TMI Blog2017 (12) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 - - - Dated:- 30-11-2017 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri A. Srinivas For The Revenue : Shri Rajeev Benjwal, DR ORDER PER D. MANMOHAN, VP: This appeal is filed at the instance of assessee-company and it is directed against order passed by Ld. CIT(A)-I, Hyderabad. Though the assessee-company has raised six grounds before us, at the time of hearing Ld Counsel for the assessee did not press Ground no.2; Grounds no. 1 and 6 are general in nature. We therefore reject those Grounds and proceed to consider Grounds no.2 to 5. 2. Assessee-company is engaged in infrastructure development projects. For the year under consideration, original assessment was completed on a total income of ₹ 2,08,20,880/-. However, consequent to search and seizure operation on the premises of Managing Director (MD), A.O. sought to reopen the assessment by issuing notice u/s 148 of the Act. It may be noticed that according to Investigation Wing some papers, pertaining to assessee-company, were found at the residence of MD concerning details for purchase of property. Since the matter relates to A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cr having not been explained, the same was added to the total income of assessee-company as unexplained investment . 5. Assessee has raised a technical plea i.e., issuing notice u/s 148 of the Act on the ground that any proceedings consequent to search and seizure operation should be under the provisions of section 153A of the Act and in fact, assessment proceedings u/s 153A having been initiated for A.Ys 2004-05 to 2009-10, reopening of assessment by issuing a notice u/s 148 of the Act for the A.Y. 2004-05 is against the Statute. 6. A.O. observed that the proceedings initiated u/s 148 of the Act is a separate proceeding on the basis of seized material, found and gathered during the course of search, and thus the objection raised by assessee-company was not accepted. In this regard, he also observed that there was a time limit for reopening of assessment and therefore, A.O. had taken prior approval of CIT (Central) to initiate valid re-assessment proceedings. It was reiterated that the document seized clearly reveals that a sum of ₹ 1 Cr was paid prior to 26.03.2003 but the sources having been not explained, the said amount deserves to be treated as unexplained invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the previous year relevant to A.Y. under consideration in which event addition cannot be made. However, Ld. CIT(A) was of the opinion that MD of assessee-company admitted in his sworn statement that the said amount was paid prior to 26.03.2003. There is no dispute with regard to the fact that property has been purchased by assessee-company. Therefore, payment of ₹ 1 Cr recorded in the document pertains to the amount paid by assessee-company and hence, the same deserves to be added. With regard to the claim that the notice does not pertain to assessee-company, Ld. CIT(A) observed as under:- 08.0. I have gone through the facts of the case and the submissions of the appellant. From the assessment order it is seen that it was found in the course of search that the impugned property was purchased by the appellant company, as per the terms and conditions. Though Shri D.V. Naidu in his statement had stated that the payments recorded on page No.13 of Annexure A/DVN/5 related to the payments made to Shri Venkat Akkineni, as per the agreement entered into between him and Shri D. Srinivas on 20.3.2003, it can be seen from the copy of Agreement of sale dated 20.3.2003, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto (pages 3 and 5 of the paper book) and accepted source of investment in which event re-assessment proceedings are bad in law since there is no specific incriminating material found during the course of search. Ld Counsel for the assessee also referred to pages 15, 16 and 19 of the paper book to submit that nowhere it was specified by Shri D.V. Naidu that a sum of ₹ 1 Cr, if any, was paid by the assessee-company. In fact, a sum of ₹ 10 lakhs was admitted as additional income in the hands of Shri D. Srinivas, which was accepted by the Tax Authorities. There is nothing on record to indicate that a sum of ₹ 1 Cr was an undisclosed investment of the assessee-company and in the absence of forming any opinion for reopening assessment, the re-assessment proceedings are bad in law in the light of the decision of the Hon ble Gujarat High Court in the case of Varshaben Sanatbhai Patel vs. ITO (282 CTR 75) wherein the Court observed that for the purpose of reopening of assessment the A.O. cannot place reliance upon the material from an external source which does not form part of the record and it was further observed that a statement given before the DGIT (Inv.) cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name under which the search and seizure proceedings were initiated, the relevance of DVN in the sworn statement obtained from the Managing Director of the assessee-company whether it is the document seized in the individual capacity of the Managing Director or for and on behalf of the assessee-company and also to verify further details. 15. The case was adjourned from time to time since 2013. The record indicates that the case was adjourned on several occasions at the request of either the assessee or the Revenue and in fact on 20.06.2016 the Departmental Representative sought adjournment on the ground that he would like to file the evidence connecting to documents. The assessment record was not available to oppose the claim of the Ld Counsel for the assessee with regard to search and seizure proceedings. The fact remains that there is no report from the Assessing Officer, no Panchanama on record and it is not known as to whether the seizure is in the name of M/s. SCL Infratech Ltd., or search and seizure was conducted in the name of Managing Director of the assessee-company. Ld DR merely relied upon page 4 of the assessment order to submit that the search might have taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment year under consideration. The loose sheet was obtained in the residential premises of Shri D.V. Naidu which does not indicate that the assessee-company made a payment of ₹ 1 Cr. In fact in the same sheet another sum of ₹ 10 lakhs was shown to have been paid to the seller, but it was offered to tax in the hands of Shri D. Srinivas and neither any comment was made by the Assessing Officer in that regard nor added in the hands of the assessee-company, which is an indication that the figures mentioned in the loose sheet need not automatically be treated as undisclosed income of the assessee. In other words, it cannot be treated as an incriminating material so as to initiate proceedings u/s 148 of the Act in the hands of the assessee, as rightly pointed by the Hon ble Gujarat High Court in the case of Varshaben Sanatbhai Patel vs. ITO (282 CTR 75). Decision of the ITAT B Bench, Hyderabad also, in a way, supports the stand of the assessee. Having regard to the circumstances of the case, we are of the view that there is no incriminating material in the possession of the Assessing Officer to reopen the assessment originally completed u/s 143(3) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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