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2013 (1) TMI 420 - AT - Income TaxAssessment proceedings u/s. 153C - search & seizure operations - no search warrant in the name of M/s. Global Estate (appellant firm) has been served on it therefore assessment proceedings u/s 153A are without jurisdiction and illegal - Held that - The provisions contained u/s 158BD are more or less similar to provisions contained in sec. 153C except undisclosed income which is mentioned in sec. 158BD, however, in sec. 153C, it is mentioned any money, bullion, jewellery or other valuable articles or things or books accounts or documents seized or requisitions. The conditions precedent for invoking provisions u/s 158BD as decided in Manish Maheshwari case (2007 (2) TMI 148 - SUPREME COURT OF INDIA) are therefore same as are provided u/s 153C. It is admitted fact that no search warrant was executed in the case of the present assessee u/s 132(1), therefore, provisions of sec. 153A were not applicable. The AO has, therefore, proceeded against the assessee u/s 153C. This view is further strengthened in the case of Vijaybhai N. Chandrani vs. ACIT 2010 (3) TMI 770 - GUJARAT HIGH COURT in which it was held that under section 153C notice can be issued only where the money, bullion, jewellery or other valuation article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the AO was satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he could proceed against such other person under section 158BC. Considering the facts recorded the assessee in the present case had a case for quashing of proceedings u/s 153C. No material is produced to prove that the AO in the case of person searched was satisfied that any money, bullion, jewellery or other valuable articles or things or books accounts or documents seized or requisitioned belongs to or belong to a person other than the person referred to in sec. 153A. No material is produced to show if any satisfaction was recorded by the AO in that case that the seized material belongs to any person other than the person with respect to whom search was made u/s 132 - no satisfaction as required u/s 153C was recorded by the AO in the case of person searched - no infirmity in the order of the CIT(A) in quashing the proceedings u/s 153C. CIT(A) quashed the assessment order for want of issue of statutory notice u/s. 143(2) before completion of the assessment proceedings - Held that - This issue is squarely covered against the assessee by the decision of Ashok Chaddha vs. ITO 2011 (7) TMI 252 - DELHI HIGH COURT considering the decision of Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA wherein held that No specific notice was required under section 143(2) of the Act when the notice in the present case as required under Section 153 (A) (1) (a) was already given - in favour of revenue. Addition on account of unexplained capital introduced in the assessee firm by the partners - CIT(A) deleted the addition - Held that - CIT(A) found that both the partners, Smt. Honey Arora and Smt. Neeru Wadhwa introduced capital in the assessee firm and both are assessed to tax and have proved the fact of capital introduction. Therefore, the issue is covered by the judgments of Jaiswal Motor Finance 1983 (2) TMI 47 - ALLAHABAD HIGH COURT and Sundar Lal Jain vs. CIT, 1978 (8) TMI 54 - ALLAHABAD HIGH COURT with Metachem Industries 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT & DR has relied upon the decision of ITAT, Hyderabad Bench, thus in view of the decision of jurisdictional High Court above, the decision of the Tribunal cannot be given preference - against revenue. Addition on account of concealed work in progress - CIT(A) deleted the addition - Held that - As found that the assessee maintained complete details of work in progress and that when the addition is made in assessment year under appeal, the benefit should have been given in the next assessment year 2004-05 which is not given in the case of the assessee. CIT(A) was satisfied with the complete details filed by the assessee and, therefore, held that the addition is made on surmises and presumption and cannot be sustained - against revenue. Addition on account of disallowance of 60% of expenses by rejecting book results u/s. 145(3) - CIT(A) deleted the addition - Held that - As the assessee had made purchase of 90% through cheques which are reflected in the bank statement also and addition is made by relying upon the observations of ADIT(Inv.). The addition was accordingly deleted - against revenue. Addition on account of difference in market price and sale - Held that - the land is owned by the Society, Sanatan Grah Nirman and the assessee only acted as construction agency and has not made any sales. Therefore, the addition is deleted - against revenue. Addition on account of current liabilities - CIT(A) deleted the addition - Held that - In assessment year under appeal, i.e., 2003-04, only Rs.30,000/- has been received in advance whereas full amount of Rs.2,00,000/- has been received and credited during the assessment year 2004-05. The CIT(A) on examination of the documents accepted the contention of the assessee and deleted the addition - against revenue. Addition on account of unconfirmed unsecured loan - CIT(A) deleted the addition - Held that - The CIT(A) accepted the contention of the assessee because the opening balance as on 01.04.2007 (PB-44) was Rs.5,56,880/-, which is closing balance of the last year. During the year under consideration, only quarterly interest of Rs.54,289/- was credited in the books of account along with confirmation. The addition was, accordingly, deleted - against revenue. Addition on account of unconfirmed advances - CIT(A) deleted the addition - Held that - Considering the explanation of the assessee in the light of material on record, it is clear that substantial amount was old balances and rest of the amounts were received through banking channel for booking of flats, which is also confirmed by the parties - against revenue.
