TaxTMI 
TaxTMI 
2015 (11) TMI 1682
X X X X Extracts X X X X
X X X X Extracts X X X X
....: (i). That the action taken u/s. 143(3)/147 instead of section 153C, is void ab initio, having been beyond jurisdiction of AO; (ii). That the sustenance of order u/s. 147 is not justified with reference to the finding of CIT(A) that no material belonging to the assessee was seized during the course of search; (iii). That the conclusion of CIT(A) that seized documents prove the interest paid on PDC, is not sustainable because no document belong to assessee, no enquiry was made from any of the alleged recipient and no corroborating independent evidence was found; and (iv) That CIT(A) erred in upholding the addition of interest for the period for which PDC's were extended and directing the AO to compute the interest after six months f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not satisfied therewith and computed a sum of Rs. 34,67,098/- paid by assessee to the vendors as interest on PDCs issued to them. The AO, finding this interest having not been accounted for in the books of account, added the same to the income of the assessee being paid out of its undisclosed sources. 4. The assessee challenged the order of AO in appeal before the ld.CIT(A) both on validity of order u/s. 147 as well as merits of addition. The ld. CIT(A) after considering the matter at length concluded that the action taken u/s. 147 was legally valid and on merits directed the AO to compute the interest for the extended period of PDC, i.e., after 6 months from the date of sale on conservative side and accordingly, the appeal of the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v) relied upon by the ld. CIT(A) has laid down the principle that even if the search and seizure were in contravention of the provisions of section 132, still the material seized was liable to be used subject to law against the person from whose custody it was seized. In our considered opinion, the same analogy may also be applied to the person other than the person searched if some documents belonging to him are found and seized during the course of a search. The decision of Hon'ble Supreme Court nowhere puts a bar on the action against the third party u/s. 147 if any information with regard to detection of material belonging to it is received by the AO. Moreover, ITAT, Lucknow Bench in the case of ACIT vs. M/s. Shivam Gramodyog Sansthan, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l, the block assessment under section 158BC of the Act cannot be made but the regular assessment or the re-assessment contemplated under the Act can be made. Therefore, initiation of proceedings under section 148 of the Act read with section 147 of the Act by the Addl. CIT cannot be said to be without jurisdiction. 16. In the light of the aforesaid judgments, we are of the considered view that the impugned incriminating material found during the course of search can be used by the Assessing Officer against the assessee, as it relate to it." The ld. Counsel for the assessee has not placed before us any judicial pronouncement for the proposition that the material belonging to the person other than the person search, found and seized in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The assessee is a separate and distinct assessee under the Act and is to be assessed on the basis of material which belongs to it or specifically relevant for its assessment. In the instant case no specific document is pointed out belonging to the assessee nor any evidence or material, whatsoever, has been demonstrated by the authorities below to show that the assessee had paid interest on PDCs. Therefore, there being no definite material belonging to the assessee, in our opinion, the reasons recorded for initiation of proceedings u/s. 147 against the assessee, are not in consonance with law, having been based on mere suppositions and surmises and extrapolation of material seized. The fact that the assessee is a group company of BPTP Ltd. a....