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TMI Blog2013 (10) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... rushing unit at Manjapra in the name and style "Popular Industries". The said Paulson P Varkey has also interest in Royal Cartoons Pvt Ltd, Angamali and Swagat Enterprises, Angamali. According to the ld.representative, in the course of search in M/s Matha Enterprises, a group concern of Shri P.A. Kuriakose and P.A. Kuriakose Jewellers large scale suppression of sale was found. M/s P.A. Kuriakose Jewellers and Matha Enterprises appear to have introduced loans and credits in the name of family members. The returns were also filed by respective family members disclosing the loan advanced to Matha Enterprises and P.A. Kuriakose Jewellers before the date of search. According to the ld.representative, the present assessee, Shri Promy Kuriakose is one of the family members of Shri P.A. Kuriakose and Shri Paulson P Varkey. The ld.representative for the assessee further submitted that in the course of search proceedings no material pertaining to the present assessee, Shri Promy Kuriakose was obtained. 3. Referring to section 153C of the Act, the ld.representative submitted that proceedings u/s 153C could be initiated in case the assessing officer satisfied that the money, bullion, jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2011) 57 DTR 241 (Pune) and submitted that for initiating proceedings u/s 153C, the document seized must be speaking one and also prima facie incriminating one. According to the ld.representative, in case, the assessing officer was satisfied that the document found during the course of search operation belongs to the person other than the searched person which discloses generation of any income prima facie, there may be justification for initiating proceedings u/s 153C of the Act. Therefore, according to the ld.representative, only such documents which are incriminating in nature could be a basis for initiating proceedings u/s 153C of the Act. Since no incriminating material was found for the assessment years 2001-02 to 2007-08, the proceedings initiated u/s 153C are not valid. The ld.representative has also placed reliance on the decision of the Cochin Bench of this Tribunal in Mrs Kunjamma Varkey vs ACIT in ITA Nos 624 to 629/Coch/2010 order dated 26-08-2011, copy of which is available at page 31 of the paper book. The ld.representative has also placed reliance on the decision of this bench of this Tribunal in the case of Smt. Beena Thomas vs Dy.CIT I.T.(SS)A. No.43/Coch/97 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. The ld.DR further submitted that it is mandatory for the assessing officer to initiate proceedings u/s 153C for all the six assessment years. The ld.DR placed her reliance on the judgement of the Chattisgarh High Court in Trilok Singh Dhollon (supra). 7. We have considered the rival submissions on either side and also perused the material available on record. The assessee is challenging the proceedings initiated u/s 153C of the Act on the ground that no document was found and seized relating to him. The assessee is not challenging the validity of the search. The specific contention of the assessee is that in the absence of any material relating to other persons found during the course of search operation, the proceedings cannot be initiated against persons other than the searched person u/s 153C of the Act. Therefore, this Tribunal is of the considered opinion that the judgment of the Chhattisgarh High Court in the case of Trilok Singh Dhillon (supra) may not be applicable to the facts of the case. 8. Apart from that the Special Bench of this Tribunal at Bangalore in the case of Ramaiah & others considered this issue and found that the Tribunal cannot go into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Cochin Bench of this Tribunal in M/s Kunjamma Varkey (supra). The case before this bench of this Tribunal was that no incriminating material belonged to the assessee was found. This Tribunal, after considering the provisions of section 153C of the Act found that in the absence of any relevant material belonging to the assessee, the assessing officer lacks his jurisdiction to initiate proceedings u/s 153C of the Act. This Tribunal placed its reliance on the decision of the Bangalore Bench of this Tribunal in the case of P Srinivas Naik (supra) and Bombay Tribunal in the case of Sinhagad Technical Education Society (supra). In view of the above, it is obvious that wherever the proceedings was initiated u/s 153C, there should be assessment year specific documents seized in the course of the search proceedings available on record. In the case before us, as found earlier, there are two material documents, one is registered sale deed which relates to assessment year 2001-02 and the other the balance-sheet as on 31-03-2005 disclosing the investment of Rs.41,71,199 in the partnership firm. Apart from these two documents, no material is available on record. 11. Let us n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the proceedings u/s 153C in the absence of search material? As discussed earlier, this was examined by the Mumbai Bench of this Tribunal in the case of Sinhagad Technical Education Society (supra). After considering the provisions of section 153C of the Act the Mumbai Bench found that when there was no search material found during the course of search operation there is no question of initiation of proceedings u/s 153C of the Act. We have also carefully gone through the provisions of section 153C of the Act which reads as follows:- "153C.(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case before us, only for the assessment year 2005-06 a balance as on 31-03-2005 was found which relates to the present assessee. Apart from this, a sale deed was also found. However, no addition was made on the basis of the sale deed. Therefore, the only document available on record is the balance-sheet as on 31-03-2005 which relates to assessment year 2005-06. This bench of this Tribunal in Dr Sasikumar ITA Nos 251 to 259/Coch/2011 had an occasion to examine an identical issue and found that the addition can be made only on the basis of the material available on record. In respect of other years, there cannot be any addition in the absence of any material. 14. This bench of this Tribunal in the case of Kunjamma Varkey (supra) has considered this issue elaborately and found that the initiation of proceedings u/s 153C is without jurisdiction and hence it is bad. In fact, the case in Kunjamma Varkey (supra) relates to this very same group. In the case of Kunjamma Varkey (supra) this Tribunal has observed as follows at paras 4.2 and 4.3 of its order as follows: "4.2 We have carefully perused the assessment order for each of the relevant years, including for A.Y. 2007-08 (copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person." 4.3 The nature of the additions made for each of the years, and the material/s on which the same are based, again, leaves us in no manner of any doubt that no seized books of accounts or documents or assets belonging to the assessee were available with the AO; the assessment orders being de hors any reference there to, enabling the initiation of legally valid proceedings. We may clarify that it is not the want of explicit expression of satisfaction (in the assessment orders), which is to be firstly, prima facie and, secondly, is liable to have some element of subjectivity, that inflicts the present proceedings. The hon'ble jurisdictional high court in CIT vs. Panjanyam Management Agencies and Services (2011) 239 CTR 424 (Ker) has explained that there is no requirement of recording the satisfaction, which is principally for the transfer of the relevant materials by the AO of the person searched to that of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings were concluded by operation of law. Therefore, what remains is only the marriage gift. 17. The ld.representative for the assessee submitted that no material was found during the course operation with regard to gift. The gift was disclosed in the cash flow statement filed during the course of assessment proceedings. The assessee has also disclosed the marriage expenses of Rs.1,50,000 in the cash flow statement. According to the ld.representative, the assessing officer disbelieved the explanation of the assessee and added the entire amount of Rs.5 lakhs as income from unexplained sources. According to the ld.representative, the gift was received from close relatives and it is customary practice among the family members to give and receive gift during the marriage. According to the ld.representative the assessing officer disallowed the claim of the assessee on the ground that the assessee's wife claimed a gift of Rs.4,05,000 which was disallowed. According to the ld.representative, in fact, the assessee's wife Mrs. Nita Promy is not an assessee. Therefore, the question of disallowance of any gift in her hand does not arise for consideration. Therefore, the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs.5 lakhs is deleted. In the result, the appeals of the assessee for the assessment years 2001-02, 2003-04, 2004-05 and 2005-06 are allowed. 20. Now coming to assessment years 2006-07 and 2007-08, admittedly, the assessee has not filed the regular return of income. The only return of income available on record is one filed with reference to notice issued u/s 153C of the Act. The common addition made by the assessing officer is with respect to disclosed agricultural income of Rs.70,000 for the assessment year 2006-07 and Rs.80,000 for assessment year 2007-08. 21. According to the ld.representative, the assessee filed all the relevant material to prove the land holdings. The assessee was cultivating the land, however, the assessing officer disallowed the entire claim of the assessee on the basis of the report said to be filed by the Inspector of Income-tax. The ld.representative further submitted that the assessee was holding 17.34 cents of land. According to the ld.representative, the assessing officer ought to have accepted the estimation of agricultural income. Referring to the judgment of the Madras High Court in CIT vs D Venkatesh (2009) 310 ITR 303 (Mad), the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant wants us to rely on the inspection report dated December 28, 1982, obviously discarding exhibit P-1 inspector report dated April 28, 1988. This approach as it appears to us, is basically deceptive. When the assessment order in dispute admittedly relates to the year 1987-88, it is difficult for this court to adopt a report relating to an anterior period, that is to say, a report relating to the year 1982-83. What we can legitimately adopt here is the inspection report dated April, 1988, which relates to the relevant accounting year even though serious attempt was made to belittle the said report by the appellant. The inspection report made available by an officer not below the rank of an Agricultural Income-tax Officer is a material piece of evidence inasmuch as the officer has the statutory power to enter into any land belonging to an assessee and inspect any accounts, registers and other documents, which such officer considers to be relevant for the purpose of any proceeding under the Act. The evidentiary value of the inspection report cannot be minimized according to the convenience of the assessee. The report is ordinarily prepared after inspection of the land as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.representative for the assessee submitted that no doubt the land was sold by a single document. However, the lands are not adjacent to each other. The assessee's land was situated in the interior side. Therefore, it fetched only Rs.17,516 per cent. In fact, this fact was disclosed in the registered sale deed, the copy of which is filed at page 7 of the paper book. According to the ld.representative, the registered sale deed clearly discloses the sale price for sale of the assessee's land at Rs.17,516 per cent. Therefore, merely because a single registered sale deed was executed for sale of land of the assessee and his brother, the contents of the sale deed cannot be ignored by the taxing authorities. In the absence of any other material to show that the assessee has received on money, accounting to the ld.representative, the sale consideration disclosed in the registered sale deed has to be accepted. The ld.representative further submitted that the sale of land was disclosed in the regular return filed on 27-07-2004, i.e. before the date of search and the assessment proceedings were not pending. Therefore, the concluded assessment cannot be reopened by issuing notice u/s 153C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers cannot be telescoped. According to the ld.DR, the unexplained investment may or may not have nexus with surplus turnover. Therefore, the CIT(A) is not correct in telescoping the investment made to the extent of Rs.22,87,818 with profit of the firm. The ld.DR placed reliance on the judgment of the Punjab & Haryana High Court in Grover Fabrics (India) (P) Ltd vs CIT (2011) 332 ITR 312 (P&H). 30. On the contrary, the ld.representative for the assessee submitted that on the basis of the material found during the course of search operation substantial additions were made in the case of the partnership firm P.A. Kuriakose Jewellers. Therefore, accrual in the capital of the partners of the above firm has a consequence of the unaccounted income so determined in the hands of the firm which needs to be considered. According to the ld.representative, admittedly, the seized document SSA- 29, i.e. the balance-sheet discloses the investment made by the assessee in the partnership firm. The investment may be accretion to the income of the partnership firm which was given to the respective partners in their profit sharing ratio. Therefore, according to the ld.representative, the CIT(A) has ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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