Income Tax Appellate Tribunal - Mumbai
Wellknown Textile Industries P.Ltd, ... vs Dcit Cen Cir 7(4), Mumbai on 13 December, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " I" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM
ITA No. 5526/Mum/2016
(A.Y. 2010-11)
The Dy. Commissioner of W ell Known Technologies
Income Tax, CC -7(4), Pvt. Ltd.
Room No.653, 6th Floor, Vs. 14 t h Floor, Nirmal Building,
Aayakar Bhavan, M.K. Road, Nariman Point,
Mumbai-400 020 Mumbai-400 021
Appellant .. Respondent
PAN No.AAECM3469J
ITA No. 5815/Mum/2016
(A.Y. 2013-14)
ITA No. 5814/Mum/2016
(A.Y. 2014-15)
The Dy. Commissioner of W ell Known Textiles
Income Tax, CC-7(4), Industries Pvt. Ltd.
Room No.653, 6th Floor, Vs. 14 t h Floor, Nirmal Building,
Aayakar Bhavan, M.K. Road, Nariman Point,
Mumbai-400 020 Mumbai-400 021
Appellant .. Respondent
PAN No. AAACW0552A
ITA No. 5852/Mum/2016
(A.Y. 2013-14)
ITA No. 5853/Mum/2016
(A.Y. 2014-15)
W ell Known Textiles The Dy. Commissioner of
Industries Pvt. Ltd. Income Tax, CC -7(4),
14 t h Floor, Nirmal Building, Room No.653, 6 t h Floor,
Vs.
Nariman Point, Aayakar Bhavan, M.K.
Mumbai-400 021 Road,
Mumbai-400 020
Appellant .. Respondent
PAN No. AAACW0552A
2
ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016
Revenue by : Mrs. Sushmita Misra , DR
Assessee by : Rishabh Shah, AR
Date of hearing: 06-12-2017 Date of pronouncement : 13-12-2017
ORDER
PER MAHAVIR SINGH, JM:
These cross appeals are arising out of the different order of Commissioner of Income Tax (Appeals)-49, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-CIT(A)-49/IT-129, 130,131,132-134/2015-16 dated 12- 07-2016, 17-06-2016. The Assessments were framed by the Deputy Commissioner of Income Tax, Circle-7(4), Mumbai [in short DCIT] for the assessment year 2010-11, 2013-14, 2014-15 vide order even dated 01- 04-2015 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act').
2. The first issue in ITA No. 5815/Mum/2016 for AY 2013-14 of Revenue's appeal is as regards to the order of CIT(A) deleing the disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with rule 8D of the Income Tax Rules 1962 (hereinafter the Rules), i.e. under Rule 8D(2)(ii) at ₹ 27,76,374/- and under Rule 8D(2)(iii) on average value of investment at 0.5% at ₹ 16,65,521/-. The AO also made disallowance under this provisions while computing the book profit under section 115JB of the Act. For this Revenue has raised following two grounds: -
"1. "On the fact and in the circumstances of the case and in (aw, the cfl14) has erred in restricting the addition mate by .91.0 u/s (read 3 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 with rule 82) of income-tax 'Rules 1962 ofRs.42,66271/- to Rs.175624/-"
2. On the facts and circumstances of the case.
The Ld. CIT(A) has erred in restricting the addition made by the AO on account of adhoc disallowance u/s 14A read with rule 8D of income Tax Rules 1962 of Rs. 42,66,271/- to Rs. 1,75,624/- while computing the book profit u/s 115JB of the .Act."
3. Briefly stated facts are that the assessee is a domestic company engaged in the business of textiles. The AO during the course of assessment proceedings noted that the assessee has claimed exempt income i.e. dividend income of ₹ 44,41,505/- under section 10(38) of the Act. According to AO, the assessee has made investment of ₹ 33,32,28,676/- in the instruments yielding exempt income. The assessee has also made suo moto disallowance under section 14A of the Act at ₹ 1,75,624/-. The AO applying Rule 8D of the Rules read with section 14A of the Act simply applying the formula made disallowance under section 8D(2)(ii) at ₹ 27,76,374/- under the Rule 8D(2)(iii) at ₹ 16,65,521/-. Aggrieved assessee preferred the appeal before CIT(A), who after going through the facts that the assessee has interest free funds available to the tune of ₹ 85.39 crores as against the investment of ₹ 33.29 crores in the assets giving exempt income, noted that the assessee has interest free funds available from where investment is made and in view of the presumption that the investment would be out of interest free funds, deleted the disallowance made by AO under Rule 8D(2)(ii) as under: -
"51.2. I find that the disallowance against interest expense was not justified since from the balance sheet it is noted that the appellant had interest free funds available to the tune of 4 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 Rs65.39 crores as against the investment of Rs33.29 crores in assets capable of yielding exempt income. Thus there is a presumption that investment would be out of interest tree funds generated or available with the company since the interest free funds were sufficient to meet the investment Therefore, the interest expense of Rs.25,37,2601- could not be considered for computing disallowance of rs.10,93,863/under Rule 8D(2)(ii), in view of the decision of the jurisdictional High Court in the case of CIT vs HDFC Bank Ltd 366 ITR 505, which has been further explained in the case of HDFC Bank Ltd vs DCII in Writ Petition No 1753 of 2016 (order dated 25.2 2016). In the case of Reliance Utilities and Power Ltd 313 ITR 340 it has been held by the Hon'ble High Court of Bombay that 'tin principle, if there are funds available, both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company if the interest-free funds were sufficient to meet the investment. S This decision was in context of section36(1)(ii) but was applied by the Jurisdictional High Court in the case of CIT vs HDFC Bank Ltd (supra) while interpreting section 14A of the Act In view of above discussion, the disallowance of interest expense under Rule 8D(2)(H) of Rs 10,93,863/- is not found to be justified and the same is deleted."5
ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016
4. Similarly, the CIT(A) also deleted the disallowance under Rule 8D (2)(iii) made by AO by noting the fact that there is no expenditure incurred by assessee except interest, depreciation and other expenses of ₹ 3,64,208/-. According to CIT(A), the assessee has suo moto disallowed a sum of ₹ 3,64,208/-, no further disallowance would be made and for this CIT(A) observing in Para 5.1.3 as under: -
"5.1.3. Further, I find that the A.O. has computed the disallowance under Rule 8D(2)(iii) at Rs 16,64898/- @ 5% of average value of investment. From the submission made by the appellant, it is noted that out of total expenses debited to profit and loss account of Rs.2946, i28/-. an amount of Rs25,37260/- is on account of interest expense which is not covered under the quantum of disallowance and an amount of Rs.44660/- is on account of depreciation which has been disallowed and added while computing business income. After excluding these expenses, the actual expense which can be said to be in relation to exempt income would be only Rs 364.208/-. Accordingly, the disallowance under Rule 8D(2)(iii) is to be restricted to the said amount i.e. Rs.354205/-
in view of the decision in the case of Gillette Group India Pvt Ltd of the ITAT, Delhi and the decision in the case of ACIT vs lqbal & Chagala of the ITAT, Mumbai, as cited by the appellant. Since the appellant has computed and made a disallowance of Rs 3642081- any further addition on this count is found to be not justified in view of above, the entire addition of 6 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 Rs 23,94,553/- made by the AO u/s 14A of the Act, is deleted and ground No.1 is allowed."
Aggrieved, now Revenue is in appeal before Tribunal.
