AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1922
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.... Appellate Authority was inadvertently mixed in the office with other files. The same could not be brought to the notice of the Ld. Counsel who was handling the taxation work. The cross-objection in the case of the assessee was being filed for the AY 2004-05 to 2007-08 wherein the Department has filed the appeal before the Tribunal. When the crossobjections being prepared, facts of the appellate orders for assessment year under appeal came to the light. It was, therefore, submitted that delay in filing the appeal may be condoned which is inadvertent omission on the part of the assessee. Affidavit in support of the application is filed. Ld. Counsel for the assessee reiterated the facts stated in the application for condonation of delay and submitted that the assessee in the present appeal, has challenged the charging of interests u/s 234A & 234B of the Income Tax Act, 1961 (in short "Act") and that the additions have been made without recovery of incriminating material. Therefore, the assessee has a prima facie case for inference in the orders of the authorities below. The assessee prayed for condonation of delay. Ld. CIT DR, however, objected to the same and submitted that the dela....
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....ial found during the course of search during the year under consideration. He has submitted that the assessee has filed original return of income on 31.03.2004 (P.B 3, 4). Accordingly, the AO cannot make any addition in reassessment proceedings u/s 153A of the Act. The assessment of this year stood completed much before the search and was not pending on the date of search. He has relied upon the orders of Jurisdictional Chandigarh ITAT in the case of Mala Builders P.Ltd. vs ACIT [2016] 51 ITR (Trib.) 272 in which it was held that in the absence of incriminating material found during the course of search and the assessment proceedings having not abated, at the time of search, the AO has no jurisdiction to make the addition u/s 153A of the Act. He has relied upon the judgement of the Hon'ble Delhi High Court in the case of CIT (Central)-III vs Kabul Chawla [2015] 380 ITR 573 (Delhi) in which it was held that:  "On a conspectus of section 153A(l), read with the provisos thereto, and in the light of the law explained in various decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132, notice under section 153A(1) will have to....
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....discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. [Para 37]  The present appeals concern assessment years 2002-03,2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search. No additions could have been made to the income already assessed.[para 38]  The revenue's appeals are accordingly dismissed." 9. He has also relied upon the decision of Hon'ble Delhi High Court in the case of Pr. CIT, Central-2, New Delhi vs Meeta Gutgutia Prop. M/s Ferns 'N' Petals 395 ITR 526 in which it was held that :- 69. "What weighed with the Court in the above decision was the "habitual' concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions ....
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....on the order of ITAT, Delhi Bench in the case of Parag Dalmia vide order dated 26.02.2018 in ITA No.5499/Del/2017 in which documents were received by the Government of India from a sovereign country containing information regarding the undisclosed foreign accounts were received prior to the search and confronted to assessee during search was held to constitute incriminating material. Ld. Counsel for the assessee, however, submitted that this ground is legal in nature and arise out of the orders of the authorities below, therefore, same may be adjudicated. 12. We have considered rival submissions and material on record. Hon'ble Punjab & Haryana High Court in the case of VMT Spinning Co. Ltd. vs CIT & Another [2016] 389 ITR 326 (P&H) held as under:- "The Tribunal could decide the appeal on a ground neither taken in the memorandum of appeal nor by seeking its leave. The only requirement was that the Tribunal could not rest its decision on any other ground unless the party who might be affected had sufficient opportunity of being heard on that ground. Therefore, the Tribunal ought to have exercised its discretion in view of the fact that the assessee intended raising only a legal ....
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....und to reject the prayer of the assessee. Hon'ble Delhi High Court in the case of Pr. CIT vs Nilkanth Concast P. Ltd. (supra) held that the powers of the Tribunal are wide enough to consider the point which may not have been urged before the Commissioner (Appeals) so long as the question request to examine in the interests of justice. In this case, the issue is covered in favour of the assessee by the judgement of Hon'ble Delhi High Court in the case of Kabul Chawla and Meeta Gutgutia Prop. M/s Ferns 'N' Petals (supra), therefore, the contention of the Ld. CIT DR is rejected that this ground may not be adjudicated. Ld. Counsel for the assessee filed the transfer order in the case of the assessee to show that the case of the assessee has been transferred to DCIT, Circle-2, Faridabad on 30.06.2015. The assessee is situated at Faridabad, therefore, the Jurisdictional High Court in the case of the assessee would be Hon'ble Punjab & Haryana High Court. The assessee, therefore, rightly relied upon the decision of the ITAT, Chandigarh Bench in the case of Mala Builders P.Ltd. (supra) in which the point in issue has been decided in favour of the assessee. No other contrary decision of Hon'....
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....TMI 692-ITAT Mumbai in which it was held that "as per amended provisions of law, there is no requirement to seek any request from the assessee for adjustment". The AO was directed to adjust the remaining cash seized by Department from the date of seizure. Copy of the order of ITAT, Mumbai Bench is filed. 17. After considering rival submissions, we find the submissions of the Ld. Counsel for the assessee to be correct because submission of assessee is not rebutted by Department. Ld. DR relied upon the judgement of the Hon'ble Delhi High Court in the case of Prannoy Roy & Anr. vs Commissioner Of Income Tax [2002] 254 ITR 755 in which it was held that "interests u/s 234A would be payable only in a case where tax had not been deposited prior to the date of filing of the return. In this judgement, the amended provision inserted in section 234A(3) w.e.f. 01.06.2003 have not been considered. Therefore, this decision would not support the case of the Revenue. The charging of interest u/s 254A is to be restricted to 07 months only and cash seized to be adjusted against demand u/s 234B as discussed above. However, the same issue does not require detailed discussion because legal issue has ....
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....e of no explanation. The addition is liable to be deleted. The explanation of the assessee is accepted, however no further reasons are required in view of finding on Ground No.3. All Grounds are allowed. 21. In the result, the appeal of the assessee is allowed. ITA No.1018/Del/2014 & C.O.No.-297/Del/2014 [Assessment Year: 2005-06] 22. The Revenue's appeal as well as cross objection by the assessee are directed against the order of Ld.CIT(A), Meerut dated 29.11.2013 for AY 2005- 06. The AO passed the assessment order u/s 153A/143(3) of the Act on 29.12.2009. The assessee filed return of income declaring income of Rs. 3,90,800/-. The AO made an addition on account of income from undisclosed sources which were based on the record produced by the assessee. The AO made addition of Rs. 1,09,38,880/- on account of unexplained credit u/s 68 of the Act which was based upon the material produced by the assessee at the assessment stage. The AO made an addition of Rs. 1,50,000/- u/s 69 of the Act on account of unexplained investment for purchase of FDs. An addition of Rs. 27,000/- was made on account of unexplained expenditure for purchase of Samsung Air Conditioner. An addition of Rs. 3....
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....atement was filed. It was explained that partly refund of Rs. 50,000/- was made by that party which have been credited to the bank account of the assessee on 25.08.2004. Besides interests of Rs. 18,880/- was also paid by the party which was credited to the bank account of the assessee but the cheque was not honoured on account of insufficient fund, therefore, equivalent amount was debited. Ld.CIT(A), accordingly deleted the addition. 24. On Ground No.5, Revenue challenged the deletion of addition of Rs. 1,50,000/- for short term deposit/cumulative deposit favouring wife and daughter of the assessee. It was found that such deposit was not in the name of the assessee. It was in the name of the daughter of the assessee in which wife of the assessee was nominee, therefore, the addition was deleted. Revenue raised Ground No.6 for deletion of Rs. 27,000/- for investment in Air Conditioner which were deleted by Ld.CIT(A) where investment was made by the wife and only general query was made by the AO in this regard. It would, therefore, show that on these additions, no incriminating material was found during the course of search. 24.1. Ld. CIT DR relied upon the order of the AO. On the....
