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TMI Blog2019 (8) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... ort interest income under the head Income from other sources either on the cash or mercantile basis which is regularly employed by the assessee. Where the assessee contends that it has offered the interest income on maturity of fixed deposits and on receipt of income tax refund, basically, the assessee has followed the cash basis of accounting which is permissible under law. In the scenario, where it is found on examination that the interest income has not been reported to tax as so claimed by the assessee even in the subsequent assessment year, the Assessing officer will be at liberty to take action as per law to bring such interest income to tax. Under the present proceedings which has been initiated u/s 153A, given that the original proceedings were not abated as on the date of search and in absence of any incriminating material found during the course of search, no addition can be made in the hands of the assessee and the same is hereby directed to be deleted. - Decided in favour of assessee. - ITA. No. 674 & 675/JP/2019 - - - Dated:- 5-8-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Rajendra Jain (CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee furnished his return of income on 13.08.2016 declaring total income of ₹ 15,20,610/- and agricultural the income of ₹ 2,53,942/- as declared earlier in the return filed u/s 139. The assessment u/s 153A was completed at total income of ₹ 18,05,903/- wherein the Assessing Officer brought to tax interest income of ₹ 2,14,211/- and has also disallowed various expenses amounting to ₹ 71,085/-. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) has deleted the disallowance of ₹ 71,085/-. However, interest income of ₹ 2,14,211/- on account of undisclosed interest has been confirmed against the said finding. The assessee is now in appeal before us. 4. During the course of hearing, the ld. AR submitted that no incriminating documents were found during the course of search in relation to interest income and in absence of any incriminating documents, no additions can be made while completing the assessment u/s 153A. It was submitted that time limit for issue of notice u/s 143(2) has expired well before the date of search and the assessment in respect of return originally filed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under appeal, he had earned interest income of ₹ 2,14,211/- which were omitted from being disclosed in the return of income filed u/s 139(1) or u/s 153A. In appeal also, the fact of earning such income is not disputed, The addition of interest income are contested only on the ground that it is not based on incriminating material found during search and therefore outside the scope of assessment u/s 153A. 7.1.1. Undisputedly, as on the date of search, 02.07.2015, notice u/s 143(2) could not have been issued for the A.Y 2010- 11, and, in view of the various judicial pronouncements on the scope of assessment u/s 153A, including the decision of the Hon. Rajasthan High Court in case of Jai Steels, u/s 153A the A.O would not have the powers as in original assessment u/s 143(3) and could only make additions to income based only on incriminating material found during search. However, the question of the scope of proceedings u/s 153A, in a case where, on the date of the search, action u/s 148 (though not u/s 143(3)), could have been taken as per law, but cannot be taken only for the reason that search has been conducted and the only section under which assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material found during the course of search. Admittedly, in the instant case, there is no incriminating material found during the course of search and it is only during the reassessment proceedings that the Assessing officer basis review of Form 26AS has come to know that the assessee has earned interest income from bank. Therefore, no addition can be made in the hands of the asseesee in the impugned assessment year and we thus agree with the following findings of the ld CIT(A) where she stated as follows: Undisputedly, as on the date of search, 02.07.2015, notice u/s 143(2) could not have been issued for the A.Y 2010-11, and, in view of the various judicial pronouncements on the scope of assessment u/s 153A, including the decision of the Hon. Rajasthan High Court in case of Jai Steels, u/s 153A the A.O would not have the powers as in original assessment u/s 143(3) and could only make additions to income based only on incriminating material found during search. 8. At the same time, it may be noted that the Assessing officer is not without recourse to bring this interest income to tax. The reason for the same is that there is no dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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