Income Tax Appellate Tribunal - Hyderabad
T Sukhender Reddy, Hyderabad, ... vs Department Of Income Tax on 15 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI D.MANMOHAN, VICE PRESIDENT
AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. Asst year Appellant Respondent
691/Hyd/2015 2003-04 Shri T.Sukhender Reddy, Dy. Commissioner of
692/Hyd/2015 2004-05 Hyderabad Income-tax,
693/Hyd/2015 2005-06 Central Circle 7,
694/Hyd/2015 2006-07 (PAN - AFEPT 3231 P ) Hyderabad
695/Hyd/2015 2007-08
696/Hyd/2015 2008-09
697/Hyd/2015 2009-10
676/Hyd/2015 2003-04 Dy. Commissioner of Shri T.Sukhender Reddy,
677/Hyd/2015 2004-05 Income-tax, Hyderabad
698/Hyd/2015 2006-07 Central Circle 2(4),
699/Hyd/2015 2007-08 Hyderabad (PAN - AFEPT 3231 P )
700/Hyd/2015 2008-09
701/Hyd/2015 2009-10
Assessee by : Shri K.C.Devdas
Department by : Shri M.Sitaram DR
Date of Hearing 15.2.2016
Date of Pronouncement 15.2.2016
ORDER
Per Bench :
There are thirteen appeals in this bunch. They are cross appeals for 2003-04 to 2009-10, except for 2005-06(only assessee's appeal). These appeals arise out of the orders passed by the Assessing Officer under S.143(3) read with S.153C of the Income Tax Act, 1961, for various assessment years from 2003-04 to 2009-10.
2 ITA No.691/Hyd/2015 & othersShri T.Sukhender Reddy, Hyderabad Assessee's Appeals :
ITA Nos.691 to 697/Hyd/2015
2. Following common additional ground was raised by the assessee, except for change of assessment year -
"The Learned CIT(A) failed to note that the satisfaction as enjoined in Section 153C of the IT Act, 1961 that the Appellant had undisclosed income not having been recorded by the Assessing Officer in the assessment file of B.Ramdas Goud who was subject to proceedings u/s. 132 of the IT Act, 1961 and therefore the order passed u/s. 143(3) r.w.s. 153C of the IT Act, 1961 in the case of the Appellant for the assessment year 2004-05 is without jurisdiction and therefore wholly unsustainable in law and facts."
3. Learned counsel submitted that facts necessary for consideration of the additional ground are already on record, and being a pure question of law involved in the additional ground, supported by the judgment of the Apex Court as well as the Circular issued by the CBDT, the same deserves to be admitted. Having regard to the circumstances of the case, we admit the additional ground raised by the assessee in these appeals.
4. Facts concerning the issue are stated in brief. Search and seizure operations were conducted in the cases of Shri B.Ramdas Goud and Shri Desagoni Raghupathi Goud group on 15.9.2008. Certain incriminating material/documents pertaining to the assessee herein appear to have been found during the course of search, and hence, the Assessing Officer initiated proceedings under S.153C of the Act and ultimately completed the assessments in the case of this assessee for the relevant years under appeal, by making certain additions/disallowances.
5. Aggrieved by the assessments made as above, assessee preferred appeals before the CIT(A), and further aggrieved by the 3 ITA No.691/Hyd/2015 & others Shri T.Sukhender Reddy, Hyderabad additions sustained by the CIT(A), assessee preferred the present appeals before the Tribunal.
