TaxTMI 
TaxTMI 
2014 (1) TMI 651
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....of service of notice. As per assessment order, the assessee failed to file return of income within stipulated period and therefore a notice u/s 142(1) dated 5.10.2010 along with questionnaire were issued requiring the assessee to file return of income along with in other details. In response to these notices, the assessee filed letter dated 25th October, 2010 stating therein that return of income filed originally as per the provisions of section 139(1) of the Act declaring nil income may be treated as filed in response to notice u/s 153C of the Act. During assessment proceedings, the Assessing Officer observed that the assessee was carrying out the business of manufacturing and selling of tobacco products and had declared a turnover of Rs.2.9 crores and Rs.3.91 crores respectively for the years 2006-07 & 07-08. The Assessing Officer also observed that assessee had declared a gross profit of Rs.1.08 crores and Rs.1.42 crores respectively in the above assessment years. During course of assessment proceedings the assessee was asked to file certain details and produce stock register which the assessee did not produce. The Assessing Officer held that during the course of search, evidenc....
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....fforded any opportunity to the appellant nor confronted the material gathered by him to the appellant during course of assessment proceedings. f) That Assessing Officer failed to bring any material on record, the evidences which were seized from the premises of Gopal Zarda group which prompted him to estimate the sale at Rs.4 crores and Rs.5 crores respectively by rejecting the actual sale. g) That Assessing Officer erred both in fact and in law initiating and completing assessment proceedings u/s 153A read with section 153C of the Act without providing copy of reasons recorded for initiation of assessment proceedings. 4. The Ld CIT(A) obtained a remand report from Assessing Officer regarding as to whether copies of documents and copy of reasons were provided to the assessee or not. The Assessing Officer vide remand report submitted that assessee had never filed any requisition for copy of satisfaction as well as copies of documents based on which the satisfaction for initiating proceedings u/s 153C of the act were recorded. In his rejoinder, the assessee submitted that Assessing Officer has wrongly mentioned in remand report that appellant had no....
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....on note has been recorded at a date which is after the date on which notice U/S 153C was issued in the case of the appellant. Similar is the position with the "satisfaction note" in case of the appellant, in which reference to the various annexures which includes Balance Sheet, P & L Account and Audited Accounts of the appellant company has been made. In view of the above facts all these documents, even while belonging to the appellant, are apparently reflecting it's audited accounts based on which the returns of income have been filed by the appellant on earlier occasion. Thus there is nothing incriminating in these documents which can lead to forming of the satisfaction on part of the AO to initiate proceedings u/s 153C.of the Act. In the spirit of enactment of section 153C it would be am licit and inherent requirement that there must be existence of prima facie unrecorded unaccounted transaction recorded in the documents belonging to the assessee before the said provision can be invoked in case of a third party, who has not been subjected to search u/s 132 of the IT Act. Any other interpretation of Section 153C would result in unintended consequences in case of third parties to ....
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....f the same. The appellant has finally summed up his submission in para 1.36 of his submission dated 23.04.2012 and concluded that the AO has erred both in fact and in law in making addition by estimating income on estimated sales without bringing in any material on record to substantiate that sales are not fully accounted for in the books of accounts and therefore it has been requested that the addition of Rs.36,80,000/- is liable to be deleted." Similar findings were made by ld CIT(A) in respect of assessment year 2007-08. 5. Aggrieved with the order the revenue is in appeal before us. 6. At the outset, the Ld DR referred to pages 36 to 38 of Ld CIT(A)'s order and submitted that all documents narrated by ld CIT(A) were seized and assessee has submitted that these are acknowledgement of returns and copy of audited accounts. The provisions of section 153C were read to substantiate that Ld CIT(A) has wrongly deleted the addition by holding that no incriminating document was found. On merits, the Ld DR relied upon the order of the Assessing Officer. 7. The Ld AR, on the other hand, submitted that no satisfaction was recorded by the Assessing Officer and even copy of seized....