Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2012 (9) TMI 979

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 these appeals, therefore, these were heard together and are being disposed of by this common order. ITA No. 1586/PN/2011 (A.Y. 2000-01) (By Assessee) : ITA No. 1606/PN/2011 (A.Y. 2000-01) (By Revenue) : 2. The assessee is a charitable trust and running various educational institutions. It came into existence on 27-12-1990 and was granted registration u/s.12A of the Income Tax Act from the CIT, Kolhapur on 25-11-1991. The assessee is engaged in running of educational institutions. A search and seizure 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 docu .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... hthan. iv. Item No. 57, Page No. 16 to 20 are receipts against the payment to matured fixed deposit amounts to Dr. D.Y. Patil Education Society and Dr. D.Y. Patil Pratishthan by Padmashree Dr. D.Y. Patil Nagari Sah. Pat Sanstha Ltd. Further, during the search and seizure action at residential premises of Shri D.Y. Patil, Shri Sanjay D. Patil and Shri Satej D. Patil at Flat No. 10, Gulmohar 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/- respectively. iii. Page Nos. 11 14 are copies of debit vouchers dated 12-09-2001 of Dr. D.Y. Patil Pratishthan C/o. D.Y. Patil College of Engineering, Pimpri, Pune 411018 connected with the D.Ds at Pages 9 10. Amount has been paid to the Karad Janata Sahakari Bank Ltd., Karad payable at .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... td. 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.Y. Patil Pratishthan has given an advance of ₹ 20 lacs prior to 31-01-2003 and of ₹ 15 lacs prior to 30-11-2003. The bills have been adjusted from these advances. Item No. 5 of Annexure A to the Panchanama is a file containing papers related to purchase of property by Dr. D.Y. Patil Pratishthan vide deed of assignment dated 30-09- 2000 in respect of property at Flat No. 8, Gulmohar Palace Co-op Hsg. Society Ltd., Koregaon Park, Pune, Area -87 Sq. mtrs. Consideration ₹ 16,50,000/- 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., 200 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... otal income at ₹ 4,29,51,970/- by making various additions, the details of which are as under : Income as per P L account shown by the assessee -7688529.06 1 Disallowance u/s.37(1)-(C) 2532097.00 2 Payment to persons u/s.40A(2)(b)/13 (1)(3)-(E) 3592081.53 3 Trust 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 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 15 (Kol)] wherein it has been held that only undisclosed income detected as a result of search can be added u/s.153C and not the items of regular assessment . 6. The assessee in its further submission dated 02-05-2011 while challenging the initiation 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 satisfaction note, the documents found pertaining to the assessee are all recorded in the books and they are not incriminating evidence. We are enclosed herewith to indicate that the various documents found in the course of search are properly recorded in the books. Thus, it is submitted that the notice issued u/s.153C for the above years is not justified at all. In this context, Your Honour s kind attention is invited to section 153 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 otherwise on merit also he dismissed the ground raised by the assessee and held that provisions of section 153C r.w.s.153A refers to material seized during the search. There is nothing in section153A or 153C which prescribes that incriminating material should be found in the search and seizure operation. He noted that it is an undisputed fact that during the course of search certain documents belonging to the assessee were found at the various premises belonging to the trustees of the assessee firm. 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 valua .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... provisions of sections 11 to 13 and consequently, the income of the appellant was taxable under the normal provisions of the Act. 4. The 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 1,52,550.00 3 Payment of Audit Fee to M/s. R.D. Patil Co. 7,48,000.00 5.1 The learned CIT(A) erred in holding that 50% of the advertisement expenses resulted in image building of the trustees and thereby the appellant had granted a personal benefit to the trustees resulting in violation of section 13(1)( .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... y the assessee from the students as per the circulars 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 were not supported by proper evidences. 9.1 The learned CIT(A) failed to appreciate that the disallowance of such expenses was not warranted since most of the expenses were paid by cheque and incurred for the objects of the trust, 10. The learned CIT(A) erred in confirming the disallowance of depreciation on the capital expenditure of ₹ 6,47,388/- on the ground that the said capital expenses were not supported by proper evidences. 10.1 The learned CIT(A) failed to appreciate that the disallowance of depreciation in respect of such capital expenses was not warranted since most of the capital expenses were paid b .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the proportionate disallowance of ₹ 53,336/- from out of interest to financial institutions debited by the assessee holding that assessee s own funds are much more than the funds advanced to sister concern without appreciating the fact that assessee s own funds and borrowed funds are part of common pool of funds and assessee s own funds are not in liquid form and are infact locked as investment in building, 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. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ve Act, Rule, Order or Notification governing such funds is erroneous and contrary to provisions of Income tax Act, 1961? (iv) Whether the decision of ITAT ignoring the fact that the amendment to section 43B is applicable only to employer s contribution and not to employee s contribution is bad in law? (v) Whether on the facts and in the circumstances 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. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing maintenance expenses of flats at Gulmohar Society when the said flats were used exclusively by the founder of the Trust violating the provisions of sec. 13(1)(c) of the Act. 10. The Appellant prays that the order of the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 1 66 of PB NO 3 2 b) 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, 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 duly recorded in books of accounts of Kolhapur Division. The photocopy of Bank statement and photocopy of ledger extract showing the transaction of this A/C No. 333 in the books of Dr. D. Y. Patil Pratishthan, Kolhapur Division is enclosed at page no.1 to 11. 1 to 11 343 to 353 of PB 2 to 5 67 to 70 of PB NO 4 2 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 7 a) Item No.1 Annexure 'A' to the Panchanama made at above premises, is a file containing some loose papers pertaining to Dr. D. Y. Patil Pratishthan - 8 * Page No. 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/- 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 Pratishthan, Pune Division. The photocopy of ledger extract of Karad Janata Sah. Bank Ale 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. 17 to 18. 17 to 18 359 to 360 of PB 25 to 26 90 to 91 of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... f A/c.No.50/779 of Rupee Co-op. Bank Ltd., Chinchwad Branch, Pune, drawn in favour of Cube Power Care (P) Ltd., by Dr. D.Y. Patil Pratishthan amounting to ₹ 2,45,000/-. 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, Pune Division are enclosed at page no. 19 20 19 to 20 361 to 362 of PB 30 95 of PB NO 12 * Pages 24A is a copy of letter dt. 01-07-2001 from the Karad Janta Sahakari bank Ltd., Karad, Mumbai Branch to Dr. D.Y. Patil Pratishthan, Mumbai Pune intimating for payment of outstanding interest on loan taken vide hire purchase loan A/c. No. 98. The interest upto 30-06- .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... f interest and principal. The payment of interest along with principal is duly recorded in the books 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 the payment of ₹ 22,812/- received from D.Y. Patil Pratishthan against invoice No. 2100322 2100424. 2001-02 YES This seized paper no. 32 is photocopy of receipt received from Concorde Motors Ltd. 46/9, Vadgaon Sheri, Kharadi Road, off Pune-Nagar Road, Pune-14 for the payment of ₹ 22,8121 received from D. Y. Patil Pratishthan against invoice No. 2100322 2100424. This payment 24 to 34 of ₹ 22,812/- dated 22.11.2001 i .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... an 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 made on 13.02.2001 and payment of ₹ 12,00,0001- is made on 08.03.2001. Copy of ledger account extract is enclosed at page no. 37 to 38. 37 to 38 379 to 380 of PB 36 101 to 132 of PB The cost of the flat has been recorded in the books and no addition has been made by the AO on account of the cost. However, the AO has presumed that the said flat is used for the personal purpose of the trustees and disallowed the maintenance and depreciation expenditure related to the said flat. It is submitted 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 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ent 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 and the consideration paid of ₹ 4.25 Lacs is duly accounted in the books of Dr. D. Y. Patil Pratishthan. The payment of ₹ 4,25,000/- was made on 06.08.2000. Copy of ledger account extract is enclosed at page no. 37 to 38 41 37 to 38 41 379 to 380 383 of PB 38 173 to 313 of PB Same comment as in Sr.No.17 20 3 e) Item NO.6 of Annexure 'A' to the Panchanama is a loose paper bundle containing following papers related to Dr. D. Y. Patil Pratishthan:- 21 * Page 1 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 petro .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 H.A. Ltd., Pimpri, Pune. 2000-01 YES This seized page no. 15 is regarding the use of chartered flight by Dr. D. Y. Patil. This bill is amounting to ₹ 30,595/- dated 15.07.2000 of Taneja Aerospace and Aviation Ltd. This bill along with other bills for the FY. 2000-01 of Taneja Aerospace and Aviation Ltd. are duly 49 to 54 recorded in the books of account of Dr. D. Y. 45 Patil Pratishthan, Pune Division under the head of Travelling Conveyance A/C. The photocopy of Ledger Extract of Taneja 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, Pun .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d party found from the party searched are not incriminating in nature, the initiation of proceedings u/s.153C is not valid : 1. Sinhagad Technical Education Society [ITA No. 114 to 117/10] ITAT, Pune. 2. Bharati Vidyapeeth Vs. ACIT [ITA Nos. 917 to 922/PN/2010 ITA Nos.1028 to 1033/PN/10] ITAT, Pune. 3. Parangtao Kadam Pratshthan Vs. DCIT [ ITA Nos.283 to 288/PN/11]. Referring to the decision of 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 Special Bench of the Tribunal in the case of Al Cargo Global Logistics Ltd. Vs. DCIT vide ITA No. 5108 to 5022 and 5059/M/2010 order dated 06-7-2012 for A.Ys 2004-05 to 2009- 10. 13. The learned DR on the other hand heavily relied on the order of the learned CIT(A). He submitted that .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 Court cited (Supra). He accordingly submitted that the order of the CIT(A) on this issue be upheld. 16. The learned counsel for the assessee in his rejoinder submitted that according to the provisions of section 292B return of income, assessment, notice, summons or other proceedings furnished or made or issued or taken or purported to have been furnished or made shall not be invalid merely by reason of any mistake, defect or omission in such return of income assessment, notice, summons etc. The issue 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 inst .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ion of proceedings u/s.153C is not valid. Therefore, this is a covered matter in favour of the assessee and against the revenue. Accordingly, the notice issued u/s.153C has to be held as invalid and the subsequent proceedings made thereafter are also to be 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 another person during a search. However, according to the said decision if the returns filed by the other person for the period of 6 years show that the income reflected in the documents has been accounted for then the proceedings will have to be closed and no further addition can be made. For this proposition the learned counsel for the assessee drew the attention of the Bench to para 14 to 17 of the order. 22. We have considered the r .