TaxTMI 
TaxTMI 
2022 (11) TMI 464
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....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.w.s 153C of the Act dated 14.12.2019 without properly analyzing and appreciating the land pro....
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..... 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 SBH, in which cash deposits were made, was not declared in the return of income filed for the assessment year concerned. 6. The ld. CIT(Appeal) did not even revert back to the assessing officer t....
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....ails 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 - Loss - Add : Unexplained income u/s 68 (as discussed above) = 2,00,09,000/- = 2,00,09,000/- Total INCOME ASSESSED = 2,25,65581/- Agricultural Income Returned = 0 Income on special rate (Capital Gain Tax) of Rs. -= &nbs....
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....s 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. (Satisfaction note for initiation of proceedings u/ s.153C): "3.0 During the course of Search and seizure operation at the residence of Sri. Jayanth Kumar Datta, 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/ 0 1 (Cheque books) ii) A/ JKD/ Res/ 04(pen drive) iii) A/ JKD/ Res/ 05(Sheet no. 14-23) which contains the information/ details of fix....
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....eturn 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 Income for this year and for earlier years also. The sheets (14-23 of Annexure A/JKD/Res/05) and relevant copies of the material in the pen drive (A/JKD/Res/04) only. The above material can not be termed as 'incriminating seized material pertaining to A.Y-2011-12. 6.4 As the AO has relied on the above material only for recording satisfaction for initiating proceedings u/s.153C, it can not be said that the satisfaction is based on 'incriminating seized material' in relation to the A.Y. 2011-12. 6.5 In view of the factual position and finding as above, it is held th....
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....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 processed as it was barred by limitation. Thus, the entire averment of the assessee, that RoI was filed within the limitation period cannot be entertained. It is also submitted that the Bank Account disclosed in the ROI and the details of bank A/c. seized during search u/s 132 of the IT Act, where cash deposits were made are different and the bank account details are not disclosed in the return of income which are as under: Sl.No Asst.Year Bank A/cs. not declared in the Return of Income in which cash deposit were made. Bank A/c. declared in the Return of Income. Sl.No Asst.Year Bank A/cs. not declared ....
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....he 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 Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, (f, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [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 referred to in sub-section (1) of section 153A1 :] (Emphasis Supplied) [Provided that in case of s....
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....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. In this regard reliance is placed on the following case laws: 1) B.Kishore Kumar vs DCIT 229 Taxman 614 (Madras)/ [2015] 2) Gopal Lal Badruka Vs DCIT 346 ITR 106 (Andhra Pradesh)/ [2012] 3) EN Gopu kumar VS CIT(2017)390 ITR 131(kerala) 4) CIT ,(Central), Kanpur Vs. Raj Kumar Arora - (2014) 367 ITR 517 (Allahabad) 8. In view of the foregoing, as the notice u/s 153C was issued on the basis of the seized documents pertaining to the assessment year under consideration i.e., AY 2011-12, as mentioned above, it is prayed to allow the grounds filed by the Revenue and quash the order of the CIT(Appeal) 9. Further, the asessee-firm could not explain the sources of cash deposits in its bank accounts durin....
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.... 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 seen that Assessee firm M/s Orbit Ventures filed ROI for AY 2011-12 on 24.11.2016 by admitting income of Rs 25,56,581/- and same is not processed by ITD and Non-est. (emphasis supplied by us). 5.0 It is further noted that the search operation u/s 132 in the above group had taken place on 04.07.2017(FY 2017-18) and the date of handing over of seized documents for necessary action u/s 153C is on 14.02.2019. Accordingly, the instant AY 2011-12 falls in the category "relevant assessment year" as defined by explanation 1 to section 153A of Income Tax Act. 6.0 And as per the amended provisions, the latest provisions of section 153A and 153C of Income Tax Act to issue notice for relevant Assessment year are as fallows. "Assessment in case of search or requisition. 153A. (1) Notwithsta....
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....) 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 years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in ba....
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....s, 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 material seized and information contained therein has bearing on the determination of the total income of assessee firm, M/s Orbit Ventures for the relevant A.Y. 2011-12 as specified in Sub Section 1 of Section 153C of the Income Tax Act. Accordingly proceedings u/s 153C are initiated and notice u/s 153C is being issued." 13. The ld.AR also submitted that the documents mentioned in Para 6.2 of the order of ld.CIT(A) in ITA 34/Hyd/2021 do not pertain to the years under consideration and that the document No.1 is the cheque book of the IDBI Bank which does not pertain to the assessment year under consideration and it pertains to A.Y. 2014-15. Similarly, the details of documents in the pen drive and five sheets do not pertain to the years under consideration. The above said aspects have been duly examined by the learned ld.CIT(A) in Paras 6.3 and 6.3.1 of his order. 14. Lastly, the ld.AR relied upon the decision in the case of M/s. G.V.K. Enterprises (supra), wherei....
