TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 256
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....me papers, pertaining to assessee-company, were found at the residence of MD concerning details for purchase of property. Since the matter relates to A.Y. 2003-2004, a notice was issued to assessee-company by taking prior approval of CIT (Central). 3. In response to the said notice, assessee-company contended that the said papers having been found in the course of search at the residence of MD, assessment cannot be reopened for the year under consideration u/s 148 of the Act. A.O. however observed that on account of fresh evidence found at the time of search, reopening of assessment by taking prior approval of CIT (Central) is in accordance with law and thus he proceeded to consider the main issues on merits. A notice u/s 143(2) of the Act was issued along with the copy of the seized documents and assessee-company was asked to submit their objections. As per page 13 of the seized documents, identified as "A/DVN/5", there were certain financial transactions showing payments, both in cash and cheque, out of which there was a payment of Rs. 1 Cr in cash prior to 31.3.2003. In the assessment order the said document was reproduced to highlight that a cash payment is recorded prior to 2....
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....r to 26.03.2003 but the sources having been not explained, the said amount deserves to be treated as 'unexplained investment' in the hands of assessee-company and assessment was completed accordingly. 7. Aggrieved, assessee contended before Ld. CIT(A) that reopening of assessment is bad in law since the proceedings were initiated consequent to search and seizure operation at the residential premises of MD of assessee-company. It was also contended that proper course of action is to issue a notice u/s 153 of the Income Tax Act, 1961, as the assessee would come within the ambit of definition of "any other person". In other words, the plea of assessee was that A.O. ought to have passed on the information to the jurisdictional A.O., if assessee was not a part of the search proceedings and he whould not have jurisdiction otherwise. It was also contended that assessee having furnished all material facts during the course of original assessment proceedings, reopening of assessment by issuing a notice u/s 148 of the Act is bad in law. With regard to addition of Rs. 1 Cr towards unaccounted investment, it was contended that the same do not pertain to assessee. 8. Ld. CIT(A) observed that ....
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..... Srinivas on 20.3.2003, it can be seen from the copy of "Agreement of sale" dated 20.3.2003, that the same is not a registered document. Likewise, even the Agreement of Sale dated 19.1.2004 between them also is not a registered document. Therefore, even if Shri D. Srinivas has been mentioned as the purchaser in those unregistered Agreements of Sale, such documents itself cannot establish that the property was not to be purchased by the appellant company, but by Shri D. Srinivas only in his individual capacity and further that the final registration of property was to be done in favour of Shri D. Srinivas only. On the other hand, the seized document itself shows that substantial payments out of the total consideration were paid by the appellant company through Pay Order and Cheque. Therefore, I am of the view that there is no merit in the contention of the appellant that the document and the notings therein do not pertain to the appellant-company." 11. It was also highlighted that majority of the entries in the seized document were admitted as correct and thus the remaining part should also be treated as true and correct and it was incumbent on the assessee to explain entry of Rs.....
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.... was further observed that a statement given before the DGIT (Inv.) cannot be utilised for forming a belief that there was escapement of income, chargeable to tax, and the subsequent reasons would not make the proceedings valid. 13. On merits, it was submitted that the loose paper was found in the premises of Shri D.V. Naidu, Managing Director of the assessee-company, and it was seized and placed on record as "DVN", indicating 'D.V. Naidu'. Thus it cannot be treated as document found in the premises of the assessee-company. Even during the course of examination of Shri D.V. Naidu no specific question was asked with regard to Rs. 1 Cr and the assessee-company was not involved - by obtaining the signature of the authorised person of the assessee-company. In fact, while explaining the transactions Shri D.V. Naidu stated that certain amounts were recorded in the books of M/s. SCL Infratech Ltd., and certain amounts were paid by others and accordingly offered to tax a sum of Rs. 10 lakhs in the individual hands of Shri D. Srininvas but there is no specific question with regard to the source of Rs. 1 Cr, and whether it was an amount paid by the Managing Director from his individual sour....
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....essment order to submit that the search might have taken place in the name of the assessee-company. 16. However, vide written submissions dated 12.10.2017 Ld DR submitted that the search and seizure operations were conducted in the case of Managing Director of the assessee-company and during the course of search proceedings a document was found in the premises of the Managing Director which indicates that the assessee-company paid a sum of Rs. 1 Cr to Shri Venkata Akkineni in cash and a statement of Managing Director of the assessee-company shows that he has accepted that payment of Rs. 1 Cr pertains to the period on or before 26.03.2003. In fact, the Managing Director accepted that the cash payment shown on 18.04.2004 for a sum of Rs. 10 lakhs, as per the same seized document, was offered to tax as additional income in the hands of his son. He also submitted that the initiation of proceedings u/s 148 of the Act with respect to an assessment year falling beyond the period of 6 years is valid in law in the light of the decision relied upon by the Ld. CIT(A). He also relied upon a decision of the Hon'ble Gujarat High Court in the case of Praful Chunilal Pate vs. ACIT (236 ITR 832) (....