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TMI Blog2022 (4) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... come - We find that in case of property which has been let out for part of the year, the assessee would be entitled for vacancy allowance if the property remains vacant for part of the year. It is undisputed position that the property has remained unoccupied for part of the year. Therefore, the assessee is entitled for vacancy allowance and this addition has no legs to stand. By deleting the same, we allow the ground of appeal. Legal grounds are concerned, we find that the assessee was subjected to search action on 11.05.2012. The assessee had already filed return of income on 14.03.2012. However, the time limit to issue notice u/s 143(2) had not expired and Ld. AO could have issued said notice by 30.09.2012. Therefore, it is not a case of concluded assessment. Rather Ld. AO was well within his right to make any addition after examination of assessee s books of account. The legal proposition laid down by Hon ble Delhi High Court in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] also supports this view. No infirmity has been shown to us in the jurisdiction acquired by Ld. AO. - Decided in favour of assessee. - ITA Nos.1682 to 1688/Chny/2019 - - - Dated:- 5-4-2022 - Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in consequence to the disallowance of the claim of interest payments in the computation of income from house property in para 8.7 para 8.8 of the impugned order without assigning proper reasons and justification. 7. The CIT(Appeals) went wrong in recording the findings in paras 8.3 to 8.6 of the impugned order with reference to the interpretation of the provisions in section 24(b) of the Act without assigning proper reasons and justification. 8. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 9. The Appellant craves leave to file additional grounds/arguments at the time of hearing. As evident, the assessee challenges the additions confirmed by Ld. CIT(A) on legal grounds as well as on merits. Arguments Before us 2. The Ld. AR, at the outset, submitted that in the absence of any incriminating material as found during the course of search proceedings, the additions could not have been made as per the decision of Hon ble Delhi High Court in Pr. CIT V/s Meeta Gutgutia (82 Taxmann.com 287 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings u/s 153A has to be confined only to material unearthed during search. Since no material was found, no such additions could be made u/s 153A. To support the same, reliance was placed on various judicial pronouncements notable amongst the same was the decision of Hon ble High Court of Delhi in CIT V/s Kabul Chawla (380 ITR 573) as well as the decision of Hon ble High Court of Bombay in CIT V/s Continental Warehousing (Nhavasheva) Ltd. (374 ITR 645) and also the decision of special bench of Mumbai Tribunal in All Cargo Global Logistics Ltd. V/d DCIT (137 ITD 287). 6.2 However, Ld. CIT(A), considering the statutory provisions of Sec.153A, held that Ld. AO was duty bound to issue notice for preceding 6 years and assess total income. The notice u/s 153A was mandatory and the assessee was bound to furnish return of income even if no books of accounts / assets / documents were seized or no statement was made by the assessee during the course of search. Reliance was placed on the decision of Hon ble Kerala High Court in the case of E.N.Gopakumar V/s CIT (75 Taxmann.com 215; 03.10.2016) which was not considered in the decision of Meeta Gutgutia (supra). Further, this issue had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax. iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 153A, was competent to issue notice under the said provision and require the assessee firm to furnish the returns as provided there-under. It was further held that neither under section 132 nor under section 153A, is the phraseology incriminating used by the Parliament. Therefore, any material which was unearthed during search operations or any statement made during the course of search by the assessee is a valuable piece of evidence in order to invoke the provisions of Section 153A of the Income Tax Act, 1961. In the present case, no such admission is shown to have been made by the assessee. The revenue could not place any incriminating material before us. Therefore, these case laws are distinguishable on facts. 11. The second decision as referred by Ld. CIT-DR is the Special Leave Petition (SLP) filed by the revenue and accepted by Hon ble Supreme Court in the case of Pr. CIT V/s Gahoi Foods Pvt. Ltd. (117 Taxmann.com 118). We find that SLP has been filed by the revenue against the decision of Hon ble High Court of Madhya Pradesh as reported at 117 Taxmann.com 117. In this case, Hon ble Court chose to follow the decision of Hon ble Delhi High Court in CIT V/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading to undisclosed income was seized. 14. Another decision referred to by Ld. DR is the decision of Chennai Tribunal in ACIT V/s KI International Ltd. (ITA Nos.897 898/Mds/2017 dated 24.08.2017). After perusal of this decision, we find that in that case the assessee was searched on 18.12.2012 and another search action was carried out by revenue in the case of alleged accommodation entry provider Shri Praveen Kumar Jain on 01.10.2013 wherein in statement u/s 132(4), Shri Praveen Kumar Jain admitted to have indulged in providing accommodation entry and explained the modus operandi of providing such entries. The assessee did not furnish the specific details of the allotment of shares. Going by the factual matrix, the bench upheld the validity of assessment proceedings u/s 143(3) r.w.s. 153A 153C of the Act. However, none of the case laws as enumerated by us in the preceding paragraphs has been considered rather the adjudication is purely based on factual matrix of the case. Therefore, the ratio of this decision could not be applied to the facts of the present case before us. 15. The decision of Chennai Tribunal in ACIT V/s Leela Distilleries (P) Ltd. (ITA Nos.2714-16/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for ₹ 8.74 under the head Income from House Property . Upon perusal of documents, it was noted that the loan was given by Indian Overseas Bank (IOB) against future rental rather than for construction of building. Accordingly, the interest was disallowed. The property was purchased by the assessee jointly with her mother in the year 2006. The loan obtained by the assessee in that year was partly satisfied and substituted by fresh loans. The Ld. AO noted that new loan was taken neither against construction not purchase of property. The balance amount after settling the old loan was used by the assessee in the business. Therefore, the claim was denied. The Ld. CIT(A) held that interest on subsequent loan could be allowed provided the same was taken to repay earlier loans and deduction would be allowable only to the extent of interest on earlier loan used for acquiring the property and not on the unpaid interest on earlier loans. It was noted that ₹ 45 Lacs out of new loan was utilized to discharge the pending loan of ₹ 45.09 Lacs. Therefore, the interest on ₹ 45 Lacs would be allowable u/s 24(b). The Ld. AO was directed to rework the allowable interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made since the assessee advanced interest free loans. Upon further appeal, Ld. CIT(A) rendered its decision on similar lines with respect to first two issues whereas the addition of ₹ 0.40 Lacs was not pressed by the assessee. 22. Facts being pari-materia the same as in AY 2011-12, we confirm the stand of Ld. CIT(A) qua interest on borrowed capital. The three additions of notional rent stand deleted. The addition of 0.40 Lacs stands deleted since Ld. AO has merely computed notional interest income on interest free loans without reference to any statutory provisions. The appeal stands partly allowed. Assessee s Appeal, ITA No.1688/Chny/2019, AY 2013-14 23. In this year, the assessment has been framed u/s 143(3). The subject matter of appeal is disallowance of interest on borrowed capital, notional rental income on three properties and addition of notional interest for ₹ 2.40 Lacs. Upon further appeal, Ld. CIT(A) rendered its decision on similar lines as in AY 2012-13. Aggrieved, the assessee is in further appeal before us. 24. Facts being pari-materia the same as in AY 2012-13, we confirm the stand of Ld. CIT(A) qua interest on borrowed capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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