TMI Blog2014 (9) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... both the assessee and Tirumala Rao have denied of making the said payment to B. Nagarjuna Rao – thus, the seized document on the basis of which proceeding u/s 153C was initiated cannot be said to be belonging to the assessee - the assumption of jurisdiction u/s 153C has to be held as invalid and the assessment order passed must be declared as without jurisdiction - since the seized material has no reference to the assessee, it cannot be considered to be belonging to the assessee for enabling the initiation of proceedings u/s 153C of the Act – Decided in favour of assessee. - ITA No. 2097/Hyd/2012 - - - Dated:- 9-4-2014 - Shri Chandra Poojari And Sri Saktijit Dey,JJ. For the Appellant : Sri A. V. Raghu Ram For the Respondent : Smt. K. Haritha ORDER Per Saktijit Dey, J. M: This appeal filed by the assessee is directed against the order dated 30-9-2011 of CIT (A)-III, Hyderabad pertaining to the assessment year 2007-08. 2. There is a delay of seven days in filing the appeal. The assessee has filed a petition seeking condonation of delay accompanied by an affidavit explaining the cause of delay. Upon considering the averments made in the affidavit, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received toward sale of the property and the sum of ₹ 81,48,000/- was received for sale of the above property. It was also admitted by him that the entries in the seized document was made by him in his own hand-writing. He further stated, the property was registered in the name of M/s Seetaramanjaneya Constructions a partnership firm in which he and Sri K. Venkateswara Reddy are partners. He further stated that the amount of ₹ 81,48,000 was received on various stages through one Tirumala Rao towards sale of the said property. He further stated that the property was registered in the name of Sri P. Gangadhar Rao, the present assessee. It was stated by D. Nagarjuna Rao that the profit of ₹ 43,68,000/- derived from the sale of the property was also offered to tax. When the aforesaid fact along with seized material was confronted to Sri Tirumal Rao, though he admitted the fact that he has negotiated with D. Nagarjuna Rao towards purchase of the said plot of 420 sq. yards on behalf of P. Gangadhar Rao, the present assessee but he flatly denied of having paid ₹ 81,41,000 as mentioned in the seized document. It was further stated by him by him that whatever amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not mention the name of assessee or as any reference to the transaction entered into by the assessee and it cannot be considered to be belonging to the assessee. It was submitted that the condition precedent for assuming jurisdiction u/s 153C is, the seized material or valuable articles or things must belong to the person against whom the proceedings u/s 153C is sought to be initiated. The learned AR submitted that when there is no reference to the assessee in the seized document, only relying upon the statement of D. Nagarjuna Rao to whom the document originally belongs, proceedings cannot be initiated against the assessee u/s 153C of the Act. It was submitted that apart from aforesaid loose sheet there is no other evidence before the Assessing Officer which could show that the assessee has paid the amount of ₹ 81,48,500/- to D. Nagarjuna Rao towards sale consideration of the property. The learned AR therefore submitted that when the seized document does not belong to the assessee, proceeding u/s 153C cannot be said to have been validly initiated. The learned AR relying upon a decision of Income-tax Appellate Tribunal, Hyderabad Bench in case of M/s. Shouri Constructions, H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther they are receipts or payments. The aforesaid loose sheet neither mentions the name of the assessee nor it refers to the plot Number, survey number etc., for which the payment was allegedly made. There is nothing in the seized document to suggest that it relates to the sale transaction of plot No.22, Survey No.230 admeasuring 420 sq. yards at Madinaguda. Apart from the aforesaid seized document, the only other evidence on the basis of which the Assessing Officer concluded that the assessee has paid the amount of ₹ 81,48,000/- is the statement recorded from D. Nagarjuna Rao wherein he stated that an amount of ₹ 81,48,000/- was received from Tirumala Rao towards sale consideration of the property. However the statement recorded from B. Tirumala Rao would show that he has categorically denied of having paid ₹ 81,48,000/- to D. Nageswara Rao. The assessee also in the statement recorded from him has denied of having paid anything over and above the amount mentioned in the sale deed. 12. In the aforesaid circumstances in our view, the Assessing Officer could not have initiated proceedings u/s 153C of the Act solely on the basis of the loose sheets i.e., page No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her transactions similar assessments u/s 153C of the Act were also made in case of M/s Shouri Constructions and T. Jaipal Reddy. When the issue came up before the Tribunal the coordinate bench of the Tribunal in ITA Nos. 2056 and 2057/Hyd/2011 in case of M/s Shouri Constructions and T. Jaipal Reddy dated 28-6-2013 (supra) while considering the issue of validity of proceedings initiated u/s 153C of the Act accepted the contention of the assessee and held that the proceedings initiated u/s 153C of the Act on the basis of the so called incriminating material is invalid in law. At this point, it will be relevant to look into the finding of the Tribunal in this regard which is extracted hereunder:- 10. Thus the condition precedent for assumption of jurisdiction u/s 153C is, the AO must be satisfied that the seized materials belongs to such other person. The word belong has not been defined under the Act. As per the dictionary meaning belong to means be the property of; be the rightful possession of; be due to. Undisputedly seized document on the basis of which proceeding u/s 153C is initiated against the assessee is a loose sheet marked as A/DNR/18 . At our request the learned DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed against such other person under section 158BC. 13. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person. If the said requirement is not satisfied, recourse cannot be had to the provisions of section 153C of the Act. 14. Examining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t found during the course of search and seized cannot be termed, to be indicating any limited interest of the ownership of the assessee in such books of account or documents. The language used in section 153C is materially different from the language used under section 158BD. As per section 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, section 153C says that if valuable or books of account or documents belonging to other persons are seized then action under section 153C can be taken against that person. In the instant case, we are satisfied that books of account or documents do not belong to the assessee and, therefore, the Assessing Officer was not justified in initiating action under section 153A read with section 153C of the Income-tax Act. The Assessing Officer is free to take proper remedial measure as per law. 14. We, in the preceding paragraphs, have already held that the seized document on the basis of which proceeding u/s 153C was initiated cannot be said to be belonging to the assessee. Therefore, con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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