DCIT Central Circle, Tirupathi V. Smt. P. Geetha, Tirupathi

ITA 1122/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66312 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Opportunity of being heard; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1122 /HYD/2011 ASSESSMENT YEAR: 2006-07 DCIT, CENTRAL CIRCLE, TIRUPATI. APPELLANT -VS.- SMT. P. GEETA, TIRUPATI. PAN:AMCPP 3836 D ... RESPONDENT CO NO.62HYD/2011 (IN ITA NO.122/HYD/11 A.YR. 2006-07 SMT. P. GEETHA, TIRUPATI. VS- ... APPELLANT DCIT, CENTRAL CIRCLE, TIRUPATI. ... RESPONDENT DEPARTMENT BY : SHRI M.H. NAIK ASSESSEE BY : SRI K.A. SAI PRASAD DATE OF HEARING : 09-08-2012 DATE OF PRONOUNCEMENT : 05-10-20 12 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDE R DATED 31-3- 2011 OF CIT (A)-VII, HYDERABAD AND THEY PERTAIN TO THE 2 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI. ASSESSMENT YEAR 2006-07. FOR THE SAKE OF CONVENIENC E, THESE ARE TAKEN UP TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER. 2. WE FIRST DEAL WITH CROSS OBJECTION FILED BY THE ASSESSEE SINCE THE ASSESSEE HAS CHALLENGED THE INITIATION OF PROCEEDIN GS U/S 153C BY RAISING THE FOLLOWING TWO GROUNDS:- 1. THE CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE AOS ACTION OF INITIATING PROCEEDINGS U/S 153C FOR THE ASSESSMENT YEAR UNDER APPEAL IN SPITE OF THE FACT THAT NO MATERIAL RELATI NG TO THE APPELLANT WAS FOUND DURING THE COURSE OF SEARCH. 2. IT IS PRAYED THAT THE ITAT BE PLEASED, IN FACTS AND CIRCUMSTANCES OF THE CASE, TO CANCEL THE ORDER U/S 143(3) READ WITH SECTION 153C FOR THE ASSESSMENT YEAR 2006-07 S INCE THE VERY INITIATION IS NOT VALID. 3. BRIEF FACTS OF THE CASE ARE THE ASSESSEE IS AN I NDIVIDUAL. A SEARCH OPERATION U/S 132 WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF SRI P. DINADAYAL, TIRUPATI ON 27-9-2007. AS A CONSEQUENCE OF THE SEARCH OPERATION, A NOTICE U/S 153C WAS ISSUED TO THE ASSE SSEE CALLING FOR RETURN FOR THE ASSESSMENT YEAR UNDER DISPUTE. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED A RETURN OF INCOME ADMITTING TOTAL I NCOME OF RS.61,010. IN COURSE OF ASSESSMENT PROCEEDINGS, VARIOUS INFORMATI ON WERE CALLED FOR AND THE ASSESSEE ALSO COMPLIED WITH THE QUERIES MA DE BY THE AO. THE AO COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SE CTION 153C BY MAKING AN ADDITION OF RS.13,10,000/- BEING UNSECURE D LOAN BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE DETAILS REGARDING NAME, ADDRESS, MODE OF PAYMENT, CREDITWOR THINESS ETC. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING AN APPEAL BEFORE THE CIT (A). IN GROUND NO.1 TAKEN BEFORE THE CIT (A), THE ASSESSEE SPECIFICALLY CHALLENGED THE INITIATION OF PROCEEDIN GS U/S 153C IN ABSENCE OF 3 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI. ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. IN COURSE OF HEARING BEFORE THE CIT (A), IT WAS CONTENDED BY THE ASSESSE E THAT THE DEPARTMENT HAVING NOT SEIZED ANY DOCUMENT PERTAINING TO THE AS SESSEE, NOTICE U/S 153C COULD NOT HAVE BEEN ISSUED TO THE ASSESSEE. T HE ASSESSEE FURTHER CONTENDED THAT THE ASSESSMENT COULD NOT HAVE BEEN R EOPENED AS THERE WAS NO SEIZURE OF ANY DOCUMENT OR ANY OTHER VALUABL E ARTICLES I.E, MONEY, JEWELLERY ETC., BELONGING TO THE ASSESSEE. THE CIT (A) REJECTED THE CONTENTION OF THE ASSESSEE BY HOLDING THAT SINCE TH E ASSESSEE IS THE WIFE OF SRI DINADAYAL AND NOTICES IN CASE OF SRI DINADAY AL HAS BEEN ISSUED AND THE ASSESSMENT HAS BEEN REOPENED, THEREFORE THE AO WAS JUSTIFIED IN ISSUING NOTICES U/S 153C AND REOPENING THE ASSESS MENT IN CASE OF THE ASSESSEE ALSO. THE LD. AR SUBMITTED BEFORE US THA T AS PER THE PROVISION CONTAINED U/S 153C, THE AO MUST BE SATISFIED THAT M ONEY, VALUABLE ARTICLES AND BOOKS OF ACCOUNTS AND IMPORTANT DOCUME NTS ETC., SEIZED BELONGED TO A PERSON OTHER THAN A PERSON IN WHOSE C ASE SEARCH AND SEIZURE OPERATION WAS INITIATED U/S 132 OF THE ACT, THEN THE BOOKS OF ACCOUNTS OR DOCUMENTS AS REQUIRED, SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON BY ISSUI NG A NOTICE U/S 153C OF THE ACT. 4. THE LD. AR SUBMITTED THAT NO MONEY, BULLION OR M ONEY OR ARTICLE OR BOOKS OF ACCOUNTS OR DOCUMENTS PERTAINING TO THE AS SESSEE HAVING BEEN SEIZED DURING THE SEARCH AND SEIZURE OPERATION COND UCTED BY THE DEPARTMENT IN CASE OF DINADAYAL, NO NOTICE COULD HA VE BEEN ISSUED U/S 153C OF THE ACT. IN SUPPORT OF SUCH CONTENTION, TH E LD. AR RELIED UPON A DECISION OF OF HONBLE SUPREME COURT IN MANISH MA HESWARI VS. ACIT (289 ITR 341) AND HONBLE DELHI HIGH COURT IN CASE OF SS P AVIATION LTD.,LTD. VS. DCIT REPORTED IN (2012)20 TAXMAN 214 AND ALSO D ECISION OF MADRAS HIGH COURT IN CASE OF CIT VS. LATE J. CHANDRASEKAR (HUF) (2012) 20 TAXMAN 451. 4 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE ASSESSMENT ORDER, NOTHING IS REVEA LED AS TO WHETHER ANY MONEY, BULLION, JEWELLERY BOOKS OF ACCOUNTS OR OTHE R DOCUMENTS PERTAINING TO THE ASSESSEE WERE SEIZED DURING THE S EARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF SRI DINADAYAL. THOU GH A SPECIFIC GROUND HAS BEEN RAISED BEFORE THE CIT (A), THE CIT (A) HAS GLOSSED OVER THE ISSUE AND REJECTED THE CONTENTION OF THE ASSESSEE BY SIMP LY OBSERVING THAT SINCE ASSESSMENT HAS BEEN REOPENED AND NOTICE HAS B EEN ISSUED IN CASE OF S.P. DINADAYAL, THE AO WAS JUSTIFIED ON REOPENIN G THE ASSESSMENT AND ISSUE OF NOTICES U/S 153C IN CASE OF THE ASSESSEE. THE CIT (A) HAS NOT GONE DEEP INTO THE ISSUE. AT THIS STAGE, IT WILL B E PERTINENT TO LOOK INTO THE PROVISION CONTAINED IN SECTION 153C WHICH IS QU OTED HEREUNDER FOR READY REFERENCE:- NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE AO IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS S EIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCO UNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL B E HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSO N AND THAT AO SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND IS SUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A 7. THE AFRESAID PROVISION WHICH BEGINS WITH A NON O BSTANTE CLAUSE CATEGORICALLY LAYS DOWN THAT THE AO MUST BE SATISFI ED THAT MONEY BULLION OR JEWELLERY OR VALUABLE ARTICLE OR BOOKS OF ACCOU NTS AND DOCUMENTS 5 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI. SEIZED BELONGING TO A PERSON OTHER THAN THE PERSON IN WHOSE CASE ACTION WAS INITIATED. THEREFORE, CONDITION PRECEDENT FOR ISSUING A NOTICE U/S 