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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.
O R D E R Per Shri L.P. Sahu, A.M. : This assessee’s appeal for Asst. Year 2010-11 arises from the Commissioner of Income Tax (Appeals)-7, Hyderabad order dt.23.09.2019 passed in case No.0159/CIT(A)-7/2017-18 in proceedings under Section 153C r.w.s. 153A r.w.s. 144 of Income Tax Act, 1961 (‘the Act’).
Heard both the parties. Case file perused.
The assessee has raised the following grounds :
“ 1. The order of the learned CIT(A) is erroneous both on facts and in law.
2. The learned CIT (Appeals) erred in confirming the action of the Assessing Officer in initiating proceedings after the limitation for completion of assessment in the searched assessees case as satisfaction is to be reached before the assessment u/s.153A is made and thereby erred in upholding the invalid assessment.
3. Without prejudice, the learned CIT (Appeals) in confirming the addition made by the Assessing Officer for an amount of Rs.29,57,000 by not accepting the explanation for sources and opening balance on mere suspicion and presumption and thereby erred in upholding the addition.
4. Without prejudice, the learned CIT (Appeals) failed to appreciate that even the alleged seized material refers to payment of 15+ 4x5, demonstrating that Rs. Four lakhs is paid in five years and thus erred in confirming that entire payment of Rs.29,57,000 is paid in this assessment year.”
The brief facts of the case are that the assessee is an individual deriving income from business, capital gains and other sources. Search & seizure operations u/s.132 of the Act were conducted in the case of M/s. Arihant Educational Society located at Bommakal Village, Karimnagar District- 505001 and 301 & 303, Pavani Estates, Liberty Road, Himayathnagar, Hyderabad-29 on 25.07.2013. Under search operations it was observed that collection of capitation fees/donation over and above the regular fee fixed by the Govt. for management quota seats in medical college. From the seized material/documents, it was found that the assessee's daughter (Ms. T. Alekhya) was taken to admission in FY 2009-10 for MBBS course of 5 years.
From the seized material / documents, it was found that the documents seized have bearing on the determination of the total income of the assessee for the Assessment Year 2010-11. Hence notice u/s.153C was issued on 17.03.2017. On detailed examination of the seized documents at page No.28 of Annexure A/CAIMS/01, the ao noticed that the assessee has not furnished any proof/witness bona fide source/explanation in respect of an amount of Rs.29.57 lakhs and treated it as unexplained
69C of the Act and added to the total income of the assessee. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the CIT(A). The CIT(A) after considering the detailed submissions made by the assessee, rejected the assessee's appeal and affirmed the assessment order. Aggrieved the assessee is in appeal before the Tribunal.
The learned Authorised Representative submitted that the Assessing Officer has not recorded reasons in the assessment order as per section 153C of the Act. The CIT(A) has mentioned reasons recorded for issue of notice u/s.153C r.w.s. 153A of the Act which reads as under :
“ I have examined the seized documents vide A/CAIMS/01 (Page 28) and the information is made available on record. I am satisfied that the Books of A/c. or documents or assets seized or requisitioned have bearing on the determination of the total income of Sri T V Prasad for the Asst. Year 2010-11.” 6. On the other hand, learned Departmental Representative vehemently argued the case and relied on the orders of the authorities below and submitted that the MBBS course. Therefore the Assessing Officer has framed the assessment as per law.
There is no dispute between the parties that the instant lis has arisen from the departmental search action dt.25.07.2013 carried out in the business premises of M/s. Arihant Educational Society running various educational institutions. The departmental authorities found/seized the alleged incriminating material indicating the assessee to have paid an amount of Rs.29.57 lakhs representing cash donation/capitation payment to the foregoing educational institutions for the purpose of getting admission of her daughter; as unexplained.
We now come to the clinching issue as to whether the instant lis involves a valid section 153C satisfaction note or not. There is further no quarrel that the Assessing Officer in case of the searched assessee i.e. M/s. Arihant group and the third person i.e. the assessee herein are different. The former Assessing Officer i.e. DCIT, Central Circle 2(2),
Hyderabad appears to have recorded his impugned satisfaction on 19.12.2016 in case of 57 third parties (assessee at Sl.No.45) that the incriminating material indicating payment of donation / capitation fees i.e. “A/CAIMS/04” in fact “belongs to the respective assessees”. He therefore sent the relevant records to the assessee's Assessing Officer i.e. ITO, Ward 9(1), Hyderabad; who in turn, recorded his satisfaction that foregoing seized documents only “relate to Sri Venkateswara Prasad T” as per the assessment order dt.29.12.2017 before us. It is at this stage that we are of the opinion that the former Assessing Officer had erred in law and on facts in terming the seized document as “belonging to the assessee” for want of ownership sense missing therein in light of Vijaybai M Chandrani Vs. CIT 333 ITR 436 (Guj); CWT Vs. Viswanath 103 ITR 530 and Late Nawab Sir Mir Osman Ali Khan VS. CIT 162 ITR 888 (SC). Learned departmental representative could not dispute the clinching factual position that the seized document “A/CAIMS/04” could not have been held to be helping to the assessee in any manner; whatsoever. We thus quash the impugned assessment for this precise reason alone.
The assessee has raised the following additional ground :
On the facts and in the circumstances of the case, the assessment order dt.29.12.2017 passed by the Assessing Officer u/s.153C r.w.s. 153A r.w.s. 144 of the Income Tax Act, 1961 for assessment. Year 2010-11 is barred by limitation as prescribed u/s.153C r.w.s 153A of the Act and there is unsustainable on facts and in law.
Learned DR vehemently rejected the additional ground filed by the assessee and he submitted that after lapse of three years, the assessee filed the additional ground, thereafter the case was posted for hearing many times.
Learned AR of the assessee submitted that the assessee has filed additional ground which involved legal issue. In view of decision of Hon’ble Supreme Court in the case of NTPC Ltd. Vs. CIT 229 ITR 383 (SC), we admit
the additional ground raised by the assessee. Since the Assessing Officer has issued notice u/s.153C of the Act on 17.03.2017 for the Assessment Year 2010-11 which is beyond period of six years and the assessment framed by the Assessing Officer on 29.12.2017 is barred by limitation as per the provisions of section 153C of the Act and also considering the judgment of Hon’ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society 397 ITR 344 (SC). Accordingly, the additional ground raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed on both counts.
Order pronounced in the open court on 12th April, 2022.