P. Ashok Kumar, Hyderabad V. Dy.CIT, Central Circle, Tirupathi

ITA 56/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6001 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA.NO.55 & 56/HYD/2014 ASSESSMENT YEARS 2007-2008 & 2009-2010 MR. P. ASHOK KUMAR TIRUPATI. PAN ABZPP5247J VS. DCIT, CENTRAL CIRCLE TIRUPATI (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI A. SITARAMA RAO DATE OF HEARING : 09.11.2016 DATE OF PRONOUNCEMENT : 25.11.2016 ORDER PER J. SUDHAKAR REDDY, A.M. BOTH THE APPEALS ARE FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A), GUNTUR DATED 30.10.2013. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS ON JURISDICTION. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT INTIMATION OF PROCEEDINGS UNDER SECTION.153C ARE NOT V ALID AS NO MATERIAL WAS FOUND, RELATING TO THE YEAR UNDER CONSIDERATION, DURING THE SEARCH AND SEIZURE OPERATIO N. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 153C ARE BAD IN LAW AND, THEREFORE, OUGHT TO HAVE ANNULLED THE ASSESSMENT MADE BY THE ASSESSING OFFICER. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE SATISFACTION AS PRESCRIBED UNDER SECTION 153C OF THE ACT WAS NOT RECORDED BY THE ASSESSING OFFICER WHO HAD COMPL ETED THE ASSESSMENT OF THE SEARCHED PERSON AND CONSEQUENTLY, THE 2 ITA.NOS. 55 & 56/HYD/2014 MR. P. ASHOK KUMAR, TIRUPATI. ASSESSMENTS ARE BAD IN LAW. FOR THIS PROPOSITION THE LEARNED COUNSEL PLACED RELIANCE ON THE FOLLOWING DECISIONS- (A) DECISION OF BOMBAY BENCH H OF THE TRIBUNAL IN THE CASE OF BEJAY SECURITIES & FINANCE LTD. V/S. ACIT (ITA NO.485 9 TO 4865/MUM/2009 AYS 2001-02 TO 2007-08) DATED 24.6.2011; (B) DECISION OF BOMBAY BENCH H OF THE TRIBUNAL IN THE CASE OF ANIL P.KHIMANI V./S. DY. CIT (ITA NO.2855 TO 2860/MUM/2008 FOR ASSESSMENT YEARS 1999-2000 TO 20004-05) DATED 23.2.2010; (C) JINDAL STAINLESS LEARNED. V/S. ACIT(120 ITD 301)-DEL . (D) SINGHAD TECHNICAL EDUCATION SOCIETY V/S. ACIT (140 T TJ 233)-PUNE. (E) SSP AVIATION LTD. V/S. DCIT (346 ITR 177)-DEL. (F) INGRAM MICRO (INDIA) EXPORTS V/S. DDIT ITAT (MUMBAI) 3. THE LD. D.R. SUBMITTED THAT THE ASSESSING OFFICER OF THE ASSESSEE AND THE ASSESSING OFFICER OF THE SEARCHED PARTY BEING THE SAME, NO SEPARATE SATISFACTION NEED BE RECOR DED. HE COULD NOT PRODUCE ANY SATISFACTION NOTE BEFORE THE BENC H. 3.1. THE UNDISPUTED FACT IS THAT NO SATISFACTIO N HAS BEEN RECORDED BY THE ASSESSING OFFICER COMPLETING THE ASSES SMENT OF THE SEARCHED PERSON. IN THE ABSENCE OF ANY SUCH SATISF ACTION, THE PROCEEDINGS INITIATED UNDER S.153C WHICH CULMINATED I NTO ORDER UNDER S.143(3) READ WITH S.153C IS BAD IN LAW AND VOID AB INITIO . 3 ITA.NOS. 55 & 56/HYD/2014 MR. P. ASHOK KUMAR, TIRUPATI. 3.2. THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. RRJ SECURITIES LTD. IN ITA 164/2015 AND OTHER, JUDGE MENT DATED 30.10.2015 AT PARA 13 TO 16 HELD AS FOLLOWS. 13. THE FIRST AND FOREMOST STEP FOR INITIATION OF PROCEEDINGS UNDER SECTION 153C OF THE ACT IS FOR THE AO OF THE SEARCHED PERSON TO BE SATISFIED THAT THE ASSETS OR DOCUMENTS SEIZED BELON G TO THE ASSESSEE (BEING A PERSON OTHER THAN THE SEARCHED PERSON). TH E AO OF THE ASSESSEE, ON RECEIVING THE DOCUMENTS AND THE ASSETS SEIZED, WOULD HAVE JURISDICTION TO COMMENCE PROCEEDINGS UNDER SECTION 153C OF THE ACT. THE AO OF THE SEARCHED PERSON IS NOT REQUIRED TO EXAMINE WHETHER THE ASSETS OR DOCUMENTS SEIZED REFLECT UNDISCLOSED INCOME. ALL THAT IS REQUIRED FOR HIM IS TO SATISFY HIMSELF THAT THE ASS ETS OR DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON BUT TO ANOTHER PERSON . THEREAFTER, THE AO HAS TO TRANSFER THE SEIZED ASSETS/DOCUMENTS TO THE AO HAVING JURISDICTION OF THE ASSESSEE TO WHOM SUCH ASSETS/DO CUMENTS BELONG. SECTION 153C(1) OF THE ACT CLEARLY POSTULATES THAT ONCE THE AO OF A PERSON, OTHER THAN THE ONE SEARCHED, HAS RECEIVED THE ASSETS OR THE DOCUMENTS, HE IS TO ISSUE A NOTICE TO ASSESS/RE-ASS ESS THE INCOME OF SUCH PERSON - THAT IS, THE ASSESSEE OTHER THAN THE PERSON SEARCHED - IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT. 14. THE PROVISO TO SECTION 153C(1) OF THE ACT EXPRESSLY INDICATES THAT REFERENCE TO THE DATE OF INITIATION OF SEARCH FOR T HE PURPOSES OF SECOND PROVISO TO SECTION 153A SHALL BE CONSTRUED AS A REFERENCE TO THE DATE ON WHICH VALUABLE ASSETS OR DOCUMENTS ARE RECEIVED BY THE AO OF AN ASSESSEE (OTHER THAN A SEARCHED PERSON). THUS, BY V IRTUE OF THE SECOND PROVISO TO SECTION 153A OF THE ACT, THE ASSESSMENTS/REASSESSMENTS THAT WERE PENDING ON THE DATE OF RECEIVING SUCH ASSETS, BOOKS OF ACCOUNTS OR DOCUMENTS WOULD ABATE. 15. THE CONTROVERSY IN THIS REGARD IS NO LONGER RES INTEGRA. A COORDINATE BENCH OF THIS COURT IN SSP AVIATION LTD. V. DEPUTY COMMISSIONER OF INCOME TAX : (2012) 346 ITR 177 HAS HELD THAT: 'IN CASE OF THE SEARCHED PERSON, THE DATE WITH REFE RENCE TO WHICH PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF ANY A SSESSMENT YEAR WITHIN A PERIOD OF SIX ASSESSMENT YEARS SHALL ABATE , IS THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A . HOWEVER, IN CASE OF OTHER PERSON.. SUCH DATE WILL B E THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITION BY THE 4 ITA.NOS. 55 & 56/HYD/2014 MR. P. ASHOK KUMAR, TIRUPATI. ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON. IN THE CASE OF OTHER PERSON, THE QUESTION OF PENDENCY AND ABATE MENT OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT TO THE SIX ASSESSMENT YEARS WOULD HAVE TO BE EXAMINED WITH REFERENCE TO SUCH DATE' 16. THE CIT(A) SOUGHT TO DISTINGUISH THE PRESENT CA SE BY OBSERVING THAT IN THE FACTS OF THE PRESENT CASE, THE AO OF THE SEA RCHED PERSON WHO HAS TO HANDOVER THE DOCUMENTS AND THE AO OF THE ASSESSE E WAS ONE AND THE SAME PERSON. IN OUR VIEW, THIS DISTINCTION IS NOT R ELEVANT IN THE SCHEME OF SECTION 153C OF THE ACT AND THE CIT(A) ERRED IN PROCEEDING ON T HE BASIS THAT THE PERIOD OF SIX YEARS WAS TO BE RECKON ED FROM THE END OF THE FINANCIAL YEAR PRECEDING THE FINANCIAL YEAR IN WHIC H THE SEARCH WAS CONDUCTED. 3.3. NO CONTRARY FINDING IS BROUGHT TO OUR NOTICE. HE NCE WE RESPECTFULLY FOLLOW THE ABOVE JUDGEMENT AND QUASH THE ASSESSMENT FRAMED U/S 153 C R.W.S.143(3) OF THE ACT. 4. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 25 TH NOVEMBER, 2016. SD/- SD/- (SMT. P. MADHAVI DEVI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 25 TH NOVEMBER, 2016. VBP/- COPY TO 1. MR. P. ASHOK KUMAR, TIRUPATI, C/O. SRI S. RAMA RA O, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3-6-64 3, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E, TIRUPATI. 3. CIT(A), GUNTUR. 4. CIT (CENTRAL), HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.