THE DCIT, CIRCLE-2(1), Vijayawada V. M/s Laila Nutraceuticals, Vijayawada

CO 10/VIZ/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9197 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: TH LUCAS PETER
• Keywords: Search and seizure; Loose papers; Document seized; Share purchase agreement; Documents seized
• Section: 143(3); 133A; 153A; 12A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNAM BEFORE S/SHRI B. RAMAKOTAIAH (AM) & SAKTIJIT DEY (JM) I.T.A. NOS.31 TO 35/VIZ/2012 ASSESSMENT YEARS:2001 - 02 TO 2005 - 06 THE ACIT, CENTRAL CIRCLE - 2, 5 TH FLOOR, DIRECT TAXES BUILDING, MVP DOUBLE ROAD,OPP: RYTU BAZAR, VISAKHAPATNAM VS. SRI RAMA EDUCATIONAL TRUST, B - 4, SRI LAXMI TULASI APARTMENTS, DASAPALLA HILLS, VISAKHAPATNAM PAN/GIR NO. : AACTS 4829 B ( APPELLANT ) .. ( RESPONDENT ) C.O.NOS.7 TO 11/VIZ/2013 (ARISING OUT OF I.T.A. NOS.31 TO 35/VIZ/2012) ASSESSMENT YEARS:2001 - 02 TO 2005 - 06 SRI RAMA EDUCATIONAL TRUST, B - 4, SRI LAXMI TULASI APARTMENTS, DASAPALLA HILLS, VISAKHAPATNAM VS. THE ACIT, CENTRAL CIRCLE - 2, 5 TH FLOOR, DIRECT TAXES BUILDING, MVP DOUBLE ROAD,OPP: RYTU BAZAR, VISAKHAPATNAM PAN/GIR NO. : AACTS 4829 B ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : TH. LUCAS PETER RESPONDENT BY : G.V.N. HARI DATE OF HEARING : 11/12/2013 DATE OF PRONOUNCEMENT : 13 /12/2013 O R D E R PER BENCH: THE DEPARTMENT HAS FILED THESE APPEAL S FOR ASSESSMENT YEAR S 2001 - 2002 TO 2005 - 06 AGAINST COMMON ORDER DATED 31.10.2011 OF LD CIT(A) - VISAKHAPATNAM. 2. THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE NOT ORIGINALLY LISTED BEFORE US ALONGWITH THE APPEALS OF THE DEPARTMENT. HOWEVER, AT THE REQUEST OF THE ASSESSEE AND ON CONSENT OF BOTH PARTIES AND CONSIDERING THE FACT THAT CROS S OBJECTIONS ALSO ARISE OUT OF 2 THE COMMON ORDER OF THE CIT(A), WHICH AR E SUBJECT MATTER OF APPEAL IN DEPARTMENTS APPEALS NOS.31 TO 35/VIZ/2012 FIXED BEFORE US TODAY, FOR THE SAKE OF CONVENIENCE, WE ALSO TAKE UP THE CROSS OBJECTIONS FOR HEARING AND DISPOSA L. 3. ALL THE APPEALS OF THE DEPARTMENT RAISE THE FOLLOWING COMMON GROUNDS: 1. THE CIT (A) ERRED IN DELETING THAT THE INITIATION OF PROCEEDINGS U/S.153C IS AB INITIO VOID WITHOUT CONSIDERING THE FACTS OF THE CASE. 2. THE LD CIT(A) WRONGLY CONCLUDED THAT T HE SEIZED DOCUMENTS ARE NOT INCRIMINATING. 3. THE LD CIT(A) DID NOT CONSIDER THE DECISION IN CIT VS PANCHAJANYAM MANAGEMENT AGENCIES AND SERVICES, 333 ITR 281 REGARDING THE REQUIREMENT OF SATISFACTION BY THE AO WHEN HE IS SAME FOR THE ASSESSEEU/S.153A AND THAT U/S.153C. 4. THE ONLY ISSUE ARISING OUT OF GROUNDS OF THE DEPARTMENT IS WHETHER THE CIT(A) WAS JUSTIFIED IN ANNULLING THE ASSESSMENT FOR ALL THE ASSESSMENT YEARS ON THE GROUND THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 153C IS NOT CORRECT AS THERE ARE NO SEIZED MATERIALS FOUND DURING THE SURVEY ACTION BELONGING TO THE ASSESSEE. 