2017 (8) TMI 657 - AT - Income Tax

Tribunal rejects Revenue's appeal, upholds CIT(A)'s decision on unjustified additions.

The Tribunal upheld the CIT(A)'s decision to delete the additions for all three assessment years, stating that the additions were unjustified due to the ... Assessment u/s 153A - Proof of incriminating material found during the course of search - Held that:- Addition made in the three years is not based on any incriminating material found during the course of search. In the absence of any challenge to such factual findings of the CIT(A), we find that the CIT(A) has made no mistake in applying the ratio of the judgment of the Hon'ble Bombay High Court in the case of All Cargo Global Logistics Ltd., (2015 (5) TMI 656 - BOMBAY HIGH COURT ) for deleting the impugned addition. At the time of hearing, the emphasis of the ld. DR was only on the point that the ratio laid down in the judgment of the Hon'ble Bombay High Court in the case of All Cargo Global Logistics Ltd., (supra) has not become final since the SLP filed by the Department is pending. However, in our considered opinion, the point made out by the Department does not distract from the subsisting binding nature of the ruling of the Hon'ble Bombay High Court and, therefore, we find no merit in the plea raised by the Revenue. Thus, the order of the CIT(A) is liable to be affirmed. - Decided against revenue Issues Involved:1. Deletion of additions on account of apportionment of expenses between tonnage and non-tonnage activities for Assessment Years (AY) 2006-07, 2007-08, and 2008-09.2. Application of the decision of the Bombay High Court in the case of All Cargo Global Logistics Ltd.3. Validity of additions in the absence of incriminating material found during the course of search.Issue-wise Detailed Analysis:1. Deletion of Additions on Account of Apportionment of Expenses:For AY 2006-07, the Assessing Officer (AO) made an addition of Rs. 3,85,52,286/- by reallocating common expenses between the tonnage and non-tonnage activities based on actual revenues (78:22 ratio), instead of the 67:33 ratio used by the assessee. The CIT(A) deleted this addition, noting that the original assessment had accepted the 67:33 ratio and that no incriminating material was found during the search to justify the reallocation.For AY 2007-08, the AO made an addition of Rs. 2,73,99,267/- by reallocating common expenses based on actual revenues. The CIT(A) deleted this addition, citing the absence of incriminating material found during the search and noting that the original assessment had accepted the 67:33 ratio.For AY 2008-09, the AO made an addition of Rs. 9,89,74,034/- by reallocating common expenses based on actual revenues. The CIT(A) deleted this addition, again citing the absence of incriminating material found during the search and noting that the original assessment had accepted the 67:33 ratio.2. Application of the Decision of the Bombay High Court in the Case of All Cargo Global Logistics Ltd.:The CIT(A) relied on the decision of the Bombay High Court in the case of All Cargo Global Logistics Ltd. to delete the additions. This decision held that no additions could be made in assessments that were not pending as of the date of the search unless incriminating material was found. The CIT(A) found that the additions were not based on any incriminating material and thus were unjustified.3. Validity of Additions in the Absence of Incriminating Material:The CIT(A) noted that no incriminating material was found during the search to justify the additions made by the AO. The CIT(A) analyzed the fact-situation and concluded that the additions were unjustified in view of the decision of the Bombay High Court in the case of All Cargo Global Logistics Ltd. The Revenue's appeal did not challenge the factual findings of the CIT(A) regarding the absence of incriminating material.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the additions for all three assessment years, affirming that the additions were unjustified in the absence of incriminating material found during the search. The Tribunal also noted that the Revenue's appeal did not dispute the factual findings of the CIT(A) and that the decision of the Bombay High Court in the case of All Cargo Global Logistics Ltd. was binding, despite the pending SLP filed by the Department. Consequently, the appeals of the Revenue were dismissed.