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Dr. D.Y. Patil Pratishtan Versus DCIT, Central Circle, Kolhapur and vice-versa

2012 (9) TMI 979 - ITAT PUNE

Assessment u/s 153A - Registration u/s.12A denied - proof of charitable activities - Held that:- As examined the said satisfaction note very closely and found that the impugned reasons mentioned by the AO are silent in so far as any AY Specific- Incriminating-Information (ASII) or others ie unaccounted or undisclosed or hidden information to the revenue by the assessee. In our opinion, the impugned satisfaction note is very general one for six years. It is surprising to note that the AO has narr .....

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N/2011 to ITA No. 1611/PN/2011 - Dated:- 7-9-2012 - Shri Shailendra Kumar Yadav, Judicial Member and Shri R.K. Panda, Accountant Member For the Appellant : Sri Sunil Pathak & Sri Nikhil Pathak For the Respondent : Sri S.K. Singh ORDER PER BENCH These are cross appeals and are directed against the separate orders dated 05-09-2008 of the CIT(A), Central, Pune relating to assessment years 2000-01 to 2005-06 respectively. Since common grounds have been taken by the assessee and revenue in all th .....

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ure action u/s.132 of the Income Tax Act was conducted on 20-07-2005 in the case of Dr. D.Y. Patil group. The assessee being one of this group was covered u/s.133A of the Income Tax Act, 1961. On the basis of the seized/impounded documents during the course of search/survey and the enquiries conducted later on it was concluded by CIT, Central, Pune vide order dated 30-11-2007 that the activities of the trust are neither genuine nor are being carried out in accordance with the objects of the trus .....

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und & seized during the search in case of the trustees the AO issued notice u/s.153C for the A.Y. 2000-01 to 2005-06 on 18-01-2007. It may be mentioned that no search has taken place in case of the assessee Trust. The satisfaction note of the AO reads as under : Search and seizure action u/s.132 of the Act was conducted in the cases of Dr.D.Y.Patil Group at Kolhapur and Pune on 20-07-2005 at the various residential as well as business premises. This group basically run various educational in .....

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of D.Y. Patil Pratishthan, Kolhapur (A/c No. 333) given by Rajarambapu Sahakari Bank Ltd., Peth, Shahpuri Branch Kolhapur dt. 03-12-2001 showing balance of ₹ 18,25,687/- as on 03-09-2001. ii. Pages 8 to 11 of Item No. 12 are copy of account extract of A/c. No.333 of D.Y. Patil Pratishthan, Kolhapur held in Rajarambapu Sah. Bank Ltd., Peth, Shahpuri Branch, Kolhapur for the period from 01-09-2001 to 07-12-2001 showing balance as on 07-12-2001 of ₹ 3,82,832/-. iii. Item No. 20 of Anne .....

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ar Palace, B Lane, North Main Road, Koregaon Park, Pune-1, following documents/books were seized pertaining to Dr. D.Y. Patil Pratishthan, Kolhapur. i. Item No. 1 of Annexure A to the Panchanama made at above premises is a file containing some loose papers pertaining to Dr. D.Y Patil Pratishthan. ii. Page Nos.9 and 10 in this file are copy of Demand Drafts No. 331957 & 331958 dated 12-09-2001 drawn in favour of Dr. D.Y. Patil Pratishthan amounting to ₹ 1,00,000/- & ₹ 9,00,000 .....

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through which Padmashree Dr. D.Y. Patil Pratishthan, C/o. Padmashree Dr. D.Y. Patil Nisargopchan Kendra, Yawat, Pune has given order for purchase of generator set to Cube Power Care Pvt. Ltd., 74/B, Muktangan Commercial Complex, Sahakar Nagar No.2, Pune-9, costing ₹ 1,08,500/-. v. Page 18 is a copy of A/c payee cheque No. 449719 dated 01-10-2001 of A/c. No.50/779 of Rupee C-op Bank Ltd., Chinchwad Branch, Pune, drawn in favour of Cube Power Care Pvt. Ltd., by Dr. D.Y. Patil Pratishthan amo .....

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bai amounting to ₹ 10,74,256/-. The cheque is drawn through A/c, No.200/2003 of Andhra Bank, Pimpri Chinchwad Branch, Pune-18. viii. Page No.26 is a letter dt. 01-07-2002 from Dr. D.Y. Patil Pratishthan, C/o, Dr. D.Y. Patil College of Engg. Pimpri, Pune-18 to the Manager. The Karad Janata Sah. Bank Ltd. Mumbai enclosing cheque at Page No.25. The loan taken was of ₹ 10 lacs and the interest is of ₹ 74,256/-. ix. Page No. 32 is a receipt No. 2100513 dated 22-11-2001 of Concorde M .....

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he residential premises of this group at Pune is a file containing 27 papers connected with the purchase of property at Flat No. G-2, Fulmohar Palace Co-op Hst. Society Ltd. Koregoan Park, Pune for a consideration of ₹ 12,50,000/- by Dr. D.Y. Patil Pratishthan vide deed of conveyance dated 08-03-2001. Item No. 3 of Annexure A to the Panchanama is a file connected with the use of Chartered flight by Shri P.D. Patil, Director and Trustee of Dr. D.Y. Patil Pratishthan. As per the file, Dr. D. .....

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00/- and furniture - ₹ 4,25,000/-. Item No. 6 of Annexure A to the Panchanama is a loose paper bundle containing following papers related to Dr. D.Y.Patil Pratishthan : Page 1 & 2 are bills of Roshani Services, d79 C/480A, Koregaon, Park, Pune for the fuel purchased by Dr. D.Y. Patil Pratishthan for its vehicle in the month of Feb., 2004. Page 5 is a challan cum invoice of Cube Power Care (P) Ltd., dated 1 -08-2001 against the delivery of Generator set to Dr. D.Y.Patil Pratisthan at Gu .....

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ted 13-05-2005 give by Dr. D.Y. Patil Pratishthan s D.Y. Patil College of Engg. Akurdi, Pune, to Swift Industries, Pune for ₹ 78,144/-. As the above seized documents belong to Dr. D.Y. Patil Pratishthan, Kolhapur, notices under section 153C for A.Ys. 2000-2001 to 2005-06 are required to be issued in this case. Issue notices under section 153C of the Act for A.Ys. 2000-2001 to 2005-06. 4. The assessee did not file the return of income in response to the notice issued by the AO u/s.153C r.w. .....

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balance sheet and income and expenditure account along with return of income. Having regard to the nature and complexity of the accounts of the assessee and in the interest of the revenue a proposal was made by the AO for getting the accounts of the assessee trust audited under the provisions of section 142(2A) of the Income Tax Act which was subsequently approved by the CIT, Central, Pune. Rejecting the objections of the assessee for appointment of the special auditor u/s.142(2A) the revenue a .....

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rust Fund - (F) 25828563.00 4 Capital Exp. Dr. To P&L - (G) 7046088.00 5 Late payment of Employee P.F. - (H) 1091396.00 6 Penalty/Fine (I) 233953.00 7 Prior Period Expenses (J) 761063.00 8 20% of Cash Payments 40(A)(3)-(K) 170669.20 9 Late payment of Employer P.F.- (L) 1061015.00 10 Revenue Exp. Not supported by Vouchers -(M) 6431842.54 11 Addition on account of depreciation re-working -(N) 396490.91 12 Interest accrued on F.D. in D.Y. Patil Pat Sanstha -(O) 295240.00 13 Unsecured loans/depo .....

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f any incriminating evidence the proceedings initiated u/s.153C are not invalid. It was submitted that the various additions made by the AO has nothing to do with any incriminating material found during the search. It was argued that additions can be made only in respect of the issues wherein some incriminating evidence is found. Accordingly it was argued that the proceedings initiated u/s.153C are illegal and therefore the consequent assessment has to be declared null and void. The relevant sub .....

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ising out of any evidence found during the search. If that be so, the question of making such additions in this assessment does not arise. Thus, without prejudice to our contention that the assessment is null and void, we submit that the learned AO should have restricted the additions to the extent of documents found at the time of search. She has gone much beyond the information so gathered. The appellant submits that during the search, hardly any incriminating documents were found. Accordingly .....

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of 153C proceedings submitted as under : 1] In this case, the learned AO has issued notice u/s.153C for the above asst. years. The notice u/s.153C was issued on the basis of the search carried out on D.Y. Patil Group. It may be noted that survey action u/s.133A was carried out in the case of the assessee. The assessee has raised a ground of appeal in all the above years that the notice issued u/s.153C is bad in law. 2] It is submitted that the notice issued u/s.153FC is bad in law. As per the sa .....

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able article or thing or books of accounts or documents seized belong to a person other than a person referred to section 153A, then the notice u/s.153C can be issued in respect of the other person. Thus, there has to be some concrete evidence found from the person who has been searched. Now, the documents pertaining to the appellant found during the course of search are not incriminating documents and therefore, the notice u/s.153C could not be issued. 3] In this context, Your Honour s kind att .....

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nt was found with Shri Navale. Hon ble ITAT accepted the claim of the assessee that when no specific document was found for A.Ys. 2000-01 to 2003-04 with Shri Navale, the notice u/s.153C cannot be issued for those years. It is further held that notice can be issued only when some incriminating evidence has been found. Accordingly, since no document was found for A.Ys. 200-01 to 2003-04, Hon ble ITAT allowed the claim and held that the notice u/s.153C issued for those years is invalid. 4] Accordi .....

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assts. made may kindly be declared null and void . 7. However, the learned CIT(A) was not satisfied with the explanation given by the assessee and the various decisions cited before him. He observed that no objection was taken by the assessee during the proceedings initiated by the AO u/s.153C r.w.s.153A of the Income Tax Act subsequent to the search. Therefore, the same cannot be challenged to be invalid in view of the provisions contained in section 292B and 292BB of the Income Tax Act. Even .....

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irm. Proceedings u/s.153C of the Income Tax Act were initiated in pursuance to recovery of these documents. Therefore, the proceedings u/s.153C of the Income Tax Act were validly initiated in the case of the assessee. As regards the submission of the assessee that notice u/s.153C of the Income Tax Act can be issued only when some incriminating evidence has been found, he observed that section 153C gives mandate to the AO to proceed against the person to whom any money/bullion, jewellery or other .....

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ram Deshmukh and Others reported in 40 DTR (Bilaspur) (Trib) 252 (2010)/133 TTJ 53 and the decision of the Hon ble Gujarat High Court in the case of Vijaybhai N. Chandrani Vs. ACIT reported in 231 CTR 474 (Gujarat) he held that the notice issued by the AO u/s.153C of the Income Tax was valid notice. 8. So far as the various additions made by the AO the learned CIT(A) gave partial relief to the assessee. Aggrieved with such order of the CIT(A) the assessee as well as revenue are in appeal before .....

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re applicable only when any incriminating evidence pertaining to the assessee was found with the person searched and since in this case, no incriminating evidence pertaining to the assessee trust was found in the course of search, the issue of notice u/s.153C was invalid in law. 2. The learned CIT(A) erred in not appreciating that the reference u/s.142(2A) for special audit was an illegal one as the AO had not given an opportunity of hearing to the assessee as required under proviso to section 1 .....

