Dy. Commissioner of Income Tax, Central Circle-2(1), Hyderabad V. Nama Chinnamma, Hyderabad

ITA 1690/Hyd/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6374 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P.MURALI MOHANA RAO
• Section: 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A. No. 1690/HYD/2017 Assessment Year: 2011-12 Dy.Commissioner of Income Tax, Central Circle-2(1), HYDERABAD Vs Smt. Nama Chinnamma, HYDERABAD [PAN: ABKPW1887D] (Appellant) (Respondent) For Assessee : Shri P.Murali Mohana Rao, AR For Revenue : Shri B.Bala Krishna, DR Date of Hearing : 13-10-2021 Date of Pronouncement : 15-12-2021 O R D E R PER A.MOHAN ALANKAMONY, A.M. : This appeal is filed by the Revenue for the AY.2011-12, aggrieved by the order of the Ld.CIT(Appeals)–12, Hyderabad, in appeal No.0098/2013-14, dated 06-07-2017. 2. The Revenue has raised the following grounds in this appeal: “1. "In the facts & Circumstances of the case and in law, the Ld CIT(A) has erred in invalidating the proceedings u/s.143(3) of the I.T.Act 1961 even though the assessment proceedings were rightly initiated by the Assessing officer by way of issue of scrutiny notice u/s.143(2) and not by issue of notice u/s.153C of the I.T.Act 1961" 2. "In the facts & Circumstances of the case and in law, the Ld CIT(A) has erred in invalidating the assessment proceedings u/s.143(3) of the I.T.Act 1961 without appreciating that recording of Satisfaction ITA No.1690/Hyd/2017 :- 2 -: Nate is not a prerequisite in cases where assessment proceedings are not initiated u/s.153C of the I.T.Act 1961" 3. "In the facts & Circumstances of the case and in law, the Ld CIT(A) has erred in applying the ratio of the decision of the jurisdictional ITAT "B" Bench in the case of Quli Qutub Shah Medical & General Stares, Hyderabad to the Instant case without appreciating that bath the cases are distinguishable an facts viz. the assessment proceedings in the case cited by the Ld CIT(A) were initiated u/s.153C and the DR could not bring on record any material in support of the AO's claim that the documents belonging to the assessee were found & seized, whereas, in the instant case, proceedings were not initiated u/s.153C and the assessment was completed u/s.143(3) as regular scrutiny assessment after making additions based of seized material identified as belonging to the assessee." 3. Brief facts of the case are that there was a search and seizure operation u/s.132 of the Income Tax Act [Act] was carried out in M/s.Madhucon Projects Ltd and group of cases on 04-02-2011. During the course of search carried out in the residential premises of Sri Nama Nageswar Rao, documents and papers belonging to the assessee, were found and impounded, based on which, notices u/s.153C were issued and assessments were completed u/s.143(3) r.w.s.153C for the six assessment years, immediately preceding the year under consideration. For the year under reference, being the search year, notice u/s.142(1) of the Act was issued and the assessment was completed u/s.143(3) of the Act vide order dt.28-03-2013. 4. At the outset, Ld.DR argued reiterating the grounds raised in the appeal and submitted that the Ld.CIT(A) was not justified in allowing the appeal of the assessee. ITA No.1690/Hyd/2017 :- 3 -: 5. Ld.AR on the other hand submitted before us that no satisfaction was recorded by the Ld.AO of M/s. Madhucon Projects Ltd., which was the searched party and assessed u/s.153A of the Act. It was further submitted that the Ld.AO had issued notice u/s.153C to the assessee without recording satisfaction which is a pre-condition for invoking the provisions of Section 153C of the Act. For the above stated reasons, the Ld.CIT(A) was right in quashing the order of the Ld.AO which was without jurisdiction. It was therefore prayed that the appeal of the Revenue may be dismissed. 6. We have heard the rival submissions through video conference and carefully perused the material on record. From the facts of the case, it is apparent that there was no satisfaction recorded by the AO in case of the assessee for initiating proceedings u/s.153C of the Act. Therefore the Ld.CIT(A) has allowed the appeal of the assessee. The relevant portion of the order is reproduced herein for reference: “5.0 I have carefully considered the submissions made by the appellant as well as the observations of the AO in the Impugned order. The reasons for issue of 153C notice in the preceding six years have been obtained from the AO, and placed on record. As per the AO's letter dated 29-12-2016 "no satisfaction was recorded by the A.O. of M/s.Madhucon Projects Limited, who was searched party and assessed u/s.153A, since the A.O. of both the persons was same." 5.1 Thus, as can been seen from the above, there is no recording of satisfaction by the AO of M/s. Madhucon Projects Limited who was the searched party u/s.153A, that the said documents belong to the other assessee under reference i.e., Nama Chinnamma. 5.2 In its decision in the case of M/s.Madhucon Infra Ltd, reproduced in Para 4.3 above, the ITAT, Hyderabad, has quashed the order u/s. 143(3) rws 153C, on similar set of facts. In light of the said order of ITAT, on similar set of facts, I am of the considered opinion that the order under reference does not survive with no valid ITA No.1690/Hyd/2017 :- 4 -: satisfaction/reasons recorded by the Assessing Officer of the searched party. As such, the proceedings u/s.153C are held to be annulled, on the ratio and the similar facts of the decisions by the jurisdictional High Court and the jurisdictional ITAT, as referred to in this order. Since the very foundation of initiation of proceedings u/s.153C is wrong, the proceedings u/s.143(3) are held to have no legs to stand and are held to be. annulled. Since the order under reference is held to be nonexistent, the other grounds of appeal, do not require separate adjudication. On these lines, the appeal of the assessee against the order u/s.143(3), is treated as allowed, subject to the condition that the assessed income will not go below the returned/admitted income shown in return of income filed by the assessee”. 7. Before us, the Ld.DR could not controvert the submissions of the Ld.AR or findings of the Ld.CIT(A). Therefore, we do not find it necessary to interfere with the order of the Ld.CIT(A). 8. In the result, the appeal of Revenue is dismissed. Order pronounced in the open court on the 15 th December, 202. Sd/- Sd/- (CHANDRA MOHAN GARG) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 15-12-2021 TNMM / OKK ITA No.1690/Hyd/2017 :- 5 -: Copy to : 1.The Dy. Commissioner of Income Tax, Central Circle-2(1), Hyderabad. 2.Smt.Nama Chinnamma, H.No.8-2-293/82/A/1129A, Road No.36, Jubilee Hills, Hyderabad. 3.CIT(Appeals)-12, Hyderabad. 4.The Pr.CIT-(Central), Hyderabad. 5.D.R. ITAT, Hyderabad. 6.Guard File.