9911796707
TMI Blog2016 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... e in other three appeals, are similar. In ITA No. 7061/Del/2014, the assessee has also challenged the validity of notice and assumption of jurisdiction u/s 153C of the Act. Therefore, these appeals have been clubbed together and being disposed of by this consolidated order for the sake of convenience and brevity. ITA No. 6947/Del/2014 [A.Y 2006-07] 2. We shall now take up appeal in ITA No. 6947/Del/2014 since both the parties agreed that this appeal may be taken up for hearing first. The above appeal of the assessee is directed against the order of the CIT(A)-II, New Delhi dated 20.10.2014 in Appeal No. 111/14-15 for A.Y. 2006-07. 3. The assessee has raised the following grounds of appeal: "1. The order of the learned Commissioner of Income Tax (A) is arbitrary, against law and facts on record. 2. The learned Commissioner of Income Tax (A) before dismissing the appeal has not given a reasonable opportunity of being heard which is against the principle of natural justice and is bad in law and hence liable to be quashed 3. The learned Commissioner of Income Tax (A) has failed to appreciate that the issuance of notices u/s 153C/142(1)/143(2) of the Income Tax Act, 1961 as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried out on the back of the assessee without bringing any cogent material on record (if any collected) and without providing an opportunity to confront the same. 11. The learned Commissioner of Income Tax (A) while dismissing the appeal has erred in considering the fact that the parties did not appear for personal deposition before the Assessing officer which is clearly against the fact as no personal deposition were called for by the Assessing officer by issue of notice u/s 133(6) of the Income Tax Act 12. That having regard to the facts and circumstances of the case, learned Commissioner of Income Tax (A) has erred in law and facts in confirming the action of learned Assessing officer in making an addition of Rs. 5, 10,500/- on account of alleged commission." 4. It is relevant to note that Ground Nos. 2 and 3 of the assessees in the appeals bearing ITA No. 7060/Del/2014 and ITA No. 6948/Del/2014 challenging the validity of initiation of proceedings and assumption of jurisdiction for initiation of proceedings u/s 153C of the Act and legal ground Nos. 2 and 3 raised by the assessee in ITA No. 6947/Del/2014 are same and similar. Therefore, these legal grounds in all the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own decision in the case of SSP Aviation Ltd reported as 346 ITR 177 [Del] their Lordships explicitly held that the date with reference to which proceedings for assessment or reassessment of any assessment year within the period of six A.Ys shall abate shall be the date of initiation of the search u/s 132 of the Act or the requisition u/s 132A in the cases of the other person [like the assessee in the present case], such date will the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person. The ld. AR vehemently pointed out that their Lordships in these cases explicitly held that in the case of other person, the question of abatement of the pending assessment proceedings and completed and their assessment or reassessment of the six A.Ys will be examined with reference to such date on which satisfaction note for initiation of proceedings u/s 153C has been recorded and notice u/s 153C of the Act has been issued in pursuance thereto. 7. The ld. AR further placed second proposition that the documents as mentioned in the satisfaction note available at page 13 of assessee's paper book are documents not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d over by the AO of the searched person (Minda Group) to the AO of such other person (assessee) on the same date i.e. 29.11.2013. (ii) That on a perusal to provisions of section 153C of the Act and more specifically proviso to section 153C of the Act, it would become evident that the date of search is to be substituted by the date of receiving the books of account or documents or assets seized for the purposes of framing of assessments under section 153C of the Act. Accordingly, the assessments can be framed for the preceding six years with reference to date 29.11.2013 i.e. AY 2008-09 to AY 2013-14. Whereas, the learned AO has framed assessments for AY 200607 to 2011-12 under section 153C of the Act, which means. AY 2006-07 and 2007-08 are clearly without jurisdiction and beyond the purview of section 153C of the Act. In order to appreciate the aforesaid, the proviso to section 153C (as stood on the date of assessment) is extracted, hereunder, for ready reference: "Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub-section (1) of] section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer having jurisdiction over such other person. Since in this case satisfaction is recorded on 29.11.2013 and notice under Section 153C is also issued on the same date, then only conclusion that can be drawn is that the Assessing Officer of such other person has taken over the possession of seized document on 29.11.2013. Accordingly, as per Section 153A(1), the Assessing Officer can issue the notice