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TMI Blog2017 (6) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 relating to assessment year 2009-10 passed under section 143(3) r.w.s 153C of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. The asst. order passed u/s 143(3) r.w.s 153C is bad in law and the same may be declared null and void. 2. The assessee submits that the notice issued u/s 153C is invalid in law and the consequential asst. passed by the learned A.O be declared null and void. 3. The learned CIT(A) erred in confirming an addition of ₹ 34,12,230/- on the ground that the assessee had made an unaccounted investment of the said amount for purchase of land at Gat No. 40/4/5/6, Rankala, Kolhapur. 4. The learned CIT(A) erred in confirming the addition by placing reliance on seized paper No. 18 found in the course of search on Shri Vijay Rajaram Shah without appreciating that no addition could be made in the hands of the assessee on the basis of evidence found with third party. 5. The learned CIT(A) failed to appreciate that the presumption u/s 132(4A) was appreciable to the person searched and not to the third party and hence, no addition was warranted in the hands of the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the record. Briefly, in the facts of the case, the assessee had filed its return of income declaring total income of ₹ 1,25,950/-. The assessee was engaged in the business of jewellery. Search u/s 132 of the Act was carried out in the case of Laxmi Civil Engineering Pvt Ltd, Kolhapur on 15.06.2010. Residence of its Director, Shri Vijay Rajaram Shah was also covered for search action. During the course of search action, two loose papers were seized which indicated transactions in respect of certain land purchased/ sold. The assessee was one of the parties involved in the land transactions. The Assessing Officer noted that the said two loose papers at serial No. 18 and 21 of the bundle No.2 seized from the residence of Shri Vijay Rajaram Shah who is the Director of Laxmi Civil Engineering Services Pvt Ltd and it depicted the details of purchase of agricultural lands situated at Rankala, Kolhapur and at Wadipur, Kolhapur. The cost of land as well as expenditure has been coded. As per the noting on page No. 18, the total cost of acquisition of agricultural land was ₹ 86,74,487/- and that of page No. 21 was ₹ 1,62,60,100/-. The said value was less then cost shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e document seized was in relation to sale of land by Ranakla Rahul Mane, under which 38.5 guntas were sold, wherein the assessee purchased 9.5 guntas, Shri Bharatkumar Kundanlal Jain purchased 13.5 guntas, firm and relatives purchased 15.5 guntas. The total consideration for the said deal was ₹ 35 lakhs. He further pointed out that on the basis of said piece of paper, notice was issued under section 153C of the Act, under which total consideration of sale of land was taken at ₹ 1.62 crores and the assessee s share of 9.5 guntas was worked out at ₹ 34,12,230/-. 9. The issue which arises by way of additional grounds of appeal before the Tribunal is whether in view of pre-amended provisions of section 153C of the Act, where the word was used belonging and where the transaction recorded on seized document related between the firm and Mr. Vijay Rajaram Shah and where the Assessing Officer also says that the document belongs to Mr. Vijay Shah, then no proceedings under section 153C of the Act could be initiated against the assessee, who is not related to the firm or Mr. Vijay Shah. 10. The Hon ble High Court of Delhi in Pr. CIT Ors. Vs. Nikki Drugs Chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee, he has to issue notice and assess or reassess the income of the assessee in accordance with the provisions of Section 153A of the Act. Section 153A of the Act requires that a notice be issued to the person sought to be assessed, calling upon the said assessee to file his return of income in respect of each year falling within the specified six AYs. It is further specified that the provisions of the Act shall, so far as may be, applied as if such returns were returns required to be furnished under Section 139 of the Act. Thus, the assessing officer has to, thereafter, proceed with the assessment/reassessment in accordance with the provisions of the Act; that is, accept the return with or without such adjustments as permissible under Section 143(1) of the Act or if the claims made by the assessee are considered as inadmissible and/or it is considered necessary and expedient to subject the returns to further scrutiny, issue the requisite notice under Section 143(2) of the Act and frame the assessment in accordance with the Act. 17. In the present case, the ITAT specifically recorded that, admittedly, a satisfaction note had not been recorded by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been sold and the endorsement made on the rear of the share certificates clearly indicated that the Assessee was no longer the holder of the said shares and the same stood registered in the name of one Satpal on 26th March, 2004. 21. The ITAT considered the above contentions and following the decision of this Court in Pepsico India Holdings (P.) Ltd. v. Asstt.CIT [2015] 370 ITR 295/ 228 Taxman 116 (Mag.)/[2014] 50 taxmann.com 299 held that the documents in question could not be said to belonging to the Assessee. In Pepsico India Holdings (P.) Ltd's case. (supra), this Court has explained that the expression 'belongs to' must not be confused with the expression 'relates to'. As an illustration, this Court has referred to a registered sale deed which, although, registered by the vendor would belong to the purchaser of the property and could not be considered to be belonging to the vendor only because the vendor's name was mentioned in the documents. In the present case, although the photocopies of the documents handed over to SVP Builders India Ltd. may be copies of the original documents that belong to the assessee, the said photocopies would belong to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment in acquisition of agricultural land at Rankala, Kolhapur of 38.5 guntas. As per loose paper 21 for purchase of 13.5 guntas in the name of Rajendra Motmal Shah, proportionate amount of investment was ₹ 1,62,60,100/38.5 = 422340x9.5 = 40,12,230/-. The assessee had shown sale consideration of ₹ 6 lakhs in the sale deed dated 01.10.2008 and the amount of unexplained investment was worked out at ₹ 34,12,230/-. The Assessing Officer noted that the assessee was one of purchasers of agricultural land and his statement was recorded in which he specifically denied to have given any excess amount in cash over and above the sale consideration. The relevant portion of the statement recorded of the assessee is reproduced at pages 11 to 13 of the assessment order. The assessee during the course of assessment proceedings vehemently stated that the total investment in the said land was only ₹ 6 lakhs. The Assessing Officer collected information from various departments and applied the same and held that as per seized papers, the value of transaction was shown as ₹ 1.62 crores, which was decoded from the fact that the value of stamp paper was ₹ 1,75,000/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal. 7. The grievance of the Revenue as submitted by Mr.Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than the person searched. However, in the present case, the conditions laid down in section 153C of the Act are not fulfilled. Where the document has been seized from the person searched, which in turn, belongs to the person searched and has been so held by the Assessing Officer, then the notings on the said document itself cannot be held to belong to the assessee, who is a person other than the person searched. In the absence of fulfillment of basic conditions of section 153C of the Act and applying the ratio laid down by the Hon ble High Court of Delhi in Pr. CIT Ors. Vs. Nikki Drugs Chemicals Pvt. Ltd. Ors. (supra) and the Hon ble Bombay High Court in CIT Vs. M/s. Arpit Land Pvt. Ltd. (supra), we hold that there is no merit in the initiation of proceedings under section 153C of the Act in the case of assessee. In the absence of any incriminating material found during the course of search of the person, who is covered under section 153A of the Act, which in turn, belongs to the person, other than the searched person i.e. assessee before us, then the proceedings under section 153C of the Act cannot be triggered. Accordingly, we hold so. Accordingly, the proceedings comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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