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TMI Blog2015 (2) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... er occasion. Thus there is nothing incriminating in these documents which can led to forming of the satisfaction on part of the AO to initiate proceedings u/s 153C of the IT Act. In the spirit of enactment of Section 153C it would be a implicit and inherent requirement that there must be existence of prima facie unrecorded/unaccounted transaction recorded in the documents belonging to the assessee before the said provision can be invoked in case of a third party, who has not been subjected to search u/s 132 of the IT Act. Any other interpretation any case the Audited Accounts/Balance Sheet/ P&L Account/acknowledgement of Return/copy of capital account of partners in appellant’s books cannot be such material which can be the basis of a valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 39,82,509/- made by the Assessing Officer on account of advertisement expenses. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2. The issue raised in the grounds of appeal has been decided by the CIT A) as under:- " It is seen from the counter reply of the appellant the he has discussed in detail the page wise analysis of the nature and contents of the Anneuxres/documents which have been relied upon by the AO for recording the satisfaction u/s 153C. That all these documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us there is nothing incriminating in these documents which can led to forming of the satisfaction on part of the AO to initiate proceedings u/s 153C of the IT Act. In the spirit of enactment of Section 153C it would be a implicit and inherent requirement that there must be existence of prima facie unrecorded/unaccounted transaction recorded in the documents belonging to the assessee before the said provision can be invoked in case of a third party, who has not been subjected to search u/s 132 of the IT Act. Any other interpretation any case the Audited Accounts/Balance Sheet/ P&L Account/acknowledgement of Return/copy of capital account of partners in appellant's books cannot be such material which can be the basis of a valid and legal sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of the assessee firm is apparently to inflate profit of the brand lease holder companies that is m/s Gopal and Company; M/s Flakes and Flavourz and M/s Gopal Corporation Ltd., which are being run in industrially backward area and are entitled to claim of deduction u/s80 IB of the IT Act. It has thus been concluded that the advertisement expenditure in the appellant's case is basically an arrangement for claiming deduction u/s 37(1) and consequently only 1% of the such expense has been allowed and the balance 99% which works out to ₹ 39,82,509/- has been disallowed holding the same as advertisement expense not solely and exclusively for the business. The basic contention of the appellant is that the above presumption of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not arise question of not debiting the advertisement expenses for advertising Joie Agarbatti, the brand for which was being owned by the appellant and the trade and Copyright license of which had not been parted with to a third party. To put it differently, the assessee has not debited the advertisement expenses of other parties in its own books, as the user of trade mark license of Joie Agarbaties had not been granted in favour of these parties during the year. The appellant has also submitted details of advertisement expenditure incurred by these entities in the respective years. I have gone through the contention of the appellant as also the trade mark & Copyright license agreement which it has entered with M/s S. Gopal & Co. & M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents was not provided. Relying upon the provisions of Section 153C, the Ld. AR submitted that documents relating to another person found at the premises of person searched cannot be relied upon for making addition especially if the documents are only part of final accounts forming part of IT returns. Continuing his arguments, he cited on example wherein he stated that if shares of a listed company are found at the premises of a person who is being searched whether assessment proceedings u/s 153C can be initiated against those companies. In view of the nature of documents found, it was argued that documents were not incriminating. 8. We have heard the rival submissions of both the parties and have gone through the material available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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