DCIT Vs Midas Golden Distilleries Pvt. Ltd. (ITAT Chennai)
Summary: The Chennai Bench of the Income Tax Appellate Tribunal dismissed three appeals filed by the Revenue for Assessment Years 2008-09, 2010-11 and 2011-12 against the common order dated 31.01.2023 passed by the Commissioner of Income Tax (Appeals)-19, Chennai. The appeals concerned the validity of notices issued under section 153A of the Income-tax Act, 1961 and the consequent assessments framed under section 143(3) read with section 153A.
The assessee, M/s. Midas Golden Distilleries Pvt. Ltd., was described as a major manufacturer of beverages and a supplier to TASMAC, the State-owned monopoly for supplying liquor in Tamil Nadu. A search and seizure operation under section 132 of the Act was conducted at the assessee’s premises on 09.11.2017. Thereafter, the Assessing Officer issued notices under section 153A. The assessee filed returns in response and subsequently challenged the validity of the section 153A proceedings. The Assessing Officer rejected the jurisdictional objection and completed assessments under section 143(3) read with section 153A on 30.12.2019, making various additions for the three assessment years.
Before the CIT(A), the assessee challenged the assumption of jurisdiction under section 153A. The CIT(A) held that the notice under section 153A was without jurisdiction and that the consequential assessments were void ab initio. The CIT(A) noted that, according to the Assessing Officer, the escaped income was represented in the form of unaccounted cash allegedly paid for acquisition of various assets. However, the assessment order did not identify evidence corroborating that the unaccounted cash had actually been paid for purchase of assets or that any unexplained asset or investment had been acquired from such cash. The CIT(A) further held that the loose sheets and sworn statement could at best constitute sources of information for deducing alleged suppression of income and did not themselves possess monetary value. Accordingly, the CIT(A) held that they could not be treated as an “Asset” for purposes of the fourth proviso to section 153A(1).
