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TMI Blog2016 (3) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... see-firm is the owner of the seized material based on which the impugned additions were made. Furthermore, even in terms of law laid down by the Hon’ble Supreme Court in the cases of Bishwanath Chatterjee [1976 (4) TMI 1 - SUPREME Court ] and late Nawab Sir Mir Osman Ali Khan [1986 (10) TMI 2 - SUPREME Court ], assessee-firm cannot be said to be the owner of the document seized. - Decided in favour of assessee - ITA Nos. 1475 to 1481/Bang/2013 - - - Dated:- 18-3-2016 - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Shri S.Ramasubramanian, CA. For the Respondent : Shri T.N.Prakash, Addl.CIT(DR) ORDER Per Bench These are appeals filed by the assessee-firm directed against the common orders of the CIT(A)-VI, Bangalore, dated 23/08/2013 for the assessment years 2003-04 to 2009-10. Since common issues are involved in all these appeals, these are disposed of by this common order for the sake of convenience. 2. The assessee raised the following common grounds of appeal: 1. That the order of the learned CIT(A) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more of the above grounds either before or at the time of hearing of this appeal. 3. Facts leading to the present appeals are as follows: The assessee is a firm engaged in real estate business. A search and seizure operationS under the provisions of section 132 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] were carried out in the case of M/s.India Builders Corporation, S/Shri Ziaulla Sheriff and Yunus Zia on 17/06/2008. During the course of search and seizure operation, certain loose papers were seized. These loose papers are said to be belonging to the assessee-firm. Based on this material, notice u/s 153C of the Act was issued for the above assessment years on 15/06/2009. The assessments were completed after making several disallowances. 4. Being aggrieved, appeals were filed before the CIT(A). It was contended, inter alia, before the CIT(A) that seized documents are not of any incriminating nature and therefore, no addition can be made. It was also contended that the Assessing Officer (AO) is bereft of jurisdiction u/s 153C of the Act as required jurisdiction u/s 153C was not recorded by the AO. It was further contended that addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is on record. The appellant was under a bonafide belief that the earlier submissions made before the Commissioner of Income Tax (Appeals) would cover this issue in view of the additional grounds no. I and 2 filed before the CIT(A). The appellant has now been advised that it would be advisable to file a separate additional ground covering the above issue. The appellant submits that the additional grounds may kindly be admitted in view of the decisions of the Hon'ble Supreme Court in: a) CIT Vs National Thermal Power Corporation (229 ITR 383) b) Jute Corporation of India Ltd Vs CIT (187 ITR 688) It was prayed that since additional grounds go to the root of jurisdiction and purely on point of question of law, can be admitted in view of law laid down by the Hon ble Apex Court in the case of CIT vs. National Thermal Power Corporation (229 ITR 383). The learned Departmental Representative has no objection for admission of additional ground. 6. We have considered rival submissions. As the additional grounds raised are purely questions of law and does not require any investigation of facts and go to the root of the very jurisdiction of the matter, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the P L A/c of The Tri Colour Hotel and the above two seized documents will have a bearing on the determination of total income of the assessee-firm as the Tri Colour Hotel is a part of group of the assessee-firm. The seized document marked as A/YZS/15 Page 69 is a statement of total income, operational expenses, gross profit etc. of the assessee firm. Similarly, the seized document A/YZS/15 Page 74 shows an analysis of the profit loss A/c. of the assessee for the period Feb.2008. This and all the other material seized as per the above table relate to financial transactions of the assessee and have a direct bearing on the determination of total income of the assessee for the respective Assessment years. In view of the aforementioned documents/loose sheets seized belong to the assessee-firm, other than the persons searched, the AO was satisfied that the documents seized have a bearing on the determination of the total income of the assessee for the relevant Asst. Years and as such it was a fit case for issue of notices u/s.153C of the Act. 8. We heard the rival submissions and perused the material on record. The primary issue to be adjudicated in these appeals is whether the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of section 153A, within a period 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; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period 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 sub-section 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 jurisdiction over such other person, whichever is later. Explanation.-In co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) 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 5[sub-section (1) of] 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 requisitioned as referred to in sub-section (1) has or have been received by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recourse cannot be had to the provisions of sec.153C. The very same provisions had come for interpretation before the Hon ble Delhi High Court in the case of Pepsi Foods P. Ltd. vs. Asst.CIT (367 ITR 112) wherein the Hon ble Delhi High Court observed at page 117 as follows: On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be satisfied that inter alia any document seized or requisitioned belongs to a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re- assess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Ali Khan (162 ITR 888) wherein the Hon ble Supreme Court held as under: The apex court in the case of Bishwanath Chattejee [1976] 103 ITR 536 (page 539): The expression 'belong' has been defined as follows in the Oxford English Dictionary :-'To be the property or rightful possession of.' So it is the property of a person, or that which is in his possession as of right, which is liable to wealth-tax. In other words, the liability to wealthtax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee. The apex court in the case of (Late) Nawab Sir Mir Osman All Khan [1986] 162 ITR 888 has observed (page 899): In all these cases, as was reiterated by the Calcutta High Court in S. B. (House and Land) P. Ltd. v. CIT [1979] 119 ITR 785 the question of ownership had to be considered only in the light of the particular facts of a case. The Patna High Court in Addl. CIT v. Sahay Properties and Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A .... In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they belong‟ to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case in the light of the aforesaid statutory scheme, it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner. It may be that there is a reference to the petitioner in as much as his name is reflected in the list under the heading 'Samutkarsh Members Details' and certain details are given under different columns against the name of the petitioner along with other members, however, it is nobody's case that the said documents belong to the petitioner. It is not even the case of Revenue that the said three documents are in the handwriting of the petitioner. In the circumstances, when the condition precedent for issuance of notice is not fulfilled any action taken under s. 153C of the Act stands vitiated. 9.5 The ratio that can be culled out from the above decisions is that unless revenue establishes that the assessee is the owner of the seized documents, provisions of sec.153C cannot be invoked. Even the Hon ble Delhi High Court as well as the Hon ble Gujarat High Courts held that merely because there is a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 292C(1) also provide the same. This presumption was not rebutted by the AO of the searched person. Therefore, it cannot be said that assessee-firm is the owner of the seized material based on which the impugned additions were made. Furthermore, even in terms of law laid down by the Hon ble Supreme Court in the cases of Bishwanath Chatterjee and late Nawab Sir Mir Osman Ali Khan cited supra, assessee-firm cannot be said to be the owner of the document seized. Therefore, it cannot be said that the requirements of sec.153C are fulfilled in the present case in terms of law laid down by the Hon ble Delhi High Court in the cases cited supra as well as by the Hon ble Gujarat High Court in the case cited supra. Therefore, we hold that the AO was not justified in exercising jurisdiction u/s 153C of the Act. Hence, the assessments made pursuant to issue of notice u/s 153C are hereby cancelled for the assessment years 2003-04 to 2008-09. 11. Since we have held that the assessments are bad in law, we do not find it necessary to adjudicate other grounds of appeals on the merits of the additions for the assessment years 2003-04 to 2008-09. 12. For the assessment year 2009-10 (ITA No.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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