TMI Blog2022 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ting material unearthed during the course of search documents or undisclosed income or property discovered in the course of search, which were not produced or not already disclosed or made in the course of original assessment, we are of the considered view that in the instant facts, CIT(A) has not erred in facts and in law in deleting the additions for assessment year 2007-08. Even on merits of the case, we find no infirmity in the observations made by the Ld. CIT(Appeals) in the appeal order. The Department has not been able to bring anything on record to point out any error in the factual findings of the CIT(Appeals) in the appeal order, while deciding the issue on merits. Accordingly, in our considered view, CIT(Appeals) has not erred in facts and in law in deleting the additions made on account of contract income not offered for taxation. Addition u/s 41(1) - CIT(Appeals) erred in facts and law in confirming the addition on the ground that the assessee has not been able to prove that the liability was actually subsisting at the end of the financial year.- Decided in favour of assessee. - ITA No. 221/Rjt/2016 - - - Dated:- 31-8-2022 - Shri Waseem Ahmed, Accountant Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits of the case as well as a jurisdiction. 5. On merits, Ld. CIT(Appeals) allowed the assessee s appeal with the following observations: 4.3 The contents of the assessment order and submission of the appellant have been examined. The copy of TDS certificate revealed that the contract amount was of Rs.82219019/- and the amount of tax of Rs.1628329/- thereon was deducted at the rate of 2.24%. The total amount of the bills of the contract, as per statement in the TDS certificate including difference amount at the rate of 1.2% of VAT was of Rs.82219019/-. All the the deductions made by the contractee were evident in the copy of the ledger account as reproduced hereinabove. It is appalling that the A.O. grossly failed to apply his mind. He ignored the amount of VAT difference which was clearly mentioned in the TDS certificate itself. It was a case of complete non application of mind to the facts of the case. The contents of the TDS certificates established that the AO was not serious in dealing with the issue under consideration as a part of his duty and made addition with least sense of responsibility. There was no sense of fair play towards the taxpayer. A remand report wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment on the basis of enquiries made during the course of assessment proceedings under section 153A of the Act. Evidently, from the perusal of the assessment order, the additions were not made on the basis of any incriminating material found during the course of search conducted on the assessee. The Ld. CIT(Appeals) in the appeal order also made a categorical noting that the assessment was not framed on the basis of any incriminating material found during the course of search. 7. In the case of PCIT v. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC) , Supreme Court held that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. In the case of Pr. CIT v. Saumya Constructions 81 Taxman.com 292 (Gujarat) , the Gujarat High Court held that under section 153A, an assessment has to be made in relation to search or acquisition, namely, in relation to material disclosed during search requisitioned. If no incriminating material was found during search, no addition can be made on basis of material collected after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons and, accordingly, made addition on account of such client code modification, since impugned addition was not made by AO based on any incriminating material found during search against assessee and assessment was not pending on date of search, impugned addition was unjustified and same was to be deleted. The Department has not been able to produce any material to suggest / substantiate that the assessment order was passed on the basis of any incriminating material found during the course of search. 8. Therefore, in view of well settled proposition of law that completed assessment can be interfered by the Assessing Officer while making assessment u/s. 153A only on the basis of some incriminating material unearthed during the course of search documents or undisclosed income or property discovered in the course of search, which were not produced or not already disclosed or made in the course of original assessment, we are of the considered view that in the instant facts, the Ld. CIT(A) has not erred in facts and in law in deleting the additions of Rs. 2,57,69,929/- for assessment year2007-08. Without prejudice to the above the above, even on merits of the case, we find no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee had paid back a sum of ₹ 6,21,182/- back to the creditors in the subsequent years and an amount of ₹ 2,76,726/- was written off in the subsequent period and offered to income in the subsequent year demonstrates that there was an existing liability of ₹ 8,97,893/- against the assessee as that the end of the financial year under consideration. Therefore, in our considered view, in the instant facts, the Ld. CIT(Appeals) erred in facts and law in confirming the addition of ₹ 10,21,420/- on the ground that the assessee has not been able to prove that the liability was actually subsisting at the end of the financial year. 7. In the result, the appeal of the assessee is allowed. 11. Since the issue has already been adjudicated and in favour of the assessee on merits in the above mentioned order, Ground number 2 of the Department s appeal is dismissed accordingly. 12. In the result ground number 2 of the assessee s appeal is dismissed. 13. Ground numbers 3 and 4 of the Department s appeal are general in nature and hence do not require any specific adjudication. 14. In the combined result, the appeal of the Department is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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