Pattapagalu Venkata Rao, , Rajahmundry V. Assistant Commissioner of Income Tax, Central Circle-1, Rajahmundry

ITSSA 9/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8262 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 12-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL
• Keywords: Search and seizure; Documents seized
• Section: 143(3); 153A; 201; 143(2); 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T . (SS) .NO. 08 - 10 /VIZ/201 8 ( / A . Y S : 20 09 - 1 0, 2012 - 13 AND 2013 - 14 RESPECTIVELY ) SRI PATTAPAGALU VENKATA RAO D.NO.79 - 21 - 3, MALLINA NAGAR RAJAHMUNDRY [PAN : A GGPP6802P ] VS. ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : S HRI D.K.SONOWAL, CIT DR / DATE OF HEARING : 2 0 . 0 6 . 201 9 / DATE OF PRONOUNCEMENT : 17 .0 7 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3, VISAKHAPATNAM VIDE ITA NO.01 - 03/2016 - 17/CIT - (A) - 3/VSP/2017 - 18 DATED16.03.2018 FOR THE ASSESSMENT YEAR (A.Y.) 2009 - 10, 2012 - 13 AND 2013 - 14. SINCE THE GROUNDS RAISED IN THESE APPEALS ARE COMMON, THESE APPEALS ARE CLUBBED, HEARD 2 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY TOGETHER AND A COMMON ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AS UNDER. 2. GROUND NO.1 & 2 ARE RELATED TO THE ISSUE OF NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). IN THE INSTANT CASE SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF M/S G.S.L.EDUCATIONAL SOCIETY, RAJAHMUNDRY ON 25.07.2013. AS PER THE ASSESSMENT ORDER, DURING THE COURSE OF SEARCH OPERATIONS, CERTAIN INCRIMINATING MAT ERIAL WAS FOUND RELATING TO THE ASSESSEE AT THE R ESIDENCE OF SRI ADAPA RAMBABU, A CCOUNTANT OF THE SOCIETY WHOSE RESIDEN CE WAS ALSO COVERED U/S 132 OF THE ACT. SUB SEQUENTLY, SEARCH WAS CONDUCTED IN THE RESIDENCE OF THE ASSESSEE ALSO ON 12.09.2013. DURING T HE COURSE OF SEARCH, CERTAIN INCRIMINATING MATERIAL WAS FOUND IN THE RESIDENCE OF THE ASSESSEE RELATING TO HIS INCOME . THEREFORE, A NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE ON 23.07.2014 AND IN RESPONSE TO WHICH THE ASSESSEE FILED THE RETURN OF INCOME A ND ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 153C OF THE ACT ON TOTAL INCOME OF RS.55,81,720/ - BY AN ORDER DATED 10.03.2016 AGAINST WHICH THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND CHALLENGED THE VALIDITY OF ISSUE OF NOTICE U/S 153C IN THE CASE OF THE ASSESSEE. THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT THE SEARCH WAS CONDUCTED IN THE RESIDENCE OF THE 3 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY ASSESSEE THUS THERE IS NO CASE FOR INVOKING JURISDICTION U/S 153C AND THE AO OUGHT TO HAVE INITIATED THE PROCEEDINGS U/S 153A. THE LD.CIT(A) FO UND THAT THE CONSEQUENTIAL SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE IN CONNECTION WITH THE SEARCH PROCEEDINGS CONDUCTED IN THE CASE OF GSL EDUCATIONAL SOCIETY AND NO SEARCH WAS INITIATED IN THE CASE OF THE ASSESSEE. FURTHER THE LD.CIT(A) OBSERV ED THAT DURING THE COURSE OF SEARCH IN THE PREMISES OF SHRI ADAPA RAMBABU, THE INCRIMINATING MATERIAL RELAT ING TO THE ASSESSEE WAS FOUND, HENCE, HELD THAT THE AO HAS RIGHTLY ISSUED THE NOTICE U/S 153C TO CONDUCT THE PROCEEDINGS, ACCORDINGLY, CONFIRMED THE ACTION OF THE AO FOR INVOKING JURISDICTION U/S 153C. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR FILED PAPER BOOK AND TAKEN OUR ATTENTION TO COLUMN A OF PANCHNAMA DATED 12.09.2013 , WHEREIN, IT WAS MENTIONED THAT WARRANT WAS ISSUED ON GSL EDUCATIONAL SOCIETY, RAJAHMUNDRY, SRI PATTAPAGALU VENKATA RAO, THE ASSESSEE. THE LD.AR FURTHER SUBMITTED THAT A SEARCH U/S 132 WAS CONDUCTED ON 12.09.2013 IN THE CASE OF THE ASSESSEE AS EVIDENCED FROM PANCHNAMA DATED 12.09.2013 AND ARGUED THE AO OUGHT TO HAVE INITIATED THE PROCEEDINGS U/S 153A, BUT NOT U/S 153C OF THE ACT. TH E LD.AR SUBMITTED THAT THE NOTICE U/S 4 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY 153C IS INVALID, HENCE, REQUESTED TO QUASH THE NOTICE AND ALLOW THE APPEAL OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LD.DR ARGUED THAT SEARCH CONDUCTED IN THE CASE OF THE ASSESSEE IS CONSEQUENTIAL, HENCE, THE AO RIGHTLY INVOKED THE JURISDICTION U/S 153C, THEREFORE, REQUESTED TO UPHOLD THE NOTICE ISSUED U/S 153C OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE PAPER BOOK PAGE NOS. 1 AND 2, WHEREIN, THE ASSESSEE HAD FURNISHED THE COPY OF PANCHNAMA . A S PER PANCHNAMA, WARRANT WAS ISSUED IN THE CASE OF G.S.L.EDUCATIONAL SOCIETY, RAJAHMUNDRY FOR SEARCHING THE PREM ISES OF THE ASSESSEE IN DOOR NO.79 - 21 - 3, MALLINA NAGAR, RAJAHMUNDRY . THUS THE, SEARCH U/S 132 OF THE IT A CT WAS INITIATED IN THE CASE OF GSL EDUCATIONAL SOCIETY AND THE PREMISES OF THE ASSESSEE WAS ALSO SEARCHED. CONSEQUENTIAL, SEARCH WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AS PER SECTION 132 OF THE ACT. THE CIT(A) HAS GIVEN A FINDING THAT SEARCH WAS CONDUCTED IN THE CASE OF ADAPA RAMBABU AND THE SEIZED MATERIAL BELONGING TO THE ASSESSEE WAS FOUND VIDE ANNEXURE - A/ARB/1 (PAGENO.71) IN TH E PREMISES OF SRI RAMBABU . AS PER THE PROVISIONS OF SECTION 153C OF THE ACT, 5 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY ASSESSMENTS REQUIRED TO BE COMPLETED U/S 153A IN THE CASE OF THE PERSON WHERE THE SEARCH IS INITIATED. IN THE INSTANT CASE, SEARCH WAS INITIATED IN THE CASE OF G.S.L.EDUCATIONAL SOCIETY AND THE ASSESSEES PREMISES WERE ALSO SEARCHED FOR INCRIMINATING MATERIAL OF G.S.L.EDUCATIONAL SOCIETY . APART FROM THE ABOVE, DURING THE SEARCH IN THE PREMISES OF SHRI ADAPA RAMBABU, ACCOUNTANT OF THE FIRM, INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WAS FOUND. T HEREFORE, IN THE ASSESSEES CASE, CORRECT ACTION FOR SEARCH ASSESSMENT IS INITIATION OF PROCEEDINGS U/S 153C. ACCORDINGLY, WE UPHOLD THE ACTION OF THE AO IN ISSUING THE NOTICE U/S 153C OF THE ACT AND DISMISS THE ASSESSEES APPEAL ON TH IS GROUND. 5.1. THE NEXT CONTENTION OF THE ASSESSEE IS THAT IN THE INSTANT CASE, THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) WAS EXPIRED FOR ALL THE IMPUGNED ASSESSMENT YEARS AND NO ADDITION IS PERMISSIBLE WITHOUT THE INCRIMINATING MATERIAL . THE DETAIL S OF THE RETURN OF INCOME FILED AND THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) ARE FURNISHED AS UNDER : A.Y. DATE OF FILING THE RETURN OF INCOME TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) 2009 - 10 30.10.2009 30.09.2010 2012 - 13 23.03.2013 30.09.2013 2013 - 14 19.10.2015 30.09.2016 6 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY THE LD.AR SUBMITTED THAT THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WAS RELATED TO THE A.Y.2014 - 15 AND NO INCRIMINATING MATERIAL WAS FOUND FOR THE IMPUGNED ASSESSMENT YEARS. SINCE THE TIME LIMIT FOR ISSUE OF N OTICE U/S 143(2) GOT EXPIRED, THE ASSESSMENTS ARE UNABATED AND THE AO IS NOT PERMITTED TO ISSUE NOTICE U/S 153C, THUS, REQUESTED TO QUASH THE NOTICE U/S 153C OF THE ACT. SIMILARLY, THE LD.AR ARGUED THAT NO ADDITION IS PERMISSIBLE WITHOUT THE INCRIMINATIN G MATERIAL HENCE REQUESTED TO CANCEL THE ASSESSMENTS MADE BY THE AO FOR THE IMPUGNED ASSESSMENT YEARS. THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SINHGAD TECHNICAL EDUCATIONAL SOCIETY (2017) 397 ITR 0344 (SC) . 5.2. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND N OW IT IS SETTLED ISSUE THAT FOR INITIATING THE PROCEEDINGS U/S 153C OF THE ACT, IT IS INCUMBENT UPON THE A.O. TO HAVE THE INCRIMINATING MATERIAL EVIDENCING THE UNDISCLOSED INCOME. IN THE ASSESSEES CASE NO SUC H EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN THE CASE OF G.S.L.EDUCATIONAL SOCIETY . AS PER THE PROVISIONS OF SECTION 153C OF THE ACT, IT IS MANDATORY TO HAVE THE SATISFACTION OF THE A.O. THAT MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR T HING OR ANY BOOKS OF ACCOUNTS, DOCUMENTS SEIZED OR REQUISITIONED PERTAINS TO OR RELATES TO THE ASSESSEE, WHICH MEANS THAT 7 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY UNLESS THERE IS AN INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE IS FOUND, THE ACTION U/S 153C OF THE ACT IS NOT PERMISSIBLE. IN T HE ASSESSEES CASE THERE WAS NO INCRIMINATING MATERIAL FOUND AND SEIZED FROM THE PREMISES OF THE SEARCHED PERSON. AS DISCUSSED EARLIER THE MATERIAL FOUND DURING THE COURSE OF SEARCH WAS RELATED TO THE A.Y.2014 - 15 . THEREFORE, WE HOLD THAT THE NOTICES ISSUE D U/S 153C OF THE ACT , FOR THE IMPUGNED ASSESSMENT YEARS ARE UN SUSTAINABLE. THIS VIEW IS UPHELD BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SINHAGAD TECHNICAL EDUCATION SOCIETY (2017) 84 TAXMANN.COM 290 (SC). THIS TRIBUNAL ALSO CONSIDE RED THE IDENTICAL ISSUE IN THE CASE OF M/S. SRI BALAJI CONSTRUCTIONS, KAKINADA IN ITA NO.387/VIZAG/2014 DATED 10/01/2018 AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. RESPECT FULLY FOLLOWING THE DECISION OF HONBLE APEX COURT AND THE VIEW TAKEN BY THIS TRIBUNAL WE HOLD THAT NOTICE ISSUED U/S 153C WITHOUT HAVING INCRIMINATING MATERIAL C ANNOT SURVIVE, ACCORDINGLY QUASHED. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. 8 I.T. (SS) . NO . 08 - 10 /VIZ/2018 , A.Y.2009 - 10, 2012 - 13 AND 2013 - 14 SRI PATTAPAGALU VENKATA RAO ., RAJAHMUNDRY ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JU LY 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 17 .0 7 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - SRI PATTAPAGALU VENKATA RAO , D.NO.79 - 21 - 3, MALLINA NAGAR , RAJAHMUNDRY 2. / THE REVENUE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 RAJAHMUNDRY 3. THE PR. COMMISSIONER OF INCOME TAX ( CENTRAL ), VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM