AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 805
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the additions/disallowances made by ld A.O. without referring to any single material found during the search thus consequent order passed deserves to be quashed. 1.1 That the ld CIT(A) has further erred in upholding the additions made U/s 143(3) r.w.s. 153A to the returned income of assessee without referring to a single paper/incriminating material seized during the course of particularly when no assessment proceedings were pending before the ld A.O. as on the date of search, therefore the order of ld CIT(A) deserves to be held bad in law and the consequent additions deserves to be deleted. 2. On the facts and in the circumstances of the case the ld CIT(A) has grossly erred in upholding the disallowance of Rs. 64,235/- being excess of interest paid over the interest received by the assessee without in any manner appreciating the nature of business in which the appellant is engaged, thus the expenses of Rs. 64,235/- deserves to be allowed as claimed." The effective ground of assessee's appeal for A.Y. 2009-10. "1. On the facts and in the circumstances of the case the ld CIT(A) has grossly erred in upholding the disallowance of Rs. 43,065/- b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssing Officer that whatever unsecured loan taken were wholly and exclusively for the purpose of expanding business activity and has legitimately claimed the interest expenditure in the return of income. After considering the assessee's reply, it has been held that there is no direct nexus has been established by the assessee that borrowed fund on interest has been utilized for the business purposes. Thus, he disallowed interest of Rs. 64,235/- in A.Y. 2004-05, Rs. 1,54,996/- in A.Y. 2005-06, Rs. 1,40,740/- in A.Y. 2007-08 and Rs. 43,065/- in A.Y. 2009-10 in the case of Damodar Das Agarwal, Jaipur and Rs. 93,568/- in A.Y. 2004-05 and Rs. 1,09,450/- in A.Y. 2007-08 in the case of Nirmal Kumar Agarwal. 5. Being aggrieved by the order of the Assessing Officer, both the assessees challenged the order before the ld CIT(A), who had confirmed the disallowances by observing that the Assessing Officer had given a categorical finding that the appellant was not able to establish the business interest being served by these interest free loans. During the appellate proceedings also, no specific details had been brought on record to establish the inter unit business transactions to prove that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der:- A.Y. Date of return u/s 139(1) Last date for notice u/s 143(2) Date of search Date of notice u/s 153A Date of service of notice u/s 153A Date of filing of return u/s 153A 2004-05 29/10/2004 31/10/2005 24/08/2009 15/01/2010 21/01/2010 23/02/2010 2007-08 31/08/2007 31/08/2008 24/08/2009 15/01/2010 21/01/2010 23/02/2010 Since no incriminating material was found during the course of search pertained to the year under appeal. No additional income was admitted offered by the assessee in the return of income filed U/s 153A. As per rule, the assessee's case was scrutinized U/s 153A read with Section 143(3) of the Act and a lump sum disallowance out of general and interest expenses claimed by the assessee had been made by the Assessing Officer. This action on the part of Assessing Officer is squarely out of jurisdiction as Section 153A does not authorize to him to complete the assessment under the section without referring to any seized material. The assessee preferred appeal before the ld CIT(A), who had allowed the appeal partly but confirmed the disallowance of interest expenses. The assessee also taken leg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case laws:- (i) Kusum Gupta Vs DCIT, ITA Nos. 4873/Del/2009, (2005- 06) 2510 (A.Y. 2003-04), 3312 (A.Y. 2004-05) 2833/Del/2011(A.Y. 2006-07). (ii) MFG Automobiles Ltd. Vs ACIT, ITA Nos. 4212 & 4213/Del/2011. (iii) Tarannum Zafar Khan Vs ACIT, ITA Nos. 5888 to 5890/Mum/2009. (iv) Vee Gee Industrial Enterprises Vs. ACIT, ITA No. 1/Del/2011 & ITA No. 2/Del/2011. (v) ACIT Vs Shri Manoj Narain Aggarwal, ITA NOs. 5518 to 5524/Del/2012. (vi) Mir Mazharudin ITA Nos. 1153 to 1159 to 1159/Hyd/2012, order dated 24/1/2013 (vii) Asha Kataria, ITA Nos. 3105, 3106 & 3107/Del/2011, order dated 20/5/2013. Thus, it is clear from the above legal position settled by the various ITATs and Courts that no addition can be made in the proceedings U/s 153A without referring to any seized material. The ld CIT(A) has considered the judgment of Hon'ble Karnataka High Court in the case of Canara Housing Development Co. Vs DCIT dated 09/8/2014 which has been reconsidered by the Hon'ble Delhi High Court in the case of CIT Vs Kabul Chawla 234 Taxman 300 (Delhi) wherein it has been held that in case of Canara Housing Development Co. Vs DCIT, incrimin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A). 8. We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that there was a search seizure operation at the business as well as residential premises of the assessee. During the course of search, no incriminating documents were found as revealed from the order of the Assessing Officer. Even during the course of assessment proceedings, the ld CIT(A) and before us the ld DR had not brought our notice that some incriminating documents were found and seized during the course of search. The case laws relied by the ld CIT(A) i.e. Canara Housing Development Co. Vs DCIT (supra), which was considered by the Hon'ble Delhi High Court in the case of Kabul Chawla (supra) has held that there was incriminating documents found during the case of Canara Housing Development Co. Vs DCIT (supra), which has been considered by the Hon'ble Delhi High court. It is also undisputed fact that time limit for issue of notice U/s 143(2) in A.Y. 2004-05, 2005-06 and 2007-08 in case of Damodar Das Aarwal and for A.Y. 2004-05 and 2007-08 in the case of Nirmal Kumar Agarwal has already expired. The last date of issue of notice U/s 143(2) ....