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TMI Blog2021 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... the searched person on the basis of incriminating materials seized during the search as has been testified and brought out by RTI application by the assessee and response thereto by the AO that no satisfaction has been recorded by the AO of the searched person i.e. Katrina Kaif. No incriminating documents were seized during search on Kaitrina Kaif belonging to the assessee as is apparent from the punchnama prepared during search. Also during the course of recording of statement of Kaitrina Kaif not even a single query was raised on the basis of materials seized from Ms Katrina Kaif about the assessee - contentions of the Ld. Counsel of the assessee carry weight that even if the assessment framed is presumed to be under section u/s 143(3) r.w.s. 153C of the Act, even then the assessment is bad in law as the notice has been issued with the satisfaction of the AO of the searched person. In our opinion the assessment framed by the AO is without jurisdiction and can not be sustained. Undisclosed receipt from the clients - Addition on the basis of some rough workings found from the back up of the computer of Ms. Sandhya Ramachandran for the period for which she was not employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses and conjectures. In view of these facts and the decisions as stated above, we are inclined to uphold the order passed by the ld CIT(A) on this issue. The ground no. 2 is allowed. - ITA Nos.2938, 2939, 2940 & 2941/M/2015, ITA Nos.3208, 3209 & 3210/M/2015, CO Nos.26, 27 & 28/M/2017 (Arising out of ITA Nos.3207, 3208 & 3209/M/2015 - - - Dated:- 23-7-2021 - Shri Rajesh Kumar, Accountant Member And Shri Ramlal Negi, Judicial Member For the Assessee : Dr. K. Shivaram, A.R. Shri Rahul Hakani, A.R. For the Revenue : Shri Sandeep Raj, D.R. ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER: The above titled cross appeals and cross objections have been preferred by the assessee and the Revenue against the orders even dated 23.03.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2005-06, 2006-07 2007-08, 2008-09, 2009- 10, 2010-11 2011-12. 2. We are first taking up the ITA No.2938/M/2015 A.Y. 2005-06 for adjudication. ITA No.2938/M/2015 A.Y. 2005-06 (Assessee s appeal) 3. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 76,001/- as unexplained expenditure on the basis of some rough workings found from the backup of the computer of Ms. Sandhya Ramchandran for the period for which she was not employed with the Appellant company. 8. In view of the above, the appellant prays that the Assessing Officer be directed to not to initiate the penalty u/s 271(1)(c) of the Act. 9. The appellant prays that : i) Assessment order my be cancelled as being without jurisdiction and bad in law, ii) Addition of ₹ 94,000/- may be deleted iii) Addition of ₹ 37,851/- may be deleted iv) Addition of ₹ 7,650/- may be deleted v) Addition of ₹ 40,900/- may be deleted vi) Addition of ₹ 33,416/- may be deleted vii) Addition of ₹ 76,001/- may be deleted viii) Any other relief your honours may deem fit. 10. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal. 4. The issue raised in the 1st ground of appeal is a jurisdictional issue challenging the order of Ld. CIT(A) on the ground of wrong upholding of the assessment order framed under section 153A read with section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the order passed by Ld. CIT(A), upholding the assessment order which is bad in law as it is passed u/s. 153A r.w.s. 143(3) and not u/s. 153C of the Act, is wrong and against the provisions of the Act. Secondly, the ld AR submitted that there was a survey action u/s 133A of the Act on the assessee on 24.1.2011 and there was no search action on the assessee. The ld AR submitted that there was a search action on Ms Kaitrena Kaif in which some documents were reported seized and accordingly the assessee was issued notice under section 153C of the Act on 9.01.2012. The ld AR argued that once the assessee is other than the searched person and notice is issued under section 153C of the Act, then the assessment has to be framed under section 143(3) r.w.s. 153C of the Act whereas the assessment was framed under section 153A r.w.s.143(3) of the Act and therefore the same is invalid and bad in law. The ld AR also made a without prejudice contention to the above one that the notice u/s. 153C of the Act and the consequent assessment order is bad in law. The ld AR argued that during search in case of Katrina Kaif, no incriminating material was found pertaining to the assessee as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .153A of the Act in case of completed assessment no addition can be made unless there is incriminating seized material during