TMI Blog2015 (8) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... such circumstances, we fail to see as to how the AO formed an opinion that the document found in the course of search belongs to the assessee. The proceedings against the assessee commenced on issue of notice u/s. 153C on 8.5.2009. In the order u/s. 153C, there is a reference to the agreement for sale seized and the difference in value between registered document and agreement for sale. There is a reference to show cause notice dated 18.11.2004 issued to assessee and reply dated 19.11.09 filed by the assessee. The order of assessment was passed by the AO on 29.12.2009 and there is no reference to any other document or statement in the order of assessment. Even before us, no material was placed regarding the basis on which satisfaction note dated 8.5.2009 was recorded by the AO. In these circumstances, we are of the view that assumption of jurisdiction u/s 153C of the Act was not proper and therefore the proceedings for both the assessment years are required to be quashed. We also derive support for the above conclusion from the decision of Vijaybhai N Chandrani v. ACIT,(2010 (3) TMI 770 - Gujarat High Court ), wherein it was held that the fact of a reference to the name of person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seized u/s. 132. Exhibit I.D Page No.s SCHL/A/6 Page No.60 to 65 On a scrutiny of the above document seized it is seen that the above materials belongs to you. I am satisfied that action u/s 153C has to be initiated in the case of Smt. Uma Prasad, for the A.Y. 2005-06. Hence issue notice u/s. 153C. Dt. 08/05/2009 4. The AO thereafter gathered information that the sale deed of the property was executed by the Vendors in favour of the assessee on 23.6.2005 and the value reflected in the registered sale deed was only a sum of ₹ 43,80,000. The AO was therefore of the view that a sum of ₹ 25 lakhs which was paid by cash as found recorded in the agreement of sale seized in the course of search had to be added as unexplained cash for AY 2005-06. The AO was also of the view that as far as AY 2006-07 is concerned, the sum of ₹ 6,20,000 had to be treated as unexplained cash, which is arrived at in the following manner:- Sale consideration as per agreement for sale 75,00,000 Less: Value as per regd. Sale deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs u/s. 153C of the Act should be held without jurisdiction and quashed. 8. Apart from the above, the assessee also submitted cash book before the CIT(A) showing that there was availability of cash balance as per books of account from which the alleged cash payments could be explained and therefore no addition ought to have been made by the AO. 9. Both the aforesaid contentions were not accepted by the CIT(Appeals). On the argument that assessee had not signed the agreement for sale, the CIT(A) was of the view that absence of the assessee s signature in the agreement for sale will not undermine the veracity of the document and that it is a common practice in the real estate business that such sale transaction are put in an agreement for sale to safeguard the interest of the purchaser. It is more in the nature of receipt and therefore does not bear the signature of the purchaser. On such reasoning, the CIT(Appeals) upheld the assumption of jurisdiction u/s. 153C of the Act. 10. With regard to availability of cash balance, the CIT(A) was of the view that if the cash payments made and added in the assessment are reduced from the cash book filed by the assessee, then there wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound from the person searched belongs to the other person. What is crucial to note is capacity of the AO and not his identity. In view of the fact that when the statutory stipulation is for recording the satisfaction by the AO of the person searched, then, it cannot be substituted with the satisfaction of the AO of the other person. This contention also fails. 18. At this stage, it is relevant to note that the legislature has substituted the latter part of section 153C(1) by the Finance (No.2) Act, 2014 w.e.f. 1.10.2014. The hitherto part of subsection (1) : and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person .........referred to in sub-section (1) of section 153A. has been substituted as under : - and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing notice u/s. 153C is that the document seized in the course of search of Skyline group of cases should belong to the assessee. In the present case, what was found was a photocopy of the agreement for sale dated 18.4.2004. Purchaser has not signed this document. In the course of search nobody was examined nor post-search investigations was made regarding the absence of signature of the assessee in this document. It is no doubt true that in the course of 153C proceedings, the AO did not give any explanation about this document for deciding the question of assumption of jurisdiction. We should not take note of the events that occurred subsequent to assumption of jurisdiction u/s. 153C. The question is as to whether on 8.5.2009, when proceedings were initiated against the assessee u/s. 153C, there was material to show that the document found and seized in the course of search of Skyline group of cases belonged to the assessee. The document in question is a photocopy of agreement for sale dated 18.4.2004, which is signed only by the Vendors and in which the assessee s name as purchaser is found, but the assessee s signature is not found in the said document. As we have already o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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