispute that as on the date of search the original assessment for Asst Year 2010-11 was completed u/s 143(3) of the Act and hence stood unabated. It is now well settled by various high courts including the Hon’ble Jurisdictional High Courts relied upon supra that the concluded assessments could be disturbed only in the event of presence of any incriminating materials found in the course of search. We find from the above explanation of various seized documents found in the course of search, there was absolutely no material much less 5 I.T.(SS).A. No.19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal any incriminating material, so as to disturb the earlier concluded assessment for the Asst Year 2010-11. Hence the ld AO had rightly not considered the aspect of deemed dividend and claim of depreciation on motor lorries at 30% while framing the search assessment u/s 153A of the Act. Moreover, we find that the assessee had given proper explanations regarding these items before the lower authorities as reproduced above. We find that the assessee had also duly explained the complete contents of the seized documents relied upon by the ld CIT in his order. In our considered opinion, those materials are not incriminating at all and are forming part of regular books of accounts of the assessee. These explanations have been completely ignored by the ld CIT while directing the ld AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then the said order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the ld CIT. We hold that even on merits, there is no case made out by the ld CIT for making any addition towards deemed dividend or disallowance of excess depreciation on motor lorries. In these facts and circumstances, we find that the order of the ld CIT u/s 263 of the Act deserves to be quashed. Accordingly, the preliminary ground raised by the assessee on the issue of assumption of jurisdiction u/s 263 of the Act is allowed.” In view of the above, we are inclined to quash the revisionary jurisdiction exercised by the PCIT. Accordingly the appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 24 th June, 2024 Sd/- Sd/- (Pradip Kumar Choubey / द प क ु मार चौबे) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 24 th June, 2024 SM, Sr. PS 6 I.T.(SS).A. No.19/Kol/2024 Assessment Year: 2018-19 Bimla Agarwal Copy of the order forwarded to: 1. Appellant- Bimla Agarwal, 410, A Block G, New Alipore, Kolkata-700053 2. Respondent- ACIT, CC-1(2), Kolkata 3. Pr. CIT- Central-1, Kolkata 4. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata