A. Srinivas Rama Raju, Hyd, Hyderabad V. DCIT, Central Circle-1(1), Hyd, Hyderabad

ITA 975/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6391 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Speculation loss
• Section: 153A; 80IB; 147; 148; 132; 12; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.975/HYD/2015 ASSESSMENT YEAR 2010-2011 MR. A. SRINIVAS RAMA RAJU, HYDERABAD 033. PAN ACEPA2196F VS., THE DCIT, CENTRAL CIRCLE-1(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. V. RAGHAVENDRA RAO FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 17.06.2016 DATE OF PRONOUNCEMENT : 19.08.2016 ORDER PER D. MANMOHAN, V.P. THIS APPEAL FILED BY THE ASSESSEE PERTAINS TO THE A. Y. 2010-2011. THE ONLY ISSUE URGED BEFORE US PERTAINS TO THE DENIAL OF THE BENEFIT OF DEDUCTION OF SUM OF RS.24,57,965. 2. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE WAS A DIRECTOR OF M/S. N CC INFRASTRUCTURE HOLDINGS AND WAS ALSO ACTING AS A DIR ECTOR/ PARTNER IN SEVERAL COMPANIES/FIRMS. FOR THE A.Y. 201 0-2011, THE ASSESSEE DECLARED INCOME OF RS.75,46,300 AND AGRICU LTURAL INCOME OF RS.9,04,539 ON 31.07.2010. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 30.03.2011. IT DESERVES TO BE NOTICED THAT SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSE E ON 06.10.2010 WHEREIN HE HAS ADMITTED THAT HE HAD EARNED 2 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. UNACCOUNTED INCOME AND WAS PREPARED TO ADMIT THE SAME FOR THE A.YS. 2009-2010 TO 2011-2012. CONSEQUENT THERETO, A NOTI CE UNDER SECTION 153A WAS ISSUED ON 22.02.2011 AND THE A SSESSEE ADMITTED INCOME OF RS.5,33,46,941 IN ADDITION TO THE AG RICULTURAL INCOME. ON VERIFICATION, THE ASSESSING OFFICER OBSERV ED THAT IN ADDITION TO THE INCOME ALREADY DECLARED, ASSESSEE ADM ITTED INCOME OF RS.4,82,58,604 WHEREAS, NOW HE ADMITTED AN INCOME OF RS.4,58,00,641 WHICH RESULTS IN A SHORT FALL OF RS.24 ,57,963. ACCORDING TO THE ASSESSING OFFICER, THE INCOME DECLA RED IS NOT MATCHING WITH THE INCOME ORIGINALLY ADMITTED DURING THE COURSE OF SEARCH PROCEEDINGS AND ACCORDINGLY, THE SHORT FAL L WAS ADDED AND ASSESSMENT WAS COMPLETED ACCORDINGLY. 3. AGGRIEVED BY THE ABOVE ADDITION, ASSESSEE CONTEND ED BEFORE THE CIT(A) THAT THE RETURN OF INCOME WAS ORIGINAL LY FILED WHEREIN THE ASSESSEE HAD NOT SET-OFF THE INTEREST RECEI VED AGAINST THE INTEREST PAID UNDER THE HEAD INCOME FROM OTHER SOUR CES WHEREAS, DURING THE COURSE OF PROCEEDINGS UNDER SEC TION 153A THE ASSESSEE CLAIMS SET-OFF WHICH IS PERMISSIBLE UND ER LAW. IT WAS ALSO EXPLAINED THAT IN FACT, THE ASSESSEE INCLUDED THE ENTIRE SUM OF RS.4,82,58,604 AS ADDITIONAL INCOME IN THE RETURN F URNISHED PURSUANT TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT AND HENCE, IT IS NOT A CASE OF NON-INCLUSION OF THE SUM O F RS.24,57,965 BUT HE MERELY CLAIMED SET-OFF OF THE INT EREST PAID AGAINST THE INTEREST RECEIVED AND ALL THESE FACTS ARE ALR EADY ON RECORD. 4. LD. CIT(A) DID NOT DISPUTE THE FACTS. IN THIS REGARD , SHE OBSERVED AS UNDER : 3 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. 