Gajendra D. Pawar, Pune V. Deputy Commissioner of Income-tax,

ITA 1012/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7240 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment; Depreciation; Income from undisclosed sources; Search and seizure; Retraction; Revised return; Documents seized
• Section: 143(3); 153A; 14A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO S . 1009 TO 1012/PUN/2015 / ASSESSMENT YEAR S : 2005 - 06 TO 2008 - 09 SHRI GAJENDRA D. PAW A R, 1641, SADASHIV PETH, MADHAV HERITAGE,TILAK ROAD, PUNE - 411 030 / APPELLANT PAN : AFEPP7678E / V/S. THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 1(1), PUNE / RESPONDENT A PPELLANT BY : SHRI SUNIL PATHAK R ESPONDENT BY : SHRI AJAY MODI / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT : 31 .1 0.2017 / ORDER PER SUSHMA CHOWLA , JM : TH IS BUNCH OF FOUR APPEAL S FILED BY THE ASSESSEE ARE AGAINST SEPARATE ORDER S OF THE CIT(A) - 11, PUNE DATED 27.02.2015 & 30.03.2015 RELATING TO ASSESSMENT YEAR S 200 5 - 0 6 TO 200 8 - 09 AGAINST RESPECTIVE OR DER S PASSED UNDER SECTION 153A R.W.S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. ALL THE APPEALS FILED BY THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ASSESSMENT YEAR 2005 - 06 : - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY AO OF RS. 116816/ - ON ACCOUNT OF INTEREST ON BORROWED CAPITAL DISREGARDING THE SUBMISSIONS GIVEN BY THE APPE LLANT ONLY ON THE GROUND THAT THE INTEREST EXPENDITURE WAS A FRESH CLAIM WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN FILED IN RESPONSE TO NOTICE U/S. 153A. 2. THE LEARNED CIT(A) ERRED IN MAKING ADDITION OF RS.78000/ - ON ACCOUNT OF INTEREST ON BORROWED CA PITAL DISREGARDING THE SUBMISSIONS GIVEN BY THE APPELLANT ONLY ON THE GROUND THAT THE THERE IS A DIRECT NEXUS BETWEEN THE AMOUNT BORROWED AND INTEREST FREE ADVANCES GIVEN. 3. THE LEARNED CIT(A) HAS ERRED : A) IN REJECTING THE CONTENTION OF THE APPELLANT T HAT THE INTEREST EXPENDITURE WAS INCURRED FOR BUSINESS PURPOSE OF THE APPELLANT AND THE SAME IS ALLOWABLE IN THE ASSESSMENT U/S. 143(3) R.W.S 153A. B) IN REJECTING THE CONTENTION OF THE APPELLANT THAT THE INTEREST FREE ADVANCES WERE MADE OUT OF ITS OWN IN TEREST FREE FUNDS IN THE FORM OF CAPITAL, PROFIT OF THE YEAR AND INTEREST FREE ADVANCES WERE MUCH MORE THAN THE AMOUNT ADVANCED THUS INTEREST BE ALLOWED AS EXPENDITURE U/S. 36(1) (III). 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF T HE ABOVE GROUNDS OF APPEAL. 4. THE FIRST ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST THE ADDITION OF RS.1,16,816/ - ON ACCOUNT OF BORROWED CAPITAL. 5. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 10.02.2011 . M/S. PINNACLE CONSTRUCTIONS AND M/S. PINNACLE CONSTRO HOMES PVT. LTD. WERE TWO CONCERNS OF THE PINNACLE GROUP, WHICH WERE MANAGED BY SHRI GAJENDRA D. PAWAR, WHO WAS THE PROPRIETOR AND DIRECTOR, RESPECTIVELY, IN THE SAID CONCERNS. THE GROUP HAD UNDERTAKEN CONSTRUCTION OF LARGE NUMBER OF RESIDENTIAL AND COMMERCIAL PROJECTS. THE GROUP USED TO RECEIVE ON - MONEY IN CASH FROM FLAT HOLDERS AND THE SAME WAS NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. THE MODUS OPERANDI ADOPTED B Y 3 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR THE ASSESSEE OF RECEIVING ON - MONEY WAS CONFIRMED ON THE BASIS OF INCRIMINATING PAPERS RELATING TO DIFFERENT PROJECTS , WHICH WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION. FURTHER, THE INCOME EARNED FROM UNACCOUNTED ACTIVITIES , IN TURN, WAS U SED FOR INVESTMENTS IN LAND AND ACQUISITION OF SEVERAL PERSONAL ASSETS. THE SAID UNACCOUNTED INCOME WAS ALSO USED BY SHRI GAJENDRA D. PAWAR I.E. ASSESSEE TO MAKE UNACCOUNTED ADVANCE S TO THIRD PARTIES. THE DETAILS OF UNACCOUNTED ADVANCES WERE ALSO FOUND R ECORDED IN THE DOCUMENTS SEIZED DURING SEARCH. CONSEQUENT TO SEARCH AND THE MODUS OPERANDI OF THE GROUP ON THE BASIS OF SEIZED DOCUMENT, UNDISCLOSED INCOME OF RS.20.19 CRORES WAS ADMITTED BY THE ASSESSEE GROUP. THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT FURNISHED RETURN OF INCOME AND ALSO DISCLOSED ADDITIONAL INCOME IN THE RESPECTIVE YEARS. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH ACTION, DISCLOSURE OF RS.20.19 CRORES WAS MADE. HOWEVER, IN THE RETURN OF INCOME OF THE GROUP CONCERNS, SUM OF RS.17.13 CRORES WAS ONLY OFFERED. THE ASSESSEE WAS ASKED TO CLARIFY AS TO RETRACTION TO THE TUNE OF RS.3.06 CRORES. THE ASSESSEE FURNISHED CERTAIN RE CONCILIATION IN THIS REGARD, WHICH WAS NOT ACCEPTED. HOWEVER, IT IS NOT AN ISSUE BEFORE US. THE SECOND PLEA OF THE ASSESSEE THAT ON - MONEY RECEIVED IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 WAS UTILIZED AGAINST UNEXPLAINED INVESTMENTS IN ASSESSMENT YEAR 201 1 - 12 WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER. THE PLEA OF ASSESSEE OF ONLY TAXING OF PROFITS OF ON - MONEY WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER. THE NEXT ISSUE WHICH WAS CONSIDERED BY THE ASSESSING OFFICER WAS THE FRESH CLAIM OF EXPENDITUR E / DEDUCTION WHICH WAS NOT CLAIMED IN THE RETURN OF INCOME / REVISED RETURN OF INCOME. IN THIS REGARD, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE THE FRESH CLAIMS IN RESPECT OF CERTAIN EXPENDITURE I.E. INTEREST EXPENSES, MEMBERSHIP FEES AND D EPRECIATION WHICH WAS NEITHER 4 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR CLAIMED IN THE ORIGINAL RETURN OF INCOME OR REVISED RETURN OF INCOME. THE ASSESSEE WAS ASKED TO GIVE REASON BEHIND THE FRESH CLAIM MADE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. THE A SSESSEE EXPLAINED THAT IT WAS ENTITLED TO MAKE THE SAID CLAIM IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER HELD THAT AS PER PROVISIONS OF SECTION 153A OF THE ACT, TOTAL INCOME OF THE ASSESSEE FOR EARLIER SIX YEARS WAS TO BE RE - ASSESSED, WHEREIN THE CORRECT INCOME WAS TO COMPUTED; BUT THE CONTENTION OF ASSESSEE THAT IT COULD MAKE FRESH CLAIM AND EXPENDITURE OR DEDUCTION WHICH WAS NOT MADE IN EARLIER RETURN WAS NOT ACCEPTED BEING NOT THE POSITION OF LAW. THE ASSESSING OFFICER HELD THAT WHAT THE ASSESSEE COULD NOT CLAIM IN ORIGINAL RETURN OR REVISED RETURN, THE SAME COULD NOT BE CLAIMED UNDER THE SHELTER OF SEARCH ASSESSMENT. ACCORDINGLY, THE CLAIM OF ASSESSEE IN THIS REGARD WAS REJECTED. IN ASSESS MENT YEAR 2005 - 06, THE ASSESSEE HAD MADE CLAIM OF INTEREST EXPENDITURE OF RS.1,16,816/ - WHICH WAS ADDED BACK TO THE INCOME OF ASSESSEE. 6. THE SECOND ADDITION WHICH WAS MADE IN THE HANDS OF ASSESSEE WAS INTEREST DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT. THE ASSESSEE WAS FOUND TO HAVE GIVEN INTEREST FREE ADVANCES TO THE TUNE OF RS.20.56 LAKHS AND ON THE OTHER HAND, THE ASSESSEE HAD TA KEN LOAN OF RS.0.92 CRORES AT INTEREST RATE OF 13%. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. HOWEVER, THE PLEA OF ASSESSEE THAT IT HAD SUFFICIENT INTEREST FREE FUNDS WAS NOT ACCEPTED. THE ASSESSING OFFICER NOTED THAT OUT OF INTEREST FREE ADVANCES OF RS.20.56 LAKHS, ADVANCE OF RS.6 LAKHS WAS NOT GIVEN FOR BUSINESS PURPOSE AND THERE WAS NO COMMERCIAL EXIGENCY ON SUCH ADVANCES. THE ASSESSING OFFICER FURTHER COMPUTED THE AVAILABILITY OF FUNDS AND THE APPLICATION OF FUNDS AND HELD THAT 5 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR THERE WAS NO SURPLU S FUNDS AVAILABLE TO GIVE INTEREST FREE ADVANCES TO THE TUNE OF RS.20.56 LAKHS AND HENCE, INTEREST RELATABLE TO THE ADVANCE OF RS.6 LAKHS NOT GIVEN FOR BUSINESS PURPOSE AND ACCORDINGLY, APPLYING THE RATE OF INTEREST AT 13%, INTEREST OF RS.78,000/ - WAS DISA LLOWED. FURTHER, CERTAIN DISALLOWANCES WERE MADE ON ACCOUNT OF EXPENDITURE INCURRED ON TRAVELLING AND TELEPHONE EXPENSES, WHICH WERE NOT THE ISSUES RAISED BEFORE US. 7. THE CIT(A) CONFIRMING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON BO RROWED CAPITAL AND ALSO UPHELD THE ADDITION OF DISALLOWANCE OF INTEREST ON BORROWED CAPITAL OF RS.78,000/ - . 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE GROUND OF APPEAL NO.1 RAISED IN ALL THE APPEALS IS THE SAME I.E. DEDUCTION ON ACCOUNT OF EXPENDITURE WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE BUT WAS CLAIMED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. HE POINTED OUT THAT THE ASSESSMENTS FOR EARLIER YEARS HAD NOT ABATED, SO THERE WAS NO QUESTION OF ANY FRESH CLAIM BEING MADE IN THE SAID YEARS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE I SSUE IS DECIDED AGAINST THE ASSESSEE BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. (1) CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (2) ALL CARGO GLOBAL LOGISTICS LTD., (2015) 374 ITR 645 (BOM). 6 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW AND STATED THAT THE FRESH CLAIM OF EXPENDITURE WAS AGAINST THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE WHICH ARISES IN TH E PRESENT APPEAL IS IN RESPECT OF CLAIM OF EXPENDITURE ON ACCOUNT OF INTEREST AND IN SOME CASES ON ACCOUNT OF DEPRECIATION. ADMITTEDLY, THE SAID EXPENDITURE WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PRIOR TO SEARCH AT THE PREMISES OF A SSESSEE. HOWEVER, CONSEQUENT TO SEARCH PROCEEDINGS CARRIED ON THE PREMISES OF ASSESSEE, NOTICE