ORDER
By the Bench :
These cross-appeals by the assessee and the Revenue are directed against the order of the learned CIT(A)-III, Ahmedabad, dt. 23rd Aug., 2008 in an appeal against assessment framed under s. 153A r/w s. 153C of the IT Act (the Act).
2. A search was conducted pursuant to a warrant of authorisation issued under s. 132(1) of the Act in case of Sanjay R. Shah and Meghmani Industries Ltd. The documents were found and seized from the residential premises of Shri Lalit K. Patel and Kantilal M. Patel at 31, Park Hills Society, Ahmedabad. The AO noticed that pp. 87 to 91 of Annex. A-4 seized from the residence of Lalit K. Patel are handwritten estimate for the purpose of land, building and machinery works for Meghmani Organics Ltd. (the assessee herein). Pages 84 to 86 of Annex. A-4 seized from the residence of Lalit K. Patel are statements of steel issued and steel deducted, details of cement issued and deducted on behalf of Meghmani Organics Ltd., Panoli. The AO, therefore, held that since these papers belong to Meghmani Organics in view of s. 153C(1) of the Act proceedings were initiated for framing assessment as per s. 153A of the Act. The AO also noted as under :
"Although the seized documents do not reveal any specific undisclosed income on verification, but the proceedings validly iniated have to be completed in the manner prescribed under s. 143(2) and 143(3) of the Act."
3. The assessee filed return of income in pursuant to notice under s. 153A of the Act declaring total income as declared in the original return. The AO completed assessment whereby the claim of deduction under ss. 80HHC and 80-IA of the Act was reduced. No addition was either proposed or made in respect of so-called papers found during the course of search and seized from the premises of Lalit K. Patel.
4. The assessee preferred further appeal before the learned CIT(A). The assessee challenged inter alia action for framing assessment under s. 153A r/w s. 153C of the Act. It was contended that the documents seized during the search do not belong to the assessee but maintained by Kantilal M. Patel himself since he is working as supervisor in professional capacity supervising the factory construction of the assessee at Paloni. The assessee has engaged the services of Kantilal M. Patel for supervision of the construction and for supervising the construction bills raised by the independent contractor. Therefore, the documents do not belong to the assessee, but belong to Kantilal M. Patel. Even the AO himself has noted that the seized documents do not reveal any undisclosed income. The issues raised by reducing the claim of deductions under ss. 80HHC and 80-IA of the Act are all subject-matter of appeal in original assessment proceedings and the same have attained finality by the appellate order and the Tribunal in cross-appeals by the assessee as well as by the Revenue. Therefore, the assessments not being pending cannot be refrained by resorting to the provisions of s. 153 r/w s. 153A of the Act particularly when no documents belonging to the assessee have been found and the said documents do not reveal any undisclosed income. The learned CIT(A) held that he is not a proper forum before whom the validity of proceedings under s. 153C of the Act can be challenged. The assessee is in further appeal before us.
