Shri Rajesh A. Sompura, Ahmedabad V. The Dy. CIT, Central Circle-2(2), Ahmedabad

ITSSA 12/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3209 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAURAV NAHTA AR
• Section: 143(3); 153A; 194C; 132; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER (SS) ./ I.T(SS).A. NOS.12, 13 AND 14/AHD/2014 ( / ASSESSMENT YEARS:2005-06,2006-07&2009-10) RAJESH A.SOMPURA G-3, BALESHVER AVENUE OPP. RAJPATH CLUB, SG HIGHWAY, BODAKDEV AHMEDABAD / VS. THE DCIT CENTRAL CIR-2(2) AHMEDABAD # ./ ./ PAN/GIR NO. : AKUPS 3814 Q ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI GAURAV NAHTA, AR '#& )( / RESPONDENT BY : SHRI JAGADISH, CIT-DR *+ ), / DATE OF HEARING 26/04/2017 -./0 ), / DATE OF PRONOUNCEMENT 16/ 05 /2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE PRESENT BUNCH OF APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMON ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS)-III, AHMEDABAD [CIT(A) IN SHORT] DATE D 10/10/2013 FOR THE ASSESSMENT YEARS (AYS) 2005-06, 2006-07 AND 200 9-10. IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 2 - 2. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND BASED ON BROADLY SIMILAR FACTS, WE DEEM IT APPROPRIATE TO ADJUDICATE ALL THE THREE APPEALS BY THE CONSOLIDATED ORDER. IT(SS) NO.12/AHD/2014 AY 2005-06 ASSESSEES APP EAL 3. THE SUBSTANTIVE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LD.CIT(APPEALS)-III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE UNDER ASS ESSMENT FRAMED U/S.153A IN SPITE OF NO EVIDENCE OF UNACCOUN TED INCOME WAS FOUND DURING SEARCH PROCEEDING. 2. THE LD.CIT APPEALS III AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN PASSING APPELLATE ORDER DATED 10/10/2013 F OR A.Y. 2005-06 IN THE CASE OF APPELLANT BY CONFIRMING THE DISALLOWANCE MADE OF RS.572341/- INVOKING THE PROVI SION OF SECTION 40(A)(IA). 4. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL. A SEARCH ACTION UNDER S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFE RRED TO AS 'THE ACT') WAS CARRIED OUT IN THE ASSESSEE AND ITS GROUP ON 21 /04/2010. AS A CONSEQUENCE, PROCEEDINGS UNDER S.153A OF THE ACT WE RE INITIATED AGAINST THE ASSESSEE. PRIOR TO THE SEARCH, THE ASSESSEE HA S FILED ITS RETURN FOR AY 2005-06 ON 29/10/2005. THE RETURN WAS DULY ACCEPTE D UNDER S.143(1) OF THE ACT AND THE TIME LIMIT FOR COMPLETION OF REGULA R ASSESSMENT IS EXHAUSTED. ACCORDINGLY, NO ASSESSMENT IS PENDING O N THE DATE OF IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 3 - INITIATION OF SEARCH UNDER S.132 AS CONTEMPLATED IN SECOND PROVISO TO SECTION 153A OF THE ACT. IN OTHER WORDS, THE RETUR N FILED PRIOR TO SEARCH HAS ATTAINED FINALITY. 5. CONSEQUENT UPON SEARCH UNDER S.132 ON THE ASSESS EE, PROCEEDINGS UNDER S.153A WERE INITIATED FOR VARIOUS ASSESSMENT YEARS INCLUDING THE IMPUGNED ASSESSMENT YEAR IN RESPECT OF THE ASSESSEE HEREIN. CONSEQUENT UPON NOTICE UNDER S.153A, A RETURN OF INCOME WAS FI LED BY THE ASSESSEE UNDER S.153A DECLARING TOTAL INCOME AT RS.1,08,55,1 47/-. ASSESSMENT WAS MADE UNDER S.153A R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 19/03/2013. IN THE AFORESAID ASSESSMENT PURSUANT T O SEARCH, AN ADDITION OF RS.5,72,341/- WAS MADE BY INVOKING SECTION 40(A) (IA) OF THE ACT FOR NON-DEDUCTION OF TDS ON PAYMENT TO CLEARING AND FOR WARDING AGENT. THE CIT(A) SUSTAINED THE ACTION OF THE AO. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT(A). 7. THE LD.AR FOR THE ASSESSEE MR.GAURAV NAHTA, AT T HE OUTSET, SUBMITTED THAT THE ADDITION/DISALLOWANCE MADE IN TH E ASSESSMENT UNDER S.153A PURSUANT TO SEARCH IS NOT FOUNDED UPON ANY I NCRIMINATING MATERIAL. THE AO HAS MERELY PROCEEDED TO MAKE ROB BING ENQUIRIES IN THE SEARCH ASSESSMENT DE HORS ANY OBJECTIONABLE MATERIAL IN THE POSSESSION OF THE REVENUE AND EMBARKED MAKING ADDIT IONS/DISALLOWANCES IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 4 - AS PER THE NORMAL AND MACHINERY PROVISIONS OF THE A CT. THE LD.AR SUBMITTED THAT JURISDICTION REASSESSING THE COMPLET ED ASSESSMENT UNDER S.153A IS LIMITED TO SEARCH RELATED MATERIALS AND E VENTS. NO ADDITIONS HAVE BEEN MADE IN THE INSTANT CASE WITH REFERENCE TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH PER SE . THE ASSESSMENT FOR THE IMPUGNED AY 2005-06 STANDS CONCLUDED IN LAW AND IS NOT PENDING AT THE TIME OF SEARCH. THE LD.AR THEREFORE CONTENDED THAT NOTWITHSTANDING ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETE D ASSESSMENT HAS BEEN SOUGHT TO BE ABATED. THE ADDITIONS/DISALLOWAN CES MADE BY THE AO UNDER S.153A OF THE ACT WAS THUS ALLEGED TO BE OPPO SED TO LAW. IT WAS THUS ASSERTED THAT THE ISSUES ALREADY CONCLUDED ARE SOUGHT TO BE ASSESSED UNDER S.153A OF THE ACT REGARDLESS OF THE FACT THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND. THE LD.AR CONTENDED THAT IN VIEW OF SEVERAL DECISION HOLDING THE FIELD, THE AO IS NOT ENTITLED TO INDULGE IN MAKING ADDITIONS/DISALLOWANCES IN THE COURSE OF 153A PROCE EDINGS WITHOUT SHOWING NEXUS TO SOME INCRIMINATING MATERIAL. NO M ATERIAL HAS BEEN FOUND WHICH WOULD IMPLICATE THE ASSESSEE TOWARDS AN Y UNDISCLOSED INCOME IN ANY MANNER. IN THE CIRCUMSTANCES, IT WAS CONTENDED THAT THE CASE OF THE ASSESSEE IS CLEARLY COVERED BY THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. SAUMYA CONSTRUCTION PVT.LTD. REPORTED AT 387 ITR 529 (GUJ.) AND HOST OF OTHER DECISIONS. THE LD.AR ACCORDINGLY CONTENDED THAT ADDITIONS/DISALLWO ANCES MADE UNDER IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 5 - S.153A OF THE ACT ARE BAD IN LAW AND CONSEQUENTLY T HE ORDER OF THE CIT(A) UPHOLDING THE ACTION OF AO REQUIRES TO BE ST RUCK DOWN. 8. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDE RS OF THE AO AND THE CIT(A) AND SUBMITTED THAT THE ADDITIONS/DISALLO WANCES UNDER S.153A NEED NOT BE RESTRICTED OR LIMITED TO THE INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE LD.DR RELIED UPON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAK UMAR VS. CIT (CENTRAL) REPORTED AT 390 ITR 131 (KER.) FOR THE PR OPOSITION THAT THE PROVISIONS OF SECTION 153A NOWHERE MAKES IT CONDITI ONAL THAT DEPARTMENT HAS TO UNEARTH SOME INCRIMINATING MATERI AL TO CONCLUDE AGAINST THE INTEREST OF THE ASSESSEE IN ASSESSMENT PURSUANT TO SEARCH. IT WAS SUBMITTED THAT ONCE THE PROCEEDINGS ARE INITIAT ED UNDER S.153A, THE LEGAL EFFECT IS THAT EVEN IN A CASE WHERE THE ASSES SMENT ORDER IS CONCLUDED UNDER THE NORMAL PROVISIONS OF THE ACT, IT STANDS REOPENED AND THE AO IS ENTITLED TO REDO THE ASSESSMENT OF INCOME ALREADY D ISCLOSED PRIOR TO SEARCH, INCOME UNEARTHED AND ANY OTHER INCOME. HE ACCORDINGLY CONCLUDED THAT THE REVENUE IS NOT HAMSTRUNG BY THE PRESENCE OR OTHERWISE OF ANY INCRIMINATING MATERIAL. THE LD.DR , ACCORDINGLY, ASSERTED WITH VEHEMENCE THAT NO FAULT CAN BE ENVIS AGED IN THE ORDER OF CIT(A). IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 6 - 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SUBSTANTIVE ISSUE THAT ARISES FOR CONSIDERATION IN THE PRESENT APPEAL IS WHETHER THE PROCEEDINGS UNDERTAKEN AS TERMS OF S.1 53A, SHOULD NECESSARILY BE BASED ON INCRIMINATING MATERIAL FOUN D IN THE COURSE OF SEARCH, WHERE THE RETURN FILED PRIOR TO SEARCH ALRE ADY STANDS CONCLUDED UNDER S.143(1) ON ACCOUNT OF ESTOPPEL DUE TO BAR O F LIMITATION. IN THE INSTANT CASE, THE ASSESSMENT WAS FRAMED THE ASSESSM ENT WAS FRAMED IN FURTHERANCE OF SEARCH AS CONTEMPLATED UNDER S.153A OF THE ACT. THE ASSESSMENT SO MADE SEEKS TO ENCOMPASS REGULAR ITEMS OF ADDITIONS/DISALLOWANCES INDEPENDENT OF INCRIMINATIN G MATERIAL. IT IS ALSO ADMITTED POSITION IN THE INSTANT CASE THAT THE ASSESSMENT WAS CONCLUDED PRIOR TO SEARCH UNDER S.143(1) AND THUS D O NOT STAND ABATED IN TERMS OF SECOND PROVISO TO SUB-SECTION (1) OF S.153 A. 10. WE NOTE THAT THE LAW HAS BEEN CLEARLY LAID D OWN ON THE ISSUE BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAUMYA CO NSTRUCTION(SUPRA) REFERRED TO AND RELIED UPON BY THE ASSESSEE. THE HO NBLE GUJARAT HIGH COURT AFTER MAKING REFERENCE TO THE HOSTS OF THE DE CISIONS RENDERED IN THIS REGARD BY VARIOUS HIGH COURTS AND AFTER MAKING REFE RENCE TO THE PROVISIONS OF THE STATUTE EXPLAINED THE LEGISLATIVE FIAT IN THIS REGARD. HONBLE HIGH COURT HELD THAT IN EXERCISE OF POWERS OUTLINED UNDER S.153A OF THE ACT TOWARDS COMPLETED ASSESSMENTS, A DDITIONS OR DISALLOWANCES IN SECTION 153A PROCEEDINGS OUGHT TO BE MADE WITH IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 7 - REFERENCE TO INCRIMINATING MATERIAL FOUND IN THE CO URSE OF SEARCH. THE RELEVANT PARA OF THE JUDGEMENT IS EXTRACTED FOR REA DY REFERENCE HEREUNDER:- 18. IN THIS CASE, IT IS NOT THE CASE OF THE APPELL ANT THAT ANY INCRIMINATING MATERIAL IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND DURING THE COURSE OF SEARCH . AT THE RELEVANT TIME WHEN THE NOTICE CAME TO BE ISSUED UND ER SECTION 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF I NCOME. MUCH LATER, AT THE FAG END OF THE PERIOD WITHIN WHICH TH E ORDER UNDER SECTION 153A OF THE ACT WAS TO BE MADE, IN OTHER WO RDS, WHEN THE LIMIT FOR FRAMING THE ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS ABOUT TO EXPIRE THE NOTICE HAS BEEN ISSUED IN T HE PRESENT CASE SEEKING TO MAKE THE PROPOSED ADDITION OF RS.11,05,5 1,000/- ON THE BASIS OF THE MATERIAL WHICH WAS NOT FOUND DURING TH E COURSE OF SEARCH, BUT ON THE BASIS OF A STATEMENT OF ANOTHER PERSON IN THE OPINION OF THIS COURT, IN A CASE LIKE THE PRESENT O NE, WHERE AN ASSESSMENT HAS BEEN FRAMED EARLIER AND NO ASSESSMEN T OR REASSESSMENT WAS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SE CTION 153A OF THE ACT, ADDITIONS OR DISALLWOANCES CAN BE MADE ONL Y ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE SEAR CH OR REQUISITION IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURE O F SEARCH, HOWEVER, IT IS ON THE BASIS OF SOME MATERIL COLLECT ED BY THE ASSESSING OFFICER MUCH SUBSEQUENT TO THE SEARCH, TH AT THE IMPUGNED ADDITIONS CAME TO BE MADE. 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING TH AT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATE RIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOW ANCE IN RESPECT OF ALL THE SIX ASSESSMENT YEARS. IN THE OP INION OF THIS COURT, IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 8 - THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INAS MUCH AS, THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 15 3A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEA RCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLO SED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSES SMENT YEAR, NO INCRIMINATING MATERIAL IF FOUND, NO ADDITION OR DIS ALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESSMENT YEAR IN EXER CISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSES SMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HI GH COURT IN THE CASE OF JAI STEEL (INDIA), JODHPUR V. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA). BESIDES, AS RIGHTLY POINTED OU T BY THE LEARNED COUNSEL FOR THE RESPONDENT THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX-1, V. JAYABEN RATILAL SO RATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANN OT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSES SING OFFICER CAN REOPEN AND/O9R ASSESS THE RETURN WITH RESPECT TO SI X PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MA TERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT T O THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR. 11. ON FACTS, IT IS ADMITTED POSITION THAT NO INC RIMINATING MATERIAL HAS BEEN FOUND WITH REFERENCE TO ADDITIONS/DISALLOWANCE S WHICH ARE SUBJECT MATTER OF PRESENT APPEAL. THUS, THE ACTION OF THE REVENUE IS DIRECTLY AT ODDS WITH THE JUDICIAL WISDOM. THE RELIANCE WAS PLAC ED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF E.N. GO PAKUMAR (SUPRA) ON BEHALF OF THE REVENUE FOR THE PROPOSITION THAT THE AO IS CONTINUED TO RETAIN ORIGINAL JURISDICTION AS WELL AS JURISDICTIO N CONFERRED ON HIM UNDER IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 9 - S.153A IN THE ASSESSMENT PROCEEDINGS PURSUANT TO SE ARCH. WE ARE NOT PERSUADED BY THE AFORESAID PLEA OF REVENUE IN THE L IGHT OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT GOVERNING BY THE IDENTICAL ISSUE WHICH SEEKS LIMIT THE SCOPE OF ASSESSMENT UNDER S.1 53A. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPUGNED ADD ITIONS/ DISALLOWANCES MADE BY THE AO IN ASSESSMENT UNDER S. 153A ACT ARE CLEARLY BEYOND THE SCOPE OF AUTHORITY VESTED UNDER STATUTE OWING TO ABSENCE OF ANY INCRIMINATING MATERIAL OR EVIDENCE D ETECTED AS A RESULT OF SEARCH. IT IS PERTINENT TO NOTE THAT NO REFERENCE TO ANY INCRIMINATING MATERIAL UNEARTHED IN SEARCH IS FOUND IN THE ORDER S OF THE AO OR CIT(A) FOR THE PURPOSE OF MAKING IMPUGNED ADDITION/DISALLO WANCE UNDER CHALLENGE. ACCORDINGLY, WE FIND THAT THE ORDER OF THE CIT(A) CONFIRMING THE ADDITION/DISALLOWANCE IN APPEAL CANNOT BE SUSTA INED IN LAW. 12. SINCE WE FIND THAT THE IMPUGNED ADDITION/DIS ALLOWANCE MADE BY THE AO IS NOT PERMISSIBLE IN LAW AT THE THRESHOLD, WE D O NOT CONSIDER IT EXPEDIENT TO EXAMINE THE MERITS OF THE ADDITION/DIS ALLOWANCE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT (SS)A NO.12/AHD/2014 FOR AY 2005-06 STANDS ALLOWED. IT(SS)A NO.13/AHD/2014 AY 2006-07 IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 10 - 14. THE GRIEVANCES RAISED BY THE ASSESSEE IN THE CAPTIONED APPEAL IS IDENTICAL TO IT(SS)A NO.12/AHD/2014 FOR AY 2005-06. THE FACTS AND ISSUES ARE INVOLVED IN THE CAPTIONED APPEAL BEING A NALOGOUS TO IT(SS)A NO.12/AHD/2014 WHEREIN THE GROUNDS RAISED HAVE BEEN DISCUSSED IN EARLIER PARA IN GREAT LENGTH. ACCORDINGLY, OUR OB SERVATIONS MADE IN IT(SS)A NO.12/AHD/2014 FOR AY 2005-06(SUPRA) SHALL APPLY MUTATIS MUTANDIS TO THE CAPTIONED APPEAL. 15. FOR PARITY OF REASONS, WE ALLOW THE CAPTION ED APPEAL OF THE ASSESSEE IN IT(SS)A NO.13/AHD/2014 FOR AY 2006-07. IT(SS)A NO.14/AHD/2014 AY 2009-10 16. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THE LD.CIT APPEALS III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE UNDER ASS ESSMENT FRAMED U/S.153A IN SPITE OF NO EVIDENCE OF UNACCOUN TED INCOME WAS FOUND DURING SEARCH PROCEEDING. 2. THE LD.CIT(APPEALS) III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 10/10/2013 F OR A.Y. 2009-10 IN THE CASE OF APPELLANT BY CONFIRMING THE DISALLOWANCE MADE OF RS.191430/- INVOKING THE PROVI SION OF SECTION 40(A)(IA). IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 11 - 17. IN THIS APPEAL, THE FACTS ARE AT VARIANCE WITH THE EARLIER APPEALS. IN THIS CASE, THE RETURN FOR AY 2009-10 WAS FILED ON 0 6/08/2009. AS NOTED, THE SEARCH WAS CONDUCTED ON 21/04/2010. THEREFORE, AT THE TIME OF INITIATION OF SEARCH, THE TIME LIMIT FOR COMPLETION OF REGULAR ASSESSMENT HAD NOT EXPIRED. THUS, THE PRESENT APPEAL STANDS O N A SOMEWHAT DIFFERENT FOOTING THAN THAT OF EARLIER APPEALS INASMUCH AS TH E ASSESSMENT FOR AY 2009-10 (SUBJECT MATTER OF APPEAL) WAS PENDING ON T HE DATE OF INITIATION OF SEARCH UNDER S.132 AND THUS STANDS ABATED AS CON TEMPLATED BY SECOND PROVISO TO SECTION 153A OF THE ACT. THEREFORE, THE ACTION OF THE AO TO EXAMINE VARIOUS ISSUES ON MERITS CANNOT BE SAID TO BE IN CONFLICT AND CONTRADICTION TO THE SCOPE OF ASSESSMENT SECTION 15 3A OF THE ACT. IN SHORT, WE HOLD THAT THE SCOPE OF ASSESSMENT UNDER S .153A ENCOMPASSES ADDITIONS/DISALLOWANCES REGARDLESS OF ANY INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH IN CASE WHERE THE ASSES SMENT, AT THE TIME OF SEARCH, IS PENDING AND CONSEQUENTLY ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. 18. IN THE RESULT, GROUND NO.1 OF THE ASSESSEE IS D ISMISSED. 