TMI Blog2017 (3) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Since the issues involved are common and the appeals were heard together so these are being disposed of by this consolidated order for the sake of convenience and brevity. 3. First we will deal with the cross appeal for the assessment year 2002-03. In the assessee s appeal in ITA No. 4985/Del/2013, following grounds have been raised: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of ₹ 1,09,029/- made by the AO invoking the provisions of Section 14A of the Act. 3. The appellant craves leave to add, amend or alter any/all of the grounds of appeal before or during the course of the hearing of the appeal. 4. In the appeal of the department in ITA No. 5615/Del/2013, the grounds raised read as under: 1. On the facts and in the circumstance of the case, the CIT(A) has erred in deleting the disallowance of ₹ 2,31,55,000/- made by the A.O. on account of unexplained expenditure on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that in a proceeding under Section 153A no addition can be made in the absence of any incriminating material being found during the course of the search. (ii) On the facts and circumstances of the case, the additions made by the AO and the additions confirmed by the learned CIT(A) are untenable in the absence of any incriminating material being found during the course of the search. 6. During the course of hearing the ld. Counsel for the assessee reiterated the contents of the aforesaid application and requested to admit the additional grounds. The reliance was placed on the judgment of the Hon ble Supreme Court in the case of NTPC Vs CIT (1998) 229 ITR 383. 7. In his rival submissions the ld. DR opposed the admission of the additional grounds. 8. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the additional grounds raised by the assessee are purely the legal grounds for which no investigation is required and facts are already available on the record. As regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of ₹ 12,08,391/- made by the AO u/s 14A of the Act and deleted the disallowance of ₹ 2,31,55,000/- by observing in paras 4.4.2 and 4.4.3 of the impugned order as under: 4.4.2 It is noted that, CIT(A)-I has considered all the points raised by the present AO which are very much part of the assessment order itself. He has observed that the parties involved had confirmed the fact of rendering services and receipt of payments through banking channels in their replies given to the AO u/s 133(6) and the disallowance made by the AO was not based on any evidence but only on the basis of his subjective opinion which is in the form of suspicion. Even though this is a search assessment completed u/s 153A r.w.s 143(3), there are no incriminating documents seized during action u/s 132 relating to these sub-arrangers who have rendered services as already noted by CIT(A), The companies involved, though located in U.P. have offices in Delhi as per the invoices/ letter heads of these sub-arrangers which are part of the records. Further, the AO had not asked any specific detail which according to him could have satisfied that the other party rendered actual services. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of that company for subsequent years namely assessment year 2003-04, 2004-05 etc. In the instant case it is seen that the action of learned Assessing Officer is wholly arbitrary and untenable in law as the disallowance is based not on the basis of any evidence but only on the basis of his subjective opinion which is in the form of suspicious. Such a disallowance cannot be sustained and directed to be deleted on the basis of my observation as above as also in view of my findings in the case of A.K. Capita Services Ltd. This ground of appeal is allowed. 4.4.3 It is noted that CIT(A)-I, had taken a view after appreciating the evidences before him on winch I cannot find fault. Being a search assessment the disallowances should have emanated from the documents seized during the search. However, there is no clarity on this aspect in the assessment order. ITAT has set aside the order mainly for giving opportunity of being heard to the AO who had expressed his desire to be heard by way of a specific request in ITNS-5I in this regard. The AO has accordingly been heard. No new fact has been pointed out or brought out on the issue, that was not considered in the 1st round. The AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del) Jakson Engineering Ltd. Vs ACIT in ITA Nos. 349 350/Del/2013 order dated 11.04.2014 CIT(Central)-III Vs Kabul Chawla in ITA Nos. 707, 709 713/2014 order dated 28.08.2015 to the Hon ble Delhi H.C. 14. In his rival submissions the ld. DR supported the order passed by the AO and further submitted that the additions were made since the assessee failed to furnish the reply to the satisfaction of the AO. Therefore, the ld. CIT(A) was not justified in allowing the relief to the assessee. 15. We have considered the submissions of both the parties and carefully gone through the material available on the record. On a similar issue the Hon ble Jurisdictional High Court in the case of CIT (Central-III) Vs Kabul Chawla in ITA Nos. 707, 709 713/2014 order dated 28.08.2015 (supra) held 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 (1) will have to be mandatorily issued to the person searched requiring h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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