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TMI Blog2023 (3) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Adlene Kagoo and fresh proceedings under section 153C of the Act ought to have been initiated. As seen upon receipt of the said information/materials, the AO did not assume jurisdiction under section 153C of the Act, but rather chose to use the said materials/information for making additions in the impugned orders of assessment concluded under section 153A of the Act. The AO has discussed these additions in the order of assessment and clear referred to the documents found in the course of search of Smt. Adlene Kagoo. Thus, the AO has not followed the procedure laid down in section 153C of the Act for taking cognizance of the material found/seized in the case of Smt. Adlene Kagoo and making an assessment with reference to those materials in the case on hand. We are of the view that in the event the AO wanted to take cognizance of the seized materials, he ought to have invoked the provisions section 153C of the Act after recording his satisfaction based on material sent by the AO of Smt. Adlene Kagoo. This jurisdictional pre-condition laid down by the Legislature of recording of satisfaction for taking action under section 153C of the Act cannot be side-stepped/brushed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Mr. P. Dayanand Pai. 4. Based on the documents found in the search conducted in the case of Smt. Adlene Kagoo, the AO proceeded to make assessment for all the Assessment Years. Based DTTE, the AO made some additions. We shall first deal with the additions made in AY 2006-07 to 2009-10 that are challenged in the appeals ITA No. 67 to 70/Bang/2017. According to the Revenue, the DTEE contained details of payment made by the assessee to Shri. P. Dayananda Pai outside the books of accounts in cash. The AO has set out in detail the aforesaid payments which total a sum of Rs. 7,75,00,000/- in Assessment Year 2006-07. Similarly, in Assessment Year 2007-08, the AO relying the documents seized in the premises of Smt. Adlene Kagoo came to the conclusion that assessee had given a sum of Rs. 13,08,00,000/- to Shri. P. Dayananda Pai as loan from undisclosed sources. Besides the aforesaid loan, the AO also attributed a sum of Rs. 55,29,601/- as interest paid outside the books of accounts and brought to tax a sum of Rs. 18,73,29,601/-. 5. In so far as the additions of Rs. 7,75,00,000/- made in Assessment Year 2006-07 is concerned, the additions have been made by the AO with the observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of the AO were as follows: II. Interest charged : Further, the assessee has raised certain amounts as interest from M/s. Dayanand Pai. The documents show that the assessee had made computations at 14%, 18% and 24%. However an analysis of the relevant pages, namely, 10, 11, 12, 13, 14, 15, 16, 45, 46, 47 of the documents show that he has charged interest at 18%. The working of the interest actually charged by the assessee is at Page 45, based on 18% interest. Rest of the documents are supportive documents for the same. Based on the workings, the assessee has written letters to M/s. Dayanand Pai, which are appearing in pages 47, 16, 14, 12. The details of interest charged by the assessee are as under : AY Interest Charged 2007-08 5529601 2008-09 10202005 2009-10 1552636 The assessee was asked to explain these transactions. The assessee vide letter dated 11.3.2014 gave a reply. In the said reply, the assessee stated that they tried to collect interest on the funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2007-08 30-03-2007 24-04-2007 128300000 128300000 Subsequent to AY 2007-08, the peak credit has no exceeded Rs. 13,08,00,000/-. Thus the discussion is limited to the aforementioned credits only. All the documents found in the premises of Ms. Adlene Kagoo consistently show the figures as above for the purpose of computation of interest. The Assessee was required to explain the entries. Bu the reply filed by the Assessee is vague. As staged, all the pages showing the computations of interest namely, 45, 44, 43, show the advances at the same figures. Pages 47, 32, 15, 13, 10, being computation sheets for interest confirm to the entries in pages 45, 44, 43. Thus, the chain of documentation establishes that the entries in these sheets that are in the hand writing of Mrs. Adlene Kagoo are true and are nothing but the accounting maintained by M/S. Dayanand Paid in respect of actual transactions that the two business partners have entered into. In other words, the assessee had advanced these amounts to M/S. Dayanand Paid, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on the basis of the material found in the case of some other person was argued before us. The said issue was raised by the assessee in ground No. 5(i) to (iii) in all these appeals and the same reads as follows: 5. Grounds on whether Section 153A or 153C is applicable: i. The learned CIT(A) was not justified in law in confirming the additions based on the material seized from the search conducted in the case of Dr. P. Dayananda Pai in the premises of Mrs. Adelene Kagoo in