TaxTMI 
TaxTMI 
2011 (4) TMI 871
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....Sec. 251(2) of the Income Tax Act 1961, in order to enhance the assessment thereby making the appellant liable on the grounds different from those not considered by the Assessing Officer. Ground No. 1(b) On the facts and in the circumstances of the case and without prejudice to the above ground no. 1 the order of CIT(A) is bad in law and invalid as he has decided the appeal by considering the issues which are not mentioned in the assessment order- Ref CIT vs Shapurji Palloji Mistri 44 ITR 891(SC). Ground No. 2(c) On the facts and in the circumstances of the case and without prejudice to the above ground no. 1 the learned CIT(A) has erred in not appreciating the established legal position that his power of enhancement is restricted to the subject matter of assessment which has been considered expressly or by clear implication by the Assessing Officer. Refer CIT vs. Raj Bahadhur Hardutroi Motilal Chamaria - 66 ITR 443 (SC). Ground No. 2 On the facts and in the circumstances of the case and without prejudice to Ground No. 1 the CIT(A) has erred in treating the acquisition of shares in cooperative bank for Rs. 49,750/- as in contravention....
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....re, appellant prays that this additional ground may kindly be admitted and disposed off on merit" 2. Briefly stated relevant facts of the case are that the assessee is an Educational Institution registered under Bombay Public Trust Act, 1950 and Societies Registration Act, 1860. It was also registered U/s 12A(a) of the Income Tax Act, 1961 since the A.Y. 1994-95. The search and seizure operation U/s. 132 was carried out in the case of Shri M.N. Navale on 20/07/05. Shri M.N. Navale is the President of the assessee Educational Society. In the course of search operation, the search party found and seized certain loose papers. Simultaneously, the survey action was conducted on the Institute. However, on the basis of the loose papers Bundle A-2 found with and seized from Shri M.N. Navale and the CIT issued the show Cause Notice stating that in view of the findings in the search operation, he had reason to believe that the notings in the said loose papers are in respect of Capitation Fees/Donations and therefore, CIT proposed that the registration of the institution was to be cancelled on both the limbs namely the activity of the trust are not genuine and that these are not being....
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....ion note is made and the Assessing Officer was one and the same both for Mr. M.N. Navale and the appellant, it is necessary to have the mention, in the satisfaction note a to who is the Assessing Officer i.e., the Ward/Circle. It is the ward/circle which gets the jurisdiction and not an individual who governs or administers the said ward/circle. 3. This satisfaction note has not been provided to the appellant at any time in the course of assessment proceedings or thereafter till 31/8/2010 on which date the paper book is filed by the Department. It is necessary for the Assessing Officer of the appellant to inform about the satisfaction so recorded as well as to provide the copies of the seized documents and the appellant must be given a reasonable opportunity to object to the same. Refer: Janki International 278 ITR 296. This view is taken by Delhi High Court in the case of Janki International vs. UOI. Although it is k158Bd and 158BC, nonetheless natural justice demands that the assessee who is proceeded u/s. 153C must be provided with the copy of the satisfaction note as well as the certified copy of the document seized. (See Page No. 29) Neither in ....
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....N. Navale for purchase of certain property from one Shree Amir Mohidin Sheikh by issuing cheques from his personal bank account with Central Bank of India, STES Extension Counter. However Shri M.N. Navale has obtained the acknowledgment erroneously by using the printed management vouchers of STES. The fact however remains that these papers do not relate to the appellant. (See page No. 7 to 19 of this paper book) b. Page No. 45 mentioned at Serial No. 6 is the copy of the letter dated 23/06/2001 written by the appellant's college of Pharmacy to the Directorate of Technical Education, Mumbai. The contents do not suggest even remotedly that there could be any hidden income. The Fixed Deposit mentioned in the said letter are duly accounted in the regular books of accounts of the appellant. (See Page No. 20) c. Page No. 35 mentioned at Serial No. 7 is a piece of paper bearing dated 25/06/2005 and it shows certain figures. It is a dumb paper and does not convey anything. (See Page No.21). d. Page No. 50 mentioned at Serial No. 8 show the details of staff arrangements made by the appellant and explaining the admission process for the F.Y 2003-04. (See Page No. ....
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....4 TTJ 856. (See Page No. 53). 11. Mere passing of the seized material by the Assessing Officer of the searched person does not amount to recording of requisite satisfaction and proceeding u/s. 153C(1) in such a case will be treated as without jurisdiction. Refer Nauvik Investment and Commercial Enterprise Ltd. vs. DCIT- 5 DTR 479 - Delhi High Court. Copy enclosed (See page No. 58). 12. The issue of notice u/s. 153C(1) in the absence of the requirement of prima-facie belief that there could be some hidden income it would not be within the predominant object of assessing the undisclosed income for which section 153A and 153C are brought on statute. 13. It is true that section 153C(1) provides that on receiving the requisite satisfaction from the Assessing Officer, the Assessing Officer of the connected person "shall" proceed against the connected person for making the assessment or reassessment u/s. 153A. The word "shall" is indicative of enabling the Assessing Officer with the power to proceed against the connected person and that word is not indicative of a mandatory duty. Submitted that the word "shall" should be interpreted as only directory. There....