5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the CIT(A) has clearly recorded the finding of fact that the interest free funds available with the assessee was to the tune of ₹ 85.39 crores as against the investment of ₹ 33.29 crores in the assets yielding exempt income. In such scenario, the presumption will be that the assessee has made investment out of interest free funds unless and until the AO has pointed out in nexus that the investment that all the interest bearing funds have been invested. The presumption will be in favour of assessee in view of the decision of Hon'ble Bombay High Court decision in the case of CIT vs HDFC Bank Limited [2014] 366 ITR 505 (Bom). In view of the above facts and circumstances, assessee has share capital and resources which is much more than the investment of tax free incomes and once assessee has sufficient own funds for making investment, then the presumption will be that no disallowance can be made on account of interest. This view of ours is supported the decision of Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra). Accordingly, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same.
6. Similarly, in respect of disallowance under Rule 8D(2)(iii), there is no expenses relatable to exempt income in the profit and loss account of the assessee and other expense of ₹ 3,64,208/- have already been disallowed by the assessee suo moto. In view of these facts, we confirm the order of CIT(A) and this issue of Revenue's appeal is dismissed.
7. The next issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by AO of exempt income under section 7 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 14A of the Act read with Rule 8D of the Rules while computing book profit under section 115IB of the Act.
8. At the outset, the learned Counsel for the assessee stated that this issue is covered in favour of assessee and against Revenue by the decision of Special Bench of this Tribunal in the case of ACIT vs. Vireet Investments (P.) Ltd. [2017] 58 ITR (AT) 313 (Delhi - Trib.) (SB) wherein the Tribunal has clearly held that no disallowance under section 14A of the Act r.w.r 8D of the Rules can be made while computing book profit under section 115JB of the Act. The learned CIT Departmental Representative could not controvert the above proposition. Accordingly, we are of the view that this issue is covered by the special bench decision of this Tribunal in the case of Vireet Investments (P.) Ltd. (supra), respectfully following the same, we dismiss this issue of Revenue's appeal.
9. Similar is the issue in Revenue's appeal in ITA No.5814/Mum/2016 for AY 2014-15 and the grounds raised are as under: -
"1. on the fact and the circumstances of the case in law, the CIT(A) has erred in restricting the addition male by AO u/s 14A read-with rule 8D of income-tax Rules 1962 of ₹ 30,39,879/- to Rs.57,180/-"
2. On the facts and circumstances of the case restricting the addition made by the AO on account of the adhoc disallowance u/s 14A read with rule 8D of Income-Tax Rules 1962 of Its. 30,39879/- to Rs. 57,180/- while computing the book prof it under section 115JB of the Act."
8ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016
10. During the course of hearing before us, both the parties agreed that the facts and circumstances are exactly identical as in the AY 2013- 14 and there is no change in facts and circumstances in this year also. Both the parties agreed that the similar view is to be taken in this year also. As we have already confirmed the order of CIT(A) deleting the addition in ITA No. 5815/Mum/2015 for AY 2013-14, respectfully following the same and taking consistent view, we confirm the order of CIT(A) deleing the addition in this year also. Both the appeals of Revenues are dismissed.
11. Coming to assessee's appeal in ITA No. 5852/Mum/2016 for AY 2013-14, the only issue in this appeal is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of redemption of the provision made for reduction of preference shares while computing the book profit under section 115JB of the Act. For this assessee has raise following ground No.1: -
"On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making disallowance on reduction of the provision made for redemption of preference shares of Rs.15,13,197/- while computing the book profits u/s 115JB of the Act, without is an ascertained liability and hence liable to be reduced while computing book profit u/s 115JB of the Act."
