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2022 (3) TMI 1195 - AT - Income TaxAssessment u/s 153A - whether no incriminating material was discovered? - HELD THAT:- We note that at the time when the search operations were carried out on 15-06-2011, the original assessment proceedings had been finalized. We also note that during the course of search operation no fresh material or incriminating evidence was found by the Department - The assessment was not pending when the search took place in this case. The assessment therefore did not abate as per the provisions of second proviso to section 153A(1) - It is a settled position of law that in case of unabated assessment to be made u/s.153A of the Act no addition could be made de-hors the material found during the search. If there is no fresh and incriminating material found during the search, the previously made assessment is to be reiterated. In view of the above factual and legal position, in our view, the Pr. CIT has erred in law and in fact in initiating proceedings u/s. 263 of the Act. The ground of appeal raised by the assessee is thus allowed. Revision u/s 263 - expenditure of foreign exchange rate difference and addition u/s 14A - HELD THAT:- CIT noted that the assessee had debited “foreign exchange” rate difference in its profit and loss account but it had not shown any export income and nor had incurred any expense towards import of goods or services. The Assessing Officer had further allowed the aforesaid expenditure of foreign exchange rate difference. Second point noted by the ld. Pr. CIT was that the assessee had debited interest expense in the profit and loss account but as per balance sheet assessee had made an investment in equity shares of Kutch Salt Allied Industries Ltd. which was an investment yielding exempt income. The assessee had however not disallowed any part of the expenditure u/s.14A in the statement of total income. AO has also not made any disallowance u/s. 14A - Pr. CIT accordingly in view of the above two issues issued show cause notice u/s. 263 and proceeded to pass orders u/s. 263 holding that the order passed by the Ld. A.O. u/s. 143(3) r.w.s. 153A(1)(b) is erroneous and prejudicial to the interest of the Revenue. - Decided in favour of assessee.
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