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TMI Blog2016 (9) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... making disallowance of a sum of Rs. 8,51,OOO/- under provisions of the section 40A(3) of Income Tax Act, 1961. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction to pass impugned assessment order under section 153A, more so in making impugned disallowance which ought not to have been made under the law. 3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. A.O in making the impugned disallowance and framing the impugned assessment order is contrary to law and facts, void ab initio, beyond jurisdiction and the same is not sustainable on various legal and factual grounds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the limit prescribed u/s. 40A(3) of the Income Tax Act, the explanation of the assessee was sought and the in response to the same, assessee filed the written explanation on 10.1.2013. After considering the same, AO observed that since the assessee made the payments aggregating to Rs. 42,55,000/- to various persons in cash during the FY 2005-06, therefore, under the provisions of section 40A(3) of the Income Tax Act, 1961 20% of the said expenditure which comes to Rs. 8,51,000/- was added back to the total income of the assessee company and assessment was completed an income of Rs. 8,42,020/- vide his dated 23.1.2013 passed u/s. 153A of the I.T. Act, 1961. 3. Against the aforesaid assessment order dated 23.1.2013, assessee preferred an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08 dated 10.6.2013 by which the issue in dispute is squarely covered. 6. At the time of hearing, Ld. DR relied upon the order of the authorities below and stated that the provision of section 153A has rightly been applied in the case of the assessee on the material available with them. Hence, the appeal of the Assessee may be dismissed. 7. We have heard both the counsel and perused the relevant records available with us, especially the orders of the revenue authorities and the cases referred by the Ld. Counsel of the Assessee in the shape of Paper Book. We find that the additions made by the AO are beyond the scope of section 153A of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 8. Respectfully following the precedent of the Hon'ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla, as aforesaid, we allow the appeal of the Assessee, because AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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