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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. Commissioner of Income Tax (Appeals)-2, Pune dated 18.12.2015 for the assessment year 2010-11 as per the grounds of appeal on record.
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Though the assessee has preferred multiple grounds of appeal, the crux of the grievance of the assessee is whether the action initiated by the Assessing Officer u/s.147 of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) is legal since as per the assessee application of appropriate provision under the facts and circumstances is Section 153C of the Act.
The brief facts of the case are that the assessee is assessed to income tax in his individual status. The assessment for the assessment year under appeal was reopened invoking section 147 of the Act. Before the ITO, Ward 7(2), vide letter dated 08.02.2013 acknowledged by the office of the ITO on 15.02.2013 the factual matrix and objections against reasons recorded were raised as under:
i) It appears the action under section 147 of the Act was initiated against the assessee on the basis of information received from the ITO(Inv.) Unit-II, Pune to the effect that the search and seizure action under section 132 was conducted against Pinnacle Group, Pune, Shri Gajendra D Pawar, Prop. M/s. Pinnacle Construction had constructed the project „Pinnacle Kalpataru, CTS No.1173, Erandvane, Pune.
ii) By the same letter, the assessee was informed that he has purchased Flat No.B-604, 605, 606 vide agreement dated 31.03.2010. The letter further states during the course of search and seizure action against Shri Gajendra D Pawar certain loose paper bundles were seized and accordingly, Shri Gajendra D Pawar made a statement under section 132(4) of the Act accepting that he had received cash of Rs.87,07,500/- over and above the agreement value of Rs.2,12,92,500/-. On the basis of this information reasons have been recorded by the Assessing Officer that the income to the extent of Rs.87,07,500/- has escaped assessment in the hands of the assessee. This was the only reason for reopening of assessment u/s.147 of the Act.
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At the time of hearing, the Ld. AR of the assessee vehemently argued that in the given facts and circumstances, provisions of section 153C of the Act should have been applied and not provision of section 147 of the Act. The Ld. AR relied on the decision of Co-ordinate Bench of the Tribunal, Pune in ITA No.1971/PUN/2014 for assessment year 2006-07 decided on 24.04.2018. In this case, the issue before the Co-ordinate Bench of the Tribunal was „whether in such facts and circumstances of the case, where the basis of making investigation and assessment thereafter in the hands of assessee is on the basis of information unearthed during the course of search action on the premises of some other person other than the assessee, then whether proceedings are to be initiated under section 147/148 or under section 153C of the Act.‟ The Ld. AR further submitted that the issue was decided in favour of the assessee.
Per contra, the Ld. DR placed reliance on the orders of the Sub-ordinate Authorities.
We have perused the case records and heard the rival contentions, analyzed the facts and circumstances in this case. We have also given considerable thought to the decision of the Co-ordinate Bench of the Tribunal, Pune in ITA No.1971/PUN/2014 (supra.). On this issue, the Co- ordinate Bench of the Tribunal has held and observed as follows:
“8. ………..The perusal of provisions of section 153C of the Act reflects that in case any document relating to any other person is found during the course of search on a person, then the said document is to be forwarded to the Assessing Officer in-charge of the person other than the person searched. The proceedings have to be initiated against such person on the basis of such document found and impounded. Section 153C of the Act very clearly provided that where the conditions as mentioned in the said section prevail, then provisions of said section have to be applied notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act. The requirement of section 153C of the Act is the first satisfaction of Assessing Officer that any money,
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bullion, jewellery or other valuable article or thing or books of account or documents or assets belongs to a person other than the person referred in section 153A of the Act, 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 such other person and issue notice of assessment or re-assessment of the income of other person in accordance with provisions of section 153A of the Act. The Assessing Officer has to record satisfaction that books of account or assets seized or requisitioned, have a bearing on determination of the total income of such other person. The said provisions are notwithstanding anything contained in sections as mentioned above including sections 147 / 148 of the Act. In other words, where the provisions of section 153C of the Act are attracted in given set of facts and the documents impounded during the course of search, then the proceedings have to be initiated under section 153C of the Act as per prescribed procedure and no proceedings can be initiated under section 147 / 148 of the Act. The said proposition has been held by the Pune Bench of Tribunal in the case of Joshi Wadewale Hadapsar Vs. DCIT in ITA Nos.105 & 106/PUN/2016, relating to assessment years 2009-10 & 2010-11 with lead order in the case of Mrs. Vasundhara Shailesh Joshi Vs. DCIT in ITA Nos.95 & 96/PUN/2016, relating to assessment years 2009-10 & 2010- 11, vide consolidated order dated 27.03.2018. The relevant findings of the Tribunal are as under:- “28. The first issue which arises is whether the assessment in such circumstances was to be made under section 153C or 148 of the Act and connected issue is whether such an issue of assessment being completed under a particular section was valid or not, can be raised while deciding the issue of levy of penalty under section 271(1)(c) of the Act against the income assessed in the hands of assessee. In this regard, the learned Authorized Representative for the assessee has pointed out that the issue stands covered by the ratio laid down in ITO Vs. Shri Shailendra B. Agrawal (supra) and in bunch of appeals with lead order in ACIT Vs. Shamsundar Laxman Jagtap (supra). The relevant provisions of the Act to which reference is being made is section 153C of the Act which provides as under:- “153C. (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 any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong 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 such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-
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section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. ….. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.”
Section 153C of the Act very clearly lays down that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing seized or requisitioned, belongs to; or 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, such 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 the Assessing Officer shall proceed against such other person and issue notice and assess or reassess the income of other person in accordance with provisions of section 153A of the Act. Section thus, very clearly lays down the procedure to be followed when during the course of search on a person any money, bullion, jewellery or valuable article or thing, or any books of account or documents or any information contained therein pertains to or relate / relates to other than the person searched; then first, all the said assets or information is to be handed over to the Assessing Officer, who is incharge of the person other than the person searched and then the Assessing Officer has to proceed and determine the income of the other person in accordance with provisions of section 153C of the Act. The said section very clearly also lays down that the provisions of section 153C of the Act are to be applied notwithstanding anything
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contained in sections 139, 147, 148, 151 and 153 of the Act. Applying the said provisions to the facts of the present case, wherein certain documents were found during the course of search at the residence of partners of assessee firm on the basis of which, additional income was to be assessed in the hands of partnership firm i.e. one of the assessees before us, then for making aforesaid addition, recourse which was open to the Assessing Officer was to initiate proceedings under section 153C of the Act. Where the provisions of said section are to be applied, then no proceedings can be initiated under section 147, 148, 151 and 153 of the Act. Accordingly, we hold that when during the course of search under section 132 of the Act at the residence of Mrs. Vasundhara S. Joshi and Shri Shailesh Joshi, loose paper bundle Nos.6, 7, 8 and 9 were found, which depicted the receipts and expenditure relating to different outlets being run under the partnership firms and the additional income was also offered by the persons searched on behalf of partnership firms, in which he was partner, on the basis of such documents found during the course of search, then for making addition in the hands of partners, provisions of section 153C of the Act are attracted. Once the said provisions are so attracted, then there is no question of initiating any proceedings under section 147/148 of the Act. Accordingly, we hold that proceedings initiated under section 147 / 148 of the Act are thus, not correctly initiated.” 9. The issue raised in the present appeal is squarely covered by the issue before the Tribunal in Joshi Wadewale Hadapsar Vs. DCIT (supra) and following the same parity of reasoning, we hold that re-assessment proceedings initiated against the assessee under section 147/148 of the Act are not warranted. The Assessing Officer after receipt of information belonging to the assessee should have invoked provisions of section 153C of the Act and not section 147/148 of the Act. Accordingly, we hold so. Consequently, re-assessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same. Consequently, the additional ground of appeal raised by the assessee is allowed and we hold that assessment framed by the Assessing Officer is null and void. …..”
Reverting to the facts of the present case, the assessment was completed u/s.143(3) r.w.s147 of the Act. Then at Page 11 of the assessment order, seized document impounded during the search action in the business premises of Shri Gajendra Pawar (Builder of Pinnacle Kalpataru) regarding cash payment of Rs.87,07,500/- over and above the agreement value by the assessee for the purchase of Flat No. 604, 605 and 606. Therefore, search action had taken place in the premises of Shri Gajendra D Pawar wherein
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some documents were found suggesting that some money was paid in cash over and above agreement value by the assessee.
Now coming to the section 153C of the Act that when any document or books of account or other assets as referred to therein is found in the premises which does not belong to the person whose premises is being searched but actually belongs to some other person, in this case, the assessee, in such scenario, Section 153C only shall apply. The very opening of statement in Section 153C states that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act which ascertains the overriding effect of section 153C of the Act vis-à-vis other provisions referred therein. On examination of facts, application of Section 153C of the Act is absolutely justifiable.
Respectfully following the decision of the Co-ordinate Bench of the Tribunal, Pune in ITA No.1971/PUN/2014(supra.), we hold that the Assessing Officer after receipt of information belonging to the assessee should have invoked the provisions of Section 153C of the Act and not the provisions of Section 147/148 of the Act. Consequently, reassessment order passed u/s.147 of the Act does not stand. The Assessing Officer is, thus, directed to cancel the same.
In the result, appeal of the assessee is allowed.
Order pronounced on 26th day of June, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 26th June, 2019. SB
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आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-2, Pune. 4. The Pr. CIT-2, Pune. , आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
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Date 1 Draft dictated on 25.06.2019 Sr.PS/PS 2 Draft placed before author 25.06.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order