TaxTMI 
TaxTMI 
2022 (11) TMI 464
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....l year in which the search took place. 3. The Ld. CIT(A) erred in not adjudicating the legal point that the search and seizure operation was carried out in July 2017 and that therefore, the cases to be covered are up to AY 2012-13 and not beyond and thus making the assessment for AY 2010-11 is beyond the law. 4. The Ld. CIT (A) ought to have appreciated that the A.O. erred in passing assessment u/s 153C for AY 2010-11 which is beyond time as provisions of section 153C did not empower the A.O. to make assessment for the A.Ys beyond six years preceding the financial year in which the search was made. 5. The Ld. CIT(A) erred in not adjudicating on addition of Rs. 2,00,09,0001ul s 68 of the IT. Act as unexplained deposits in the assessment order made u/s 153C of the I.T. Act, without fairly appreciating the explanations / clarifications submitted by the appellant. 6. The Ld. CIT (A) ought to have appreciated the fact that the assessee has discharged its primary onus by providing required documents, clearly establishing the source of deposit in bank. 7. The Ld. CIT (A) failed to appreciate that the A.O. erred in passing the order u/s 143(3) r....
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....i.e., ITA 10 and 13/Hyd/2021 for A.Y.s 2012-13 and 2017-18, except the amounts involved in. 4. The grounds raised by the Revenue in ITA No.34/Hyd/2021 for A.Y. 2011 -12 reads as under : "1. The ld.CIT(Appeal) erred both in law and on facts of the case in allowing relief to the assessee. 2. The ld. CIT (Appeal) erred in deleting the addition of Rs.2,00,09,000/- made u/s 68, without giving any credence to the material seized, post search enquiries made and the enquiries made during the assessment by the assessing officer. 3. The CIT (A) erred in holding that the proceedings u/s 153C were not validly initiated and that the incriminating seized material does not pertain to the A.Y.2011-12. 4. The ld. CIT (Appeal) erred in holding that the bank accounts found during the search were already declared to the Department though the assessee filed a return for assessment year 2011-12 on 24.11.2016, in which the only account number declared is 62343105741 of SBI and not 0446102000010362 of whose cheque book was found and seized during the search. 5. The ld. CIT (Appeal) erred in ignoring the fact that even the bank account number 62116116209 of S....
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....the Act was not processed and treated by the AO as Non-est. During the course of scrutiny assessment, notices u/s 142(1) of the Act and show cause notices were issued to assessee on different dates asking for various details as required. With the information submitted by the assessee, AO had completed the assessment u/s 143(3) r.w.s. 153C of the Act by computing the total income at Rs.25,56,581/- by making an addition of Rs.2,00,09,000/- as unexplained cash credits u/s 68 of the Act. Subsequently, initiated penalty proceedings u/s 271(1)(c) for concealment of income on the above addition on account of cash deposits in the bank accounts. Paragraph 33 of the assessment order is reproduced hereinbelow for the completeness of the record. "33.0 Accordingly an amount of Rs 2,00,09,000/- is brought to tax as unexplained cash credits of assessee firm for A.Y. 2011-12 u/s 68 of the provisions of the Income Tax Act. (ADDITION: Rs 2,00,09,000/-) Subject to the above, the assessment is completed as under. After examining the details the total income for the assessment year 2011-12 is computed as under: Income returned = 25,56,581/- MAT Income - &....
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.... in s.no.5 belongs to the person referred to in s.no.4 i) During the course of search and seizure operation at the residential premises of Sri. Jayanta Kumar Datta at Flat No.402, GK's Crescendo, Plot No.558 & 559, Behind Neredmet Police Station, Neredmet, Secunderabad certain incriminating material/documents were found and seized. That contains cheque books, pend rives, copies taken from contents of pendriue, copies of bank account statements and other loose sheets annexed as A/JKD/Res/01, A/JKD/ Res/04, A/JKD/ Res/05. ii) On perusal of the seized material, it is noticed that it contains details of bank accounts, fixed deposits, cash deposits' and other debits and credits. From the further analysis of seized material it is found that the information contained therein relates/pertains to M/ s. Orbit Ventures and M/s. Orbite Ventures is one of the firm related to Sri. Azaj Farooqi on whom a warrant u/s.132 of the act was executed on 04.07.2017. iii) In view of the above, findings, I' am satisfied that the information contained in the seized material pertains/ relates to M/s. Orbit Ventures and same is forwarded to DCIT, CC-3(4) for necessary action u/s.153C. ....
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.... 6.3 The annexure A/JKD/Res/01 (Cheque Books) was produced before me by the AO. It is seen that the same contains the current cheque books issued by the banks to the 6 different account holders, The assessee M/s. Orbit Ventures is one of them. On examination of the contents it is seen that all the cheques are blank cheques and the details contained in the record slip pertain to cheques issued from 19.11.2016 to30.03.2017. The appellant has filed return for A.Y-2011-12 on 24.11.2016 and ,the bank account is disclosed in the books of account/balance sheet in the Return of Income. The above material can not be termed as 'incriminating seized material' pertaining to A.Y-2011-12. 6.3.1 The Annexure A/JKD/Res/04 contains working copies of back up of 4 pen drives seized during the course of Search. The annexure A/JKD/Res/05 (Sheets 14-23) contains details of the bank accounts maintained by 5 firms and the transactions in the bank accounts of the firm during the period 25.09.2014 to 20.11.2014. These are the bank accounts discussed in relation to the cheque books above. The above bank accounts stands disclosed the accounts/balance sheet filed with the Return of Inco....
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....Declaration Scheme by the assessee in the present case and therefore, the return of income filed by the assessee on 24.11.2016 is required to be treated as non-est. It was also the contention of ld.DR that the last date for availing the benefit under Income Declaration Scheme, 2016 was 31.07.2017. The ld.DR has also filed the written submissions along with the copy of the bank statement, seized documents etc., in support of the case of the Revenue. We are reproducing hereinbelow the written submissions filed by the Revenue : "In the course of hearing before the Hon'ble Bench, the assesee's AR submitted that assessee-firm M/s. Orbit Ventures has filed IDS before the Department. However, no such information was produced during assessment proceedings, appeal proceedings or produced before the Hon'ble Bench. The records available with the Department also do not show any disclosure made by the assessee-firm under Income Disclosure Scheme. The assessee-firm filed its return of income for the AY 2011-12 only on 24-11-2016 whereas the due date for filing Return of Income was 31-7-2011. Thus, the Return of Income filed for Asst.Year 2011-12 on 24.11.2016 could not be pr....
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....or issuing notice u/s 153C of the I.T Act. 3.The case-law relied by the Ld.CIT(Appeal) and the assessee is Sinhghad Technical Education Society Vs. CIT-III, Pune reported in 397 ITR 344 (SC)/ [2017]. In this regard, it is submitted that the above decision of the Hon'ble Supreme Court was with regard to assessments made u/s 153C for A.Ys 2000-2001 to 2005-06. The Judgment pertains to pre amended Section 153C. However, there is an amendment to Section 153C w.e.f 1-10-2014 which reads as under: [(1)] [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assess....
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....etermination of the total income of the assessee-firm for the Assessment year 2011-12, the notice u/s 153C is valid. 6. Further as seen from the bank account statements, the assessee-firm has deposited amounts Rs.9,99,990 most of the times only to evade the reporting in banks and thus has no intention to disclose these bank accounts, credits nor pay taxes on the same. 7. Further, it is submitted that there is no term 'incriminating material' defined in Income Tax Act, 1961. Section 153A or Section 153C only speaks of documents, books of accounts, things, assets. These documents/material will become incriminating if there is no explanation offered regarding the sources. The seized documents in pendrives form the basis for sheets 14-13 in Annexure A/JKD/Res/05. The Ld.CIT(A) has only taken into account these documents while allowing the appeal without considering the other documents seized in pendrives. The seized documents have details of bank accounts and details of fixed deposits pertaining to the Assessment Year 2011-12 and thus have bearing on the income of the assessee for AY 2011-12 and thus there is enough material to proceed u/s 153C of the IT Act. ....
