TMI Blog2017 (10) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Hon’ble Bombay High Court in (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. All Cargo Global Logistics Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) and in CIT Vs. Shri Deepak Kumar Agarwal [2017 (9) TMI 850 - BOMBAY HIGH COURT],we hold that in the years under appeal, where the assessment has not abated, then no deduction is to be allowed in respect of fresh claim made in the return of income filed in response to notice under section 153A of the Act. Disallowance of interest against interest free advances made by the assessee - Held that:- The perusal of Balance Sheet in respect of all the years reflect the availability of interest free funds with the assessee, out of which the said interest free advances have been made by the assessee. Relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) we hold that availability of funds as on the date of Balance Sheet has to be seen and there is no merit in the orders of authorities below in looking at the day-to-day position of availability of funds. - ITA Nos. 1009 to 1012/PUN/2015 - - - Dated:- 31-10-2017 - MS. Sushma Chowla, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectively, in the said concerns. The group had undertaken construction of large number of residential and commercial projects. The group used to receive on-money in cash from flat holders and the same was not recorded in regular books of account. The modus operandi adopted by the assessee of receiving on-money was confirmed on the basis of incriminating papers relating to different projects, which were found during the course of search and seizure action. Further, the income earned from unaccounted activities, in turn, was used for investments in land and acquisition of several personal assets. The said unaccounted income was also used by Shri Gajendra D. Pawar i.e. assessee to make unaccounted advances to third parties. The details of unaccounted advances were also found recorded in the documents seized during search. Consequent to search and the modus operandi of the group on the basis of seized document, undisclosed income of ₹ 20.19 crores was admitted by the assessee group. The assessee in response to notice under section 153A of the Act furnished return of income and also disclosed additional income in the respective years. The Assessing Officer noted that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the tune of ₹ 20.56 lakhs and on the other hand, the assessee had taken loan of ₹ 0.92 crores at interest rate of 13%. The assessee was asked to explain the same. However, the plea of assessee that it had sufficient interest free funds was not accepted. The Assessing Officer noted that out of interest free advances of ₹ 20.56 lakhs, advance of ₹ 6 lakhs was not given for business purpose and there was no commercial exigency on such advances. The Assessing Officer further computed the availability of funds and the application of funds and held that there was no surplus funds available to give interest free advances to the tune of ₹ 20.56 lakhs and hence, interest relatable to the advance of ₹ 6 lakhs not given for business purpose and accordingly, applying the rate of interest at 13%, interest of ₹ 78,000/- was disallowed. Further, certain disallowances were made on account of expenditure incurred on travelling and telephone expenses, which were not the issues raised before us. 7. The CIT(A) confirming the addition made on account of disallowance of interest on borrowed capital and also upheld the addition of disallowance of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down by the Hon ble Bombay High Court in CIT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. (2) All Cargo Global Logistics Ltd. (supra), we hold that in the years under appeal, where the assessment has not abated, then no deduction is to be allowed in respect of fresh claim made in the return of income filed in response to notice under section 153A of the Act. Consequently, the first issue raised by way of ground of appeal No.1 in assessment year 2005-06, grounds of appeal No.1 and 3 in assessment year 2006-07, ground of appeal No.1 in assessment years 2007-08 and 2008-09 are dismissed. 12. Now, coming to the second issue raised in bunch of appeal i.e. the disallowance of interest against interest free advances made by the assessee. 13. The learned Authorized Representative for the assessee in this regard pointed out that the Assessing Officer held that interest bearing advances were used for making interest free advances. He pointed out that no incriminating document was found during the course of search. He thus, stated that no such addition could be made in non-abated assessment years. However, without prejudice, he pointed out that interest free funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial was found but since no assessment was completed under section 143(3) of the Act, the Tribunal held that the Assessing Officer was competent to invoke the jurisdiction under section 153A / 153C of the Act and complete the assessment under section 143(3) of the Act. 15. The learned Authorized Representative for the assessee in rejoinder referred to the decision of Hon ble Bombay High Court in the case of Deepak Agarwal (supra). Since it was not clear from the said decision whether the assessment in the said case has been completed under section 143(1) or 143(2) of the Act, he filed the copy of the order of the Tribunal in the case. The Mumbai Bench of Tribunal in Deepak Agarwal Vs. ACIT (2014) 40 CCH 311 (Mum-Trib) has noted the fact that assessment was completed under section 143(1) of the Act. The Tribunal vide para 14 had held that in case of completed assessment under section 143(1) or 143(3) of the Act, no addition in routine manner could be made in the assessment framed under section 153A of the Act when there is no incriminating material gathered in search action. The additions before the Tribunal were under section 68 or 14A of the Act. The Hon ble Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
