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2017 (8) TMI 1359 - AT - Income TaxRevision u/s 263 - whether direction of the Ld.CIT is beyond the scope of the provision of section 153A - Held that - Whereas, the opening capital balance was taken at ₹ 13,952/- as on 01.04.2005 and there was a difference and hence, the Ld. CIT has directed the assessing officer to reexamine the issue and make the enquiries and complete the assessment. During the appeal, AR referred the paper book page No.30 which is the closing balance as on 31.03.2005. As per the balance sheet, the capital balance as on 31.03.2005 was ₹ 7,76,810/-. The assessee also enclosed the account copy of the assessee in respect of the capital account which shows the opening balance of ₹ 776810/- as on 01.04,2005 and there was no difference. Therefore, the Ld.AR submitted that the Ld.CIT has committed an error while examing the capital accounts. DR did not controvert the above facts furnished by the Ld.AR and we do not find any difference as observed by the Ld.CIT in his order passed u/s 263. Accordingly, we set aside the order of the Ld.CIT and allow the appeal of the assessee. Revision u/s 263 in respect of expenditure under the head repairs and maintenance - Held that - It is not permissible to revise the assessment order in the case of search assessments without referring to the incriminating material in the case of completed assessments. In the instant case the assessments were unabated and there is no incrimainating material. Hence we set aside the orders of the Ld.CIT and allow the appeal of the assessee for the A.Y.2006-07 and 2007-08. Admission of additional income during the post search investigation which was not declared in the return of income filed subsequent to search - CIT set aside the assessment order passed by the AO u/s 143(3) r.w.s. 153A with a direction to reexamine the issue - Held that - As per the statement recorded u/s 131 on 19.03.2010 the assessee has admitted the total income of ₹ 35 lakhs for the assessment year 2010-11 but no admission was given for additional income and accordingly filed the Return of Income. No other incriminating material was placed before us by the Ld.DR evidencing any other additional income. Therefore, there is no error which is prejudicial to the interest of the revenue for taking up the case for revision u/s 263, and accordingly, we set aside the order passed u/s 263 and allow the appeal of the assessee.
Issues Involved:
1. Validity of the order passed under Section 263 by the CIT directing the assessing officer to redo the assessment. 2. Examination of capital account differences for A.Y. 2005-06. 3. Nature of expenses under the head "repairs and maintenance" for A.Ys. 2006-07 and 2007-08. 4. Non-admission of additional income declared during the search for A.Y. 2009-10. 5. Non-declaration of undisclosed income of ?35 lakhs for A.Y. 2010-11. Detailed Analysis: Issue 1: Validity of the Order Passed under Section 263 The appellant argued that the CIT's direction to redo the assessment was beyond the scope of Section 153A of the I.T. Act. The assessments completed under Section 143(3) read with Section 153A were not based on any incriminating material found during the search. The CIT's revision under Section 263 was challenged as bad in law and without jurisdiction. The Ld. DR contended that the validity of the assessments should be challenged separately and not in the appeal against Section 263 proceedings. The tribunal held that the CIT's revision under Section 263 was not permissible without referring to incriminating material in the case of completed assessments. Issue 2: Examination of Capital Account Differences for A.Y. 2005-06 The CIT observed a discrepancy between the closing balance as on 31.03.2005 and the opening balance as on 01.04.2005. However, the appellant provided evidence that there was no such discrepancy. The tribunal found no difference as observed by the CIT and set aside the order, allowing the appeal of the assessee. Issue 3: Nature of Expenses under the Head "Repairs and Maintenance" for A.Ys. 2006-07 and 2007-08 The CIT directed the assessing officer to treat the expenses as capital expenditure and allow depreciation. The appellant argued that the expenses were verified during the original assessment, and a conscious decision was made. The tribunal held that reassessment under Section 153A is permissible only with incriminating material found during the search. Since the assessments were unabated and there was no incriminating material, the tribunal set aside the CIT's orders and allowed the appeals for A.Ys. 2006-07 and 2007-08. Issue 4: Non-Admission of Additional Income Declared During the Search for A.Y. 2009-10 The CIT observed that the additional income of ?17 lakhs declared during the search was not added to the returned income. The appellant provided evidence that the revised return included the additional income. The tribunal found no error in the assessment order and set aside the CIT's order, allowing the appeal for A.Y. 2009-10. Issue 5: Non-Declaration of Undisclosed Income of ?35 Lakhs for A.Y. 2010-11 The CIT revised the assessment, citing undisclosed income of ?35 lakhs. The appellant argued that the revised return declared the total income as ?35.09 lakhs, and no additional income was admitted. The tribunal found no error prejudicial to the interest of the revenue and set aside the CIT's order, allowing the appeal for A.Y. 2010-11. Conclusion: The tribunal allowed all the appeals of the assessee, setting aside the orders passed under Section 263 by the CIT for the respective assessment years. The judgments were pronounced in the open court on 9th Aug 2017.
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