TMI Blog2012 (11) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... search action and framing assessment under section 153C of the Act is different from regular assessment or it is not substitute for regular assessment. Being so, the AO shall frame assessment on the basis of incriminating material found during the course of search action under sec. 153C of the Act. The Assessing Officer was not justified in making additions by way of disallowance of interest without any specific incriminating material on hand. - Decided in favor of assessee. Decision case of Vijaybhai N. Chandrani Vs. ACIT [2010 (3) TMI 770 - GUJARAT HIGH COURT], followed. - ITA NOS. 843 TO 848/HYD/2010 - - - Dated:- 27-7-2012 - SHRI CHANDRA POOJARI AND SMT. ASHA VIJAYARAGHAVAN, JJ. Appellant by : Shri M. Dayakar Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee s claim that interest paid on loans were utilized for earning income is not acceptable in the absence of evidence. This had resulted in addition by way of disallowance of interest for the six assessment years under appeal as below:- AY Addition made(Rs.) 2002-03 3,21,143/- 2003-04 6,47,702/- 2004-05 6,54,630/- 2005-06 8,40,181/- 2006-07 11,24,448/- 2007-08 12,74,306/- Being aggrieved against the said additions, the assessee carried the matter in appeal before the CIT(A) raising among other grounds, a specific ground that the AO has erred in law and on facts in initiating the proceedings u/s 153C of the Act. 4. Before the CIT(A), the assessee submitted that he filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems of regular additions cannot be made in an assessment made u/s 153A/153C if there is no incriminating material in respect of the proposed additions. He, therefore, held that since in the appeals under consideration there was no specific incriminating material based on which the additions have been made, the AO was not justified in making additions by way of disallowance of interest without any specific incriminating material on hand. Accordingly the disallowances made by the AO in all the six assessment years under appeal is directed to be deleted. 7. Aggrieved by the order of the CIT(A), the revenue is in appeals before us, raising the following grounds of appeal, which are common in all the appeals under consideration: 1. The orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings of P. Prabhakar Reddy. Our opinion is supported by the following cases: i) In the case of Vijaybhai N. Chandrani Vs. ACIT, [2011] 333 ITR 436 (Guj.), the Hon ble Gujarat High Court held as under:- Sections 153A, 153B and 153C of the Income-tax Act, 1961, lay down a scheme for assessment in case of search and requisition. Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any money, buillion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A he shall proceed against each such other person and issue such other person notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT Vs. Late. J. Chandrasekhar (HUF), 338 ITR 61, has confirmed the view taken by the Hon ble Gujarat High Court in the said case(supra). Following the ratio laid down by the Madras and Gujarat High Courts (supra), we are of the opinion that the condition precedent for issuing notice u/s 153C being the valuable article or things or books of account or documents seized or requisitioned is not belonging to the assessee, the provisions of section 153C stands vitiated. iii) The coordinate bench of ITAT, Hyderabad in the case of JCIT Vs. M/s Spectrum Pearls Exports Pvt. Ltd. in ITA Nos. 2107 to 2113/Hyd/2011 for assessment years 2003-04 to 2009-10 held that the Assessing Officer without bringing any incriminating material on record f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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