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M/s Naresh Kumar and Co. Pvt. Ltd. Versus JCIT (OSD) , Central Circle-XX, Kolkata

2016 (1) TMI 350 - ITAT KOLKATA

Assessment u/s 153A - disallowance on account of foreign travel having no nexus with the business of assessee - Held that:- Since assessment has already been completed u/s. 143(3) of the Act on the disputed amount of ₹ 12.77 lakh for foreign travel at the time of search that there was no incriminating material found which requires the AO to disallow the same. So in the absence of any material information quoted during the time of search we are inclined to allow the expenses incurred on for .....

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e assessee is arising out of order of Commissioner of Income Tax (Appeals) Central-III, Kolkata in appeal No.255/CC-XX/CIT(A)CIII/ 11-12/Kol. dated 26.11.2012. Assessment was framed by JCIT(OSD),CCXX., Kolkata u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 26.12.2011 for assessment year 2004-05. 2. The issue raised by assessee in his appeal is that Ld. CIT(A) has confirmed the order of Assessing Officer by sustaining the disallowance of ₹ 12, .....

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ferent dates, however no substantial details were furnished before AO for completing assessment under the Act. Only some details were furnished by assessee which were not sufficient enough to make the assessment in scientific manner. So in the absence of information and co-operation from the assessee that there was no option available to AO but to complete the assessment to the best of his judgment as provided u/s 144 of the Act. Accordingly, AO estimated income at ₹ 6.00 crores by making .....

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on 20.08.2003, 11.09.2003 & 25.11.2003. Neither the P&L account of the assessee nor its computation of income reflected any computation of capital gains/losses to this effect. Evidently, it was highly irregular. 2. Similarly, transactions of shares of M/s Kartikay Coal Washeries P Ltd were not reported in the P&L account or in computation of income. 3. No disallowance u/s. 14A of the Act was made and copies of bank accounts wre not provided for examination of sources of investments. .....

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thority in the following manner (with all cloumn totals) for each year: Names of the deductors Total TDS deducted Total receipts as per TDS certificate Corresponding receipts as per accounts Reason for difference, if any However, such details were not provided. 7. Details of foreign travel indicated that Sri Arjun Kuamr had undertaken foreign travel, for which ₹ 12,47,860/- was spent. Apparently, the assessee did not gain any foreign contract. No evidence was also adduced to justify the pu .....

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ceedings that the expenses was incurred on the foreign travel of Shri Arjun Kumar, a director of the assesseecompany to Singapore, Europe and UK for the purposes of business. In this regard, assessee produced copies of the invitation letters from M/s Rag Trading Asia Pacific Pvt. Ltd. and M/s Derek Parnaby Cyclones International Ltd., U.K. Therefore, assessee expressed that the said foreign travel expenses was incurred wholly and exclusively for business purposes and are allowable u/s 37 of the .....

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214 and the decision of the Hon ble Delhi Tribunal in the case of Anil Kumar Bhatia & others & ACIT (2010)1 ITR(Trib.) 484 (Del). However the Ld CIT(A) has disregarded the claim of the assessee by observing that the decision in the case of Anil Kumar Bhatia & others & ACIT (supra) has been reversed by the Hon ble Delhi High Court. Therefore on the basis of above Ld. CIT(A) has confirmed the action of AO. Aggrieved, now assessee is in second appeal before us on the following groun .....

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ee, which could have entitled the A.O to make the assessment u/s. 144 of the Act. 2(b). On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the validity of the assessment make u/s. 144/153A of the Act, by observing that the A.O had allowed multiple opportunities to the appellant calling certain details but all the information requisitioned by him were not furnished by the appellant , although the A.O completing the assessment was there for only a short while .....

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ts and in the circumstances of the case, the learned CIT(A) erred in upholding the validity of the assessment made u/s. 144/153 of the Act, in spite of the fact that the A.O had not issued the statutory notice calling upon the appellant assessee to show cause why the assessment should not be completed to the best of his judgment. 3(a). On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate that the issue of examination of Foreign Travel expenses had been close .....

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in that view, in sustaining the disallowance of ₹ 12,47,860/- out of Foreign Travel expenses. Shri Ravi Tulsiyan, Ld. Authorized Representative appearing on behalf of assessee and Shri Niraj Kumar, Ld. Departmental Representative appearing on behalf of Department. 4. We have heard rival parties and perused the materials available on record. Before us Ld. AR of assessee submitted paper book of assessee containing pages 1 to 32 and he submitted that expenses were disallowed by AO on the grou .....

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he Ld. AR also argued that the issue of examination of Foreign Travel expenses had been closed during the time of the original assessment u/s. 143(3) of the Act and that since no incriminating material on this issue had been found during the search, the mater could not be re-agitated in course of fresh assessment u/s. 144/153A of the Act. So until and unless no incriminating material is found in the course of search to suggest that expense are bogus or not for the purpose of assessee s business, .....

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sed at pages 7-32) • Mumbai ITAT Special Bench All Cargo Global Logistics Ltd. V. DCIT 18 ITR (Trib) 106 (Mum) • Jodhpur Bench of Tribunal in the case of Suncity Alloys (P) Ltd. v.ACIT [2009] 124 TTJ 674 (Jod) On the contrary, Ld. DR supported the orders of Authorities below. 5. On careful analysis of the aforesaid discussion reveals that assessment has made u/s 144 of the Act on estimated basis and AO issued several notices to assessee to furnish the desired details in specific format .....

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incurred on the foreign travel but the question arise whether that foreign travel was in connection with assessee s business or not. Besides it was also argued by the Ld. AR that the action of the lower authorities for re-opening the assessed case under section 153A of the Act is ultra vires as long as there is no incrimination material found during the time of search. The Ld. AR has submitted that the necessary details to justify the business connection of the aforesaid trip. As regards the ch .....

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