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he learned CIT(A) ought to have granted exemption u/s.11 to the appellant trust since the registration u/s.12A was restored by Hon ble ITAT, Pune and therefore, the appellant was entitled to claim exemption u/s.11. 5. The learned CIT(A) erred in holding that the appellant trust had violated the provisions of section 13(1)(c) on account of the following payments made by it : Sr.No. Particulars Amount (Rs.) 1 Advertisement expenses 3,66,473.00 2 Payment of Membership Fee to Mahindra Holidays 1,52, .....

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course of achieving the objects of the appellant and there was no violation of section 13(1)(c). 5.3 The learned CIT(A) erred in holding that the payment made to Mahindra Holidays by the appellant trust resulted in personal benefit to the trustees and hence, the appellant had violated the provisions of section 13(1)(c). 5.4 The learned CIT(A) failed to appreciate that no benefit was given to the trustee on account of payment to Mahindra Holidays and hence, the assessee has not violated the provi .....

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13(1)(c). 6. The learned CIT(A) further erred in holding that the following expenses were not allowable as a deduction while computing the income of the appellant because the appellant had violated the provisions of section 13(1)(c) : Sr.No. Particulars Amount (Rs.) 1 Advertisement expenses 3,66,473.00 2 Payment of Membership Fee to Mahindra Holidays 1,52,550.00 3 Payment of Audit Fee to M/s. R.D. Patil & Co. 7,48,000.00 6.1 The learned CIT(A) failed to appreciate that the above expenses wer .....

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ars issued by the Govt. was a capital receipt and no amount was chargeable as a revenue receipt. 8. The learned CIT(A) erred in holding that the donations received by the appellant of ₹ 1,82,15,915/- was taxable as income of the appellant without appreciating that the said donations were received towards the corpus of the trust and hence, the same were exempt from tax. 9. The learned CIT(A) erred in disallowing revenue expenditure of ₹ 60,14,975/- on the ground that the said expenses .....

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llowance of depreciation in respect of such capital expenses was not warranted since most of the capital expenses were paid by cheque and therefore, the depreciation ought to have been allowed. 11. The learned CIT(A) erred in confirming the following disallowances without appreciating that since the assessee was entitled to claim exemption u/s.11, such disallowances were not warranted while computing the income of the appellant us/.11. Sr. No. Particulars Amount (Rs.) a Disallowance on account o .....

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13. The appellant craves leave to add, alter, amend, or delete any of the above grounds of appeal Grounds by Department : 01 (i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in holding that advancing interest free loan of ₹ 2,17,08,290/- by the assessee to its related concern D.Y. Patil Education Society does not attract provisions of sec. 13(1)(d) of the IT. Act, 1961. (ii) Without prejudice, CIT(A) erred in not appreciating the fact th .....

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cluding Hon ble Madras High Court in the case of R.P Kundaswamy & Others Vs. CIT ( 49 ITR 344). 02 Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing 50% of the advertisement expenses as expenditure towards objects of the Trust, when the expenses were infact for the image building of the founder Trustee and not for the objects of the Trust, thus squarely in violation of provisions of section 13(1)(c). 03. (i) Whether on the facts and .....

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g, furniture, working capital etc., (ii) CIT(A) failed to appreciate the fact that had the assessee not advanced interest free loans to sister concern, there would have been no need to borrow funds from financial institutions to that extent and accordingly no need to pay interest to that extent. 04. (i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing remuneration paid to relatives of Trustees to the tune of ₹ 22,81,528/- holding .....

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(1964) 53 ITR 225, 229 (SC). 05 (i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing entire amount of ₹ 6,33,018/- on account of telephone and mobile expenses paid to the Trustees at the residence of the trustees without considering the personal use of telephones and mobiles and without appreciating that no evidence was produced before the AO and were covered u/s.40A (2)(b). (ii) CIT(A) erred in not appreciating that the account .....

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e and in law the Ld. CIT(A) was justified in holding that employees contribution which was not deposited within due date under that Act is allowable as expenditure when the same was rightly disallowed by the Assessing Officer. (ii) Whether the decision of Ld. CIT(A) ignoring the clear distinction between employee s contribution to ESI, PF and Pension Fund and employer s contribution is bad in law? (iii) Whether the decision of Ld. CIT(A) ignoring the provisions of section 2(24) (x) r.w.s. 36(1)( .....

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umstances of the case and in law the Ld. CIT(A) was justified in ignoring the decision of Special Bench of Kolkata in the case of JCIT Vs. ITC Lt., reported at 112 ITD 57. 08. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition u/s.68 of the Act of ₹ 14,90,000/- made by the AO towards advance fee, when the said credits were not satisfactorily explained by the assessee and were squarely covered by Sec. 68 of the Act. 09. .....

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rounds at the time of proceedings before the Hon ble Tribunal which may be granted. 9. The learned counsel for the assessee raised the preliminary issue challenging the validity of notice issued u/s.153C. Referring to the following chart he submitted that each and every entry on the document referred to in the satisfaction note has been properly accounted for. Therefore, it does not constitute any incriminating evidence. Details of recording in the Books, regarding satisfaction note Sr. No. Part .....

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2 'A' to the Panchanama made at above premises is a Xerox copy of balance certificate of D. Y. Patil Pratishthan, Kolhapur (A/c.No.333) given by Rajarambapu Sahakari Bank Ltd., Peth, Shahhupuri Branch, Kolhapur dt. 03-12-2001 showing balance of ₹ 18,25,687/- as on 03-09-2001 2001-02 YES This seized page no. 7 is a certificate issued by Rajarambapu Sahakari Bank Ltd., Peth, Shahupuri Branch, Kolhapur dt. 03-12-2001 showing balance of ₹ 18,25,687/- as on 03-09- 200 and pertains .....

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nk Ltd., Peth, Shahupuri Branch, Kolhapur for the period from 01-09-2001 to 07-12-2001 showing balance as on 07-12-2001 of ₹ 3,82,832/-. 2001-02 YES These seized page no. 8 to 11 are a copy of account extract of A/C No. 333 with Rajarambapu Sahakari Bank Ltd., Peth, Shahupuri Branch, Kolhapur for the period from 01-09- 2001 to 07.012.2001 showing balance as on 7.012.2001 of ₹ 3,82,832/-. This bank A/C pertains to Dr. D. Y. Patil Pratishthan, Kolhapur 1 to 11 Division. This account is .....

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regarding purchase of ply and hardware material for C- DAC Center at Kolhapur Division. These purchases are duly recorded in books of 12 to 13 accounts of Kolhapur Division. The photocopy of ledger extract of Furniture Alc and photocopy of Journal Register towards recording of these bills are enclosed at page no. 12 to 13 12 to 13 354 to 355 of PB 6 to 19 71 to 84 of PB NO 5 2 d) Item No. 57, Page No. 16 to 20 are receipts against the payment to matured fixed deposit amounts to Dr. D.Y. Patil Pr .....

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Pratishthan, Kolhaour Division. This payment of ₹ 10.00 Lacs is duly recorded in books of accounts of extract of interest A/c in the books of Dr. D.Y. Patil pratishthan, Kolhapur Division towards payment of interest amounting to ₹ 1,21,827.85 and photocopy of ledger extract of Dr. D.Y. Patil Patsantha A/c. in the books of Dr. D.Y. Patil Pratishthan, Kolhapur Division towards payment of ₹ 8,78,172.15 is enclosed at Page No. 14 to 16 14 to 16 356 to 358 of PB 20 to 24 85 to 89 o .....

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n this file are copy of Demand Drafts No. 331957 & 331958 dated 12-09- 2001 drawn in favour of Dr. D.Y. Patil Pratishthan amounting to ₹ 1,00,000/- & ₹ 9,00,000/- respectively. 2002-03 YES YES These seized page no. 9 & 10 pertains to Dr. D.Y.Patil Pratishthan, Pune Division. These demand drafts are paid to Karad Janata Sahakari Bank Ltd. towards repayment of loan taken by our trust. These payments are duly recorded in the books of accounts of Dr. D. Y 17 to 18 Patil Prati .....

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with the Ds at page 9 & 10. Amount has been paid to the Karad Janata Sahakari Bank Ltd. Karad payable at Mumbai. The amount has been paid vide Cheque No. 449705 through Alc No.50/779 of Rupee Co-op. Bank Ltd., Chinchwad Branch, Pune. 2001-02 YES These seized page no. 11 & 14 pertains to Dr. D.Y.Patil Pratishthan, Pune Division. This document is photocopy of voucher for issue of demand drafts to be paid to Karad Janata Sahakari Bank Ltd. towards repayment of loan taken by the assessee tr .....

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h Padmashree Dr.D..Y. Patil Pratishthan C/o. Padmashree Dr. D.Y.Patil Nisargopchar Kendra, Yawat, Pune has given order for Purchase of generator set to Cube Power Care Pvt. Ltd., 74/B, Muktangan Commercial Complex, Sahakar Nagar No.2, Pune9; costing ₹ 1,08,500/-. 2001-02 YES This seized document is order registration form for purchase of generator set. This purchase of generator is duly recorded in the books of accounts of Dr. D. Y. Patil Pratishthan, Pune Division. The photocopy of ledger .....

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-. 2001-02 YES This seized document is photocopy of cheque no. 449719 of Rupee Co-op. Bank Ltd. paid for purchase of generator set. This purchase of generator is duly recorded in the books of accounts of Dr. D. Y. Patil Pratishthan, Pune Division. The photocopy of ledger extract of 19 to 20 Generator Ale towards recording of Generator set purchased from Cube Power Care Pvt. Ltd.and ledger extract of Cube Power Care Pvt. Ltd. towards payment appearing in the books of Dr. D. Y. Patil Pratishthan, .....

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ocument is photocopy of intimation for making payment of outstanding interest on loan taken from Karad Janata Sahakari Bank Ltd. by our trust. The payment of interest along with principal is duly recorded in the books of 21 to 23 accounts of Dr. D. Y. Patil Pratishthan, Pune Division. The photocopy of ledger extract of Karad Janata Sah. Bank Alc in the books of Dr. D. Y. Patil Pratishthan, Pune Division and Bank Statement of Karad Janata Sahakari Bank for the period 01/04/2000 to 05/12/2002 is e .....

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que pertains to Dr. D.Y.Patil Pratishthan, Pune Division. The payment of interest along with principal is duly recorded in the books of accounts of Dr. D. Y. 21 to 23 Patil Pratishthan, Pune Division. The photocopy of ledger extract of Karad Janata Sah. Bank Alc in the books of Dr. D. Y. Patil Pratishthan, Pune Division and Bank Statement of Karad Janata Sahakari Bank for the period 01/04/2000 to 05/12/2002 is enclosed at page no. 21 to 23 21 to 23 363 to 365 of PB 32 97 of PB NO 14 * Page No. 2 .....

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ks of accounts of Dr. D. Y. Patil Pratishthan, Pune Division. The photocopy 21 to 23 of ledger extract of Karad Janata Sah. Bank Alc in the books of Dr. D. Y. Patil Pratishthan, Pune Division and Bank Statement of Karad Janata Sahakari Bank for the period 01/04/2000 to 05/12/2002 is enclosed at page no. 21 to 23. 21 to 23 363 to 365 of PB 33 98 of PB NO 15 * Page 32 is a receipt No. 2100513 dated 22-11-2001 of Concorde Motors Ltd. 46/9, Vadgaon Sher, kharadi Road, of Pune Nagar Road, Pune-14 for .....

