TMI Blog2022 (11) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... leged non-disclosure of the bank account in the return of income, the Assessing Officer has not resorted to proceed u/s 147 / 148 of the Act. In the present case, as mentioned above, a search was carried out in the premises of Ajaz Farooqui, one of the partners of the assessee firm, and his related business concerns and some incriminating material / documents were found and seized. However, the documents so found do not pertain to the years under consideration and therefore, cannot form the basis for making an addition in the hands of assessee under section 153C. From the perusal of the assessment order and the seized material, it is clear that no addition has been made by the Assessing Officer based on the incriminating material. Therefore, the plea of the Revenue that the additions were made on the basis of the seized material is without any basis. Further, we may point out that the Assessing Officer had also examined the return of income filed by the assessee in response to the notice which was duly considered by him and the income already been declared was considered while computing the total income for Rs. 2,25,65,581/-. Thus, the additions made by the AO were not based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) ought to have appreciated that the A.O. erred in passing assessment u/s 153C for AY 2010-11 which is beyond time as provisions of section 153C did not empower the A.O. to make assessment for the A.Ys beyond six years preceding the financial year in which the search was made. 5. The Ld. CIT(A) erred in not adjudicating on addition of Rs. 2,00,09,0001ul s 68 of the IT. Act as unexplained deposits in the assessment order made u/s 153C of the I.T. Act, without fairly appreciating the explanations / clarifications submitted by the appellant. 6. The Ld. CIT (A) ought to have appreciated the fact that the assessee has discharged its primary onus by providing required documents, clearly establishing the source of deposit in bank. 7. The Ld. CIT (A) failed to appreciate that the A.O. erred in passing the order u/s 143(3) r.w.s 153C of the Act dated 14.12.2019 without properly analyzing and appreciating the land procurement Agreements provided. 8. The ld.CIT(A) ought to have appreciated the fact that cash deposits for the Assessment year under consideration represents the amounts received back by the firm as per MOU, advanced by Partner for procurement of Lands, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving any credence to the material seized, post search enquiries made and the enquiries made during the assessment by the assessing officer. 3. The CIT (A) erred in holding that the proceedings u/s 153C were not validly initiated and that the incriminating seized material does not pertain to the A.Y.2011-12. 4. The ld. CIT (Appeal) erred in holding that the bank accounts found during the search were already declared to the Department though the assessee filed a return for assessment year 2011-12 on 24.11.2016, in which the only account number declared is 62343105741 of SBI and not 0446102000010362 of whose cheque book was found and seized during the search. 5. The ld. CIT (Appeal) erred in ignoring the fact that even the bank account number 62116116209 of SBH, in which cash deposits were made, was not declared in the return of income filed for the assessment year concerned. 6. The ld. CIT(Appeal) did not even revert back to the assessing officer to check whether the cheque book found during the search was declared in the return but believed in the plain averments of the assessee which are factually incorrect. 7. The ld. CIT(Appeal) based on wrong f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs.2,00,09,000/- as unexplained cash credits u/s 68 of the Act. Subsequently, initiated penalty proceedings u/s 271(1)(c) for concealment of income on the above addition on account of cash deposits in the bank accounts. Paragraph 33 of the assessment order is reproduced hereinbelow for the completeness of the record. 33.0 Accordingly an amount of Rs 2,00,09,000/- is brought to tax as unexplained cash credits of assessee firm for A.Y. 2011-12 u/s 68 of the provisions of the Income Tax Act. (ADDITION: Rs 2,00,09,000/-) Subject to the above, the assessment is completed as under. After examining the details the total income for the assessment year 2011-12 is computed as under: Income returned = 25,56,581/- MAT Income - Loss - Add : Unexplained income u/s 68 (as discussed above) = 2,00,09,000/- = 2,00,09,000/- Total INCOME ASSESSED = 2,25,65581/- Agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter before ld.CIT(A), who partly allowed the appeal of assessee after examining the material relied upon by the Assessing Officer to record satisfaction for issuance of notice u/s 153C of the Act by holding at Paras 6.1 to 7.0 as under : 6.1 The relevant portion of satisfaction note recorded by the AO of the person referred in Section 153A and that of AO for issuing notice u/s 153C is as under : (Satisfaction of AO of person referred to in section 153A) 5. Specific details of the seized material on the basis of which action under sec.153 is proposed: (f) Annexure/S.No. Page Number etc (Particulars to be specified) i) A/JKD/Res/01 (Cheque books) ii) A/JKD/Res/04 (pen drive) iii) A/JKD/Res/05 (copies of bank account statements and other loose sheets) 7. Satisfaction of the AO of the person referred to in sec.153A that the seized material referred to in s.no.5 belongs to the person referred to in s.no.4 i) During the course of search and seizure operation at the residential premises of Sri. Jayanta Kumar Datta at Flat No.402, GK's Cresce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque books) ii) A/ JKD/ Res/ 04(pen drive) iii) A/ JKD/ Res/ 05 (Sheet No. 14-23) and information contained therein has following contents. a. The assessee firm M/ s. Orbit Ventures which did not file ROI for a.y-20 11-12 but has made cash deposits of Rs.2, 00,09,000/ -. Thus, I (AO) has in possession books of account or other documents or evidence which reveal that the income, represented in the form. of -asset, which has escaped assessment amounts to or is likely to amount. to fifty-lakh. rupees or more in the relevant a.y or in aggregate in the relevant a.yrs. b. The said income has escaped assessment for a.y-2011-12 as assessee did not file ROI. c. The search u/s.132 was conducted on 04.07.2017 i.e after 01.04.2017 6.2. On careful examination of the above satisfaction note recorded, it is seen that the material relied on by the AO to initiate proceedings u/s 153C is: i) A/JKD/Res/01 (Cheque books) ii) A/JKD /Res/04 ( Pen Drive) iii) A/JKD/Res/05 (Sheets 14-23) 6.3 The annexure A/JKD/Res/01 (Cheque Books) was produced before me by the AO. It is seen that the same contains the current cheque books issued by the banks to the 6 different acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de addition. He had drawn our attention to the order of ld.CIT(A), more particularly, Paras 6.1 to 6.3.1 wherein the ld.CIT(A) has wrongly deleted the addition made by the Assessing Officer on the pretext that no incriminating material was found during the course of the search pertaining to the assessment year under consideration. He has sought to distinguish the decision of Hon ble Supreme Court in the case of CIT Vs. Sinhghad Technical Educational Society and also the decision of co-ordinate Bench of the Tribunal in the case of M/s. GVK Enterprises Vs. DCIT in ITA Nos.20 to 25/Hyd/2021 and others dt.21.12.2021. It was the further contention of ld.DR that the decision in the case of M/s. GVK Enterprises (supra) is not applicable as in the said case, assessee had filed the return of income under the Income Declaration Scheme, 2016 on 04.08.2016 and thereafter, the search has taken place on 04.07.2017. It was submitted by the ld.DR that no return of income was filed under the Income Declaration Scheme by the assessee in the present case and therefore, the return of income filed by the assessee on 24.11.2016 is required to be treated as non-est. It was also the contention of ld.DR th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the seized material and holding that there is no incriminating material for issue of notice u/s 153C of the IT Act. The Satisfaction note of the AO dt 18.02.2019 clearly mentions the contents of pendrives which form the basis for issuing notice u/s 153C of the IT Act. It is humbly submitted that during search u/s 132 at the residence of Shri.Jayanth Kumar Dutta, a pendrive marked as Pendrive-1 was seized. A document in the Pen drive was available with the path (Pendrive-1 \:Hpv220w \Pen-D \HBS(tar).docx was available wherein details of deposits and transactions in the SBH bank account No.62116116209 were available. Similar details were also available in Pendrive-2 and Pendrive-3. The bank accounts as well as credits in the bank account and the fixed deposits made thereto were not disclosed. The Ld.CIT(A) has not verified all the documents seized and has deleted the addition basing the grounds filed by the assessee without verifying the facts or the seized documents. A copy of some of the extracts of the documents from pendrives seized