Smt. Anne Vijaya, Hyderabad V. Dy.CIT, Central Circle-5, Hyderabad

ITA 564/HYD/2013

• Counselvise Citation: 56422514 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: Capital asset; Income from undisclosed sources; Search and seizure; Document seized; Source of fund; Additional evidence; Documents seized
• Section: 153A; 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 660/HYD/2013 2004-05 ASST. COMMISSIONER OF INCOME TAX, HYDERABAD SMT. A. VIJAYA, 507, SRINIVASAN, OPP.SANGAMITRA SCHOOL, NIZAMPET, KUKATPALLY, HYDERABAD [PAN: AGHPA 7473 N] 661/HYD/2013 2008-09 662/HYD/2013 2009-10 663/HYD/2013 2010-11 563/HYD/2013 2008-09 SMT. ANNE VIJAYA, FLAT NO.507, SRINIVASAM, OPP.SANGAMITRA SCHOOL, NIZAMPET, KUKATPALLY, HYDERABAD [PAN: AGHPA 7473 N] DEPUTY COMMISSIONER OF INCOME TAX, HYDERABAD 564/HYD/2013 2009-10 565/HYD/2013 2010-11 659/HYD/2013 2005-06 ASST. COMMISSIONER OF INCOME TAX, HYDERABAD SHRI G.C.SUBBA NAIDU, 5-79, PEOPLES HOSPITAL, M.G.ROAD, PATANCHERU, MEDAK DIST., [PAN: ADJPG 5842 N] FOR REVENUE : SHRI RAJAT MITRA, DR FOR ASSESSEE : S HRI A.SRINIVAS, AR DATE OF HEARING : 19 - 0 1 - 201 5 DATE OF PRONOUNCEMENT : 21 - 01 - 2015 O R D E R PER BENCH : THESE APPEALS ARE FILED BY REVENUE AND AS SESSEE FOR ASSESSMENT YEARS (AYS) 2004-05, 2008-09, 2009-10 & 2010-11 AND FOR AY 2005-06 IN ONE CASE. SINCE COMMON ISSUES ARE INVOLVED IN T HESE APPEALS, WE HEARD THESE TOGETHER AND DECIDED IN THIS COMMON ORD ER. ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 2 -: APPEALS IN THE CASE OF SMT. ANNE VIJAYA: 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL HAVING SOURCES OF INCOME FROM OTHER SOURCES AND AGRICULTURE. CONSEQUENT TO SEARCH AND SEIZURE PROCEEDINGS IN THE CASE OF BHAVYA GROUP, ON THE REASON THAT CERTAIN INCRIMINATING DOCUMENTS HAVE BEEN FOUND IN SEARCH P ERTAINING TO ASSESSEE, PROCEEDINGS U/S.153C OF THE INCOME TAX AC T (ACT) WERE INITIATED. IN THE ASSESSMENT MADE CONSEQUENTLY, IN THE AY.2004-05, THE ASSESSING OFFICER EXAMINED THE INVESTMENT MADE IN T HE PURCHASE OF FLAT AND CONSIDERED THE ENTIRE AMOUNT OF RS.4,52,000/- I NVESTED BY ASSESSEE AS UN-EXPLAINED. THE LD.CIT(A) AFTER CONSIDERING T HE ADDITIONAL EVIDENCE FILED AND REMANDING THE DOCUMENTS TO ASSESSING OFFI CER, DELETED THE ADDITION AS THE SOURCES ARE EXPLAINED. HOWEVER, WH ILE CONSIDERING THE SAME, LD.CIT(A) ALSO HELD THAT PROCEEDINGS U/S.153C ARE INVALID AND CONSEQUENTLY, THE ASSESSMENT MADE IN PURSUANCE OF T HE SAME WAS ALSO INVALID. 3. COMING TO AYS.2008-09, 2009-10 AND 2010-11, THE FACTS OF THE CASE ARE THAT ASSESSEE ENTERED INTO DEVELOPMENT AGR EEMENT ON CERTAIN LANDS BEING DEVELOPED BY M/S. SREE CONSTRUCTIONS AT THE RATIO OF 40:60 OF THE BUILT UP AREA BETWEEN THE LAND OWNERS AND DE VELOPERS. AS A PART OF THE AGREEMENT, ASSESSEE RECEIVED TWO FLATS MEASU RING 2,460 SQ. FT., WHICH WERE SOLD IN SEMI-FINISHED STAGE IN THE MONTH S OF AUGUST AND SEPTEMBER, 2008. ASSESSEE OFFERED LONG TERM CAPITA L GAINS IN AY.2010-11 AFTER CLAIMING EXEMPTION U/S.54F ON INVE STMENT A FLAT FOR RS.21 LAKHS. THE ASSESSING OFFICER DID NOT AGREE W ITH THE CLAIM OF ASSESSEE THAT LONG TERM CAPITAL GAINS AROSE IN AY.2 010-11. ACCORDING TO HIM, SINCE LAND WAS GIVEN ON DEVELOPMENT IN CONS IDERATION TO THE BUILT UP AREA CONSTRUCTED, THE TRANSFER OF LAND IS TAXABLE AS SHORT TERM CAPITAL GAIN IN AY.2008-09 AND BROUGHT TO TAX AMOUN T ON 24,49,260/-. ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 3 -: CONSEQUENT TO SALE OF FLATS IN SEMI-FINISHED CONDIT ION IN AY.2009-10, ASSESSING OFFICER BROUGHT SHORT TERM CAPITAL GAINS IN AY.2009-10 TO AN EXTENT OF RS.26,55,240/-. SINCE CAPITAL GAINS ARE BROUGHT TO TAX IN THESE TWO ASSESSMENT YEARS, ASSESSEE CONTESTED THE SAME B EFORE LD.CIT(A), NOT ONLY ON THE COMPUTATION OF CAPITAL GAINS BUT AL SO ON THE JURISDICTION FOR COMPLETING THE PROCEEDINGS U/S.153C. ASSESSEE ALSO PREFERRED APPEAL IN AY.2010-11 SEEKING RELIEF ON THE LONG TER M CAPITAL GAINS OFFERED BY ASSESSEE IN THAT YEAR. THE CIT(A) WHILE HOLDING THAT PROCEEDINGS U/S.153C ARE BAD IN LAW, ON THE REASON THAT NO DOCUMENT BELONGING TO ASSESSEE WAS SEIZED, SHE UPHELD THE AD DITIONS ON MERITS WHILE DIRECTING RELIEF IN AY.2010-11. THE LD.CIT(A ) OPINED THAT PROCEEDINGS U/S.147 ARE TO BE INITIATED FOR AY.2008 -09 AND 2009-10, REVENUE IS AGGRIEVED ON THE ORDER OF THE CIT(A) CAN CELLING THE PROCEEDINGS U/S.153C IN ALL THE IMPUGNED AYS. I.E., 2004-05, 2008-09 AND 2009-10. REVENUE IS IN APPEAL ON THE DIRECTION OF CIT(A) GIVING RELIEF IN AY.2010-11, WHILE CANCELLING ASSESSMENTS IN EARL IER TWO ASSESSMENT YEARS. ASSESSEE RAISED CROSS-APPEALS IN AYS.2008-09 AND 2009-10 ON THE ORDER OF CIT(A), ON MERITS WHICH ARE HELD AGAIN ST ASSESSEE. 4. DURING THE COURSE OF PROCEEDINGS, LD.DR WAS ASKE D TO FURNISH THE RELEVANT DOCUMENTS IF ANY, CONNECTED TO ASSESSEE SE IZED DURING THE SEARCH SO AS TO EXAMINE THE ISSUE OF PROCEEDINGS U/ S.153C. LD.DR COULD ONLY PLACE A COPY OF APPRAISAL REPORT WHEREIN IT WAS SIMPLY STATED THAT ASSESSEE IS ONE OF THE INVESTORS IN M/S.BHAVYA CONS TRUCTIONS P. LTD., AND SHE IS LAND OWNER WHO HAS GIVEN HER LAND ON DEV ELOPMENT TO M/S.SREE CONSTRUCTIONS. DOCUMENTS RELATED TO HER TRANSACTION WERE SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS VIDE PAGE N OS. 247 TO 252 OF ANNEXURE A/BCPL/25 . EXCEPT THIS COPY OF APPRAISAL REPORT PAGE 14, NO OTHER DOCUMENTS WERE PLACED ON RECORD TO COUNTER TH E FINDINGS OF THE LD.CIT(A). ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 4 -: 5. HAVING CONSIDERED THE RIVAL CONTENTIONS AND PERU SING THE ORDERS OF LD.CIT(A), WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE FINDINGS OF LD.CIT(A) ON ASSUMING JURISDICTION U/S 153C. IN FA CT HER FINDINGS IN PARA 5 ARE VERY ELABORATE AND ULTIMATE CONCLUSION I N PARA 5.6, 5.7 AND 5.8 IN AY.2008-09 ARE EXTRACTED AS UNDER FOR THE SA KE OF RECORD: 5.6 IT IS A COMMON FEATURE OF SEARCHES CONDUCTED U/S 132 O F THE I.T.ACT THAT THEY CONTAIN DETAILS OF UNACCOUNT ED TRANSACTIONS OF THE PERSONS SEARCHED AND, HENCE, H AVE IMPLICATION OF UNACCOUNTED INCOME FOR THE PERSONS SEARCHED AS WELL AS FOR OTHER PARTIES WITH WHOM THE TRANSAC TIONS HAD BEEN ENTERED INTO. THE LANGUAGE OF THE SECTION 153 C OF THE I.T. ACT, IS CLEAR THAT IT IS NOT PERMISSIBLE FOR THE A O TO TREAT SUCH DOCUMENTS AS BELONGING TO THE PERSON SEARCHED WHIL E MAKING ASSESSMENT U/S 153A OF THE I.T ACT AND ALSO RECORD THE SATISFACTION THAT THE SAME BELONGED TO SOME OTHER PERSON (SO TH AT PROCEEDING U/S153C OF THE I.T.ACT COULD BE INITIATE D AGAINST THE LATTER). IT IS ALSO NOT THE REQUIREMEN T OF LAW THAT, IN SUCH CASES, THE ASSESSMENT HAS TO BE SOMEHOW MADE U/S 153C OF THE I.T.ACT ONLY. THE PROVISION OF SECTIO N 153C IS A SPECIAL ONE AND COMES INTO PLAY ONLY WHEN THE O BJECTIVE CONDITI ONS LEADING TO THE SATISFACTION THAT THE SEIZED VALUABLES/DOCUMENTS BELONGED TO A PERSON OTHER TH AN THE PERSON SEARCHED EXIST. NO DOUBT, THIS PROVISION O VERRIDES THE NORMAL PROVISIONS RELATING TO ASSESSMENT OF INCOM E I.E. SECTION 143, 147, ETC. BUT THERE IS NOTHING TO PREVENT IN ITIATION OF PROCEEDING U/S 143(2) OR 147 OF THE I.T.ACT IN TH E CASE OF A PERSON ON THE BASIS OF INFORMATION CONTAINED IN T HE DOCUMENTS SEIZED IN THE COURSE OF A SEARCH CONDUCTED IN THE CASE OF ANOTHER PERSON. THE CORRECT POSITION OF LAW IS THAT: I. WHERE THE SEIZED DOCUMENTS BELONG TO THE PERSON SEARCHED BUT HAVE IMPLICATION OF ADDITIONAL INCOM E FOR ANY OTHER PERSON, THE INFORMATION CONTAINED IN THE SEIZED DOCUMENTS MAY BE UTILIZED FOR RECORDING SATISFACTI ON THAT THAT INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF SUCH OTHER PERSON AND INITIATING ASSESSMENT/RE-ASSESSME NT PROCEEDING U/S 147 OF THE I.T.ACT. II. WHERE THE SEIZED DOCUMENTS BELONG TO THE OTHER PERSON, PROCEEDING U/S.153C OF THE I.T.ACT ARE REQUIRED TO BE INITIATED. ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 5 -: IN THIS CONNECTION, THE FOLLOWING DECISION IS AL SO RELEVANT: VIJAY BHAI N. CHADRANI VS. ACIT (GUJARAT HIGH COURT ): WHERE SEIZED DOCUMENTS DID NOT BELONG TO THE OTHER PERSON THOUGH THERE WAS A REFERENCE TO SUCH OTHER P ERSON THEREIN, THE ISSUE OF NOTICE U/S 153C TO HIM WAS IN VALID. 5.7 T HE SATISFACTION ENVISAGED IN SECTION 153C HAS TO BE GENUINE AND HAS TO BE REACHED OBJECTIVELY ON THE B ASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS CASE, THE DOCUMENTS PERTAINED TO BHAVYA GROUP OF CA SES (M/S SREE CONSTRUCTIONS). THEY WERE FOUND IN THE POSSESSION/CONT ROL OF THEIR PREMISES AT BHAVYA CONSTRUCTIONS PVT. LTD. T HUS, THEY WERE PRESUMED TO BE BELONGING TO THEM. THERE WAS N O DISCLAIMER FROM THE BHAVYA GROUP THAT THESE DOCUME NTS DID NOT BELONG TO IT. THUS, ANY OBJECTIVE GROUND FOR REACH ING THE SATISFACTION THAT THE DOCUMENTS BELONGED TO A PERS ON OTHER THAN SEARCHED PARTY DID NOT EXIST. THIS BEING SO, IT IS CLEAR THAT THE REQUIRE MENT OF THE PROVISIONS OF SECTION 153C OF THE I.T.A CT WAS NOT MET. THE APPRO PRIATE COURSE IN SUCH SITUATION WAS TO INITIATE PROCEEDINGS U/S 147 OF THE I.T.ACT AND MAKE ASSESS MENT ACCORDINGLY. IF THE DOCUMENTS SEIZED IN THE COURSE OF SEARCH IN THE CASE OF A CONTAIN INFORMATION RELATING TO ADDI TIONAL TAX LIABILITY OF B AND THE DOCUMENTS ARE NOT FOUND TO BE BELONGING TO B, SUCH INFORMATION FORMS A VALID REASON TO BELIEV E THAT INCOME IN THE CASE OF B HAS ESCAPED ASSESSMENT AND SUCH REASON IS A VALID GENESIS FOR INITIATING PROCEEDING U/S 147 OF THE I.T.ACT AGAINST B. 5.8 IN VIEW OF THE FOREGOING DISCUSSION, IT IS HELD THA T PROCEEDING INITIATED U/S 153C OF THE I.T.ACT IN TH IS CASE WAS INVALID AND, CONSEQUENTLY, THE ASSESSMENT MADE IN PURSUANCE OF THE SAME WAS ALSO INVALID. THE APPROPRIATE COUR SE OF ACTION FOR THE AO IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WAS TO TREAT THE COPY OF THE IMPUGNED DOCUMENTS AS A S OURCE OF INFORMATION AND INITIATE PROCEEDINGS U/S 147 OF TH E I.T.ACT ON THE BASIS OF THE SAME. SINCE THE ASSESSMENT MADE U/S 153C HAS BEEN ANNULLED, THE AO IS FREE TO INITIATE PROC EEDING U/S 147 OF THE I.T.ACT BY FOLLOWING THE PRESCRIBED PROCEDU RAL REQUIREMENTS. 