ACIT, Central Circle-1, Bhubaneswar V. M/S- Badri Gardens Pvt. Ltd., Angul

ITSSA 49/CTK/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1217 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-10-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-10-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Document seized; Period of limitation; Non compliance; Assessment record; Right to appeal; Documents seized; Revenue expenditure; TDS
• Section: 132; 40A(3); 153A; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER ACIT, Central Circle Bhubaneswar (Appellant Per Bench This is an appeal filed by the CIT(A-2, Bhubaneswar for the assessment year 2. Shri M.K.Gautam, ld CIT DR appeared for the revenue and Shri P.K.Mishra, ld AR appeared for the assessee. 3. Ld AR has filed a written submission dated 29.10.2021 as follows: IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 ACIT, Central Circle-1, Bhubaneswar VS M/s. Badri Gardens Pvt Ltd.,At: Baghuabol, PO: Hatatota, Talcher, Angul 759100 PAN/GIR No. (Appellant) .. ( Respondent Assessee by : Shri P.K.Mishra, AR Revenue by : Shri M.K.Gautam, CIT Date of Hearing : 11 /10 Date of Pronouncement : 11/10 O R D E R This is an appeal filed by the revenue against the order of the ld 2, Bhubaneswar dated 20.3.2019 in Appeal No. for the assessment year 2011-12. Shri M.K.Gautam, ld CIT DR appeared for the revenue and Shri P.K.Mishra, ld AR appeared for the assessee. Ld AR has filed a written submission dated 29.10.2021 as follows: Page1 | 21 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER 19 M/s. Badri Gardens Pvt Ltd.,At: Baghuabol, PO: Hatatota, Talcher, Angul- PAN/GIR No.AAECB 4123 A Respondent) P.K.Mishra, AR , CIT DR 10/2022 10/2022 against the order of the ld in Appeal No.0461/2016-17 Shri M.K.Gautam, ld CIT DR appeared for the revenue and Shri Ld AR has filed a written submission dated 29.10.2021 as follows: IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page2 | 21 “1.For that, the Respondent is a real estate company running under the name and style of M/s. Badri Gardens Pvt. Ltd. A search and seizure operation was conducted in the case of Pravakar Sahoo and Groups including the above named Assessee Company on 07.11.2013 pursuant to the warrant of authorization U/s.132 of the Act. Thereafter, notice U/s.153A was issued and served on the Assessee Company for filing of return and subsequently, the Assessee Company filed its return of income declaring total income at Rs.Nil. While completing the Assessment U/s.153A/144 of the Act, the learned A.O. enhanced the income to Rs.5,74,10,000.00. In order to enhance the income of the Assessee Company, the learned A.O. has disallowed Rs.1,00,00,000.00 paid to M/s. Srabani Construction Pvt. Ltd. against purchase of Srabani Villa by applying section 40A(3) of the Act and also disallowed the balance amount of Rs.4,74,10,000.00 out of the total payment made towards the purchase to the tune of Rs.6,50,00,000.00 on the ground of non deduction of tax by applying section 40(a)(ia) of the Act in the hand of the Assessee Company. 2. For that, since the impugned order of Assessment passed U/s.153A and consequential additions made by the learned A.O. are without jurisdiction, without the Authority of law and not proper and contrary to the facts on record as well as to the settled principles of law, the Respondent/Assessee preferred Appeal before the learned CIT(A)-2, Bhubaneswar. while adjudicating Appeal of the Assessee, the learned CIT(A) after examining the facts, Assessment record, Audit Report and settled principles of law though dismissed the legal ground taken by the Assessee, but allowed the Appeal of the Assessee on merit by holding that, since the Assessee Company has not claimed the impugned expenditures in its Profit and Loss Account, question of applicability of section 40A(3) and section 40(a)(ia) does not arise. Being aggrieved with the order passed by learned CIT(A), the Revenue preferred Appeal before this Hon’ble Tribunal which is now under consideration. 3. That, since the learned CIT(A) dismissed the legal issue, even though allowed the appeal on merit, the Assessee while initiating his arguments, wants to submit the legal issue first as it goes to the root of the matter. 4. The Impugned Order Of Assessment Is Without Jurisdiction:- 4.1. That, in the case in hand, the Assessment was completed u/s.153A/144 of the Act, particularly when, no search warrant was issued in the name of the Assessee Company. There was a search conducted in the hand of the directors of the Assessee Company. Since, a company is a separate legal entity and has its own tax liability and no search warrant was issued in the name of the Assessee Company, the impugned Assessment order so passed u/s.153A/144 of the Act has no legs to stand, as such, the same needs to be IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page3 | 21 quashed in the interest of justice. The Assessee in support of this submission most respectfully relies on the law laid down by Hon’le jurisdictional Orissa High Court in the case of Sikshya “O” Anusandhan –vs- Commissioner of Income Tax reported in 20 taxman.com 798, wherein their Lordships have held that, in absence of warrant in the name of the Assessee, search conducted in its premises would not be a valid search as is contemplated u/s.132 of the Act. Thus, the Assessment completed u/s.153A of the Act is liable to be quashed. Further, the Hon’ble Gujarat High Court in case of Commissioner of Income Tax –vs- Ramesh D. Patel, reported in [2014] 42 taxman.com 540, wherein their Lordships have held that, in absence of search authorization, Assessment order u/s.153A cannot be passed. In view of the settled principles of law laid down by the Hon’ble High Courts as cited herein above, it is respectfully submitted here that, the impugned assessment order being not sustainable in the eye of law is liable to be quashed. 4.2. That, while issuing notice for Assessment, the learned A.O. has referred to seized material identified as SCPL-2, page 03 to 20 for initiation of the impugned search Assessment proceeding, particularly when, the impugned seized material was neither seized from the Assessee Company nor belong to the Assessee Company. Since, the seized documents itself are found not incriminating and have no bearings of any concealed Income, the learned A.O has no Authority and jurisdiction to complete Assessment by making addition, which have already attended finality and should not have disturbed completed Assessment. Since, the Seized documents SCPL-2 relates to M/S. Srabani Construction and has not been seized from the Assessee and does not found place on the seizer List of the Assessee, it cannot be construed as incriminating material, so as to attract section 153A of the I.T.Act,1961. Following records of a third party, the learned A.O disturbed the completed Assessment, ignoring the settled law that, unabated Assessment U/s.153A(1) would not encompass an addition, if there is no incriminating material, because in such a case, the original Assessment had become final. Therefore, the impugned additions made by the learned A.O. is wholly illegal and without the Authority of law. The Assessee most respectfully relies on the judicial pronouncement of Hon’ble jurisdictional Odisha High Court in case of Smt. Jami Nirmala –vs- the Principal Commissioner of Income Tax, Bhubaneswar & Others in W.P. (C) No.2857 of 2018 vide its order dated 10.08.2021, in para-11 have held that, in absence of incriminating materials, no additions can be made in the hand of the Assessee, as such, the impugned Assessment and the consequential additions made therein being not sustainable in the eye of law is liable to be quashed. The Assessee also relies on the law laid down by Hon’ble Delhi High Court in case of Kabul Chawla [2016] 380 ITR 573 and Smt. Dayabanti –vs- CIT [2017] 390 ITR 496. IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page4 | 21 5. Submissions on merit: Disallowance of Rs.1,00,00,000.00 U/s.40A(3)of the Act is illegal: 5.1. That, the allegation of the learned A.O is that, out of total payment of Rs.6.5 crores, the Assessee Company has paid a sum of Rs.5.5 crores through banking channel and balance Rs.1 crore was paid by the Assessee Company in cash. The learned A.O applied section 40A(3) of the Act and disallowed Rs.1,00,00,000.00 in the hand of the Assessee Company, particularly when, the payment made were advance in nature and the Asset to be acquired was treated as a capital Asset hence, the cost of sale was not debited to the purchase Account. The Assessee Company has capitalized such expenditure and has shown it in the balance sheet and no such amount is debited to the Profit and Loss Account as a deduction. Therefore, there is neither any infraction of provisions of law nor any non compliance to the statutory provisions of law, as such, the impugned application of section 40A(3) of the Act is wholly unjustified, wrong and illegal, the consequential addition so made being not sustainable in the eye of law is liable to be deleted in the interest of justice. 5.2. That, the basic pre-condition for application of section 40A(3) is that, there must be an expenditure, the expenditure must have been claimed as a deduction and that deduction is claimed in the Profit and Loss Account, while computing income from profit and gains from business or profession. Unless, these conditions are fulfilled, section 40A(3) cannot be applied to disallow such expenditure. In the case in hand, the Assessee Company has not claimed the deduction of payments made to M/s.Srabani Construction, while computing its income from profit and gains of business or profession. Once, Assessee Company has not claimed such expenditure, question of disallowance of such expenditure does not arise at all. The learned CIT(A) after examining the facts, copy of audit report has rightly deleted the addition. Therefore, there is no illegality or infirmity in the order passed by the learned CIT(A), as such, the same should be confirmed and the grounds taken by the Revenue being devoid of any merit, needs to be dismissed in the interest of justice. Law in this aspect is well settled that, section 40A(3) can be invoked only when, the revenue expenditure debited to the Profit and Loss Account, where such expenditure was claimed. Ref:-Kalayan Constructions Hyderabad –vrs- Income Tax officer Ward-4(3), Hyderabad in ITA No.2113/Hyd./2017, Hyderabad ITAT. 5.3. That, without prejudice to the above submissions, it may be respectfully submitted here that, the learned A.O. in page 4 of his Assessment order has categorically observed that, cash payment made by M/s.Badri Gardens/ Sister Concerns/Flat purchasers on its behalf to M/s.Srabani Constructions Pvt. Ltd for purchase of land and construction of building. The details IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page5 | 21 payments made by parties to M/s.Srabani Constructions Pvt. Ltd., noted by the learned A.O. are given here under in a tabular form for better appreciation of facts; Date of payment Amount Mode of payment Name of the payer 06.01.2011 Rs. 10,00,000.00 Cash P. Santosh Patra 30.01.2011 Rs. 10,00,000.00 -do- Prasanta Behera 30.01.2011 Rs. 10,00,000.00 -do- Sudipta Panda 30.01.2011 Rs. 8,00,000.00 -do- Pushparani Parida 12.02.2011 Rs. 8,00,000.00 -do- Biswajit Sahu 22.02.2011 Rs. 2,50,000.00 -do- Sudipta Panda 22.02.2011 Rs. 8,00,000.00 -do- B.B. Routray 27.02.2011 Rs. 11,50,000.00 -do- Prasanta Behera 18.03.2011 Rs. 6,00,000.00 -do- Kulamani Parida 18.03.2011 Rs. 4,00,000.00 -do- Dinabandhu Panigrahi 20.03.2011 Rs. 9,00,000.00 -do- Bhanu Prakash Choubey 22.03.2011 Rs. 5,00,000.00 -do- Kalpana Pattnayak 22.03.2011 Rs. 1,50,000.00 -do- Sunil Mohanty 24.03.2011 Rs. 5,00,000.00 -do- Pusparani Parida 24.03.2011 Rs. 1,50,000.00 -do- Manas Manjari Ray Total Rs.1,00,00,000. 00 5.4. That, the learned A.O. in his order of Assessment, has categorically mentioned the name of the payers who had paid cash to M/s.Srabani Constructions Pvt. Ltd. On perusal of the above table, it is clear that, the Assessee, M/s.Badri Gardens has never made any cash payment to M/s.Srabani Constructions Pvt. Ltd., rather the payments were made by flat purchasers directly to M/s.Srabani Constructions Pvt. Ltd. on behalf of the Assessee Company. They booked flats from the Assessee Company. Due to scarcity of fund and to complete the work in time, they directly deposited cash in the bank account of M/s.Srabani Constructions Pvt. Ltd., and the Assessee Company has adjusted the said payment through journal entry. From this fact, it is crystal clear that, your Assessee Company has never made any cash payment in violation of section 40A(3) of the Act, therefore, the question of disallowance in the hand of the Assessee Company does not arise at all. That apart, the Assessee Company had no control over the third party. They acted as an agent and made payment on behalf of the Assessee Company. Therefore, for violation of cash payment U/s.40A(3) of the Act by third parties, the Assessee Company cannot be saddled with disallowance of Rs.1,00,00,000.00, particularly when, the Assessee Company has not committed any fault. Law in this aspect is well settled in the case of DCIT – vrs- Allied Infra Suppliers reported in [2018] Tax Publishers (DT) 7243, Cuttack ITAT, wherein their Lordships have held that, expenses incurred in cash by partners in excess of restriction provided U/s.40A(3) of IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page6 | 21 the Act on behalf of the Firm and the Firm has shown it as capital introduction by partner, same cannot be disallowed in the hand of the Firm U/s.40A(3) of the Act. The fact of the case of the Assessee is that, the flat purchasers had paid directly to the builder M/s.Srabani Constructions Pvt. Ltd. on behalf of the Assessee and the Assessee has booked such payments through journal entry adjustment and has disclosed as advance, therefore, the case of the Assessee is squarely covered with this judgment. In view of this, the impugned addition needs to be deleted in the interest of justice. 5.5. That, in view of the undisputed fact and submissions, it is therefore, respectfully prayed that, since your Assessee Company has not claimed any such expenses in its Profit & Loss Account for this year, the impugned disallowance and consequential addition of Rs.1,00,00,000.00 made by the learned A.O. on application of section 40A(3) of the Act is completely illegal and not sustainable in the eye of law, hence needs to be deleted in the interest of justice. 6. Disallowance of Rs.4,74,10,000.00 U/s.40(a)(ia) of the Act is illegal: 6.1. That, in Assessment year 2011-12, the allegation of the learned A.O is that the Assessee Company has paid Rs.4,74,10,000.00 to M/s. Srabani Construction Pvt. Ltd. for purchase of Srabani Villa during the year. The learned A.O. found that, since the Assessee Company has not deducted TDS on said payments of Rs.4,74,10,000.00, the expenditure so claimed needs to be disallowed U/s.40(a)(ia) of the Act, particularly when, no such expenses was ever claimed by the Assessee in the profit and loss Account so as to attract section 40(a)(ia) of the Act. 6.2. That, when the Assessee company has not claimed any such expenditure in its Profit and Loss Account and this fact was brought to his knowledge, he should not have disallowed Rs.4,74,10,000.00. It is not understood how can the learned A.O disallow the same by applying section 40(a)(ia) of the Act. Section 40(a)(ia) of the Act authorizes the learned A.O. to disallow expenses claimed in computing the income chargeable under the head profit and gains from business profession, when no such expenses is claimed, the impugned disallowance is quite illegal and bad in law, as such the impugned addition being not sustainable in the eye of law is liable to be deleted in the interest of justice. Copies of the I.T. Return filed along with Audit Report are enclosed herewith for your Honour’s reference and record. IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page7 | 21 6.3. That, on perusal of section 40(a)(ia), it goes on saying without any iota of doubt that, the basic precondition for disallowance under this section against the deduction claimed are that, there must be an expenditure, that expenditure must have been claimed as a deduction within the meaning of section 30 to 38 and that expenditure must be revenue in nature. In the case in hand, the Assessee has not claimed this expenditure as deduction in Profit and Loss Account within the meaning of section 30 to 38, as such, question of application of section 40(a)(ia) for disallowance of expenditure does not arise at all. Further, law in this aspect is well settled by the Hon’ble Bombay High Court in the case of CIT –vrs- Dedicated Health Care Services (TPA) India (P.) Ltd. reported in 408 ITR 0036 and in the case of Commissioner of Income Tax, Mumbai vs- Health India TPA Service Pvt. Ltd., reported in [2018] 99 taxman.com 82 (Bombay), wherein their Lordships have held that, Sine qua non for application of section 40(a)(ia) to apply it claiming of amount sought to be disallowed as an expenditure/deduction to determine taxable income of Assessee. In these judgments, there Lordships have categorically held that, in absence of having been claimed as expenditure while determining the income, section 40(a)(ia) cannot be applied to disallow non claimed expenditure. 6.4. That, in view of the undisputed fact and submissions, it is therefore, respectfully prayed that, since your Assessee has not claimed any such expenses in its Profit & Loss Account for this year, the impugned disallowance and consequential addition of Rs.1,00,00,000.00 made by the learned A.O. on application of section 40A(3) of the Act and Rs.4,74,10,000.00 made by the learned A.O. on application of section 40(a)(ia) of the Act being illegal are not sustainable in the eye of law, as such, the learned CIT(A) following above judicial pronouncement have rightly deleted these additions. Since, the order passed by the learned CIT(A) is based on the concrete facts and supported by settled principles of law, the same needs to be confirmed and the Revenue’s appeal being devoid of any merit, needs to be dismissed in the interest of justice. 4. A perusal of the order sheet in this case shows that the appeal has been posted on multiple occasions nearly 16 times. A perusal of the file shows that ld CIT DR has filed a note on 23.5.2022, which is extracted as under: IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page8 | 21 “Sub: Appeal .IT(SS)A No.49/CTK/2019 in the case of M/s. Badri Gardens (P.) Ltd. for A.Y. 2011-12 - regarding. Kindly refer to the above. 2. It may be recalled that during the course of hearing on 27.10.2021, your honours had asked the learned authorized representative of the assessee to submit the following details/documents: a) As per agreement dated 10.12.2010 between the assessee company and M/s. Srabani Construction Pvt. Ltd., payment of Rs.6.5 crores was made to M/s. Srabani Construction Pvt. Ltd. for construction of flats. However the work-in-progress was not shown in the balance sheet of the assessee company as on 31.03.2011. The assessee has shown advance for purchase amounting to Rs.6.5 crores but the land was purchased for Rs.75,90,000/- only. The Id. AR of the assessee company was asked to explain the same by filing the necessary documents. b) Though no work-in-progress was shown in the balance sheet yet advances amounting to Rs.1.48 crores were received from customers as per balance sheet as on 31.03.2011. The Id. AR of the assessee was required to explain the same. c) Ledger copy of M/s. Badri Gardens (P.). Ltd. in the books of M/s. Srabani Construction Pvt. Ltd. was required to filed by the Id. AR of the assessee. d) In whose books of account, the work-in-progress was allegedly shown. It is seen that till date, these relevant details/documents have not been filed by the Id. AR of the assessee. Hence in the absence of such vital details/documents, the case should be adjourned to a suitable date.” IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page9 | 21 5. At the time of hearing, ld CIT DR took us through the assessment order in depth. He read out the assessment order in detail. It was the submission that the assessee is in real estate business and Shri Pravakar Sahoo was the Director. It was the further submission that the assessee had purchased land in Chandrasekharpur, Bhubaneswar and had engaged the services of M/s. Srabani Construction Pvt ltd., for construction of 30 flats known as “ Badri Gardens Pvt Ltd.”. It was the submission that there was a search on 7.11.2013 and notice u/s 153A was issued on 13.3.2015, in response to which, the assessee had filed its return of income declaring Nil income. It was the further submission that M/s. Srabani Construction Pvt Ltd., hold a Power of Attorney in respect of the said land from M/s. Concorde Infratech Pvt Ltd., It was further submitted that there was a survey on M/s. Srabani Construction Pvt Ltd., u/s.133A on 6.12.2013 and in the course of survey, an agreement between the assessee and M/s. Srabani Construction Pvt Ltd., had been found, duly signed on 10.12.2010 for the construction of the building and sale of land in Plot No.360/6172, Bhubaneswar Sahara Unit No.41, Chandrasekharpur, Bhubaneswar. As per the said agreement, the assessee company was to pay Rs.7.5 crores to M/s. Srabani Construction Pvt Ltd., towards the cost of the undivided land and construction of the building. The said agreement was identified as SCPL-02. It was the further submission that another sale deed made on 29.12.2010 had also been found during the course of survey in respect of 0.230 acres IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page10 | 21 of the said land for a consideration of Rs.75,90,000/-. It was the submission that the assessee had paid the consideration of Rs.7.5 crores. It was the submission that out of Rs.7.5 crores, Rs.1 crore had been paid by 15 persons directly to M/s. Srabani Construction Pvt Ltd., on behalf of the assessee company. Another amount of Rs.5.5 crores had been paid through banking channel. It was the submission that the assessee in its balance sheet has not shown Rs.6.5 crores paid to M/s. Srabani Construction Pvt Ltd., as work-in-progress but has shown as loans and advances. It was the primary contention of ld CIT DR that in respect of 15 persons, who paid an amount of Rs.1 crore to M/s. Srabani Construction Pvt Ltd., no confirmation letters had been produced to show that the payment had been made by them for purchase of the flats. It was the submission that as there was no confirmation produced, the presumption to be drawn is that the amounts had been paid by 15 persons on behalf of the assessee. It was the submission that consequently, there was violation of provisions of section 40A(3) of the Act insofar as the amount of Rs.1 crore has been paid in cash. It was the submission that the amount having been paid in cash, the provisions of section 40A(3) is applicable and the AO had disallowed the amount of Rs.1 crore. It was the further submission that as the agreement between the assessee and M/s. Srabani Construction was for the purchase of land and construction of 30 flats thereon, the agreement was one of the contract and as no TDS had been deducted in respect of IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page11 | 21 Rs.5.5 crores, the provisions of section 40(a)(ia) came into play. Consequently, from the amount of Rs.5.5 crores, he reduced the cost of the land of Rs.75,90,000/- and the balance of Rs.4,74,10,000/- was disallowed by invoking the provisions of section 40(a)(ia) of the Act. It was the further submission that the amount of Rs.1 crore was not considered because same had already been disallowed by invoking the provision of section 40A(3) of the Act. Ld CIT DR further drew our attention to the order of the ld CIT(A) to submit that in para 4.3 of his order, ld CIT(A) has deleted the addition of Rs.1 crore on the ground that the assessee has not claimed the expenses of Rs.1 crore. It was the submission by ld CIT DR that the amount has been paid to M/s. Srabani Construction pvt Ltd., by the assessee and the payment has been made for the purpose of construction of building consisting of 30 flats. The assessee has not shown the construction of the building as work-in-progress in its balance sheet and the amount of Rs.1 crore having been paid on behalf of the assessee and in the absence of any confirmation letters from the payers, the provisions of section 40A(3) was applicable. It was the submission that the order of the ld CIT(A) is liable to be reversed. 6. Ld CIT DR further drew our attention to para 5.2 of the order of the ld CIT(A) to submit that the order of the ld CIT(A) was perverse insofar as in respect of addition made by invoking the provisions of section 40(a)(ia) of the Act, the ld CIT(A) has deleted the addition by holding that no IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page12 | 21 expenses has been claimed by the assessee in respect of the said amount of Rs.4,74,10,000/- and for this purpose, ld CIT(A) has referred to the decision of Hon’ble Bombay High Court without quoting the name or the citation. It was the submission that the order of the ld CIT(A) is perverse and has been passed in a hurried manner without application of mind, which is evident from the fact that the Hon’ble Bombay High Court decision relied upon by ld CIT(A) has not been clearly clarified by name or citation. It was further submitted by ld CIT DR that in para 4 of the written submission of the assessee, the assessee has claimed that there is no search warrant in the name of the assessee and that the search warrant is in the name of Shri Pravakar Sahoo. It was the submission that the assessee has not filed any cross objection raising the said issue and consequently, the ground is not liable to be considered. It was the further submission that the assessee has also challenged that no incriminating material has been found in the course of search on Pravakar Sahoo nor was any incriminating material found connected to the assessee in the search and consequently, assessment u/s.153A is not sustainable. It was the submission that as in respect of this issue, the assessee has not filed any cross objection, the ground should not be permitted. It was the prayer that the order of the ld CIT(A) is liable to be reversed. 7. In reply, ld AR, at the outset, submitted that the search was conducted in the case of Pravakar Sahoo and no search warrant was there IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page13 | 21 in the name of the assessee. It was the submission that the assessee M/s. Badri Gardens Pvt Ltd., is a separate legal entity and in absence of search warrants much less the search on the assessee, no assessment u/s.153A could be done. For this proposition, he placed reliance on the decision of the Hon’ble Gujarat High Court in the case of CIT vs Ramesh D Patel (2014) 362 ITR 492 (Guj), wherein, it has been held that in the absence of search authorization, assessment order u/s 153A cannot be passed. He further placed reliance on the decision of Hon’ble Jurisdictional High Court of Orissa in the case of Siksha “O” Anusandhan vs CIT, 336 ITR 112 (Orissa), wherein, it has been held that the initiation of a valid search as contemplated under section 132 in case of a person is a prerequisite to issue notice for making an assessment/reassessment under section 153A in respect of such person. Ld AR placed before us copy of the Panchanama, which mentions the warrant in the case of Pravakar Sahoo, Kanaka Lata Sahoo, however, assessee’s name does not find mention in the said Panchanama. For the sake completeness, the Panchanama is scanned and attached as under: IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page14 | 21 IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page15 | 21 7. At this point, ld AR was specifically asked whether he is invoking his rights under Rule 27 of the ITAT Rules. To this, he submitted ‘Yes’ and he placed before us the decision of Hon’ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd vs CIT (2005) 149 TAXMAN 456 (Guj)/282 ITR 321, wherein, at paras 15 to 18, the Hon’ble High Court has held as follows: “15. Taking up the second issue first. The Tribunal has committed an error in law in holding that the assessee having not filed cross objection against findings adverse to the assessee in the order of Commissioner (Appeals), the said findings had become final and remained unchallenged. The Tribunal apparently lost sight of the fact that the assessee had succeeded before the Commissioner (Appeals). The appeal had been allowed and the penalty levied by the assessing officer deleted in entirety. In fact, there was no occasion for the assessee to feel aggrieved and hence, it was not necessary for the assessee to prefer an appeal. The position in law is well settled that a cross objection, for all intents and purposes, would amount to an appeal and the cross objector would have the same rights which an appellant has before before the Tribunal. 16. Section 253 of the Act provides for appeal to the Tribunal. Under Sub-section (1), an assessee is granted right to file an appeal; under Sub-section (2), the Commissioner is granted a right to file appeal by issuing necessary direction to the assessing officer; Sub-section (3) prescribes the period of limitation within which an appeal could be preferred. Section 253(4) of the Act lays down that either the assessing officer or the assessee, on receipt of notice that an appeal against the order of Commissioner (Appeals) has been preferred under Sub-section (1) or Sub-section (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page16 | 21 Sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or a discretion to file cross objection. 17. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 18. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redundant and nugatory. It is not possible to interpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and an interpretation which makes other connected provisions otiose has to be to avoided. Rule 27 of the Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to provisions of Section 253(4) of the Act. The Tribunal was, therefore, in error in holding that the finding recorded by the Commissioner (Appeals) remained unchallenged since the assessee had not filed cross objections.” 8. It was the submission that as there was no search in the case of the assessee, the issuance of notice u/s.153A and consequential assessment is liable to be annulled. 9. On merits, it was submitted by ld AR that perusal of para 3 of the assessment order clearly shows that the AO was well aware that the search was in the case of Pravakar Sahoo. Ld AR further drew our attention to para 7 of the assessment order to submit that the agreement dated 10.12.2010 for the construction of building and sale of land at Plot No.360/6172, Bhubaneswar Sahara Unit No.41, Chandrasekharpur, IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page17 | 21 Bhubaneswar was found in the course of survey conducted on 6.12.2013 on the premises of Srabani Construction Pvt Ltd., It was the submission that no incriminating material found in the course of any search has been used for the purpose of making the assessment u/s.153A of the Act on the assessee. The so called material being agreement dated 10.12.2010 was not found in the course of search but was categorically found in the course of survey. It was the submission that in absence of any incriminating material having been found in the course of search, the assessment made u/s.153A on the assessee is unsustainable. It was the further submission that in respect of disallowance as made by the AO and deleted by the ld CIT(A) u/s.40A(3) and by invoking the provisions of section 40(a)(ia) of the Act. The assessee has not categorically claimed the said amount as expenses. It was the submission that a perusal of provisions of section 40A(3) of the Act shows that the opening words is “ Where the assessee incurs any expenditure” . It was the submission that the assessee has not incurred the expenditure though admittedly the assessee has paid the amount but it has been shown as loans and advances. In respect of issue of 40(a)(ia) of the Act, it was submitted that sine qua non for application of provisions of section 40(a)(ia) is the claiming of the amount sought to be disallowed as an expenditure/deduction to determine the taxable income of the assessee. Ld AR placed reliance on the decision of Hon’ble Bombay High Court in the case of CIT vs Health India TPA Services (P) Ltd., (2018) IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page18 | 21 99 taxmann.com 82 (Bombay) to support his proposition. It was the submission that as the assessee has not claimed expenditure, neither the provisions of section 40A(3) applied nor the provision of section 40(a)(ia) applied. It was the submission that on merits, the order of the ld CIT(A) is liable to be upheld. 10. In reply, ld CIT DR submitted that if the Tribunal is going to admit in respect of search having not been conducted in the case of the assessee, then, the revenue must be given time for the production of the search warrant. 11. We have considered the rival submissions. At the outset, it must be noticed that the assessee has filed written submission bringing out the issue of non-availability of search warrant in the case of the assessee in its written submission dated 29.10.2021. A perusal of the letter of ld CIT DR dated 23.5.2022 shows that the assessee was asked by the Bench to file certain details, which has not yet been filed as per the claim of ld CIT DR. The arguments in respect of non-availability of warrant having been brought to the revenue as earlier as in October, 2021 and the revenue have not produced any warrant in the name of the assessee. Further time cannot be granted that too after a detailed argument in respect of the appeal is also completed. IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page19 | 21 12. Coming to the decision of Hon’ble Bombay High Court relied upon by ld CIT, admittedly, the ld CIT(A) has referred to the said decision in page 14, which is Dedicated Health Care Services (TPA) India (P.) Ltd. reported in 408 ITR 0036. A perusal of the decision of Hon’ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd (supra), clearly shows that there is no necessity for an assessee to file cross objection and the liberty under Rule 27 of the ITAT Rules is available to the assessee to raise such other grounds to support the order as required. A perusal of the decision of Hon’ble Gujarat High Court in the case of Ramesh D. Patel (supra) clearly explains that in the absence of search authorization, assessment orders under section 153A cannot be passed. This view stands reiterated by the decision of the Hon’ble Jurisdictional High Court of Orissa in the case of Siksha “O” Anusandhan (supra). A perusal of the assessment order clearly shows that the search has been conducted in the case of Pravakar Sahoo group cases. The AO mentions that the search is there in the case of the assessee also. However, the revenue has not placed before us the copy of the warrant of search in the case of the assessee till date. A perusal of the assessment order further clearly shows that though in para 3, the AO mentions “in the course of such search proceedings, some incriminating documents and books of account were found and seized from business premises of the assesse and sister concern” but nowhere in the assessment order is there any reliance or reference to any such IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page20 | 21 incriminating documents which were found or seized from the business premises of the assessee or its sister concerns. In fact, a perusal of para 7 of the assessment order clearly shows the very foundation of the assessment is the agreement dated 10.12.2010 between the assessee and M/s. Srabani Construction Pvt Ltd., and this document was found in the course of survey on Srabani Construction Pvt Ltd., on 10.12.2010. In these circumstances, as the assessment has been done without relying upon any documents or materials found during the course of search, the assessment u/s.153A is unsustainable and is liable to be quashed and we do so. As no search warrant has been shown in the case of the assessee, respectfully following the proposition laid down by Hon’ble Jurisdictional High Court in the case of Siksha “O” Anusandhan (supra), the issuance of notice and the completion of assessment u/s.153A is unsustainable and stands quashed. 13. In respect of merits, as the amount of Rs.1 crore which has been added by invoking the provisions of section 40A(3) of the Act has not been claimed as expenses, we are of the view that the findings of the ld CIT(A) in deleting is on right footing and same stands confirmed. In respect of addition made by invoking the provisions of section 40(a)(ia) on account of non-deduction of TDS in respect payment of an amount of Rs.4,74,10,000/- , as it is noticed that the assessee has not claimed said expenditure, we are of the view that the findings of the ld CIT(A) on this issue in deleting the addition is on right footing and does not call for any interference. IT(ss)A No.49/CTK/2019 Assessment Year : 2011-12 Page21 | 21 14. In the result, the appeal of the revenue stands dismissed. Order dictated and pronounced in the open court on 11/10/2022. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 11/10/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : ACIT, Central Circle-1, Bhubaneswar 2. The Respondent: M/s. Badri Gardens Pvt Ltd.,At: Baghuabol, PO: Hatatota, Talcher, Angul-759100 3. The CIT(A)-2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//