Sai Fertilizers (P) Ltd, Kolkata V. DCIT, CC-1(3), Kolkata

ITSSA 28/KOL/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4792 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDIPTA GUHA
• Keywords: Search and seizure
• Section: 132; 2; 143(3); 153A; 143(1); 143(2); 139(1)

Judgement Text

1 IT(SS)A No. 28/Kol/2021 Sai Fertilizers Pvt. Ltd., AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA [Before Shri A. T. Varkey, JM & Shri Girish Agrawal, AM] I.T.(SS)A. No. 28/Kol/2021 Assessment Year: 2010-11 Sai Fertilizers Pvt. Ltd. (PAN: AAECS0325B) Vs. Deputy Commissioner of Income-tax, Central Circle-1(3), Kolkata Appellant Respondent Date of Hearing 05.04.2022 Date of Pronouncement 08.04.2022 For the Appellant Shri Rajeeva Kumar, Advocate For the Respondent Shri Sudipta Guha, CIT, DR ORDER Per Shri A.T.Varkey, JM This is an appeal preferred by the assessee against the order of Ld. CIT(A), Kolkata- 20 dated 24.12.2020 for AY 2010-11. 2. This appeal of assessee is time barred by 277 days and application for condoning the delay has been filed. After hearing both the sides, it is noted that the main reason for delay was due to Covid-19 Pandemic, therefore, we condone the delay and admit the appeal for hearing. 3. At the outset, the Ld. AR of the assessee Shri Rajeeva Kumar, Advocate brought to our notice that there was a search and seizure conducted by the department u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) on 20.12.2012 (AY 2013-14) at the various residential and business premises of persons including the assessee belonging to the Fogia Group. Consequently, as per section 153A of the Act six (6) years were reopened u/s. 153A of the Act; and the relevant assessment year before us is AY 2010-11 wherein the assessee had filed return of income [originally u/s 139(1) of the Act] on 13.10.2010 showing a total income of Rs.1,91,69,657/- and the return was processed u/s. 143(1) of the Act (intimation). According to the Ld. AR, no notice u/s. 143(2) of the Act was issued within the last date (30.09.2011) which could have allowed the AO to have scrutinized the assessment u/s. 143(3) of the Act. Therefore, according to the Ld. AR, as per second 2 IT(SS)A No. 28/Kol/2021 Sai Fertilizers Pvt. Ltd., AY 2010-11 proviso to section 153A of the Act, the relevant assessment year (AY 2010-11) is a non- abated assessment since it was not pending on the date of search i.e. 20.12.2012. Therefore, according to Ld. AR, as per the decision of Hon’ble Delhi High court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) in respect of an un-abated assessment, the AO could have made addition only if there was any incriminating material found during search qua the assessee qua the year. Even though this was raised before the AO, however, the AO made certain additions which was challenged before the Ld. CIT(A) who was pleased to allow the aforesaid proposition of law while adjudicating the legal ground by holding as under: “I have carefully considered the facts of the case and submission of the appellant. It appears that no incriminating material has been found in respect of the addition made under section 153A. Besides proceedings have been completed u/s.143(1) and time limit for issuing notice u/s. 143(2) was already over on the date of search. In the case of CIT vs Kabul Chawla (2016), 380 ITR 573(Delhi) the Hon'ble Delhi High Court has held that once a search takes place, notice u/s.153A(1) has to be mandatorily issued. Assessment and re-assessment pending on the date of search shall abate. But, an assessment under the section 153A has to be made only on the basis of seized materials. In absence of any incriminating material, the completed assessment can be only reiterated and assessment can be made only in respect of abated assessment or re-assessment. Completed assessment can be only interfered with by the AO while making the assessment u/s.153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed or made known in the course of original assessment. While delivering the judgment; the Hon'ble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645. These two judgments have been followed by various High Courts and Tribunals on this issue. The position as on today is that in respect of completed assessment any addition can be made under proceedings u/s 153A only if any incriminating documents are found. As mentioned above, no incriminating documents have been found during search against the assessee. Addition (disallowance) has been made on the basis of information available in the Audit Report/Return of Income. Hence respectfully following the judgments / decisions of various High Courts and the Tribunals including those of the jurisdictional High Courts and the ITAT the disallowances made in the current assessment year, in respect of issues mentioned at ground of appeal nos.2 & 3 are not sustainable” 4. Even after observing that the relevant year (AY 2010-11) was an unabated assessment and that there was no incriminating materials found during search against the assessee for AY 2010-11, and after having allowed the legal challenge, the Ld. CIT(A) deleted two additions i.e. Rs.47,403/- and Rs.14,146/-, but have erroneously sustained two additions of Rs.3,46,710/- and Rs.96,495/-. According to Ld. AR, the impugned confirmation of both the additions cannot stand the scrutiny of law because the legal issue 3 IT(SS)A No. 28/Kol/2021 Sai Fertilizers Pvt. Ltd., AY 2010-11 has been allowed. Per contra, the Ld. DR relied on the decision of the Ld. CIT(A) and does not want us to interfere. 5. We have heard rival submissions and gone through the facts and circumstances of the case. It is not disputed that the Ld. CIT(A) has given a clear finding of fact (supra) that the relevant year under consideration is AY 2010-11 was a non-abated assessment u/s 153A of the Act; and, therefore, taking note of the settled position of law regarding this he held that no addition could have been made in this assessment year [AY 2010-11] without incriminating material. And having found that there was no incriminating material found during search against the assessee for AY 2010-11, he erred in sustaining the impugned two additions. Since the legal issue has been allowed by Ld. CIT(A) no addition could have survived in the eyes of law and, therefore, both the additions of Rs.3,46,710/- and Rs.96,495/- are directed to be deleted. 6. In the result, the appeal of assessee is allowed. Order is pronounced in the open court on 8 th April, 2022. Sd/- Sd/- (Girish Agrawal) (Aby. T. Varkey) Accountant Member Judicial Member Dated: 08.04.2022 JD, Sr. PS Copy of the order forwarded to: 1. Appellant– M/s. Sai Fertilizers Pvt. Ltd., 21, C. R. Avenue, 2 nd floor, White House, Kolkata-700 072. 2. DCIT, Central Circle-1(3), Kolkata. 3. CIT(A), Kolkata-20, Kolkata. (sent through e-mail).. 4. CIT, Kolkata. 5. DR, ITAT, Kolkata, (sent through e-mail).. True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata