TS. Kapoor, AM:
1. These are four appeals filed by the revenue against separate orders of Ld CIT(A) all dated 3.5.2010. The assessee has also filed cross objections to the appeals foiled by the revenue in all the four years. Similar grounds of appeals has been taken by the revenue and similar grounds in cross objections has been taken by the assessee. For the sake of convenience, the grounds of appeals for assessment year 2000-01 as well as cross objections for assessment year 2000-01 are reproduced below:-
I.T.A. No.3720/Del/2010 (A.Y. 2000- 2000-01):
1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and facts in annulling the assessment made u/s 153C.
2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and facts by holding that the seized documents on the basis of which proceedings u/s 153C were initiated do ot belong to the assessee.
3. On the facts and in the circumstances of the case, the CIT(A) has erred in interpreting section 153A/153C of the Income Tax Act, 1961 .
4. The order of CIT(A) is erroneous and not tenable in law and on facts.
5. The appellant craves leave to add, alter or amend any/all of the grounds of appeals before or during the courts of the hearing of the appeal.
C.O. No. 308/Del/2010:
308/Del/2010: (A.Y. 2000-2000-01):
1. It is contended that the provisions of Section 153A of the Income-tax Act, 1961 (the Act) are not applicable at all and the assessment order passed u/ s 153C /143(3) of the Act is without jurisdiction.
2. It is contended that neither any search was initiated against the assessee u/s 132(1) of the Act, nor any books of accounts, other documents or any other assets were requisitioned u/ s 132A of the Act and hence the assessment made u/s 153C/ 153A of the Act is invalid.
3. The order dated 24.12.2007 passed u/s 153C read with Section 143(3) of the Act is without jurisdiction.
4. It is contended that the additions made in the order u/s 153C/ 153A of the Act are not qua search material and need to be deleted.
5. That no corresponding seized material was found in the course of search for subject additions and the relevant Income Tax Return for the said Assessment Year was filed prior to the search in normal course suo moto disclosing the particulars of subject additions, which stood accepted u/ s 143(1) of the Act.
6. That the returns having been accepted u/s 143(1) of the Act, no assessment as such could be said to be pending on the date of initiation of search and have abated in the light of contextual and harmonious reading of second proviso of Section 153A( 1) of the Act.
7. That the assessment as contemplated u/ s 153A of the Act is not a denovo assessment and additions made therein have to be necessarily restricted to undisclosed income unearthed during the search.
8. That as per Hon'ble Supreme Court ruling in the case of Manish Maheshwari, 289 ITR 341 (SC), present provision of Section 153A leading to six years assessment, being drastic in consequence needs to be interpreted most strictly and whenever possible to the favour of the assessee.
9. That since longest arm of revenue, being search stands exercised in present case, assessment u/s 153C/ 153A of the Act needs to be made on the basis of hidden assets/unaccounted money, incriminating material, unearthed during the search.
10. That the power of review being not available to same authority, under act in normal circumstances, must/ should not be allowed in present provisions of Section 153C, otherwise it would allow roving and fishing enquiries in search based assessment, which is not the legislative intent.
11. That the aforesaid legal position stands accepted in the following orders of ITAT in context of Section 153C/ 153A of the assessment:
(i) Anil Kumar Bhatia vs. ACIT, Central Circle 17, New Delhi in Income Tax Act, 1961 No.2660 to 2665/Del/2009. (ii) Jodhpur Bench of ITAT ruling in Suncity Alloys Pvt. Ltd. vs. ACIT, (2009) 124 TIJ 674.
(iii) Kolkata Bench of IT AT ruling in LMJ International, 119 TIJ 214.
12. That the Commissioner of Income Tax (Appeals) has erred in not deciding the issues (Grounds of Appeal) raised by the appellant on the merits of the case.
13) It is contended that the sum of Rs.5,53,752/- being the Commission . Income is taxable under Chapter IV-D (income from business and profession) of the Act and not under Chapter IV-F (income from other sources) of the Act.
2. The brief facts of the case are that during search and seizure operations on the premises of Shri Manvinder Singh, M/s Flex Industries Ltd. certain documents alleged to be belonging to assessee were seized. The Assessing Officer initiated the proceedings u/s 153C and completed assessments as per provisions of section 153A of the Act.
3. Dissatisfied with the addition, the assessee filed appeals before Ld CIT(A) and challenged the validity of assessment u/s 153A by taking an additional ground on legal issue and submitted that proceedings u/s 153C of the Act were initiated on the basis of certain documents which did not belong to the assessee. Therefore, the proceedings itself were not legal. The Ld CIT(A) on the basis of this legal ground annulled the assessment made by the Assessing Officer by observing as under:- "The perusal of the satisfaction record before issuing the notice u/s 153C of the Act makes it clear that the documents claimed as belonging to the appellant have not been discussed in the assessment order. The assessment order reveals that a cursory reference has been made to certain documents seized during the search at the premises of Shri Manvinder Singh, Flex Industries Ltd, Shri Harish Chaturvedi and M/s Ultimate Flex Pack.
4. Thereafter relying upon the provisions of section 153C and on the basis of various judicial pronouncements, the ld CIT(A) annulled the assessment orders by holding as under:-
"The term 'belonging to' implies something more than the idea of casual association. It involves notion of continuity and indicates more or less intimate connection with the person over a period of time. The expression belonging to the assessee connoted both the complete ownership and limited ownership of interest. Of course, belonging to is capable of connoting interest which is less than absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets belong to the assessee. In the instant case, the documents seized during the search cannot be termed to be indicating any limited interest of the ownership of the appellant in such documents. This is clear from the fact that no addition has been made by the Assessing Officer on the basis of these documents. The language used in section 153C of the Act is materially different from the language used in section 158BD of the Act. As per section 1568 BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the search. However, section 153C of the act says that if valuable or books of accounts or documents belonging to such other person are seized then the proceedings u/s 153C of the Act can be initiated against such other person. On the touchstone of the ratio laid down in the decisions of the Hon'ble ITAT discussed in earlier paras, it is held that the documents seized do not belong to the appellant and the Assessing Officer was not justified in initiating the proceedings u/s 153C read with section 153A of the Act and as such the proceedings initiated u/s 153C of the Act are not as per the law. The assessment made u/s 153A read with section 153C of the Act cannot stand of its own and hence the same is cancelled."
5. Aggrieved, the revenue is in appeal before us.
6. At the outset, the Ld DR submitted that findings of Ld CIT(A) is not based upon the facts of the case as various documents belonging to the assessee were recovered during search and seizure operation and referred to various documents placed in paper book pages 356,396,496,537,374, 484, 557 and 362 and in view of the above submitted that without going into the documents the Ld CIT(A) made the finding that documents did not belong to the assessee which is not as per facts of the present cases as all these documents belong to assessee. In his reply, the Ld AR submitted that documents did not belong to the period under consideration and they belonged to period not covered by the assessment year which were reopened and therefore Ld CIT(A) has rightly annulled the assessments. He further argued that satisfaction was not recorded by Assessing Officer and therefore initiation was invalid and relied upon the case law of DSL Properties Ltd. reported at 33 Taxman.com 420. Further continuing his arguments he submitted that additions were not made on the basis of material found during survey.
7. We have heard the rival submissions of both the parties and have gone through the material available on record. While going through the assessment order and that of Ld CIT(A) we observe that documents recovered during the search and seizure operation were not discussed by the Assessing Officer or Ld CIT(A) regarding its nature and belongingness. The Ld CIT(A) did not make any finding as to whether the documents belonged to assessee or not and simply cancelled the assessment holding that documents did not belong to assessee as the Assessing Officer had not made any addition on the basis of these documents. In our considered opinion., section 153C is triggered when the documents or any money or bullion belonging to another person is recovered from the premises of person searched and assessment has to be made as per the provisions of the section 153A of the Act. The Assessing Officer has referred to a number of documents which were recovered during search and seizure operations but has not mentioned the nature of documents. The Ld CIT(A) has cancelled the assessments holding that documents did not belong to assessee. However, documents as pointed out by Ld DR clearly indicates that they belong to assessee. These documents are part of annexure A-35, A-37 and A-38 as mentioned by Assessing Officer as being part of documents found during search operations. Therefore, the action of Ld CIT(A) in annulling the assessments i not correct and is not as per law. Therefore, we set aside the orders of the Ld CIT(A) and remit the same back to the office of Ld CIT(A) who would re-adjudicate the same in accordance with law after providing reasonable opportunity to assessee. Therefore, the appeals filed by revenue are allowed for statistical purposes.
8. The cross objections filed by assessee becomes infructuous as we have set aside the order of Ld CIT(A) and hence they are dismissed. The assessee will be at liberty to plead its case before ld CIT(A).
9. In view of the above, the appeals of revenue are allowed for statistical purposes whereas cross objections of assessee are dismissed.
10. Order pronounced in the open court on 31st day of January, 2014.