The ITO Ward-1 Palakol, Palakol V. Sri Nekkanti Sri Krishna Prasad Indl, Narasapuram

ITA 280/VIZ/2011

• Counselvise Citation: 28025314 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 15-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH L PETER
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Loose papers; Document seized; Fair market value; Block assessment; Documents seized
• Section: 153A; 131; 132; 15

Judgement Text

ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 280 /VIZAG/ 2011 ASSESSMENT YEARS : 2006-07 ITO WARD-1 PALAKOL VS. SRI NEKKANTI SRI KRISHNA PRASAD (INDL) NARASAPUR (APPELLANT) (RESPONDENT) PAN NO.ACGPN 0519F ITA NO.281/VIZAG/2011 ASSESSMENT YEARS : 2006-07 ITO WARD-1 PALAKOL VS. SRI NEKKANTI SRI KRISHNA PRASAD (HUF) NARASAPUR (APPELLANT) (RESPONDENT) PAN NO.ACGPN 0519F ASSESSEE BY: SRI S. RAMA RAO, ADVOCATE REVENUE BY: SHRI TH.L. PETER, CIT(DR) DATE OF HEARING : 03.03.2014 DATE OF PRONOUNCEMENT : 07.03.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE DEPARTMENT ARE AGAINST A COMMON ORDER OF THE CIT(A), RAJAHMUNDRY IN CASE OF TWO DIFFERENT AS SESSEES PERTAINING TO THE ASSESSMENT YEAR 2006-07. WE WILL FIRST TAKE UP THE ITA NO.281/VIZAG/2011 SINCE SUBSTANTIVE ADDITIONS HAVE BEEN MADE IN THIS CASE. 2. BRIEFLY, THE FACTS ARE THE ASSESSEE A HUF IS ENG AGED IN THE BUSINESS OF MONEY LENDING. THE ASSESSEE ALSO OWNS AGRICULTURAL LANDS AND DERIVES INCOME FROM AGRICULTURAL OPERATION ALSO. FOR THE A SSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED RETURN OF INCOME ON 29. 10.2007 DECLARING TOTAL INCOME OF RS.1,53,331/- AND AGRICULTURAL INCOME OF RS.3 LAKHS. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT WAS CONDUCTED IN CASE OF ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 2 MR. M. SAMBA SIVA RAO ON 16.7.2008. AS ALLEGED BY THE ASSESSING OFFICER DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING MATERIALS RELATING TO THE ASSESSEE WAS FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF MR. M. SAMBA SIVA RAO. THE INCRIMINATING MATERIALS CONTAI NED A NOTE BOOK MARKED AS ANNEXURE A/MSR/RES/16 DATED 16.7.2008. THE SAID NOTE BOOK CONTAINED DETAILS OF FINANCIAL TRANSACTIONS OF MR. M. SAMBA S IVA RAO AND MR. R. RAMAKRISHNA BOTH RESIDENTS OF PLOT NO.174 ROAD NO.1 0C, JUBILEE HILLS, HYDERABAD. THE ASSESSEE WAS THE OWNER OF PLOT OF L AND ADMEASURING 600 SQ.YDS. LOCATED AT PLOT NO.174, ROAD NO.10C, JUBILE E HILLS, HYDERABAD, WHICH WAS SOLD TO MR. M. SAMBA SIVA RAO AND MR. R. RAMAKR ISHNA. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE SAID SEIZED MATER IAL CONTAINED THE DETAILS OF ACTUAL CONSIDERATION OF RS.1,64,00,000/- AND ADVANC E OF RS.1 LAKH PAID FOR PURCHASE OF THE PROPERTY BY MR. M. SAMBA SIVA RAO A ND MR. R. RAMAKRISHNA AND MR. N.S.K. PRASAD. HE NOTED THAT THE CASH CONS IDERATION WAS PAID IN ADDITION TO THE AMOUNTS PAID THROUGH DD/CHEQUE. IN RESPONSE TO THE NOTICE ISSUED U/S 153C OF THE ACT, THE ASSESSEE SUBMITTED HIS RETURN ON 30.9.2003 DECLARING THE SAME INCOME AS WAS ADMITTED IN THE OR IGINAL RETURN. IN COURSE OF THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE SEEKING HIS EXPLANATION AS T O WHY ADDITIONAL CONSIDERATION RECEIVED IN CASH