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TMI Blog2013 (12) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiation of proceedings u/s.153C is ab initio void without considering the facts of the case. 2. The ld CIT(A) wrongly concluded that the seized documents are not incriminating. 3. The ld CIT(A) did not consider the decision in CIT vs Panchajanyam Management Agencies and Services, 333 ITR 281 regarding the requirement of satisfaction by the AO when he is same for the assesseeu/s.153A and that u/s.153C." 4. The only issue arising out of grounds of the department is whether the CIT(A) was justified in annulling the assessment for all the assessment years on the ground that the initiation of proceedings under section 153C is not correct as there are no seized materials found during the survey action belonging to the assessee. 5. Briefly stated the facts are that the assessee trust is engaged in the activity of running a medical college. As stated by the AO in the assessment order, the assessee has been granted registration under section 12A of the Act vide order dated 7.12.2005 and has a been approved under section 10(23C)(vi) and (vii) of the Act by the Commissioner of Income tax-1, Visakhapatnam for Assessment years 2004-05,2005-06 and 2006-07 vide order dated 20-2-2006. A se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequent upon the survey operation determined the total income. The assessee being aggrieved of the assessment orders so passed by the AO, preferred appeals before the CIT(A). 7. Before the CIT(A), the assessee challenged the validity of the assessment orders passed under section 143(3) r.w.s 153C of the Act basically on the ground that since there was no material seized belonging to the assessee, no assessment could have been made under section 153C of the Act. The assessee took a further ground that the so called incriminating material does not show any undisclosed income. It was the specific contention of the assessee at the time of hearing of appeals before the CIT(A) that none of the seized materials referred to by the AO, which were seized from the third party belong to the assessee. Hence, the conditions precedent for invoking section 153C of the Act was not satisfied. The CIT(A) after considering the submissions of the assessee called for a remand report from the Assessing Officer asking for his comments on specific plea of the assessee that the seized material do not belong to the assessee. The AO in his Remand Report submitted, as per the noting available in the appraisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A), the AO has only referred to seized material at page 64 of PB, which is a letter dt.10.12.2004. He, therefore, submitted that the aforesaid facts make it clear that the seized material on the basis of which the AO has made the assessment under section 153C of the Act do not belong to the assessee. Ld A.R. specifically referring to para 6 of the order passed by the CIT(A) submitted that the CIT(A) after considering all the facts and material on record and specifically examining the seized materials has come to the conclusion that so called seized materials do not belong to the assessee. Hence, the findings of fact arrived at by the CIT(A) cannot be disturbed. Ld A.R. further submitted that the assessment order passed for the assessment years 2001-02, 2002-03 & 2003-04 would reveal the fact that the income assessed has no connection with any seized materials or any incriminating material as the AO has determined the income only on the ground that the assessee is not approved under section 10(23C) of the Act. He further submitted that so far as assessment years 2004-05 and 2005-06 are concerned, the determination of income is on the basis of material impounded as a result of sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading of the aforesaid provision makes it clear that two conditions have to be satisfied for initiating proceedings under section 153C of the Act. Firstly, the AO must be satisfied that the 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. Secondly, after being satisfied that it belongs to a person other than the persons to whom seized, he shall handover the seized material to the AO having jurisdiction over such other person and that AO shall proceed against such other person by issuing notice for assessing or reassessing for such material. Thus, the primary condition for assumption of jurisdiction under section 153C of the Act is the seized materials must belong to the person against whom proceedings under section 153C is sought to be initiated. As would be evident from the assessment order, the AO has referred to pages 31, 32 & 61 of the seized document with identification mark TH/HNR/2. On going through the said seized materials, copies of which are placed before us, it is to be noted that the seized materials at page 31 is a recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee trust. Page No. 64 is no doubt a letter signed by the Chairman and Managing Trustee of Sri Rama Educational Trust. The letter is a certificate issued to whom-so-ever it may concern, certifying that certain works of construction are entrusted to M/s.HNR construction, a proprietorship concern of Sri Tangi Hari Narayana. This though is on assessee's letter head is a general certificate which is issued to HNR Construction and there is nothing either incriminating in this document suggesting any unaccounted transactions. This certificate only says what is already declared in the books of accounts of assessee. In my opinion if 153C proceedings can be initiated based on such general letters that would be stretching the law a bit too far. If that is the intention of the law-makers then 153C proceedings can be initiated against all assesses whose letter heads/visiting cards are found during the search. To illustrate the matter, if some person is searched and during the search proceedings, if bank statements, LIC policy certificates or share certificates etc are found, it does not mean that 153C proceedings can be initiated 'against those banks/LIC/ companies to which the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or assets were requisitioned under s. 132A, he shall proceed against such other person under s. 158BC. 13. Thus a condition precedent for issuing notice under s. 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person. If the said requirement is not satisfied, resort cannot be had to the provisions of s. 153C of the Act. 14. Examining the facts of the present case in the light 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 petitioner in as much as his name is reflected in the list under the heading 'Samutkarsh members details' and certain details are given under different columns against the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat view of the matter, we do not find any infirmity in the order of the CIT(A) in holding the initiation of proceedings under section 153C to be ab initio void and consequently annulling the assessments for all the aforesaid assessment years. Accordingly, we uphold the same by dismissing the grounds taken by the department. 16. So far as the issue taken in Ground No.3 by the department is concerned, it relates to the issue of requirement of satisfaction. However, as can be seen from the record, the AO in fat has recorded his satisfaction. Therefore, this ground actually does not arise for consideration. Ld D.R. also fairly accepted the same. In that view of the matter, Ground No.3 is rejected as infructuous. 17. So far as cross objections are concerned, though the assessee has raised issues on merits of the additions both in the main grounds as well as additional ground but considering the fact that we have upheld the order of the CIT(A) in annulling the assessments while deciding the department's appeals in I.T.A No.31 to 35/Viz/2012, the grounds raised in the cross objections have become infructuous. Therefore, the same are dismissed. 18. In the result, appeals filed by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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