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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
PER MAHAVIR PRASAD, JUDICIAL MEMBER
These two appeals have been filed by the Assessee against the order of ld. Pr. CIT u/s. 263. The assessee has taken following grounds of appeal:
ITA No. 1244 & 1245/Ahd/2018 2 . A.Ys. 2009-10 & 2010-11 1- The Ld. Pr. CIT (Central), Surat has erred in law and in facts in holding that the assessment order passed by the Ld. A.O. u/s. 153A r.w.s. 143(3) dated 29.02.2016 is erroneous and prejudicial to the interest of the revenue so as to justify the invocation of powers u/s. 263 and directing to revise the assessment order to verify and consider the allowance or otherwise of the claim of interest expenses amounting to Rs. 57,37,042 against interest income of Rs. 42,11,011/-The order of the Pr. CIT being erroneous in law and in facts is prayed to be cancelled / revoked. 2. The Ld. Pr. CIT has further erred in law and in facts in completely disregarding the submission of the appellant that the impugned assessment order sought to be revised u/s. 263 is passed u/s. 153A r.w.s. 143(3) having a scope of assessment of undisclosed income on the basis of incriminating documents / material. In absence of any material / document in relation to the claim of expenses directed to be re-verified, no incriminating material or document is found and as such, such verification being beyond the scope of impugned assessment, the assessment order cannot be said to be erroneous and consequently, no prejudice can be said to have been caused. 3. The Ld. Pr. CIT (Central), Surat has further erred in law and in facts in directing the conduct of enquiry and verification which are beyond the scope of powers vested u/s 153A r.w.s. 143(3) and consequently u/s. 263 of the I.T. Act, 1961. 4. Your appellant craves liberty to add, alter, amend, substitute or withdraw any of the ground of appeal hereinabove contained.
On verification of the case records of the assessee for A.Y.2009-10, it is noticed that the assessee has shown to have received Rs.42,11,011/- as interest income in the year under consideration. He has also claimed .interest expenditure of Rs.57,37,042/- resulting into declaration of loss of Rs. 15,26,031/-under the head "Income from Other Soruces". Further, perusal of records reveal that the borrowed funds have been utilized for making investment in shares/securities. Thus, the interest payment/expenditure has not been utilized wholly and exclusively for the purpose of earning interest income. On perusal of his reply dated 23.12.2015 .submitted on 29.12.2015 during course of assessment proceedings, it is noticed that the assessee has ... submitted the ledgers of interest received and interest payment, but not
ITA No. 1244 & 1245/Ahd/2018 3 . A.Ys. 2009-10 & 2010-11 furnished the proof establishing the nexus between source of funds and its utilization. His submission made during assessment proceedings by simply : filing copy of ledger accounts has been accepted .by the A.O. without conducting verification of nexus and without verifying their admissibility under the I.T. Act. Accordingly, the said interest expenditure has been allowed erroneously and is prejudicial to the interest of revenue.
Thus, impugned assessment for A.Y. 2009-10 passed on 29.02.2016 by the Assessing Officer i.e. DCIT, Central Circle-3, Baroda u/s. 153A r.w.s. 143(3) of the Act order is erroneous and prejudicial to the interest of Revenue within meaning of section 263 of the Income Tax Act.
Now assessee has come before us with the grievance for order passed by the ld. Pr. CIT is wrong and already had adequate enquiry have been made by the Assessing Officer.
In this case, assessee has shown has to have received Rs. 42,11,011/- as interest income in the year under consideration, and has also claimed interest expenditure of Rs. 57,37,042/- resulting into declaration of loss of Rs. 15,26,031/- under the head “Income from Other Sources”.
We can see in this case, during search no incriminating material was found and ld. A.O. made adequate enquiry in this case.
In Support of its contention, ld. A.R. cited an order in the matter of CIT vs. Amit Corporation (2012) 81 CCH 0069 (Guj.) High Court wherein it is held that “ during the course of framing of assessment, Assessing Officer had access to all records
ITA No. 1244 & 1245/Ahd/2018 4 . A.Ys. 2009-10 & 2010-11 of assessee, after pursuing such record Assessing Officer framed assessment, such assessment could not have been re-opened in exercise of revision power u/s 263 for making further inquiries”.
In this case, assessee cannot be branded as erroneous as there has been inquiry with regard to claims made and mere inadequacy cannot ground for taking action u/s. 263 of the Income Tax Act.
Ld. A.R. also cited a case of Pr. CIT Vs. Saumya Construction Pvt.Ltd. 81 taxmann.com 292 (Guj.) wherein has been held that assessment “u/s. 153A, relation to material disclosed during search or requisition; if no incriminating material is found during search, no addition can be made on basis of material collected after search.”
In view of the above, we allow both the appeal of the Assessee.
Order pronounced in Open Court on 18 - 02- 2019 Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad: Dated 18/02/2019 Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER
Deputy/Asstt.Registrar ITAT,Ahmedabad