6. By way of additional ground noted above, the assessee contends that in order to assume jurisdiction under S.153C of the Act, it is mandatory on the part of the Assessing Officer, in the assessment file of Shri B.Ramdas Goud, which was subject to proceedings under S.132 of the Act, to record satisfaction that the assessee's income escaped assessment, and in the absence of recording satisfaction by the Assessing Officer dealing with the matter of Shri B.Ramdas Goud, the Dy. Commissioner of Income-tax Central Circle 7, Hyderabad has no jurisdiction to initiate the proceedings under S.153C of the Act in the case of the assessee herein. In this regard, the assessee placed before us a copy of Circular No.24/2015 issued by the CBDT, (F.No.279/Misc./140/2015(ITJ) dated 31.12.2015), wherein the Central Board observed that the Hon'ble Supreme Court in the case of CIT V/s. Calcutta Knitwears (362 ITR 673) has laid down that for the purpose of S.158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the Assessing Officer before he transmits the record to the other Assessing Officer who has jurisdiction over such other person u/s. 1538BD of the Act, and the Board further observed that the provisions of S.153C are substantially similar to the provisions of S.158BD of the Act and therefore, the above guidelines of the Hon'ble Supreme Court apply to the proceedings under S.153C of the Act. In para 5 of the circular, it was clarified that even in the pending litigation, if satisfaction is not available, the Revenue has to abide by the guidelines issued by CBDT which are in terms of the guidelines laid down by the Apex Court. Learned counsel also placed before us a copy of the judgment of the jurisdictional High Court in the case of CIT V/s. Shettys 4 ITA No.691/Hyd/2015 & others Shri T.Sukhender Reddy, Hyderabad Pharmaceuticals & Biologicals Ltd.(2015)57.taxmann.Com.282(Andhra Pradesh) wherein the Hon'ble Court observed that recording of satisfaction is a precondition for invoking jurisdiction under S.153C of Act and in the absence of following of such procedure, the assessments framed under S.153C deserve to be quashed.
7. Learned Departmental Representative fairly admitted that the issue stands squarely covered by the Circular issued by the CBDT as well as the decision of the jurisdictional High Court. At the same time, the Learned Departmental Representative contended that non- recording of satisfaction is only a procedural irregularity and one has to refer to the facts of the case and the incriminating documents found during the course of search proceedings to appreciate whether it is a deserving case for initiating the proceedings under S.153C of the Act. Thus, he strongly supported the orders passed by the Assessing Officer.
7.1. On the previous occasion, Learned Departmental Representative sought adjournment on the ground that records could not be obtained. Hence, bench granted adjournment and directed the Assessing Officer to be present before the bench alongwith records to clarify the factual matrix of the case. Shri N.Parthasaraathy, ITO was present in the court and admitted that record does not contain any forwarding letter from the Assessing Officer of Shri Ramdas Goud, recording his satisfaction, as required under S.153C of the Act, before forwarding the files to the officer in charge of Shri Sukhender Reddy's assessments.
8. Having regard to the rival submissions and in the light of the decision of the jurisdictional High Court in line with the view taken by the Apex Court and the binding Circular issued by the CBDT(binding 5 ITA No.691/Hyd/2015 & others Shri T.Sukhender Reddy, Hyderabad upon the Revenue), we are of the view that the proceedings initiated under S.153C of the Act in the cases of the assessee herein for the relevant years under appeal, deserve to be quashed in as much as the concerned Assessing Officer has admittedly not recorded any satisfaction before forwarding the files to the Assessing Officer in whose charge, the assessee herein are assessed. In other words, the assessments made under S.153C of the Act are hereby quashed. In this view of the matter, the other grounds urged by the assessee have no legs stand, since the very assessments giving rise to these appeals are quashed. Consequently, assessee's appeals are treated as allowed on the legal ground.
Revenue's Appeals :
ITA Nos.676 & 677 and 698 to 701/Hyd.2015
9. In view of our decision in the context of assessee's appeals hereinabove, whereby the assessments giving rise to the present appeals of the Revenue have been quashed on the ground that Assessing Officer has admittedly not recorded any satisfaction before forwarding the files to the Assessing Officer in whose charge, the assessee herein are assessed, the present appeals of the Revenue have no legs to stand. They are accordingly dismissed.
10. In the result, as pronounced in the open court, appeals filed by the assessee are treated as allowed and the appeals filed by the Revenue are dismissed.
Sd/- Sd/-
(S.Rifaur Rahman) (D.Manmohan)
Accountant Member. Vice President
Dt/- 15th February, 2016
6 ITA No.691/Hyd/2015 & others
Shri T.Sukhender Reddy, Hyderabad
Copy forwarded to:
1. Shri T.Sukhender Reddy, C/o. B.Narsing Rao & Co., Chartered Accountants, Plot No.554, Road no.92, Jubilee hills, Hyderabad 96.
2. Dy. Commissioner of Income-tax Central Circle 7, Hyderabad
3. Dy. Commissioner of Income-tax Central Circle 2(4), Hyderabad
4. Commissioner of Income-tax(Appeals), Guntur
5. Commissioner of Income-tax (Central), Hyderabad
6. Departmental Representative ITAT, Hyderabad B.V.S.