Late Shri Babanlal Bhikulal Agrawal, Jalgaon V. Income-tax Officer,

ITA 19/PUN/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6006 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2018
• Assessment Year: 2003-2004
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY NETKE
• Keywords: Unexplained investment; Search and seizure; Cost of acquisition; Reason to believe; Documents seized; Capital Gains
• Section: 271(1)(c); 143(3); 133A; 153A; 143(1); 153; 153C; 147; 131; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI LALIET KUMAR, JM . / ITA NO.19/PUN/2015 / ASSESSMENT YEAR : 2003-04 LATE SHRI BABANLAL BHIKULAL AGRAWAL, THROUGH L/H SHRI ANIL BABANLAL AGRAWAL, 84-85, MAIN ROAD, RAVER, DIST. JALGAON-425508 PAN : AABHA7676P ....... / APPELLANT / V/S. ITO, WARD-2(2), JALGAON. / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI VIJAY NETKE / DATE OF HEARING : 10.02.2020 / DATE OF PRONOUNCEMENT : 12.02.2020 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-2, NASHIK DATED 28.10.2014 FOR THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1] THE LD.CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY IMPOSED OF RS. 10,12,126/- U/S.271(1)(C) ON ACCOUNT OF ALLEGED ADDITION MADE AT RS.32,13,100/(INCLUSIVE OF ENHANCED INCOME), WITHOUT ESTABLISHING ANY ALLEGED FACTS/THING AND BRINGING ANY CORROBORATIVE EVIDENCE ON RECORD, EVEN IN PENALTY PROCEEDINGS AND HENCE, PENALTY BE DELETED 2] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY U/S.271(1)(C) OF THE I T ACT, WITHOUT REBUTTING ANY CONTENTION OF THE APPELLANT FILED BEFORE HIM. THEREFORE, 2 ITA NO.19/PUN/2015 PENALTY BE DELETED. 3] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY IMPOSED BY A.O WITHOUT HAVING JURISDICTION TO HIM TO IMPOSED SUCH PENALTY ON ENHANCED INCOME TO RS.32,13,100/-, HENCE, IT IS BAD IN LAW AND IT MAY PLEASE BE DELETED. 4] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY U/S.271 (1)(C) OF THE I T ACT, EVEN THOUGH A.O HAS NOT GIVEN ANY CLEAR FINDING , AS TO WHETHER IT IS IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME, OR FOR CONCEALMENT OF INCOME AND HENCE, IN ABSENCE OF CLEAR FINDING, PENALTY IMPOSED CANNOT BE SUSTAINED AND IT IS BAD IN LAW AB INITIO. THUS, PENALTY MAY PLEASE BE DELETED. 5] THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF THE APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS IN THE STATUS OF HUF AND EARNED INCOME FROM UNEXPLAINED DEPOSITS AND INTEREST THEREON. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,34,950/-. IN THE ASSESSMENT MADE U/S 144 R.W.S. 148 OF THE ACT, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME AT RS.21,86,950/- AGAINST THE RETURNED INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THERE WAS AN ESCAPEMENT OF INCOME TO THE TUNE OF RS.18,52,000/-. THE ASSESSING OFFICER RECORDED THE REASON TO BELIEF OF THE SAID ESCAPEMENT OF INCOME AND ISSUED NOTICE TO THE ASSESSEE U/S 148 OF THE ACT. HOWEVER, THERE WAS NO COMPLIANCE FROM THE SIDE OF THE ASSESSEE TO THE SAID NOTICE U/S 148 OF THE ACT. THE ASSESSING OFFICER ISSUED VARIOUS NOTICES AGAIN AND AGAIN BUT THE ASSESSEE DID NOT RESPONSE TO ANY OF THEM. THEREFORE, THE ASSESSING OFFICER PASSED THE EX-PARTE ASSESSMENT AND COMPUTED THE UNEXPLAINED DEPOSITS AND INTEREST THEREON TO THE TUNE OF RS.18,52,000/- AND ADDED THE SAME TO THE RETUNED INCOME OF THE ASSESSEE. FURTHER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 3 ITA NO.19/PUN/2015 4. AGAINST THE SAID ACTION OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A), AFTER DETAILED DISCUSSION IN HIS ORDER ON THIS ISSUE, ENHANCED THE UNEXPLAINED INVESTMENTS OF RS.23,13,100/- AND INTEREST THEREON OF RS.75,000/- FOR 12 MONTHS I.E. RS.9,00,000/ TOTALLING TO RS.32,13,100/-. FURTHER, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RELATING TO THE ENHANCED INCOME ALSO. FOLLOWING THE SAID DECISION OF THE CIT(A), THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED MINIMUM PENALTY OF RS.10,12,126/- VIDE PENALTY ORDER DATED 11.03.2013. IT IS EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME OF RS.32,13,100/-. 5. AGAINST THE ABOVE SAID PENALTY ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED A FURTHER APPEAL BEFORE THE CIT(A). THE CIT(A) WITHOUT ESTABLISHING ANY ALLEGED FACTS/THING AND BRINGING ANY CORROBORATIVE EVIDENCE ON RECORD CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CARRIED THE LITIGATION ON ADDITION IN QUANTUM APPEAL TO THE TRIBUNAL AND GOT RELIEF IN FAVOUR OF THE ASSESSEE. FURTHER, LD. COUNSEL FOR THE ASSESSEE, BY MAKING A REFERENCE TO THE GROUNDS, MENTIONED THAT THE ADDITION WAS DELETED BY THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.1427/PUN/2011 DATED 05.09.2019. IN THIS REGARD, LD. AR BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 4 AND 5 OF THE ORDER OF THE TRIBUNAL (SUPRA) FOR DEMONSTRATING THE REASONS FOR GRANTING RELIEF TO THE ASSESSEE. THE LD. AR 4 ITA NO.19/PUN/2015 FOR THE ASSESSEE FURTHER MENTIONED THAT THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE ON THE ISSUE OF PENALTIES GIVING THE REASON THAT THE PENALTY DOES NOT SURVIVE WHEN THE QUANTUM ADDITION IS DELETED. THUS, THE LD. AR FAIRLY MENTIONED THAT THE TRIBUNAL MAY TAKE A VIEW ON THE ISSUE OF PENALTY U/S 271(1)(C) OF THE ACT AND PRAYED FOR REVERSING THE ORDER OF THE LOWER AUTHORITIES. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). OTHERWISE, LD. DR FAIRLY ADMITTED THAT IF THE QUANTUM ADDITION IS DELETED AT THE LEVEL OF THE TRIBUNAL OR THE CIT(A) THE IMPUGNED PENALTY DOES NOT SURVIVE. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). WE HAVE ALSO GONE THROUGH THE CONTENTS OF PARA 4 AND 5 OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) AND FIND IT RELEVANT TO EXTRACT THE SAME AND THE SAID PARA 4 AND 5 ARE EXTRACTED HEREUNDER :- 4. WE HEARD BOTH THE SIDES ON THIS LEGAL ISSUE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES ALONG WITH THE ORDERS OF THE TRIBUNAL IN THE CASES OF (I) JAYANT HEMRAJ CHOUDHARI (SUPRA) AND (II) SHRI V.L. KHANDGE (SUPRA). FOR THE SAKE OF COMPLETENESS, THE CONTENTS OF PARA 7 TO 10 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF JAYANT HEMRAJ CHOUDHARI (SUPRA) ARE EXTRACTED HEREUNDER :- 7. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT MY ATTENTION TO THE ABOVE EXTRACTED ADDITIONAL GROUND NO.1 AND SUBMITTED THAT THIS A CASE OF ISSUING NOTICE U/S 153C OF THE ACT AS THE INFORMATION RELATING TO THE ASSESSEE WAS FOUND FROM THE DOCUMENTS SEIZED BELONGING TO SINHAGAD TECHNICAL EDUCATION SOCIETY (STES). FURTHER, BRINGING MY ATTENTION TO THE AMENDED PROVISIONS OF SECTION 153C BY THE FINANCE ACT, 2015 W.R.E.F. 01.06.2003 (A.Y. 2004-05), LD. COUNSEL SUBMITTED THAT THE AMENDED PROVISIONS ARE IN EXISTENCE AT THE TIME OF ISSUE OF NOTICE U/S 148 OF THE ACT DATED 21.04.2016 WHEREBY THE LAW MAKERS HAVE WIDEN SCOPE OF PROVISIONS OF SECTION 153C OF THE ACT FOR TAXING SUCH INCOME OF RS.15 LAKHS IN THIS CASE. THE LD. COUNSEL SUBMITTED THAT THIS IS A CLEAR