UNDER SECTION 153A OF THE ACT WAS SERVED UPON THE ASSESSEE. IN RESPONSE THERETO, IN THE RETURN OF INCOME FILED BY THE ASSESSEE, FRESH CLAIM OF INTEREST EXPENDI TURE AND DEPRECIATION ON CERTAIN ASSETS WAS MADE. THE SAID CLAIM WAS NOT ALLOWED BY THE AUTHORITIES BELOW. THE ASSESSMENTS FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 I.E. APPEALS LISTED BEFORE US HAVE NOT ABATED. IN SUCH CASES , WHERE THE ASSESSMENT HAS NOT ABATED, THEN THE HONBLE BOMBAY HIGH COURT (SUPRA) HAS LAID DOWN THAT ONLY UNDISCLOSED INCOME AND UNDISCLOSED ASSETS DETECTED DURING THE COURSE OF SEARCH COULD BE BROUGHT TO TAX. APPLYING THE SAID RATIO TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM ANY DEDUCTION ON ACCOUNT OF FRESH CLAIM I.E. ON ACCOUNT OF INTEREST AND DEPRECIATION IN THE RESPECTIVE YEARS. APPLYING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. (1) CONTINENTAL WAREHOUSING CORPORATIO N (NHAVA SHEVA) LTD. (2) ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), WE HOLD THAT IN THE YEARS UNDER APPEAL, WHERE THE ASSESSMENT HAS NOT ABATED, THEN NO DEDUCTION IS TO BE ALLOWED IN RESPECT OF FRESH CLAIM MADE IN THE RETURN OF INCOME FILED IN RESPONSE TO NO TICE UNDER SECTION 153A OF THE ACT. CONSEQUENTLY, THE FIRST ISSUE RAISED BY 7 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR WAY OF GROUND OF APPEAL NO.1 IN ASSESSMENT YEAR 2005 - 06, GROUNDS OF APPEAL NO.1 AND 3 IN ASSESSMENT YEAR 2006 - 07, GROUND OF APPEAL NO.1 IN ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09 ARE DISMISSED. 12. NOW, COMING TO THE SECOND ISSUE RAISED IN BUNCH OF APPEAL I.E. THE DISALLOWANCE OF INTEREST AGAINST INTEREST FREE ADVANCES MADE BY THE ASSESSEE. 13. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD POINTED OUT THAT THE ASSESSING OFFICER HELD THAT INTEREST BEARING ADVANCES WERE USED FOR MAKING INTEREST FREE ADVANCES. HE POINTED OUT THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING TH E COURSE OF SEARCH. HE THUS, STATED THAT NO SUCH ADDITION COULD BE MADE IN NON - ABATED ASSESSMENT YEARS. HOWEVER, WITHOUT PREJUDICE, HE POINTED OUT THAT INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE MUCH HIGHER THAN THE ADVANCES MADE. IN RESPECT O F FIRST ISSUE OF NON - ABATEMENT OF ASSESSMENT PROCEEDINGS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN BUNCH OF APPEALS WITH LEAD ORDER IN CIT VS. SHRI DEEPAK KUMAR AGARWA L IN INCOME TAX APPEAL NO.1709 OF 2014, JUDGMENT DATED 11.09.2017. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE BEFORE THE HONBLE BOMBAY HIGH COURT WAS WHETHER ANY ADDITION COULD BE MADE WHILE COMPLETING THE ASSESSMEN T UNDER SECTION 153A OF THE ACT IN THE CASE OF COMPLETED ASSESSMENT , IF NO UNDISCLOSED INCOME WAS DETERMINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. THE HONBLE BOMBAY HIGH COURT UPHELD THE ORDER OF TRIBUNAL, WHEREIN IT WAS HELD THAT NO ADDITION COULD BE MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT 8 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR SIMILAR ISSUE IS RAISED IN ALL