Padam Chand Jain & Co., Sirsa vs Assessee

Padam Chand Jain & Co., Vs. The A.C.I.T., #E-125, New Anaj Mandi, Central Circle I, Sirsa. Chandigarh. PAN: AAGFP1263J (Appellant) (Respondent)

Appellant by : Shri M.R.Sharma Respondent by : Shri S.K.Mittal, DR

Date of hearing : 23.03.2015 Date of Pronouncement : 25.03.2015

PER BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed

against the order of learned Commissioner of Income

Tax(Appeals)(Central), Gurgaon dated 8.9.2014, for

assessment year 2008-09.

2. Briefly, the facts are that search and seizure action

under section 132(1) of the Act was conducted on M/s Om

Commodity Group of cases on 25.3.2008. Following premises

were covered under section 132(1) of the Act :

i) M/s Om Commodity Brokers ii) Shri Pankaj Khemka iii) Shri Raj Kumar Jallan 2

iv) Shri Raj Kumar Jallan, Locker No.55, Central Bank of Punjab, Sirsa

3. Further on 25.3.2008, an action under section 133A

of the Act was also carried out on by the Investigation Wing at

the business premises of the assessee firm, M/s Padam Chand

Jain & Co. and Shri Pankaj Khemka is one of the partners in

the assessee firm. All the above cases are interlinked group

of cases with the case of M/s Om Commodity Brokers group of

cases. Notice under section 153C of the Act was issued, in

response to which, the assessee stated that the return

already filed may be treated as return filed under section

153C of the Act. The assessee is engaged in the trading of

grains and also in receipt of commission on trading. It is

noted in the assessment order that during the course of

survey under section 133A of the Act in the case of the

assessee firm cash of Rs.6,76,110/- was found. Shri Pankaj

Khemka, partner of the assessee firm was confronted with the

same and he stated that as per the cash book, cash available

as on date was Rs.6,09,547/-. It was stated regarding excess

cash that the same might be belonging to another partner

Smt.Shakuntla Devi. The cash book was also examined to

consider the issue of excess cash found during the survey.

The explanation of the assessee was not found satisfactory

with regard to excess cash. No evidence was produced to

show that the money belonged to Smt.Shakuntla Devi.

Therefore, the amount of Rs.66,563/- was treated as income

from undisclosed sources and was added to the income of the

assessee.

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4. The assessee challenged the assessment order before

the learned CIT (Appeals) and it was stated that the survey

under section 133A of the Act cannot be the basis for framing

assessment under section 153C of the Act and that the

Assessing Officer has erred in making the addition of

Rs.66,563/-. It was also claimed that no incriminating

documents or valuable were found during the course of

search. Therefore, proceedings initiated under section 153C

of the Act being void are liable to be cancelled. The learned

CIT (Appeals), however, noted that the search and seizure

operations were conducted on the same date of 25.3.2008. In

other words, the survey operation on the business premises of

the assessee emanated from the search operation on Shri

Pankaj Khemka, partner of the assessee firm. It was also

noted that intrinsic relationship between a firm and its

partners need no elaboration and consequently, the

proceedings under section 153C of the Act are held to be

valid. As regards addition on merit, the learned CIT

(Appeals) confirmed the addition of Rs.66,563/- being excess

cash as no satisfactory explanation was filed. The appeal of

the assessee was accordingly dismissed.

4. The assessee in the original Form No.36 filed for the

purpose to challenge the impugned order raised the grounds

of appeal challenging the assessment framed under section

153C as a result of action under section 133A of the Act. It

is, therefore, pleaded that the assessment order under section

153C may be cancelled. It was also claimed that no 4

incriminating material was found against the assessee during

the course of search under section 132(1) of the Act.

Therefore, the assessment order under section 153C of the Act

needs to be cancelled. The assessee, however, later on filed

revised form No.36 raising altogether different grounds of

appeal claiming that no satisfaction under section 153C of the

Act have been recorded for framing the assessment and that

the addition of Rs.66,563/- is bad in law.

5. We have heard the learned representatives of both

the parties and perused the material available on record.

6. The learned counsel for assessee was asked to

explain as to why he has changed the grounds of appeal as

raised originally in the revised grounds of appeal without

leave to the Tribunal. The learned counsel for assessee was

not able to answer anything satisfactorily. He has also not

able to explain that when the issue of satisfaction under

section 153C of the Act was not raised before the learned CIT

(Appeals) or in the original grounds of appeal, why the

assessee without leave to the Tribunal changed the grounds of

appeal in the revised form No.36. The learned counsel for

assessee was not able to answer anything. Further the

addition of Rs.66,563/- was not challenged in the original

grounds of appeal and the learned counsel for assessee was

not able to answer how he could change the grounds of appeal

without raising any additional ground of appeal in the manner

as done by the assessee.

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7. We may note here that the grounds of appeal raised

in the revised form No.36 were not raised in the original

grounds of appeal. No application has been filed by the

assessee seeking permission to raise the additional grounds of

appeal. Further the issue of satisfaction under section 153C

of the Act was not raised or decided by the learned CIT

(Appeals). Therefore, these revised grounds cannot be raised

in the grounds of appeal. Further addition on merits was

also not challenged in the original grounds of appeal.

Therefore, without making application for raising additional

grounds of appeal, such course taken by the assessee is not

permissible. Both these grounds raised in revised Form

No.36 are accordingly rejected.

8. Now we are left with the original grounds of appeal

for consideration.

9. We have considered the rival submissions. The

assessee specifically raised the issue before the learned CIT

(Appeals) that as a result of survey under section 133A of the

Act, the assessment order under section 153C of the Act is

liable to be cancelled. Further it was challenged that since

no material was found against the assessee in search,

therefore, no assessment could be framed under section 153C

of the Act. The impugned order clearly shows that the search

under section 132(1) of the Act was conducted on 25.3.2008

in the case of M/s Om Commodity Brokers, Shri Pankaj

Khemka, Shri Raj Kumar Jallan and his locker. No

incriminating material was found against the assessee during 6

the course of search under section 132(1) of the Act in this

group of cases. However, on the same date on 25.3.2008,

survey under section 133A of the Act was carried out by

Investigation Wing at the business premises of the assessee

firm and excess cash of Rs.66,563/- was found, for which

addition was made in the case of the assessee firm under

section 153C r.w.s. 143(3) of the Act vide assessment order

dated 30.12.2009. According to section 153C of the Act where

the Assessing Officer is satisfied that any money, bullion,

jewellery or other valuable article or thing or books of account

or other documents seized or requisitioned belongs or belong

to a person other than the person referred to in section 153A

of the Act, then the books 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 such 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 of the Act. According to section

153A of the Act, where the search is initiated under section

132 of the Act or books of account, documents or other assets

are requisitioned under section 132A of the Act, the Assessing

Officer shall issue notice under section 153A of the Act to

assess or reassess income of six assessment years

immediately preceding to assessment year relevant to previous

year in which search is conducted or requisition is made. The

combined reading of these provisions would clearly show that

there should be search conducted under section 132 of the 7

Act or requisition made under section 132A of the Act and

where the Assessing Officer is satisfied that the money,

bullion, jewellery or other valuable article, etc. belong to such

person other than the person referred to in section 153A,

shall hand over such incriminating material to the Assessing

Officer to proceed against such person under section 153C of

the Act. Therefore, the requirement of law for proceedings

under section 153C of the Act has been that there should be

search under section 132 of the Act or requisition under

section 132A of the Act and during the course of search some

incriminating material should be found against some other

person other than the person searched or requisition made

under section 132A of the Act. In the case of the present

assessee firm, it appears that no incriminating material was

found in the case of the person searched against the assessee

firm. The excess cash was found in the case of the assessee

firm in the survey under section 133A of the Act only.

Therefore, the assessee was justified in contending before the

learned CIT (Appeals) that the survey under section 133A of

the Act could be made the basis for assessment framed under

section 153C of the Act.

10. This point was not addressed to by the learned CIT

(Appeals) while dismissing the appeal of the assessee. Since

it is a legal issue and goes to the root of the matter and

requires consideration of the entire seized material, therefore,

in our view, the matter requires reconsideration at the level of

the learned CIT (Appeals). We accordingly set aside the 8

impugned order and restore the matter in issue to the file of

the learned CIT (Appeals) with direction to redecide the issue

strictly in accordance with law by giving reasonable sufficient

opportunities of being heard to the assessee.

11. In the result, the appeal of the assessee is allowed

for statistical purposes.

Order pronounced in the open court on this 25th day of

March, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 25 t h March, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh