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TMI Blog2015 (11) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of 50% of expenditure - CIT(A) deleted the addition - Held that:- Regarding allowance of depreciation the AO was rightly directed to allow the same as per Income Tax Act Rules. Therefore, this ground was therefore allowed in favour of the assessee company.- Decided against revenue Validity of assessment u/s. 153C - Held that:- As incriminating material belonging to the assessee were found during search period, the assessment made is without jurisdiction and proceedings initiated u/s. 153C is null and void. - Decided against revenue - I.T.A. Nos. 4129 - 4134/Del/2012, C.O. Nos. 338 - 343/Del/2012 - - - Dated:- 9-10-2015 - Shri H. S. Sidhu, Judicial Member And Shri L. P. Sahu, Accountant Member For the Petitioner : Md. Mohsin Alam, CIT (DR) For the Respondent : Sh. Anil Jain, CA ORDER Per H. S. Sidhu, JM These appeals filed by the Revenue and Cross Objections filed by the Assessee emanate out of the common Order dated 14.5.2012 passed by the Ld. CIT(A-II), New Delhi pertaining to assessment years 2003-04 to 2008-09. Since the issues involved in these appeals as well as cross objections are similar and identical, hence, for the sake of conveni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. That in view of the facts circumstances of the case the CIT (A) has erred on facts and in law in holding that the assessment has been framed in conformity with statutory provision of Section 153C r/w Section 153A of the Act. 5. That in view of the facts and circumstances of the case the CIT(A) has erred on facts and on law in upholding the validity of assessment particularly when the assessment had been made without complying with the law and the additions made are illegal, bad in law without jurisdiction. 6. That on the facts and circumstances of the case and the provisions of the law, the Ld CIT (A) has erred in not considering the fact that the assessment proceeding for the year under appeal was not pending on the date of the recording of satisfaction u/s 153C of the Act and accordingly the same did not abate for the purpose of initiation of proceedings u/s 153C and as such the assessment being bad in law deserves to be quashed. 7. That the respondent reserves the right to add/amend/alter the grounds of cross objection. 4. Briefly stated the facts are that a search and seizure action u/s. 132 of the Income Tax Act, 1961 was carried out in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14.5.2012 has partly allowed the appeal of the assessee. 6. Now the Revenue is in Appeals and Assessee has filed Cross Objections before the Tribunal. 7. As regards the issues involved in the Revenue appeals is concerned, the Ld. DR relied upon the order passed by the AO and the contention raised in the Grounds of Appeal filed by the Revenue. On the contrary, the Ld. Counsel for the assessee relied upon the order passed by the Ld. CIT(A). 8. Now we first deal with the Revenue s appeal i.e. ITA 4129/Del/2012 (AY 2003-04) wherein two effective issues have been raised. The first issue raised vide Ground No. 1 is relating to deletion of addition of RS.31,32,336/- on account of unexplained purchase u/s 69C of the Income Tax Act, 1961 and the second issue raised vide Ground No. 3 is relating to deletion of addition of RS.2,06,645/- by way of disallowance of 50% of expenditure and depreciation claimed by the assessee. We have heard both the parties and perused the relevant records, especially the orders passed by the Ld. First Appellate Authority. 8.1 After hearing both the parties and perusing the records, especially the orders passed by the Ld. CIT(A), on the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration as compared to earlier year. When opening stock stood accepted and the sales also stood accepted as income, there is no rationale of not accepting the purchase as expenditure. It is also admitted fact that the books of accounts were also produced before the Sales Tax Officer ward 101, New Delhi during the assessment proceeding under the Delhi Sales Tax Act. No adverse remark has been made in the Sales Tax Assessment order. It is pertinent to note that assessment of the appellant co. for the AY. 2005-06, has been completed u/s 143(3) of the I.T. Act, by ITO, Ward no 3(4), New Delhi vide Assessment Order dt 30.03.2007. Working and status of the company stood accepted in the (Page no 27 28 of Paper Book) said assessment order. Further, no disallowance of purchase has been made in the said Scrutiny order. In the original assessment for the AY. 2005-O6, framed under section 143(3) of the I T Act by the AO, no disallowance of purchases and the expenses had been made. The AO after application of mind and detailed scrutiny of accounts had consciously allowed said purchases and expenses. Further, the said purchases and