Shettys Pharmaceuticals & Biologicals Limited, Hyderabad V. DCIT,Central Circle-2, Hyderabad

ITA 931/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77907 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Document seized; Period of limitation; Advance ruling; Cost of acquisition; Fair market value; Block assessment; Documents seized
• Section: 143(3); 133A; 153A; 148; 132; 90; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 930/HYD/2013 A.Y. 2007-08 ITA NO. 931/HYD/2013 A.Y. 2009-10 M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., HYDERABAD PAN: AAHCS8943A VS. THE DEPUTY CIT CENTRAL CIRCLE-2 HYDERABAD APPELLANT RESPONDENT ITA NO. 983/HYD/2013 ASSESSMENT YEAR 2007-08 THE DEPUTY CIT CENTRAL CIRCLE-2 HYDERABAD VS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., HYDERABAD PAN: AAHCS8943A APPELLANT RESPONDENT ASSESSEE BY: SRI S. RAMA RAO REVENUE BY: SRI D. SUDHAKAR RAO DATE OF HEARING: 21 .0 3 .2014 DATE OF PRONOUNCEMENT: 28.05.2014 ORDER PER CHANDRA POOJARI, A.M.: ITA NO. 930/HYD/2013 BY ASSESSEE AND ITA NO. 983/HYD/2013 BY REVENUE ARE CROSS APPEALS FOR ASSES SMENT YEAR 2007-08 AND ITA NO. 931/HYD/2013 BY THE ASSESS EE FOR A.Y. 2009-10. ALL THE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A)-I, HYDERABAD DATED 28.3.2013 PA SSED U/S. 143(3) R.W.S. 153C OF INCOME-TAX ACT, 1961. SINCE THE ISSUES IN 2 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== THESE APPEALS ARE INTERRELATED, THEY ARE CLUBBED TO GETHER, HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE WILL TAKE UP THE CROSS APPEALS PERTAINING TO ASSESSMENT YEAR 2007-08. 3. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW . 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS UNDER SEC. 153C O F THE I.T. ACT. THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE INITIATIO N OF PROCEEDINGS UNDER SEC. 153C ARE NOT VALID. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT CAPITAL GAIN ARISES ON ENTERI NG INTO THE DEVELOPMENT AGREEMENT AND OUGHT TO HAVE HELD THAT THE CAPITAL GAIN IS TAXABLE FOR THE ASSESSMENT YEAR 2009-10 WHEN THE CONSTRUCTED AREA WAS RECEIVED BY THE APPELLANT HEREIN AND NOT FOR TH E YEAR UNDER CONSIDERATION. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT ALL THE AGREEMENTS ENTERED INTO WITH THE DEVELOPER WOULD CLEARLY INDICATE THAT THE TRANSACTION IS IN THE NATURE OF A SALE AND NOT THAT OF A DEVELOPMENT AGREEMENT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE APPELLANT FINALLY RECEIVED ONLY CONSIDERATION IN RUPEES AND NOT IN CONSTRUCTED AREA . 5. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE CONSTRUCTED AREA HANDED OVE R TO THE APPELLANT AS 88,520 SQ. FT. AS AGAINST THE A CTUAL AREA RECEIVED OF 70,947 SFT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THE EVIDENCE PRODUCED TO THE EFFECT THAT THE APPELLANT BECAME ENTITLED ONLY FOR 70,947 SFT A ND NOT FOR 88,520 SFT. 3 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE COST OF THE LAND BE ADOPT ED AT RS. 500 SQ. YD AS ON 1-4-1981 AS AGAINST RS. 50 ADOPTED BY THE ASSESSING OFFICER. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE CLAIM OF THE APPELLANT THAT THE MARKET VALUE OF THE LAND AS ON 1-4-1981 IS RS. 1000 PER SQ. YD. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE ALLOWED THE EXPENDITURE INCURRED BY THE APPELLANT OF RS. 84,00,000 TOWARDS DEVELOPMENT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT OUT OF THE SAID AMOUNT, RS. 44,34,246 REPRESENTS PAYMENTS TO THE GHMC FOR PERMISSIONS AND THE BALANCE OF THE EXPENDITURE REPRESENTS EXPENDITURE ON SITE SURVEY; DRAWINGS ETC . 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT CONSIDERING THE CLAIM OF THE APPELLANT THAT AN AMOUNT OF RS. 7,04,56,050 WAS SPENT DURING THE PREVIOUS YEAR RELEVANT FOR THE ASSESSMENT YEAR 2005-06 AND THE SAID AMOUNT WAS INCURRED IN DEVELOPING THE PREMISES UNDER CONSIDERATION. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE ASSESSMENT FOR THE SAID ASSESSMENT YEAR WAS COMPLETED UNDER SEC. 143(3) AND WAS ACCEPTED BY THE ASSESSING OFFICER. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALSO OUGHT TO HAVE SEEN THAT PAYMENTS WERE MADE THROUGH CHEQUES. 4. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO ADOPT COST OF ACQUISITION AT RS. 500 PER SQ. YARD INSTEAD OF RS. 50 PER SQ. YARD AS ADOPTED BY THE AO ON THE BASIS OF INFORMATION RECEIVED FROM SRO. 5. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE HAD NOT FILED ITS ORIGINAL RETURN OF INCOME WITHIN THE DUE DATE P RESCRIBED U/S. 139(1) FOR ANY OF THESE TWO YEARS. SEARCH AND SEIZURE 4 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== OPERATIONS U/S. 132 OF IT ACT WERE CONDUCTED AT THE RESIDENTIAL PREMISES OF SRI MADDI NARSAIAH AND SRI MADDI LINGAI AH, DIRECTORS OF M/S. SHANTA SRIRAM INFRA AND CONSTRUCT IONS PVT. LTD. ( FOR SHORT SSICPL) ON 25-3-2010. A SURVEY U/S . 133A WAS ALSO CONDUCTED IN THE OFFICE PREMISES OF SSICPL. DU RING THE SAID SEARCH, INCRIMINATING MATERIAL/DOCUMENTS BELON GING TO THE ASSESSEE COMPANY WERE FOUND AND SEIZED. ACCORD INGLY, A NOTICE U/S. 153C WAS ISSUED TO THE ASSESSEE COMPANY . IN RESPONSE, THE ASSESSEE FILED THE RETURN OF INCOME F OR THE A.Y. 2007-08, DECLARING LOSS OF RS. 19,215/- FROM BUSINE SS. THE ASSESSEE ALSO FILED THE RETURN OF INCOME FOR THE A. Y. 2009-10 ON 9-11-2011 ITSELF, DECLARING LONG TERM CAPITAL LO SS OF RS. 39,79,148/- ON SALE OF 6885 SQUARE YARDS (SQY) OF L AND. 6. AS REGARDS THE ADDITION OF RS. 8,69,18,511/- TOWARD S LONG TERM CAPITAL GAIN IN A.Y. 2007-08, IN THE COUR SE OF SEARCH, VARIOUS DETAILS REGARDING CHIPPENDALE PROJECT WERE SEIZED FROM THE PREMISES OF SHRI NARSAIAH AND SRI LINGAIAH , BESIDES SSICPL. A DEVELOPMENT AGREEMENT-CUM GPA EXECUTED BY THE ASSESSEE IN FAVOUR OF SSICPL ON 27-10-2006 WAS ALSO FOUND, WHEREBY 6885 SQY OF LAND HAD BEEN GIVEN TO THEM FOR DEVELOPMENT WITH A SHARING RATIO OF 50 : 50. M/S. SSICPL HAD CONSTRUCTED A PROJECT IN THE NAME AND STYLE OF CHIP PENDALE. 7. IN ORDER TO EXAMINE THE LIABILITIES OF CAPITAL GAIN S ON ACCOUNT OF THE SAID DEVELOPMENT AGREEMENT IN THE HA NDS OF THE ASSESSEE, SUMMONS WAS ISSUED TO THE ASSESSEE CO MPANY AT ITS MUMBAI ADDRESS. HOWEVER, THE SAME WAS RETURNED UN- SERVED. IN THE POST SEARCH ENQUIRIES, IT WAS OBSER VED THAT SHRI 5 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== MADDI NARSAIAH ALONG WITH FOUR OTHERS HAD ACQUIRED THE SAID COMPANY IN THE YEAR 2004-05. IN HIS STATEMENT ON O ATH DATED 9-7-2010, HE HAD STATED THAT THE SAID COMPANY HAS A PAID UP CAPITAL OF RS. 20 LAKHS AND HIS SHARE HOLDING THERE IN IS 35%, WHILE SHRI M. RAVINDER GOUD HOLDS ANOTHER 35% AND S HRI N. RAMAKRISHNA REDDY, T. ASHOK KUMAR GOUD AND AMANULLA H KHAN HOLD 10% EACH. IT WAS STATED THAT THE SHARES WERE ACQUIRED FOR A TOTAL CONSIDERATION OF RS. 1,96,60,0 00/- AND HE WAS APPOINTED AS THE MANAGING DIRECTOR AFTER EXECUT ION OF DEVELOPMENT AGREEMENT. NO EVIDENCE COULD BE FURNIS HED REGARDING HIS SUBSEQUENT RESIGNATION. 8. IT WAS NOTICED THAT AS PER THE DEVELOPMENT AGREEMEN T THE SHARES OF BUILT UP AREA HAD TO BE DIVIDED AT 50 : 50 BETWEEN SSICPL AND THE ASSESSEE. ACCORDINGLY, THE AO FELT THAT THE WORKING OF CAPITAL GAIN WAS TO BE DONE AFT ER CONSIDERING THE FACT THAT IN LIEU OF THE LAND FOREG ONE BY THE ASSESSEE COMPANY, IT WAS TO GET 50% OF THE BUILT UP AREA I.E. 88,520 SQ. FEET OUT OF THE TOTAL OF 1,77,040 SQ. FE ET. HE FURTHER NOTICED THAT SSICPL HAD BOUGHT BACK THE BUILT UP AR EA OF 70,947 SFT FOR RS. 12,97,62,978/- IN THE YEAR 2008- 09, THUS ATTRACTING SHORT TERM CAPITAL GAINS. ACCORDINGLY, HE CONCLUDED THAT THE APPELLANT COMPANY WAS LIABLE FOR CAPITAL GAINS TAX. 9. IN VIEW OF THE ABOVE, A STATEMENT WAS RECORDED BY T HE DDIT (INV) FROM SHRI M. LINGAIAH IN THE CAPACITY OF MANAGING DIRECTOR OF THE ASSESSEE COMPANY. SHRI M. NARSAIAH WAS ASKED 6 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== BY HIM TO SHOW CAUSE WHY THE CAPITAL GAINS SHOULD N OT BE CALCULATED FOR THE ASSESSMENT YEARS 2007-08 AND 200 9-10 AS UNDER: (A) LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR 2007-08 TOTAL AREA 6885 SQY TOTAL BUILTUP AREA 177040 SFT TOTAL COST (RS. 30,53,94,000 12,97,62,978) 17,56, 31,022 COST PER SFT (AS PER BUILDER) = 175631022/177040 = RS. 992 SHARE OF M/S. SHETTY PHARMA (88520 X RS. 992) = 8,7 8,112,840 LESS: COST OF LAND (6885/2 X 5.19 X 500) (@ RS. 500 PER SQY AS ON 1.4.1981 APPROX) = 89,33,2 88 LTCG 7,88,78,552 (B) SHORT TERM CAPITAL GAIN FOR THE ASSESSMENT YEAR 2009-10 PURCHASED BUILTUP AREA MEASURING 70947 SFT X 1829 R S. 12,97,62,978 LESS: COST OF CONSTRUCTION @ RS. 1000 PER SFT RS. 7 ,09,47,000 STCG RS. 5,88,15,978 10. IN HIS STATEMENT DATED 9-7-2010, SHRI M. NARSAIAH H AD STATED THAT THE ASSESSEE COMPANY HAS TO PAY THE CAP ITAL GAINS AS THE HOLDER OF THE LAND. HOWEVER, ALL THE SHARE O F THE ASSESSEE COMPANY HAD BEEN ALREADY ACQUIRED BY HIM A ND HIS ASSOCIATES, AND HE WAS ALSO MANAGING DIRECTOR THERE OF. BESIDES, NO EVIDENCE COULD BE PRODUCED TO THE EFFEC T THAT THE SHARES WERE SOLD OFF BY HIM LATER OR THAT HE HAD RE SIGNED AS THE MANAGING DIRECTOR. THEREFORE, IT WAS CONCLUDED THAT THE ENTIRE MANAGEMENT OF THE ASSESSEE COMPANY VESTED WI TH HIM ONLY. BESIDES, THE CONSIDERATION OF RS. 12,97,62,9 78/- TO BE PAID TO THE ASSESSEE COMPANY WAS NOT PAID BY SSICPL , BUT SHOWN AS LIABILITY IN THE BOOKS OF SSICPL, EVEN THO UGH THE AGREEMENT WAS EXECUTED. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SHRI M . NARSAIAH WAS AGAIN ASKED TO EXPLAIN AS TO WHY THE C APITAL GAIN 7 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== SHOULD NOT BE LEVIED IN THE HANDS OF THE ASSESSEE C OMPANY. HOWEVER, NO SATISFACTORY EXPLANATION COULD BE SUBMI TTED BY HIM. ON THE OTHER HAND, HE IN THE STATEMENT DATED 9-7-2010, HAD ALREADY AGREED THAT THE ASSESSEE HAD TO PAY THE CAPITAL GAIN AS THE HOLDER OF THE LAND. IN ANOTHER STATEME NT RECORDED ON 27-12-2011, SHRI NARSAIAH FEIGNED IGNORANCE ABOU T THE TRANSACTIONS OF THE ASSESSEE COMPANY AND ABOUT ITS MANAGEMENT. HOWEVER, THE ASSESSING OFFICER OPINED THAT HE COULD NOT HAVE DISOWNED THE FACTS. SINCE THERE WAS NO RESPONSE TO THE NOTICES U/S. 143(2) AND 142(1), THE AO PASSED THE ORDER U/S. 153C R.W.S. 144 TO THE BEST OF HIS J UDGEMENT ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. 12. AS PER THE INFORMATION RECEIVED FROM SRO, CHIKKADAP ALLI VIDE LETTER DATED 9-12-2011, THE MARKET VALUE OF TH E PROPERTY WAS RS. 50 PER SQ. YARD AS ON 1.4.1981. THEREFORE, THE AO ADOPTED THE SAME FOR DETERMINING THE LONG TERM CAPI TAL GAINS FOR THE A.Y. 2007-08 AND AFTER ADOPTING THE SHARE O F THE ASSESSEE COMPANY @ RS. 992/- PER SQUARE FEET (SFT) FOR 88,520 SFT, WORKED OUT THE LONG TERM CAPITAL GAIN AT RS. 8 ,69,18,511/-. 13. ON APPEAL, THE CIT(A) OBSERVED WITH REGARD TO THE OBJECTION OF THE ASSESSEE FOR INITIATION OF PROCEED INGS U/S. 153C IN THE ASSESSEE'S CASE, THAT THE ASSESSEE HAS CATEGORICALLY ADMITTED THAT NO SUCH OBJECTION HAD BEEN RAISED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD VOLUNT ARILY AND UNCONDITIONALLY FILED RETURNS OF INCOME IN RESPONSE TO THE NOTICE U/S. 153C ISSUED BY THE ASSESSING OFFICER. ON THE OTHER 8 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== HAND, FROM THE REPORT OF THE ASSESSING OFFICER IT I S CLEAR THAT DURING THE COURSE OF SEARCH PROCEEDINGS IN THE PREM ISES OF SHRI M. NARSAIAH AND M. LINGAIAH, VARIOUS DETAILS R EGARDING CHIPPENDALE PROJECT WERE FOUND AND SEIZED. IN THIS REGARD, IT HAS BEEN MENTIONED BY HIM THAT THERE IS SPECIFIC SE IZED MATERIAL, BEING PAGES 29 AND 30 OF ANNEXURE A/ML/RE S/02 SEIZED FROM THE PREMISES OF SHRI M. LINGAIAH, WHICH HAPPENS TO BE A LETTER ADDRESSED TO SHRI K. SUBBA RAO BY SH RI M. NARSAIAH ON BEHALF OF THE ASSESSEE COMPANY. AS DISC USSED EARLIER, SHRI M. NARSAIAH WAS INDEED THE MANAGING D IRECTOR OF THE ASSESSEE COMPANY AND THE RELEVANT FAMILY. THERE FORE, IT IS CLEAR THAT DURING THE COURSE OF SEARCH DOCUMENTS BE LONGING TO THE ASSESSEE COMPANY WERE INDEED FOUND AND SEIZED W HICH WERE SUFFICIENT TO INITIATE THE PROCEEDINGS U/S. 15 3C OF THE ACT. THEREFORE, FINDING NO INFIRMITY IN THE INITIATION O F SUCH PROCEEDINGS, THE CIT(A) DECIDED THIS ISSUE AGAINST THE ASSESSEE. 14. THE CIT(A) OBSERVED WITH REGARD TO DETERMINATION OF LONG TERM CAPITAL GAINS IN THE ASSESSMENT YEAR 2007 -08, THAT IT A DEVELOPMENT AGREEMENT CUM GPA HAD INDEED BEEN EXECUTED BY THE ASSESSEE IN FAVOUR OF SSICPL ON 27. 10.2006, WHEREBY 6885 SQ. YARDS OF LAND HAD BEEN GIVEN FOR DEVELOPMENT. THE SHARING RATIO OF 50 : 50 IN RESPE CT OF THE BUILT UP AREA HAD ALSO BEEN SPECIFICALLY PROVIDED T HEREIN AND THE ASSESSEE WAS TO INITIALLY GET 88,520 SQ. FEET I N LIEU OF THE LAND FOREGONE, OUT OF THE TOTAL BUILT UP AREA OF 1, 77,040 SFT. THE CONSTRUCTION WAS SUBSEQUENTLY COMPLETED BY SSIC PL AND THE DEVELOPER EVEN BOUGHT BACK BUILT UP AREA OF 70, 947 SFT 9 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== FROM THE ASSESSEE FOR RS. 12,97,62,978/- IN THE YEA R 2008-09. THE CIT(A) OBSERVED THAT IN THE LIGHT OF THE DECISI ON OF THE TRIBUNAL IN THE CASE OF DR. MAYA SHENOY VS. ACIT (I TA NO. 266/HYD/2005 DATED 24-10-2008), THERE WAS INDEED A 'TRANSFER' AS CONTEMPLATED U/S. 2(47)(V) OF THE ACT READ WITH THE PROVISIONS OF SEC. 53A OF TRANSFER OF PROPERTY ACT, 1882. 15. THE CIT(A) OBSERVED THAT THE VIEW TAKEN BY THE TRIB UNAL FINDS SUPPORT FROM THE VIEW OF THE HON'BLE BOMBAY H IGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA VS. CIT (2003 INDLAW MUM 47, 501) AND ALSO BY THE HON'BLE AUTHORITY FOR ADVANCE RULING IN THE CASE OF JASBIR SINGH SARKARIA, (2007 INDLAW AIR 14). BESIDES, THE ITAT , COCHIN BENCH, IN THEIR RELATIVELY RECENT DECISION DATED 28 .9.2012 IN THE CASE OF G. SREENIVASAN VS. DCIT (ITA NO. 188/COCH/2 009) HAVE ALSO EXPRESSED A SIMILAR VIEW AFTER REFERRING TO TH E ABOVE MENTIONED DECISION OF THE HON'BLE BOMBAY HIGH COURT . ACCORDINGLY, FOLLOWING THE ABOVE MENTIONED JUDICIAL PRONOUNCEMENTS, IT IS CLEAR THAT SINCE THE ASSESSEE AND OTHERS HAD ENTERED INTO THE ABOVE REFERRED DEVELOPMENT AGR EEMENT ON 27-10-2006 AND HAD ALSO GIVEN POSSESSION OF LAND FOR CONSTRUCTION OF RESIDENTIAL UNITS THEREON, WHICH WA S EVEN DULY CONSTRUCTED LATER, THE CAPITAL GAINS ARISING FROM S UCH TRANSFER WAS INDEED CHARGEABLE TO TAX IN THE ASSESSMENT YEAR 2007-08. 16. THE CIT(A) OBSERVED AS REGARDS THE SUBSEQUENT CONTENTION OF THE REPRESENTATIVE THAT THE DEVELOPME NT AGREEMENT WAS IN THE NATURE OF A SALE AGREEMENT AND THAT SUCH SALE WAS FINALIZED ONLY IN THE YEAR 2010. SUC H CONTENTION 10 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== HAD NOT BEEN RAISED BEFORE THE ASSESSING OFFICER. BESIDES, IT IS CLEAR THAT THE DEVELOPMENT AGREEMENT CUM GPA IS AN INDEPENDENT LEGAL DOCUMENT, WHEREBY THE ASSESSEE HA D TRANSFERRED ITS RIGHTS OVER THE IMPUGNED LAND IN LI EU OF 50% OF THE CONSTRUCTED AREA TO BE BUILT THEREON. THEREFOR E, UNLESS AND UNTIL THE SAID DOCUMENT ITSELF HAD BEEN RESCIND ED, IT COULD NOT HAVE LOST ITS LEGAL VALUE. IN THE INSTANT CASE , ADMITTEDLY, THE DEVELOPMENT AGREEMENT WAS INDEED ACTED UPON. EV EN IF ANY CONSTRUCTED AREA FALLING TO THE SHARE OF THE LA ND OWNER WAS LATER TRANSFERRED TO THE DEVELOPER ITSELF, IT CANNO T BE SAID THAT ALL THE DOCUMENTS WERE ONLY PART OF THE ULTIMATE ST EP AND HAD NO LEGAL AND FINANCIAL IMPLICATION ON THEIR OWN. F INDING NO STRENGTH IN THE CONTENTION THEREFORE, HE WAS OF THE VIEW THAT THE LONG TERM CAPITAL GAINS IS INDEED TO BE CONSIDE RED AS ARISING ON ACCOUNT OF 'TRANSFER' EFFECTED BY WAY OF THE DEVELOPMENT AGREEMENT DATED 29-10-2006, IN THE ASSE SSMENT YEAR 2007-08. 17. THE CIT(A) WITH REGARD TO THE CLAIM THAT SSICPL BOU GHT BACK THE BUILT UP AREA OF 70,947 SFT ONLY IN THE YE AR 2008-09, AND THEREFORE, THE BUILT UP AREA RECEIVED BY THE AS SESSEE HAS TO BE TAKEN AT 70,947 SFT ONLY AND NOT AT 88,520 SFT, WAS OF THE VIEW THAT THE LONG TERM CAPITAL GAINS IN THE PRESEN T CASE IS REQUIRED TO BE COMPUTED ON THE BASIS OF THE DEVELOP MENT AGREEMENT ITSELF AND NOT ON THE BASIS OF ANY OTHER AGREEMENT, WHEREBY A LESSER AREA WAS BOUGHT BACK BY THE DEVELO PER FROM THE LAND OWNERS. THEREFORE, NO INFIRMITY CAN BE SA ID TO EXIST IN 11 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== THE COMPUTATION OF TOTAL CONSIDERATION BY ADOPTING THE FIGURE OF 88,520 SQ. FEET ONLY. 18. THE CIT(A) WITH REGARD TO THE FURTHER CLAIM THAT TH E MARKET VALUE OF THE IMPUGNED LAND AS ON 1-4-1981 WA S ABOUT RS. 1,000/- PER SQ. YARD, OBSERVED THAT THE ASSESSI NG OFFICER ADOPTED THE RATE OF RS. 50/- PER SQY MERELY ON THE BASIS OF INFORMATION RECEIVED FROM SRO, CHIKKADAPALLI. HOWEV ER, IN A NUMBER OF JUDICIAL PRONOUNCEMENTS, IT HAS BEEN HELD THAT THE GUIDELINE VALUE OR THE BASIC VALUATION HAS BEEN REP EATEDLY FOUND TO BE A POOR SUBSTITUTE TO THE FAIR MARKET VA LUE, AS IT LAYS DOWN ONLY GUIDELINES, FIXING THE MINIMUM AND D OES NOT EVEN BIND THE REGISTERING AUTHORITY. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF JAWAJEE NAGANATHAM VS. RDO, ADILABAD, A .P. (1994) (4 SCC 595), PRAKASHVATI VS. CHIEF CONTROLLI NG REVENUE AUTHORITY, UP (1996) (4 SCC 657) AND STATE OF PUNJA B VS. MOHABIR SINGH (1996) (1 SCC 609). FOLLOWING THE SA ID JUDICIAL PRONOUNCEMENTS, THE TRIBUNAL IN THE CASE OF G. VIJA YA AND OTHERS, HAVE HELD THAT SUCH VALUE CANNOT BE ADOPTED AS THE FAIR MARKET VALUE AS ON 1-4-1981. THIS VIEW HAS BE EN REITERATED BY THEM IN A NUMBER OF OTHER JUDICIAL PRONOUNCEMENTS SUCH AS K. PRATHAP REDDY, ASHVEN DAT LA VS. ITO ETC ALSO. FOLLOWING THE SAID DECISIONS, THEREF ORE, THE CIT(A) HELD THAT THE ASSESSING OFFICER COULD NOT HA VE ADOPTED THE RATE OF RS. 50/- PER SQY IN THE INSTANT CASE ME RELY ON THE BASIS OF SRO VALUE, WITHOUT THERE BEING ANY OTHER C ONCLUSIVE EVIDENCE FOR SUCH RATE. 12 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== 19. AS REGARDS THE CLAIM OF THE AR THAT AS PER THE REPO RT OF THE REGISTERED VALUER, THE MARKET RATE OF THE IMPUG NED LAND IS RS. 1000 PER SQ. YARD, AS ON 1-4-1981, THE CIT(A) O BSERVED THAT THE SAID REPORT OF THE VALUER IS NOT BASED ON ANY C OMPARABLE CASE OR ANY OTHER SCIENTIFIC BASIS, BUT HAS BEEN GI VEN ONLY ON THE BASIS OF HIS EXPERTISE. THEREFORE, THE CLAIM O F THE ASSESSEE IN THIS REGARD CANNOT BE ACCEPTED MERELY ON THE BAS IS OF SUCH REPORT. THE CIT(A) HELD THAT THE LOCALITY UNDER CO NSIDERATION WAS INDEED HAVING SUFFICIENT COMMERCIAL POTENTIAL E VEN IN THE YEAR 1981 AS IT WAS IN A COMMERCIALLY FLOURISHING A REA OF THE TWIN CITIES. HE, THEREFORE, FELT THAT IT WILL MEET THE ENDS OF JUSTICE IF THE FAIR MARKET VALUE OF THE LAND AS ON 1-4-1981 IS TAKEN AT RS. 500/- PER SQ. YARD. 20. AS REGARDS THE CONTENTION REGARDING THE COST OF IMPROVEMENT BEING RS. 7,04,56,050/-, THOUGH IT IS C LAIMED THAT SUCH EXPENDITURE WAS INCURRED IN THE FINANCIAL YEAR 2004-05, THE CIT(A) OBSERVED THAT NO EVIDENCE TO THIS EFFECT COULD BE FURNISHED AT ANY STAGE. MERE ACCEPTANCE OF THE INCO ME ADMITTED FOR THE ASSESSMENT YEAR 2005-06 WOULD NOT MEAN THAT EXPENDITURE SO CLAIMED AS INCURRED HAS TO BE A CCEPTED AS ACTUALLY INCURRED. SINCE SUCH CLAIM WAS MADE BY TH E ASSESSEE, THE ONUS WAS UPON IT TO ESTABLISH THE SAME WITH NEC ESSARY EVIDENCE. HOWEVER, NO SUCH EVIDENCE COULD EVER BE FURNISHED. ON THE OTHER HAND, THE DEVELOPMENT AGREEMENT ONLY S PEAKS OF 'LAND' AND NOT ANY CONSTRUCTION THEREON. IT IS CLAIMED BY THE ASSESSEE THAT THE SAID STRUCTURE WAS DEMOLISHED BY THE DEVELOPER AND A NEW CONSTRUCTION WAS MADE THEREON. 