6.1. THE REAL REASON FOR THE SHORTFALL IS THAT THE AMOUNT OF RS.24,57,965 WAS CLAIMED AS DEDUCTION IN THE RETURN AGAINST THE INTEREST INCOME OF RS.24,57,965 WHICH H AD BEEN SHOWN IN THE ORIGINAL RETURN BUT AGAINST WHICH THE SAID DEDUCTION HAD NOT BEEN CLAIMED. THE QUESTION T HAT ARISES FOR CONSIDERATION IS WHETHER SUCH DEDUCTION WHICH HAD NOT BEEN CLAIMED IN THE ORIGINAL RETURN C AN BE ALLOWED IN THE RETURN FURNISHED IN RESPONSE TO T HE NOTICE UNDER SECTION 153A OF THE I.T. ACT. 4.1. HOWEVER, SHE WAS OF THE OPINION THAT THE ASSESSIN G OFFICER HAS ISSUED NOTICE UNDER SECTION 153A OF THE A CT TO BRING TO TAX ADDITIONAL INCOME AND THEREFORE, IT IS NOT FOR TH E BENEFIT OF THE ASSESSEE. RELIANCE WAS PLACED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGI NEERING WORKS P. LTD., 198 ITR 297 WHICH CONCERNS THE RE-ASSE SSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ACCORDIN G TO THE LEARNED COMMISSIONER THE SAME LOGIC APPLIES EVEN TO THE PROCEEDINGS UNDER SECTION 153A OF THE ACT. SHE THUS CO NCLUDED AS UNDER : 6.3. THE ADDITION OF RS.24,57,965 MADE BY THE ASSE SSING OFFICER ON THE BASIS OF THE ALLEGED NON-INCLUSION O F THE SUM AS PART OF THE ADDITIONAL INCOME IN THE RETURN WAS NOT JUSTIFIED. AS ALREADY DISCUSSED THE DIFFERENCE HAD ARISEN DUE TO THE CLAIM OF INTEREST PAID AGAINST IN TEREST INCOME EARNED. THE REASON WHY THE CLAIM CANNOT BE ALLOWED HAS BEEN DISCUSSED IN DETAIL IN THE FOREGOI NG PARAS OF THIS ORDER. IN VIEW OF IT, THE ADDITION OF RS.24,57,965 IS CONFIRMED ALBEIT ON DIFFERENT GROUN D. 5. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIB UNAL BY RAISING THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH ON F ACTS AND IN LAW SO FAR AS IT IS PREJUDICIAL TO THE APPELLANT . 4 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.24,57,965. 3. THE LD. CIT(A) ERRED IN CONCLUDING THAT, THE INTERE ST AMOUNT OF RS.24,57,965 WAS NOT CLAIMED AS DEDUCTION IN THE ORIGINAL RETURN OF INCOME, HENCE SUCH DEDUCTION WHICH HAD NOT BEEN CLAIMED IN THE ORIGINAL RETURN CANNOT BE CLAIMED IN THE RETURN FURNISHED IN RESPONSE TO NOTI CE ISSUED UNDER SECTION 153A OF THE I.T. ACT, 1961. 4. THE LD. CIT(A) ERRED IN CONCLUDING THAT, THE PURPOS E OF ISSUING NOTICE U/S. 153A OF THE INCOME TAX ACT, 196 1 AND MAKING ASSESSMENT UNDER THAT SECTION IS TO BRING TA X ADDITIONAL INCOME, THUS PROVISION IS FOR THE BENEFI T OF THE REVENUE NOT FOR THAT OF ASSESSEE. 5. THE LD. CIT(A) SHOULD NOT HAVE CONCLUDED THAT, NOTI CE UNDER SECTION 153A IS FOR THE BENEFIT OF THE REVENU E AND NOT FOR THE APPELLANT. THE APPELLANT CLAIM OF SET O FF OF INTEREST INCOME EARNED AGAINST INTEREST PAID SHOULD HAVE BEEN ALLOWED. 6. THE LD. CIT(A) SHOULD HAVE ALLOWED THE INTEREST PAI D AMOUNT OF RS.24,57,965 TO SET OFF AGAINST THE INTER EST INCOME EARNED BY THE APPELLANT UNDER THE HEAD INCO ME FROM OTHER SOURCES. 7. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/MODIFY GROU NDS WHICH WOULD BE NECESSARY FOR ADJUDICATION OF THE CA SE. 6. IT MAY BE NOTICED THAT BOTH THE ASSESSEE AS WELL AS THE REVENUE FILED PAPER BOOKS AND CASE LAW. LEARNED COU NSEL FOR THE ASSESSEE, ADVERTED OUR ATTENTION TO PAGE 25 AND 33 OF THE PAPER BOOK TO SUBMIT THAT ALL THE DETAILS CONCERNING LOAN TAK EN AND THE INTEREST RECEIVED WERE AVAILABLE ON RECORD AND IN FAC T, THE LD. CIT(A) ADMITTED THAT THE AMOUNT OF RS.24,57,965 WAS CLAI MED AS DEDUCTION IN THE RETURN AGAINST THE INTEREST INCOME OF RS.24,57,965. THE ONLY REASON FOR DISALLOWING THE CL AIM OF DEDUCTION WAS THAT PROVISIONS OF SECTION 153A WERE MEA NT FOR THE BENEFIT OF THE REVENUE AND HENCE, ASSESSEE CANNOT MAK E ANY NEW 5 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. CLAIM. IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASS ESSEE, ADVERTED OUR ATTENTION TO THE DECISIONS OF ITAT I.E., CH ENNAI BENCH IN THE CASE OF ACIT VS. VN DEVADOSS (2013) 57 SOT 67 (CHENNAI) (URO), ITAT, PUNE BENCH IN THE CASE OF M/S . MALPANI ESTATES VS. ACIT (2014) 64 SOT 105 (PUNE) (URO) TO SUB MIT THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD., (CITED SUPRA) IS NOT APPLIC ABLE TO THE PROCEEDINGS UNDER SECTION 153A OF THE ACT INASMUCH AS THE LANGUAGE OF SECTION 153A MAKES IT CLEAR THAT ONCE THE RE TURN OF INCOME IS FILED UNDER SECTION 153A, IT HAS TO BE DEEME D TO BE THE RETURN OF INCOME FILED UNDER SECTION 139 OF THE ACT AND AS A NATURAL CONSEQUENCE, ALL OTHER PROVISIONS WOULD APPLY . IN OTHERWORDS, A REGULAR AND FRESH ASSESSMENT HAS TO BE M ADE AS THOUGH THE RETURN WAS FILED UNDER SECTION 139 OF THE AC T. LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON AN UN-REPO RTED DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF MR. FAISAL A BBAS VS. DCIT, CENTRAL CIRCLE-2, MUMBAI IN ITA.NO.3485 & 3487/MUM/2010 DATED 25.10.2011 WHEREIN THE BENCH DEAL T WITH AN IDENTICAL ISSUE AND IN THIS REGARD OBSERVED A S UNDER : 4. THE OTHER GROUNDS IN THIS APPEAL ARE AGAINST T HE DISALLOWANCE OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS. THE FACTS APROPOS THESE GROUNDS ARE THAT THE ASSESSEE IN HIS RETURN U/S.153A CLAIMED SET OFF OF BUSINESS LOSS OF RS.1,45,021/- AND SPECULATION LOSS OF RS.2,50,950 AGAINST THE CURRENT INCOME. THE AO DID NOT GRANT THE SET OFF ON THE GROUND THAT THE SET OFF, WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME, COULD NOT BE ALLOWED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A. BEFORE THE LD. FIRST APPELLATE AUTHORITY ALSO, THE ASSESSEE CONTENDED TH AT THE LOSS WAS INCURRED BY HIM IN ASSESSMENT YEAR 200 1- 02 AND THE SAME OUGHT TO HAVE BEEN ALLOWED. THE LD. CIT(A) ECHOED THE ASSESSMENT ORDER BY RELYING ON A 6 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. JUDGMENT IN E.K. LINGAMURTHY & ANR. VS. SETTLEMENT COMMISSION (2007) 293 ITR 76 (MAD.). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED FROM TH E COPY OF RETURN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2001-02 ON 31-10-2001 THAT LOSS OF RS.27,26,360/- UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION WAS DECLARED. THE SAID RETURN FOR THE Y EAR WAS DULY FILED WITHIN THE TIME ALLOWED U/S.139(1). WE ARE CURRENTLY DEALING WITH ASSESSMENT YEAR 2002-03 IN WHICH THE ASSESSEE HAS CLAIMED SET OFF OF THE BROUG HT FORWARD BUSINESS LOSS AGAINST THE INCOME FOR THE CURRENT YEAR. IN OUR CONSIDERED OPINION, THE AUTHOR ITIES BELOW WERE NOT JUSTIFIED IN NOT GRANTING THE SET OF F OF THE BROUGHT FORWARD BUSINESS LOSS FOR THE REASON TH AT THE REQUIREMENT TO FILE RETURN WITHIN THE TIME PRES CRIBED U/S.139(1) IS FOR CARRYING FORWARD THE LOSS. ONCE L OSS IS DETERMINED IN THE RETURN FILE U/S.139(3), THE ASSES SEE BECOMES ELIGIBLE FOR SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS IRRESPECTIVE OF THE FACT WHETHER T HE RETURNS OF SUCH LATER YEARS ARE FILED U/S.139(1) OR NOT. SEC. 80 READ WITH SEC. 139(3) REQUIRES THE SUBMISSI ON OF RETURN FOR LOSS BEFORE THE DUE DATE. THERE IS NO SUCH REQUIREMENT THAT THE SUBSEQUENT YEARS, IN WHICH THE SET OFF IS CLAIMED, MUST ALSO FULFIL THE REQUIREMEN T OF FURNISHING THE RETURNS WITHIN THE TIME REQUIRED U/S.139(1). 6. IT IS FURTHER IMPORTANT TO NOTE THAT SEC. 153A DEALING WITH ASSESSMENT IN CASE OF SEARCH PROVIDES FOR THE ISSUANCE OF NOTICE TO THE ASSESSEE IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED. SEC. 153A(1)(A) CLEARLY PROVIDES THAT THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139. FROM THE PRESCRIPTION OF SEC. 153A, IT IS APPARENT THAT THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A IS TREATED AS THE RETURN FILED U/S.139. IF THAT IS THE POSITION, WE ARE UNABLE TO APPRECIATE AS TO HOW THE LOSS DETERMINED FOR THE 7 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. IMMEDIATELY PRECEDING YEAR WILL NOT BE AVAILABLE TO THE ASSESSEE FOR THE SET OFF AGAINST THE CURRENT YEARS INCOME DECLARED IN THE RETURN FILED U/S.153A. 7. THE PUNE BENCH OF THIS TRIBUNAL IN THE CASE OF M/ S. MALPANI ESTATES (CITED SUPRA) WAS CONCERNED WITH DECLAR ING OF ADDITIONAL INCOME CONSEQUENT TO SEARCH PROCEEDINGS AND THEREUPON CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB WITH RESPECT TO AFOREC ITED COMPONENT OF ON-MONEY ON SALE OF FLATS RECEIVED BY THE ASSESSEE AND IN FACT, HE DID NOT TREAT IT AS BUSINESS INCOME O F THE ASSESSEE AND THEREFORE, DID NOT ALLOW DEDUCTION UNDER SECTION 80IB. THE INCOME ORIGINALLY DECLARED BY THE ASSESSEE WAS RS.2,10,86,083 WHICH WAS ENHANCED AS RS.2,46,89,494 . ACCORDING TO THE ASSESSING OFFICER, ENHANCEMENT OF CL AIM OF DEDUCTION UNDER SECTION 80IB(10) WAS NOT PERMISSIBLE I N AN ASSESSMENT UNDER SECTION 153A OF THE ACT. BEFORE THE TRI BUNAL, RELIANCE WAS PLACED UPON THE JUDGMENT OF THE HONBLE S UPREME COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD., 19 8 ITR 297 TO POINT OUT THAT EVEN IN THE CASE OF RE-ASSESSMENT UN DER SECTION 147/148 FRESH CLAIMS CANNOT BE RAISED BY THE ASSESSEE . UNDER THESE CIRCUMSTANCES, THE PUNE BENCH OF THE TRIBUNAL OB SERVED THAT ACCORDING TO THE HONBLE SUPREME COURT THE CLAIM IS NOT ENTERTAINABLE IF THE SAME IS NOT CONNECTED TO THE ASSESS MENT OF ESCAPED INCOME. IN THIS REGARD, IT OBSERVED AT