2016 (8) TMI 910

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.... 4. Rival submissions were heard at length. Briefly stated the facts of the case are that a search and seizure operation was conducted at the residential premises of the assessee at Village Kochava, Tal. Mehsana on 01.11.2006. Accordingly, proceedings u/s. 153A was initiated and statutory notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. 5. While scrutinizing the return of income, the A.O. noticed that the assessee has shown pension income, income from sale of milk, tube well, pasupalan and interest income. On perusal of the income and expenditure account, the A.O found that the assessee has shown pasupalan income of Rs. 95,785/- against which he has claimed expenses of Rs. 1,76,185/-. The A.O. was of the opinion that the expenditure claimed by the assessee is very high in comparison to the income. 6. The A.O. issued a show cause notice asking the assessee as to why proportionate expenses should not be disallowed. The assessee filed a detailed reply stating that pasupalan income also includes milk sale income. It was brought to the notice of the A.O. that the assessee has shown milk sale of Rs. 1,93,638/- and pasupalan income at Rs. 95,785/....

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.... assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the AO while passing order u/s. 153A r.w.s. 143(3) cannot disturb the assessment order." 10.2. The Hon'ble High Court had an occasion to consider the following questions of law: "1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax? 2. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Sec. 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO.? 3. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in limiting the scope of Sec. 153A only to undisclosed income when as per the section the AO h....

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....i. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 11. As the disallowances/additions made in both these assessments are devoid of any incriminating material found at the time of search. Respectfully following the ratio laid down by the Hon'ble High Court (supra), we set aside the findings of the ld. CIT(A) and quashed the assessment years for A.Y. 2001-02 & 2002-03. IT(SS)A Nos. 293 & 294/Ahd/2011 are accordingly allowed. 12. Since, we have quashed the assessment orders, we do not find it necessary to go into the merits of....

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....ing the totality of the facts, in our considered opinion, the expenditures claimed by the assessee are not unreasonable and deserves to be allowed. We, accordingly, direct the A.O. to allow the expenditure claimed by the assessee as per his computation of income. This grievance of the assessee in all the impugned appeals is allowed. 19. The second grievance relates to the additions made on account of the alleged rental income from letting out of property for Bakery business. 20. Facts relating to this issue are that a survey action u/s. 133A of the Act was carried on at the stud farm house of the assessee. The survey team found that a Bakery was also running in addition to agricultural and pasupalan activities. On enquiries, the authorities came to know that the bakery was running since last 10 years. Statement of one Shri Harshadbhai Barot was recorded on 01.11.2006 who admitted that the bakery was started 10 years back in the name of Aviraj from which no profit was made. He further stated that since the last 5 years, it was given on rent to one Shri Anish Ahmed for a sum of Rs. 2500 per month. The facts mentioned in the statement of Shri Harshadbhai Barot were confirmed by ....