TMI Blog2018 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 only on the basis of incriminating material unearthed during the course of search which are not produced. When no incriminating material was found in respect of shortage of materials in the course of search operations, therefore, the order of revision u/s.263 of the Act by Pr. CIT cannot be sustained. Hence, applying the above ratio decidendi to the present case, we quash the order u/s.263 of the Act passed by the Pr. CIT and allow the grounds of appeal of the assessee. - ITA No.204/CTK/2018 - - - Dated:- 5-12-2018 - Shri N.S. Saini, AM And Shri Pavan Kumar Gadale, JM For the Assessee : Shri P.K.Mishra, AR For the Revenue : Shri S.M.Keshkamat, CITDR ORDER PER SHRI PAVAN KUMAR GADALE, JM : This is an appeal filed by the assessee against the revision order u/s.263 of the Act passed by the Pr.CIT(Central), Visakhapatnam, dated 20.03.2018. 2. The assessee has raised the following grounds :- 1. That on the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 shortage of materials was recorded. The Pr. CIT observed that the expenditure claimed towards shortage of goods/material during the transportation is not an allowable expenditure u/s.37(1) of the Act. Therefore, the Pr. CIT held that the assessment order passed by the AO was erroneous in so far as it is prejudicial to the interest of Revenue. Further the Pr. CIT relied on the decision of Hon ble Kerala High Court in the case of E.N.Gopakumar vs. CIT [2017] 390 ITR 131 (Ker.), and set aside the assessment order u/s.153A r.w.s.143(3) of the Act and directed the AO to re-do the same afresh after examining the issue in detail. 5. Aggrieved by the order of Pr. CIT, the assessee filed an appeal before Tribunal. 6. Before us, ld. AR reiterated the submissions made in the revision proceedings and submitted that the expenditure as claimed in the profit and loss account in respect of shortage of material is an allowable expenditure u/s.37(1) of the Act as the assessee s primary business is transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 iron ore and other minerals to various mines to railway siding and loading of the same material into railway rack for onward transportation. Further in the course of entire process of handling, loss of material is inevitable because of loading/unloading and again loading. Therefore, the difference as claimed as expenditure and in case of shortage of material the customers deducts the cost of materials from the bills raised by the assessee and the same was brought to the knowledge of the AO in the earlier years. Ld. AR further submitted that in the search proceedings in respect of shortage material no incriminating material was found and, therefore, the matter cannot be considered in the revision proceedings and the order of Pr. CIT does not satisfy the twin conditions of erroneous and prejudicial to the interest of revenue, whereas ld. DR relied on the order of Pr. CIT and could not bring any cogent evidence that the expenditure does not satisfy the business conditions of wholly and exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn 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 ₹ 21,90,642/-. 24. In pursuance to search conducted on 6.8.2014, proceedings u/s.153A was initiated in the case of the assessee for the assessment years under consideration. In pursuance to these proceedings, the impugned orders of assessment was passed on 28.12.2016, where, additions of ₹ 9,94,50,000/- and ₹ 15,00,000/- were made on account of unexplained cash credit by invoking the provisions of section 68 of the Act. It is not in dispute that the time limit of issuance of notice u/s.143(2) of the Act with reference to the original return filed by the assessee on 29.9.2011 for the assessment year 2011-12 and on 27.9.2012 for the assessment year 2012-13, respectively expired on 30.9.2012 for the assessment year 2011-12 and on 30.9.2013 for assessment year 2012-13 and no such notice was issued to the assessee by the said dates. Thus, the original return of income became final on 30.9.2011 and 30.9.2012 for the assessment years 2011-12 and 2012-13, respectively i.e. before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 holding that the power u/s.153A of the Act being not expected, to be exercised routinely, should be exercised if the search revealed any incriminating material. If that was not found then in relation to the. second phase of three years, there was no warrant for making an order within the meaning of this provision, (ii) Jai Steel (India) Ltd. Vs. ACIT, [2013] 36 axmann.com 523 (Raj.HC), wherein the Hon'ble Rajasthan High Court has held that the plea raised on behalf 0 the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 was found which shows that the assessee has received cash credit from (i) Runicha Merchants Pvt Ltd., (ii) Sankalp (iii) Scope Vyapar, Event Developers Pvt ltd.,(v) Scope Vyapar, Harman Hire Purchase Pvt Ltd.(vi) Scope Vyapar Sarwati Vincom Ltd., (vi) Scope Alfha Properties Pvt Ltd., (vii) Signet Vinimay Pvt Ltd., (viii) Signet Country Wide Tradecom Pvt Ltd., (ix) Srijan Vypar Pvt Ltd., (x) Srijan Vyapar Caplin Marketing pvt Ltd., (xi) Srijan Tantia Agrochemicals Pvt Ltd.,(xii) West Line, Economy Advisory Services Pvt Ltd., (xiii)Winall Vinimay Pvt Ltd., (xiv) Winall Electro Cock Fuels Pvt Ltd and (xv) Yogiraj aggregating to ₹ 9,94,50,000/- for the assessment year 2011-12 and ₹ 15,00,000/- for the assessment year 2012-13. 30. In the instant case, we find that the addition was made by the Assessing Officer on the sole ground that amount received on sale of investment of ₹ 9,94,50,000/- for the assessment year 2011-12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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