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....peration U/s 132 of IT Act, 1961 was conducted in the case of Sri Ajaz Farooqi and his related concerns and persons on 04.07.2017 also covering residential premises of Sri Jayanth Kumar Dutta.(who is GM finance in M/s KVR Rail infra projects pvt ltd-promoted by Sri Aijaz Farooqi ) 3.0 During the course of search and seizure operation at the residence of Sri Jayanth Kumar Dutta, certain incriminating material in the form of cheque book of M/s Orbit Ventures, pendrives , copies of contents in pendrives and loose sheets were found and seized as annexure (i) A/JKD/Res/01 (cheque books) (ii) A/JKD/Res/04(pendrive) (iii) A/JKD/Res/05 (sheet no 14-23) which contains the information/ details of fixed deposits and other debits & credits of the assessee firm M/s Orbit Ventures. 4.0 On perusal and further examination, It is found that Assessee firm M/s Orbit Ventures has fixed deposits maintained at State Bank of Hyderabad, Tarnaka branch valued more than Rs 50,00,000/-during AY 2011-12. Further from the evidences available, it is. seen that Assessee firm M/s Orbit Ventures has made cash deposit of 2,00,09,000/- in its bank account in AY 2011-12.And from the records it is se....
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.... pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), Specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or oilier documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment yea....
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....ion conducted on 04.07.2017 in the case of Sri Jayanta Kumar Dutta, vide annexure (i) A/JKD/Res/01(cheque books) (ii) A/JKD/Res/04(pendrive) (iii) A/JKD/Res/05 (sheet no 14-23) and information contained therein has fallowing contents. (a) The assessee firm, M/s Orbit Ventures, which did not file ROI for AY 2011-12 but has made cash deposits of Rs 2,00,09,000/- in its bank account and subsequent Fixed deposits and thus, I (assessing officer) has in possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years. (b) The said income has escaped assessment for AY 2011 -12 as assessee did not file ROI. (c) The search u/s 132 was conducted on 04.07.2017, i.e after 01.04.2017. 8. In view of the above facts, I am satisfied that all the three conditions specified in Sub section 1 of Section 153A of the Income Tax Act being same also for notice u/s 153C to issue notice for relevant assessment year AY 2011-12 are met and the mat....
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....d the impugned additions made by the AO. Being aggrieved by the order of the Ld. CIT (A), both the Assessee and Revenue has preferred an appeal before the Hon'ble ITAT, Hyderabad. 1. We would like to, humbly, submit certain cross objections and clarifications on the main issue raised by the Revenue against the order of Hon'ble CIT(A), for your kind consideration as follows : 2. The impugned second appeal has arisen at the instance of Revenue out of the appellate order passed by the Hon'ble CIT(A). The first appeal by the assessee against the order of assessment by Assessing Officer, the Hon'ble CIT(A) has allowed the appeal, quashing the orders u/ s 143(3) r.w.s. 153C of the Act. The appeal is allowed by adjudicating the assessment orders as not maintainable and not as per law. The CIT(A) has observed that the satisfaction recorded by Assessing Officer basing on the availability of bank cheque books was adjudged as not an incriminating material proceeding u/ s 153C of the Act. The CIT(A) also observed that the bank transactions relating to cheque books have been duly accounted for and therefore, cannot be treated as incriminating. Thus, qu....
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....minating seized material' in relation for the A Y. 2017-18. 6.5 In view of the factual position and finding as above, it is held :that the proceedings u/s 153C are. not validly initiated for the above years and the subsequent orders passed u/s 143(3) r.w.s. 153C do not survive and are quashed. 7.0 As the proceedings initiated u/s 153C have been held to be invalid, the other grounds raised on merits/otherwise are academic and are not adjudicated. 3. The being so, aggrieved of the above order, the Department has filed the above appeal raising certain grounds which are not exactly originating from the appellate order. To have better understanding of the grounds raised by the Department the same are reproduced here under: "1. The Ld. CIT(Appeal) erred both in law and on facts of the case in allowing relief to the assessee. 2. The Ld. CIT(Appeal) erred in deleting the addition of Rs. X,XX,XX,XXX/-made u/s 68 without giving any evidence to the material seized, post search enquiries made and the enquiries made during the assessment by the assessing officer. 3. The CT(A) erred in holding that. the proceedings u/s 153C were not valid....
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.... decision made by the CIT(A) in quashing the order on legal front. 4.2 As regards to the Grounds Nos.3, 4, and 5. raised by Revenue in respect of satisfaction for bringing the case to the scrutiny basket u/s 153C of the Act, on alleged reasons of non-mentioning of and non-accounting for deposits in IDBI Bank account, it may be humbly submitted that, actually the IDBI Bank account has, only been opened on 07.05.2016, i.e., in the financial year 2016-17 relevant to assessment year 2017-18 only. Thus, the IDBI account for the Assessment years 2016-17 and that of earlier years, is not existing at all to say that the IDBI account has not been mentioned in the return of. income. In view of the above factual matrix alone, the satisfaction arrived at by the Assessing Officer's concerned for these years (2011-12, 2012-13), is not with strong reasons and not based on facts of the case. It is to further submit that the account number of Assessee's IDBI Bank has been mentioned wrongly in grounds raised by the Revenue as 0446102000010362 instead of 0446102000010487. 4.3 It may be appropriate to mention here that the basic satisfaction of the Assessing Officer, assessin....
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....s already stated supra, for the financial years relevant for assessment year 2016-17 and for earlier years the IDBI account does not exist. For. the assessment year 2017-18, the assessee has duly recorded the bank account. in the books of. account and while deciding the appeal, the Hon'ble CIT(A) had made a specific mention in the order stating that it is. not incriminating seized material. 6. Further to this, for the assessment years 2015-16 and 2016-17, the returns have been filed well before the conduction of search u/ s 132 of the Act. in the returns of income the particulars of the bank account and the transactions relating to the SBI have duly been recorded and disclosed in accounts/balance sheet filed, along with return of income. Therefore, it cannot be said that the bank cheque books and bank transactions noticed in the course of search and seizure operation in another parties premises ,as incriminating material leading to initiation of, assessment proceedings u/s 153C of the Act. Thus, the assessment proceedings u/ s 153C of the Act on the invalid satisfaction note is not valid in the eyes of law. 7. As regards to the admission of bank transactions i....
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....egard to assessment year 2017-18, also the bank account transactions and the bank account details have been duly admitted in the return of income. Therefore, the cheque books of the bank account found during the course of search and seizure operation cannot be, in any stretch of imagination and ,in the eyes of law, be treated as incriminating material for taking up the case for scrutiny in terms of section 153C of the Act. Thus, the orders were rightfully dismissed by the Hon'ble CIT(A) and that there is no infirmity or error in the order of appeal. * Relevant Extract of Bank Statement containing the account opening date is reproduced below for your kind consideration: * Picture of IDBI Bank account. ............ In view of the above submissions and facts of the case, Assessee places reliance on the following case law: * Decision of Hon'ble ITAT, Hyderabad in the case of M/S. GVK. Enterprises vs DCIT having citation ITA No: 20 to 25/H/2021 is as follows: "We find no merit in the Revenue's instant argument. since not only hon'ble apex court's recent decision in CIT Vs. Sinhghad Technical Educational Society. (....
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....e search year itself only: We therefore decline the Revenue's foregoing arguments in light of all the relevant facts and circumstances forming part of record before us. Revenue's five appeals i.e. ITA 45 to 49/Hyd/2021 seeking to reverse the CIT(A)' s identical -action quashing the impugned section 153C assessments fail accordingly. " 15. We have heard the rival submissions and perused the material on record. This is a case where incriminating material was found and seized during the course of search operation conducted in the case of one of the partners of assessee firm by name, Ajaz Farooqui and his related business concerns. During the course of assessment, Assessing Officer, based on verification of entire records of assessee firm and also on the reply submitted by the assessee firm in pursuance to notice u/s 153C made an addition of Rs.2,00,09,000/- as unexplained cash credits u/s 68 of the Act and also initiated penalty proceedings for concealment of income on the above addition. The ld.CIT(A) in Paras 6.3 and 6.3.1 of his order (reproduced hereinabove) had examined the documents found during the course of alleged search, thread bear and held that none of the d....
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....8,00,000/- in favour of 1) M/s. Anka Relators, 2) GVK Enterprises, 3) Royal Engineering, 4) Ace Constructions and 5) Orbit Ventures. No 30 Statement showing the FD details of SBH, Medchal Branch No 31 to 35 Letters addressed to the Chief Manager, SBH, Tarnaka Branch transferring of Rs.29 lakhs in favour of M/s. Orbit Ventures by M/s. Anka Relators, 2) GVK Enterprises, 3) Royal Engineering and 4) Ace Constructions No 36 to 45 Excel sheets showing various entries pertaining to the period from 29.09.2014 to 20.11.2014, 18.09.2014 to 07.11.2014, 29.11.2014 to 16.10.2014, 10.01.2014 to 20.11.2014, 10.11.2014 to 20.11.2014, 10.01.2014 to 20.11.2014, 25.09.2014 to 20.11.201 and 25.09.2014 to 20.11.2014 No 19. The perusal of the assessment order clearly shows that the addition was made in the hands of the assessee on account of cash deposit made on 13.04.2010 to 05.03.2011 as mentioned in Paragraphs 5 to 7 of the assessment order which is to the following effect : "5.0 During this assessment year 2011-12, the Assessee firm has made following cash deposits totaling to Rs 2,00,09,000/- in the bank account, bear....
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....ors M/s. GVK Enterprises M/s. Ace Constructions M/s Royal Engineering Total 2009-10 2,99,94,800 3,09,94,100 3,09,94,700 3,29,94,300 12,49,77,900 2010-11 2,10,09,400 2,00,09,750 2,00,08,900 1,90,09,300 8,00,37,350 2011-12 1,90,08,100 1,90,08,100 1,90,08,100 1,90,08,100 7,60,32,400 2012-13 99,58,900 99,58,900 99,58,900 99,58,900 3,98,35,600 2014-15 1,40,07,100 1,40,07,100 1,50,07,000 1,40,07,300 5,70,28,500 Total 9,39,78,300 9,39,77,950 9,49,77,600 9,49,77,900 37,79,11,750 20. From the perusal of the assessment order and the seized material, it is clear that no addition has been made by the Assessing Officer based on the incriminating material. Therefore, the plea of the Revenue that the additions were made on the basis of the seized material is without any basis. Further, we may point out that the Assessing Officer had also examined the return of income filed by the assessee in response to the notice which was duly considered by him and the income already been declared was considered while com....
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....that whilst framing an assessment u/s 153A / 153C, the Assessing Officer is nowhere barred from taking cognizance of any other material as well. 7. Now comes the equally important question as to whether the assessee's return(s) in issue would be treated as invalid being belated ones or not. Our reply is negative in assessee's favour and against the department. This is because of the fact that the assessee had filed its return(s) under the Income Declaration Scheme, 2016 on 04.08.2016 followed by the search in issue dt.04.07.2017. The Revenue's argument that it had not filed any return in the corresponding assessment year u/s 139(1) of the Act, we are of the opinion that the decision as to whether the income sought to be added as under the head "undisclosed income" has to be seen on the date of search only which purely stands satisfied in the facts of instant appeal. We further wish to observe here that the assessee's returns filed under 2016 scheme stands stood duly accepted as there is no ground in Revenue's pleadings to the contrary. 8. Learned CIT-DR lastly contended that the assessee had not disclosed its IDBI bank account in the computation corresponding to t....