TMI Blog2023 (9) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... 84/- in capital account of the assessee. The contention of the ld. D.R. is that this income has been received by the assessee in the assessment year under consideration and same to be taxed. In our opinion, opening capital account balance as on 1.4.2008 cannot be taxed in the assessment year under consideration though it was received in the assessment year under consideration as the TDS for the same has been made in the earlier assessment year, which shows the amount accrued in earlier assessment years. Regarding the balance amount of Rs. 39,85,184/-, in our opinion, since the assessee has admitted that he is not able to explain the year in which it was received or accrued and voluntarily offered as income in the assessment year 2009-10, being so, we have no hesitation in sustaining this addition of Rs. 39,85,184/-. Addition of payment of consultancy charges - invoices provided by the assessee do not indicate the nature of services availed - assessee claimed expenditure as hewants to develop a big residential project by entering into Joint Development Agreement with Manyata Developers in the area Seegehalli and in order to develop a detailed project report and mobilise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B - In our opinion, this ground is consequential and mandatory in nature and is to be charged accordingly. This ground is dismissed. However, the assessee is at liberty to seek waiver before DG/CCIT, if so advised. - Hon'ble Judges Chandra Poojari, Member (A) and Beena Pillai, Member (J) For the Appellant : Narendra Sharma, A.R. For the Respondents : Veera Raghavan, D.R. ORDER CHANDRA POOJARI, MEMBER (A) 1. These appeals by assessee are emanated from the order of CIT(A) passed for the assessment years 2009-10, 2010-11 2013- 14. Since the issues are common in all these appeals, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. ITA Nos.1108 to 1110/Bang/2022 (AYs 2009-10, 2010-11 2013-14):- 2.1. In this case, there was a search action u/s 132 of the Act at No.109, 10th Main, 7th Cross, RMV Extension, 2nd Stage, Sadashivanagar, Bengaluru on 7.1.2015 which is in connection with search proceedings in the group case of M/s. Reddy Veeranna Constructions Pvt. Ltd. Consequent to search, notice u/s 153A of the Act was issued on 17.11.2015 to the assessee requiring her to file the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) That the decision of this Court in the case of C. Ramaiah Reddy (supra). which allowed the Appellate Authority to go into the question of validity of Search is a subject-matter of pending appeal before the Hon'ble Supreme Court and therefore, not only the Authorities of the Department, but even this Court should await the decision of Hon'ble Supreme Court on the said issue and cannot direct the Appellate Authorities like (CIT(Appeal) below by way of a writ of mandamus to go into the question of validity of search under Section 132 of the Act and it would be incongruous and not in deference to the pendency of aforesaid Civil Appeal No.2734/2013 before the Hon'ble Supreme Court. (ii) That even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. That Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax- payer. (iii) That this Amendment came after both, ITAT passed the order in the present case on 21.11.2014 as also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the TDS certificate issued by the said company for the assessment year 2008-09 to substantiate the claim of the assessee that the aforesaid professional charges did not relate to the year under appeal and hence, the same were shown as opening capital and amount receivable from M/s. Embassy Services Pvt. Ltd. in the financial statement. The ld. AO did not accept the aforesaid computation of the assessee and since the assessee has received the aforesaid sum during the year under appeal and the same as considered as income of the assessee for the impugned assessment year 2009-10, since the assessee has not filed any return of income for the assessment year 2008-09 reporting the said income for the earlier assessment year 2008-09. The ld. AO also observed that the TDS certificate issued by M/s. Embassy Services Pvt. Ltd. cannot be proof for accrual of income in the earlier assessment year 2008-09 and since the assessee has not filed any agreement for rendering professional services, the ld. AO made an addition of Rs. 1,04,47,255/- u/s 68 of the Act. Against this assessee is in appeal before us. 3.2. On appeal, the ld. CIT(A) observed that there is no necessity of seized materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had deducted tax at source on professional services fee of Rs. 64,72,071/- accrued to the assessee in FY 2007-08, as claimed by the assessee. Anyhow, a TDS certificate would not reflect the nature of payment i.e. whether the same was actual payment or a mere advance or accrual of income as tax is deducted at source on the basis of credit or actual payment, whichever is earlier. 