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TMI Blog2024 (6) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... bjections of the assessee which seeks to put question mark over the legitimacy of additions/disallowances made under section 153A of the Act, we deem it expedient to dispose of the aforesaid preliminary ground at the outset as it strikes the root of the matter. 4. Briefly stated, a search and seizure operation under section 132 of the Income Tax Act, 1961 (The Act) was carried out at the premises of Urbtech group of cases including the captioned assessee herein on 10.10.2013. Consequently, a notice under section 153A of the Act was issued seeking to assess the income of the assessee under the provisions of section 153A of the Act. The assessment was carried out under section 153A read with Section 143(3) of the Act and certain additions / disallowances were made. The action of the AO was confirmed by the CIT(A) in the first appeal. The assessee has knocked the door of the Tribunal against the impugned first appellate order in the present appeal. 5. When the matter was called for hearing, the learned Counsel for the assessee, at the outset, submitted that the captioned appeal stood concluded / completed at the time of search and consequently, the assessment in the captioned appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with reference to impugned additions. The learned Counsel thus emphasized that appraisal report of a third party obtained in a post search inquiry cannot be construed as incriminating material found in the course of search in respect of the instant assessee to enable the AO to make additions / disallowances in the search assessment under section 153A of the Act. The appraisal report of third party prepared in an altogether separate proceedings cannot be construed any incriminating material per se. The learned Counsel thus asserted that in the absence of any incriminating material emanating from search in the case of assessee, no adjustment to the returned income is permissible under the umbrella of section 153A of the Act in such unabated assessment. 5.2 The learned Counsel reiterated that the assessment for A.Y. 2009-10 in question stood concluded by operation of law and was not pending for assessment at the time of search. Therefore, such assessment concluded prior to search survives and do not get abated. The learned Counsel submitted that in these facts, it is not permissible for the AO to invoke authority vested under section 153A of the Act to indulge in making routine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Investigation Team of that searched person do not have any nexus or live link whatsoever with any material of incriminating nature found in the course of search at the premises of the assessee which is the genesis of proceedings under section 153A of the Act as held in Abhisar Builwell (supra). 7.2 The appeal of the assessee thus hinges around one pertinent legal point as to whether, while making assessment under section 153A, the Revenue is entitled to interfere with unabated assessment which stood concluded either under section 143(1) or under section 143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search in the case of assessee. 8. On facts, it is noticed that the assessee had issued shares at premium to subscriber namely, M/s. Ordinary Financial Services Pvt. Ltd. and received total consideration of Rs.3,30,00,000/-. Likewise shares issued to other subscriber namely, M/s. Elecon Securities Pvt. Ltd. fetched Rs.1,70,00,000/- to the assessee. The AO alleged that these two entities are controlled by entry provider namely, Shri Tarun Goyal who has admitted such facts on oath in the course of search carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case and in law, no addition on the basis of the bills of M/s Shubam Enterprises bearing dates 01.05.2011, 02.06.2011, 02.07.2011, 03.08.2011, 02.09.2011, 02.10.2011, 02.11.2011, 04.11.2011 (covering total amount of Rs.23839725/-) was justified for AY 2013-14. 4. That in the light of the observations recorded in the assessment order, at the most the expenses claimed on the basis of the bills of M/s Shubam Enterprises (Rs.23839725/-) and M/s Roayal Sales Corporation (Rs.2428754/-) could had been disallowed. In any case, making addition u/s 69C of the I.T. Act, 1961 is illegal. 5. That on the facts of the case and in law, the learned CIT(Appeals)-3 Gurgaon has erred in confirming the addition of Rs 26268479/- with the remark "Accordingly the addition made by the AO is confirmed u/s. 69C of the Act as well as u/s. 68 of the Act." 6. That on the facts of the case and in law, the learned CIT(Appeals) -3 Gurgaon has erred in confirming the addition while taking shelter of the provisions of section 68 of the I.T. Act, 1961, without issuing the mandatory Show Cause Notice to the appellant assessee asking it to explain as to why the provisions of section 68 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er paragraph 6.8 of the first appellate order, the CIT(A) invoked co-terminus power vested with him and observed that the additions made by the Assessing Officer are also covered by the provisions of Section 68 of the Act in tandem with Section 69C of the Act. 15. Further aggrieved, the assessee preferred appeal before the Tribunal. The assessee has raised multiple grounds as noted above raising factual and legal contentions. 16. The ld. counsel for the assessee submitted at the outset that AO as well as CIT(A) have proceeded on misconception of facts and law. Apropos the addition towards bogus purchases aggregating to Rs.2,62,68,479/-, the ld. counsel pointed out that the payments have been made through banking channel towards such purchases to the suppliers. The supplies from M/s. Shubham Enterprises of Rodi & amp; river sand went into the construction of the building and capitalized. Likewise supplies of furniture & amp; fixtures and DG-sets from M/s. Raoyal Sales Corporation are again capital in nature and can also be physically verified at the site. The ld. counsel pointed out that both the expenditures are capital expenditure in nature and a balancesheet item and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order and also the first appellate order. The material referred to and relied upon in the course of hearing has been taken into account in terms of Rule 18(6) of the Income Tax (Appellate Tribunal) Rules 1963. 19. The disallowance towards alleged bogus purchases aggregating to Rs.2,62,68,479/- is subject matter of controversy. We take notice of the fact that the expenditure incurred in the instant case are capital expenditure and therefore, no addition as proposed could be made to the taxable income towards such capital expenditure. Secondly, as pointed out on behalf of the assessee and corroborated by the copy of invoices and the ledger account, it is evident that the impugned purchases relate to financial year other than F.Y. 2011-12 relevant to A.Y. 2012-13 in question. Therefore, disallowance if any is not permissible in the A.Y. 2013-14 under adjudication. 20. We now advert to the legal ground raised on behalf of the assessee towards inapplicability of Section 69C as well as Section 68 of the Act in the facts of the case. The power of the CIT(A) to modify the assessment on the touchstone of Section 68 along with Section 69C has also been called into question. A bare re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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