A.T.Rayudu (HUF), Visakhapatnam V. THE ACIT, Visakhapatnam

ITA 326/VIZ/2014

• Counselvise Citation: 32625314 RSA 2014
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Document seized; Share purchase agreement; Validity of assessment; Documents seized
• Section: 143(3); 153A; 68; 132; 15

Judgement Text

ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.325 TO 331/VIZAG/2014 ASSESSMENT YEAR S : 2004 - 05 TO 2008 - 0 9 RESPECTIVELY A.T. RAYUDU (HUF) VISAKHAPATNAM VS. ACIT CENTRAL CIRCLE-2 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AADHA 7450H ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 10.07.2014 DATE OF PRONOUNCEMENT : 10.07.2014 ORDER PER BENCH:- THESE ARE BUNCH OF SEVEN APPEALS BY THE ASSESSEE A GAINST A COMMON ORDER DATED 25.4.2014 OF THE CIT(A), VISAKHAPATNAM PERTAINING TO THE ASSESSMENT YEARS 2004-05 TO 2008-09. 2. GROUNDS RAISED IN ITA NOS.325 TO 330/VIZAG/2014 BEING COMMON, WE WILL DEAL WITH THESE APPEALS AT FIRST. THE GROUNDS RAISED ARE AS UNDER: 1. THE LD. CIT(A) OUGHT TO HAVE QUASHED THE ASSESS MENT PROCEEDINGS AS VOID-AB-INITIO AS THE NOTICE ISSUED U/S 153A BY THE ASSESSING OFFICER WAS INVALID IN THE ABSENCE OF ANY SEARCH PROCEEDINGS CONDUCTED IN THE CASE OF THE APPELLANT U/S 132 OF T HE ACT. 2. A) WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A ) ERRED IN UPHOLDING THE VALIDITY OF ASSESSMENT BY CONSIDERING THE NOTIC E AS ONE ISSUED U/S 153C OF THE ACT IN AS MUCH AS NO SUCH NOTICE COULD HAVE BEEN ISSUED IN THE ABSENCE OF ANY SUCH DOCUMENTS THAT CAN WARRA NT ISSUE OF A NOTICE U/S 153C OF THE ACT. B) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT NO TICE U/S 153C ISSUED WITHOUT RECORDING SATISFACTION IS INVALID. 3. WITHOUT PREJUDICE TO GROUNDS NOS.2 AND 3, THE AD DITIONS MADE BY THE ASSESSING OFFICER ARE OUTSIDE THE SCOPE OF AN A SSESSMENT U/S 153C OF THE ACT. ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 2 4. ON MERITS, THE APPELLANT SUBMITS THAT THE LD. CI T(A) IS NOT JUSTIFIED IN PARTLY SUSTAINING THE ADDITION MADE BY THE ASSES SING OFFICER U/S 68 OF THE ACT TOWARDS ALLEGED UNEXPLAINED AGRICULTURAL INCOME. 3. SINCE FACTS ARE IDENTICAL IN ALL THESE APPEALS, FOR SAKE OF CONVENIENCE WE WILL DEAL WITH THE FACTS IN ITA NO.325/VIZAG/201 4. 4. ASSESSEE IS AN HUF. IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.7.2002 ADMITTING T OTAL INCOME OF RS.1,80,000/- BESIDES AGRICULTURAL INCOME OF RS.1,8 0,000/-. AS A CONSEQUENCE OF SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT IN CASE OF SHRI A.T. RAYUDU (INDIVIDUAL) ON 4.12.2007, THE ASS ESSING OFFICER ISSUED A NOTICE U/S 153A OF THE ACT ON 15.12.2008 CALLING UP ON THE ASSESSEE TO FILE ITS RETURN OF INCOME. IN RESPONSE TO THE SAID NOTICE, T HE ASSESSEE WROTE A LETTER TO THE ASSESSING OFFICER STATING THEREIN THAT RETUR N OF INCOME FILED ORIGINALLY ON 31.7.2002 MAY BE CONSIDERED AS RETURN IN RESPONSE T O THE NOTICE U/S 153A OF THE ACT. IN COURSE OF THE ASSESSMENT PROCEEDING, TH E ASSESSING OFFICER WHILE EXAMINING THE AUTHENTICITY OF AGRICULTURAL INCOME C ONDUCTED ENQUIRY THROUGH HIS INSPECTOR AND ON THE BASIS OF SUCH ENQUIRY AND FOLLOWING THE DECISION TAKEN BY HIM IN THE ASSESSMENT ORDER PASSED IN CASE OF M/S. AVINASH ESTATES AND RESORTS PVT. LTD. HELD THAT THE ASSESSEES CLAI M OF AGRICULTURAL INCOME CANNOT BE ACCEPTED AND ACCORDINGLY TREATED THE AMOU NT CLAIMED TOWARDS AGRICULTURAL INCOME AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 5. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(A) CHALLENGING THE VALIDITY OF THE PROCEEDI NG U/S 153A OF THE ACT AS WELL AS ON THE MERITS OF THE ADDITION. THE CIT(A) WHILE UPHOLDING THE VALIDITY OF THE PROCEEDING INITIATED U/S 153A OF THE ACT GRA NTED PARTIAL RELIEF WITH REGARD TO THE CLAIM OF AGRICULTURAL INCOME. 6. THE LD. A.R. SUBMITTED BEFORE US THAT THERE IS N O SEARCH IN CASE OF THE ASSESSEE. HENCE, THE ASSUMPTION OF JURISDICTION U/ S 153A OF THE ACT IS INVALID IN LAW. ALTERNATIVELY, THE LD. A.R. SUBMITTED THAT EVEN ASSUMING THAT THE ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 3 ASSESSMENT IS PURPORTED TO BE UNDER SECTION 143 R.W .S. 153C OF THE ACT BUT STILL THEN IN ABSENCE OF INCRIMINATING MATERIAL, TH E INITIATION OF PROCEEDING U/S 153C OF THE ACT IS ALSO INVALID AND CONSEQUENTLY TH E ASSESSMENT ORDER PASSED CANNOT BE SUSTAINED. SO FAR AS THE MERITS OF THE A DDITION IS CONCERNED, THE LD. A.R. SUBMITTED THAT SINCE THE CIT(A) ACCEPTS TH E FACT THAT THE ASSESSEE HAS EARNED AGRICULTURAL INCOME, HE WAS NOT JUSTIFIE D IN REDUCING IT TO CONSIDERABLE EXTENT WITHOUT ANY BASIS. 7. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORD ER OF THE CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. UNDISPUTEDLY THE ASSESSING OF FICER HAS NOT ONLY INITIATED PROCEEDING BY ISSUING NOTICE U/S 153 OF THE ACT BUT THE ASSESSMENT HAS ALSO BEEN COMPLETED U/S 143(3) OF THE ACT R.W.S. 153A OF THE ACT. IT IS ALSO AN UNDISPUTED FACT THAT THERE IS NO SEARCH WARRANT AND SEIZURE OPERATION IN CASE OF THE ASSESSEE. IN THE AFORESAID VIEW OF THE MATT ER THE ASSESSING OFFICER COULD NOT HAVE PROCEEDED U/S 153A OF THE ACT. WHEN THE STATUTE MANDATES TO DO A PARTICULAR ACT IN A PARTICULAR MANNER IT HA S TO BE DONE IN THAT MANNER ONLY. IT IS SEEN THAT THE CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER PURPORTED TO PAS THE ORDER U/S 153C OF THE ACT. HO WEVER, THERE IS NO SCOPE FOR SUCH PRESUMPTION AS THE FACTS AND MATERIALS ON RECORD CLEARLY SHOW THAT THE ASSESSING OFFICER HAS NOT ONLY ISSUED NOTICE U/ S 153A OF THE ACT BUT HAS ALSO ULTIMATELY COMPLETED THE ASSESSMENT U/S 143 R. W.S. 153A OF THE ACT. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SR I LALITHA CONSTRUCTIONS VS. ACIT 162 TO 164/VIZAG/2013 DATED 13.12.2013 WHILE C ONSIDERING THE ISSUE OF INITIATION OF PROCEEDING U/S 153A OF THE ACT IN CAS E OF AN ASSESSEE WHO IS NOT SUBJECT TO SEARCH AND SEIZURE OPERATION HELD AS UND ER: 9. IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT 137 ITD 287 (MUM) (SB). THE SPECIAL BENCH OF THE ITAT HAS HELD THAT PROVISIONS OF SECTION 153A COMING TO OPERATION IF S EARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. THE SPEC IAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, AO RETAIN S THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION U/S 153A IN WH ICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED, THE AO CAN MAKE ADDITI ON IN THE ASSESSMENT, EVEN IF ANY INCRIMINATING MATERIAL HAS BEEN FOUND BUT ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 4 IN OTHER CASES, SPECIAL BENCH HELD THAT ASSESSMENT HELD U/S 153A CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATE RIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOU NTS AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH, BUT NOT PR ODUCED IN THE COURSE OF ORIGINAL ASSESSMENT OR UNDISCLOSED INCOM E OR PROPERTY DISCLOSED DURING THE