TaxTMI 
TaxTMI 
2014 (7) TMI 1315
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....nd other sources. A search and seizure operation was conducted in case of the assessee as well as others in the same group on 19.2.2009. For the assessment year under dispute, the assessee filed its return of income on 29.9.2009 declaring income of Rs. 98,36,440/- in addition to agricultural income of Rs. 6 lakhs. In course of the scrutiny assessment proceeding, the assessing officer noticed that during the search and seizure operation in assessee's residence, gold jewellery and silver articles weighing 3612 gms. And 5055 gms. Respectively were found. The approved valuer had valued the gold jewellery at Rs. 44,21,050/- and silver articles at Rs. 95,700/-. On examining the return filed by assessee's wife V. Subba lakshmi, it was noticed by the assessing officer that on the date of search, the drawings towards purchase of gold worth Rs. 3,40,000/- was verifiable for assessment years 2007-08 and 2008-09 which correspond to 300 gms. in weight. So far as the balance gold and silver articles are concerned, it was stated by the assessee that on the date of search, these were not reflected in their balance sheet or capital account as they were made out of conversion of ancestral gold. The ....
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....ermined at Rs. 5,86,950/-. 5. Contesting the addition sustained by the CIT(A), the Ld. A.R. submitted that the CIT(A) has worked out the unexplained gold jewellery at 999 gms. wrongly. It was submitted that the correct excess quantity is 569 gms. It was explained that out of the difference of 430 gms, 400 gms. is the difference on account of short credit given by the CIT(A) in respect of two daughters and mother of the assessee. The assessee also claimed credit of 200 gms. Per daughter, whereas the CIT(A) allowed only 100gms. credit per daughter. Similarly, while the assessee claimed 500gms. in respect of his mother but the CIT(A) allowed only 300 gms. Thus the difference was 500 gms. And calculated @ Rs. 1365/- per gm. the unexplained investment would work out to Rs. 5,46,000/-. Referring to the board's instruction no.1916, the Ld. A.R. submitted that the assessee is entitled for credit of 500 gms. in respect of a married lady and 250 gms. for unmarried lady. Hence, considered in the aforesaid perspective, there is no scope for addition towards unexplained investment u/s 69A of the Act. The Ld. AR also placed reliance upon a decision of the Hon'ble Gujarat High Court in case of....
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.... the aforesaid circular is in the context of seizure of gold jewellery but the same can also be applied while considering the unexplained investment in gold jewellery by the assessee. In the aforesaid instruction 1916 dated 11.5.1994, it is clearly mentioned that in case of married lady 500 gms. And in case of unmarried lady 250 gms can be given credit. The Hon'ble Gujarat High court in case of CIT Vs. Ratanlal Vyaparilal Jain (supra) taking note of board's instruction no.1916 has also expressed similar view by holding that though the circular has been issued for the purpose of laying down guidelines for seizure of jewellery but it can also be considered for the purpose of explaining the source of jewellery in terms with the guidelines laid down in the said instruction. Considering the aforesaid facts and circumstances and in the light of the board's instruction no.1916 dated 11.5.1994 and decision of Hon'ble Gujarat High Court we direct the assessing officer to work out the unexplained investment, if any, after giving credit for gold jewellery as per clause (iii) of board's instruction no.1916 dated 11.5.1994. Accordingly, assessee's appeal is considered to be allowed for statisti....
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.....2004 along with tax audit report which was duly processed u/s 143(1) of the Act. It was submitted that the gift received was duly shown in the capital account of the assessee as well as in his books of accounts and reflected in the return of income filed originally. It was submitted that during the search operation no incriminating material was found relating to the assessment year under dispute. It was therefore submitted that when the assessment stood concluded and there is no assessment proceeding pending on the date of search, the assessing officer could not have considered the investment made in the land and source of such investment which is not only recorded in the books of accounts and reflected in the return of income filed prior to the search. So far as merit of the addition is concerned, the assessee submitted that since affidavits were filed by assessee's mother and his father's brother confirming the gift, the assessing officer was not justified to make the addition ignoring the averments made in the affidavit. The CIT(A) however rejected assessee's contention by stating that since incriminating material relating to investment in land was found as a result of search, ....
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....eturn filed prior to the date of search. This view of us is supported by the decision of the ITAT Vizag Bench in case of Sri Lalitha Constructions Vs. ACIT (supra) wherein the bench held as under: "9. In the case of All Cargo Global Logistics Ltd. Vs. DCIT 137 ITD 287 (Mum) (SB). the special bench of the ITAT has held that provisions of section 153A coming to operation if search or requisition is initiated after 31.5.2003. The special bench further held that in case assessment has abated, AO retains the original jurisdiction as well as jurisdiction u/s 153A in which assessment shall be made for each assessment year separately. Thus in case where assessment has abated, the AO can make addition in the assessment, even if any incriminating material has been found but in other cases, special bench held that assessment held u/s 153A can be made only on the basis of incriminating material which in the context of relevant provisions means books of accounts and other documents found in the course of search, but not produced in the course of original assessment or undisclosed income or property disclosed during the search. In the present case the assessments having been completed u....
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....sidered academic." 17. As would be clear from the assessment order, the assessing officer has only disputed the source of investment which is already reflected in the books of accounts and return filed prior to the date of search. He has not made any other additions with reference to any incriminating material as a result of search. In the aforesaid circumstances, an amount which has already been recorded in the books of accounts and disclosed in the return of income cannot be made subject matter of assessment u/s 153A of the Act, in absence of abatement of assessment proceeding. We therefore hold that the addition made of Rs. 7,30,000/- is not justified. So far as merits of the issue is concerned, undisputedly the assessee from the very beginning has explained that the amount was received as gift from his father. This fact was confirmed during the assessment proceeding through affidavit of his mother and father's brother. The assessing officer has simply disbelieved the affidavit without verifying the veracity of the averments made therein, which in our view is not a correct approach on the part of the assessing officer. Hence, the assessing officer having made the addition pur....
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....nt. The CIT on verifying the lease rent debited in the P&L account against the prevailing market rate found that the assessee has debited excess lease rent of Rs. 12,58,000/- and on which TDS has also not been deducted. He was therefore of the view that the assessing officer should have examined the issue of disallowance of excess lease rent debited and also applicability of the TDS provision. On the basis of the aforesaid issues, he issued a show cause notice to the assessee. In response to the show cause notice, the assessee submitted his reply objecting to the proposed action u/s 263 of the Act. The CIT after considering the submissions of the assessee passed the impugned order setting aside the assessment orders passed for the assessment year 2003-04 to 2007-08 with the following observation: "I have gone through the submission filed by the assessee. It is a fact that the assessing officer while completing the assessment has not verified the above issues in proper perspective. It has been judicially held that as assessment made without necessary enquiry can be held to be erroneous and can be revised u/s 263 of the I.T. Act 1961. Reference in this regard can be made to ....
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....disallowance. So far as interest disallowance is concerned, it was submitted that the assessing officer at the time of assessment u/s 143(3) of the Act r.w.s. 153A of the Act has thoroughly examined this issue and came to a conclusion that no interest disallowance was warranted. The assessing officer being satisfied with the explanation of the assessee that advances made to the firm Sai Agro Industries were out of commercial expediency has not made any interest disallowance. Moreover, it was submitted that M/s. Sai Agro Industries used to supply material to the assessee for its business of pisciculture. Thus, the relationship between assessee and Sai Agro Industries is one of debtor and creditor and the advances given to the firm stood adjusted from time to time against supply of material. Therefore, it cannot be said that interest bearing funds have been diverted for non business purpose. In support of such contention, he relied upon the decision of Hon'ble Supreme Court in case of S.A. Builders Vs. CIT 288 ITR 1. It was further submitted that the assessee has interest free funds as well as in the form of own capital and also sundry creditors which were not considered while disall....