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TMI Blog2022 (8) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... me were claimed to have been provided by the assessee. It has also not been denied that the draft financials were of the assessee company only. In the present case, even if the draft financials were provided by the assessee to the searched entity, the said documents continued to be belonged to the assessee, as the services of the searched entity were sought only for the purpose of finalising the accounts and if at all anything can be said to be belonging to the searched entity, it can only be the final outcome of such exercise, for which searched entity s services were availed. Analogically can be drawn with the situation where books / vouchers / bills etc. are provided to a consultant for preparation of accounts. In such a situation, the documents / books as provided and available with the consultant will always belong to the taxpayer. No infirmity in the impugned order passed by the learned CIT(A) on this issue. Accordingly, grounds raised in assessee s appeal are dismissed. Disallowance u/s 14A - Appellant prays that the disallowance be restricted to the exempt income earned by it - assessee suo moto made a disallowance under section 14A of the Act over and above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further erred in not appreciating the fact that the Satisfaction Note for issuing Notice under section 153C of the Act did not mention the assessment year for which it belongs. 1.3 The learned CIT(A) erred in not appreciating the fact that the seized material referred in the Satisfaction Note was not belonged to the Appellant. 1.4 The learned CIT(A) further erred in not appreciating the fact that the Satisfaction Note was not displaying any reason or basis concluding that the seized material was belonged to the Appellant. 1.5 The appellant prays that the order passed under section 143(3) r/w section 153C of the Act be held as bad in law or void ab initio and as such was liable to be quashed. Without prejudice to the above, 2.1. On the facts and in circumstances of the case and in law, the Learned CIT(A) erred in no appreciating the fact that there was no incriminating material being found during the course of search based on which additions/disallowances were made under the assessment u/s. 143(3) r.w.s. 153C of the Act on the alleged ground that the assessment u/s. 143(3) of the Act was pending and was abated due to initiation of assessment u/s. 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Due to initiation of assessment under section 153C of the Act, assessment under section 143(3) was abated. During the assessment proceedings, it was observed that assessee had offered income under head capital gain at Rs. 14,31,67,447 on sale of shares against which expenses were claimed at Rs. 1,72,65,457. In the absence of specific reply justifying allowability of the aforesaid expenditure under the head capital gains, expenditure claimed by the assessee were disallowed and accordingly, added to the taxable capital gains in the hands of the assessee. 6. In appeal before the learned CIT(A), assessee raised additional ground of appeal challenging the initiation of assessment under section 153C of the Act. Accordingly, remand report from the Assessing Officer was sought regarding the additional grounds raised by the assessee. In the remand report, Assessing Officer, inter-alia, submitted that assessee neither filed any objection after issuance of notice under section 153C nor filed any objection against the proceedings under section 153C, during the course of assessment proceedings. The Assessing Officer further submitted that before the issuance of notice under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. As is evident, no objection was taken by the assessee against the finalisation of proceedings under section 153C of the Act during the course of assessment proceedings. It is also pertinent to note that as the scrutiny proceedings pursuant to notice issued under section 143(2) of the Act were pending, the same were abated after initiation of proceedings under section 153C of the Act. The assessee in its appeal before the learned CIT(A), for the first time, challenged the initiation of proceedings under section 153C of the Act, which was, inter alia, dismissed vide impugned order. In appeal before us, the learned A.R. submitted that the books of account / documents, which were found in possession of M/s. Lexcorp Advisory Services Pvt. Ltd., were in draft form, which were provided by the assessee to the said entity for the purpose of finalisation of accounts after perusal of the draft, therefore, the said documents cannot be said to be belong to the assessee for the purpose of section 153C of the Act. It is also the submissions of the learned A.R. that since these documents were provided to the said entity, which was rendering consultancy services to the assessee, the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of shareholders and directors, during the course of search, cannot be held to be belonging to the taxpayer company and such photocopy shall belong only to the shareholder and director in whose possession the same were found, despite the fact that such documents were supplied by the taxpayer company. From careful perusal of the aforesaid decisions, as relied upon by the learned A.R., we find that in both the cases, the Hon ble Courts were dealing with a situation wherein though the original documents were in the possession of the taxpayer, the photocopy of the same was found in possession of the searched person and on the basis of such photocopy of the documents, proceedings under section 153C of the Act were initiated in case of the taxpayer. We are of the view that both the decisions cited by the learned A.R., during the course of hearing, are factually distinguishable from the present case. As in the present case, the documents which were found in possession of the Lexcorp Advisory Services Pvt. Ltd. (searched entity) were the draft financials provided by the assessee to the said entity for the purpose of finalisation of its accounts after perusing the same. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer under section 14A of the Act nor this issue was raised in appeal before the learned CIT(A). It was further submitted that no computation has been provided by the assessee as to how suo moto disallowance under section 14A of the Act was offered by the assessee. 13. We have considered the rival submissions and perused the material available on record. From the perusal of the financials, we find that for the year under consideration, the assessee has earned dividend income of Rs.26,81,157. Further, the assessee while filing its return of income suo moto disallowed Rs.1,72,65,457, under section 14A of the Act. However, the Assessing Officer did not make any further disallowance and return of income on this aspect was accepted. Recently, it has been held by various Hon ble Courts that disallowance under section 14A has to be restricted to the dividend income earned. Accordingly, the assessee has made a fresh claim before us. We find that Hon'ble Supreme Court in Goetz India Ltd. v/s CIT, [2006] 284 ITR 323 and Hon'ble Jurisdictional High Court in CIT v/s Pruthvi Brokers and Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom.) has held that the appellate authority can ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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