SEARCH. IN THE PRESENT CASE T HE ASSESSMENTS HAVING BEEN COMPLETED U/S 143(3) OF THE ACT BEFORE THE DATE OF SEARCH AND AS THERE WAS NO ASSESSMENT PENDING IN TH IS CASE, ACCORDINGLY THERE CANNOT BE ANY RE-ASSESSMENT ON TH E ISSUE OF ESTIMATION OF INCOME, AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. IN THE CASE OF ASP SOFTWARE SOL UTIONS PVT. LTD. 84 DTR (HYD)(TRIB.) 35 THE COORDINATE BENCH AT HYDE RABAD TRIBUNAL HAS EXAMINED THE ISSUANCE OF NOTICE U/S 153A OF THE ACT OR 153C OF THE ACT AND CONSIDERED AS UNDER: COMING TO THE OTHER CONTENTIONS ABOUT THE JURISDICTION FOR INITIATION OF PROCEEDINGS UNDER S. 153C, THESE ISSUES HAVE BECOME ACADEMIC IN NATURE. HOWEV ER, AS SEEN FROM THE ADDITIONAL GROUNDS RAISED, AND PAP ER BOOK FILED, THE ASSESSING OFFICER HAS ISSUED A NOTICE UN DER S.153A WHEN THE ASSESSEE IS NOT A SEARCHED PARTY. REVENUE DID NOT BRING OUT ANYTHING ON RECORD TO SUB MIT THAT THE NOTICE UNDER S.153C HAS BEEN ISSUED. AS S EEN FROM THE NOTICE ITSELF, THIS NOTICE WAS ISSUED/TYPE D AS A NOTICE UNDER S.153C. THIS WAS CORRECTED BY WAY OF INK TO BE THAT OF 153A. THE LEARNED DEPARTMENTAL REPRESEN TATIVE WAS SPECIFICALLY ASKED TO ENQUIRE AND PLACE ON RECO RD, WHETHER THE NOTICE WAS ISSUED UNDER S. 153A OR UNDE R S.153C. HOWEVER, NO INFORMATION WAS PLACED ON RECO RD. AS SEEN FROM THE ORDER PLACED ON RECORD, THERE IS NO F INDING BY THE ASSESSING OFFICER WHO COMPLETED THE SEARCH ASSESSMENT, THAT THESE DOCUMENTS PERTAINED TO THE ASSESSEE. NOR THERE IS ANYTHING IN THE PROCEEDINGS INITIATED THAT THESE ARE REQUIRED TO BE CONSIDERED IN THE CASE OF THE ASSESSEE. THEREFORE, ON THE PRELIMINAR Y ISSUE OF JURISDICTION ITSELF, AS THE ASSESSEE IS NOT A SE ARCHED PARTY, NOTICE UNDER S.153A CANNOT BE ISSUED, AND TH E ASSESSEE HAVING BEEN ISSUED A NOTICE UNDER S.153A, PROCEEDINGS UNDER S.153C CANNOT BE COMPLETED. 10. RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT ASSESSING OFFICER HAVING ISSUED A NOTICE U/S 153A OF THE ACT , COULD NOT HAVE COMPLETED PROCEEDINGS WHICH ARE SUPPOSED TO BE DONE U/S 153C OF THE ACT IF THERE IS ANY INCRIMINATING MATERIAL AND ACCORDINGLY, THE PROCEEDINGS ITSELF BECOME BAD IN LAW. IN VIEW OF T HE ABOVE, WE HAVE NO HESITATION IN SETTING ASIDE THE ORDERS PASS ED BY THE AUTHORITIES IN ITA NOS.162, 163 & 164 IN THE CASE O F SRI LALITA CONSTRUCTIONS.. SINCE WE HAVE CONSIDERED THE ISSUE ON JURISDICTION OTHER CONTENTIONS OF ASSESSMENT ON MERITS OF ADDITI ON MADE ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 5 BECOMES ACADEMIC. ACCORDINGLY, THE GROUNDS ARE CON SIDERED ACADEMIC. 9. THERE BEING NO DISPUTE TO THE FACT THAT THE PROC EEDING HAS BEEN INITIATED U/S 153A OF THE ACT AND ASSESSMENT HAS BE EN COMPLETED U/S 143 R.W.S. 153A OF THE ACT IN CASE OF THE ASSESSEE AGAI NST WHOM THERE IS NO SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, WE HOLD THAT THE ASSESSMENT ORDER IS INVALID. EVEN ASSUMING AS THE FINDING OF THE CIT(A) THAT THE ASSESSMENT WAS PURPORTED TO HAVE BEEN MADE U/S 153C OF THE ACT TO BE CORRECT, WE ARE OF THE VIEW THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL EVEN THE INITIATION OF PROCEEDING U/S 153C OF THE ACT IS NOT POSSIBLE. AS CAN BE SEEN FROM ASSESSMENT ORDER, THE ASSESSING OFFICER H AS NOT REFERRED TO ANY INCRIMINATING MATERIAL. ON THE CONTRARY, HE HAS AC CEPTED THE INCOME RETURNED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME EX CEPT THE AGRICULTURAL INCOME WHICH HAS BEEN TREATED AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. NO OTHER ADDITION HAS SEEN MADE BY THE AO WITH REFEREN CE TO ANY SEIZED MATERIAL. FROM THE AFORESAID FACT, IT IS PATENT AN D OBVIOUS THAT THERE IS NO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH WHICH COULD HAVE ENABLED THE ASSESSING OFFICER TO INITIATE PROCEEDING U/S 15 3C OF THE ACT. FURTHER, THE ASSESSING OFFICER HAS TREATED THE AGRICULTURAL INCO ME AS UNEXPLAINED CREDIT U/S 68 BY FOLLOWING HIS DECISION IN CASE OF M/S. AVINAS H ESTATES AND RESORTS PVT. LTD. IT IS WORTH MENTIONING HERE THAT WHILE CONSIDE RING THE APPEAL OF AVINASH ESTATES AND RESORTS LTD. IN ITA NOS.299 TO 302/VIZA G/2014, THE TRIBUNAL HAS HELD AS UNDER: 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 6 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. 7. 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 INTERP RETED 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 7 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 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. 8. 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 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 8 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.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 9 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 10 LICENSED ENGINEER SRI K.KRISHNA PRASAD. THIS PE RTAINS TO HNR 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 11 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 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 ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 12 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 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. ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 13 9. THE SAME VIEW WAS AGAIN REITERATED IN CASE OF SR I 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 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. 10. FOLLOWING THE AFORESAID VIEW EXPRESSED BY THE C OORDINATE BENCH OF THIS TRIBUNAL, WE HOLD THAT THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE ARE INVALID IN LAW. THEREFORE, WE QUASH THE SAME. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ITA NO.331/VIZAG/2014: 12. AS ALREADY STATED HEREIN BEFORE, THE ASSESSEE H AS DECLARED AGRICULTURAL INCOME FOR ALL THE ASSESSMENT YEARS. WHILE COMPLET ING ASSESSMENT U/S 143(3) OF THE ACT THE ASSESSING OFFICER REJECTED AS SESSEES CLAIM OF AGRICULTURAL INCOME AND TREATED IT AS UNEXPLAINED C REDIT U/S 68 OF THE ACT. THE CIT(A) ALLOWING PARTIAL RELIEF MODIFIED THE ADD ITION MADE BY THE ASSESSING OFFICER. WHILE CONSIDERING IDENTICAL NATURE OF DIS PUTE IN CASE OF M/S. AVINASH ITA NOS.325 TO 331/VIZAG/2014A.T. RAYUDU (HUF), VSK P 14 ESTATES AND RESORTS LTD. VS. DCIT IN ITA NOS.299 TO 302/VIZAG/2014 AND OTHER GROUP COMPANIES, THIS BENCH HAS DIRECTED THE ASSESSING OFFICER TO DISALLOW 25% OUT OF THE AGRICULTURAL INCOME DECLARE D BY THE ASSESSEE. RESPECTFULLY, FOLLOWING THE SAME, THE PRESENT CASE ALSO WE DIRECT THE AO TO DISALLOW 25% OUT OF THE AGRICULTURAL INCOME DECLARE D BY THE ASSESSEE. 13. IN THE RESULT, APPEALS OF THE ASSESSEE IN ITA N OS. 325 TO 330/VIZAG/2014 ARE ALLOWED AND ITA NO.331/VIZAG/2014 IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 10 TH JULY, 2014 COPY TO 1 M/S. A.T. RAYUDU (HUF), D.NO.11-8-34, DASAPALLA H ILLS, 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