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TMI Blog2016 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings u/s 153C are liable to be quashed - Decided in favour of assessee - ITA No. 202/Del/2014 & ITA No. 203/Del/2014, ITA No. 416/Del/2014 - - - Dated:- 31-3-2016 - SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Anil Jain, CA For The Respondent : Ms Nirupma Kotru, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A. Nos. 202 and 203 have been filed by the assessee and pertain to assessment year 2009-10 and 2010-11 respectively whereas I.T.A. No. 416/2014 has been preferred by the Department for assessment year 2010-11. Since the appeals have common issue, they were heard together and they are being disposed of by this common order. 2. The facts in brief are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out in the Amrapali Group on 9.9.2010. The assessee was also covered in the search. The original return had been filed on 21.9.2009 declaring income of ₹ 8,53,631 for Assessment Year 2009-10. For Assessment Year 2010-11, the original return had also been filed on 21.9.2009 declaring an income of ₹ 4,64,619/-. Notices u/s 153C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents were seized:- Page No. 65 to 72, Annexure A-2, Party-AB-1 This is copy of MOU dated 16.08.2009 entered between M/s Ultra Home Construction Pvt. (Builder) M/s Moon Buildtech Pvt. Ltd. (investor) for investment in nine flats at Amrapali Platinum Tower, 1775 sq ft. for ₹ 2,25,00,000/- which has been paid by investor. The relevant extract of the agreement are reproduced as under:- 1. That in pursuance of the meetings held and the agreement between the Builder and the Investor, the Investor has paid a sum of ₹ 2,25,00,000/- (Rupees Two Crore Twenty five lacs only) towards the Full and Final value/cost of the Nine flats and the Builder has allocated Flats with number and Tower names/numbers and sizes in favor of the investor, as per the details given: 2. Cheque No. Date Amount (in Rs.) Tower No./Flat NoJSize Receipt No. (Issued by Builder) 606936 13.06.2008 ₹ 25,00,000/- Tower-D/703/J 775 Sq. Ft. 656 dated 13.06.2008 606937 13.06.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed investment u/s 69A of the Act as per seized documents. (ii) ₹ 45,67,500/- on account of assured return as per the seized documents. 6. In the appeals before the First Appellate Authority, the assessee, besides contesting the issue on the merits of addition, also challenged the assessment on the legal ground that the Assessing Officer had erred in fact and law in initiating the assessment proceedings under the provisions of section 153C of the Act only on the basis of Memorandum of Understanding (MOU) seized during the course of search and seizure operation of a third party on the assumption that the same belonged to the assessee whereas the presumption u/s 132(4A) of the Act was applicable only in the case of the person in whose case the search and seizure operation was carried out under section 132 of the Act. 7. However, this legal ground of the assessee was dismissed by the Ld. CIT (A) with the following observations:- 3.3 The recording of satisfaction by the AO of the person searched has two purposes. One, the proceeding u/s 153A against the person searched ceases with regard to the valuables or books / documents belonging to other persons, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person searched, i.e. Sh. Shiv Priya. In my respectful view, this is the correct legal position in the matter. 3.6 In the above factual and legal view of the matter, the objection raised by the appellant to the legality of the proceedings u/s 153C is not valid and is rejected. This ground of appeal is dismissed. 8. However, on merits, the Ld. CIT(A) deleted the addition of ₹ 8,82,000/- on account of alleged assured return in the appeal for Assessment Year 2009-10 and for Assessment Year 2010-11 the Ld. CIT(A) deleted the addition of ₹ 4,50,00,000/- on account of alleged undisclosed investment added back u/s 69A of the Act and ₹ 34,20,000/- on account of alleged assured return. 9. Now, the assessee is in appeal for Assessment Years 2009- 10 and 2010-11 challenging first and foremost the initiation of proceedings u/s 153C of the Act. The assessee has also challenged the sustenance of addition of ₹ 22,50,000/- on merits for Assessment Year 2009-10 and of ₹ 11,47,500/- on merits for Assessment Year 2010-11 whereas the Department is in appeal in Assessment Year 2010-11 challenging the action of the Ld. CIT(A) in deleting the additions of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken. The first step is that the AO 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. The second step is after such satisfaction is arrived at, the document is handed over to the AO of the person to whom the said documents belong . The Ld. AR further submitted that in the present appeals, the first step itself has not been fulfilled. The Ld. AR also submitted that section 132(4A)(i) clearly stipulates that when any document is found in the possession or control of any person in the course of a search, it may be presumed that such document belongs to such person and it is for the AO to rebut that presumption and come to a conclusion or satisfaction that the document in fact belongs to someone else. The Ld. AR argued that there must be some cogent material available with the AO before he arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. The Ld. AR also relied on the judgment of the Hon ble Delhi High Court in the case of Pepsico India Holdings (P) Ltd. Vs ACIT 270 ITR 467 for the preposition that the MOU seized did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first instance, a presumption is created by virtue of provision of return u/s 132(4A)(i) of the Act that the documents belong to the searched person. However, before the Assessing Officer of the searched person can be said to have arrived at the satisfaction that the documents belonged to the other person (the person not searched), there has to be some cogent material available with the Assessing Officer before he arrives at the satisfaction that the seized document does not belong to the searched person but to the other person. The Hon'ble Delhi High Court has discussed the provision of section 153C in Pepsi Foods (P) Ltd. vs ACIT 270 CTR 459 in Para 6 as under:- 6. On a plain reading of s. 153C, it is evident that the AO 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 AO of the searched person can handover such document to the AO having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the AO of such other person can issue a notice to that person and assess or reassess his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fail to comprehend as to how the requirement of recording satisfaction by the AO of the person searched provided by the statute can be substituted with anything else. There is an underlying rationale in providing for recording of such satisfaction by the AO of the person searched. As the money, bullion, jewellery, books of account or documents etc. always come to the possession of the AO of the person searched who has to frame assessment, it is only he who can find out that which of such documents etc. do not belong to the person searched and are relevant for the assessment of the other person. It is not as if all the books of account and documents etc. found during the course of a search are evaluated by a separate authority to figure out that which of these documents belong to the person searched and to the others and thus handed over to the concerned AOs of the person searched and others for making assessment. It is only the AO of the person searched who can reach a conclusion that some of the documents etc. do not belong to the person searched but to some other person, the legislature has provided for recording of such satisfaction by the AO of the person searched. It is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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