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2018 (12) TMI 459

Revision u/s 263 - assessment u/s 153A - poof of incriminating material unearthed during the course of search - satisfaction of twin conditions being erroneous and prejudicial to the interest of Revenue - assessee has debited expenses towards the shortage of material and is of the opinion that assessee’s primary business is transportation of iron ore and other minerals to various mines to railway siding and loading of the same material into railway rack for onward transportation - whether the assessee has been incurring such expenditure from the earlier years as envisaged before us considering the type of business activity and claim of expenditure - Held that:- We are of the opinion on the subject matter of shortage of expenses envisaged by the ld. AR as per the questionnaire in the original assessment proceedings, where the assessee has satisfied the availability of evidence and the assessment was completed - substance in the submissions of AR that the expenditure claimed by the assessee considering the business is normal in nature and the business operations of expenditure is arising out of shortages, which has already been submitted and completed assessments can be interfer .....

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ntrary to law, should hence be quashed and the appellant Company be given such relief or reliefs as prayed for. 5. That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds. 3. The facts in brief are that the assessee is engaged in the business of transportation of goods & materials. There was a search and seizure operation u/s.132 of the Act on 25.02.2014 in the business and residential premises of the assessee. In the search operations certain materials and documents were seized and impounded. Accordingly, the assessment proceedings u/s.153A were initiated. In response to the notice u/s.153A of the Act, issued on 15.01.2016, the assessee-company disclosed its total income at ₹ 1,08,48,050/- for the A.Y.2009-10. Subsequently, the assessment u/s.153A r.w.s.143(3) of the Act was completed on 31.03.2016, determining the total income at ₹ 15,84,80,150/-. 4. Subsequently, the Pr. CIT noticed from the assessment records of the assessee for A.Y. 2009-2010 that the assessee had debited an amount of ₹ 35,79,213/- in the P & L account towards shortage of materials for which no reasons for sh .....

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ntentions of ld. AR that the type of expenditure as referred by the Pr. CIT is inevitable to the assessee for claim and has been claiming from the earlier years and the department has been accepting the same. Further the assessee, in the course of earlier assessment u/s.143(3) dated 16.12.2011 the AO has issued notices u/s.143(2) & 142(1) of the Act and questionnaire to the assessee and in compliance to the submissions the AO having satisfied with the submissions as per the questionnaire has completed the assessment and assessed income of ₹ 1,08,48,050/- with disallowances, whereas we found that the AO subsequently upon the search proceedings has called for the various information in respect of share application money and also the cash balances and whereas the same has been added to the income as determined u/s.143(3) of the Act on 16.12.2011 and assessed the total income at ₹ 1,08,48,050/-. The Pr. CIT on the issue of orders passed by the AO as erroneous and prejudicial to the interest of Revenue has made observation that the assessee has debited expenses towards the shortage of material and is of the opinion that assessee s primary business is transportation of ir .....

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iness is normal in nature and the business operations of expenditure is arising out of shortages, which has already been submitted and completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A of the Act only on the basis of incriminating material unearthed during the course of search which are not produced. 9. We find that the disputed issue in respect of no incriminating material found during the course of search, was discussed by the coordinate bench of the Tribunal in the case of Midas Capital Pvt. Ltd. Vs. ACIT, IT(SS)A No.04&05/CTK/2018, order dated 23.03.2018 for the assessment years 2011-2012 & 2012-2013, where the decision relied on by the CIT(A) of Hon ble Kerala High Court was considered by the coordinate bench and observed as under :- 23. We have heard rival submissions and perused the orders of lower authorities and materials available on record. In the instant case, the assessee originally filed its return of income on 29.9.2011 for the assessment year 2011-12 and on 27.9.2012 for the assessment year 2012-13 disclosing total income at ₹ 9,56,200/- and ₹ 2,95,840/- and MATY of ₹ 21,90, .....

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sessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a) Held, yes [Paras 7 and 8] [In favour of revenue). " (b) Commissioner of Income-tax Central, Kanpur v. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) : "Section 153A, read with section 143 of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Scope of assessment) - Assessment year 2000-01 - Whether Assessing Officer has power to reassess returns of assessee not only for undisclosed income, which was found during search operation but also with regard to material that was available at time of original assessment - Held, yes [Para 11] [In favour of revenue/Matter remanded]" 27. On the other hand, the AR of the assessee relied upon the following decisions: (i) (1) CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2)All Cargo Global Logistics Ltd. (2015) 374 1TR 645 (Bom), where it was held that the notice u/s.153A of the Act was founded on search. If there was no incriminating material found during the search then the Tribunal was right in .....

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ed under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed." 28. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. 29. In the instant case, we find that during the course of the relevant search only tally data of the assessee company w .....

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