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M/s. Gitanjali Infratech Ltd. Versus ACIT, Central Circle-1 (2) , Mumbai

2018 (2) TMI 965 - ITAT MUMBAI

Assessment proceedings u/s. 153C - disallowance of the claims of expenditure u/s. 37 (1) - principles of res judicata OR consistency - Held that:- We find that the documents do not disclose any undisclosed income on part of the assessee for any of the above AY's . The AO had disallowed business losses and that clearly prove that seized documents were of no relevance for the AO to make the disallowance. We allow the additional grounds raised by the assessee for all the three AY. s and decide the .....

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gh Court in the case of Gopal Purohit (2010 (1) TMI 7 - BOMBAY HIGH COURT) has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. While upholding the principles of res judicata the FAA has not demonstrated as to how the facts of AY. 2009-10 were different from the facts of other three AY's. especially of AY. 2008-09. This one more reason to reverse the order of the FAA. - Decide .....

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dential/commercial buildings. Details of filing of returns, returned incomes, assessment dates etc. , can be summarised as under: A. Y. ROI filed on Returned Income Assessment dt. Assessed Income 2008-09 3. 12. 2013 ₹ 6, 41,16, 960/- 20/03/2014 ₹ 6. 46 crores 2010-11 30/11/12 ₹ 75, 91,149/- 20/03/2014 Rs. 7.77 lakhs 2011-12 30/11/2012 Rs. 31, 54, 224/- 20/03/2014 ₹ 17. 68 lakhs 2. Vide its applications, dtd. 07/09/2017, the Assessee has requested for admitting that additi .....

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atter. In the additional ground the assessee had challenged the action taken by the AO u/s. 153C C of the Act. Therefore, we admit the additional grounds raised by the assessee for all the three years. The additional grounds read as under: 1. The notice dated 22. 10. 2012 issued under section 153C and the subsequent assessment order passed under section 143(3) r. w. s 153C are bad in law as the material seized during the course of search does not reveal any undisclosed income of the Appellant. T .....

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s not at all justified and the same may be deleted. 4. The Appellant craves leave to add, alter or amend any of the above grounds of appeal. 3. Before proceedings further, we would like to take note of the brief facts of the matters before us. Assessee-compay is part of Gitanjali Group. A search action u/s. 132 (1) and survey action u/s. 133A of the Act were initiated in the group cases on 29 /11/2011. During the proceedings, seized material belonging to the assessee was found and accordingly pr .....

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against the said income declaring loss of ₹ 31. 54 lakhs, that the AO had examined the eligibility of expenses u/s. 57 (iii) of the Act, that he had observed that various expenses claimed by the assessee had resulted in business loss, that the AO had given a finding that assessee had not shown any business income during the year, that the assessee had submitted that expenses were incurred for the purpose of general day-to-day operations and conduct of the business, that it was also conten .....

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id further advances relatable to the said projects that the development business of the assessee had commenced during the year under appeal, that it had not returned any income, that the AO was justified in holding that the expenses debited to the P&L account should have been capitalised. Referring to the case of Vardhaman Developers Ltd. (55 taxmann. com 370), relied upon by the assessee, the FAA held that the business of the assessee had commenced, that it had incurred similar expenses to .....

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ngs certain papers were seized, that the seized material had been placed on record, that as a consequent to the search action the assessee was served with the notice u/s. 153C, on 22/10/2012, that the AO had made dis-allowance of expenses u/s. 37(1) of the Act, that the action of the AO in issuing the notice u/s. 153C was without jurisdiction, that no incriminating material was found or seized during the search proceedings for any of the AY. s, that pages 92-96, seized during the search, were so .....

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e no addition on the basis of seized material, that while finalising the assessment he disallowed the claim of expenditure u/s. 37 (1) of the Act, that the disallowance made by the AO and all the AY. s was based on regular books of accounts, that the same did not have any nexus with the seized material, that the assessment proceedings u/s. 153C of the act were bad in law. He relied upon the case of Sinhgad Technical Education Society (378 ITR 84) of the honorable Bombay High Court that was later .....

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th regard to AY. s 2010-11 and 2011-12, he stated that returns were filed on 20/09/2010 and 27/09/2011 respectively, that the same were processed and accepted u/s. 143 (1) of the Act. It was further argued that the FAA, while deciding the appeal for the AY. 2009-10 did not confirm the additions made by the AO under the same heads. The Departmental Representa - tive(DR)supported the order of the AO and stated that documents belonged to the assessee, that the AO had rightly made the disallowace. 4 .....

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while completing the assessment he did not refer to any of the seized documents, that the seized material also pertained to the AY. 2012-13 and not to any of the AY. s under consideration, that the seized documents, wherein the name of the assessee is mentioned, were extract of the Ledger accounts, that the AO had not mentioned anywhere in his assessment order is as to how the Ledger accounts represented the undisclosed income of the assessee. Here, we would like to reproduce the provisions of s .....

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ferred to in section 153CA, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person shall be inserted. that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153CA A perusal of the above section clearly shows that there should be some relation betw .....

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assets represent the undisclosed income of the other person then the incriminating material, including the assets are transferred to the AO having jurisdic -tion over that other person. But the basic and foremost thing is the documents/ asset should be incriminating. If the documents/assets do not represent the undisclosed income of the other person, then there would be no justification for passing order u/s. 153C. Here, would like to refer to the case of the Hon ble Apex Court. The facts of the .....

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s not adhering to the object of providing education to the masses and the managing trustees were using the assessee s trust for their own benefit. Accordingly, notice u/s. 153CC of the Act was issued on 18/04/2007 for the AY. s 2000-01 to 2005-06 and u/s. 143(2) for AY. 2006-07. Reassessment proceedings were taken for the AY. 1999-2000. On the ground that the activities of the trust were not genuine and were not being carried out in accordance with the trust deed, registration of the trust was c .....

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al, the assessee raised an additional ground questioning the validity of the notice u/s. 153CC of the Act on the ground that satisfaction was not properly recorded and that the notice u/s. 153CC was time-barred in respect of AY. s 2000-01 to 2003-04. The Appellate Tribunal allowed the appeal on the additional ground and quashed the notice. The order of the Tribunal was upheld by the High Court. The appeal filed by the Department before the Hon ble Apex Court was decided as follow: …. . th .....

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r thereafter. The Tribunal rightly permitted this additional ground to be raised and correctly dealt with the ground on the merits as well. The High Court was right in affirming this view of the Tribunal. We have gone through the documents seized by the Department authorities during the search proceedings. We find that the documents do not disclose any undisclosed income on part of the assessee for any of the above AY. s . The AO had disallowed business losses and that clearly prove that seized .....

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ither on jurisdictional question or on merits. So, revering the orders of the FAA, we allow the appeals filed by the assessee-company. Before concluding we will like to mention that principles of res judicata do not apply to income tax proceedings, but it is equally true that rule of consistency is applicable to income tax matters. In the case of International Tractors Ltd. ( 397 ITR 696)the Hon ble Delhi High Court has held that deductions allowed in the earlier assessment years should not be w .....

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