TaxTMI 
TaxTMI 
2015 (10) TMI 2023
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....riginal return filed on 23.10.2007 be considered as the return filed in response to the notice issued u/s 153A r.w.s. 153C of the Act. During the course of search proceedings, the Director of the company Shri A. Avnash was examined u/s 132(4) of the Act. He was confronted with certain documents which contained noting about receipt of money in respect of a real estate transaction by way of commission. The seized documents showed that Shri Avnash had received Rs. 20 lakhs by way of cash and the staff of the assessee had also received a sum of Rs. 3,45,000/-. In the sworn statement, the assessee admitted Rs. 20 lakhs as unaccounted income of the assessee company. However, the same was not declared in the return of income to be filed u/s 153A of the Act, since the assessee had intimated that the original return may be treated as return filed u/s 153 of the Act. Subsequently, during the course of assessment proceeding, the assessee filed a revised return of income, wherein it declared unaccounted income of Rs. 20 lakhs. The assessing officer, in view of the unaccounted income referred above, rejected the books of accounts pertaining to "automobile business" and estimated the business in....
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....placed reliance on the decision rendered by Hon'ble jurisdictional Andhra Pradesh High Court in the case of Sri Rao Subba Rao (HUF) (I.T.T.A.No.254 of 2014 dated 15.04.2014), wherein the Hon'ble High Court has held as under:- "We have heard the learned Counsel for the appellant and have gone through the judgement and order of the learned Tribunal. In paragraph No.78.22 of the judgement, the learned Tribunal on fact found that there is clear non-fulfillment of conditions laid down in Section 153C of the Income Tax Act, 1961, as there is no recording of satisfaction by the Assessing Officer that undisclosed income belongs to any person other than the person who was searched which is a condition precedent. Settled position of law has been applied. Therefore, we do not find any reason to interfere with the judgement and order of the learned Tribunal." Accordingly, the ld A.R submitted that the assessment made u/s 153C of the Act for AY 2007-08 is liable to quashed. 6. With regard to the issue relating to the recording of satisfaction, the Ld. D.R. submitted that the assessing officer of the searched person and the assessee is one and the same and hence there is no requirement of rec....
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....d legal issue relating to recording of satisfaction for initiating proceedings u/s 153C of the Act. A perusal of assessment order would show that the assessing officer did not refer anything about satisfaction recorded by the assessing officer of the searched person. During the course of hearing before us also, the department did not produce any material to show that the assessing officer of the searched person has recorded satisfaction in respect of the assessee herein as per the provisions of section 153C of the Act. 9. The Ld D.R contended that the assessing officer was the same for both the assessee and searched person and hence the satisfaction should be deemed to have been arrived at. However, the decision rendered by the Hon'ble M.P. High Court in the case of Mechmen 11C (supra) states that the responsibility of recording of satisfaction at the respective stages would not be extricated even if the assessing officer is common at both stages. In view of the decision of Hon'ble M.P High Court, referred supra, we are unable to accept the contentions of the Ld D.R. Hence, in the absence of compliance of provisions of section 153C of the Act with regard to the recording of satisf....
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....y him in the immediately preceding year and accordingly offered Rs. 72.00 lakhs in the revised return of income. However, the assessing officer assessed the sum of Rs. 92 lakhs originally declared by the Director of the assessee company in the sworn statement as income of the assessee. Besides the above, the AO also rejected the books of accounts of automobile business and estimated the income at Rs. 91.84 lakhs. During the course of search a receipt was seized which showed that the assessee has paid a sum of Rs. 3 lakhs to a person named Shri B. Srinivas. Since the assessee could not give proper explanation with regard to this payment the assessing officer also assessed the above said sum of Rs. 3 lakhs. Accordingly, the assessing officer determined the total income of the assessee for assessment year 2008-09 at Rs. 1,86,84,742/-. 13. In the appellate proceedings, the Ld. CIT(A) confirmed the rejection of books of accounts and estimation of income from automobile business. The Ld. CIT(A) also confirmed the assessment of unaccounted payment of Rs. 3 lakhs. The Ld. CIT(A), as held by him in assessment year 2007-08, held that no separate addition of Rs. 92 lakhs is required to be ma....
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....tly the admission of additional income in the hands of the assessee company by its Director. We have noticed about the nature of additional income offered by the Director of the assessee company in assessment year 2007-08 is commission income earned in respect of real estate transaction. In assessment year 2008-09, the nature of additional income was unaccounted payment in respect of property purchased. As submitted by Ld. A.R., there is no evidence to show that the unaccounted money relating to property purchased was generated out of automobile business. Similarly, the commission income earned on real estate transaction, though offered in the hands of the assessee company, is generally construed as the fruits of personal efforts. Hence, we agree with the contentions of the assessee that both this additional income admitted by the assessee, though admitted in the hands of the assessee company, cannot be linked to the books of accounts maintained in respect of automobile business, since there are no evidence to arrive at such inference. Hence, in the absence of any defect noticed in the automobile business, we are of the view that the assessing officer was not justified in rejecting....