12. Briefly stated facts are that the AO noted that the assessee is assessed under MAT Provisions and therefore while computing book profit he disallowed the amount reduced on account of provisions for preference shares redemption reserve of ₹ 13,73,230/-. The CIT(A) also confirmed the disallowance by holding that this amount is in the nature of 9 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 reserve and unascertained provisions/liability by observing in Para 7.6 as under: -
"7.6 From above discussion it is clear that the basic issue in respect of this ground is whether the net profit, as per the statement of profit and loss account prepared in accordance with provisions of part-11 of Schedule VI to the companies Act, 1956, is to be further reduced by the amount of preference share redemption reserve appropriated from the surplus in the statement of profit and loss account to arrive at the book profit as per section 115JB of the I.T. Act. As already held in para 7.4.4 above, that the appellant has not credited the profit and loss account by the said amount of addition to reserves of Rs. 1373230/-, so any reduction from the net profit was not required as per Explanation (i). The appellant has not claimed the said amount in the statement of profit and loss account as an expense/liability, so its claim to reduce the net profit by the said amount could not be allowed. Further, as held in para 7.4.7 above, the amount of Rs.13,73,230/- is in the nature of reserve and not provision/liability. Therefore, the said amount was not to be excluded from the net profit to arrive at the book profit u/s.1 15 JB of the Act. Accordingly, the addition of Rs
13.73230/- is upheld and ground No.4 & 5 are dismissed."
Aggrieved, now assessee is in appeal before tribunal.
10ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016
13. At the outset, the learned Counsel for the assessee stated that this issue is now squarely covered by ITAT decision in assessee's sister concern case in the case of well known Synthetics Pvt. Ltd vs ACIT in ITA No. 2691/Mum/2015 for AY 2010-11 order dated 22-11-2016, wherein it is held that the preferential share is akin to the debentures for the reason that both are repayable and are in the nature of debt. It was held that this amount debited to the P&L Account is in the nature of charge on the profit and thus, cannot be said to be appropriation out of profits. The Tribunal considered this issue vide Para 15 to 17 as under: -
"15. We have considered this aspect of the argument also. But, we do not find force in his contention of Ld. DR. It is well settled law that under the income tax law, taxability of an amount or otherwise is determined on the basis of intrinsic nature of a transaction and not necessarily on the basis of its nomenclature or the manner in which same is reflected in its accounts by an assessee. As discussed in detail above, the impugned amount has been debited in the Profit & Loss account of the assessee because of mandate of law. As discussed above in detail, section 80 of the Companies Act, 1956, stipulate that premium payable on the redemption on preference shares is to be provided for out of the 'profits' of the company or out of Company's Security Premium account. Thus, if this amount is not provided for from the security premium account, then, it has to be compulsorily provided for out of the 'profits' of the company. Under these circumstances, if this amount is debited in the P & L A/c, then it partakes the character akin to a 'charge' on the profits. Thus, the impugned amount debited in the profit and loss account is a 11 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 'charge' on the profits and cannot be said to 'appropriation' out of profits. Hence in order to arrive at and compute the book profit u/s 115JB, this amount has also to be adjusted from the profits of the year which has been rightly done by the assessee. Further, if an amount is actually of the nature of a 'charge', it shall not become an item of 'appropriation', merely because it has been inadvertently shown by the assessee in its P & L A/c along with the other amounts of 'appropriation'. Thus, the AO could not have denied the benefit of this amount of 'charge' by notionally adding this amount to the amount of profits of the year for the purpose of computing book profit u/s 115JB.
17. Accordingly, we hold that the reasons assigned by the authorities below for making addition for book profit of Rs.39,82,190/- on account of preference share redemption reserve cannot be upheld and Assessing Officer is directed to allow the same and the amount should be reduced from the working of the book profit u/s 115JB. Accordingly, ground No.1 as raised by the assessee is allowed."
14. When this was put to the learned Senior Departmental Representative he fairly agreed that the issue is covered by Tribunal's decision. As the issue is squarely covered, and in the given facts and circumstances of the case, we respectfully following the co-ordinate Bench decision in assessee's sister concern case on principle, in the case of Well Know Synthetics Pvt. Ltd. (supra), we delete the disallowance made by AO on account of the reduction of provision made on the redemption of preference shares. Accordingly, the orders of the 12 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 lower authorities are reversed and this issue of the assessee's appeal is allowed.
