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2016 (8) TMI 910 - ITAT AHMEDABAD

2016 (8) TMI 910 - ITAT AHMEDABAD - TMI - Denial of claim of expenditure on pasupalan - Held that:- The expenditures claimed by the assessee are not unreasonable and deserves to be allowed. We, accordingly, direct the A.O. to allow the expenditure claimed by the assessee as per his computation of income. - Decided in favour of assessee. - Addition on rental income from letting out of property for Bakery business.- Held that:- The stud farm belongs to the assessee, therefore, only the assesse .....

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R AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri S.N. Divatia, A.R. For The Respondent : Shri R.I. Patel, CIT/DR PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. The above captioned appeals are by the Assessee preferred against the order of the ld. CIT)(A)-I, Ahmedabad dated 28.01.2011 pertaining to A.Y. 2001-02 to 2007-08. 2. Appeals for A.Y. 2001-02 & 2002-03 have common issues and appeals of A.Y. 2003-04 to 2007-08 have identical issues, therefore, all these appeals were heard .....

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tion was conducted at the residential premises of the assessee at Village Kochava, Tal. Mehsana on 01.11.2006. Accordingly, proceedings u/s. 153A was initiated and statutory notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. 5. While scrutinizing the return of income, the A.O. noticed that the assessee has shown pension income, income from sale of milk, tube well, pasupalan and interest income. On perusal of the income and expenditure account, the A.O found that .....

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e assessee has shown milk sale of ₹ 1,93,638/- and pasupalan income at ₹ 95,785/- totaling to ₹ 2,89,413/- against which the total expenditure was ₹ 1,76,185/-. The assessee further stated that the expenditure is very reasonable in comparison to the total income. The A.O. found that most of the expenditures claimed by the assessee are not supported by any documentary evidences. The A.O. further noticed that the assessee has also incurred certain other expenditure under th .....

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the ld. CIT(A) and in addition to challenging the disallowances made by the A.O. also challenged the validity of the assessment made u/s. 153A of the Act. However, the First Appellate Authority did not accept the contentions made by the assessee and confirmed the assessment. 8. Aggrieved by this, the assessee is before us. The ld. counsel for the assessee vehemently stated that the lower authorities grossly erred in making the assessment u/s. 153A of the Act without any incriminating material f .....

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igh Court in the case of Continental Warehousing Corporation 374 ITR 645 which reads as under:- Once it is held that the assessment has attained finality, then the AO while passing the independent assessment order u/s. 153A r.w. s 143(3) of the IT. Act could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s. 153A of the Income Tax Act establish that the reliefs granted under the finalized assessmen .....

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in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax? 2. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Sec. 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO.? .....

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the Hon ble High Court of Delhi in the case of Kabul Chawla 380 ITR 573 wherein the Hon ble High Court has summarized the legal position as under:- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos 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 153 A(l) will have to be mandatorily issued to the person searched requi .....

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me' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be rel .....

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he date of search) and the word reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under s .....

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t (supra), we set aside the findings of the ld. CIT(A) and quashed the assessment years for A.Y. 2001-02 & 2002-03. IT(SS)A Nos. 293 & 294/Ahd/2011 are accordingly allowed. 12. Since, we have quashed the assessment orders, we do not find it necessary to go into the merits of the case. IT(SS)A Nos. 295 to 299/Ahd/2011 pertaining to A.Ys. 2003- 04 to 2007-08. 13. The common grievance in all these appeals are twofold-(i) Disallowances of expenditure and thereby denying the losses incurred b .....

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re:- Assessment Year Income Total Pashupalan Income Pashupalan Expense Pashupalan Milk Sale 2001-02 95785 193628 289413 176185 2002-03 4700 152173 179446 2003-04 5800 127340 133140 176602 2004-05 33950 132054 166004 149244 15. The only reason given by the A.O. and accepted by the ld. CIT(A) in respect of the disallowance of expenditure is that the expenditures are not supported by any documentary evidences. A perusal of the aforementioned chart shows that there is excess of expenditure over inco .....

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factual matrix as mentioned hereinabove, in our humble opinion, it cannot be said that the expenses are exorbitant and inflated. 17. The other allegation of the A.O. is that by showing excess loss, the assessee is setting off the losses from his other income is also ill founded because the only other income of the assessee is from salaries, dividends and interest. Interest from bank is exempt u/s. 80L of the Act and income from dividends is exempt u/s. 10(34) & 10(35) of the Act. The only o .....

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ental income from letting out of property for Bakery business. 20. Facts relating to this issue are that a survey action u/s. 133A of the Act was carried on at the stud farm house of the assessee. The survey team found that a Bakery was also running in addition to agricultural and pasupalan activities. On enquiries, the authorities came to know that the bakery was running since last 10 years. Statement of one Shri Harshadbhai Barot was recorded on 01.11.2006 who admitted that the bakery was star .....

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nsidered for taxation purpose. Assessee strongly objected to this proposition of the A.O. and stated that Shri Harshadbhai Barot may be receiving rental income but the assessee was not receiving any income from the said bakery. In support, the assessee filed the affidavit of Shri Sharshadbhai Barot. 22. The A.O. did not believe in the story of the assessee and proceeded by making addition of the rental income in the hands of the assessee thereby making addition of ₹ 30,000/- in all the imp .....

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given a thoughtful consideration to the sequence of events. We have carefully perused the orders of the authorities below. The undisputed fact is that a bakery was running at stud farm house of the assessee. It is also an undisputed fact that since last 5 years, the bakery was run by one Shri Anis Ansari who was paying rent of ₹ 2500 p.m. i.e. ₹ 30,000 per annum to Shri Harshadbhai Barot. What is not understandable is the authority of Shri Harshadbhai Barot taking rent from Shri Ani .....

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