TMI Blog2013 (9) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... are unable to agree with the contention of the assessee that assessment u/s 153A has been made on the basis of outside the search material and after the change of opinion - Decided in favour of Revenue. Addition u/s 69C - Held that:- . The Assessing Officer has not made any enquiry in respect of correctness of the contents of the correspondence by the brokers. There is no evidence found with regard to the payment of these bills from any source of income. The assessee’s claim that payments of commission had been made by cheques and the necessary TDS were deducted had some force. In our considered view, no addition can be made merely on the basis of certain correspondence on the presumption when addition is to be made u/s 69C of the Income-tax Act while making the assessment u/s 153A of the Income-tax Act. No addition can be made under the scope of section 153A on presumption basis. The revenue has to bring certain corroborative evidence or supporting material by way of making investigation or enquiries. All the brokers were located in Delhi, however, the revenue has done nothing in this regard. Some of the brokers were even corporate assessees. Their records could have been easil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- in respect of The Property Mart Rs.2,41,000/- in respect of M/s Suraj Bhan Pvt. Ltd.) out of the total addition of Rs.1,46,79,390/- made by the Assessing Officer in respect of disallowance of commission by admitting addition evidence in contravention of rule 46A of Income Tax Rules. 1962. 3. On the facts and in the circumstances of the case. the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs.10,00,000/- out of the total addition of Rs.30,14,662/- made by the Assessing Officer in respect of disallowance of commission. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the disallowance of donation of Rs.5,37,500/- made by the Assessing Officer. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in deleting the disallowance interest of Rs.28,28,130/- made by the Assessing Officer as the advances given by the office assessee to its sister concerns was utilized for non-business purpose. . 6. The order of Ld. CIT(A) is perverse in law and on facts. 7. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zance as it was only a correspondence but in the nature of invoice raised to the assessee. Such documents were not found in the premises of the assessee s company during the search proceedings. Hence there is no search material in the case of the assessee. The assessee company has duly accounted for the payments of commission and necessary TDS was duly deducted and deposited to the Government. Any document by way of correspondence cannot be given cognizance unless raised as a bill and that too approved by the assessee. The ld. AR has drawn our attention to page 40 to 47 of the paper book related to Sachin Proptech Pvt. Ltd. on the basis of which the addition of Rs.1,46,79,390/- was made. The total amount as per these papers was of Rs.1,87,64,550/-. Assessing Officer reduced the amount of Rs.57,54,896/- which was actually paid by assessee and debited in books. Page 49 was the correspondence relating to the Property Mart on the basis of which addition of Rs.7,73,604/- was made by mentioning that payment made to Neel Kamal Properties. Page 53 of the paper book is the correspondence made to Suraj Bhan Pvt. Ltd. on the basis of which addition was made of Rs.2,41,000/-. These additions h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be considered for making the assessment u/s 153A in the case of assessee company and on the basis of such seized material as far as it relates to the undisclosed income of the assessee the addition is required to be made. It is not the material, whether the seized material was found at the premises of the assessee or at the residence of the Director. The company is represented through its Directors, therefore, material found at the residence of the Director is relevant and has to be considered for making the assessments u/s 153A. As far as the scope of the assessment is concerned, we hold that wherever the issues have been considered u/s 143(3) and the assessment has been concluded prior to the initiation of the search the scope of assessment remains limited to the search material and other issues not considered at the time of making the assessment u/s 143(3) of the Act. Considering the totality of the facts and circumstances, we are unable to agree with the contention of the assessee that assessment u/s 153A has been made on the basis of outside the search material and after the change of opinion. 7. Ground No.2 in the revenue s appeal and ground no.2 in the assessee s ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt at the time of search and therefore an addition of difference amount was made by the AO. In contention to that the AR has submitted detailed explanation party wise and also submitted the reconciliation for the difference amount. After considering the submissions made and documents submitted, I am of the considered opinion that an addition of Rs.1,24,44,544/- is to be retained against Rs.1,36,09,651/- of Sachin Proptech Pvt. Ltd. A Bill of 1,87,64,550/- was raised by M/S Sachin Proptech (P) Ltd and the assessee company has credited commission amount of Rs.59,65,452/- after deduction of TDS @ 5.61 %. If this amount is grossed up, it comes to Rs.63,19,996/-. Therefore, the AO should have allowed the deduction of Rs.63,19,996/- instead of Rs.51,54,896/-. Therefore, a further deduction of Rs.11,65,100/- should be allowed to the appellant. The commission amount of Rs.4,52,377/- against Rs.7,73,604/- of The Property Mart and Rs.55,132 against 55,132/- of Neel Kamal Properties have also been retained because proper explanation and reconciliations have not been placed by the AR on record. Therefore, the addition amounting to Rs.1,29,52,053. (1,24,44,544 + 4,52,377 + 55,132) is confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tever amount of commission paid to the brokers has been paid by account payee cheques after deducting TDS on the same. The seized documents itself show that amount has been asked by way of cheques. In view of this fact, an inference that assessee has made the payments out of the books is completely unfounded. Moreover if it would have been the case, then this expenditure shall reduce the taxable income of the assessee. Then also there is no additional tax liability which can be levied on the taxpayer. Ld. AR vehemently pleaded that such baseless addition deserves to be deleted. 10. On the other hand, the ld. DR submitted that the seized material clearly leads to the inference that there was hidden deals with the brokers who demonstrate their brokerage. As per ld. DR s contention, the assessee had failed to explain the difference in the amount debited in books of account and the amount recorded in the seized material. 11. In the rejoinder, the ld. AR submitted that this addition has been made without any incriminating document suggesting that assessee had made any hidden payment as claimed by ld. DR. He pleaded to set aside the order of the CIT (A) for sustaining part addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard. Some of the brokers were even corporate assessees. Their records could have been easily verified. The seized material relied upon by the AO alone cannot be made a basis for driving adverse inference with regard to the undisclosed expenditure which can be added u/s 69 of the Income-tax Act. In our considered view, material relied upon by the AO for making the addition was merely a correspondence which alone cannot lead to the inference that assessee had incurred such expenditure. This cannot be made basis for addition made u/s 69 of the Income-tax Act while framing the assessment u/s 153A of the Income-tax Act, 1961. There is no evidence gathered by revenue from anywhere, which could establish a bit of the fact that assessee has paid anything more than whatever recorded in the books of account. Therefore, in our considered view, such addition cannot be sustained. 13.1 The revenue has also raised the issue of admitting additional evidence in contravention of Rule 46A of the Income-tax Rules. Our notice was brought to the relevant copies of the ledger account showing payments to various parties on which TDS was deducted. The confirmation of the account was also filed al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d interest on income Tax Rs.96,547/-, I am not convinced with the submissions made by the AR because there is a specific section of disallowance. As per section 40 (a) (ii) of the Income Tax Act, Income Tax paid and interest on interest Tax paid is not an allowable expenditure and therefore, disallowance of Rs.96,547/- is confirmed. iv) In case of Interest on loan to others Rs.28,28,130/- I have gone through the assessment order and submissions made by the AR of the appellant. In this case the original assessment was completed u/s 143(3) of the I.T Act on 27.05.2008 but no such disallowance was made. However, under 153A assessment the disallowance of interest was made which is not based on seized material per se and appears to be a change of opinion which is not permissible under the law. After considering the arguments of both and in view of the judgement announced by the Hon'ble Delhi High Court in case of Bharti Televenture Ltd. (2011) 51 DTR 98, I am of the considered opinion that the appellant was found to be having adequate non-interest bearing fund by way of share capital, reserves and the advances received from the booking of plots and there was no nexus between the borro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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