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2019 (7) TMI 384
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.... "1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not holding that the assessment completed vide order dated 19.08.2011 under section 143(3) r.w.s. 153A of the Income-tax Act ("the Act‟), is beyond jurisdiction, bad in law and void-ab- initio. 2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the issue of legality of search initiated under section 132 of the Act cannot be adjudicated by the first appellate authority. 3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not holding that the impugned assessment under section 153A having been completed de-hors any incriminating material/document being found/ seized during the course of search conducted under section 132 of the Act m the case of the appellant, is illegal and bad in law. 4. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not deleting various additions/disallowances made by the assessing officer de-hors any material/document found during the course of search. 5. That the Commissioner of Income-tax (Appeals) erred on facts and in law in affirming the ....
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....g & Fobbing charges of Rs. 1,33,90.665/-: (ii) Insurance claim received of Rs. 1,00,061/- and (iii) Sale of Scrap of Rs. 57,949/- for the purpose of deduction under section 80HHC of the Act. 6.5. That the Commissioner of Income-tax (Appeals) erred on facts and in law in affirming ' the action of the assessing officer in reducing 100°o of 'other income‟ for the purpose of determining deduction allowable under section SOHHC of the Act. 7. That the Commissioner of Income-tax Appeals erred on facts and in law upholding the action of the assessing officer 1:1 levying interest under section 234A of the Act. 7.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that there was no warrant to levy interest under section 234A in the case of the appellant, as there w as no default in filing the return of income under section 153A of the Act. 4. Brief facts of the case shows that the assessee is a company engaged in the business of manufacturing and trading of rice. It filed its return of income on 2/10/2003 declaring total income of Rs. 2555011/- after availing deduction u/s 80 HHC at INR 3 8289254/- and ....
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....e. 7. The assessee challenged the same before the learned CIT - A. The learned CIT - A considered the argument and grounds of appeal of the assessee with respect to the validity of initiation of search and consequent addition dismissed them vide para number 3.3 of his order. The other grounds of appeal with respect to the several addition made by the learned assessing officer were dealt with by the learned CIT - A. Consequently, the appeal of the assessee was partly allowed. Therefore, assessee aggrieved with the order of the learned CIT - A has preferred this appeal. 8. The learned authorised representative submitted that the assessment has been made pursuant to the search u/s 132 of the income tax act u/s 153 A of the act. He submitted that original assessment proceedings u/s 143 (3) of the income tax act was concluded as per order dated 29/3/2006 restricting the deduction claimed under section 80 HHC of the act. On appeal, CIT(A) vide order dated 24.04.2007 decided the issue of restriction of deduction under section 80HHC against the assessee and other issues in its favour. No further appeal preferred by assessee against the order of CIT (A). Thereafter, application dat....
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.... he stated that there is no incriminating material found during the course of search and merely on the basis of the comments in special audit report the addition cannot be made. He further stated that addition could only be made in case of concluded assessment only based on the incriminating material found during the course of search. 14. The learned departmental representative vehemently supported the order of the learned assessing officer and stated that in the 148 proceedings the issue of the allowability of deduction u/s 80 HHC of the income tax act was in question. He submitted that the learned CIT - A has considered the decision with different aspect whereas in the assessment order the learned assessing officer has looked into the correct claim of the assessee u/s 80 HHC of the income tax act. He otherwise stated that the assessment proceedings under section 148 of the income tax act was pending at the time of the search and therefore the learned assessing officer has correctly recomputed the deduction allowable to the assessee u/s 80 HHC of the income tax act at Rs. Nil. He further stated that this is an appeal against the order of the learned assessing officer under sect....
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.....81 crores. I have reasons to believe that the income chargeable to tax for the assessment year 2003 - 2004 has escaped assessment to the tune of INR 1.81 crores within the meaning of section 147/148." 18. On careful analysis of the reasons recorded by the learned assessing officer it is important to note following facts:- a. Original assessment u/s 143 (3) of the act was passed on 29/3/2006 and notice u/s 148 of the income tax act has been issued on 18/11/2008. In the reasons recorded for the reopening of the assessment the learned assessing officer has no where stated that what is the failure on the part of the assessee to fully and truly disclose the material facts for the computation of the total income. b. In the reasons recorded itself, the learned assessing officer has stated that there is a mistake in calculation, which has resulted in over statement of export the purpose of calculation of deduction u/s 80 HHC of the income tax act. Therefore, it is apparent that the learned assessing officer himself in stating that it is a mistake and there is no escapement of income because of failure on the part of the assessee. c. Further,....
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.... in concluded assessment, the addition can be made only on the basis of incriminating material found during the course of search. The learned departmental representative could not show us any material found during the course of search based on which the additions/disallowances other than the computation of the claim of deduction u/s 80 HHC of the income tax act was made. In view of this, as the additions have been made without having any incriminating material found during the course of search, we reverse the order of the ld CIT (A) and direct the learned assessing officer to delete those additions/disallowances. 21. Accordingly, appeal filed by the assessee for AY 2003-04 is allowed. 22. Now we come to the appeals for AY 2004-05 preferred by both the parties against the order of the dl CIT (A) _ XXXIII, New Delhi dated 25/3/2013 wherein appeal of the assessee is partly allowed.. 23. The assessee has raised the following grounds of appeal in ITA No. 4161/Del/2013 for the Assessment Year 2004-05:- "1. That the search conducted under Section 132 is illegal, bad in law and without jurisdiction and the assessment made U/s 153A is also bad in law and without jurisdicti....