expenses had also been allowed in summary assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases, item-wise detail of purchases and sales giving inventory and rates which purchases and sales were affected. But no defect was found by the Assessing officer either in the books of account or in the detail furnished by the assessee. After going through the reasons mentioned by the Ld. CIT(A) while deleting the addition in dispute, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A) on the deletion of addition of ₹ 31,32,336/- made by the AO on account of unexplained purchases u/s. 69C of the I.T. Act. Respectfully following the order dated 30.4.2010 of the Hon ble Jurisdictional High Court passed in ITA No. 692 of 2009 in the case of Commissioner of Income Tax-V vs. Radhika Creation, we uphold the order of the Ld. CIT(A), who has rightly deleted the addition in dispute involved in ground no. 1 and accordingly, decide the issue in dispute against the Revenue. 8.3 Apropos to another effective issue raised in ground no. 3 relating to deletion of addition of RS.2,06,645/- by way of disallowance of 50% of expenditure and depreciation claimed by the assessee. We are of the view that the Ld. CIT(A) has adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,71,568/- 6. 2008-09 2,51,061/- Accordingly the AO is directed to delete the addition for the AY. 2003-04 to 2008-09, details hereinabove made on this account. Regarding allowance of depreciation the AO is, directed to allow the same as per Income Tax Act Rules. This ground is therefore allowed in favour of the appellant company. 8.4 After going through the aforesaid relevant finding of the impugned order on the issue involved in Ground No. 3 raised by the Revenue, we find that Ld. CIT(A) has observed that during the search proceedings no material has been found which justifies the disallowance of the expenses. Moreover, books of accounts were duly audited under the Companies Act. There is no negative observation in the auditor's report. Books of accounts were produced before the AO and, the same were examined by him. No deficiency has been pointed out in the books of accounts. It is further submitted that the assessment of the assessee company for the A.Y. 2002-03 has already been completed, wherein no disallowance of expenses made. We have considered the fact that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the order of the Ld. CIT(A) on both the issues in dispute. Keeping in view of the above, we uphold the orders of the Ld. CIT(A) in respect of the assessment years 2004-05 to 2008-09 also and decide the issue against the Revenue by dismissing all the 6 the appeals filed by the Revenue. ASSESSEE S CROSS OBJECTION 10. At the time of hearing, Ld. Counsel of the assessee argued the issued involved in ground no. 3 of the Cross Objection. He stated that certain documents belonging to the assessee were seized by the Search Party of the Department, which the assessee has already disclosed while filing the return of income for the assessment year in dispute. Therefore, no incriminating material belonging to the assessee were found during search period. Therefore, he stated that the assessment made in the case of the assessee is without jurisdiction, in view of the Hon ble Jurisdictional High Court decision dated 28.8.2015 in the case of CIT vs. Kabul Chawla passed in ITA No. 707, 709 and 713/2014. He further draw our attention towards the Page No. 1 64 especially the pages no. 14 to 15 of the Paper Book especially the Column no. 13 in which the AO has asked the assessee to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in ITA No. 707, 709 and 713/2014. Respectfully, following the above precedent, we quash the assessment made u/s. 153C and decide the issue in dispute in favour of the assessee and accordingly, the cross objection is allowed on this ground. 13. Secondly, Ld. Counsel of the assessee stated that AO has not recorded the Satisfaction before issuing the notice u/s. 153C of the I.T. Act to the assessee and in the absence of recording the satisfaction before issuance of the notice u/s. 153C of the I.T. Act, there is non-compliance with legal requirement regarding recording of the satisfaction and this issue. He further stated that similar issue has already been adjudicated and decided by the Hon ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax (Central-II) vs. Aakash Arogya Mandir Pvt. Ltd. Anr. Dated 28.7.2015 decided in ITA No. 509/2015 Others. He draw our attention towards para 8 of the aforesaid order in which the Hon ble High Court gave its finding. He further stated that on this ground the issuance of notice u/s. 153C is illegal and arbitrary, and stated that this ground also squarely covered by the decision of the Hon ble Jurisdictional High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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