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TMI Blog2019 (2) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... tt.Years 2007-08, 2008-09, 2009-10 and 2010-11 and the assessee, viz. Shri Rajnibhai Jivraj Desai is in cross-appeal against the order of the ld.CIT(A) for the Asstt.Year 2009-10. 4. In the third set of appeals, the assessee i.e. Shri Rameshbhai J. Desai and Revenue are in cross appeal against the order of the ld.CIT(A) dated 26.12.2016 for the Asstt.Year 2007-08. While remaining one appeal is by Smt.Alkaben R. Desai against the order of the ld.CIT(A) dated 28.11.2016 for the Asstt.Year 2009-10. 5. Since all these appeals are inter-related and raise more or less common issue, we proceed to dispose all of them by this common order for the sake of convenience. 6. To begin with, we take first set of assessee's appeals in the case of Shri Rajnibhai Jivraj Desai for the Asstt.Years 2007-08 to 2010-11. Common ground raised in the first three grounds of appeals is that the ld.CIT(A) has erred in deleting disallowance under section 40A(3) of the Income Tax Act, 1961 made by the AO in assessment framed under section 143(3) r.w.s. 153A of the Act. 7. In the Asstt.Years 2008-09, 2009-10 second common issue raised by the Revenue is against deletion of addition made under section 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the issue in details and considering the judgment of Hon'ble jurisdictional High Court in the case of CIT Vs. Saumya Construction, Tax Appeal No.24 of 2016 dated 14.3.2016 deleted the impugned additions. Aggrieved Revenue is now in appeal before the Tribunal. 13. Assessee in the cross-objection in IT(SS)A.No.105/Ahd/2017 for the Asstt.Year 2009-10 also challenged validity of proceedings under section 153A of the Act and addition of Rs. 46,49,277/- made towards bad debts/business loss which was confirmed by the ld.CIT(A). 14. Briefly stated facts are that during the assessment proceedings the AO noticed that the assessee has claimed bad debts amounting to Rs. 46,49,227/- which have been written off but no details were provided for verification before the AO. To the query by the AO, it was explained by the assessee that the said bad debts represented towards expenses incurred during the course of business, which remained unrecoverable from the vendors since long, and therefore, the same written off as bad debts. The AO however disallowed the same on the ground of non-availability of relevant records. The addition was confirmed by the ld.CIT(A). 15. Similar challenge was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(2) appears to have not been issued upon the assessee on the original return. In this background, let us first take up proposition laid down by Hon'ble Courts on scope of section 153A of the Income Tax Act,1961. The Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra) have examined scope of section 153A. After a detailed analysis Hon'ble Court has summarized legal proposition emerging out for application of section 153A. Such proposition reads 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 to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady stood completed and no incriminating material was unearthed during the search, therefore, no addition should have been made to the income of the assessee. 8. It is pertinent to take note the finding recorded by the Hon'ble jurisdictional High Court in the case of Saumaya Construction Ltd. (supra) in para 18 and 19 of the judgments. It reads as under: "18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs. 11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .AO has not made reference to any seized material found during the course of search while considering this issue. Therefore, disallowance under section 10(38) of the Act is beyond the scope of section 153A and not sustainable. We allow this ground and delete impugned disallowance. 18. Considering the above decisions of the ITAT, Ahmedabad Bench and the judicial findings, we do not find any infirmity in this finding of the ld.CIT(A), and therefore, we confirm his orders on these issues and reject all the grounds of appeals of the Revenue. 19. So far as appeal of the assessee is concerned qua addition of bad debts/business loss, we allow this ground for the reasons recorded hereinabove paragraphs. 20. Now we take second set of appeals in the case of Jivraj V. Desai in IT(SSA)No.98 to 101 and 103/Ahd/2017 for the Asstt.Years 2007-08 to 2010-1 and 2012-13. Common ground raised in all these appeals are that assessment framed under section 143(3) r.w.s. 153A is bad in law, and therefore disallowance of interest expenses are wholly illegal and unlawful. In the Asstt.Year 2008-09, the assessee has also raised disallowance of carry forward loss of 34,38,408/- and against addition of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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