TaxTMI 
TaxTMI 
2016 (3) TMI 1023
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.... the aforesaid assessment order are exactly the same as made in the earlier assessment u/s 143(3) of the Act which have been subject to appeal before various appellate forums. 2.2 That the learned CIT(A) erred in law and on facts in holding that the order u/s 153C of the Act is valid even though no incriminating materials were seized from the premises of the searched persons. 2.3 That the learned CIT(A) erred in law and on facts in holding that the seized documents disclose that borrowed capital is not utilized in the business of the appellant and such a finding is perverse as not being supported by any evidences on record and are contrary to the materials on record. 2.4 That the learned CIT(A) erred in law and on facts in holding that the satisfaction recorded by the learned assessing officer to invoke the jurisdiction u/s 153C of the Act is valid. 3. That the learned CIT(A) erred in law and on facts in holding that the interest is not allowable u/s 36 of the Act. 4. That the learned CIT(A) erred in law and on facts in not following the binding decisions of the Hon'ble ITAT for the AY 2001-02 and 2002- 03. 5. That the learned CIT(A) erred in law and on facts ....
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....d to the assessee-firm. As regards the assessee-firm's argument that addition has no reference to seized material, the CIT(A) held that once the documents belonging to the assessee are found, it is sufficient to assume jurisdiction u/s 153C. It is not necessary that the additions made should be with reference to seized document. In support of this contention, the CIT(A) placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia reported in 24 Taxmann.com 98 (Del) and CIT vs. Chetan Das Lachman Das (25 Taxmann.com 27(Del). On merits, the CIT(A) held that since borrowed funds were not utilized for the purpose of acquisition of immovable property in respect of which rental income has been offered to tax, no deduction can be allowed u/s 24. As regards, alternative claim of the assessee-firm of deduction of the same under business head, it was held that the decision of the Tribunal in earlier years cannot operate as res judicata as each assessment year is distinct and different. Therefore, he confirmed the addition. 5. Being aggrieved, assessee-firm is in appeal before us in the present appeals. The assessee-firm had raised the following ....
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....we shall now deal with the same. Learned AR of the assessee-firm vehemently argued that the AO ought not to have exercised jurisdiction u/s 153C of the Act, inasmuch as there was no satisfaction reached before assuming jurisdiction. He further argued that assumption of jurisdiction also faulty for the reason that the documents seized as a result of search and seizure operations which are relied upon for making impugned assessments does not belong to the assessee-firm. He further argued that the seized material does not bear any signature or date and finally, he argued that the satisfaction note recorded is not a satisfaction as required under the provisions of section 153C of the Act inasmuch as the satisfaction note does not indicate that the seized material belongs to the assessee-firm. In support of this proposition, he relied upon the Hon'ble High Court of Delhi in the case of Pepsi Foods Pvt. Ltd. vs. ACIT (367 ITR 112) and the decision of Hon'ble High Court of Allahabad in CIT vs. Classic Enterprises (358 ITR 465). On the merits, learned AR submitted that the very same issue was considered in the regular assessments for the assessment years 2003-04, 2004-05 and 2005-0....
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....ntained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed 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 assessment 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 ....
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.... ending on the day on which the assessee is required to furnish a report of such audit under that sub-section; or (iii) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee of being re-heard under the proviso to section 129; or (iv) in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, 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 section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. (2) The authorisation referred to in clause (a) and clause (b) of sub-sectio....
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....section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or 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 assessment year in the manner provided in section 153A. 9. The controversy in the present appeals relates to interpretation of the provisions of sec.153C of the Act. On plain reading of the above provision, it is clear that the provisions of sections153A, 153B and 153C lay down scheme of assessment in the case of search and requisition u/ss.132 and 132A of the Act. The provisions of sec.153A deal with the procedure for issue of notice in the case of a person where search u/s 132 or books of account or other documents or assets are requisitioned u/s 132A of the Act after 31st ....
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....ion 132(4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction" . . . 'It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted b....
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....executed in its favour, but had not exercised that option. The assessee was not entitled to say that because of its own default in having a deed registered in its name, the assessee was not the owner of the property. In the circumstances, it was held that the assessee must be deemed to be the owner of the property within the meaning of section 22 of the Income-tax Act, 1961, and was assessable as such on the income from the property." 9.3 Again, the Hon'ble Delhi High Court in the case of Pepsico India Holdings P. Ltd. vs. ACIT (370 ITR 295) following its earlier decision in the case of Pepsi Foods P. Ltd (supra) held that unless it is established that the documents in question do not belong to the searched person, the question of invoking the provisions of sec.153C of the Act does not arise. It was also held that unless searched person disclaims the documents as belonging to him, provisions of sec.153C do not get attracted. It is also further laid down that in the satisfaction note there should be something to indicate that the seized document do not belong to the searched person. The Hon'ble Delhi High Court held as follows: "Having set out the position in law in the decisi....
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....refers to‟. A registered sale deed, for example, "belongs to‟ the purchaser of the property although it obviously "relates to‟ or "refers to‟ the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to‟ the vendor just because his name is mentioned in the document. In the converse case if the vendor's premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy "belongs to‟ the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to "belong to‟ the petitioner. In view of the foregoing discussion, we do not find that the ingredients of Section 153C of the said Act have been satisfied in this case. Consequently the notices dated 02.08.2013 issued under Section 153C of the said Act are quashed. Accordingly all proceedings pursuant thereto stand quashed." 9.4 Similarly, the Hon'ble Gujarat....
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....urts, even went to the extent of holding that possession of documents and possession of photo copies of documents are two separate things. It may be quite possible that photo copies may be belonging to the searched person and whereas the original may be owned by some other person. 10. Applying the above legal position to the facts of the present case, satisfaction note recorded by the AO reads as under: "Satisfaction Note for initiating action u/s 153C Action u/s 132 was conducted in the case of India Builders Corporation and its Group based on the authorization issued by the Addl.CIT (Inv)-I, Bangalore vide warrant No.1017 dated 17.06.2008. During the course of search in the case of Indian Builders Corporation the following book/documents were found and seized u/s 132 Exhibit I.D A/YZS 10 A/YZS/15 On a scrutiny of the above documents seized it is seen that the above materials belong to M/s.The Senate. I am satisfied that action U/s 153C has to be initiated in the case. Notice u/s 153C issued calling for return of income within 20 days." The satisfaction note recorded by the AO is identical for all the years except for difference in the assessment year....