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TMI Blog2024 (9) TMI 1654X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai failed to appreciate that in any event the addition originally made by the Assessing officer to the tune of Rs.4,00,000/- could not be assessed in the hands of the appellant and further ought to have appreciated that the disputed sum was already offered in the hands of the individual partners in the Returns of income filed by them for the Assessment year under consideration. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the return of income filed in response to the notice issued u/s 153A of the Act should be construed as implied retraction to the statement recorded at the time of search and further ought to have appreciated that the presumption of non retraction till date was wholly unjustified especially in view of its contention before both the lower authorities. 14. The CIT (Appeals) - 20, Chennai failed to appreciate that there was no independent examination carried out by the Revenue despite the availability of entire documents forming part of the search records and the sole reliance on the statement recorded in the absence of any corroborative evidence should be reckoned as bad in law. 15. The CIT (Appeals) - 20, Chennai erred in partly sustaining the total addition of Rs.29,53,685/- on the presumption of salary payable as bogus without assigning proper reasons and justification. 16. The CIT (Appeals) - 20, Chennai failed to appreciate that the salary payable was actually incurred by the Appellant in the normal course of business and the disallowance of such expenses as not genuine was wholly unjustified and not sustainable both on facts and in law. 17. The CIT (Appeals) - 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity granted before passing the impugned order and search assessment order and further ought to have appreciated that any order passed in violation to the Principles of Natural Justice should be reckoned as nullity in law. As is evident, the issues that fall for our consideration are addition arising out of search proceedings in the case of the assessee. 1.3 The Ld. AR advanced arguments and referred to various documents as placed on record. The Ld. CIT-DR also advanced arguments and supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 2.1 The assessee being resident firm filed return of income u/s 139(1). The assessee was subjected to search action u/s 132 on 28-10-2020. Accordingly, an assessment was framed u/s 143(3) r.w.s. 153A on 04- 05-2022 making certain additions in the hands of the assessee. The issues that form subject matter of this year are disallowance of wages payable for Rs.62.75 Lacs and disallowance of salaries payable for Rs.14.69 Lacs. Post search-proceedings, notice u/s 153A was issued to the assessee on 30-04-2021. The assessee filed r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , entries of payments were made in FY 2018-19. On these facts, Ld. AO alleged that the same was done so as to suppress the profit. Similar practice was followed for booking salaries payable. The wages payable for this year was Rs.391.07 Lacs whereas salaries payable was for Rs.29.53 Lacs. The Ld. AO proceeded to make appropriate disallowance against the same. 2.4 The assessee refuted the allegation of Ld. AO on the strength of ledger extracts and submitted that wages paid for subsequent years was inadvertently provided in the relevant previous year. The payment made in subsequent years was not claimed as expenditure but reversed against the provisions made in previous year. While submitting the return in response to notice u/s 153A, the assessee stated to have not considered the above provisions. Regarding salary, it was submitted that it was year-end provision which was subsequently paid. In other words, it was submitted that the amount of Rs.391.07 Lacs was already disallowed in the form of reduction in the claim of wages in the Profit & Loss account filed in response to notice issued u/s 153A. The provision of salary for Rs.29.53 Lacs was stated to be rightly claimed since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount recorded was bogus, the question of payment of such bogus salary in subsequent year would not arise. Therefore, the addition of Rs.14.69 Lacs was sustained. With respect to balance provision of Rs.14.84 Lacs as stated to be reversed in AY 2016-17, the AO was directed to verify the claim and delete the addition to that extent, if the claim was found to be true. Aggrieved, the assessee is in further appeal before us. Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01-04-2016, the wages payable are for Rs.62.75 Lacs which have fully been paid by the assessee by 30- 04-2016. The assessee has made provision of wages payable for AY 2017-18 for Rs.391.07 Lacs which, as per the statements made during the course of search proceedings, are booked artificially to suppress the profit of this year. The assessee has reversed / not considered this provision while filing the return of income u/s 153A and it has already offered additional income to that extent. The Ld. AO has already concurred with this fact. Another finding of Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;19,07,00,923 11,58,49,606 30,79,08,589 36,16,07,280 67,59,66,220 It could be seen that the assessee has reversed provision of wages payable for Rs.62.75 Lacs in FY 2015-16 and claimed the same on actual payment basis in FY 2016-17. The same is very much clear from the above reconciliation. Since the provision as wrongly claimed in return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount of Rs.62.75 Lacs would be allowed as deduction to the assessee during AY 2017-18. We order so. 6. Similarly, in respect of salaries payable, it could be seen that the assessee has reversed provision of Salaries payable for Rs.14.84 Lacs during FY 2015-16 and claimed deduction of the same on actual payment basis. Therefore, the disallowance, to that extent, could not be upheld. The balance provision of Rs.14.69 Lacs has been made on 31- 03-2017. The aggregate provision as on 31-03-2017 was Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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