DCIT Vs Adamas Builders Pvt. Ltd. (ITAT Bangalore)
The ITAT Bangalore held that transfer pricing adjustment of ₹12.22 crore could not be sustained as the AO failed to pass a final assessment order pursuant to DRP directions within the prescribed time. Consequently, the adjustment was held to be invalid—not on merits, but due to procedural lapse and lack of jurisdiction in subsequent 263 proceedings.
The Tribunal noted that the DRP had issued directions on 20.11.2019, but no final order was passed within the statutory time. Instead, the AO attempted to reintroduce the TP adjustment in a later order passed under section 143(3) r.w.s. 263, even though TP was not part of the revision scope. This was held impermissible, and the adjustment was directed to be deleted.
On the issue of share capital of ₹288.26 crore received from a Mauritius-based investor (Greenwald Development Ltd.), the Tribunal upheld the CIT(A)’s deletion of addition under section 68. It found that the assessee had discharged its onus by producing extensive evidence including FIRC, RBI filings (FC-GPR), bank statements, valuation report, tax residency certificate, and audited financials of the investor.
The Tribunal emphasized that identity, creditworthiness, and genuineness were clearly established—especially since the investor was an existing major shareholder and the transaction was duly recorded in audited accounts. Mere rejection by AO without proper reasoning was held unsustainable.
On Rule 46A, the Tribunal clarified that documents called for by the CIT(A) cannot be treated as “additional evidence,” though it allowed limited verification of investor’s financials by the AO.
Accordingly, the assessee’s appeal was allowed (TP addition deleted), while the Revenue’s appeal was partly allowed only for limited verification, reinforcing both procedural discipline and evidentiary standards under section 68.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 771 and 772/Bangalore/2025 are the cross appeals filed by The Deputy Commissioner Of Income Tax, Central Circle 2 (2), Bangalore (learned assessing officer/AO) and Adamas builders private limited (the assessee/appellant) for assessment year 2013 – 14 against the appellate order passed by the Commissioner Of Income Tax (A) – 12, Bangalore (the learned CIT – A) passed on 13 January 2025 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) read with section 144C read with section 263 dated 29/9/2021 by the assessing officer, was partly allowed. Therefore, both the parties are in appeal before us.