u/s 143(3) for the previous year in which search is conducted (i.e. for the purpose of Section 153C the document is handed over) and notice u/s 153C for six assessment years preceding such assessment years. Now, in this case, the previous year in which the document is handed over is 1st April, 2013 to 31st March, 2014 i.e. the assessment year would be AY 2014-15. Six preceding previous years and relevant assessment year would be as under:- Previous Year Assessment Year 1.4.2007 to 31.3.2008 2008-09 1.4.2008 to 31.3.2009 2009-10 1.4.2009 to 31.3.2010 2010-11 1.4.20J0 to 31.3.2011 2011-12 1.4.2011 to 31.3.2012 2012-13 1.4.2013 to 31.03.2014 2013-14 (v) That, the same view has also been upheld by Hon'ble jurisdictional High Court of Delhi in the case of CIT vs Jasji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium (kindly see pgs A to B of this brief note) and as such, nothing was pending or nothing will abate, on the date of handing over of the documents by the AO of the searched person to the AO of the assessee - appellant and thus, the AO was not empowered in law to tinker with the completed assessments and further, to make additions beyond the seized/incriminating material as referred in the satisfaction note. (ii) That further, even for assessments for AY 2011-12 and 201213 (kindly see pages E to F and G to J of this note), no additions have been made with reference to the documents so referred in the satisfaction note, which are copies of trial balances and balance sheets (found to be duly recorded in books of accounts) and as such, the additions made under proceedings') u/s 153C of the Act was not validly made, as no document pertaining to 2007-08 was found from the premises of searched person, nor the same was made a basis in the satisfaction note. That in order to support the aforesaid, the assessee - appellant would seek to place its reliance on following judgments, wherein, it has been held that, "in respect of completed assessments, the AO is only empowered to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the seized documents do not belong to the Minda Group and mere finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals or in whose name they pertain. Possession of documents and possession of photocopies of documents are two separate things. While the Minda Group may be the owner of the photocopies but it does not get established that the same belong to the assessee - appellant. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise and various courts have quashed the proceedings initiated under section 153C of the Act on this proposition, and the assessee - appellant also seeks to place reliance on judgments as filed in paper book - III and are extracted below for ready reference: S.No . Judgments Pg Nos. of PB- III 3. Copy of order of Hon'ble ITAT Delhi in the case of DSL Properties (P) Ltd. vs DCIT reported in 60 SOT 88 (URO). 17-27 7. Copy of judgment of Hon'ble High Court of Delhi in the case of Pepsico India Holdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any ground, challenging the valid assumption of jurisdiction and not raising the ground directly during assessment or reassessment proceedings, then it has to be presumed that the assessee has waived his right to challenge the validity of assumption of jurisdiction for assessment or reassessment. 10. The ld. CIT-DR further contended that the first proposition advanced by the ld. AR is not tenable and sustainable in the light of this proposition and reference cannot be made to the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of Shri Jasjit Singh [supra] because in this case neither the question of law was framed nor answered. Hence, this decision cannot be taken as precedent to be used in other cases and benefit of this decision is not available to the assessee. The ld. CIT-DR vehemently contended that the limitation for initiation of proceedings and issuance of notice u/s 153C of the Act has to be taken in the light of the mandate provided in proviso to clause (b) to sub-section (1) of section 153A of the Act and the AO shall assess or reassess the total income in respect of each A.Y falling within six A.Ys from the date of search and seizure operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio merely prima facie observation cannot be considered as ratio and the same cannot be relied for granting any relief to any party. 13. The ld. CIT-DR reiterated the arguments as advanced in the written submissions and submitted that for A.Y 2007-08 relevant to ITA No. 7060/Del/2014 and 6948/Del/2014 has to be rejected for failure of the assessee to challenge the jurisdictional issue within the time provided u/s 124 of the Act relevant to jurisdiction provisions and ITA No. 6947/Del/2014 also have similar facts and circumstances wherein the assessee has not challenged the validity of jurisdiction during the assessment proceedings and therefore, the assessee is stopped to raise legal objections in this regard for its failure to challenge the legal jurisdictional issue within the time prescribed u/s 124 of the Act. The ld. CIT-DR also submitted that the proposition laiddown by the Hon'ble Jurisdictional High Court of Delhi in the case of Jasjit Singh [supra] is not applicable and the proposition as relied by the assessee by placing reliance on the decision of ITAT Delhi in the case of DSL Properties Pvt. Ltd reported at 60 SOT 88 URO is also not applicable to the present case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tex India Ltd VS. CIT [2014] TIOL -1325-SC-Del-IT and in the case of Madugula Venu Vs. DIT reported at 266 CTR 372 [Del] wherein it was held that the notice issued u/s 153A of the Act calling upon the assessee to file return for earlier six A.Ys cannot be challenged on the ground that it would cause certain degree of hardships to the assessee. The ld. CIT-DR strongly contended that the benefit of the decision of ratio of Hon'ble High Court of Delhi in the case of Kabul Chawla [supra] cannot be extended to the assessee. Furthermore, the ld. CIT-DR submitted that it is factually wrong to say that there was no incriminating material found during the search and seizure operation upon the Minda Group which belongs to the assessee because documentary incriminating material found during search and seizure operation has direct linkage with the present appellants. 17. The ld. CIT-DR, further referring to the judgment of the Hon'ble Supreme Court in the case of Kulwant Kaur Vs. Gurdial Singh Mann [2001] 4 SCC 262 para 2 at 267 submitted that the decision based on concession cannot be termed as a 'binding precedent'. The ld. CIT-DR further referring to para 17 of the order of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi bench in the case of DSL Properties [supra] is not applicable to the present case. iii) There was amply incriminating material against the assessee which has been mentioned in respective satisfaction notes. Therefore, the arguments of the assessee is not tenable that there was no material belonging to the assessee as per satisfaction note prepared by the AO of the other person i.e. the present assessees at the time of initiation of proceedings and issuance of notice u/s 153C of the Act. iv) Ratio or proposition of the judgments/orders of the Hon'ble Supreme Court, various Hon'ble High Court and Tribunal should be seen in the right perspective. Mere prima facie remarks for passing reference do not have binding effect and the same cannot be relied upon for granting relief to the assessee. 19. The ld. AR, by placing reliance on the written submissions and objecting to the ld. CIT-DR's arguments, submitted that the ld. CIT-DR Shri Ramesh Chander raised similar contentions and objections before the ITAT 'D' Bench in the case of M/s Computer Engineering Services India [P] Ltd Vs. ACIT [Delhi ITAT in ITA Nos. 5874 to 5878/Del/2015 which were rejected at the threshold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT Vs. Ramesh D. Patel reported 362 ITR 492. The ld. Counsel also submitted that the issue of inherent lack of jurisdiction can be raised at any stage and the contention of the ld. DR is baseless as in the present case, the ld. CIT(A) has not dealt with the said issues which were raised by the assessee vide its grounds of appeal and written submissions. To support this proposition, the ld. AR placed reliance on various judgments of Hon'ble High Courts including the Hon'ble Jurisdictional High Court in the case of Valvoline Cummins Ltd. Vs. DCIT reported in 307 ITR 103 [Del]. 21. On the second contention, the ld. AR submitted that in the case of Jasjit Singh [supra] it has been categorically held that the cut off date for issuance of notice u/s 153C has to be reckoned from the date of handing over of books to the AO of the other person and the said findings is applied to the facts of the assessee, pertain to A.Y 2006-07 and 2007-08 would be beyond the purview of the prescribed limitation relevant to provisions of section 153C of the Act as the satisfaction note in the instant case was recorded on 09.09.2013 and the notice u/s 153C of the Act was also issued on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment the addition has to be based upon the seized documents as mentioned in the seized documents only. Once the AO of the searched person records and hands over the seized documents mentioned therein to the other person, then the answer of the other persons is precluded in considering any other material over and above the material/documents mentioned in the satisfaction note and further more, looking at the documents as well, nothing but mere photocopies of financial statements. The ld. AR placing reliance on the judgment of the Hon'ble High Court of Delhi in the case of Pepsico reported in 370 ITR 295 submitted that the said documents mentioned in the satisfaction note cannot be said to be belonging to the assessee because the photocopies of the balance sheet and financial statements cannot be held as documents belonging to the assessee and therefore initiation of proceedings u/s 153C and issuance of notice was bad in law and without jurisdiction and the same should be quashed. 