TaxTMI 
TaxTMI 
2019 (4) TMI 1306
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.... 3. The Ld. CIT(A) erred in holding the notice u/s 153C as invalid merely on the submissions and evidences furnished by the assessee during the course of appellate proceedings many of them being in the nature of additional evidence/argument and not affording opportunity to the Assessing Officer by way of seeking remand report from her. 4. The Ld. CIT(A) erred in deciding the appeal by not stepping into the shoes of the Assessee Officer by not requisitioning records of the searched party from Hyderabad. 5. The Ld. CIT(A) erred in deleting the addition of Rs. 6,45,00,000/- by ignoring the fact that the person making the payment had admitted for the same and also offered the income for taxation purpose. 6. The Ld. CIT(A) erred in allowing relief to the assessee on the ground that the assessee ceased to be the Director of the company M/s Humming Birds Solution Pvt. Ltd. w.e.f. 16.03.2007 whereas he was the key person as per seized document to negotiate the deal for transfer of company and also the name of other director were not disclosed at the time of negotiations. The Ld. CIT(A) should have taken cognizance of "substantive" or "beneficial" ownership, b....
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....that the seized documents belong to the assessee, Sh. Gulshan Kumar Sethi. She further stated that Ld. CIT(A) wrongly observed that the notice u/s 153C is invalid merely on the submissions and evidences furnished by the assessee during the course of appellate proceedings and even many of them being in the nature of additional evidence/argument and not affording opportunity to the Assessing Officer by way of seeking remand report from her. It was further submitted that Ld. CIT(A) wrongly deleted the addition of Rs. 6,45,00,000/- by ignoring the fact that the person making the payment had admitted for the same and also offered the income for taxation purpose and Ld. CIT(A) also erred in allowing relief to the assessee on the ground that the assessee ceased to be the Director of the company M/s Humming Birds Solution Pvt. Ltd. w.e.f. 16.03.2007 whereas he was the key person as per seized document to negotiate the deal for transfer of company and also the name of other director were not disclosed at the time of negotiations. However, Ld. CIT(A) should have taken cognizance of "substantive" or "beneficial" ownership, being that of the assessee, which he had not done. 5. On the other ....
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....A or. 31.03.2015, thereby making addition in the hands of the assessee at Rs. 6,45,00,000/- represented the value of Plot no. C-l. Sector-65, as found mentioned on page 19. 6. On appeal before the Id. CIT(A), the assessee had challenged the initiation of proceedings u/s 153C on the ground that the assessing officer of the searched person has not recorded his satisfaction that those documents do not belong to the searched person. For such proposition, the assessee had placed reliance upon the decisions of Hon'ble Delhi High Court in the cases Pepsi Foods Pvt. Ltd. Vs. ACIT [367 ITR 112] and Pepsico India Holdings Pvt. Ltd. Vs. ACIT [370 ITR 295]. 7. After carefully examining the facts of the case, the case made out by the ACIT, Circle-59(1) New Delhi vide assessment order in the light of the seized documents forwarded by the Assessing Officer of the searched person and the assessee's submissions in the light of the decisions relied upon by the assessee, the Id. CIT(A) had categorically recorded his finding that "the Assessing Officer of the search company namely DCIT, Central Circle-4 Hyderabad, in the Satisfaction Note had not stated that the seized materi....
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....on Financial Services Ltd. vs. ITO (2017) 399 ITR 202 (Del.) d) Hon'ble Delhi High Court decision in the case of CIT vs. (1) Renu Constructions Pvt. Ltd. (ITA No. 499 of 2011); (2) Ankit Gupta (ITA Nos. 32 and 35 of 2012); and (3) Ankit Gupta, L/H Manoj Kumar (ITA Nos. 41 and 125 of 2017) vide order dated 6.9.2017 (2017) 399 ITR 262 (Del.) 6. We have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A), Written Synopsis and the case laws filed by the Assessee's counsel. We find that Ld. CIT(A) has elaborately discussed the issues in dispute i.e. legal as well as on merits vide para no. 5 to 11 at page nos. 4 to 11 of the impugned order passed by the Ld. CIT(A). For the sake of clarity, we are reproducing hereunder the said relevant findings of the Ld. CIT(A). "5. Ground Nos. 1 & 2 are against the initiation of proceedings under section 153C which as per the appellant is not in accordance with law and therefore, the assessment completed on 31.03.2015 needs to be set aside. During the appellate proceedings, the appellant's Authorized Representative challenged the assumption of jurisdiction by the Assessing Officer....
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.... 3. The Assessing Officer is requested to issue notices under section 153C in the above case for Assessment Year Assessment Year 2006-07 to 2012-13 and complete the assessment. It is further requested to note that the Time Barring date for completion of assessment 131.03.2015. Yours faithfully, Sd/- (B. KURMINAIDU) Deputy Commissioner of Income Tax Central Circle-4, Hyderabad. " Enel: As above. 6. As per the appellant's Authorized Representative, the Assessing Officer of the searched Company only stated that he was satisfied that sheet numbered 18-19 of the Annexure A/CPL/01 belonged to the appellant but failed to mention that these papers do not belong to the search Company namely M/s. Coastal Projects Ltd. The appellant's Authorized Representative also mentioned Jurisdictional High Court's decision in the case of Pepsi Food (P) Ltd. reported in 367 ITR 112, wherein it was held that before a notice under section 153C can be issued two steps are to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at satisfaction that a document seized from him does not belong to him but to some o....
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....on mentioned above is in favour of the appellant, as the Assessing Officer of the search Company namely DCIT, Central Circle-4, Hyderabad, in the Satisfaction Note had not stated that the seized material do not belong to the searched person. I am constrained to decide the issue in favour of the appellant. Based on the above decision of the Jurisdictional High Court, the issue of notice under section 153C to the appellant had to be considered as illegal and as a result, Ground Nos. 1 & 2 of the appellant are allowed. 8. Ground Nos. 3 & 4 are against the addition of Rs. 6,45,00,000/- as undisclosed income. As per the assessment order, the appellant had sold property bearing No. C-l, Sector -65, Noida, to M/s. Coastal Projects Ltd. As per the appellant, he never owned the above property but the property belonged to M/s. Humming Birds Solution Pvt. Ltd. and the property continues to belong to the same Company. The appellant had filed a copy of the e-filed income tax return of the above Company for Assessment Year 2010-11 and as per the same, the Company's Permanent Account Number is AABCH8051J and assessed by ITO, Ward 12(4), Delhi. Copy of the seized document No. 18 mentions ....
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....sessment order about the date of sale or any detail regarding the sale transaction. The seized document also indicates the possibility of M/s. Coastal Projects Ltd. acquiring the Company M/s. Humming Birds Solution Pvt. Ltd. which had the property at C-l, Sector-65, Noida. Since it is clearly mentioned in the assessment order that Rs. 70,00,000/- of the consideration was paid by cheque, the Assessing Officer should have at least traced this cheque payment. If there was evidence that the cheque of Rs. 70,00,000/- was received by the appellant Sh. Gulshan Kumar Sethi, then there was some basis for considering that the appellant had received the entire sale consideration of Rs. 6,45,00,000/- for transferring the property either through a sale deed or through the outright transfer of the shares of the Company. In the absence of any such concrete evidence, the addition of Rs. 6,45,00,000/- on the appellant is based only on assumptions and thus, not sustainable. 11. As per the assessment order, Sh. Subbineni Surendra of M/s. Coastal Projects Ltd. had admitted the payment of Rs. 6,45,00,000/- to Sh. Gulshan Kumar as per letter dated 17.3.2015 of DCIT, Central Circle 2(2), Hyderab....
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....f the Act on the assessee is illegal. We further note that the Hon'ble Jurisdictional High Court in the case of Pepsico India Holdings Pvt. Ltd. vs. ACIT & Anr. reported in 370 ITR 295, has held that unless and until it is established that documents seized do not belong to searched person, the provisions of section 153C of the Act do not get attracted. The relevant portion of the above decision of Pepsico India Holdings Pvt. Ltd. (Supra) is as follows:- "Unless and until it is established that the documents do not belongs to the searched person, the provisions of Section 153C of the said Act do not set attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A..." In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belongs to ....
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....t the assessee is the owner of the property based on the seized documents No. 18, which mentions as follows:- "Owner's name is Mr. Gulshan. The names of other Directors of the said Company shall be known later." 6.4 After perusing the aforesaid details, it is observed that the assessee Sh. Gulshan was one of the Directors and there is no mention in the assessment order about the other Directors of the Company which proposed to sell property to M/s Coastral Project Pvt. Ltd. However, during the appellate proceedings, the AR of the assessee stated that the assessee ceased to be the Director of the above Company M/s. Humming Birds Solution Pvt. Ltd. w.e.f. 16.03.2007. The assessee also filed a copy of Form No. 32 filed before the Registrar of companies indicating that he had resigned as a Director of the above Company from 15.03.2007. The audited Balance Sheet of the above Company M/s. Humming Birds Solution Pvt. Ltd. for the year ending 31.03.2010 filed before the Ld. CIT(A) which indicates the names of the Directors as Sandeep Malik and Veena Malik, but the Assessing Officer is either not aware of these Directors or even if aware, had not carried out any enquiries on their source....