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. Patil Pratishthan, Pune Division in repairs & Maintenance AIC on 22.11.2001. The photocopy of ledger extract of Repairs & Maintenance Alc is enclosed at page no. 24 to 34. 24 to 34 366 to 376 of PB 34 99 of PB This page indicates repairs expenditure on Mercedez car owned by the trust. The said expenditure is accounted for in the books. No addition has been made by the ld. AO on the ground as the said expenditure is accounted. This car is used for VIP guests of the trust. However, the A .....

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ue No. 528228 dated 22-07- 2002 amounting to ₹ 86,662.87 drawn in favour of Milennium Motors Pvt. Ltd. by Dr. D.Y. Patil Pratishthan from A/c. No.10555 of the United Western Bank Ltd., Prabhadevi Br. Mumbai. 2002-03 YES This seized paper no. 33 is photocopy of cheque no. 528228 dated 22.07.2002 of The United Western Bank Ltd. towards making the payment of ₹ 86,662.87 by Dr. D. Y. Patil Pratishthan to Millenium Motors Pvt. Ltd. This payment of ₹ 86,662.87 dated 22.07.2002 is dul .....

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e purchase of property at Flat No. G-2, Gulmohar Palace Co-op. Hst. Society Ltd., Koregoan Park, Pune for a consideration of ₹ 12,50,000/- by Dr. D.Y. Patil Pratishthan vide deed of conveyance dated 08-03-2011 2000-01 YES The assessee trust has purchased the Flat No. G-2 at Gulmohar Palace Co-op. Housing Society, Koregaon Park, Pune and the consideration paid of ₹ 12.50 Lacs is duly accounted in the books of Dr. D. Y. Patil 37 to 38 36 Pratlshthan. The payment of ₹ 50,0001- was .....

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ted that the flat is used as a guest house and the trustee, Dr. D.Y. Patil, also stays there whenever he visits pune. There is no question of disallowing the expenditure and depreciation . The expenditure noted therein is duly accounted and hence, it cannot be considered as an incriminatin g evidence 18 3 c) Item No. 3 of Annexure A to the Panchanama is a file connected with the use of Chartered flight by Sri P.D. Patil, Director and Trustee of Dr. D.Y. Patil pratishthan has given an advance of .....

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oks of account of Dr. D.Y. Patil Pratishthan, Pune Division. The photocopy of ledger extract of Taneja Aerospace A/c for the F.Y. 2002-03 & 2003-04 are enclosed at Page No. 30 to 40. 39 to 40 381 to 382 of PB 37 133 to 172 of PB The assessee had made payments to Taneja Aerospace for use of their Aircrafts. The payments made are accounted in the books. The AO has also accepted the same. However, the AO in the order has alleged that this expenditure resulted in violation of section 13(1)(c). T .....

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mtrs., Consideration- ₹ 16,50,000/- and furniture ₹ 4,25,000/- 2000-01 YES The assessee trust has purchased the Flat No.F-8 at Gulmohar Palace Co-op. Housing Society, Koregaon Park, Pune and the consideration paid of ₹ 16.50 Lacs is duly accounted in the books of Dr. D. Y. Patil Pratishthan. The payment of ₹ 11,00,000/- was made on 16.08.2000 and payment of ₹ 5,50,000/- is made on 06.10.2000. Copy of 37 to 38 & furniture in that Flat No. F- 8 at Gulmohar Palace .....

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& 2 are bills of Roshani Services, 479 C/480 A, Koregaon Park, Pune for the fuel purchased by Dr. D.Y. Patil Pratishthan for its vehicles in the month of Feb., 2004. 2003-04 YES These Seized paper No. 1 & 2 are statement / bill of Roshani Services towards purchase of petrol/diesel by Dr. D. Y. Patil Pratishthan, Pune Division for its vehicles in the month of Feb 2004. These bills are duly recorded in the books of Dr. D. Y. Patil Pratishthan s Dental College, 42 to 45 39 to 40 Pune Divisi .....

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Page No.18 of item No.1 above. 2001-02 YES This seized document is photocopy of challan cum invoice of Cube Power Care Pvt. Ltd for purchase of generator set. This purchase of generator is duly recorded in the books of accounts of Dr. D. Y. Patil Pratishthan, Pune Division. The photocopy of ledger extract of 19 to 20 Generator Alc towards recording of generator 41 set purchased from Cube Power Care Pvt. Ltd.and ledger extract of Cube Power Care Pvt. Ud. towards payment appearing in the books of .....

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Patil Pratishthan, Pune Division for its vehicle. These bills are duly recorded in the books of Dr. D. Y. Patil Pratishthan, Pune 46 to 48 42 to 44 Division on 23.10.2001 by ₹ 32,388/- under the head of Repairs & Maintenance A/C. The photocopy of ledger extract of Repairs & Maintenance Alc is enclosed at page no 46 to 48. 46 to 48 388 to 390 of PB 42 to 44 317 to 319 of PB NO 24 * Page No. 15 is a charter bill dated 15-07-2000 of ₹ 30,595/- of Dr. D.Y. Patil Pratishthan, Opp .....

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neja Aerospace A/c and statement of Taneja Aerospace are enclosed at page no.49 to 54 49 to 54 391 to 396 of PB 45 320 of PB Same comments as in sr.No.18 25 * Page 16 is a copy of purchase order dated 13-05-2005 give by of Dr. D.Y. Patil Pratishthan s Dr. D.Y. Patil college of Engg. Akurdi, Pune-44 to Swift Industries, Pune for ₹ 78,144/-. 2004-05 YES This Seized page no. 16 is copy of purchase order no. 2843/01 dated 22-03-2005 of Dr. D. Y. Patil Pratishthan's D. Y. Patli college of E .....

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the various proofs/evidences to explain as to how all these entries reflected in the above documents are duly accounted for. Referring to the letter dated 02-05-2011 addressed to the CIT(A), a copy of which is placed at Paper Book Page Nos. 322 to 331 he submitted that it was explained by the assessee before the CIT(A) that all these documents did not constitute any incriminating evidence and all the entries mentioned in these documents are duly accounted for. 11. The learned counsel for the ass .....

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a including that of the principal, i.e. Telco is found from the premises of the searched party giving sales made etc. to each dealer by Telco it is unthinkable to issue notice u/s.153C to all the dealers and the principal. Since in the instant case the documents found are not incriminating at all, therefore, the AO is not justified in initiating the proceedings u/s.153C against the assessee. 12. Referring to the following decisions of the Pune Bench of the Tribunal he submitted that under identi .....

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f the Hon ble Bombay High Court in the case of Mural Agro Products Ltd. vide ITA No. 36/2009 order dated 29-10-2010 he submitted that completed assessments could not be disturbed by making addition in absence of any material unearthed during the search or during 153A proceedings. He accordingly submitted that the 153C notice issued by the AO should be held as invalid and consequently the assessment order passed u/s.153C/143(3) should be treated as invalid. He also relied on the decision of the S .....

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issue of notice u/s.153C. Therefore, in view of the provisions contained in section 292B and 292BB, in absence of any objection raised by the assessee during the assessment proceedings the assessee cannot challenge the validity of the notice issued u/s.153C of the Income Tax Act. 14. Referring to the provisions of section 153C the learned DR submitted that the section does not contain the word incriminating. It is only the satisfaction of the AO and there is nothing like incriminating to be the .....

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case the AO shall hand over the valuables or articles or books of accounts or documents etc. to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of Section 153A. Therefore, in the facts and circumstances of the case the issue of notice u/s. .....

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y the CIT(A) being in consonance with the provisions of section 153C should be upheld. He submitted that the intention of the legislature has to be seen while bringing in the provisions of section 153C. He submitted that the various decisions cited by the learned counsel for the assessee are of the Pune Bench of the Tribunal. However, the revenue has relied on the decisions of various other Benches of the Tribunal and the decision of the Hon ble Gujarat High Court and Hon ble Chattisgarh High Co .....

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sue in the instant case, however, is regarding the validity of the notice and not any omission or mistake in such notice. Therefore, the provisions of section 292B are not applicable. As regards the reliance on the provisions of section 292BB he submitted that the said provisions speak of service of notice not to be invalid in certain cases. In the instant case service of notice is not the issue and the issue is regarding the validity of the issue of notice u/s.153C. Therefore, the provisions of .....

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Court in the case of Trilok Singh Dhillon (Supra) cannot be applicable to the facts of the present case. 18. So far as the decision of the Hon ble Gujarat High Court in the case of Vijaybhai N. Chandrani (Supra) he submitted that the said decision is not applicable to the facts of the present case. In that case the notice issued u/s.153C by the AO was quashed on the ground that the loose papers found at the time of search of one Housing Society do not belong to the assessee. The Hon ble Gujarat .....

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ious other decisions relied on by the learned DR he submitted that all those decisions relate to provisions of section 153A and not 153C. 20. He submitted that the Pune Bench of the Tribunal has already considered the decision of the Chennai Bench of the Tribunal in the case of Harvey Heart Hospitals Ltd. (Supra), decision of the Hon ble Gujarat High Court in the case of Vijaybhai N. Chandrani (Supra) and the decision of Bilaspur Bench of the Tribunal in the case of ACIT Vs. Panchuram Deskmukh a .....

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held as invalid. 21. So far as the decision of Hon ble Delhi High Court in the case of SSP Aviation Ltd.(Supra) relied on by the learned DR is concerned he submitted that the said decision is rather in favour of the assessee. In the said decision it has been held that notice u/s.153C has to be issued by the AO having jurisdiction to the person who has not been searched but whose books of account or other valuable articles or documents belonging to such person is found from the premises of anothe .....

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O and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that search u/s.132 took place in the premises of some of the trustees of the assessee trust during which certain documents belonging to the assessee were found and seized. It is an admitted fact that no search has taken place in the case of the assessee. From the chart filed by the assessee we find all the documents found during the .....

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n has been made on the ground that such expenditure has resulted in violation of the provisions of section 13(1)(c) of the Income Tax Act. Similarly although the cost of the flats (as per item 2 and 5 of Annexure) used for guest house are already reflected in the books of account, the AO has presumed that the said flat is used for the personal purpose of the trustees for which he disallowed depreciation and maintenance charges. Similarly, although the AO has accepted that payments made to Taneja .....

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Further, we have gone through the voluminous paper books, written submissions, plenty of citations filed by both the parties to advance their respective arguments. On consideration of the original grounds and the additional grounds, we find it relevant to consider the additional ground first as it relates to the legal issue and it goes into the root of the matter. It questions the validity of the notice issued u/s 153C of the Act for all the four AYs under consideration. The relevant discussion .....

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of section 153A(1)(b) of the Act and also its first proviso ignoring various settled legal propositions ie the concluded assessments, which fall in the bunch of six AY, should not disturbed unless there exists incriminating material relevant for the said AYs or concluded assessments and such incriminating material should be of that nature it should not be a dumb documents. In this regard, the stand of the revenue is that the express provisions are clear on the proposition that the AO is empowere .....

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C of the Act for the impugned four AYs. For this purpose, we have extracted the relevant portion of the reasons and the same read as follows. 9. Satisfaction Note for proceedings u/s 153C of the I T Act, 1961 in the case of M/s Sinhgad Technical Educational Society (STES), Pune……… 1) page 11 - this is voucher of Sinhgad Technical Education Society (STES) dt. 17-01-2004 for cheque payment of ₹ 2.80 lacs to Amir Moiddin Shaikh. 2) page 12 - this is voucher of STES dt. NI .....

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Sinhgad College of Pharmacy, owned by STES. Bundle no. A-2 7) page no. 35- there are the balances available to various institute of STES on or before 25.06.2005. Bundle no. A-4 8) page no. 50 & 54 - these pages contains the details of staff arrangements made by the STES college of Engineering for admission process for F.Y. 2003-04. 9) page no. 58 to 60- these pages contain the details of expenses incurred by STES. 10. From the above, it is demonstrated by the Ld Counsel that the items at sl .....

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o erred in disturbing the settled and completed assessments. Accordingly, AO should not assume jurisdiction in respect of such AYs in the absence of any incriminating information or transactions specific to any of the impugned four AYs ie 2000-01 to 2003-04. The contrary argument from the side of the revenue is that the overall approach in matters of concealment by the group assesses and all the discoveries of the search on Mr Navale and it concerns, have to be taken into account while forming t .....

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hat the AO has narrated some information against the Mr Navale HUF, which is not relevant for the present assessee. In the process, the AO totally missed the requirements of the law ie only the AY with the pending assessments and the AY with the AY specific incriminating documents/ transactions or seized asset should only be reopened under the provisions of the first proviso to section 153A of the Act and not otherwise. 11. In this regard, we have perused various legal propositions. First, we ha .....

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ot be a dumb document and therefore a speaking one, but they must be the document with prima facie incriminating information too. Such incriminating nature of the seized document is an essential factor for switching on the proceeding u/s 153C. In other words, the document seized must not only be a speaking one but also be prima facie incriminating one for igniting the proceedings u/s153C. Unlike other AYs, there is nothing made out by the AO what is called incriminating for the current AY under .....

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AO merely makes an addition in the assessment u/s 153C based on change of opinion and when such additions are likely to be deleted in view of the settled nature of the issues? Income Tax provisions are not merely for the issue of notice u/s 153C but it is essentially for taxing the income of the person. What is point in issuing notice u/s 153C on flimsy grounds and finally tax nothing? Such proceedings only creates avoidable nuisance both to the overburdened taxman and the much hazzled taxpayers .....

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ion, the AO has invalidly issued the notice u/s 153C for the AY 2000-01 on the wrong presumption that AO can assume jurisdictional in respect all the six AYs automatically even with out any incriminating documents in respect of the concluded issues too. Accordingly, the relevant grounds of the assessee are allowed. 12. From the above, it is our finding that the reasons recorded by the AO as extracted above do not contain anything incriminating for the AYs upto 2003-04. It is the settled position .....

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for this kind of interpretation was already given in para 25 and 26 of our order in the case of Kumar Company for the AY 2000-01. In this regard, we posed question to ourselves if it is fair to reopen the assessment which is already concluded without any reason or logic thereby encroach on the rights of the tax payers? Should the AO be given unfettered or arbitrary powers to issue notice for the six AYs specified in the first proviso to section 153A(1) of the Act when the impugned assessments f .....

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1251,1022 & 1252/PN/2008, relied upon by the Ld DR is found distinguishable in so far as the existence of the incriminating document for the relevant AY is concerned. Whereas, in the instant case, first of all, there is no mention of any document in the said reasons relatable to the impugned four years and the incriminating nature of the same is out of question. Therefore, reliance of the DR on the said case is misplaced. 13. Further, we have examined various other judicial propositions ment .....

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3A are not de novo assessment and therefore no new claim of deduction or allowance can be made by assessee where admittedly the regular assessments are shown as completed assessments on the date of initiation of action under s. 132. 3) Meghmani Organics Ltd. (2010) 129 TTJ (Ahd) 255 Conclusion:- Record maintained by a person for his own purpose though referable to the assessee cannot be said to be belonging to the assessee within the meaning of s. 153C. Further, where none of the assessments are .....

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ce Ltd. (2009) 32 SOT 80 (Luck) Conclusion:- A notice under s. 148(1) can be issued even where notice under s. 143(2) has been pending and not closed. By processing the return and by issuing acknowledgment as token of accepting the return, the proceedings initiated by filing the return are terminated and no proceedings, therefore, remain pending. 6) R.M.L. Mehrotra (2010) 320 ITR 403 Conclusion:- Undisclosed income of the block period has to be determined on the basis of evidence found as a resu .....

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ments should not be disturbed merely for making routine additions, which could have been otherwise done in the regular assessment and of course, the pending assessments fall under exceptions. As stated by the Ld Counsel point no 9 of his note reproduced above, nothing is seized pertaining to A.Y 2000-01 to 2003-04 obviously there is no question of recording satisfaction note. On this reasoning itself, we find that the assessee has to succeed. Therefore, we do not examine the other arguments of t .....

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luous and merely an academic exercise as we have upheld the applicability of the decision of the Tribunal in the case of LMJ International Ltd (supra) for the proposition that the where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be distributed and other local decision cited above. Accordingly, the additional ground raised by the assessee for all the four appeals under consideration are allowed and in favour of th .....

