Avinash Estates & Resorts Ltd., Visakhapatnam V. THE CIT, Guntur

ITA 300/VIZ/2014

• Counselvise Citation: 30025314 RSA 2014
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Document seized; Share purchase agreement; Documents seized
• Section: 143(3); 153A; 68; 132; 12; 2

Judgement Text

ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.299 TO 303/VIZAG/2014 ASSESSMENT YEARS : 2004-05 TO 2008-09 RESPECTIVELY AVINASH ESTATES & RESORTS LTD. VISAKHAPATNAM VS. DCIT CENTRAL CIRCLE-2 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AADCA 6004A ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 04.07.2014 DATE OF PRONOUNCEMENT : 04.07.2014 ORDER PER BENCH:- THESE ARE BUNCH OF FIVE APPEALS BY THE ASSESSEE AG AINST A COMMON ORDER DATED 26.3.2014 OF THE CIT(A), VISAKHAPATNAM PERTAINING TO THE ASSESSMENT YEARS 2004-05 TO 2008-09. 2. GROUNDS RAISED IN ITA NOS.299 TO 302/VIZAG/2014 BEING COMMON, WE WILL DEAL WITH THESE APPEALS AT FIRST. THE GROUNDS RAISED ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FACT S AND ALSO THE LAW APPLICATION TO THE FACTS. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN REJECTING THE CO NTENTION OF THE APPELLANT THAT THE NOTICE ISSUED U/S 153C OF THE AC T IS NOT LEGALLY VALID AND THEREFORE THE SAME IS LIABLE TO BE QUASHE D AS ILLEGAL AND CONSEQUENTLY THE ENTIRE ASSESSMENT PROCEEDINGS ARE LIABLE TO QUASHED AS VOID-AB-INITIO. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) OUGH T TO HAVE HELD THAT THE ADDITIONS MADE WERE OUTSIDE THE SCOPE OF A SSESSMENT MADE U/S 143(3) R.W.S. 153C OF THE ACT. 4. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING RS.1, 23,851/- OUT OF THE ADDITION OF RS.2,43,151/- MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED AGRICULTURAL INCOME U/S 68 OF THE ACT. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF APPEAL HEARING. GROUND NOS.1 AND 5 ARE GENERAL, HENCE NEED NOT BE ADJUDICATED UPON. GROUND NOS.2 &3 RELATE TO THE LEGAL ISSUE OF VALIDI TY OF THE PROCEEDING ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 2 INITIATED U/S 153C OF THE INCOME-TAX ACT AND GROUND NO.4 IS ON MERITS OF ADDITION SUSTAINED BY CIT(A). SINCE FACTS ARE IDEN TICAL IN ALL THESE APPEALS, WE WILL DEAL WITH THE FACTS RELATING TO ITA NO.299/ VIZAG/2014 FOR CONVENIENCE. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF REAL ESTATES. FOR THE IMPUGNED ASSESSMENT YEAR, IT HAS FILED ITS RETURN I N REGULAR COURSE ON 30.10.2004 DECLARING TOTAL INCOME OF RS.5,151/- AND AGRICULTURAL INCOME OF RS.2,38,600/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN CASE OF A.T. RAYUDU AND VINAYAGAR GROUP ON 4.12.2007. AS ALLEGE D BY THE ASSESSING OFFICER, DURING THE COURSE OF SEARCH & SEIZURE OPER ATION, CERTAIN INCRIMINATING DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND S EIZED. ON THAT BASIS NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESS EE ON 15.12.2008 CALLING UPON THE ASSESSEE TO SUBMIT HIS RETURN OF INCOME. IN RESPONSE TO THE NOTICE ISSUED U/S 153C OF THE ACT, ASSESSEE FILED ITS RETU RN OF INCOME ON 12.01.2009 DECLARING THE SAME INCOME AS WAS RETURNED IN THE OR IGINAL RETURN OF INCOME. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFF ICER, AS NOTED IN THE ASSESSMENT ORDER, ON THE BASIS OF INFORMATION AVAIL ABLE WITH HIM AS A RESULT OF POST SEARCH INVESTIGATION AS WELL AS DURING THE COURSE OF INFORMATION OBTAINED DURING THE ASSESSMENT PROCEEDING AND ALSO ON THE BASIS OF ALLEGED INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH , HE NOTICED THAT THE ASSESSEE HAS BEEN CLAIMING AGRICULTURAL INCOME FROM THE LAND AT POLIPALLI. HE NOTED THAT THE FUND FOR THE PURCHASE OF ABOVE STATE D LAND HAS BEEN BASICALLY TRANSFERRED FROM M/S. ATR WAREHOUSING PVT. LTD. THR OUGH ITS SISTER CONCERNS. M/S. ATR WAREHOUSING PVT. LTD. AND ITS OTHER SISTER CONCERNS M/S. VIJAYA ICE COLD STORAGE PVT. LTD.. ITS DIRECTORS SHRI A.T. RAY UDU AND SHRI ANUMOLU AVNASH ARE IN THE BUSINESS OF DEVELOPING AND LEASIN G THE INFRASTRUCTURES, WARE HOUSES AND GODOWNS AT VARIOUS PLACES LIKE VISA KHAPATNAM, KAKINADA, HYDERABAD, BANGALORE, ETC. HE NOTICED THAT THE ASS ESSEE AND SIX OTHER SISTER COMPANIES WHO HAVE PURCHASED AROUND 160 ACRES OF LA ND AT POLIPALLI ARE ALSO IN THE BUSINESS OF ACQUIRING VARIOUS INDUSTRIAL INF RASTRUCTURAL LAND AND ARE IN RECEIPT OF LEASE RENTALS FROM SUCH INFRASTRUCTURES INCLUDING HOARDING RENTS. HE FURTHER NOTED THAT DURING THE ASSESSMENT PROCEED INGS, THE ASSESSEE IN LETTER DATED 30.11.2009 HAD STATED THAT ATR WAREHOU SING PVT. LTD. HAS ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 3 ADVANCED MONEY TO VARIOUS OTHER COMPANIES FOR PURCH ASE OF LANDS WITH AN INTENTION OF ESTABLISHING A LARGER INDUSTRIAL, INFR ASTRUCTURE HUB AS A JOINT VENTURE PROJECT WITH OTHER BIG PLAYERS WORLD OVER I N INFRASTRUCTURE FIELD. HOWEVER, DUE TO WORLD ECONOMIC CRISES, IT HAS NOT M ATERIALIZED AND THE ADVANCES WERE RETURNED BY THE RESPECTIVE COMPANIES. FURTHER, IN REPLY DATED 29.12.2009, IT WAS STATED BY THE ASSESSEE THAT EVEN THOUGH THE LANDS WERE NOT PURCHASED FOR CULTIVATION BUT DURING THE COURSE OF HOLDING THE ASSESSEE AND OTHERS RECEIVED AGRICULTURAL INCOME FROM THEM. ON THE BASIS OF THE AFORESAID CLAIMS OF THE ASSESSEE, THE ASSESSING OFF ICER INFERRED THAT THE LAND IN QUESTION HAS BEEN PURCHASED FOR THE PURPOSE OF I NDUSTRIAL AND INFRASTRUCTURAL ACTIVITIES AND FURTHER THE LAND IS LOCATED ON THE NATIONAL HIGHWAY AND ADJACENT TO THE BUILDING AND BUILDING S ITE. HENCE, THE LAND HAS NOT BEEN PURCHASED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES. FURTHER, THE FIELD ENQUIRY CONDUCTED THROUGH THE INSPECTOR ALSO REVEALED, AS STATED BY THE AO, NO AGRICULTURAL ACTIVITIES ARE CARRIED ON AND T HE LAND WITH THE CASURINA PLANTATION AND COCONUT GARDEN IN PATCHES ARE FOUND TO BE IN A NEGLECTED CONDITION. IT IS FURTHER FOUND BY AO THAT ALL THE OWNERS ARE IN POSSESSION OF AGRICULTURAL LAND IN EXCESS OF CEILING PROVIDED UND ER THE A.P. LAND REFORMS ACT. FROM THE RECORDS AVAILABLE IN THE OFFICE, IT WAS FOUND THAT NO PERMISSION HAS BEEN OBTAINED BY THE COMPANIES FOR POSSESSING T HE LAND IN EXCESS OF THE CEILING FOR THE PURPOSE OF PLANTATION OF CROP. HE FURTHER NOTED THAT ON SCRUTINY OF THE PURCHASE DEED OF ALL THE POLIPALLI LAND PURCHASED BY SEVEN COMPANIES, IT IS NOTICED THAT A DECLARATION HAS BEE N GIVEN BY SELLERS TO THE EFFECT THAT NO MANGO TREES/COCONUT TREES, BETEL LEA F GARDENS/ ORANGE GROVES OR ANY SUCH OTHER GARDENS ARE EXISTING ON THE LAND. IT WAS NOTED BY THE ASSESSING OFFICER THAT IT IS THE DUTY OF THE ASSESS EE TO PROVE THE GENUINENESS OF THE AMOUNTS CREDITED IN THE BOOKS OF ACCOUNTS. IT WAS NOTED BY THE ASSESSING OFFICER THAT DESPITE GIVING SEVERAL OPPOR TUNITIES, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE EXCEPT THE PURCHASE DEED A ND PATTADAR PASS BOOK FOR THE LAND. THE ASSESSEE DID NOT PRODUCE ANY EVI DENCE WITH REGARD TO THE AGRICULTURAL ACTIVITIES UNDERTAKEN OR EXPENDITURE I NCURRED TOWARDS SUCH AGRICULTURAL ACTIVITIES. THOUGH THE ASSESSEE SUBMI TTED BEFORE THE ASSESSING OFFICER THAT THEY HAVE NOT CARRIED OUT ANY AGRICULT URAL ACTIVITY DIRECTLY BUT HAVE LEASED OUT THE LANDS TO THE FARMERS AND ALSO P RODUCED COPIES OF THE ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 4 CONFIRMATION LETTERS GIVEN BY THE FARMERS BUT THE A SSESSING OFFICER WAS NOT CONVINCED WITH THE SAME BY STATING THAT ORIGINAL CO PIES OF THE CONFIRMATION HAVE NOT BEEN SUBMITTED BY THE ASSESSEE. THE ASSES SING OFFICER AFTER EXAMINING THE CONFIRMATION LETTERS NOTED THAT ALL T HE CONFIRMATIONS WERE PREPARED BY THE ASSESSEE AFTER THE SEARCH & SEIZURE OPERATION BUT HAS BEEN ANTE DATED. IT WAS NOTED BY THE ASSESSING OFFICER T HAT THOUGH THE ASSESSEE WAS ASKED TO PRODUCE THE CONCERNED PERSONS WHO HAVE CONFIRMED/FILED AFFIDAVITS BUT THE ASSESSEE DID NOT PRODUCE THEM WI TH THE EXPLANATION THAT ALL OF THEM HAVE MIGRATED AND COULD NOT BE CONTACTED. HE THEREFORE DOUBTED THE GENUINENESS OF THE AGRICULTURAL INCOME AND THE CONFIRMATIONS SUBMITTED BY THE ASSESSEE. FURTHER, RELYING UPON THE FIELD I NVESTIGATION REPORT CONDUCTED THROUGH THE INSPECTOR, HE NOTED THAT THE VILLAGE REVENUE OFFICER, POLIPALLI IN HIS STATEMENT HAS GIVEN DETAILS OF THE LAND OF THE ASSESSEE COMPANY, NUMBER OF PLANTATIONS AND CONDITION OF THE LAND, AS PER WHICH THE ASSESSEE COMPANY IS IN POSSESSION OF 93 ACRES OF BA RREN LAND 20 ACRES OF COCONUT GARDEN AND REMAINING 47 ACRES CASURINA PLAN TATION. IT WAS ALSO STATED THAT THE AGE OF THE COCONUT TREES WAS 25 TO 30 YEARS AND THE CASURINA TREES WAS 2 YEARS. ON THE BASIS OF THE AFORESAID I NFORMATION, THE ASSESSING OFFICER FINALLY CONCLUDED THAT THE ASSESSEES CLAIM OF AGRICULTURAL INCOME IS NOT ACCEPTABLE. IN THIS CONTEXT, HE ALSO EXAMINED SOME OF THE FARMERS WHO SUPPOSED TO HAVE TAKEN LEASE FROM THE ASSESSEE COMP ANY. ON CONSIDERATION OF THE AFORESAID FACTS AND RESULT OF ENQUIRY, THE A SSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE BURDE N OF PROVING THE GENUINENESS OF THE AGRICULTURAL INCOME CREDITED IN THE BOOKS OF ACCOUNTS AND TREATED THEM AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND ADDED IT TO THE INCOME OF THE IMPUGNED ASSESSMENT YEAR. 4. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(A) BOTH ON THE ISSUE OF VALIDITY OF PROCEED ING U/S 153C OF THE ACT AS WELL AS ON MERITS OF THE ADDITION MADE U/S 68 OF TH E ACT. SO FAR AS THE VALIDITY OF THE PROCEEDING U/S 153C OF THE ACT ARE CONCERNED, THE CIT(A) NEGATING ALL THE CONTENTIONS OF THE ASSESSEE HELD T HAT THE PROCEEDING INITIATED U/S 153C OF THE ACT IS VALID. SO FAR AS MERITS OF THE ADDITION MADE U/S 68 OF THE ACT IS CONCERNED, THE CIT DID NOT AGREE WITH TH E ASSESSING OFFICER THAT THE ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 5 ASSESSEE HAS NOT EARNED ANY INCOME FROM AGRICULTURA L ACTIVITY. BY RELYING ON THE REPORT OF THE VRO, THE CIT(A) HELD THAT THE ASS ESSING OFFICERS VIEW THAT THE ASSESSEE HAS NOT EARNED ANY AGRICULTURAL INCOME CANNOT BE ACCEPTED. ACCORDINGLY, HE PROCEEDED TO ESTIMATE THE AGRICULTU RAL INCOME AT 50% OF THE INCOME RETURNED. 5. THE LD. A.R. ADVANCING HIS ARGUMENT BOTH ON THE VALIDITY OF PROCEEDING U/S 153C OF THE ACT AS WELL AS THE MERIT S OF THE ADDITION SUSTAINED BY THE LD. CIT(A) SUBMITTED THAT SO CALLED SEIZED M ATERIAL ON THE BASIS OF WHICH PROCEEDING WAS INITIATED U/S 153C OF THE ACT ARE MATERIAL OF GENERAL NATURE WHICH ARE NOT INCRIMINATING. IT WAS SUBMITT ED THAT IN THAT VIEW OF THE MATTER THE INITIATION OF PROCEEDING U/S 153C OF THE ACT IS INVALID AND CONSEQUENTLY THE ASSESSMENTS ARE LIABLE TO BE QUASH ED. IN SUPPORT OF SUCH CONTENTION, THE LD. A.R. RELIED UPON THE DECISION O F THE ITAT VIZAG BENCH IN CASE OF SRI RAM EDUCATIONAL TRUST VS. CIT IN ITA NO .31 TO 35/VIZAG/2012 DATED 13.12.2013 AND IN CASE OF SMT. G. BANGARAMMA IN ITA NO.361/VIZAG/2013 DATED 5.3.2014. IT WAS SUBMITTED THAT ASSESSMENT FOR ALL THE 4 YEARS STOOD CONCLUDED ON THE DATE NOTICE WAS ISSUED U/S 153C OF THE ACT ON 15.12. 2008. IT WAS SUBMITTED THAT ON THE DA TE NOTICE WAS ISSUED U/S 153C ASSESSMENTS FOR ALL THE AFORESAID ASSESSMENT Y EARS STOOD CONCLUDED IN AS MUCH AS THE TIME AVAILABLE FOR ISSUE OF NOTICE U /S 143(2) OF THE ACT HAD ALREADY EXPIRED. THEREFORE, THE ADDITION MADE TOWA RDS UNEXPLAINED AGRICULTURAL INCOME WITHOUT REFERENCE TO SEIZED MAT ERIAL IS COMPLETELY OUTSIDE THE SCOPE OF ASSESSMENT MADE U/S 153C OF THE ACT. IN SUPPORT OF SUCH CONTENTION, THE LD. A.R. RELIED UPON THE DECISION O F THE ITAT VISAKHAPATNAM BENCH IN CASE OF SRI LALITHA CONSTRUCTION IN ITA NO .162 TO 164/VIZAG/2013 DATED 13.12.2013. SO FAR AS THE MERITS OF THE ADDI TIONS SUSTAINED BY THE LD. CIT(A) IS CONCERNED, THE LD. A.R. SUBMITTED THAT TH E ASSESSING OFFICER HAS INITIALLY MADE THE ADDITION ON THE BASIS OF REPORT OF INSPECTOR OF INCOME-TAX. HOWEVER, DURING THE PROCEEDING BEFORE THE CIT(A) WH EN THE MATTER WAS REMANDED TO THE ASSESSING OFFICER, HE CONDUCTED AN ENQUIRY AND ON THE BASIS OF THE REPORT OBTAINED FROM THE VRO AND THE INSPECT OR, THE ASSESSING OFFICER SUBMITTED HIS REMAND REPORT ON 23.1.2013 ACCEPTING THE FACT THAT THE ASSESSEE HAD EARNED AGRICULTURAL INCOME FROM COCONU T TREES AND CASURINA ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 6 PLANTATION. HE FURTHER CONTENDED THAT IN THE SAID REMAND REPORT, THE ASSESSING OFFICER HAS ALSO STATED THAT THE EXPENDIT URE INCURRED BY THE ASSESSEE TOWARDS INTEREST ON AGRICULTURAL LOANS CAN BE ALLOWED AS A DEDUCTION FROM THE AGRICULTURAL INCOME. IT WAS THEREFORE SUB MITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION TO THE EXT ENT OF 50%. 6. THE LD. D.R. ON THE OTHER HAND RELIED UPON THE O RDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE RE VENUE AUTHORITIES. SECTION 153C OF THE ACT POSTULATES THAT IN COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF AN ASSESSEE IF MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNTS AND OTHER DOCUMENTS PERTAINING TO ANOTHER PERSON IS FOUND AND SEIZED, THEN PROCEEDING U/S 153C OF THE ACT CAN BE INITIATED BY THE ASSESSING OFFICER AFTER RECORDING SATISFACTION. THEREFORE, T HE MONEY, BULLION, JEWELLERY, VALUABLE ARTICLE, THINGS, BOOKS OF ACCOUNTS OTHER D OCUMENTS REFERRED TO IN SECTION 153C OF THE ACT WOULD MEAN THAT THOSE ARTIC LES OR THINGS ARE IN NATURE OF INCRIMINATING MATERIAL AND INDICATE CONCEALED/SU PPRESSED INCOME OF THE ASSESSEE. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS NOT FORTHCOMING, WHAT ARE THE SEIZED MATERIALS ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS INITIATED PROCEEDINGS U/S 153C OF THE ACT. HOWEVER , A REFERENCE TO THE ORDER PASSED BY LD. CIT(A) WOULD REVEAL THAT THE SO CALLE D INCRIMINATING MATERIALS FOUND AND SEIZED AS BELONGING TO THE ASSESSEE ARE A S UNDER:- M/S. AVNASH ESTATES & RESORTS PVT. LTD. S.NO. ANNEXURE NO DETAILS MATERIAL FOUND IN ANNEXURE 1 ATR/B/2 PAGE NOS.12 TO 15 PAGE NOS.76 TO 78 INVESTMENT DETAILS IN THE PROJECT OXYGEN SERVICED APARTMENTS BY M/S. AVNASH ESTATES & RESORTS LTD. PROVISIONAL PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF M/S. AVNASH ESTATES & RESORTS LTD. AS ON 31.03.2007 2 A/ATRR/1 PAGE NOS.57 TO 73 DEVELOPMENT AGREEMENT CUM GENERAL POWER OF ATTORNEY EXECUTED BY SHRI I. SURYANARAYANA RAO AND OTHERS IN FAVOUR OF M/S. AVNASH ESTATES AND RESORTS PVT. LTD. ON 15.12.2006 AT KAKINADA. 3 ATR/B/PO2/2 PAGE NOS.6 TO 9 UNSIGNED CASH PAYMENT VOUCHERS. ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 7 8. A REFERENCE TO THE ASSESSMENT ORDER IN THE CONTE XT OF THE AFORESAID SEIZED MATERIAL WOULD SHOW THAT THE ADDITION MADE I N THE ASSESSMENT ORDER HAS NO RELEVANCE OR CONNECTION TO THE AFORESAID SEI ZED MATERIALS ON THE BASIS OF WHICH PROCEEDING HAS BEEN INITIATED U/S 153C OF THE ACT. FURTHER, NOWHERE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS R EFERRED TO THESE SEIZED MATERIALS TO SAY THAT AS A RESULT OF SUCH SEIZED MA TERIALS, UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UNEARTHED. IN THE AFORESA ID FACTS, THE SO CALLED SEIZED MATERIALS CANNOT BE CONSIDERED TO BE INCRIMI NATING MATERIALS SO AS TO EMPOWER THE ASSESSING OFFICER TO INITIATE PROCEEDIN GS U/S 153C OF THE ACT. SECTION 153C OF THE ACT CANNOT BE INTERPRETED IN A MANNER TO CONTEMPLATE THAT ANY MATERIAL WHICH HAS A REFERENCE TO THE ASSE SSEE, WHETHER IT IS INCRIMINATING OR NOT CAN BE USED AS A TOOL TO LAUNC H A PROCEEDING U/S 153C OF THE ACT. IF SECTION 153C OF THE ACT IS TO BE INTER PRETED IN SUCH A NARROW MANNER THEN ANY INNOCUOUS MATERIAL FOUND DURING A S EARCH OF THIRD PARTY AND HAS ANY REFERENCE TO THE ASSESSEE THEN IT WILL LEAD TO A PROCEEDING U/S 153C OF THE ACT. THAT CANNOT BE THE INTENTION OF LEGISL ATURE. AS WOULD BE CLEAR FROM THE ASSESSMENT ORDER, THE INCOME WHICH THE ASS ESSING OFFICER HAS SOUGHT TO ASSESS IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT READ WITH SECTION 153C OF THE ACT HAS ALREADY BEEN REFLE CTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE MAINTAINED IN REGULAR COUR SE AS WELL AS DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE PRIOR TO THE SEARCH. ONLY ON THE BASIS OF SOME ENQUIRY CONDUCTED AT THE TIME OF ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS FORMED AN OPINION THAT THE AG RICULTURAL INCOME REFLECTED IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETUR N OF INCOME IS UNEXPLAINED. IT IS PATENT AND OBVIOUS FROM THE ASSESSMENT ORDER T HAT AO HAS ACCEPTED THE INCOME DECLARED BY THE ASSESSEE ORIGINALLY EXCEPT T INKERING WITH THE AGRICULTURAL INCOME SHOWN BY TREATING IT AS UNEXPLA INED CREDIT U/S 68 OF THE ACT. IN FACT NO OTHER ADDITION HAS BEEN MADE BY THE AO WITH RELATION TO ANY MATERIAL SEIZED DURING SEARCH. IN THESE CIRCUMSTANC ES, WE FAIL TO UNDERSTAND THE PURPOSE OF INITIATING PROCEEDING U/S 153C OF TH E ACT. EVEN IN RESPECT OF ADDITION MADE U/S 68 OF THE ACT ALSO THE AO SUBSEQU ENTLY IN HIS REMAND REPORT HAS ACCEPTED THAT THE INCOME IS IN NATURE OF AGRICULTURAL INCOME. WHEN THE INCOME HAS ALREADY BEEN REFLECTED IN THE B OOKS OF ACCOUNTS OF THE ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 8 ASSESSEE AND DISCLOSED IN THE RETURN OF INCOME MUCH PRIOR TO THE INITIATION OF PROCEEDINGS U/S 153C OF THE ACT, THERE IS NO JUSTIF ICATION ON THE PART OF THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S 153C OF THE ACT TO ASSESS SUCH INCOME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT . THE ASSESSING OFFICER CERTAINLY IS NOT EMPOWERED UNDER THE ACT TO CONSIDE R THE ISSUES IN A SEARCH ASSESSMENT, WHICH CAN BE CONSIDERED IN REGULAR ASSE SSMENT. THE ITAT VIZAG BENCH IN CASE OF ACIT VS. SRI RAM EDUCATIONAL TRUST (SUPRA) WHILE CONSIDERING THE POWERS OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S 153C OF THE ACT HAS HELD AS UNDER: THAT BESIDES, THERE ARE NO INCRIMINATING MATERIALS INDICATING ANY UNDISCLOSED INCOME OF THE ASSESSEE, WHICH COULD HAVE ENABLED THE AO TO INVOKE THE PROVISIONS OF SECTION 153C OF THE ACT. THIS BECOMES FURTHER CLEAR FROM THE FACT THAT THE INCOME WERE DETERMINED FOR THE ASSESSMENT YEARS 2001-02, 2002-0 3 & 2003-04 ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN A PPROVED UNDER SECTION 10(23C) OF THE ACT. THE DETERMINATION OF I NCOME HAS ABSOLUTELY NO RELATION OR RELEVANCE TO THE SEIZED M ATERIALS. SO FAR AS THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE CONCER NED, PERUSAL OF THE ASSESSMENT ORDERS PASSED IN THOSE YEARS WOUL D REVEAL THE FACT THAT THE DETERMINATION OF INCOME IS ON THE BAS IS OF THE IMPOUNDED MATERIALS AS A RESULT OF SURVEY AND NOT O N THE BASIS OF ANY SEIZED MATERIALS BELONGING TO THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, THE PRE CONDITIONS FOR ASSUMING JURI SDICTION UNDER SECTION 153C ARE NOT SATISFIED. SO FAR AS THE DECI SIONS RELIED UPON BY LD. D.R. IN SUPPORT OF HIS CONTENTION, AFTER CAR EFULLY APPLYING OUR MIND TO THE RATIO LAID DOWN THEREIN, WE OBSERVE THA T THE DECISIONS ARE DISTINGUISHABLE ON FACTS AND DO NOT APPLY TO TH E FACTS OF THE ASSESSEES CASE. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THE INITIATION OF PROCEEDINGS UNDER SECTION 153C TO BE AB INITIO VOID AND CONSEQUENTLY ANNULLING THE ASSESSMENTS FOR ALL THE AFORESAID ASSESSMENT YEARS. ACCORDINGLY, WE UPHOLD THE SAME BY DISMISSING THE GROUNDS TAKEN BY THE DEPARTMENT. 9. THE ITAT VIZAG BENCH AGAIN IN CASE OF GADIRAJU V ENKATA SUBBA RAJU VS. DCIT AND ANOTHER ITA NO.360 & 361/VIZAG/2013 DA TED 5.3.2014 CONSIDERING IDENTICAL ISSUE ON PROCEEDING INITIATED U/S 153C OF THE ACT IN ABSENCE OF INCRIMINATING MATERIAL HELD AS UNDER: 9. WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AN D PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WE LL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY APPLIE D OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES. IT IS APPARE NT FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS PRO CEEDED U/S 153C OF THE ACT. HOWEVER, WE MAY OBSERVE THAT WHILE DEA LING WITH ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 9 ASSESSEES GROUND ON THIS ISSUE IN PARA-7 OF HIS OR DER EXTRACTED HEREIN ABOVE, THE CIT(A) HAS RECORDED A FINDING OF FACT THAT WARRANTS WERE IN THE NAME OF THE ASSESSEE. HENCE, IF SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN PURSUANCE OF SUC H WARRANT, NOTICES U/S 153A OF THE ACT HAD TO BE MANDATORILY I SSUED TO THE ASSESSEE. IF THAT IS THE CONCLUSION OF THE CIT(A), THEN THE VERY EDIFICE OF THE ASSESSMENT ORDER U/S 153C OF THE ACT WOULD COLLAPSE, BECAUSE ONCE THE WARRANT IS IN THE NAME OF THE ASSE SSEE, THEN IT IS TO BE PRESUMED THAT SEARCH AND SEIZURE OPERATION U/ S 132 OF THE ACT WAS INITIATED IN CASE OF THE ASSESSEE AND AS A NATU RAL COROLLARY, ASSESSING OFFICER SHOULD HAVE PROCEEDED U/S 153A OF THE ACT AND NOT 153C OF THE ACT AS HAS BEEN DONE IN THE PRESENT CAS E. HENCE, IN THIS PREMISES ALONE, THE ASSESSMENT ORDER PASSED U/S 153 C OF THE ACT CANNOT SURVIVE. BE THAT AS IT MAY, IT IS VERY MUCH CLEAR FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS PRO CEEDED U/S 153C OF THE ACT PRIMARILY RELYING UPON TWO SEIZED MATERI ALS I.E. THE REGISTERED SALE DEED COPY DATED 14.11.2007 AND THE COMPUTATION OF INCOME IN THE HAND WRITING OF SRI GADIRAJU RAMAKRIS HNAM RAJU. SO FAR AS REGISTERED SALE DEED IS CONCERNED, IT CANNOT BE CONSIDERED TO BE AN INCRIMINATING MATERIAL BELONGING TO THE ASSES SEE. SIMILARLY, THE COMPUTATION OF INCOME IN THE HAND WRITING OF SR I GADIRAJU RAMAKRISHNAM RAJU ALSO CANNOT BE CONSIDERED INCRIMI NATING MATERIAL OR A DOCUMENT BELONGING TO THE ASSESSEE. ON THE OTHER HAND, IT SHOWS A CLEAR INTENTION OF THE ASSESSEE TO FILE HIS RETURN OF INCOME FOR WHICH TIME IS AVAILABLE U/S 139(4) OF TH E ACT AS ON DATE OF SEARCH. NO OTHER MATERIAL WHATSOEVER WAS RECOVE RED. IN THAT VIEW OF THE MATTER, THE CONDITION PRECEDENT FOR INI TIATION OF PROCEEDING U/S 153C OF THE ACT IS NOT SATISFIED. F OR SUCH CONCLUSION, WE DRAW SUPPORT FROM THE ORDER PASSED BY THE COORDI NATE BENCH IN THE CASE OF CIT VS. SRI RAMA EDUCATIONAL TRUST (SUP RA), WHEREIN THE COORDINATE BENCH HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS OF THE CASE AS WELL AS THE ORDERS OF THE AUTHORITIES BE LOW. WE HAVE ALSO EXAMINED THE DECISIONS RELIED UPON BY THE PARTIES. ADMITTEDLY, IN THE PRESENT CASE, THE AO HAS INITIATED PROCEEDINGS UNDE R SECTION 153C OF THE ACT. THEREFORE, IT IS CLEAR THAT THERE IS NO S EARCH ACTION IN THE CASE OF THE ASSESSEE. SECTION 153 C OF THE ACT READS AS UNDER: 153C(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTI ON 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151, AND SECTION 153, WHERE THE AO IS SATISFIED THAT ANY MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BEL ONGS OR BELONG TO A PERSON REFERRED TO IN SECTION 153A, THE N THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHA LL 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 ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 10 10. A PLAIN READING OF THE AFORESAID PROVISION MAKE S IT CLEAR THAT TWO CONDITIONS HAVE TO BE SATISFIED FOR INITIATING PROCEEDINGS UNDER SECTION 153C OF THE ACT. FIRSTLY, THE AO MUST BE S ATISFIED THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. SECONDLY, AFTER BEING SATISFIED THAT IT BELONGS TO A PERSON O THER THAN THE PERSONS TO WHOM SEIZED, HE SHALL HANDOVER THE SEIZED MATERI AL TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST SUCH OTHER PERSON BY ISSUING NOTICE FOR ASS ESSING OR REASSESSING FOR SUCH MATERIAL. THUS, THE PRIMARY C ONDITION FOR ASSUMPTION OF JURISDICTION UNDER SECTION 153C OF TH E ACT IS THE SEIZED MATERIALS MUST BELONG TO THE PERSON AGAINST WHOM PR OCEEDINGS UNDER SECTION 153C IS SOUGHT TO BE INITIATED. AS WOULD BE EVIDENT FROM THE ASSESSMENT ORDER, THE AO HAS REFERRED TO PAGES 31, 32 & 61 OF THE SEIZED DOCUMENT WITH IDENTIFICATION MARK TH/HNR/2. ON GOING THROUGH THE SAID SEIZED MATERIALS, COPIES OF WHICH ARE PLACED BEFORE US, IT IS TO BE NOTED THAT THE SEIZED MATERIALS AT PAGE 31 IS A RECEIPT OF M/S. HNR CONSTRUCTIONS ACKNOWLEDGING THE RECEIPT OF RS.1,50,000/- FROM ONE SHRI K. BANGARRAJU . SIMILARLY, PAGE 32 I S ALSO RELATING TO HNR CONSTRUCTIONS MENTIONING CERTAIN DISBURSEMENT S CHEDULE GIVEN BY SHRI R.KRISHNA MOHAN, LICENSED ENGINEER TOTALING TO RS.20 LAKHS. PAGE 61 ALSO MENTIONS CERTAIN FIGURES IN HANDWRITING . IN NONE OF THE DOCUMENTS, THERE IS ANY REFERENCE TO THE ASSESSEE. THEREFORE, IT CANNOT BE SAID THAT THESE DOCUMENTS BELONG TO THE A SSESSEE. IN THE REMAND REPORT, SUBMITTED BEFORE THE CIT(A), IN THE COURSE OF APPEAL PROCEEDINGS, THE AO HOWEVER HAS TAKEN A DIFFERENT ST AND BY STATING THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 15 3C AS PER THE NOTING IN THE APPRAISAL REPORT IS ON THE BASIS OF PAGE 64 OF THE SEIZED DOCUMENT WHICH IS A LETTER DATED 10.12.2004. PERUSA L OF THE SAID LETTER, COPY OF WHICH IS PLACED IN THE PB, WOULD REV EAL THAT IT IS NOTHING BUT A CERTIFICATE ISSUED BY THE CHAIRMAN OF THE MAN AGING TRUSTEE OF THE ASSESSEE TRUST CERTIFYING THE WORKS ENTRUSTED TO H.N.R. CONSTRUCTIONS. THEREFORE, ON PERUSAL OF THE AFORES AID DOCUMENTS, IT WOULD CLEARLY REVEAL THAT THE DOCUMENTS CONSIDERED BY THE AO FOR INITIATION OF PROCEEDINGS U/S.153C DO NOT BELONG TO THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, IN OUR VIEW PROCEEDINGS UNDER SECTION 153C OF THE ACT COULD NOT HAVE BEEN INITIATED BY TH E AO ONLY ON THE BASIS OF SO CALLED SEIZED DOCUMENTS AS REFERRED TO BY HIM WHICH, IN OUR VIEW, DO NOT BELONG TO THE ASSESSEE. AT THIS STAGE , IT WOULD BE WORTHWHILE TO LOOK INTO THE FINDING OF FACTS RECORDE D BY THE CIT(A) IN THIS REGARD, WHICH IS EXTRACTED HEREUNDER: 6. I HAVE CONSIDERED THESE ARGUMENTS AND ALS O PERUSED THE DOCUMENTS ON THE BASIS OF WHICH SATISFACTION IS SAID TO BE ARRIVED A T BY AO. PAGE NO.31 OF TH/HNR/2 IS A RECEIPT OF HNR CONSTRUCTIONS WHICH REFLECTS RECEIPT OF RS.1,50,000/- FROM SRI K.BANGRAJU VIDE A CHEQUE TOWARDS PLOT ADVANCE. PAGE NO.32 ALSO BELONG S TO HNR CONSTRUCTIONS WHICH SHOWS THE DISBURSEMENT SCHEDULE GIVEN BY LICENSED ENGINEER SRI K.KRISHNA PRASAD. THIS PE RTAINS TO HNR ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 11 CONSTRUCTIONS AND IT ALSO HAS NOTHING TO DO WITH THE ASSESSEE. THE ENTIRE PAYMENT SHOWN ON THE PAPER TOTAL-UP TO AROUN D RS.10 TO RS.12 LAKHS AND THERE IS NOTHING IN THIS PAPER TO S HOW THAT THIS BELONGS TO THE ASSESSEE TRUST OR HAS ANY CONNECTION WITH IT. PAG E 61 CONTAINS CERTAIN CALCULATIONS WHICH DO NOT SUGGEST THAT IT HAS ANYTHING TO DO WITH ASSESSEE TRUST. PAGE NO. 64 IS NO DOUBT A LETTER SIGNED BY THE CHAIRMAN AND MANAGING TRUSTEE OF SRI RAMA EDUCATIONAL TRUST. THE LETTER IS A CERTIFICATE ISSUED TO WHOM-S O-EVER IT MAY CONCERN, CERTIFYING THAT CERTAIN WORKS OF CO NSTRUCTION ARE ENTRUSTED TO M/S.HNR CONSTRUCTION, A PROPRIETORSHIP CONCERN OF SRI TANGI HARI NARAYANA. THIS THOUGH IS ON ASSESSEE'S LETTER HEAD IS A GENERAL CERTIFICATE WHICH IS ISSUED TO HNR CONSTRUC TION AND THERE IS NOTHING EITHER INCRIMINATING IN THIS DOCUMENT SUGGESTING ANY UNACCOUNTED TRANSACTIONS. THIS CERTIFICATE ONLY SAYS WHAT IS ALREADY DECLARED IN THE BOOKS OF ACCOUNTS OF ASSESS EE. IN MY OPINION IF 153C PROCEEDINGS CAN BE INITIATED BASED ON SUCH GENERAL LETTERS THAT WOULD BE STRETCHING THE LAW A BIT TOO FAR. IF THAT IS THE INTENTION OF THE LAW-MAKERS THEN 153C PROCEEDINGS CAN BE INITIATED AGAINST ALL ASSESSES WHOSE LETTER HEADS/VISITING CARDS ARE FOUN D DURING THE SEARCH. TO ILLUSTRATE THE MATTER, IF SOME PERSON IS SEARCHED AND DURING THE SEARCH PROCEEDINGS, IF BANK STATEMENTS, LIC POL ICY CERTIFICATES OR SHARE CERTIFICATES ETC ARE FOUND, IT DOES NOT MEAN THAT 153C PROCEEDINGS CAN BE INITIATED 'AGAINST THOSE BANKS/L IC/ COMPANIES TO WHICH THE SHARES BELONG. SIMILARLY FROM ANY PERSO N SEARCHED MANY PURCHASE BILLS WOULD BE FOUND. ALL THOSE BILLS WIL L BE ON LETTER HEADS OF THOSE CONCERNS AND WOULD BE SIGNED AND STAMPED. THIS WOULD NOT ENTAIL THE AO TO PROCEED AGAINST ALL SUCH CONCERNS U/S.153C, SI MPLY BECAUSE THESE ARE ALSO THE DOCUMENTS ON THE LETTER HEAD OF THOSE CONCERNS AND ARE SIGNED BY THE PERSONS THEREIN. THIS IN MY OPINION WOULD BE RIDICULOUS INTERPRETATION OF THE WORD 'ANY DOCUMENTS' AS FOUND IN SEC. 153C. THIS DEFINITELY DOES NOT SEEM T O BE THE INTENTION OF THE LAW-MAKERS IN DRAFTING THE SAID SECTION. 11. AS CAN BE SEEN FROM THE AFORESAID EXTRACTED POR TION OF THE ORDER OF THE CIT(A), THE CIT(A) AFTER EXAMINING THE SEIZED MATERIAL HAS GIVEN A CATEGORICAL FINDING THAT THE SO CALLED SEIZED MATERIALS BY NO STRETCH OF IMAGINATION COULD BE SAID TO BE BELON GING TO THE ASSESSEE. THIS FACTUAL FINDING OF THE CIT(A) REMAI NS UNCONTROVERTED. IN THE AFORESAID FACTUAL BACKGROUND, WE WILL NOW EXA MINE THE RATIO LAID DOWN IN VARIOUS DECISIONS OF HIGH COURTS AND D IFFERENT BENCHES OF THE TRIBUNAL. 12. IN THE CASE OF VIJAYBHAI N CHANDRANI (SUPRA), T HE HONBLE GUJARAT HIGH COURT HELD AS UNDER: 12. ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SS. 153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. SEC. 153A DEALS WITH PROCEDURE FOR ISSUANCE OF NOTICE AND ASSESSMENT OR REASSESSMENT IN CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER S. 132 OR BOOKS OF ACCOUNT, OTHER D OCUMENTS OR ASSETS ARE REQUISITIONED UNDER S. 132A AFTER THE 3 1ST DAY OF ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 12 MAY, 2003. SEC. 153B LAYS DOWN THE TIME- LIMIT FOR C OMPLETION OF ASSESSMENT UNDER S. 153A. SEC. 153C WHICH IS SIM ILARLY WORDED TO S. 158BD OF THE ACT, PROVIDES THAT WHERE TH E AO IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY _OR OT HER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS S EIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN S. 153A HE SHALL PROCEED AGAI NST 'EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTIC E AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS I N AS MUCH AS UNDER S. 153C NOTICE CAN BE ISSUED ONLY WHERE TH E MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER S. 158BD IF THE AO IS SA TISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S. 1 32 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER S. 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON UNDER S. 158BC. 13. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE U NDER S. 153C AND ASSESSING OR REASSESSING I NCOME OF SUCH OTHER PERSON, IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR RE QUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED, RESORT CANNOT BE HAD TO THE PROVISIONS O F S. 153C OF THE ACT. 14. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY SCHEME, IT IS AN ADMITTED POSIT ION AS EMERGING FROM THE RECORD OF THE CASE, THAT THE DOCU MENTS 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 IN AS M UCH 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 THE PETITIONER ALONG WI TH OTHER MEMBERS, HOWEVER, IT IS NOBODY'S CASE THAT THE SAID DOCUMENTS BELONG TO THE PETITIONER. IT IS NOT EVEN THE CASE OF REVENUE THAT THE SAID THREE DOCUMENTS ARE IN THE HA NDWRITING OF THE PETITIONER. IN THE CIRCUMSTANCES, WHEN THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE IS NOT FULFILLED A NY ACTION TAKEN UNDER S. 153C OF THE ACT STANDS VITIATED. 13. THE ITAT HYDERABAD BENCHES IN THE CASE OF M/S. SHOURI CONSTRUCTION (SUPRA), FOLLOWING THE AFORESAID DECISI ON OF HONBLE GUJARAT HIGH COURT HELD THAT UNLESS THERE IS MATERI AL BELONG TO THE ASSESSEE, INITIATION OF PROCEEDINGS UNDER SECTION 1 53C IS INVALID. 14. IN THE CASE OF DCIT VS. ASP SOFTWARE SOLUTIONS ( SUPRA), THE ITAT HYDERABAD, WHERE BOTH THE MEMBERS ARE PARTIES, IN PARA 29 OF ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 13 THE ORDER EXPRESSED THE VIEW THAT IF THE SEIZED DOCU MENTS DO NOT ESTABLISH ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME, PROVISIONS OF SECTION 153C CANNOT BE INVOKED. 15. THE OTHER DECISIONS RELIED UPON BY LD A.R. ALSO SUPPORT THE ABOVE VIEW. THEREFORE, CONSIDERING THE FACTS OF TH E ASSESSEES CASE IN THE LIGHT OF RATIO LAID DOWN IN THE AFORESAID DEC ISIONS, IT BECOMES CLEAR THAT THE SEIZED MATERIALS DO NOT BELONG TO TH E ASSESSEE. THAT BESIDES, THERE ARE NO INCRIMINATING MATERIALS INDIC ATING ANY UNDISCLOSED INCOME OF THE ASSESSEE, WHICH COULD HAV E ENABLED THE AO TO INVOKE THE PROVISIONS OF SECTION 153C OF THE ACT. THIS BECOMES FURTHER CLEAR FROM THE FACT THAT THE INCOME WERE DETERMINED FOR THE ASSESSMENT YEARS 2001-02, 2002-0 3 & 2003-04 ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN A PPROVED UNDER SECTION 10(23C) OF THE ACT. THE DETERMINATION OF I NCOME HAS ABSOLUTELY NO RELATION OR RELEVANCE TO THE SEIZED M ATERIALS. SO FAR AS THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE CONCER NED, PERUSAL OF THE ASSESSMENT ORDERS PASSED IN THOSE YEARS WOUL D REVEAL THE FACT THAT THE DETERMINATION OF INCOME IS ON THE BASIS OF THE IMPOUNDED MATERIALS AS A RESULT OF SURVEY AND NOT ON THE BASI S OF ANY SEIZED MATERIALS BELONGING TO THE ASSESSEE. IN THE AFORES AID CIRCUMSTANCES, THE PRE CONDITIONS FOR ASSUMING JURI SDICTION UNDER SECTION 153C ARE NOT SATISFIED. SO FAR AS THE DECI SIONS RELIED UPON BY LD D.R. IN SUPPORT OF HIS CONTENTION, AFTER CAREFUL LY APPLYING OUR MIND TO THE RATIO LAID DOWN THEREIN, WE OBSERVE THAT THE DECISIONS ARE DISTINGUISHABLE ON FACTS AND DO NOT APPLY TO THE FA CTS OF THE ASSESSEES CASE. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THE INITIATION OF PROCEEDINGS UNDER SECTION 153C TO BE AB INITIO VOID AND CONSEQUENTLY ANNULLING THE ASSESSMENTS FOR ALL THE AFORESAID ASSESSMENT YEARS. ACCORDINGLY, WE UPHOLD THE SAME B Y DISMISSING THE GROUNDS TAKEN BY THE DEPARTMENT. 10. THE ITAT DELHI BENCH IN CASE OF V.K. FISCAL SER VICES PVT. LTD. VS. DCIT IN ITA NOS.5460 TO 5465/DEL/2012 ON A CONS PECTUS OF DECISIONS OF DIFFERENT HIGH COURTS AS WELL AS DIFFE RENT BENCHES OF ITAT ALSO EXPRESSED THE VIEW THAT IN ABSENCE OF INC RIMINATING MATERIAL BELONGING TO ASSESSEE, PROCEEDING U/S 153C CANNOT BE INITIATED. HONBLE A.P. HIGH COURT IN A JUDGEMENT DATED 12.7.2003 IN ITA NO.266 OF 2013 IN CASE OF M/S. HYDERABAD HOU SE PVT. LTD. UPHELD THE DECISION OF THE ITAT HYDERABAD BENCH, WH EREIN IT IS HELD THAT COMPUTATION OF UNDISCLOSED INCOME U/S 153A/153 C OF THE ACT MUST BE IN REFERENCE TO THE INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 10. THE SAME VIEW WAS AGAIN REITERATED IN CASE OF S RI LALITHA CONSTRUCTIONS (SUPRA). THEREFORE, CONSIDERING THE FACT THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS ON THE BASIS OF THE ENTRIES MA DE IN THE BOOKS OF ACCOUNTS ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 14 AND INCOME DISCLOSED IN THE RETURN OF INCOME MUCH P RIOR TO SEARCH AND WHICH HAS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUN D AS A RESULT OF SEARCH AND SEIZURE OPERATION, WE ARE OF THE VIEW THAT THE PROC EEDING INITIATED U/S 153C OF THE ACT IS INVALID IN LAW. THE MATTER CAN ALSO BE LOOKED INTO FROM ANOTHER ANGLE. AS RIGHTLY BEEN STATED BY THE LD. A.R., ON THE DATE NOTICE WAS ISSUED U/S 153C OF THE ACT, THERE IS NO ASSESSMENT PROCEED ING PENDING BEFORE THE ASSESSING OFFICER FOR THE AFORESAID ASSESSMENT YEAR . THEREFORE, IN ABSENCE OF ANY INCRIMINATING MATERIAL SHOWING CONCEALED/UNDISC LOSED INCOME OF THE ASSESSEE, THE ASSESSING OFFICER COULD NOT HAVE PROC EEDED TO ASSESS INCOME WHICH HAS ALREADY BEEN REFLECTED IN THE BOOKS OF AC COUNTS AND DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. EVEN O THERWISE ALSO, CONCLUSION DRAWN BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER THAT THE AGRICULTURAL INCOME IS UNEXPLAINED ALSO FOUND TO BE NOT ON COGEN T MATERIAL, BECAUSE OF THE FACT THAT THE CIT(A) HAS ACCEPTED 50% OF THE IN COME SHOWN AS AGRICULTURAL INCOME AGAINST WHICH THE DEPARTMENT IS NOT IN APPEAL. FURTHER, IN THE REMAND REPORT, THE ASSESSING OFFICER HIMSELF HA S ACCEPTED THAT THE ASSESSEE HAS EARNED INCOME FROM COCONUT TREES AND C ASURINA PLANTATION WHICH CAN BE CONSIDERED AS AGRICULTURAL INCOME. IN AFORESAID VIEW OF THE MATTER, THE PROCEEDING INITIATED U/S 153C OF THE AC T IN ABSENCE OF ANY INCRIMINATING MATERIAL AND ONLY ON THE BASIS OF THE MATERIAL ALREADY DISCLOSED BY THE ASSESSEE IS INVALID AND CONSEQUENTLY THE ASS ESSMENT ORDERS PASSED ARE ALSO UNSUSTAINABLE IN LAW. ACCORDINGLY, WE QUASH A SSESSMENT ORDERS PASSED IN ALL THESE ASSESSMENT YEARS. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. ITA NO.303/VIZAG/2014: 12. FACTS IN THE PRESENT APPEAL OF THE ASSESSEE ARE IDENTICAL EXCEPT THE FACT THAT IN THE PRESENT CASE THE ASSESSMENT HAS BE EN MADE U/S 143(3) OF THE ACT. SINCE FACTS ARE IDENTICAL THERE IS NO NEED TO DISCUSS THEM OVER AGAIN IN THIS APPEAL. THE GRIEVANCE OF THE ASSESSEE IN THE PRESENT APPEAL IS RESTRICTED TO THE ADDITIONS SUSTAINED BY THE LD. CIT(A) AT 50% OUT OF THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER. IN OTHER WORDS, THE CIT(A) HAS ACCEPTED 50% ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 15 OF THE INCOME SHOWN AS AGRICULTURAL INCOME. IT IS T HE CONTENTION OF THE LD. A.R. THAT DURING THE PROCEEDING BEFORE CIT(A), THE ASSESSING OFFICER HAS SUBMITTED A REMAND REPORT, WHEREIN HE HAS ACCEPTED THE FACT THAT ASSESSEE HAS EARNED AGRICULTURAL INCOME FROM COCONUT TREES A ND CASURINA PLANTATION. FURTHER, HE HAS ALSO STATED THAT THE EXPENDITURE IN CURRED BY THE ASSESSEE TOWARDS INTEREST ON AGRICULTURAL LOANS CAN BE DEDUC TED FROM THE AGRICULTURAL INCOME. IT WAS THEREFORE CONTENTED THAT CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFICER HIMSELF, THE CIT(A) WAS NOT J USTIFIED IN SUSTAINING 50% OF THE ADDITION MADE BY THE ASSESSING OFFICER. ALT ERNATIVELY IT WAS SUBMITTED BY THE LD. A.R. THAT THE ADDITIONS SUSTAINED BEING ON THE HIGHER SIDE MAY BE REASONABLY SCALED DOWN. 13. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. ON A PERUSAL OF THE IMPUGNED ORDER OF THE CIT(A), IT IS SEEN THAT THOUGH HE HAS ACCEPTED THE FACT THAT THE ASSESSING OFFICER HAS NO T POINTED OUT ANY SPECIFIC DEFECT OR DISCREPANCY IN THE VROS REPORT BUT STILL THEN HE HAS RESTRICTED THE AGRICULTURAL INCOME TO 50% OF THE AMOUNT SHOWN BY T HE ASSESSEE. SO FAR AS THE ASSESSING OFFICERS OBSERVATION REGARDING EXPEN DITURE INCURRED TOWARDS INTEREST ON AGRICULTURAL LOAN IS CONCERNED, THE CIT (A) HAS TOTALLY IGNORED THAT FACT. IN THIS CONTEXT, IT WOULD BE BENEFICIAL TO RE FER TO THE REMAND REPORT OF THE ASSESSING OFFICER WHICH IS REPRODUCED HEREUNDER :- WITH REGARD TO NOT CONSIDERING THE INCOME FROM THE COCONUT GARDEN AS AGRICULTURAL INCOME, IT IS SUBMITTED THAT , AS PER THE REPORT OF SHRI K. CHINNA APPALA NAIDU, VRO, AND THE ENQUIR Y REPORT OF INSPECTOR OF INCOME TAX, THE LAND IS FOUND TO BE AG RICULTURAL LAND AND HENCE, THE INCOME DERIVED FROM COCONUT AND CASU RINA CAN BE CONSIDERED AS AGRICULTURAL INCOME. WITH REGARD TO THE ALTERNATE CLAIM PROPOSED BY THE ASSESSEE, IT IS SUBMITTED THAT, THE INTEREST CAN BE CONSIDERE D AS EXPENDITURE FOR COMPUTING THE AGRICULTURAL INCOME, SINCE THE IN TEREST IS PAID ON AGRICULTURAL LOANS OBTAINED FROM BANKS. THEREFORE, THE ASSESSEES CLAIM CAN BE ACCEPTED. 14. IT IS ALSO EVIDENT FROM THE ORDER OF THE CIT(A) THAT HE HAS GIVEN NO REASON WHY HE CONSIDERED IT REASONABLE TO ACCEPT 50 % OF THE INCOME SHOWN BY THE ASSESSEE AS AGRICULTURAL INCOME. THEREFORE, CONSIDERING THE COMMENTS OF THE ASSESSING OFFICER IN THE REMAND REPORT AND P OSSIBILITY OF INFLATION OF ITA NOS.299 TO 302/VIZAG/2014 AVINASH ESTATES & RES ORTS LTD., VSKP 16 AGRICULTURAL INCOME TO CERTAIN EXTENT AS WELL AS OT HER FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT DISALLOWANCE OF 25% OUT OF THE INCOME SHOWN BY THE ASSESSEE AS AGRICULTURAL INCOME WOULD SERVE THE END S OF JUSTICE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DISALLOW 25% OUT OF THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YE AR. 15. IN THE RESULT, THE ITA NOS.299 TO 302/VIZAG/2014 ARE ALLOWED AND ITA NO.303/VIZAG/2014 IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON 4 TH JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 4 TH JULY, 2014 COPY TO 1 M/S. AVNASH ESTATES & RESORTS LTD., D.NO.11-8-34, DASAPALLA HILLS, VISAKHAPATNAM. 2 THE CIT (CENTRAL), HYDERABAD 3 THE DCIT, CENTRAL CIRCLE-2, VISAKHAPATNAM 4 THE CIT(A), VISAKHPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM