9911796707
TMI Blog2019 (11) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication. After hearing both the sides, we admit the revised grounds for adjudication. 3. Ground No.2 in the revised grounds is related to the validity of addition made by the Assessing Officer (AO) in the proceedings u/s 153C of the Income Tax Act, 1961 (in short 'Act') without having the incriminating material. Ground No.3 is related to the addition of Rs. 7,36,053/- towards the rent paid for business premises. Both Ground 2 &3 are interdependent, hence we take up these grounds first for adjudication. 5. Brief facts of the case are that the assessee is an individual, deriving income from house property and textile cloth business. He filed the return of income admitting total income of Rs. 15,46,013/- for the A.Y.2012-13 on 30.09.2012. Subsequently, search and seizure operations wee conducted in the case of M/s G.S.L.Educational Society, Rajahmundry( 'society' in short) on 25.07.2013. During the course of search in the residence of Shri Adapa Rambabu, the Accountant of the society, certain incriminating material was found relating to the assessee, evidencing the undisclosed income. therefore, the AO has initiated the proceedings u/s 153C of the Act, and issued notice u/s 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted u/s 143(1) and no enquiries / verifications were made by the AO. Under the head 'income from other sources', the assessee is not permitted to claim the payment of rent as deduction. Therefore, argued that the AO has rightly made the addition and requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. 9. We have heard both the parties and perused the material placed on record. The Ld.AR relied on the decision of Y.V.Anjaneyulu Vs.DCIT, Central Circle, Vijayawada (supra) and argued that in the concluded assessments, the AO is not permitted to make the additions without having seized material. In the cited case, the assessment was made u/s 153A, the date for holding the assessment as concluded assessment was taken as the date of search, but not the date of issue of notice. For a query from the Bench, the Ld.AR submitted that as per proviso to section 153C, the trigger date for reckoning the assessment as concluded assessment or not is the date of receiving the books of accounts or documents or assets seized or requisitioned by the AO. We have gone through the proviso to section 153C of the Act and the proviso to section 153C of the Act reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of accounts, documents etc. seized from the premises of the searched person were in handed over to the officer having jurisdiction prior to the date of notification dated 03.03.2014. Therefore, in the absence of any evidence to establish that the material was handed over to AO of such other person before the date of notification, the date to be reckoned is the date on which the case was notified to the present AO, hence, the date of search for the purpose of section 153C / 132 is to be taken as 03.03.2014 in the case of the assessee. In the instant case, there is no doubt that the assessee has filed the return of income on 30.09.2012 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2013 prior to the date of transfer of the case to the AO having jurisdiction and the present AO had issued notice u/s 153C on 23.07.2014. By the time, the case was notified to the present AO, the assessment for the A.Y.2012-13 is unabated. Hence, the AO is not permitted to make any addition without having the incriminating material. In the instant case, the addition was made with reference to the rent paid by the assessee, which was accounted in the regular books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which the balance amount worked out was Rs. 3,50,933/- and proposed for addition. The assessee submitted the copy of letter issued by M/s G.S.L.Educational Society, clarifying that due to financial problems, the management of the M/s G.S.L.Educational Society has decided not to pay the unpaid amount as per the seized material found during the course of search and hence requested not to make the proposed addition and also requested to reduce the amount of Rs. 56,92,455/- which was due from the society since it was irrecoverable. The AO examined the assessee's request in the light of the society's letter and withdrawn the proposal for making the addition of Rs. 3,50,933/-. Therefore, the assessee submitted that the sum of Rs. 56,92,455/- was also irrecoverable and in view of the society's inability to make the payment, requested to reduce the sum of Rs. 56,92,455/- also from the income admitted in the return of income already filed. The AO did not reduce the said sum, hence, the assessee filed the appeal before the CIT(A) and the Ld.CIT(A) also did not find favour with the argument of the assessee, hence dismissed the appeal of the assessee observing that the AO has not made any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the assessee filed a letter from GSL Educational Society wherein the society expressed their inability to make the payments in respect of the amounts found in the seized material. Hence, the AO dropped the proposed addition of Rs. 3,50,933/-. Since the AO had dropped the proposed addition of Rs. 3,50,933/- on the basis of the letter of GSL Educational Society dated 28.01.2016, the assessee requested for reducing the sum of Rs. 56,92,455/- which was also forms part of irrecoverable advance as per the letter of the society.. It is a fact that the assessee has advanced the sums to the GSL Educational Society from unaccounted sources and receiving the interest from GSL Educational Society. As per the evidence found, the assessee has to receive the sum of Rs. 56,92,455/- from GSL Educational Society which was not disputed by the assessee. Merely because GSL Educational Society decided not to make payment, accrued income cannot be reduced. The income has to be computed as per the provisions of the Act and as per which the amount accrued as per the system of accounting followed by the assessee required to be taxed. In the instant case, there is no dispute that the assessee had advan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
