TMI Blog2015 (10) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings u/s. 153C are appropriate, the AO cannot make any routine disallowance in the search assessments in the absence of any incriminating material. AO would be entitled to make additions u/s. 153A. As the jurisdiction for completion of assessment u/s. 153C is limited, AO cannot make roving enquiries or routine disallowances which are not warranted otherwise - Decided against revenue. Coming to AY. 2009-10, as already stated above, the proceedings are not u/s. 153C. Since AO has neither followed the procedure u/s. 144 nor CIT(A) has considered assessee’s request for examining the Books of Accounts, we are of the opinion that the deletion by CIT(A) of the disallowance of the personal expenditure and also confirmation of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opal. Notices u/s. 153C dt. 24-09-2009 were issued by the AO in respect of these assessment years. Assessee filed the return of income originally filed for the assessment years upto AY. 2008-09 and in AY. 2009-10, being post search period filed the regular return of income, consequent to the notice u/s. 142(1) issued on 31-05-2010. AO issued various notices for completion of assessments and as per AO, there is no response except to one notice in which one Shri S. Ram Mohan Rao, CA appeared and filed Power of Attorney (POA) on 05-11-2010. AO records that neither assessee nor his AR appeared and furnished any information called in the notice issued u/s. 142(1) dt. 22-10-2010. In the absence of any response from assessee, AO invoked the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Ld. CIT(A) that assessee has maintained Ledger, Books of Accounts and they can be produced for verification. Since AO has not seen the Books of Account and resorted the various additions, assessee requested the Ld. CIT(A) to consider the issue on facts. Assessee also explained individual additions made before the CIT(A). 4. Ld. CIT(A) after considering the facts of the case, assessment order and various written submissions, upheld the proceedings u/s. 153C. Ld. CIT(A) noticed that search and seizure operations were conducted on Shri Ch. Raja Gopal, who is the father of assessee and thereby notices issued u/s. 153C are to be treated as valid due to relationship and to verify inter-related transactions. With reference to add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is any incriminating material identified as belonging to assessee. Therefore, the proceedings per se u/s. 153C should not arise. Even if for the sake of argument consider that proceedings u/s. 153C are appropriate, the AO cannot make any routine disallowance in the search assessments in the absence of any incriminating material. AO would be entitled to make additions u/s. 153A. As the jurisdiction for completion of assessment u/s. 153C is limited, AO cannot make roving enquiries or routine disallowances which are not warranted otherwise. Moreover, as rightly considered by the CIT(A) in the ex-parte assessments, AO has simply disallowed all the amounts shown in the capital accounts without any scrutiny. We also found that befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re for the limited purpose of Revenue appeal in AY. 2009-10, we uphold the grounds as the issue require fresh examination. Therefore, the appeal in AY 2009-10 is considered allowed for statistical purposes. 8. Coming to the Cross Objections in AY. 2004-05, 2005-06 and 2008-09, the only issue is with reference to sustaining proceedings U/s 153C. As can be seen from the order of CIT(A), there are contradictory findings while considering this ground and grounds on merits. Ld. CIT(A) records, while disagreeing with the contentions u/s. 153C, that the notices u/s. 153C are to be treated as valid due to the relationship and to verify the inter-related transactions and that the AO verifies the same after giving the notice Us 153C since the cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings u/s. 153C cannot be initiated in assessee s case. Therefore, there is merit in assessee s contentions that the proceedings are not validly initiated. For these reasons, we uphold the Cross Objections of assessee in the impugned three assessment years. 9. As far as AY. 2009-10 is concerned, assessee s Cross Objection is with reference to addition of ₹ 12,39,000/- upheld by the CIT(A) without appreciating the fact that the loans are verifiable and were taken in the previous year for the business. As already stated in the Revenue s appeal, the order of CIT(A) cannot be upheld as no opportunity was given to assessee to substantiate the transactions. As already noted, proceedings in this assessment year are not consequential proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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