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TMI Blog2015 (11) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... dv. and Sh. Shailesh Gupta, Adv. ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned Order dated 06/6/2011 passed by the Ld. Commissioner of Income Tax (Appeals)-III, New Delhi for the asstt. year 2003-04 on the following grounds:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 14,98,653/- made by the Assessing Officer on account of unexplained investment in office flat. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 4,400/- made by the Assessing Officer u/s 40A(3) out of medical allowances. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 36,200/- made by the Assessing Officer out of conveyance expenses. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 50,611/- made by the Assessing Officer out of travelling expenses. 5. On the facts and in the circumstances of the case, the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the order of the AO and reiterated the contentions raised in the Grounds of Appeal. 5.1 On the contrary, Ld. Counsel of the assessee stated that the issue in dispute is squarely covered in favor of the assessee by the decision dated 28.8.2015 of the Hon ble Jurisdictional High Court passed in the case CIT(Central)-III vs. Kabul Chawla in ITA No. 707, 709, 713/Del/2014 wherein the Hon ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions are not sustainable in the eyes of law. 6. We have heard both the counsel and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) had adjudicated the legal issue as well as the issues on merits vide para no. 7 to 7.5 at pages 9 to 15. For the sake of convenience, we are reproducing the relevant findings of the Ld. CIT(A) as under:- 7. I have considered the facts of the appellant, material placed on record and, order of assessment. It is evident from the assessment order that the AO has made the. impugned disallowances which is not based on any incriminating document/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given credit, for computing the further tax payable by the assessee. The assessee is also required to pay interest under ss. 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. The construction that the Department seeks to place on the impugned provisions would lead to serious hardship, inconvenience, injustice, absurdity and anomaly. Suppose, in the course of a search, nothing incriminating was found. Does this mean that an honest citizen be unduly harassed by facing automatic reopening of the concluded assessments merely because there was search action against him? The absurdity of the construction gets all the more pronounced when say, no incriminating material is found relating to the 'other person' but the material found indicates disclosed income. Suppose, loan confirmations relating to loans duly disclosed in the return of income of A are found at the time of search in the premises of B, Should the assessments of A be reopened for all the six preceding years merely because search action has been initiated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the claim of the Revenue. (i) S. 153A does not authorize the making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that complete assessments do not abate. There can be two assessments for the same assessment year. Assessments which are not pending before the AO on the date of search but are pending before an appellate authority will survive. (ii) An assessment can be said to be pending only if the AO is statutorily required to do something further. If a s.143(2) notice has been issued, the assessment is pending. However, the assessment in respect of a return processed u/s 143(I) is not pending because the AO is not required to do anything further about such a return. (iii) The power given by the Proviso to assess income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. (iv) On facts, s the returns had been processed u/s 143(I), the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings under section 153A unless there is some fresh material found during the course of search in relation to such points/ issues. 4.3 In this case the claim of deduction under section 80HHC had already been decided by the Tribunal in the appeal against regular assessment for A. Y .2001-02 and no fresh material had been found during the course of search in relation to allowability of deduction under section 80HHC. Therefore we agree with the submission of the Learned AR that the claim of deduction under section 80HHC cannot be considered afresh in the proceedings under section 153A. The Learned DR has relied on the decision of the Tribunal in case of Shivnathrai Harnarayan India (Pvt) Ltd. (supra) but the said case in our view is distinguishable. In that case, the Tribunal held that any assessment or reassessment proceedings initiated by the AO which are pending on the date of initiation of search, the same shall abate and AO cannot proceed with such pending assessment. Thus as per the decision of the Tribunal, only the assessment/reassessment .proceedings pending before AO shall abate. The issue whether the assessment already completed by AO and pending in appeal or revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer entries have been accepted by Assessing Officer while computing depreciation on factory building/loss on sale of flat. Hence, it is held that, investment made stands duly explained, and as such, the addition made for ₹ 14,98,653/- is not tenable and therefore is directed to be deleted. Regarding the disallowances made totaling to ₹ 1,62,561/- under the head medical allowance, conveyance expenses, travelling expenses, miscellaneous expenses, telephone and telex expenses, vehicle running and maintenance expenses and vehicle depreciation is concerned, the appellant has submitted that the AO has made all these disallowances holding that no proof in form of vouchers in support of such claim has been produced with respect to these expenses debited in the books of accounts. The appellant has in his paper book inter alia stated that complete details of such expenses duly supported by necessary bills / vouchers had been filed before the AO in the course of assessment proceedings. Copy of ledger accounts of these expenses have also been filed through the paper book and has submitted that in the absence of any basis given by the AO for making the disallowances, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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