5. As regards allowing claim under s. 80HHC of the Act the Revenue is in further appeal before us.
6. The learned counsel for the assessee Shri S.N. Soparkar submitted that the AO has observed that some documents were found and seized from the residential premises of Lalit K. Patel and Kantilal M. Patel. The documents found from the residence of Lalit K. Patel are in his own handwriting for the estimate of the proposed building on behalf of the assessee. Therefore, these documents cannot be considered as belonging to the assessee. Similarly, the documents found from the premises of Kantilal M. Patel are statements of steel and cement issued and deduction thereof for the purpose of computing the amount payable to the contractor. Though the work is to be carried out on behalf of the assessee, the documents are the records maintained by Kantilal M. Patel so as to raise his own supervision charges bill. How and in what, manner Shri Kantilal M. Patel maintains his record is not under the control of the assessee. At any rate the documents do not "belong to the assessee". The prerequisite for initiating proceedings under s. 153C of the Act is that any money, bullion, jewellery or other valuable articles or things or documents seized or requisitioned belong to a person other than person in whose case warrant of authorisation is issued under s. 132(1) of the Act. Since none of the documents belongs to the assessee, though they may be referable to the work of the assessee the same cannot be considered as "belonging to the assessee". It is also admitted by the AO that the seized documents do not reveal any undisclosed income. The reductions in claim under s. 80HIIC and 80-IA have all along been subject of litigation and now have attained finality prior to search. He accordingly pleaded that initiation of proceeding under s. 153C r/w s. 153A is bad in law and hence the impugned order be struck down. Reliance was placed on the decision of Tribunal Calcutta Bench in the ease of LMJ International Ltd. v. Dy. CIT [2008] 119 TTJ (Kol) 214 : [2008] 14 DTR (Kol)(Trib) 540 . He also invited our attention to the circular issued by CBDT No. 7 of 2003, dt. 15th Sept., 2003 [ [2003] 184 CTR (St) 33]. In the said circular it has been opined that only the assessment or reassessment pending on the date of initiation of search under s. 132 of the Act shall abate but it was also clarified that the appeal revision or rectification proceedings pending on the date of initiation of search under s. 132 of the Act shall not abate. Therefore, what abates is only the pending assessment before the AO. Once the assessment or reassessment has been framed and the subject-matter of appeal before any higher forum such assessment shall not abate. The finality of the dispute raised in the original assessment and settled therein cannot be reagitated either by the assessee or by the AO in proceedings under s. 153A r/w s. 153C of the Act. Since the appeal docs not abate, the appellate proceeding shall be separately continued. But the issue settled therein cannot be re-examined by the AO. The fresh assessment can only be qua the documents found belonging to the assessee. If either the documents do not belong to the assessee or if the documents do not reveal any undisclosed income, proceedings under s. 153C of the Act cannot be initiated. Reliance was also placed on the decision of the Tribunal Bangalore Bench in the case of P. SrinLuas Naik v. Asstt CIT [2008] 114 TTJ (Bang) 856 : [2008] I DTR (Bang)(Trib) 347: [2008] 24 SOT 10 (Bang) .
7. The learned Departmental Representative, Shri K. Sridhar submitted that the wordings of s. 153C of the Act are different than the earlier provisions contained in s. 158BD of the Act. As per s. 158BD of the Act action can be initiated where the AO is satisfied that undisclosed income belonging to any person other than person searched under s. 132 of the Act. Whereas under s. 153C of the Act notwithstanding anything contained in ss. 139, 147, 148, 149, 151 and 153 of the Act, where the AO is satisfied that any money, bullion, articles or things or books of account or documents seized and requisitioned belonging to or belong to a person other than a person in whose case search is carried under s. 132(1) of the Act the assessment is to be framed in terms of s. 153A of the Act. There is no mention that the valuables articles etc. or documents seized and contained any undisclosed income. The only requirement is that such valuable articles or document should be belonging to the assessee. 'In such cases, the pending assessment or reassessment shall abate and all these assessments can be framed once again. He further submitted that if as per second proviso to s. 153(1) of the Act if the pending assessment or reassessment abates and if in the subsequent appeal against the order under s. 153C such assessments are annulled the whole of the assessment will be annulled including the original assessment. Thus, even in these cases additions/disallowances that were made in original/regular assessment the same would also stand deleted. This situation is not envisaged under the Act. Therefore, the requirement for assumption of jurisdiction having been fulfilled in the present case framing of assessment is valid in law. Reliance was also placed on the decision of Tribunal, Delhi Benches in the following cases :
(1)Ms. Shyam Lata Kaushik v. Asstt. CIT [2008] 114 TTJ (Del) 940 : [2008] 4 DTR (Del)(Trib) 337 ;
(2)Shivnath RaiHarnarain (India) Ltd. [2008] 117 TTJ (Del) 480 : [2008] 9 DTR (Del)(Trib) 466 : [2008] 304 ITR 271 (Del)(AT) .
He submitted that the decision of Tribunal, Bangalore Bench is in fact wherein it has been found that the documents seized do not belong to the person in whose case proceedings were sought to be initiated under s. 153C of the Act. That being the factual finding will not assist the case of the assessee.
8. In reply the learned counsel of the assessee submitted that the decisions relied on by the learned Departmental Representative both relate to proceedings under s. 153A of the Act where the search was conducted in the case of those assessees. Therefore, these decisions cannot be applied in the present cases where the actions were taken under s. 153C r/w s. 153A of the Act. Even, in both the above cases the Tribunal has observed that any income which has already completed the assessment under s. 143(3)/148 prior to search in respect of six assessment years has not been included in the assessment framed under s. 153A of the Act. It was also found that some assessments were pending and since in terms of second proviso to s. 153C of the Act these assessments have been abated, the assessments under s. 153A were reframed. He accordingly pleaded that framing of assessment under s. 153C of the Act be set aside.
9. We have carefully considered the relevant facts, arguments advanced and the decisions cited. Provisions of ss. 153A, 153B and 153C were inserted by the Finance Act, 2003 w.e.f. 1st June, 2003. Originally s. 153A of the Act did not have any sub-section. However, sub-s. (2) of s. 153A was inserted by Finance Act, 2008 with retrospective effect from 1st June, 2003. Sec. 153A provides for assessment in case of a person in whose case a search is initiated under s. 132 of the Act or documents or assets are requisitioned under s. 132A of the Act after 31st May, 2003. Sec. 153B provides for time-limit for completion of assessment under ss. 153A and 153C of the Act. Sec. 153C provides for assessment of income of person other than a person in respect of whom warrant of authorisation is issued under s. 132 of the Act. Sees. 153A and 153C are extracted herein :
"Sec. 153A. (1) Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, in the case of a person where a search is initiated under s. 132 or books of account, other documents or any assets are requisitioned under s. 132A after the 31st day of May, 2003, the AO shall—
(a)
issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in cl. (
b), in the prescribed form and verified in the prescribed manner and setting forth such particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s. 139;
(b)
assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made :
Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years :
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six years referred to in this sub-section pending on the date of initiation of the search, under s. 132 or making of requisition under s. 132A, as the case may be, shall abate,
(2) If any proceeding initiated or any order or assessment or reassessment made under sub-s. (1) has been annulled in appeal or any other legal proceedings, then, notwithstanding anything contained in sub-s. (1) of s. 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-s. (1), shall stand revived with effect from the date of receipt of the order of such annulment by the CIT :
Provided that such revival shall cease to have effect, if such order of annulment is set aside.
Explanation—For the removal of doubts, it is hereby declared that,—
(i)
save as otherwise provided in this section, s. 153B and s. 153C, all other provisions of this Act shall apply to the assessment made under this section;
(ii)
in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.
Sec. 153C. (1) Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in s. 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO 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 s. 153A :
Provided that in case of such other person, the reference to the date of initiation of the search under s. 132 or making of requisition under s. 132A in the second proviso to sub-s. (1) of] s. 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person.
(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-s. (1) has or have been received by the AO having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under s. 132 or requisition is made under s. 132A and in respect of such assessment year—
(a)
no return of income has been furnished by such other person and no notice under sub-s. (1) of s. 142 has been issued to him, or
(b)
a return of income has been furnished by such other person but no notice under sub-s. (2) of s. 143 has been served and limitation of serving the notice under subs. (2) of s. 143 has been expired, or
(c)
assessment or reassessment, if any, has been made, before the date receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person, such AO shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in s. 153A."
10. The AO assumes jurisdiction for framing assessment under s. 153C of the Act where the AO is satisfied that any money, bullion, jewellery or other valuable articles or things or books of account or documents seized or requisitioned belongs to or belong to a person other than the person in whose case search is conducted under s. 132(1) of the Act. Therefore, for initiating action under s. 153C of the Act for framing assessment under s. 153A. the prerequisite is that the satisfaction of the AO that the money etc. and documents etc. belongs to a person other than the person searched under s. 132 of the Act. The AO in the assessment order has categorically held that pp. 87 to 91 of Annex. A-4 seized from Lalit K. Patel are his own handwritten estimate for the proposed work of the assessee. Therefore, though these documents may refer to for the work proposed on behalf of the assessee, the same cannot be considered as "documents belonging to the assessee". If a person makes some jottings/notes etc. for his own purpose and which have no nexus to hold that if belongs to other person and also does not contain a material which reveals any income therein, cannot be used so as to initiate action under s. 153C of the Act. Similarly, pp. 84 to 86 of Annex. A-4 seized from the residence of Lalit K. Patel are record maintained by Lalit K. Patel for his own purpose. The said documents do not belong to the assessee though it may refer to the work carried on behalf of the assessee. If the assessee has engaged the services of a professional and if the