153C IS THE SATISFACTION OF THE AO ON THE BASIS OF MATERIALS SEIZED THAT THE VALUABLE ARTICLES OR DOCUMENTS PERTAINED TO SUCH OT HER PERSONS. THE SATISFACTION OF THE AO HAS TO BE AN OBJECTIVE SATIS FACTION AND BASED ON MATERIALS FOUND AS A RESULT OF SEARCH. THE HONBLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD.,VS. DCIT (20 TAXMAN 214) HAS HELD THAT PRE- CONDITION FOR ISSUING A NOTICE U/S 153C TO BE FULFI LLED IS THE AO HAVING JURISDICTION OVER SUCH PERSON IS REQUIRED TO REACH A SATISFACATION THAT VALUABLE ARTICLE OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED DURING SEARCH BELONGED TO A PERSON OTHER THAN A SEARCHED PERSON. SUCH REQUIREMENT OF REACHING THE SATISFACTION IS MANDATORY IN VIEW OF O VER-RIDING NATURE OF THE PROVISION. SIMILAR IS THE VIEW OF THE HONBLE MADRA S HIGH COURT IN THE CASE OF CIT VS. LATE J. CHANDRASEKAR (HUF) (20 TAXMAN 4 51). CONSIDERING THE CONTENTIONS OF THE LEARNED AR THAT NOTHING WAS FOU ND IN COURSE OF THE SEARCH AND SEIZURE OPERATION PERTAINING TO THE ASSE SSEE WHICH WOULD HAVE LED THE AO TO REACH A SATISFACTION FOR INITIATING A CTION U/S 153C. HENCE, THE NOTICE ISSUED TO THE ASSESSEE U/S 153C IS INVAL ID. FROM THE RECORD, IT IS NOT AT ALL EVIDENT WHETHER ANY VALUABLE ARTICLES OR DOCUMENTS PERTAINING TO THE ASSESSEE WERE SEIZED IN COURSE OF THE SEARCH AND SEIZURE OPERATION. 8. THE LEARNED DR WAS ALSO NOT ABLE TO THROW ANY LI GHT IN THIS REGARD. THEREFORE, CONSIDERING THE PROVISION U/S 153C AND THE PRINCIPLES LAID DOWN BY THE HONBLE DELHI HIGH COURT AND HONBLE MA DRAS HIGH COURT (SUPRA) WE RESTORE THE MATTER BACK TO THE AO TO IND ICATE TO THE ASSESSEE WHAT ARE THE MATERIALS SEIZED PERTAINING TO THE ASS ESSEE AS A RESULT OF SEARCH ON THE BASIS OF WHICH A SATISFACTION WAS REA CHED FOR INITIATING PROCEEDINGS U/S 153C AND THEREAFTER COMPLETE THE AS SESSMENT IN ACCORDANCE WITH THE PROVISIONS OF LAW. THE AO SHAL L AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE C OMPLETING THE PROCEEDINGS. 6 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI. 9. IN THE RESULT, THE CROSS OBJECTION IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1122/HYD/2011 (DEPARTMENTAL APPEAL):- 10. THE REVENUES APPEAL IS AGAINST DELETION OF UNS ECURED LOAN OF RS.13,10,000/- ADDED BY THE AO. IT IS SEEN FROM THE ORDER OF THE CIT (A) THAT THE CIT (A) HAS DELETED THE ADDITION ON THE RE ASONING THAT THE ADDITION WAS NOT ON THE BASIS OF ANY BOOKS OF ACCOU NTS AND OTHER DOCUMENTS FOUND DURING THE SEARCH AND SEIZURE OPERA TION. SINCE WE HAVE REMITTED THE MATTER BACK TO THE FILE OF THE AO ON T HE ISSUE OF VALIDITY OF NOTICE U/S 153C, WE ALSO REMIT THIS MATTER TO THE F ILE OF THE AO FOR ADJUDICATION IN ACCORDANCE WITH LAW. 11. IN THE RESULT, BOTH THE APPEAL AS WELL AS CROSS OBJECTIONS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 05-10-2012. SD/- S D/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 5 TH OCTOBER, 2012. COPY TO:- 1) SMT. P. GEETHA, W/O DEENDAYAL, PLOT NO.51, TUD P LOTS, RC ROAD, TIRUPATI. 2)ACIT, CC, 3 RD FLOOR, KT ROAD, TIRUPATI. 3) THE CIT (A)-VII, HYDERABAD. 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR* 7 ITA NO.1122 OF 2011 AND CO 62 OF 2011 SMT. P. GEETHA, TIRUPATI.