the assessment order passed under Section 153A r.w.s 143(3) of the Act on the facts and circumstances of the case. ii. The learned CIT(A) failed to appreciate that the notice under Sects 153C of the Act ought to have been issued for making the assessment a. respect of the material seized from the search conducted in the case of Dr. P. Dayananda Pai in the premises of Mrs. Adelene Kagoo and the order passed under Section 153A of the Act by considering the materials seized from the premises of Mrs. Adelene Kagoo is not valid in the law on the facts and circumstances of the case. iii. The learned CIT(A) failed to appreciate that the assessment order passed under Section 153A r.w.s 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 153A against such other person. According to the learned AR, the AO while passing the order of assessments under section 153A of the Act had taken into account/considered materials found in the course of subsequent search in the case of Smt. Adlene Kagoo, without adopting and following the procedure laid down under section 153C of the Act. It was argued that the additions made by the AO in the order of assessment under section 153A of the Act, based on documents and materials found in the course of search in the case of Smt. Adlene Kagoo is contrary to law and hence these additions even to the extent sustained by the learned CIT(A) are legally untenable and are required to be deleted. In support of the aforesaid proposition of law, the assessee, inter alia, placed reliance on the decision of the Kolkata Bench of ITAT in the case of Krishna Kumar Singhania (168 ITD 217) (Kol. - Trib.). Reliance was also placed on the judgment of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd., (174 DTR 92) (Bom). 12. The learned DR supported the impugned orders of assessment for Assessment Years 2006-07 to 2009-10 and submitted that the AO was fully justified in taking cogniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate 15. The provisions of Section 153C of the Act enjoins upon the AO of the person searched; that on being satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdictional conditions and circumstances prescribed by the legislature for assumption of jurisdiction and taking action under sections 153A and 153C of the Act are different and are not interchangeable. The jurisdiction to make an assessment under section 153A of the Act arises when there is a search conducted under section 132 of the Act. Whereas, jurisdiction to make assessment under section 153C of the Act arises when satisfaction is reached that the materials found in the course of search of some other person have a bearing on the determination of the income of the assessee. Further, in the first proviso to section 153C of the Act, it is provided that the reference to the date of search in the second proviso to section 153A of the Act; dealing with abatement of pending proceedings on the date of search; shall for the purpose of the persons proceeded under section 153C of the Act be construed as the date on which the seized materials are received by the AO. 17. In the present appeals for AY 2006-07 to 2009-10, there was a search under section 132 of the Act in the case of the assessee on 30.6.2011. No incriminating materials were found during the said search. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per section 292C of the Act, there is a presumption that the documents, assets, books of accounts etc found at the time of search in the premises of a person is always presumed to be belonging to him/them unless proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn, has got every right to state that the said documents does not belong to him/them. The ld. AO if he is satisfied with such explanation, has got recourse to proceed on such other person (i.e. the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized documents and other material found and seized in the course of search conducted in the premises/case of Smt. Adlene Kagoo, while framing the orders of assessment under section 153A of the Act in the case the assessee. As a matter of fact, the ongoing assessment proceedings under section 153A of the Act would abate on receipt of these seized materials as per the second proviso to section 153C of the Act. We are of the view that in the event the AO wanted to take cognizance of the seized materials, he ought to have invoked the provisions section 153C of the Act after recording his satisfaction based on material sent by the AO of Smt. Adlene Kagoo. This jurisdictional pre-condition laid down by the Legislature of recording of satisfaction for taking action under section 153C of the Act cannot be side-stepped/brushed aside and additions be made in proceedings pending under section 153A of the Act as the scope of assessments framed under sections 153A and 153C of the Act are quite different. In that view of the matter, we hold that the additions made by the AO in the impugned orders of assessment for Assessment Years 2006-07 to 2009-10 cannot be sustained as they are contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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