Issues Involved:
1. Validity of assessment proceedings under Section 153C of the Income Tax Act. 2. Non-issuance of statutory notice under Section 143(2) of the Income Tax Act. 3. Various additions made by the Assessing Officer (AO) on merits, including unexplained capital, concealed work in progress, disallowance of expenses, difference in market price and sale, and unconfirmed advances. Issue-wise Detailed Analysis: 1. Validity of Assessment Proceedings under Section 153C: The Revenue challenged the order of the CIT(A) in quashing the assessment proceedings under Section 153C. The brief facts are that search and seizure operations were conducted at the premises of certain individuals related to the assessee firm. The AO issued notice under Section 153A, which was later changed to Section 153C. The assessee contended that no search warrant was issued in its name, no reasons were communicated for the notice under Section 153C, and no incriminating material was found during the search. The CIT(A) found that the AO did not record any satisfaction before issuing the notice under Section 153C, which is mandatory as per the law. The CIT(A) relied on several judicial decisions, including those of the Delhi High Court and the Supreme Court, which held that the absence of recorded satisfaction renders the proceedings invalid. The Tribunal upheld the CIT(A)'s decision, stating that the AO failed to produce any material proving that the seized documents belonged to the assessee or that any satisfaction was recorded. Thus, the assessment proceedings under Section 153C were quashed. 2. Non-issuance of Statutory Notice under Section 143(2): The Revenue also challenged the CIT(A)'s order quashing the assessment for want of issuance of notice under Section 143(2). The CIT(A) relied on the Supreme Court's decision in Hotel Blue Moon, which mandates the issuance of such notice. However, the Tribunal noted that the issue is now covered against the assessee by the Delhi High Court's decision in Ashok Chaddha, which held that no specific notice under Section 143(2) is required when a notice under Section 153A has already been issued, and the assessee has been asked to attend the AO's office through questionnaires. Thus, the Tribunal decided this issue in favor of the Revenue. 3. Additions Made by the AO on Merits: - Unexplained Capital Introduced by Partners: The CIT(A) deleted the addition, noting that the partners were assessed to tax and had proved the capital introduction. The Tribunal upheld this decision, citing jurisdictional High Court decisions that support the assessee's case. - Concealed Work in Progress: The AO made additions based on an average calculation of work carried out over three years. The CIT(A) found that the assessee maintained complete details and that the addition was made on surmises and presumption. The Tribunal upheld the CIT(A)'s decision. - Disallowance of Expenses by Rejecting Book Results under Section 145(3): The AO disallowed 60% of expenses. The CIT(A) noted that the assessee made 90% of purchases through cheques and deleted the addition. The Tribunal found no contrary material and upheld the CIT(A)'s decision. - Difference in Market Price and Sale: The CIT(A) deleted the addition, noting that the assessee acted only as a construction agency and did not make any sales. The Tribunal upheld this decision. - Unconfirmed Advances: The CIT(A) deleted the addition, noting that substantial amounts were old balances and the rest were received through banking channels. The Tribunal upheld this decision. - Unexplained Capital for Assessment Year 2008-09: The CIT(A) deleted the addition, noting that the partners had shown the investment in their balance sheets and returns of income. The Tribunal upheld this decision. - Disallowance of Expenses for Assessment Year 2008-09: The CIT(A) deleted the addition, noting that the AO did not bring any adverse material against the assessee. The Tribunal upheld this decision. - Difference in Market Price and Sale Price for Assessment Year 2008-09: The CIT(A) deleted the addition, following the order for the assessment year 2003-04. The Tribunal upheld this decision. - Unconfirmed Unsecured Loan: The CIT(A) deleted the addition, noting that the balance was an old one and only interest was credited during the year. The Tribunal upheld this decision. - Difference in Work in Progress for Assessment Year 2008-09: The CIT(A) deleted the addition, noting that the AO's method was incorrect and the assessee maintained the stock at cost. The Tribunal upheld this decision. Conclusion: The Tribunal dismissed all the departmental appeals, upholding the CIT(A)'s orders in quashing the assessment proceedings under Section 153C and deleting various additions made by the AO on merits. The Tribunal also decided in favor of the Revenue on the issue of non-issuance of notice under Section 143(2) based on the Delhi High Court's decision in Ashok Chaddha.
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