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2016 (11) TMI 875 - ITAT MUMBAI

2016 (11) TMI 875 - ITAT MUMBAI - TMI - Validity of assessment under Section 153C - non approval from Joint Commissioner of Income Tax as prescribed u/s 153D - Held that:- These appeals were filed on 04/02/2013 and the Bench has asked DR to produce copy of approval from Joint Commissioner of Income Tax as prescribed u/s 153D. The department was also asked to confirm as to whether u/s 153C notice or u/s 143(2) notice was issued. However, nothing came from the department. On 24/02/2016 hearing was .....

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g approval from Joint Commissioner of Income Tax as prescribed u/s 153D. No evidence of any satisfaction have been recorded was brought to our notice. Even it was also not shown whether any notice u/s 143 (2) was issued. Accordingly, we set aside the order passed by the lower authorities and the appeals of the assessee are allowed. - ITA No.926 to 931/Mum/2013 - Dated:- 30-9-2016 - SHRI R.C.SHARMA, AM AND SHRI C.N.PRASAD, JM For The Assessee by : Shri Bhupendra Shah For The Revenue : Shri Rahul .....

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Chaitanya Kochar was also covered under the search conducted. During the course of the search undertaken, it was found that the assessee-company was a paper company used by the Raisoni-Sancheti group as a conduit for brining unaccounted income of the group into its regular books by way of share capital and share premium. The AO issued notice u/s.153C to the assessee on 15-12-2009 and 7-12-2010 for A.Y.2002-03 to 2007-08 commencing the proceedings u/s.153C of the I.T.Act. In the assessment frame .....

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has been made by the assessee. If assessee has not filed Return of Income then assessing officer can make an assessment 'of the total income to the best of his judgment U/s 144. Thus when no return of income is filed by the assessee then no assessment can be done U/s 143(3). Learned AO erred in not considering this comprehensive scheme of assessment and wrong in passing order U/s 143(3) even when no return of Income and no explanations etc are filed by the Assessee. 2) Learned AO erred in p .....

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mmissioner. It is mandatory to take such approval and also to mention it in the body of assessment order itself. The learned CIT appeals also erred. to held that approval to re open the case had already be sought and got by the AO from AddI.CIT,Rg-6(3) on 17-03-2009 when it was proposed that the case should be assessed U/s 147 r.w.s.148 of the Act. Therefore the contention of the appellant that there was no approval available with the AO before making said assessment does not hold ground". .....

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appeal erred in not holding the assessment order passed by AO without service of any notice U/s 153C or U/s 143(2) or 142(1) as illegal. Statement of facts filed by appellant before CIT Appeals very clearly mentions that the impugned assessment order is passed without service of any notice U/s 153 C or 143(2) or 142(1) and hence bad in law and null and void and assessee clearly mentioned that the only communication received by the assessee was a telephone call at Directors Mobile No.9822224177 .....

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Had the notice U/s 153 C dated 15-12-2009 been served on the assessee it must be in the case record' called by CIT Appeals .ClT Appeals does not found any such notice dated 15-12 2009 in the case record called by her neither AO denied the statement of fact made by assessee about non service of notice U/s 153 C etc. In the case record called CIT Appeals found notice dated 7·12 2010 has been served on some V. Jain who is neither the Director nor the principal officer nor the employee of .....

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3 C was served on 15-12-2009, then no notice under the same section can be issued after a lapse of one year on 7-12-2010 Evan assuming that' notice said to be served on 15-12-2009 was not complied by the appellant. the available remedy is to start proceeding for non compliance of notice U/s 153 C dated 1.5-12- 2009 ,but no such proceedings were initiated and no reminder was issued during entire period' of 12 months to appellant to comply to the notice dt. 15-12-2009 . A new notice under .....

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appellant and hand over the money bullion etc to the AO of the appellant along with his satisfaction report. learned CIT Appeals erred in holding that "Here it is to be considered that at the point of time of recording his satisfaction and sending across the information to the AO of the appellant Company, the Dy.ClT CC 2(3),Nagpur was the AO for Mr. C. Kochar by virtue of jurisdiction conferred upon him by the order passed on 7-03-2008 bY,ClT-11 Nagpur even though Mr. C. Kochar Challenged t .....

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of person searched never vest in AO at Central Circle Nagpur for a single' day but is for all the period vest only with Income Tax Officer, Wardha: Thus satisfaction of the Dy.ClT CC 2(3) Nagpur and forwarding of document by him to the' AO of appellant is of no value as regards provisions of section 153 C are concerned. 7) Learned AO and learned CIT Appeals erred in not considering the fact that assessment was made without fallowing the principals laid down by judgements various courts. .....

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rred in to hold that recording of satisfaction is not required. 8) Learned CIT Appeals erred in considering that by recording the reasons the AO of appellant (instead of the satisfaction of the AO of the person searched C.Kochar) has taken cognizance of the facts of the case in its totality and proceed to take action as per the right section under the income tax act. Receipt of information or document from any AO other than AO of personsearched may give valid ground to initiate proceedings u/s 1 .....

