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TMI Blog2015 (3) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... panies. One Mr. Vijay Bhat, Manager of K.P. Shetty, was also searched on 20.11.2009. In his residential premises, a bunch of diaries were found and seized. Those were marked as A/UB/2 of the seized material. The diaries contained recording of receipts and payments from and to various persons. The transactions so recorded were mostly cash transactions, besides some cheque transactions. 3. In post search proceedings, Mr. Vijay Kumar, Manager of the assessee was examined. In his statement, he admitted that the writing in the diaries was written by him and one Ms. Indira, Office Assistant. The writings in the diaries were made as told by Mr. K.P. Shetty and Smt. Asha P. Shetty, another partner of the assessee and other seniors of Trishul Developers (the assessee). The questions and answers in this regard is reproduced for better appreciation of facts:- "Q.No.3: I am showing you the pages 1 to 167 of the seized material marked A/VB/2 which was seized from your residence during the course of search proceedings under section 132 on 20.11.2009. Please go through the seized material and explain the contents of the seized material? Ans.: I have gone through the pages 1 to 167 of the seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized material marked A/VB/2 and also with the statement recorded from Mr. Vijay Kumar. Mr. Prakash admitted that the diaries and the notebooks in the seized material marked A/VB/2 have been written by his employees. The relevant portion is reproduced as under: "Q.No.3: I am showing you the seized material marked A/VB/2 which was seized from the residence of Shri. Vijay Kumar B during the course of search proceedings under section 132 on 20.11.2009 at his residence. Please go through the seized material and explain the contents of the seized material? Ans.: I have seen the seized material marked A/VB/2 which was seized from the residence of Shri. Vijay Kumar B on 20.11.2009. The seized material contains hand written pocket diaries written by Mr. Vijay Kumar B, Vice President (Infrastructure) of Goldfinch Hotels group and Ms Indira, office assistant. The entries in these pocket diaries are written by them. I will go through the diaries after taking Xerox copies and come back with detailed explanation as far as directly connected to my business income. Q.No.4: lam showing you the statement recorded from Mr. Vijay Kumar B(Vijay Bhat,) wherein he has stated that these diaries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the office of M/s Trishul Developers, Mangalore during the search proceedings. Please go through is state who has written this diary? Ans.: 1 have gone through the seized material marked as A/TD/35 dated 20.11.2009. This diary has been written by me. Q.No.5: Please go through the page number 1 to 6 of the diary marked A/TD/35 and explain the contents of these pages? Ans.: I get instructions through phone from the staff at the head office of by the head office at Bangalore to make payments to various persons. Accordingly, I make the payments and the same are written by me in this diary. However, I do not remember the exact nature of these payments. I do not know the details of the persons to whom the payments are made and in what context. Q. No. 6: Who gives you the instructions to make the payments? Ans.: I used to get calls from the various persons working in the corporate office of M/s Trishul Developers. They used to tell me about the instructions given by the Managing Director to pay or receive money from various persons at Mangalore. I acted upon the instructions to receive or pay the amount." 10. Page 2 of the seized material marked as A/TD/34 contains a receipt a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that certain diaries were found and seized in the residential premises of the manager of Shri. Prakash Shetty and also in the Mangalore premises managed by his brother-inlaw as stated earlier. The diary entries were discussed during the course of search proceedings. The assessee has admitted certain entries present in the diaries and has admitted undisclosed income of Rs. 10.46 crores for various years in the hands of M/s Trishul Developers and in the hands of Shri. K Prakash Shetty. However, a total reconciliation of the diary entries during the search proceedings revealed that the total receipts were of 56,00,51,300/- and total payments were of 88,24,82,425/-. 9. During the course of assessment proceedings the diary entries were verified and it was found that only a few entries have been admitted by the assessee group. The circumstantial evidence and preponderance of probability suggests that the assessee has had numerous transactions which are in the nature of receipts and payments. 10. In view of the facts and the circumstances of this case and the type of diary entries available, it would be fair and reasonable to compute the difference in the receipts and payments and bring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessment order dated 30.12.2011 (notice u/s 153A were issued on 25.04.2011 and returns of income filed on 09.08.2011, 09.08.2011 and 10.08.2011) in the name of M/s Trishul Developers which was a non existent entity is bad in law and deserves to be quashed. In this regard, the Assessing Officer has brought on record the following facts tabulated below :- 01 Date of search 20/11/2009 02 Date of takeover of firm by the company 01/02/2010 (as claimed by the appellant and not in knowledge of the Assessing Officer. 03 PAN of firm AAAFT9758G 04 PAN of company AADCT3672P 05 Date of issue of notice u/s 153A 25/04/2011 06 Date of filing Return of Income in response to Notice u/s 153A, A.Y:2004-05-09/08/2011, A.Y.2005-06-09/-8/2011, A.Y.2006-07-07/12/2011, A.Y. 2007-08-10/08/2011, A.Y.2008-09-10/08/2011, A.Y.2009-10-10/08/2011, (In name and status of firm M/s Trishul Developers) As could be seen from the above dates, the Return of Income in response to notice u/s 153A have been filed on 09/09/2011, and 07/12/2011, much after the takeover of the firm by the Company. However, in the returns filed, the assessee has mentioned its name as M/s. Trishul Developers. The stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting M/s Trishul Buildtech Infrastructure Pvt Ltd and the fact that the Assessing Officer had not been informed about the change in status of the entity. In the facts and circumstances of the case, where the appellant has filed a return itself in the said status, complied with the notices, received and understood the notices to have been intended for the said firm, the mere omission of not mentioning M/s Trishul Developers now M/s Trishul Buildtech Infrastructure Pvt Ltd instead of mentioning only "M/s Trishul Developers" in the notices issued and the order made do not negate the proceedings so made." 19. The CIT(A) relied on the provisions of section 170(1) of the Act and expressed the view that as per the aforesaid provisions, the predecessor has to be assessed in respect of income of the previous year, in which the succession took place upto the date of succession. He also held that the provisions of section 170(2) will not be applicable because the erstwhile firm was found and it filed return of income and that section 170(2) is applicable only when the predecessor "cannot be found". For the above reasons, he upheld the assessment in the hands of Trishul Developers. The CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him both prior and subsequent to his promotion with the knowledge of the promotion of the officer as Joint Commissioner of Income Tax and has therefore, accepted his jurisdiction over the case. This is evident from one of the letters of the appellant to the Assessing Officer (though undated as under). "To The Joint Commissioner of Income Tax Central Circle 1(3) Bangalore. Sir, Ref. PAN-AAAFr9756G Sub: Assessment of our own AY (07-08) With reference to your further enquiry during assessment proceedings we wish to submit as follows - (1) Purchase of property at Kulai: We have purchased land from Srimati Umavati agricultural land at Kulai, Mangalore for sum of 1,066,000.00 paid in cash. Copy of RTC is enclosed showing that the land purchased is agricultural land. (2) Ledger extract of TDS accounts in respect of commission, professional charges, interest and contracts payments showing tax deducted and remittance of the same are enclosed. Kindly consider the above, do the needful finalize the assessment and oblige. Thanking you" Similar correspondence has been made for other years as well. As such, the jurisdiction of the officer assessing the case is in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly." 25. It can be seen from the provisions of s. 170(1) that if there is a succession in the business of assessee, the predecessor has to be assessed in respect of income of the previous year in which succession took place upto the date of succession. The admitted factual position in the present case is that the conversion of Trishul Developers the partnership firm as a limited company by name TBIPL took place on 1.2.2010. Therefore, for A.Ys. 2004-05, 2005-06 & 2007-08, only Trishul Developers will have to be assessed. The provisions of s. 170(2) cannot be invoked for the simple reason that the erstwhile firm filed the return of income and was very much available. S. 170(2) is attracted only in a case where the predecessor "cannot be found". In our opinion, the CIT(A) has rightly rejected the contentions in this regard put forth by the assessee. 26. The next contention of the ld. counsel for the assessee was that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in section 153A of the Act. A.Ys. 2004-05, 2005-06 and 2007-08 are assessment years failing within the period contemplated u/s. 153A of the Act. The assessment to be done u/s. 153A is not dependent on any incriminating material being found during the course of search. There is no such requirement u/s. 153A. While concluding assessment u/s. 153A, the AO can take cognizance of any material relating to the assessee. As we have already seen, it is not in dispute that the diaries were written under his instructions and contains recordings of transactions. In fact, K.P. Shetty took copies of seized diary and admitted undisclosed income based on entries therein. In such circumstances, the plea taken by the assessee that the proceeding u/s. 153A are invalid and that the proper course would be to proceed u/s. 153C of the Act and therefore the impugned assessment order has to be held to invalid is a contention, which cannot be accepted and has no force or merit. 29. The next submission made by the ld. counsel for the assessee was that in the course of assessment proceedings, K.P. Shetty wrote a letter disowning the entries in the diary. According to the ld. counsel for assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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