OF RS.1,64,00,000/- IN ADDITION TO REGISTERED VALUE OF RS.75 LAKHS SHOULD NOT BE ADDED TO THE INC OME RETURNED BY THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, ASSESSEE EXPLAINED THAT HE HAS ONLY RECEIVED RS.75 LAKHS TOWARDS SALE CONSIDERATION AND NOT MORE. IN SUPPORT OF THE MARKET VALUE OF THE PROPERTY, THE ASSESSEE ALSO FURNISHED TWO COMPARABLE SALE INSTANCES. THE ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER STRONGLY RELYING UPON THE SEIZED NOTE BOOK OPINED THAT THE SAID NOTE BOOK CON TAINS THE DETAILS OF PAYMENTS MADE TO THE ASSESSEE TOWARDS PURCHASE OF T HE LAND. THE ASSESSING OFFICER REFERRING TO THE STATEMENT RECORDED FROM MR . SAMBA SIVA RAO U/S 131 OF THE ACT INFERRED THAT WHEN MR. SAMBA SIVA RAO HA S OWNED UP THE NOTE BOOK AND HAS ACCEPTED ALL THE ENTRIES MADE THEREIN, EXCEPT THE CASH PAYMENT OF RS.1,64,00,000/-, THEN IT HAS TO BE PRESUMED THA T THE CASH PAYMENT OF RS.1,64,00,000/-WAS ALSO MADE TO THE ASSESSEE TOWAR DS THE SALE ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 3 CONSIDERATION, OVER AND ABOVE, THE AMOUNT MENTIONED IN THE REGISTERED SALE DEED. ACCORDINGLY, HE ADDED THE AMOUNT OF RS.1,64, 00,000/- TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(A). 4. IN COURSE OF HEARING OF APPEAL, IT WAS CONTENDED BY THE ASSESSEE THAT DURING THE SEARCH PROCEEDING SHRI SAMBA SIVA RAO FR OM WHOM THE NOTE BOOK WAS SEIZED HAS DENIED THE ENTRIES MADE THEREIN AND STATED THAT NO AMOUNT IN EXCESS OF CONSIDERATION MENTIONED IN THE REGISTERED DOCUMENT WAS PAID. SHRI N.S.K. PRASAD ALSO IN HIS STATEMENT RECORDED IN THE POST SEARCH PROCEEDINGS DENIED RECEIPT OF ANY AMOUNT OVER AND ABOVE WHAT IS REFLECTED IN THE REGISTERED DOCUMENT. IT WAS THEREFORE CONTENDED THA T THE PRE-REQUISITES OF INVOKING THE PROVISION OF SECTION 153C OF THE ACT A RE NOT SATISFIED AND THE RETURN U/S 153C WAS FILED BY THE ASSESSEE UNDER PRO TEST. TO SUBSTANTIATE ITS CLAIM I.E. SALE CONSIDERATION AS MENTIONED IN THE R EGISTERED DOCUMENT IS THE FAIR MARKET VALUE THE ASSESSEE ALSO FURNISHED TWO C OMPARABLE SALE INSTANCES OF NEARBY PROPERTIES. THE ASSESSEE RELYING UPON CE RTAIN JUDICIAL PRECEDENTS CONTENDED THAT ONLY WHEN CASH, BULLION, VALUABLE AR TICLES OR THINGS, BOOKS OF ACCOUNTS/DOCUMENTS BELONGING TO THE ASSESSEE ARE SE IZED IN COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED AGAINST SUCH THIRD PARTY, FROM A THIRD PARTY PROVISIONS OF SECTION 153C OF THE ACT CAN BE INVOKE D. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE DECISIONS PLACED BEFORE HIM HELD THAT THE ISSUANCE OF NOTICE U/S 153C OF THE ACT BOTH IN THE CASE OF THE ASSESSEE HUF AS WELL AS THE INDIVID UAL IS NOT JUSTIFIED AND ALLOWED THE APPEALS OF THE ASSESSEE. THE FINDING O F THE CIT(A) IS EXTRACTED HEREUNDER: 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS PUT FORWARD BY THE APPELLANT. THE SEARCH TOOK PLACE ON THE PREMISES OF SRI M.SAMB ASIVA RAO DURING WHICH THE BOOKS OF ACCOUNTS AND DOCUMENTS BELONGING TO SRI M.SAMBASIVA RAO WERE SEIZED. IN THE DIARY WHICH WAS. BELONGING TO SRI M.SAMBASIVA RAO, CERTAIN ENTRIES RELATED TO THE PAY MENTS MADE TO SRI N.S.K.PRASAD WERE FOUND. WHEN QUESTIONED BOTH SRI S AMBASIVA RAO AND SRI N.S.K.PRASAD, DENIED PAYMENTS OF ANY EXTRA CONSIDER ATION TOWARDS PURCHASE/SALE OF PLOT. ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 4 THE FACT THAT THE DIARY BELONGS TO SRI SAMBASIVA RA O AND NOT TO SRI N.S.K. PRASAD IS NOT DISPUTED BY THE ASSESSING OFFICER. 4.1 IN THE LIGHT OF THE ABOVE FACTS, IT IS PERTINEN T TO GO THROUGH THE PROVISIONS OF SECTION 153C. SUB-SECTION (1) OF SECTION 153C STATES AS UND ER: ' 153C - ASSESSMENT OF INCOME OF ANY OTHER PERSON. NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRE D 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 OTH ER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH S UCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES S OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. '(EMPHASIS SUPPLIED). 4.2 THE SECTION CLEARLY STATES THAT THE ASSESSING O FFICER SHOULD BE SATISFIED THAT ANY MONEY, BULLION, JEWELLERY VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS BELONGING TO A PERSON OTHER THAN PERSON REFERRED TO IN SECTION 153A. THE ASSESSING OFFICER, NOWHERE IN THE SATISFACTION MENTIONED AS T O WHICH ASSET / DOCUMENT BELONGING TO SRI N.S.K.PRASAD ARE SEIZED FROM THE PREMISES OF SR I SAMBASIVA RAO WHICH NECESSITATED THE ISSUE OF NOTICE U/S.!53C. THE ASSESSING OFFICER SEE MS TO HAVE GONE ON THE PRESUMPTION THAT SECTION 153C COMES INTO OPERATION ONCE INCRIMI NATING ENTRIES BELONGING TO 3 RD PERSON ARE FOUND IN THE SEIZED DOCUMENTS THEN THE PROVISIO NS OF SECTION 153C APPLY TO THAT PERSON. THIS VIEW OF THE ASSESSING OFFICER IS NOT S UPPORTED BY THE PROVISIONS OF THE ACT. THE ASSESSING OFFICER'S ACTION WOULD HAVE BEEN JUST IFIED UNDER THE PROVISIONS OF SECTION 158BD OF ERSTWHILE BLOCK ASSESSMENT. SECTION 158BD IS ON A DIFFERENT FOOTING AS AGAINST THE PROVISIONS OF SECTION 153C. UNDER THE PROVISIONS OF SECTION!58BD, A SATISFACTION BY THE ASSESSING OFFICER THAT THE UNDISCLOSED INCOME BELON GS TO ANY OTHER PERSON IS SUFFICIENT. THIS CAN BE SEEN FROM THE PROVISIONS OF SECTION 158 BD WHICH ARE AS FOLLOWS: 'WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER 'SECTION 132,......' 4.3 HOWEVER, SECTION 153C STANDS ON A DIFFERENT FOO TING WHEREIN IT IS MANDATORY THAT VALUABLE ARTICLES OR BOOKS OF ACCOUNTS / DOCUMENTS BELONGING TO THE 3 RD PERSON HAVE TO BE SEIZED FROM THE PREMISES, ONLY THEN SECTION 153C COMES INTO OPERATION. IN THE INSTANT CASE, ADMITTEDLY, THERE IS NO SEIZURE OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO SRI N.S.K.PRASAD OR HIS HUF WERE SEIZED DURING THE SEARCH. SIMILAR ISSUE CAME UP IN THE CASE OF GAMBHI R SILK MILLS ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 5 (006 ITR TRIB 376) BEFORE THE HON'BLE AHMEDABAD TRIBUNAL. THE HON 'BLE TRIBUNAL AFTER EXAMINING THE ISSUE IN DETAIL HELD AS UNDER: HELD THAT WHEN THE SEARCH WAS CONDUCTED AT THE PREMISES OFS, NO AMOUNT OF MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED, BELO NGED TO THE ASSESSEE. NOTHING WAS HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE. NO SUCH VALUABLE AR TICLE OR THING OR ANY BOOKS OF ACCOUNT OR DOCUMENTS HAD BEEN REFERRED EVEN IN THE ASSESSMENT ORDER FOR FRAMING ASSESSMENT UNDER SECTI ON 153C OF THE ACT. SINCE FOR ALL THESE YEARS, THE RETURNS WERE OR IGINALLY FILED AND PROCESSED AND SINCE NO ADDITIONAL MATERIAL WAS FOUN D PERTAINING TO THE ASSESSEE WHICH WAS HELD TO BE BELONGING TO THE ASSESSEE, THE ASSESSING OFFICER COULD NOT ASSUME JURISDICTION FOR FRAMING ASSESSMENT UNDER SECTION 153C READ WITH SECTION 153 A OF THE ACT. THE ASSESSMENTS MADE FOR ALL THESE YEARS WERE TO BE CANCELLED. 4.4 WHILE ARRIVING AT THIS DECISION, THE HON'BLE IT AT RELIED ON THE DECISION ON COORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF MEGHAMAN I ORGANICS VS. DCIT 06 ITR 360 WHEREIN IT WAS HELD AS UNDER: THE AO IS NOT COMPETENT TO ASSUME JURISDICTION U/S. 153C OF THE ACT AS NONE OF THE DOCUMENTS FOUND DURING THE COURS E OF SEARCH OF OTHER PERSON BELONG TO THE ASSESSEE AND THE ORIGINA L ASSESSMENT HAD NOT A BATED. 4.5 FURTHER, THE HON'BLE TRIBUNAL ALSO RELIED ON IT AT, BANGALORE BENCH DECISION IN THE CASE OF P.SRINIVAS NAYAK VS. ACIT, 306 ITR (AT) 411 WHEREIN IT WAS HELD BY THE BANGALORE BENCH THAT SINCE THE BOOKS OF ACCOUNT DID NOT BELONG TO THE ASSESSEE, THE AO WAS NOT JUSTIFIED IN INITIATING ACTION U/S.!53A R.W.S.!53C OF I.T.ACT. 4.6 THE HON'BLE CHENNAI TRIBUNAL IN THE CASE OF SRI M.N.RAJA RAO, 6ITR TRIB 261 HELD AS UNDER: THE SEARCH ASSESSMENT PROCEEDINGS AS CONTEMPLATED U NDER CHAPTER XIV-B CANNOT BE EQUATED WITH SEARCH ASSESSM ENT PROCEEDINGS UNDER SECTIONS 153A TO 153D OF THE INCO ME-TAX ACT, 1961. BLOCK ASSESSMENT PROCEEDINGS REFERRED TO SEAR CH MATERIALS FOR MAKING AN ASSESSMENT PURSUANT TO SEARCH, WHEREAS SE CTION 153C ALONG WITH SECTION 153A OF THE ACT DO NOT REQUIRE T HAT THE ASSESSMENTS HAVE TO BE MADE ONLY WITH REFERENCE TO THE MATERIALS SEIZED AT THE TIME OF SEARCH. BOTH SECTIONS SPECIFY THAT THE ASSESSING OFFICER HAS TO BE SATISFIED. THE SATISFACTION UNDER SECTION 158BD OF THE ACT REFERS TO UNDISCLOSED INCOME BELONGING TO A NY PERSON OTHER THAN THE PERSON SEARCHED WHEREAS SATISFACTION UNDER SECTION 153C IS WITH REGARD TC MONEY, BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLE OR ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 6 THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELON GING TO ANY PERSON OTHER THAN THE PERSON SEARCHED. 4.7 IN THE LIGHT OF THE JUDICIAL DECISIONS CITED AB OVE, THE CLEAR CUT PROVISIONS OF SECTION 153C AND THE FACTUAL BACKGROUND OF THIS CAS E, I HOLD THAT THE SATISFACTION OF THE AO AND CONSEQUENTLY THE ACTION OF ISSUE OF NOTICE U/S.153C BOTH IN THE CASE OF INDIVIDUAL AS WELL AS HUF IS NO T JUSTIFIED. HENCE, THE ENTIRE PROCEEDINGS TAKEN BY THE AO IS HELD TO BE NOT IN AC CORDANCE WITH THE LAW. IN VIEW OF THE ABOVE DECISION OF HOLDING THE ACTION OF INITIATING OF PROCEEDINGS ITSELF IS NOT IN ACCORDANCE WITH THE LAW. I AM NOT DECIDING THE ISSUE ON MERITS SO AS TO PREEMPT ANY FINDINGS ON THE MERITS IN RESP ECT OF THE ISSUES TO BE TAKEN UP BY AO I, RECOURSE IS TAKEN FOR REMEDIAL ME ASURES IF ANY. 5. IN THE RESULT, THE APPEALS OF THE APPELLANT IN B OTH INDIVIDUAL AND HUF ARE ALLOWED. 5. THE LD. D.R. SUBMITTED BEFORE US THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE INITIATION OF PROCEEDING U/S 153C OF THE ACT IS INVALID. THE LD. D.R. SUBMITTED THAT THE EXPRESSION BELONGS TO A S APPEARING IN SECTION 153C OF THE ACT SHOULD NOT BE GIVEN A NARROW MEANIN G BUT SHOULD BE INTERPRETED TO MEAN THAT THE SEIZED MATERIAL RELATE S TO THE ASSESSEE. THE OWNERSHIP OF THE SEIZED MATERIAL IS NOT THE CRITERI A IF THE INFORMATION OBTAINING FROM THE SEIZED MATERIAL RELATES TO THE THIRD PARTY THEN PROCEEDING U/S 153C OF THE ACT CAN BE VALIDLY INITIATED IN RESPECT OF T HE THIRD PARTY. THE LD. D.R. FURTHER ELABORATING SUBMITTED THAT THE SEIZED NOTE BOOK WAS NOT DISOWNED BY MR. M. SAMBA SIVA RAO FROM WHOM IT WAS SEIZED. IT IS ALSO A FACT THAT THEY HAVE ADMITTED ALL THE ENTRIES MADE THEREIN EXCEPT T HE CASH PAYMENT OF RS.1,64,00,000/-. THEREFORE, IT CANNOT BE SAID THAT THE INFORMATION CONTAINED IN THE NOTE BOOK DOES NOT RELATE TO THE ASSESSEE. CONSIDERED IN THIS CONTEXT, THE PROCEEDING HAS BEEN VALIDLY INITIATED U/S 153C OF THE ACT AS THE ENTRIES IN THE NOTE BOOK REFERRED TO THE TRANSACTION OF SALE O F THE PLOT BY THE ASSESSEE TO M. SAMBA SIVA RAO AND M. RAMAKRISHNA. IN SUPPOR T OF SUCH CONTENTION, THE LD. A.R. RELIED UPON A DECISION OF THE ITAT MUM BAI `G BENCH IN CASE OF GURU PRERNA ENTERPRISES VS. ACIT (57 DTR 465). ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 7 6. THE LD. A.R. STRONGLY RELYING UPON THE ORDER OF THE CIT(A) SUBMITTED THAT THE EXPRESSION BELONGS TO USED IN SECTION 15 3C OF THE ACT HAS TO BE CONSIDERED IN THE PERSPECTIVE IN WHICH IT HAS BEEN USED AND CANNOT BE GIVEN A WIDE MEANING. IT WAS CONTENDED THAT BELONGS TO MEANS THE MATERIALS SEIZED MUST BE BELONGING TO THE ASSESSEE. IN OTHER WORDS, THE ASSESSEE MUST BE HAVING A RIGHT/OWNERSHIP OVER THAT MATERIAL OR INTIMATELY CONNECTED TO IT. IT WAS CONTENDED THAT THE SEIZED MATERIAL O N THE BASIS OF WHICH THE ASSESSING OFFICER HAS INITIATED PROCEEDING U/S 153C OF THE ACT WAS SEIZED FROM THE PREMISES OF A THIRD PARTY AND HE ALSO ADMITTED THAT THE NOTE BOOK BELONG TO HIM AND ENTRIES ALSO HAVE BEEN MADE BY HIM. THE REFORE, IT CANNOT BE CONSIDERED TO BE BELONGING TO THE ASSESSEE SO AS TO ENABLE THE ASSESSING OFFICER TO INITIATE PROCEEDING U/S 153C OF THE ACT. HE THEREFORE SUBMITTED THAT THE ASSESSEE NEVER STATED THAT EITHER THE NOTE BOOK OR THE ENTRIES MADE THEREIN RELATES TO HIM. FURTHERMORE, EVEN SRI M. S AMBA SIVA RAO AND SRI M. RAMAKRISHNA HAVE MADE ALSO DENIED OF HAVING ANY CAS H PAYMENT OF RS.1,64,00,000/-. IN THESE CIRCUMSTANCE THE INITIA TION OF PROCEEDINGS U/S 153C OF THE ACT SOLELY RELYING UPON THE SEIZED NOTE BOOK IS INVALID IN LAW. SO FAR AS THE DECISION RELIED UPON BY THE LD. D.R. IN CASE OF GURU PRERNA ENTERPRISES VS. CIT (SUPRA), THE LD. A.R. SUBMITTED THAT THE DECISION REFERRED TO BY THE LD. D.R. IS FACTUALLY DISTINGUISHABLE SIN CE THE DOCUMENT SEIZED IN THAT CASE IS A JOINT VENTURE AGREEMENT IN WHICH THE ASSESSEE WAS A PARTY. WHEREAS, IN ASSESSEES CASE NEITHER THE NOTE BOOK B ELONG TO THE ASSESSEE NOR THE ENTRIES IN THE NOTE BOOKS WERE MADE BY THE ASSE SSEE. THE LD. A.R. IN SUPPORT OF HIS CONTENTION THAT THE PROCEEDING INITI ATED U/S 153C OF THE ACT IS INVALID IN LAW RELIED UPON A DECISION OF THE ITAT H YDERABAD BENCH IN CASE OF SHOURI CONSTRUCTIONS AND ANOTHER IN ITA NOS.2056 & OTHERS/HYDERABAD/2011 DATED 28.6.2013 AND THE FOLLOWING OTHER DECISIONS:- 1. MANISH MAHESHWARI VS. ACIT 289 ITR 341 2. VIJAYBHAI N. CHANDRANI VS. ACIT 231 CTR (GUJ) 474 3. CBI VS. V.C. SHUKLA & OTHERS (1998) 3 SCC 410 DT .2.3.98 4. CIT (CENTRAL)-I NEW DELHI VS. VED PRAKASH CHOUDHA RY 169 TAXMAN 130 5. CIT VS. PRESIDENT INDUSTRIES 258 ITR 654 IN GUJAR AT HIGH COURT ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 8 6. DECISION OF ITAT PUNE BENCH IN CASE OF RAMA TRAD ERS VS. FIRST INCOME-TAX OFFICER REPORTED IN 32 TTJ 483. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD AS WELL AS THE DECISIONS PLACED BEFORE US. IT IS NOT IN DI SPUTE THAT THE SEIZED DOCUMENT, ON THE BASIS OF WHICH THE ASSESSING OFFIC ER HAS INITIATED THE PROCEEDING U/S 153C OF THE ACT IS A NOTE BOOK FOUND AND SEIZED FROM THE PREMISES OF M. SAMBA SIVA RAO. IT IS ALSO NOT DISPU TED THAT THE NOTE BOOK BELONG TO SRI M. SAMBA SIVA RAO AND ENTRIES IN THE NOTE BOOK WERE ALSO MADE BY HIM. FURTHER, ON GOING THROUGH THE STATEME NTS RECORDED FROM M. SAMBA SIVA RAO WHICH HAS BEEN EXTENSIVELY EXTRACTED IN THE ASSESSMENT ORDER WOULD SHOW THAT HE HAS CATEGORICALLY DENIED O F HAVING PAID THE AMOUNT OF RS.1,64,00,000/- TO THE ASSESSEE IN CASH TOWARDS SALE CONSIDERATION. THE ASSESSEE ALSO IN THE STATEMENT RECORDED FROM HIM EM PHATICALLY DENIED OF HAVING RECEIVED THE CASH PAYMENT OF RS.1,64,00,000/ -. APART FROM THE SEIZED NOTE BOOK, THERE IS NO OTHER CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE CASH PAYMENT OF RS.1,64, 00,000/- TO THE ASSESSEE. ON A PLAIN READING OF THE PROVISION CONTAINED U/S 1 53C OF THE ACT IT BECOMES CLEAR THAT THE PRE-CONDITION FOR INVOKING THE PROVI SION OF SECTION 153C OF THE ACT IS, VALUABLE ARTICLES, BOOKS OF ACCOUNTS, DOCUM ENTS ETC. MUST BELONG TO THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, NEITHE R THE NOTE BOOK BELONGS TO THE ASSESSEE NOR THE ENTRIES MADE THEREIN ARE BY THE ASSESSEE. THEREFORE, WHEN THE SEIZED MATERIAL DOES NOT BELONG TO THE ASS ESSEE BUT TO A THIRD PARTY PROCEEDING U/S 153C OF THE ACT CANNOT BE INITIATED AGAINST THE ASSESSEE. THAT TOO WHEN THE OWNER OF SUCH SEIZED MATERIAL HAS DENIED OF HAVING PAID ANY CASH TO THE ASSESSEE. IN ABSENCE OF ANY OTHER M ATERIAL TO CORROBORATE THE ENTRIES MADE IN THE NOTE BOOK, PROCEEDING U/S 1 53C OF THE ACT CANNOT BE INITIATED BY THE ASSESSING OFFICER. WHILE CONSIDER ING IDENTICAL ISSUE IN CASE OF M/S. SHOURI CONSTRUCTIONS VS. ACIT CONSIDERING THE ITAT HYDERABAD BENCH FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF VIJAYABHAI N. CHANDRANI VS. ACIT 231 CTR 474 HELD AS UNDER: ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 9 10. THUS THE CONDITION PRECEDENT FOR ASSUMPTION OF JURISDICTION U/S 153C IS, THE AO MUST BE SATISFIED THAT THE SEIZ ED MATERIALS BELONGS TO SUCH OTHER PERSON. THE WORD BELONG HAS N OT BEEN DEFINED UNDER THE ACT. AS PER THE DICTIONARY MEANING 'BELON G TO' MEANS BE THE PROPERTY OF; BE THE RIGHTFUL POSSESSION 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 11. SINCE THE SEIZED DOCUMENT REPRODUCED HEREINABOV E IS NOT PROPERLY VISIBLE, WE ARE ALSO ANNEXING HEREWITH A C OPY OF THE SAID DOCUMENT TO THIS ORDER, WHICH SHOULD BE TREATED AS PART OF THIS ORDER. 