By Ajay R. Singh, Advocate

1. S. 153C: Assessment - Search or requisition - No addition can be made in respect of an unabated assessment which has become final if no incriminating material is found during the search. Provisions cannot be invoked

The assessee was subjected to proceedings u/s. 153C pursuant to search & seizure operations u/s. 132 on 09/01/2013 in the group cases belonging to M/s. Enpar. The quantum assessment order at para-3 record a finding that the trial balances belonging to assessee for the period April 2010 to March 2011, April 12 to 9-1-2013 & April 2011 to March 2012 were seized. In response to notice u/s. 153C, the assessee offered the same return of income as filed u/s. 139(1) at ₹ 41,400/-. From perusal of financial statements, it was found that the assessee raised a sum of ₹ 12.70 crore by way of issue of share capital from five parties, the details of which have already been extracted at para 7 of the quantum assessment order. The Ld. AO, not satisfied with creditworthiness of the share allottees, added the aforesaid amount to the income of the assessee as cash credit u/s. 68.

Held that though the documents relied upon by the AO for initiating the proceedings u/c. 153C for AY 2007-08 to AY 2012-13 pertain to period AY 2010-11, 2011-12 and 2013-14, no additions have been made in those assessment years. The only assessment year in which additions have been made is the AY 2008-09. Even in that assessment year, the additions made were not based on the documents as relied upon by the AO. This clearly shows that no incriminating documents relating to the appellant was seized for AY 2008-09. Further the assessment for AY 2008-09 was completed u/s. 143(3) r.w.s. 147 of the Act, before the date of initiation of the search. Therefore, respectfully following the decision of the Hon’ble jurisdictional Bombay High Court in case of CIT-11, Thane vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., [(2015) 374 ITR 645] it was held that the AO was not justified in making the addition. Accordingly, the addition of ₹ 12,70,00,000/- was deleted.

DCIT vs. Silver Sand Beach Inn Private Ltd., ITA No. 4907/Mum/2016, DOH: 08/08/2018 (Mum.)(Trib.)

Silver Sand Beach Inn Private Ltd.

2. S. 154 : Rectification of mistake – claimed rebate u/s. 88E of the Act on account of STT paid - rebate admissible on the income arising from taxable securities transaction, considering the average rate – Debatable issue–Not a matter for rectification. [S. 88E]

The assessee company is engaged in the business of share trading and also investment. During the course of assessment proceedings, the assessee claimed rebate u/s. 88E of the Act on account of STT paid at ₹ 30,93,497/- and which was eventually allowed by the AO while completing the assessment u/s. 143(3) of the Act.

The AO issued notice u/s. 154 of the Act and according to AO, the assessment framed suffers from mistake apparent from record as the rebate u/s. 88E of the Act has been allowed excessive.

The assessee relied on Tribunal’s order in the case of DCIT vs. M/s. Malhar Traders Pvt. Ltd. in ITA No. 707/Mum/2011 for AY 2007-08, wherein Tribunal has categorically held that to invoke sub-section 88E of the Act, which clearly provides that the deduction of security transaction paid would be in total if the total income of the assessee includes income chargeable under the head profits and gains of business or profession.

Tribunal found that 88E of the Act provides where the total income of the assessee in previous year includes any income chargeable under the head “Profits and gains of business or profession” arising from transaction chargeable to securities transaction tax, he shall be allowed deduction of an amount equal to the securities transaction tax paid by him in respect of transactions chargeable to securities transactions tax entered into in the course of business during that previous year. From the amount of income-tax on such income arising from such transaction. According to the above provisions, we are of the view that an assessee is eligible for deduction from the amount of income-tax on such income arising from such transactions computed in the manner provided in section 88E of the Act i.e., an equal amount to the securities transaction paid by him in respect of taxable securities transaction entered into in the course of business during the previous year. It means that the issue has two plausible views and once, it is doubtful issue, the AO cannot resort to section 154 of the Act i.e., rectification of mistake apparent from record. Accordingly, allow the appeal of the assessee.

Prakash Securities Pvt. Ltd. vs. ACIT, ITA No. 2624/Mum/2017, DOH: 29/08/2018 (Mum.)(Trib.)

Prakash Securities Pvt. Ltd.

Note: The Whole decisions can be downloaded from the CTC website under Knowledge Centre.

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