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....failed to appreciate that payment of Rs. 67,100/- (Disallowance made @ 20% Rs. 13,420/-) is made out of commercial expediency and is allowable expenditure. 12. That A.O., in view of the facts and circumstances of the case, has erred in law and on facts in disallowing payments of Rs. 3,59,252/- (Disallowance made @ 20% Rs. 71,850/-) U/s 40A(3) paid as freight and CIT(A) has erred in law and on facts in upholding the same. The CIT(A) has failed to appreciate that payment is made out of commercial expediency and is allowable expenditure. Addition on account of personal expenses 13. That the CIT(A) has in view of the facts and circumstances of the case, erred on facts and in law in upholding the additions made by the AO of Rs. 63,000/- on account of alleged personal expenses. Addition U/s 14A r/w Rule 8D 14. That in view of the facts and circumstances of the case and in law the A.O./CIT(A) has erred in making disallowance to the tune of Rs. 29,763/- u/s 14A read with Rule 8D of the Act. The disallowance made is unjust, unlawful and is also highly excessive. Disallowance of Deduction u/s 80HHC 15. That in view of the facts a....
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....order of the CIT(A) is erroneous and is not tenable on facts and in law." 25. The brief facts of the case shows that original return of income was filed on 30/9/2005 declaring total income of INR 7928840/-. The assessee claimed deduction u/s 80 HHC of the act at INR 3 9392912/-. The return was processed u/s 143 (1) of the income tax act on 6/10/2004 on the returned income. Subsequently the return was revised on 31/3/2006 and the income declared therein was nil. In the revised return assessee claimed deduction u/s 80 HHC of the act at INR 3 9392912/-. Assessee also claimed deduction u/s 80 IB of the income tax act of INR 2 7527680/-. The assessment u/s 143 (3) of the act was completed on 15/12/2006 at the total income of INR 2 3188945/-. In the assessment proceedings, the disallowance of deduction u/s 80 HHC of the act was made however deduction u/s 80 IB of the act was allowed. However assessee mood an application under section 154 of the income tax act on 26/12/2006 which was adjudicated by the learned assessing officer on 15/2/2007 and thereafter no proceedings were pending. 26. Search took place on 10/2/2009. Thus on the date of search, assessment proceedings for this a....
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....s. As held by the honourable Delhi High Court in CIT vs Kabul Chawla 380 ITR 573 that in case of concluded assessment the additions/disallowances can only be made on the basis of the incriminating material found during the course of search. Apparently, no such incriminating material has been found. Therefore, apparently the additions have been made in the concluded assessment proceedings for this year without having any incriminating material. Therefore the disallowance of payment in contravention is of the provisions of section 40A (3) of the income tax act of INR 1 3420/-, addition on account of personal expenses of INR 6 3000/-, disallowance u/s 14 A of the income tax act of Rs. 29763/-, the disallowance of deduction u/s 80 HHC of the income tax act are all made without having any incriminating material found during the course of search. Therefore, these additions cannot be sustained in assessment order passed u/s 153A of the income tax act. Hence we reverse the order of the learned CIT - A in confirming the above additions. Accordingly, appeal of the assessee to that extent is allowed. 31. Now coming to the appeal of the revenue, which is against the deletion of disallowance....
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....hile preparing and submitting the report to the revenue authorities. 8. That the CIT(A) has in view of the facts and circumstances of the case, erred on facts and in law in upholding the additions made by the AO on the basis of the special audit report. 9. That in view of the facts and circumstances of the case and in law the A.O. has erred in completing the assessment U/s 153A at a total income of Rs. 17,01,29,886/- as against returned income of Rs. 1,44,13,190/- when there is no seized material pertaining to this year. The additions made are unjust, unlawful, bad in law, without jurisdiction and are also highly excessive. Disallowance of payment in Contravention of Section 40A(3) 10. That, in view of the facts and circumstances of the case and in law, the A.O. and subsequently CIT(A) has erred in law and on facts in holding that the assessee has made cash payments to various concern which are to be disallowed U/s 40A(3) of the Act. 11. That, in view of the facts and circumstances of the case, the A.O. and subsequently CIT(A) has failed to appreciate that payment of Rs. 2,97,814/- is made out of commercial expediency and is allowable ex....
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....re highly excessive. 19. That the various observations made by the CIT(A) are illegal, bad in law and factually incorrect and based on surmises and conjectures. 20. That the interest u/s 234A, 234B, 234D and 244A has been wrongly and illegally charged as there is no delay in Filling of return and there is no default of payment of Advance tax as the receipt / income is liable to TDS and it could not have anticipated such additions. In any case the interest charged has been wrongly worked out and is excessive. 21. That all the above grounds are independent to each other and mutually exclusive." 35. The revenue has raised the following grounds of appeal in ITA No. 4044/Del/2013 for the Assessment Year 2005-06:- "1. On the facts and in the circumstance of the case, the CIT(A) has erred in directing the Assessing Officer to allow deduction under section 80IB(11A) of the Income tax Act, 1961. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in holding that the assessee is engaged in the integrated business of transportation, handling and storage of food grains and conditions contained in section 80IB(11A) are fulfi....
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....3) of the income tax act as well as certain other disallowances. The total taxable income of the assessee was determined at INR 1 70129886/-. On appeal before the learned CIT - A appeal of the assessee was partly allowed. Therefore, both the parties are in appeal before us. 38. Coming to the appeal of the assessee wherein it has been contested that the additions made by the learned assessing officer are bad in law as there is no incriminating material found during the course of search. It is further stated that the assessment proceedings to the concluded on the date of initiation of the search and therefore if any additions/disallowances are required to be made should be made only on the basis of the incriminating material found during the course of search. 39. The learned departmental representative vehemently supported the order of the learned assessing officer and reiterated the argument that there is no requirement of having any incriminating material to make any addition u/s 153A of the income tax act. 40. We have carefully considered the rival contention and perused the orders of the lower authorities. It is apparent that on the date of initiation of search on 10/2/2....