12. THIS DOCUMENT WAS SEIZED FROM THE BUSINESS PREM ISES OF D. NAGARJUNA RAO IN COURSE OF ACTION U/S 132 OF THE AC T AGAINST HIM. IN THE IMPUGNED ASSESSMENT ORDER THE AO HAS ALSO OBS ERVED 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 THE ASSESSEE, THE AO HAS ALSO ADMITTED THE FACT THAT NEITHER THE NAME OF THE ASSESSEES APPEAR IN THE SEIZED DOCUMENT NOR IT BEARS THEIR S IGNATURE. THE NOTINGS MADE IN THE SEIZED DOCUMENT ONLY SHOWS THA T AN AMOUNT OF RS.74,81,2507- WAS PAID TO MR. VENKATESH TOWARDS SA LE CONSIDERATION OF THE PROPERTY. WHEN THE DOCUMENT IN QUESTION WAS NOT SEIZED FROM THE ASSESSEE BUT FROM A THIRD PARTY, WHO ADMITTEDLY HAS MADE THE ENTRIES THEREIN AND FURTHERM ORE 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 HON'BLE GUJARAT HIGH COURT IN CASE OF VIJAYBHAI N. CHANDRANI VS. ACIT [SUPRA] WHI LE CONSIDERING IDENTICAL ISSUE HELD AS UNDER:- '12. ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SECTIONS 153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. S ECTION 153A DEALS WITH PROCEDURE FOR ISSUANCE OF NOTICE AN D ASSESSMENT OR REASSESSMENT IN CASE OF THE PERSON WH ERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, 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 ASSESSMENT UNDER SECTI ON 153A. SECTION 153C WHICH IS SIMILARLY WORDED TO SECTION 1 58BD OF THE ACT F PROVIDES THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING. OR BOOKS OF ACCOUNT OR D OCUMENTS ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 10 SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERS ON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A HE SHAL L PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SU CH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME O F SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWE EN THE TWO PROVISIONS INASMUCH AS UNDER SECTION 153C NOTIC E CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON , WHEREAS UNDER SECTION 158BD IF THE ASSESSING OFFICE R 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-ACCOUN T OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER SECTION 132A F 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 THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSO N. IF THE SAID REQUIREMENT IS NOT SATISFIED, RECOURSE CAN NOT BE HAD TO THE PROVISIONS OF SECTION 153C OF THE ACT. 14. EXAMINING THE FACTS OF THE PRESENT CASE IN THE FIGH T OF THE AFORESAID STATUTORY SCHEME, IT IS AN ADMITTED P OSITION AS EMERGING FROM THE RECORD OF THE CASE, THAT THE DOCU MENTS IN QUESTION, NAMELY THE THREE LOOSE PAPERS RECOVERE D DURING THE SEARCH PROCEEDINGS DO NOT BELONG TO THE PETITIONER. IT MAY BE THAT THERE IS A REFERENCE TO THE PETITIONER INASMUCH AS HIS NAME IS REFLECTED IN THE LIST UNDER THE HEADING SAMUTKARSH MEMBERS DETAILS AND CERTAIN DETAILS ARE GIVEN UNDER DIFFERENT COLUMNS AGAINST T HE NAME OF THE 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 CONDITIO N PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED A NY ACTION TAKEN UNDER SECTION 153C OF THE ACT STANDS VITIATED .' 13. THE ITAT, BANGALORE BENCH IN CASE OF P. SRINIVAS NAIK VS. ACIT [SUPRA] HAS HELD AS UNDER: '7. WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDISPUTED FACT THAT BOOKS OF ACCOUNT OR DOCUMENT D OES ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 11 NOT BELONG TO THE ASSESSEE, AS THESE WERE SEIZED FR OM THE PREMISES OF SHRI REDDY. IT IS NOWHERE STATED T HAT 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 O F 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 ASSOCIAT ION WITH THE GROUP CONCERN OF SHRI REDDY. IT RECORDS T HE TRANSACTION CARRIED OUT BY THAT GROUP. I T 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 AN D LIMITED OWNERSHIP OF INTEREST. OF COURSE BELON GING TO IS CAPABLE CONNOTING, INTEREST, WHICH IS LESS THAN ABSOLUTE PERFECT LEGAL TITLE. HOWEVER, THERE SHOU LD 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 SEIZ ED CANNOT BE TERMED, TO BE INDICATING ANY LIMITED INTEREST O F 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 OT HER PERSON, THEN ACTION AGAINST SUCH OTHER PERSON C AN BE TAKEN PROVIDED SUCH UNDISCLOSED INCOME IS REFERABL E TO THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. HOWEVER, SECTION 153C SAYS THAT IF VALUABLE O R BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THEN ACTION UNDER SECTION 153C CAN BE TAKEN .AGAINST THAT PERSON. IN THE INSTAN T CASE, WE ARE SATISFIED THAT BOOKS OF ACCOUNT OR DOCUMEN TS DO NOT BELONG TO THE ASSESSEE AND, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED I N INITIATING ACTION UNDER SECTION 153A READ WITH SECTION 153C OF THE INCOME-TAX ACT. THE ASSESSING OFFICER IS FREE TO TA KE PROPER REMEDIAL MEASURE AS PER LAW. ' 14. WE, IN THE PRECEDING PARAGRAPHS, HAVE ALREADY H ELD 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 ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 12 IN THE LIGHT OF THE RATIOS LAID DOWN IN THE JUDICIAL PRECEDENTS REFERRED TO ABOVE, THE ASSUMPTION 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 SET ASIDE THE ORDER P ASSED BY THE CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 8. THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT AS WELL AS THE ITAT HYDERABAD BENCH, AS EXTRACTED HEREIN ABOVE, CL EARLY APPLIES TO THE FACTS OF THE PRESENT CASE. THE DECISION OF THE ITAT, MUM BAI BENCH IN CASE OF GURU PRERNA ENTERPRISES VS. ACIT WILL NOT BE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS SEIZED MATERIAL THEREIN IS A JOI NT VENTURE AGREEMENT IN WHICH ASSESSEE IS A PARTY. THEREFORE, CONSIDERED I N THE LIGHT OF THE RATIO AS DECIDED, WE DO NOT FIND ANY REASON TO INTERFERE WIT H THE ORDER OF THE CIT(A) WHICH IS ACCORDINGLY SUSTAINED. GROUNDS RAISED AR E DISMISSED. ITA NO.280/VIZAG/2011: 9. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT ON SUBSTANTIVE BASIS IN CASE OF THE HUF HAS MADE THE ADDITIONS ON PROTECTIVE BASIS IN CASE OF THE INDIVIDUAL I.E. THE PRESENT ASSESSEE. SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A) IN CASE OF THE HUF (SUPRA), THIS APPEAL OF THE DEPARTMENT ALSO DESERVES TO BE DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7 TH MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH MARCH, 2014 ITA NOS.280&281/VIZAG/2011 SRI NEKKANTI SRI KRISHNA PRASAD INDL, NARASAPUR 13 COPY TO 1 ITO WARD-1, PALAKOL 2 SRI NEKKANTI SRI KRISHNA PRASAD (INDL) NARASAPUR 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM