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08-11-2019, Bommana Rajkumar, Section 153C, 139, 147, Tribunal Visakhapatnam

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3 days 6 hours ago #11371 by amit
Section - 153C, 139, 147, 148, 149, 151, 153
Order Date - 08-11-2019
Favouring - Assessee
Court - Tribunal Visakhapatnam
Appellant - Bommana Rajkumar
Respondent - ACIT
Justice - V. DURGA RAO JM & D.S. SUNDER SINGH AM
Citation - 1119Taxpundit106
Appeal No. - I.T.A.No.546-548/Viz/2018
Asstt. Year - 2012-13 to 2014-15

Order

PER : D.S.Sunder Singh

These appeals are filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-3, Visakhapatnam in ITA.No.29-31/2016-17/CIT-(A)-3/VSP/2018-19 dated 27.06.2018 for the Assessment Year (A.Y.) 2012-13 to 2014-15. For the sake of convenience, these appeals are clubbed, heard together and disposed of by a common order as under :

I.T.A. No.546/Viz/2018, A.Y.2012-13

2. The assessee filed originally, seven grounds in this appeal, which are lengthy and argumentative, therefore, later on, the assessee filed the revised grounds of appeal vide petition dated 18.03.2019 during the pendency of appeal and requested to admit the revised grounds for adjudication. After hearing both the sides, we admit the revised grounds for adjudication.

3. Ground No.2 in the revised grounds is related to the validity of addition made by the Assessing Officer (AO) in the proceedings u/s 153C of the Income Tax Act, 1961 (in short ‘Act’) without having the incriminating material. Ground No 3 is related to the addition of Rs.7,36,053/- towards the rent paid for business premises. Both Ground 2 &3 are interdependent, hence we take up these grounds first for adjudication.

5. Brief facts of the case are that the assessee is an individual, deriving income from house property and textile cloth business. He filed the return of income admitting total income of Rs.15,46,013/- for the A.Y.2012-13 on 30.09.2012. Subsequently, search and seizure operations wee conducted in the case of M/s G.S.L.Educational Society, Rajahmundry( ‘society’ in short) on 25.07.2013. During the course of search in the residence of Shri Adapa Rambabu, the Accountant of the society, certain incriminating material was found relating to the assessee, evidencing the undisclosed income. therefore, the AO has initiated the proceedings u/s 153C of the Act, and issued notice u/s 153C for which the assessee filed the return of income on 31.12.2014, admitting total income of Rs.42,62,970/ including long term capital gains amounting to Rs.28,16,958/- During the course of assessment proceedings u/s 153C, the AO found that the assessee has claimed the deduction for payment rent of Rs.7,36,053/- u/s 57 of the Act,i.e. from the income from other sources. Since the rent paid is not an allowable deduction u/s 57 of the Act, the AO made the disallowance of Rs.7,36,053/- and added back to the income.

6. Against the order of the AO the assessee filed appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition stating that the payment of rent was not an allowable as deduction u/s 57 of the Act. Hence, the assessee is in appeal before this Tribunal.

7. During the appeal hearing, the Ld.AR submitted that the assessee has filed the return of income for the A.Y.2012-13 on 30.09.2012 and the time limit for issue of notice u/s 143(2) has got expired on 30.09.2013, thus, the assessment for the A.Y.2012-13 was concluded assessment for the purpose of initiation of proceedings u/s 153C by 30.09.2013. In the instant case, the AO had issued notice u/s 153C on 23.07.2014 which was served on the assessee on 05.08.2014. Therefore, by the time, the notice u/s 153C was issued, the time limit for issue of notice u/s 143(2) got expired and the assessment was concluded. In the concluded assessment, the AO is not permitted to make the addition without the support of incriminating material. This issue was decided by this Tribunal also in favour of the assessee in the case of Y.V.Anjaneyulu, Guntur Vs. DCIT, Central Circle, Vijayawada in I.T.A. No.513 & 514/Viz/2013 and I.T.A. No.524/Viz/2014 dated 09.06.2017. Therefore, submitted that the payment of rent was claimed as deduction in the regular return of income and there was no incriminating material found and seized during the course of search relating to the payment of rent, which was claimed as deduction u/s 57 of the Act. Hence, submitted that the addition made by the AO is unsustainable and hence, requested to set aside the order of the Ld.CIT(A) and allow the appeal of the assessee.

8. On the other hand, the Ld.DR argued that the issue with regard to claim of rent was noticed by the AO during the assessment proceedings taken up u/s 153C of the Act. In the instant case, the original assessment was completed u/s 143(1) and no enquiries / verifications were made by the AO. Under the head ‘income from other sources’, the assessee is not permitted to claim the payment of rent as deduction. Therefore, argued that the AO has rightly made the addition and requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee.

9. We have heard both the parties and perused the material placed on record. The Ld.AR relied on the decision of Y.V.Anjaneyulu Vs.DCIT, Central Circle, Vijayawada (supra) and argued that in the concluded assessments, the AO is not permitted to make the additions without having seized material. In the cited case, the assessment was made u/s 153A, the date for holding the assessment as concluded assessment was taken as the date of search, but not the date of issue of notice. For a query from the Bench, the Ld.AR submitted that as per proviso to section 153C, the trigger date for reckoning the assessment as concluded assessment or not is the date of receiving the books of accounts or documents or assets seized or requisitioned by the AO. We have gone through the proviso to section 153C of the Act and the proviso to section 153C of the Act reads as under : Assessment of income of any other person. 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,—

(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or

(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requ sition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :

9.1. Therefore in the case of other than searched person, reference date for initiation of search u/s 132 is to be reckoned from the date of receiving the books of accounts or documents by the AO having jurisdiction over such other person. In the instant case, as noticed from the assessment order, it is found that the case was notified to the AO by notification vide

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