TMI Blog2012 (11) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... at a search and seizure operation was conducted in the assessee s group of cases on 17-03-2006. During the course of search action, documents, books, loose papers etc. were seized from the residential and business premises of the various assessees. The AO thereafter issued notice u/s.153A(a) dated 16-01-2007 to the assessee. Subsequently, notice u/s.142(1) dated 11-09-2007 was also issued to the assessee. Thereafter, the AO noted that there was no warrant issued in the name of the assessee. Therefore, after recording the following reasons the AO initiated proceedings u/s.148 of the Income Tax Act : The assessee has entered into sham transaction in M/s. Database Finance Ltd. and Media Matrix Ltd. to book bogus long term capital gain of ₹ 11.33 lakhs. Key persons of the group Shri Moti Panjabi and Shri Ram Udharam Panjabi have admitted additional income in the hands of the entire group in this regard. The assessments u/s.153A of these persons were completed on 31-12-2007 and transactions in the shares done by the assessee were found bogus and additions were made accordingly. Hence, I have reason to believe that taxable income of ₹ 2,26,794/- has escaped assessment. Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the search action. It was submitted that during the search action all papers pertaining to the capital gains transaction have been found and seized by the department. The assessee enclosed sample copies of the seized material pertaining to the assessee for perusal of the learned CIT(A). It was submitted that the contract notes/share certificates, demat statements etc. pertaining to the share transactions have been found and seized during the search action. Therefore, the comment of the AO that there were no incriminating documents found or seized of the assessee is patently wrong and false. The decision of the Amritsar Bench of the Tribunal in the case of ITO Vs. Arun Kumar Kapoor was relied upon by the assessee , according to which reassessment u/s.147 on the basis of incriminating material against the assessee found in search of third party and forwarded to the AO of assessee by the Search Officer was illegal, void ab-initio and in such situation assessment could be made only u/s.153C which specifically ousted the application of sections 147 and 148. 5. So far as the merit of the case is concerned it was submitted that the submission made in the lead case Shri Moti Panjabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTR 225. In this case, Hon ble Gujarat High Court has held that there is a distinction between the two provisions. The relevant portion of the judgment is reproduced below : 12. On a plain reading of the aforesaid provisions it is apparent that ss.153A, 153B and 153C lay down a scheme for assessment in case of search and requisition. Sec.153A deals with procedure for issuance of notice and assessment or reassessment in case of the person where a search is initiated under s.132 or books of account, other documents or assets are requisitioned under s.132A after the 31st day of May, 2003. Sec. 153B lays down the time limit for completion of assessment under s.153A. Sec.153C which is similarly worded to s.158BD of the Act, provides that where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to such other 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.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,130/- on account of alleged fictitious sales of shares and fictitious capital gains inclusive of brokerage and commission at 6% is imaginary, unwarranted, unjustified and contrary to the facts prevailing in the case and provisions of law. It further be held that addition made in violation of rules of natural justice is not tenable in law. The addition made by the AO in this respect be detected. The appellant be granted just and proper relief as per provisions of law and facts prevailing in the case. 4. The appellant be granted all consequential relief as result of decision in the appeal. 5. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing . 9. The learned counsel for the assessee at the time of hearing before the Tribunal referred to page No.15 of the Paper Book and drew the attention of the Bench to the notice dated 16-01-2007 for A.Y. 2003-04 issued u/s.153A(a) of the Income Tax Act. Referring to the copy of the assessment order he submitted that in the very first paragraph itself the AO has dropped such notice and after more than a year of completion of search assessment had issued notice u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Referring to CBDT Circular No. 07/2003 which has been reproduced by the Tribunal at Para 6 of the order the learned counsel for the assessee drew the attention of the Bench to the following wherein the circular has explained the provisions of section 153C. The new s.153C provides that where an AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account of documents seized or requisitioned belong or belongs to a person other than the person referred to in s.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 such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s.153A . He accordingly submitted that since incriminating documents were found and seized by the department during the course of search, therefore, the proper course of action should have been issue of notice u/s.153C and not u/s.148. Therefore, in view of the decision cited above, the re-assessment proceedings initiated by the AO and upheld by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the decision cited by the learned counsel for the assessee. From the various replies given by the assessee during the course of assessment proceedings as well as appeal proceedings we find certain documents were found and seized by the department from the residential premises of the assessee. 14. We find the AO at Para 3.2 of the Assessment order has observed as under : 3.2 In the course of search operations, certain evidences were seized/impounded which go to show that the long term capital gains booked for various assessment years are not genuine and the same are based on fictitious documents created. Evidences gathered from stock exchanges and brokers are also in line with the evidences emanating from the material seized/impounded. In the course of search operation and assessment proceedings, certain statements, clearly bringing out crucial evidences going against the fact of purchase and sale of share transactions, were recorded from the key person, i.e. Shri Moti U. Panjabi and other family members. Similarly, we find the AO at Para 4.4 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 148 of the Act and proceedings under section 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of section 153C of the Act, section 147/148 stand ousted. In the instant case, the procedure laid down under section 153C has not been followed by the A.O. and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari Vs. ACIT and another, reported in (2007) 289 ITR 341, wherein it has been held that if the procedure laid down in section 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of section 153C are exactly similar to the provisions of section 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do not find any merit in the submissions of the learned DR that during the course of search, it was found at premises of M/s.Today Homes Infrastructure Pvt. Ltd. pertaining to M/s.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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