Madhucon Infra Limited, Hyderabad, Hyderabad V. DCIT, Central Circle-3, Hyderabad, Hyderabad

ITA 266/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6015 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Assessment record
• Section: 143(3); 153A

Judgement Text

ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.266/HYD/2015 (ASSESSMENT YEAR: 2010-11) M/S. MADHUCON INFRA LTD HYDERABAD PAN: AAECM 6443 Q VS DCIT CENTRAL CIRCLE 3 HYDERABAD FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SHRI A. SITARAMA RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11. IN T HIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A)-VII, HYDERABAD IS ERRONEOUS BOTH ON FACTS AND IN LAW, TO THE EXTENT THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT. 2. THE LD. CIT(A)-VII, OUGHT TO HAVE APPRECIATED THAT AO HAS NOT REFERRED TO ANY SEIZED DOCUMENT OR MATERIAL IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH ADDITIONS HAVE BEEN MADE AND THEREBY THE CONDITIONS OF SEC. 153C ARE NOT SATISFIED. 3. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND RELATING TO YEAR UNDER CONSIDERATION TO INVOKE THE PROVISIONS OF SECTION 153C OF THE ACT. DATE OF HEARING : 28.03.2017 DATE OF PRONOUNCEMENT : 31.03.2017 ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 2 OF 6 4. THE LD. CIT(A)-VII, OUGHT TO HAVE APPRECIATED THAT ADDITION SO MADE DOES NOT HAVE ANY NEXUS WITH THE MATERIAL IMPOUNDED DURING SEARCH AND SUCH ADDITION MADE IS BAD IN LAW. 5. THE LD. CIT(A)-VII, OUGHT TO HAVE CONSIDERED THE ISSUE THAT THE APPELLANT IS ENTITLED TO CLAIM AN AMOUNT OF RS. 42,26,393/- TOWARDS DEDUCTION U/S 35DOF THE ACT. 6. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. VIDE LETTER DATED 21.04.2016, THE ASSESSEE HAS R AISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: THE FOLLOWING ADDITIONAL GROUNDS S1. NO.7 TO 13 MAY PLEASE BE CONSIDERED IN ADDITION TO THE EARLIER GROUNDS FILED WITH ITAT HAVING S1. NO.1 TO 6. 7. 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 20 10-11, THERE BEING NO SATISFACTION RECORDED BY HIM AS WELL AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE COMPANY SEARCHED. 8. THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER'S ORDER, BY CONCLUDING THAT I T IS ENOUGH TO INVOKE THE PROVISIONS OF SECTION 153C, IF THE DOCUMENT FOUND IN A SEARCHED PERSON'S PLACE JUST BELONG TO THE ASSESSEE, WITHOUT APPRECIATING THE LEGAL POSITION THAT SUCH A DOCUMENT SHOULD HAVE BEARING ON THE DETERMINATION IN THE ASSESSMENT OF A THIRD PERSON. 9. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE DOCUMENTS ALLEGED TO BE BELONGING TO THE ASSESSEE, IN FACT, DO NOT HAVE ANY BEARING ON THE ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 3 OF 6 DETERMINATION OF THE IMPUGNED ASSESSMENT, WHICH FACT IS CLEARLY VISIBLE FROM THE ADDITIONS MADE IN THE ASSESSMENT ORDER. 10. THE ASSESSING OFFICER ERRED IN MAKING THE ASSESSMENT U/S. 143(3) R.W.S 153A WITHOUT THERE BEING ANY INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE. CASE LAW: M/S. MIDWEST GOLD LTD. VS. DCIT [1288-1293/H/2014] 11. THE LD. CIT(A) OUGHT TO HAVE ANNULLED THE ORDER OF THE ASSESSING OFFICER APPRECIATING THAT INVOKING THE PROVISIONS VI] S. 153C WITHOUT RECORDING SATISFACTION BY THE I.T. AUTHORITY WHO CONDUCTED THE SEARCH & SEIZURE OPERATION ON THE SEARCHED PARTY AS WELL AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE IMPUGNED ASSESSEE BECOMES INVALID AS HELD BY THE HON'BLE A.P. HIGH COURT IN THE CASE OF CIT VS. MIS. SHETTYS PHARMACEUTICALS & BIOLOGICAL LTD IN ITTA NOS.662 OF 2014 DATED 26-11-2014. 12. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE MATERIAL FOUND IN PREMISES OF M/S. MADHUCON PROJECTS LTD DOES NOT BELONG TO THE APPELLANT FOR THE YEAR UNDER CONSIDERATION AND THAT THE PROCEEDING U/S 153C CANNOT BE INITIATED. CASE LAW: DR. N. PAWAN KUMAR VS. DCIT (ITA NOS.1568 & 1569/HYD/2013) 3. IN ORDER TO VERIFY THE FACTS REGARDING THE ISSUE S RAISED IN THE ADDITIONAL GROUNDS OF APPEAL, THE DR WAS DIR ECTED TO VERIFY WHETHER ANY SATISFACTION WAS RECORDED U/S 153A OF T HE ACT IN THE CASE OF THE PERSON SEARCHED IN ORDER TO INITIATE PR OCEEDINGS U/S 153C OF THE ACT IN THE CASE OF THE ASSESSEE. THE LE ARNED DR HAS FILED BEFORE US A COPY OF THE LETTER OF THE DCIT CE NTRAL CIRCLE- 2(1)HYDERABAD HYDERABAD DATED 29.1.2016 WHICH IS AS UNDER: ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 4 OF 6 OFFICE OF THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), ROOMNO.612, 6TH FLOOR, AAYAKAR BHAVAN, BASHEER BAGH, HYDERABAD. F.NO.DCIT/CC2(11/SATISFACTION NOTE/2016-17. DATE: 2 9/12/16. THE SENIOR AUTHORISED REPRESENTATIVE II INCOME TAX APPELLATE TRIBUNAL A - BENCH, HYDERABAD. SUB: APPEAL IN THE CASE OF MY S, MADHUCON INFRA LIMITED - PAN: AAECM6443Q- FOR THE ASSESSMENT YEARS 2010-11 - ITA NO.266/HI 15 - SUBMISSION REPORT _ REGARDING. REF: 1) LETTER IN F.NO.SR.AR-II/ITAT / A-BENCH/2661 15/2016-17, DATED 05.12.2016 RECEIVED FROM THE SR. AR-II, ITAT-II, 'A' BENCH, HYDERABAD. 2) LETTER IN F.NO.DCIT-C-16(2)/ITAT 12016-17, DATED 07.12.2016 RECEIVED FROM THE DCIT, CIRCLE-16 (2), HYDERABAD . PLEASE REFER TO THE ABOVE. 2. AS DIRECTED, I AM HEREWITH SUBMITTING THAT AFTER VERIFICATION OF ASSESSMENT RECORD, IT IS FOUND THAT BEFORE TRANSMITTING RECORDS TO THE A.O. OF M/S.MADHACAON INFRA LIMITED, NO SATISFACTION WAS RECORDED BY THE A.O. OF MY S. M/S.MADHACAON PROJECTS LIMITED, WHO WAS SEARCHED PARTY AND ASSESSED U/S.153A, SINCE THE A.O. OF BOTH THE PERSONS WAS SAME. ( SUNIL K MAR PANDEY) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), HYDERABAD. COPY 1) SUBMITTED TO THE PRO COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD FOR FAVOUR OF INFORMATION. ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 5 OF 6 2) SUBMITTED TO THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE _ 2, HYDERABAD FOR FAVOUR OF INFORMATION. 3) SUBMITTED TO THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD FOR FAVOUR OF INFORMATION. 4. EVEN THOUGH THE AO OF THE PERSON SEARCHED AND TH E ASSESSEE BEFORE US IS THE SAME, THE REQUIREMENT OF LAW IS THAT THE SATISFACTION HAS TO BE RECORDED BEFORE INITIATING P ROCEEDINGS U/S 153C OF THE ACT. THEREFORE, THE ADDITIONAL GROUNDS OF APPEAL BEING LEGAL GROUNDS AND THE FACTS ARE ALREADY ON RE CORD, WE DEEM IT PROPER TO ADMIT THE GROUNDS. SINCE THE AO HAS RE PORTED THAT THE SATISFACTION HAS NOT BEEN RECORDED AS REQUIRED UNDE R THE LAW, WE ARE INCLINED TO ALLOW THE ADDITIONAL GROUND OF APPE AL NO.7 AND HOLD THAT THE ASSESSMENT U/S 153C IS NOT SUSTAINABL E. 5. SINCE THE ASSESSMENT ITSELF HAS BEEN HELD TO BE VOID AB INITIO, THE OTHER GROUNDS OF APPEAL NEED NO ADJUDIC ATION. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST MARCH, 2017. VINODAN/SPS ITA NO 266 OF 2015 MADHUCON INFRA LTD HYDERABAD PAGE 6 OF 6 COPY TO: 1 P. MURALI & CO. CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2 DCIT CENTRAL CIRCLE 3 HYDERABAD 3 CIT (A)-VII HYDERABAD 4 CIT CENTRAL HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER