9911796707
TMI Blog2024 (3) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act on the basis of material seized during the course of search of another person rather than assessment should have been made u/s. 153C of the Act instead of 153A r.w.s. 143(3) of the Act. For this, Revenue has raised common grounds in all the three years and facts and circumstances are also emanating from the search conducted on the assessee firm u/s. 132 of the Act on 06.07.2015. Hence, will take the facts and circumstances from ITA No. 732/CHNY/2023 for the relevant assessment year 2013-14. The relevant grounds raised read as under:- 2. The Ld. CIT (A) erred in deleting the addition made towards unaccounted income of Rs. 3,20,00,000/- towards cash received over and above the agreement value on sale of commercial space in M/s. BSR Mall holding that the addition made u/s. 153A on the basis of materials seized during the course of search of another person is not sustainable. The Ld. CIT (A) ought to have adjudicated the merits of the case. 2.1 The Ld. CIT (A) failed to appreciate that search was conducted in the assessee's case on the basis of separate warrant issued in the name of assessee, M/s. BSR Builders engineers and contractors, hence, the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t search u/s. 132 of the Act was conducted in the case of Dr. Murugu Sundaram and Dr. Raja Sundaram on 06.07.2015 u/s. 132 of the Act. Simultaneously, search was conducted on the assessee's firm on 06.07.2015 u/s. 132 of the Act also. During the course of search in the case of Dr. Murugu Sundaram and Dr. Raja Sundaram on 06.07.2015, unaccounted money in cash along with incriminating evidences were found and also certain loose sheets were recovered which contained details of cash payments made by Dr. Murugu Sundaram and Dr. Raja Sundaram to the assessee firm M/s. BSR Builders Engineers & Contractors. From the loose sheets recovered and seized, the AO noted that the cash amount was paid during financial years 2012-13 to 2015-16 relevant to assessment years 2013-14 to 2016-17 aggregating to Rs. 11.20 crores as under:- FY AY Amount (Rs.) 2012-13 2013-14 3,20,00,000 2013-14 2014-15 3,80,00,000 2014-15 2015-16 3,20,00,000 2015-16 2016-17 1,00,00,000 Total 11,20,00,000 This triggered simultaneous search u/s. 132 of the Act in the case of assessee's firm on 06.07.2015, wherein Shri B. Raghavendra Reddy, Managing Partner of the assessee firm in his sworn state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,20,00,000/- to the appellant's income in the impugned order of assessment passed u/s. 143(3) r.w.s. 153A of the Act. 1.2 The addition being based on the documents and materials found during the search conducted in the case of Dr. Raja Sundaram and Dr. Murugu Sundaram, the appellant being the person other than the person referred to in section 153A, the addition in the impugned order is illegal. 1.3 In the absence of any "satisfaction note" recorded as mandated by the provisions of section 153C of the Act; the assessment made under section 153A of the Act is incorrect, unsustainable and is liable to be annulled." The assessee before CIT (A) as is seen from above, raised whether additions can be made while framing assessment u/s. 153A of the Act, based on the material found and seized during the course of search of any other person, the CIT (A) held that the material seized during the course of search in the case of any other person cannot be used while framing assessment u/s. 153A of the Act rather action should be taken u/s. 153C of the Act. The CIT (A) recorded his finding in paras 36 to 38 as under:- "36. It is evident from the judicial decisions discussed above that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case. Brief facts are that search and seizure operation was conducted u/s. 132 of the Act in the case of Dr. Murugu Sundaram and Dr. Raja Sundaram on 06.07.2015 from where unaccounted money in cash along with other incriminating evidences was found. Certain loose sheets were found and seized during the search operation which contained details of cash payments made by Dr. Murugu Sundaram and Dr. Raja Sundaram to assessee firm during financial years 2012-13 to 2015-16 relevant to assessment years 2013-14 to 2016-17 in aggregate to Rs. 11.20 crores and in the relevant assessment year 2013-14, the amount received was Rs. 3.20 crore. This amount was received by assessee in connection with sale of part of commercial building in BSR Mall which was admitted by Dr. Murugu