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TMI Blog2014 (4) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gains in sum of Rs.7,22,000/- and enhancement also. 4. Briefly, the facts of the case are that the assessee belongs to M/s. Shanker Gutkha group, in which search and seizure operation u/s. 132(1) of the IT Act was carried out on 30th / 31st January, 2008. The assessee is wife of Shri Laxman Das Keshwani, who manages the business of M/s. Shanker Gutkha group. During the course of search and seizure operation, total amount of cash of Rs.61,32,540/- was found at the residential premises out of which Rs.4,00,000/- cash was owned up by the assessee and she had duly shown this cash amount in her income as acquired by her from undisclosed source while filing the return of income after the search pertaining to assessment year 2008-09. Since no search warrant was issued in the name of assessee, therefore, the proceedings u/s. 153C were initiated and assessee filed return of income declaring income of Rs.14,72,274/-. The AO in the assessment order made the above additions on account of house property and long term capital gains, under challenge in this appeal, and passed the order u/s. 153C r.w.s. 153A/143(3) of the IT Act. The assessee challenged the initiation of proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be noted here that in assessment year 2004-05, the AO also made addition of Rs.5,00,000/- on account of unexplained gift, which has been deleted by the ld. CIT(A) vide order dated 05.03.2012. Nothing is brought to our notice if department have challenged this finding of the ld. CIT(A) in any appeal. 4. The assessee challenged initiation and validity of proceedings u/s. 153C and addition on merits before the ld. CIT(A).The written submission of the assessee is incorporated in the appellate order in which the assessee briefly explained that no action u/s. 132 of the IT Act has been taken in the case of assessee. The assessee's source of income is mainly income, which is assessed under the head 'income from other sources'. Search was conducted and Panchnama was drawn in the name of her husband, father-in-law and brother of her husband. No adverse or incriminating material was found as a result of search which can be made the basis for AO to have satisfied that the income relating to the assessee, has been unearthed during the search. Even the satisfaction recorded, if any, which is a pre-requisite condition for the initiation of proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of ACIT Circle I, Gwalior vs. M/s. Global Estate in ITA No. 144 to 149/2011, assessment years 2003-04 to 2008-09 dated 30.11.2012, in which on the identical issue, departmental appeal has been dismissed. The findings in para 9 to 9.7 of this order are reproduced as under : "9. We have considered the rival submissions and the material available on record. Section 153A, 153B and 153C of the IT Act provides :- "Assessment in case of search or requisition. 153A. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : [Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this subsection or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having Provided further that in the case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2004 or any subsequent financial year,- (i) the provisions of clause (a) or clause (b) of this sub-section shall have effect as if for the words "two years" the words "twenty one months" had been substituted; (ii) the period of limitation for making the assessment or reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of thirty-three months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or twenty-one months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later.] Explanation.-In computing the period of limitation for the purposes of this section,- (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (ii) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under subsection (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that subsection; or (iii) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee of being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, 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 such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :] [Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. (2) Where books of account or documents or assets seized or requis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceeded under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act. It was further held - " Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated February 6, 1996, satisfies the requirements of section 158BD of the Act. The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search is necessary. Once a warrant of authorization or requisition is issued and search is conducted and panchnama is drawn, the assessments for the all the relevant years would get reopened irrespective of whether any incriminating material is found or not in relation to a particular AY. In other words, even if the material found shows the concealment in only one year, all the completed assessments falling in the period of six AYs preceding the year of search will get reopen. There was an identical provision contained in Chapter XIV-B of the Act, which provides that where after 30th June, 1995, a search is initiated u/s 132 or books accounts etc. are requisitioned u/s 132A, the AO shall proceed to assess undisclosed income in accordance with provisions of Chapter XIV-B for making assessment for block period but in the block assessments, the question of assessing an undisclosed income in relation to any AY was restricted to the incriminating material on undisclosed assets discovered during the course of search and seizure or in the post search inquiry the material was relatable to such evidence discovered in search. The income assessed in the regular assessments was not to be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is admitted fact that no search warrant was executed in the case of the present assessee u/s 132(1) of the IT Act, therefore, provisions of sec. 153A were not applicable. The AO has, therefore, proceeded against the assessee u/s 153C of the IT Act. This view is further strengthened by the judgment of Hon'ble Gujrat High Court in the case of Vijaybhai N. Chandrani vs. ACIT, 333 ITR 436 in which it was held as under : "Section 153A, 153B and 153C of the Income-tax Act, 1961, lay down a scheme for assessment in case of search and requisition. Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments or assets seized had been handed over to the AO having jurisdiction over such other person. In the absence of any adequate material produced by ld. DR, we find the contention of ld. counsel for assessee was justified that in this case, the AO has not recorded any satisfaction that any seized document or material belongs to any person other than the person searched. Since the revenue is in appeal, therefore, burden was upon them to prove that necessary ingredients of sec. 153C have been complied with in this case before invoking jurisdiction u/s 153C of the IT Act. We may also add here that the AO has not referred to any seized document or material in the assessment orders on the basis of which, additions on merit have been made. Therefore, the conditions of sec. 153C as noted above are also not satisfied in this case. We, therefore, do not find any infirmity in the order of the ld. CIT(A) in quashing the proceedings u/s 153C of the IT Act. 9.7 Considering the above discussion, it is clear that the ld. CIT(A) on perusal of the record found that the AO has nowhere recorded any satisfaction as required u/s. 153C of the IT Act. Due to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before us to show that the books of account or documents or assets seized had been handed over to the AO having jurisdiction over such other person. In the absence of any material produced before us, we find the contention of the ld. counsel for the assessee was justified that in this case the AO has not recorded any satisfaction that any seized documents or material belongs to any person other than the person searched. Therefore, necessary ingredients of section 153C have not been complied with in this case before invoking the jurisdiction u/s. 153C of the IT Act. We may also add here that the AO has not referred to any seized documents or material in the assessment orders on the basis of which notional Annual Letting Value was determined. Therefore, conditions of section 153C as noted above are not satisfied in this case. Considering the above discussion in the light of our order in the case of M/s. Global Estates (supra), we do not find any justification to sustain the proceedings u/s. 153C initiated by the authorities below against the assessee. We, accordingly, set side the orders of the authorities below and quash the proceedings u/s. 153C of the IT Act. Therefore, all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er person under section 158BC. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable articles or thing or books of account or documents seized or requisitioned should belong to such person. If the requirement is not satisfied, recourse cannot be had to the provisions of section 153C. Held, allowing the petition, that admittedly, the three loose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the three documents were in the handwriting of the petitioner. In the circumstances, when the condition precedent for issuance of notice was not fulfilled action taken under section 153C of the Act stood vitiated." 7.1. Thus, the requirements of section 153C are not satisfied in this case. May be the assessee owned up Rs.4,00,000/- cash found during the course of search and declared in assessment year 2008-09, but according to the ld. counsel for the assessee, the same order was regular assessment u/s. 143(3), i.e., after search was completed. Therefore, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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