TMI Blog2014 (9) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... abling the initiation of proceedings u/s 153C of the Act - as the AO has relied upon the same seized material i.e., A/DNR/18 and since the seized material has no reference to the assessee, it cannot be said to be belonging to the assessee so as to empower the AO to assume jurisdiction u/s 153C of the Act - the assessment proceedings initiated not being in accordance with the provisions of section 153C, and is invalid in law and consequently the assessment order passed is nullity in eye of law – the order of the CIT(A) is set aside – Decided in favour of assessee. - ITA. No. 235/Hyd/2014, ITA. No. 236/Hyd/2014 - - - Dated:- 27-8-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Mr. A. V. Raghuram For the Respondent : Mr. P. Somasekhar Reddy ORDER Per B. Ramakotaiah, A.M. Both the assessees are related and have purchased common property which was subject matter of present assessments under section 143(3) read with section 153C read with section 153A passed by the A.O. ACIT, Circle 8(1), Hyderabad as approved by the Ld. CIT(A), Vijayawada dated 21.12.2013 by a separate orders. Since facts are similar and are inter linked, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt K Vijaya Lakshmi and accordingly filed returns of income for the Asst. Years 2002-03 to 2005-06 explaining the source of investment to the extent of sale consideration of ₹ 18,37,500/- only i.e for ₹ 10,00,000/- as investment in the assessee s hand. Since there is evidence that the recipient has confirmed the receipt of ₹ 94,50,000/- through the father of the assessee, summons have been issued to the assessee by the A.O asking to explain the source of investment of ₹ 94,50,000/-. The Assessing Officer after analyzing the seized material held that there is evidence clearly indicating the name of Sri Chakradhar Rao who is from the side of the assessee who has materialized the transaction. In view of the same, the claim of the assessee was not accepted and in the absence of any explanation giving source for the amount over and above the sale consideration of ₹ 76,12,500/- was treated as unexplained investment u/s 69 of the Act and accordingly brought to tax the assessee s share of investment i.e., ₹ 38,06,250/- 2.1. In addition to the above which is common in both the cases, A.O. enquired the source of the amount stated to have paid in the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. As submitted earlier the seized document no where refers either to the appellant or there is any indication that the transaction relate to the same plot purchased by the appellant. The appellant therefore submit that assessment made u/s.153C is invalid . 3.1. Ld. CIT(A), however, referring to the provisions of section 153C held that the documents belongs to the assessee and therefore, A.O. is justified in invoking the provisions of section 153C of the I.T. Act in completing the assessment. 4. Ld. Counsel before us while referring to the material facts of the case submitted that from the same annexure at page 59, there was a transaction pertaining to Mr. Ravindra rao the same seized material pertaining to Mr. D. Nagarjuna Rao which was brought to tax in their hands of M/s. Shouri Constructions and Mr. T. Jaipal Reddy and ITAT vide order in ITA.No.2056 and 2057/Hyd/2011 dated 28.06.2013 has quashed the same on the ground that the seized material does not refer to the said assessee. Ld. Counsel also placed on record another order of the Coordinate Bench in the case of Mr. P. Gangadhar Rao ITA.No.2097/Hyd/2012 dated 09.04.2014, similarly, initiated proceedings u/s.153C on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,250/-, to that same value in the name of assessees at ₹ 18,37,500/-. Mr. D. Nagarjuna Rao stated to have registered to them on 09.10.2006 for consideration of ₹ 18,37,500/- which in turn was purchased by the assessee for the same amount on 30th November, 2006. In case, if A.O s contention were correct and the amounts are paid by Mr. Chakradhar Rao as early as on 04.10.2006 and 09.10.2006 then, it is not understandable why the property was registered in the name of Mr. K. Ravindranath and Smt. K. Venkateswar rao on 09.10.2006 which in turn was registered in the name of the assessees on 30th November, 2006. In view of these, we are unable to understand whether the said document do pertain to property purchased by the assessee. In the absence of any co-relation between Mr. Chakradhar Rao account for 525 sq. yards to that of property purchased by the assessee and considering the inter-linking transactions between various persons in the same note book seized, it cannot be said that this particular account maintained do pertain to the assessees. 6.2 On similar facts in the case of Sri Pulla Gangadhar Rao, Hyderabad vs. ACIT, Cir.8(1), Hyderabad ITA.No.2097/Hyd/2012 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.38 of annexure A/DNR/18. Reading of section 153C of the Act makes it clear that the primary condition for initiating proceedings u/s 153C, the Assessing Officer must be satisfied that jewellery and other valuable articles or books of accounts or documents seized belongs to a person other than the person referred to in section 153A of the Act. In the present case, the so called seized material on the basis of which the Assessing Officer has initiated proceedings u/s 153C of the Act was admittedly not seized from the possession of the assessee but a third person Sri D. Nagarjuna Rao against whom the search and seizure operation was carried out u/s 132 of the Act. Further, the said person not only admitted that the seized material belongs to him but the entries made therein are also in his hand writing. A reference to the seized material also makes it clear that ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord belong has not been def ined 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 has submitted a copy of the aforesaid seized material which is reproduced below: 11. Since the seized document reproduced hereinabove is not properly visible, we are also annexing herewith a copy of the said document to this order, which should be treated as part of this order. 12. This document was seized from the business premises of D. Nagarjuna Rao in course of action u/s 132 of the Act against him. In the impugned assessment order the AO has also observed that the said D. Nagarjuna Rao had admitted that entries in the seized documents were made by him in his own handwriting. While considering the objection of the assessee, the AO has also admitted the fact that neither the name of the assessees appear in the seized document nor it bears their signature. The notings made in the seized document only shows that an amount of ₹ 74,81,250/- wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the facts of the present case in the light of the aforesaid statutory scheme, it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner. It may be that there is a reference to the petitioner inasmuch as his name is reflected in the list under the heading Samutkarsh Members Details and certain details are given under different columns against the name of the petitioner along with other members, however, it is nobody's case that the said documents belong to the petitioner. It is not even the case of the revenue that the said three documents are in the handwriting of the petitioner. In the circumstances, when the condition precedent for issuance of notice is not fulfilled any action taken under section 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, considered in the light of the ratios laid down in the judicial precedents referred to above, the assumption of jurisdiction u/s 153C has to be held as invalid and consequentially the assessment order passed must be declared as without jurisdiction. Accordingly, we set aside the order passed by the CIT(A) and allow the appeal of the assessee. 6.3 As can be seen from the aforesaid observations, the Tribunal has categorically held that 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. Facts in the present case being materially the same, as the Assessing Officer has relied upon the same seized material i.e., A/DNR/18 and since the seized material has no reference to the assessee, it cannot be said to be belonging to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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