TMI Blog2022 (7) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ld. CIT(A) had rightly deleted the disallowance made on account of commission, travelling and conveyance and depreciation. Accordingly, the grounds raised by the Revenue are dismissed. Addition made u/s.69C on account of bogus purchases - alleged seized materials found during the course of search - HELD THAT:- The book results of the assessee had been rejected by the lower authorities for not addressing the defects pointed out by the lower authorities. Hence, once the book results are rejected as stated supra, there cannot be separate addition that could be made on account of purchases which are already reflected in the book results, based on alleged seized material. Hence, we direct the ld. AO to delete the addition made on account of bogus purchase as the said issue also gets subsumed in the net profit estimated at 1% of turnover. Accordingly, the ground Nos. 11 12 raised by the assessee in its cross objections are allowed. Validity of the search assessment on the ground that notice u/s.143(2) of the Act was not served - HELD THAT:- The assessee before the ld. CIT(A) had challenged the non-issuance of notice u/s 143(2) of the Act which had been rightly adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act does not constitute any incriminating material found during the course of search within meaning of Section 153A to 153D of the Act. Reliance in this regard is placed on the decision in the case of PCIT vs Best Infrastructure (India) (P) Ltd. [ 2017 (8) TMI 250 - DELHI HIGH COURT] - In view of the above, we hold that no additions could be made in the search assessment completed u/s.153A of the Act for the A.Y.2007-08. Hence, the grounds raised by the Revenue are dismissed - ITA No.2647/Mum/2016 And ITA No.2649/Mum/2016, CO No.343/Mum/2018 (Arising out of ITA No.2647/Mum/2016) And CO No.345/Mum/2018 (Arising out of ITA No.2649/Mum/2016) - - - Dated:- 15-7-2022 - Shri Vikas Awasthy, Judicial Member And Shri M.Balaganesh, Accountant Member For the Revenue : Shri Rajesh Damor For the Assessee : None ORDER PER M. BALAGANESH (A.M): These appeals in ITA No.2647/Mum/2016 2649/Mum/2016 CO No.343/Mum/2018 CO No.345/Mum/2018 for A.Y.2007-08 2009-10 respectively arises out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No.CIT(A)-48/IT.463/DCCC-14/2013-14 CIT(A)-48/IT.465/DCCC-14/2013-14 dated 28/01/2016 (ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of depreciation claimed on addition to fixed assets, by observing that since income has been estimated by rejecting the books of accounts, no separate addition can be made by disallowing expenses based on the same books of accounts ignoring the fact that the Assessing Officer had not estimated total income or Net Profit (N.P.) of the assessee but made addition @ 1% of the turnover over and above G.P. of 23.29% declared by the assessee in the books of accounts by rejecting book results and the disallowance of commission expenses claimed in the Profit Loss account against G.P. was made as the assessee failed to furnish details in support of its claim. 2. The appellant craves to add, to amend and/ or alter any grounds of appeal, if need to be. 3. The Appellant, therefore, prays that on the grounds stated above the order of the CIT(A)-48, Mumbai may be set aside and that of the Assessing Officer restored. 3. The brief facts of the case are that a search and seizure action u/s.132(1) of the Act was carried out at the premises of the assessee on 23/02/2010. Prior to the search action, the assessee had filed its original return of income on 30/09/2009 declarin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payees, business procured through the payees and commission agreement, if any. In reply, the assessee produced only a copy of ledger account evidencing the name of persons to whom the commission was paid and no other details were provided to substantiate the claim of payment of the commission. Accordingly, the ld. AO proceeded to disallow 50% of the commission for want of details and made disallowance of Rs.25,59,209/- in the assessment. 3.5. Further, the ld. AO observed that assessee had booked expenditure of Rs.26,44,739/- under the head Travelling and Conveyance for which no details were furnished and accordingly, proceeded to disallow 50% of the same and added Rs.13,22,370/- to the total income. 3.6. Further, the ld. AO observed that assessee had claimed depreciation of Rs.2,02,55,475/- on fixed assets during the year under consideration. Since no details were furnished for the same, the ld. AO proceeded to disallow the depreciation of Rs.2,02,55,475/- in the assessment. 4. The ld. CIT(A) appreciated the contentions of the ld. AO that the book results had been rightly rejected by him in the facts and circumstances of the instant case u/s.145(3) of the Act. