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2015 (9) TMI 1013 - ITAT AHMEDABAD

2015 (9) TMI 1013 - ITAT AHMEDABAD - TMI - Validity of proceedings u/s 153C - Held that:- The Assessing Officer of the person searched and such other person may be the same but these are two different assessees and, therefore, the Assessing Officer has to carry out the dual exercise, first as the Assessing Officer of the person searched in which he has to record the satisfaction, during the course of assessment proceedings of the person searched. After recording such satisfaction note in the fil .....

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does not satisfy the condition of assuming jurisdiction under Section 153C.

Notices u/s 153C have been issued for Assessment Year 1999-2000 to 2004-2005. The only document on the basis of which the notices have been issued is an undated cheque found during the course of search at the premises of Kabhai Chauhan Group on 04.03.2005. An undated cheque found on 04.03.2005 cannot pertain to the previous years 1998-1999 to 2003- 04. It can pertain to previous year 2004-05 and thus, can be .....

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upon whom the cheque was drawn. Therefore, in our opinion, the cheque “belongs to” the person upon whom it was drawn and cannot be said to be continued to “belonging to” the person who issued the cheque. Therefore, in our opinion, the conditions for issue of notice u/s 153C were not satisfied. - Decided in favour of assessee. - ITA No. 3088 to 3093/Ahd/2008, IT(SS)A No. 666 to 671/Ahd/2010 - Dated:- 12-6-2015 - SHRI G.D. AGRAWAL AND SHRI S.S. GODARA, JJ. For The Assessee : Shri S.N. Soparkar, AR .....

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ears 1999-2000 to 2004-2005 respectively. Since these appeals involve common issues, these were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. It was pointed out by the ld. Counsel for the assessee that there is a small delay of 21 days in filing of the appeals. The assessee has already filed the application for condonation of delay supported with the affidavit. It is explained that since all the bank accounts of the assessee were attached by .....

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of delay. 3. After considering the facts of the case and arguments of both the sides and considering the nominal delay of 21 days, we are of the opinion that it would be in the interest of justice to condone the delay in filing of the appeals. We, therefore, condone the delay in filing of the appeals by the assessee and admit the appeals for hearing on merit. ITA Nos 3088 to 3093/Ahd/2008 - Assessee s appeals : AYs 1999-00 to 2004-05 4. The Ground No.1.1 in assessee s appeal in all the years is .....

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ed by Smt. Rekhaben Thakkar, proprietor of M/s. Durga Finance in favour of Shri Vijay K. Chauhan was found and seized. On the basis of above cheque, the Assessing Officer i.e. Deputy Commissioner of Income-tax, Central Circle-1, Baroda recorded satisfaction note for issuing notice u/s 153C of the Income-tax Act, dated 08.11.2005 and the notices u/s 153C were issued on the same day, i.e., 08.11.2005 for Assessment Year 1999-2000 to 2004-2005. On appeal, the CIT(A) sustained the validity of the no .....

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of the person searched. He further stated that proceedings u/s 153C are initiated on the basis of undated cheque issued by M/s. Durga Finance s proprietor - Smt. Rekhaben Thakkar in favour of Shri Vijay K. Chauhan. That the search and seizure proceedings were carried out in the case of Kabhai Chauhan Group of cases on 04.03.2005. Therefore, the undated cheque pertained to Assessment Year 2005-06 and not for Assessment Year 1999-2000 to 2004-05 for which satisfaction dated 08.11.2005 was recorded .....

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ed by the Finance Act, 2015 whereby the word belongs to has been used with reference to money, bullion, jewellery or any other valuable article or thing. But the word pertaining to has been used with reference to books of accounts or documents. That in the satisfaction note, the Assessing Officer himself has mentioned that the document (cheque) found from Kabhai Chauhan Group of cases pertained to the assessee i.e. Smt. Rekhaben Thakkar. That the proceedings u/s 153C can be validly initiated aga .....

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n activities of issuing cheque to third parties so as to facilitate them to carry on un-recorded transactions. Such activities were carried on by the assessee in a regular and systematic manner. The Revenue during the course of search of Kabhai Chauhan Group of cases was able to catch hold of undated cheque issued by M/s. Durga Finance, i.e., assessee s proprietorship concern. He submitted that the cheque belongs to the assessee, because, even after the issue of cheque, the assessee can control .....

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fied that some document belonging to the person other than the person searched, he has to simply handover such document to the Assessing Officer of the person to whom such document belong and thereafter, the Assessing Officer of such other person has to issue notice u/s 153C. In these cases, since the Assessing Officer of the person searched as well as the Assessing Officer of the assessee were the same, there was no question of formally handing over and taking over of the document. He reiterate .....

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He, therefore, submitted that all the conditions for initiating the proceedings u/s 153C were duly fulfilled and the CIT(A) rightly sustained the validity of initiation of proceedings u/s 153C in the case of the assessee for the years under consideration. Therefore, the same should be sustained and the ground No.1.1 of the assessee s appeals should be dismissed. 8. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 153C of the Income-t .....

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nded 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 assess or reassess income of such other person in accordance with the provisions of section 153A:]." 9. From the above, it is evident that action under Section 153C can be taken in respect of any other person than the person searched if the Assessing Officer of the person searched is satisfied that any mo .....

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A. Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to the person other than the person searched is a sine qua non for initiating action under Section 153C. 10. The ld. Departmental Representative has contended that though the Assessing Officer of the person searched should be satisfied that money, bullion, jewellery or any other valuable articl .....

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cedent 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 said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions p .....

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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 person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act." 11. Though the above decision was given by their Lordships of the Hon ble Apex Court with reference to Section 158BD of the Income-tax Act; however, the language of Section 158BD .....

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. 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 at the residential / business premises in the Kabhai Chauhan Group of cases. During the course of search, certain incriminating documents were found and seized. On scrutiny of the documents so seized, it is noticed that certain documents were found to be pertaining to the above assessee, including the following documents: Undated che .....

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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. As we have already mentioned that as per Section 153C, the Assessing Officer of the person searched should be satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents belong to a person other than the person searched. Admittedly, in this case, the satisfaction is recorded not by .....

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en 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, then also, first while making the assessment in the case of the person searched, he has to record the satisfaction that the money, bullion, jewellery or other valuable article or thing or books of account or documents belong to the person other than the person searched. Then, the copy of this satisfaction note is to be placed in t .....

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sessing Officer of the person searched in which he has to record the satisfaction, during the course of assessment proceedings of the person searched. After recording such satisfaction note in the file of the person searched, the same is to be placed in the file of such other person. Then, in his capacity as the Assessing Officer of such other person, he should take cognizance of such satisfaction note and thereafter issue notice under Section 153C. In this case, this exercise of recording the s .....

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f Kabhai Chauhan Group on 04.03.2005. An undated cheque found on 04.03.2005 cannot pertain to the previous years 1998-1999 to 2003- 04. It can pertain to previous year 2004-05 and thus, can be relevant only for Assessment Year 2005-06 and not in earlier years. Admittedly, there is no seized material in the years for which notices u/s 153C have been issued. 15. As per Section 153C, as it stood at the relevant time, Section 153C would be applicable if the Assessing Officer is satisfied that any mo .....

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The cheque cannot belong to two persons at the same time. 16. The ld. Departmental Representative, on the other hand, submitted that till the cheque is encashed, the person who issues the cheque remains in control of the cheque, because he can make the stop payment of the cheque. The ld. Departmental Representative has also relied upon the decision of Hon ble jurisdictional High Court in the case of Kamleshbhai Dharamshibhai Patel vs. CIT (supra) so as to contend that the meaning of word belongi .....

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sue of notice u/s 153C, the document i.e., the undated cheque was pertaining to the assessee and not belonging to the assessee. The decision of the Hon ble jurisdictional High Court relied upon by the ld. CIT-DR is on different facts. In the above case, the assessee sold certain land to the company named S . Subsequently, during the course of search at the premises of S , certain documents including the sale deed as well as an agreement between the tenant and the assessee was found. The agreemen .....

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ee was in the name of Vijay K. Chauhan i.e., the person of the Group which was searched. The cheque was found from the person upon whom the cheque was drawn. Therefore, in our opinion, the cheque belongs to the person upon whom it was drawn and cannot be said to be continued to belonging to the person who issued the cheque. Therefore, in our opinion, the conditions for issue of notice u/s 153C were not satisfied. For ready reference, we may summarize the reasons on the basis of which we form opi .....

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