9911796707
TMI Blog2017 (12) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... d below:- "(i) The order of Commissioner of Income Tax (Appeals) is against law and facts. (ii) The Commissioner (Appeals) should have appreciated that when the payees have included the amount paid in their income and paid tax thereon, the disallowance u/s 40A(ia) will not be applicable. The Commissioner of Income Tax (Appeals) is not justified in confirming disallowance only because of the jurisdictional Kerala High Court decision. The issue whether the disallowance under section 40(a)(ia) is attracted only if the amounts are remaining payable at the end of year or whether it is applicable even for amounts paid during the year has not become final and there are conflicting judgments of various high courts on the said issue." 3. The assessee also filed petition for admission of additional ground by way of a letter dated 11.05.2016, raising the additional ground of appeal to challenge the validity of assessment order passed by the A.O. u/s 153C on the ground that no additions could be made in cases of assessments which are concluded / unabated as on the date of search in the absence of any seized material. The relevant additional ground raised by the assessee is extracted bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that the additional ground raised by the assessee requires to be admitted and adjudicated on merits. Hence, we admit the additional ground raised by the assessee and proceeded to dispose off on merits. 6. The brief facts of the case are that the assessee is a partnership firm engaged in the construction and sale of flats. The search action u/s 132 of the Income-tax Act, 1961 was conducted on 31.10.2011 at the residence of Dr.K.M.Ashik in connection with the search of M/s.Kunhitharuvai Memorial Charitable Trust, Calicut. Consequent to the search, survey u/s 133A was conducted on 31.10.2011 at the business premises of the assessee. Thereafter notice u/s 153C was issued. In response to the notice, the assessee has filed return of income. The assessment was completed u/s 143(3) r.w.s. 153C on 29.03.2014 by making additions towards disallowance of expenditure u/s 40(a)(ia), additions towards cash credit in partners account and disallowance of remuneration paid to partners u/s 40(b) of the Income-tax Act. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has challenged additions made by the A.O. towards disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search to make these additions. Therefore, in the absence of any sized material, no addition can be made towards assessments years which are concluded / unabated as on the date of search. The AR further submitted that in this case the search book place on 31.10.2011. The assessments for the assessment year 2006-2007 to 2008-2009 and the time limit for issue of notice u/s 143(2) of the Act was expired before the date of search. As such, the assessments for assessment year 2006-2007 to 2008-2009 have been concluded / unabated. Therefore, no addition can be made to the returned income in the absence of any incriminating materials. In support of his argument, the AR relied upon the following decisions:- (i) Sinhgad Technical Educational Seciety v. ACIT [140 TTJ 233 - ITAT Pune] (ii) Sinhgad Technical Education Society v. CIT-III [378 ITR 84 (Bombay) (iii) Sinhgad Technical Education Society v. CIT-III [397 ITR 344 (SC)] (iv) CIT (Central) v. Promy Kuriakose (Kerala HC) RP No.715 of 2006 in ITA No.296/2013 (v) Mr.Eldhose K.Varghese v. DCIT (Central Circle 1) in ITA Nos.261 to 267 - ITAT Cochin. 8. The learned DR, on the other hand, supported the order of the CIT(A). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Circle) v. Promy Kuriakose in RP No.750 of 2016 in ITA No.296/2013 dated 29th August, 2016, observed that in the absence of search material, proceedings u/s 153C of the Act cannot be initiated by the Assessing Officer. In yet another case, the coordinate bench of the ITAT in the case of Shri Eldhose K.Varghese v. DCIT in ITA No.261 to 267/Coch/2016 dated 04.10.2017, had examined similar issue in the light of the decision of the ITAT Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. v. DCIT [(2012) 137 ITD 287 (SB) (Mum,)] and after considering various case laws, observed that it is quite significant to denote that in respect of completed or non-pending assessment, the Assessing Officer albeit duty bound to assess or reassess the total income, but if there is scope for additions in such assessment, on the basis of income unearthed during the search, he can make the addition. The sum and substance of the ratio laid down in these case laws is that the A.O. cannot make any addition towards completed / unabated assessment in the absence of any seized materials. In this case the fact with regard to date of search is not disputed. The search took place on 31.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
