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2015 (11) TMI 1373 - ITAT CHENNAI

2015 (11) TMI 1373 - ITAT CHENNAI - TMI - Validity of assessment order u/s 153C - Held that:- No material was found during the course of search operation. What was available with the Revenue is the computer statement of depositors which was found during the course of survey operation u/s 133A of the Act. Even assuming that the material found during the course of survey operation can be a basis for making a block assessment, this Tribunal is of the considered opinion that the details of deposits .....

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Assessing Officer u/s 153C of the Act in the absence of any material found during the course of search operation cannot be justified. Accordingly, the orders of the lower authorities are set aside for assessment years 2001-02 to 2004-05.

Now coming to the assessment proceedings for the assessment years 2005-06 and 2006-07, the assessee fled the return of income on 10.10.2005 for the assessment year 2005-06. The time limit for issuing notice u/s 143(2) for the assessment year 2005-06 .....

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ts - Held that:- The genuineness of the deposits made in assessment year 2001-02 cannot be examined in assessment year 2005-06 since the assessment proceedings were not pending on the date of search operation. Therefore, even assuming that the deposits are not genuine, this Tribunal is of the considered opinion that that cannot be a reason for making any addition for the assessment year 2005-06 and 2006-07, therefore, the Assessing Officer is not justified in following his observation for the as .....

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quired in respect of such deposits for the assessment years 2005-06 and 2006-07. The CIT(A) computed the peak deposit by computing the difference between the earlier deposits and the current deposits. For assessment year 2005-06 the peak credit computed by the CIT(A) is NIL. Therefore, this Tribunal is of the considered opinion that there is no justification for making any addition for the assessment year 2005-06.

Now coming to assessment year 2006-07, the CIT(A) computed the peak cre .....

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called for assessment year 2006-07 also. In view of the above discussion, we are unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside - Decided in favour of assessee. - I.T.A.Nos.2103 to 2108/Mds/2014 - Dated:- 9-10-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Assessee : Shri T. Vasudevan, Advocate For The Department : Shri S. Bharat, CIT ORDER PER N.R.S.GANESAN, JUDICIAL MEMBE .....

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ssee submitted that there was a search in the premises of the partners of the assessee-firm Shri S. Soundararajan and Shri S. Manivannan on 4.7.2006. The ld. Counsel clarified that no search was conducted in the premises of the assessee, therefore, assessment was framed u/s 153C of the Act. Referring to the assessment orders, the ld. Counsel submitted that the assessee filed the return of income in the regular course for the assessment years 2001-02 to 2006-07. In fact, the time limit for issuin .....

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(2). According to the ld. Counsel, for the assessment years 2001-02 to 2004-05, the time limit for issuing notice u/s 143(2) has expired on the date of search, therefore, the assessment proceedings are not pending. In other words, by operation of law, according to the ld. Counsel, the assessment proceedings are terminated, therefore, in the absence of any material found during the course of search operation, no proceedings can be initiated u/s 153C of the Act against the assessee for the assessm .....

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assessment year 2001-02, the ld. Counsel pointed out that the Assessing Officer placed reliance on the statements said to be recorded during the course of search operation by the Addl. Director of Income-tax. According to the ld. Counsel, no opportunity was given to the assessee to cross examine the persons from whom statements were recorded and the copies of the statements were also not furnished to the assessee. The ld. Counsel further clarified that all the deposits are carried forward from .....

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ing any further addition. 5. On the contrary, Shri S. Bharat, ld. Departmental Representative submitted that during the course of search operation in the premises of Shri S. Soundararajan and Shri S. Manivannan, certain incriminating materials were found. According to the ld. DR, the assessee is a partnership-firm engaged itself in the business of money lending on hypothecation of two and three wheelers. A survey operation was also conducted in the premises of the assessee u/s 133A of the Act. D .....

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terest pertaining to these deposits. According to the ld. DR, since the computerized statement of the depositors was found, the Assessing Officer has rightly assumed jurisdiction u/s 153C of the Act. 6. We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that the assessee is a partnership firm. There was a search in the residential premises of the partners of the firm Shri S. Soundararajan and Shri S. Manivannan on 4.7.2 .....

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he assessment year 2001-02, the assessee filed the return of income on 10.10.2001. Similarly, for the assessment years 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07, the assessee filed return of income on 4.10.2002, 25.09.2003, 7.12.2004, 10.10.2005 and 31.10.2006 respectively. 7. We have carefully gone through the provisions of section 153C of the Act. Section 153C provides for assessment of income on the person other than the searched person. In the course of the search operation, any materia .....

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a person other than the searched person. Therefore, the Assessing Officer has to necessarily initiate proceedings u/s 153C of the Act in case any material relates to the assessee-firm is found during the course of search operation. 8. Now the Revenue claims that a list of depositors was found in the computer printed sheet. The contention of the assessee before this Tribunal is that all the details of depositors were filed before the lower authorities in the course of filing regular return of in .....

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ly. Therefore, the Revenue has full knowledge about the deposits received by the assessee before the date of search. Hence, this Tribunal is of the considered opinion that the computer statement said to be found during the course of survey operation in the premises of the assessee cannot be considered to be a new material. It is not the case of the Revenue that any material relating to receipt of deposit was found in the premises of the partners during the course of search operation. Admittedly, .....

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ending on the date of search u/s 132 of the Act. This section further clarifies that the pending assessment shall abate and the Assessing Officer has to pass a composite order for all incomes including the undisclosed income found during the course of search operation. As discussed earlier, for the assessment year 2004-05, the time limit for issuing notice u/s 143(2) expired on 30.9.2005. Similarly, for the assessment years 2001-02, 2002-03 and 2003-04 also time limit expired on the date of the .....

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terial was found during the course of search operation. What was available with the Revenue is the computer statement of depositors which was found during the course of survey operation u/s 133A of the Act. Even assuming that the material found during the course of survey operation can be a basis for making a block assessment, this Tribunal is of the considered opinion that the details of deposits were very much before the Assessing Officer in the returns of income filed by the assessee in the r .....

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arch operation cannot be justified. Accordingly, the orders of the lower authorities are set aside for assessment years 2001-02 to 2004-05. 11. Now coming to the assessment proceedings for the assessment years 2005-06 and 2006-07, the assessee fled the return of income on 10.10.2005 for the assessment year 2005-06. The time limit for issuing notice u/s 143(2) for the assessment year 2005-06 is available upto 30.9.2006. In fact, the search operation was conducted on 4.7.2006. For the assessment y .....

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of ₹ 1,41,67,695/-. Out of this, ₹ 17,56,932/- pertains to deposits from relatives. The Assessing Officer has simply made addition on the basis of his finding recorded for assessment year 2001-02. We have gone through the assessment order for assessment year 2001-02. The Assessing Officer, referring to the statement said to be recorded from eight persons by the Addl. Commissioner of Income-tax during the course of survey operation, found that the deposits were non-genuine. It is well .....

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denied deposits were continuing for the assessment years 2005-06 and 2006-07. If the fresh deposits were received for the assessment years 2005-06 and 2006-07, then there may be a justification for making addition. Further more, the deposits were accepted in the earlier assessment years on the basis of the details furnished by the assessee. The deposits said to be made by 8 persons were disclosed to the Revenue in the course of filing regular return of income. The time limit for framing assessm .....

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the considered opinion that that cannot be a reason for making any addition for the assessment year 2005-06 and 2006-07, therefore, the Assessing Officer is not justified in following his observation for the assessment year 2001-02. The Assessing Officer is expected to make independent enquiry for the assessment years 2005-06 and 2006-07. Admittedly, the deposits were received in the earlier assessment years and the same were carried forward for the assessment years 2005-06 and 2006-07 and the a .....

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s Tribunal is of the considered opinion that there is no justification for making any addition for the assessment year 2005-06. 13. Now coming to assessment year 2006-07, the CIT(A) computed the peak credit at NIL. The Assessing Officer says that a sum of ₹ 50 lakhs was admitted by the assessee as undisclosed deposits. The CIT(A) rejected the claim of the assessee to set off the peak credit of ₹ 40,74,441/- for assessment year 2001-02. Since this Tribunal find that there cannot be an .....

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