24. The ld. Counsel for the assessee further submitted that regarding fifth limb of arguments of the ld. CIT-DR that no such legal argument challenging the jurisdiction of the AO was raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of above, from the operative paras 34 to 36 of the order of the ITAT, Delhi in the case of Computer Engineering Services India [Pvt] Ltd [supra] similar contentions of the ld. CIT-DR Shri Ramesh Chander were rejected with the following observations: "4. Before parting with the matter, we would like to deal with the contention of Ld CIT-DR that extant plea of amalgamation as raised by assessee is hit by provisions of section 124(3) of the Act. In this regard, he vociferously argued and tried to persuade us that said provision clearly comes in the way of assessee to raise the plea of assessment on non existing company without raising the same before AO at a later stage and heavily relied on Full Bench decision of Guwathi High Court in Smt. Sohani Devi Jain reported in 109 ITR 130. After much deliberation, we are unable to subscribe to the views of Ld CIT-DR for the simple reason that Hon'ble Jurisdictional Delhi High Court in the case of S.S.Ahluwalia in ITA 255/2002 (order dated 14/3/2014) reported in 2014 (88) CCH (158) Delhi H.C. in turn relying on another Delhi High court decision in case of K.K. Loomba reported in 241 ITR 152 has clearly held that section 124 has applicabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not challenging the territorial jurisdiction of the assessee but it is challenging the validity of assumption of jurisdiction for initiation of proceedings and issuance of notice u/s 153C of the Act and thus said legal objection of ld CIT-DR is rejected. 29. We further observe that the Tribunal in the order in the case of Computer Engineering Services [supra] has referred to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of K.K. Loomba [supra] wherein it was held that section 124 of the Act has applicability to only territorial jurisdiction issue and not the other jurisdiction issue when there is inherent lack of jurisdiction. Same dicta was given by the Hon'ble Gujarat High Court in the case of Ramesh D. Patel [supra] wherein it was held that section 124 of the Act has no relevant in so far as the inherent jurisdiction for passing an order of assessment u/s 153A is concerned, hence this legal contention of the ld. CIT-DR is also dismissed. 30. So far as participation in the assessment and first appellate proceedings without raising any legal objections are concerned in this from copy of Form No. 35 it is clear that the assessee raised legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show denial of certain documents by the person from whom they were found. 1.2 At the outset, it is pointed out thatbefore the AO never ever there was any challenge to his jurisdiction. Even before the CIT(A) or the ITAT there is no specific ground challenging AO's jurisdiction that the AYrs assessed were beyond the period of 6 AYrs contemplated in law or that these certain years had already abated. However, very strangely in the garb of propositions made out in the Written submissions these jurisdictional issues have been raised. Before the AO this objection was not raised till the end of the assessment proceedings for the simple reason that there was a bar as provided u/s 124 to rake up this issue later when the assessee had already failed to challenge the jurisdiction within the statutory period prescribed under the Act. 2.1 As mentioned, by raising these ground basically the assessee has tried to challenge the jurisdiction of the AO which is not possible now because of the bar provided u/s 124(3) °f the Act as per which after the finalization of the assessment proceedings it is not open to the assess to challenge the jurisdiction of the AO to assess it. As held in Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia including of Delhi High Court in Jasjit Singh (ITA No.337/2015); & ITAT Delhi decision in DSL Properties P. Ltd. {60 SOT 88 URO} etc. 2.1 Before adverting to the arguments and the decisions relied it is considered necessary to point out the relevant legal position as contained in proviso to section 1530(1) which is as under; Provided that in case of such other person, the reference to the date of initiation of the search u/s 132 or making requisition u/s 132A in the second proviso to sub-section (1) of section 153A shall be construed as'reference to the date of receiving the books of account or document or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. 2.2 Before showing the absurdity of the argument advanced, it is considered necessary to point out that the law does not require as to the time limit within which the documents need to be handed over to the other AO. Going by the details of present appeals, it would be noticed that the search took place on 1001-2012 (PY 11-12) which was yet to end. The date of handing over of document is 29-11-2013 and the AR submits that this date has to be deemed to be the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording of satisfaction was involved where it was held that number of assessments to be framed u/s 153A or u/s 153C have to be same. Further, this DSL decision is based upon additional grounds which were not even taken up before the lower authorities which again is contrary to law and also the Rule 11 of the AT Rules. Further, this decision entertains an alternative contention not raised