SRI VENKATESH DEVELOPERS ,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4(1), HYDERABAD
ITA No 1687 of 2019 Sri Venkatesh Developers
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आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘ A ‘ Bench, Hyderabad
ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ |
Before Shri Ravish Sood, Judicial Member
A N D
Shri Madhusudan Sawdia, Accountant Member
आ.अपी.सं /ITA No.1687/Hyd/2019
(िनधाŊरण वषŊ/Assessment Year: 2009-10)
M/s Shri Venkatesh
Developers, Hyderabad
PAN:ABCFS6497A
Vs.
Asstt. Commissioner of Income Tax, Circle 4(1)
Hyderabad
(Appellant)
(Respondent)
िनधाŊįरती Ȫारा/Assessee by:
Shri K.C. Devdas, CA
राज̾ व Ȫारा/Revenue by::
Ms. Payal Gupta, Sr.DR
सुनवाई की तारीख/Date of hearing:
06/11/2025
घोषणा की तारीख/Pronouncement: 14/11/2025
आदेश/ORDER
Per Madhusudan Sawdia, A.M.:
This appeal is filed by Shri Venkatesh Developers (“the assessee”), feeling aggrieved by the order passed by the Learned
Commissioner of Income Tax (Appeals)-8, Hyderabad (“Ld. CIT(A)”) dated 13.09.2019 for the A.Y. 2009-10. 2. The grounds of appeal are as under:
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1 The assessee has raised the additional grounds as under: “7. The Learned CIT(Appeals) erred in confirming the Capital Gain worked out by Assessing Officer at Rs.2, 79,44,478/- as against the returned Capital Gain by assessee at Rs. 1,08,07,822/-.
That in confirming the Long- Term Capital Gain computed by AO, the learned CIT(Appeal) should not have ignored the Indexed Cost of the expenditure incurred by the assessee from ITA No 1687 of 2019 Sri Venkatesh Developers Page 3 of 9
FY 2004-05 to 2007-08 and the entire expenditure is further supported by the fact that all is by Account Payee Cheques, hence question of disallowing such expenditure does not arise.
That the Order passed u/s 143(3) r/w section 153C is bad in law as there was no satisfaction of AO that seized material allegedly belonging to the Appellant was of incriminating nature indicating Undisclosed Income of the Appellant and in the absence of such satisfaction the proceedings-initiated u/s 153C are bad in law.
That without prejudice to above, the amendment to Section 153C to the effect that if the books of accounts or documents seized or requisitioned, pertains to, or any information contained therein, relates to' Other Person was inserted with effect from 01-06-2015 by Finance Act, 2015, since the amended provision apply only prospectively and not to the search and seizures prior to that date, the proceedings u/s 153C are bad in law as the search and seizure operation were conducted much before 01-6-2015 and the seized documents did not belong to Appellant." 3. 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. 4. 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 ITA No. 1687/Hyd/2019. This Tribunal, vide order dated 30.06.2022, initially dismissed the appeal of the assessee, observing that ITA No 1687 of 2019 Sri Venkatesh Developers Page 4 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 ITA No. 1687/Hyd/2019 on merits. Accordingly, as per the direction of the Honble High Court, we proceed to decide the appeal on merits.
5. At the threshold of hearing, the Ld. AR submitted that the assessee would press only ground no. 9 of the additional grounds of appeal, being the juri ictional ground. In this context, the Ld. AR submitted that the Ld. AO has invoked the provisions of section 153C of the Act in the case of the assessee for AY 2009-
10. The Ld. AR inviting our attention to incriminating material seized during search conducted under section 132 of the Act, placed at page nos. 4 to 16 of the paper book submitted that the seized material consisted of an "Agreement of Sale-cum-General
Power of Attorney" executed in February 2007, which, on its face, pertains to AY 2007-08 and not to AY 2009-10. Referring to the first page of the seized material placed at page no.4 of the paper book, the Ld. AR submitted it is evident that the document was executed in February 2007 and therefore relates to AY 2007-08. Further, our attention was invited to the "receipt-cum-delivery of possession" forming part of the same seized material placed at page nos. 11 and 12 of the paper book. Specifically, at page no. 12
it is recorded that the asseSsee received the total sale onsideration and delivered peaceful and vacant possession of the property on 24.03.2007. This, according to the Ld. AR, fortifies that the sale was effectuated in FY 2006-07 (AY 2007-08) and that the seized material pertains to AY 2007-08 only. On this foundation, the Ld.
AR argued that the initiation of proceedings under section 153C of the Act for AY 2009--10 is invalid ab initio as the seized material
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does not pertain to the year unde Consideration. Reliance was placed on the ratio of the Hon'ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society (2017) 397 ITR 344, for the proposition that, for issuance of notice under section 153C of the Act for any assessment year, the seized material must relate to that very assessment year. The Ld. AR emphasized that, as the notice for AY 2009-10 was founded solely on a document relating to AY 2007-08, there being no other seized material for AY 2009-
10, the notice and the consequential assessment order are void and liable to be quashed.
6. 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 juri iction 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
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in a particular year cannot cure a foundational juri ictional defect. The Ld. AR reiterated that the seized material, on its plain reading, pertains to AY 2007-08. Issuing a notice for AY 2009-10
on the strength of a document that does not pertain to that year is contrary to law laid down by the Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (Supra).
Hence, the notice under section 153C of the Act for AY 2009-10
and the resultant assessment are unsustainable.
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:
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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 ITA No 1687 of 2019 Sri Venkatesh Developers Page 8 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 juri iction 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 juri iction. 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 juri ictional 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 juri ictional 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.
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Hence, , in the absence of such nexus, recourse to section 153C of the Act is impermissible.
12. 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. Juri iction 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.
13. In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 14th November, 2025. (RAVISH SOOD)
JUDICIAL MEMBER
Hyderabad, dated 14.11.2025
PVV
Copy of the order forwarded to:
S.No Addresses
1
Sri Venkatesh Developers, C/o Siddharth Toshnival, Advocate,
3-5-144/5 Eden Garden Hyderabad 500001
2
ACIT, Circle 4(1) 7th Floor, Room No.742,IT Towers, AC Guards,
Hyderabad 500004
3
Pr. CIT - Hyderabad
4
DR, ITAT Hyderabad Benches
5
Guard File
By Order