TMI Blog2019 (5) TMI 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance. Whether no addition was called for as no incriminating material was found during the course of search u/s. 132? - Assessment Year 2009-10 - HELD THAT:- No merit in this ground because the assessee has not filed regular return of income u/s. 139 of the Act. Return of income for Assessment Year 2009-10 was filed on 28.1.2016 i.e. after the date of search u/s. 132 of the Act. Therefore assessment year 2009-10 cannot be treated as non abated assessment and Ld. A.O. was well within his powers u/s. 153A r.w.s. 143(3) of the Act to carry out regular assessment proceedings for Assessment Year 2009-10 and for making additions if any and it was not necessary to prove the nexus with the incriminating material found during the course of search. Therefore the assessee fails to succeed in this legal ground raised. Disallowance of interest paid on loan - HELD THAT:- Allegation of the lower authorities that the bank loan was not utilised for business purposes has no legs to stand. Further the assessee has incurred consistent losses. No business activity is carried out since 1.4.2008. Bank loan was outstanding. For repayment of bank loan the partners have brought additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re arising out of the order u/s. 143(3) for the Assessment Year 2014-15 and remaining orders u/s 153A r.w.s. 143(3) of the Income Tax Act 1961(In short the 'Act') dated 15.03.2016 framed by ACIT (Central)-II, Bhopal. 2. As the issues raised in these appeals are common in nature and relates to same assessee, these were heard together and are being disposed off by this common order for the sake of convenience and brevity. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in the business of real estate. Search u/s. 132 of the Act was conducted at the business premises of the assessee firm as well as on the premises of other concerns/business associates on 29.01.2014. Notices u/s. 153A of the I.T. Act dated 12.09.2014 were issued to the assessee for filing returns for Assessment Years 2008-09 to 2013-14 and in response to that assessee filed return of income on 28.1.2016. For Assessment Year 2008-09 the assessee filed its regular return u/s. 139 of the Act on 30.09.2008 showing income of Rs. 2,10,410/- but for remaining assessment years return of income were filed for the first time after the issuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e craves leave to add, alter, delete or modify any ground(s) of appeal during or before the hearing of the appeal. IT (SS) A No. 246/Ind/2017 Assessment Year 2009-10 1. That on the facts and in the circumstances of the case of the assessee the Ld. Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making disallowance of Rs. 2,11,264/- towards interest paid on loan holding that the loan funds were not utilized for the purpose of the business. 2. That on the facts and in the circumstances of the case of the assessee the Ld. Commissioner of Income Tax CA), was not justified in holding that the AO was justified in making addition of Rs. 3,00,000/- treating the recovery of excess withdrawal of capital as unexplained. 3. That the assessee craves leave to add, alter, delete or modify any ground(s) of appeal during or before the hearing of the appeal. IT (SS) A No. 247/Ind/2017 Assessment Year 2010-11 1. That on the facts and in the circumstances of the case of the assessee the Ld. Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making disallowance of Rs. 2,08,819/- towards in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferring to Ground No. 1 of the appeal submitted that no incriminating material was found during the course of search and the addition were made only on the basis of information received during assessment proceedings. Assessee's case is squarely covered by the decision of this Co-ordinate Bench in the case of Sainath Coloniers V ACIT (2019) 35 ITJ 77 (Trib. Indore) in IT (SS) A Nos. 289 to 291/Ind/2017 dated 28.02.2019. 7. Per contra Ld. Departmental Representative vehemently argued and supporting the order of lower authorities. 8. We have heard rival contentions and perused the records placed before us and gone through the decision referred and relied by the Ld. Counsel for the assessee. For Assessment Year 2008-09 assessee has raised two grounds of appeal. Ground No. 1 challenges the addition on the ground that no incriminating material was found during the course of search and addition has been made merely on the basis of information called during the course of assessment proceedings. Through Ground No. 2 the impugned addition of Rs. 2,24,326/- is challenged with regard to disallowance of interest paid on loan holding that the loan funds were not utilized for the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Year 2009-10 and our decision on adjudication of Grounds for Assessment Year 2009-10 will apply mutandis to the similar issues raised in the other appeals for Assessment Years 2009-10, 2010-11, 2011-12, 2013-14 and 2014-15. 13. As regards Ground No. 1 raised for Assessment Year 2009-10 claiming that no addition was called for as no incriminating material was found during the course of search u/s. 132 of the Act, we fail to find any merit in this ground because the assessee has not filed regular return of income u/s. 139 of the Act. Return of income for Assessment Year 2009-10 was filed on 28.1.2016 i.e. after the date of search u/s. 132 of the Act. Therefore assessment year 2009-10 cannot be treated as non abated assessment and Ld. A.O. was well within his powers u/s. 153A r.w.s. 143(3) of the Act to carry out regular assessment proceedings for Assessment Year 2009-10 and for making additions if any and it was not necessary to prove the nexus with the incriminating material found during the course of search. Therefore the assessee fails to succeed in this legal ground raised in Ground No. 1 and the same stands dismissed. As facts and issues remains the same for Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of the firm and no interest was charged to the partners on their negative capital. On the basis of these observations, Ld. A.O. disallowed the bank interest and bank charges debited to Profit Loss Account. 19. We are of the considered view that the bank loan taken during the financial year 2005-06 was utilised only for the business purposes and was not utilised by the partners for their personal purpose by withdrawing it from the firms bank account. Therefore the allegation of the lower authorities that the bank loan was not utilised for business purposes has no legs to stand. Further the assessee has incurred consistent losses. No business activity is carried out since 1.4.2008. Bank loan was outstanding. For repayment of bank loan the partners have brought additional capital to repay the loan. In these facts and circumstances, we find no justification in the action of Ld. A.O. disallowing the interest paid on loan to the bank completely ignoring the fact that during the year under appeal assessee is having NIL revenue and it is not the case of the revenue authorities that the assessee has claimed the interest to reduce its tax liability. We accordingly delete the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk statement on page 74-75 of the paper book shows that sufficient bank balance was available before the respective transaction of the capital contribution. No major amount of cash has been deposited before the issuance of the cheque to the assessee firm. Ld. A.O. has not conducted any enquiry from Mr. Manoj Jain before making the alleged addition. The alleged amounts of capital contribution is for repaying the bank loan outstanding in the name of assessee firm. We therefore are satisfied that the assessee has successfully proved the identity, genuineness and creditworthiness of the capital contribution received from the partner Mr. Manoj Jain. Therefore no addition was called for u/s. 68 of the Act for Rs. 3,00,000/- Rs. 21,000/-, Rs. 6,65,000/-, Rs. 50,000/- and Rs. 10,766/-. 24. As regards capital contribution of Rs. 8,52,000/- during assessment year 2011-12 by another partner Mr. Manish Rawatiya there can be no dispute about the identity of the partner Mr. Manish Rawatiya and the genuineness of the transaction which was entered into for repaying the bank loan outstanding on the firm. Now the last limb for us to examine is the creditworthiness of the partner Mr. Manish Rawati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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