×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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This is an appeal filed by the assessee against the order of ld.CIT(A), 2, Udaipur dated 19-03-2018 for the A.Y. 2008-09 in the matter of order passed u/s.143(3) r.w.s. 153C of the Income Tax Act, 1961 (in short, the Act).
2. Grounds of appeal raised by the assessee are as under: -
1(a) In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of ld. AO of the searched party whose cases were covered u/s. 153A in proposing for initiating proceedings u/s. 153C of the Income Tax Act, 1961.
(b) In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of ld. AO of the assessee for initiating the proceedings u/s. 153C of the Income Tax Act, 1961.
2. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of ld. AO in disallowing the following u/s. 40(a)(ia) of the Income Tax Act, 1961:-
The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the above mentioned expenses of Rs.40,87,119/-.
3. The appellant craves his rights to add, amend or alter any of the grounds on or before the hearing.”
3. Rival contentions have been heard and record perused. The facts of the case in brief are that search & seizure operation was carried in the cases of Siyaram Group (Katta) on 31/07/2012. During the course of which certain documents belonging to the assessee was found and seized from his residence.Consequently, the AO issued notice u/s. 153C after recording satisfaction, on 24/03/2015. Due to change of ncumbent notice u/s. 142(1) was issued by the AO on 26/10/2015 the assessee filed copy of the return filed in response to notice u/s. 153C in which total income of Rs. 5,70,870/- was declared. Same income was declared in the return filed u/s 139(1). Assessment has been completed by the AO on total income of Rs. 46,57,970/- after making disallowance of Rs. 40,87,119/-. In the assessment so framed U/s 143(3) read with Section 153A of the Act, the A.O. made following disallowances U/s 40(a)(ia) of the Act:
4. The assessee challenged the assessment having been framed U/s 153C of the Act, which was declined by the ld. CIT(A) and the addition so made was also confirmed by the ld. CIT(A), against which the assessee is in further appeal before the ITAT.
5. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that after search the seized material have been handed over by the AO of searched party to the AO of party to whom seized material relates by proper satisfaction and initiation of action u/s 153C by the AO of the assessee referring the relevant seized material. The proceedings made as per provisions of section 153C is valid in respect of issues arising due to material found due to search and seizure and consequent enquiries. Since the claim of expenditure incurred was noticed subsequent to search, the proceedings made as per provisions of section 153C is valid in respect of issues arising due to material found due to search and seizure and consequent enquiries. We found that satisfaction so recorded U/s 153C of the Act with reference to the relevant material is suffice to dispel the doubt to initiate the proceeding U/s 153C of the Act. Accordingly, ground Nos. 1 and 2 so raised by the assessee is dismissed.
6. Now coming to the merit of addition, we found that disallowance of Rs. 28,62,582/- on account of printing and dyeing charges U/s 40(a)(ia) of the Act was declined by the A.O. by holding that the second proviso to section 40(a)(ia) inserted vide Finance Bill 2012 w.e.f. 01/04/2013 is not retrospective effect from 01/04/2005 because it is not declaratory and curative in nature. The A.O. observed that the CBDT vide circular No.10 dated 16.12.2013 has made it clear that these provisions are applicable for A.Y. 2013-14 and onwards.
7. By the impugned order, the ld. CIT(A) confirmed the action of the A.O. against which the assessee is in further appeal before the ITAT.
8. We have gone through the orders of the authorities below and found that the assessee derives income from printing and dyeing. During assessment proceedings AO noticed from the audit report (form 3CD) furnished by the assessee that TDS was not deducted from the expenses of Job charges of Rs. 11,55,356/- and Printing & Dyeing charges of Rs. 28,62,582/-. It was also noticed that the assessee paid interest of Rs. 69,181/- without making TDS. When asked to show cause why these expenses be not disallowed u/s. 40(a)(ia) the