CASE OF INFORMATION PERTAINING TO THE ASSESSEE EMANATING FROM THE DOCUMENTS BELONGING TO SINHAGAD TECHNICAL EDUCATION SOCIETY (STES). BOTH THESE EXPRESSIONS FALL IN THE SCOPE OF THE AMENDED SECTION 153C OF THE ACT. THEREFORE, THE ASSESSING OFFICER ERRONEOUSLY ASSUMED JURISDICTION U/S 147 OF THE ACT WITH REFERENCE TO THE PROVISIONS OF SECTION 5 ITA NO.19/PUN/2015 153C OF THE ACT. CONSEQUENTLY, THE ORDER MADE BY THE ASSESSING OFFICER U/S 147 R.W.S. 143(3) OF THE ACT IS UNSUSTAINABLE IN LAW. FOR THIS PROPOSITION, LD. COUNSEL RELIED ON THE VARIOUS DECISIONS INCLUDING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI V. L. KHANDGE VS. ITO IN ITA NO.1971/PUN/2014 FOR THE ASSESSMENT YEAR 2006-07 DATED 24.04.2018 AND SUBMITTED THAT THIS APPEAL ALSO PERTAINS TO THE PERIOD POST-ASSESSMENT YEAR 2004-05 AND THE PROVISIONS OF SECTION 153C OF THE ACT ARE APPLICABLE TO THE SAID CASE. ON THESE FACTS, THE TRIBUNAL DID NOT APPROVE THE ASSESSING OFFICER ACTION IN RESORTING TO SECTION 147 OF THE ACT IN REFERENCE TO THE PROVISIONS OF SECTION 153C OF THE ACT. HE ALSO MENTIONED THAT THE CONTENTS OF PARA 7 TO 11 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) ARE RELEVANT IN THIS REGARD. 8. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 9. ON HEARING BOTH THE SIDES ON THIS ISSUE, I FIND THE CONTENTS OF PARA 7 TO 11 OF THE ORDER OF THE TRIBUNAL (SUPRA) ARE RELEVANT TO EXTRACT. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARA 7 TO 11 OF THE ORDER OF THE TRIBUNAL (SUPRA) ARE EXTRACTED HEREUNDER :- 7. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME IN TIME WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER IN THE CASE, HAD RECEIVED INFORMATION FROM THE OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX (INV), UNIT II(1), PUNE VIDE LETTER DATED 30.03.2013. BASED ON THE ABOVE SAID INFORMATION, THE ASSESSING OFFICER MADE PROPOSAL FOR INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT. INFORMATION IN THIS REGARD WAS RECEIVED FROM THE ADDL.CIT, RANGE-8, PUNE VIDE LETTER DATED 30.03.2013. THE ASSESSING OFFICER THEREAFTER, ISSUED NOTICE UNDER SECTION 148 OF THE ACT, DATED 30.03.2013. THE REASONS RECORDED BY THE ASSESSING OFFICER FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ARE REPRODUCED AT PAGES 2 TO 8 OF THE ASSESSMENT ORDER. THE SAID REASONS CLEARLY NOTE THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT AND SURVEY ACTION UNDER SECTION 133A OF THE ACT WERE CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI GANESH KHANDGE ON 12.02.2013. DURING THE COURSE OF SEARCH PROCEEDINGS, IT WAS FOUND THAT SHRI VASANT LAXMAN KHANDGE I.E. ASSESSEE BEFORE US, FATHER OF SHRI GANESH KHANDGE, ALONG WITH HIS BROTHER SHRI DATTATREYA LAXMAN KHANDGE HAD SOLD LAND SITUATED AT TALEGAON TO NAMRATA DEVELOPERS. THE TRANSACTION RELATED TO ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER WHILE RECORDING REASONS FOR REOPENING THE ASSESSMENT MENTIONED THAT THE ASSESSEE HAD DECLARED INCOME FROM LONG TERM CAPITAL GAINS ON THE SALE OF SAID LAND IN THE RETURN OF INCOME. SECONDLY, FROM THE EVIDENCES SEIZED / IMPOUNDED, IT WAS OBSERVED THAT THE ASSESSEE AND HIS BROTHER HAD ENTERED INTO JOINT VENTURE AGREEMENT WITH NAMRATA DEVELOPERS TO EVADE TAX ON SALE OF LAND, SINCE ON THE SAID LAND NAMRATA DEVELOPERS DEVELOPED 80IB(10) PROJECT AND CLAIMED DEDUCTION ON THE ENTIRE PROJECT. THEREAFTER, THE ASSESSING OFFICER HAS RAISED VARIOUS ISSUES IN RESPECT OF SUPPRESSION AND SHORT COMPUTATION OF LONG TERM CAPITAL GAINS BY INCREASING COST OF ACQUISITION AND / OR SUPPRESSION THE SALE CONSIDERATION. REFERENCE IS ALSO MADE TO THE STATEMENT OF SHRI GANESH KHANDGE, THE PERSON SEARCHED, WHICH WAS RECORDED UNDER SECTION 131 OF THE ACT ON 12.02.2013. THE ASSESSING OFFICER THUS, HELD THAT THERE WAS REASON TO BELIEVE THAT 6 ITA NO.19/PUN/2015 INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSEE IN REPLY, SUBMITTED THAT RETURN OF INCOME EARLIER FILED MAY BE TREATED AS FILED UNDER SECTION 148 OF THE ACT AND RAISED OBJECTIONS TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. 8. THE ISSUE WHICH ARISES BEFORE US IS WHETHER IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE BASIS OF MAKING INVESTIGATION AND ASSESSMENT THEREAFTER IN THE HANDS OF ASSESSEE IS ON THE BASIS OF INFORMATION UNEARTHED DURING THE COURSE OF SEARCH ACTION ON THE PREMISES OF SHRI GANESH KHANDGE ON 12.02.2013, THEN WHETHER PROCEEDINGS ARE TO BE INITIATED UNDER SECTION 148 OR UNDER SECTION 153C OF THE ACT. THE PERUSAL OF PROVISIONS OF SECTION 153C OF THE ACT REFLECTS THAT IN CASE ANY DOCUMENT RELATING TO ANY OTHER PERSON IS FOUND DURING THE COURSE OF SEARCH ON A PERSON, THEN THE SAID DOCUMENT IS TO BE FORWARDED TO THE ASSESSING OFFICER IN-CHARGE OF THE PERSON OTHER THAN THE PERSON SEARCHED. THE PROCEEDINGS HAVE TO BE INITIATED AGAINST SUCH PERSON ON THE BASIS OF SUCH DOCUMENT FOUND AND IMPOUNDED. SECTION 153C OF THE ACT VERY CLEARLY PROVIDED THAT WHERE THE CONDITIONS AS MENTIONED IN THE SAID SECTION PREVAIL, THEN PROVISIONS OF SAID SECTION HAVE TO BE APPLIED NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT. THE REQUIREMENT OF SECTION 153C OF THE ACT IS THE FIRST SATISFACTION OF ASSESSING OFFICER THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED IN SECTION 153A OF THE ACT, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED, SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST SUCH OTHER PERSON AND ISSUE NOTICE OF ASSESSMENT OR RE-ASSESSMENT OF THE INCOME OF OTHER PERSON IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT. THE ASSESSING OFFICER HAS TO RECORD SATISFACTION THAT BOOKS OF ACCOUNT OR ASSETS SEIZED OR REQUISITIONED, HAVE A BEARING ON DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON. THE SAID PROVISIONS ARE NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS AS MENTIONED ABOVE INCLUDING SECTIONS 147 / 148 OF THE ACT. IN OTHER WORDS, WHERE THE PROVISIONS OF SECTION 153C OF THE ACT ARE ATTRACTED IN GIVEN SET OF FACTS AND THE DOCUMENTS IMPOUNDED DURING THE COURSE OF SEARCH, THEN THE PROCEEDINGS HAVE TO BE INITIATED UNDER SECTION 153C OF THE ACT AS PER PRESCRIBED PROCEDURE AND NO PROCEEDINGS CAN BE INITIATED UNDER SECTION 147 / 148 OF THE ACT. THE SAID PROPOSITION HAS BEEN HELD BY THE PUNE BENCH OF TRIBUNAL IN THE CASE OF JOSHI WADEWALE HADAPSAR VS. DCIT IN ITA NOS.105 & 106/PUN/2016, RELATING TO ASSESSMENT YEARS 2009-10 & 2010-11 WITH LEAD ORDER IN THE CASE OF MRS. VASUNDHARA SHAILESH JOSHI VS. DCIT IN ITA NOS.95 & 96/PUN/2016, RELATING TO ASSESSMENT YEARS 2009-10 & 2010-11, VIDE CONSOLIDATED ORDER DATED 27.03.2018. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 28. THE FIRST ISSUE WHICH ARISES IS WHETHER THE ASSESSMENT IN SUCH CIRCUMSTANCES WAS TO BE MADE UNDER SECTION 153C OR 148 OF THE ACT AND CONNECTED ISSUE IS WHETHER SUCH AN ISSUE OF ASSESSMENT BEING COMPLETED UNDER A PARTICULAR SECTION WAS VALID OR NOT, CAN BE RAISED WHILE DECIDING THE ISSUE OF LEVY OF PENALTY 7 ITA NO.19/PUN/2015 UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE INCOME ASSESSED IN THE HANDS OF ASSESSEE. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THAT THE ISSUE STANDS COVERED BY THE RATIO LAID DOWN IN ITO VS. SHRI SHAILENDRA B. AGRAWAL (SUPRA) AND IN BUNCH OF APPEALS WITH LEAD ORDER IN ACIT VS. SHAMSUNDAR LAXMAN JAGTAP (SUPRA). THE RELEVANT PROVISIONS OF THE ACT TO WHICH REFERENCE IS BEING MADE IS SECTION 153C OF THE ACT WHICH PROVIDES AS UNDER:- 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER 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 SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER 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: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. .. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB-SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM, OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB-SECTION (2) OF SECTION 143 HAS EXPIRED, OR (C) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF 8 ITA NO.19/PUN/2015 SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN SECTION 153A. 29. SECTION 153C OF THE ACT VERY CLEARLY LAYS DOWN THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING SEIZED OR REQUISITIONED, BELONGS TO; OR ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN, RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN, SUCH BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THE ASSESSING OFFICER SHALL PROCEED AGAINST SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF OTHER PERSON IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT. SECTION THUS, VERY CLEARLY LAYS DOWN THE PROCEDURE TO BE FOLLOWED WHEN DURING THE COURSE OF SEARCH ON A PERSON ANY MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE OR THING, OR ANY BOOKS OF ACCOUNT OR DOCUMENTS OR ANY INFORMATION CONTAINED THEREIN PERTAINS TO OR RELATE / RELATES TO OTHER THAN THE PERSON SEARCHED; THEN FIRST, ALL THE SAID ASSETS OR INFORMATION IS TO BE HANDED OVER TO THE ASSESSING OFFICER, WHO IS INCHARGE OF THE PERSON OTHER THAN THE PERSON SEARCHED AND THEN THE ASSESSING OFFICER HAS TO PROCEED AND DETERMINE THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH PROVISIONS OF SECTION 153C OF THE ACT. THE SAID SECTION VERY CLEARLY ALSO LAYS DOWN THAT THE PROVISIONS OF SECTION 153C OF THE ACT ARE TO BE APPLIED NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 139, 147, 148, 151 AND 153 OF THE ACT. APPLYING THE SAID PROVISIONS TO THE FACTS OF THE PRESENT CASE, WHEREIN CERTAIN DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AT THE RESIDENCE OF PARTNERS OF ASSESSEE FIRM ON THE BASIS OF WHICH, ADDITIONAL INCOME WAS TO BE ASSESSED IN THE HANDS OF PARTNERSHIP FIRM I.E. ONE OF THE ASSESSEES BEFORE US, THEN FOR MAKING AFORESAID ADDITION, RECOURSE WHICH WAS OPEN TO THE ASSESSING OFFICER WAS TO INITIATE PROCEEDINGS UNDER SECTION 153C OF THE ACT. WHERE THE PROVISIONS OF SAID SECTION ARE TO BE APPLIED, THEN NO PROCEEDINGS CAN BE INITIATED UNDER SECTION 147, 148, 151 AND 153 OF THE ACT. ACCORDINGLY, WE HOLD THAT WHEN DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT AT THE RESIDENCE OF MRS. VASUNDHARA S. JOSHI AND SHRI SHAILESH JOSHI, LOOSE PAPER BUNDLE NOS.6, 7, 8 AND 9 WERE FOUND, WHICH DEPICTED THE RECEIPTS AND EXPENDITURE RELATING TO DIFFERENT OUTLETS BEING RUN UNDER THE PARTNERSHIP FIRMS AND THE ADDITIONAL INCOME WAS ALSO OFFERED BY THE PERSONS SEARCHED ON BEHALF OF PARTNERSHIP FIRMS, IN WHICH HE WAS PARTNER, ON THE BASIS OF SUCH DOCUMENTS FOUND DURING THE COURSE OF SEARCH, THEN FOR MAKING ADDITION IN THE HANDS OF PARTNERS, PROVISIONS OF SECTION 153C OF THE ACT ARE ATTRACTED. ONCE THE SAID PROVISIONS ARE SO ATTRACTED, THEN THERE IS NO QUESTION OF INITIATING ANY PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT. ACCORDINGLY, WE HOLD THAT PROCEEDINGS INITIATED UNDER SECTION 147 / 148 OF THE ACT ARE THUS, NOT CORRECTLY INITIATED. 9. THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ISSUE BEFORE THE TRIBUNAL IN JOSHI WADEWALE HADAPSAR VS. DCIT (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT RE-ASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE UNDER SECTION 147 / 148 OF THE ACT ARE NOT WARRANTED. THE 9 ITA NO.19/PUN/2015 ASSESSING OFFICER AFTER RECEIPT OF INFORMATION BELONGING TO THE ASSESSEE SHOULD HAVE INVOKED PROVISIONS OF SECTION 153C OF THE ACT AND NOT SECTION 147 / 148 OF THE ACT. ACCORDINGLY, WE HOLD SO. CONSEQUENTLY, RE-ASSESSMENT ORDER PASSED UNDER SECTION 148 OF THE ACT DOES NOT STAND. THE ASSESSING OFFICER IS THUS, DIRECTED TO CANCEL THE SAME. CONSEQUENTLY, THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED AND WE HOLD THAT ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS NULL AND VOID. CONSEQUENTLY, THE ISSUE RAISED ON MERITS BY THE ASSESSEE AND THE REVENUE BECOMES ACADEMIC IN NATURE AND THE SAME ARE DISMISSED. 10. THE FACTS AND ISSUES IN ITA NOS.1972/PUN/2014 & 2056/PUN/2014 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NOS.1971/PUN/2014 & 2057/PUN/2014 AND OUR DECISION IN ITA NOS.1971/PUN/2014 & 2057/PUN/2014 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.1972/PUN/2014 & 2056/PUN/2014. 11. IN THE RESULT, APPEALS OF ASSESSEE ARE ALLOWED AND APPEALS OF REVENUE ARE DISMISSED. 10. FROM THE ABOVE, IT IS EVIDENT THAT THE ABOVE DECISION OF THE TRIBUNAL (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE, THE ADDITIONAL GROUND NO.1 HAS TO BE ALLOWED. 5. THE AMENDED PROVISIONS OF SECTION 153C OF THE ACT W.R.E. FROM 2013, APPLY TO THE YEAR UNDER CONSIDERATION. CONSIDERING THE ABOVE SETTLED LEGAL PROPOSITION ON THIS ISSUE (COMMON IN BOTH THE APPEALS), WE DO NOT FIND FORCE IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE SET-ASIDE THE ORDER OF THE CIT(A) AND QUASH THE REASSESSMENT ORDERS MADE BY THE ASSESSING OFFICER. THUS, THE RELEVANT ADDITIONAL GROUNDS/CONCISE GROUNDS RAISED BY THE ASSESSEE ON THE LEGAL ISSUE, COMMON IN THE BOTH APPEALS, ARE ALLOWED. 9. CONSIDERING THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), WE FIND THAT THE TRIBUNAL DELETED THE ADDITIONS ON MERITS. THEREFORE, IT IS REASONABLE BE INFER THAT THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE ON MERITS IN QUANTUM APPEAL. AS SUCH, THERE IS NO DISPUTE ON THE ISSUE OF DELETION OF THE SAID ADDITION, WHICH IS THE SUBJECT MATTER OF THE PENALTY. ACCORDINGLY, THE IMPUGNED PENALTY LEVIED U/S 271(1)(C) OF THE ACT SHALL NOT SURVIVE. CONSIDERING THE ABOVE FATE OF THE FACTUAL MATRIX OF THE PENALTY, IN OUR OPINION, THE ORDER OF THE CIT(A) IS REQUIRED TO BE SET-ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE IN THE PRESENT APPEAL SHOULD BE ALLOWED IN 10 ITA NO.19/PUN/2015 FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF FEBRUARY, 2020. SD/- SD/- (LALIET KUMAR) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH FEBRUARY, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, NASHIK. 4. THE CIT-II, NASHIK. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.