THE APPEALS LISTED BEFORE US. HE FURTHER TOOK US THROUGH T HE COPY OF BALANCE SHEET AND POINTED OUT THAT IN EACH OF THE CASES, INTEREST FREE FUNDS WHICH WERE AVAILABLE WITH THE ASSESSEE WE RE MUCH HIGHER THAN THE INTEREST FREE ADVANCES MADE BY THE ASSESSEE. HE REFERRED TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM) THAT IN ORDER TO DETERMINE THE AVAILABILITY OF FUNDS, THEN THE POSITION AS ON THE DATE OF BALANCE SHEET HAS TO BE SEEN. HE FURTHER REFERRED TO THE RATIO LAID DOWN BY THE PUNE B ENCH OF TRIBUNAL IN M/S. KOLTE PATIL DEVELOPERS LTD. VS. DCIT IN ITA NOS.1656 & 1657/PN/2014, RELATING TO ASSESSMENT YEARS 2008 - 09 & 2009 - 10, ORDER DATED 29.04.2016 THAT DAY - TO - DAY POSITION IS NOT TO BE SEEN TO DETERMINE THE AVAILABILITY OF INTEREST FREE F UNDS. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN REPLY, POINTED OUT THAT IN THE PRESENT CASE, THE RETURNS OF INCOME WERE ONLY PROCESSED UNDER SECTION 143(1) OF THE ACT. HE FURTHER REFERRED TO THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN KRANTI REALTORS PVT. LTD. VS. ACIT IN ITA NOS.2021 TO 2023/PN/2013, RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, ORDER DATED 10.11.2015 TO POINT OUT THAT WHERE THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(1) OF THE ACT AND EVEN THOUGH NO INCRIMI NATING MATERIAL WAS FOUND BUT SINCE NO ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER WAS COMPETENT TO INVOKE THE JURISDICTION UNDER SECTION 153A / 153C OF THE ACT AND COMPLETE THE ASSESSMENT UNDER SE CTION 143(3) OF THE ACT. 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER REFERRED TO THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF DEEPAK 9 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR AGARWAL (SUPRA). S INCE IT WAS NOT CLEAR FROM THE SAID DECISION WHETHER THE ASSESS MENT IN THE SAID CASE HAS BEEN COMPLETED UNDER SECTION 143(1) OR 143(2) OF THE ACT, HE FILED THE COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE. THE MUMBAI BENCH OF TRIBUNAL IN DEEPAK AGARWAL VS. ACIT (2014) 40 CCH 311 (MUM - TRIB) HAS NOTED THE FACT THAT AS SESSMENT WAS COMPLETED UNDER SECTION 143(1) OF THE ACT. THE TRIBUNAL VIDE PARA 14 HAD HELD THAT IN CASE OF COMPLETED ASSESSMENT UNDER SECTION 143(1) OR 143(3) OF THE ACT, NO ADDITION IN ROUTINE MANNER COULD BE MADE IN THE ASSESSMENT FRAMED UNDER SECTION 1 53A OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL GATHERED IN SEARCH ACTION. THE ADDITIONS BEFORE THE TRIBUNAL WERE UNDER SECTION 68 OR 14A OF THE ACT. THE HONBLE BOMBAY HIGH COURT (SUPRA) HAS UPHELD THE ORDER OF TRIBUNAL. 16. WE HAVE HEARD THE RI VAL CONTENTIONS AND PERUSED THE RECORD. THE SECOND ISSUE WHICH IS ARISING IN THE BUNCH OF APPEALS IS AGAINST THE DISALLOWANCE OF INTEREST EXPENDITURE ON ACCOUNT OF INTEREST FREE ADVANCES MADE BY THE ASSESSEE FROM YEAR TO YEAR. ADMITTEDLY, IN NONE OF THE CASES, ANY INCRIMINATING DOCUMENTS WERE FOUND IN TH IS REGARD . THE ASSESSMENTS FOR ALL THESE YEARS HAVE NOT ABATED. THE QUESTION WHICH ARISES IS WHETHER IN THE CIRCUMSTANCES WHERE NO INCRIMINATING DOCUMENT WAS FOUND FROM THE POSSESSION OF ASSESSEE WITH RE GARD TO SUCH DISALLOWANCE OF INTEREST EXPENDITURE CAN THE SAME BE MADE IN THE CASE OF NON - ABATED ASSESSMENTS? 17. THE PUNE BENCH OF TRIBUNAL IN KRANTI REALTORS PVT. LTD. VS. ACIT (SUPRA) HA D HELD THAT EVEN IN THE ABSENCE OF ANY INCRIMINATING DOCUMENT WHER E THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF THE ACT AND THE ASSESSMENT HAD NOT ABATED , BUT SUCH AN ADDITION COULD BE MADE. HOWEVER, BEFORE THE 10 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR MUMBAI BENCH OF TRIBUNAL IN THE CASE OF DEEPAK AGARWAL VS. ACIT (SUPRA) , THE ISSUE WAS IN RESPECT OF NON - ABATED ASSESSMENT PROCEEDINGS, WHEREIN INCRIMINATING MATERIAL WAS NOT FOUND AND THE ASSESSMENT WAS EITHER MADE UNDER SECTION 143(1) OR 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI DEEPAK KUMAR AGARWAL (SUPRA) HAS UPHELD THE ORDER OF TRIBUNAL AND HAS HELD THAT THE ADDITIONS MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL IN THE CASE OF NON - ABATED PROCEEDINGS ARE NOT SUSTAINABLE AND ARE TO BE DELETED IN CASES OF ASSESSMENTS UNDER SECTION 143(1) OR 143(3 ) OF THE ACT . IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT, WE HOLD THAT IN THE CASE OF NON - ABATED ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEARS, WHERE NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH, WHETHER THE ASSESSM ENT WAS COMPLETED UNDER SECTION 143(1) OR 143(3) OF THE ACT, THERE IS NO BASIS FOR MAKING THE ROUTINE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER I.E. THE DISALLOWANCE OF INTEREST EXPENDITURE ON ACCOUNT OF INTEREST FREE ADVANCES MADE BY THE ASSESSEE. AC CORDINGLY, WE HOLD SO. THE ISSUE RAISED BY THE ASSESSEE IN THE BUNCH OF APPEAL S IS THUS, ALLOWED. 18. THE SECOND ASPECT OF THE ISSUE IS THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THE PERUSAL OF BALANCE SHEET IN RESPECT OF ALL THE YEARS REFLE CT THE AVAILABILITY OF INTEREST FREE FUNDS WITH THE ASSESSEE, OUT OF WHICH THE SAID INTEREST FREE ADVANCES HAVE BEEN MADE BY THE ASSESSEE. REL YING ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. RELIANCE UTILITIES & POWER LTD. (SUPRA) A ND THE PUNE BENCH OF TRIBUNAL IN M/S. KOLTA PATIL DEVELOPERS LTD. VS DCIT (SUPRA) , WE HOLD THAT AVAILABILITY OF FUNDS AS ON THE DATE OF BALANCE SHEET HAS TO BE SEEN AND THERE IS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN LOOKING AT THE DAY - TO - DAY POSIT ION OF AVAILABILITY OF FUNDS. 11 ITA NOS. 1009 TO 1012/PUN/2015 SHRI GAJENDRA D. PAWAR HENCE, THE ASSESSEE IS ALSO ENTITLED TO THE SAID DEDUCTION ON MERITS OF ITS CLAIM AND THE SAME IS ALLOWED. THE GROUND OF APPEAL NO.2 RAISED IN ALL THE APPEALS IS ALLOWED. 19. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRO NOUNCED ON THIS 31 ST DAY OF OCTO BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; / DATED : 31 ST OCTO BER , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) - 11, PUNE. 4. THE CIT - 11, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE