2022 (7) TMI 1156

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e seized as per annexure A/ISPR/Res/01. Page No.68 to 71 of Annexure A/ISPR/Res/01 are provisional balance sheets of the assessee as on 31.03.2009. As the documents belonging to the assessee were found and seized in course of search proceedings in the case of Sri I.Syam Prasad Reddy proceedings u/s.153C were initiated in this case. Accordingly, notice u/s.153C dated.19/03/2014 was issued and served on the assessee. Return of Income in response to notice u/s.153C was filed on 22/04/2014 declaring a total income of Rs.1,61,46,330/-. Subsequently, the Assessing Officer issued notice u/s 143(2) which was duly served on the assessee. In response to the same, the assessee appeared before the Assessing Officer on various dates and furnished the details. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 153C on 31.3.2015 determining the total income of the assessee at Rs.7,73,35,189/- wherein he made the following additions: A) Income from capital gain - Rs.25,55,33,574 B) Income from other sources - Rs. 1,61,46,326 C) Disallowance u/s 14A - Rs. 6,11,88,863 3. Before the learned CIT (A), the assessee challenged only the disallowance u/s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... on their own, having admitted the facts of the case, as borne out or seized documents. Thus, it is reasonable to hold that there is no ground/basis for assessee to question the proceedings u/s 153C and the Case laws relied are held to be distinguishable on fact. Accordingly, the grounds related to the issue are treated as Dismissed" 4. So far as the disallowance of Rs.6,11,88,863/- is concerned, the learned CIT (A) upheld the same by observing as under: "6.3 Perused the submissions of appellant and the observations of thee Assessing Officer in the Assessment Order as well as the findings of search proceedings. As could be seen from the facts that have emerged from the search proceedings, the appellant company had admitted on diversion of business funds for the purpose of non-core business as well as the investments that yielded incomes which are exempted from tax. On these lines, the MD of the company had agreed in principle that disallowances need to be worked out by applying the provisions of Sec.14A, for the purpose of offering for tax, based on the information originated from the search findings. However, while furnishing the Return of Income such computation was n....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....llowances. While quantification of disallowance is never contested by the assessee, the disallowance as made by the assessee in revised computation, as agreed by the M.D. of the company vide statement recorded during search proceedings and replicated in assessment order by the AO, which is to the tune of Rs.6,11,88,663/-, is justified and upheld. On these lines, the grounds related to this issue are treated as Dismissed". 5. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal: "1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, 1 weight of evidence and probabilities of case. 2. The Commissioner erred in confirming the order of the Assessing Officer made u/s 143(3) r.w.s 153C of the IT Act, as no incriminating material was found and and seized belonging to the assessee in the searched premises. 3. The learned Commissioner ought to have held that the notice issued u/s 153C is an invalid notice as there was no incriminating material belonging to the assessee found and seized from the searched person and further ought to have held that t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....far as the grounds including the additional ground relating to the validity of the initiation of proceedings u/s 153C is concerned, we do not find any infirmity in the order of the learned CIT (A) on this issue. Admittedly, the impugned A.Y falls within the period of six years as envisaged in the provisions of section 153C of the Act and the Assessing Officer has completed the assessment u/s 143(3) r.w.s. 153C of the Act. The basis of initiation of proceedings u/s 153C is the documents being provisional balance sheet of the assessee seized from the premises of Shri I. Shyam Prasad Reddy during the course of search at his premises on 18.7.2012. The satisfaction note was duly received by the Assessing Officer of the assessee from the Assessing Officer of the searched person. Therefore, in our opinion, there is no infirmity or illegality in the order of the Assessing Officer in initiating the proceedings u/s 153C and the order of the learned CIT (A) in upholding the order u/s 153C. Accordingly, grounds raised by the assessee on this issue including the additional grounds are dismissed. 10. So far as the ground challenging the addition/disallowance of Rs.6,11,88,863/- u/s 14A is con....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... investments. 5. The learned Commissioner erred in confirming the order of the Assessing Officer wherein, the income was assessed at Rs.3,06,64,061/- by making an addition of Rs.6,95,94,485/- u/s 14A of the IT Act. 6. The appellant craves leave to add to, amend or modify the above grounds of 6 appeal either before or at the time of hearing of the appeal, if it is considered necessary" 12. The assessee has raised additional grounds which are as under: "The learned Commissioner ought to have appreciated that the Commissioner ought to have satisfaction is deemed to have been recorded on 19.03.2014, therefore, appreciated that the assessment year 2013-14, is also falls in the block of 6 assessment years (2008-09 to 2013-14), therefore, in the absence of a satisfaction as envisaged in section 153C of the IT Act, the order may u/s 143(3) is an invalid order. 2. The learned Commissioner (Appeals) ought to have appreciated that satisfaction as enjoined in section 153C of the IT Act 1961, that the appellant had undisclosed income, on account of material found in the case oi searched person belonging to the assessee and not belonging to searched person,....