Lotus Chick Foods Private Limited Vs ACIT (ITAT Bangalore)
A Search Paper Repeating What the Books Already Reveal Is Not “Incriminating”-Farm Expenses Cannot Be Disallowed u/s 153C in Unabated Years: Bangalore ITAT
The Bangalore ITAT has held that a document found during search cannot be treated as incriminating material merely because it pertains to the assessee. Where the seized document merely records expenditure already disclosed in the regular books & audited financial statements, it does not reveal any undisclosed income or justify an addition u/s 153C for completed or unabated assessment years.
Following the Supreme Court decisions in PCIT v. Abhisar Buildwell Pvt. Ltd. & DCIT v. U.K. Paints (Overseas) Ltd., the Tribunal deleted the disallowance of farm maintenance expenses for five assessment years.
Facts of the Case
Sri Lotus Chick Foods Pvt. Ltd. had filed its original returns u/s 139 for AYs 2014-15 to 2018-19. All the returns were processed through intimations u/s 143(1).
A search u/s 132 was conducted on 14.02.2020 in the case of M/s Lotus Farms & at the residence of Mr. Damodar Reddy. Certain documents stated to pertain to the assessee were found during the search.
The AO recorded satisfaction on 22.02.2021 that the seized documents pertained to Sri Lotus Chick Foods Pvt. Ltd. & had a bearing on determination of its total income. Notices u/s 153C were issued for the relevant assessment years.