before the lower authorities which entertainment is contrary to the well laid down law as also explained by Kerala High Court in CK Gopinath { 260 ITR 213 Ker}. In short, for all these reasons the decision has to be held to be not applicable especially in view of the bar contained u/r II 3.2 Delhi High Court judgment in Jasjit Singh in ITA No.337/2015 etc. also are not available as precedents to be used because in this case (as seen from para 5 of the order) the question of law was neither framed nor answered as required u/s 260A of the Act. It is a settled proposition of law that for applying any judgment of the High Court it is necessary that it must formulate the question of law and then it should be answered either way. In support of this ready reference is drawn to the Supreme Court judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances and making out of a prima facie case justifying the conduct of a search action. When it is so, non recovery of incriminating material cannot make the Satisfaction Note nonexistent. Even if incriminating material is not found facts and circumstances narrated in the Satisfaction Note would still require examination/consideration later on in reference to various disclosures made by the Assessee in the return of income. Requirement of any incriminating material before an addition is made u/s 153A cannot be assumed when unambiguously it is not there and such an attempt will amount to reframing the legislation which is the exclusive domain of the legislature. It needs to be appreciated that when unambiguously requirement of addition always to be solely based on seized material is not there and to restrict addition only qua the seized documents/material will amount to reframing the legislation & in this context useful reference can be made of (a) the State of Kerala v. Mathai Verghese {(1986) 4 SCC 746 p.749} where it was observed that the Courts cannot reframe the legislation for the very good reasons that it has no power to legislate. (b) In a taxing Act one has to look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inter alia for various reasons given in short in Annexure A-l to these submissions and also in view of the jurisdictional High Court judgments and the arguments referred to by the CIT(A) as well as what is mentioned in the present submissions specifically in view of Delhi High Court judgments in SSP Aviations Ltd; Chetan Das Lachhman Das; Anila Bhatia; Madugula Venu { 29 Taxmann.Com 200 Del} & Filatex India Ltd { 49 Taxmann.Com 465 Del}. 3. Qua the proposition that "in the earlier innings the additions made on account share capital had been subjected to investigation or verification and hence the same ought not to have been visited u/s 153C of the Act", it is submitted that search action had revealed that the share capital received by the assessee companies were in the nature of accommodation entries. The statements of the Entry Provider SK Tain and that of Ashok Minda as recorded during the course of search showed that the share capital received was not genuine. This search material {search statements recorded u/s 132(4)} had to be necessarily taken note of when in the earlier inning the AO was not having this material at all. In view of the new search material it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Vinimay P. Ltd. AY 11-12 67-69 Ann. of Report of Balram Vinimay P. Ltd. Hans Raj Chug & 70-71 Auditors Report Balram Vinimay P. Ltd. 72-105 ITR for AY n-12 of Balram Vinimay P. Ltd- Date of 106 ITR of Balram Vinimay P. Ltd A-12/13 Trial Balance Sheet 1-4-n to 31-12-11 of Sunny Infro Projects 14 Trial Balance Sheet 1-4-n to 31-12-11 of Balram Vinimay P 16 Trial Balance Sheet 1-4-n to 31-12-n of Lairy Distributors P. A-13/86 Pay Voucher of Rs. 25 lac-Sunny Infraprojects dt. 2-12- 87 Pay Voucher of Rs. 655 lac-Sunny Infraprojects dt. 1-12- 88 Pay Voucher of Rs. 5 lac-Sunny Infraprojects dt. 30-11- 89 Pay Voucher of Rs. 3.23 Cr. -Sunny Infraprojects dt. 2-12- A-18/21 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Sunny 22 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Balram Vinmay 23 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Balram Vinmay 26 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Lairy 64 Balance Sheet 1-4-2011 to 31-03-2008- Lairy Distributors 78 General Document of Balram Vinimay P. Ltd. 79 General Document of Investment of Lairy Distributors P. 1.1.3 Undisputedly, the assessee under consideration are belonging to Minda Group and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessees evidences were required to be adduced to show as to whom these belonged (if not to them). 2.2 About the major reliance placed by the AR on the Delhi High Court judgment in Pepsico India Holdings relied by the assesses cannot be pressed into service as a binding 'precedent' because this judgment is firstly obtained by way of Writ and secondly this judgment is fundamentally based on facts, concessions. Further, as would be shown later in this para, this was obtained by misrepresentation. 2.2.1. It would be noticed that there in that case there were following three types of documents in all (i) Copies of shares whose originals were with that company (Pepsico). (ii) Unsigned Cheques (in the cheque books of Jaipuria Group); (iii) Photo copy of Agreement (between assessee Pepsico & one Pearl Drinks). 