Chekuri Venkata Ranga Raju, Bhimavaram V. THE DCIT, CENTRAL CIRCLE, Rajahmundry

ITA 412/VIZ/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80192 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Search and seizure; Reasonable cause; Assessment record; Commercial expediency
• Section: 143(3); 153A; 263

Judgement Text

ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.30 & 410/VIZAG/2012 ASSESSMENT YEARS : 2009-10 & 2004-05 RESPECTIVELY CHEKURI VENKATA RANGA RAJU BHIMAVARAM VS. ACIT CENTRAL CIRCLE RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.ACKPR 0677G ITA NOS.412 TO 416/VIZAG/2013 ASSESSMENT YEARS : 2003-04 TO 2007-08 RESPECTIVELY CHEKURI VENKATA RANGA RAJU BHIMAVARAM VS. DCIT CENTRAL CIRCLE RAJAHMUNDRY (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 09.07.2014 DATE OF PRONOUNCEMENT : 21.07.2014 ORDER PER BENCH:- THESE SEVEN APPEALS ARE BY THE ASSESSEE. WHILE IT A NO.30/VIZAG/2012 AND 410/VIZAG/2012 ARE AGAINST SEP ARATE ORDERS OF CIT(A) PERTAINING TO ASSESSMENT YEARS 2009-10 AND 2004-05, ITA NOS.412 TO 416/VIZAG/2013 ARE AGAINST THE ORDER PASSED U/S 263 OF THE ACT BY THE CIT PERTAINING TO ASSESSMENT YEARS 2003-04 TO 2007-08. ITA 30/VIZAG/2012: 2. THE SOLE ISSUE IN THE PRESENT APPEAL IS IN RESPE CT OF ADDITION OF RS.5,86,950/- SUSTAINED BY THE CIT(A) OUT OF THE TO TAL ADDITION OF RS.28,49,360/- MADE BY THE AO TOWARDS UNEXPLAINED I NVESTMENT IN JEWELLERY U/S 69A OF THE INCOME-TAX ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL DERIVING INCOME FROM FISH TANKS AND OTHER SOURCES. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 2 IN CASE OF THE ASSESSEE AS WELL AS OTHERS IN THE SA ME GROUP ON 19.2.2009. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.9.2009 DECLARING INCOME OF RS.98,36,44 0/- IN ADDITION TO AGRICULTURAL INCOME OF RS.6 LAKHS. IN COURSE OF THE SCRUTINY ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT DURI NG THE SEARCH AND SEIZURE OPERATION IN ASSESSEES RESIDENCE, GOLD JEWELLERY A ND SILVER ARTICLES WEIGHING 3612 GMS. AND 5055 GMS. RESPECTIVELY WERE FOUND. T HE APPROVED VALUER HAD VALUED THE GOLD JEWELLERY AT RS.44,21,050/- AND SILVER ARTICLES AT RS.95,700/-. ON EXAMINING THE RETURN FILED BY ASS ESSEES WIFE V. SUBBA LAKSHMI, IT WAS NOTICED BY THE ASSESSING OFFICER TH AT ON THE DATE OF SEARCH, THE DRAWINGS TOWARDS PURCHASE OF GOLD WORTH RS.3,40 ,000/- WAS VERIFIABLE FOR ASSESSMENT YEARS 2007-08 AND 2008-09 WHICH CORRESPO ND TO 300 GMS. IN WEIGHT. SO FAR AS THE BALANCE GOLD AND SILVER ARTI CLES ARE CONCERNED, IT WAS STATED BY THE ASSESSEE THAT ON THE DATE OF SEARCH, THESE WERE NOT REFLECTED IN THEIR BALANCE SHEET OR CAPITAL ACCOUNT AS THEY WERE MADE OUT OF CONVERSION OF ANCESTRAL GOLD. THE ASSESSING OFFICER DISBELIEVING THE CLAIM OF THE ASSESSEE PROPOSED TO ADD THE VALUE OF BALANCE GOLD AND SILVE R FOUND AMOUNTING TO RS.41,76,750/- AS UNEXPLAINED INVESTMENT. OBJECTIN G TO THE PROPOSED ADDITION, THE ASSESSEE STATED THAT A MAJOR PART OF THE DISCREPANCY IS EASILY EXPLAINABLE IN VIEW OF THE BOARDS INSTRUCTION NO.1 916 DATED 11.5.1994. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT SUCH CONTE NTION OF THE ASSESSEE AND TREATED THE GOLD JEWELLERY WEIGHING 2860 GMS. VALUE AT RS.36,26,045/- AND SILVER ARTICLES WEIGHING 2555 GMS. AS UNEXPLAINED I NVESTMENT OF THE ASSESSEE, WHICH WAS VALUED AT RS.36,26,045/-. AFTER REDUCING THE AMOUNT ALREADY ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME TO THE TUNE OF RS.7,76,685/- THE BALANCE AMOUNT OF RS.28,49,360/- WAS TREATED AS UNEXPLAINED INVESTMENT U/S 69A OF THE ACT AND ADDED TO THE INCOME OF THE A SSESSEE. 4. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER WAS NOT JUSTIFI ED IN TREATING THE ENTIRE GOLD JEWELLERY TO BE UNEXPLAINED. THE ASSESSEE RELYING UPON THE CBDT CIRCULAR NO.419 DATED 31.5.1985 AND INSTRUCTION NO. 1916 DAT ED 11.5.1994 STATED THAT ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 3 AS PER THE CIRCULAR THE GOLD JEWELLERY FOUND AT THE TIME OF SEARCH IS REASONABLE AMOUNT TO BE EXPECTED IN CASE OF MARRIED WOMAN AND OTHERS. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTIALLY ACCEPTED THE CONTENTION OF THE ASSESSEE BY HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO IGNORE THE EXISTENCE OF GOLD J EWELLERY IN POSSESSION OF THE FAMILY MEMBERS CONSIDERING THE ECONOMIC STATUS ENJO YED BY THE ASSESSEE IN THE SOCIETY. HE FURTHER HELD THAT CONSIDERING THE INCOME DERIVED FROM AGRICULTURAL LAND AND BUSINESS INCOME BY THE ASSESS EE OVER THE YEARS IT WILL NOT BE UNCOMMON TO HOLD GOLD AND SILVER JEWELLERY W HICH IS CUSTOMARY IN NATURE. CONSIDERING THE ABOVE ASPECTS, THE CIT(A) HELD THAT OUT OF THE TOTAL GOLD JEWELLERY FOUND DURING THE COURSE OF SEARCH WE IGHING 3049 GMS. CREDIT WHICH COULD BE GIVEN TO THE ASSESSEE WOULD BE 2050 GMS. THEREBY TREATING THE BALANCE 999 GMS. AS AN UNEXPLAINED INVESTMENT I N JEWELLERY BY THE ASSESSEE. THE CIT(A) VALUING SUCH JEWELLERY AT RS. 1365 PER GM. WORKED OUT THE TOTAL VALUE AT RS.13,63,635/-. SINCE THE ASSES SEE HAD DISCLOSED RS.7,76,685/- THE UNEXPLAINED INVESTMENT WAS DETERM INED AT RS.5,86,950/-. 5. CONTESTING THE ADDITION SUSTAINED BY THE CIT(A), THE LD. A.R. SUBMITTED THAT THE CIT(A) HAS WORKED OUT THE UNEXPL AINED GOLD JEWELLERY AT 999 GMS. WRONGLY. IT WAS SUBMITTED THAT THE CORRE CT EXCESS QUANTITY IS 569 GMS. IT WAS EXPLAINED THAT OUT OF THE DIFFERENCE OF 430 GMS, 400 GMS. IS THE DIFFERENCE ON ACCOUNT OF SHORT CREDIT GIVEN BY THE CIT(A) IN RESPECT OF TWO DAUGHTERS AND MOTHER OF THE ASSESSEE. THE ASSESSEE ALSO CLAIMED CREDIT OF 200 GMS. PER DAUGHTER, WHEREAS THE CIT(A) ALLOWED O NLY 100GMS. CREDIT PER DAUGHTER. SIMILARLY, WHILE THE ASSESSEE CLAIMED 50 0GMS. IN RESPECT OF HIS MOTHER BUT THE CIT(A) ALLOWED ONLY 300 GMS. THUS T HE DIFFERENCE WAS 500 GMS. AND CALCULATED @ RS.1365/- PER GM. THE UNEXPL AINED INVESTMENT WOULD WORK OUT TO RS.5,46,000/-. REFERRING TO THE BOARD S INSTRUCTION NO.1916, THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS ENTITLED FO R CREDIT OF 500 GMS. IN RESPECT OF A MARRIED LADY AND 250 GMS. FOR UNMARRIE D LADY. HENCE, CONSIDERED IN THE AFORESAID PERSPECTIVE, THERE IS N O SCOPE FOR ADDITION TOWARDS UNEXPLAINED INVESTMENT U/S 69A OF THE ACT. THE LD. AR ALSO PLACED ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 4 RELIANCE UPON A DECISION OF THE HONBLE GUJARAT HIG H COURT IN CASE OF CIT VS. RATANLAL VYAPARILAL JAIN, 339 ITR 351. 6. THE LD. D.R. REFERRING TO PARA-5 OF THE CIT(A)S ORDER SUBMITTED THAT SINCE THE CIT(A) AFTER CONSIDERING SUBMISSIONS OF T HE ASSESSEE HAS GRANTED REASONABLE RELIEF, THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS OF THE REVENU E AUTHORITY. THE DISPUTE IN PRESENT CASE IS CONFINED TO ADDITION OF RS.5,86,950 /- AS UNEXPLAINED INVESTMENT IN JEWELLERY. AS CAN BE SEEN, IN COURSE OF THE PROCEEDING BEFORE CIT(A), ASSESSEE HAS WORKED OUT THE VALUE OF THE G OLD JEWELLERY AS UNDER: TOTAL GOLD ORNAMENTS FOUND DURING SEARCH 3049.00 ALLOWABLE GOLD AS PER C.B.D.T. INSTRUCTIONS APPELLANTS FAMILY MEMBERS - CH.V. RANGA RAJU (APPELLANT) - SMT. CH.V. SUBBA LAKSHMI (WIFE) - CH. GAYATRI DEVI (DAUGHTER) - CH. SUSHIMITA (DAUGHTER) - CH. TYAGA RAJU (SON) - SMT. CH.V. SUBBAMMA (MOTHER) 100 GRAMS 500 GRAMS 250 GRAMS 250 GRAMS 100 GRAMS 500 GRAMS ------------ 1700.00 ------------- 1349.00 GOLD COINS PURCHASES RECORDED IN APPELLANTS BOOKS OF ACCOUNT 380.00 ------------- 969.00 GOLD COINS PURCHASES RECORDED IN APPELLANTS WIFE BOOKS 400.00 ------------- EXCESS GOLD IN CASE OF APPELLANTS STATUS AND ANCESTRAL NATURE NOT CONSIDERED 569.00 ------------- THE VALUE OF EXCESS GOLD AT PRESENT RATE RS.7,76,685 8. WHEREAS THE CIT(A) HAS CONSIDERED JEWELLERY IN R ESPECT OF EACH MEMBER OF THE FAMILY AS UNDER: ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 5 1. CH. V. RANGA RAJU (APPELLANT 100 GRAMS 2. SMT. CH.V. SUBBA LAKSHMI (WIFE) 500 GRAMS 3. CH. GAYATRI DEVI (DAUGHTER) 150 GRAMS 4. CH. SUSHIMITA (DAUGHTER) 150 GRAMS 5. CH. TYAGA RAJU (SON) 100 GRAMS 6. SMT. CH. V. SUBBAMMA (MOTHER) 300 GRAMS TOTAL WEIGHTAGE 1300 GRAMS 9. IT IS THE CONTENTION OF THE ASSESSEE THAT AS PER BOARDS INSTRUCTION NO.1916, THE ASSESSEE WILL BE ENTITLED FOR CREDIT O F 500GMS. IN RESPECT OF MARRIED LADY AND 250 GMS. FOR UNMARRIED LADY. AFTE R GOING THROUGH THE BOARDS INSTRUCTION NO.1916, A COPY OF WHICH IS PLA CED BEFORE US BY THE LD. A.R., WE ARE OF THE VIEW THAT THOUGH THE AFORESAID CIRCULAR IS IN THE CONTEXT OF SEIZURE OF GOLD JEWELLERY BUT THE SAME CAN ALSO BE APPLIED WHILE CONSIDERING THE UNEXPLAINED INVESTMENT IN GOLD JEWELLERY BY THE ASSESSEE. IN THE AFORESAID INSTRUCTION 1916 DATED 11.5.1994, IT IS C LEARLY MENTIONED THAT IN CASE OF MARRIED LADY 500 GMS. AND IN CASE OF UNMARR IED LADY 250 GMS CAN BE GIVEN CREDIT. THE HONBLE GUJARAT HIGH COURT IN CA SE OF CIT VS. RATANLAL VYAPARILAL JAIN (SUPRA) TAKING NOTE OF BOARDS INST RUCTION NO.1916 HAS ALSO EXPRESSED SIMILAR VIEW BY HOLDING THAT THOUGH THE C IRCULAR HAS BEEN ISSUED FOR THE PURPOSE OF LAYING DOWN GUIDELINES FOR SEIZURE O F JEWELLERY BUT IT CAN ALSO BE CONSIDERED FOR THE PURPOSE OF EXPLAINING THE SOU RCE OF JEWELLERY IN TERMS WITH THE GUIDELINES LAID DOWN IN THE SAID INSTRUCTI ON. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES AND IN THE LIGHT OF THE BOARDS INSTRUCTION NO.1916 DATED 11.5.1994 AND DECISION OF HONBLE GUJ ARAT HIGH COURT WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE UNEXPL AINED INVESTMENT, IF ANY, AFTER GIVING CREDIT FOR GOLD JEWELLERY AS PER CLAUS E (III) OF BOARDS INSTRUCTION NO.1916 DATED 11.5.1994. ACCORDINGLY, ASSESSEES A PPEAL IS CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. ITA 410/VIZAG/2012: 10. THERE IS A DELAY OF 247 DAYS IN FILING THE PRES ENT APPEAL. THE ASSESSEE HAS FILED A DELAY CONDONATION PETITION BEING SUPPOR TED BY AFFIDAVIT PRAYING FOR CONDONATION OF DELAY. IN THE DELAY CONDONATION PETI TION IT IS STATED THAT DUE TO AN INADVERTENT MISTAKE ON THE PART OF THE COUNSE L, THE APPEAL COULD NOT BE FILED. THE LD. D.R. HOWEVER OBJECTED FOR CONDONATI ON OF DELAY. ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 6 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. ON GOING THROUGH THE CONTENTS OF THE DELAY CONDONATION PETITION AND THE AVERMENTS MADE IN THE AFFIDAVIT, W E ARE SATISFIED THAT THERE IS A REASONABLE CAUSE FOR NOT FILING THE APPEAL IN TIME. ACCORDINGLY, WE CONDONE THE DELAY IN FILING OF APPEAL AND ADMIT IT FOR HEARING ON MERITS. THE ONLY ISSUE IN THE PRESENT APPEAL IS IN RESPECT OF A DDITION OF RS. 7,30,000/- AS UNEXPLAINED CASH CREDIT. 12. BRIEFLY THE FACTS ARE, A SEARCH AND SEIZURE OPE RATION WAS CONDUCTED IN CASE OF THE ASSESSEE ON 19.2.2009. AS A CONSEQUENC E OF THE SEARCH AND SEIZURE OPERATION, A NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME FOR THE IMPUGNED ASSES SMENT YEAR. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED ITS RETURN OF INC OME ON 14.9.2009 DECLARING INCOME OF RS.4,80,501/-. DURING THE ASSESSMENT PRO CEEDING, THE ASSESSING OFFICER ON EXAMINING THE CAPITAL ACCOUNT ENCLOSED W ITH THE RETURN OF INCOME NOTICED THAT THE ASSESSEE HAS PURCHASED A SITE ADME ASURING 673 SQ.YDS. FOR AN AMOUNT OF RS.7,30,000/-. WHILE EXPLAINING THE S OURCE OF THE AFORESAID INVESTMENT, IT WAS STATED BY THE ASSESSEE THAT THE AMOUNT WAS RECEIVED AS GIFT FROM HIS FATHER. TO SUBSTANTIATE SUCH CLAIM, THE ASSESSEE PRODUCED LAND HOLDING DETAILS OF HIS FATHER AND AN AFFIDAVIT OF H IS MOTHER AND ONE SHRI R. RAJU WHO IS BROTHER OF THE ASSESSEES FATHER CONFIR MING THE FACT THAT ASSESSEE WAS GIFTED AN AMOUNT OF RS.7,30,000/- DURING THE FI NANCIAL YEAR 2003-04 FOR THE PURPOSE OF PURCHASING THE SITE. THE ASSESSING OFFICER DISBELIEVING THE CLAIM OF THE ASSESSEE TREATED THE AMOUNT OF RS.7,30 ,000/- AS UNEXPLAINED CREDIT AND ADDED IT TO THE INCOME OF THE ASSESSEE. 13. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). REITERATING THE CONTENTION MADE BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ORIGINALLY FILED HIS RETURN OF INCOME ON 29.10.2004 ALONG WITH TAX AUDIT REPORT WHICH WAS DULY PROCESSED U/S 143(1) OF THE ACT. IT WAS SUBMITTED THAT THE GIFT RECEIVED WAS DULY SHOWN IN THE CAPITAL ACCOUNT OF THE ASSESSEE AS WELL AS IN H IS BOOKS OF ACCOUNTS AND REFLECTED IN THE RETURN OF INCOME FILED ORIGINALLY. IT WAS SUBMITTED THAT DURING ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 7 THE SEARCH OPERATION NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE ASSESSMENT YEAR UNDER DISPUTE. IT WAS THEREFORE SUB MITTED THAT WHEN THE ASSESSMENT STOOD CONCLUDED AND THERE IS NO ASSESSM ENT PROCEEDING PENDING ON THE DATE OF SEARCH, THE ASSESSING OFFICER COULD NOT HAVE CONSIDERED THE INVESTMENT MADE IN THE LAND AND SOURCE OF SUCH INVE STMENT WHICH IS NOT ONLY RECORDED IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE RETURN OF INCOME FILED PRIOR TO THE SEARCH. SO FAR AS MERIT OF THE ADDITI ON IS CONCERNED, THE ASSESSEE SUBMITTED THAT SINCE AFFIDAVITS WERE FILED BY ASSES SEES MOTHER AND HIS FATHERS BROTHER CONFIRMING THE GIFT, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE THE ADDITION IGNORING THE AVERMENTS MADE IN TH E AFFIDAVIT. THE CIT(A) HOWEVER REJECTED ASSESSEES CONTENTION BY STATING T HAT SINCE INCRIMINATING MATERIAL RELATING TO INVESTMENT IN LAND WAS FOUND A S A RESULT OF SEARCH, THE PROCEEDING U/S 153A OF THE ACT WAS VALIDLY INITIATE D. SO FAR AS MERITS OF THE ADDITION IS CONCERNED, THE CIT(A) HELD THAT THE AFF IDAVITS SUBMITTED BY THE ASSESSEE ARE ONLY SELF-SERVING DOCUMENTS AND CANNOT BE RELIED UPON. IT WAS HELD BY THE CIT(A) THAT APART FROM THE AFFIDAVIT TH E ASSESSEE COULD NOT PRODUCE ANY OTHER EVIDENCE TO SUBSTANTIATE THE RECE IPT OF GIFT AND ACCORDINGLY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 14. THE LD. A.R. REITERATING THE STAND TAKEN BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT AS THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 STOOD CONCLUDED AT THE TIME OF SEARCH AND SEIZURE OPERATI ON AND SINCE THERE IS NO ASSESSMENT PROCEEDING PENDING, THE ASSESSING OFFICE R WAS PRECLUDED FROM MAKING ANY ADDITIONS WITHOUT REFERENCE TO SEIZED MA TERIALS. IN SUPPORT OF SUCH CONTENTION, THE LD. A.R. RELIED UPON THE DECIS ION OF THE ITAT VIZAG BENCH IN CASE OF SRI LALITHA CONSTRUCTIONS AND ANO THER VS. ACIT IN ITA NOS.162 TO 164/VIZAG/2013 DATED 13.12.2013. CONTES TING THE MERITS OF THE ADDITION, THE LD. A.R. SUBMITTED THAT WHEN ASSESSEE S MOTHER AND FATHERS BROTHER HAVE CONFIRMED THE GIFT GIVEN BY HIS FATHER THROUGH AFFIDAVIT, THE DEPARTMENTAL AUTHORITIES CANNOT DISCARD THE SAME WI THOUT VERIFYING THE AVERMENTS MADE THEREIN. IT WAS THUS SUBMITTED THAT ADDITION MADE BEING NOT JUSTIFIED SHOULD BE DELETED. ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 8 15. THE LD. D.R. ON THE OTHER HAND STRONGLY RELIED UPON THE FINDING OF THE CIT(A). 16. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES, PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIA LS ON RECORD. IT IS A FACT ON RECORD THAT INVESTMENT IN PURCHASE OF LAND HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS THROUGH GIFT RECEIVED FROM FATHER AMOUNTI NG TO RS.7,30,000/-. THE SAME HAS ALSO BEEN DISCLOSED IN THE RETURN FILED PR IOR TO THE DATE OF SEARCH. AS CAN BE SEEN THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER PASSED U/S 143(3) R.W.S. 153A OF THE ACT HAS NOT MADE ANY ADDI TION IN REFERENCE TO ANY SEIZED MATERIAL BUT HAS TREATED THE INVESTMENT MADE IN PROPERTY OF RS.7,30,000/- AS UNEXPLAINED CREDIT. THIS AMOUNT H AS ALREADY BEEN SHOWN IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETURN. THEREFORE, WHEN THERE IS NO ASSESSMENT PROCEEDING PENDING ON THE DATE OF SEA RCH FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER CANNOT CONSI DER INCOME WHICH HAS ALREADY BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE RETURN FILED PRIOR TO THE DATE OF SEARCH. THIS VIEW OF US IS SUPPORTED BY THE DECISION OF THE ITAT VIZAG BENCH IN CASE OF SRI LALITHA CONS TRUCTIONS VS. ACIT (SUPRA) WHEREIN THE BENCH HELD AS UNDER: 9. IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT 137 ITD 287 (MUM) (SB). THE SPECIAL BENCH OF THE I TAT HAS HELD THAT PROVISIONS OF SECTION 153A COMING TO OPER ATION IF SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABAT ED, AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISD ICTION U/S 153A IN WHICH ASSESSMENT SHALL BE MADE FOR EACH ASS ESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED, THE AO CAN MAKE ADDITION IN THE ASSESSMENT, EVEN IF ANY INCRIMINATING MATERIAL HAS BEEN FOUND BUT IN OTHER CASES, SPECIAL BENCH HELD THAT ASSESSMENT HELD U/S 153A CA N BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL WH ICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOU NTS AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH, BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT OR U NDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE SEARCH. IN THE PRESENT CASE THE ASSESSMENTS HAVING BEEN COMPLETED U/S 143(3) OF THE ACT BEFORE THE DATE OF SEARCH AND AS THERE WAS NO ASSESSMENT PENDING IN THIS CASE, ACCORDINGLY TH ERE CANNOT BE ANY RE-ASSESSMENT ON THE ISSUE OF ESTIMATION OF INCOME, AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. IN ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 9 THE CASE OF ASP SOFTWARE SOLUTIONS PVT. LTD. 84 DTR (HYD)(TRIB.) 35 THE COORDINATE BENCH AT HYDERABAD T RIBUNAL 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 BECOMES ACADEMIC. ACCORDINGLY, THE GROUNDS ARE CON SIDERED ACADEMIC. 17. AS WOULD BE CLEAR FROM THE ASSESSMENT ORDER, TH E ASSESSING OFFICER HAS ONLY DISPUTED THE SOURCE OF INVESTMENT WHICH IS ALR EADY REFLECTED IN THE BOOKS OF ACCOUNTS AND RETURN FILED PRIOR TO THE DATE OF S EARCH. HE HAS NOT MADE ANY OTHER ADDITIONS WITH REFERENCE TO ANY INCRIMINATING MATERIAL AS A RESULT OF SEARCH. IN THE AFORESAID CIRCUMSTANCES, AN AMOUNT WHICH HAS ALREADY BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETURN OF INCOME ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 10 CANNOT BE MADE SUBJECT MATTER OF ASSESSMENT U/S 153 A OF THE ACT, IN ABSENCE OF ABATEMENT OF ASSESSMENT PROCEEDING. WE THEREFORE HOLD THAT THE ADDITION MADE OF RS.7,30,000/- IS NOT JUSTIFIED. S O FAR AS MERITS OF THE ISSUE IS CONCERNED, UNDISPUTEDLY THE ASSESSEE FROM THE VE RY BEGINNING HAS EXPLAINED THAT THE AMOUNT WAS RECEIVED AS GIFT FROM HIS FATHER. THIS FACT WAS CONFIRMED DURING THE ASSESSMENT PROCEEDING THROUGH AFFIDAVIT OF HIS MOTHER AND FATHERS BROTHER. THE ASSESSING OFFICER HAS SI MPLY DISBELIEVED THE AFFIDAVIT WITHOUT VERIFYING THE VERACITY OF THE AVE RMENTS MADE THEREIN, WHICH IN OUR VIEW IS NOT A CORRECT APPROACH ON THE PART O F THE ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER HAVING MADE THE ADDITI ON PURELY ON PRESUMPTION AND SURMISES WITHOUT MAKING ANY ENQUIRY, THE SAME C ANNOT BE SUSTAINED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE SAME. 18. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA 412 TO 416/VIZAG/2013: 19. THESE APPEALS OF THE ASSESSEE ARE AGAINST A COM MON ORDER DATED 28.3.2013 OF THE CIT(CENTRAL) HYDERABAD U/S 263 OF THE ACT REVISING THE ASSESSMENT ORDERS PASSED U/S 143(3) R.W.S. 153A OF THE ACT PERTAINING TO THE ASSESSMENT YEAR 2003-04 TO 2007-08. 20. BRIEFLY THE FACTS ARE, PURSUANT TO THE SEARCH A ND SEIZURE OPERATION CONDUCTED IN CASE OF THE ASSESSEE, ASSESSMENT PROCE EDING WAS INITIATED U/S 153A OF THE ACT WHICH WERE ULTIMATELY COMPLETED BY THE ASSESSING OFFICER VIDE ORDER DATED 29.12.2010 PASSED U/S 143(3) R.W.S. 153 A OF THE ACT. THE CIT IN EXERCISE OF POWER CONFERRED U/S 263 OF THE ACT CALL ED FOR THE ASSESSMENT RECORDS FOR THE AFORESAID ASSESSMENT YEARS AND AFTE R EXAMINING THE SAME WAS OF THE VIEW THAT THE ASSESSMENT ORDER PASSED ARE ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASON S:- I) IN ASSESSMENT YEAR 2003-04 TO 2006-07 THE ASSESSI NG OFFICER HAS NOT EXAMINED THE ALLOWABILITY OF INTEREST AS PER THE PR OVISIONS OF SECTION ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 11 36(I) TO (III) AS HE HAS NOT CONSIDERED THE PROPORT IONATE INTEREST WHICH IS NOT UTILIZED FOR THE PURPOSE OF BUSINESS. II) IN ASSESSMENT YEAR 2003-04, ASSESSEE PROCURED AS SETS WORTH RS.17,02,771/- WHICH ARE NOT REFLECTED IN THE BALAN CE SHEET FOR THE ASSESSMENT YEAR 2003-04. AS THE SAID AMOUNT REPRES ENTING LAND HOLDING HAS NOT BEEN EXAMINED BY THE ASSESSING OFFI CER TO FIND OUT THE ACQUISITION PRICE OF THE LAND REQUIRING TO BE TREAT ED AS UNEXPLAINED INVESTMENT, THE ASSESSMENT ORDER IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE. III) IN ASSESSMENT YEARS 2003-04 TO 2007-08, THE AS SESSEE HAS SHOWN AGRICULTURAL INCOME OF VARIOUS AMOUNTS. HOWEVER, I N ABSENCE OF ANY PROOF TO SHOW THAT THE ASSESSEE HAS EARNED AGRICULT URAL INCOME, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ACCEPTING TH E SAME AND SHOULD HAVE EXAMINED THE SAME FOR TREATING IT AS INCOME FR OM OTHER SOURCES. IV) FOR ASSESSMENT YEAR 2005-06 TO 2007-08, THE ASS ESSEE HAS REARED FISH IN FRESH WATER TANK IN 233.11 ACRES OUT OF WHI CH 111.11 ACRES WAS OWNED BY THE ASSESSEE AND 122 ACRES TAKEN ON LEASE AGAINST WHICH LEASE RENTS HAVE BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. THE CIT ON VERIFYING THE LEASE RENT DEBITED IN THE P&L ACCO UNT AGAINST THE PREVAILING MARKET RATE FOUND THAT THE ASSESSEE HAS DEBITED EXCESS LEASE RENT OF RS.12,58,000/- AND ON WHICH TDS HAS A LSO NOT BEEN DEDUCTED. HE WAS THEREFORE OF THE VIEW THAT THE AS SESSING OFFICER SHOULD HAVE EXAMINED THE ISSUE OF DISALLOWANCE OF E XCESS LEASE RENT DEBITED AND ALSO APPLICABILITY OF THE TDS PROVISION . ON THE BASIS OF THE AFORESAID ISSUES, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUB MITTED HIS REPLY OBJECTING TO THE PROPOSED ACTION U/S 263 OF THE ACT . THE CIT AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PASSED THE IMPUGNED ORDER SETTING ASIDE THE ASSESSMENT ORDERS PASSED FO R THE ASSESSMENT YEAR 2003-04 TO 2007-08 WITH THE FOLLOWING OBSERVAT ION: I HAVE GONE THROUGH THE SUBMISSION FILED BY THE ASSESSEE. IT IS A FACT THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAS NOT VERIFIED THE ABOV E ISSUES IN PROPER PERSPECTIVE. IT HAS BEEN JUDICIAL LY HELD THAT AS ASSESSMENT MADE WITHOUT NECESSARY ENQUIRY C AN ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 12 BE HELD TO BE ERRONEOUS AND CAN BE REVISED U/S 263 OF THE I.T. ACT 1961. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF SPECIAL BENCH, ITAT, CHENNAI REP ORTED IN 313 ITR (AT) 182, CHENNAI SB WHEREIN IT WAS OBSERVED THAT IT IS NOT NECESSARY FOR THE COMMISSIO NER OF INCOME-TAX IN REVISION TO MAKE FURTHER ENQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE A.O. THE COMMISSIONER OF INCOME-TAX CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE, THE A.O. SHOULD HAVE MADE FURTHER ENQUIRI ES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSE E IN HIS RETURN. IT IS INCUMBENT ON THE A.O. TO INVE STIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES W OULD MAKE SUCH AN ENQUIRY PRUDENT. THE