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ntioned by the revenue authorities that the AO issued notices u/s 153C of the Act simply relying on the contents of section 153A(1)(b) of the Act and also its first proviso. It is the stand of the department as discussed in the preceding paragraphs of this order that there is no need for the AY-specific seizure and handing over of the document to the AO of the assessee as the provisions of section 153C of the Act. AO relied on the plain reading of the relevant provisions of the said sections. In .....

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ssess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted.. (first proviso). It is also fact that the decision in the case of LMJ International Ltd. (2008) 119 TTJ (Kol) 214 is undisturbed as on date and it is relevant for the proposition that Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be distributed; items of reg .....

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re six AYs. Based on the existence of the seized documents, these six AYs can categorized into two categories. (i) the AYs without seizure of any documents or any other seizures as referred to in the provisions of section 153C of the Act; and (ii) the AY with the seizure of some documents as referred to in the provisions of section 153C of the Act. 22. Appeals by the Assessee - AYs 2000-01 to 2003-04 & 2005-06: In connection with the AYs at sl no (i) above ie AYs 2000-01 to 2004-05, admitted .....

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e appeal ITA1039/PN/10 for AY 2003-04 is concerned, the same has to be dismissed without going in to the merits of the ground as we quashed the assessment proceedings in view of the invalid notice. 24. Appeals by the Assessee - AY 2004-05: In connection with the AYs at sl no (ii) above ie AYs 2004-05, admittedly, there is some seizure of the documents as evident from the satisfaction note. We are convinced that the said ledger is an accounted one. Further, the reasoning given by us in the order .....

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rty based on the material/others seized during the search action. As such, only the unaccounted and incriminating material or others listed in the said section are only seized during the search and the accounted documents should not be seized. Seizure of the documents is aimed at the unearthing of the unaccounted income of the assessee assessable u/s 153A or the other third parties subjected assessment u/s 153C of the Act. When the documents do not indicate any undisclosed income, the ledger in .....

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these appeals of the assessee relating to the validity of the notice u/s 153C of the Act are allowed in favour of the assessee in respect of all the AYs under consideration. Further, we are of the considered opinion that the adjudication of the other grounds relating to the other legal and merit oriented issues is merely an academic exercise. Therefore, the relevant grounds in all the four appeals are dismissed as academic. 25. In the result all the six appeals of the assessee are allowed and co .....

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hich are filed before the CIT(A) and also other orders in the cases of Bharati Vidyapeeth, Bharati Vidyapeeth Medical Foundation (Supra). These imported paragraphs contained an important discussion on the issues relating to the validity of the notice u/s.153C of the Act and adjudication in the sense that we have analysed the provisions of section 153C of the Act, the existing precedents on the topic relating to the validity of the notice issued u/s.153C of the Act, so called recent decisions rel .....

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ax Authorities amounts to the non compliance to the binding judgment in the case of Bank of Baroda supra and Dunlop India Ltd. supra. We have narrated these issues also in the above extracted paragraphs. 12. Thus, we have no doubt in our minds that the said ratio is equally applicable to the facts of the instant case. Eventually, for the AO to assume jurisdiction validly in any case u/s.153C of the Act, there is need for AY-Specific incriminating documents with the AO. AO cannot issue the said n .....

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which are under consideration, the adjudication of other legal issues as well as the merit oriented issues raised in the appeals become academic and therefore, we proceed the dismiss the same as academic. 14. In the result, all the six appeals of the assessee are allowed. ITA No. 306 to 311/PN/2011 BY REVENUE (Assessment Year : 2000-01 to 2005-06) 15. Hither to, we have dealt with one of the legal issues relating to validity of the jurisdiction of the AO u/s.153C of the Act in respect of the si .....

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n above, the adjudication of these appeals by the revenue become merely an academic exercise. Therefore, all the grounds of the revenue in respect of the six AYs under consideration have to be dismissed as an academic exercise. 16. In the result, six appeals of the revenue are dismissed. 26. Nothing contrary was brought to our notice against the above decisions of the Pune Bench of the Tribunal. However, we find the Pune Bench of the Tribunal while passing above decisions did not have the benefi .....

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ncome of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to .....

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l abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of .....

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ection 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income. 16. It will be appreciated from the above that the procedure envisaged by Section 153C, which is applicable to the petitioner herein, does not in any way infringe any rights of the petitioner or curtail or curb his right to be heard by the Assessing Officer or .....

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on of ₹ 86 crores only in the assessment year 2007-08 against which an appeal has already been filed, as stated by the ld. senior standing counsel. This also finds mention in para VI of the counter affidavit filed by the respondent. Thus, full opportunity of being heard is available, and in fact was made available to the petitioner herein to represent against the proposed assessments or reassessments. The apprehension expressed by Mr. Bajpai, ld. senior counsel for the petitioner seems to .....

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f Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been .....

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he other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by Section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed. If the returns filed by the other person for the period of six years does not show that th .....

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tice in view of the decision of Hon ble Delhi High Court in the case of SSP Aviation Ltd. (Supra). However, since all the entries found in those documents have already been reflected in the books of accounts as per the chart furnished by the assessee which have been reproduced at Para 9 of this order and which have been analysed above and which could not be controverted by the learned DR, therefore, in view of the decision of the Hon ble Delhi High Court in the case of SSP Aviation Ltd. (Supra) .....

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the case of SSP Aviation Ltd.(Supra) we hold that the notice issued u/s.153 is a valid notice. However, since the assessee has satisfactorily explained that entries found in the seized documents are reflected in the regular books of account, further proceedings u/s.153C will have to be closed and no further addition can be made by making roving and fishing enquiries since the assessee cannot be put to undue harassment. Since the assessee succeeds on this preliminary issue we refrain ourselves f .....

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