Shri Jivraj V. Desai, Mehsana V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 98/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6513 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Loose papers; Earning of tax free income; Bad and doubtful debts; Validity of assessment; Rule 8D
• Section: 40A(3); 143(3); 153A; 14A; 143(1); 143(2); 68; 132; 15; 139

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I T(SS)A NO.98 TO 101 AND 103/AHD/2017 / ASSTT. YEAR: 2007-08, 2008-09, 2009-10, 2010-11 AND 2012-13 SHRI JIVRAJ V. DESAI PROP: M/S.MAHADEV ENTERPRISE 5, ASHOKNAGAR SOCIETY RAHANPUR ROAD, MEHSANA PAN : AAWPD 8565 F VS. DCIT, CENT.CIR.2(1) AHMEDABAD. ./ I T(SS)A NO.167 TO 170/AHD/2017 / ASSTT. YEAR: 2007-08, 2008-09, 2009-10 AND 2010-11 DCIT, CENT.CIR.2(1) AHMEDABAD. VS. SHRI RAJNIBHAI I. DESAI 5, ASHOKNAGAR SOCIETY RADHANPUR ROAD, MEHSANA 384 002 PAN : AAWPD 3250 B ./ I T(SS)A NO.105/AHD/2017 / ASSTT. YEAR: 2009-10 SHRI RAJNIBHAI I. DESAI 5, ASHOKNAGAR SOCIETY RADHANPUR ROAD, MEHSANA 384 002 PAN : AAWPD 3250 B VS. DCIT, CENT.CIR.2(1) AHMEDABAD. ./ I T(SS)A NO.109/AHD/2017 / ASSTT. YEAR: 2007-08 SHRI RAMESHBHAI I. DESAI PROP. M/S.RAJIV ENTERPRISE 5, ASHOKNAGAR SOCIETY RADHANPUR ROAD MEHSANA 384 002. RADHANPUR ROAD, MEHSANA 384 002 PAN : AAWPD 3248 B VS. DCIT, CENT.CIR.2(1) AHMEDABAD. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 2 ./ I T(SS)A NO.128/AHD/2017 / ASSTT. YEAR: 2007-08 DCIT, CENT.CIR.2(1) AHMEDABAD. VS. SHRI RAMESHBHAI J. DESAI HUF 5, ASHOKNAGAR SOCIETY RADHANPUR ROAD, MEHSANA 384 002 PAN : AAWPD 3249 A ./ I T(SS)A NO.187/AHD/2017 / ASSTT. YEAR: 2009-10 SMT. ALKABEN R. DESAI 5, ASHOKNAGAR SOCIETY RADHANPUR ROAD, MEHSANA 384 002 PAN : AAWPD 3283 E VS. DCIT, CENT.CIR.2(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI O.P. SHARMA, CIT-DR ASSESSEE BY : SHRI S.N. DIVETIA, WITH SHRI MEHUL TALERA, ARS. ! / DATE OF HEARING : 14/02/2019 '#$ ! / DATE OF PRONOUNCEMENT: 26/02/2019 %& / O R D E R PER BENCH: THESE ARE FOUR SETS OF APPEALS CONTAINING THIRTEEN APPEALS BY THE REVENUE AND FOUR ASSESSEES. THEY ARE IN FACT CROSS APPEALS DIRECTED AGAINST RESPECTIVE ORDERS OF THE LD.CIT(A) PASSED F OR THE ASSESSMENT YEARS FROM ASST.YEARS 2007-08 TO 2012-13. 2. IN THE FIRST OF APPEALS, ASSESSEE, VIZ. SHRI JIV RAJ V. DESAI IS IN APPEALS AGAINST ORDERS OF THE LD.CIT(A) OF EVEN DAT ED I.E. 31.1.2017 PASSED FOR THE ASSTT.YEARS 2007-08, 2008-09, 2009-1 0, 2010-11 AND 2012-13. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 3 3. IN THE SECOND SET OF APPEALS, REVENUE IS IN APPE ALS AGAINST THE ORDERS OF THE LD.CIT(A) OF EVEN DATED I.E. 27.1.201 7 FOR THE ASSTT.YEARS 2007-08, 2008-09, 2009-10 AND 2010-11 AND THE ASSES SEE, VIZ. SHRI RAJNIBHAI JIVRAJ DESAI IS IN CROSS-APPEAL AGAINST T HE ORDER OF THE LD.CIT(A) FOR THE ASSTT.YEAR 2009-10. 4. IN THE THIRD SET OF APPEALS, THE ASSESSEE I.E. S HRI RAMESHBHAI J. DESAI AND REVENUE ARE IN CROSS APPEAL AGAINST THE O RDER OF THE LD.CIT(A) DATED 26.12.2016 FOR THE ASSTT.YEAR 2007- 08. WHILE REMAINING ONE APPEAL IS BY SMT.ALKABEN R. DESAI AGAINST THE O RDER OF THE LD.CIT(A) DATED 28.11.2016 FOR THE ASSTT.YEAR 2009- 10. 5. SINCE ALL THESE APPEALS ARE INTER-RELATED AND RA ISE MORE OR LESS COMMON ISSUE, WE PROCEED TO DISPOSE ALL OF THEM BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 6. TO BEGIN WITH, WE TAKE FIRST SET OF ASSESSEES A PPEALS IN THE CASE OF SHRI RAJNIBHAI JIVRAJ DESAI FOR THE ASSTT.YEARS 2007-08 TO 2010-11. COMMON GROUND RAISED IN THE FIRST THREE GROUNDS OF APPEALS IS THAT THE LD.CIT(A) HAS ERRED IN DELETING DISALLOWANCE UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961 MADE BY THE AO IN ASSESSMENT F RAMED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. 7. IN THE ASSTT.YEARS 2008-09, 2009-10 SECOND COMMO N ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF ADDITION MADE UNDER SECTION 68 OF THE ACT. REVENUE HAS ALSO CHALLENGED DELETION OF A DDITIONS MADE UNDER SECTION 14A OF THE ACT R.W. RULE 8D FOR THE ASSTT.Y EARS 2008-09, 2009- 10 AND 2009-10. 8. OTHER COMMON GROUND RAISED IN THE APPEALS OF THE REVENUE FOR THE ASSTT.YEAR 2007-08 AND 2010-11 ARE AGAINST DELE TION OF ADDITION MADE UNDER SECTION 41(1) OF THE ACT. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 4 9. SINCE FACTS ARE SIMILAR IN ALL THESE ASSESSMENTS EXCEPT QUANTUM OF DISALLOWANCES, WE TAKE UP THE FACTS FROM THE ASSESS MENT YEAR 2007-08 FOR THE CONVENIENCE OF OUR ADJUDICATION ON THESE IS SUES. 10. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZ URE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE RESID ENTIAL AND BUSINESS PREMISES OF THE GROUP CASES OF MASTER GROUP, WHICH IS FAMILY GROUP CONCERN OF THE ASSESSEES ON 3.1.2007. DURING THE S EARCH CERTAIN LOOSE PAPERS AND GOLD JEWELLERY WERE FOUND AND SEIZED. P URSUANT TO THAT THE AO INITIATED PROCEEDINGS UNDER SECTION 143(3) R.W.S . 153A OF THE ACT. NOTICE UNDER SECTION 153A WAS ISSUED AND SERVED UPO N THE ASSESSEE. IN RESPONSE TO THAT, ASSESSEE FILED RETURNS OF INCO ME. 11. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTIC ED THAT ASSESSEE HAS MADE PAYMENT IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. ASSESSEE SUBMITTED THAT SINCE SELLER OF T HE LAND WAS FARMERS AND THEY DID NOT HAVE BANK ACCOUNT OR HAVING BANKIN G FACILITY, THEREFORE DUE TO BUSINESS EXPEDIENCY, PAYMENTS WERE MADE IN C ASH. HE ALSO CHALLENGED VALIDITY OF ASSESSMENT FRAMED UNDER SECT ION 143(3) R.W.S. 153A OF THE ACT. THE AO DID NOT ACCEPT THE SUBMISS IONS, AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 12. SIMILARLY ADDITIONS UNDER SECTION 68 FOR THE AS STT.YEAR 2008-09 AND 2009-10 WERE ALSO MADE ON ACCOUNT OF UNSECURED LOANS ON THE GROUND THAT IDENTITY AND CREDITWORTHINESS OF THE DE POSITORS WERE NOT PROVED BY THE ASSESSEE. LIKEWISE, ADDITIONS UNDER S ECTION 41(1) OF THE ACT, WAS ALSO MADE BY THE AO ON THE GROUND THAT NO MATERIAL HAS BEEN FURNISHED TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE . THE AO ALSO MADE ADDITION UNDER SECTION 14A R.W.S RULE 8D ON THE GRO UND THAT ASSESSEE HAS INVESTMENT WHICH FORMED PART OF EXEMPT INCOME. THOUGH THE ASSESSEE HAS CLAIMED THAT IT HAS NOT INCURRED ANY E XPENDITURE FOR EARNING EXEMPT INCOME, THE AO MADE ADDITION BY APPL YING RULE 8D OF SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 5 THE INCOME TAX RULES. AGGRIEVED BY THE ABOVE ADDIT IONS, THE ASSESSEE WENT IN APPEAR BEFORE THE LD.CIT(A), WHO AFTER CONS IDERING THE ISSUE IN DETAILS AND CONSIDERING THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAUMYA CONSTRUCTION, T AX APPEAL NO.24 OF 2016 DATED 14.3.2016 DELETED THE IMPUGNED ADDITIONS . AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 13. ASSESSEE IN THE CROSS-OBJECTION IN IT(SS)A.NO.1 05/AHD/2017 FOR THE ASSTT.YEAR 2009-10 ALSO CHALLENGED VALIDITY OF PROCEEDINGS UNDER SECTION 153A OF THE ACT AND ADDITION OF RS.46,49,27 7/- MADE TOWARDS BAD DEBTS/BUSINESS LOSS WHICH WAS CONFIRMED BY THE LD.CIT(A). 14. BRIEFLY STATED FACTS ARE THAT DURING THE ASSESS MENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED BAD DE BTS AMOUNTING TO RS.46,49,227/- WHICH HAVE BEEN WRITTEN OFF BUT NO D ETAILS WERE PROVIDED FOR VERIFICATION BEFORE THE AO. TO THE QU ERY BY THE AO, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID BAD DEBTS R EPRESENTED TOWARDS EXPENSES INCURRED DURING THE COURSE OF BUSINESS, WH ICH REMAINED UNRECOVERABLE FROM THE VENDORS SINCE LONG, AND THER EFORE, THE SAME WRITTEN OFF AS BAD DEBTS. THE AO HOWEVER DISALLOWE D THE SAME ON THE GROUND OF NON-AVAILABILITY OF RELEVANT RECORDS. TH E ADDITION WAS CONFIRMED BY THE LD.CIT(A). 15. SIMILAR CHALLENGE WAS MADE IN IT(SS)A.NO.109/AH D/2017 IN THE CASE OF RAJESHBHAI JIVRAJ DESAI AND IN IT(SS)A.NO.1 28/AHD/2017 IN THE CROSS APPEAL IN THE CASE OF SHRI RAMESHBHAI JIVRAJB HAI HUF FOR THE ASSTT.YEAR 2007-08. 16. BEFORE US, THE LD.DR RELIED UPON RELEVANT ORDER S OF THE AO, WHILE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE RESPECT IVE ORDERS OF THE LD.CIT(A) AND REITERATED SUBMISSIONS MADE BEFORE TH E REVENUE AUTHORITIES. HE FURTHER SUBMITTED THAT THE IMPUGNE D ADDITIONS MADE BY THE AO BY FRAMING ASSESSMENT UNDER SECTION 143(3) R .W.S. 153A ARE NOT SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 6 SUSTAINABLE BECAUSE NO INCRIMINATING MATERIAL WAS F OUND DURING THE COURSE OF SEARCH, AND THEREFORE, IT WAS BAD IN LAW. HE RELIED UPON THE FOLLOWING DECISIONS TO SUPPORT HIS CLAIMS. I) CIT VS. KABUL CHARWALA, 380 ITR 0183 (DEL) II) PR.CIT VS. SAUMYA CONSTRUCTION, III) CREELOTEX ENGINEERING P.LTD. VS. CIT, IT(SS)A.NO.254/AHD/2015 ORDER DATED 10.12.2018, DECISION OF ITAT, AHMEDABAD BENCH 17. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, WE H AVE GONE THROUGH THE MATERIAL CAREFULLY AND JUDGMENT OF HONBLE JURI SDICTIONAL HIGH COURT RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. TH E LD.CIT(A) WHILE DELETING THE ADDITIONS ALSO RELIED UPON THE JUDGMEN T OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. SAUMYA CONSTRUCTION (SUPRA) AND HELD THAT ADDITIONS CAN BE MADE UNDER S ECTION 153A ONLY IN THOSE CASES WHERE DURING THE COURSE OF SEARCH INCRI MINATING DOCUMENTS OR BOOKS OF ACCOUNTS HAVE BEEN FOUND AND SEIZED AND ADDITIONS HAVE TO BE BASED ON SUCH EVIDENCES AND DOCUMENTS. HE FOUND THAT AO HAS NOT MADE ANY REFERENCE TO ANY DOCUMENTS FOUND DURING TH E COURSE SEARCH, AND THEREFORE, ADDITIONS HELD TO BE UNSUSTAINABLE. WE FIND THAT ISSUE OF VALIDITY OF ADDITION MADE IN AN ASSESSMENT FRAMED U NDER SECTION 143(3) R.W.S. 153A WAS CONSIDERED BY THE ITAT IN THE CASE OF CREELOTEX ENGINEERING P.LTD. VS. CIT (SUPRA). THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE WORTH TO NOTE, WHICH READS AS UNDER: 6. THE QUESTION BEFORE US IS, WHETHER ANY INCRIMIN ATING MATERIAL WAS FOUND SHOWING THAT THE ASSESSEE HAS WR ONGLY CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT D URING THE COURSE OF SEARCH. THE AO HAS NOT MADE REFERENCE TO ANY DOCUMENTS OR INFORMATION WHICH CAME TO HIS POSSESSI ON DURING THE COURSE OF SEARCH. THIS IS THE ASSESSMENT YEAR 2 008-09. ACCORDING TO THE AO, ORIGINAL RETURN WAS FILED UNDE R SECTION 139 AT NIL AMOUNT. NOTICE UNDER SECTION 143(2) APPEARS TO HAVE NOT BEEN ISSUED UPON THE ASSESSEE ON THE ORIGINAL RETUR N. IN THIS BACKGROUND, LET US FIRST TAKE UP PROPOSITION LAID D OWN BY HONBLE COURTS ON SCOPE OF SECTION 153A OF THE INCOME TAX A CT,1961. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 7 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAVE EXAMINED SCOPE OF SECTION 153A. AFTER A DETAILED ANALYSIS HONBLE COURT HAS SUMMARIZED LEGAL PROPOSI TION EMERGING OUT FOR APPLICATION OF SECTION 153A. SUCH PROPOSIT ION READS AS UNDER: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REA SSESS THE 'TOTAL INCOME ' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UN DISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUN D, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARB ITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEI ZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PE NDING ON THE DATE OF SEARCH) AND THE WORD 'REASSES S' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 8 ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIA L EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINAT ING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 7. IT IS ALSO PERTINENT TO NOTE THAT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HONBLE COURT HAS OBSERVED THAT RETU RN FOR ASSTT.YEARS 2002-03, 2005-06 AND 2006-07 WERE ACCEP TED UNDER SECTION 143(1) OF THE ACT. THUS, HONBLE COURT HAS CONSIDERED THIS ACCEPTANCE OF RETURN AS AN ASSESSMENT MADE UND ER SECTION 143(1). IN CONCLUDING PARAGRAPH, THE HONBLE COURT HAS HELD THAT ON THE DATE OF SEARCH, ASSESSMENTS FOR A.YS. 2002-0 3, 2005-06 AND 2006-07 ALREADY STOOD COMPLETED AND NO INCRIMIN ATING MATERIAL WAS UNEARTHED DURING THE SEARCH, THEREFORE , NO ADDITION SHOULD HAVE BEEN MADE TO THE INCOME OF THE ASSESSEE . 8. IT IS PERTINENT TO TAKE NOTE THE FINDING RECORDE D BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA UMAYA CONSTRUCTION LTD. (SUPRA) IN PARA 18 AND 19 OF THE JUDGMENTS. IT READS AS UNDER: 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 ISS UED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED I TS RETURN OF INCOME. MUCH LATER, AT THE FAG END OF THE PERIOD WITHIN WHICH THE ORDER UNDER SECTION 153A OF THE ACT WAS T O BE MADE, IN OTHER WORDS, WHEN THE LIMIT FOR FRAMING TH E ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS ABOUT TO EXPIRE, THE NOTICE HAS BEEN ISSUED IN THE PRESENT C ASE SEEKING TO MAKE THE PROPOSED ADDITION OF RS.11,05,5 1,000/- ON THE BASIS OF THE MATERIAL WHICH WAS NOT FOUND DU RING THE COURSE OF SEARCH, BUT ON THE BASIS OF A STATEMENT O F ANOTHER PERSON. IN THE OPINION OF THIS COURT, IN A CASE LIK E THE PRESENT ONE, WHERE AN ASSESSMENT HAS BEEN FRAMED EA RLIER AND NO ASSESSMENT OR REASSESSMENT WAS PENDING ON TH E DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR M AKING OF REQUISITION UNDER SECTION 132A, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 153A OF THE AC T, SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 9 ADDITIONS OR DISALLOWANCES CAN BE MADE ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR REQUISITION. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, HOWEVER, IT IS ON THE BASIS OF SOME MATE RIAL COLLECTED BY THE ASSESSING OFFICER MUCH SUBSEQUENT TO THE SEARCH, THAT THE IMPUGNED ADDITIONS CAME TO BE MADE . ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTENDED T HAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTAN DING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INC RIMINATING MATERIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF ALL THE SIX ASSESSME NT YEARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION D OES NOT MERIT ACCEPTANCE, INASMUCH AS, THE ASSESSMENT IN RE SPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE A ND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLO SED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY AS SESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITI ON OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESS MENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF TH E ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERA TED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WI TH THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CAS E OF JAI STEEL (INDIA), JODHPUR (SUPRA). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CON CLUDED BY THE DECISION OF THIS COURT IN THE CASE OF JAYABE N RATILAL SORATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHIL E IT CANNOT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSE SSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN TH E PARTICULAR ASSESSMENT YEAR. 9. AS OBSERVED EARLIER, A PERUSAL OF THE ASSESSMENT ORDER WOULD INDICATE THAT THE LD.AO HAS NOT MADE REFERENC E TO ANY SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH W HILE CONSIDERING THIS ISSUE. THEREFORE, DISALLOWANCE UN DER SECTION 10(38) OF THE ACT IS BEYOND THE SCOPE OF SECTION 15 3A AND NOT SUSTAINABLE. WE ALLOW THIS GROUND AND DELETE IMPUG NED DISALLOWANCE. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 10 18. CONSIDERING THE ABOVE DECISIONS OF THE ITAT, AH MEDABAD BENCH AND THE JUDICIAL FINDINGS, WE DO NOT FIND ANY INFIR MITY IN THIS FINDING OF THE LD.CIT(A), AND THEREFORE, WE CONFIRM HIS ORDERS ON THESE ISSUES AND REJECT ALL THE GROUNDS OF APPEALS OF THE REVENUE. 19. SO FAR AS APPEAL OF THE ASSESSEE IS CONCERNED QUA ADDITION OF BAD DEBTS/BUSINESS LOSS, WE ALLOW THIS GROUND FOR THE R EASONS RECORDED HEREINABOVE PARAGRAPHS. 20. NOW WE TAKE SECOND SET OF APPEALS IN THE CASE O F JIVRAJ V. DESAI IN IT(SSA)NO.98 TO 101 AND 103/AHD/2017 FOR THE ASS TT.YEARS 2007-08 TO 2010-1 AND 2012-13. COMMON GROUND RAISED IN ALL THESE APPEALS ARE THAT ASSESSMENT FRAMED UNDER SECTION 143(3) R.W .S. 153A IS BAD IN LAW, AND THEREFORE DISALLOWANCE OF INTEREST EXPENSE S ARE WHOLLY ILLEGAL AND UNLAWFUL. IN THE ASSTT.YEAR 2008-09, THE ASSES SEE HAS ALSO RAISED DISALLOWANCE OF CARRY FORWARD LOSS OF 34,38,408/- A ND AGAINST ADDITION OF REMUNERATION OF RS.64,575/- FOR THE ASSTT.YEAR 2 009-10 AND PROFESSIONAL FEES OF RS.1,00,000/- IN THE ASSTT.YEA R 2012-13. 21. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTIC ED BY THE AO THAT THE ASSESSEES HAS CLAIMED INTEREST EXPENDITURE ON U NSECURED LOANS WHICH WAS USED FOR PAYING INCOME TAX DUES. THE ASS ESSEE DENIED THAT BORROWED FUNDS WERE UTILIZED FOR PAYMENT OF OUTSTAN DING INCOME TAX LIABILITY IN RESPECT OF SEARCH ASSESSMENT. HE CONT ENDED THAT SINCE NO INCRIMINATING MATERIAL RELATING TO INTEREST EXPENSE S WAS FOUND DURING THE COURSE OF SEARCH DISALLOWANCE WAS UNWARRANTED. THE ASSESSEES HAVE ALSO CHALLENGED ASSESSMENT FRAMED UNDER SECTIO N 143(3) R.W. SECTION 153A OF THE ACT, AS THE SAME WERE FRAMED WI THOUT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE LD.AO DID NOT ACCEPT THIS SUBMISSION OF THE ASSESSEES AND HE MADE RESPECTIVE ADDITIONS. APPEAL TO THE LD.CIT(A) DID NOT BRING A NY RELIEF TO THE ASSESSEES IN ALL THESE YEARS. SHRI JIVRAJ V. DESAI AND OTHERS (13 APPEALS) ASSTT.YEARS 2007-08 TO 2010-11 AND 2012-13 11 22. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RECORD CAREFULLY AND MATERIAL PERUSED. WE FIND THAT ISSUE S AGITATED IN ALL THESE APPEALS ARE SIMILAR TO THE ISSUES DECIDED IN THE CA SES OF RAJNIBHAI JIVRAJ DESAI FOR THE ASSTT.YEARS 2007-08 TO 2010-11, WHERE WE HAVE HELD THAT NO ADDITIONS COULD BE SUSTAINED IN VIEW OF THE POSI TION OF THE LAW THAT WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH RELATING TO THE IMPUGNED ADDITIONS, THE SAME CANNOT BE SUSTAINED. THEREFORE, FOR THE REASONS RECORDED IN PARA 16-18 H EREINABOVE, WE ALLOW THE GROUNDS OF THE ASSESSEES APPEALS AND REJ ECT THAT OF THE REVENUE. 23. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED AND THAT OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH FEBRUARY, 2019 AT AHMEDABAD. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 26/02/2019