Mr M Srinivasa Reddy, Hyderabad V. DCIT, Central Cir-2, Hyderabad

ITA 1856/HYD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6251 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained cash credit; Search and seizure; Question of law; Assessment record; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1856/HYD/2012 ASSESSMENT YEAR: 2003-04 M. SRINIVASA REDDY (HUF), HYDERABAD. PAN AAGHM3539 J VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 2, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI K.J. RAO DATE OF HEARING 17-08-2016 DATE OF PRONOUNCEMENT 09-09-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - III, HY DERABAD FOR AY 2003-04. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT (A) ERRED WHILE CONFIRMING THE ADDITION OF RS.1,22,000/- TOWARDS UNEXPLAINED CASH CREDIT IGNOR ING THE EXPLANATIONS GIVEN BY THE ASSESSEE WHICH IS NOT COR RECT. 2. THE CIT (A) ERRED WHILE CONFIRMING THE ADDITION OF RS.16,19,900/- - MADE BY THE AO WHICH WAS BASED ON WORK SHEET WHICH IS A DUMB PAPER AND WAS NOT MATERIALIZED. 3. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT, THE WORK SHEET IS ONLY A PROPOSED PLAN WHICH WAS NOT MATERIA LIZED. THE ADDITION ON THE BASIS OF WORK SHEET IS ONLY AN IMAG INARY AND WHICH WAS NOT SUBSTANTIATED BY ANY CORROBORATIVE EV IDENCE. 2 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. 4. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT, THE ASSESSEE HAS DISCLOSED THE ADVANCES OF RS.33,50,000 /- MADE TO VARIOUS PARTIES AND ITS SUBSEQUENT REVERSAL TO THE APPELLANT. 5. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT, THE ADVANCES OF RS.33,50,000/- WERE MADE THROUGH BANK A CCOUNT AND RECEIVED BACK THROUGH BANK ONLY. FURTHER, THE A SSESSEE HAS GIVEN A BRIEF EXPLANATION ALONG WITH CHEQUE NUMBERS THROUGH SUBMISSIONS FROM TIME TO TIME. 6. THE CIT (A) ERRED WHILE CONFIRMING THE ADDITION OF RS.1,07,500/- TOWARDS INTEREST RECEIPT IGNORING THE FACT THAT, THE SAME WAS ALREADY OFFERED BY THE APPELLANT IN RETURN OF INCOME. 7. THE ASSESSEE MAY ADD, ALTER, OR MODIFY OR SUBSTI TUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2.1 THE ASSESSEE FILED A PETITION FOR ADMITTING THE ADDITIONAL GROUNDS OF APPEAL, WHICH ARE AS UNDER: 8. WE WOULD LIKE TO SUBMIT THAT AS PER THE RATIO LA ID DOWN BY THE HONOURABLE SUPREME COURT OF INDIA IN THE CASE OF NA TIONAL THERMAL POWER CO. LTD V. CIT (1998) 229 ITR 383 (SC ) THE IT AT HAS JURISDICTION TO EXAMINE THE QUESTION OF LAW WHI CH THOUGH NOT AROSE BEFORE THE AO BUT AROSE BEFORE THE IT AT FOR THE FIRST TIME. 9. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS. 84,000 INVESTED IN CHIT FUNDS BEARING CHIT NO. LT/0 5/TY16 IGNORING THE EXPLANATION GIVEN BY THE ASSESSEE WHIC H IS NOT CORRECT. 10. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 30,000 IN CHIT FUNDS BEARING CHIT NO. NKL1 IGNORING THE EXPLANATION GIVEN BY THE ASSESSEE WHICH IS NOT CORR ECT. 11. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 4,000 IN CHIT FUNDS BEARING CHIT NO. LT/NLL/2/16 IG NORING THE EXPLANATION GIVEN BY THE ASSESSEE WHICH IS NOT CORR ECT. 12. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 4,000 IN CHIT FUNDS BEARING CHIT NO. LT/NLL/2/17 IG NORING THE EXPLANATION GIVEN BY THE ASSESSEE WHICH IS NOT CORR ECT.. 13. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT, THE ADVANCES OF RS. 5,00,000 TO M/ S. MAHAVIR CONSTRUCT IONS WERE MADE THROUGH BANK ACCOUNT AND RECEIVED BACK THROUGH BANK ONLY. FURTHER, THE ASSESSEE HAD GIVEN A BRIEF EXPLA NATION ALONG WITH CHEQUE NUMBERS THROUGH SUBMISSIONS FROM TIME T O TIME. 3 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. 14. THE CIT (A) OUGHT TO HAVE CONSIDERED THE EXPLAN ATIONS GIVEN BY THE ASSESSEE THAT, THE ADVANCES OF RS. 3, 50,000 TO SHRI M M REDDY AND POOJITHA HOSPITAL WERE MADE THROUGH BANK ACCOUNT AND RECEIVED BACK THROUGH BANK ONLY. FURTHER, THE A SSESSEE HAD GIVEN A BRIEF EXPLANATION ALONG WITH CHEQUE NUMBERS THROUGH SUBMISSIONS FROM TIME TO TIME. 15. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT, THE ADVANCE OF RS. 5,00,000 TO MR. ASHOK AGARWAL WAS MA DE THROUGH BANK ACCOUNT AND RECEIVED BACK THROUGH BANK ONLY. FURTHER, THE ASSESSEE HAD GIVEN A BRIEF EXPLANATION ALONG WITH C HEQUE NUMBERS THROUGH SUBMISSIONS FROM TIME TO TIME. 16. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT, THE ADVANCE OF RS. 15,00,000 TO SIDDHI RAMA CONSTRUCTIO NS AND MAHAVIR CONSTRUCTIONS WERE MADE THROUGH BANK ACCOUN T AND RECEIVED BACK THROUGH BANK ONLY. FURTHER, THE ASSES SEE HAD GIVEN A BRIEF EXPLANATION ALONG WITH CHEQUE NUMBERS THROUGH SUBMISSIONS FROM TIME TO TIME. 17. THE CIT (A) ERRED WHILE CONFIRMING THE ADDITION OF RS. 67,500 TOWARDS INTEREST RECEIPT FROM SRI ASHOK AGARWAL IGN ORING THE FACT THAT, THE SAME WAS ALREADY OFFERED BY THE APPELLANT IN RETURN OF INCOME. 18. THE CIT (A) ERRED WHILE CONFIRMING THE ADDITION OF RS. 40,000 TOWARDS INTEREST RECEIPT FROM M/ S. MAHAVIR CONSTRU CTIONS IGNORING THE FACT THAT, THE SAME WAS ALREADY OFFERE D BY THE ,APPELLANT IN RETURN OF INCOME. 19. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD. CIT (A) OUGHT TO HAVE APPLIED THE PRINCIPLE OF TELESCOPING OF EXPENDITURE/ INVESTMENT AGAINST THE UNEXPLAINED INCOME OF THE AS SESSEE FOR THE BLOCK PERIOD. 20. THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT FOR THE ASSESSMENT YEAR 2003-04, THERE BEING NO SATISFA CTION RECORDED BY HIM AS WELL AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE COMPANY SEARCHED. 21. THE LD. CIT(A) OUGHT TO HAVE ANNULLED THE ORDER OF THE ASSESSING OFFICER APPRECIATING THAT INVOKING OF THE PROVISIONS U/ S 153C WITHOUT RECORDING SATISFACTION BY HIM AS WEL L AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PARTY BECOMES INVALID AS HELD BY THE HON'BLE A.P HIGH COU RT IN THE CASE OF CIT V S. MJS SHETTYS PHARMACEUTICALS & BIOL OGICALS LTD 22. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT MATERIAL FOUND DURING THE COURSE OF SEARCH AT THE P REMISE OF SEARCH PARTY DID NOT BELONG TO THE ASSESSEE. 4 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. 23. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT NO ADDITION CAN BE MADE TO THE INCOME OF THE ASSESSEE U/S 143(3) RWS 153C:; OF THE ACT WITHOUT THERE BEING ANY INCRI MINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. 24. THE ASSESSEE MAY ADD, ALTER, OR MODIFY OR SUBST ITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME B EFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE CO UNSELS, WE ARE OF THE VIEW THAT SINCE THE ISSUES GOES TO THE ROOT OF THE MATTER AND NO FURTHER EXAMINATION OF FACTS ARE REQUIRED, OTHER TH AN THOSE WHICH ARE ALREADY AVAILABLE WITH THE AO, THE ADDITIONAL GROUN DS RAISED BY THE ASSESSEE ARE ADMITTED IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC REPORTED IN 229 I TR 383. 4. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQU ARELY COVERED BY THE DECISION OF THE SMC BENCH OF THIS TRIBUNAL IN A SSESSEES OWN CASE FOR AYS 2000-01 TO 2002-03 AND 2004-05 & 2005- 06 IN ITA NOS. 1853 TO 1855 AND 1857 & 1858/HYD/2012 VIDE ORDER DA TED 09/08/2016. A COPY OF THE SAID ORDER IS AVAILABLE O N RECORD. 5. THE LD. DR, ON THE OTHER HAND, NEITHER CONTROVER TED THE SUBMISSION OF THE LD AR NOR BROUGHT ANY CONTRARY DE CISION IN THIS REGARD. 6. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES A ND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. WE FIND THAT THE SMC BENCH OF THIS TRIBUNAL IN ASSE SSEES OWN CASE (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE. FOR THE SAKE OF CLARITY COMPLETE ORDER OF THE SMC BENCH IS EXTRACTED BELOW: THESE APPEALS BY THE ASSESSEE-HUF ARE DIRECTED AGA INST THE ORDERS PASSED BY THE CIT(A)-III, HYDERABAD. THOUGH THE FIRST APPELLATE A UTHORITY PASSED SEPARATE ORDERS BUT THE ISSUES INVOLVED THEREIN BEING COMMON, THEY ARE TAKEN-UP TOGETHER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HUF RAISED SEVERAL GROUNDS IN THE G ROUNDS OF APPEAL ENCLOSED TO REVISED FORM NO.36. IN ADDITION THERETO, A SEPARATE SET OF ADDITIONAL GROUNDS OF APPEAL WERE FILED WHEREIN IT WAS CONTENDED THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE 5 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 153C OF THE ACT WITHOUT RECORDING THE SATISFACTION OF THE ASSESSING OFFICER WHO HAS C ARRIED OUT THE SEARCH AND FORWARDED THE FILE TO THE ASSESSING OFFICER WHO HAS ISSUED NO TICE UNDER SECTION 153C OF THE ACT. IN SHORT, THE PLEA OF THE ASSESSEE IS THAT THE PROCEED INGS UNDER SECTION 153C OF THE ACT ARE BAD IN LAW IN THE LIGHT OF DECISION OF THE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. SHETTY PHARMACEUTICALS AND BIOLOGICALS LTD., I TTA.NO.662 OF 2014 DATED 26.11.2014. IT WAS FURTHER SUBMITTED THAT SINCE THE ISSUE GOES TO THE ROOT OF THE MATTER AND NO FURTHER EXAMINATION OF FACTS ARE REQUIRED, O THER THAN THOSE WHICH ARE ALREADY AVAILABLE WITH THE ASSESSING OFFICER, THE ADDITIONA L GROUND DESERVES TO BE ADMITTED IN THE INTEREST OF SUBSTANTIAL JUSTICE IN THE LIGHT OF RATIO OF THE DECISION OF THE APEX COURT IN THE CASE OF NTPC REPORTED IN 229 ITR 383. LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER DO NOT INDICATE THAT PROPER SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER AND THEREFORE , THE NOTICE UNDER SECTION 153C OF THE ACT IS BAD IN LAW. IN ORDER TO VERIFY THE SAME, WE HAVE CALLED FOR THE ASSESSMENT RECORD. THE LD. D.R. PLACED BEFORE US COPY OF THE O RDER SHEET IN RESPECT OF THE A.Y. 2000- 2001 AND ALSO LETTER DATED 11.07.2016 OF THE ASSESS ING OFFICER TO SUBMIT THAT THE ORDER SHEETS WERE IDENTICAL FOR ALL THE YEARS AND REASONS TO REOPEN ASSESSMENTS UNDER SECTION 153C ARE MENTIONED AS UNDER: IN THIS CASE, A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE I.T. ACT, 1961 WERE CONDUCTED ON 24.08.2005 IN THE M.V. SUBRAMANYESWARA REDDY GROUP OF CASES. THE ASSESSEE SRI M. SRINIVASA REDDY IS THE BROTHER OF M .V. SUBRAMANYESWARA RAO, THE MAIN PERSON IN THIS GROUP AND HE IS ALSO COVERED UNDER S ECTION 132. HE IS ASSESSED TO TAX AND HE IS HAVING INCOME FROM HOUSE PROPERTY AND OTHER S OURCES. A NOTICE UNDER SECTION 153A WAS ISSUED IN THIS CASE ON 28.02.2006 IN THE STATUS OF HUF. THE ASSESSEE HAS NOT FILED ANY RETURNS OF INCOME. HOWEVER, THERE WAS NO WARRANT IS SUED IN THE STATUS OF HUF. HENCE, TO AVOID LEGAL COMPLICATIONS, NOTICE UNDER SECTION 153 C IS ISSUED AS CERTAIN DOCUMENTS SEIZED FROM ASSESSEES HOUSE RELATING TO HUF INDICA TING UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS ALREADY ELABORATELY DISCUSSED IN THE ASSESSMENT ORDER. 2.1. THE ORDER SHEET MERELY MENTIONS AS UNDER : SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN TH E MVS REDDY GROUP. THE ASSESSEES CASE COVERED UNDER SECTION 153A/C OF THE I.T. ACT. NOTICE UNDER SECTION 153A PUT UP. 3. LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THA T THE ORDER SHEETS PLACED BEFORE THE BENCH DO NOT INDICATE THAT THE OFFICERS WHO ARE INV OLVED IN SEARCH HAVE NOT RECORDED ANY SATISFACTION THAT THE ASSESSEE HUF HAD CONCEALED AN Y INCOME AND EVEN THE ASSESSING OFFICER, WHO IS CONCERNED WITH THE ASSESSMENT OF AS SESSEE HUF, HAS NOT RECORDED ANY SATISFACTION AND IT WAS A MERE VAGUE NOTICE ISSUED UNDER SECTION 153A OF THE ACT AND EVEN AS PER THE LETTER OF THE ASSESSING OFFICER, NO TICE UNDER SECTION 153C IS ISSUED TO AVOID LEGAL COMPLICATIONS WHICH PROVES THAT THE ASS ESSING OFFICER CONCERNED HAS NOT RECORDED HIS SATISFACTION. 4. LD. D.R. WAS CALLED UPON TO EXPLAIN AS TO WHAT WAS THE SPECIFIC REASONS RECORDED BY THE ASSESSING OFFICER CONCERNED WHILE ISSUING NOTIC E UNDER SECTION 153C OF THE ACT. LD. D.R. ADMITTED THAT AS PER THE AVAILABLE ORDER SHEET ENTRIES ETC., IT IS NOT CLEAR AS TO WHAT ARE THE SPECIFIC REASONS RECORDED BUT STATED THAT S EARCH AND SEIZURE OPERATIONS WERE CARRIED OUT IN THE CASE OF MVS REDDY GROUP. 5. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE RECORD. I HAVE ALSO PERUSED THE ORDER SHEET COPY FOR THE A.Y. 2000-2001 AND ALSO THE LETTER ISSUED BY THE 6 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. ITO, WARD- 6(5), HYDERABAD. THERE IS NO DISPUTE THA T PROVISIONS OF SECTION 153A COMES INTO PLAY ONLY IN THE CASE OF A PERSON AGAINST WHOM SEARCH WARRANT WAS ISSUED AND SEARCH AND SEIZURE PROCEEDINGS WERE INITIATED UNDER SECTION 132 OF THE ACT. IN THE INSTANT CASE, SEARCH PROCEEDINGS WERE NOT CARRIED OUT IN TH E NAME OF ASSESSEE HUF. HOWEVER THE ASSESSING OFFICER, IN THE ORDER SHEET, OBSERVES THAT ASSESSEES CASE IS COVERED UNDER SECTION 153A/C OF THE ACT. THE REASONS RECORDED, AP ART FROM BEING VAGUE, INDICATES THAT NOTICE COULD NOT HAVE BEEN ISSUED UNDER SECTION 153 A OF THE ACT. ONCE PROCEEDINGS ARE INITIATED IN THE CASE OF A PERSON WHO WAS SEARCHED AND IF SOME INCRIMINATING MATERIAL IS FOUND IN RESPECT OF A PERSON OTHER THAN THE PERSON SEARCHED, THE ASSESSING OFFICER SHOULD RECORD HIS SATISFACTION THAT ANY MONEY, BULLION, JE WELLERY OR OTHER VALUABLE ARTICLES ETC., BELONGS TO SUCH PERSON, OTHER THAN THE PERSON REFER RED TO IN SECTION 153A, AND THEREAFTER THE SAID BOOKS OF ACCOUNT ETC., SHOULD BE HANDEDOVE R TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON SO AS TO ENABLE THE ASSESSING OFFICER CONCERNED TO PROCEED AGAINST SUCH PERSON. IN THE INSTANT CASE, T HERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSING OFFICER WHO HAS CONDUCTED SEARCH , OR WHO HAS PROCEEDED TO MAKE THE ASSESSMENT AGAINST THE PERSON AGAINST WHOM SEARCH I S INITIATED, WAS IN POSSESSION OF ANY INCRIMINATING MATERIAL CONCERNING THE ASSESSEE HUF. NO MATERIAL WAS PLACED BY THE LD. D.R. TO SHOW THAT THE ASSESSING OFFICER WHO HAD ISSUED A NOTICE UNDER SECTION 153A/153C WAS SATISFIED THAT ANY MONEY, BULLION, JE WELLERY OR OTHER VALUABLE ARTICLES BELONGS TO THE ASSESSEE HEREIN. THUS THE FIRST STEP TO INITIATE PROCEEDINGS UNDER SECTION 153C OF THE ACT WAS NOT FOLLOWED. IN OTHERWORDS, TH E RECORD DO NOT INDICATE THAT THE BOOKS OF ACCOUNT, DOCUMENTS OR ASSETS SEIZED WERE H ANDEDOVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE UPON RECORDIN G SATISFACTION. SECTION 153C OF THE ACT IMPOSES AN OBLIGATION UPON THE ASSESSING OFFICER, W HO HAS TO INITIATE PROCEEDINGS UPON THE ASSESSEE, TO RECORD HIS SATISFACTION THAT INCRI MINATING MATERIAL BELONGING TO THE ASSESSEE WAS FOUND DURING THE SEARCH AND TRANSFERRE D BY THE CONCERNED ASSESSING OFFICER. THE ORDER SHEET ENTRY AS WELL AS THE LETTE R PLACED BEFORE ME DO NOT INDICATE THAT THE ASSESSING OFFICER HAD ANY MATERIAL ON RECORD BA SED ON WHICH HE COULD HAVE RECORDED THE REASONS. IN FACT, REASONS FOR INITIATING PROCEE DINGS UNDER SECTION 153C ARE MISSING IN THE INSTANT CASE. 6. IT IS WELL SETTLED NOW THAT THE PROVISIONS CONTA INED IN SECTION 153C CAN BE INVOKED ONLY WHEN THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCH PERSON RECORDS HIS SATISFACTION AND THEREAFTER, THE ASSESSING OFFICER WHO HAS TO INITIATE PROCEEDINGS UPON THE ASSESSEE RECORDS HIS SATISFACTION; IN THE INSTA NT CASE, PROPER REASONS WERE NOT RECORDED BY BOTH THE ASSESSING OFFICERS. AT ANY RAT E NOTHING WAS BROUGHT ON RECORD BY THE REVENUE TO SUPPORT ITS STAND THAT APPROPRIATE R EASONS WERE RECORDED BY THE ASSESSING OFFICERS CONCERNED. 