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2016 (1) TMI 1477 - AT - Income TaxAssessment framed u/s. 153A for want of any incriminating material seized during the course of search - HELD THAT - We find in these circumstances that all the judgments quoted at the assessee s behest including that of hon ble jurisdictional high court hereinabove hold that no addition is to be made in framing of search assessment without there being any in any incriminating evidence found in the course of search proceedings itself. Revenue s case law does not involve any judgment of hon ble jurisdictional high court. We follow hon ble jurisdictional high court decision in these circumstances and hold that the lower authorities have wrongly initiated section 153A proceedings in absence of any such incriminating evidence. We accept assessee s argument accordingly. The impugned search assessment itself stands quashed. Validity of initiation of section 153A proceedings - AY 2010-11 - HELD THAT - The assessee invites our attention to corresponding finding on the former issue as decided in preceding two assessment years. We find that facts of the instant case are not similar. We find that he filed his return of income on 30- 07-2010. The impugned search is dated 08-09-2011. The assessee does not place any material on record a regular or security assessment already stood framed in his case. Even time limitation u/s. 143(2)(Proviso) stipulating time period of six months from the end of the financial year of filing the return has not expired. This is not found to be a case of either deemed completion of assessment or completion of assessment. We accordingly accept Revenue s argument that section 153A of the Act has rightly been invoked in case of the impugned assessment already pending. This first ground fails. Unexplained election expenditure - HELD THAT - The assessee files before us proof of payment of the impugned sum in prescribed form Appendix-1 in the shape of register of maintenance of day to day account. Photocopy of the document is also attached. The assessee accordingly prays for this additional evidence. The Revenue strongly objects to this admission and prays for affirming the impugned findings. We tend to differ with this technical objection. There is no dispute about genuineness thereof. We observe in these facts and circumstances that procedural technicality shall not come in the way of substantive justice. We proceed on this proposition and admit this additional evidence. The Assessing Officer is directed to make necessary verification and pass a consequential order after affording adequate opportunity of the hearing to the assessee. Addition on the value of gold jewellery weighing 112.5 gms remained to be explained out of the total found 7711.54 gms - HELD THAT - here is no dispute that the impugned explained jewelry weight is 1.46% of the total weight found during search. This is not the Revenue s case that this jewelry does not contain stones and impurities therein. Both the authorities below also nowhere take into account the assessee s social economic status. We are also alive of the fact that the assessee has not filed any specific evidence in support of the plea to have received the impugned jewelry on various social occasions. We draw inference from assessee s and his families social economic status and hold that the impugned jewelry can be well said to have been received on various family functions and past savings thereof. We decide this ground in assessee s favour Expenses on foreign travel disallowance - HELD THAT - We find these expenses to have been debited to personal account in personal books and balance to have been met from saving account in Corporation Bank. This made both authorities to treat the same as unexplained. The same factual position continues herein as well since the relevant capital account or trust s accounts are nowhere produced before us where the assessee is stated to be serving. We affirm lower appellate findings accordingly.
Issues:
1. Validity of section 153A proceedings 2. Disallowance of interest expenses and section 14A amount 3. Addition of unexplained election expenditure 4. Disallowance of indexation benefit on sale of furniture 5. Addition on value of gold jewelry 6. Disallowance of foreign travel expenses Issue 1: Validity of section 153A proceedings The case involves appeals for multiple assessment years challenging the validity of section 153A proceedings. The assessee argued that the impugned assessment should be quashed due to the absence of incriminating material found during the search. The CIT(A) rejected this argument citing legal precedents. The Tribunal, after considering the arguments, held that no addition can be made in a search assessment without any incriminating evidence. Relying on jurisdictional high court decisions, the Tribunal quashed the impugned search assessment, rendering other grounds of the assessee infructuous. Issue 2: Disallowance of interest expenses and section 14A amount The assessee challenged the disallowance of interest expenses and section 14A amount. The Tribunal accepted the assessee's legal ground and quashed the impugned search assessment based on the absence of incriminating material. Therefore, the grounds related to interest expenses and section 14A amount became irrelevant. Issue 3: Addition of unexplained election expenditure The assessee contested the addition of unexplained election expenditure. The Tribunal noted that the assessee provided proof of payment for the disputed amount and admitted this additional evidence despite objections from the Revenue. The Tribunal directed the Assessing Officer to verify the evidence and pass a consequential order after affording the assessee a hearing. This ground was remitted to the assessing authority for further action. Issue 4: Disallowance of indexation benefit on sale of furniture The assessee challenged the disallowance of indexation benefit on the sale of furniture. The Tribunal, following the legal grounds of preceding assessment years, rejected the substantive ground related to this issue as not pressed by the assessee due to the smallness of the matter involved. The Revenue did not raise any objection, and the second ground was dismissed accordingly. Issue 5: Addition on value of gold jewelry The assessee contested the addition on the value of gold jewelry. The Tribunal considered the weight of the explained jewelry compared to the total weight found during the search. It analyzed the social economic status of the assessee and inferred that the unexplained jewelry could have been received on various family occasions. The Tribunal decided this ground in favor of the assessee. Issue 6: Disallowance of foreign travel expenses The Tribunal upheld the disallowance of foreign travel expenses as the expenses were debited to a personal account in personal books without relevant capital or trust accounts being produced. The Tribunal affirmed the lower appellate findings on this issue, and the ground was rejected. In conclusion, the Tribunal allowed the appeals for certain assessment years, partly allowed one for statistical purposes, dismissed one, and partly allowed another. The orders were pronounced on 22-01-2016.
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