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TMI Blog2015 (11) TMI 1439X X X X Extracts X X X X X X X X Extracts X X X X ..... ve & other overheads without appreciating the fact that the assessee had not commenced its business as construction of Mall was not started upto A.Y. 2012-13, therefore, the expenditure incurred by it should have been capitalized under the head 'Capital work-in-progress' as against revenue expenditure claimed by the assessee?" Assessee, on the other hand, challenged the jurisdiction of the AO in passing an order under section 143(3) r.w.s. 153C of the Act and also contested certain other additions such as disallowance made under Rule 8D, etc. Since the learned counsel for the assessee strongly challenged the action of the AO in passing the order under section 143(3) r.w.s. 153C of the Act, both the parties agreed that the prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 5,43,130/- wherein he has disallowed a sum of Rs. 16,05,200/- referable to expenditure debited by the assessee in the Profit & Loss Account; according to the AO the expenditure ought to have been shown as capital work-in-progress, since it cannot be allowed as revenue expenditure. 5. Aggrieved, assessee contended before the CIT(A) that the proceedings under section 143(3) r.w.s. 153C are bad in law. It was also contended that the disallowance of administrative and other overheads expenses is not in accordance with law. 6. The main plea of the assessee was that for the year under consideration the return filed by the assessee having been deemed to be processed under section 143(1) of the Act, in the absence of any notice issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the light of the decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia it is mandatory on the part of the AO to initiate proceedings under section 153A of the Act, consequent to search and seizure action. He also observed that in this case return of income was filed on 03.09.2011 and hence the time limit for issuance of notice under section 143(2) would be expiring after the date of search. He also admitted that it is not clear as to whether any notice under section 143(2) was issued which got abated. In his opinion there is no purpose in making two assessments in the same assessment year, once a notice is issued under section 153C of the Act. He also admitted that there is no incriminating material found du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. In his opinion the decision of the ITAT Third Member in the case of Royal Cartons Pvt. Ltd. as well as the Coordinate Bench decision in the case of Hagwood Commercial Developers Pvt. Ltd. (ITA No. 1305/Mum/2015 dated 22.05.2015) are distinguishable on facts, whereas the decision of the Hon'ble Kerala High Court in the case of Dr. K.M. Mehaboob vs. DICT 26 taxmann.com 54 has direct bearing on the issue on hand. According to him there is no need to examine whether evidence/material seized represents undisclosed income of another person; all that is required is to consider whether such material relates to another assessee or not. He also relied upon the decision of the Hon'ble Bombay High Court in the case of SSP Aviation Ltd. vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Delhi High Court in the case of SSP Aviation Ltd. 346 ITR 177 (Del) to submit that the decision was rendered in the context of the powers of the AO who was required to hand over the file to the AO who has jurisdiction over the third party but even in that context the court observed that in the case of the other person the question of pendency or abatement of assessment or reassessment will be examined with reference to the date on which the books accounts or documents seized and requisitioned by the AO having jurisdiction over such other person. He also referred to paras 14 to 18 of the said judgement to submit that validity of seizure has to be examined independently while initiating proceedings under section 153C of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additions are not in accordance with law in the light of the fact that there is no incriminating material even during the course of search, a fact which is not disputed by Tax Authorities. He mainly relied upon the following orders of the Third Member of ITAT to submit that the amendments to provisions of section 153C of the Act are clarificatory in nature and therefore applicable retrospectively and hence in order to initiate proceedings under section 153C of the Act for each year the AO should have, in his possession, incriminating material concerning third party: - i) Trishul Hi-Tech Industries vs. DCIT -(2014-TIOL-862-ITAT-KOL) ii) DCIT vs. Royal Cartons Pvt. Ltd. (ITA 472/Coch/2013) It was submitted that in the instant case no in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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