DCIT, DEHRADUN vs. SH. ARUN KUMAR GIRDHAR, DEHRADUN

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ITA 5353/DEL/2013Status: DisposedITAT Delhi06 January 2017AY 2009-105 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, stating that the Revenue failed to demonstrate a valid satisfaction for initiating proceedings under Section 153C. Since the Revenue had already initiated proceedings under Section 147 and completed the assessment, the appeal became infructuous.

What were the facts?

The Revenue appealed against the CIT(A)'s order annulling the assessment under Section 153C. The CIT(A) held that the documents found did not belong to the assessee but to M/s T.R. Builders, making the notice under Section 153C invalid. The Assessing Officer later initiated proceedings under Section 147 based on the CIT(A)'s observation.

What were the issues?

Whether the assessment under Section 153C was validly initiated when the seized documents did not clearly belong to the assessee and whether the subsequent initiation of proceedings under Section 147 rendered the appeal infructuous.

Which sections of the Income-tax Act were involved?

Section 153C,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL

Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI KULDIP SINGH SHRI KULDIP SINGHSHRI KULDIP SINGH SHRI KULDIP SINGH

For Appellant: Shri Salil Kapoor and Ms. Ananya Kapoor, Advocates
For Respondent: Shri Ravi Jain, CIT-DR, Shri Salil Kapoor and Ms. Ananya Kapoor, Advocates
Hearing: 04.01.2017Pronounced: 06.01.2017

PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP Revenue’s appeal : Revenue’s appeal :- ITA No.5353/Del/2013 ITA No.5353/Del/2013 Revenue’s appeal : Revenue’s appeal : This appeal by the Revenue for the assessment year 2009-10 is directed against the order of learned CIT(A)-1, Dehradun dated 28th March, 2013.

2.

The Revenue has raised the following grounds of appeal :-

2 ITA-5353/D/2013 & C.O.No.110/D/2014

1.

“1. That ld. CIT(A) has erred in law and on facts in annulling the assessment u/s 153C by holding that the document does not belong to the assessee but to M/s T.R. Builders and therefore issue of notice u/s 153C is invalid, without appreciating the fact that the document is in agreement signed by the assessee and therefore belonged to the assessee as indicated in the statement of fact enclosed herewith.

2. That ld.CIT(A) is not justified in law in annulling the assessment u/s 153C holding that the document does not belong to the assessee but to M/s T.R. Builders and therefore issue of notice u/s 153C is invalid whereas the document belonged to the assessee as well, as it was signed by him and represented a transaction entered into by him.

3. That ld.CIT(A) is not justified in law in annulling the assessment u/s 153C and not deciding the cases on merits.

4. That ld.CIT(A) has erred in law and ignoring the fact that neither before Investigation Wing nor before the AO, either the assessee or M/s T.R. Builders denied the genuineness/authenticities of the document.

5. That the order of the ld.CIT(A) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored.”

3.

We have heard the arguments of both the sides and have perused the material placed before us. Learned CIT(A) has recorded the finding that search and seizure has taken place at the residential premises of Shri Mohit Batola from whom certain papers belong to M/s T.R. Builders were found. Action u/s 153C has already been taken in the case of M/s T.R. Builders. Shri Mohit Batola is the partner in M/s T.R. Builders. However, in the papers belonging to M/s T.R. Builders, the name of the assessee was also found recorded and, therefore, action u/s 153C has been initiated in the case of the assessee. Learned CIT(A) quashed the action in the case of the assessee with the following finding :-

3 ITA-5353/D/2013 & C.O.No.110/D/2014

“1.7 The satisfaction envisaged in section 153C has to be genuine and has to be reached objectively on the basis of the facts and circumstances of the case. In this case, there was a prima facie reason to believe that the impugned documents belonged to M/s T.R. Builders in so far as it was the seller in the land transaction concerned and the documents were found in the possession/control of Mr. Mohit Batola (a partner of M/s T.R. Builders). There was no disclaimer from the said firm (that these documents did not belong to it) nor was there a claim from the assessee (that they belonged to him). Thus, any objective ground for reaching the satisfaction that the documents belonged to a person other than M/s T.R. Builders did not exist. That being so, it is clear that the requirement of the provision of section 153C of the I.T. Act was not met in substance. The appropriate course in such situation was to initiate proceedings u/s 147 of the I.T. Act and make assessment accordingly.”

4.

At the time of hearing before us, it was pointed out by the learned counsel that in the light of the above direction of learned CIT(A), the Assessing Officer has already initiated proceedings u/s 147 in the case of the assessee and has made the addition of `1,33,30,000/- i.e., the impugned addition which was made in the case under appeal in the light of the paper found from Shri Mohit Batola. He, therefore, stated that once action u/s 147 has already been taken and the similar addition is made, the Revenue’s appeal has become infructuous. A copy of the assessment order passed u/s 143(3) read with Section 147 dated 25th February, 2015 is placed on record. He also stated that even otherwise, the proceedings u/s 153C are not valid because – (i) no paper belonging to the assessee was found from the person searched and (ii) no satisfaction was recorded in the case of the person searched that the seized document belonged to the assessee.

5.

Learned CIT-DR, on the other hand, relied upon the order of the Assessing Officer.

4 ITA-5353/D/2013 & C.O.No.110/D/2014

6.

We have carefully considered the submissions of both the sides and perused the material placed before us. The facts mentioned in paragraph 1.7 of learned CIT(A)’s order have not been disputed by the Revenue. On the other hand, the Revenue has already acted upon on the basis of observation in above paragraph of learned CIT(A)’s order and has initiated proceedings u/s 147. The assessment order has already been completed in pursuance to the notice issued u/s 147 and the relevant addition has already been made. In the above circumstances, now the Revenue cannot dispute/challenge the finding recorded by the learned CIT(A) in paragraph 1.7. It has not been pointed out before us that a valid satisfaction as required under the provisions of Section 153C for taking action was recorded. Therefore, we do not find any justification to interfere with the order of learned CIT(A). The same is sustained.

Assessee’s Cross Assessee’s Cross-Objection No.110/Del/2014 : Assessee’s Cross Assessee’s Cross Objection No.110/Del/2014 : Objection No.110/Del/2014 :- Objection No.110/Del/2014 : 7. In the cross-objection, the assessee has raised the grounds against the merit of the addition. Once the proceedings u/s 153C have been quashed by the learned CIT(A) and which has been upheld by us, the impugned assessment order does not survive and therefore, assessee’s grounds of appeal with regard to the merit of the addition need no adjudication.

8.

In the result, the appeal of the Revenue is dismissed and the cross-objection of the assessee is treated as infructuous.

Decision pronounced in the open Court on 06.01.2017.

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