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2015 (10) TMI 2167 - ITAT DELHI

2015 (10) TMI 2167 - ITAT DELHI - TMI - Validity of assessment made u/s 153C - CIT(A) annulled assessment as the seized documents do not belong to the assessee?- Held that:- In the present case, documents at pages 148-149 are the ledger accounts in the books of AR Airways (P) Ltd. Therefore, proceedings u/s 153C could be initiated as the documents belonged to assessee. Therefore, ld. CIT(A) was not justified in annulling the assessment. However, if the documents did not pertain to the year under .....

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ned appeal by the revenue and the cross-objection by the assessee, are directed against the order dated 3-5-2010 passed by the ld. CIT(A)-III, New Delhi in appeal no. 261/07-08, relating to AY 2000-01. 2. In its appeal the revenue has raised following grounds of appeal: 1. On the facts and in the circumstances ofthe case, the CIT(A) has erred in law and on facts in annulling the assessment made u/s 153C? 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on fac .....

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ns the assessee has taken following grounds: 1. It is contended that the provisions of Section 153A of the Income-tax Act, 1961 (the Act) are not applicable at all and the assessment order passed is] s 153CI 143(3) of the Act is without jurisdiction. 2. It is contended that neither any search was initiated against the assessee u/s 132(1) of the-Act, nor any books of accounts, other documents or any other assets were requisitioned u] s 132A of the Act and hence the assessment made u/s 153C/ 153A .....

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iculars of subject additions, which stood accepted u/s 143(1) of the Act. 6. That the returns having been accepted u/s 143(1) of the Act, no assessment as such could be said to be pending on the date of initiation of search and have abated in the light of contextual and harmonious reading of second proviso of Section 153A( 1) of the Act. 7. That the assessment as contemplated uls 153A of the Act is not a de-novo assessment and additions made therein have to be necessarily restricted to undisclos .....

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money, incriminating material, unearthed during the search. 10) That the power of review being not available to same authority, under act in normal circumstances, must/ should not be allowed in present provisions of Section 153C, otherwise it would allow roving and fishing enquiries in search based assessment, which is not the legislative intent. 11) That the aforesaid legal position stands accepted in the following orders of ITAT in context of Section 153C/ 153A of the assessment: (i) Anil Kum .....

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d Brokerage Services is taxable under Chapter IV-D (income from business or profession) of the Act and not under Chapter IV-F (income from other sources) of the Act. 4. Brief facts of the case are that search and seizure operation in M/s Flex Group of cases was conducted on 23-2-2006. During the course of search, certain documents/ books of account, belonging to the assessee company were seized from the premises of Sh. Manvinder Singh (Party A-10) and M/s Flex Industries Ltd. (now M/s Uflex Ltd. .....

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sessee had paid taxes on book profit of ₹ 71,33,231/- u/s 115JA . 6. The assessee was engaged in the business of investment in shares and securities, sale/purchase of shares and securities. The AO has observed that from the perusal of P&L A/c of the assessee for the year under consideration, it was observed that the assessee had received ₹ 19,93,025/- on account of commission from M/s Akshay Trading Corporation and ₹ 47,37,247/- on account of brokerage from M/s Enam Securit .....

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3C of the Act, vide additional ground on the ground that the proceedings in respect of such other person, other than the person in whose case the search u/s 132 of the Act had been conducted, could only be initiated if any books of account/ documents or other assets belonging to such other person were seized during the search. 8. Ld. CIT(A) admitted the additional ground raised by the assessee in view of the decision of Hon ble Supreme Court in the case of NTPC 229 ITR 383, inter alia, observing .....

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d from the premises of Sh. Manvinder Singh( Party A-10) and M/s Flex Industries Ltd (now M/s. Uflex Ltd. Party B-2) in whose names/cases warrants of authorisation had been issued. These documents were seized vide Annexures A-9 of Party A-10, A-3 of Party B-2. The documents seized from various premises are listed as under: Party Nos. Premises Annexure Page Nos. A-10 Residence of Sh. Manvinder Singh A-9 12 and 23 B-2 Office of Flex Industries Ltd. A-3 35 to 66 In the light of the above, I am satis .....

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tice u/s 153C of the Act makes it clear that the documents claimed as belonging to the assessee had not been discussed in the assessment order. 11. Ld. counsel referred to the decision of the ITAT Bangalore Bench in the case of P. Shrinivas Naik Vs. ACIT (2008) 306 ITR (AT) 411 (Bang.), wherein the term belonging to had been examined. It was, inter alia, held that term belonging implied something more than the idea of casual association. It involves the notion of continuity and indicates one mor .....

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ing assessment is abated and not otherwise. If the original assessments are completed which are subject matter of further litigation and if those very assessments are re-agitated u/s 153C proceedings the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. This can never be the intention of the Legislature.) 12. He also referred to the decision of Kolkata Bench of the Tribunal in the case of LMJ International Ltd., wherein it was, inter alia, held .....

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hai N Chandrani Vs. ACIT (Spl. Civil application no. 13787 of 2009 dated 30-3-2010), wherein it has been, inter alia, observed as under: 12. On a plain reading of the aioresaid provisions it is apparent that sections. 1 53A, I53B and I53C lay down a scheme for assessment in case of search and requisition. Section I53A deals with procedure for issuance of notice and assessment or reassessment in case of the person where a search is initiated under section 132 or books of account, other documents .....

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he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However; there is a distinction between the two provisions in as much as under section I53C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents. seized or requisitioned belong to such other person, whereas under Section 158BD if the Assessing Officer is satisfied that any undisclosed in .....

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d or requisitioned should belong to such person. If the said requirement is not Satisfied , resort cannot be had to the provisions of section I53C of the Act. 14. Examining the facts of the present case in the fight 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 pe .....

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tion taken under section I53C of the Act stands vitiated. 13. Ld. CIT(A), after examining the facts of the case allowed the assessee s appeal for the following reasons: a. The Assessing officer, having jurisdiction over the cases of Shri Malviner Singh and M/s Flex Industries Ltd. recorded the satisfaction that the documents seized belonged to the assessee, without discussing the contents of the documents. b. No addition had been made by the AO to the income of the assessee on the basis of these .....

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dingly, held that documents seized did not belong to the assessee and the AO was not justified in initiating proceedings u/s 153C read with section 153A of the Act and as such the proceedings initiated u/s 153C of the Act were not as per the law. 15. Ld. DR submitted that papers belonging to assessee were found during the course of search at the premises of Sh. Manvinder Singh and M/s Flex Industries Ltd. and, therefore, CIT(A) was not justified in annulling the assessment. 16. Ld. DR submitted .....

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Y 2004-05 and not for the relevant assessment year 2000-01. 18. Ld. counsel referred to the submissions made before ld. CIT(A), contained at pages 107 to 131 of the PB and pointed out that on page 118 of the PB, it was clearly pointed out that seized papers pertained to FY 2004-05 (wrongly mentioned as FY 2005-06) and had nothing to do with the assessment year under consideration. Apart from this, both these transactions with M/s AR Airways (P) Ltd. belonging to Shri Manvinder Singh were duly re .....

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re-examination of the issue in the light of the above decision of Hon ble Jurisdictional High Court i.e., the Assessing Officer will first verify the years to which the seized documents belonged. There would be no justification for continuation of the proceedings under Section 153C to which the seized documents do not belong. Therefore, the Assessing Officer will drop the proceedings initiated under Section 153 of the years to which the seized documents do not belong. For the year to which the .....

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