Sundaram and Dr. Raja Sundaram vide their sworn statement u/s. 1 32(4) of the Act on 06.07.2015 and also by the Managing Partner of the assessee firm Shri B. Raghavendra Reddy. Consequently search was also conducted on the assessee firm u/s. 132 of the Act on 06.07.2015. Consequently, notice u/s. 153A of the Act dated 15.11.2016 was issued and served on the assessee. The assessee now befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing the income of that 'other person'. The ld. counsel for the assessee before us relied on the decisions of Hon'ble Delhi High Courts in the case of PCIT vs. Anand Kumar Jain (HUF) in ITA No. 23 of 2021 and PCIT vs. Subhash Khattar in ITA No. 60 of 2017. The ld. counsel also relied on the decision of Co-ordinate Bench of this Tribunal, Bangalore Bench in the case of P. Shyamaraju and Co. India P. Ltd., vs. DCIT in ITA No. 978/Bang/2014. 6. We have gone through the decision of Hon'ble Delhi High Court in the case of Anand Kumar Jain, supra, wherein the Hon'ble Delhi High Court has dealt with exactly identical issue and relying on the decision of CIT vs. Kabul Chawla reported in [2016] 380 ITR 573 has held as under:- "7. The preliminary question under consideration before us is whether a statement under Section 132(4) constitutes incriminating material for carrying out assessment under S. 153(A) of the Act. A reading of the impugned order reveals that the statement of Mr. Jindal recorded under Section 132(4) forms the foundation of the assessment carried out under Section 153A of the Act. That statement alone cannot justify the additions made by the AO. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 24. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 25. (...) However, as stated earlier, a statement on oath can only be recorded of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 28. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 29. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. (...)" 10. Now, coming to the aspect viz the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153C of the I.T. Act. The answer to the above question would be 'no'. The reason being that as per the provisions of section 153C of the I.T .Act. it is imperative that in order to use the material found and seized in a search of an another person other than the person who is subjected to assessment, such material cannot be used without invoking the provisions of section 153C of the I.T. Act. The proceedings u/s 153C of the I.T. Act ought to have been initiated in the case of the assessee when satisfaction was arrived at in the assessment proceedings of Sri. V. Shambamoorthy that material found and seized in the search of Sri. V. Shambamoorthy did not pertain to him, but instead pertains to the assessee. ............... ................ ................ 6.6 The learned Standing Counsel submitted that the decision of the Coordinate Bench in the case of Sri. Anil H Lad (supra) was per in curium inasmuch as the said order did not notice the judgment of the Hon'ble Karnataka High Court in the case of Canara Housing Development Company (supra), and hence, the same ought to be ignored by this Bench. The order of the Co-ordinate Bench in the case of Sri. Anil H Lad (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmenced." 7. After going through the judicial precedents and particularly the decision of Hon'ble Delhi High Court in the case of Anand Kumar Jain, supra, we are of the view that as per the mandate provided by the provisions of section 153C of the Act, the statement made by assessee cannot be a base for making assessment u/s. 153A of the Act on the basis of alleged incriminating material (being the statement recorded u/s. 132(4) of the Act) on the basis of which assessment was framed u/s. 153A of the Act rather assessment should have been framed u/s. 153C of the Act by recording a separate satisfaction. Hence, we find no infirmity in the order of CIT (A) and we affirm the order of CIT (A) on this legal issue. 8. Consequent to above view of ours, we upheld the order of CIT (A) quashing the assessment in all these three years i.e., assessment years 2013-14, 2014-15 & 2015-16. Therefore, these appeals of Revenue are dismissed. 9. Coming to cross objections of the assessee, we noted that mainly the grounds raised are supportive to the order of CIT (A) except the ground that the addition made by AO will fructify only on completion of project as per project completion method. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