the search. The ld AR submitted that in the facts of present case, as is clear from panchnama, no material seized belonged to the assessee. The ld AR submitted that even otherwise nothing seized during search is even prima facie incriminating as additions were not made on the basis of anything found during the course of search in case of Katrina Kaif. Therefore the ld Counsel for the assessee make a without prejudice argument to the above that since A.Y. 05-06 to A.Y. 09-10 are completed assessments, all additions ought to be deleted as same are not made based on any incriminating material found during search in the case of Katrina Kaif. In view of above submissions it is prayed that Assessee appeals and cross- objections/ application under Rule 27 may be allowed and department appeals may be dismissed. 9. The ld DR, per contra, strongly rebutted the arguments of the ld AR by submitting that the assessment has been rightly framed under section 153A read with 143(3) of the Act. The Ld. D R. submitted that a search action was conducted on Katrina Kaif gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the AO is bad in law. Further so far as proceedings u/s 153C of the Act is concerned on the person other than the searched person, it is prerequisite that proper satisfaction is recorded by the AO of the searched person that some incriminating documents seized during search belonged to the assessee and after receiving the satisfaction by the AO of the assessee(the person other than the searched person) again the AO will record his satisfaction and only then the notice u/s 2153C of the Act can be issue to the person other than the searched person and not otherwise. In the present case the assessee is a person other than the searched person. So the proceedings u/s 153C of the Act can be initiated when these pre-conditions are fulfilled otherwise the proceedings and consequent assessment would be rendered bad and invalid. We note that no such satisfaction has been recorded by the AO of the searched person on the basis of incriminating materials seized during the search as has been testified and brought out by RTI application by the assessee and response thereto by the AO that no satisfaction has been recorded by the AO of the searched person i.e. Katrina Kaif. We also note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in CIT vs. Sinhagad Technical Education Society Civil Appeal No. 11080 of 2017 dt. 29/8/2017. (2017) 397 ITR 344 (SC) vi) In the case of Skylark Build vs. ACIT (supra) where in it is held that recording of satisfaction in the case of the search party is a sine qua non for assuming jurisdiction for the issue of notice u/s. 153C. It is further held that even if Assessing Officer is the same, recording of satisfaction is mandatory. For coming to this conclusion, ITAT has relied upon Circular No. 24/2015 dt. 31/12/2015. 11. We also find merit in the third without prejudice argument of the ld Counsel of the assessee that A.Y. 05-06 to A.Y. 09-10 have attained finality on the date of search and were completed assessments, and therefore the additions ought to be made on the basis of seized incriminating materials during search and not otherwise. In the present case the search team has not seized any incriminating materials. Therefore we are inclined to hold that additions can not be sustained and accordingly have to be deleted as same are not made based on any incriminating material found during search in the case of Katrina. 12. In view of above facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are therefore inclined to condone the delay of 33 delays. 18. The assessee has also filed under Rule 27 application submitting therein that the respondent is entitled to raise an objection under Rule 27 even in respect of fresh issues. The ld AR submitted that it is not necessary that the ground should have been decided against the Respondent by the CIT(A) by relying on the decision in the case of AAP Paper Marketing Ltd. v ACIT ITA No 167/Lkw/2016 AY 11-12 dtd 28/4/17(Luck)(Trib.). The application is not being decided as we have condoned the delay in filing the cross objections. 19. The ld AR submitted that since there is no appeal of the revenue in AY 2008-09, the cross objection of the assessee for the said year becomes infructuous and accordingly may be dismissed. 20. Since we have already decided the jurisdictional issue as raised in the above ITA Nos.2939 2940/M/2015 for AY 2006- 07, 2007-08 and Cross Objections Nos.26, 27 28/M/2017 for AY 2008-09 to 2010-11 in ITA No.2938/M/2015 A.Y. 2005-06. Therefore our decision in ITA No.2938/M/2015 AY 2005-06 would, mutatis mutandis, apply to these appeals and cross objections as well except CO No .26/M/2017 AY2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 25,00,000/- thereby adding 100% of the undisclosed professional receipts on the basis of blackberry conversation between one Ms. Sandhya Ramachandran and unknown some third party. 