TaxTMI 
TaxTMI 
2024 (1) TMI 1461
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.... without jurisdiction as no in criminating material was found during search. He further erred in not following the decision of the Guj HC in ACIT v. Saumaya Construction P. Ltd (387 ITR 529) 2. In law and in facts and circumstances of the case CIT(A) erred in not holding that the order under section 127 for centralisation of the case to Ahmedabad from Mumbai was devoid of natural justice and hence was void ab initio as the Assessee was not given sufficient opportunity of being heard. 3. In law and in facts and circumstances of the case CIT(A) erred in upholding downward adjustment by Rs. 18,92,95,606 incurred by the Appellant to purchase Tugsin AY 2018-19 resulting in disallowance of depreciation of Rs. 4,42,06,564 in AY 2019-20. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. The 1st issue raised by the assessee in ground No. 1 is that Ld. CIT(A) erred in confirming the adjustment made by the AO/TPO without appreciating the fact that no incriminating material was found during the search. 4. The briefly stated facts are that the assesse....
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.... as per the TPO, it is clear that BOL sold such TUGS at a very High Value to the assessee company in a very short span of time of one month only. 4.4 Further, the TPO considering the Statement of Shri Sanjay Mehta recorded during search at his residence, found that no document was maintained for justifying the ALP for the international transactions. This fact came to know during the search proceedings only. 4.5 Further, the Ld. AO before making a reference to the TPO has given an opportunity to the assessee to furnish the objection against such reference. But the assessee has stated that it had no objection for the case being referred to TPO. In view of the above TPO applied the TNMM to determine the ALP and computed the Downward adjustment of Rs. 18,92,95,606/- only. 5. The assessee preferred an appeal before Ld. CIT(A) who upheld the adjustment made by the Ld. AO/ TPO. 6. Being aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us. 7. The learned AR for the assessee before us submitted that there was no incriminating material found from the premises of the assessee during the search operation. The material which was relied on and referred by the....
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.... be made by Assessing Officer in absence of any incriminating material found during course of search under section 132 or requisition under section 132A of the Act in the batch of cases namely PCIT, Central-3 -Vs- Abhisar Buildwell Pvt. Ltd. reported [2023] 149 taxmann.com 399 (SC) by observing as follows: "Section 153A, read with sections 132 and 143, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Conditions precedent) - Whether object of section 153A is to bring under tax undisclosed income which is found during course of search or pursuant to search or requisition; therefore, only in a case where undisclosed income is found on basis of incriminating material, Assessing Officer would assume the jurisdiction to assessor reassess total income for entire six years block assessment period even in case of completed/unabated assessment- Held, yes - Whether in case of search under section 132 or requisition under section 132A, Assessing Officer assumes jurisdiction for block assessment under section 153A and that all pending assessments/reassessments shall stand abated - Held, yes - Whether in respect of completed assessments/unabated assessments no a....
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....erials belonging to the assessee was recovered from the premises of the 3rd party in the course of search proceedings under section 132 of the Act. Then, the AO of the search party has to record the satisfaction by observing that the documents found in the course of search from the premises of the 3rd party belongs to the person other than searched person and he/she (AO of search assessee) will hand over such satisfaction note along with the necessary documents to the AO of such other person (present assessee) who was not subject to search. The AO of the other person (present assessee) will again record his satisfaction that the documents found from the premises of the 3rd party in the course of search has bearing on the income of the assessee. The question arises what the fate of the case would be where there was search in the case of the assessee as well as in the case of the other party under the provisions of section 132 of the Act and the document was found from the premises of the 3rd party. This issue has been answered by the order of this Tribunal in the case of Shri Rajesh Sundardas Vaswani & others in IT(SS)A No. 95/Ahd/2019 & others where the coordinate bench vide order ....
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....on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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 the course of search which were not produced or not already disclosed or made known in the course of original assessment." 30. ITAT, Delhi Bench in the case of DIT Vs. Smt. Shivali Mahajan and others, ren....
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....Rani Lakhotia vs. ACIT and Subhag Khattar Vs. ACIT are on the same line. 32. Hon'ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No. 60 of 2017 has considered the following question of law: "Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law? " 33. After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: "6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the ITAT. The ITAT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016] 380 ITR 573. 7. A que....
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....limited to incriminating material found during the course of search?" 35. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without Shri Dilipkumar Lalwani and Others (107 Appeals) 36 saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals u....
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....y received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs. 11,05,51,000/- on the basis of the material which Shri Dilipkumar Lalwani and Others (107 Appeals) 37 was not found d....
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....er with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed." 36. As far as decisions relied upon by the ld.CIT-DR are concerned, we have already considered the decision in the case of E.N. Gopakumar (supra). Other decisions are also on the similar line, but they are not in coherence with the position of law propounded by the Hon'ble jurisdictional High Court. Therefore, Tribunal being subordinate to the Hon'ble Gujarat High Court, is required to first follow Hon'ble Supreme Court and thereafter Hon'ble jurisdictional High Court. If no ratio of the law is available from Hon'ble Supreme Court as well as Hon'ble jurisdictional high Court, then the decision of non-jurisdictional High Court is to be followed. Therefore, we do not deem it necessary to recapitulate the decisions of Hon'ble Kerala High Court and make discussion on them. Ld. CIT-DR was un....
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....ons have been made on the basis of the material found during the search relating to some third person. In other words, the AO has not made the addition on the basis of material found during the course of search of these three assessees. We will discuss the material considered by the AO in the subsequent part of his order. Primarily, after looking the material considered by the AO and compiled in tabular form by the ld. counsel for the assessee, we have verified that these additions are not based on the material found during the course of search conducted at the premises of these three assessees. Let us take note of the material considered by the AO for making the addition. These details have been compiled in tabular form and they read as under: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 37. With the assistance of the ld. representatives, we have gone through the record carefully, and material available on record. For the sake of reference, let us take the assessment of Shri Deepak Budharmal Vaswani for the assessment year 2009-10. The assessee has filed his return of income under section 139(1) of the Act on 30.9.2009 declaring total i....
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....roceedings under section 153A. They ought to be considered under some other provisions viz. Section 153C or some other sections; but not under this section. 9.3 Based on the above, we hold that the revenue has to follow the procedures laid down under the provisions of section 153C of the Act in a situation where the documents were found from the premises of the 3rd party irrespective of the fact that the other party was also subject to the search. In other words, the process as provided under section 153C of the Act has to be followed by the revenue for the purpose of making the addition or disturbing completed assessment years based on the documents found in the course of search at the premises of the 3rd party. 9.4 Coming to the facts of the case on hand, we note that the TPO while making the downward adjustment relied certain documents being the MOA between assessee's AE and Kalsubai Shipping & Offshore Pvt Ltd but such MOA was found during the independent search at the premises of Shri Sanjay Prapatraj Mehta, Mrs Trupti S Mehta, Shri Vishwa Sanjay Mehta, at 502, Shanti shilp, 24 ashok dave marg, Nr Takeshwar post office waghawaadi road, Bhavnagar. This fact can be verifie....
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....enses and the amount for the guarantee to be provided. Kindly note we are ready to provide a 25% margin money for the requested finance amount. 2. Ref: Ship Recycling Policy - Collateral A. Our sincere request not to consider all the ship recycling companies at same level while advising the collateral security. Please consider 10% collateral for good customers and the standard percentage in policy for others. We also request you to consider based on Class NK certification received by the yards as well yards that were inspected by EU to be included in their list as well as the past performance of the clients. B. As a special Case Priyablue can do 15%. C. Netting Of Liability D. Ship Recycling Policy-Associate companies 3. Ref: Best Oasis Ltd - Colleteral Margin 40%. Previously it was 30% 4. Bhuval Industries-100 Cr LC/BC 15 Cr CC with 15% Colleteral On perusal of the above page, it is noticed that Net profit USD 12,776,400 declared. In this regard, it is requested - Explain with documentary evidence and transaction trail as to how the various transactions shown in the pages of 14 Annexure-A-3 a....
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....In law and in facts and circumstances of the case CIT(A) erred in not holding that the order under section 127 for centralisation of the case to Ahmedabad from Mumbai was devoid of natural justice and hence was void ab initio as the Assessee was not given sufficient opportunity of being heard 3. In law and in facts and circumstances of the case CIT(A) erred in upholding the disallowance of depreciation of Rs. 4,42,06,564 4. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 11. The issue raised by the assessee in ground No. 1 is that the ld. CIT-A erred in not holding the assessment framed under section 153A of the Act as invalid. 12. During the assessment proceedings u/s 153A of the Act, the Ld. AO observed that assessee has purchased 3 TUGS namely (i) Malviya 23, (ii) Malviya 25, (iii) Malviya 27 from its AE namely BOL. The assessee out of these TUGS, capitalized two TUGS bearing name as Malviya 23, and Malviya 25 amounting to Rs. 50,62,10,000/- only and claimed depreciation on it for Rs. 10,13,15,819/during the year under consideration. However, asses....