M/s Famous Enterprises, Muzaffarpur V. ACIT, Central Circle-, Muzaffarpur

ITSSA 2/PAT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5139 (ITAT-PATNA)
• Duration Of Justice: 4 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 132; 143(3); 142(1); 133A; 153A; 133(6); 143(2); 153C

Judgement Text

IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA ‘E-COURT’, KOLKATA [Virtual Court Hearing] Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member I.T.(SS)A. Nos.02, 03, 04, 05/PAT/2018 Assessment years : 2010-11, 2011-12 2012-13, 2013-14 M/s. Famous Enterprises,.................................................................Appellant Manjhri Nikunj, Amgola Road, Muzaffarpur, Bihar-842001 [PAN: AAAFF4958J] -Vs.- Assistant Commissioner of Income Tax,.........................................Respondent Central Circle, Muzaffarpur, Bela Kothi Bela, Muzaffarpur & I.T.(SS)A. Nos.06, 07, 08, 09, 10, 11 & 12/PAT/2018 Assessment years : 2007-08, 08-09 09-10, 10-11, 11-12, 12-13 & 2013-14 M/s. Agro Clearing Enterprises,........................................................Appellant Manjhri Nikunj, Amgola Road, Muzaffarpur, Bihar-842001 [PAN: AAJFA1176C] -Vs.- Assistant Commissioner of Income Tax,.........................................Respondent Central Circle, Muzaffarpur, Bela Kothi Bela, Muzaffarpur Appearances by: Shri Rakesh Kumar, Advocate, appeared on behalf of the assesseee Shri Sanjay Mukherjee, CIT(D.R.), appeared on behalf of the Revenue Date of concluding the hearing : February 16, 2022 Date of pronouncing the order : February 23, 2022 IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 2 O R D E R Per Bench:- This bunch of 11 (eleven) appeals is directed at the instance of two assessees against the separate orders of ld. Commissioner of Income Tax (Appeals) dated 13.10.2017 passed in the case of each assessee for Assessment Years 2010-11 to 2013-14 (in the case of M/s. Famous Enterprises) and for Assessment Years 2007-08 to 2013-14 (in the case of M/s. Agro Clearing Enterprises). 2. Both the assessees have taken verbatim same grounds of appeals in all these assessment years except variation of amounts. We also find that the impugned orders of ld. CIT(Appeals) are also identical, therefore, for the facility of reference, we take facts from the case of M/s. Famous Enterprises, Muzaffarpur. In the assessment year 2010-11, the assessee has taken four grounds of appeal, but in brief, its grievances revolve around a single issue namely; that the ld. CIT(Appeals) has erred in upholding the order of ld. Assessing Officer whereby an addition of Rs.1,68,646/- was made by making a disallowance out of rent paid by the assessee. 3. Similarly in the case of M/s. Agro Clearing Enterprises is concerned, it has also taken four grounds of appeal in A.Y. 2007-08, wherein briefly its grievance revolves around a single issue namely ld. CIT(Appeals) has erred in confirming the disallowance of rent paid by the assessee at Rs.9,67,257/-. In rest of the grounds in case of both the assessees, the assessees have taken peripheral arguments for challenging the impugned orders. IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 3 4. The brief common facts pertaining to both the assessees are that they are the partnership firms engaged in the business of Clearing and Forwarding Agency pertaining to Tata Chemicals Limited, Sri Ram Fertilisers. Apart from the above two concern M/s. Famous Enterprises was also working as a Clearing and Forwarding Agent of M/s. Indo Gulf Fertilizers. A search & seizure operation under section 132 of the Income Tax Act was carried out at the shop-cum-office premises of M/s. Gobardhan Ram Ramashish Prasad Gupta Jeweller’s Group on 28.06.2012. Apart from their business premises, the residential premises of the partners as well as Directors were covered under search proceedings. A survey under section 133A was carried out at the business premises of both the assessees. The assessee-firms are having two partners, namely Shri Manoj Kumar Gupta and Shri Bhubneshwar Prasad Gupta. On conclusion of the search and survey proceedings, ld. Assessing Officer has issued notice under section 153C in the case of both the assessees for A.Y. 2007-08 to 2012-13. Ld. Assessing Officer further issued notice under section 142(1) for A.Y. 2013-14. Returns were filed in response to such notice or earlier returns filed by the assessee were reiterated. Thereafter notices under section 143(2) and 142(1) were duly served upon the assessees. 