PARA-16 AS UNDER : 16. ... ... .... ACCORDING TO THE HONBLE SUPR EME COURT, THE CLAIM WAS NOT ENTERTAINABLE BECAUSE THE SAID CLAIM NOT CONNECTED WITH THE ASSESSMENT OF ESCAPED INCOME. IN - FACT, THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS PVT. LTD. (SUPRA) IS NOT 8 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. AN AUTHORITY TO SAY THAT ASSESSEE CANNOT RAISE A CL AIM PERTAINING TO AN ISSUE WHICH IS CONNECTED TO THE ASSESSMENT OF ESCAPED INCOME. IN-FACT, IF A CLAIM W HICH IS CONNECTED TO THE ESCAPED INCOME IS SET-UP BEFORE THE ASSESSING OFFICER IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE SAME IS LIABLE TO BE CONSIDERED AN D THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF SUN ENGINEERING WORKS PVT. LTD. (SUPRA) ONLY PRECLUDES SUCH NEW CLAIMS BY THE ASSESSEE WHICH ARE UNCONNECTED WITH THE ASSESSMENT OF ESCAPED INCOME. IN THE PRESENT CASE, WE ARE DEALING WITH AN ASSESSMENT U/S 153A OF THE ACT AND THE SCOPE OF SUC H AN ASSESSMENT HAS ALREADY BEEN EXAMINED BY US IN THE CONTEXT OF THE RELEVANT SPECIFIC PROVISIONS, WH ICH DO NOT LEAVE ANY SCOPE FOR AMBIGUITY. THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERIN G WORKS PVT. LTD. (SUPRA) HAS BEEN RENDERED ON A DIFFERENT FOOTING AND IS STRICTLY NOT APPLICABLE TO THE PRESENT PROCEEDINGS. SO, HOWEVER, EVEN IF ONE WERE TO IMPORT THE REASONING RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BASED ON THE JUDGMENT O F THE HONBLE SUPREME COURT, TO THE PRESENT CASE, YET WE DO NOT FIND THAT IT WOULD DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT ON THE IMPUGNED ADDITIONAL INCOME DECLARED IN THE RETURN F ILED IN RESPONSE TO NOTICE U/S 153A(1)(A) OF THE ACT. IN THE PRESENT CASE, THE CLAIM OF DEDUCTION U/S 80IB(10) O F THE ACT WAS MADE IN THE RETURN OF INCOME ORIGINALLY FIL ED AND IN THE RETURN FILED IN PURSUANCE TO THE NOTICE U/S 153A(1)(A) OF THE ACT, THE CLAIM U/S 80IB(10) OF TH E ACT IS ONLY ENHANCED AND THEREFORE, IT IS NOT A FRESH C LAIM. 8. THE CHENNAI BENCH ALSO ADDRESSED THE ISSUE AS TO WHETHER A SEARCH UNDER SECTION 132 IS CONDUCTED FOR TH E BENEFIT OF THE ASSESSEE OR DEPARTMENT. IT ALSO TOOK NOTE OF THE FA CT THAT RETURNS ARE NOT VOLUNTARILY FILED BY THE ASSESSEE WITHIN THE DUE DATE PRESCRIBED UNDER SECTION 139(1) BUT THEY ARE FILED AFTER THE SEARCH OPERATION WAS CONDUCTED BUT BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 153A OF THE ACT. IN PARA-28 OF ITS ORDER, THE BENCH HAS OBSERVED AS UNDER : 9 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. 28. NEXT WE HAVE TO EXAMINE THE DECISION OF THE COMMISSIONER OF INCOME-TAX(APPEALS) RENDERED ON THE ALTERNATE GROUND RAISED BY THE ASSESSEES BEFORE HIM . THE ALTERNATE GROUND WAS WHETHER THE RETURNS FILED IN RESPONSE TO NOTICES ISSUED UNDER SECTION 153A CAN B E TAKEN AS RETURNS FILED WITHIN THE TIME LIMIT STIPUL ATED UNDER SECTION 139(1). THE COMMISSIONER OF INCOME-TA X (APPEALS) HAS DECIDED IN FAVOUR OF THE ASSESSEES HOLDING THAT THE RETURNS FILED UNDER SECTION 153A A RE TO BE TREATED AS RETURNS FILED UNDER SECTION 139(1) WI THIN THE TIME ALLOWED UNDER THE STATUTE. 