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Deputy Commissioner of Income Tax, Central Circle, Tirupati Versus Sri C. Gopi Krishna and Vica-Versa

2015 (10) TMI 1266 - ITAT HYDERABAD

Validity of proceedings u/s. 153C - roving enquiries or routine disallowances - AO invoked the provisions of Section 144 and made various additions - Held that:- No merit in Revenue’s grounds in AYs. 2004-05, 2005-06 and 2008-09. There is no incriminating material as far as assessee is concerned. Nothing was brought on record either in the assessment order or before the CIT(A) or during the proceedings before us that there is any incriminating material identified as belonging to assessee. Theref .....

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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 as unexplained cash credit is without any basis. Even though Ld. CIT(A) noted that assessee failed to produce the genuineness of these trans .....

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/15) - Dated:- 9-9-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Smt Nivedita Biswas, CIT-DR For The Assessee : Shri A.V. Raghu Ram, AR ORDER PER BENCH : These appeals and Cross Objections are by Revenue and assessee for AYs. 2004-05, 2005-06, 2008-09 and 2009-10. In all these appeals, Revenue is aggrieved on the issues that Ld. CIT(A) erred in deleting unexplained cash credits and the disallowance of personal expenditure made by the As .....

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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 .....

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xparte assessment. It was submitted that as assessee was not searched and as there is no incriminating material pertaining to assessee, initiation of proceedings u/s. 153C are not legally valid. With reference to additions made without any incriminating material, it was submitted that original returns have been filed earlier. Though AO is expected to make assessments based on seized material, while making assessments on the basis of seized material, he can also rely on other material though not .....

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of explaining the issues on which additions were made. It was submitted 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 s .....

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atement of Mr. Ch. Raja Gopal. Since it is an assessment completed by applying the provisions of Section 153C, AO is not supposed to make these additions in the absence of any seized material/documents. Therefore, additions made by the AO are deleted in all the impugned assessment years except in AY. 2009-10. As far as AY. 2009-10 is concerned, Ld. CIT(A) noticed that the proceedings are not initiated u/s. 153C but are regular proceedings under normal assessment procedure. However, while upholdi .....

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s far as Revenue s grounds are concerned, we do not see any merit in Revenue s grounds in AYs. 2004-05, 2005-06 and 2008-09. There is no incriminating material as far as assessee is concerned. Nothing was brought on record either in the assessment order or before the CIT(A) or during the proceedings before us 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 pr .....

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al accounts without any scrutiny. We also found that before invoking provisions of Section 144, AO has not issued any show cause notice to assessee nor there is any evidence that proper procedure has been followed. Be that as it may, in the three impugned assessment years, as there is no incriminating material and proceedings being u/s. 153C , the order of the CIT(A) is to be upheld. There is no merit in Revenue s grounds and accordingly, they are rejected. 7. Coming to AY. 2009-10, as already s .....

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xplained cash credit is without any basis. Even though Ld. CIT(A) noted that assessee failed to produce the genuineness of these transactions before the AO and before CIT(A), there seems to be no enquiry made by any of the authorities to come to the said conclusion. In view of this, we are not in a position to uphold the order of CIT(A) in AY. 2009-10 and therefore the Revenue s grounds on disallowance of personal expenditure are to be considered as allowed for statistical purposes. Similar issu .....

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round 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 certain documents were seized at the time of search and seizure of Shri Ch. Raja Gopal. However, this finding of CIT(A) is contradictory to the finding given in para 6.1 while deleting the additions mad .....

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ection 153C, the AO is not supposed to make these additions in the absence of seized material/documents . 8.1 As can be seen from the above, Ld. CIT(A) gave contradictory statements/findings in the order. At the time of upholding the proceeding u/s. 153C, Ld. CIT(A) admitted that there is seized material linked to assessee, that is the reason why she upheld the proceedings u/s. 153C. However, at the same time additions were deleted stating that there is no incriminating material. The fact is tha .....

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