7. UNDER IDENTICAL CIRCUMSTANCES, THE ITAT HYDERABA D BENCH IN THE CASE OF SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., VS. DCIT, CENTR AL CIRCLE-2, HYDERABAD (2014) 47 TAXMANN.COM 85 (HYD.) (TRIBU.) QUASHED THE PROCEEDI NGS FOR NON-RECORDING OF REASONS BY OBSERVING IN PARA-33 AS UNDER : 33. THE ABOVE TWO JUDGMENTS WERE DELIVERED U/S. 158BD. WE HAVE CAREFULLY GONE THROUGH THE LANGUAGE USED IN SECTION 153C AND 158BD OF THE ACT. THE MAIN DIFFERENCE IN THE LANGUAGE IS THA T IN SECTION 158BD THE SCOPE OF JURISDICTION OF AO IS ONLY WITH RESPECT TO THE UNDI SCLOSED INCOME FOUND DURING THE COURSE OF SEARCH. WHEREAS IN SECTION 153C THE SCOPE OF JUR ISDICTION OF THE AO IS WITH RESPECT TO ANY MONEY, BULLION, JEWELLERY, OTHER VALUABLE ARTIC LES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS WITH RESPECT TO WHICH THE ASSESSING OFFIC ER IS SATISFIED THAT IT BELONGS TO SUCH OTHER PERSON. BUT SO FAR AS THE REFERENCE TO WORD ' SATISFACTION' IS MADE IT IS SAME AS AVAILABLE IN SECTION 158BD OF THE ACT. THEREFORE, W E ARE OF THE VIEW THAT THE RATIO LAID 7 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. DOWN IN THE ABOVE CASES IN RESPECT TO THE POINT OF SATISFACTION WILL APPLY FOR INITIATION OF ACTION U/S. 153C OF THE ACT. IN VIEW OF THIS, WE AR E INCLINED TO HOLD THAT INITIATION OF PROCEEDINGS U/S. 153C OF THE ACT IN THE CASE OF THE ASSESSEE FOR THESE TWO ASSESSMENT YEARS IS NOT PROPER AS THERE IS NO SATISFACTION REC ORDED BY THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED OR REQUISITIONED U/S. 132A OF T HE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SEARCHED PARTY OR LATER B EFORE ISSUE OF NOTICE U/S. 153C OF THE ACT. ACCORDINGLY, WE QUASH THE ASSESSMENT FRAMED U/ S. 153C OF THE ACT IN BOTH THE ASSESSMENT YEARS IN THIS CASE. 8. ON AN APPEAL FILED BY THE REVENUE, THE ORDER OF THE ITAT WAS AFFIRMED BY THE HONBLE A.P. HIGH COURT (ITTA.NO.662 OF 2014 DATED 26.11.20 14). SINCE NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER AND THE SO-CALLED REASONS BEING VAGUE, I AM OF THE FIRM VIEW THAT THE INITIATION OF PROCEEDINGS UNDER SECTI ON 153C OF THE ACT DESERVES TO BE QUASHED AS IT DO NOT STAND THE TEST OF LAW. SINCE T HE INITIATION OF PROCEEDINGS ARE HELD TO BE BAD IN LAW, IT IS NOT NECESSARY FOR ME TO DISCUS S THE OTHER ISSUES URGED BY THE ASSESSEE ON MERITS. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDEN TICAL TO THAT OF ASSESSEES OWN CASE FOR AYS 2000-01 TO 2002-03 AND 2004-05 & 2005-06, RESPECTFULLY FOLLOWING THE DECISION OF THE SMC BENCH THEREIN, WE QUASH THE PROCEEDINGS INITIATED BY THE AO U/S 153C OF THE ACT. SINCE THE INITIATION OF PROCEEDINGS ARE HELD T O BE BAD IN LAW, THERE IS NO NEED TO ADJUDICATE THE OTHER GROUNDS RA ISED BY THE ASSESSEE ON MERITS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 9 TH SEPTEMBER, 2016 KV 8 ITA NO. 1856/H/12 MR. M. SRINIVASA REDDY (HUF), HYD. COPY TO:- 1) MR. M. SRINIVASA REDDY (HUF), C/O P. MURALI & C O., CAS., 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) DCIT, CENTRAL CIRCLE 2, HYDERABAD. 3) CIT(A) - III, HYDERABAD 4 CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.