9. LEARNED COUNSEL FOR THE ASSESSEE PLACED STRONG RELIANCE UPON THE CASE LAW AND THE RELEVANT PAPERS IN THE PAPER BOOK TO SUBMIT THAT ALL THE FACTS WERE ALREADY AVAILABL E ON RECORD AND THE CLAIM OF DEDUCTION FOR SET OFF WAS MADE ONLY ON THE BASIS OF THE ENHANCED INCOME DECLARED CONSEQUENT TO THE SEAR CH OPERATIONS AND THEREFORE, CLAIM OF SET OFF IS PERMISSI BLE UNDER LAW. 10. LD. D.R. ON THE OTHER HAND RELIED UPON THE DECI SION OF THE HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF C IT VS. ANIL KUMAR BHATIA REPORTED IN (2012) 211 TAXMAN 453 (DEL. ) (HC) WHEREIN THE COURT OBSERVED THAT ASSESSMENTS CONTEMPLATED BY SECTION 153A IS NOT A DENOVO ASSESSMENT AND THE ADDITIONS MADE THEREUNDER HAVE TO BE NECESSARILY RESTRICTED TO THE UND ISCLOSED INCOME UN-EARTHED DURING THE SEARCH. THE FACTS THEREIN WERE THAT DURING THE COURSE OF SEARCH, THE LOAN WAS NOT REFLECT ED IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND THERE WAS N O DOCUMENT OR CORROBORATIVE MATERIAL CONCERNING THE SAID LAND. THE CLAIM OF THE ASSESSEE WAS THAT ON THE DATE OF INITIAT ION OF THE SEARCH, NO ASSESSMENT WAS PENDING AS THEY HAD ABATED AND THE ASSESSING OFFICER WAS WRONG IN INVOKING THE PROVISIO NS OF SECTION 153A OF THE ACT. UNDER THESE CIRCUMSTANCES, THE COURT OB SERVED 10 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. THAT RETURNS OF INCOME FILED BY THE ASSESSEE FOR ALL T HE SIX ASSESSMENT YEARS UNDER CONSIDERATION BEFORE THE SEARC H TOOK PLACE WERE PROCESSED UNDER SECTION 143(1)(A) OF THE A CT AND THE PROVISIONS OF SECTION 153A CAN BE INVOKED. IN THIS RE GARD, THE COURT OBSERVED THAT THE TIME LIMIT WITHIN WHICH A NOTICE U NDER SECTION 148 CAN BE ISSUED IS NOT APPLICABLE HERE AND IN FACT, SUCH TIME LIMIT WAS PRESCRIBED UNDER SECTION 153 HAS BEEN DONE AWAY WITH IN CASES COVERED BY SECTION 153A OF THE ACT. SECTI ON 153A HAS BEEN ENTRUSTED WITH THE DATE OF BRINGING TO TAX THE TO TAL INCOME OF THE ASSESSEE WHOSE CASE IS COVERED BY SECTI ON 153A, BY EVEN MAKING RE-ASSESSMENT WITHOUT ANY FETTERS. 10.1. THE LD. D.R. PLACED RELIANCE UPON THIS JUDGME NT ONLY FOR THE LIMITED PURPOSE THAT EVEN AFTER PROCESSING THE R ETURN UNDER SECTION 143(1)(A) OF THE ACT, THE PROVISIONS OF S ECTION 153A CAN BE INVOKED WHICH IS CONTRARY TO THE JUDGMENT OF TH E HONBLE HIGH COURT OF JHARKHAND IN THE CASE OF ABHAY KUMAR S HROFF VS. CIT & OTHERS REPORTED IN (2007) 290 ITR 114 WHEREIN THE COURT OBSERVED THAT BY VIRTUE OF SECOND PROVISO TO SECTION 15 3A OF THE ACT, PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SE ARCH STAND ABATED. LD. D.R. STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND CONTENDED THAT THE PROVISIONS OF SECTION 153A ARE NOT MEA NT FOR ASSESSEE TO MAKE A FRESH CLAIM AND THEREFORE, THE CIT( A) WAS JUSTIFIED IN APPLYING THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD., (CITED SUPRA). 