K. Vijaya Lakshmi, Hyderabad V. ACIT, Circle 8(1), Hyderabad

ITA 236/HYD/2014

• Counselvise Citation: 23622514 RSA 2014
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 143(3); 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.235/HYD/2014 ASSESSMENT YEAR 2007-2008 MS. CH. MADHAVI HYDERABAD PAN AOHPM-1603-E VS. ACIT, CIRCLE 8 (1) HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.236/HYD/2014 ASSESSMENT YEAR 2007-2008 SMT. K. VIJAYALAKSHMI HYDERABAD PAN AZEPK-3638-B VS. ACIT, CIRCLE 8 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 27.06.2014 DATE OF PRONOUNCEMENT : 27.08.2014 ORDER PER B. RAMAKOTAIAH, A.M. BOTH THE ASSESSEES ARE RELATED AND HAVE PURCHASED COMMON PROPERTY WHICH WAS SUBJECT MATTER OF PRESENT ASSESSMENTS UNDER SECTION 143(3) READ WITH SECTION 153C READ WITH SECTION 153A PASSED BY THE A.O. ACIT , CIRCLE 8(1), HYDERABAD AS APPROVED BY THE LD. CIT(A), VIJA YAWADA DATED 21.12.2013 BY A SEPARATE ORDERS. SINCE FACTS ARE SIMILAR AND ARE INTER LINKED, THESE TWO APPEALS ARE CONSIDE RED TOGETHER 2 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI AND DISPOSED OF BY THIS COMMON ORDER. ASSESSEES HER EIN HAVE RAISED COMMON GROUNDS WHICH ARE AS UNDER : 2. LD. CIT(A) ERRED IN HOLDING THAT INITIATION OF PROCEEDINGS U/S.153C IS VALID WITHOUT CONSIDERING T HE DECISION RELIED UPON BY THE ASSESSEE IN A CONNECTED CASE OF SRI T. JAIPAL REDDY IN ITA NO.2056 & 2057/H/2011, DT. 28.6.2013 WHEREIN IT IS HELD INVALID. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE CONSIDE RATION PAID IS RS.94,50,000 THOUGH IT IS NOT DEMONSTRATED THAT THE PAPER SEIZED, A COPY OF WHICH IS ACTUALLY PROVIDED ONLY DURING APPEAL BEFORE THE CIT(A), RELA TE TO ASSESSEE AND THOUGH CROSS EXAMINATION OF THE PERSON WHO DEPOSED IS NOT ALLOWED. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.10,06,083 IN A CRYPTIC MANNER WITHOUT CONSIDERIN G THE SUBMISSIONS AND THE RATIO OF SUPREME COURT IN T HE CASE OF P.K. NOORJEHAN. 1.1. EXCEPT THE AMOUNT IN GROUND NO.4 IN CASE OF S MT. K. VIJAYA LAKSHMI WHICH IS AT RS.1,77,000/- REST OF THE GROUNDS ARE SIMILAR. 2. FOR THE SAKE OF CONVENIENCE REFERENCE WAS MADE TO FACTS IN CH.MADHAVI CASE. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT WAS CONDUCTED IN THE CASE OF SRI D. NAGARJUNA RAO SRI K.SRINIVASA REDDY AND OTHERS, MIYAPUR, HYDERABAD ON 29.10.2007 AND CERTAIN BOOKS AND DOCUMENTS WERE SEIZED. DURING TH E ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ON ANA LYZING THE DOCUMENTS SEIZED FOUND THAT 525 SQ YARDS OF LAND AT SY. NO. 228, 229/1 BEARING PLOT NO 137 TO 139 AT MADINAGUDA WAS SOLD BY M/S. SEETHARAMANJANEYA CONSTRUCTIONS THROUG H SRI K. CHAKRADHAR RAO FOR AN AMOUNT OF RS.94,50,000/- ON 29.10.2007 TO THE ASSESSEES. IT WAS NOTED BY AO THA T THE SALE 3 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI CONSIDERATION AS PER THE SALE DEED WAS ONLY RS.18,3 7,500/- WHEREAS THE ACTUAL SALE CONSIDERATION AS PER THE NO TINGS WAS RS.94,50,000/-. SRI D. NAGARJUNA RAO, SRI VENKATESW ARA REDDY AND SRI RAVINDRANATH ALSO HAS CONFIRMED THE R ECEIPT OF RS.94,50,000/- AS SALE CONSIDERATION FROM THEM. IN THIS REGARD, DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO EXPLAIN THE SOURCES OF INVESTMENT IN THE SAID PROPERTY. IN RESP ONSE TO WHICH, THE ASSESSEE DENIED TO HAVE PAID ON MONEY FO R PURCHASE OF PROPERTY FOR RS.94,50,000/- AND STATED THAT SHE HAS PURCHASED THE PROPERTY FOR RS.18,37,500/- ONLY ALONG WITH SMT K VIJAYA LAKSHMI AND ACCORDINGLY FILED RETURNS OF INCOME FOR THE ASST. YEARS 2002-03 TO 2005-06 EXPLAINING T HE SOURCE OF INVESTMENT TO THE EXTENT OF SALE CONSIDERATION O F RS18,37,500/- ONLY I.E FOR RS.10,00,000/- AS INVESTMENT IN THE ASSESSEES HAND. SINCE THERE IS EVIDENCE THAT T HE RECIPIENT HAS CONFIRMED THE RECEIPT OF RS.94,50,000/- THROUGH THE FATHER OF THE ASSESSEE, SUMMONS HAVE BEEN ISSUED TO THE AS SESSEE BY THE A.O ASKING TO EXPLAIN THE SOURCE OF INVESTMENT OF RS. 94,50,000/-. THE ASSESSING OFFICER AFTER ANALYZING THE SEIZED MATERIAL HELD THAT THERE IS EVIDENCE CLEARLY INDICA TING THE NAME OF SRI CHAKRADHAR RAO WHO IS FROM THE SIDE OF THE A SSESSEE WHO HAS MATERIALIZED THE TRANSACTION. IN VIEW OF TH E SAME, THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED AND IN THE A BSENCE OF ANY EXPLANATION GIVING SOURCE FOR THE AMOUNT OVER A ND ABOVE THE SALE CONSIDERATION OF RS.76,12,500/- WAS TREATE D AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND ACCORD INGLY BROUGHT TO TAX THE ASSESSEES SHARE OF INVESTMENT I .E., RS.38,06,250/- 4 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 2.1. IN ADDITION TO THE ABOVE WHICH IS COMMON IN B OTH THE CASES, A.O. ENQUIRED THE SOURCE OF THE AMOUNT S TATED TO HAVE PAID IN THE INVESTMENT OF PLOT WHICH IS AT RS. 10,06,083/- BEING 50% OF THE TOTAL COST. IN THE CASE OF SMT. CH . MADHAVI A.O. MADE ADDITION OF ENTIRE AMOUNT OF RS.10,06,083 /- AS HAVING NO SOURCE OF INCOME WHEREAS IN THE CASE OF S MT. K. VIJAYALAXMI HE HAS MADE ADDITION OF RS.1,77,000/- A CCEPTING THE BALANCE SOURCE OF AMOUNT. LD. CIT(A) AFTER CONS IDERING THE ASSESSEES SUBMISSIONS UPHELD THE ADDITIONS MADE IN THE CASE OF BOTH THE ASSESSEES. 3. IN THE COURSE OF APPEAL BEFORE THE LD. CIT(A), ASSESSEE RAISED ADDITIONAL GROUND STATING THAT INVO KING THE PROVISIONS OF SECTION 153C ARE NOT CORRECT INASMUCH AS THERE WAS NO INCRIMINATING MATERIAL TO ASSUME JURISDICTIO N UNDER SECTION 153C OF THE I.T. ACT. IN RAISING THE ABOVE ADDITIONAL GROUND, ASSESSEE SUBMITTED BEFORE THE CIT(A) AS UND ER : 'THE LEARNED CIT(A) PROVIDED A COPY OF THE LETTER O F THE AO ALONG WITH COPY OF SEIZED MATERIAL WHICH WAS NOT PROVIDED AT THE TIME OF ASSESSMENT. THE APPELLANT I NVITE KIND ATTENTION TO THE SAID SEIZED MATERIAL. THE HON OURABLE CIT(A) WOULD FIND THAT THERE IS NO INDICATION ANY W HERE IN THE SEIZED MATERIAL THAT IT IS CONNECTED TO THE APP ELLANT. THE TITLE OF THE SEIZED MATERIAL WHICH IS IN TELUGU IF TRANSLATED IN ENGLISH IS 'CHAKRADAR RAO A/C 525 YDS ' EVEN THE CONTENTS NO WHERE REFER TO THE APPELLANT O R MRS. CH. MADHAVI ANOTHER PURCHASER. THEREFORE IT IS CLEA R THAT THIS MATERIAL COULD NOT HAVE BEEN RELIED UPON. THE AO STATES THAT RECIPIENT ACCEPTED THE CONSIDERATION TO BE RS.94,50,000. FOR VARIOUS REASONS THEY MAY ACCEPT T HE RECEIPT TO BE SO MUCH. BUT THERE SHOULD BE EVIDENCE TO THAT EFFECT. NOWHERE IN THE ASSESSMENT ORDER SUCH EVIDEN CE IS REFERRED TO EXCEPT THE ABOVE SAID MATERIAL AND CONFIRMATION BY RECIPIENT. ON THE OTHER HAND IT IS FOUND THAT THE SAID SEETHARAMANJANEYA CONSTRUCTIONS ENTER ED INTO AN AGREEMENT FOR PURCHASE FROM ONE MR.T.JAIPAL REDDY AND CLAIMED TO HAVE PAID RS.74,81,250 WHEREAS THE REGISTERED DEED SHOWN A CONSIDERATION OF RS.18,37,500 WHICH IS SIMILAR TO THE AMOUNT PAID BY THE 5 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI APPELLANT. ON THE SAID ASSERTION BY THE SAID SEETHARAMANJANEYA CONSTRUCTIONS ADDITION WAS MADE I N THE HANDS