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TMI Blog2018 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions of facts, law and identical grounds have been raised in the aforesaid appeals, the same are being disposed off by way of consolidated order to avoid repetition of discussion. 2. The appellant, M/s. ATS Infrastructure Ltd. (hereinafter referred to as the assessee ) by filing the present appeals, sought to set aside the impugned orders dated 26.08.2014 passed by Ld. CIT (Appeals), Meerut qua the assessment years 2002-03, 2003-04 and 2004-05 on the grounds inter alia that :- AY 2002-03 1. BECAUSE the Hon'ble CIT (Appeals) failed to appreciate that no incriminating document was found in search in respect of AY 2002-03 and therefore, no additions can be made by the Ld. AO following the ratio of judgment in All Cargo Logistics Limited vs. DCIT and other leading cases under section 153A read with section 143(3) of the Act. The Ld. AO had no jurisdiction to pass the order under section 153A read with section 143(3) of the Act. 2. BECAUSE the addition of ₹ 2,54,789/- on account of pre-paid portion of insurance is illegal and unjustified. The assessee has adopted the same method of accounting in all the earlier as well as subsequent assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in law and on ground taken and basis adopted the disallowance of ₹ 50,000/- under the head business promotion expenses is uncalled for and unjustified. The Hon'ble CIT (Appeals) has not fully appreciated the facts of the case and has confirmed the disallowance of ₹ 50,000/- made on conjectures and surmises. 4. BECAUSE on facts and in law and on grounds taken and basis adopted the addition of ₹ 59,850/- on account of amount charged to P L A/c in uncalled for and unjustified. The Ld. CIT (A) has failed to appreciate the facts and has confirmed the disallowance made on conjectures and surmises. The addition of 59,850/- deserves to be deleted in full. 5. BECAUSE notwithstanding ground 4 above, the Ld. CIT (A) should have allowed depreciation on the fixed assets. 6. BECAUSE the addition of ₹ 2,55,717/- on account of pre-paid portion of insurance is illegal and unjustified. The assessee has adopted the same method of accounting in all the earlier as well as subsequent assessment years and accordingly has charged the insurance paid in the year of payment. The Hon'ble CIT (Appeals) confirmed the addition without appreciating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee maintains the books of accounts on double entry system. The Ld. CIT (A) failed to understand the facts and law relating to unexplained investment under section 69. The addition is not maintainable under section 69 of the Act and the same deserves to be deleted in full. 5. BECAUSE the Ld. CIT (A) has wrongly held that the assessee is not entitled to revise the return and therefore, the assessee is not entitled to be assessed at the correct income in accordance with the provisions of the Act. The facts of the cases relied upon by the IT Department are distinguishable and therefore, the ratio of judgment in the cases of CIT v. Suraj Pal Singh (1991) 188 ITR 297; Kumar Jagdish Chandra Sinha vs. CIT (1996) 220 ITR 67 (SC); Indian Farms Fert. Co-operative Ltd. V. Commissioner of Income tax (2008) 170 TAXMAN 139 (Del) and Nelco (India) (P.) Ltd. vs. CIT (2005) 142 TAXMAN 380 (All.) is not applicable to the present case. 6. BECAUSE on facts and in law and on grounds taken and basis adopted, the assessee is entitled to claim deduction of entire interest on borrowed capital under section 36(1)(iii) of the Act amounting to ₹ 4,62,70,118/-. The assessee inad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,54,789/- on account of insurance paid during the year amounting to ₹ 5,09,162/- at various dates but prepaid portion of ₹ 2,54,789/- has not been accounted for; made addition of ₹ 50,965/- on account of addition in fixed assets during the year; and made addition of ₹ 8,000/- claimed on account of crane service for labour charges for keeping Genset on the roof for AY 2002-03 and assessed total income at ₹ 48,94,918/-. 3.1 In AY 2003-04, AO made addition of ₹ 9,50,000/- received by the assessee from the sister concerns by treating the same as deemed dividend u/s 2(22)(e) of the Act. AO also made addition of ₹ 11,50,128/- on account of travelling expenses being personal in nature;; made addition of ₹ 50,000/- on account of business promotion expenses; made addition of ₹ 59,850/- on account of expenses being capital in nature; made addition of ₹ 2,55,717/- on account of insurance paid during the year amounting to ₹ 5,53,593/- but prepaid portion of ₹ 2,55,717/- has not been accounted for; made addition of ₹ 4,17,950/- on account of least rent payable and assessed total income at ₹ 30,79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) and reply filed by the assessee to the special audit report, available in the paper book containing pages 1 to 75, for the AYs 2002-03 and 2003-04. Assessee also brought on record copy of the tax audit report u/s 44AB of the Act, available at pages 23 to 32 and pages 19 to 28A of the paper book for AYs 2002-03 and 2003-04 respectively. Special audit report and reply filed by the assessee go to prove that the entire assessment made u/s 153A/143 (3) for AYs 2002-03 2003-04 hinges upon special tax audit report and not on any incriminating material. 11. Identical issue has come up before the Hon ble jurisdictional High Court in the case cited as Kabul Chawla (supra) wherein all the earlier decisions delivered by the Hon ble High Courts have been considered and legal position decided by the Hon ble jurisdictional High Court is summarized for ready reference as under :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als concern AYs 2002-03, 2005- 06 and 2006-07. On the date of the search the said assessments already stood completed . Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 12. In view of the law laid down by Hon ble jurisdictional High Court in Kabul Chawla (supra) case, we are of the considered view that when no incriminating material has come on record during the search and seizure operation conducted at the premises of the assessee rather assessment has been based upon special audit report whereas such facts were already brought on record by the assessee by filing original return of income along with computation, the assessment framed u/s 153A read with section 143 (3) is not sustainable in the eyes of law, hence the assessments for AYs 2002-03 2003-04 are ordered to be quashed. ASSESSMENT YEARS 2004-05 13. So far as question of assessment order framed u/s 153A/143(3) by the AO in AY 2004-05 is concerned, admittedly, the assessee has not filed the return before the due date or before the date mentioned in the notice. Admittedly, the assessee has not filed the return u/s 153A be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 153A has to be filed, which incidentally gives him an opportunity to make good omission, if any. By this understanding the appellant should have claimed deduction under section 36(1)(iii) in its return filed in response to notice under section 153A. Since this was not done the charge leveled by the assessing officer that revision of return is an afterthought seems correct. On the basis of above facts I have come to a conclusion that the assessing officer has rightly rejected the revised return filed by the appellant. Since the revised return itself is considered as nonest any claim made there in has no merit. Therefore detailed submission made by the AR of the appellant on the admissibility of claim of interest is immaterial and irrelevant. The ground of appeal No.4 is accordingly dismissed. 14. In view of the admitted facts, discussion made in the preceding para 13 and the fact that ld. AR for the assessee fairly conceded that impugned order passed by the ld. CIT (A) needs no interference, the appeal filed by the assessee is hereby dismissed. 15. Resultantly, appeals for the AYs 2002-03 2003-04 filed by the assessee are allowed and appeal for AY 2004-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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