is submitted along with these submissions which clearly indicate the basis for issuing notice u/s 153C of the I.T Act. 3.The case-law relied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 4. The above words in the Section 153C show that the intent of the legislation is to bring out undisclosed income of any other person wherein the documents or material was seized from the searched person as the material seized has bearing on the determination of total income of such other person for the six preceding AYs and relevant assessment years referred to in sub-section (1) of Section 153A. 5. As mentioned above, all the bank accounts were not disclosed in the Rol filed. These deposits in the bank accounts definitelyhada bearing on the total income of assessee for AY 2011-12 as the credits in the bank account could not be explained by the assessee-firm during search nor at the time of assessment proceedings. As the material seized has bearing on the determination of the total income of the assessee-firm for the Assessment year 2011-12, the notice u/s 153C is val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the Hon'ble Bench to sustain the addition made on merits also. 12. Per contra, ld.AR submitted that ld.CIT(A) has rightly held that there was no incriminating material found during the course of search belonging to the assessee as stipulated u/s 153C of the Act. Besides that ld.AR submitted that the Assessing Officer was aware of the return of income filed by the assessee, which is clear from the satisfaction note reproduced hereinbelow wherein the Assessing Officer mentioned that the return of income was filed by the assessee during the demonetization period and also mentioned that the details of the accounts disclosed by the assessee in the said return of income. SATISFACTION NOTE FOR NOTICE U/S 15EC FOR AY 2011-12 A copy of satisfaction note and seized material pertains/relates to M/s Orbit Ventures pertains to AY 2011-12 was received from Dy. Commissioner of Income Tax, Central Circle 3(4), Hyderabad, (being the same assessing officer), on 14.02.2019 . 2.0 As per the details, a Search seizure operation U/s 132 of IT Act, 1961 was conducted in the case of Sri Ajaz Farooqi and his related concerns and persons on 04.07.2017 also covering residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this subsection pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : Provided also that the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson other than the person referred to in section I53A, 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] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or, requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and ] for the relevant assessment year or years referred to in sub-section (1) of section 153A] 7.0 Further, the material/documents seized during search and seizure operation conducted on 04.07.2017 in the case of Sri Jayanta Kumar Dutta, vide annexure (i) A/JKD/Res/01(cheque books) (ii) A/JKD/Res/04(pendrive) (iii) A/JKD/Res/05 (sheet no 14-23) and information contained therein has fallowing contents. (a) The assessee firm, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sri Ajaz Farooqi and his related business concerns and other key persons. Accordingly, a notice u/s 153C of the Income Tax Act 1961, dt 27.02.2019 was issued to furnish its return of income for all the AY's. The assessee filed its return of income for all the Assessment Years under consideration on 09.05.2019. Subsequently notice u/ s 143(2) was issued and served on assessee through email and in person' also. During the course of scrutiny proceedings, notice u/s 142(1) of the Act was' issued to the appellant directing to submit the information. for completing the assessment. Thereafter, AO completed the Assessment u/ s.143(3) r.w.s 153C of the IT Act, and being aggrieved by the above order, the appellant preferred an appeal before Ld. CIT(A) Hyderabad: The Ld. CIT(A) has accepted the submissions 'made by the assessee and allowed the appeal in favour of assessee and deleted the impugned additions made by the AO. Being aggrieved by the order of the Ld. CIT (A), both the Assessee and Revenue has preferred an appeal before the Hon'ble ITAT, Hyderabad. 1. We would like to, humbly, submit certain cross objections and clarifications on the main issue r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains working copies of back up of 4 pen drives seized during the course of Search. The annexure A/JKD/Res/05 (Sheets 1423) contains details of the bank accounts maintained by 5 firms and the transactions in the bank accounts of the firm during the period 25.09.2014 to 2011.2014. These are the bank accounts discussed in relation to the. cheque books above. The above bank accounts stands disclosed in the accounts/balance sheet filed with the Return of Income. The sheets (14-23) of Annexure A/JKD/Res/05) and relevant copies of the material in the pen drive (A/JKD/Res/04) only. The above material cannot be termed as. 'incriminating seized material pertaining to A .Y. 2017-18. 6.4 As the AO has relied on the above material only for recording satisfaction for initiating proceedings u/s 153C, it cannot be said that the satisfaction is based on incriminating seized material' in relation for the A Y. 2017-18. 6.5 In view of the factual position and finding as above, it is held :that the proceedings u/s 153C are. not validly initiated for the above years and the subsequent orders passed u/s 143(3) r.w.s. 153C do not survive and are quashed. 7.0 As the proceedings initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of decision of the CIT(A). Some grounds are raised basing on the facts which are not decided by the CIT(A) on merits. We would like to clarify the ground wise objections raised, and the decision rendered in the appellate order by the Hon'ble CIT(A), strongly objecting for the grounds raised by the Revenue. 4.1 Ground No. 1 is general in nature. Vide ground ,No.2, the Revenue has assailed the deletion of addition u/ s 68 of the Act on the facts of the case. However, the ground raised is not originated from the decision of CIT(A) and thus the ground raised is, baseless. This is so, because of the fact that the assessment order u/ s 143(3) was quashed on legal front as per para 7 of the decision of Hon'ble CIT(A). Thus, the ground raised has no base and it has no direct relation with the decision made by the CIT(A) in quashing the order on legal front. 4.2 As regards to the Grounds Nos.3, 4, and 5. raised by Revenue in respect of satisfaction for bringing the case to the scrutiny basket u/s 153C of the Act, on alleged reasons of non-mentioning of and non-accounting for deposits in IDBI Bank account, it may be humbly submitted that, actually the IDBI Bank account h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded is not as per the provisions of section 153C. of the Act on bringing the assessments within the ambit u/ s 153C of the Act for 2017-18 and thus the assessment is, beyond the law. ' 4.6 Through ground No.6, the Revenue had assailed the decision of CIT(A) in not reverting the issue to the Assessing Officer, which appears to be baseless, as the appellate authority has verified the facts of admission of bank transactions and reporting of bank accounts in the return of income. 5. Now, in the present appeal before the Hon ble ITAT, the Revenue has, through ground Nos.3, 4 and 5, contended on factual ground that the assessee has not admitted IDBI account number and that is the reason for converting the case for block assessment u/ s 153C. But, as a matter of fact, as already stated supra, for the financial years relevant for assessment year 2016-17 and for earlier years the IDBI account does not exist. For. the assessment year 2017-18, the assessee has duly recorded the bank account. in the books of. account and while deciding the appeal, the Hon'ble CIT(A) had made a specific mention in the order stating that it is. not incriminating seized material. 6. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fine, as a decisive point, it may be re-affirmed that through the ground No.s.3, 4. and 5, the revenue has assailed the Appellate Order of the CIT(A), contending that the IDBI account was not declared in the return of income, which contention is baseless, devoid of merits and un-sustainable to the text of legal scrutiny. Further, this ground of Revenue is incorrect because, as clearly stated in earlier paragraphs the account transactions in IDBI bank have already been shown in assessment year 2017-18. For assessment year 2016-17 and earlier years, there is no existence of the IDBI Bank account and thus, the reasons for satisfaction for making assessment u/ s 153C for those years before 2017-18 are undoubtedly not reasonable and lawfully incorrect. In regard to assessment year 2017-18, also the bank account transactions and the bank account details have been duly admitted in the return of income. Therefore, the cheque books of the bank account found during the course of search and seizure operation cannot be, in any stretch of imagination and ,in the eyes of law, be treated as incriminating material for taking up the case for scrutiny in terms of section 153C of the Act. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee' s returns filed under 2016 scheme stands stood duly accepted as there is no ground in Revenue's pleadings to the contrary. 8. Learned CIT-DR lastly contended that the assessee had not disclosed its IDBI bank account in the computation corresponding to the alleged returns filed in the year 2016. We find no substances in the instant last argument as well since' a perusal of the corresponding account documents indicate that the same had been opened only on 05.08.2016 and therefore, it could not be treated as an undisclosed bank account in assessment years 2010-11 to 201617 to say the least. So far as the last A. Y. 2017-18 is concerned, it is made clear that the relevant proceedings therein are in the search year itself only: We therefore decline the Revenue's foregoing arguments in light of all the relevant facts and circumstances forming part of record before us. Revenue's five appeals i.e. ITA 45 to 49/Hyd/2021 seeking to reverse the CIT(A)' s identical -action quashing the impugned section 153C assessments fail accordingly. 15. We have heard the rival submissions and perused the material on record. This is a case where incriminating materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material are filed and the same are placed at pages 26 to 45. 18. The summary of the documents seized and filed by the Revenue are as under : Page No. Document Date Whether any addition was made by the Assessing Officer on such document or not 26 Letter to the Chief Manager, State Bank of Hyderabad for creating the FDR for 1.45 crores in favour of M/s. Orbit Ventures 27.01.2021 No 27 Letter to the Chief Manager, State Bank of Hyderabad for creating the FDR for 20 lakhs in favour of M/s. GVK Enterprises. 06.01.2011 No 28 Excel Sheet showing entries pertaining to various dates. No 29 Statement of FD at SBH, Maredpalli for creating the 25 FDR valuing to Rs.11,98,00,000/- in favour of 1) M/s. Anka Relators, 2) GVK Enterprises, 3) Royal Engineering, 4) Ace Constructions and 5) Orbit Ventures. No 30 St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999900 8 31.05.2010 Cash deposit by self 999900 9 01.06.2010 Cash deposit by self 999900 10 06.01.2011 Cash deposit by self 999900 11 07.01.2011 Cash deposit by self 999900 12 11.01.2011 Cash deposit by self 999900 13 12.01.2011 Cash deposit by self 999900 14 24.01.2011 Cash deposit by self 999900 15 25.01.2011 Cash deposit by self 999900 16 27.01.2011 Cash deposit by self 999900 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,90,08,100 1,90,08,100 1,90,08,100 1,90,08,100 7,60,32,400 2012-13 99,58,900 99,58,900 99,58,900 99,58,900 3,98,35,600 2014-15 1,40,07,100 1,40,07,100 1,50,07,000 1,40,07,300 5,70,28,500 Total 9,39,78,300 9,39,77,950 9,49,77,600 9,49,77,900 37,79,11,750 20. From the perusal of the assessment order and the seized material, it is clear that no addition has been made by the Assessing Officer based on the incriminating material. Therefore, the plea of the Revenue that the additions were made on the basis of the seized material is without any basis. Further, we may point out that the Assessing Officer had also examined the return of income filed by the assessee in response to the notice which was duly considered by him and the income al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Their lordships rather observe that whilst framing an assessment u/s 153A / 153C, the Assessing Officer is nowhere barred from taking cognizance of any other material as well. 7. Now comes the equally important question as to whether the assessee s return(s) in issue would be treated as invalid being belated ones or not. Our reply is negative in assessee s favour and against the department. This is because of the fact that the assessee had filed its return(s) under the Income Declaration Scheme, 2016 on 04.08.2016 followed by the search in issue dt.04.07.2017. The Revenue s argument that it had not filed any return in the corresponding assessment year u/s 139(1) of the Act, we are of the opinion that the decision as to whether the income sought to be added as under the head undisclosed income has to be seen on the date of search only which purely stands satisfied in the facts of instant appeal. We further wish to observe here that the assessee s returns filed under 2016 scheme stands stood duly accepted as there is no ground in Revenue s pleadings to the contrary. 8. Learned CIT-DR lastly contended that the assessee had not disclosed its IDBI bank account in the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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