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TMI Blog2013 (12) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully applying our mind to the ratio laid down therein, we observe that the decisions are distinguishable on facts and do not apply to the facts of the assessee’s case. In that view of the matter, we do not find any infirmity in the order of the CIT(A) in holding the initiation of proceedings under section 153C to be ab initio void and consequently annulling the assessments for all the aforesaid assessment years. Accordingly, we uphold the same by dismissing the grounds taken by the department. - I.T.A. Nos.31 to 35/Viz/2012 & C.O.Nos.7 to 11/Viz/2013 - - - Dated:- 13-12-2013 - Shri B. Ramakotaiah (AM) Saktijit Dey (JM) For the Petitioner : : Th. Lucas Peter For the Respondent : G.V.N. Hari ORDER Per Bench: The department has filed these appeals for assessment years 2001-2002 to 2005- 06 against common order dated 31.10.2011 of ld CIT(A)-Visakhapatnam. 2. The cross objections filed by the assessee were not originally listed before us alongwith the appeals of the department. However, at the request of the assessee and on consent of both parties and considering the fact that cross objections also arise out of the common order of the CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. On the basis of the impounded documents showing cash payments made by the assessee, the AO requisitioned u/s.131 of the Act the books of account of the assessee for the assessment year 2003-04 and the AO on verification of the books of account found that some of the cash payments to the contractor having made outside the books of account, impounded the books of account of the assessee. On the basis of the seized materials and impounded books of accounts and other documents, the AO issued notice u/s.153C of the Act to the assessee for all the aforesaid assessment years i.e. 2001-02 to 2005-06 calling upon the assessee to submit his return of income. In response to the notice, the assessee filed its return of income declaring Nil income for the assessment years 2001- 02, 2002-03, 2003-04 and loss of ₹ 4,41,81,1145/- and ₹ 5,23,50,828/- for assessment years 2004-05 and 2005-06, respectively. The AO, however, completed the assessments for all the aforesaid assessment years assessing the income as under: Assessment year Income assessed 2001-02 18,28,746 2002-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessments without going into the merits of the case. 7. At the time of hearing, ld D.R. before us submitted that the seized materials on the basis of which assessments were made under section 153C since belong to the assessee, initiation of proceedings under section 153C of the Act could not be held to be invalid as has been done by the CIT(A). Ld D.R. submitted that since incriminating materials found at the time of search in the premises of Shri Tangi Hari Narayan belong to the assessee, assumption of jurisdiction under section 1534C cannot be questioned. Ld D.R. submitted that it is not necessary that the AO has to complete the assessment only on the basis of incriminating material. It is enough to initiate proceedings u/s.153C if there are some incriminating materials but while completing the assessments, the AO may consider any other materials which are available with him. Ld D.R. submitted that the impounded books of account as well as seized materials clearly indicate the undisclosed income of the assessee, hence, the AO was correct in initiating the proceedings under section 153C of the Act. In support of such contention, ld D.R. relied upon the following decisions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Guj) 225 iv) Janki Exports International through S./P.Gupta vs Union of India, 278 ITR 296(Del) v) S.G.R.Enterprises vs ACIT, 112 TTJ (Bang) 377 vi) Saraya Industries Ltd vs. Union of India Ors, 306 ITR 189 vii) CIT vs. Late J. Chandrasekhar(HUF), 338 ITR 61(Mad) viii) Vijaybhai N. Chandrani vs ACIT, 333 ITR 436 ix) ACIT vs. Gambhir Silk Mills, 6 ITR (Trib) 376 (Ahd) x) Meghmani Organics Ltd vs. DCIT, 6 ITR 360 xi) Singhad Technical Educational Society vs ACIT, 57 DTR (Pune)(Trib) 241 xii) GRR Exports (ITA No.494/V/2007) xiii) DCIT vs. ASP Software Solution, 152 TTJ (Hyd) 739 xiv) M/s. Shouri Construction vs ACIT( ITA Nos.2056 2057/Hyd/2011) 9. We have heard the rival contentions and perused the records of the case as well as the orders of the authorities below. We have also examined the decisions relied upon by the parties. Admittedly, in the present case, the AO has initiated proceedings under section 153C of the Act. Therefore, it is clear that there is no search action in the case of the assessee. Section 153 C of the Act reads as under: 153C(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent stand by stating that the initiation of proceedings under section 153C as per the noting in the appraisal report is on the basis of page 64 of the seized document which is a letter dated 10.12.2004. Perusal of the said letter, copy of which is placed in the PB, would reveal that it is nothing but a certificate issued by the Chairman of the Managing Trustee of the assessee trust certifying the works entrusted to H.N.R. Constructions. Therefore, on perusal of the aforesaid documents, it would clearly reveal that the documents considered by the AO for initiation of proceedings u/s.153C do not belong to the assessee. In the aforesaid circumstances, in our view proceedings under section 153C of the Act could not have been initiated by the AO only on the basis of so called seized documents as referred to by him which, in our view, do not belong to the assessee. At this stage, it would be worthwhile to look into the finding of facts recorded by the CIT(A) in this regard, which is extracted hereunder: 6. I have considered these arguments and also perused the documents on the basis of which satisfaction is said to be arrived at by AO. Page No.31 of TH/HNR/2 is a receipt of HNR Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As can be seen from the aforesaid extracted portion of the order of the CIT(A), the CIT(A) after examining the seized material has given a categorical finding that the so called seized materials by no stretch of imagination could be said to be belonging to the assessee. This factual finding of the CIT(A) remains uncontroverted. In the aforesaid factual background, we will now examine the ratio laid down in various decisions of High Courts and different benches of the Tribunal. 12. In the case of Vijaybhai N Chandrani (supra), the Hon ble Gujarat High Court held as under: 12. On a plain reading of the aforesaid provisions it is apparent that ss. 153A, 153B and 153C lay down a scheme for assessment in case of search and requisition. Sec. 153A deals with procedure for issuance of notice and assessment or reassessment in case of the person where a search is initiated under s. 132 or books of account, other documents or assets are requisitioned under s. 132A after the 31st day of May, 2003. Sec. 153B lays down the time- limit for completion of assessment under s. 153A. Sec. 153C which is similarly worded to s. 158BD of the Act, provides that where the AO is satisfied that any mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the assessee, initiation of proceedings under section 153C is invalid. 14. In the case of DCIT vs. ASP Software Solutions (supra), the ITAT Hyderabad, where both the members are parties, in para 29 of the order expressed the view that if the seized documents do not establish any incriminating evidence of undisclosed income, provisions of section 153C cannot be invoked. 15. The other decisions relied upon by ld A.R. also support the above view. Therefore, considering the facts of the assessee s case in the light of ratio laid down in the aforesaid decisions, it becomes clear that the seized materials do not belong to the assessee. That besides, there are no incriminating materials indicating any undisclosed income of the assessee, which could have enabled the AO to invoke the provisions of section 153C of the Act. This becomes further clear from the fact that the income were determined for the assessment years 2001-02, 2002-03 2003-04 only on the ground that the assessee has not been approved under section 10(23C) of the Act. The determination of income has absolutely no relation or relevance to the seized materials. So far as the assessment years 2004-05 and 2005-06 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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