Case Number: ITA 5402/DEL/2019
Appellant: DCIT Circle-1 LTU, New Delhi
Respondent: Dalmia Bharat Sugar & Industries Ltd, New Delhi
Assessment Year: 2007-08
Order Type: Final Tribunal Order
Case Filed On: 2019-06-14
Date of Order: 2021-09-13
Pronounced On: 2021-09-13
The case was heard before the Delhi Bench ‘B’ of the Income Tax Appellate Tribunal, with Shri Sudhanshu Srivastava, Judicial Member, and Shri Prashant Maharishi, Accountant Member, presiding over the matter through video conferencing.
The six appeals filed by the Deputy Commissioner of Income Tax Circle-1 LTU, New Delhi, and cross objections by Dalmia Bharat Sugar & Industries Ltd., relate to the assessment years 2006-07 to 2011-12. The appeals are against the orders dated 29.03.2019 passed by the Commissioner of Income Tax (Appeals)-22, New Delhi. The CIT(A) allowed the appeals of the assessee against orders passed under section 153C read with section 143(3) of the Income Tax Act, 1961, dated 30.03.2015 by the AO.
The Assessee, Dalmia Bharat Sugar & Industries Ltd., is part of the Dalmia Group of Companies. Originally, Dalmia Cement (Bharat) Ltd. was incorporated in 1951. Its name was changed to Dalmia Bharat Sugar & Industries Ltd. on 07.09.2010. Prior to 01.04.2010, Dalmia Bharat Sugar & Industries was engaged in the business of manufacturing cement and sugar, power generation, refractory trading, magnesite, and travel agency business.
Under a scheme of arrangement and demerger approved by the Hon’ble High Court of Madras vide its order dated 29.07.2010, the cement business was demerged to Avnija Properties Ltd., the refractory business was demerged to Dalmia Bharat Enterprises Ltd., and the thermal power business was transferred to DCB Power Ventures Ltd.
Search and seizure operations under section 132 of the Income Tax Act were conducted in the Dalmia Group of cases, including the Dalmia Bharat Enterprises Ltd. and the Dalmia Cement Bharat Ltd., on 20th January 2012, 27th and 28th January 2012. The Assessee Company was not covered under the search action.
Searches were also conducted at the residences of employees of group companies on 27th and 28th January 2012. A pen drive was seized from Mr. Joydeep Basu containing data that led to disagreements between the revenue and the assessee.
The AO made an addition of Rs. 22,80,39,000/- on a protective basis for the assessment year 2006-07 based on alleged total receipts recorded in the cash book contained in the pen drive seized from Mr. Basu. Identical additions were made on a substantive basis in the case of Dalmia Cement (Bharat) Ltd. and on a protective basis in the case of Mr. Joydeep Basu.
Mr. Yadu Hari Dalmia, along with three other applicants, filed a petition before the Income Tax Settlement Commission owning the contents of the pen drive and disclosing a sum of Rs. 90 Crores. The Settlement Commission accepted the disclosure and held that the contents of the cashbook in the seized pen drive belonged to Mr. Yadu Hari Dalmia and Mr. Gautam Dalmia in their individual capacity.
The Tribunal noted that the substantive addition made in the hands of Dalmia Cement Bharat Limited was deleted by the CIT(A)-29, New Delhi, and no second appeal was filed by the revenue. Similarly, protective additions in the hands of Dalmia Bharat Enterprises Ltd. and Mr. Joydeep Basu were also deleted by the CIT(A). The revenue has not challenged these orders.
Given these facts, the Tribunal upheld the deletion of the protective addition in the hands of Dalmia Bharat Sugar & Industries Ltd. The Tribunal also noted that the Settlement Commission had conclusively settled the matter regarding the ownership of the contents of the pen drive, which belonged to the individual promoters and not the companies.
The Tribunal concluded that the addition of Rs. 22,80,39,000/- made on a protective basis in the hands of Dalmia Bharat Sugar & Industries Ltd. for the assessment year 2007-08 was not sustainable. The appeal of the revenue was dismissed.
The case highlights the importance of the Settlement Commission’s findings and the principle that once substantive additions are deleted, protective additions cannot be sustained. It also underscores the need for proper satisfaction before invoking the provisions of section 153C of the Income Tax Act.
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