professional maintains his own record for the purpose of rendering his services, the documents cannot be said to be belonging to such other person. Shri Lalit K. Patel was engaged by the assessee and he was expected to verify the bills raised by the dependent contractors so as to certify that the bills raised are in accordance with the terms of contract and also contain deductions for materials supplied by the assessee. This being the document maintained by Lalit K. Patel for his personal purpose, though may be referable to the assessee, cannot be considered as "belonging to the assessee". It is also admitted by the AO that the seized documents do not reveal any specific undisclosed income. It is also admitted fact that none of the assessments in the present appeals were pending on the date of initiation of action under s. 153C of the Act i.e., on 14th April, 2006. Though the appeals before the CIT(A) or Tribunal were pending, the same do not come within the parameters of second proviso to s. 153C as those assessments shall not abate. Only the assessment or reassessments which are pending before the AO on the date of initiation of search shall abate. The CBDT in its Circular No. 7 of 2003 in para 65.5 clarify as under :
"65.5 The AO shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under s. 132 or requisition under s. 132A, as the case may be, shall abate. It is clarified that the, appeal, revision or rectification proceedings pending on the date of initiation of search under s. 132 or requisition shall not abate. Save as otherwise provided in the proposed s. 153A, ss. 153B and 153C, all other provisions of this Act shall apply to the assessment or reassessment made under s. 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, this tax shall be chargeable at the rate or rates as applicable to such assessment year."
(Emphasis, italicized in print, supplied)
11. The assessee has filed a chart for all the years, it demonstrates that the original assessments were completed prior to initiation of action under s. 153C of the Act. The following table will reveal the said fact :
| Asst. yr. |
Original order passed on |
| 2001-02 |
4 3 2003 |
| 2002-03 |
9 6-2003 |
| 2003-04 |
29-3 2003 |
| 2004 05 |
30 11 2005 |
| 2005 06 |
17-11-2004 |
In the present assessment orders no addition has been made on account of documents stated to be pertaining to the assessee. However, deductions claimed under ss. 80IIIIC and 80-IA of the Act have been recalculated. From the table filed in all the years, we find that the deductions under s. 80IIIIC of the Act was reduced on the following grounds :
(i)Inclusion of excise duty and sales-tax etc. in total turnover
(ii)Ignoring loss from export trade while computing deduction under s. 80HIIC
(iii)Eligibility of deducting under s. 80HHC of the Act qua the assessee and not unit-wise
(iv)Deduction under s. 80HHC in accordance with provisions of s. 80-IA(9) of the Act and
(v)As regards deduction under s. 80-IA of the Act, the same was reduced by excluding duty drawback, premium on sale of license etc. in eligible profits.
All these issues were subject-matter of earlier proceedings in original assessment and were in further litigation before the CIT(A) and Tribunal. Though all these assessments have been decided in further appeal and settled by CIT(A) or Tribunal, the same are subject-matter of the litigation. In our opinion the AO could not have done so since all these assessments have not abated. As per second proviso to s. 153C of the Act only those assessments or reassessments falling within the period of six assessment years referred to in sub-s. (1) of s. 153A of the Act and pending on the date of initiation of search shall abate. Since, the original assessments were not pending the same have not abated. The AO was not competent to assume jurisdiction under s. 153C of the Act as (i) none of the documents found during the course of search of other person belong to the assessee, (ii) the original assessments have not abated. What were pending were, only the appeals. However, since the appeals do not abate the original assessments survive and hence cannot be reopened under s. 153C proceedings. We, therefore, set aside all the assessments made under s. 153C of the Act.
12. The procedure of assessment contained in Chapter XIV visualises various types of assessments; s. 143(1) provides for assessment on the basis of return filed by the assessee; s. 143(3) visualises assessment on the basis return filed as scrutinised and examined by the AO. Sec. 144 visualises best judgment assessments; s. 147 provides for reassessment where the AO has reason to believe that any income chargeable to tax has escaped assessment. Sec. 153A of the Act is titled as "assessment in case of search or requisition", where warrant of authorisation is issued in case of such person. Sec. 253 of the Act empowers the CIT to revise any order which is found to be erroneous insofar as it is prejudicial to the interest of the Revenue. Thus, all the different types of assessments envisage different situations.
13. The Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO 1977 CTR (SC) 32 : [1977] 106 ITR 1 (SC) observed as under :
"It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity."
14. The Hon'ble Supreme Court in the case of Commissioner Of Income Tax v. Sun Engineering Works (P) Ltd. [1992] 107 CTR (SC) 209 : [1992] 198 ITR 297 (SC)held that the scope of reassessment is only with regard to the income escaping assessment. The matters which have attained finality in original assessment cannot be reagitated in reassessment proceedings. If the assessee is precluded from reagitating the issue in reassessment proceedings, in the similar fashion the AO is also precluded from re- agitating the issue which has attained finality in original assessment proceedings. The original assessment proceedings are subject to further appeals. Therefore, as per s. 153A, the same has not abated. The AO is also, therefore, precluded from re-agitating the assessments that have attained finality in original assessment proceedings, though pending in for the appeals. So far as the AO is concerned, his jurisdiction is ousted and is a "functus officio" so far as the original assessments are concerned. Therefore, re-agitating the concluded issues in s. 153C proceedings without any documents relating there to belonging to the assessee cannot be considered in such assessment under s. 153C of the Act.
15. Secs. 153A to 153C of the Act are substituted in place of erstwhile Chapter XIV-B providing procedure in computation of undisclosed income in case of search under s. 132 of the Act.
16. The Hon'ble Finance Minister in his Budget Speech while introducing ss. 153A to 153C of the Act observed that the existing provisions of Chapter XIV-B which provide for single assessment of undisclosed income for block period were introduced for avoidance of disputes, early finalisation of such assessments and reduction in multiplicity of proceedings. However, since there were parallel proceedings namely regular assessment proceedings as well as assessment of block assessments for undisclosed income had amounted to multiplicity of proceedings. In order to avoid multiplicity of proceedings and to have only single assessment and in respect of pending assessments, s. 153A to s. 153C of the Act were proposed to be introduced. If that be the intention, in assessments under s. 153C the issue can be considered only if the pending assessment is abated and not otherwise. If the original assessments are completed which are subject-matter of further litigation and if those very assessments are reagitated under s. 153C proceedings the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. This can never be the intention of the legislature.
17. The decision of the Tribunal Calcutta Bench in the case of LMJ International Ltd. (supra) relied on by the learned counsel for the assessee squarely applies. In the said case the assessments were sought to be made under s. 153A r/w s. 153C of the Act. The Tribunal in this case held as under :
"A reading of s. 153A reveals apparent contradiction in the first proviso and the second proviso. The proviso provides that the assessment or reassessment shall be done by the AO in respect of each assessment year falling within six assessment years preceding the year of search. The second proviso, on the other hand, provides that the assessment/reassessment pending on the date of search shall abate. In other words, the assessments which are not pending, shall hold the field. The language of s. 153A is not unambiguous and is not susceptible to only one meaning. In the circumstances, the principle of literal construction is of no help. One of the salutary rule is rule of harmonious construction. According to this rule, a statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act. so as to make a consistent enactment. The meaning of assessment/reassessment docs not always mean taking recourse to the whole procedure laid down in the Act for computing the tax liability. It is possible to effect reconciliation of the two provisos appended to s. 153A by restricting the meaning of the term 'assess or reassess' appearing in the first proviso. After the search, the total income of the assessee is to be recomputed on the basis of the undisclosed income unearthed during search and the same is to be added with the regular income assessed under s. 143(3) or computed under s. 143(1) for each of the six preceding assessment years. Where any prepaid taxes are there, the same are required to be given credit, for computing the further tax payable by the assessee. The assessee is also required to pay interest under ss. 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. The construction that the Department seeks to place on the impugned provisions would lead to serious hardship, inconvenience, injustice, absurdity and anomaly. Suppose in the course of a search, nothing incriminating was found. Docs this mean that an honest citizen be unduly harassed by facing automatic reopening of the concluded assessments merely because there was search action against him ? The absurdity of the construction gets all the more pronounced when say, no incriminating material is found relating to the 'other person' but the material found indicates disclosed income. Suppose, loan confirmations relating to loans duly disclosed in the return of income of A are found at the time of search in the premises of B. Should the assessments of A be reopened for all the six preceding years merely because search action has been initiated against B ? In selecting out of different interpretations, the Courts shall adopt that which is just, reasonable and sensible rather than that which is none of those things. One may also refer to CBDT Circular No. 7 of 2003, dt. 15th Sept., 2003. A reading of the circular clearly indicates that the appeal, revision etc. arising out of earlier assessments shall not abate. In other words, there is no merger of the earlier assessments with the assessments done under the new scheme, i.e., s. 153A or 153C. The amendment made in ss. 234A and 234B docs not help the case of the Department. The submission of learned CIT-Departmental Representative that s. 153A starts with non obstante clause and excludes application of ss. 147 and 148 relating to reopening of assessments is tenable. But at the same time in terms of ss. 139, 142 and 143, concluded assessments can be reopened as per ss. 147 and 148 in case the AO has 'reasons to believe' that the income chargeable to tax has escaped assessment and provisions of ss. 153A to 153C can be resorted to for the assessment of undisclosed income in search cases. All the three procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. Items of regular assessment cannot be added back in the proceedings under s. 153C when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. The additions made by the AO, being all relating to regular assessments are hereby deleted."
18. The Tribunal Bangalore Bench in the case of P. Srinivas Naik ( supra) held that if any documents found though pertaining to the assessee, if not belonging to such assessee, the action under s. 153C r/w s. 153A cannot be invoked. The Tribunal in this case held as under :
"7. We have heard both the parties. It is an undisputed fact that books of account or documents do not belong to the assessee, as these were seized from the premises of Shri Reddy. It is nowhere stated that these books of account or documents showed that all the transactions were belonging to the assessee. Such books of account or documents contained the transactions relating to the group concerns of Shri Reddy. No valuable belonging to the assessee has been seized during the course of search. The term belonging implied something more than the idea of casual association. It involves the action of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search have a close association with the group concern of Shri Reddy. It records the transaction carried out by that group. It does not record the transaction carried out by the assessee. Under the WT Act, assets belonging to assessee were taxable. The expression belonging to the assessee connotes both the complete ownership and limited ownership of interest. Of course, belonging to is capable of 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 belong to the assessee. In the instant case, documents or books of account found during the course of search and seized cannot be termed to be indicating any limited interest of the ownership of (he assessee in such books of account or documents.
The language used in s. 153C is materially different from the language used under s. 158BD. As per s. 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, s. 153C says that if valuable or books of account or documents belonging to other persons are seized then action under s. 153C can be taken against that person. In the instant case, we are satisfied that books of account or documents do not belong to the assessee and, therefore, the AO was not justified in initiating action under s. 153A r/w s. 153C of the IT Act. The AO is free to take proper remedial measure as per law."
19. The decisions relied upon by the learned Departmental Representative will not apply in this case as in both cases the facts are that the assessments were framed under s. 153A of the Act i.e., the assessee was the person in whose case search was initiated under s. 132(1) of the Act. It is also found that the assessments were pending in those cases and it was also observed that "it is not the complaint of the assessee that any income which is already subjected to the assessment under s. 143(3)/148 of the Act which was completed prior to search has also been included in the assessments framed under s. 153A of the Act." Therefore, both the cases relied upon by the learned Departmental Representative will not help the case of the Revenue. In view of our above finding and applying the decision of the Tribunal Calcutta Bench in the case of LMJ International Ltd. (supra), since we have found that the documents found during the search at the residential premises of Shri Lalit K. Patel and Kantilal M Patel do not "belong to the assessee" the AO was not competent to initiate action under s. 153C of the Act so as to frame assessment under s. 153A of the Act. We, therefore, set aside the assessments.
20. The doubt raised by learned Departmental Representative that if the original assessment abates and if subsequently the Tribunal holds that even the assessments under s. 153A of the Act are also invalid, the entire assessment including original assessment stands cancelled. The doubt is now dispelled by amendment to s. 153A of the Act whereby sub-s. (2) is included by Finance Act, 2008 with retrospective effect from 1st June, 2003. In such a situation the assessments shall stand revived, with effect from the date of receipt of order of such annulment. Therefore, in the present case, since we have held that assessment under s. 153A r/w s. 153C does not survive, the original assessment stands revived.
21. Since we have set aside the assessments the issues raised by the assessee as well as by the Revenue as regards computation of deduction under ss. 80HHC and 80-IA of the Act are not proposed to be dealt.
22. In the result, the appeals of the assessee are allowed and that of the . Revenue are dismissed.