ACIT, Bangalore v. Shri. Lakshman B. Tukral, Bangalore

PAGE 1 OF 14 ITA NOS.897 TO 902/BANG/2 007 1 THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NOS.897 TO 902/BANG/2007 (ASST. YEARS 1998-99 TO 2003-04) THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2) BANGALORE. - APPELLA NT VS SHRI LAKSHMAN B TUKRAL NO.53/1 III CROSS V MAIN BENIKAPPA GARDEN SHANTINAGAR BANGALORE-27. - RESPONDENT APPELLANT BY : SHRI G V GOPALA RAO CIT-I RESPONDENT BY : SHRI H N KHINCHA C.A. O R D E R PER BENCH : THESE SIX APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT (A)-VI BANGALORE DAT ED: 24.4.2007. THE RELEVANT ASSESSMENT YEARS ARE 1998-99 TO 2003-04. 2. THE REVENUE HAD RAISED NINE IDENTICAL GROUNDS F OR ALL THE ASSESSMENT YEARS UNDER DISPUTE IN WHICH GROUND NOS: 1 8 AND 9 BEING GENERAL AND NO SPECIFIC ISSUES INVOLVED THEY HAVE B EEN TREATED AS NON- CONSEQUENTIAL. IN THE REMAINING GROUNDS THE SUBST ANCES OF THE ISSUES PAGE 2 OF 14 ITA NOS.897 TO 902/BANG/2 007 2 RAISED ARE REFORMULATED FOR THE SAKE OF CLARITY IN A CONCISE MANNER AS UNDER: - THAT THE CIT (A) ERRED IN DELETING THE UNACCOUNT ED INVESTMENT MADE BY THE ASSESSEE; - THAT THE CIT (A) ERRED IN DELETING THE UNACCOUNT ED INCOME ON UNACCOUNTED INVESTMENT; - THAT THE CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE ASSESSMENTS UNDER DISPUTE WERE ON PROTECTIVE BASIS AND THE APPEALS AGAINST THE ASSESSMENTS MADE SUBSTANTIVELY IN THE CASE OF SARAVANA CONSTRUCTIONS WERE STILL PENDING; & - THAT THE CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CL AIM OF FINANCE PROCURED THROUGH VARIOUS FINANCIERS BY PRODUCING NECESSARY MATERIAL EVIDENCE. 3. AS THE ISSUES RAISED IN THESE APPEALS BEING IDE NTICAL AND COMMON FOR THE SAKE OF CONVENIENCE THEY WERE HEARD CONSIDERED AND DISPOSED OFF IN THIS COMMON ORDER. 4. THE ISSUES IN BRIEF WERE THAT THERE WAS A SEA RCH OPERATION U/S 132 OF THE ACT ON 8.10.2003 IN THE CASE OF L. S AMBHASIVA REDDY AND HIS ASSOCIATE CONCERN SARAVANA CONSTRUCTIONS PVT. LTD [SCPL]. ACCORDING TO THE REVENUE DURING THE COURSE OF SEAR CH INCRIMINATING DOCUMENTS INDICATING A SIZABLE CASH LOANS AVAILED B Y SAMBHASIVA REDDY AND HIS ASSOCIATES AND REPAYMENTS MADE TO VARIOUS PA RTIES WERE UNEARTHED. AS THE ASSESSEE WAS ONE OF THE ALLEGED REGULAR LENDERS OF MONEY TO SCPL HE WAS SUBJECTED TO AN INTENSIVE INVE STIGATION BY THE REVENUE WITH REGARD TO THE TRANSACTIONS APPEARING I N THE SEIZED MATERIALS AND SUBSEQUENTLY THE ASSESSEE WAS SLAPPED WITH NOTICES U/S PAGE 3 OF 14 ITA NOS.897 TO 902/BANG/2 007 3 153C R.W.S 153A OF THE ACT REQUIRING HIM TO FURNIS H THE RETURNS OF INCOME FOR THE AYS UNDER CHALLENGE. 4.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ACCORDING TO THE REVENUE THE ASSESSEE WAS REQUIRED TO EXPLAIN T HE INTEREST PAYMENTS MADE ON VARIOUS DATES FROM 1.4.1997 TO 31.3.2004 TO HIM AS THE LEDGER ACCOUNTS OF THE ASSESSEE APPEARING IN THE BOOKS OF SCPL SHOWED THAT ASST. YEAR INTEREST PAID 1998-99 RS. 26 000 1999-00 5 05 375 2000-01 4 78 050 2001-02 1 91 530 2002-03 1 00 000 2003-04 4 65 250 4.2. HOWEVER BRUSHING ASIDE THE ASSESSEES CONTEN TIONS THAT HE WAS A FINANCE BROKER AND ARRANGED FINANCE THROUGH B ANKERS CHEQUES FOR VARIOUS FINANCIERS AND DID NOT MAINTAIN ANY RECORD O F THOSE TRANSACTIONS THAT HE WAS ALSO DOING SMALL PERSONAL FINANCE BUSIN ESS OUT OF HIS SAVINGS AND LENT MONEY TO SARAVANA CONSTRUCTIONS PVT. LTD HOWEVER NONE OF THE TRANSACTIONS MENTIONED IN THE LEDGER ACCOUNT EXTRAC TS APPEARING IN THE BOOKS OF SARAVANA CONSTRUCTIONS PVT. LTD DONE BY HIM THE AO WAS OF THE FIRM VIEW THAT THE SEIZED MATERIALS INDICATED V ARIOUS PARTIES WHO HAVE LENT MONEY TO SCPL WHICH INCLUDED THE NAME OF T HE PRESENT ASSESSEE; THAT AS PER THE SEIZED MATERIALS AND BOOK S REGULARLY MAINTAINED BY SCPL THAT THE ASSESSEE WAS REGULARLY IN THE LINE O F MONEY LENDING BUSINESS AND HAD ADVANCED MONEY BY CHEQUE AND RECEIVE D THE SAME THAT THOUGH THE ASSESSEE HAD CLAIMED DURING THE COURSE OF HEARING THAT HE WAS A FINANCE BROKER AND ARRANGED FINANCE THROUGH B ANKERS FOR SCPL HE PAGE 4 OF 14 ITA NOS.897 TO 902/BANG/2 007 4 HAD FAILED TO FURNISH THE DETAILS NAMES AND ADDRESS ES AND ALSO BOOKS OF ACCOUNT WITH REGARD TO THE TRANSACTIONS SAID TO HAV E BEEN MADE BY OTHER PARTIES. AS THE ASSESSEE HAD FAILED TO FURNISH CON FIRMATION LETTER FOR NOT HAVING RECEIVED ANY INTEREST AMOUNTS FROM SCPL F OR THE ALLEGED ADVANCEMENT OF LOANS ETC. THE AO WENT AHEAD IN BRI NGING TO THE TAX NET THE INTEREST AMOUNTS FOR THE RESPECTIVE AYS AS DETA ILED SUPRA. 4.3. LIKEWISE BASED ON THE ACCOUNT EXTRACTS OF TH E ASSESSEE APPEARING IN THE BOOKS OF SCPL AND ALSO TURNED DOWN THE ASSESSEES STRONG PLEA THAT HE HAD NOT LENT ANY LOANS TO SCPL THE AO WENT AHEAD IN CONCLUDING THAT THE UNACCOUNTED MONEY LENT TO SCPL W AS NOTHING BUT UNACCOUNTED INVESTMENT IN MONEY LENDING AND ACCORDI NGLY ASSESSED THE SAME PROTECTIVELY FOR THE ASSESSMENT YEARS THE DETAILS OF WHICH ARE AS UNDER : ASST. YEAR MONEY ADVANCED 1998-99 RS. 16 37 500 1999-00 18 92 395 2000-01 18 81 450 2001-02 7 81 470 2002-03 4 43 000 2003-04 13 52 500 5. ASSAILED BY THE FINDINGS OF THE AO THE ASSESSEE HAD APPROACHED THE CIT (A) FOR RELIEF. ANALYZING THE SPI RITED ARGUMENTS PUT- FORTH BY THE ASSESSEES AUTHORIZED REPRESENTATIVE AN D ALSO THE FACTS OF THE ISSUES PLACED BEFORE HIM THE LD. CIT (A) HAD O BSERVED THUS (ON PAGE 6)IT IS SEEN THAT THERE IS CERTAINLY FO RCE IN THE CONTENTIONS OF THE APPELLANT PARTICULARLY THAT THE AO PAGE 5 OF 14 ITA NOS.897 TO 902/BANG/2 007 5 HAS EXAMINED HIS BOOKS AND NOT REJECTED THE SAME AN D THESE SHOW HE IS A SMALL FINANCIER HAVING VERY SMALL CAPIT AL FOR INVESTMENT. THE ACCOUNTANT OF M/S. SARAVANA CONSTR UCTIONS IN HIS STATEMENT HAS STATED THAT LSR STANDS FOR L . SAMBASIVA REDDY L FOR LAKSHMAN. IT HAS BEEN POIN TED OUT BY THE APPELLANT THAT HE HAS NOT BEEN GIVEN THE OPPO RTUNITY TO CROSS-EXAMINING THE ACCOUNTANT AND THAT THE ACCO UNTANT BEING AN EMPLOYEE OF SRI L. SAMBASIVA REDDY WOULD ONL Y GIVE STATEMENTS IN HIS FAVOUR. BEFORE THE ADIT ALSO HE HAD DENIED THAT HE HAD EVER LENT ANY MONEY BUT ONLY PROCU RED FINANCE THROUGH VARIOUS FINANCIERS. THE MOST PERTI NENT FINDING GIVEN BY THE AO THAT THE ADDITIONS REGARDING THE LOAN INVESTMENTS ARE MADE IN THE HANDS OF THE ASSESSEE PROTECTIVELY SINCE M/S. SARAVANA CONSTRUCTIONS HAVE BEEN REQUESTED TO PROVE THE GENUINENESS OF THE CREDIT AP PEARING IN THE BOOKS OF ACCOUNTS IF NOT PROVED WOULD RESULT IN MAKING SUBSTANTIAL ADDITION IN THAT CASE. IN THE ASSESSME NT PROCEEDINGS OF M/S. SARAVANA CONSTRUCTIONS THE CLA IM OF SRI SARAVANA OF HAVING BORROWED FROM SRI TUKRAL HAS NOT BEEN ACCEPTED. IN SUM AND SUBSTANCES THE AO HAS ADMITT ED THAT THE ADDITION IS PROTECTIVE IN THE HANDS OF SRI LAKS HMAN V TUKRAL AND COULD BE SUBSTANTIVE IN THE HANDS OF M/S . SARAVANA CONSTRUCTIONS. IN VIEW OF THIS THE ISSUE REQUIRES TO BE EXAMINED ON A SUBSTANTIVE BASIS ON THE HANDS OF M/S. SARAVANA CONSTRUCTIONS AND THE PROTECTIVE ADDITION IN THE HANDS OF SRI LAKSHMAN V TUKRAL IS HEREBY DELETED AS HE NEITHER HAD THE MEANS NOR THE WHEREWITHAL TO INDULG E IN SUCH MONEY LENDING ACTIVITIES. THE APPELLANT IS A FINANC E BROKER AND THAT IS THE MAIN NATURE OF HIS ACTIVITIES AND A S STATED BY HIM HIS MAIN INCOME IS BY WAY OF COMMISSION.. 6. DISENCHANTED WITH THE FINDING OF THE LD. CIT(A) CITED SUPRA THE REVENUE HAS COME UP WITH THE PRESENT APPEALS. THE THRUST OF THE REVENUES CONTENTIONS WERE REVOLVED THAT PAGE 6 OF 14 ITA NOS.897 TO 902/BANG/2 007 6 - THE UNACCOUNTED INVESTMENTS MADE BY THE ASSESSEE WAS VERY MUCH EVIDENT FROM THE SEIZED MATERIALS; - THE UNACCOUNTED INTEREST INCOME EARNED BY THE ASSESS EE ON THE UNACCOUNTED INVESTMENT WAS RECORDED IN THE SEIZ ED MATERIALS; - THE ARGUMENT OF THE ASSESSEE THAT THE AO WITHOUT REJECTING THE BOOKS OF ACCOUNT HAD BROUGHT TO TAX THE UNACCOUNTED INVESTMENT DOESNT HOLD WATER SINCE THE SEARCH ASSESSMENTS WERE DONE ON THE BASIS OF THE SEIZED MA TERIALS WITH REFERENCE TO REGULAR BOOKS OF ACCOUNTS; - THE ARGUMENT OF THE ASSESSEE WHICH WAS CONCEDED BY T HE LD. CIT (A) THAT THE ASSESSEE WAS A SMALL FINANCIER HA VING VERY SMALL CAPITAL FOR INVESTMENT WILL NOT HOLD THE FO RT WHEN THERE WAS HUGE UNACCOUNTED LOAN ADVANCED BY THE ASSE SSEE AND INTEREST INCOME EARNED AGAINST IT WAS EVIDENT FROM THE SEIZED MATERIALS; & - THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CL AIM OF FINANCE PROCURED THROUGH VARIOUS FINANCIERS BY PRODU CING NECESSARY MATERIAL EVIDENCE 6.1. PLACING STRONG RELIANCE ON THE ABOVE FACTS T HE LD. D R DURING THE COURSE OF HEARING WAS OF THE FIRM VIEW THAT THE FINDING OF THE LD. CIT (A) IS LACKING CONVICTION WHICH REQUIRES T O BE ANNULLED. 6.2. ON HIS PART THE LD. A R SUBMITTED THAT HIS C LIENT HAD NEVER LENT ANY MONEY DURING THE COURSE OF PERIOD UNDER CHAL LENGE TO SCPL HOWEVER CONCEDED THAT HE LENT SERVICES IN PROCURIN G FINANCE THROUGH CHEQUES FROM VARIOUS PARTIES AS HE WAS ONLY A FINANC E BROKER. THE LD. A R HAD ALSO VEHEMENT IN HIS INSISTENCE THAT HI S CLIENT WAS A SMALL FINANCIER HAVING VERY SMALL CAPITAL FOR INVESTMENT A ND THUS LENT NO MONEY OR MADE ANY INVESTMENT WITH SCPL AS PROJECTED BY THE REVENUE BUT AT THE SAME TIME HE HAD ACKNOWLEDGED THAT HIS CLIENT PROCURED FINANCE FOR SCPL THROUGH VARIOUS FINANCIERS. IT WAS THEREFOR E PLEADED THAT SINCE PAGE 7 OF 14 ITA NOS.897 TO 902/BANG/2 007 7 THE LD. CIT (A) HAD ARRIVED AT A CONCLUSION IN A JU DICIOUS MANNER AND THUS NO INTERFERENCE IS CALLED FOR AT THIS STAGE. 6.3 FURTHER IT WAS SUBMITTED BY THE LEARNED AR THA T ASSESSMENT IS COMPLETED U/S 153C OF THE ACT SINCE NO SEARCH O R REQUISITION WAS MADE IN HIS CASE. THEREFORE IT WAS CONTENDED THAT MENT ION IN THE ASSESSMENT ORDER THAT THE SAME IS COMPLETED U/S 143(3) RWS 153 A IS WRONG. IT WAS STATED BY THE LEARNED AR THAT NO MATERIAL BELONGING TO THE ASSESSEE WAS SEIZED IN THE COURSE OF SEARCH CONDUCTED IN THE PRE MISES OF L SAMBHASIVA REDDY AND SARAVANA CONSTRUCTIONS. THE REFORE RELYING ON THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N CHANDRANI V ACIT 231 CTR 474 AND THE ORDER OF THE TRIBUNAL IN THE CASE OF P SRINIVAS NAIK V ACIT (2008) 114 TTJ (BANG ALORE) 856 IT WAS CONTENDED THAT ASSESSMENT COMPLETED U/S 153 IS BAD IN LAW. IT WAS SUBMITTED THAT THE LANGUAGE USED IN SECTION 153C IS MATERIALLY DIFFERENT FROM THE LANGUAGE USED UNDER SECTION 158BD. AS PER SECTION 158BD IT WAS SUBMITTED; IF ANY UNDISCLOSED INCOME RELATES TO OTHER PERSON THEN ACTION AGAINST SUCH PERSON CAN BE TAKEN PROVIDED SU CH UNDISCLOSED INCOME IS REFERABLE TO THE DOCUMENT SEIZED DURING THE COUR SE OF SEARCH. HOWEVER SECTION 153C SAYS THAT IF VALUABLE OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSONS ARE SEIZED THEN ACTION U/S 153C CAN BE TAKEN AGAINST THAT PERSON. IT WAS STAT ED BY THE LEARNED AR THAT IN THE INSTANT CASE ONLY ENTRIES RELATING TO T HE ASSESSEE IS RECORDED IN THE BOOKS OF ACCOUNTS OF THE SARAVANA CONSTRUCTI ON WHICH WAS FOUND IN THE COURSE OF SEARCH. THIS BY ITSELF WOULD NOT B E SUFFICIENT TO INITIATE AND COMPLETE ASSESSMENT U/S 153C OF THE ACT. IT WA S ARGUED THE PAGE 8 OF 14 ITA NOS.897 TO 902/BANG/2 007 8 CORRECT COURSE OPEN FOR THE REVENUE IS THAT IT OUGH T TO HAVE ISSUED NOTICE U/S 148 AND TO COMPLETE REGULAR ASSESSMENT U/S 143( 3) OF THE ACT. 6.4 TO DRIVE HOME HIS POINT HE HAD FURNISHED A P APER BOOK CONTAINING 1 18 PAGES WHICH CONSIST OF COPIES OF (I) NOTICES ISSUED U/S 153C OF THE ACT; (II) CONFIRMATION LETTERS FROM VAR IOUS FINANCIERS (III) FINDING OF THE TRIBUNAL IN THE CASE OF P.SRINIVAS N AIK V. ACIT ETC. 7. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS D ILIGENTLY PERUSED THE RELEVANT RECORDS AND ALSO THE DOCUMENTA RY EVIDENCES PRODUCED BY THE LD. A R DURING THE COURSE OF HEARING IN THE SHAPE OF A PAPER BOOK. 7.1. DURING THE COURSE OF ACTION U/S 132 OF THE AC T IN THE RESIDENTIAL PREMISES OF L SAMBHASIVA REDDY AND HIS A SSOCIATE CONCERN NAMELY SCPL THE REVENUE PURPORTED TO HAVE UNEARTH ED AMONG OTHERS DOCUMENTS CITING HUGE CASH LOAN TRANSACTIONS AND RE PAYMENTS OF LOANS INTEREST ETC. ON EXAMINATION OF THE SEIZED MATERI ALS I.E. BOOKS OF ACCOUNT OF SCPL THE AO HAD NOTICED THE ENTRIES PER TAINING TO THE PRESENT ASSESSEE WITH REGARD TO PAYMENTS (INVESTMENT S) INTEREST PAYMENTS ETC. ON THE BASIS OF WHICH THE ASSESSEE WAS CALLED UPON BY WAY OF ISSUANCE OF NOTICE U/S 153C R.W.S 153A OF TH E ACT TO FURNISH HIS RETURNS OF INCOME AND SO ON AND SO FORTH. THE AFTE RMATH OF THE ISSUANCE OF THE SAID NOTICE HAS SINCE BEEN DISCUSSED/ NARRAT ED IN THE FORE-GOING PARAGRAPHS. PAGE 9 OF 14 ITA NOS.897 TO 902/BANG/2 007 9 8. THE CRUX OF THE ISSUE BEFORE US IS - WHETHER THE ASSESSING OFFICER WAS WITHIN HIS REALM TO CALL UPON THE ASSES SEE TO FURNISH HIS RETURNS OF INCOME ON THE SOLE REASONING THAT THE AS SESSEES NAME WAS FINDING A PLACE [LEDGER ACCOUNT] IN THE BOOKS OF AC COUNT OF SCPL? IT MAY NOT BE OUT OF PLACE TO MENTION HERE THAT NO BOOKS O F ACCOUNT OR DOCUMENT BELONGING TO THE ASSESSEE WAS UNEARTHED DURING THE COURSE OF OPERATION U/S 132 OF THE ACT IN THE PREMISES OF SCPL. SUCH B EING A GROUND REALITY WE HAVE BEEN BURDENED WITH A TASK OF ANALYZING THE I SSUE AS TO WHETHER THE AO WAS WITHIN HIS DOMAIN TO ISSUE A NOTICE U/S 153C R.W.S. 153A OF THE ACT? 8.1. LET US HAVE A GLIMPSE OF WHAT S.153C OF THE A CT PRECISELY SAYS? 