9911796707
TMI Blog2014 (7) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 153C of the Act calling upon the assessee to file return of income. Assessee complying to the said notice, returned the same income as declared originally. In course of the assessment proceeding, the assessing officer while examining the authenticity claim of agricultural income conducted enquiry through his inspector and on the basis of such enquiry held that the assessee's claim of agricultural income cannot be accepted and accordingly treated as unexplained credit u/s 68 of the Act. 4. Being aggrieved of such addition, the assessee preferred appeal before the CIT(A) challenging the validity of the proceeding u/s 153C of the Act as well as on the merits of the addition. The CIT(A) while upholding the validity of the proceeding initiated u/s 153C of the Act granted partial relief with regard to the claim of agricultural income. 5. We have heard the parties perused the orders of the revenue authorities as well as other materials on record. We have dealt with identical issue in case of M/s. Avinash Estates & Resorts Ltd. in ITA Nos.299 to 302/Vizag/2014 dated 4.7.2014, an assessee of the same group, where in the bench has held as under: "7. We have considered the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3C of the Act. Section 153C of the Act cannot be interpreted in a manner to contemplate that any material which has a reference to the assessee, whether it is incriminating or not can be used as a tool to launch a proceeding u/s 153C of the Act. If Section 153C of the Act is to be interpreted in such a narrow manner then any innocuous material found during a search of third party and has any reference to the assessee then it will lead to a proceeding u/s 153C of the Act. That cannot be the intention of legislature. As would be clear from the assessment order, the income which the assessing officer has sought to assess in the assessment order passed u/s 143(3) of the Act read with section 153C of the Act has already been reflected in the books of accounts of the assessee maintained in regular course as well as disclosed in the return of income filed by the assessee prior to the search. Only on the basis of some enquiry conducted at the time of assessment proceedings, the assessing officer has formed an opinion that the agricultural income reflected in the books of accounts and disclosed in the return of income is unexplained. It is patent and obvious from the assessment order that A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the facts of the assessee's case. In that 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." 9. The ITAT Vizag Bench again in case of Gadiraju Venkata Subba Raju Vs. DCIT and another ITA No.360 & 361/Vizag/2013 dated 5.3.2014 considering identical issue on proceeding initiated u/s 153C of the Act in absence of incriminating material held as under: "9. We have heard the contentions of the parties and perused the orders of the revenue authorities as well as other materials on record. We have also carefully applied our mind to the decisions relied upon by the parties. It is apparent from the assessment order that the assessing officer has proceeded u/s 153C of the Act. However, we may observe that while dealing with assessee's ground on this issue in para-7 of his order extracted herein above, the CIT(A) has recorded a finding of fact that warrants were in the name of the assessee. Hence, if search and sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO 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" 10. A plain reading 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s plot advance. Page No.32 also belongs to HNR Constructions which shows the disbursement schedule given by licensed engineer Sri K.Krishna Prasad. This pertains to HNR Constructions and it also has nothing to do with the assessee. The entire payment shown on the paper total-up to around Rs. 10 to Rs. 12 lakhs and there is nothing in this paper to show that this belongs to the assessee trust or has any connection with it. Page 61 contains certain calculations which do not suggest that it has anything to do with assessee 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisitioned belongs or belong to a person other than the person referred to in s. 153A 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 s. 153C 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 s. 158BD if the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of income is on the basis of the impounded materials as a result of survey and not on the basis of any seized materials belonging to the assessee. In the aforesaid circumstances, the pre conditions for assuming jurisdiction under section 153C are not satisfied. So far as the decisions relied upon by ld D.R. in support of his contention, after carefully applying our mind to the ratio laid down therein, we observe that the decisions are distinguishable on facts and do not apply to the facts of the assessee's case. In that 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." 10. The ITAT Delhi Bench in case of V.K. Fiscal Services Pvt. Ltd. Vs. DCIT in ITA Nos.5460 to 5465/Del/2012 on a conspectus of decisions of different high courts as well as different benches of ITAT also expressed the view that in absence of incriminating material belonging to assessee, proceeding u/s 153C cannot be initiated. Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment made by the AO is not with reference to any incriminating material found as a result of search. Therefore, respectfully following the aforesaid decision of the coordinate bench, we quash the assessment order passed for all these assessment years. 7. As we have quashed the assessments orders, the other issue relating to merits of the addition is merely of academic interest, hence, not required to be adjudicated. 8. In the result, appeals of the assessee are allowed. ITA No.343/Vizag/2014: 9. As already stated herein before, the assessee has declared agricultural income for all the assessment years. While completing assessment u/s 143(3) of the Act for the impugned assessment year, the assessing officer rejected assessee's claim of agricultural income and treated it as unexplained credit u/s 68 of the Act. The CIT(A) allowing partial relief modified the addition made by the assessing officer. While considering identical nature of dispute in case of M/s. Avinash Estates and Resorts Ltd. Vs. DCIT in ITA Nos.299 to 302/Vizag/2014 and other group companies, this bench has directed the assessing officer to disallow 25% out of the agricultural income declared by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