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rejecting the book results u/s.145(3) of the Act. Accordingly, the ground Nos. 8 9 raised by the assessee in its cross objections are dismissed. 5.1. Once the book results are rejected u/s.145(3) of the Act and net profit @1% is estimated by the ld. AO, then there cannot be further disallowance that could be made separately on account of commission expenses, travelling and conveyance expenses and depreciation by looking into the same entries in the books. Hence, we hold that the ld. CIT(A) had rightly deleted the disallowance made on account of commission, travelling and conveyance and depreciation. Accordingly, the grounds raised by the Revenue are dismissed. 5.2. With regard to the addition made u/s.69C of the Act on account of bogus purchases in the sum of Rs.84,38,546/- based on alleged seized materials found during the course of search, we find that the said purchases of Rs.84,38,546/- had been duly reflected as purchases in the books of the assessee and the same has already been considered while arriving at the book results by the assessee. It is not the case of the Revenue that the said purchases of Rs.84,38,546/- had been incurred outside the books of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5.5. The ground No.7 raised by the assessee in its cross objection is challenging the action of the ld. CIT(A) confirming the action of the ld. AO in framing the assessment without giving effect to the directions passed u/s.144A of the Act by the ld. Additional Commissioner of Income Tax. Before us, the directions issued by the ld. Additional CIT(A) u/s.144A of the Act is not placed on record. We also find that the ld. CIT(A) in para 7.1 of his order had dealt with this issue by stating that the assessment has been completed by the ld. AO after considering the directions issued by the ld. Addl. CIT u/s.144A of the Act and had dismissed the plea of the assessee. This finding given by the ld. CIT(A) remain uncontroverted before us and hence, the ground No.7 raised by the assessee in its cross objections is devoid of merit and is hereby dismissed. 5.6. The ground Nos. 1-5 raised by the assessee in its cross objections are challenging the validity of search assessment framed in the hands of the assessee by challenging on the ground that search assessment is barred by limitation u/s.153B of the Act; that there was no material or evidence available during the course of search to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact as to whether there were any seizures or not, proceedings u/s.153A of the Act gets automatically triggered and assessments had to be framed u/s.153A of the Act in respect of that searched assessee. This is very clear from the starting lines of the provisions of Section 153A of the Act itself. 5.6.4. In view of the above observations, the ground Nos. 1-5 raised by the assessee in its cross objections are completely devoid on merits and hence, dismissed. 6. The ground Nos.13 14 raised by the assessee are challenging the action of the ld. CIT(A) confirming the disallowance made on account of proportionate interest of Rs. 3,14,160/-. 6.1. The ld. AO had observed in para 17 of his order that assessee had advanced certain loans without charging any interest thereon. During the course of 143(3) assessment for A.Y.2006-07 interest @12% has been added on such loans and addition has been made in the sum of Rs.3,14,160/-. This addition has been admitted by the assessee in earlier years and accordingly the ld. AO made the same addition in A.Y.2009-10 also in the search assessment completed u/s.153A of the Act. This action was upheld by the ld. CIT(A). We find that ultima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08 was filed by the assessee company u/s.139(1) of the Act on 30/10/2007 declaring total income of Rs.2,43,00,975/-. The assessment was completed u/s.143(3) of the Act on 31/12/2008 accepting the returned income. Hence, as on the date of search on 23/02/2010, the assessment for the A.Y.2007-08 becomes concluded assessment. Hence, the assessment earlier completed u/s.143(3) of the Act could be disturbed only when there are certain incriminating materials found during the course of search relatable to A.Y.2007-08. From the perusal of the assessment order and the order of the ld. CIT(A), we find that all the additions and disallowances were made by the ld. AO in the assessment framed u/s.153A of the Act for the A.Y.2007-08 without reference to any incriminating seized document found during the course of search. The law is very well settled that without incriminating material found during the course of search, the assessments already framed shall not be disturbed by the ld. AO in the proceedings u/s.153A of the Act. Reliance in this regard is placed on the decision of the Hon ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645 (Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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