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Income Tax Appellate Tribunal, BENGALURU BENCH A, BENGALURU
Before: SHRI. A. K. GARODIA
Heard on : 10.01.2019 Pronounced on : 11.01.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : These are appeals filed by the assessee trust, against the common order of the CIT (A) – VI, Bengaluru, dt.28.02.1014, for the assessment years 2004-05 to 2007-08.
ITA.809 to 812/Bang/2014 Page - 2
The assessee has raised the following grounds of appeal which are common to all the assessment years, but for change in the amount of donation mentioned in ground no.5 :
A search and seizure operation u/s.132 of the Act, was conducted at the premises of Divyashree group, on 01.03.2007, which was continued in the next financial year and finally the search was concluded on 11.04.2007. During the course of search, some documents were filed pertaining to the assessee. On the basis ITA.809 to 812/Bang/2014 Page - 3 of the same, a notice u/s.153C was served on the assessee on 15.01.2008 for AY 2004-05. In response to the notice the assessee filed a letter dt.23.10.2008 which is common for all the assessment years. The AO based on the reply submitted by the assessee, completed the assessments raising demand for all the years. Feeling aggrieved by the orders, the assessee filed appeal before the CIT (A).
Ground no.3 before the CIT (A), reads as under :
3. Without prejudice to the above, the order of assessment passed u/s.153C of the I. T. Act is further bad in law as reasons for issuance of such notice u/s.153C of the I. T.Act have not been given and the appellant has reasons to believe that the same has not been recorded and that the mandatory conditions to assume jurisdiction is to record reasons and in the absence of the same, the assessment is bad in law and liable to be cancelled. However, the CIT (A) vide common order has dismissed all the appeals filed by the assessee. Hence the assessee is in appeals before us.
At the outset the assessee has submitted that the CIT (A) had not adjudicated ground no.3 and had disposed the appeals without deciding the grounds. The Ld. AR drew our attention to para 6 of the common order passed by the CIT (A), which is to the following effect : 6. Assumption of Jurisdiction u/s 153C r.w.s. 143(3) of I T Act. The appellant has raised an issue that the assumption of jurisdiction u/s 143(3) r.w.s. 153C is bad in law as it had reasons to believe that no reasons were recorded as the same was not made available to him. The Assessing Officer has clearly brought on record that following documents were ITA.809 to 812/Bang/2014 Page - 4 found and seized. (i) A/ VS M/1 6 (New Folder/En ter/ VSM/Misc.A. 1) as N/s Rukmini Educational Charitable Trust. (ii) A/VSM116 (Misc.A/Best-lnvest/xl/sheet-1) When the name of the trust was N/s Bheemaneni Educationa/ Systems Trust" Also, the appellant has not brought on record anything to show that it had asked for the reasons recorded and that these were given to it. No further argument has been raised. From the above, I find that the proceedings initiated in the case of the appellant u/s 153C r.w.s. 143(3) are in order and are upheld. 06. Per contra, the Ld. DR had submitted that there is no basis for alleging that the reasons were not recorded by the AO of the searched person at the time of issuing notice u/s.153C of the Act, and therefore the contention of the assessee is without any merit. However in the alternative it was submitted that the Revenue has no objection if the matter is remanded back to the CIT (A) for the purpose of recording the finding in this regard, after verifying the records.
7. We have heard the rival contentions and perused the record. In respect of assessment years 2004-05 to 2006-07, as emanating from the record, that the assessee during the first appellate proceedings had raised an issue of non-recording of reasons by the AO of the searched person and therefore, we are of the opinion that it was necessary for the CIT (A) to record a finding with respect to existence of the reasons recorded by the AO of the searched person thereby recording that some incriminating material were found pertaining to the assessee and therefore hence proceeding u/s.153C ITA.809 to 812/Bang/2014 Page - 5 are to be initiated . Accordingly these appeals are required to be sent to the allowed and remanded back to the file of CIT(A). Even assuming that the AO of the searched person as well as that of the assessee are the same, and then also the reasons are to be recorded by the AO in his capacity as the AO of the searched person, in the file of the searched person thereby mentioning the reasons for assuming the jurisdiction u/s.153C of the Act.
In the present case, as the CIT (A) has not adjudicated this ground, therefore we deem it appropriate to remit the matter to the file of the CIT (A) with a direction to call for the records from the AO and find out whether the AO of the searched person has recorded the reasons for initiation of proceedings u/s.153C of the Act, or not and thereafter decided the all the grounds a fresh in accordance with law. We are not adjudicating the other grounds raised herein as the ground raised by the assessee with respect to recording of reasons by the AO of the searched person goes to the very root of the matter and is a jurisdictional issue.
Accordingly the appeals for AYs.2004-05 to 2006-07 are allowed for statistical purpose.
In respect of appeal of the assessee for AY 2007-08, we may record that the CIT (A) had also decided this issue on the premise that for this assessment year the AO of the searched person is also required to record the reasons. We may point out, the assessment year 2007-08, was the year of search, hence pending assessment shall abate and therefore this issue was not required to be examined ITA.809 to 812/Bang/2014 Page - 6 for the purpose of deciding the issue. As the issue of reasons recorded in the searched person is not relevant, for the year of search . Hence we do not find any reasons for sending the matter back to the file of the CIT (A) for determining this issue . However, we find that in respect of the other grounds raised by the assessee in the proceedings before the CIT (A), in para 7, the ld CIT(A) had recorded as under :
Whether the Assessment was barred by Limitation :
The appellant has raised an other issue that the assessment passed u/s.153C of I T Act ought to have been completed by 31.12.2008 and the same having been completed on 29.12.2009, is barred from limitation. I find from record that the Assessing Officer has brought on record that the search and seizure operation u/s.132 was concluded on 10.04.2007. Accordingly, as per provisions of section 153B, the assessments completed u/s.153C r.w. 143(3) on 29.12.2009 are within time limit allowed under the Income Tax Act. The issue raised is dismissed.
We may point out that , the CIT (A) has only given cryptic reasons and has not dealt with the issue on merit , in the light of above the appeal for AY 2007-08 is also sent back to the file of CIT (A) with a direction to denova examine grounds except the ground of non recording of reasons , raised before her in accordance with law , without being influenced by our observations made hereinabove.
ITA.809 to 812/Bang/2014 Page - 7
In the result, all the four appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 11th day of January, 2019.