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TMI Blog2019 (5) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... on is found, then such a transaction which is recorded in the books of account of such other person cannot be the basis for initiating action u/s 153C which admittedly, are relation to the determination of undisclosed income / property in the hands of such other person. Accordingly, we hold so. Addition of gift - Coming to the facts of present case, search u/s 132 was conducted on the premises of Ashoka group of cases on 20.04.2010 the alleged undisclosed income was on account of gift deed which was executed on 02.02.2010 i.e. relevant for financial year 2009-10, which is the year before the year of search. Since the search took place in April, 2010, on the basis of copy of such gift deed, which is one time transaction, there is no merit in initiating proceedings u/s 153C starting from assessment year 2005-06 onwards. No such gift deed was found for those years - as perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to infla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Therefore, it is prayed to hold that the assessment proceedings initiated by issue of such Notice u/s 153C and the consequent assessment order passed u/s 153C were both bad in law. 2. The learned CIT(A) erred in disallowing various expenses @ adhoc 5%. It is prayed to cancel the disallowance. 4. The assessee has also raised additional grounds of appeal. 5. The assessee is aggrieved by exercise of jurisdiction by the Assessing Officer under section 153C of the Act, wherein vide ground of appeal No.1 the assessee has challenged notice issued under section 153C of the Act as not correct and hence, the consequent assessment order passed being bad in law. Vide ground of appeal No.2, the assessee has challenged disallowance of various expenses on adhoc basis @ 5%. The assessee has also raised additional grounds of appeal. 6. The learned Authorized Representative for the assessee at the outset pointed out that the issue which needs to be addressed as to when the proceedings can be initiated under section 153C of the Act. He further stated that during the course of search conducted on Ashoka group on 20.04.2010, copy of gift deed was found. As per the said gift deed, three Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble High Court of Gujarat in Rajesh Sunderdas Vaswani Vs. ACIT (2016) 76 taxmann.com 311 (Guj) and Kamleshbhai Dharamshibhai Patel Vs. CIT (2013) 263 CTR 362 (Guj). 9. We have heard the rival contentions and perused the record. The jurisdictional issue which is raised in the present bunch of appeals is whether the Assessing Officer has correctly invoked the jurisdiction under section 153C of the Act. Briefly, in the facts of the case, search and seizure operation under section 132 of the Act was conducted on Ashoka group of cases on 20.04.2010. The assessee had originally filed the return of income under section 139(1) of the Act on 14.12.2005 showing total loss of ₹ 93,158/-. Notice under section 153C of the Act was issued to assessee on 25.02.2011. The assessee in response, furnished return of income on 31.05.2011 declaring total loss of ₹ 93,158/-. The assessee during the course of assessment proceedings requested the Assessing Officer to provide copy of satisfaction note recorded for issue of notice under section 153C of the Act and also clarification on other points. The Assessing Officer replied to the same. It was also clarified that the Commissioner, Nashik h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, notice under section 153C of the Act was not valid, the CIT(A) observed that there was no mention of the word 'incriminating' in the provisions of section 153C of the Act. The only triggering factor is the issue of some asset or document belonging or having relation to the assessee, being found. The gift deed clearly established the relationship between the persons searched with the assessee and where the Assessing Officer had followed the procedure laid down in section 153C of the Act, the validity of notice under section 153C of the Act was held to be not tenable. The CIT(A) further held that the Assessing Officer was justified in denying exemption under sections 11 and 12 of the Act for assessment years 2006-07 to 2010-11, since CIT-I, Nashik because of various violations had withdrawn the exemption granted as per order passed under section 12AA(3) of the Act. 11. Coming to ground of disallowance of various expenses, the CIT(A) noted that survey under section 133A of the Act was carried out at the assessee's office premises on 20.04.2010 and during survey, the books of account were found to be maintained on computer and the Assessing Officer issued detailed questionn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to, a person other than the person searched under section 153A of the Act, then the books of account or documents or assets seized or requisitioned, shall be handed over to the Assessing Officer having jurisdiction over such other person. It is further provided that the Assessing Officer shall proceed against each such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search was concluded or requisition was made. Under the said section, the first requirement is of the Assessing Officer of incharge of the person searched who would record satisfaction that any money, bullion, jewellery or any valuable article or books of account or documents seized or requisitioned belongs or belonging to a person other than the searched person; then such books of account, documents, assets seized would be handed over to the Assessing Officer having jurisdiction over such other person, who shall then proceed and issue notice and assess income in the hands of such other person. Before proceedings with the same, the Assessing Officer of the searched person is to be satisfied that the books of account, documents and assets seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted on some person under section 132 of the Act. In case, we look at the said provisions of the Act (section 132), search and seizure proceedings are initiated where there is information in the possession of the Officer concerned and there is reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represent either wholly or partly income or property, which has not been or would not be disclosed, for the purpose of income tax, which income shall be referred to as 'undisclosed income or property'. The machinery section thus, talks of undisclosed income which needs to be assessed in the hands of searched person and hence, the start of proceedings by way of search under section 132 of the Act. The assessment proceedings are initiated in case of the person searched under section 153A of the Act, wherein also assessment for six years immediately preceding the year of search are open for assessment or reassessment. Further proceedings can be initiated under section 153C of the Act against other person, in case any document or asset is found relating to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no merit in initiating proceedings under section 153C of the Act starting from assessment year 2005-06 onwards. No such gift deed was found for those years. While referring to the decision of CIT(A) in the hands of assessee in the paras above, we have also referred to his observations at page 23 onwards, wherein he has perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group. He also mentioned that the Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to inflated expenses, if any. He mentioned that there is no specific doubt over the correctness of expenses claimed by the assessee trust in various assessment years under reference. In such scenario, where no incriminating material at all was found against the assessee, there is no merit in initiating proceedings under section 153C of the Act for assessment years 2005-06 to 2009-10. 16. Coming to assessment year 2010-11 i.e. the year in which gift deed was executed, again the document which was found was in respect of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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