D Ramesh Babu(HUF), Hyd, Hyderabad V. DCIT, Central Circle-7, Hyd, Hyderabad

ITA 613/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6203 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

1 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC) : HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA.NO.613/HYD/2016 ASSESSMENT YEARS 2007-2008 SRI D. RAMESH BABU (HUF) HYDERABAD. PAN AAJHR9310P VS. THE DCIT, CENTRAL CIRCLE-7 HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.614/HYD/2016 ASSESSMENT YEARS 2008-2009 SRI A. RAMESH HYDERABAD. PAN AFIPA0221L VS. THE DCIT, CENTRAL CIRCLE-7 HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI A. SITARAMA RAO DATE OF HEARING : 14.02.2017 DATE OF PRONOUNCEMENT : 14.02.2017 ORDER THE ABOVE APPEALS ARE FILED BY TWO ASSESSEES AND ARE DIRECTED AGAINST THE SEPARATE BUT IDENTICAL ORDERS OF TH E CIT(A)-12, HYDERABAD DATED 10.12.2015 FOR THE A.YS. 2007-08 AND 2008-09 WHEREIN THE LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE A.O. DATED 13.13.2013 UNDER SECTION 143(3) READ WITH SECTION 153C OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS ACT). THE GROUNDS OF A PPEAL RAISED BY THE ASSESSEE SRI D. RAMESH BABU (HUF) FOR THE A.Y. 2007- 08 ARE AS UNDER: 1. THE LD. CIT(A), IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS NOT JUSTIFIED IN DISMISSING THE APPELLANTS GROUND/OBJE CTION ON THE VALIDITY OF INITIATING THE PROCEEDINGS U/S.153C OF THE I.T. ACT. 2 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN REJECTING THE AP PELLANTS EXPLANATION AND CONFIRMING THE ADDITION OF RS.10 LA KHS. 3. THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER OR S UBSTITUTE ANY OF THE GROUND OR GROUNDS DURING THE COURSE OF HEARING. 1.1. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE SRI A. RAMESH BABU FOR THE A.Y. 2008-09 ARE AS UNDER : 1. THE LD. CIT(A) IN THE FACTS AND CIRCUMSTANCES OF T HE CASE, IS NOT JUSTIFIED IN DISMISSING THE APPELLANTS GROUND/OBJE CTION ON THE VALIDITY OF INITIATING THE PROCEEDINGS U/S.153C OF THE I.T. ACT. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN REJECTING THE AP PELLANTS EXPLANATION AND CONFIRMING THE ADDITION OF RS.4,67, 500. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A DDITION OF RS.3,01,000 REJECTING THE FACT THAT THE TRANSACTION IS NOT MATEIRALISED DURING THE RELEVANT PREVIOUS YEAR. 4. THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER OR S UBSTITUTE ANY OF THE GROUND OR GROUNDS DURING THE COURSE OF HEARING. 2. WE HAVE HEARD SHRI K.A. SAIPRASAD, LD. COUNSEL FOR THE ASSESSEE AND SHRI A. SITARAMA RAO, LEARNED SENIOR D. R. APPEARING ON BEHALF OF THE REVENUE. 3. ON CAREFUL CONSIDERATION OF THE CONTENTIONS OF BOTH THE PARTIES AND ON A PERUSAL OF THE PAPERS ON RECORD, THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAW CITED, I HOL D AS FOLLOWS. 3.1. THE ASSESSEE CONTENDED THAT THE NOTICE ISSUED UNDE R SECTION 153C OF THE ACT IS BAD IN LAW FOR THE REASON THAT, THE A. O. OF THE ASSESSEE WHO WAS SEARCHED UNDER SECTION 132 OF THE ACT, HAS NOT RECORDED SATISFACTION THAT INCRIMINATING MATERIAL ETC., BELONGING TO THE APPELLANTS HAVE BEEN FOUND DURING THE COURSE OF SEARCH AND THERE AFTER REFERRED THE MATTER TO THE A.O. OF THE APPELLANTS ALONG WITH SUCH MAT ERIAL. IT WAS 3 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. PLEADED THAT IN THE ABSENCE OF THE SATISFACTION NOTE RECOR DED BY THE A.O. OF THE SEARCHED PARTY, THE PROCEEDINGS INITIATED UNDER SECTION 153C WOULD BE ILLEGAL AND CONSEQUENTLY, THE ASSESSMENTS ARE BAD IN LAW. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS : (I) PEPSICO INDIA HOLDINGS (P) LTD., VS. ACIT (2014) 50 TAXMANN.COM 299 (DEL.) (HC) (II) CIT VS. MEGHMANI ORGANICS LTD., (2013) 40 TAXMANN.CO M 31 (GUJARAT) (HC) (III) CIT VS. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., (2 015) 57 TAXMANN.COM 282 (A.P.) 4. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAD CONSI DERED THIS POINT AND AS THE ASSESSEE HAS NOT RAISED THIS ISSUE AT ANY POINT OF TIME DURING THE ASSESSMENT PROCEEDINGS, THIS GROUND C ANNOT BE TAKEN BEFORE THE CIT(A). ON A QUERY FROM THE BENCH, THE LD. D.R. COULD NOT PRODUCE ANY SATISFACTION NOTE RECORDED BY THE A.O. OF TH E SEARCHED PARTY I.E., M/S. SRI SAI KAMAL CONSTRUCTIONS AND DEVELOPER S, HYDERABAD. HE PRODUCED A FILE OF THE APPELLANTS BUT THE NOTING SHOWN TO THE BENCH IS NOT A SATISFACTION NOTE. 5. I FIND THAT THE ISSUE IN QUESTION IS A JURISDICT IONAL ISSUE. THE ASSESSEE HAS TAKEN THIS GROUND BEFORE THE LD. CIT(A) A ND THE LD. CIT(A) SHOULD HAVE DISPOSED OFF THIS JURISDICTIONAL ISSUE. 6. AS ADMITTEDLY, NO SATISFACTION HAS BEEN RECORDED B Y THE A.O. OF M/S. SRI SAI KAMAL CONSTRUCTIONS AND DEVELOPERS I. E., THE SEARCHED PARTY THAT A NY MONEY, BULLION, JEWELLER; OR OTHER VALUABLE ARTI CLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT WAS FOUND THE ENTIRE PROCEEDINGS UNDER SECTION 153C OF THE ACT IS BAD IN LAW. 4 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. 7. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., 57 TAXMANN.COM 28 2 (A.P.) HAS HELD AS FOLLOWS : 5. THE ARGUMENT APPARENTLY IS VERY ATTRACTIVE, BU T THE LAW IS OTHERWISE AND THE LEARNED TRIBUNAL HAS CORRECTLY AP PLIED. WE THEREFORE APPROPRIATELY SET OUT SECTION 153C OF THE ACT. '153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON.- ( 1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BEL ONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTH ER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF AC COUNT OR DOCUMENTS OR ASSETS. SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO I N SUB- SECTION (1) OF SECTION 153A.' (EMPHASIS SUPPLIED) 6. IT IS THEREFORE CLEAR THAT FIRSTLY SATISFACTIO N HAS TO BE RECORDED BY THE ASSESSING OFFICER WHO CONDUCTED SEARCH, THAT ANY MONEY, BULLION, JEWELLER; OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO. A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THIRD PA RTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOUNTS OR DOCUMENT BE ING HANDED OVER TO HIM SHALL RECORD HIS OWN SATISFACTION AFTER EXAMINI NG THE SAME INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE SATIS FACTION OF THE SEIZING OFFICER. IN OTHER WORDS IT IS NOT AN AUTOMATIC ACTI ON. WE FIND SATISFACTION OF TWO OFFICERS IS MISSING. IN THIS CONNECTION WE S ET OUT THE TEXT OF THE ORDER OF THE ASSESSING OFFICER WHICH IS AS FOLLOWS: 'A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIE D OUT IN THE GROUP CASE OF DR.T.YADHAIAH GOUD AND OTHERS ON 25.3 .2010. DURING THE COURSE OF SEARCH OPERATION DOCUMENTS BEL ONGING TO SHETTY PHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN 5 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDI NG U/S. 153C OF THE LT. ACT.' 7. THE AFORESAID SECTION MANDATES RECORDING OF SA TISFACTION OF THE ASSESSING OFFICER(S) IS A PRECONDITION FOR INVO KING JURISDICTION AND IT IS NOT A MERE FORMALITY BECAUSE RECORDING OF SATISF ACTION POSTULATES APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENTS SE IZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PE RSON REFERRED TO IN SECTION 153-A OF THE ACT. IT IS CONTENDED THAT THE SAME ASSESSING OFFICER IS INVOLVED IN THE MATTER. THIS FACT DOES NOT DISPE NSE WITH ABOVE REQUIREMENT. IT IS SETTLED POSITION OF LAW THAT WHE N A THING IS TO BE DONE IN ONE PARTICULAR MANNER UNDER LAW THIS HAS TO BE D ONE IN THAT MANNER ALONE AND NOT OTHER WAY (SEE NAZIR AHMED V. KING EM PEROR). WE THINK THE LEARNED TRIBUNAL HAS CORRECTLY FOLLOWED THE. PR INCIPLE. WE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED. 8. WE ACCORDINGLY DISMISS THE APPEAL. THERE WILL BE NO ORDER AS TO COSTS. 8. THE FACTS OF THE CASE ON HAND ARE SIMILAR TO THE F ACTS OF THE ABOVE CASE. HENCE, RESPECTFULLY FOLLOWING THE ABOVE J UDGMENT OF THE JURISDICTIONAL HIGH COURT, I QUASH BOTH THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) READ WITH SECTION 153C AS BAD IN LAW. 9. IN THE RESULT, APPEALS OF THE ASSESSEE IN BOTH THE ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.02.2017. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER HYDERABAD, DATED 14 TH FEBRUARY, 2017 VBP/- 6 ITA.NOS.613 & 614/HYD/2016 SHRI D. RAMESH BABU (HUF) & SHRI A. RAMESH, HYDERABAD. COPY TO 1. SHRI D. RAMESH BABU (HUF), HYDERABAD. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD- 020. 2. SHRI A. RAMESH, HYDERABAD. C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD- 020. 3. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-7, POSNETT BHAVAN, TILAK ROAD, RAM KOTI, HYDERABAD 95. 4. CIT(A)-12, HYDERABAD. 5. PR. CIT (CENTRAL), HYDERABAD. 6. D.R. ITAT A (SMC) BENCH, HYDERABAD. 7. GUARD FILE.