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2018 (1) TMI 391

t’s belief is that some material found during the course of search in Aryan Sainik Group of cases. The A.O. on examining the books of account of the assessee-company found that assessee has received share application money of ₹ 1.25 crores in assessment year under appeal which were already disclosed to the Revenue Department prior to the date of search. Therefore, its books of account could not be treated as incriminating material against the assessee-company. No evidence was found during the course of search that any money (cash credit) belongs to the assessee- company. - No evidence was found during the course of search or otherwise to prove that assessee-company has received any accommodation entry. The A.O. has not referred to any seized document or material in the assessment order on the basis of which, addition on merit have been made. Therefore, the conditions of Section 153C are not satisfied in this case. Therefore, there were no justification for the A.O. to make addition of ₹ 1.25 crores against the assessee in proceeding under section 153C of the I.T. Act, 1961. We, accordingly, set aside the orders of the authorities below and quash the proceedings und .....

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e in the cross objection supported the order of the Ld. CIT(A) in deleting the addition as well as raised the issue that since no incriminating material was found during the course of search and no material was recovered during the course of search and original assessment had been completed, therefore, no addition is warranted as per the decision of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla 61 taxmann.com 412. The assessee filed cross objection and also raised an additional ground which reads as under: That the impugned proceedings u/s. 153C of the Act initiated by the A.O. being devoid of any incriminating material in terms of the recent decision of the Hon ble Apex Court dated 29.08.2017 in the case of CIT vs. Sinhgad Technical Education Society, (2017) Tax Pub (DT) 3941 84 taxmann.com 290 (SC), is bad in law. 5. Learned Counsel for the Assessee submitted that search was conducted in Aryan Sainik Group of cases and assessee- company was not subjected to search. The A.O. made addition on account of unexplained cash credit, under section 68 of the I.T. Act , which are recorded in the books of account of the assessee-company. He submitted that since no incrimi .....

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re issuing notice under section 153C of the I.T. Act, the primary condition that has to be fulfilled is that the money, bullion, documents etc., seized should belong to such other person. If this condition is not satisfied, no proceedings could be taken under section 153C of the I.T. Act. 8.2. In the present case, it is an admitted fact that since no search was conducted in the case of the assessee-company and the A.O. proceeded to make assessment under section 153C of the I.T. Act against the assessee-company and made the addition on the basis of the entries contained in the books of account of the assessee- company considered at assessment stage, it would have to be seen whether Revenue has brought on record any material to prove that any incriminating material found during the course of search belongs to the assessee-company or that whether A.O. is able to satisfy the conditions of Section 153C of the I.T. Act, in the present case. The additional ground is legal in nature and all the relevant facts and material are available in the orders of the authorities below and on record. The additional ground being legal in nature and goes to the route of the matter, therefore, it should .....

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for the purpose of hearing and disposal of appeal. 9. The Hon ble Gujrat High Court in the case of Vijaybhai N. Chandrani vs. ACIT (2011) 333 ITR 436 (Guj.) held as under : Sections 153A, 153B and 153C of the Income-tax Act, 1961, lay down a scheme for assessment in case of search and requisition. Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer was satisfied that any undisclosed income belongs to any person, other than the person with respect to whom se .....

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hese amounts should not be treated as unexplained expenditure under section 69C of the Act, since the assessee did not provide any explanation with regard to the documents seized under section 132 of the Act for the assessment years from 2003 to 2009 and 2009-10. The assessment order was passed and the additions were made. The unexplained expenditure was apportioned to all the land companies floated by the JC- group. The Tribunal held that an entry in the hooks of account maintained in the regular course of business is relevant for the purpose of considering the nature and impact of a transaction, but notings on slips of paper or loose sheets of paper were required to be supported or corroborated by other evidence. There was a distinction between loose papers found from the possession of the assessee and similar documents found from a third person. The documents were not found from the possession of the assessee but from the possession of a third person i.e., D. Mere mention of the names of the villages where the companies might have purchased lands would not give any basis to assume, presume or surmise that the names of the companies were mentioned in the documents. The Tribunal s .....

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t case that the material belongs to any person other than the person with respect to whom search was made under section 132. Department did not produce any material to show if any such satisfaction as required under section 153C was recorded by the Assessing Officer in the case of person searched. No material is produced in reference to above requirement. • No material is also produced before to show that books of account or documents or assets seized had been handed over to the Assessing Officer having jurisdiction over such other person. In the absence of any adequate material produced by the department contention of the assessee was justified that in this case, the Assessing Officer had not recorded any satisfaction that any seized document or material belongs to any person other person searched. • Since the revenue is in appeal, therefore, burden was upon them to prove that necessary ingredients of section 153C have been complied with in this case before invoking jurisdiction under section 153C. • It is added further here that the Assessing Officer has not referred to any seized document or material in the assessment orders on the basis of which, additions on mer .....

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