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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 ..... 53C are not valid and therefore the assessments made thereon were quashed. Consistent with the view taken by the ITAT in the aforecited cases I hold that the proceedings initiated under section 153C and the assessment made in the instant case is also not valid in as much as there is no incriminating material found during the course of search, pertaining to A.Y. 2011-12. Since the notice issued under section 153C is held to be invalid, the assessment made thereon has no legs to stand and therefore it is not necessary to deal with other disallowance. - Decided in favour of assessee - ITA No. 1307/Mum/2015, ITA No. 1538/Mum/2015 - - - Dated:- 12-10-2015 - D. Manmohan, VP For the Appellant : Shri Rushabh Mehta For the Respondent : Shri B Pruseth CIT-DR ORDER Per D. Manmohan, VP These cross appeals are directed against the order passed by CIT(A) 48, Mumbai and they pertain to A.Y. 2011-12. 2. The only ground urged by the Revenue reads as under: - (i) Whether on facts and circumstances of the case the learned CIT(A) was justified in deleting the disallowance of ₹ 16,05,200/- on account of administrative other overheads without appreciating the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 issued under section 148 of the Act it attained finality. In other words, no assessment or reassessment was pending on the date of initiation of search. In such an event an assessment can be made only if incriminating documents, etc. are found. In the instant case no incriminating material was found which was the basis for initiating proceedings under section 153C of the Act and thus the notice issue under section 153C and the assessment made thereon are bad in law. The learned CIT(A) extracted the arguments advanced by the assessee before him (vide letters dated 01.07.2014 and 06.09.2014). The brief submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this the Income Tax Officer-8(1)(1), having erstwhile jurisdiction over the case, had issued a notice under section 143(2) of the act which was served upon the assessee on 28.09.2012. Further, the time limit for completion of the assessment was 31.03.2014. Proceedings under section 153C were initiated on 13.08.2013. Presuming that the date of handing over the seized material is prior to issuance of notice under section 153C, assessment was very much pending on that date and therefore the AO was justified in passing an order under section 153C r.w.s. 143(3) of the Act. It was thus contended that the assessment did not abate and hence proceedings under section 153C of the Act can be initiated even if there is no incriminating material. 10. 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 ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said judgement to submit that validity of seizure has to be examined independently while initiating proceedings under section 153C of the Act. There is no requirement under section 153C of the Act that the AO should also be satisfied that such valuable articles or books, etc., belonging to other person, reflect undisclosed income of the third party because under section 153C it enables the Revenue authorities to investigate the contents of the documents seized which belongs to a person other than searched so as to ensure that income does not escape assessment in the hands of any other person merely because he has not been searched. It is only a first step of the enquiry. The AO who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the AO having jurisdiction over the other person and thereafter it is for the AO having jurisdiction over the other person to follow procedure prescribed in an attempt to ensure that income reflected in the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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