Mutha Parasram Dhanaji & Co. & Ors. v. Dy. CIT & Ors.

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153CNotice issued under section 153A--Assessee's contention was that the assessment under section 153C in the case of the assessee was bad in law as no notice as per the provisions of section 153C was issued to the assessee. In fact, the alleged notice was issued under section 153A. He had contended that, in fact, the search action was conducted in the case of partners of the firm and the firm being distinct entity from its partners under the IT Act was a third party. Since the assessee was not a searched party, the notice issued under section 153A was bad in law and hence the assessments framed in pursuance to issuance of invalid notice have also got invalidated. Held: It was not the case of the assessee that no incriminating material was found against the assessee during the search action against its partners. The assessee firm had never raised any objection that no incriminating material was found against it, rather had returned the additional income in pursuance to the notice issued to it. Under such circumstances, the assessee had no case that any incriminating material was not found against it or that the satisfaction recorded by the concerned AO was wrong or vitiated. In the absence of such a case, how could it be said that any right of the assessee has been infringed or affected by mere not mentioning the 'section 153C' in the body of the notice which had been duly issued as per the provisions of section 153A as prescribed therein under the provision of section 153C itself. So, in view of the peculiar facts and circumstances of this case, no prejudice had been caused to the assessee, so far so, the non-mentioning of section 153C in the body of the notice in question was concerned.

Income Tax Act, 1961 Section 153A

Income Tax Act, 1961 Section 153C

Applied:Manish Maheshwari v. ACIT (2007) 289 ITR 341 (SC).

REFERRED : Jindal Stainless Steel v. ACIT (2009) 120 ITD 301 (Del, Dy. CIT v. ASP Software Solutions (P) Ltd. (2013) 84 DTR 38 (Hyd), Bombay High Court in the case of CIT v. Tirupati Oil Corporation and ACIT v. Dilip Kumar Balar (2011) 8 ITR 229 (Bang-Trib).

FAVOUR : Against the assessee.

A.Y. : 2004-05 to 2007-08

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153AAddition for undisclosed interest income--During search in the residential premises of R, partner, certain documents were found and seized, including certain documents indicating receipt of interest income on advances. The CIT(A) held that that the AO had rightly quantified interest income at 3 per cent per month and added the excess income. Held: The assessee had actually charged interest @ 3 per cent per month as against 1.5 per cent per month recorded in the books. On the basis of this revelation, the AO arrived at a conclusion that the assessee was suppressing interest receipt by 50 per cent and accordingly added a sum of Rs. 4,07,918 to returned income. The assessee, in the books of account, had shown an interest income of Rs. 4,07,918. The fact which could not be ignored in this case was that the AO had correlated the entries relating to six persons only, whereas as per the assessee, there were about 500 to 600 persons to whom the advances were made. There was also no direct evidence on the file that the assessee in the past had charged the interest at the double rate than shown in the books of account from all the persons with whom he had made such transactions. Hence, in view of the overall facts and circumstances of the case, the interest of justice would be best served if the additions were reduced considering the submission of the assessee that it was not possible that the assessee had been charging same rate of interest from all the borrowers in the past. Accordingly, the addition made by the lower authorities was reduced on this issue to the extent of 50 per cent of the added amount.

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