TMI Blog2019 (5) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be the basis for initiating action u/s 153C which admittedly, are relation to the determination of undisclosed income / property in the hands of such other person. Accordingly, we hold so. Addition of gift - Coming to the facts of present case, search u/s 132 was conducted on the premises of Ashoka group of cases on 20.04.2010 the alleged undisclosed income was on account of gift deed which was executed on 02.02.2010 i.e. relevant for financial year 2009-10, which is the year before the year of search. Since the search took place in April, 2010, on the basis of copy of such gift deed, which is one time transaction, there is no merit in initiating proceedings u/s 153C starting from assessment year 2005-06 onwards. No such gift deed was found for those years - as perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to inflated expenses, if any. there is no specific doubt over the correctness of expenses claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft deed found in search action with the donors that cannot be said to be belonging to appellant. Therefore, it is prayed to hold that the assessment proceedings initiated by issue of such Notice u/s 153C and the consequent assessment order passed u/s 153C were both bad in law. 2. The learned CIT(A) erred in disallowing various expenses @ adhoc 5%. It is prayed to cancel the disallowance. 4. The assessee has also raised additional grounds of appeal. 5. The assessee is aggrieved by exercise of jurisdiction by the Assessing Officer under section 153C of the Act, wherein vide ground of appeal No.1 the assessee has challenged notice issued under section 153C of the Act as not correct and hence, the consequent assessment order passed being bad in law. Vide ground of appeal No.2, the assessee has challenged disallowance of various expenses on adhoc basis @ 5%. The assessee has also raised additional grounds of appeal. 6. The learned Authorized Representative for the assessee at the outset pointed out that the issue which needs to be addressed as to when the proceedings can be initiated under section 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no question of initiating proceedings under section 153C of the Act. 8. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the decisions of the Hon ble High Court of Gujarat in Rajesh Sunderdas Vaswani Vs. ACIT (2016) 76 taxmann.com 311 (Guj) and Kamleshbhai Dharamshibhai Patel Vs. CIT (2013) 263 CTR 362 (Guj). 9. We have heard the rival contentions and perused the record. The jurisdictional issue which is raised in the present bunch of appeals is whether the Assessing Officer has correctly invoked the jurisdiction under section 153C of the Act. Briefly, in the facts of the case, search and seizure operation under section 132 of the Act was conducted on Ashoka group of cases on 20.04.2010. The assessee had originally filed the return of income under section 139(1) of the Act on 14.12.2005 showing total loss of ₹ 93,158/-. Notice under section 153C of the Act was issued to assessee on 25.02.2011. The assessee in response, furnished return of income on 31.05.2011 declaring total loss of ₹ 93,158/-. The assessee during the course of assessment proceedings requested the Assessing Officer to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 of the Act from the premises of Ashoka group. Since the gift deed clearly mentions the assessee s name, gift deed was very much related to assessee. As regards its contention that the said gift deed was not incriminating in nature and hence, notice under section 153C of the Act was not valid, the CIT(A) observed that there was no mention of the word incriminating in the provisions of section 153C of the Act. The only triggering factor is the issue of some asset or document belonging or having relation to the assessee, being found. The gift deed clearly established the relationship between the persons searched with the assessee and where the Assessing Officer had followed the procedure laid down in section 153C of the Act, the validity of notice under section 153C of the Act was held to be not tenable. The CIT(A) further held that the Assessing Officer was justified in denying exemption under sections 11 and 12 of the Act for assessment years 2006-07 to 2010-11, since CIT-I, Nashik because of various violations had withdrawn the exemption granted as per order passed under section 12AA(3) of the Act. 11. Coming to ground of disallowance of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, where the Assessing Officer is satisfied that (a) any money, bullion, jewellery or other valuable article or thing seized or requisitioned, belongs to; or (b) any books of account or documents seized or requisitioned pertains or pertained to or any information contained therein relates to, a person other than the person searched under section 153A of the Act, then the books of account or documents or assets seized or requisitioned, shall be handed over to the Assessing Officer having jurisdiction over such other person. It is further provided that the Assessing Officer shall proceed against each such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search was concluded or requisition was made. Under the said section, the first requirement is of the Assessing Officer of incharge of the person searched who would record satisfaction that any money, bullion, jewellery or any valuable article or books of account or documents seized or requisitioned belongs or belonging to a person other than the searched person; then such books of account, documents, assets seized would be handed over to the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en such a document cannot be made the basis for initiating proceedings for about seven years in the hands of the person, on the premise that such a document belongs to him. The provisions of section 153C of the Act are special provisions of determination of income in the hands of assessee consequent to search being conducted on some person under section 132 of the Act. In case, we look at the said provisions of the Act (section 132), search and seizure proceedings are initiated where there is information in the possession of the Officer concerned and there is reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represent either wholly or partly income or property, which has not been or would not be disclosed, for the purpose of income tax, which income shall be referred to as undisclosed income or property . The machinery section thus, talks of undisclosed income which needs to be assessed in the hands of searched person and hence, the start of proceedings by way of search under section 132 of the Act. The assessment proceedings are initiated in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 to 36 of Paper Book-2. First of all, the alleged undisclosed income was on account of gift deed which was executed on 02.02.2010 i.e. relevant for financial year 2009-10, which is the year before the year of search. Since the search took place in April, 2010, on the basis of copy of such gift deed, which is one time transaction, there is no merit in initiating proceedings under section 153C of the Act starting from assessment year 2005-06 onwards. No such gift deed was found for those years. While referring to the decision of CIT(A) in the hands of assessee in the paras above, we have also referred to his observations at page 23 onwards, wherein he has perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group. He also mentioned that the Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to inflated expenses, if any. He mentioned that there is no specific doubt over the correctness of expenses claimed by the assessee trust in various assessment years under reference. In such scen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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