Assessee wins appeal for deduction, Revenue appeal dismissed, Tribunal cites absence of notice.

The Tribunal allowed the assessee's appeal for the deduction of Rs. 53,00,00,000/-, quashing the assessment order due to the absence of a mandatory notice under section 153C. The Tribunal also dismissed the Revenue's appeal regarding the addition of Rs. 3.66 crores, upholding the deletion by the Commissioner of Income Tax (Appeals).

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Issues Involved:

1. Disallowance of expense of Rs. 53,00,00,000/- claimed as per Debit Note issued by M/s Jasmine Buildmart Private Limited.
2. Legality of the Assessment Order under section 153B(1)(b)/143(3) considering the impugned year as the year of search.
3. Addition of Rs. 3.66 crores on account of failure to prove the identity, creditworthiness, and genuineness of unsecured loans and advances.

Issue-wise Detailed Analysis:

1. Disallowance of Expense of Rs. 53,00,00,000/- Claimed as per Debit Note:

The assessee contended that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs. 53,00,00,000/- claimed as per the Debit Note issued by M/s Jasmine Buildmart Private Limited (JBPL). The appellant argued that the payments were made through proper banking channels. The Tribunal examined the documentary evidence and found that the appellant had entered into a development agreement with JBPL, which included an agreement for the appellant to reimburse certain project-related expenses incurred by JBPL. The Tribunal noted that these documents were found during the search and seizure proceedings, indicating their authenticity.

JBPL had incurred significant expenses related to External Development Charges (EDC), Infrastructure Development Charges (IDC), and other project-related costs, which were reimbursed by the appellant through banking channels. The Tribunal found that the payments made by JBPL to the Haryana Town and Planning Department were statutory and genuine. Additionally, the Tribunal referred to an arbitration award that confirmed the appellant's liability for these expenses. The Tribunal also noted that the Assessing Officer of JBPL had acknowledged the reimbursement of these expenses by the appellant in JBPL's assessment order.

Based on these findings, the Tribunal concluded that the appellant was lawfully entitled to the deduction of Rs. 53,00,00,000/- and directed the Assessing Officer to allow the same.

2. Legality of the Assessment Order under Section 153B(1)(b)/143(3):

The appellant raised additional grounds challenging the legality of the assessment order passed under section 153B(1)(b)/143(3), arguing that the impugned year was not the year of search. The Tribunal admitted these additional grounds as they went to the root of the matter. The Tribunal noted that the search and seizure action was conducted on the Krrish Group on 09.11.2011, and the seized documents were received by the Assessing Officer on 29.08.2013. According to the proviso to section 153C, the date of receiving the documents should be considered as the date of search.

The Tribunal found that the Assessing Officer had incorrectly proceeded on the premise that the assessment year under consideration was the year of search. The correct assessment year should have been 2014-15, making the year under consideration one of the six assessment years to be considered in cases of search. The Tribunal noted that no notice under section 153C was issued to the assessee, which was mandatory for initiating proceedings. The Tribunal referred to similar cases within the Krrish Group, where the absence of notice under section 153C led to the quashing of the assessment orders.

Based on these findings, the Tribunal quashed the assessment order, declaring it void, illegal, and bad in law.

3. Addition of Rs. 3.66 Crores on Account of Unsecured Loans and Advances:

The Revenue appealed against the deletion of the addition of Rs. 3.66 crores made by the Assessing Officer due to the assessee's failure to prove the identity, creditworthiness, and genuineness of unsecured loans and advances. The Tribunal noted that Rs. 2.66 crores of the loan liability were brought forward from earlier years and could not be added under section 68 for the year under consideration. The remaining Rs. 1 crore was received from Krrish Reality Ventures Pvt. Ltd., a part of the Krrish Group, which was also subjected to search proceedings.

The Tribunal found that the identity of the creditor was established, and the transaction was accepted in the assessment of Krrish Reality Ventures Pvt. Ltd. Therefore, the Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal.

Conclusion:

The Tribunal allowed the assessee's appeal regarding the deduction of Rs. 53,00,00,000/- and quashed the assessment order due to the absence of a mandatory notice under section 153C. The Tribunal dismissed the Revenue's appeal concerning the addition of Rs. 3.66 crores, upholding the deletion by the Commissioner of Income Tax (Appeals).

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