19. GROUND NO.2 OF THE ASSESSEES APPEAL CONCERNS DISALLOWANCE OF RS.1,91,430/- ON MERITS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 12 - 20. THE LD.AR FOR THE ASSESSEE SUBMITTED AT THE OUT SET THAT MAJOR REASONS CITED BY THE AO FOR MAKING DISALLOWANCE WAS SUMMARIZED BY THE CIT(A) IN PARA NO.11 OF ITS ORDER. THE LD.AR ADVER TED OUR ATTENTION TO THE REASONS SO LISTED BY THE CIT(A) AND SUBMITTED T HAT THE ASSESSEE HAS MADE PAYMENTS IN THE NATURE OF RAILWAY FREIGHT AND REIMBURSEMENT OF EXPENSES. IN THESE SITUATIONS, THE TDS IS NOT DEDU CTIBLE. THE LD.AR FURTHER SUBMITTED THAT PAYMENTS TO THE RAILWAY AGEN CY WERE MADE IN SMALL SUM OVER THE PERIOD TOWARDS RAILWAY FREIGHT. THE LD.AR REFERRED TO PROVISIONS OF SECTION 194C AND SUBMITTED THAT RA ILWAY FREIGHT IS EXCLUDED FROM ITS APPLICABILITY. IT WAS FURTHER SU BMITTED THAT TOTAL SUM PAID TO THE AGENCY FROM TIME TO TIME WAS LESSER THA N THE THRESHOLD FOR DEDUCTION OF TDS AND THEREFORE THE ASSESSEE WAS NOT DEDUCTED TDS AND THUS NO NON-COMPLIANCE OF TDS PROVISIONS CAN BE ENV ISAGED. 21. THE LD.AR FURTHER SUBMITTED THAT CERTAIN PAYMEN TS AS REFLECTED IN THE LEDGER ACCOUNT ARE IN THE NATURE OF REIMBURSEME NT TO THE PARTY AND THUS DO NOT FORM PART OF THE TRADING RECEIPTS OF TH E CLEARING AND FORWARDING AGENT AND THEREFORE ON THIS SCORE ALSO, THE ASSESSEE WAS NOT ALLOWABLE FOR DEDUCTION OF TDS. THE LD.AR ACCORDIN GLY SUBMITTED IN CONCLUSION THAT THERE IS NO LEGAL JUSTIFICATION FOR PRESSING SECTION 40(A)(IA) INTO SURVICE. HE ACCORDINGLY PLEADED T HAT DISALLOWANCE OF RS.1,91,430/- UNDER S.40(A)(IA) OF THE ACT REQUIRES TO BE CANCELLED. IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 13 - 22. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE CIT(A). 23. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORDS. WE FIND, AT THE OUTSET, THAT THE CASE OF THE ASSESSEE IS COVERED BY THE EXCLUSION PROVIDED IN EXPLANATION-4 TO SECTION 194C OF THE ACT. AS PER THE EXPLANATION, WORK SHALL INCL UDE CARRIAGES OF GOODS OR PASSENGERS BY MODE OF TRANSPORT OTHER THAN BY RA ILWAYS. IT IMPLIES THAT WORK AS CONTEMPLATED UNDER S.194C DOES NOT ENVISA GE PAYMENTS TOWARDS CARRIAGES OF GOODS BY RAILWAYS. THIS BEING SO, WE FIND MERIT IN THE PLEA OF THE ASSESSEE THAT ITS CASE DO NOT FALL WITHIN THE FOUR CORNERS OF SECTION 194C OF THE ACT. COUPLED WITH THIS, THE AS SESSEE HAS ALSO MADE OUT A CASE THAT A PAYMENT IS MADE LESSER THAN THE T HRESHOLD LIMIT AS WELL AS A PART OF THE PAYMENT IS IN THE NATURE OF REIMBU RSEMENT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT PROVISIONS O F SECTION 40(A)(IA) DO NOT SET INTO MOTION. THUS THE DISALLOWANCE MADE F OR ALLEGED DEFAULT OF S.194C REQUIRES TO BE REVERSED. 24. IN THE RESULT, GROUND NO.2 OF ASSESSEES APPEAL IS ALLOWED. 25. CONSEQUENTLY, ASSESSEES APPEAL IN IT(SS)A NO.1 4/AHD/2014 FOR AY 2009-10 IS PARTLY ALLOWED. IT(SS)A NOS.12,13&14/AHD/2014 RAJESH A.SOMPURA VS. DCIT ASST.YEARS 2005-06, 2006-07& 2009-10 - 14 - 26. IN THE COMBINED RESULT, IT(SS)A NOS.12/AHD/2014 AY 2005-06 AND 13/AHD/2014 AY 2006-07 ARE ALLOWED, WHEREAS I T(SS)A NO.14/AHD/2014 FOR AY 2009-10 IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16/ 05 /2017 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 05 /2017 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-III, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 27.4.17 (DICTATION-PAD PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.5.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER