SRI VENKATESH DEVELOPERS ,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4(1), HYDERABAD

The Learned Authorised Representative ("Ld. AR") submitted that the additional ground so raised are admissible in view of judgment rendered by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The prayer for admission of additional ground noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the ITAT Rules owing to the fact that objections raised in additional ground are legal in nature for which relevant facts are stated to be emanating from the existing records.

The brief facts of the case are that the assessee is a partnership firm. In its earlier round of appeal before this Tribunal, vide order dated O7.10.2013, the matter was restored to the file of the Ld. CIT(A) for fresh adjudication. The Ld. CIT(A) thereafter passed an order dated 13.09.2019 against which the assessee filed the present appeal before the Tribunal bearing . This Tribunal, vide order dated 30.06.2022, initially dismissed the appeal of the assessee, observing that Page 3 of 9 adjudication on merits would amount to a review of its earlier order. However, the Hon'ble High Court of Telangana, vide order dated 09.01.2023, directed this Tribunal to decide the appeal in on merits. Accordingly, as per the direction of the Honble High Court, we proceed to decide the appeal on merits.

At the threshold of hearing, the Ld. AR submitted that the assessee would press only ground no. 9 of the additional grounds of appeal

Per contra, the Learned Departmental Representative ("Ld. DR") invited out attention to the computation of income of the assessee for AY 2009-10 placed at page no. 35 of the paper book and submitted that the assessee himself offered the income from the sale of the impugned land (the very subject of the seized document) in the return for AY 2009-10. Drawing our attention to the assessee's computation of income placed at page no. 35 of the paper book, the Ld. DR pointed out that the assessee stated possession was given in April 2008, which falls in AY 2009-10. Therefore, the nexus between the seized document and the income assessed in AY 2009-10 stands established, and the assessee cannot now contend that the document pertains to AY 2007-08. It was contended that once the assessee has admitted taxability in AY 2009-10, the objection to the section 153C proceedings on the ground of year-pertinence should be rejected.

In rejoinder, the Ld. AR submitted that jurisdiction under section 153C of the Act must be tested solely on the basis of the seized material and the satisfaction recorded thereon by the Ld. AO. An assessee's subsequent admission or an erroneous offer

We have considered the rival submissions and perused the material on record, inchuding the seized "Agreement of Sale cum-General Power of Attorney" (page nos. 4 to 16 of the paper book). The relevant portion of page no. 4 of the paper book is reproduced as under:

On perusal of the above, we find that the first page records execution of the document in February, 2007, which is a registered document. Further, we have also gone through the relevant portion of the annexed “receipt-cum-delivery of possession” placed at page No.12 of the paper book which is to the following effect:

On perusal of the above, it is evident that the full consideration was received and possession was delivered on 24.03.2007. On a plain reading, we are of the considered view that Page 7 of 9 the seized material pertains to FY 2006-07 AY 2007-08). Further. As per the provision of section 153C of the Act, the jurisdiction for a given assessment year must rest on seized material that pertains to that very year and the Ld. A0's satisfaction to that effect. Where the seized document does not pertain to the vear for which section 153C of the Act is invoked, the notice is without jurisdiction. The Hon'ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society (supra) at para no. 18 of the order has held as under: "The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the which provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the seized did not establish any co-relation document-wise, with co-relation, with these four Assessment Years. Since this requirement under section153C of the Act is essential for assessment it becomes a reasoning to be jurisdictional fact. We find this reasoning to be ligical and valid, having regard to the provisions of section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the Counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appeareing for the resopondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred”.

On perusal of above, we find that the Hon'ble Supreme Court has held that, incriminating material which was seized had to pertain to the Assessment Years in question and the Ld.AO must establish a nexus or correlation between the seized incriminating document and the specific assessment year for which the proceedings under section 153C of the Act are initiated.

The Revenue's contention that the assessee offered the income in AY 2009-10 and mentioned possession in April 2008 in the computation cannot, in our view, supplant or substitute the statutory precondition that the seized material itself must pertain to AY 2009-10. Jurisdiction cannot be conferred by consent, admission, or an erroneous self-offer in the return. On appraisal of the seized material (page nos. 4 to 16 of the paper book), we find it abundantly clear that it pertains to AY 2007-08. Nevertheless, the notice under section 153C of the Act was issued for AY 2009-10. Therefore, in our considered view, in light of the legal position stated above, the notice under section 153C of the Act for AY 2009-10 is invalid, and the consequential assessment is liable to be quashed. Accordingly, we set aside the order passed by the Ld. CIT(A) and the Ld. AO.