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION WHERE THE ASSESSING OFFICER IS SATISFI ED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTIC LE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A THEN THE BO OKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH S UCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A 8.2. ON A PLAIN READING OF S.153C WE FIND THAT W HERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY BULLIO N JEWELLERY OR OTHER PAGE 10 OF 14 ITA NOS.897 TO 902/BANG/ 2007 10 VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A THEN............. .............THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. 8.3. HOWEVER IN THE PRESENT CASE NEITHER BOOKS O F ACCOUNT NOR ANY INCRIMINATE DOCUMENTS PERTAINING TO THE ASSESSEE WAS SEIZED WHEN A SEARCH TOOK PLACE IN THE PRECINCT OF SCPL. THUS IN OUR CONSIDERED VIEW THE AO WAS NOT WITHIN HIS DOMAIN TO INITIATE ACTION U/S 153C R.W.S. 153A OF THE ACT AGAINST THE ASSESSEE. 8.3.1. IN THIS CONNECTION WE RECALL THE FINDING O F THE HONBLE BENCH IN THE CASE OF P.SRINIVAS NAIK V. ACIT REPORTED IN (2008) 114 TTJ (BNG) 0856 WHEREIN THE HONBLE BENCH HAD OBSERVED T HAT 7. WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDIS PUTED FACT THAT BOOKS OF ACCOUNTS OR DOCUMENT DO NOT BELO NG TO THE ASSESSEE AS THESE WERE SEIZED FROM THE PREMISE S OF SHRI REDDY. IT IS NOWHERE STATED THAT THESE BOOKS O F ACCOUNT OR DOCUMENTS SHOWED THAT ALL THE TRANSACTIO NS BELONGING TO THE ASSESSEE. SUCH BOOKS OF ACCOUNT O R DOCUMENTS CONTAINED THE TRANSACTIONS RELATING TO TH E GROUP CONCERNS OF SHRI REDDY. NO VALUABLE BELONGIN G TO THE ASSESSEE HAS BEEN SEIZED DURING THE COURSE OF SEARCH. THE TERMS BELONGING IMPLIED SOMETHING MORE THAN THE IDEA OF CASUAL ASSOCIATION. IT INVOLVES T HE NOTION OF CONTINUITY AND INDICATES ONE MORE OR LESS INTIMAT E PAGE 11 OF 14 ITA NOS.897 TO 902/BANG/ 2007 11 CONNECTION WITH THE PERSON OVER A PERIOD OF TIME. THE BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE COU RSE OF SEARCH HAVE A CLOSE ASSOCIATION WITH THE GROUP C ONCERN OF SHRI REDDY. IT RECORDS THE TRANSACTION CARRIED OUT BY THAT GROUP. IT DOES NOT RECORD THE TRANSACTION CARRIED OUT BY THE ASSESSEE. UNDER WEALTH-TAX ACT ASSETS BELONGING TO ASSESSEE WERE TAXABLE. THE EXPRESSION BELONGING TO THE ASSESSEE CONNOTES BOTH THE COMPLETE OWNERSHIP AND LIMITED OWNERSHIP OF INTERES T OF COURSE BELONGING TO IS CAPABLE CONNOTING INTEREST WHICH IS LESS THAN ABSOLUTE PERFECT LEGAL TITLE. HOWEVER THERE SHOULD BE SOME LIMITED OWNERSHIP OF INTEREST IF IT IS TO BE PERMITTED THAT THE ASSETS BELONGS TO THE ASSESSE E. IN THE INSTANT CASE DOCUMENTS OR BOOKS OF ACCOUNT FOU ND DURING THE COURSE OF SEARCH AND SEIZED CANNOT BE TE RMED TO BE INDICATING ANY LIMITED INTEREST OF THE OWNERSH IP OF THE ASSESSEE IN SUCH BOOKS OF ACCOUNT OR DOCUMENTS. THE LANGUAGE USED IN SECTION 153C IS MATERIALLY DIFFERE NT FROM THE LANGUAGE USED UNDER SECTION 158BD. AS PER SECTION 158BD IF ANY UNDISCLOSED INCOME RELATES TO OTHER PERSON THEN ACTION AGAINST SUCH OTHER PERSON CAN B E TAKEN PROVIDED SUCH UNDISCLOSED INCOME IS REFERABLE TO THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. HOWEVER SECTION 153C SAYS THAT IF VALUABLE OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THEN ACTION UNDER SECTION 153C CAN BE TAKEN AGAINST THAT PERSON. IN THE INSTANT CASE WE ARE S ATISFIED THAT BOOKS OF ACCOUNT OR DOCUMENTS DO NOT BELONG TO THE ASSESSEE AND THEREFORE THE AO WAS NOT JUSTIFIED I N INITIATING ACTION UNDER SECTION 153A READ WITH SECT ION 153C OF THE INCOME-TAX ACT. 8.3.2. INCIDENTALLY THE ABOVE NAMED ASSESSEE WAS O NE OF THE PERSONS LIKE THE PRESENT ASSESSEE [ALLEGED TO HAVE LENT CASH LOANS REPAYMENT OF CASH LOANS AND PAYMENT OF INTEREST TO SA VARANA CONSTRUCTIONS PVT. LTD.] AGAINST WHOM THE REVENUE H AD INITIATED PAGE 12 OF 14 ITA NOS.897 TO 902/BANG/ 2007 12 PROCEEDINGS U/S 153C R.W.S.153A OF THE ACT LIKEWISE IN THE CASE OF THE PRESENT ASSESSEE. 8.3.3. IN THE CASE OF VIJAYBHAI N. CHANDRANI V. AC IT REPORTED IN (2010) 231 CTR 0474 (GUJ) THE HONBLE GUJARAT HIGH COURT HAD RULED THAT 13. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE UNDER SECTION 153C AND ASSESSING OR REASSESSING INCOME OF SUCH PERSON IS THAT THE MONEY BULLION JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED RESORT CANNOT BE HAD TO THE PROVISIONS OF SECTION 153C OF THE ACT. 8.4. WE SHALL ANALYZE THE ISSUE ON MERITS ANGLE TOO. (I) THE AOS CONCLUSION WAS BAS ED SOLELY ON THE DOCUMENTS PURPORTED TO HAVE BEEN SEIZED WHICH INDICTED THAT S AMBHASIVA REDDY AND HIS ASSOCIATE CONCERN SCPL INDULGED IN CASH TRA NSACTIONS WITH VARIOUS PARTIES WHICH INCLUDED THE ASSESSEE. HOWEVER NO D OCUMENTARY EVIDENCE WAS BROUGHT ON RECORD TO REMOTELY SUGGEST THAT THE P RESENT ASSESSEE HAD ADVANCED MONIES TO SAMBHASIVA REDDY AND RECEIVED INTEREST PAYMENTS. (II) HOWEVER ON THE OTHER HAND T HERE WAS CONSIDERABLE FORCE IN THE CONTENTION OF THE ASSESSEE THAT HE WAS ONLY A FINANCE BROKER AND DID NOT HAVE FINANCIAL CAPACITY FOR MONEY LENDING TO THE EXTENT AS ASSESSED BY THE AO. PAGE 13 OF 14 ITA NOS.897 TO 902/BANG/ 2007 13 (III) WE HAVE ALSO SCRUPULOUSLY PER USED THE REASONING OF THE AO IN HIS IMPUGNED ORDERS WHEREIN HE HAD STATED E. G. THAT 9.4. (X) THE ASSESSEE HAS CONTENDED THAT NONE OF THE INTEREST MENTIONED IN THE LEDGER ACCOUNT EXTRACT HA S BEEN RECEIVED BY HIM. THIS CONTENTION IS NOT ACCEPT ABLE FOR THE REASON THAT THE ENTIRE MONEY ADVANCED AS APPEARING IN THE LEDGER ACCOUNT EXTRACT OF M/S. SAR AVANA CONSTRUCTIONS PVT. LTD. HAS NOT BEEN DISCLOSED BY T HE ASSESSEE TO THE DEPARTMENT IN HIS REGULAR RETURN OF INCOME FILED. WHEN THE MONEY ADVANCED IS TOTALLY UNACCOUNTED THE INTEREST EARNED ON SUCH ADVANCE IS ALSO UNACCOUNTED INTEREST INCOME EARNED BY THE ASSESSEE. IN THIS CONNECTION WE WOULD LIKE TO POINT OUT THAT THOUGH THE LEDGER ACCOUNT EXTRACT OF SCPL HAD SHOWN WITH R EGARD TO MONEY ADVANCED AND INTEREST PAYMENTS ETC. IN THE NAME OF THE ASSESSEE HOWEVER THE AO HAD NOT BROUGHT ON RECORD ANY CLINCH ING DOCUMENTARY EVIDENCE TO SHOW THAT THE ALLEGED INTEREST PAYMENTS FOUND ITS WAY TO THE ASSESSEE. YET AGAIN THE AO HAD FURTHER JUSTIFIED HIS ACTION IN BRINGING TO TAX NET (IN THE HANDS OF THE ASSESSEE) THE ALLEGED INVESTMENTS AND RECEIPT OF INTERESTS ETC. ON THE PREMISE THAT 9.4. (XI) THE ASSESSEE HAS FAILED TO SUBMIT EITHER THE CONFIRMATION FOR HA VING NOT RECEIVED THE INTEREST OR ANY OTHER EVIDENCE IN SUPPORT OF HIS CLA IM TO PROVE THAT HE HAS NOT ADVANCED MONEY AND RECEIVED THE INTEREST INC OME. THE REASONING OF THE AO CAN A T BEST BE VIEWED AS RATHER STRANGE AND UN-HEARD OF. WHEN THE ASSESSEE HAS BEEN STEADILY PAGE 14 OF 14 ITA NOS.897 TO 902/BANG/ 2007 14 MAINTAINING THAT HE HAD NEITHER LENT ANY CASH LOAN(S ) TO SAMBHASIVA REDDY AND HIS ASSOCIATE CONCERN NOR RECEIVED ANY INTE REST FROM THEM HOW COULD HE BE EXPECTED TO PROCURE A CONFIRMATION LETTER TO SHOW HIS INNOCENCE ON THIS SORDID AFFAIR? AS A MATTER OF F ACT THE ONUS WAS AT THE DOORSTEP OF THE REVENUE TO DERAIL THE ASSESSEE S ASSERTION WHICH IN OUR CONSIDERED VIEW IT HAD FAILED IN ITS ENDEAVOUR . 8.5. IN AN OVER ALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON JUDICIAL AS WELL AS ON MERITS - IN THE FORE-GOING PARAGRAPHS AND IN CONFORMITY WITH THE FIN DINGS OF THE JURISDICTIONAL HONBLE BENCH AS WELL AS THE HONBLE GUJARAT HIGH COURT CITED SUPRA WE ARE OF THE FIRM VIEW THAT WHEN THE CONDITIONS PRECEDENCE FOR ISSUANCE OF NOTICE U/S 153C R.W.S. 153A WERE NO T FULFILLED AS RIGHTLY RULED BY THE HONBLE GUJARAT HIGH COURT ANY ACTION T AKEN U/S 153C OF THE ACT STANDS VITIATED. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT THE REVENUES APPEALS FOR ALL TH E ASSESSMENT YEARS UNDER CHALLENGE ARE DISMISSED. THE ORDER PRONOUNCED ON FRIDAY THE 11 TH DAY OF FEBRUARY 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMB ER COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT CONCERNED. 5. THE DR 6. GF BY ORDER MSP/10.2. ASSISTANT REGISTRAR ITAT BANGALORE.