TaxTMI 
TaxTMI 
2020 (3) TMI 116
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....of the Income Tax Act, 1961 (in short 'Act') was conducted in the business premises of the assessee firm at D.No.20-8-5, Nadellavari Street, Tanuku on 22.01.2015 and during the course of survey, certain books of accounts, loose sheets were found and impounded u/s 133A of the Act vide proceedings dated 22.01.2015. Subsequently search u/s 132 was conducted in the residential premises of Sri Kundula Veera Venkata Satyanarayana, the managing Partner of the firm at D.No.33-8-35, Babuvari Street, Tanuku on 22.02.2015 and during the course of search, certain incriminating material in the form of loose sheets, note books were found and seized. The Assessing Officer (AO) issued notice u/s 153C of the Act on 27.04.2016 and made the assessments u/s 143(3) r.w.s. 153C of the Act. The total income assessed by the AO for the A.Ys. 2010-11 to 2014-15 are as under : A.Y. Returned Income (Rs.) Assessed Income (Rs.) 2010-11 9,89,770 2,25,05,245 2011-12 11,55,400 3,54,35,650 2012-13 30,37,980 20,48,41,420 2013-14 13,72,380 4,76,51,275 2014-15 26,95,030 5,68,44,446 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) quash....
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....urse of search as not the incriminating material and has no bearing on the income of the assessee. The Ld.DR further submitted that page No.11 and 12 were the papers seized as page Nos.84 and 85 and 15 to 17 are the loose sheets marked as Sl. 136 to 138 of Annexure A/KVVSN/02. The Ld.DR further argued that it is not necessary to have the material evidencing the undisclosed income at the stage of issue of notice u/s 153C, but, it is sufficient to have material found during the course of search which has bearing on the income of the assessee. The word 'bearing' has very wide connotation having long ramification thus, submitted that the seized material need not necessarily indicate the undisclosed income for issue of notice u/s 153C. In the instant case, the material was found and seized during the course of search, it belonged to the assessee and has bearing on the income of the assessee, therefore, argued that the AO rightly initiated the proceedings u/s 153C, hence requested to set aside the order of the Ld.CIT(A) and uphold the notice issued u/s 153C of the Act and remit the matter back to the file of the CIT(A) to decide the issue on merits. The Ld.DR relied on the orders of the ....
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....e of search in the residence of the Managing Partner, Shri K.V.V.Satyanarayana on 22.06.2016 which is unlikely and impossible. Therefore, argued that whatever the material stated to be seized was already impounded u/s 131 by an order dated 22.01.2015, hence, there is no case of material seized during the course of search, hence the notices issued u/s 153C is without jurisdiction and required to be declared as invalid. 5.2. The third line of argument taken by the Ld.AR is that the AO of the searched person has not recorded the satisfaction. Though the department has placed the satisfaction note in separate sheet in the case of searched person, there was no order sheet entry having recorded the satisfaction in the hands of searched person while transferring the material, thus argued that there was no satisfaction recorded by the AO. The Ld.AR taken the support of the office manual for assessment procedure in para No.5.1 to 5.3, wherein, it is mentioned that the AO must record satisfaction in the order sheet of both the searched person as well as the other person. 5.3. Further, the Ld.AR also argued that in the assessee's case all the assessments were completed assessments and there....
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.... 153C of the Act. On the basis of the loose sheets marked as page No.84, 85 and page No.136 to 138 of Annexure-A/KVVSN/02, the AO came to conclusion that the loose sheets have bearing on the determination of the total income of the assessee, therefore, issued notice u/s 153C after recording the satisfaction note. The Ld.CIT(A) placing reliance on the decision of Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Sinhgad Technical Education Society, held that there is no incriminating material, hence quashed the notice u/s 153C and made the assessments void-ab-initio. The said page No.84, 85 and 136 to 138 were placed in paper book page No.11 and 12 and 15 to 18. We have gone through the page No.11, it relates to the detailed estimation of expenditure to be incurred for river sand usage in the districts of West and East Godavari and to excavate the silt sand but not actuals. The table given in page No.11 was the revenue collected by the Government in the past 5 years in West and East Godavari districts. Page No.11 and 12, 15 to 18 of paper book does not indicate any sales, expenditure incurred or the investments made by the assessee etc. which has bearing on the det....
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....was seized which pertains to the Assessment Year 2010-I1 is invalid. More so, when there is nothing incriminating in these documents. Therefore, the notice issued u/s.153C is quashed and consequently the entire assessment proceedings based on such invalid notice are also quashed as void-ab- initio. This ground of appeal is allowed." 7.1. Careful verification of the loose sheets found during the course of search clearly indicate that it is the estimate and proposal sent to the state government to stop mining from the downstream area and to excavate the sand from the upstream of barrage area with the benefits to increase the storage of water in the rivers. Similarly page No.136 to 138 also contain similar calculations of estimation prepared for the purpose of proposal sent to the state government. No evidence was placed by the department to show that the said proposal is approved by the Government or contract is awarded to the assessee. For the sake of better understanding, we reproduce the contents of page No.84 of the seized material which reads as under : "Details of River Sand Usage in the Districts of West and East Godavari Lorries per day consumed (Approximately) 2000 @ 200 ....
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....s not permissible to initiate action u/s 153C without having the incriminating material belonging to the assessee. For the sake of clarity and convenience, we extract para No.5.2 of the order of this Tribunal which reads as under : "5.2. We have carefully considered the submission and now it is settled issue that for initiating the proceedings u/s 153C of the Act, it is incumbent upon the A.O. to have the incriminating material evidencing the undisclosed income. In the assessee's case no such evidence was found during the course of search in the case of G.S.L.Educational Society. As per the provisions of section 153C of the Act, it is mandatory to have the satisfaction of the A.O. that money, bullion, jewellery or other valuable article or thing or any books of accounts, documents seized or requisitioned pertains to or relates to the assessee, which means that unless there is an incriminating material belonging to the assessee is found, the action u/s 153C of the Act is not permissible. In the assessee's case there was no incriminating material found and seized from the premises of the searched person. As discussed earlier the material found during the course of search was relate....