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TMI Blog2014 (10) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... ous general expenses. For this, assessee has raised following ground No.2:- "2. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the disallowance of Rs. 8,63,229/- made at the ad-hoc rate of 5% of the total expenses claimed under different heads neglecting to take into consideration the fact that the accounts of the appellant company are fully audited." 3. Briefly stated facts are that a search u/s 132 of the Act was conducted on the business and residential premises of the assessee and its Director on 04-10-2007. During the course of assessment proceedings, the AO made disallowance of expenses @5% of the following expenses:- Expenditure Amount of disallowance 1) Generator expenses 1,36,89,672/- 6,83,483/- 2) Loading Unloading charges 15,54,514/- 77,725/- 3) Repair & Maintenance 8,19,090/- 40,954/- 4) Laboratory expenses 1,44,613/- 7,230/- 5) Packing expenses 10,18,878/- 50,943/- 6) Travelling & conveyance 57,877/- 2,894/- 8,63,229/- The AO noted that the assessee failed to file details and hence, he estimated the disallowance @ 5% of the above disallowance. Aggrieved, assessee preferred appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t April, 1988. Such being the position, the deletion of the amount paid by the Employees' contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal." Once this position, the issue is squarely covered in favour of assessee by the jurisdictional High Court in the case of M/s Vijay Shree Limited (supra). As the issue is covered, we allow this common issue in these three appeals of assessee. Coming to Revenue's appeals in IT(SS)A No.66-69/Kol/2011 (AYs 02-03 to 05-06) 7. The first common issue in IT(SS)A No. 66 and 67/Kol/2011 is against the order of CIT(A) deleting the addition made by Assessing Officer on account of deemed dividend. For this, Revenue has raised following ground nos. 3 and 4 in IT(SS)A 66/Kol/2011 and ground No. 3 in IT(SS)A No.67/Kol/2011:- IT(SS)A No.66/Kol/2011 "3) That the Ld. CIT(A), Central-I, Kolkata is erred in deleting the addition on account of deemed dividend of Rs. 8,44,353/- relying on the case law of M/s. LMJ International 119 TTJ(Kol) 214." 4) That the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. The effect is that completed assessments do not abate. Since,, addition on account of deemed dividend doesn't emanate from incriminating material found during the course of search, hence the same cannot be the subject matter of consideration under the proceeding under section 153A. Hence I must follow the decision of LMJ International vs DCIT (2008) 119 TTJ (Kol) 214 to maintain the judicial discipline, where it has been held that where nothing incriminating is found in the course of search proceeding relating to any assessment years, the completed assessment for such years cannot be disturbed Accordingly the disallowance of Rs. 4575/- and addition of Rs. 24,93,333/- (Rs. 16,48,950/- + Rs. 8,44,353) on account of deemed dividend made by the A.O is deleted. Accordingly the ground no 2 to 5 taken by the appellant is allowed." We find that this issue is now squarely covered in favour of assessee and against Revenue by the decision of Hon'ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT reported in (2013) 88 DTR (Raj) 1, wherein it is held as under:- "The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty." (emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. Income Tax Officer : (1981) 131 ITR 597 that "it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded upto the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese (supra). Consequently, it is held that it is not open fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.O. C of Rs. 66,200/- relying on the case law of M/s. LMJ International 119 TTJ (Kol) 214." IT(SS)A No69/Kol/2011 (A.Y.05-06) "3) That the Ld. CIT(A), Central-I, Kolkata is erred in deleting the disallowance of expenses of Rs. 7,29,769/- relying on the case law of M/s. LMJ International 119 TTJ (Kol) 214. 4) That the Ld. CIT(A), Central-I, Kolkata is erred in deleting the disallowance of fees paid to R.O.C of Rs. 66,200/- relying on the case law of m/s LMJ International 119 TTJ (Kol) 214." 11. We have heard rival submissions and gone through facts and circumstances of the case. Briefly stated facts are that there was a search and seizure operation carried out on the business and residential premises of the assessee on 04-10-2007 along with the Memani Group of cases. Accordingly, notice u/s 153A of the Act was issued and in response to the same, assessee filed return of income. The AO while framing the assessment made additions of above noted expenses. The contention of the assessee was that this has already been considered in the original assessment framed u/s 143(3) of the Act and no new facts came to the knowledge of the revenue or any incriminating material was found dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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