9911796707
TMI Blog2014 (10) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... ner in several partnership firms. A search and seizure operation was conducted in case of Sri D. Nagarjuna Rao and Sri K. Srinivasa Reddy and others on 29.10.2007. As alleged by the Assessing Officer, in course of the aforesaid search and seizure operation, certain incriminating material relating to assessee was found and seized. As a consequence, notice u/s. 153C was issued to assessee on 16.10.2008 calling upon her to file her return of income for A.Y. 2006-07. In response to the said notice, assessee filed a return of income on 24.9.2009 declaring total income of Rs. 1,97,700. 5. During the scrutiny assessment proceedings, Assessing Officer on examining the seized material found that assessee had entered into an agreement of sale cum GPA in respect of property at plot No. 22, Sy. No. 230 admeasuring 420 square yards (sqy) at Madinaguda for a consideration of Rs. 6,30,000 on 27.6.2005. He noticed, subsequently, assessee has sold away the said property on 3.2.2006 through a registered sale deed to M/s. Sitaramanjaneya Constructions for a consideration of Rs. 8,40,000. The Assessing Officer found that page 55 dated 29.10.2007 of the seized material marked Annexure A/DNR/18 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r both on the validity of proceedings initiated u/s. 153C of the Act as well as on the merits of the additions made by the Assessing Officer. The CIT(A) after considering the submissions of assessee in the light of the materials available on record held that as the seized document recovered from the premises of Sri D. Nagarjuna Rao referred to transactions made by assessee, the Assessing Officer was justified in initiating proceedings u/s. 153C. So far as the merits of the addition made on account of short term capital gains, the CIT(A) held that as the seized document as well as the statement recorded from Sri D. Nagarjuna Rao and the mediator Sri S. Venkateswara Rao clearly indicated payment of sale consideration of Rs. 37,80,000 towards sale of the property by assessee, the computation of short term capital gains by the Assessing Officer is correct. However, considering the fact that assessee had already disclosed an amount of Rs. 1,61,700 from such sale transaction, the CIT(A) directed the Assessing Officer to restrict the addition made towards short term capital gains to Rs. 29,40,300. So far as the addition of Rs. 6,78,000 as unexplained investment u/s. 69 of the Act, the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. In these circumstances, when assessee has not received any amount from the purchaser directly, it cannot be said that the amount mentioned in the seized document was received by her towards sale consideration. The learned AR submitted, the Assessing Officer has placed much reliance on the statement of Sri S. Venkateswara Rao, the mediator. However, Sri S. Venkateswara Rao, being an interested party who was acting as a mediator between assessee and the purchaser and who also received the sale consideration from the purchaser, his statement cannot be relied upon. Further, assessee during the assessment proceedings having specifically requested for cross examination of Sri S. Venkateswara Rao and the same having not been granted to assessee, the statement of Sri S. Venkateswara Rao will have no evidentiary value as it was not tested through cross-examination. 9. The learned AR submitted that the sale deed as well as the payment received indicate that assessee had received sale consideration directly from Sri S. Venkateswara Rao much prior to the amount was paid by the purchaser to Sri S. Venkateswara Rao. Therefore, if at all any on-money has been paid assessee was not in awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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:] 12. On a plain reading of the aforesaid provisions it becomes clear that the Assessing Officer if he is satisfied with any books of account, money, bullion, jewellery, document found in the course of a search conducted belongs to any other person then he can initiate proceedings u/s. 153C of the Act against such other person under his jurisdiction or the Assessing Officer has to transfer the case to the Assessing Officer who has jurisdiction over such other person. Therefore, the condition precedent for initiating proceedings u/s. 153C of the Act is, the seized document must belong to the person against whom the proceedings u/s. 153C is sought to be initiated. It is clear from the assessment order that the seized material on the basis of which the Assessing Officer has initiated the proceedings u/s. 153C of the Act is page 55 of Annexure A/DNR/18. A reference to the seized material, a copy of which is at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittedly has made the entries therein and furthermore when the seized document neither mentions the name of the assessee or bears his signature, then by no stretch of imagination it can be said to be belonging to the assessee. Thus, the precondition for initiating proceeding u/s 153C is not satisfied. Therefore, the initiation of proceeding u/s 153C against the assessee is without jurisdiction. The Hon'ble Gujarat High Court in case of Vijaybhai N. Chandrani Vs. ACIT [supra] while considering identical issue held as under:- 12. On a plain reading of the aforesaid provisions it is apparent that sections 153A, 153B and 153C lay down a scheme for assessment in case of search and requisition. Section 153A deals with procedure for issuance of notice and assessment or reassessment in case of the person where a search is initiated under section 132 or books of account, other documents or assets are requisitioned under section 132A after the 31st day of May, 2003. Section 153B lays down the time limit for completion of assessment under section 153A. Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an undisputed fact that books of account or document does not belong to the assessee, as these were seized from the premises of Shri Reddy. It is nowhere stated that these books of account or documents showed that all the transactions belonging to the assessee. Such books of account or documents contained the transactions relating to the group concerns of Shri Reddy. No valuable belonging to the assessee has been seized during the course of search. The term belonging, implied something more than the idea of casual association. It involves the notion of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search have a close association with the group concern of Shri Reddy. It records the transaction carried out by that group. It does not record the transaction carried out by the assessee. Under Wealth-tax Act, assets belonging to assessee were taxable. The expression belonging to the assessee connotes both the complete ownership and limited ownership of interest. Of course belonging to is capable connoting, interest, which is less than absolute perfect legal title. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, since the parties were heard on merits, we consider it appropriate to record our findings with regard to the merits of the additions also. 16. As can be seen from the seized material i.e., page 55 of Annexure A/DNR/18 it contains certain payments made to Sri S. Venkateswara Rao on different dates totalling to Rs. 96,80,000. On the basis of the said sized document as well as the statement recorded from Sri D. Nagarjuna Rao, partner of M/s. Sitaramanjaneya Constructions and the mediator Sri S. Venkateswara Rao, the Assessing Officer inferred that assessee has received the alleged sale consideration of Rs. 37,80,000. However, there is no evidence on record which can clinchingly establish the fact that assessee has actually received the sale consideration of Rs. 37,80,000 as stated by the purchaser and the mediator. As we have already stated herein before, the seized document neither has any reference to assessee nor to the property sold by assessee. Further the entries made in the seized document show certain cheque payments. However, no effort or enquiry has been made by the Assessing Officer to ascertain in whose favour the cheques were drawn and who had encashed them. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of unexplained investment in purchase of property, we are of the view that the same is not justified considering the fact that assessee has explained the source of such investment by producing necessary evidence. It is a fact on record that assessee at the time of assessment proceedings as well as before the CIT(A) had stated that the amount of Rs. 3 lakhs was received from her uncle who is an agriculturist and she has also filed a confirmation in support of such claim. That being the case, it is not understood what more supporting evidence assessee could have produced in support of her claim. When assessee has explained her source by producing evidence in the form of confirmation it is duty of the Departmental authorities to make enquiry and ascertain whether assessee's claim is correct or not. Without conducting any enquiry, assessee's claim cannot be rejected merely on doubts and suspicion. In the aforesaid view of the matter, we hold that the addition of Rs. 3 lakhs sustained by the CIT(A) is to be deleted. Accordingly, assessee succeeds both on the legal issue as well as on the merits of the additions. 18. In the result, appeal of assessee is allowed. Pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