3.6. As regards the confirmation filed from M/s. Embassy, as reproduced supra, the ld. CIT(A) observed that here too there is nothing to show that the opening balance as on 01.04.2008 was the income of Rs. 64,72,071/-, which had already accrued to the assessee in FY 2007-08 but pending payment. Here it is important to note that this account of the assessee in the books of M/s. Embassy does not tally with the account of M/s. Embassy in the books of the assessee (annexure III to the assessment order). The above confirmation from M/s. Embassy although refers to period 01/04/2008 to 31/03/2009, but the same does not show details of the professional fees of Rs. 53,80,972 and its payment, which has already been disclosed by the assessee in her books of account (annexure III to the assessment order) and reflecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while framing u/s 153A of the Act, we are of the opinion that in case of completed assessment/unabated assessment, in absence of any incriminating material, no addition can be made by the AO and the ld. AO has no jurisdiction to reopen the completed assessment. For this proposition, we place reliance on the judgement of jurisdictional High Court in the case of Delhi International Airport Pvt. Ltd. In ITA No.322/2018 vide judgement dated 29.9.2021, wherein it was held as under:- 30. Thus, it is clear that the Assessing Office: while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that. the finalized assessments are contrary to the material unearthed during the, course of 153A proceedings, as held by the Co- ordinate Bench of this Court in the case of IBC Knowledge Park (P) Ltd., supra. A concluded assessment could not be disturbed without there being any basis for doing so which is impermissible in law. Even in case of a searched person, the same reason would hold good. As observed in Canara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 'Assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section. 15:3A[I] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be necessary unlike Section 153C of the Act which mandates recording of satisfaction. For the reasons aforesaid, substantial question of law in ITA Nos.322/2018 to 324/2018, 354/2018 and 355/2018, substantial question of law No.1 in ITA Nos.380/2018, 382/2018 to 385/2018 and 197/2021 to 199/2021 and substantial question of law Nos.1 and 2 in ITA No.381/2018 are answered in favour of the assessee and against the Revenue. Substantial question of Law No.2 in ITA Nos.380/2018, 383/2018 to 385/2018 is squarely covered by the ruling of the coordinate Bench of this 'Court in ITA No.352/2018 and connecter? matters (DI) 25.05.2021) wherein the said substantial question of law has been answered ir favour of the assessee and against the Revenue. Substantial question of law No.2 in ITA No.382/2018 and substantial question of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.16 issued by M/s. Embassy Services Pvt. Ltd. Admittedly, in this case, there was no seized material suggesting these additions. This has been shown by assessee in its balance sheet filed by assessee before ld. AO and also it is also admitted fact that an amount of Rs. 64,72,071/- shown as opening balance as on 1.4.2008 and there was increase of Rs. 39,85,184/- in capital account of the assessee. The contention of the ld. D.R. is that this income has been received by the assessee in the assessment year under consideration and same to be taxed. In our opinion, opening capital account balance as on 1.4.2008 cannot be taxed in the assessment year under consideration though it was received in the assessment year under consideration as the TDS for the same has been made in the earlier assessment year, which shows the amount accrued in earlier assessment years. Regarding the balance amount of Rs. 39,85,184/-, the assessee has filed a letter before ld. Deputy Commissioner of Income-tax as follows: 4.3. In our opinion, since the assessee has admitted that he is not able to explain the year in which it was received or accrued and voluntarily offered as income in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the materials available on record. In this case, the assessee claimed expenditure of Rs. 55.15 lakhs as consultancy charges and submitted before the lower authorities that assessee wants to develop a big residential project by entering into Joint Development Agreement with Manyata Developers in the area Seegehalli. In order to develop a detailed project report and mobilise the funds from various financial institutions, assessee incurred this expenditure and the TDS also made on this expenditure. However, the AO doubted availing the services and payment for those services. The AO has not carried out any enquiry in this regard. When he disbelieved the contention of the assessee, the burden cast upon the AO to carry out necessary enquiry to suggest that the claim of expenditure by assessee is bogus. The rejection of this expenditure as not incurred by assessee is only on surmises and conjectures, which cannot be upheld. More so, there was no material in the hands of AO to suggest that this expenditure is of bogus nature. Hence, we are not in a position to uphold the orders of the lower authorities. Accordingly, we reverse the order of the lower authorities and allow the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found and seized at the time of search to show that the said expenditure is not genuine is therefore opposed to law and hence, the same deserves to be deleted. It is prayed accordingly. 8.4. The ld. A.R. submitted that without prejudice to the above, the learned A.O. also ought to have appreciated that the assessee was entitled to the deduction u/s. 36[1][iii] of the Act. It is submitted that the learned A.O. ought to have appreciated the fact that the assessee is also engaged in real estate business and had used the borrowed funds for business purposes. Hence, he submitted that the disallowance made by the learned A.O. was purely on suspicion and surmise, assumption and presumptions and therefore, the same deserves to be deleted. 8.5. The ld. D.R. relied on the order of ld. CIT(A). 9. We have heard the rival submissions and perused the materials available on record. In the present case, assessee's balance sheet reads as follows as on 31.3.2013:- 9.1. As seen from the above, assessee has used the money borrowed for acquisition of property at Singapore. However, there was another term loan availed from Vysya Co-operative Bank on which assessee paid the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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