5. The Assessing Officer has passed a very brief assessment order in the case of both the assessees. He has narrated the background of search, details of cash found and seized at the different premises of the family members or other business organizations of the partners of assessees. He thereafter made a reference to the issuance of notice under section 153C and 143(2) etc. The Assessing Officer thereafter discussed the issue of disallowance of rent. A brief finding from the assessment year, i.e. A.Y. 2010-11 in the case of M/s. Famous Enterprises and A.Y. 2007-08 in the case of M/s. Agro Clearing Enterprises is read as under:- IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 4 “M/s. Famous Enterprises Assessment Year: 2010-2011 “Godown Rent:- The assessee, during the year under assessment made a receipt of Rs.11,80,940/- from the principal companies against bills raised by the assessee on this account. Godowns were taken on Rent, by the assessee. Payments to owners of the godowns were made by the assessee, During the course of hearing the assessee filed a statement showing details of godown rent paid by the assessee for A.Y. 2007-08 to 2013-14. As per statement rent paid for A.Y. 2010-11 amounts to Rs.10,12,294/- shown as under: S . N o . A s s t. Y e a r N a m e o f t h e p a r t y D e s t i n a t i o n A m o u n t o f g o d o w n r e n t T D S d e d u c t e d N e t a m o u n t p a i d 0 1 . 2 0 1 3- 1 4 M i t h i l a P r o p e r t i e s P u b . M u z a f f a r p u r 1 0 , 1 2 , 2 9 4 /- 1 , 5 4 , 0 1 0 /- 8 , 5 8 , 2 8 4 /- T o t a l 1 0 , 1 2 , 2 9 4 /- 1 , 5 4 , 0 1 0 /- 8 , 5 8 , 2 8 4 /- It is seen that while computing income for the year, the assessee has claimed Rs.11,80,940/- as godown rent, the amount that has been received from the companies. It is seen from statement "godown rent paid to parties" except for rent paid of Rs.10,12,294/- for Mithila Properties Publication. No details of balance amount of Rs.ll,80,940/- minus Rs.10,12,294/- i.e Rs.1,68,646/- were filed by the assessee during hearing. No TDS was made for payment to others even no details of such payment of godown rent was filed. During the course of hearing the matter was also discussed with the AR of the assessee as per order sheet noting dated.22.01.2015. The AR of the assessee expressed his inability to substantiate such claim in full. After a careful consideration of facts and circumstances of the case, the payment of godown rent to the extent of 10,12,294/- is allowed and the balance of Rs.1,68,646/- is disregarded and is added back to the total income of the assessee”. “M/s. Agro Clearing Enterprises Assessment Year: 2007-2008 “Godown rent :- The assessee, during the year under asessment made a receipt of Rs.45,65,736/- from the principal companies against bills raised by him on this account. Godowns were taken on Rent, by the assessee. During the course of hearing the assessee filed a statement showing details of godown rent paid for A.Y. 2007-08 to 2013-14. As per statement rent paid for A.Y. 2007-08 amounts to Rs. 22,02,835/- shown as under: IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 5 It is seen that while computing income for the year, the assessee has claimed Rs.35,65,534/- as godown rent, the amount that has been received from the companies. But as per statement filed during the course of hearing amount of godown rent paid is found to be Rs. 22,02,835/- It is seen from statement "godown rent paid to parties" except for rent paid of Rs.12,35,578/- to Govind Prasad Rajgaria, Vinod Saraf, Renu Saraf, Sonal Saraf, Bihar State Suger Corp. Ltd., Tarkeshwar Nath Kedia, Parwati Devi Khetan, Sangita Devi Khetan, Krishna Kr. Boobna, R. B. Boobna & Sons's & Bihar Fruits & Vegetable, No TDS was made for payments to others. For the balance the assessee had claimed to have paid rent to 14 nos. of persons and small amounts were put against their names, so that no TDS were required to be made. Further, it is noted that such payments where no TDS was made payments were all made in cash. For verification of the assessee's claim ITI Mr. Rizwanur Rahaman attached to this office was deputed to enquire about the 14 no's of Godown owners, whom the assessee claimed to have paid rent in cash. Inspector Shri Rahaman submitted his report that no godown or Godown owners were located or found after his several visits. References were also made u/s. 133(6) of the IT Act to verify genuineness of claim of godown rent paid in cash to the land lords at the addresses provided by the assessee during hearing. Most of the letters were sent back by the postal IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 6 department "UNSERVED", mentioning not found/not known/left etc. Under the circumstances it was observed that claim of expenditure under godown rent is not fully verifiable. During the course of hearing the matter was also discussed with the AR of the assessee as per order sheet noting dated.22.01.201S. The AR of the assessee also expressed his inability to substantiate such claim in full. After a careful consideration of facts and circumstances of the case, the payment of godown rent to the extent of 12,35,578/- is allowed and the balance of Rs.9,67,257/- is disregarded and is added back to the total income of the assessee”. Under identical findings, disallowances have been made in other assessment years in the case of both the assessees. 6. Dissatisfied with the disallowances, the assessee carried the matter in appeal before the ld. 1 s t appellate authority in all these assessment years. The ld. CIT(Appeals) has disposed of the appeals of the assessee (M/s. Famous Enterprises for A.Y. 2010-11 to 2013-14 vide impugned order dated 13.10.2017). Similarly by way of a common order, appeals of M/s. Agro Clearing have also been disposed of by the ld. CIT(Appeals) vide order dated 13.10.2017. 7. With the assistance of ld. CIT(DR), we have gone through the record carefully. A perusal of the impugned orders passed on the appeals of both the assessees would reveal that they are verbatim same without touching any specific material. The orders are theoretical discussion of the position of law without referring to any particular facts situation for making a reference. We take note of the finding recorded by the ld. CIT(Appeals) in the case of M/s, Famous Enterprises:- IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 7 “Appellate finding and decision:- I have carefully gone through the assessment order and also the submissions made by the appellant in the course of present proceedings. Since, there are common grounds of appeal for the assessment years 2007-08 to 2012-13, accordingly, these appeals are taken up together for adjudication. It is observed that action under section 132 (1) of the Act was carried out at the residential and business premises of M/s. Goberdhan Ram Ramashish Prasad Gupta group of jewelers at Sonapatti, Muzaffarpur on 28th June 2012. Simultaneously, action under section 133A of the Act was carried out at the business premises of the appellant, a partnership firm comprising of 2 partners namely Sri Manoj Kumar Gupta and Sri Bhubaneshawar Prasad Gupta. Consequent upon search and survey action at the residential and business premises of the group proceedings under section 153C of the act was initiated against the appellant by the issue of notice dated 23rd April 2014 for the assessment years 2007-08 to 2012-13. Pursuant to the said notice, returns for the relevant assessment years where duly filed. It is also found that the appellant was engaged in the business of Carrying-and Forwarding Agent of Mj s Tata Chemicals Ltd, Indo Gulf Fertilisers and Sri Ram Fertilisers and Chemical. For the purposes of the said agency business of the fertilisers, the appellant had taken godowns on rent for storage of their products for which they were in receipt of rent from their Principals and in turn they were paying rent to the respective godowns owners. It has been contended by the appellant that for the purposes of agency business, there was requirement of ample spaces for storage of products and for the same the appellant had to take temporary spaces from various persons as per availability of the godowns. In the course of search operation and subsequent search assessment proceedings, it has been found that the appellant had been paying rent in cash to the godowns owners from whom premises were apparently taken on temporary basis. It has been also categorically found that in the cases premises for storage of products have been taken IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 8 up on a permanent basis, payment of rent were being made by way of cheque and applicable and appropriate taxes were also deducted at source. However, in the cases wherever premises have been taken on temporary basis, payment of rent were being made by way of cash and more surprisingly, applicable and appropriate taxes were not deducted at source. It would also be very significant to note here that neither the so-called premises taken on rent nor the spaces which have been taken on temporary basis for storage of products of its agency business were not found to be in existence. As regards, the payments of rents in cash without TDS, no satisfactory explanation was offered in the course of assessment proceedings or at the appellate stage as well. It was merely reiterated that this aspect could not be examined by the AO as his inspector so deployed did not visit the sites as per the addresses given and made stray enquiries during odd hours and drew his own conclusion regarding non- existence of godowns and godown owners. It was also submitted that mere non delivery of notices does not amount to non-payment of rent and AO must have given them opportunity to produce the owners and confront them accordingly. But, it would be pertinent to note in this regard that the AO, in the course of assessment proceedings, had confronted the aspect of enquiry carried out by his office through the inspector by the order sheet entry dated 22nd of January 2015. But the AR of the appellant expressed his inability to substantiate the claim of payment of rent leading the AO to conclude that the payment of rent in cash for godowns taken on temporary basis is therefore not genuine expenses and accordingly, brought the same to tax in the hands of the appellant. However, as contended by the A.R. of the appellant that the godowns owners can be produced for verification before the AO and also that even the payments of rent to individual person below the limit of TDS as well is disallowed, a fresh opportunity was allowed by way of Remand Report which was called for by this office letter No. CIT(A)- 3/RR/PAT/2016-17/1639 dated 18th November, 2016, And the AO submitted its report by his office through Range IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 9 Head vide letter No. JCIT/CR-1/Remand Report/2016- 17/3565, dated 31th January, 2017 which is extracted as under:- "In connection with the above the AR of the assessee appeared and produced Ledger account of godown rent in support of his claim. The assessee has claimed that the disallowed amount of Rs.1,68,646/- has already been included in service charges forming part of profit and loss account. The A.R. however could not produce the ledger account of service charges and any other documents to substantiate his claim. In view of the above the claim of the assessee is not tenable, hence not acceptable in this case." A copy of the report was made available to the AR of the appellant for the necessary rejoinder, if any. But the facts on record particularly in respect of payment of rent in cash and that too without deduction of tax at source remained uncontroverted. As against, this it has been contended by the appellant that no incriminating material was found in respect of the appellant for the assessment years regarding rent paid on cash, In absence of incriminating material, the order passed under section 153C of the Act is not valid in view of the several judicial pronouncements. In this regard the AR of the appellant placed reliance on judgements of the honourable High Court's of Delhi and Kolkata in the cases of Kabul Chawla, LMJ International and submitted that the assessment order under appeal is bad in law. The controversy of addition being made in the absence of any incriminating material being found in the course of search operation has, it seems, now been laid to rest in various judicial pronouncements. It would be pertinent to observe that Section 153A of the Act postulates the assessment in cases of search or requisition under section 132 or under section 132A of the Act respectively. The said section envisages that the Assessing Officer shall assess or reassess the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. The second IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 10 proviso to section 153A(1) of the Act also prescribes that assessment or re-assessment, if any, relating to any assessment year falling within the period of six years referred to in sub- section(1) of section 153A ITA of the Act, which is pending on the date of initiation of search or making of requisition as the case may be , shall abate. In other words, in so far as the pending assessments are concerned, the competence of the Assessing Officer to make the original assessment converges with the assessment to be made u/s 153A of the Act, Le. only one assessment shall be made for such assessment years based on the findings of the search as well as any other material existing or brought on record by the Assessing Officer. Notably, there would assessments in the period of the six assessment years identified in section 153A(l) of the Act, which would have become final (i.e. which are not pending on the date of search); such assessments do not abate in terms of the second proviso to sec.153A(I) of the Act. In this context, it would be pertinent to refer to the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava-Sheva) 58 Taxmann.Com 78 (Born) wherein the scope of an assessment under section 153A of the Act has been considered. One of the points addressed by the Hon'ble High Court was whether the scope of assessment under section 153A of the Act envisages additions, which are otherwise not based on any incriminating material found during the course of search. As per Hon'ble High Court, no addition could be made in respect of the assessment that had become final in the event no incriminating material was found during the course of search. The Hon'ble High Court also noticed its earlier judgment in the case of Murali Agro- Products Ltd.(ITA No. 36 of 2009) and elaborately culled out the scope and ambit of the assessment and reassessment of total income under section 153A(I) of the Act read with the proviso thereof. The Hon'ble Bombay High Court in Continental Warehousing corporation (supra) has ruled that an unabated assessment under section 153A(1) would not encompass an addition, if no incriminating material is found during the course of search because in such a case, the original assessment had become final. However, in order to decide the issues involved in the present appeal it has to be seen that what are the provisions of section 153A of Act and also the judicial decisions by the various high Courts and benches of IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 11 respective ITAT. In this regard, it would be of particular relevance to look into the provision of section 153A of the Act which lays down that 153A. Assessment in case of search or requisition.- Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books count, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and 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; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Explanation.-For the removal of doubts, it is hereby declared that,-....... From the plain reading of this provision as well judicial pronouncements on the subject leads to following conclusion that IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 12 "(i) Carrying out search against a person u/s 132 of the Act gives jurisdiction to the AO to issue notices u/s 153A (or u/s 153C as the case may be) for 6 assessment years prior to the A.Y. in which search is carried out. (ii) The A.O. is bound to issue notice to the Year of the assessee to furnish the returns for six assessment years prior to the year of the search, but at another place. (iii) Where incriminating material relating to earning of income not declared to the department is found in the search than there is no dispute as to the jurisdiction as well as scope of assessment. Where an assessment for any particular A.Y. is pending on the date of the search than proceedings relating to that assessment will abate and scope of assessment will be wide enough to include issues emerging from abated proceedings as well as issues emerging from seized incriminating material. The Hon'ble High Court of Delhi in the landmark judgment of Kabul Chawla 380 ITR 573 (Delhi), had held that completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment. In this case, there is definite reference to seized or incriminating material leading the AO to conclude that there has been suppression of profit or inflation of expenses by payment of rent in cash to non-existent godown owners without deduction of tax at source. No doubt, addition in search assessments cannot be made in absence of incriminating materials as held in several judicial pronouncements but in the same judgements it has been categorically held that additions can be made if there are incriminating materials found in the course of search operation indicating suppression of income. In the instant case, it has been clearly found out that godowns rents paid in cash and without deduction of taxes at source to the non- existent godowns owners are not genuine expenditure. Such findings have been clearly come out in the course of search operation only. As regards claim of the appellant that no IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 13 incriminating material in respect of payment of rent in cash to non-existent godowns owners being not found in the course of search operation, it has to be understood in the context of fact that there cannot be any stark existence of material than those available records in the instant case. Thus, the contention of the appellant is not only devoid of merit but also without any legal basis. In the instant case, the AO had categorically referred to incriminating material/evidences found during the search based on which addition had been made. Therefore following the decision of the Honble High Court and various ITAT Benches, it can very well be said that the AO had valid jurisdiction to make addition under section 153C of the Act. Relying on the judgement of the hon'ble ITAT, Pune in the case of Samrat Beer Bar vs CIT, the Hon’ble jurisdictional Tribunal in one of its recent decision delivered in the case of Hari Om Verma in IT(SS)A No.70/PAT/2013, dated 13-04- 2017, on the basis of materials available on record had held that in the cases of assessment framed under section 153A of the Act, addition can be made in such assessments if based on the materials and not otherwise. In view of the aforesaid and respectfully following the decision of Hon’ble Courts Supra as well as jurisdictional ITAT, Patna, the action of the A.O., in this regard, is as per law is being upheld”. 8. Though ld. Counsel for the assessee sought adjournment on the ground that the assessees wished to file written submission along with paper book but keeping in view the smallness of the issues involved in all these appeals and their pendency in the Tribunal from the last four years, we did not accede to his request and commence the hearing with the assistance of both the sides. 9. A perusal of the assessment orders except for A.Y. 2013-14 would reveal that these are the assessment orders passed under section 153C of the Income Tax Act. Section 153(C) of the Income Tax Act contemplates IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 14 that if during the course of search, some incriminating material was found exhibiting the escapement of income of some other persons than the searched persons, then such material would be transmitted to the Assessing Officer having jurisdiction over such other persons. The Assessing Officer of such other persons would also record his satisfaction and thereafter commence the proceedings against the assessee. The assessments are required to be made on the basis of the seized material found during the course of search. It is also pertinent to observe that the Assessing Officer of the searched persons required to record his satisfaction that action against any other person, to whom material belonging to before 01.06.2015 was found during the course of search, is required to be taken. Though the assessees have not challenged about the issue of recording of satisfaction and it is to be kept in mind that the assessments under section 153C are to be appreciated with the angle that additions ought to be made on the basis of seized material found during the course of search and such material was transmitted by the Assessing Officer of the searched persons to the Assessing Officer of the present assessees i.e. (another person). We have extracted the finding of the Assessing Officer whereby he has disallowed the godown rent. In the whole finding, he has not made any reference about any seized material. He has simply made a reference to certain details submitted by the assessee in tabulation on the asking of the Assessing Officer. To our mind, such type of addition in these years cannot be made. We could appreciate the case of Assessing Officer, if additions are made by making reference of the details exhibiting the fact that godown rent paid to non-existing entities. This fact should, however, be discovered during the course of search and material pertaining to that effect ought to have been transmitted by the Assessing Officer of the searched person. IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 15 10. Referring to the impugned orders of ld. CIT(Appeals), we find that the ld. first appellate authority made a reference to the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla, Hon’ble Bombay High Court in the case of Continental Warehousing Corporation and thereafter culled out the position of law for the purpose of passing an assessment under section 153A. It is to be kept in mind that assessment under section 153A is meant for a serched person and not for other person. No doubt after recording the satisfaction for the purpose of section 153C and transmission of the searched material to the Assessing Officer of the other person, the other proceedings are identical to that of 153A. But the ld. First appellate authority has nowhere taken into cognizance what are the conditions for framing assessment under section 153C. At the cost of repetition, we would like to take note of the concluding paragraph of ld. CIT(Appeals):- In the instant case, the AO had categorically referred to incriminating material/evidences found during the search based on which addition had been made. Therefore following the decision of the Honble High Court and various ITAT Benches, it can very well be said that the AO had valid jurisdiction to make addition under section 153C of the Act. Relying on the judgement of the hon'ble ITAT, Pune in the case of Samrat Beer Bar vs CIT, the Hon’ble jurisdictional Tribunal in one of its recent decision delivered in the case of Hari Om Verma in IT(SS)A No.70/PAT/2013, dated 13-04- 2017, on the basis of materials available on record had held that in the cases of assessment framed under section 153A of the Act, addition can be made in such assessments if based on the materials and not otherwise. 11. A perusal of the above paragraph would reveal that the ld. first appellate authority had made reference that perusal of the assessment order would reveal that the ld. Assessing Officer has referred incriminating material/evidence. We have taken cognizance of the finding IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 16 of the Assessing Officer but there is no such material in the assessment order. Thus this finding is factually incorrect and is only theoretical narration. Therefore, in view of the above discussion, the disallowances of godown rent in all these assessment years are not sustainable except in A.Y. 2013-14. The appeals of both the assessees are allowed, i.e. IT(SS)A Nos. 2, 3 & 4/PAT/2018 in the case of M/s. Famous Enterprises and IT(SS)A Nos. 6, 7, 8, 9, 10 & 11/PAT/2018 in the case of M/s. Agro Clearing Enterprises. 12. Now we take up the assessment year 2013-14 in both the cases, i.e. IT(SS)A No. 5/PAT/2018 in the case of M/s. Famous Enterprises and IT(SS)A. No. 12/PAT/2018 in the case of M/s. Agro Clearing Enterprises. These are two assessment years, where according to the ld. CIT(DR), assessment were framed under section 143(3) read with section 153C. In other words, he submitted that these are the regular assessments also, where the issue regarding admissibility of godown rent can be examined. 13. We have perused the impugned orders. As far as the first appellate authority is concerned, it did not deal with specific issues. We have reproduced the complete reasoning of the ld. first appellate authority. A perusal of the assessment order would reveal that Assessing Officer has tabulated the details of party to whom godown rent was paid, amount of godown rent and details of TDS. Before visualizing the finding of the Assessing Officer, it is necessary to bear in mind certain basic details. It is evident that both the assessees were in the business of Clearing Agents for three famous companies, namely Tata Chemicals Limited, Shri Ram Fertilizers and Indo Gulf Fertilizers. The principal companies were used to reimburse the rent for godowns used for storing their products. The Assessing Officer found variation in the quantification of amounts, for example Agro Clearing Enterprises has received godown rent of IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 17 Rs.49,77,984/- from principal companies. It has alleged to have spent a sum of Rs.44,58,117/- on payment of godown rent for procuring the space. The assessee has submitted the list of persons from whom it has procured the space and rent was paid. The Assessing Officer was of the view that the assessee failed to deduct the TDS and these parties did not respond to his queries, therefore, the Assessing Officer was of the view that the claim of assessee regarding payment of rent is not fully genuine. He accordingly allowed the rent payment to the extent of Rs.24,12,950/- and disallowed the balance of Rs.20,45,167/-. 14. In the case of M/s. Famous Enterprises, a similar exercise was made. We have gone through these details reproduced in the assessment orders of both the assessees. It is pertinent to note that recipients of godown rent are same persons over the years. The assessee did not deduct the TDS on some of the payments, where payments were below the TDS limit. Probably Assessing Officer failed to appreciate the nature of business. One possibility could be that material from the principal companies might have been directly delivered at the premises of these persons before further sales. This is only hypothetical observation, but the assessee has submitted the complete details, their addresses and details of TDS wherever it is required to deduct. The Assessing Officer further observed that he has deputed Inspector to locate these recipients of godown rent but he could not find them. 15. We have appreciated the above factual situation. To our mind the inquiry was not complete. The ld. Assessing Officer simply accepted the payment of rent where TDS was made but belied the other claim. The report of inspector was not discussed, i.e. to whom, he met, who were the witness at a particular place etc. Therefore, we are of the view that in this year in the case of both the assessees required further investigation. The IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 18 assessee is directed to submit the complete details of godown owners to whom they have paid rent in cash. The assessee should also file confirmation and thereafter ld. Assessing Officer would investigate afresh. The Assessing Officer is directed to re-adjudicate the issue after providing due opportunity of hearing to both the assessees. In view of the above, the appeals of both the assessees in IT(SS)A No. 5/PAT/2018 in the case of M/s. Famous Enterprises and in IT(SS)A No. 12/PAT/2018 in the case of M/s. Agro Clearing Enterprises for A.Y. 2013-14 are allowed for statistical purposes. 16. To sum up, the appeals of both the assessees are allowed, i.e. IT(SS)A Nos. 2, 3 & 4/PAT/2018 in the case of M/s. Famous Enterprises and IT(SS)A Nos. 6, 7, 8, 9, 10 & 11/PAT/2018 in the case of M/s. Agro Clearing Enterprises. The appeals of both the assessees for A.Y. 2013-14 are allowed for statistical purposes. Order pronounced in the open Court on February 23, 2022. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 23 rd day of February, 2022 Copies to : (1) M/s. Famous Enterprises, Manjhri Nikunj, Amgola Road, Muzaffarpur, Bihar-842001 (2) M/s. Agro Clearing Enterprises, Manjhri Nikunj, Amgola Road, Muzaffarpur, Bihar-842001 (3) Assistant Commissioner of Income Tax, Central Circle, Muzaffarpur, Bela Kothi Bela, Muzaffarpur (4) Commissioner of Income Tax (Appeals), Patna (5) Commissioner of Income Tax , IT(SS)A Nos.02 to 05/PAT/2018 A.Ys. 2010-11 to 2013-2014 M/s. Famous Enterprises & IT(SS)A Nos. 06 to 12/PAT/2018 A.Ys. 2007-08 to 2013-2014 M/s. Agro Clearing Enterprises 19 (6) The Departmental Representative (7) Guard File TRUE COPY By order Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.