5 . BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE TRUST IS ENGAGED IN THE ACTIVITY OF RUNNING A MEDICAL COLLEGE. AS STATED BY THE AO IN THE ASSESSMENT ORDER, THE ASSES SEE HAS BEEN GRANTED REGISTRATI ON UNDER SECTION 12A OF THE ACT VIDE OR DER DATED 7.12.2005 AND HAS A BEEN APPROVED UNDER SECTION 10(23C)(VI) AND (VII) OF THE ACT BY THE COMMISSIONER OF INCOME TAX - 1, VISAKHAPATNAM FOR ASSESSMENT YEARS 2004 - 05,2005 - 06 AND 20 06 - 07 VIDE ORDER DATED 20 - 2 - 2006. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF SRI.TANGI HARI, PROPRIETOR, M/S H.N.R. CONSTRUCTIONS ON 25.8.2005. 3 DURING THE SEARCH AND SEIZURE OPERATION, CERTAIN DOCUMENTS AS STATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER BELONGING TO THE ASSESSEE AT PAGE S 31, 32 AND 61 WITH IDENTIFICATION MARK TH/HNR/2 WERE SEIZED. CONSEQUENT UPON THE SEA RCH OPERATION, A SURVEY OPERATION UNDER SECTION 133A WAS ALSO CONDUCTED IN THE CASE OF TANGI HARI AT HIS SITE OFFICE LOCATED WITHIN THE PREMISES OF THE ASSESSEES MEDICAL COLLEGE AND HOSPITAL, NAMELY, MAHARAJAH INSTITUTE OF MEDICAL SCIENCES ( MIMS ) , NELLIM ERLA, VIZIANAGARAM(DIST ) AND CERTAIN DAYBOOKS WERE IMPOUNDED UNDER THE IDENTIFICATION MARK HNR/MIMS/18, HNR/MIMS/24 AND HNR/MIMS/25. AS NOTED BY THE AO, T HESE IMPOUNDED DOCUMENTS CONTAIN THE DETAILS OF ALLEGED CASH PAYMENTS MADE BY ASSESSEE . ON THE BASIS OF THE IMPOUNDED DOCUMENTS SHOWING CASH PAYMENTS MADE BY THE ASSESSEE, THE AO REQUISITIONED U/S.131 OF THE ACT THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04 AND THE AO ON VERIFICATION OF THE BOOKS OF ACCOUNT FOUND THAT SOME OF THE C ASH PAYMENTS TO THE CONTRACTOR HAVING MADE OUTSIDE THE BOOKS OF ACCOUNT, IMPOUNDED THE BOOKS OF ACCOUNT OF THE ASSESSEE. ON THE BASIS OF THE SEIZED MATERIALS AND IMPOUNDED BOOKS OF ACCOUNTS AND OTHER DOCUMENTS, THE AO ISSUED NOTICE U/S.153C OF THE ACT TO THE ASSESSEE FOR ALL THE AFORESAID ASSESSMENT YEARS I.E. 2001 - 02 TO 2005 - 06 CALLING UPON THE ASSESSE E TO SUBMIT HIS RETURN OF INCOME. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03, 2003 - 04 AND LOSS OF RS.4,41,81,1145/ - AND RS.5,23,50,828/ - FOR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06, RESPECTIVELY. THE AO, HOWEVER, COMPLETED THE ASSESSMENT S FOR ALL THE AFORESAID ASSESSMENT YEARS ASSESSING THE INCOME AS UNDER: ASSESSMENT YEAR IN COME ASSESSED 4 2001 - 02 18,28,746 2002 - 03 5,32,538 2003 - 04 36,226 2004 - 05 72,12,000 2005 - 06 16,00,000 6. IT WILL BE PERTINENT TO MENTION HERE THAT FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03 AND 2003 - 04, THE AO COMPLETED THE ASSESSMENT BY ASSESSING THE INCOME ONLY ON THE GROUND THAT THE ASSESSEE IS NOT APPROVED UNDER SECTION 10(23C) OF THE ACT. HOWEVER, SO FAR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ARE CONCERNED, THE AO ON THE BASIS OF IMPOUNDED DOCUMENTS CONSEQUENT UPON THE SURVEY OPERATION DETERMINE D THE TOTAL INCOME. THE ASSESSEE BEING AGGRIEVED OF THE ASSESSMENT ORDERS SO PASSED BY THE AO, PREFERRED APPEALS BEFORE THE CIT(A). 7. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) R.W.S 153 C OF THE ACT BASICALLY ON THE GROUND THAT SINCE THERE WAS NO MATERIAL SEIZED BELONGING TO THE ASSESSEE, NO ASSESSMENT COULD HAVE BEEN MADE UNDER SECTION 15 3C OF THE ACT. THE ASSESSEE TOOK A FURTHER GROUND THAT THE SO CALLED INCRIMINATING MATERIAL DOES NOT SHOW ANY UNDISCLOSED INCOME. IT WAS THE SPECIFIC CONTENTION OF THE ASSESSEE AT THE TIME OF HE ARING OF APPEALS BEFORE THE CIT (A) THAT NONE OF THE SEIZED MATERIALS REFERRED TO BY THE AO, WHICH WERE SEIZED FROM THE THIRD PARTY BELONG TO THE ASSESSEE. HENCE , THE CONDITIONS PRECEDENT FOR INVO KING SECTION 153C OF THE ACT WAS NOT SATISFIED. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CALLED FOR A REMAND 5 REPORT FROM THE ASSESSING OFFICER ASKING FOR HIS COMMENTS ON SPECIFIC PLEA OF THE ASSESSEE THAT THE SEIZED MATERIAL DO NOT BELONG TO THE ASSESSEE. THE AO IN HIS REMAND REPORT SUBMITTED , AS PER THE NOTING AVAILABLE I N THE APPRAISAL REPORT, THE PROCEEDINGS UNDER SECTION 153C WAS INITIATED ON THE BASIS OF THE SEIZED MATERIAL AT PAGE 64IN ANNEXURE TN/HNR/2 WHICH IS A LETTER OF THE ASSESSEE DATED 10.12.2004 CERTIFYING THE WORKS UNDERTAKEN BY M/S. HNR CONSTRUCTIONS IN THE ASSESSEES HOSPITAL. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIS - - VIS FACTS AND MATER IALS AVAILABLE ON RECORD AS WELL AS IN THE LIGHT OF RATIO LAID DOWN IN VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE CAME TO A FINDING THAT INITIATION OF PROCEEDINGS U/S.153C OF THE ACT IS AB INITIO VOID AS THE SEIZED MATERIAL DO NOT BELONG TO THE ASSESSE E AND, ACCORDINGLY, ANNULLED ALL THE ASSESSMENTS WITHOUT GOING INTO THE MERITS OF THE CASE. 7. AT THE TIME OF HEARING, LD D.R. BEFORE US SUBMITTED THAT THE SEIZED MATERIALS ON THE BASIS OF WHICH ASSESSMENT S WERE MADE UNDER SECTION 153C SINCE BELONG TO THE ASSESSEE, INITIATION OF PROCEEDINGS UNDER SECTION 153C OF THE ACT COULD NOT BE HELD TO BE INVALID AS HAS BEEN DONE BY THE CIT(A). LD D.R. SUBMITTED THAT SINCE INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH IN THE PREMISES OF SHRI TANGI HARI NARAYAN B ELONG TO THE ASSESSEE, ASSUMPTION OF JURISDICTION UNDER SECTION 1534C CANNOT BE QUESTIONED. LD D.R. SUBMITTED THAT IT IS NOT NECESSARY THAT THE AO HAS TO COMPLETE THE ASSESSMENT ONLY ON THE BASIS OF INCRIMINATING MATERIAL. IT IS ENOUGH TO INITIATE PROCEED INGS U/S.153C IF THERE ARE SOME INCRIMINATING MATERIALS BUT WHILE COMPLETING THE ASSESSMENT S , THE AO MAY CONSIDER ANY OTHER MATERIALS WHICH AR E AVAILABLE WITH HIM. LD D.R. SUBMITTED THAT THE IMPOUNDED BOOKS OF 6 ACCOUNT AS WELL AS SEIZED MATERIALS CLEARLY INDICATE THE UNDISCLOSED INCOME OF THE ASSESSEE, HENCE, THE AO WAS CORRECT IN INITIATING THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. IN SUPPORT OF SUCH CONTENTION, LD D.R. RELIED UPON THE FOLLOWING DECISIONS: I) SSP AVIATION LTD VS DCIT, (70 DTR (DEL) 275) II) KAMLESHBHAI DHARAMSHIBHAI PATEL VS CIT, 214 TAXMAN 558 (GUJ) III) HARVEY HEART HOSPITALS LTD VS. ACIT, 130 TTJ (CHEN) 700 IV) GURUPRERNA ENTERPRISES VS ACIT, 57 DTR (MUM) (TRIB) 465 V) ACIT VS. PANCHURAM DESHMUKH & ORS., 133 TTJ (BIL ASPUR ) 53 8. ON THE OTHER HAND, LD A.R. STRONGLY SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT WHILE IN THE ASSESSMENT ORDERS, THE AO REFERRED TO SEIZED