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....ssessee as against addition of Rs. 32,90,000/-. As regards, addition of Rs. 12,80,000/-, the details could not be explained but it was explained that it was paid by Demand Draft. Cheque of Rs. 6,00,000/- was received on 28.02.2005 from Sh. Narender and in AY 2007- 08, Ld.CIT(A) deleted the addition in respect of same person and Department is not in appeal. Ld. CIT DR, however, submitted that no confirmations have been filed by these parties. It was also explained by Ld. Counsel for the assessee that these additions were made without bringing incriminating material during the course of search against the assessee. Ground No.2 of the cross-objection is general in nature and Ground No.3 is with regard to telescoping which were not pressed. Ground No.4 of the Cross Objection is for charging of interest u/s 234A & 234B of the Act which is similar as decided in ITA No.5739/Del/2014. Ground No.5 of the Cross Objection is that no addition could be made in the assessment u/s 153A of the Act because the assessment had become final and had not abated. No incriminating material was found and seized during the course of search qua these additions. Ld. Counsel for the assessee pointed out that P....
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....O made similar additions u/s 68 & 69 of the Act and also disallowed the interests u/s 36(1)(iii) of the Act. The assessee challenged these additions in the cross-objection, charging of interests u/s 234A & 234B are also challenged. The assessee raised legal ground on Ground No.7 of cross- objection that no addition can be made u/s 153A of the Act because assessment stood completed and no incriminating material was found during the course of search to make these additions. Admittedly, the original return of income was filed on 30.09.2006 and assessment was completed on the date of search. The AO made the addition on merit based on record and details and documents produced by the assessee at the assessment stage. Admittedly, no incriminating material was found so as to make the above additions under challenge. Therefore, the issue is covered in favour of the assessee in the case of the same assessee in ITA No.5739/Del/2014 (supra). We, accordingly, set aside the orders of the authorities below and delete all the additions. Ground No.7 of C.O. is allowed. 32. Briefly grounds on merits are also considered. On Ground No.1 of the Cross-Objection, the assessee challenged the addition of....
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....on the other hand, he has advanced these amounts to other persons as loans/advances but has not charged any interests thereon. Interest has been paid by the assessee on loans of Rs. 83 Lakhs. But the assessee has given loan/advances/debts totaling to Rs. 89,19,030/- on which no interest has been declared. The AO, therefore, computed notional interests of Rs. 2,22,637/- on interest free advances and made the addition. It was explained before Ld.CIT(A) that in the nature of business carried on by the assessee there were no practice of charging interest on loan/advances. Further, the explanation has been given in respect of certain parties as to why interest was not charged from them and moreover, it could not be disputed that the assessee had not actually charged any interest. The assessee, therefore, claimed that no notional interest should be charged and no addition should be made on hypothetical income. The assessee relied upon the decision of Hon'ble Supreme Court in the case of Shoorji Vallabhdas 36 ITR 144. In the second limb of the arguments, it was contended that interest bearing funds used for making investment which have yielded income, therefore, interest should be allowed....
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....enalty u/s 271(1)(c) of the Act. The AO vide separate order levied the penalty u/s 271(1)(c) of the Act on the addition made in the assessment order. Ld.CIT(A) partly confirmed the additions/sustained in appeal. Ld.CIT(A), therefore, partly allowed the appeal of the assessee and cancelled the part penalty. The assessee is in appeal challenging the penalty order. The Revenue is in appeal challenging the deletion of penalty because the Departmental appeal on merits is pending before the Tribunal. Ld. Counsel for the assessee submitted that quantum order of the Tribunal may be followed in deciding the penalty appeals and also filed copy of the show cause notice dated 29.12.2009 issued for assessment year under appeal before levy of penalty u/s 274 r.w.s 271(1)(c) in which the AO has mentioned "(c) Have concealed the particulars of your income or.................................furnished inaccurate particulars of such income." Ld. Counsel for the assessee, therefore, submitted notice is bad in law and that penalty is not leviable in the matter. 38. On the other hand, Ld. Sr. DR relied upon the orders of the authorities below and relied upon the order of ITAT, Mumbai Bench in the case....