26. The facts in brief are that the AO on the basis of chat in a blackberry phone of Ms. Sandhya Ramachandran came to conclusion that assessee has received ₹ 25,00,000/- in cash and accordingly a show cause notice was issued as to why the same should not be treated as professional fees in cash in the hands of the assessee. Finally, the AO added 25% on the same to the income of the assessee on the ground that assessee has not offered any explanation and therefore issue remained unexplained. Thus AO made an addition of ₹ 5,00,000/- being 25% of ₹ 25,00,000/- which was alleged to be paid in cash. 27. In the appellate proceedings the Ld. CIT(A) enhanced the addition by observing and holding as under: 10.3 Vide order dated 20.03.2014 in the case of Katrina Rosemary Turcotte for A.Y.2011-12 the addition of ₹ 20,00,000/- (being 80%) had been deleted by me holding the view that the entire ₹ 25,00,000/- being 100% (as per seized document El) is to be sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as raised in ground No.2 with exception of variation in the amount. Therefore, our finding in ground No.2, would mutatis mutandis, apply to ground No.3 as well. Accordingly, ground No.3 is allowed. 31. Accordingly, appeal of the assessee is allowed. ITA No.3210/M/2015 (Revenue s appeal) 32. The issue raised in ground No.1 is against the deletion of addition of ₹ 35,00,000/- by Ld. CIT(A) as made by the AO on account of undisclosed receipts. 33. During the course of assessment proceedings the AO observed on the basis of SMS and conversation in blackberry mobile back up of Ms. Sandhya Ramachandran which was found at the time of search that a professional fees of ₹ 50 lakhs was collected against the issuance of bills while ₹ 75 lakhs was received in cash on the account of Ms. Katrina Kaif. Similarly ₹ 75 lakhs were received against bills and ₹ 1.00 Cr in cash on the account of Mr. Salman Khan. Accordingly, a show cause notice was issued to the assessee as to why the same should not be added to the income of the assessee. The assessee submitted before the AO that this was just a proposal and no cash has actually been received. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it was through another agency, M/s. ATN Records Ltd. and not through M/s. Matrix India Entertainment P. Ltd. Therefore there is no material in the possession of the AO to demonstrate that the assessee has received any amount in cash from M/s. Matrix India Entertainment P. Ltd. For Dhaka event. On the contrary, the evidences on record do indicate, though, the assessee appeared in the Dhaka event conducted through M/s. ATN Records Ltd., however, she has received her fees fully in cheque and has offered it as income in the relevant assessment year. As no material has been brought before us by the Revenue to controvert the aforesaid facts we are inclined to affirm the order of the CIT(A) on this issue by dismissing the ground raised by the Revenue. 36. In the present case also the revenue could not bring any materials on records to controvert findings of the ld CIT(A). Since the facts before us are similar to ones as decided by the coordinate bench in the case of Katrina Kaif as discussed hereinabove. We, therefore, respectfully following the decision of the co-ordinate bench of the Tribunal uphold the order of Ld. CIT(A). Accordingly, ground No.1 is dismissed. 37. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at cash was paid to Katrina and thus revenue appeal on said ground was dismissed. It was held that AO has not brought on record any clinching evidences to prove that cash was paid. Thus, the order of CIT(A) which is in conformity with the observations of the coordinate bench in the case of Katrina Kaif deserved to be confirmed. The observations of Ld. CIT(DR) in his written submissions with respect to the Annexures do not survive in view of decision of this co-ordinate bench in the case of Katrina Kaif. The learned CIT (DR) has relied on following decisions to justify estimation / extrapolation which were distinguished by the counsel of the assessee as under: a)Shri Surinder Kumar v. CIT (Appeal nos. 389 and 390 of 2009) (P H)(HC) / [2012] 340 ITR 173 (Punjab Haryana)(HC)-This decision is not applicable as there was corroborative material and also it does not pertain to estimation of another assessment year. b)CST vs. H.M. Esufali H M Abdulai (1973) SCC (2) 137 (SC) / [1973] 90 ITR 271 (SC)-The issue was relating to estimation for same year and not other Assessment Years. Hence, this decision is not applicable. c)Gopal Lal Bhadruka vs. DCIT (2012) 346 ITR 106 (AP)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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