OF THE SAID SRI T.JAIPAL REDDY. THE I.T.A .T., VIDE THEIR ORDER IN ITA NOS.2056 & 2057/H/2011, DT.28- 6-2013 HAS QUASHED THE VERY ASSESSMENT ON THE GROUN D THAT THE SEIZED MATERIAL DOES NOT REFER TO THE SAID ASSESSEE. THE APPELLANT HAS ALREADY SUBMITTED A COP Y OF THE DECISION. AS SUBMITTED EARLIER THE SEIZED DOCUM ENT NO WHERE REFERS EITHER TO THE APPELLANT OR THERE IS AN Y INDICATION THAT THE TRANSACTION RELATE TO THE SAME PLOT PURCHASED BY THE APPELLANT. THE APPELLANT THEREFORE SUBMIT THAT ASSESSMENT MADE U/S.153C IS INVALID'. 3.1. LD. CIT(A), HOWEVER, REFERRING TO THE PROVISI ONS OF SECTION 153C HELD THAT THE DOCUMENTS BELONGS TO THE ASSESSEE AND THEREFORE, A.O. IS JUSTIFIED IN INVOKING THE PR OVISIONS OF SECTION 153C OF THE I.T. ACT IN COMPLETING THE ASSE SSMENT. 4. LD. COUNSEL BEFORE US WHILE REFERRING TO THE MATERIAL FACTS OF THE CASE SUBMITTED THAT FROM THE SAME ANNEXURE AT PAGE 59, THERE WAS A TRANSACTION PERTAI NING TO MR. RAVINDRA RAO THE SAME SEIZED MATERIAL PERTAINING TO MR. D. NAGARJUNA RAO WHICH WAS BROUGHT TO TAX IN THEIR HAN DS OF M/S. SHOURI CONSTRUCTIONS AND MR. T. JAIPAL REDDY A ND ITAT VIDE ORDER IN ITA.NO.2056 AND 2057/HYD/2011 DATED 28.06.2013 HAS QUASHED THE SAME ON THE GROUND THAT THE SEIZED MATERIAL DOES NOT REFER TO THE SAID ASSESSEE . LD. COUNSEL ALSO PLACED ON RECORD ANOTHER ORDER OF THE COORDINA TE BENCH IN THE CASE OF MR. P. GANGADHAR RAO ITA.NO.2097/HYD/20 12 DATED 09.04.2014, SIMILARLY, INITIATED PROCEEDINGS U/S.153C ON THE LOOSE SHEET AT PAGE 38 OF ANNEXURE A/DNR/18 WHI CH WAS ALSO QUASHED. IT WAS THE SUBMISSION THAT THE SEIZED DOCUMENT DOES NOT REFER TO EITHER ASSESSEE OR THE TRANSACTIO NS OF THE ASSESSEE AND THEREFORE, PROCEEDINGS UNDER 153C CANN OT BE INITIATED. 6 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 5. LEARNED D.R. HOWEVER, SUPPORTED THE ORDERS OF T HE ASSESSING OFFICER. 6. BEFORE ADVERTING TO THE ISSUE UNDER 153C, IT IS NECESSARY TO EXTRACT PAGE 63 OF PAPER BOOK WHICH IS OF THE SAID ANNEXURE WHICH IS AS UNDER : CHAKRADHARA RAO A/C. 525 SQ.YARDS PLOT. 04.10.06 CASH REMITTED 1,18,000.00 09.10.06 CASH REMITTED 40,00,000.00 13.10.06 IN RESPECT OF PLOT AS SUBBARAMIREDDY 15,00,000.00 16.10.06 CASH RECEIVED BY SELF 5,00,000.00 26.10.06 CASH 3,00,000.00 26.10.06 CH.NO.020911 22,00,000.00 28.10.06 CASH 99,500.00 30.10.06 RT CH.020911 2,20,000.00 31.10.06 CASH 2,00,000.00 08.11.06 CASH REMITTED 10,00,000.00 08.11.06 CASH REMITTED 12,82,500.00 20.11.06 CASH REMITTED 33,00,000.00 18.11.06 CASH REMITTED 10,00,000.00 21.11.06 CASH REMITTED 8,50,000.00 06.03.07 CASH FROM CHAKRADHAR RAO 1,00,000.00 06.03.07 CASH FROM SUBBIRAMI REDDY 5,00,000.00 11.03.07 CASH FROM CHAKRADHAR RAO 1,00,000.00 29,20,000.00 1,23,70,000.00 29,20,000.00 11.03.07 INTEREST TOWARDS PLOT FOR 3 MONTHS 13 DAYS 94,50,000.00 PAID TO SUBBIRAMI REDDY 48,066.00 48,066.00 94,01,934.00 7 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 6.1. AS CAN BE SEEN FROM THE ABOVE, THERE IS NO MENTION OF EITHER OF THE ASSESSEES IN THE SAID DOCU MENT. MOREOVER, THE SAID ACCOUNT IS IN THE NAME OF MR. CH AKRADHARA RAO WHO HAS NOT BEEN QUESTIONED AT ALL IN THIS TRAN SACTION. AS SEEN FROM THE SALE DEED PLACED ON RECORD, THE SALE DEED IS BETWEEN M/S. SHOURI CONSTRUCTIONS AND MR. T. JAIPAL REDDY REPRESENTED BY AGPA HOLDERS MR. K. RAVINDRANATH AND K.V. REDDY. INCIDENTALLY, THESE NAMES DO FIGURE IN THE A PPEALS OF M/S. SHOURI CONSTRUCTIONS AND MR. T. JAIPAL REDDY W