13 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== HOWEVER, NO EVIDENCE REGARDING INCURRENCE OF ANY EX PENDITURE FOR SUCH HUGE DEMOLITION WORK, EITHER BY THE ASSESS EE ITSELF OR BY THE DEVELOPER, COULD BE FURNISHED AT ANY STAGE. THEREFORE, THE CIT(A) WAS OF THE VIEW THAT THE CLAIM REGARDING COST OF IMPROVEMENT CANNOT BE ENTERTAINED. 21. REGARDING THE CLAIM OF RS. 84 LAKHS TOWARDS COST OF DRAWINGS, PLANS, APPLICATION FOR PERMISSION, FEES T O THE MUNICIPAL CORPORATION ETC IS CONCERNED, THE CIT(A) OBSERVED THAT SINCE THE VERY EXISTENCE OF ANY CONSTRUCTION O R IMPROVEMENT OF THE IMPUGNED PROPERTY HAS NOT BEEN P ROVED, THE MERE SUBMISSION OF A RECEIPT REGARDING PAYMENT CANNOT BE CONSIDERED FOR THE PURPOSE OF COMPUTATION OF LON G TERM CAPITAL GAINS. THEREFORE, NO DEDUCTION ON THIS ACC OUNT IS ALSO HELD TO BE ALLOWABLE. IN THE LIGHT OF THE ABOVE DI SCUSSION, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE LONG TERM CAPITAL GAINS ARISING IN THE ASSESSMENT YEAR 2 007-08 AFTER CONSIDERING THE FAIR MARKET VALUE OF THE IMPU GNED LAND @ RS. 500/- PER SQUARE YARD. THE CIT(A) PARTLY ALL OWED THE ISSUE IN FAVOUR OF THE ASSESSEE. 22. FOR A.Y. 2009-10, THE CIT(A) OBSERVED THAT, AS REGA RDS THE COMPUTATION OF SHORT TERM CAPITAL GAINS IN THE ASSESSMENT YEAR 2009-10 BY THE ASSESSING OFFICER, IT IS CLEAR THAT IN TERMS OF THE DEVELOPMENT AGREEMENT, THE ASSESSEE WAS TO G ET 88,580 SQ. FEET OF THE BUILT UP AREA IN THE PROJECT . SINCE BY WAY OF A SUBSEQUENT AGREEMENT, SSICPL BOUGHT BACK 70,94 7 SQ. FEET OF THE BUILT UP AREA IN THE ASSESSMENT YEAR 20 09-10, THE 14 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== GAIN RESULTING FROM THE TRANSACTION HAS BEEN RIGHTL Y BROUGHT TO TAX AS SHORT TERM CAPITAL GAINS. IT IS CLEAR THAT THE CONSIDERATION OF RS. 12,97,62,978/- WAS THE CONSIDE RATION FOR THE BUILT UP AREA OF 70,947 ONLY AS IT WAS ONLY SUC H BUILT UP AREA THAT WAS BOUGHT BACK BY THE DEVELOPER FROM THE ASSESSEE. IT WAS ONLY SUCH BUILT UP AREA THAT HAD B EEN RECEIVED BY THE ASSESSEE IN LIEU OF THE LAND TRANSFERRED BY IT BY WAY OF THE DEVELOPMENT AGREEMENT EARLIER. THEREFORE, THE ASSESSING OFFICER CANNOT BE SAID TO BE WRONG IN WORKING OUT T HE SHORT TERM CAPITAL GAINS BY DEDUCTING ONLY THE COST OF CO NSTRUCTION OUT OF THE TOTAL CONSIDERATION. THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN DETERMINATION OF SHORT TER M CAPITAL GAINS AT RS. 5,93,83,554/- IN THE A.Y. 2009-10. 23. AGAINST SUSTAINING THE ADDITION BY THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US FOR BOTH THE A.YS. 2007-08 AND 2009-10 AND FOR GIVING PARTIAL RELIEF BY THE CIT(A) , THE REVENUE IS IN APPEAL BEFORE US FOR THE A.Y. 2007-08 ONLY. 24. FIRST WE WILL TAKE UP FOR ADJUDICATION THE FIRST CO MMON GROUND IN BOTH THE APPEALS OF THE ASSESSEE WHICH IS AS FOLLOWS: (2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN INITIATING PROCEEDINGS UNDER SEC. 153C OF THE I. T. ACT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) OUGHT TO HAVE SEEN THAT THE INITIATION OF PROCEEDIN GS UNDER SEC. 153C ARE NOT VALID. 25. THE CONTENTION OF THE AR IS THAT INITIATION OF PROCEEDINGS U/S. 153 IS NOT IN ACCORDANCE WITH LAW. ACCORDING TO HIM, BEFORE ISSUE OF NOTICE U/S. 153C SATISFACTI ON NOTE IS 15 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== REQUIRED TO BE MADE BY THE AO WHO HAS PASSED THE OR DER U/S. 153A BEFORE THE SEIZED DOCUMENT HAS TRANSMITTED TO THE AO O THE ASSESSEE IN WHOSE JURISDICTION THE PRESENT ASSE SSEE FALLS, AS THE ASSESSEE IS OTHER THAN THE SEARCHED PERSON. FU RTHER HE SUBMITTED THAT SUCH SATISFACTION NOTE SHOULD BE REC ORDED BEFORE THE PROCEEDINGS OF THE SEARCHED PERSON ARE C OMPLETED U/S. 153A OF THE ACT AND NOT LATER. ACCORDING TO H IM, NO SATISFACTION IS RECORDED BY THE AO WHO HAS PASSED T HE ORDER U/S. 153A OF THE ACT IN CASE OF SEARCHED PERSON U/S . 132 OF THE ACT. 26. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH ERE WAS A SEARCH IN THE CASE OF SRI MADDI NARASAIAH AND SRI MADDI LINGAIAH, DIRECTORS OF M/S. SHANTA SRIRAM INFRA & C ONSTRUCTIONS PVT. LTD. ON 25.3.2010 U/S. 132 OF THE ACT. VARIOU S INCRIMINATING MATERIALS WERE FOUND BELONGING TO THE ASSESSEE AND NOTICE U/S. 153 WAS ISSUED AFTER RECORDING SATI SFACTION. HE PRODUCED A COPY OF SATISFACTION NOTE FOR BOTH THE A SSESSMENT YEARS WHICH IS SIMILAR IN NATURE AS FOLLOWS: (1) 'ORDER SHEET NAME : SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. STATUS : COM PAN : AAHCS8943A A.Y. 2004-05 TO 2009-10 --------------------------------------------------- ---------------- A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIED OUT IN THE GROUP CASE OF DR. T. YADHAIAH GO UD AND OTHERS ON 25.3.2010. DURING THE COURSE OF SEAR CH OPERATION DOCUMENTS BELONGING TO SHETTY PHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDING U/S. 153C OF THE I.T. ACT. 16 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== SD/- 6/4/11 AS DIRECTED NOTICE U/S. 153C PUT UP.' SD/- 6/4/11 (2) 'ORDER SHEET NAME : SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. STATUS : COM PAN : AAHCS8943A A.Y. 2009-10 --------------------------------------------------- ---------------- A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIED OUT IN THE GROUP CASE OF DR. T. YADHAIAH GO UD AND OTHERS ON 25.3.2010. DURING THE COURSE OF SEAR CH OPERATION DOCUMENTS BELONGING TO SHETTY PHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDING U/S. 153C OF THE I.T. ACT. SD/- 6/4/11 AS DIRECTED NOTICE U/S. 153C PUT UP.' SD/- 6/4/11 27. ACCORDING TO THE DR THE AO HAS COMPLIED WITH THE REQUIREMENT OF SECTION 153C IN ITS ENTIRETY BEFORE ISSUING THE NOTICE AND ASSESSMENT ORDER WAS FRAMED U/S. 153C IS VALID. 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE SEARCH WAS CONDUC TED NOT IN THE CASE OF THE ASSESSEE. THERE WAS NO WARRANT U/S . 132 AGAINST THE ASSESSEE. ADMITTEDLY A SEARCH AND SEIZ URE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SRI M. NARASIAH AND SRI M. LINGAIAH, DI RECTORS OF 17 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== M/S. SSICPL ON 25.3.2010. A SURVEY U/S. 133A WAS C ONDUCTED AT THE OFFICE PREMISES OF M/S. SSICPL. INCRIMINATI NG MATERIAL AND DOCUMENTS WERE FOUND AND SEIZED. CONSEQUENTLY, 153C NOTICE WAS ISSUED TO THE ASSESSEE ON 6.4.2011. BEF ORE ISSUING THE NOTICE, THE AO MADE AN ORDER SHEET ENTRY, AS RE PRODUCED IN PARA 26 (SUPRA), AND ASSESSMENT WAS FRAMED U/S. 153C OF THE ACT. 29. IN ORDER TO UNDERSTAND THE SCHEME OF FRAMING THE ASSESSMENT IN THE CASE OF SEARCH CONDUCTED U/S. 132 OF THE ACT AND DOCUMENTS REQUISITIONED U/S. 132A OF THE ACT, W E HAVE TO EXAMINE THE PROVISIONS OF SECTION 153A TO 153D OF T HE ACT BROUGHT ON STATUTE BY THE FINANCE ACT, 2003 W.E.F. 1.6.2003. THESE PROVISIONS HAVE REPLACED THE EARLIER PROVISIO NS RELATING TO SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES IN SECTION 158B TO 158BI OF THE ACT. IN THE INSTANT CASE, TH E ACTION WAS TAKEN IN THE HANDS OF THE ASSESSEE U/S. 153C R.W.S. 153A OF THE ACT CONSEQUENT TO THE SEARCH CONDUCTED UPON M/S. SS ICPL U/S. 132 OF THE ACT. THEREFORE, PROVISIONS OF SECTION 1 53C STAND APPLICABLE IN THE CASE OF PRESENT ASSESSEE TO FRAME THE ASSESSMENT. FOR THE SAKE REFERENCE, WE PREFER TO R EPRODUCE SECTION 153A TO 153C OF THE ACT HEREUNDER: '153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTIO N 139, SECTION 147, SECTION 148, SECTION 149, SEC TION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FUR NISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTI CE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE 18 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== ( B ), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESC RIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSES SMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS [SUB-SECTI ON] PENDING ON THE DATE OF INITIATION OF THE SEARCH UND ER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE : [ PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZE TTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS A BATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLA SSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE R EQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE.] [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF A SSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN AN NULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTW ITH- STANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR S ECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND P ROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY T HE COMMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF S UCH ORDER OF ANNULMENT IS SET ASIDE.] EXPLANATION .FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, ( I ) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECT ION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; 19 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== ( II ) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL B E CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SU CH ASSESSMENT YEAR. 153B. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 153, THE ASSESSING OFFICER SHALL MAKE AN ORDER OF A SSESSMENT OR REASSESSMENT, ( A ) IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHI N SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B ) OF 53 [SUB-SECTION (1) OF] SECTION 153A, WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED; ( B ) IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO TH E PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A, WITHIN A PE RIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED : [ PROVIDED THAT IN CASE OF OTHER PERSON REFERRED TO IN SECTIO N 153C, THE PERIOD OF LIMITATION FOR MAKING THE ASSES SMENT OR REASSESSMENT SHALL BE THE PERIOD AS REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF THIS SUB-SECTION OR ONE YEAR FROM THE END OF T HE FINANCIAL YEAR IN WHICH BOOKS OF ACCOUNT OR DOCUMEN TS OR ASSETS SEIZED OR REQUISITIONED ARE HANDED OVER UNDE R SECTION 153C TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH OTHER PERSON, WHICHEVER IS LATER:] [ PROVIDED FURTHER THAT IN THE CASE WHERE THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED DURING THE FINANCIA L YEAR COMMENCING [ON OR AFTER THE 1ST DAY OF APRIL, 2004 BUT BEFORE THE 1ST DAY OF APRIL, 2010], ( I ) THE PROVISIONS OF CLAUSE ( A ) OR CLAUSE ( B ) OF THIS SUB- SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS 'TWO YEARS' THE WORDS 'TWENTY-ONE MONTHS' HAD BEEN SUBSTITUTED; ( II ) THE PERIOD OF LIMITATION FOR MAKING THE ASSESSME NT OR REASSESSMENT IN CASE OF OTHER PERSON REFERRED TO IN SECTION 153C, SHALL BE THE PERIOD OF TWENTY-ONE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTH ORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UND ER SECTION 132A WAS EXECUTED OR NINE MONTHS FROM THE END OF TH E FINANCIAL YEAR IN WHICH BOOKS OF ACCOUNT OR DOCUMEN TS OR ASSETS SEIZED OR REQUISITIONED ARE HANDED OVER UNDE R SECTION 153C TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH OTHER PERSON, WHICHEVER IS LATER:] 20 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== [ PROVIDED ALSO THAT IN CASE WHERE THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED DURING THE FINANCIA L YEAR COMMENCING [ON OR AFTER THE 1ST DAY OF APRIL, 2005 BUT BEFORE THE 1ST DAY OF APRIL, 2009] AND DURING THE C OURSE OF THE PROCEEDINGS FOR THE ASSESSMENT OR REASSESSMENT OF TOTAL INCOME, A REFERENCE UNDER SUB-SECTION (1) OF SECTIO N 92CA ( I ) WAS MADE BEFORE THE 1ST DAY OF JUNE, 2007 BUT AN ORDER UNDER SUB-SECTION (3) OF SECTION 92CA HAS NOT BEEN MADE BEFORE SUCH DATE; OR ( II ) IS MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, T HE PROVISIONS OF CLAUSE ( A ) OR CLAUSE ( B ) OF THIS SUB-SECTION SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( I ) OF THE SECOND PROVISO, HAVE EFFECT AS IF FOR THE WORDS 'TW O YEARS', THE WORDS ' THIRTY-THREE MONTHS' HAD BEEN SUBSTITUTED: [PROVIDED ALSO THAT IN CASE WHERE THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED DURING THE FINANCIA L YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2009 OR ANY SUB SEQUENT FINANCIAL YEAR AND DURING THE COURSE OF THE PROCEED ING FOR THE ASSESSMENT OR REASSESSMENT OF TOTAL INCOME, A R EFERENCE UNDER SUB-SECTION (1) OF SECTION 92CA IS MADE, THE PROVISIONS OF CLAUSE ( A ) OR CLAUSE ( B ) OF THIS SUB-SECTION, SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( I ) OF THE SECOND PROVISO, HAVE EFFECT AS IF FOR THE WORDS 'TW O YEARS', THE WORDS 'THREE YEARS' HAD BEEN SUBSTITUTED: ] PROVIDED ALSO THAT IN CASE WHERE THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED DURING THE FINANCIA L YEAR COMMENCING [ON OR AFTER THE 1ST DAY OF APRIL, 2005 BUT BEFORE THE 1ST DAY OF APRIL, 2009] AND DURING THE C OURSE OF THE PROCEEDINGS FOR THE ASSESSMENT OR REASSESSMENT OF TOTAL INCOME IN CASE OF OTHER PERSON REFERRED TO IN SECTI ON 153C, A REFERENCE UNDER SUB-SECTION (1) OF SECTION 92CA ( I ) WAS MADE BEFORE THE 1ST DAY OF JUNE, 2007 BUT AN ORDER UNDER SUB-SECTION (3) OF SECTION 92CA HAS NOT BEEN MADE BEFORE SUCH DATE; OR ( II ) IS MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, T HE PERIOD OF LIMITATION FOR MAKING THE ASSESSMENT OR REASSESS MENT IN CASE OF SUCH OTHER PERSON SHALL, NOTWITHSTANDING AN YTHING CONTAINED IN CLAUSE ( II ) OF THE SECOND PROVISO, BE THE PERIOD OF THIRTY-THREE MONTHS FROM THE END OF THE FINANCIA L YEAR IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UND ER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECU TED OR TWENTY-ONE MONTHS FROM THE END OF THE FINANCIAL YEA R IN WHICH BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZE D OR 21 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== REQUISITIONED ARE HANDED OVER UNDER SECTION 153C TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON, WHICHEVER IS LATER:] [PROVIDED ALSO THAT IN CASE WHERE THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED DURING THE FINANCIA L YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2009 OR ANY SUB SEQUENT FINANCIAL YEAR AND DURING THE COURSE OF THE PROCEED ING FOR THE ASSESSMENT OR REASSESSMENT OF TOTAL INCOME, IN CASE OF OTHER PERSON REFERRED TO IN SECTION 153C, A REFEREN CE UNDER SUB-SECTION (1) OF SECTION 92CA IS MADE, THE PERIOD OF LIMITATION FOR MAKING THE ASSESSMENT OR REASSESSMEN T IN CASE OF SUCH OTHER PERSON SHALL, NOTWITHSTANDING ANYTHIN G CONTAINED IN CLAUSE ( II ) OF THE SECOND PROVISO, BE THE PERIOD OF THIRTY-SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UND ER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECU TED OR TWENTY-FOUR MONTHS FROM THE END OF THE FINANCIAL YE AR IN WHICH BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZE D OR REQUISITIONED ARE HANDED OVER UNDER SECTION 153C TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON, WHICHEVER IS LATER. ] EXPLANATION .IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF THIS SECTION, ( I ) THE PERIOD DURING WHICH THE ASSESSMENT PROCEEDIN G IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT; OR ( II ) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS A CCOUNTS AUDITED UNDER SUB-SECTION (2A) OF SECTION 142 AND (A) ENDING WITH THE LAST DATE ON WHICH THE ASSESSE E IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER TH AT SUB- SECTION; OR (B) WHERE SUCH DIRECTION IS CHALLENGED BEFORE A COU RT, ENDING WITH THE DATE ON WHICH THE ORDER SETTING ASIDE SUCH DIRECTION IS RECEIVED BY THE COMMISSIONER, OR ] (III) THE TIME TAKEN IN REOPENING THE WHOLE OR ANY PART OF THE PROCEEDING OR IN GIVING AN OPPORTUNITY TO THE ASSES SEE OF BEING RE-HEARD UNDER THE PROVISO TO SECTION 129; OR (IV) IN A CASE WHERE AN APPLICATION MADE BEFORE TH E SETTLEMENT COMMISSION UNDER SECTION 245C IS REJECTE D BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE P ERIOD COMMENCING FROM THE DATE ON WHICH SUCH APPLICATION IS MADE AND ENDING WITH THE DATE ON WHICH THE ORDER UN DER SUB- SECTION (1) OF SECTION 245D IS RECEIVED BY THE COMM ISSIONER UNDER SUB-SECTION (2) OF THAT SECTION; 62 [OR] 22 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== [(V) THE PERIOD COMMENCING FROM THE DATE ON WHICH A N APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANC E RULINGS UNDER SUB-SECTION (1) OF SECTION 245Q AND E NDING WITH THE DATE ON WHICH THE ORDER REJECTING THE APPL ICATION IS RECEIVED BY THE COMMISSIONER UNDER SUB-SECTION (3) OF SECTION 245R; OR (VI) THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANC E RULINGS UNDER SUB-SECTION (1) OF SECTION 245Q AND E NDING WITH THE DATE ON WHICH THE ADVANCE RULING PRONOUNCE D BY IT IS RECEIVED BY THE COMMISSIONER UNDER SUB-SECTION ( 7) OF SECTION 245R; OR] [(VII) THE PERIOD COMMENCING FROM THE DATE OF ANNUL MENT OF A PROCEEDING OR ORDER OF ASSESSMENT OR REASSESSMENT R EFERRED TO IN SUB-SECTION (2) OF SECTION 153A TILL THE DATE OF THE RECEIPT OF THE ORDER SETTING ASIDE THE ORDER OF SUCH ANNULM ENT, BY THE COMMISSIONER; [OR]] [ (VIII) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE OR FIRST OF THE REFERENCES FOR EXCHANGE O F INFORMATION IS MADE BY AN AUTHORITY COMPETENT UNDER AN AGREEMENT REFERRED TO IN SECTION 90 OR SECTION 90A AND ENDING WITH THE DATE ON WHICH THE INFORMATION REQUE STED IS LAST RECEIVED BY THE COMMISSIONER OR A PERIOD OF ON E YEAR, WHICHEVER IS LESS, ] [ OR ] (IX) [ *** ] THE FOLLOWING CLAUSE ( IX ) SHALL BE INSERTED AFTER CLAUSE ( VIII ) IN THE EXPLANATION TO SECTION 153B BY THE FINANCE ACT, 2013, W.E.F. 1-4-2016 : ( IX ) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE FOR DECLARATION OF AN ARRANGEMENT TO BE A N IMPERMISSIBLE AVOIDANCE ARRANGEMENT IS RECEIVED BY THE COMMISSIONER UNDER SUB-SECTION (1) OF SECTION 144BA AND ENDING ON THE DATE ON WHICH A DIRECTION UNDER SUB-S ECTION (3) OR SUB-SECTION (6) OR AN ORDER UNDER SUB-SECTION (5) OF THE SAID SECTION IS RECEIVED BY THE ASSESSING OFFIC ER, SHALL BE EXCLUDED : PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF THIS 67 [SUB-SECTION] AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT OR REASSESSMENT, AS THE CASE MAY BE, IS LESS THAN SIXT Y DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AN D THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO B E EXTENDED ACCORDINGLY. (2) THE AUTHORISATION REFERRED TO IN CLAUSE ( A ) AND CLAUSE ( B ) OF SUB-SECTION (1) SHALL BE DEEMED TO HAVE BEEN EXE CUTED, 23 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== ( A ) IN THE CASE OF SEARCH, ON THE CONCLUSION OF SEAR CH AS RECORDED IN THE LAST PANCHNAMA DRAWN IN RELATION TO ANY PERSON IN WHOSE CASE THE WARRANT OF AUTHORISATION H AS BEEN ISSUED; ( B ) IN THE CASE OF REQUISITION UNDER SECTION 132A, O N THE ACTUAL RECEIPT OF THE BOOKS OF ACCOUNT OR OTHER DOC UMENTS OR ASSETS BY THE AUTHORISED OFFICER. 153C. [(1)]NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHAL L BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL 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 :] [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE T O THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SEC OND PROVISO TO [SUB-SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIO NED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON:] [ PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, S PECIFY THE CLASS OR CLASSES OF CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED T O ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOM E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CO NDUCTED OR REQUISITION IS MADE EXCEPT IN CASES WHERE ANY ASSES SMENT OR REASSESSMENT HAS ABATED.] [(2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNI SHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SE CTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND I N RESPECT OF SUCH ASSESSMENT YEAR 24 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== ( A ) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH O THER PERSON AND NO NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142 HAS BEEN ISSUED TO HIM, OR ( B ) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OT HER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECTI ON 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UN DER SUB- SECTION (2) OF SECTION 143 HAS EXPIRED, OR ( C ) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MAD E, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMEN T YEAR IN THE MANNER PROVIDED IN SECTION 153A.] 30. FROM A PLAIN READING OF THESE SECTIONS, WE FIND THA T SECTION 153A IS PROCEDURAL SECTION WHICH DEALS WITH THE MODE OF ASSESSMENT. A NOTICE U/S. 153A OF THE ACT CAN O NLY BE ISSUED TO SUCH PERSON WHERE A SEARCH IS INITIATED U /S. 132 OF THE ACT OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR A NY ASSETS ARE REQUISITIONED U/S. 132A OF THE ACT AFTER 31 ST DAY OF MAY, 2003, REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD A S MAY BE SPECIFIED IN THE NOTICE, RETURN OF INCOME IN RESPEC T OF EACH ASSESSMENT YEAR FOLLOWING WITHIN SIX ASSESSMENT YEA RS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUI SITIONED IS MADE. THEREAFTER ASSESSMENT WOULD BE FRAMED AS P ER THE PROVISIONS OF SECTION 143 OF THE ACT. SECTION 153C DEALS WITH THE SITUATION WHERE THE AO IS SATISFIED THAT ANY MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR B OOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONS BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A OF THE ACT, THEN THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO 25 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT THE AO SHALL PROCEED AGAINST EACH OF SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR RE-ASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 153A OF THE ACT. MEANING THEREBY THAT ACTION U/S. 153C OF THE ACT ALWAYS DEPENDS UPON THE ACTION U/S. 153A OF THE ACT UPON SOME OTHER PERSON. THE AO OF SUCH PERSON IN WHOSE CASE SEARCH WAS CONDUCTED IS SATISFIED THAT THE MONEY, B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR B OOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SOME OTHER PERSON, HE AFTER FORMING THE BELIEF TO THAT E XTENT REGARDING THE SAME SHALL HAND OVER THE RELEVANT MAT ERIAL TO THE CONCERNED AO HAVING JURISDICTION OVER SUCH OTHE R PERSON. IN OTHER WORDS, WE SAY THAT BEFORE INITIATING PROCE EDINGS U/S 153C, THE AO WHO HAS INITIATED PROCEEDINGS FOR COMP LETION OF ASSESSMENT U/S. 153A OF THE ACT SHOULD BE SATISFIED THAT THERE IS NO UNDISCLOSED INCOME WHICH HAS BEEN TRACED OUT WHEN A PERSON WAS SEARCHED U/S. 132 OF THE ACT OR THE BOOK S OF ACCOUNT WERE REQUISITIONED U/S. 132A OF THE ACT. T HUS, IN CONTRAST TO THE PROVISIONS OF SECTION 148 OF THE AC T WHERE RECORDING A REASON IN WRITING ARE SINE QUA NON. U NDER SECTION 153C THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATE RIAL IS GERMANE TO THE ASSESSING OFFICERS SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON IS NECESSARY FOR INITIATION OF ACTI ON UNDER SECTION 153C OF THE ACT. THE BARE READING OF THE PR OVISION OF SECTION 153C INDICATES THAT THE SATISFACTION NOTE C OULD BE PREPARED BY THE ASSESSING OFFICER EITHER AT THE TIM E OF 26 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARCHED PERSON UNDER SECTION 153A OF THE ACT OR DU RING THE STAGE OF THE ASSESSMENT PROCEEDINGS. IT DOES NOT ME AN THAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING O FFICER WHO HAS PASSED THE ASSESSMENT ORDER U/S. 153A IN THE CA SE OF SEARCHED PERSON CANNOT PREPARE THE SATISFACTION NOT E TO THE EFFECT THAT THERE EXISTS INCOME TAX BELONGING TO AN Y PERSON OTHER THAN THE SEARCHED PERSON IN RESPECT OF WHOM A SEARCH WAS MADE UNDER SECTION 132 OR REQUISITION OF BOOKS OF ACCOUNTS WERE MADE UNDER SECTION 132A OF THE ACT . IN OTHER WORDS, THE PERSON WHO HAS PASSED THE ORDER IN THE CASE OF THE SEARCHED PERSON U/S. 153A OF THE ACT IS REQU IRED TO RECORD THE SATISFACTION NOTE BEFORE COMPLETION OF A SSESSMENT U/S. 153A OF THE ACT. IN THE PRESENT CASE THE BENC H CATEGORICALLY ASKED THE DR TO PRODUCE THE SATISFACT ION NOTES RECORDED IN THIS CASE SO AS TO ISSUE NOTICE U/S. 15 3C TO THE PRESENT ASSESSEE. TO THE QUERY OF THE BENCH THE DR PRODUCED THE ORDER SHEET ENTRIES FOR BOTH THE ASSESSMENT YEA RS AS MENTIONED IN PARA 26 (SUPRA). 31. THE ORDER SHEET ENTRIES ARE SAID TO HAVE BEEN RECOR DED BY THE AO WHO HAS PASSED THE ORDER U/S. 153C OF THE ACT IN THE CASE OF THE ASSESSEE AND IT IS ALSO SATISFACTION NO TE TO THAT EFFECT THAT THERE EXISTS INCOME-TAX BELONGING TO AN Y PERSON OTHER THAN THE SEARCHED PERSON IN RESPECT OF WHOM S EARCH WAS MADE U/S. 132 OF THE ACT OR REQUISITION OF BOOKS OF ACCOUNT WERE MADE U/S. 132A OF THE ACT. THE SATISFACTION NOTE IS TO BE RECORDED BY THE AO WHO HAS INITIATED PROCEEDINGS FO R 27 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== COMPLETION OF ASSESSMENT U/S. 153A OF THE ACT AND A LSO IT SHOULD BE RECORDED. IT IS ALSO TO BE NOTED THAT FO R THE PURPOSE OF S. 153C A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD T O THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSO N. THE SATISFACTION NOTE COULD BE PREPARED AT EITHER OF TH E FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH INITIATION OF PROCEEDI NGS AGAINST THE SEARCHED PERSON U/S. 153A OF THE ACT; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS U/S. 153A OF THE ACT; (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED U/S. 153A OF THE ACT OF THE SEARCHED PERS ON. 32. THUS, THE CONDITION PRECEDENT FOR ISSUING NOTICE U/ S. 153C AND ASSESSING OR RE-ASSESSING INCOME OF SUCH O THER PERSON IS THAT, THE MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH OTHER PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED RECOURSE CANNOT BE MAD E TO THE PROVISIONS OF SECTION 153C OF THE ACT. THUS, THE P ROVISIONS CONTAINED U/S. 153C OF THE ACT CAN ONLY BE INVOKED WHERE THERE WAS SATISFACTION BY THE AO HAVING JURISDICTIO N OVER THE PERSON SEARCHED OR REQUISITIONED U/S. 132A DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE PROCEEDI NGS U/S. 153A OF THE ACT ALWAYS PRECEDE THE PROCEEDINGS U/S. 153C OF THE ACT AND WITHOUT RECORDING SATISFACTION NOTE BY THE AO INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT U/S. 153A 28 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== OF THE ACT CANNOT BE PROCEEDED U/S. 153C OF THE ACT IN THE CASE OF SUCH OTHER PERSON NOT SEARCHED. SAME VIEW WAS TAKEN BY THE SUPREME COURT IN THE CASE OF CIT VS. CALCUTT A KNITWEARS, LUDHIANA IN CIVIL APPEAL NOS. 3958 OF 2014 (SLP) (C ) NO. 10542 OF 2011 DATED 12 TH MARCH, 2014. FURTHER IT WAS ALSO HELD BY THE SUPREME COURT IN THE CASE OF MANISH MAHESWARI V S. JCIT (289 ITR 341) AS UNDER: 'HELD, SEC. 158BD PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF S. 158BC IN RESPECT OF ANY O THER PERSON, THE CONDITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTION MUST BE RECORDED BY THE AO THAT ANY UN DISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S. 132; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZE D OR REQUISITIONED HAD BEEN HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE AO HAS PROCEEDED UNDER S. 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF S. 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVI SIONS OF CHAPTER XIV-B ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED U NDER S. 132A. THE IMPUGNED NOTICE DOES NOT RECORD ANY SATISFACTIO N ON THE PART OF THE AO. DOCUMENTS AND OTHER ASSETS RECOVERE D DURING SEARCH HAD NOT BEEN HANDED OVER TO THE AO HAVING JURISDICTION IN THE MATTER. NO PROCEEDING UNDER S. 158BC HAD BEEN INITIATED. THERE IS, THUS, A PATENT NON-APPLIC ATION OF MIND. A PRESCRIBED FORM HAD BEEN UTILIZED. EVEN THE STATUS OF THE ASSESSEE HAD NOT BEEN SPECIFIED. IT HAD ONLY BE EN MENTIONED THAT THE SEARCH WAS CONDUCTED IN THE MONT H OF NOVEMBER, 1995. NO OTHER INFORMATION HAD BEEN FURNI SHED. THE PROVISIONS CONTAINED IN CHAPTER XIV-B ARE DRAST IC IN NATURE. IT HAS DRACONIAN CONSEQUENCES. SUCH A PROCE EDING CAN BE INITIATED, IT WOULD BEAR REPETITION TO STATE , ONLY IF A RAID IS CONDUCTED. WHEN THE PROVISIONS ARE ATTRACTE D, LEGAL PRESUMPTIONS ARE RAISED AGAINST THE ASSESSEE. THE B URDEN SHIFTS ON THE ASSESSEE. AUDITED ACCOUNTS FOR A PERI OD OF TEN YEARS MAY HAVE TO BE REOPENED. AS THE AO HAS NOT RE CORDED HIS SATISFACTION, WHICH IS MANDATORY; NOR HAS HE TR ANSFERRED THE CASE TO THE AO HAVING JURISDICTION OVER THE MAT TER, THE IMPUGNED JUDGMENTS OF THE HIGH COURT CANNOT BE SUST AINED 29 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== 33. THE ABOVE TWO JUDGEMENTS WERE DELIVERED U/S. 158BD. WE HAVE CAREFULLY GONE THROUGH THE LANGUAGE USED IN SECTION 153C AND 158BD OF THE ACT. THE MAIN DIFFERENCE IN THE LANGUAGE IS THAT IN SECTION 158BD THE SCOPE OF JURI SDICTION OF AO IS ONLY WITH RESPECT TO THE UNDISCLOSED INCOME F OUND DURING THE COURSE OF SEARCH. WHEREAS IN SECTION 15 3C THE SCOPE OF JURISDICTION OF THE AO IS WITH RESPECT TO ANY MONEY, BULLION, JEWELLERY, OTHER VALUABLE ARTICLES OR THIN GS OR BOOKS OF ACCOUNT OR DOCUMENTS WITH RESPECT TO WHICH THE AO I S SATISFIED THAT IT BELONGS TO SUCH OTHER PERSON. BUT SO FAR A S THE REFERENCE TO WORD 'SATISFACTION' IS MADE IT IS SAME AS AVAILABLE IN SECTION 158BD OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT THE RATIO LAID DOWN IN THE ABOVE CASES IN RESPECT T O THE POINT OF SATISFACTION WILL APPLY FOR INITIATION OF ACTION U/S. 153C OF THE ACT. IN VIEW OF THIS , WE ARE INCLINED TO HOLD THAT INITIATION OF PROCEEDINGS U/S. 153C OF THE ACT IN THE CASE OF THE ASSESSEE FOR THESE TWO ASSESSMENT YEARS IS NOT PROPER AS THE RE IS NO SATISFACTION RECORDED BY THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED OR REQUISITIONED U/S. 132A OF THE A CT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SEARCHED PA RTY OR LATER BEFORE ISSUE OF NOTICE U/S. 153C OF THE ACT. ACCORDINGLY, WE QUASH THE ASSESSMENT FRAMED U/S. 153C OF THE ACT IN BOTH THE ASSESSMENT YEARS IN THIS CASE. 34. SINCE WE HAVE QUASHED THE ASSESSMENT ITSELF, WE REF RAIN FROM GOING INTO THE OTHER GROUNDS RAISED BY THE ASS ESSEE ON MERIT OF THE ADDITIONS MADE BY THE AO IN THESE APPE ALS. 30 ITA NO. 930/HYD/2013 & ORS. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ==================================== 35. IN THE RESULT, THE ASSESSEE'S APPEALS IN ITA NOS. 9 30 AND 931/HYD/2013 ARE ALLOWED. SINCE WE HAVE ALLOWED TH E APPEAL OF THE ASSESSEE IN ITA NO. 930/HYD/2013 , THE REVEN UE APPEAL IN ITA NO. 983/HYD/2013 FOR A.Y. 2007-08 WILL BECOM E INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOU S. ORDER PRONOUNCED IN OPEN COURT ON 28 TH MAY, 2014 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 28 TH MAY, 2014 TPRAO COPY TO: 1. M/S. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD., C/ O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYATNAGAR, HYDERABAD-500 029. 2. THE DEPUTY CIT, CENTRAL CIRCLE-2, HYDERABAD. 3. THE CIT(A)-I, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD 5. THE DR, B BENCH, ITAT, HYDERABAD.