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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 is given in the following paragraphs of this order. 8. Additional Ground: Invalid Notices U/s 153C: In this regard, we have perused the reasons recorded by the AO of the assessee. We find that there exists the reasons for issue of notice u/s 153C of the Act and it is an undisputed fact. We also find that they are common reasons for all six AYs including the four AYs under consideration. The Counsel for the assessee argued vehemently that AO issued notices u/s 153C simply relying on the contents 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 empowered under the statute t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ey relate to the impugned four AYs. In such circumstances, the AO not only assumed jurisdiction invalidly but also 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 the satisfaction within the meaning of section 153C of the act. Considering the divergent views of the parties, we have 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 narrated some information against the Mr Navale HUF, which is not releva .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nd the much hazzled taxpayers. In the instant case, provisions of section 153C are invoked merely to apply the provisions of section 45(4) in this year, the issue which was already examined and concluded as inapplicable to the facts of the case. Such issue of notice is unwarranted and such reopening of the assessment for the AY 2000-01 is uncalled for. 26. Therefore, the proceedings initiated u/s 153C is not valid in view of the decision in the case of LMJ International (supra). Under these circumstances, we are of the opinion, 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 of the law based on the decision of the Tribunal in the case of LMJ International (supra) that the issue of notice under the provisions of the first proviso to s .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... o 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 pending on the date of action under s. 153C, such assessments do not abate. 4) LMJ International Ltd. (2008) 119 TTJ (Kol) 214 Conclusion:- 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 regular assessment cannot be added back in the proceedings under s. 153C when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. 5) Kailash Auto Finance 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 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... of the assessee, we are of the considered opinion the adjudication of the grounds relating to the merits of the additions is merely an academic exercise. Therefore, the relevant grounds in all the four appeals are dismissed as academic. 24. Similarly, we find the Pune Bench of the Tribunal in the case of Bharati Vidyapeeth Medical Foundation (Supra) has held as under : 20. In the instant case as expressively mentioned 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 the process, revenue ignored various settled legal propositions on the subject. The said propositions are that the concluded assessments, which fall in the bunch of six AY should not be disturbed unless there exists AY specific incriminating material relevant for each of the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s 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 in the case of Sinhgad Technical Education Society (supra) apply to the issue in these appeals mutatis mutandis. In other words, the views approved by this bench in the case of Sinhgad Technical Education Society (supra) and Kumar Company (supra) are affirmed by the said Judgment of the Gujarat High Court in the case of Vijaybhai N Chandani 231CTR 474 (Guj) and mere appearance of names does not mean anything as section 153C of the Act is intended for taxing the undisclosed income of the third party 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 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d of recent decisions, which are actually decided in the context of the provisions of section 153A of the Act and on the issue of the meaning of belong . None of them are on the issue discussed herein. In our opinion, this kind of approach of the Income Tax 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 notice automatically in respect of the six AYs specified in the proviso to section 153C(1) of the Act on the basis of any and every accounted but seized documents. Accordingly, the legal issues raised by the assessee in all these six appeal relating to the validity of the notices u/s.153C for the AYs 2000-01 to 2005-06 are decided in favour of the assessee. Therefore, ground 1 with its sub grounds is allowed. 13. Since the prelimin .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall 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 th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... hat even closed assessments for six years could be reopened and this requirement postulates that the provisions of 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 accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under Section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... efrain ourselves from adjudicating the other grounds by the assessee as well as the revenue on merit. 28. In the result, the appeal filed by the assessee is allowed and the appeal filed by the revenue is dismissed. ITA Nos. 1587/PN/2011 to 1591/PN/2011 (A.Ys.2001-02 to 2005-06) and ITA Nos.1607/PN/2011 to 1611/PN/2011 (A.Y.s 2001-02 to 2005-06) : 29. After hearing both the sides we find no addition has been made on the basis of entries in the documents seized during the course of search u/s.132 in the premises of the trustees and no search has taken place in the case of the assessee. The entries in the documents seized have been duly reflected in the books of account maintained by the assessee and no addition has been made by the AO on the basis of the documents seized as per the chart filed by the assessee. We have already decided the appeal in ITA No. 1586/PN/2011 for A.Y. 2000-01 filed by the assessee by holding that although the notice issued u/s.153C is a valid notice, however, when the assessee explains to the satisfaction of the AO that entries in the documents found and seized have already been entered in the regular books of account and no addition has been made o .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates