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2022 (9) TMI 154 - AT - Income TaxAssessment to be framed u/s 153C OR u/s 147/148 - Validity of the reassessment proceedings - accommodation entry provided by the assessee - information was received from ADIT (Inv.) which was forwarded to PCIT and through him to the AO according to which a search and seizure action was carried out - HELD THAT - It is clear that the provision of Section 153C of the Act can be invoked in case of Other Person if the recovery of any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to person other than the searched person, then section 153C of the Act would be justified. In the present case, it is an undisputed fact that AO has noted that during the course of search conducted on 18.11.2015 at the various premises of Pradeep Kumar Jindal and on the basis of documents found during the course of survey at various other places, various incriminating material was found and seized, statement of various persons were recorded. Merely on the basis of information available with the AO or certain information made available prior to the handing over of the materials would not be sufficient to initiate proceedings u/s 153C of the Act and would not confer any power on the AO to initiate proceedings u/s 153C - In order to initiate proceedings to assess or reassess u/s 153C of the Act, the AO should mandatorily possess the seized material or other books of accounts etc and only after handing over of the materials to the AO of the other person, the AO is empowered to issue notice u/s 153C of the Act and that too after recording necessary satisfaction. Initiation of action u/s 153C would arise only if the seized material are handed over to the AO of such other person having jurisdiction of such other person. In the present case, it will be relevant to note that there is neither any material on record nor any evidence has been placed on record by the assessee to demonstrate that the seized and impounded material of the searched person was handed over to the AO of the assessee when the AO had initiated proceedings u/s 147 of the Act and the AO had recorded satisfaction as contemplated u/s 153C of the Act. Thus in the light of the decision of Hon ble Madras High court in the case of Karti Chidambaram 2021 (7) TMI 393 - MADRAS HIGH COURT find no fault in the initiation of proceedings u/s 147/148 of the Act by the AO and thus that there is no merit in the contention of the Ld AR that the AO should have initiated proceedings u/s 153C and not u/s 147/148 of the Act. Approval given by Addl. CIT and PCIT u/s 151 of the Act was in a mechanical way and without application of mind and therefore in the absence of proper satisfaction recorded by the competent authority, the assessment is invalid - Addl. CIT has after considering the reasons recorded by the AO has recorded his satisfaction and approval which in my view is valid approval - no merit in the contention of the Ld AR that sanction under section 151 of the Act was granted by the competent authority in a mechanical manner - statutory provisions do not require that the satisfaction has to be recorded in a particular manner. Ld AR has not placed on record any material to demonstrate the entire proposal along with the necessary details and the reasons recorded by the Income Tax Officer were not placed before the Addl.CIT and Principal CIT. See Experion Developers (P.) Ltd. 2020 (2) TMI 1061 - DELHI HIGH COURT wherein held that there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the AO - no merit in the contentions of Learned AR about the satisfaction being recorded mechanically. Ground of the assessee is dismissed. Addition u/s 68 - As lower authorities by well reasoned orders and for the reasons stated in their orders have upheld the addition. Before us AR has neither pointed to any fallacy in the findings of the lower authorities nor has placed any material on record to controvert the findings of lower authorities. In such a situation, I find no reason to interfere with the order of CIT(A) and thus dismiss the ground of the assessee.
Issues Involved:
1. Validity of reassessment proceedings under Section 147/148 of the Income Tax Act. 2. Validity of the addition under Section 68 of the Income Tax Act. 3. Validity of interest charged under various sections. 4. General contention that the order is contrary to facts, law, and principles of natural justice. Issue-wise Detailed Analysis: 1. Validity of Reassessment Proceedings under Section 147/148: The assessee challenged the reassessment proceedings initiated under Section 147/148, arguing that the correct procedure should have been under Section 153C due to the incriminating material found during a search of a third party. The Tribunal noted that the AO had received information from the ADIT (Inv.) following a search on the Pradeep Kumar Jindal group, revealing that the assessee was a front company involved in providing accommodation entries. Based on this, the AO had "reason to believe" that income had escaped assessment and issued a notice under Section 148 after obtaining PCIT's approval. The Tribunal held that Section 153C applies when seized materials are handed over to the AO of another person, which was not demonstrated in this case. The Tribunal cited the Hon'ble Madras High Court's ruling in Karti P. Chidambaram v. Principal Director of Income-Tax (Investigation) and others, which clarified that Section 153C proceedings require the actual handing over of seized materials to the AO of the other person, which did not occur here. Therefore, the initiation of proceedings under Section 147/148 was deemed valid, and the contention that the proceedings should have been under Section 153C was dismissed. 2. Validity of the Addition under Section 68: The assessee contested the addition of Rs.18,36,145/- under Section 68, which was based on the AO's determination that the assessee provided accommodation entries and earned commission income. The AO had calculated the commission based on credits in the assessee's bank accounts, which were deemed to be accommodation entries. The Tribunal noted that the lower authorities had upheld the addition through well-reasoned orders. The assessee did not present any arguments or evidence to counter the findings of the lower authorities. Consequently, the Tribunal found no reason to interfere with the addition and dismissed the ground. 3. Validity of Interest Charged under Various Sections: The judgment does not provide a detailed analysis of the interest charged under various sections. The focus was primarily on the reassessment proceedings and the addition under Section 68. Therefore, this issue appears to have been implicitly resolved in favor of the Revenue, given the dismissal of the appeal. 4. General Contention that the Order is Contrary to Facts, Law, and Principles of Natural Justice: The Tribunal addressed the general contention by thoroughly analyzing the procedural and substantive aspects of the case. It found that the reassessment proceedings were validly initiated and concluded, and the addition under Section 68 was justified. The Tribunal did not find any violation of principles of natural justice or any factual or legal errors in the orders of the lower authorities. Conclusion: The Tribunal dismissed the appeal, upholding the reassessment proceedings under Section 147/148, the addition under Section 68, and implicitly the interest charged under various sections. The Tribunal found no merit in the contention that the order was contrary to facts, law, or principles of natural justice. The appeal was dismissed in its entirety.
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