TMI Blog2016 (7) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... peal: 1. (i) That under the facts and circumstances of the case, the lower authorities were not justified to reject the claim of the appellant that the assessment framed u/s 153C of the Income Tax Act in this case was beyond jurisdiction and barred by limitation of time. (ii) That the authorities below were not justified to reject the claim ignoring the judgement of ITAT, New Delhi as well as the judgement of Hon'ble Delhi High Court on the same issue. 2. (i) That under the facts and circumstances of the case, the authorities below were not justified to make lump sum disallowance of ₹ 5,00,000/- out of business expenses incurred by the appellant which were duly supported with Audited Accounts. (ii) That even otherwise such disallowance is not called for under section 153A of the Income Tax Act in the absence of any incriminating material. That the assessee craves the right to add, amend, delete or substitute any ground of appeal 4. That the order framed is against the facts of the case and bad in law. 1.1 The 1st ground of appeal is purely legal ground and the assessee challenged the action of Assessing Officer who passed order u/s 153C/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reference i.e. AY 2004-05 and 2005-06 is outside the scope of provisions of Sec. 153C. The legal position to this effect is self evident from provisions of section 153C and also supported by legal decided cases. Since proceedings u/s 153C of IT Act in this case are beyond the statutory time limit of their initiation the same may kindly be dropped. ii) That the assessment proceedings u/s 153C are search related proceedings and shall be restricted to cover the concealed or undisclosed income based on the basis of incriminating seized documents found as result of search. It is not a case of regular assessment or reassessment and as such the provisions of section 153A of the IT Act which are parallel to provision u/s 153C of IT Act are to be considered in the context of purpose, object and scheme of IT Act. This legal proposition is also held in various decided cases on the subject. The assessment in this case may kindly be made keeping in view these provisions. iii) That as per provisions of section 153A of the IT Act which are parallel to provisions of section 153C, only pending assessment at the time of search shall abate. This legal proposition has been upheld in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a taken regarding the date of search and subsequent date of handing over of seized material is also obviated as both the sides are manned by the same AO. The number of assessment years covered u/s 153C are the same as per the provisions of section 153A only. In view of the above stated facts it is clear that the notices u/s 153C read with section 153A of the IT Act have rightly been issued after receipt of seized material of other person i.e. assessee company It may be mentioned here again that the undersigned is the AO in both the cases ie the other person i.e. the assessee as well as the person searched i.e. Shri Lalit Modi and Shri Surender Modi. 53A(1) get attracted. Moreover there is no legal requirement that initiation of proceedings should only be with respect to such years in respect of which there is some material. The requirement of the section 153C with reference to satisfaction seems to be only the prima facie satisfaction and not a conclusive satisfaction. Thus the AO must be prima facie satisfied that the documents etc. belong to the other persons than the person searched. Further as regard to your contention that assessment under section 153C cannot be eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on other than the person referred to in section 153A, 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.]. .. 3.2 He further submitted that the satisfaction u/s153C is to be recorded by the A.O. of the searched person and then he along with satisfaction note, should forward the copy of seized documents to the A.O. of the person to whom such documents belong. As per the provisions of Section 153C, the date of search is to be substituted by the date of receiving the books of accounts and documents and assets seized by the A.O. having jurisdiction over such other person. He relied upon the following judgements: i) CIT Vs Aakash Arogya Mandir Pvt. Ltd. ITA 509/2015,(H.C.), wherein Hon ble Jurisdictional High Court held that even if the A.O. were the same, satisfaction would have to be recorded separately qua the searched person and the assessee. ii) R. L. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sarily the first step towards initiation of proceedings u/s 153C of the Act. In the case where the A.O. of the searched person as well as the other person is one and the same, the date on which such satisfaction is recorded would be the date on which the A.O. assumes possession of the seized assets/documents in his capacity as an A.O. of the person other than the one searched. The second stage commences from the recording of such satisfaction by the Assessing Officer of the, searched per. on' followed by handing over of all the requisite documents etc. to the Assessing Officer of such 'other person' thereafter followed by issuance of the notice of the proceedings under Section 153 read with section 153A against such 'other person'. The initiation or proceedings against 'such other person' are dependent upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment proceedings against the 'searched person', or even during the assessment proceedings against him or even after completion of the same, but before issuance of notice to the 'such other person' under Section 153. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in taking further steps for reassessing the income of the Assessee in respect of the assessment years for which the assessments were concluded and in respect of which the seized document had no bearing. In our view, the same would be clearly impermissible as the seized material now available with the AO, admittedly, had no nexus with those assessments and was wholly irrelevant for the purpose of assessing the income or the Assessee for the years in question. Merely because a valuable article or document belonging to an Assessee is seized from the possession of a person searched under Section l32 of the Act, does not mean that the concluded assessments of the Assessee are necessarily to be re-opened under Section 153C of the Act. In our view, the concluded assessments cannot be interfered with mechanically and solely for the reason that a document belonging to the Assessee, which has no bearing on the assessments of the Assessee for the years preceding the search, was seized from the possession of the searched persons. If' the seized money, bullion, jewellery or other valuable article or thing seized as handed over to the AO of the Assessee, are duly disclosed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on the facts of the present case. 5. After hearing both the parties, perusing material on record and case law cited by both the parties, we observe that a search was conducted on 19.06.2009 on the residential/business premises at D-20, NDSE-II, New Delhi and satisfaction notes were recorded on 18.07.2011. The case was centralized on 1.07.2011. After careful reading of the provisions of Income tax Act and decision of Hon ble Jurisdictional High Court in the case of RRJ Securities (supra), it is observed that s the Hon ble Court recorded its findings as under: 15. The controversy in this regard is no longer res integra. A Coordinate Bench of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax:(2012) 346 ITR 177 has held that: in case of the searched person, the date with reference to which proceedings for assessment or reassessment of any assessment year within a period of six assessment years shall abate, is the date of initiation of search under Section l32 or requisition under Section 132A. However, in case of other person .. such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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