DCIT, NEW DELHI vs. M/S. L.T. FOODS LTD., NEW DELHI

per order dated 18/12/2007. Such assessment order was passed in response to the original return of income filed by the assessee on 29/10/2005 declaring total income of INR 1 0640958/–. The assessee claimed deduction u/s 80 IB of the income tax act at INR 3 0178411/–. The return was processed u/s 143 (1) of the act on a 28/3/2006. The assessment u/s 143 (3) of the act was completed on 18/12/2007 at the total income of INR 1 4451319/– and the deduction u/s 80 IB to the extent of Rs. 28592709/– was allowed to the assessee. The learned assessing officer made only addition/disallowance is with respect to the staff training expenses incurred on directors on to the tune of Rs. 2224659/–. The assessee did not file any appeal against the order passed by the learned assessing officer u/s 143 (3) of the income tax act. 37. Subsequently search took place of on 10/2/2009. The notices u/s 153A of the income tax act was also issued to the assessee against which the assessee filed the return of income and consequently the assessment u/s 153A) of the income tax act was passed on 19/8/2011 wherein the learned assessing officer has made the disallowance is u/s 40A (3) of the income tax act as well as certain other disallowances. The total taxable income of the assessee was determined at INR 1 70129886/–. On appeal before the learned CIT – A appeal of the assessee was partly allowed. Therefore, both the parties are in appeal before us. 38. Coming to the appeal of the assessee wherein it has been contested that the additions made by the learned assessing officer are bad in law as there is no incriminating material found during the course of search. It is further stated that the assessment proceedings to the concluded on the date of initiation

of the search and therefore if any additions/disallowances are required to be made should be made only on the basis of the incriminating material found during the course of search. 39. The learned departmental representative vehemently supported the order of the learned assessing officer and reiterated the argument that there is no requirement of having any incriminating material to make any addition u/s 153A of the income tax act. 40. We have carefully considered the rival contention and perused the orders of the lower authorities. It is apparent that on the date of initiation of search on 10/2/2009 the assessment proceedings u/s 143 (3) of the income tax act was completed on 18/12/2007. Therefore on the date of search no assessment proceedings were pending for the impugned assessment year. Therefore if any addition is required to be made by the learned assessing officer should have been made on the basis of the seized material found during the course of search. We have perused the various additions/disallowances made by the learned assessing officer and found that there is no discretion of any seized material found during the course of search based on which these disallowances/additions have been made. The learned departmental representative also could not show us any seized material based on which the said additions have been made. Therefore, respectfully following the decision of the honourable Delhi High Court in CIT vs Kabul Chawla (supra) the above additions deserve to be deleted. Accordingly we direct the learned assessing officer to delete the disallowance of payment in contravention is of provisions of section 40A (3) of the income tax act, disallowance of expenses on account of non-deduction and

short deduction of tax at source and addition on account of personal expenditure. In the result, we reverse the order of the learned CIT – A income from the above disallowances and allow the appeal of the assessee to these extent. 41. Coming to the appeal of the revenue which is against the disallowance deleted u/s 80 IB of the income tax act. The above addition has also been made by the learned assessing officer without having any incriminating material found during the course of search. Therefore for the reasons given by us while allowing the appeal of the assessee directing the learned assessing officer to delete the various disallowances made, for the similar reasons, in absence of any incriminating material found based on which the disallowance has been made, we dismiss the appeal of the revenue. 42. Accordingly, appeal for assessment year 2005 – 06 filed by both the parties are disposed of wherein appeal of the assessee in ITA number 4162/Del/2013 is allowed an appeal filed by the learned assessing officer in ITA number 4044/Del/2013 is dismissed. 43. Accordingly, all the appeals pertaining to the assessee for assessment year 2003 – 04 to 2005 – 06 are disposed of by this consolidated order. Order pronounced in the open court on 03/07/2019. -Sd/- -Sd/- (BHAVNESH SAINI) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03/07/2019 A K Keot Copy forwarded to 1. Applicant 2. Respondent Page | 25