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2015 (6) TMI 762 - ITAT AHMEDABAD

2015 (6) TMI 762 - ITAT AHMEDABAD - TMI - Validity of Section 153C proceedings challenged - Deemed dividend addition u/s.2(22)(e) - Held that:- Neither there existed any incriminating material as contemplated u/s.153C of the Act nor is the present a case of a valid satisfaction recorded therein. We reiterate that this is a case of search proceedings wherein the Revenue’s powers have to be strictly interpreted. We conclude accordingly that the initiation of section 153C proceedings against the as .....

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.3/167/2010-11 & CIT(A)- II/C.3/168/2010-11, in proceedings u/s. 153C r.w.s. 143(3) of the Income Tax Act, 1961 in short the Act . 2. The assessee s pleadings in the former appeal challenge deemed dividend addition u/s.2(22)(e) of the Act amounting to ₹ 11.50 lacs. And in the latter appeal, its grievance against identical additions of ₹ 36,38,108/- and ₹ 2,58,175/-. The case files also reveal that the assessee has preferred identical additional grounds in both cases as unde .....

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rayed that the assessment made u/s.143(3) r.w.s. 153C may please be quashed. 2. Your Honours are requested to kindly admit the above additional ground in the interest of natural justice, equity and fair play as its omission in the main ground of appeal attached with Form 36 is purely unintentional. As the said ground pertains to legal issue the same may kindly be admitted in view of Honourable Supreme Court decisions in case of NTPC v. CIT [229 ITR 383] and Jute Corporation of India Ltd. v. CIT .....

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so as to form the basis of the instant proceedings. All necessary facts are already on record. The assessee had raised a corresponding ground in the lower appellate proceedings as well. The CIT(A) did not specifically deal with the same. In these circumstances, we are of the opinion that the assessee s additional ground challenging validity of Section 153C proceedings goes to the root of the matter. We admit the same in these circumstances and proceed to decide it hereunder. The parties are in .....

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INCOME TAX ACT. 1961 OFFICE OF THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, ROOM NO.507, AAYAKAR BHAVAN, MAJURAGATE, SURAT. Date:-18/02/2009 To Addplast Agencies Ghantiwala Compound, Nr. A.S. Motors, A. K. Road, Surat. Sir/Madam, A search u/s. 132 of the IT. Act was conducted m your case/in the case of Radha Madhav Group of Vapi & Manish Group of Surat on 24/09/2008. Whereas I am satisfied that money / bullion / jewellery / other valuable articles or things and / or books of acco .....

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of which you are assessable under the Income-Tax Act, 1961. The return should be filed in the appropriate form as prescribed in Rule 12 of the Income-Tax Rules, 1962. It should be duly verified and signed in accordance with the provisions of section 140 of the said Act and delivered at my office as mentioned above within THIRTY DAYS from the service of this notice. Yours faithfully, [ P.V. YADAV] Asstt. Commissioner of Income-Tax Central Circle-3, Surat 6. The assessee filed a fresh return on 1 .....

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ceedings abate and only the impugned proceedings have to be taken recourse to u/s.153C of the Act. This leaves the assessee aggrieved. 7. We have heard rival contentions and gone through the case file. Relevant facts as well as the Assessing Officer s satisfaction note before proceeding u/s.153C against the assessee already stand narrated / reproduced hereinabove. We are not repeating the same for the sake of brevity. The Assessing Officer s reasons nowhere pin point any money, bullion, jeweller .....

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the only option available is to proceed u/s.153C r.w.s.153A of the Act since regular assessment proceedings abate. We tend to disagree with this reasoning. We are of the opinion that discovery of an incriminating material in the nature abovesaid forms is sine qua none before any satisfaction note is drawn u/s.153C of the Act. The same is nowhere forthcoming the present case. In these circumstances, we draw support from a co-ordinate bench decision in ACIT vs. Gambhir Silk Mills (2011) 45 SOT 20 .....

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enge and not the one of the searched party (supra). The Revenue submits that Assessing Officer of the assessee as well as the search party is the same. In these circumstances, we find that in a recent decision dated 12.06.2015 in cases titled as Smt. Rekhaben Thakkar Vs. ACIT in ITAs 3088 to 3093, we have held that even if the Assessing Officer happens to be the same in case of the searched party and the other party, he has to record such reasons in the case file of the searched party that the m .....

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3, 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 .....

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, he shall hand over to the Assessing Officer of such other person money, bullion, jewellery or other valuable article or thing or books of account or documents. Thereafter, the Assessing Officer of such other person shall proceed against the said person to assess or reassess his income in accordance with the provisions of Section 153A. Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article or thing or boo .....

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m. We are unable to agree with this contention of the ld. Departmental Representative. While taking this view, we derive support from the decision of Hon ble Apex Court in the case of Manish Maheshwari Vs. ACIT and Another, reported in (2007) 289 ITR 341 (SC), wherein their Lordships at page 348 held as under:- "The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The .....

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pect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceeded under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any .....

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ely applicable while interpreting Section 153C. 12. In the above legal background, let us now examine the facts of the assessee s case so as to find out whether the jurisdiction assumed u/s 153C is valid. The satisfaction note recorded by the Assessing Officer reads as under:- Name of the assessee : Smt. Rekhaben K. Thakkar Prop. M/s. Durga Finance A.Y. : 1999-00 to 2004-05 Satisfaction Note for Issuing Notice u/s 153C of the Act Search and seizure proceedings U/s were carried out on 04.03.2005 .....

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above named assessee have been found, I am satisfied that the provisions of Section 153C of the Act apply in this case and, therefore, notice u/s 153C is being issued. BARODA (AMAL GARG) Date : 08.11.2005 Dy. Commissioner of Income Tax Central Circle -1, Baroda 13. From the above, it is evident that the satisfaction is recorded in the case of Smt. Rekhaben K. Thakkar, proprietor of M/s. Durga Finance. Thus, the satisfaction is recorded in the case of the person other than the person searched. A .....

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unsel that since the Assessing Officer of the person searched as well as the Assessing Officer of such other person is the same; therefore, the satisfaction recorded by the Assessing Officer should be considered as the proper compliance of Section 153C. We are unable to agree with this view of the ld. Departmental Representative. Even if the Assessing Officer assessing the person searched as well as other person whose assets, books of account or documents were found at the time of search is same .....

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