TMI Blog2015 (11) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... ble opportunity of being heard in support of the amount of ₹ 17,526/- found in the AIR information. - Decided in favour of assessee by way of remand. - ITA No. 3345/MUM/2015 and ITA No. 3348-50/MUM/2015 - - - Dated:- 30-11-2015 - SHRI G.S. PANNU, ACCOUNTANT MEMBER. Appellant by : Shri Mayur Kishnadwala Respondent by : Shri T. Sasi Kumar ORDER PER G.S. PANNU, AM: The captioned four appeals pertaining to the same assessee involve certain common issues, therefore, they have been heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. In brief, the relevant facts are that a search and seizure action under section 132(1) of the Income Tax Act, 1961 (in short the Act ) was conducted on 16/12/2010 in the case of M/s. Patel Engineering Ltd., group of cases. The discussion in the assessment orders reveals that assessee was also, inter-alia, covered in such search and seizure operation. As a consequence, assessments for the captioned assessment years were finalized by the Assessing Officer under section 143(3) r.w.s. 153C of the Act, wherein the income assessed was higher than the returned income and such di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also asserted that neither any expenses were booked and nor any deductions have been claimed from personal accounts; and that there were no borrowings at all. The Assessing Officer and, thereafter, the CIT(A) disagreed with the assessee and disallowed a sum of ₹ 56,912/- on account of administrative expenses by applying the formula prescribed in Rule 8D(2)(iii) of the Income Tax Rules, 1962 ( in short the Rules ) 5. In this background, the Ld. Representative for the assessee submitted that by way of an Additional Ground of appeal, the assessee seeks to challenge the jurisdiction of the Assessing Officer to make the impugned disallowance in the proceedings under section 143(3) r.w.s. 153C of the Act on the ground that during the course of search no incriminating material was found and seized. The Ld. Representative for the assessee submitted that such Additional Ground involves a pure point of law that the relevant facts being on record and, therefore, it deserves to be admitted for adjudication following the ratio of the judgments of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT, 229 ITR 383(SC) and the Hon ble Bombay High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ACIT, ITA No.8576 8577/Mum/2010 for A.Y 2003-04 2005-06 order dated 17.10.2014 8. On the other hand, Ld. Departmental Representative appearing for the Revenue has defended the action of the income tax authorities and pointed out that the provisions of section 153A of the Act empower the Assessing Officer to assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search was conducted. As per Ld. Departmental Representative the Assessing Officer was duty bound to assess or reassess total income of such assessment years and, therefore, the impugned addition was justifiably made as it involves application of section 14A of the Act. 9. As the aforesaid discussion shows, the pertinent point raised by the assessee before me is that the impugned addition has been made in the absence of requisite jurisdiction. The impugned assessment has been made by invoking Section 153C of the Act, which prescribes that the assessment is to be made in the manner provided in Section 153A of the Act. In order to appreciate the controversy, it is pertinent to observe that Section 153A of the Act postulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof, and ruled that an unabated assessment under section 153A(1) would not encompass an addition, if no incriminating material is found during the course of search, because in such a case, the original assessment had become final. This proposition has been canvassed by the Ld. Representative for the assessee before me in order to assail the disallowance of ₹ 56,912/- made by the Assessing Officer by invoking section 14A of the Act. 9.1 Moreover, the Hon ble Delhi High Court in the case of CIT(Central)-III vs. Kabul Chawla in ITA 707/2014 dated 28/08/2015 has extensively considered the legal position and summarized it in the following words:- Summary of the legal position 37. On a conspectus of Section 153A (1) of the Act, read with the proviso thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes places. ii. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39(1) on 30/09/2008 had lapsed. I have perused the assessment order and find that there is nothing brought on record to suggest that any material was found during course of search which would trigger the invoking of section 14A of the Act. Rather, the assessment order reveals that the disallowance under section14A of the Act has been resorted to on a mere reappraisal of the existing material and is dehors any incriminating material found in the course of search. The entire discussion on this point in paras-6 7 of the assessment order does not refer to any material found during the course of search, leave alone any incriminating material. Therefore, in this factual background, I do not find any justification for the Assessing Officer to make the impugned addition in an assessment finalized under section 153A of the Act in the absence of any incriminating material having been found during the course of search, qua the impugned disallowance u/s. 14A of the Act. 9.3 In conclusion, I, therefore, hold that following the ratio of the judgment of the Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava-Sheva) (supra) as also the judgment of the Hon ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintaining separate Books of Account for her proprietary business and so far as the impugned investments in shares, bonds and mutual funds was concerned, they were reflected in her personal account, which is distinct from her business account. The assessee also pointed out that neither have any expenses been booked nor claimed as a deduction in her personal account and that there are no borrowings. 13.2 On the other hand, Ld. Departmental Representative appearing for the Revenue contended that in spite of the investments being from personal account, the disallowance on account of section 14A of the Act is justified. 13.3 I have considered the rival submissions carefully and find that in the facts of the present case, there is no justification for invoking of section 14A of the Act to disallow any expenditure on account of application of Rule 8D(2)(iii) of the Rules. There is no material on record to negate the factual assertions which have been made by the assessee consistently from the level of the Assessing Officer, which is to the effect that the investments made are in her personal capacity and are reflected in her personal account which are distinct from her business a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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