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.... 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, quashed this order as bad-in-law. The gist of the appeal order of the CIT(A) is reproduced here under, for the sake of brevity and for clear understanding: "6.2 On careful examination of the above satisfaction note recorded, it -is seen that the material relied on by the AO to initiate proceedings u/s 153C is i) A/JKD/Res/01 (Cheque books) ii) A/JKD/Res/04 (Pen Drive) iii) A/JKD/Res/05 (Sheets 14-23) 6.3 The annexure A/JKD/Res/0I (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 cheque's are blank cheques and the details contained in the record slip pertain to cheques issued from 19.11.2016 to 30.03.2017. The appellant has filed return for A.Y. 2017-18. on 31.03.2018 and the bank account is disclosed in the books of account/balance sheet in the Return of Income. The record slip of....
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....r. 3. The CT(A) erred in holding that. the proceedings u/s 153C were not validly initiated as the incriminating seized material does not pertain to the A. Y. 2017-18. 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 return for the assessment year 2017-18, in which the only account number declared is 62343105741. of SBI and not 0446102000010362 of IDBI, 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 '446102000010487 of IDBI, in which cash deposits were made, was not declared in the return of income filed for the concerned assessment year. 6. The Ld. CIT(Appeal) did not even. revert back to the assessing officer to check whether the cheque book found during the search and declared in the return but believed in the plain annexure of the assessee which are factually incorrect. 7. The Ld. CIT(Appeal) based on wrong facts held the initiation of proceedings u/s 153C to be invalid whereas the assessing officer has correctly satisfied himself that the seized material evidenced....
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....Officer, assessing the searched party u/ s 153A of the Act and the impugned Assessing Officer for making The assessee's income u/ s 153C, are the very noticing of cheque books of bank and presumed non-admission of the 'IDBI Bank account in the returns. The ground raised on the particular issue by the Revenue- for 2011-12 & 2012-13 on the facts emanating is without any base and not maintainable for these years. This satisfaction for the Assessment years 2011-12,, 2012-13 and A.Y. 2017-18 is not correct for the reason that the IDBI account does not exist during the previous years relevant for AY 2016-17 and earlier years. Therefore, the satisfaction recorded is not as per the provisions of section 153C of the Act on bringing the assessments within the ambit u/ s 153C of the Act for 2011-12, 2012-13 and A.Y. 2017-18 and thus the assessment is beyond the law. 4.4 While deciding the appeal, the Hon'ble CIT(A) has thoroughly examined this aspect and has rightfully allowed the appeal of the assessee by quashing' the assessment order. Hence, the orders of the CIT(A) are lawfully correct as they were passed after thorough examination and giving lucid reasoning. 4.5 Even ....
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....ear 201617 relevant to the assessment year 2017-18, it may be again reiterated that the assessee has duly reflected the transactions in the regular books of account and thus, there is no missing information in order to infer that the bank account found' is incriminating material. 8. Even in respect' of satisfaction note for making assessment u/s 153C of the Act by both Assessing Officer of the searched person and the impugned assessee on the alleged reason on. non-admission of the transactions, we have duly 'admitted the above transaction in the books of account/return. of income and that there is no reason for satisfying that the assessee's income/ transactions had escapement of admission of certain transaction and for picking up the cases for making assessment u/s 153C of the Act for all. six years, by treating wrongly the bank cheque books as incriminating material. 9. While adjudicating: the issue, on appeal the Hon'ble CIT(A) had also held clearly that the satisfaction recorded for making, assessment u/s 153C is not on related and reasonable grounds and thus had quashed the order u/ s 153C of the Act. The Ld. CIT(A) has categorically and with lucidly de....
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....2016) 360 ITR 573 (Del), CIT Vs. Salasar Stock Broking Limited (Calcutta, high court) inG.A.N0.1929 of 2016 dt.24.08.2016 and CIT vs. Continental Warehousing Corporation (2015) 374 ITR 64 (Bom) to name a few, indeed support the assessee's case that the impugned proceedings could be taken recourse to only in case of incriminating material to have been found or seized during the course of search. Hon'ble jurisdictional high court's judgment (supra) quoted at Revenue's behest also nowhere holds that such an assessment is valid even in absence of the foregoing incriminating material. Their lordships rather observe 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 ....
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....e has failed to point out any incriminating document found during the course of search pertaining to / belonging to the assessee firm relevant to the assessment years under consideration from the records of Assessing Officer as well as from the record of the Tribunal which formed basis of making the addition in the hands of assessee. The law is fairly settled that no addition can be made in the hands of assessee u/s 153C in the absence of any incriminating material pertaining to the assessee firm for the years under consideration. Further, the assessee in this case had filed return of income which was duly noticed by the Assessing Officer at the time of recording satisfaction, however, despite knowing the return of income and alleged non-disclosure of the bank account in the return of income, the Assessing Officer has not resorted to proceed u/s 147 / 148 of the Act. In the present case, as mentioned above, a search was carried out in the premises of Ajaz Farooqui, one of the partners of the assessee firm, and his related business concerns and some incriminating material / documents were found and seized. However, the documents so found do not pertain to the years under considerati....
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....tate Bank of Hyderabad, Tarnaka, Hyderabad Sl.No. Date Details Cr. Amount 1 13.04.2010 Cash deposit by self 999800 2 15.04.2010 Cash deposit by self 999800 3 22.04.2010 Cash deposit by self 999900 4 14.05.2010 Cash deposit by self 999900 5 15.05.2010 Cash deposit by self 999900 6 18.05.2010 Cash deposit by self 999900 7 19.05.2010 Cash deposit by self 999900 8 31.05.2010 Cash deposit by self 999900 9 01.06.2010 Cash deposit by self 999900 10 06.01.2011 Cash deposit by self 999900 11 07.01.2011 Cash deposit by self 999900 12 11.01.2011 Cash deposit by self 999900 13 12.01.2011 Cash deposit by self 999900 14 24.01.2011 Cash deposit by self 999900 15 25.01.2011 Cash deposit by self 999900 16 27.01.2011 Cash deposit by self 999900 17 28.01.2011 Cash deposit by self 999900 18 29.01.2011 Cash deposit by self 999900 19 31.01.2011 Cash deposit by self 999900 20 07.01.2011 Cash deposit by self 999900 21 05.03.2011 Cash deposit by self 1....
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....t by holding as under : "5. We have given our thoughtful consideration to rival contentions. Learned CIT-DR vehemently contended during the course of hearing that the impugned lower appellate findings are not sustainable in law since there existed ample incriminating material as per the Assessing Officer's sec 153C satisfaction. And that the CIT(A) has wrongly held the assessee to have filed its returns for A.Y. 2010-11 onwards validly whereas the same had been submitted only in the year 2016 i.e. on 04.08.2016 to be precise which ought to be treated as invalid ones being belated. He quoted case laws Gopal Bhadruka Vs. DCIT 346 ITR 106 (Andhra Pradesh), E.N. Gopakumar Vs. CIT (2017) 390 ITR 131 (Kerala), ITA 270 of 2014 CIT Vs. Kesarwani Zarda Bhandar and CIT Vs. Raj Kumar Arora (2014) 367 ITR 517 (Allahabad) that it is nowhere necessary to initiate and frame section 153A / 153C assessments only in case of incriminating material found / seized during the course of search. 6. 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 (supra) but also various decisions of hon'ble high co....
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....acts 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. 8. The assessee's six cross appeals ITA 20 to 25/Hyd/2021 are dismissed as withdrawn in light of our findings recorded in the Revenue's foregoing appeals. No other ground has been pressed before us. 10. To sum up, the Revenue's five appeals ITA 45 to 49/Hyd/2021 are dismissed whereas the assessee's cross appeals ITA 20 to 25/Hyd/20201 are dismissed as withdrawn. A copy of this common order be placed in respective case files." 22. In view of the above discussions and in view of the support drawn from the decision of Co-ordinate Bench of the Tribunal in the case of M/s. G.V.K. Enterprises (supra), we dismiss the appeals filed by the Revenue. Though, the ld.DR had sought to distinguish the decision on the pretext that the assessee has not gone to the Income Declaration Scheme, 2016. However, we have already mentioned that once the assessee had filed the return of income and the same was also considered by the Assessing Officer at the time of assessment, therefo....