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TMI Blog2018 (1) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... before notice u/s 153C was issued. 4. On the facts and in the circumstances of the case, Ld.CIT (A) has erred by not giving a finding on the merits of the case." 3. Facts for Assessment Year 2004-05 are taken as the same is lead matter. As per the assessment order, there was a search u/s 132 of the Income Tax Act 1961, at the premises of Mr. Dinesh Kaushal who was CFO of Tulip Telecom Ltd. as part of search & seizure operation in the Tulip Telecom group on 25/09/2009. At the said residence of Mr. Kaushal, an agreement to sell dated 05/09/2006 between the assessee (Seller) and Mr. Kaushal (purchaser) was found and seized. The AO initiated the proceedings u/s 153C against the assessee. In the assessment order, the AO noted that he had issued notice u/s 153C on 29/04/2010 and there was no compliance to the said notice. The A.O issued questionnaire u/s 142(1) on 8/12/2011 and followed with a letter dated 13/12/2011 giving final opportunity. On the appointed date (21/12/2011) the AR of the assessee submitted a written reply which was quoted by the AO at para 3 of assessment order. In the said reply the AR submitted the A.O noted in the assessment order that the AR's contentions abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO of the person in whose hands the document was originally seized and there is presumption that it belongs to the said person. As per practice prevalent in the income tax department, AO would not write name of his assessee on the order-sheet because the said order-sheet would in any case remain in assessment folder of the assessee. However, in the present case, on the sheet recording 'Satisfaction Note', the name of M/s Glensdale Enterprise Development Pvt. Ltd. is recorded on the top(just below the heading 'Satifcation Note') which clearly indicate that it is not written by the AO of M/s. Glensdale Enterprise Development Pvt. Ltd. Since AO of searched person would be required to write such 'Satisfaction Note' in more than one case, therefore, the name of each 'other person' would be indicated on top of the paper to easy reference in future. The Satisfaction Note says, " As such Notices are being issued to M/s Glensdale Enterprise Development Pvt. Ltd. in accordance with the provisions of section 153A as laid down under section 153C ... It does not say , " Notices issued...". It clearly shows that the capacity of the officer recording the 'Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09-2009 9162091260909 Pending The Ld. AR further submitted that the satisfaction note dated 02.09.2011 is not in accordance with the satisfaction as contemplated u/s 153C of the IT Act. The very agreement dated 05.09.2006 basically belongs to Dinesh Kaushal itself. Dinesh Kaushal did not disclaim the ownership of that very agreement. Hence the same cannot be said and imagined to be belonging to the assessee and the satisfaction note as prepared by the Revenue is not proper in terms of provision of Section 153C of the IT Act and accordingly the assumption of jurisdiction as made by the AO is illegal. The Ld. AR relied upon the decision of the Hon'ble Delhi High Court in case of Pepsico India Holding Pvt. Ltd Vs. ACIT 370 ITR 295. The Ld. AR submitted the important dates as under:- "Date of search on Dinesh Kaushal Date of recording of satisfaction 24.09.2009 U/s 153C of the IT Act 02.09.2011 As per the first proviso to Section 153C of the IT Act, date of search would be the date of receiving the documents by the AO of the third person, i.e. the assessee. Hence in the instant case, the date of search is 02.09.2011. The Ld.AR relied upon the Hon'ble CIT vs. RRJ Securities Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he list of additions received from his customers and details like confirmations from such parties and verifications by the assessee was asked by the Assessing Officer which is a normal assessment proceedings. There is a finding given by the CIT(A) that all these additions added by the Assessing Officer are that of the sale consideration received as advance by the assessee. The assessee is following project completion method and the advances was properly taken in profit and loss amount during the previous year relevant to the Assessment Year 2010-11. The proceedings u/s 153 C were initiated because of the agreement to sale found at the residence of CFO of Tulip Telecom Ltd. The A.O has not mentioned that the agreement reflects that there was any unaccounted transaction or unaccounted payments/receipts the business activities of the assessee in-fact was confirmed by the said agreement and all the documents were before the Assessing Officer during the regular assessment proceedings. Thus, there was no incriminating material or document found in respect of Section 153C proceedings. The Ld. DR's contentions that it is an established practice of the Income Tax Department that not everyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the advances from Mr. Kaushal stood |explained. The relevant paragraph 6 on page 2 out of the assessment order on this aspect is reproduced below: 6. ......... However it is pertinent to mention here that in the case of the assessee company an action under section 153C was taken on the basis of an agreement found and seized from the premises of one Sri Dinesh Kaushal in the course of search in which it was noticed that in November 2006 he had paid an amount of Rs. 56,00,000/- to the assessee company on account of advance for purchase of property. As per details available, the Amount advanced is reflected in the books of the assessee company!) therefore out of the total amount of Rs. 1,55,10,762/- .amount of Rs. 56,00,000/- is considered as explained and for the balance amount, it is considered that the assessee company has not been able to discharge its onus to prove the credits appearing in its books of accounts, " 3.6.3. The proceedings under section 153C were initiated because of the agreement to sell found at the residence of CFO of Tulip telecom Ltd. As per the agreement the appellant company undertook sell a piece of land along with residential house at ' Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilent about the reason for initiating such proceedings. In the satisfaction note' the AO states that the document "also" belongs to "M/s Glensdale Enterprises Development private limited." It is noted that for initiating proceedings under section 153C the AO is required to be satisfied with the fact that a particular document belongs to some other person than the person in whose case search has taken place. There is already much debate on the issue as to what is the meaning of the word "belong" given in S.153C of the Act. However, the section does not appear to be meant for the cases where the document "also belongs to" some other person. Further, by this logic it should appear that the document belonged to the person who was searched and then it also belonged to another person who was not searched. In such a case, there must be some undisclosed income in the hands of the searched person. No such finding is there in the assessment order of the person searched. The section does not talk about the dual ownership of the document: The satisfaction of the AO that the document also belongs to the appellant" cannot be a proper satisfaction for issuing notice under section 153C. By not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order u/s 153A as per the original assessment whether u/s 143(1) or 143(3). All the three decision cited above have taken into account the decision of the Hon'ble High Court of Delhi in the case of CIT VS Anil Kumar Bhatia (2012) 211 Taxman 453 (Del) and the decision of special bench of Hon'ble ITAT in the case of Allcargo Global Logistics Ltd. (Supra). 3.6.7. Considering the above factors it has to be held that the proceedings under section 153C have been wrongly invoked and the proceedings are'void ab-initio. Therefore the order is hereby held to be void ab-initio for- incorrect assumption of jurisdiction u/s 153C of the IT Act 1961. 3.6.8. As regards the appellant's request for admission of additional evidences is concerned, I'm of the view that even though the AO issued notice under section 153C of the act on 02/09/2011 as reported by the AO in the remand report, there appears to be some typographical error in mentioning the notice under section 153C as dated 29.04.2010 in the assessment order. Irrespective of that, it is noted that the AO has asked the appellant to lead evidences with regard to advances received from customers only in the middle of December. 2011 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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