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TMI Blog2016 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 lacs. Capital is more than investment made and loan advance given. The decision of Hon’ble Bombay High court in the case of CIT Vs. Reliance Utilities & power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) is squarely applicable in the case of assessee. Further the ld Assessing Officer has not established the nexus between the interest bearing loan with interest free advances given, therefore, we also delete the addition made in the A.Y. 2009-10 in regular assessment. - Decided in favour of assessee - ITA Nos. 152 to 155/JP/2015, ITA Nos. 156 & 157/JP/2015 - - - Dated:- 18-3-2016 - SHRI R.P. TOLANI, JM SHRI T.R. MEENA, AM For The Assessee : Shri Manish Agarwal (CA) For The Revenue : Shri M.S. Meena (CIT) ORDER PER: BENCH. These are two sets of appeals filed by the two different assessees, 1st set of appeals of Damodar Das Agarwal arise against the order dated 08/12/2014 passed by the ld CIT(A)-4, Jaipur for A.Y. 2004-05, 2005-06, 2007-08 and 2009-10 and 2nd set of appeals of Nirmal Kumar Agarwal arise against the order dated 03/12/2014 passed by the ld CIT(A)-4, Jaipur for A.Y. 2004-05 2007-08. The effective ground of one of the appeal is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents have been seized. Therefore, notice U/s 153A in both the cases for A.Y. 2004-05, 2005-06 and 2007-08 in the case of Damodar Das Agarwal and in the case of Nirmal Kumar Agarwal in A.Y. 2004-05 and 2007-08 were issued by the Assessing Officer. In response to this notice, the assessee submitted various details/information during the course of assessment proceedings. They also produced books of account, which have been examined by the Assessing Officer. The ld Assessing Officer observed that the assessee had paid following interest in the case of Damodar Das Agarwal. S.No. A.Y. Amount Paid Amount Received 1. 2004-05 82,500/- 18,265/- 2. 2005-06 3,51,405/- 1,96,409/- 3. 2007-08 5,56,513/- 4,15,773/- 4. 2009-10 71,847/- 28,782/- The assessee had paid following interest in the case of Nirmal Kumar Agarwal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest up to reserve and cash surplus available and capital employed but no details have been submitted by the assessee. Further he relied on the decision of Hon ble Punjab Haryana High Court in the case of Abhishek Industries Ltd. (2006) 286 ITR wherein it has been held that the assessee will not be entitled to claim deduction of interest on the borrowings to the extent those borrowings are directed to the sister concerns or others without interest. Therefore, he confirmed the addition in both the cases. 6. Now the assessees are in appeals before us. The ld AR of the assessees has submitted that the assessee had filed his return of income U/s 139(1) of the Act, which were processed U/s 143(1)(a) of the Act and income as declared by the assessee in the respective return stood accepted as no notice U/s 143(2) were issued in all the years till the expiry of period provided thereunder. Thereafter, a search U/s 132(1) of the Act was carried out on 24/8/2009 at the business and residential premises of the group to which assessee belongs. Subsequently, notices U/s 153A was issued on 15/01/2010 in all the cases except A.Y. 2009-10 in case of Damodar Das Agarwal. He has further dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer is squarely out of jurisdiction as Section 153A does not authorize to him to complete the assessment under the section without referring to any seized material. The assessee preferred appeal before the ld CIT(A), who had allowed the appeal partly but confirmed the disallowance of interest expenses. The assessee also taken legal ground before the ld CIT(A) and had challenged the proceeding initiated U/s 153A read with Section 143(3) in absence of any material being found during the course of search. By completely ignoring the settled law that no assessment U/s 153A read with Section 143(3) can be made without referring to any material found during the course of search. It is further submitted that no material whatsoever, which can be termed to be on incriminating nature and indicating any undisclosed income pertaining to relevant year were found during the course of search. Therefore, order of the Assessing Officer suffers from serious errors and which is also contrary to the settled law. These disallowances can be made in the regular assessment by the Assessing Officer. The time for scrutinizing the case as mentioned in the chart has already been expired as the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court in the case of Canara Housing Development Co. Vs DCIT dated 09/8/2014 which has been reconsidered by the Hon ble Delhi High Court in the case of CIT Vs Kabul Chawla 234 Taxman 300 (Delhi) wherein it has been held that in case of Canara Housing Development Co. Vs DCIT, incriminating documents were found during the course of search. Therefore, even the Hon ble Karnataka High Court decision is also in favour of the assessee. It is also a trite law that when there is two opinion on the issue by the Jurisdictional High Court as well as other High Court, the Jurisdictional High Court view will prevail on the case of assessee. He further relied on the decision of Hon ble ITAT, Jaipur Bench in the case of M/s Jadau Jewellers Vs. ACIT ITA No. 686/JP/2014 vide order dated 14/12/2015. 6.1 On merit also, it was submitted that the assessee was having sufficient fund of his own to make investment/give advances, which was duly appearing in the balance sheet in respect of assessment year under appeal. Thus when the assessee was having his own interest free fund then the natural presumption to be taken is that any advance/investment have been made out of own fund and not out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also undisputed fact that time limit for issue of notice U/s 143(2) in A.Y. 2004-05, 2005-06 and 2007-08 in case of Damodar Das Aarwal and for A.Y. 2004-05 and 2007-08 in the case of Nirmal Kumar Agarwal has already expired. The last date of issue of notice U/s 143(2) was on 31/8/2008 whereas search was carried ou 24/8/2009. The notices U/s 153A were issued on 15/1/2010 in all the years. Even for A.Y. 2007-08 in both the cases, no notice U/s 143(2) was issued on or before 31/8/2008. It is settled law when no assessment proceedings are abated on the date of search, no notice can be sent U/s 153A of the Act to the assessee in the case of no incriminating documents were found and seized during the course of search. Therefore, we have considered view that notice issued by the Assessing Officer U/s 153A for A.Y. 2004-05, 2005-06 and 2007-08 in the case of Damodar Das Agarwal and for A.Y. 2004-05 and 2007-08 in the case of Nirmal Kumar Agarwal are out of jurisdiction, accordingly we quash the order of the Assessing Officer and confirmed by the ld CIT(A). We do not find any reason to make disallowance of interest U/s 36 of the Act for A.Y. 2009-10 in the case of Damodar Das Agarwal a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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