MATERIALS AT PAGES 31,32 & 61 WITH IDENTIFICATION MARK TH/HNR/2, IN THE REMAND REPORT SUBMITTED BEFORE THE CIT(A), THE AO HAS ONLY REFERRED TO SEIZED MATERIAL AT PAGE 64 OF PB, WHICH IS A LETTER DT.10.12.2004. HE, THEREFORE, SUBMITTED THAT THE AFORESAID FACTS MAKE IT CLEAR THAT THE SEIZED MATERIAL ON THE BASIS OF WHICH THE AO HAS MADE THE ASSESSMENT UNDER SECT ION 153C OF THE ACT DO NOT BELONG TO THE ASSESSEE. LD A.R. SPECIFICALLY REFERRING TO PARA 6 OF THE ORDER PASSED BY THE CIT(A) SUBMITTED THAT THE CIT(A) AFTER CON SID ERING ALL THE FACTS AND MATERIAL ON RECORD AND SPECIFICALLY EXAMINING THE SEIZED MATERIALS HAS COME TO THE CONCLUSION THAT SO CALLED SEIZED MATERIALS DO NOT BELONG TO THE ASSESSEE. HENCE, THE FINDINGS OF FACT ARRIVED AT BY THE CIT(A) CANNOT BE DISTURBED. LD A.R. FURTHER SUBMITTED THAT THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEARS 2001 - 0 2, 2002 - 03 & 2003 - 04 WOULD REVEAL THE FACT THAT THE INCOME ASSESSED HAS NO CONNECTION WITH ANY SEIZED MATERIALS OR ANY INCRIMINATING MATERIAL AS 7 THE AO HAS DETERMINED THE INCOME ONLY ON THE GROUND THAT THE ASSESSEE IS NOT APPROVED UNDER SECTION 10(23C) OF THE ACT. HE FURTHER SUBMITTED THAT SO FAR AS ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ARE CONCERNED, THE DETERMINATION OF INCOME IS ON THE BASIS OF MATERIAL IMPOUNDED AS A RESULT OF SURVEY AND NOT ON THE BASIS OF ANY SEIZED MATERIALS. LD A.R. THEREFORE, SUBMI TTED THAT SINCE THERE WERE NO SEIZED MATERIALS BELONGING TO THE ASSESSEE, THE INITIATION OF PROCEEDINGS UNDER SECTION 153C IS INVALID IN LAW. IT WAS FURTHER CONTENDED THAT THERE BEING NO INCRIMINATING MATERIALS FOUND AS A RESULT OF SEARCH, THE AO COULD NO T HAVE PROCEEDED UNDER SECTION 153C OF THE ACT ALSO. IN SUPPORT OF SUCH CONTENTION, LD A.R. RELIED UPON NUMBER OF DECISIONS WHICH ARE AS UNDER: I) MANISH MAHESWAR VS ACIT, 289 ITR 341(SC) II) CIT VS. INDORE CONSTRUCTIONS (P) LTD., 279 ITR 545(MP) III) NIVEDITA M. MAKWANA VS P.M.SHUKLA, 11 DTR (GUJ) 225 IV) JANKI EXPORTS INTERNATIONAL THROUGH S./P.GUPTA VS UNION OF INDIA, 278 ITR 296(DEL) V) S.G.R.ENTERPRISES VS ACIT, 112 TTJ (BANG) 377 VI) SARAYA INDUSTRIES LTD VS. UNION OF INDIA & ORS, 306 ITR 189 V II) CIT VS. LATE J. CHANDRASEKHAR(HUF), 338 ITR 61(MAD) VIII) VIJAYBHAI N. CHANDRANI VS ACIT, 333 ITR 436 IX) ACIT VS. GAMBHIR SILK MILLS, 6 ITR (TRIB) 376 (AHD) X) MEGHMANI ORGANICS LTD VS. DCIT, 6 ITR 360 XI) SINGHAD TECHNICAL EDUCATIONAL SOCIETY VS ACIT, 57 DTR (PUNE)(TRIB) 241 8 XII) GRR EXPORTS (ITA NO.494/V/2007) XIII) DCIT VS. ASP SOFTWARE SOLUTION, 152 TTJ (HYD) 739 XIV) M/S. SHOURI CONSTRUCTION VS ACIT( ITA NOS.2056 & 2057/HYD/2011) 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS OF THE CASE AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO EXAMINED THE DECISIONS RELIED UPON BY THE PARTIES. ADMITTEDLY, IN THE PRESENT CASE, THE AO HAS INITIATED PROCEEDINGS UNDER SECTION 153C OF THE ACT. THEREFORE, IT IS CLEAR T HAT THERE IS NO SEARCH ACTION IN THE CASE OF THE ASSESSEE. SECTION 153 C OF THE ACT READS AS UNDER: 