TMI Blog2015 (1) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. Disallowance of general expenses of ₹ 34,000 - power of CIT(A) to set aside the issue to AOHeld that:- d. CIT(A) in principle, having held that expenditure incurred towards gift items is allowable as business expenditure should have deleted the addition. In the aforesaid facts and circumstances, we consider it appropriate to delete the addition of ₹ 34,000. - Decided in favour of assessee. - ITA No. 1071/H/14, 1072/H/14 1073/H/14 1074/H/14 1278/H/14 1279/H/14 1280/H/14 1281/H/14 1282/H/14 1283/H/14 1284/H/14 - - - Dated:- 14-1-2015 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri Rajat Mitra For the Respondent : Shri P. Murali Mohan Rao ORDER Per Bench: These are bunch of 11 appeals relating to same assessee. While there are cross appeals by revenue and assessee for AYs 2003-04, 2004-05, 2005-06 and 2007-08, appeals for the AYs 2006- 07, 2008-09 2009-10 are by assessee alone. Though ld. CIT(A) for later three assessment years also has held that the additions made in absence of incriminating materials cannot be upheld, but, the department has not preferred appeal against such orders of ld. CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, computed book profit at ₹ 107,09,372 without allowing any deduction u/s 80HHC. Being aggrieved of the assessment order, so passed, assessee preferred appeal before ld. CIT(A). 5. In course of hearing of appeal before ld. CIT(A), assessee raised additional grounds challenging the assessment order passed and additions made in absence of incriminating/seized materials. 6. Ld. CIT(A) after considering the submissions of assessee and following the ratio laid down in a number of decisions including the decision of ITAT, Mumbai Special Bench in case of All Cargo Global Logistics Pvt. Ltd. Vs. DCIT, 137 ITD 287 decided the issue in favour of assessee by holding as under: 4.5 Perused the submissions of the appellant, with specific reference t the issues raised through additional grounds, which was mainly relied upon the judicial decisions, more particularly in the case of All Cargo (,obal Logistics Pvt. Ltd., by Special Bench of Mumbai ITAT reported in 137 ITD 287. Before getting into the judicial decision, it is pertinent to look into the relevant law on this issue, which is Section 153C as applicable to the facts of the case where search was conducted in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142 has been issued to him, or (b) a .turn of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of sue assessment year in the manner provided in section 153A.] 4.6 As could be seen from the language used, the basis for initiation of proceedings u/s. 153C is the information /valuables/documents seized belonging to persons other than covered u/s 153A. As could be seen from the assessment order under reference, here is no indication as to the information on the valuables / documents seized during from the search proceedings conducted in the case of MJ '. Midwest Granites (P) Ltd(MGPL), and it's directors, and no such valuables or documents relatable/belong to the assessee. As could be seen fn m the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that if assessment for any of the assessment year falling within a period of 6 years mentioned in clause (b) of Section 153A(1), is pending on the date of search, it shall abate. The present assessment year is 1999- 2000 which is falling within the period of 6 years but its assessment is complete and hence the proceedings do not abate. In other words the original assessment was made u/s. 143(3) has become final and is not affected by the second proviso to section 153A. Of course, the present assessment is a case falling u/s. 153C, but then, as per sub section (2) of section 153C, this assessment was also to be done in the manner provided in section 153A. Therefore, the second proviso to section 153A i pp lies equally to the cases falling u/s. 153C. What follows is that the assessment now to be done is to be confined to the material found in the course of search only. The additions/disallowances made in the regular assessment cannot be repeal d in the assessment to be made u/s. 153C of the Act unless fresh, material has been unearthed in course of search in respect of those additions/disallowances..... (iv) Hon'ble Special Bench of ITAT, Mumbai, in the case of All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to assess is limited to incriminating material and in other cases the assessing officer has unfettered jurisdiction to make assessment both by exercising his normal jurisdiction to make assessment both by exercising his normal jurisdiction and also by utilising the incriminating material/evidence. 4.9 Coming to the facts of the case, the assessments for the assessment years 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 w': I e unabated and treated to have been concluded. It is also evident from1 the assessment orders that assessing officer has not specifically pointed to any availability of seized/incriminating material related to the assessee found during the search proceedings conducted in case of MGPL or the directors of the group companies. There is no specific reference to any material or valuables that are relatable to the assessee and have become the basis for making the additions or disallowance and prompt the assessing officer to reagitate the issues which were otherwise settled in the unabated assessments. Thus, considering the legal additional ground raised by the appellant, it is reasonable to hold that the various additions made by the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 139 of the Act. In fact for AY 2003-04 and 2004- 05, assessments were completed u/s 143(3) of the Act, much prior to the date of search in other group cases and in AYs 2005-06 and 2006-07, returns filed by assessee were processed u/s 143(1) prior to the date of search. Therefore, as on the date of search, there was no assessment proceeding pending in case of assessee. In the aforesaid facts and circumstances, AO could have assessed the undisclosed income unearthed as a result of incriminating material found during the search and seizure operation. However, none of the additions made by AO are with reference to any incriminating material found in search. The Department has failed to bring any material on record to show that additions made were on the basis of any incriminating material. On the contrary, it is evident on record, in the search assessment, AO has revisited the issues which were subject matter of original assessments. Even, assuming that AO has proceeded u/s 153C, we need to observe, neither the assessment order nor any other material placed before us could indicate that any valuable article, thing, document etc., belonging to assessee was found as a result of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the facts, the appellant incurred certain expenses under the head 'general expenses', which include the amount incurred on purchase of 'gifts' by the assessee company during the year. No details were brought on record by the A.O to treat such expenses are disallowable. Similarly, no detailed explanation was offered by the appellant, explaining the nature and relevance of such expenses to the business. Prima facie, the expenditure under the head 'gifts', is business expense, as it Is customary for any business to offer the gifts to it's customers or employees on certain special occasions. There is no blanket bar on allowance of expenses on gifts, as long as they relate to business There is no denial on this issue. But the fact remains that, the details a d nature of expense require scrutiny along with allowable limits on cost of gifts etc. This requires examination by the A.O and if there is no bar on the limits of value of gifts given to employees or customers, the A.O is directed to allow the expenses, on verification of the bills related to it. On this issue, the ground is treated as allowed, subject to verification. 16. We have heard the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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