6. SINCE NO INCRIMINATING MATERIAL PERTAINING TO AS SESSEE WAS FOUND IN THE COURSE OF SEARCH AND THE TRANSACTION WHICH W AS ENTERED BY ASSESSEE FOR DEVELOPMENT WAS ALREADY ON RECORD, WE ARE OF THE OPINION ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 6 -: THAT THERE IS NO MERIT IN THE REVENUE CONTENTIONS. IN FACT AS SEEN FROM THE ORDER IN AY.2004-05, ASSESSING OFFICER DID NOT EVEN HAVE ANY DOCUMENTS PERTAINING TO THAT YEAR AND THE ONLY ADDI TION MADE WAS ABOUT ASSESSEE'S INVESTMENT IN PURCHASE OF A FLAT, WHICH HAS NO CONNECTION TO THE SEARCH AT ALL. IN VIEW OF THIS, WE DO NOT FIND ANY REASON INTERFERE WITH THE ORDERS OF CIT(A) ON THE ISSUE OF JURISDICTION U /S.153C. ACCORDINGLY, REVENUE'S APPEALS IN AYS.2004-05, 2008-09, 2009-10 ARE DISMISSED. 7. COMING TO AY.2010-11, LD.CIT(A) GAVE DIRECTION T O ASSESSING OFFICER TO GIVE RELIEF TO THE EXTENT OF INCOMES ASS ESSED IN AYS.2008-09 AND 2009-10 AND ALLOWED ASSESSEE'S ALTERNATE CONTEN TIONS. SINCE THE ASSESSMENTS U/S 153C IN AYS.2008-09 AND 2009-10 ARE HELD TO BE BAD IN LAW BY THE LD.CIT(A), SHE COULD NOT HAVE GIVEN D IRECTIONS IN AY.2010- 11, EITHER WAY SINCE NO PROCEEDINGS ARE PENDING AGA INST ASSESSEE IN THOSE ASSESSMENT YEARS AT THAT POINT OF TIME. THER EFORE, WE SET ASIDE THE DIRECTION OF CIT(A) WITH AN OBSERVATION THAT AS SESSEE IS FREE TO RAISE THE ISSUE LATER, IF ANY PROCEEDINGS ARE INITIATED A GAINST ASSESSEE IN ANY OTHER YEAR(S) PERTAINING TO THE ISSUE OF CAPITAL G AINS OFFERED BY ASSESSEE IN THIS YEAR. WITH THESE OBSERVATIONS, THE ORDER O F LD.CIT(A) ON THIS ISSUE ARE SET ASIDE AND SO, REVENUE'S GROUNDS ARE C ONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 8. COMING TO ASSESSEE'S CROSS-APPEALS IN AYS.2008-0 9, 2009-10 & 2010-11 THESE GROUNDS ARE ON MERITS. SINCE PROCEED INGS INITIATED U/S.153C ARE HELD TO BE BAD IN LAW, THERE IS NO NEE D TO GIVE ANY FINDING ON THE ISSUE ON MERITS BY THE LD. CIT(A). ASSESSEE IS FREE TO RAISE THE CONTENTIONS IN ANY OTHER ASSESSMENT PROCEEDINGS IN ITIATED BY ASSESSING OFFICER. ASSESSEE'S RIGHT TO SUBMIT NECESSARY DETA ILS AND OBJECTION TO THE PROCEEDINGS ARE THEREFORE PROTECTED. IN CASE ASSES SING OFFICER CONSIDER IT NECESSARY TO INITIATE PROCEEDINGS U/S.147, THEN ONL Y THE ISSUES CAN BE ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 7 -: EXAMINED AFRESH. THEREFORE, TO THAT EXTENT ASSESSE E'S OBJECTIONS ON ORDERS OF LD.CIT(A) ON MERITS ARE TO BE UPHELD. TO THAT EXTENT, WE SET ASIDE THE FINDINGS OF CIT(A) ON THE MERITS OF THE I SSUE. ASSESSEE'S GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURP OSES. 9. WE MAKE IT CLEAR THAT THESE ORDERS SHOULD NOT BE CONSIDERED AS DIRECTION FOR INITIATING FRESH PROCEEDINGS AGAINST ASSESSEE AND IN CASE ASSESSING OFFICER ALREADY INITIATED THE PROCEEDINGS , ASSESSEE IS FREE TO RAISE THE NECESSARY OBJECTIONS IF ANY, ON MERITS. WITH THESE OBSERVATIONS, WE ALLOW THE ASSESSEE'S CROSS-APPEALS . G C SUBBANAIDU ITA NO.659/HYD/2013 (AY.2005-06) : 10. THIS APPEAL IS FILED BY REVENUE AGAINST THE ORD ER OF CIT(A) DT.08- 02-2013. HEREIN ALSO ASSESSEE IS AN INDIVIDUAL AND DOCTOR BY PROFESSION RUNNING HOSPITAL IN THE NAME OF 'PEOPLE'S HOSPITAL' AT PATANCHERU, HYDERABAD. THE ISSUE IN THIS APPEAL IS ALSO WITH R EFERENCE TO COMPUTATION OF CAPITAL GAIN ON THE PROPERTIES SOLD AT JUBILEE HILLS, HYDERABAD ON 10-11-2004. IN THIS CASE, THE PROCEED INGS OF 153C WERE INITIATED ON THE REASON THAT CERTAIN DOCUMENTS WERE SEIZED AND ARE RELATED/BELONGING TO ASSESSEE. HOWEVER, IN THE ASS ESSMENT PROCEEDINGS U/S 153C, THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S.54F. ON THE OBJECTION RAISED BY ASSESSEE WITH REFERENCE TO PROCEEDINGS U/S.153C, LD.CIT(A) EXAMINED THE SEIZING MATERIAL A ND DOCUMENTS AND HELD AS UNDER: 4.5 IT IS A COMMON FEATURE OF SEARCHES CONDUCTED U/S 132 O F THE I.T.ACT THAT THEY CONTAIN DETAILS OF UNACCOUNT ED TRANSACTIONS OF THE PERSONS SEARCHED AND, HENCE, H AVE IMPLICATION OF UNACCOUNTED INCOME FOR THE PERSONS SEARCHED ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 8 -: AS WELL AS FOR OTHER PARTIES WITH WHOM THE TRANSAC TIONS HAD BEEN ENTERED INTO. THE LANGUAGE OF THE SECTION 153 C OF THE I.T. ACT, IS CLEAR THAT IT IS NOT PERMISSIBLE FOR THE A O TO TREAT SUCH DOCUMENTS AS BELONGING TO THE PERSON SEARCHED WHIL E MAKING ASSESSMENT U/S 153A OF THE I.T ACT AND ALSO RECORD THE SATISFACTION THAT THE SAME BELONGED TO SOME OTHER PERSON (SO TH AT PROCEEDING U/S153C OF THE I.T.ACT COULD BE INITIATE D AGAINST THE LATTER). IT IS ALSO NOT THE REQUIREMEN T OF LAW THAT, IN SUCH CASES, THE ASSESSMENT HAS TO BE SOMEHOW MADE U/S 153C OF THE I.T.ACT ONLY. THE PROVISION OF SECTION 153C IS A SPECIAL ONE AND COMES INTO PLAY ONLY WHEN THE OBJ ECTIVE CONDITI ONS LEADING TO THE SATISFACTION THAT THE SEIZED VALUABLES/DOCUMENTS BELONGED TO A PERSON OTHER TH AN THE PERSON SEARCHED EXIST. NO DOUBT, THIS PROVISION OV ERRIDES THE NORMAL PROVISIONS RELATING TO ASSESSMENT OF INCOM E I.E. SECTION 143, 147, ETC. BUT THERE IS NOTHING TO PREVENT IN ITIATION OF PROCEEDING U/S 143(2) OR 147 OF THE I.T.ACT IN THE CASE OF A PERSON ON THE BASIS OF INFORMATION CONTAINED IN T HE DOCUMENTS SEIZED IN THE COURSE OF A SEARCH CONDUCTED IN THE CASE OF ANOTHER PERSON. THE CORRECT POSITION OF LAW IS THAT: I. WHERE THE SEIZED DOCUMENTS BELONG TO THE PERSON SEARCHED BUT HAVE IMPLICATION OF ADDITIONAL INCOM E FOR ANY OTHER PERSON, THE INFORMATION CONTAINED IN THE SEIZED DOCUMENTS MAY BE UTILIZED FOR RECORDING SATISFACTI ON THAT THAT INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF SUCH OTHER PERSON AND INITIATING ASSESSMENT/RE-ASSESSME NT PROCEEDING U/S 147 OF THE I.T.ACT. II. WHERE THE SEIZED DOCUMENTS BELONG TO THE OTHER PERSON, PROCEEDING U/S.153C OF THE I.T.ACT ARE REQUIRED TO BE INITIATED. IN THIS CONNECTION, THE FOLLOWING DECISION IS AL SO RELEVANT: VIJAY BHAI N. CHADRANI VS. ACIT (GUJARAT HIGH COURT ): WHERE SEIZED DOCUMENTS DID NOT BELONG TO THE OTHER PERSON THOUGH THERE WAS A REFERENCE TO SUCH OTHER P ERSON THEREIN, THE ISSUE OF NOTICE U/S 153C TO HIM WAS IN VALID. 4.6 T HE SATISFACTION ENVISAGED IN SECTION 153C HAS TO BE GENUINE AND HAS TO BE REACHED OBJECTIVELY ON THE B ASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS CASE, THE DOCUMENTS PERTAINED TO BHAVYA GROUP OF CA SES. THEY WERE FOUND IN THE POSSESSION/CONT ROL OF THEIR PREMISES AT ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 9 -: BHRAMARAMBA THEATRE. THUS, THEY WERE PRESUMED TO B E BELONGING TO IT. THERE WAS NO DISCLAIMER FROM THE BHAVYA GROUP THAT THESE DOCUMENTS DID NOT BELONG TO IT. T HUS, ANY OBJECTIVE GROUND FOR REACHING THE SATISFACTION TH AT THE DOCUMENTS BELONGED TO A PERSON OTHER THAN SEARCHE D PARTY DID NOT EXIST. THIS BEING SO, IT IS CLEAR THAT THE REQUIRE MENT OF THE PROVISIONS OF SECTION 153C OF THE I.T.ACT WA S NOT MET. THE APPRO PRIATE COURSE IN SUCH SITUATION WAS TO INITIATE PROCEEDINGS U/S 147 OF THE I.T.ACT AND MAKE ASSESS MENT ACCORDINGLY. IF THE DOCUMENTS SEIZED IN THE COURSE OF SEARCH IN THE CASE OF A CONTAIN INFORMATION RELATING TO ADDI TIONAL TAX LIABILITY OF B AND THE DOCUMENTS ARE NOT FOUND TO BE BELONGING TO B, SUCH INFORMATION FORMS A VALID REASON TO BELIEV E THAT INCOME IN THE CASE OF B HAS ESCAPED ASSESSMENT AND SUCH REASON IS A VALID GENESIS FOR INITIATING PROCEEDING U/S 147 OF THE I.T.ACT AGAINST B. 4.7 IN VIEW OF THE FOREGOING DISCUSSION, IT IS HELD THA T THE PRIMARY REQUIREMENT OF INVOKING THE PROVISIONS OF SECTION 153C OF THE I.T.ACT WAS ABSENT IN THIS CASE. THE REQUI REMENT OF RECORDING THE SATISFACTION THAT THE IMPUGNED DOCUM ENTS BELONGED TO A PERSON OTHER THAN THE PERSON SEARCHE D WAS NOT MET IN FORM AND IN SUBSTANCE. CONSEQUENTLY, THE P ROCEEDING INITIATED BY THE AO U/S 153C IN THIS CASE WAS VOID AB INITIO AND THE ASSESSMENT MADE BY HIM IN PURSUANCE OF THE SAME WAS ALSO INVALID. THE APPROPRIATE COURSE OF ACTIO N IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WAS FOR HIM TO TREAT THE COPY OF THE IMPUGNED DOCUMENTS AS A SOURCE OF INFO RMATION AND INITIATE PROCEEDINGS U/S 147 OF THE I.T.ACT ON THE BASIS OF THE SAME. SINCE ASSESSMENT UNDER APPEAL IS ANNULLED. 11. HOWEVER, WHILE HOLDING THAT PROCEEDINGS U/S.153 C ARE VOID AB INITIO, THE LD.CIT(A) OPINED THAT PROCEEDINGS U/S.147 COULD BE INITIATED. WHILE ANNULLING ASSESSMENT, LD.CIT(A) ALSO DECIDED THE MERITS OF ADDITION VIDE PARA 5 OF THE ORDER. ASSESSEE IS NOT IN APPEAL BUT THE REVENUE IS IN APPEAL ON THE ISSUE OF ANNULLING THE ASSESSMENT U/S.153C. HAVING CONSIDERED THE FACTS OF THE CASE AND ALSO TH E EVIDENCE ON RECORD AND PARTICULARLY THE PAGE 14 FILED BY THE LD.DR ( C OPY OF APPRAISAL REPORT) WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDE R OF THE LD.CIT(A). SINCE THERE IS NO INCRIMINATING MATERIAL PERTAINING TO ASSESSEE ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 10 -: CONSEQUENT TO THE SEARCH CONDUCTED IN ANOTHER PERSO N'S CASE, THE PROCEEDINGS U/S.153C CANNOT BE UPHELD ON THE FACTS OF THE CASE. THE FACTS ARE MORE OR LESS SIMILAR TO THE FACTS IN THE GROUP APPEALS OF SMT. A.VIJAYA'S CASE DISCUSSED ABOVE. FOR THE REASONS ST ATED THEREIN ALSO, REVENUE'S CONTENTIONS CANNOT BE ENTERTAINED. IN TH E RESULT, APPEAL IS DISMISSED. 12. IN THE RESULT, REVENUE'S APPEALS IN ITA NOS. 66 0/HYD/2013, 661/HYD/2013, 662/HYD/2013 AND 663/HYD/2013 FOR AYS .2004-05, 2008-09, 2009-10 AND 2010-11 ARE DISMISSED, ASSESSE E'S CROSS-APPEALS IN ITA NOS.563/HYD/2013, 564/HYD/2013 AND 565/HYD/2 013 IN AYS.2008-09, 2009-10 AND 2010-11 ARE ALLOWED FOR ST ATISTICAL PURPOSES AND APPEAL IN ITA NO.659/HYD/2013 FOR AY.2005-06 IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY, 2015. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCO UNTANT MEMBER HYDERABAD, DATED 21 ST JANUARY, 2015. TNMM ITA NOS. 659, 660, 661, 662, 663/HYD/2013 & 563, 564 & 565/HYD/13 :- 11 -: COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE - 5, 8 TH FLOOR, AAYAKAR BHAVAN, L.B.STADIUM ROAD, BASHEERBAG H, HYDERABAD-500 004. 2. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-5, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 3. SMT. ANNE VIJAYA, FLAT NO.507, SRINIVASAM, OPP: SANGAMITRA SCHOOL, NIZAMPET, HYDERABAD. 4. SHRI G.C.SUBBA NAIDU, 5-79, PEOPLES HOSPITAL, M. G.ROAD, PATANCHERU, MEDAK DIST., 5. CIT(A)-VII, HYDERABAD 6. CIT(C) HYDERABAD 7. DR, ITAT, HYDERABAD