INCOME TAX ACT, 1961

Section 153C Section 132

Search and seizure - Proceedings under section 153C - No incriminating material found during search of searched person -

During the course of search in the residence of one AR, the Accountant of the society, certain incriminating material was found relating to the assessee, evidencing the undisclosed income. therefore, the AO had initiated the proceedings under section 153C. During the course of assessment proceedings under section 153C, the AO found that the assessee had claimed the deduction for payment rent of Rs. 7,36,053 under section 57, i.e., from the income from other sources. Since the rent paid is not an allowable deduction under section 57, the AO made the disallowance of Rs. 7,36,053 and added back to the income. CIT(A) confirmed the addition stating that the payment of rent was not an allowable deduction under section 57.Held: By the time, the case was notified to the present AO, the assessment for the assessment year 2012-13 was unabated. Hence, the AO was not permitted to make any addition without having the incriminating material. In the instant case, the addition was made with reference to the rent paid by the assessee, which was accounted in the regular books of account and declared in the returns of income already filed and no incriminating material was found during the course of search. The AO was, therefore, not permitted to make any addition in the hands of the assessee relating to the rent paid by the assessee. Case law relied upon by the assessee in the case of Y.V. Anjaneyulu supports the assessee's case. Therefore, the order of the CIT(A) was set aside and the addition made by the AO was therefore, deleted.

Followed:Y.V. Anjaneyulu, Guntur v. Dy. CIT, Central Circle, Vijayawada ITA. No. 513 & 514/Viz/2013 & ITA. No. 524/Viz/2014, dated 9-6-2017.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13 to 2014-15

INCOME TAX ACT, 1961

Section 5

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