2022 (9) TMI 191 - AT - Income Tax

Validity of assessment u/s 153C v/s 153A - as submitted that the warrant of authorisation was in the name of the assessee, the premises of the assessee was searched and thus the assessee becomes a person searched and thus the assessment proceedings ought to have been done u/s 153A and AO has completed the assessment u/s 153C of the Act which is not in accordance with law - HELD THAT - The notices were also issued by the AO and the assessee has participated in the assessment proceedings after the 15th March 2013. Therefore, it cannot be said that the order has been passed after 15th March, 2013. As per ground No.8 the assessee has contested that the seized material has not been provided to the assessee even after making request to the AO but during the course of hearing before us, he could not produce any evidence in this regard so tht it can be justified that the principal of natural justice has not been given and he has also not provided application for seeking copppy of seized documents from the AO. The case law relied on by the ld.AR is not applicable in the present facts of the case. Considering the totality of the facts and circumstances of the case as observed above we reject the legal issue raised by the assessee. Addition of URD cash purchases during the course of assessment proceedings u/s 153C - From the AO observation of the AO, it has been stated that the details of the URD vendors of Iron Ore was not submitted before the AO and even it was not submitted before us. Considering the totality of facts and circumstances of the case for substantiating the URD purchase made by the assessee, we think it fit to send back the issue to the file of the AO for verifying from the list of the URD vendors as stated before the AO and AO shall decide the issue in accordance with law. The assessee shall be given reasonable opportunity of being heard and he is directed not to seek adjournment for early disposal of the case. Unexplained source of deposit - We observe that the assessee has deposited cash of Rs.22.00/- lakhs on 29/3/2010 in Axis bank account. Since we are remitting the issues for the assessment years 2008-09 and 2009-10 to the file of the AO, we remit this issue also to the file of AO for fresh examination of the source of cash deposits of Rs.22.00 Lakhs. The Assessing Officer is directed to decide the issue as per law. The assessee shall be given reasonable opportunity of being heard and he is directed not to seek unnecessarily adjournment for early disposal of the case. A copy of this common order to be placed in the respective case files. Appeals of the assessee are allowed for statistical purposes

Summary

Issues Involved:
1. Legality of assessment under section 153C vs. section 153A.
2. Validity of search and seizure operations.
3. Addition of purchases from unregistered dealers.
4. Non-provision of seized materials to the appellant.
5. Legality of cash deposits and peak credit.

Detailed Analysis:

1. Legality of Assessment under Section 153C vs. Section 153A:
The appellant argued that the assessment should have been completed under section 153A since the search warrant was issued in the name of the appellant. The AO, however, completed the assessment under section 153C, stating the warrant was issued in the name of Shri B. Nagendra. The Tribunal found that the warrant of authorization was indeed issued in the name of Shri B. Nagendra, which justified the assessment under section 153C. The Tribunal rejected the appellant's objections, affirming the assessment's legality under section 153C.

2. Validity of Search and Seizure Operations:
The appellant contended that the search was illegal and ultra vires under section 132(1) of the Act, arguing that it was based on suspicion rather than concrete information. The Tribunal, however, upheld the validity of the search, noting that the appellant failed to provide evidence to support the claim that the search was conducted without proper authorization or adherence to legal procedures.

3. Addition of Purchases from Unregistered Dealers:
The AO disallowed Rs. 7,55,58,161/- as purchases from unregistered dealers, stating that the appellant failed to provide sufficient evidence to substantiate these purchases. The appellant argued that the purchases were genuine and made from small farmers who did not have bank accounts. The Tribunal observed that the appellant did not provide the necessary details of the unregistered dealers and remitted the issue back to the AO for fresh verification, directing the AO to consider the list of URD vendors and decide the issue in accordance with the law.

4. Non-provision of Seized Materials to the Appellant:
The appellant claimed that the AO did not provide the seized materials despite requests, violating the principles of natural justice. The Tribunal noted that the appellant failed to produce evidence of such requests or any application for seeking copies of the seized documents. Consequently, the Tribunal found no merit in this claim and rejected it.

5. Legality of Cash Deposits and Peak Credit:
The AO observed unexplained cash deposits of Rs. 22,00,000/- in the appellant's bank account and added it to the income. The appellant argued that only the peak credit should be disallowed. The Tribunal remitted this issue back to the AO for fresh examination of the source of cash deposits, directing the AO to provide the appellant with a reasonable opportunity to explain the sources.

Conclusion:
The Tribunal upheld the legality of the assessment under section 153C and the validity of the search operations. It remitted the issues regarding the addition of purchases from unregistered dealers and the unexplained cash deposits back to the AO for fresh examination. The Tribunal directed the AO to verify the details provided by the appellant and decide the issues in accordance with the law, ensuring the appellant is given a reasonable opportunity to present evidence. The appeals were allowed for statistical purposes.