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TMI Blog2019 (2) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, the cross objection for the assessment year 2011-12 is partly allowed for statistical purposes. Calculation of peak credit between the transaction of the assessee, Shri Dayananda Pai and CHD on the basis of documents filed in the course of hearing - Held that:- We are unable to understand the methodology of consolidated peak credit considered and there is no reference to peak credit calculation in respect of this assessee. The details filed by the AR are for the first time before the Tribunal based on the statements recorded in Dummy Tally Account in the course of search operations of Shri Dayananda Pai and CHD. We considering the material filed on record and the Settlement Commission and CIT(A)’s observations, are of the substantive opinion that these facts are to be examined and verified and the matter needs to be reconsidered for limited purpose for calculation of peak credit between the transaction of the assessee, Shri Dayananda Pai and CHD on the basis of documents filed in the course of hearing and accordingly, we restore this disputed issue to the file of the CIT(A) who shall call for remand report from the AO on these issues and pass a speaking order on the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties, however, later on, during the assessment proceedings, he completely reversed his stance and disowned everything recorded in the ledgers of the DTEE and other annexure of the seized documents and thereafter claimed that since transactions have been wholly owned by the M/s CHDC before the Hon'ble Income Tax Settlement Commission (ITSC), he should not be taxed. This retraction of the statement given under oath tantamount to disregard of law and subversion of the facts. 5. The Ld. CIT (A) erred in not appreciating the fact that the assessee is an investor in the business of Shri P. Dayananda Pai and M/s Canara Housing Development Company (CHDC) as per assessee's statement recorded by the Department at various point of time. Therefore, this fact should have been assessed independently in appeal. 6. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored. 7. The appellant craves leave to add, to alter, to mend or delete any of the grounds that may be urged at the time of hearing of appeal. 4. Brief facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal with the CIT(A). The CIT(A), considered the submissions, grounds of appeal and the findings of the AO on the grounds of re-assessment and the statement recorded and the comparative summary of various transactions. The CIT(A) made observations in para.6 of the order that in the course of appellate proceedings, the assessee has filed the copy of the Settlement Commission order of Shri Dayananda Pai and CHD and requested through letter dated 1/3/2016 on 3/3/2016 to delete the addition. The CIT(A) considered and referred in para.7 of the order, and the letter submitted by Shri Dayananda Pai and CHG on 18/3/2016 in respect of entries in the name of the assessee. The CIT(A) admitted the additional ground filed by the assessee on the legal provisions of section 147 and proceedings u/s 153 r.w.s 153A and dismissed the additional ground of appeal by observing that there is nothing to prohibit the AO to have initiated proceedings u/s 147 and concluding the assessment and confirmed the validity of order u/s 143(3) and 147 of the Act. 6. Further, the CIT(A) dealt on the findings of the Hon ble Settlement Commission order dated 19/10/2015 and has extracted the points at para.14 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the present applicant. The CIT(A) having considered the Settlement Commission order, made observations that the assessee is a liaison person in real estate business assisting Shri Dayananda Pai and his firm CHD for construction of flats. In the course of real estate business activities, the assessee used to receive funds from parties to be utilized for and further on behalf of parties the amounts collected by the assessee and remitted to Shri Dayananda Pai and CHD such transactions does not have income element and has been accounted by the applicants in the Settlement Commission. Further, the CIT(A) observed in paras.18 and 19 which read as under: 18. The appellant herein has been a conduit for the cash transactions of Mr.P. Dayananda Pai and M/s. CHDC, in general and specifically with respect of transactions mentioned in the Dummy Tally. Further it is a fact on record that before the Hon'ble Settlement Commission, the said Mr.P.Dayananda Pai and M/s.CHDC also agreed to the data as detailed in the Dummy Tally and accepted to the same by the Department and additional income was determined accordingly in the hands of the said Mr.P.Dayananda Pai and M/s.CHD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai and CHD have made application for disowning the funds but not the assessee sources which could not be explained and the fact remains that the assessee has advanced amounts and received back in some instances and the sources of the assessee has to be considered separately and cannot be merged with the disowning offer made by Shri Dayananda Pai and CHD which relates to their individual assessments and the assessee s sources has to be independently assessed in his hands and not on third party. Whereas the CIT(A) has only referred to the observations of the Settlement Commission on peak credit as referred inpara.14 of the order but no individual peak credit has been worked out in respect of transaction of three parties Shri Dayananda Pai, CHD and the assessee. Even the CIT(A) s order does not specify the basis on which the facts have been verified on sources but only relied on the statements of applicant and observations before the Settlement Commission. The learned DR further submitted that the sources were not explained by the assessee even before the Tribunal and prayed for allowing the revenue appeal. 9. Contra, the learned AR supported the order of the CIT(A) on this dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of the learned DR are realistic. On perusal of the CIT(A) order, we found that the CIT(A) has referred to the observations of the Hon ble Settlement Commission in particular to Shri Dayananda Pai and CHD and nowhere there is any reference on such individual peak credit calculations. 11. In the course of hearing, the learned AR has filed material in respect of peak credit working of CHD and the assessee for the assessment years 2006-07 to 2011-12 and referred to the markings. We are of the opinion that these facts were never brought on record before the lower authorities. Learned AR vehemently submitted that since assessee s sources has been offered by way of peak credit by the applicant before the Settlement Commission, the same cannot be taxed twice. But we are unable to understand the methodology of consolidated peak credit considered and there is no reference to peak credit calculation in respect of this assessee. The details filed by the learned AR are for the first time before the Tribunal based on the statements recorded in Dummy Tally Account in the course of search operations of Shri Dayananda Pai and CHD. We, therefore, considering the material filed on record and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized. 3. The Hon'ble Tribunal may therefore kindly consider the cross objection raised and dismiss the departmental appeal. 15. Learned AR argued that the assessment u/s 147 is illegal and void as the search u/s 132 of the Act has taken place at third party place and when there is search u/s 132 of the Act on third party premises, assessment based on the seized material shall be under the provisions of section 153C of the Act. The learned AR filed written submissions and relied on the decision of the Hon ble Calcutta High Court in the case of Rawatmal Harakchand vs. CIT (129 ITR 346) (Cal) and the decision of the Hon ble jurisdictional High Court in the case of CIT vs. IBC Knowledge Park (P) Ltd., (2016) 287 CTR 261(Kar) and particular attention was drawn to para.50 of the judgment and submitted that proceedings u/s 153C shall prevail. The learned AR also relied on the decision of the co-ordinate bench in ITO vs. Arun Kumar Kapoor (2011) 58 DTR(AT) 201(ITAT, Amritsar). 16. Contra, the learned DR submitted that the AO has rightly passed order u/s 143(3) r.w.s. 147. The learned DR relied on the decision of Ahmedabad Bench of Tribunal in the case of Shaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132 or requisition is made under section 132A and in respect of such assessment year- ( a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or ( b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143has expired, or ( c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. Similarly, provisions of sections 147 and 148 read as under: [ Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act has been computed Issue of notice where income has escaped assessment. 3148. 4[(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve 5 on the assessee a notice requiring him to furnish within such period, 6[* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be pres-cribed; and the provisions of this Act shall, so far as may be 7, apply accordingly as if such return were a return required to be furnished under section 139 :] 8[Provided that in a case- ( a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and ( b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble High Court dismissed the revenue s appeal on the ground of low tax effect. As far as our view is concerned, on the assessment u/s 147 r.w.s 143(3) or 153C of the Act, we consider it appropriate to refer to the provisions and the decisions as envisaged in the case of Shailesh S. Patel vs. ITO (97 taxmann.com 570) (Ahmedabad.Trib) and we consider it to refer to the observations at para.14.2, 1 and 14.2.3 and 14.5 of the order which read as under: 14.1 Before we proceed for determination of issue, it would be pertinent to refer to the provisions of s. 153C and also s. 147 of the Act, as appearing in the statue at the relevant time, to the extent as may be relevant in the context. Assessment of income of any other person . - 153C. [(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 153D exerts an overriding effect over the provisions of sections 139, 147, 148, 149, 151 and 153 of the Act since these provisions contain non-obstante clause. Secondly, the assessment proceedings under s. 153C are far more onerous qua s. 147 in the sense that proceedings are initiated for six assessment years immediately preceding the year in which search u/s. 132 is initiated or requisition is made u/s.132A. Thirdly, the provisions of section 153C are analogous to section 158BD of the Act. Therefore, decision of the Apex Court in the case of Manish Maheshwari v. Asstt. CIT [2007] 159 Taxman 258/289 ITR 341 would also apply where assessment is to be made u/s. 153C. As per the aforesaid decision, the precondition for invoking jurisdiction for issue of notice u/s. 153C is that the AO must record satisfaction as to the seized material 'belongs to' the third person i.e. assessee. . . . . . . . 14.2.3 Therefore, question posed whether, in view of the phraseology employed in the section, if the books of account belong to the person searched but entry in such books reflect the undisclosed income of the third party then, whether the AO can assume jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o erstwhile assessment procedure in the case of third person under old scheme) and Section 147/148 of the Act under normal provisions, provisions of erstwhile Section 158BC will prevail. The Hon'ble Gujarat High Court has also opined that proceedings under s.147/148 of the Act will not lie where it is repugnant to the procedure laid down under erstwhile Chapter XIV-B relating to search cases. In the instant case, where the onerous proceedings under s. 153C of the Act has not been invoked and could not possibly be invoked, there was no impediment for initiating proceedings under s.147 of the Act by the AO as discussed in elaboration above. Therefore, in Cargo Clearing Agency and other decisions of the co-ordinate bench cited on behalf of the assessee rendered on similar lines do not give rise to any conflict and are of no assistance to the assessee. 18. We are of the considered opinion that the documents seized in the Dummy Tally Account belongs to third party, i.e. the assessee. We concur with the decision of the Ahmedabad Bench in the case of Shailesh S. Patel (supra) in respect of alternative remedy available to the AO for initiating reassessment proceedings u/s 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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