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M/s. SCL Infratech Limited Versus Dy. CIT, Central Circle-2, Hyderabad

2017 (12) TMI 256 - ITAT HYDERABAD

Reopening of assessment - no payment was made by the assessee-company during the previous year - loose sheet obtained in the residential premises - Held that:- 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 commen .....

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MI 934 - GUJARAT HIGH COURT ) - Decided in favour of assessee. - ITA No. 641/Hyd/2013 - 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 hearin .....

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ng 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. 2003-2004, a notice was issued to assessee-company by taking prior approval of CIT (Central). 3. In response to the said notice, assessee-company contended that the said papers having been found in the course of search at the residence of MD, assessment cann .....

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d as A/DVN/5 , there were certain financial transactions showing payments, both in cash and cheque, out of which there was a payment of ₹ 1 Cr in cash prior to 31.3.2003. In the assessment order the said document was reproduced to highlight that a cash payment is recorded prior to 26.03.2003 in Shri Venkat Akkinani s account. Shri D.V. Naidu, MD of assessee-company, has stated on oath that the entire document belongs to the financial transaction i.e., payment made to Shri Venkat Akkineni t .....

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enkat Akkineni with whom assessee-company finalized the sale transaction. As per the revised agreement of sale the rate was fixed at ₹ 1,400/- per sq ft. The MD submitted that he does not have any details regarding the source with regard to payment of cash of ₹ 10 lakhs on 18.05.2004 and accordingly agreed to offer it as additional income for FY 2004-05. With regard to noting of cash of ₹ 1 Cr it was admitted that it pertains to a period on or before 26.03.2002. 4. Since Shri D .....

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ings 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 assessme .....

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w since the proceedings were initiated consequent to search and seizure operation at the residential premises of MD of assessee-company. It was also contended that proper course of action is to issue a notice u/s 153 of the Income Tax Act, 1961, as the assessee would come within the ambit of definition of any other person . In other words, the plea of assessee was that A.O. ought to have passed on the information to the jurisdictional A.O., if assessee was not a part of the search proceedings an .....

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riod of six years, as prescribed u/s 153A of the Act. A.O. having noticed that assessee did not truly and fully disclose the particulars of such on money in the return of income, a notice was issued u/s 148 of the Act for A.Y. 2003-04 and thus it was very much within law. 9. The next contention of assessee was once the provisions of section 153A of the Act are invoked, no recourse can be taken to the provisions of section 147 of the Act. In this regard, Ld. CIT(A) observed that as per provisions .....

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preceding AYs. He thus concluded that reopening of assessment is in accordance with law. 10. With regard to addition made by A.O., assessee contended that that there is no indication that the payment was made during 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 .....

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d 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 same is not a registered document. Likewise, even the Agreement of Sale dated 19.1.2004 betwe .....

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out of the total consideration were paid by the appellant company through Pay Order and Cheque. Therefore, I am of the view that there is no merit in the contention of the appellant that the document and the notings therein do not pertain to the appellant-company. 11. It was also highlighted that majority of the entries in the seized document were admitted as correct and thus the remaining part should also be treated as true and correct and it was incumbent on the assessee to explain entry of & .....

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f ₹ 1 Cr took place during the assessment year 2003-2004. He thus confirmed the action of A.O. Further aggrieved, assessee is in appeal before the Tribunal. 12. Ld Counsel for the assessee submitted that the search proceedings were initiated on 18.11.2009 whereas assessment sought to be reopened is for A.Y. 2003-04 overlooking the fact that u/ss 153A to 153C of the Act the Assessing Officer is competent to make assessments for 6 years prior to the date of search. In other words, notice iss .....

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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 .....

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tilised for forming a belief that there was escapement of income, chargeable to tax, and the subsequent reasons would not make the proceedings valid. 13. On merits, it was submitted that the loose paper was found in the premises of Shri D.V. Naidu, Managing Director of the assessee-company, and it was seized and placed on record as DVN , indicating D.V. Naidu . Thus it cannot be treated as document found in the premises of the assessee-company. Even during the course of examination of Shri D.V. .....

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ion with regard to the source of ₹ 1 Cr, and whether it was an amount paid by the Managing Director from his individual source or the amount was paid by the company. Thus if at all it has to be added, it would have been added in the individual hands. Thus Revenue failed in proving that a sum of ₹ 1 Cr was actually paid by the assessee-company. Reliance was placed upon the decision of the ITAT, B Bench, Hyderabad in the case of G. Mahesh Babu vs. DCIT (ITA Nos. 256/Hyd/2015 and batch, .....

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g of assessment, the Bench wanted to verify the assessment record but the Ld DR did not obtain the assessment record though as per the CBDT directions it is the duty of the Assessing Officer to forward a note and assessment record and equally it is the duty of the Ld DR to obtain the assessment record, particularly when it pertains to factual verification of certain details such as the name under which the search and seizure proceedings were initiated, the relevance of DVN in the sworn statement .....

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nd 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 r .....

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Akkineni in cash and a statement of Managing Director of the assessee-company shows that he has accepted that payment of ₹ 1 Cr pertains to the period on or before 26.03.2003. In fact, the Managing Director accepted that the cash payment shown on 18.04.2004 for a sum of ₹ 10 lakhs, as per the same seized document, was offered to tax as additional income in the hands of his son. He also submitted that the initiation of proceedings u/s 148 of the Act with respect to an assessment year .....

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the Act. 17. The Bench wanted to know as to whether the sum of ₹ 10 lakhs was offered in the individual hands of Shri Srinivas and whether it is accepted as such, and similarly whether the sum of ₹ 1 Cr was paid by the company or by any other person, and if it is paid by the Managing Director or someone else on behalf of the assessee-company, whether any proceedings were initiated therein. No such evidence could be brought on record and at the cost of repetition it may be stated that .....

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