15. Coming to assessee's appeal in ITA No. 5853/Mum/2016 for AY 2014-15, the issue is exactly identical and same as in ITA No. 5852/Mum/2016 for the AY 2013-14. The grounds raised are reads as under: -
"On the facts and circumstances if the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making disallowance of reduction on account of the provision made for Premium on redemption of preference shares of ₹ 14,56,860/- while computing the book profits u/s. I15JB of the Act, without appreciating the fact that it is an ascertained liability and hence liable to be reduced white computing book profit u/s I15JB of the Act."
16. Both the parties agreed that the issue is exactly identical and the facts and circumstances are also exactly identical. Respectfully, following and taking a consistent view, we delete the disallowance in this year also and reversed the orders of the lower authorities. The issue of assessee's appeal is allowed.
17. In ITA No. 5526/Mum/2016 for AY 2010-11, the only issue in this appeal of Revenue is as regards to the order of CIT(A) quashing the assessment framed by AO under section 153A read with section 143(3) of the Act by observing that the assessment is not based on any incriminating material found during the course of search. For this Revenue has raised following grounds: -
13ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 "1. On. the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the additions made in the assessmer order passed u/s. 153A r.w.s. 143(3) of the Act on issues not based on any incriminating material found during the course of search, without appreciating the fact that the department has not accepted the order passed by the Hon'ble High Court in the case of All Cargo Logistics Ltd., and preferred to life Special Leave Petition before the Hon'ble Supreme Court.
2. On the facts and circumstances of the case, the 14. CFJA) has erred in deleting the addition of Rs.54,34,21 7/ made u/s. 71IA read with rule 81) of Income Tax Rules 1902, without appreciating the fact that the department has not accepted the order passed by the Hon'ble High Court in the case of All Cargo Logistics Ltd., and preferred to file Special Leave Petition before the Hon'ble Supreme Court.
3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by AO as investments in 0% Preference shares for working out the disallowance u/s. 14A read with Rule 8D of Income Tax Rules 1962, without appreciating the fact that there was no likelihood of earning exempt income from the same and moreover the department has not accepted the order passed by the Hon'ble high Court in the case of All Cargo Logistics Ltd., and preferred to file 14 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 Special Leave Petition before the Hon'ble Supreme Court."
4. On the facts and circumstances of the case, the Ld. CITA) has erred in deleting the adhoc disallowance of Rs. 5434217/- made u/ s. 14A read with rule 8D of Income Tax Rules 1962 while computing the book profit u/s. 115JB of the Act, without appreciating the fact that the department has riot accepted the order passed by the Hon'ble 111gb Court in the case of All Cargo Logistics Ltd., and preferred to file Special Leave Petition before the Hon'ble Supreme Court."
18. Briefly stated facts are that the AO while completing the original assessment under section 143(3) of the Act on the original return of income made disallowance under section 14A of the Act amounting to ₹ 43,82,390/-. Subsequently, a search under section 132 of the Act was carried out on 23-05-2013 on well-known group of companies. In response to this search under section 132(1) of the Act, the AO issued notice under section 153A of the Act dated 15-03-2013. Subsequently, the AO framed the assessment under section 153A of the Act read with section 143(3) of the Act and also made disallowance under section 14A of the Act read with Rule 8D of the Rules at ₹ 54,95,517. The CIT(A) deleted the addition by following the decision of the Hon'ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) and by observing as under: -
"8.3. I find that the assessment for A.Y.2010- 11 was completed and it did not abate following the search u/s 132 in its case since assessment u/s 143(3) was completed vide 15 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 order dated 15.3.2013. In the said order addition u/s.14A was made amounting to Rs.4382390/- The A.O. has made an addition of Rs.5495,517/- in the order passed ufs.153A dated 1.4.2015, since the appellant has made a disallowance u/s 14 of Rs 61,300/- in the return u/s 153A as against the disallowance of Rs. 1113,498/- made in the original return of income. However, it is noted that the total disallowance computed uls,14A in the assessment uls.143(3) works out to Rs 54,95,888/- whereas the A.O, has computed the disallowance uls.14A in assessment u/s.153A at Rs.54,95,517/-. The small difference of Rs.371/- appears to be an error in computation.
8.3.1 Thus, there is no addition in the order u/s 153A other than what was made in the assessment passed u/s.143(3). Following the decision for A.V 2009-10 as discussed in para 5.1, 5.2. & 53 above, it is held that the A.O. has rightly made the addition u/s 14A amounting to Rs 54.34,217/- since the addition made in the original assessment has to be retained in the assessment order passed u/s 153A, subject to the decision of appeals against the assessment order u/s.143(3) of the Act. In view of above discussion, the grounds taken at ground No.1 & 2 are dismissed. The ground No.4 ground No 3 in para 2 of this order pertain to A.Y. 2009-10 only) has been withdrawn by the appellant and the same is dismissed as infructuous.16
ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 8.4. Ground No.5 is against addition of Rs 54,34,217/- in the computation of book profit u/s.115J6 of the Act The appellant has made submissions similar to those in AX. 2039-1 0.
8.5. Following the decision for A.Y.2009-10 as per para 7.4. above, the A.O is directed to verify if any disallowance ufs.14A was made while computing the book profit u/s.115J8 in the original assessment order passed on 15.3.2013, as modified by the appellate orders and restrict the disallowance u/s 14A while computing the book profit accordingly. If no such addition was made in the original assessment, then the entire disallowance will be deleted."
Aggrieved, Revenue is in second appeal before Tribunal.
19. At the outset, the learned Counsel for the assessee stated that none of the disallowance is based on seized material. The learned Counsel for the assessee stated that these items are disallowed on the basis of the entries found recorded in regular books of account of the assessee. This fact is not denied by the learned CIT-DR during the course hearing before us. When a specific point was raised by the Bench whether any seized material relating to these disallowance are there or not? He fairly conceded the position that from the order of the AO or from the order of the CIT(A) or from the seized material it cannot be gathered whether any seized material relating to these disallowances are available on record. As there is a categorical fact recorded by the AO as well as CIT(A) that these disallowances are made by the Revenue on the basis of the return filed by the assessee originally. Once, the assessment was completed and has not abated for relevant AY, this issue is squarely 17 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 covered by the decision of the Hon'ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom).
20. We find that this issue now stands covered in favour of assessee and against the Revenue by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics 137 ITD 287(SB) (Mum), considered this issue that, whether there is scope of assessment u/s. 153A of the Act in respect to completed assessment which is limited only to undisclosed income and undisclosed assets found during the course of search or not? Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of search u/s. 132 of the Act stand abated and not the assessments/reassessments already final for those assessment years which are covered u/s. 153A of the Act. Hon'ble High Court discussed the CBDT Circular No. 8 of 2003 dated 18.09.2003 reported in 263 ITR (st.) 61 at page 107 wherein CBDT has clarified that on initiation of proceedings u/s. 153A of the Act the proceedings pending in appeal, revision or rectification proceedings against final assessment shall not abate. It is only because the final assessments do not abate the appeal, revision or rectification pending against final assessments would not abate. Therefore, Hon'ble High Court rejected the arguments of the Revenue that on initiation of proceedings u/s. 153A of the Act, the reassessment final for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO while passing independent assessment 18 ITA No. 5526, 5815, 5814, 5852, 5853/ Mum/2016 order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. Accordingly, we confirm the order of CIT(A) and this appeal of Revenue is dismissed.
21. In the result, the appeals of Revenue are dismissed and appeals of assessee are allowed.
Order pronounced in the open court on 13-12-2017.
Sd/- Sd/-
(N.K. PRADHAN) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 13-12-2017
Sudip Sarkar /Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai BY ORDER,
6. Guard file.
//True Copy//
Assistant Registrar
ITAT, MUMBAI