153C(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151, AND SECTION 153, WHERE THE AO 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 REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITION ED SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A 10. A PLAIN READING OF THE AFORESAID PROVISION MAKES IT CLEAR THAT TWO CONDITIONS HAVE TO BE SATISFIED FOR INITIATING PROCEEDINGS UNDER SECTION 153C OF THE ACT. FIRSTLY, THE AO MUST BE SATISFIED THAT THE 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. SECONDLY, AFTER BEING SATISFIED THAT IT BELONGS TO A PERSON OTHER THAN THE PERSONS TO WHOM SEIZED, HE SHALL HANDOVER THE SEIZED MATERIAL TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST SUCH OTHER 9 PERSON BY ISSUING NOTICE FOR ASSESSING OR REASSESSING FOR SUCH MATERIAL. THUS, THE PRIMARY CONDITION FOR ASSUMP TION OF JURISDICTION UNDER SECTION 153C OF THE ACT IS THE SEIZED MATERIALS MUST BELONG TO THE PERSON AGAINST WHOM PROCEEDINGS UNDER SECTION 153C IS SOUGHT TO BE INITIATED. AS WOULD BE EVIDENT FROM THE ASSESSMENT ORDER , THE AO HAS REFERRED TO PAGES 3 1, 32 & 61 OF THE SEIZED DOCUMENT WITH IDENTIFICATION MARK TH/HNR/2. ON GOING THROUGH THE SAID SEIZED MATERIALS, COPIES OF WHICH ARE PLACED BEFORE US, IT IS TO BE NOTED THAT THE SEIZED MATERIALS AT PAGE 31 IS A RECEIPT OF M/S. HNR CONSTRUCTIONS ACKNOWLEDGING TH E RECEIPT OF RS.1,50,000/ - FROM ONE SHRI K. BANGARRAJU . SIMILARLY, PAGE 32 IS ALSO RELATING TO HNR CONSTRUCTIONS MENTIONING CERTAIN DISBURSEMENT SCHEDULE GIVEN BY SHRI R.KRISHNA MOHAN, LICENSED ENGINEER TOTALING TO RS.20 LAKHS. PAGE 61 ALSO MENTIONS CER TAIN FIGURES IN HANDWRITING. IN NONE OF THE DOCUMENTS, THERE IS ANY REFERENCE TO THE ASSESSEE. THEREFORE, IT CANNOT BE SAID THAT THESE DOCUMENTS BELONG TO THE ASSESSEE. IN THE REMAND REPORT, SUBMITTED BEFORE THE CIT(A), IN THE COURSE OF APPEAL PROCEEDING S, THE AO HOWEVER HAS TAKEN A DIFFERENT STAND BY STATING THAT THE INI TIATION OF PROCEEDINGS UN DER SECTION 153C AS PER THE NOTING IN THE APPRAISAL REPORT IS ON THE BASIS OF PAGE 64 OF THE SEIZED DOCUMENT WHICH IS A LETTER DATED 10.12.2004. P ERUSAL OF THE SAID L ETTER, COPY OF WHICH IS PLACED IN THE PB, WOULD REVEAL THAT IT IS NOTHING BUT A CERTIFICATE ISSUED BY THE CHAIRMAN OF THE MANAGING TRUSTEE OF THE ASSESSEE TRUST CERTIFYING THE WORKS ENTRUSTED TO H.N.R. CONSTRUCTIONS. THEREFORE, ON PERUSAL OF THE AFO RESAID DOCUMENTS, IT WOULD CLEARLY REVEAL THAT THE DOCUMENTS CONSIDERED BY THE AO FOR INITIATION OF PROCEEDINGS U/S.153C DO NOT BELONG TO THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, IN OUR VIEW PROCEEDINGS UNDER SECTION 153C OF THE ACT COULD NOT 10 HAVE B EEN INITIATED BY THE AO ONLY ON THE BASIS OF SO CALLED SEIZED DOCUMENTS AS REFERRED TO BY HIM WHICH, IN OUR VIEW , DO NOT BELONG TO THE ASSESSEE. AT THIS STAGE, IT WOULD BE WORTHWHILE TO LOOK INTO THE FINDING OF FACTS RECORDED BY THE CIT(A) IN THIS REGARD, WHICH IS EXTRACTED HEREUNDER: 6. I HAVE CONSIDERED THESE ARGUMENTS AND ALSO PERUSED THE DOCUMENTS ON THE BASIS OF WHICH SATISFACTION IS SAID TO BE ARRIVED AT BY AO. PAGE NO.31 OF TH/HNR/2 IS A RECEIPT OF HNR CONSTRUCTIONS WHICH REFLECTS RECEI PT OF RS.1,50,000/ - FROM SRI K.BANGRAJU VIDE A CHEQUE TOWARDS PLOT ADVANCE. PAGE NO.32 ALSO BELONGS TO HNR CONSTRUCTIONS WHICH SHOWS THE DISBURSEMENT SCHEDULE GIVEN BY LICENSED ENGINEER SRI K.KRISHNA PRASAD. THIS PERTAINS TO HNR CONSTRUCTIONS AND IT A LSO HAS NOTHING TO DO WITH THE ASSESSEE. THE ENTIRE PAYMENT SHOWN ON THE PAPER TOTAL - UP TO AROUND RS.10 TO RS.12 LAKHS AND THERE IS NOTHING IN THIS PAPER TO SHOW THAT THIS BELONGS TO THE ASSESSEE TRUST OR HAS ANY CONNECTION WITH IT. PAGE 61 CONTAINS CER TAIN CALCULATIONS WHICH DO NOT SUGGEST THAT IT HAS ANYTHING TO DO WITH ASSESSEE TRUST. PAGE NO. 64 IS NO DOUBT A LETTER SIGNED BY THE CHAIRMAN AND MANAGING TRUSTEE OF SRI RAMA EDUCATIONAL TRUST. THE LETTER IS A CERTIFICATE ISSUED TO WHOM - SO - EVER IT MAY CO NCERN, CERTIFYING THAT CERTAIN WORKS OF CONSTRUCTION ARE ENTRUSTED TO M/S.HNR CONSTRUCTION, A PROPRIETORSHIP CONCERN OF SRI TANGI HARI NARAYANA. THIS THOUGH IS ON ASSESSEE'S LETTER HEAD IS A GENERAL CERTIFICATE WHICH IS ISSUED TO HNR CONSTRUCTION AND THE RE IS NOTHING EITHER INCRIMINATING IN THIS DOCUMENT SUGGESTING ANY UNACCOUNTED TRANSACTIONS. THIS CERTIFICATE ONLY SAYS WHAT IS ALREADY DECLARED IN THE BOOKS OF ACCOUNTS OF ASSESSEE. IN MY OPINION IF 153C PROCEEDINGS CAN BE INITIATED BASED ON S UCH GENERAL LETTERS THAT WOULD BE STRETCHING THE LAW A BIT TOO FAR. IF THAT IS THE INTENTION OF THE LAW - MAKERS THEN 153C PROCEEDINGS CAN BE INITIATED AGAINST ALL ASSESSES WHOSE LETTER HEADS/VISITING CARDS ARE FOUND DURING THE SEARCH. TO ILLUSTRATE THE MATT ER, IF SOME PERSON IS SEARCHED AND DURING THE SEARCH PROCEEDINGS, IF BANK STATEMENTS, LIC POLICY CERTIFICATES OR SHARE CERTIFICATES ETC ARE FOUND, IT DOES NOT MEAN THAT 153C PROCEEDINGS CAN BE INITIATED 'AGAINST THOSE BANKS/LIC/ COMPANIES TO WHICH THE SHAR ES BELONG. SIMILARLY FROM ANY PERSON SEARCHED MANY PURCHASE BILLS WOULD BE FOUND. ALL THOSE BILLS WILL BE ON LETTER HEADS OF THOSE CONCERNS AND WOULD BE SIGNED AND STAMPED. THIS WOULD NOT ENTAIL THE AO TO PROCEE D AGAINST ALL SUCH CONCERNS U/S. 153C, SIMPLY BECAUSE THESE ARE ALSO THE DOCUMENTS ON THE LETTER HEAD OF THOSE CONCERNS AND ARE SIGNED BY THE PERSONS THEREIN. THIS IN MY OPINION WOULD BE RIDICULOUS INTERPRETATION OF THE WORD 'ANY DOCUMENTS' AS FOUND IN SEC. 1 53C. THIS DEFINITELY DOES N OT SEEM TO BE THE INTENTION OF THE LAW - MAKERS IN DRAFTING THE SAID SECTION. 11 11. AS CAN BE SEEN FROM THE AFORESAID EXTRACTED PORTION OF THE ORDER OF THE CIT(A), THE CIT(A) AFTER EXAMINING THE SEIZED MATERIAL HAS GIVEN A CATEGORICAL FINDING THAT THE SO CALL ED SEIZED MATERIALS BY NO STRETCH OF IMAGINAT ION COULD BE SAID TO BE BELONGING TO THE ASSESSEE. THIS FACTUAL FINDING OF THE CIT(A) REMAINS UNCONTROVERTED. IN THE AFORESAID FACTUAL BACKGROUND, WE WILL NOW EXAMINE THE RATIO LAID DOWN IN VARIOUS DECISIONS OF HIGH COURTS AND DIFFERENT BENCHES OF THE TRIBUNAL. 12. IN THE CASE OF VIJAYB HAI N CHANDRANI (SUPRA), THE HONBLE GUJARAT HIGH COURT HELD AS UNDER: 12. ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SS. 153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. SEC. 153A DEALS WITH P ROCEDURE FOR ISSUANCE OF NOTICE AND ASSESSMENT OR REASSESSMENT IN CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER S. 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER S. 132A AFTER THE 31ST DAY OF MAY, 2003. SE C. 153B LAYS DOWN THE TIME - LIMIT FOR COMPLETION OF ASSESSMENT UNDER S. 153A. SEC. 153C WHICH IS SIMILARLY WORDED TO S. 158BD OF THE ACT, PROVIDES THAT WHERE THE AO 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 S. 153A HE SHALL PROCEED AGAINST 'EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTH ER P ERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISI ONS IN AS MUCH AS UNDER S. 153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELO NG TO SUCH OTHER PERSON, WHEREAS UNDER S. 158BD IF THE AO IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S. 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER S. 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON UNDER S. 158BC. 13. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE UNDER S. 153C AND ASSESSING OR REASSESSING I NCOME OF SUCH OTHER PERSON, IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED, RESORT CANNOT BE HAD TO TH E PROVISIONS OF S. 153C OF THE ACT. 14. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY SCHEME, IT IS AN ADMITTED POSITION AS EMERGING FROM THE RECORD OF THE CASE, THAT THE DOCUMENTS IN QUESTION, NAMELY THE THREE LOOSE PAPERS 12 RECOVERED DURING THE SEARCH PROCEEDINGS DO NOT BELONG TO THE PETITIONER. IT MAY BE THAT THERE IS A REFERENCE TO THE PETITIONER IN AS MUCH AS HIS NAME IS REFLECTED IN THE LIST UNDER THE HEADING 'SAMUTKARSH MEMBERS DETAILS' AND CERTAIN DETAILS ARE GIVEN UNDER DIFFERENT COLUMNS AGAINST THE NAME OF THE PETITIONER ALONG WITH OTHER MEMBERS, HOWEVER, IT IS NOBODY'S CASE THAT THE SAID DOCUMENTS BELONG TO THE PETITIONER. IT IS NOT EVEN THE CASE OF REVENUE THAT THE SAID THREE DOCUMENTS A RE IN THE HANDWRITING OF THE PETITIONER. IN THE CIRCUMSTANCES, WHEN THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED ANY ACTION TAKEN UNDER S. 153C OF THE ACT STANDS VITIATED. 13. THE ITAT HYDERABAD BENCHES IN THE CASE OF M/S. SHOURI CONSTR UCTION (SUPRA), FOLLOWING THE AFORESAID DECISION OF HONBLE GUJARAT HIGH COURT HELD THAT UNLESS THERE IS MATERIAL BELONG TO THE ASSESSEE, INITIATION OF PROCEEDINGS UNDER SECTION 153C IS INVALID. 14. IN THE CASE OF DCIT VS. ASP SOFTWARE SOLUTIONS (SUPRA), T HE ITAT HYDERABAD, WHERE BOTH THE MEMBERS ARE PARTIES, IN PARA 29 OF THE ORDER EXPRESSED THE VIEW THAT IF THE SEIZED DOCUMENTS DO NOT ESTABLISH ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME, PROVISIONS OF SECTION 153C CANNOT BE INVOKED. 15. THE OTHER DE CISIONS RELIED UPON BY LD A.R. ALSO SUPPORT THE ABOVE VIEW. THEREFORE, CONSIDERING THE FACTS OF THE ASSESSEES CASE IN THE LIGHT OF RATIO LAID DOWN IN THE AFORESAID DECISIONS, IT BECOMES CLEAR THAT THE SEIZED MATERIALS DO NOT BELONG TO THE ASSESSEE. THAT BESIDES, THERE ARE NO INCRIMINATING MATERIALS INDICATING ANY UNDISCLOSED INCOME OF THE ASSESSEE, WHICH COULD HAVE ENABLED THE AO TO INVOKE THE PROVISIONS OF SECTION 153C OF THE ACT. THIS BECOME S FURTHER CLEAR FROM THE FACT THAT THE INCOME WERE DETERMINED FOR THE ASSESSMENT YEARS 2001 - 02, 2002 - 03 & 2003 - 04 ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN APPROVED UNDER SECTION 10(23C) OF THE ACT. THE DETERMINATION OF INCOME HAS ABSOLUTELY NO RELATION OR RELEVANCE TO THE SEIZED MATERIALS. SO FAR AS THE A SSESSMENT YEARS 13 2004 - 0 5 AND 2005 - 06 ARE CONCERNED, PERUSAL OF THE ASSESSMENT ORDERS PASSED IN THOSE YEARS WOULD REVEAL THE FACT THAT THE DETERMINATION OF INCOME IS ON THE BASIS OF THE IMPOUNDED MATERIALS AS A RESULT OF SURVEY AND NOT ON THE BASIS OF ANY SEIZED MATERIALS BELONG ING TO THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, THE PRE CONDITIONS FOR ASSUMING JURISDICTION UNDER SECTION 153C ARE NOT SATISFIED. SO FAR AS THE DECISIONS RELIED UPON BY LD D. R. IN SUPPORT OF HIS CONTENTION, AFTER CAREFULLY A PPLYING OUR MIND TO THE RATIO LAID DOWN THEREIN, WE OBSERVE THAT THE DECISIONS ARE DISTINGUISHABLE ON FACTS AND DO NOT APPLY TO THE FACTS OF THE ASSESSEES CASE. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDI NG THE INITIATION OF PROCEEDINGS UNDER SECTION 153C TO BE AB INITIO VOID AND CONSEQUENTLY ANNULLING THE ASSESSMENTS FOR ALL THE AFORESAID ASSESSMENT YEARS. ACCORDINGLY, WE UPHOLD THE SAME BY DISMISSING THE GROUNDS TAKEN BY THE DEPARTMENT. 16. SO FAR AS TH E ISSUE TAKEN IN GROUND NO.3 BY THE DEPARTMENT IS CONCERNED, IT RELATES TO THE ISSUE OF REQUIREMENT OF SATISFACTION. HOWEVER, AS CAN BE SEEN FROM THE RECORD, THE AO IN FAT HAS RECORDED HIS SATISFACTION. THEREFORE, THIS GROUND ACTUALLY DOES NOT ARISE FOR CONSIDERATION. LD D.R. ALSO FAIRLY ACCEPTED THE SAME. IN THAT VIEW OF THE MATTER, GROUND NO.3 IS REJECTED AS INFRUCTUOUS. 17. SO FAR AS CROSS OBJECTIONS ARE CONCERNED, T HOUGH THE ASSESSEE HAS RAISED ISSUES ON MERITS OF THE ADDITIONS BOTH IN THE MAIN GROU NDS AS WELL AS ADDITIONAL GROUND BUT CONSIDERING THE FACT THAT WE HAVE UPHELD THE ORDER OF THE CIT(A) IN ANNULLING THE ASSESSMENTS WHILE DECIDING THE DEPARTMENT S APPEALS IN I.T.A NO.31 TO 35 /VIZ/2012, THE 14 GROUNDS RAISED IN THE CROSS OBJECTIONS HAVE BECOME INFRUCTUOUS. THEREFORE, THE SAME ARE DISMISSED. 18. IN THE RESULT, APPEALS FILED BY THE DEPARTMENT AND CROSS OBJECTIONS FILED BY THE ASSESSEE FOR THE AFORESAID ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /12/2013 . SD/ - S D/ - (B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER VISHAKHAPATNAM DATED 13 / 12/2013 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : THE ACIT, CENTRAL CIRCLE - 2, 5 TH FLOOR, DIRECT TAXES BUILDING, MVP DOUBLE ROAD,OPP: RYTU BAZAR, VISAKHAPATNAM 2. THE CROSS OBJECTOR - ASSESSEE : SRI RAMA EDUCATIONAL TRUST, B - 4, SRI LAXMI TULASI APARTMENTS, DASAPALLA HILLS, VISAKHAPATNAM 3. THE CIT(A) - VISAKHAPATNAM 4. CIT , VISAKHAPATNAM 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER SR.PS, ITAT, VISHAKHAPATNAM //TRUE COPY//