VELIGEATI RAJI REDDY,WARANGAL vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE2-(3), HYDERABAD

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ITA 119/HYD/2021Status: DisposedITAT Hyderabad29 November 2021AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the proceedings under section 153C were invalid as there was no incriminating material found or seized during the search that implicated the assessee HUF. Confessional statements alone were not sufficient, and the alleged cash transactions pertained to earlier assessment years.

What were the facts?

The assessee's appeal for AY 2012-13 arose from proceedings under section 143(3) r.w.s. 153C. The Revenue contended that the assessment was based on a search statement and an incriminating document, and that the assessee HUF had a share in the searched group.

What were the issues?

The primary issue was the validity of section 153C proceedings due to the absence of incriminating material found during a search. The Tribunal also considered the reliance on confessional statements and the relevance of seized documents.

Which sections of the Income-tax Act were involved?

Section 153C,Section 132(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Appellant: Shri K.C. Devdas
Hearing: 25/11/2021Pronounced: 29/11/2021

O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y 2012-13 arises from the CIT(A)-12, Hyderabad’s order dated 31.12.2020, in case No.10166/2019-20 involving proceedings under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (in short, “the Act”).

Heard both sides. Case file perused.

2.

We straight away advert to the assessee’s first and foremost legal ground challenging validity of section 153C proceedings for want of any incriminating material found or seized during the course of search carried out on 20.07.2017 in case of M/s. Rachana Constructions group.

3.

Learned CIT DR has fairly placed on record the corresponding section 153C satisfaction note that the impugned assessment as well as the proceedings are based on the assessee’s authorized persons’ search statement(s) u/s 132(4) recorded on 15.09.2017 admitting alleged undisclosed income of Rs.4,57,40,680/- as well as the incriminating document marked as A/VRR/Hyd/1 (Pages 6 to 11). 4. Mr. YVST Sai further sought to highlight the fact that assessee HUF herein has 25% share in the searched assessee i.e. M/s. Rachana Constructions group. 5. We have given our thoughtful consideration to assessee’s first and foremost legal ground and find no merit in the Revenue’s stand. We make it clear that we have ourselves perused the impugned seized material (supra) wherein there is not even an iota of indication; and more so involving assessee’s name as HUF; that it had derived any undisclosed income; as the case may be. Learned AR has rather pinpointed that even if it is presumed that the assessee had been engaged in cash transactions, the same only pertain to earlier assessment years and mainly assessment year 2008-09 only whereas we are in A.Y. 2012-13. Coupled with this, we quote the CBDT’s twin circulars dt.10.03.2003 and 18.12.2014 that the departmental authorities ought to collect incriminating material during the course of a search or survey; as the case may be than recording confessional statements which carry no significance. We therefore accept the assessee’s instant legal ground challenging correctness of section 153C assessment for want of any incriminating material found or seized during the course of search. Ordered accordingly. All other pleadings on merits are rendered infructuous. 6. This assessee’s appeal is allowed in above terms.

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