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....sing Officer may call the connected person and ensure that whether those transactions are infact disclosed and accounted in the regular books of accounts or otherwise." 5. On the other hand, Ld. DR for the Revenue argued stating that there exists the seizure of the various documents belonging to Sinhgad Technical Education Society (STES) from the premises of Mr Navale and those documents undoubtedly belong to the assessee and in such circumstances, requirement of the law as mentioned in section 153C of the Act are met and therefore, the A.O validly assumed jurisdiction u/s. 153C of the Income Tax Act. Further, as per the DR, there is no need for seizure of 'any money, bullion, jewellery or other valuable articles or thing or books of account or documents' with assessment year specificity. Ld DR is of the view that mere seizure of 'any money, bullion, jewellery or other valuable articles or thing or books of account or documents' belong to the person covered u/s 153C of the Act is sufficient for the AO to assume jurisdiction in respect of all the six years as per the proviso to section 153A of the Act and there is requirement of the law that there must exist ....
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.... and none of these papers therefore are related to Financial Years 1999-00 to 2002-03 i.e. (AY. 2000-01 to 2003-04) and therefore, the notices issued in respect of the AYs upto 2003-04 should be quashed. 7. We have heard the parties and perused the orders of the revenue. Further, we have gone through the voluminous paper books, written submissions, plenty of citations filed by both the parties to advance their respective arguments. On consideration of the original grounds and the additional grounds, we find it relevant to consider the additional ground first as it relates to the legal issue and it goes into the root of the matter. It questions the validity of the notice issued issued u/s 153C of the Act for all the four AYs under consideration. The relevant discussion is given in the following paragraphs of this order. 8. Additional Ground: Invalid Notices U/s 153C: In this regard, we have perused the reasons recorded by the AO of the assessee. We find that there exists the reasons for issue of notice u/s 153C of the Act and it is an undisputed fact. We also find that they are common reasons for all six AYs including the four AYs under consideration. The Counsel for....
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....de by the STES college of Engineering for admission process for F.Y. 2003-04. 9) page no. 58 to 60- these pages contain the details of expenses incurred by STES." 10. From the above, it is demonstrated by the Ld Counsel that the items at sl no 1 to 5 above belongs to the AY 2004-05 or thereafter. Referring to the rest of the items at sl. 6 to 9 above, the Counsel mentioned the said documents seized are either recorded in the books of account or involves cheque transactions. Thus, he summed up stating that the documents in question are neither the incriminating ones nor unaccounted transactions of the assessee and nor they relate to the impugned four AYs. In such circumstances, the AO not only assumed jurisdiction invalidly but also erred in disturbing the settled and completed assessments. Accordingly, AO should not assume jurisdiction in respect of such AYs in the absence of any incriminating information or transactions specific to any of the impugned four AYs ie 2000-01 to 2003-04. The contrary argument from the side of the revenue is that the overall approach in matters of concealment by the group assesses and all the discoveries of the search on Mr Navale and it....
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....t is the point in disturbing the settled assessment when the revenue does not have incriminating information for an AY and the information what is available is only routine one and when the AO merely makes an addition in the assessment u/s 153C based on change of opinion and when such additions are likely to be deleted in view of the settled nature of the issues? Income Tax provisions are not merely for the issue of notice u/s 153C but it is essentially for taxing the income of the person. What is point in issuing notice u/s 153C on flimsy grounds and finally tax nothing? Such proceedings only creates avoidable nuisance both to the over-burdened taxman and the much hazzled taxpayers. In the instant case, provisions of section 153C are invoked merely to apply the provisions of section 45(4) in this year, the issue which was already examined and concluded as inapplicable to the facts of the case. Such issue of notice is unwarranted and such reopening of the assessment for the AY 2000-01 is uncalled for. 26. Therefore, the proceedings initiated u/s 153C is not valid in view of the decision in the case of LMJ International (supra). Under these circumstances, we are of the opini....
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.... the said case is misplaced. 13. Further, we have examined various other judicial propositions mentioned by the Ld Counsel and some of them are reproduced as under. 1) Anil Kumar Bhatia and Ors. (2010) 1 ITR (Trib) 484 (Del) Conclusion:- "In respect of an assessment under s. 153A, where processing returns under s. 143(1)(a) stood completed in respect of returns filed in due course before search and no material is found in search thereafter, no addition can be made." 2) Suncity Alloys (P) Ltd. (2009) 124 TTJ (Jd) 674 Conclusion:- "Assessments or reassessments made pursuant to notice under s. 153A are not de novo assessment and therefore no new claim of deduction or allowance can be made by assessee where admittedly the regular assessments are shown as completed assessments on the date of initiation of action under s. 132." 3) Meghmani Organics Ltd. (2010) 129 TTJ (Ahd) 255 Conclusion:- "Record maintained by a person for his own purpose though referable to the assessee cannot be said to be belonging to the assessee within the meaning of s. 153C. Further, where none of the assessments are pending on the date of action under s. 15....