NANDA KUMARI,CHENNAI vs. ITO NON CORPORATE WARD 1(4), CHENNAI

आदेश / O R D E R

Per A. Mohan Alankamony, AM:-

initiated U/s.153C r.w.s. 153A of the Act, in the absence of incriminating material for the assessment years 2006-07 to 2013-14.

(ii) The Ld.CIT(A) has erred in confirming the addition made by the Ld.AO amounting to Rs.1,29,451/-, Rs.1,06,790/-,

Rs.1,68,162/-, Rs.1,30,980/-, Rs.1,13,500/-, Rs.1,91,555/-,

Rs.1,90,672/- & Rs.66,038/- towards interest income earned from pawn broking business over and above the amount admitted by the assessee for the assessment years 2006-07 to 2013-14 respectively.

(iii) The Ld.CIT(A) has erred in confirming the addition made by the Ld.AO towards disallowance of appraiser fee amounting to Rs.52,000/-, Rs.48,000/-, Rs.48,000/-, Rs.72,000/- &

2008-09, 2009-10 & 2013-14 respectively.

(iv) The Ld.CIT(A) has erred in confirming the order of Ld.AO who had made addition by adhoc disallowance of salary expenses @ 20% which works out to Rs.30,800/-,

Rs.26,905/- & Rs.15,889/- for the assessment years 2006-07,

2007-08 & 2008-09 respectively.

(v) The Ld.CIT(A) has erred in upholding the order of the Ld.AO who had levied interest U/s.234A, 234B & 234C of the Act for the assessment years 2006-07 to 2009-10, 20012-13 & 2013-

14 and U/s. 234B for the assessment years 2010-11 & 2011-

12 respectively.

The Ld.AR submitted before us that in the case of the assessee, there was no incriminating document found during the course of the search and therefore additions cannot be made U/s.153C r.w.s. 153A of the Act. Reliance was placed in the decision of the Mumbai Bench of the Tribunal in the case M/s. All Cargo Global Logistics Ltd., reported in 137 ITD 237 and the decision of the Chennai Bench of the Tribunal in the case M/s. OM Shakthy Agencies (Madras) Pvt. Ltd. At From the facts of the case, it appears that the assessee has filed her return of income for the relevant assessment years only after the issuance of notice U/s.153C r.w.s. 153A of the Act. Hence on the earlier occasions there was no assessments U/s.143(3) of the Act made in the case of the assessee. Therefore the decision relied by the assessee is of no relevance. Further provisions of Section 153A(b) of the Act specifically provides that in the case of search proceedings, assessment as well as re-assessment of the total income of the assessee can be made for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Therefore during the course of reassessment the assessee is bound to produce the requisite documents to substantiate her claim of deduction. Hence the ground raised by the assessee with respect to jurisdiction U/s.153C r.w.s.

153A of the Act is devoid of merits. Accordingly this ground raised by the assessee is decided against her.

per month cannot be charged from the borrowers hence, she has disclosed the excess amount of interest collected from the borrowers separately. However the Ld.AO was of the view that normally in this line of business interest is charged not less than 2% per month from the borrowers. Therefore he computed the interest @ 2% and added to the income of the assessee. On appeal, the Ld.CIT(A) was also of the view that the Ld.AO has computed the interest income of the assessee fairly and in accordance with the prevailing market rates and thereby upheld his order.

5.1 Before us the Ld.AR submitted that the assessee had maintained proper books of accounts and records, and therefore in absence of any contrary findings, additions cannot be made. It was therefore pleaded that the additions made by the Ld.Revenue Authorities may be deleted. The Ld.DR on the other hand relied on the orders of the Ld.Revenue Authorities.

5.2 We find merit in the submission of the Ld.AR. From the facts of the case, it is evident that the Ld.AO had made addition based on presumptions. He has not made any independent enquiries to substantiate his presumptions. The Ld.CIT(A) has also simply endorsed the view of the Ld.AO. We are of the view that this nature of additions made by the Ld.Revenue Authorities cannot be justified.

Therefore we hereby direct the Ld.AO to delete the additions made towards excess interest income earned in the hands of the assessee for all the relevant assessment years in these appeals before us.

During the course of assessment proceedings, it was observed by the Ld.AO that the assessee had claimed deduction on account of expense incurred towards appraiser fee. The Ld.AO was of the view that in this line of business the pawn broker himself acts as the appraiser and therefore there was no scope for incurring expense towards appraiser fee. Therefore the Ld.AO disallowed the expenditure claimed towards appraiser fee and added to the income Report of the Ld.AO that certain PAN number stated by the assessee with respect to certain appraisers were incorrect. Further some of the appraisers failed to appear in person in response to the summons issued by the Ld.AO. Since there was lack of evidence with respect to the genuineness of some of the appraisers the Ld.CIT(A) granted partial relief to the assessee in parity with the Remand Report.

6.1 Before us the Ld.AR submitted that the assessee had genuinely incurred expenditure towards appraiser fee and the PAN numbers and address of the appraisers were produced before the Ld.AO. Therefore whatever records that could be possible obtainable by the assessee was produced before the Ld.AO in order to evidence the expenditure incurred. Hence it was pleaded that the addition made by the Ld.AO may be deleted. The Ld.DR on the other hand relied on the orders of the Ld.Revenue Authorities.

6.2 We have heard the rival submissions and carefully perused the materials on record. From the facts of the case it is evident that the assessee herself had disclosed excess interest received which not disclosed such interest in her books, her profit would have been reduced and there would have been no necessity to claim deduction towards appraiser fee. However the assessee has disclosed the excess income diligently and also claimed the expense towards appraiser fee. The assessee has also furnished the details submitted by the appraisers before the Ld.AO in his remand proceedings.

Further it is apparent that the Revenue has come to the conclusion that the payment made by the assessee towards appraiser fee is not genuine just because on the summons issued by the Ld.AO certain appraisers failed to appear before him. We are not agreement with this action of the Ld. Revenue Authorities. It would have been appropriate to conduct further enquiry on the appraisers before coming to such conclusion. Considering the facts and circumstance of the case, we are of the considered view that the disallowance of appraiser fee by the Ld.Revenue Authorities is not appropriate.

Hence we hereby direct the Ld.AO to delete the addition made by disallowing the appraiser fee for all the relevant assessment years in these appeal before us.

During the course of assessment proceedings, the Ld.AO directed the assessee to furnish details with respect to salary payments. The assessee requested for some time to produce the vouchers. But the Ld.AO refused to grant time because the assessments were time barring. Thereafter the Ld.AO made adhoc disallowance of 20% of the expenses claimed towards salary expenditure and made addition. On appeal, the Ld.CIT(A) obtained Remand Report from the Ld.AO. In the Remand Report, the Ld.AO observed the same discrepancy as in the claim of expenditure incurred towards appraiser fee. Therefore the Ld.CIT(A) gave partial relief to the assessee in accordance with the Remand Report of the Ld.AO. Since we have held the issue with respect to appraiser fee in favour of the assessee on similar circumstance, in the case of disallowance of salary expense also, we are of the considered view that the Revenue was not justified in disallowing the salary expenditure. Therefore we hereby direct the Ld.AO to delete the

Order pronounced on the 14th November, 2018 at Chennai.