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. AS COULD BE NOTICED FROM THE G ROUNDS OF APPEAL AND THE ARGUMENTS ADVANCED BY THE LEARNED COUNS EL FOR 11 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. THE ASSESSEE, THE MAIN CONTENTION IS NOT WITH REGARD TO ABATEMENT OF PROCEEDINGS UNDER SECTION 153A OF THE AC T. THE LIMITED ISSUE IS WITH REGARD TO CLAIM OF DEDUCTION IN R ESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT EVEN IF SU CH CLAIM WAS NOT MADE IN THE ORIGINAL RETURN. IN FACT, THE LD. CI T(A) HAS NOT DISPUTED THAT EVIDENCE IS ALREADY ON RECORD BUT REF USED THE CLAIM OF DEDUCTION ON THE LIMITED GROUND THAT PROVISION S OF SECTION 153A ARE MEANT FOR THE BENEFIT OF THE REVENUE AN D NOT FOR THE ASSESSEE. AS WE HAVE POINTED OUT IN THE PRECEDING PARAGRAPHS, THE ITAT CHENNAI BENCH, PUNE BENCH AND T HE BOMBAY BENCH HAVE CONSIDERED IDENTICAL ISSUE IN DETAI L AND OBSERVED THAT ONCE RETURN OF INCOME IS FILED UNDER SEC TION 153A OF THE ACT, IT HAS TO BE CONSIDERED AS A RETURN OF INCOM E FILED UNDER SECTION 139 OF THE ACT AND ALL OTHER PROVISIONS W OULD APPLY AS THOUGH IT IS A RETURN OF INCOME FILED UNDER SECTION 139 WHICH INCLUDES RECONSIDERATION OF ANY DEDUCTION PERMISSIBLE UNDER THE LAW. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS PLAC ED ALL THE FACTS ON RECORD EVEN IN THE ORIGINAL RETURN BUT DID NOT CLAIM SET OFF OF THE EXPENDITURE AND WHILE DECLARING ADDITIONAL INCOME, IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THOUGH HE STUCK TO THE INCOME DECLARED, SET OFF WAS CLA IMED AS PER LAW WHICH SHOULD NOT BE DENIED, OVERLOOKING THE F ACT THAT THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT S HOULD BE DEEMED TO BE THE RETURN FILED UNDER SECTION 139 OF THE A CT; IRRESPECTIVE OF THE QUESTION AS TO WHETHER IT IS FOR THE BENEFIT OF THE ASSESSEE OR DEPARTMENT, THE ASSESSEE IS ENTITLED TO C LAIM DEDUCTION OF INTEREST EXPENDITURE, PARTICULARLY WHEN THE FACTS ARE ALREADY ON RECORD. THE SAME OPINION WAS ECHOED BY A LL THE BENCHES OF THE ITAT AND THUS THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT, WHICH WAS IN THIS CONTEXT OF S ECTION 147 12 ITA.NO.975/HYD/2015 MR. A. SRINIVAS RAMA RAJU, HYDERABAD. OF THE ACT, SHOULD NOT BE IMPORTED INTO THE PROCEEDI NGS UNDER SECTION 153A OF THE ACT, MORE PARTICULARLY WHEN THE CLA IM OF THE ASSESSEE IS NOT A FRESH CLAIM UN-CONNECTED TO THE INCOM E DECLARED BUT THE CLAIM WAS LINKED WITH THE INCOME DE CLARED. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) WERE NOT JUSTIFIED IN DISALLOWING THE CLAIM OF DEDUCTION OF RS .24,57,965. WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION AND RE-COMPUTE THE INCOME ACCORDINGLY. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.08.2016. SD/- SD/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 19 TH AUGUST, 2016 VBP/- COPY TO 1. MR. A. SRINIVAS RAMA RAJU, HYDERABAD. C/O. P.R. DATLA & CO., CHARTERED ACCOUNTANTS, 6-3- 788/A/9, 1 ST FLOOR, DURGA NAGAR, AMEERPET, HYDERABAD-16. 2. THE DCIT, CENTRAL CIRCLE-1(1), HYDERABAD. 3. CIT(A)-XI, HYDERABAD. 4. PR. CIT (CENTRAL), HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE