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TMI Blog2022 (6) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has erred in law and on facts in deleting the addition made on account of Godown rent exp. of Rs. 81,00,000/-. 3) The ld. CIT(A) has erred in law and on facts in deleting the addition made on account of Godown electricity exp. of Rs. 12,00,000/-. 4) The ld. CIT(A) has erred in law and on facts in deleting the addition made on account of Handling Shifting & Other charges of Rs. 2,09,60,656/-. 5) The ld. CIT(A) has erred in law and on facts in deleting the addition made on account of disallowance of interest u/s. 36(1)(iii) of Rs. 1,16,46,130/- though the assessee had made interest free advances out of interest bearing funds. 6) On facts and in circumstances of the case and in law, the ld. CIT(A) ought to have upheld the order of the A.O. 7) It is, therefore, prayed that the order of the CIT(A) be set aside and that of the A.O. be restored to the above extent." ITA No. 227/RJT/2016 : Asst. Year 2007-08 "1) The ld. CIT(A) has erred in law and on facts in deleting the addition made on account of Handling charges of Rs. 12,00,000/-. 2) The ld. CIT(A) has erred in law and on facts in deleting the addition made on account of Godown rent exp. of Rs. 12,00,000/-. 3) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, the AO simply relied on the report and comments of Special Auditor, which in turn was based on the audited books of accounts which were being filed under section 13 of the Act by the assessee. The AO nowhere relied upon any seized material during the course of search in the order passed under section 153A of the Act. In the absence of any seized material, the assessments under section 153A itself is invalid in law, and for this proposition, he relied upon the decision of Special Bench of the ITAT in the case of All Cargo Global, reported in 137 ITD 287 (Mum-SB), Delhi High Court judgment in the case of Kabul Chawla, reported in 61 taxmann.com 412 (Del), decision of Co-ordinate Bench of the ITAT in IT(SS)A. No. 3/Ahd/2014 in the case of Saumya Construction and the decisions in the other cases. The ld. CIT(A) observed that by following the above judgments he has considered similar issue in favour of another assessee viz. Arvind V. Joshi & Co. and accordingly held that in the present appeals, it was not in dispute that the assessment orders under appeal remained unabated as no proceedings before the AO on the date of search i.e. 15.6.2011 was pending. Further, Department could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 07-03-2009 for the month of April to June - 2008, Rs. 1,10,000/- for soya doc export expenses and Rs. 99,000/- for Rapeseed doc export expenses, the book entry of which was passed on 07-03-2009 which shows that the income to the extent of Rs. 3,59,000/- has been transferred to group company M/s. Arvind V. Joshi & Co. The AO, based on such observations called upon the assessee to give details of the godown rent and how these were utilized for business purpose, why the accounting entries were not passed and tax was not deducted on month to month basis, to furnish copy of agreement entered with M/s. Arvind V. Joshi & Co. and to prove the genuineness of the expenses with documentary evidence. In response, the assessee explained that the assessee have taken open space, at port, on hire from M/s. Arvind V. Joshi & Co. for which necessary invoicing was done by M/s. Arvind V. Joshi & Co. only on the last day of accounting year and for which the assessee, as a service recipient, don't have any reason to object for. Further, necessary tax as required were deducted and deposited in to the government A/c. It was further explained that as the appellant does not own any warehouse/open spac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of the AO that payment is not made or that the part of the payment is received back or that no services were enjoyed by the appellant. Merely because the accounting entry is passed on the last day of the accounting period after receiving the invoice can be no ground to consider whole or part of the expenditure non-genuine. Thus, I find the addition wholly without merit and therefore the same is deleted. The appellant would get relief of Rs. 3,59,000/-. The related ground 3(i) succeeds. 12. We have heard rival submissions, it is not the case of the Department that the assessee has not paid the rent of Rs. 3,59,000/- but paid on the last day of the first year. The ld. AO could not prove this as bogus expenditure, whereas the assessee has proved that it required open yard to place the imported goods of its customers for a period of 30 days, which is already collected from its customers as handling charges. In the facts of the above circumstances of the case, we do not find any infirmity in the order passed by the ld. CIT(A) and therefore confirm the same and dismiss the Ground No. 1 raised by the Revenue. 13. As regards Ground No. 2 relating to disallowance of interest u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup concerns/holding company, from whom as a business policy in the whole group no interest is charged on mutual basis, and that there is no relationship of section 40A(2)(b) with any of the parties, which however, did not find favour with the AO and thus, he made the addition of proportionate interest. 15. Aggrieved against the assessment order, the assessee filed an appeal before the ld. CIT(A). The assessee submitted before the ld. CIT(A) that the assessee-company had huge funds of Rs. 22,61,18,071/- available as on 31.3.2009 on which no interest is payable; as against this interest-free advances given to the parties of Rs. 2,93,83,500/-. There was also no instance of relationship attracting section 40A(2)(b) of the Act. The assessee also furnished details of statement showing secured loans, interest-free funds, advances etc. The ld. AO failed to consider that the advances given to the parties was for the purpose of commercial expediency, and therefore, the advances given to the third parties cannot be considered for disallowance under section 36(1)(iii) of the Act. Further, the advances given to the parties are also to the sister-concerns, and the sister concerns do not charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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