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se investments will have to added substantively in the hands of the Raisoni/Sancheti group of assessee in the relevant assessment years . The protective' additions may be made in the hands of your assessee". Thus AO of the appellant received information with a clear satisfaction of AO of central circle Nagpur hat income does not belong to the appellant but belongs to the assessee of AO at Nagpur and he is making substantive additions in hands of his assessee at Nagpur which AO at Nagpur .....

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en though the AD of person searched (Mr. CKochar) informed him to make only protective assessment . Learned CIT Appeals though observed that" A protective assessment is made to ensure that same income does not get taxed twice a different hands," erred in not considering that it was already been added substantively in the hands of person searched Mr. C. Kochar by order U/s 143(3) r.w.s. 153A by AO Central Circle Nagpur on 23-12-2009. So question of adding same again in the' hands of .....

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see stood transferred from ITO 6(3)(2) to ACIT 6(3) by order dated 23/07/2010 of the CIT 6 Mumbai in exercise of powers conferred by the CBDT by notification no.267 of 2001 dated 17-09-2001. No such notification is available to the assessee at the sight of Department. The order dated 23-07-2010 was never served on the assessee. It is said during course of hearing by CIT Appeals that by notification nO.267 of 2001 dated 17-09-2001, no assessment u/s 153 A can be done by officer below the rank of .....

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. Learned CIT Appeals erred in non considering submission of the assessee that in case of transfer of case in the same city, the opportunity of hearing in section 127(1) and (2) has been dispensed with, but other statutory formalities are to be complied with as held by Hon High Court of Calcutta -WP No.1229 of 2009 ClT appeals erred' in not considering the findings of Hon High Court of Bombay that non communication of reason is a serious infirmity which renders the order invalid in WP no,5)1 .....

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Appeals erred in mentioning that Assessee has neither responded to queries raised by the AO in notice U/s 153 C. The Standard form of notice U/s 153 C does not contains any query but it requires filing of Return of Income within a stipulated period (normally of 3C) days Jas. stated in that notice, Since no such notice was served on the assessee question of filing return in response to notice u/s.153C does not arise. 13) The learned CIT Appeals erred in not considering the submission filed by ass .....

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-2009.The order passed by AO of assessee is on 31-12-2010 and thus barred by time as per provisions of section 153B. 14) Learned CIT Appeals erred in not considering the fact that order of assessment was not even passed on 31-12-2010. It was served on the assessee on 15-03-2011. There was no record available to justify that order was passed and issued to the assessee on 31-12-2010. There is no reason for such a delayed service of order along with demand notice after a lapse of 75 days of passing .....

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always available in case record. Appellant also filed his Bank statement and reconciled the share money received with the Bank statements of-Share Applicants filed during course of Regular Assessment U/s 143(3). Assessee not only filed detailed Bank, statement of Share Applicant but had also filed the Bank statement from where these share applicants had received cheques. Thus assessee had not only given details of receipt of share. money but also filed details of source from where those share a .....

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isallowance as pre operative expenses and lost before (IT Appeals and before Honourable· Income Tax Tribunal Mumbai. Learned AO and (IT appeals erred in not considering that the original Scrutiny assessment had reached finality. 16) Learned AO erred to understand that since no document which was not filed and explained during original scrutiny assessment before ITO 6(3)(2) was seized during search operation and thus the items of regular assessment which had reached finality after order of .....

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edings. 5. It was argued by ld. AR that AO erred in passing assessment order u/s.143(3) rws 153C without obtaining prior approval of JCIT u/s.153D and hence bad in law. Since no approval is taken before passing the assessment order it was not mentioned in the body of assessment order. Our attention was also invited to application filed u/s.6 of the RTI Act on 9-4-13, 16-4-13, 22-5-13 and 28-5-13 asking for copy of proof of approval obtained u/s.153D for the assessment year 2002-03 to 07-08. Howe .....

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) rws 153C even though there was no satisfaction report as contemplated u/s.153-C and hence any proceedings u/s.153-C were rendered null and void. Reliance was placed on the decision of the Supreme Court in the case of Manish Maheshwari 289 ITR 341. Our attention was also invited to application dated 9-4-13, 16-4-13, filed u/s.6 of RTI Act to ACIT-6(3) asking for copy of documents received u/s.153C and the satisfaction recorded u/s.153C transferring the records to the AO of the assessee for all .....

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Circle Nagpur and copy of notice u/s.153C dated 14-12-09. 7. We found that the CIT appeals has mentioned in his order that it is not explicitly mentioned in section 153C that the satisfaction is to be recorded by their AO in writing. 8. We have considered rival contentions. The Hon ble Supreme Court in the case of M/s Calcutta Knitwear in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014 (available in NJRS at 2014-LL-0312-5 l) has laid down that for the purpose of section 15 .....

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under section 158BC of the Act; or (e) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person." Furthermore, CBDT vide Circular No.24/15 dated 31-12-15 have observed as under :- Several High Courts have held that the provision of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guideline of the Hon'ble SC, apply to proceeding u/s 153C of the IT .....

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e Courts. 5.In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 9. In view of the above, recording of satisfaction before proceedings u/s.153C is mandatory, which is lacking in .....

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