WORD ERRONEOUS I N SEC. 263 OF INCOME-TAX ACT, 1961 INCLUDES CASES WHE RE THERE HAS BEEN FAILURE TO MAKE NECESSARY ENQUIRIES. CONSIDERING THE ABOVE, THE ORDER PASSED BY ASSESSIN G OFFICER U/S 143(3) R.W.S. 153A ON 29.12.2010 IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW THEREOF, THE ORDERS PASSED BY THE A.O. U/S 143(3) R.W.S. 153A FOR THE A.Y. 2003-04 TO 2007-08 ARE SET ASIDE WITH A DIRECTION TO REDO THE ASSESSMENT A FTER CONDUCTING NECESSARY ENQUIRIES AND VERIFICATION ON THE ABOVE ISSUES AND REDO THE ASSESSMENTS THEREAFTER AS PER THE PROVISIONS OF THE I.T. ACT 1961. NEEDLESS TO S AY AN OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE BEFORE REDOING THE ASSESSMENT AS PER DIRECTIONS ABOVE. 21. AT THE OUTSET, THE LD. A.R. SUBMITTED BEFORE US THAT THE ASSESSMENTS IN RESPECT OF THE ASSESSMENT YEARS STOOD CONCLUDED BY THE TIME SEARCH ACTION WAS INITIATED ON 19.2.2009. WHEREAS THE LAST DATE FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT EXPIRED BY THAT DATE. FURTHER, T HE ISSUE WITH REGARD TO WHICH THE CIT SOUGHT TO REVISE THE ASSESSMENT HAVE NO NEXUS WITH ANY SEIZED MATERIAL. THEREFORE, IN ANY CASE OF THE MAT TER, THE ASSESSING OFFICER COULD NOT HAVE CONSIDERED THOSE ISSUES IN AN ASSESS MENT INITIATED U/S 153A OF THE ACT. THEREFORE, THE ORDER OF THE ASSESSING OFF ICER CANNOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. IN SUPPORT OF SUCH CONTENTION, THE LD. A.R. RELIED ON THE DECISION OF THE ITAT VIZAG BENCH IN CASE OF SRI LALITHA CONSTRUCTION VS. ACIT (SUPRA). SO FAR AS MERITS OF THE ISSUES ARE CONCERNED, THE LD. A.R. SUBMITTED THAT I N THE CONSEQUENTIAL ORDER IN PURSUANCE TO THE REVISION ORDER OF THE COMMISSIO NER, THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION IN RESPECT OF ANY OF THE ISSUES EXCEPT WITH REGARD ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 13 TO THE INTEREST DISALLOWANCE. SO FAR AS INTEREST D ISALLOWANCE IS CONCERNED, IT WAS SUBMITTED THAT THE ASSESSING OFFICER AT THE TIM E OF ASSESSMENT U/S 143(3) OF THE ACT R.W.S. 153A OF THE ACT HAS THOROUGHLY EX AMINED THIS ISSUE AND CAME TO A CONCLUSION THAT NO INTEREST DISALLOWANCE WAS WARRANTED. THE ASSESSING OFFICER BEING SATISFIED WITH THE EXPLANAT ION OF THE ASSESSEE THAT ADVANCES MADE TO THE FIRM SAI AGRO INDUSTRIES WERE O UT OF COMMERCIAL EXPEDIENCY HAS NOT MADE ANY INTEREST DISALLOWANCE. MOREOVER, IT WAS SUBMITTED THAT M/S. SAI AGRO INDUSTRIES USED TO SUP PLY MATERIAL TO THE ASSESSEE FOR ITS BUSINESS OF PISCICULTURE. THUS, T HE RELATIONSHIP BETWEEN ASSESSEE AND SAI AGRO INDUSTRIES IS ONE OF DEBTOR A ND CREDITOR AND THE ADVANCES GIVEN TO THE FIRM STOOD ADJUSTED FROM TIME TO TIME AGAINST SUPPLY OF MATERIAL. THEREFORE, IT CANNOT BE SAID THAT INTERE ST BEARING FUNDS HAVE BEEN DIVERTED FOR NON BUSINESS PURPOSE. IN SUPPORT OF S UCH CONTENTION, HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF S.A. BUILDERS VS. CIT 288 ITR 1. IT WAS FURTHER SUBMITTED THAT THE ASSESS EE HAS INTEREST FREE FUNDS AS WELL AS IN THE FORM OF OWN CAPITAL AND ALSO SUND RY CREDITORS WHICH WERE NOT CONSIDERED WHILE DISALLOWING THE INTEREST. IT WAS SUBMITTED THAT SINCE THE ENTIRE ISSUE WAS EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING MERELY BECAUSE THE CIT ENTERTAINS A DIFF ERENT VIEW JURISDICTION U/S 263 OF THE ACT CANNOT BE ASSUMED. IN THIS REGARD, H E RELIED ON THE DECISION OF DIT VS. JYOTI FOUNDATION 357 ITR 388 (DEL) AND L AVANYA ENTERPRISES VS. CIT ITA NO.118/VIZAG/2010 DATED 3.8.2011. FINALLY THE LD. A.R. SUBMITTED THAT THE ORDER PASSED BY THE CIT CANNOT BE SUSTAINE D PRIMARILY BECAUSE OF THE FACT THAT HE HAS PASSED A COMMON ORDER FOR ALL ASSESSMENT YEARS. 22. THE LD. D.R. ON THE OTHER HAND SUPPORTING THE O RDER OF THE CIT SUBMITTED THAT SINCE THE ISSUES ON WHICH THE CIT HA S REVISED THE ASSESSMENT ORDERS WERE NOT AT ALL CONSIDERED BY THE ASSESSING OFFICER, THE EXERCISE OF POWER U/S 263 OF THE ACT IS JUSTIFIED. 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD AS WELL AS IMPUGNED ORDERS OF T HE CIT. WE HAVE ALSO GONE THROUGH THE DECISIONS PLACED BEFORE US BY THE PARTIES. AS CAN BE SEEN ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 14 THE ISSUES ON WHICH THE CIT HAS INVOKED JURISDICTIO N U/S 263 OF THE ACT ARE ALL REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND DISCLOSED IN THE RETURN OF INCOME FILED IN REGULAR COURSE MUCH PRIOR TO THE SEARCH AND SEIZURE OPERATION. IT IS ALSO A FACT THAT AT THE TIME WHEN SEARCH AND SEIZURE OPERATION TOOK PLACE NO ASSESSMENT PROCEEDING IS P ENDING FOR ANY OF THE ASSESSMENT YEAR WHICH COULD HAVE ENABLED THE ASSESS ING OFFICER TO EXERCISE HIS ORIGINAL JURISDICTION APART FROM THE JURISDICTI ON U/S 153A. THEREFORE, IN OUR VIEW, THE ASSESSING OFFICER COULD NOT HAVE CONSIDER ED ALL THESE ISSUES IN THE ASSESSMENT PROCEEDING INITIATED U/S 153 OF THE ACT. FOR THIS REASON ALONE, THE ASSESSMENT ORDERS CANNOT BE CONSIDERED TO BE ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR NON-CONSIDERATION OF THE ISSUES RAISED BY THE CIT. LAW IS WELL SETTLED THAT IN A PROCEEDING U/S 143 R.W.S. 153A OF THE ACT, THE ASSESSING OFFICER CAN EXERCISE HIS ORIGINAL JUR ISDICTION ALONG WITH JURISDICTION U/S 153A ONLY IN A CASE WHERE ASSESSME NT PROCEEDING HAS ABATED. HOWEVER, WHERE THERE IS NO PENDING ASSESSMENT PROCE EDING, THE ASSESSING OFFICER CAN MAKE ASSESSMENT U/S 153A OF THE ACT ONL Y ON THE BASIS OF INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. IN THE PRESENT CASE THE ISSUES ON WHICH THE CIT REVISED THE ASSESSMENT ORDE R ARE NOT IN REFERENCE TO ANY SEIZED MATERIAL FOUND AS A RESULT OF SEARCH. H ENCE, IT CANNOT BE SAID THAT FOR NON-CONSIDERATION OF THESE ISSUES THE ASSESSMEN T ORDERS ARE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. IN TH IS CONTEXT, WE REFER TO THE DECISION OF THE ITAT VIZAG BENCH IN CASE OF SRI LAL ITHA CONSTRUCTION VS. ACIT (SUPRA). THEREFORE, CONSIDERED IN THE AFORESAID PE RSPECTIVE THE EXERCISE OF JURISDICTION BY CIT IS NOT VALID. EVEN OTHERWISE A LSO, AS CAN BE SEEN FROM THE FACTS AND MATERIALS ON RECORD, THE ONLY ISSUE WHICH SURVIVES AFTER THE CONSEQUENTIAL ORDER OF THE ASSESSING OFFICER IS REL ATING TO DISALLOWANCE OF INTEREST. FROM THE MATERIALS ON RECORD, IT IS SEEN THAT THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDING HAS CONDUCTED ENQ UIRY SPECIFICALLY IN RESPECT OF THE LOANS TO M/S. SAI AGRO INDUSTRIES. M ERELY BECAUSE THE RESULT OF SUCH ENQUIRY HAS NOT BEEN MENTIONED IN THE ASSESSME NT ORDER, IT WILL NOT TANTAMOUNT TO ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, AS IT IS NOT A CASE OF NO ENQU IRY. FURTHER, CIT HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT ADVANCE S WERE NOT IN REGULAR ITA NOS.30 & 410/VIZAG/2012 AND ITA NOS.412 TO 416/VIZAG/2013 CHEKURI VENKATA RANGA RAJU, BHIMAVARAM 15 COURSE OF BUSINESS. THEREFORE, ON MERITS ALSO THE C IT WAS NOT JUSTIFIED IN EXERCISING JURISDICTION U/S 263 OF THE ACT AS THE A SSESSING OFFICER HAS CONDUCTED ENQUIRY AND PASSED THE ORDER AFTER APPLIC ATION OF MIND. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD THAT THE IMPU GNED ORDER PASSED U/S 263 OF THE ACT IS INVALID AND THEREFORE, WE QUASH T HE SAME. 24. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. PRONOUNCED IN THE OPEN COURT ON 21 ST JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 21 ST JULY, 2014 COPY TO 1 CHEKURI VENKATA RANGA RAJU, 17-17-18A, F.NO.101, SRINILAYA APARTMENT, ASR NAGAR, BHIMAVARAM 2 ACIT, CENTRAL CIRCLE, RAJAHMUNDRY 3 THE ACIT CENTRAL CIRCLE, RAJAHMUNDRY 4 THE DCIT CENTRAL CIRCLE, RAJAHMUNDRY 5 THE CIT, RAJAHMUNDRY 6 THE CIT(A), RAJAHMUNDRY 7 THE DR, ITAT, VISAKHAPATNAM. 8 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM