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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by assessee against the order of CIT(A)-3, Pune dated 07-03-2017 for the Assessment Year 2001-02.
Assessee raised the following grounds of appeal and the same are extracted as under :
“1. The learned CIT(A)-3, Pune erred in law and on facts in confirming the additions of Rs. 16,57,500 made to the taxable income of the appellant under 153C proceedings, without appreciating that, no any satisfaction was reached by the learned AO before initiating the proceedings u/s 153C of the ITA, 1961. Appellant contends that, in absence of satisfaction note, proceedings u/s 153C are null and void. 2. The learned I-T authorities erred in law and on facts in summarily rejecting appellant's explanations that, the cheques found with Mr. Soni were extended for investment pursuit of the appellant, and not for any alleged cash loan transaction. 3. The learned CIT(A)-3 Pune erred in law and on facts in sustaining the addition of Rs. 15,00,000 made by the learned AO u/s 69D of the ITA, 1961, for alleged Hundi borrowing. The learned I-T authorities ought to have appreciated that blank crossed cheques not bearing any name
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and terms and conditions can't be treated as any alleged hundi borrowing, and that, a hundi, as so referred to in section 69D is typically one, entered in vernacular language. 4. The learned CIT(A)-3, Pune erred in law and on facts in sustaining addition of Rs. 1,57,500 i.e. Rs. 135,000 (towards alleged interest payment) and Rs. 22,500 (towards alleged brokerage), made by the learned AO u/s 69C of the ITA, 1961 without appreciating that no any independent evidence to that effect was brought on record. 5. The learned I-T authorities erred on facts in not appreciating that in absence of any penalty proceedings u/s 271D / 271E being initiated in appellant's own case, and in absence of any similar additions of interest in AY 2002-03 and onwards, allegation as to CASH loan in AY 2001-02 is illogical. 6. The appellant craves, leave to add / modify / delete all or any of the grounds of appeal.
Facts of the case, in brief, are that the assessee is an individual
and there was search action u/s.132 of Act in the case of Shri Shriram
H. Soni on 29-07-2003. In response to notice u/s.153C of the Act
issued to the assessee, the return of income was filed on 24-04-2007
declaring total income of Rs.1,96,270/-. AO noticed that assessee took
Rs.15 lakhs loan in cash from Shri Shriram H. Soni and handed over
blank cheques to Shriram H. Soni as security for repayment of the said
loan. At the end of the assessment provisions, the AO invoked the
provisions of section 69D of the Act and made addition of Rs.15 lakhs.
AO also made addition of Rs.1,35,000 on account of interest and
Rs.22,500/- on account of brokerage u/s.69C of the Act. In the First
Appellate proceedings, the CIT(A) confirmed the additions made by the
AO and thus dismissed the appeal of the assessee.
Aggrieved with the confirmation of additions by the CIT(A), the
assessee is in appeal before the Tribunal with the grounds extracted
above.
Before me, Ld. Counsel for the assessee filed a copy of the letter 5.
from ITO, Ward-3(1), Pune and submitted that the issue of notice
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u/s.153C of the Act was made in respect of the assessment years 1998-
99 to 2003-04 without recording satisfaction envisaged in the said
section 153C of the Act. Considering the failure to comply with the
statutory requirement of recording satisfaction, the issue of notice
u/s.158 of the Act is bad in law. The same is argued in the context of
Ground No.1 raised by the assessee on the issue of failure to record
satisfaction and nullity of the notice u/s.153C of the Act.
On hearing both the sides on this legal issue, I perused the said
letter dated 06-05-2015 and the same is extracted here as under :
“With reference to your letters requesting for issue of copy of satisfactory note, it is to inform that the satisfactory note for issue of notice u/s.153C for the A.Ys. 1998-99 to 2003-04 is not available on file.”
Thus, the reply from AO indicates the failure of the AOs’ of the
searched person in recording the satisfaction. Considering the above
stated position on record, I am of the opinion that the notice issued
u/s.153C is bad in law. Accordingly, Ground No.1 raised by the
assessee is allowed.
Considering the relief granted by me on Ground No.1, I am of the
opinion that adjudication of other grounds on merits becomes an
academic exercise. Therefore, the said grounds on merit are dismissed
as academic.
In the result, appeal of the assessee is partly allowed.
Order pronounced on this 01st day of October, 2018.
Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 01st October, 2018. Satish
4 ITA No.1720/PUN/2017 Shree Rajendra R. Mantri
आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-3, Pune 3. आयकर आयु� / The Pr.CIT-2, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune