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2019 (4) TMI 1755 - AT - Income TaxAssessments u/s. 153C - admission of additional ground raised by the assessee - as per assessee no satisfaction is recorded by the AO who has passed the order u/s. 153A of the Act in case of searched person u/s. 132 - contention of the assessee is that satisfaction is said to have been recorded by the AO who has passed the order u/s. 153A in the case of the assessee and it is also satisfaction note to that effect that there exists income-tax belonging to any person other than the searched person in respect of whom search was made u/s. 132 of the Act or requisition of books of account were made u/s. 132A - HELD THAT - The person who has passed the order in the case of the searched person u/s. 153A of the Act is required to record the satisfaction note before completion of assessment u/s. 153A of the Act. Provisions contained u/s. 153C of the Act can only be invoked where there was satisfaction by the AO having jurisdiction over the person searched or requisitioned u/s. 132A during the course of assessment proceedings. Therefore, the proceedings u/s. 153A of the Act always precede the proceedings u/s. 153C of the Act and without recording satisfaction note by the Assessing Officer initiating proceedings for completion of assessment u/s. 153A of the Act cannot be proceeded u/s. 153C of the Act in the case of such other person not searched. Same view was taken by the Supreme Court in the case of CIT vs. Calcutta Knitwears, Ludhiana 2014 (4) TMI 33 - SUPREME COURT In the present case, there was a search u/s. 132 of the Act in M/s. Kunhitharuvai Memorial Charitable Trust, Calicut which revealed that the assessee received training charges from College of Nursing which is an institute under KMTC. It was also noted that during the course of search, the assessee had not filed return of income from assessment year 2006-07 onwards. It received income from IP and OP collections, dialysis, advertisement, X-rays, Lab, CT scan, MRI, income from hospital canteen in addition to the training charges received from KMCT. Consequently, notice u/s. 153A(a) r.w.s 153C was issued to the assessee. It was therefore, a prima facie proof that condition of section 153C was satisfied before invoking the jurisdiction in the case of the assessee. The assessee had not raised this issue before the Assessing Officer. The additional ground raised by the assessee is not arising out of the impugned order of the authorities below. In the present case, the assessee brought on record only one Panchanama recorded from M/s. Kunhitharuvai Memorial Charitable Trust, Kozhikode dated 01/11/2011 which is a searched party. In these circumstances, the assessee should have raised this ground at the earliest before the authorities below. No facts or material has been brought on record by the assessee in support of the additional ground of appeal. Since additional ground is raised by the assessee, therefore, the assessee shall have to prove that the same is fit for admission. The onus on the assessee was not discharged in this case. The challenge to notice issued u/s. 153A(a) r.w.s. 153C of the Act was not made before the authorities below. The assessee had filed the return of income before the Assessing Officer on 06/12/2012 for all the assessment years. It cannot be said that material and evidence connected with invoking the jurisdiction u/s. 153C of the Act are the internal record of the Department and the assessee could not lay hands on the same - assessee has not brought on record all the facts necessary for adjudication of the issue. - Decided against assessee Disallowance u/s 40(a)(ia) - whether deduction attracted only if the amounts are remaining payable at the end of year or whether it is applicable even for amounts paid during the year has not become final and there are conflicting judgments of various high courts on the said issue? - HELD THAT - Section 40(a)(ia) of the Act covers not only those cases where the amount is payable but also when it is paid. In view of the above judgment of the Supreme Court in the case of Palam Gas Service 2017 (5) TMI 242 - SUPREME COURT we do not find any infirmity in the order of the CIT(A) on this issue. This ground of appeals of the assessee is rejected. Disallowance under section 40(a)(ia) when the book results are rejected and income is determined on an estimate basis - HELD THAT - Nothing in law which prevents the Assessing Officer to invoke the provisions of section 145 of the Act for estimation of income and provisions of section 40(a)(ia) of the Act. We do not find any infirmity in the order of the Assessing Officer and the same is concerned. Hence, this ground of appeals of the assessee are dismissed.
Issues Involved:
1. Validity of proceedings initiated under Section 153C. 2. Disallowance under Section 40(a)(ia) for non-deduction of TDS on amounts paid during the year. 3. Disallowance under Section 40(a)(ia) when income is determined on an estimate basis. Detailed Analysis: 1. Validity of Proceedings Initiated Under Section 153C: The assessee challenged the initiation of proceedings under Section 153C, arguing that the Assessing Officer (AO) did not record the necessary satisfaction before issuing the notice. The assessee cited the Supreme Court judgment in CIT vs. Calcutta Knitwears, which mandates that the AO must record a satisfaction note before initiating proceedings under Section 153C. The AO must be satisfied that the seized documents belong to a person other than the searched person. The Tribunal examined the procedural requirements under Sections 153A to 153C, emphasizing that the satisfaction note is a sine qua non for initiating action under Section 153C. The Tribunal noted that the assessee did not raise this issue before the lower authorities and failed to bring relevant facts on record, such as the Panchanama or statements recorded during the search. Consequently, the Tribunal rejected the additional ground raised by the assessee, stating that it involves investigation of facts not brought on record and cannot be admitted for adjudication. 2. Disallowance Under Section 40(a)(ia) for Non-Deduction of TDS on Amounts Paid During the Year: The assessee argued that disallowance under Section 40(a)(ia) is applicable only if the amounts are remaining payable at the end of the year, not for amounts paid during the year. The Tribunal referred to the Supreme Court judgment in Palam Gas Service vs. CIT, which held that Section 40(a)(ia) covers both amounts payable and amounts paid. The Tribunal emphasized that the statutory obligation to deduct tax at source applies to both credited and paid amounts. Therefore, the Tribunal upheld the CIT(A)'s decision, confirming the disallowance under Section 40(a)(ia) for non-deduction of TDS on amounts paid during the year. 3. Disallowance Under Section 40(a)(ia) When Income is Determined on an Estimate Basis: The assessee contended that once income is estimated, it takes care of irregularities, and further addition by invoking Section 40(a)(ia) leads to double addition. The Tribunal referred to the Supreme Court judgments in CIT vs. Devi Prasad Vishwanath Prasad and Kale Khan Mohammed Hanif vs. CIT, which held that unexplained cash credits or disallowances can be separately added even when income is estimated. The Tribunal concluded that there is nothing in law preventing the AO from invoking Section 40(a)(ia) even when income is estimated. Therefore, the Tribunal dismissed the assessee's ground, upholding the disallowance under Section 40(a)(ia) despite the estimation of income. Conclusion: The Tribunal dismissed all the appeals filed by the assessee, upholding the validity of proceedings under Section 153C, confirming the disallowance under Section 40(a)(ia) for non-deduction of TDS on amounts paid during the year, and allowing disallowance under Section 40(a)(ia) even when income is determined on an estimate basis.
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