TaxTMI 
TaxTMI 
2023 (3) TMI 552
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....as another Search and Seizure carried out by the competent authority under Sec. 132 of the Act, in the residence of Smt. Adlene Kagoo, who is stated to be a trusted employee of one Mr. P. Dayanand Pai, on 12.4.2011. Mr. P. Dayanand pai, is the key person of Dayanand Pai Group of Companies. In the course of search of Adlene Kagoo certain Compact Discs(CD), pen drives and other electronic records were found besides loose papers. They were all seized. Among the seized document, what is relevant and important for the present appeal are the print out taken from the Seized CD in the form of a ledger and this is referred to as "Dummy (Tally Training Environment) {DTEE}. The data contained in DTEE contained day to day receipts and payments transactions-cash, bank and journal entries allegedly maintained by Smt. Adlene Kagoo on instructions from Mr. P. Dayanand Pai. 4. Based on the documents found in the search conducted in the case of Smt. Adlene Kagoo, the AO proceeded to make assessment for all the Assessment Years. Based DTTE, the AO made some additions. We shall first deal with the additions made in AY 2006-07 to 2009-10 that are challenged in the appeals ITA No. 67 to 70/Bang/2017.....
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....ts should be brought to tax as under : AY Total amounts paid towards transactions at Pages 39 &4 Total amounts paid towards transactions at Page 2 & 33 Total 2006-07 25000000 52500000. 77500000 6. In so far as the additions made in Assessment Year 2007-08 is concerned, on the basis of similar observations and placing reliance on DTTE page 2 and 4, the AO made an addition of Rs. 5,10,00,000/- as cash payments not reflected in the books of account on the same basis on which addition was made in AY 2006-07. Besides the above, the made an addition of Rs. 18,73,29,601/- on the basis of documents seized in the course of search in the case of Smt. Adlene Kagoo. The relevant observations of the AO were as follows: II. Interest charged : Further, the assessee has raised certain amounts as interest from M/s. Dayanand Pai. The documents show that the assessee had made computations at 14%, 18% and 24%. However an analysis of the relevant pages, namely, 10, 11, 12, 13, 14, 15, 16, 45, 46, 47 of the documents show that he has charged interest at 18%. The working of the interest actually charged by the assessee is at Page 45, based on 18% interest. ....
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....7 29-03-2007 20000000 100000000 17-02-2007 29-03-2007 308000000 130800000 130800000 AY 2007-08 30-03-2007 24-04-2007 128300000 128300000 Subsequent to AY 2007-08, the peak credit has no exceeded Rs. 13,08,00,000/-. Thus the discussion is limited to the aforementioned credits only. All the documents found in the premises of Ms. Adlene Kagoo consistently show the figures as above for the purpose of computation of interest. The Assessee was required to explain the entries. Bu the reply filed by the Assessee is vague. As staged, all the pages showing the computations of interest namely, 45, 44, 43, show the advances at the same figures. Pages 47, 32, 15, 13, 10, being computation sheets for interest confirm to the entries in pages 45, 44, 43. Thus, the chain of documentation establishes that the entries in these sheets that are in the hand writing of Mrs. Adlene Kagoo are true and are nothing but the accounting maintained by M/S. Dayanand Paid in respect of actual transactions that the two business partne....
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....ayananda Pai in the premises of Mrs. Adelene Kagoo in the assessment order passed under Section 153A r.w.s 143(3) of the Act on the facts and circumstances of the case. ii. The learned CIT(A) failed to appreciate that the notice under Sects 153C of the Act ought to have been issued for making the assessment a. respect of the material seized from the search conducted in the case of Dr. P. Dayananda Pai in the premises of Mrs. Adelene Kagoo and the order passed under Section 153A of the Act by considering the materials seized from the premises of Mrs. Adelene Kagoo is not valid in the law on the facts and circumstances of the case. iii. The learned CIT(A) failed to appreciate that the assessment order passed under Section 153A r.w.s 143(3) of the Act is without Jurisdiction and the lower authority without prejudice ought to have issued notice under Section 153C of the Act after complying with the mandatory conditions on the facts and circumstances of the case. iv. The CIT(A) failed to appreciate that there being no incriminating materials found/seized in the course of search in the case of the Appellant or/and there being no external evidence found....
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....der section 153A of the Act, based on documents and materials found in the course of search in the case of Smt. Adlene Kagoo is contrary to law and hence these additions even to the extent sustained by the learned CIT(A) are legally untenable and are required to be deleted. In support of the aforesaid proposition of law, the assessee, inter alia, placed reliance on the decision of the Kolkata Bench of ITAT in the case of Krishna Kumar Singhania (168 ITD 217) (Kol. - Trib.). Reliance was also placed on the judgment of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd., (174 DTR 92) (Bom). 12. The learned DR supported the impugned orders of assessment for Assessment Years 2006-07 to 2009-10 and submitted that the AO was fully justified in taking cognizance of the material found/seized in the course of search action in the case of Smt. Adlene Kagoo. It was submitted that the provisions of section 153C of the Act need not be invoked when assessment proceedings under section 153A of the Act are pending in the case of the assessee. It was also contended that there was no bar for making assessment by taking cognizance of material found/seized in the case of Smt. Adlene Kag....
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....(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] 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 15. The provisions of Section 153C of the Act enjoins upon the AO of the person searched; that on being satisfied that books of account seized or requisitioned belongs to or pertain to some other persons, to handover the books of account to the AO having jurisdiction over such other person. Thereafter, the second AO, on being satisfied that the books of account and documents received have a bearing on the determination of the total income of the other person, should assume jurisdiction under section 153C of ....
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....ment under section 153C of the Act arises when satisfaction is reached that the materials found in the course of search of some other person have a bearing on the determination of the income of the assessee. Further, in the first proviso to section 153C of the Act, it is provided that the reference to the date of search in the second proviso to section 153A of the Act; dealing with abatement of pending proceedings on the date of search; shall for the purpose of the persons proceeded under section 153C of the Act be construed as the date on which the seized materials are received by the AO. 17. In the present appeals for AY 2006-07 to 2009-10, there was a search under section 132 of the Act in the case of the assessee on 30.6.2011. No incriminating materials were found during the said search. It is not in dispute that none of the additions made in the aforesaid assessment years is based on material seized and found in the course of search conducted in the case of the assessee on 30.6.2011. After the search, notices under section 153A of the Act were issued on 30.11.2011 and thereafter assessments were framed by the AO. The material based on which the impugned additions were made ....
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....t every right to state that the said documents does not belong to him/them. The ld. AO if he is satisfied with such explanation, has got recourse to proceed on such other person (i.e. the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT v. Pinaki Misra & Sangeeta Misra [ (2017) 148 DTR 219 (Delhi)] : [TS-5161-HC-2017(DELHI)-0] wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of the....