HEREIN ALSO MR. D. NAGARJUNA RAO STATED TO HAVE PAID AMOU NT OF RS.74,81,250/- AND REGISTERED PROPERTY FOR RS.18,37 ,500/- ON 09.10.2006 IN FAVOUR OF MR. K. RAVINDRANATH AND K. VENKATESWARA REDDY VIDE REGISTERED DEED 09.10.2006. THESE TWO PEOPLE ARE THE SELLERS TO THE PRESENT ASSESSEES BEING VENDEES. NOWHERE IN THE ASSESSMENT ORDER, THE A.O. HAS NOT CO-RELATED HOW MR. D. NAGARJUNA RAO IS CONCERNED WI TH THE TRANSACTIONS BETWEEN MR. K. RAVINDRANATH AND K. VENKATESWARA REDDY WHO ARE THE SELLERS TO THE ASSES SEE. IT IS ALSO NOT SURE FROM THE DOCUMENTS SEIZED ABOVE WHY M R. CHAKRADHARA RAO HAS TO PAY VARIOUS AMOUNTS FROM 04.10.2006 TO 11.03.2007 I.E., BEYOND THE REGISTRAT ION OF THE SALE DEED DATED 30 TH NOVEMBER, 2006. AS ON 30 TH NOVEMBER, 2006 THE TOTAL AMOUNT PAID SEEMS TO BE RS.1,23,70,0 00/- OUT OF WHICH IN THE MONTH OF MARCH AND EARLIER ALSO THR OUGH ONE MR. SUBBARAMI REDDY AN AMOUNT OF RS.29,20,000/- WAS REFUNDED TO MR. CHAKRADHAR RAO. IN THESE CIRCUMSTAN CES, IT CANNOT BE STATED WHY THE ENTIRE AMOUNT ACCOUNTED TH EREIN SHOULD PERTAIN TO THE PROPERTY IN QUESTION. MOREOVE R, ON SIMILAR FACTS IN ANOTHER TRANSACTION BETWEEN M/S. SEETHARAMANJANEYA CONSTRUCTIONS REPRESENTED BY MR. NAGARJUNA RAO THE SALE CONSIDERATION AS PER THE REC ORD 8 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI ASSESSED IN THE HANDS OF M/S. SHOURI CONSTRUCTIONS AND MR. T. JAPIAL REDDY WAS STATED TO BE RS.74,81,250/-, TO TH AT SAME VALUE IN THE NAME OF ASSESSEES AT RS.18,37,500/-. M R. D. NAGARJUNA RAO STATED TO HAVE REGISTERED TO THEM ON 09.10.2006 FOR CONSIDERATION OF RS.18,37,500/- WHIC H IN TURN WAS PURCHASED BY THE ASSESSEE FOR THE SAME AMOUNT O N 30 TH NOVEMBER, 2006. IN CASE, IF A.OS CONTENTION WERE C ORRECT AND THE AMOUNTS ARE PAID BY MR. CHAKRADHAR RAO AS EARLY AS ON 04.10.2006 AND 09.10.2006 THEN, IT IS NOT UNDERSTAN DABLE WHY THE PROPERTY WAS REGISTERED IN THE NAME OF MR. K. RAVINDRANATH AND SMT. K. VENKATESWAR RAO ON 09.10.2 006 WHICH IN TURN WAS REGISTERED IN THE NAME OF THE ASS ESSEES ON 30 TH NOVEMBER, 2006. IN VIEW OF THESE, WE ARE UNABLE TO UNDERSTAND WHETHER THE SAID DOCUMENT DO PERTAIN TO PROPERTY PURCHASED BY THE ASSESSEE. IN THE ABSENCE OF ANY CO -RELATION BETWEEN MR. CHAKRADHAR RAO ACCOUNT FOR 525 SQ. YAR DS TO THAT OF PROPERTY PURCHASED BY THE ASSESSEE AND CONS IDERING THE INTER-LINKING TRANSACTIONS BETWEEN VARIOUS PERS ONS IN THE SAME NOTE BOOK SEIZED, IT CANNOT BE SAID THAT THIS PARTICULAR ACCOUNT MAINTAINED DO PERTAIN TO THE ASSESSEES. 6.2 ON SIMILAR FACTS IN THE CASE OF SRI PULLA GANGADHAR RAO, HYDERABAD VS. ACIT, CIR.8(1), HYDERABAD ITA.NO.2097/HYD/2012 DATED 09.04.2014 THE COORDINAT E BENCH HAS EXAMINED THE SUBMISSIONS AND HELD AS UNDE R : 10. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER S OF THE REVENUE AUTHORITIES ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS VERY MUCH EVIDENT THAT THE SEIZED MATERIAL ON T HE BASIS OF WHICH THE ASSESSING OFFICER HAS INITIATED PROCEEDIN GS U/S 153C OF THE ACT IS PAGE-38 OF ANNEXURE A/DNR/18 . THE 9 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI LEARNED DR HAS ALSO PRODUCED A COPY OF SEIZED MATER IAL BEFORE US. 11. THE TRANSLATED VERSION OF THE AFORESAID SEIZED MATERIAL WHICH ALSO FORMS PART OF THE STATEMENT REC ORDED FROM TIRUMALA RAO HAS BEEN EXTENSIVELY QUOTED IN P ARA-4 OF THE ASSESSMENT ORDER. THE SAME READS AS UNDER:- TIRUMALA RAO ACCOUNT DATE DESCRIPTION AMOUNT (RS.) 25-08-2006 CASH 60,000 02-09-2006 CASH 10, 00,000 05-09-2006 CASH 40, 00,000 20-09-2006 CASH 29, 50,000 21-09-2006 CASH 1 ,38,000 ------------------ 81,48,000 A PERUSAL OF THE AFORESAID SEIZED DOCUMENT CLEARLY MENTIONS THAT IN THE HEADING IT IS MENTIONED AS TI RUMALA RAO ACCOUNT AND BELOW THAT DATES AND AMOUNTS ALONG WITH THE WORD CASH HAVE BEEN MENTIONED. NOTHING H AS BEEN MENTIONED WHETHER THEY ARE RECEIPTS OR PAYMENT S. THE AFORESAID LOOSE SHEET NEITHER MENTIONS THE NAM E OF THE ASSESSEE NOR IT REFERS TO THE PLOT NUMBER, SURV EY NUMBER ETC., FOR WHICH THE PAYMENT WAS ALLEGEDLY MA DE. THERE IS NOTHING IN THE SEIZED DOCUMENT TO SUGGEST THAT IT RELATES TO THE SALE TRANSACTION OF PLOT NO.22, SURV EY NO.230 ADMEASURING 420 SQ. YARDS AT MADINAGUDA. APART FROM THE AFORESAID SEIZED DOCUMENT, THE ONLY OTHER EVIDENCE ON THE BASIS OF WHICH THE ASSESSING OFFICE R CONCLUDED THAT THE ASSESSEE HAS PAID THE AMOUNT OF RS.81,48,000/- IS THE STATEMENT RECORDED FROM D. NAGARJUNA RAO WHEREIN HE STATED THAT AN AMOUNT OF RS.81,48,000/- WAS RECEIVED FROM TIRUMALA RAO TOWAR DS SALE CONSIDERATION OF THE PROPERTY. HOWEVER THE 10 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI STATEMENT RECORDED FROM B. TIRUMALA RAO WOULD SHOW THAT HE HAS CATEGORICALLY DENIED OF HAVING PAID RS.81,48,000/- TO D. NAGESWARA RAO. THE ASSESSEE ALSO IN THE STATEMENT RECORDED FROM HIM HAS DENIED OF HA VING PAID ANYTHING OVER AND ABOVE THE AMOUNT MENTIONED I N THE SALE DEED. 12. IN THE AFORESAID CIRCUMSTANCES IN OUR VIEW, T HE ASSESSING OFFICER COULD NOT HAVE INITIATED PROCEEDI NGS U/S 153C OF THE ACT SOLELY ON THE BASIS OF THE LOOSE SH EETS I.E., PAGE NO.38 OF ANNEXURE A/DNR/18. READING OF SECTIO N 153C OF THE ACT MAKES IT CLEAR THAT THE PRIMARY CO NDITION FOR INITIATING PROCEEDINGS U/S 153C, THE ASSESSING OFFICER MUST BE SATISFIED THAT JEWELLERY AND OTHER VALUABL E ARTICLES OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. IN THE PRESENT CASE, THE SO CALLED SEIZED MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS INITI ATED PROCEEDINGS U/S 153C OF THE ACT WAS ADMITTEDLY NOT SEIZED FROM THE POSSESSION OF THE ASSESSEE BUT A THIRD PER SON SRI D. NAGARJUNA RAO AGAINST WHOM THE SEARCH AND SEIZU RE OPERATION WAS CARRIED OUT U/S 132 OF THE ACT. FURT HER, THE SAID PERSON NOT ONLY ADMITTED THAT THE SEIZED MATE RIAL BELONGS TO HIM BUT THE ENTRIES MADE THEREIN ARE ALS O IN HIS HAND WRITING. A REFERENCE TO THE SEIZED MATERIAL A LSO MAKES IT CLEAR THAT NEITHER IT MENTIONS THE NAME OF THE A SSESSEE NOR HAS ANY REFERENCE TOWARDS THE PROPERTY PURCHASED BY THE ASSESSEE. ONLY THING IT MENTIONS IS THE NAME OF TI RUMALA RAO AND SOME ENTRIES WITH REGARD TO THE CASH PAYMENT/RECEIPTS. SINCE THE SEIZED DOCUMENT HAS NO REFERENCE EITHER TO THE ASSESSEE OR TO THE PROPERT Y PURCHASED BY THE ASSESSEE IT CANNOT BE SAID TO BE B ELONGING TO THE ASSESSEE AS ENVISAGED U/S 153C OF THE ACT. BESIDES, MERELY BECAUSE D. NAGARJUNA RAO HAS STATED THAT HE HAS RECEIVED THE AMOUNT OF RS.81,48,000/- FROM TIRUMALA RAO TOWARDS SALE OF THE PROPERTY IN QUESTION IT CANNOT BE INFERRED ON THAT BASIS ALONE, THAT THE ASSESSEE HAS PAID THE SAID AMOUNT TOWARDS PURCHASE OF THE PROPERTY. MORE SO, BOTH THE ASSESSEE AND TIRUMALA RAO HAVE DENIED OF MAKING THE SAID PAYMENT TO B. NAGARJUNA RAO. IN THE AFORESAID CIRCUMSTANCES, THE INFERENCE DRAWN BY THE ASSESSING OFFICER, IN OUR VIEW, IS NOT LEGALLY SUSTAINABLE. 