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2019 (11) TMI 587 - ITAT VISAKHAPATNAMProceedings u/s 153C without having the incriminating material - HELD THAT:- In the instant case, there is no doubt that the assessee has filed the return of income on 30.09.2012 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2013 prior to the date of transfer of the case to the AO having jurisdiction and the present AO had issued notice u/s 153C on 23.07.2014. By the time, the case was notified to the present AO, the assessment for the A.Y.2012-13 is unabated. Hence, the AO is not permitted to make any addition without having the incriminating material. In the instant case, the addition was made with reference to the rent paid by the assessee, which was accounted in the regular books of accounts and declared in the returns of income already filed and no incriminating material was found during the course of search. AO is not permitted to make any addition in the hands of the assessee relating to the rent paid by the assessee Accrual of interest income - method of accounting - HELD THAT:- In the instant case, there is no dispute that the assessee had advanced the sums to the GSL Educational Society and also receiving the interest and received the substantial amount from GSL Educational Society as per the incriminating material found and seized. The said sums were not accounted in the books of accounts, therefore, the said sums were admitted as income in the hands of the assessee. No evidence found during the course of search with regard to write off of the advance. The letter was received by the assessee on 28.01.2016 relevant to the F.Y.2016-17 which has no relevance in the impugned assessment year. The assessment required to be made as per the incriminating material found during the course of search and method of accounting followed by the assessee each year independently. If the assessee accepts to forego the advance merely on the basis of letter it would take the character of donation but not the allowable expenditure. Merely because the GSL Educational Society is not inclined to make the payment, the same cannot be allowed as expenditure deduction. Therefore, we are unable to accept the contention of the assessee that on the basis of letter issued by GSL Educational Society to reduce the return of income. The assessee is free to follow the procedure laid down under the Income Tax Act to make efforts collect the outstanding dues and write off as bad debt n in the subsequent years as per law. Thus we, decline to interfere with the order of the CIT(A) and dismiss the appeal of the assessee.
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