11 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 13. IT IS A FACT THAT D. NAGARJUNA RAO IS ENGAGED IN THE BUSINESS OF REAL ESTATES AND SRI TIRUMALA RAO BY HI S OWN ADMISSION IS A BROKER. IN THE AFORESAID CIRCUMSTAN CES, THE ENTRIES MADE IN THE SEIZED DOCUMENT IN THE NAME OF TIRUMALA RAO IF AT ALL CAN BE SAID TO BE REPRESENTI NG RECEIPTS/PAYMENTS IT COULD VERY WELL BE RELATING TO SOME OTHER TRANSACTION, BUT CERTAINLY IT CANNOT BE TREAT ED TO BE THE PAYMENTS MADE BY THE ASSESSEE TOWARDS PURCHASE OF T HE PROPERTY IN QUESTION. IT WILL BE PERTINENT TO MENT ION HERE THAT ON THE BASIS OF THE SAID SEIZED MATERIAL I.E., A/DN R/18 RELATING TO SOME SOME OTHER TRANSACTIONS SIMILAR ASSESSMENTS U/S 153C OF THE ACT WERE ALSO MADE IN C ASE OF M/S SHOURI CONSTRUCTIONS AND T. JAIPAL REDDY. WHEN THE ISSUE CAME UP BEFORE THE TRIBUNAL THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NOS. 2056 AND 2057/HYD/2011 IN CASE OF M/S SHOURI CONSTRUCTIONS AND T. JAIPAL REDDY DA TED 28- 6-2013 (SUPRA) WHILE CONSIDERING THE ISSUE OF VALI DITY OF PROCEEDINGS INITIATED U/S 153C OF THE ACT ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE PROCE EDINGS INITIATED U/S 153C OF THE ACT ON THE BASIS OF THE S O CALLED INCRIMINATING MATERIAL IS INVALID IN LAW. AT THIS POINT, IT WILL BE RELEVANT TO LOOK INTO THE FINDING OF THE TRIBUNA L IN THIS REGARD WHICH IS EXTRACTED HEREUNDER:- 10. THUS THE CONDITION PRECEDENT FOR ASSUMPTION OF JURISDICTION U/S 153C IS, THE AO MUST BE SATISFI ED THAT THE SEIZED MATERIALS BELONGS TO SUCH OTHER PERSON. THE WORD BELONG HAS NOT BEEN DEFINED UNDER THE ACT. AS PER THE DICTIONARY MEANING BELONG TO MEANS BE THE PROPERTY OF; BE THE RIGHTFUL POSSESSIO N OF; BE DUE TO. UNDISPUTEDLY SEIZED DOCUMENT ON THE BASIS OF WHICH PROCEEDING U/S 153C IS INITIATED AGAINST THE ASSESSEE IS A LOOSE SHEET MARKED AS A/DNR/18. AT OUR REQUEST THE LEARNED DR HAS SUBMITTED A COPY OF THE AFORESAID SEIZED MATERIAL WHICH IS REPRODUCED BELOW: 11. SINCE THE SEIZED DOCUMENT REPRODUCED HEREINABOVE IS NOT PROPERLY VISIBLE, WE ARE ALSO ANNEXING HEREWITH A COPY OF THE SAID DOCUMENT TO THIS ORDER, WHICH SHOULD BE TREATED AS PART OF THIS ORDER. 12 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 12. THIS DOCUMENT WAS SEIZED FROM THE BUSINESS PREMISES OF D. NAGARJUNA RAO IN COURSE OF ACTION U/ S 132 OF THE ACT AGAINST HIM. IN THE IMPUGNED ASSESSMENT ORDER THE AO HAS ALSO OBSERVED THAT THE SAID D. NAGARJUNA RAO HAD ADMITTED THAT ENTRIES IN THE SEIZED DOCUMENTS WERE MADE BY HIM IN HIS OWN HANDWRITING. WHILE CONSIDERING THE OBJECTION OF TH E ASSESSEE, THE AO HAS ALSO ADMITTED THE FACT THAT NEITHER THE NAME OF THE ASSESSEES APPEAR IN THE SEIZED DOCUMENT NOR IT BEARS THEIR SIGNATURE. THE NOTINGS MADE IN THE SEIZED DOCUMENT ONLY SHOWS THAT AN AMOUNT OF RS. 74,81,250/- WAS PAID TO MR. VENKATESH TOWARDS SALE CONSIDERATION OF THE PROPERTY. WHEN THE DOCUMENT IN QUESTION WAS NOT SEIZED FROM THE ASSESSEE BUT FROM A THIRD PARTY, WH O ADMITTEDLY HAS MADE THE ENTRIES THEREIN AND FURTHERMORE WHEN THE SEIZED DOCUMENT NEITHER MENTIONS THE NAME OF THE ASSESSEE OR BEARS HIS SIGNATURE, THEN BY NO STRETCH OF IMAGINATION IT CAN BE SAID TO BE BELONGING TO THE ASSESSEE. THUS, THE PRECONDITION FOR INITIATING PROCEEDING U/S 153C IS NOT SATISFIED. THEREFORE, THE INITIATION OF PROCEEDING U/S 153C AGAINST THE ASSESSEE IS WITHOUT JURISDICTION. THE HONBLE GUJARAT HIGH COURT IN CASE OF VIJAYBHAI N. CHANDRANI VS. ACIT [SUPRA] WHILE CONSIDERING IDENTICAL ISSUE HELD AS UNDER:- 12 . ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SECTIONS 153A, 153B AND 153C LA Y DOWN A SCHEME FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. SECTION 153A DEALS WITH PROCEDURE FOR ISSUANCE OF NOTICE AND ASSESSMENT OR REASSESSMENT IN CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003. SECTION 153B LAYS DOWN THE TIME LIMIT FOR COMPLETION OF ASSESSME NT UNDER SECTION 153A. SECTION 153C WHICH IS SIMILARLY WORDED TO SECTION 158BD OF THE ACT, PROVIDES THAT 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 T HAN THE PERSON REFERRED TO IN SECTION 153A HE SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS 13 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI INCOME OF SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS INASMUCH AS UNDER SECTION 153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER SECTION 158BD IF THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO AN Y PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER SECTION 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON UNDER SECTION 158BC. 13. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE UNDER SECTION 153C AND ASSESSING OR REASSESSING INCOME OF SUCH OTHER PERSON, IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREME NT IS NOT SATISFIED, RECOURSE CANNOT BE HAD TO THE PROVISIONS OF SECTION 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 TH E CASE, THAT THE DOCUMENTS IN QUESTION, NAMELY THE THREE LOOSE PAPERS RECOVERED DURING THE SEARCH PROCEEDINGS DO NOT BELONG TO THE PETITIONER. IT MAY BE THAT THERE IS A REFERENCE TO THE PETITIONER INASMUC H 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 T HE 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 THE REVENUE THAT THE SAID THREE DOCUMENTS ARE IN THE HANDWRITING OF THE PETITIONER. IN THE CIRCUMSTANCES, WHEN THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED ANY ACTION TAKEN UNDER SECTION 153C OF TH E ACT STANDS VITIATED. 13. THE ITAT, BANGALORE BENCH IN CASE OF P. SRINIVAS NAIK VS. ACIT [SUPRA] HAS HELD AS UNDER : 14 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 7. WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDISPUTED FACT THAT BOOKS OF ACCOUNT OR DOCUMENT DOES NOT BELONG TO THE ASSESSEE, AS THESE WERE SEIZED FROM THE PREMISES OF SHRI REDDY. IT IS NOWHERE STATED THAT THESE BOOKS OF ACCOUNT OR DOCUMENTS SHOWED THAT ALL THE TRANSACTIONS BELONGING TO THE ASSESSEE. SUCH BOOKS OF ACCOUNT OR DOCUMENTS CONTAINED THE TRANSACTIONS RELATING TO THE GROUP CONCERNS OF SHRI REDDY. NO VALUABLE BELONGING TO THE ASSESSEE HAS BEEN SEIZED DURING THE COURSE OF SEARCH. THE TERM BELONGING, IMPLIED SOMETHING MORE THAN THE IDEA OF CASUAL ASSOCIATION. IT INVOLVES THE NOTION OF CONTINUITY AND INDICATES ONE MORE OR LESS INTIMATE CONNECTION WITH THE PERSON OVER A PERIOD OF TIME. THE BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE COURSE OF SEARCH HAVE A CLOSE ASSOCIATION WITH THE GROUP CONCERN OF SHRI REDDY. IT RECORDS THE TRANSACTION CARRIED OUT BY THAT GROUP. IT DOES NOT RECORD THE TRANSACTION CARRIED OUT BY THE ASSESSEE. UNDER WEALTH-TAX ACT, ASSETS BELONGING TO ASSESSEE WERE TAXABLE. THE EXPRESSION BELONGING TO THE ASSESSEE CONNOTES BOTH THE COMPLETE OWNERSHIP AND LIMITED OWNERSHIP OF INTEREST. OF COURSE BELONGING TO IS CAPABLE CONNOTING, INTEREST, WHICH IS LESS THAN ABSOLUTE PERFECT LEGAL TITLE. HOWEVER, THERE SHOULD BE SOME LIMITED OWNERSHIP OF INTEREST, IF IT IS TO BE PERMITTED THAT THE ASSETS BELONGS TO THE ASSESSEE. IN THE INSTANT CASE, DOCUMENTS OR BOOKS OF ACCOUNT FOUND DURING THE COURSE OF SEARCH AND SEIZED CANNOT BE TERMED, TO BE INDICATING ANY LIMITED INTEREST OF THE OWNERSHIP OF THE ASSESSEE IN SUCH BOOKS OF ACCOUNT OR DOCUMENTS. THE LANGUAGE USED IN SECTION 153C IS MATERIALLY DIFFERENT FROM THE LANGUAGE USED UNDER SECTION 158BD. AS PER SECTION 158BD, IF ANY UNDISCLOSED INCOME RELATES TO OTHER PERSON, THEN ACTION AGAINST SUCH OTHER PERSON CAN BE TAKEN PROVIDED SUCH UNDISCLOSED INCOME IS REFERABLE TO THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. HOWEVER, SECTION 153C SAYS THAT IF VALUABLE OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THEN ACTION UNDER SECTION 153C CAN BE TAKEN AGAINST THAT PERSON. IN THE INSTANT CASE, WE ARE SATISFIED THAT BOOKS OF ACCOUNT OR 15 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI DOCUMENTS DO NOT BELONG TO THE ASSESSEE AND, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING ACTION UNDER SECTION 153A READ WITH SECTION 153C OF THE INCOME-TAX ACT. THE ASSESSING OFFICER IS FREE TO TAKE PROPER REMEDIAL MEASURE AS PER LAW. 14. WE, IN THE PRECEDING PARAGRAPHS, HAVE ALREADY HELD THAT THE SEIZED DOCUMENT ON THE BASIS OF WHICH PROCEEDING U/S 153C WAS INITIATED CANNOT BE SAID TO BE BELONGING TO THE ASSESSEE. THEREFORE, CONSIDERED IN THE LIGHT OF THE RATIOS LAID DOWN IN THE JUDICIAL PRECEDENTS REFERRED TO ABOVE, THE ASSUMPTI ON OF JURISDICTION U/S 153C HAS TO BE HELD AS INVALID AND CONSEQUENTIALLY THE ASSESSMENT ORDER PASSED MUST BE DECLARED AS WITHOUT JURISDICTION. ACCORDINGLY, WE S ET ASIDE THE ORDER PASSED BY THE CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 6.3 AS CAN BE SEEN FROM THE AFORESAID OBSERVAT IONS, THE TRIBUNAL HAS CATEGORICALLY HELD THAT SINCE THE SEIZ ED MATERIAL HAS NO REFERENCE TO THE ASSESSEE, IT CANNOT BE CONS IDERED TO BE BELONGING TO THE ASSESSEE FOR ENABLING THE INITIATI ON OF PROCEEDINGS U/S 153C OF THE ACT. FACTS IN THE PRES ENT CASE BEING MATERIALLY THE SAME, AS THE ASSESSING OFFICER HAS RELIED UPON THE SAME SEIZED MATERIAL I.E., A/DNR/18 AND SI NCE THE SEIZED MATERIAL HAS NO REFERENCE TO THE ASSESSEE, I T CANNOT BE SAID TO BE BELONGING TO THE ASSESSEE SO AS TO EMPOW ER THE ASSESSING OFFICER TO ASSUME JURISDICTION U/S 153C O F THE ACT. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD THAT T HE ASSESSMENT PROCEEDINGS INITIATED NOT BEING IN ACCOR DANCE WITH THE PROVISIONS OF SECTION 153C, IS INVALID IN LAW A ND CONSEQUENTLY THE ASSESSMENT ORDER PASSED IS NULLITY IN EYE OF LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CI T (A) AND ALLOW THE APPEALS OF THE ASSESSEE ON THIS LEGAL ISS UE. 16 ITA.NO.235 & 236/HYD/2014 MS. CH. MADHAVI & SMT. K. VIJAYALAXMI 7. SINCE WE HAVE ALLOWED THE APPEALS OF THE ASS ESSEES ON THE LEGAL ISSUE OF VALIDITY OF PROCEEDINGS U/S 1 53C OF THE ACT, WE DESIST OURSELVES FROM DWELLING UPON THE MER ITS OF THE ADDITION MADE BY THE ASSESSING OFFICER AS RAISED IN OTHER GROUNDS. 8. IN THE RESULT APPEALS OF ASSEESSEE ARE ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH AUGUST, 2014 VBP/- COPY TO 1 & 2. MS. CH. MADHAVI & SMT. K. VIJAYALAXMI, HYDERABAD C/O. MR. K. VASANTKUMAR & MR. A.V. RAGHURAM ADVOCATES, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-1. 3. ACIT, CIRCLE 8(1), I.T. TOWERS, HYDERABAD. 4. CIT(A), VIJAYAWADA + 1 COPY 4. CIT-II, HYDERABAD 5. D.R. A BENCH, ITAT, HYDERABAD.