2.2.2 The High Court held that mere photo copies of share certificate so found cannot necessarily belong to it (Pepsico) because it is the original document which can be said to be belonging to it and in that context the High Court as an illustration explained that a registered sale deed belongs to the purchaser. Likewise, in the context of the cheques it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efficacious remedy in so far as Income Tax Act, 1961 is concerned it is important to note that in most of the income-tax cases equally effective alternative remedies are always provided about which High Court is at times not made aware. As mentioned, the relief which the Writ petitioner got by way of Writ Order would have otherwise been got if petition u/s 144A had been moved. At the same time, it cannot be said that High Court was not aware about these equally effective alternative remedy provisions and when it is so one can infer that in the facts of the case, in its discretionary powers, High Court only granting concession allowed writs. If it is so, one can say that such an order is fundamentally based on concessions and hence it is inappropriate to apply that concession based decision in other suits or appeals and in this context useful reference can be made of Kulwant Kaur v. Gurdial Singh Mann {(2001) 4 SCC 262, 267 (para 2)} where it was laid down that concession based judgment cannot be termed as a binding precedent. 2.2.6 In this very context, it is apt to mention that the Supreme Court has repeatedly held that in Writ petitions relief cannot be granted to those who ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso just aims at allaying these fears and doubts and nothing more substantive. Any other function assigned to this proviso like interpreting it to mean repetition of already returned or assessed income if no incriminating material is found in search will amount to cut down and nullify the main enactment of section 153(1) itself which unambiguously mandate assessments in all the 6 years involved. In this context useful reference can be made of the Apex Court judgment in the case of Hindustan Ideal Insurance Co. Ltd. v. Life Insurance Corporation of India Ltd. { AIR 1963 1083} where Mudholkar, J., stated the rule qua the interpretation of proviso that 'where the main provision is clear its effect cannot he cut down by the proviso'. 3. Scheme of the Income Tax Act mandates and contemplates only one assessment order for one assessment year except where the law specifically provide for adjudication of issues differently as was earlier provided u/s 158BC and 158BD of the Act. Very clearly view of the Tribunal that except in the case of abatement earlier order passed u/s 143(3) or !47 as well as subsequent orders passed u/s 153A or u/s 153C will subsist on their own needs serious recon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visional Controller, KSRTC v. Mahadeva Shetty (2003) 7 SCC 197, 206 (para 23); --decision applicable to facts of the case is not to be treated as a precedent: as held in (i) National Ins. Co. Ltd. v. Swarna Singh (2004) 3 SCC 297. --observation or simply what was done in a given case, without laying down the law cannot be read as a precedent, as held in Common Cause v. UOI (2004) 5 SCC 222, 223 (para 6)}. --Judgment to be applied should not be per incuriam: as held in Mukesh K. Tripathi v. Sr. DM LIC (2004) 8 SCC 387 396 (para 23). --Judgment to be applied should not be 'sub silentio'. as held in (i) State of UP Synthetics & Chemicals (1991) 4 SCC 139 SC; (ii) Amrit Das v. State of Bihar (2000) 5 SCC 488 para 20. II The decisions being relied upon by the AR as being discussed below are the ones which were obtained by suppressing the vital fact that before the AO there was no challenge to his jurisdiction on the grounds in these case (i) that there was no incriminating material or (ii) that years in which assessment were framed were outside the purview of 6 years contemplated u/s 153C or (iii) that there was no document found which belonged to them so as to invoke 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion note drawn by the AO (i) Documents referred were only pertaining to AY 07-08 & 08- 09 (ii) Satisfaction Note did not show any denial qua documents on the part of the party subjected to 132. (iii) Satisfaction Note does not show any satisfaction recorded in the case of party subjected to 132. (iii) Kurele Paper Mils P. Ltd. (Delhi High Courtorder dated 06-07-2015) (iv) Jasjit Singh (Delhi High Court in ITA No.337/2015) (v) GRG Steel P. Ltd. (Delhi High Court order dated 04-08-2013) (vi) Vrindavan Farms P. Ltd. (Delhi High Court order 12-08-2015) These are not applicable as in these cases neither question of law was formulated nor answered and for this reliance is placed on (i) K.L. Manhas {W.P.(c) No. 4079/2013} in para 9 holding that mere prima facie observation of the Court, not dealing with the issue on merits, does not constitute a binding precedent. (ii) Mehboob Dawood Sheikh v. State of Maharashtra (2004) 2 SCC 362 para 12 (iii) Satwant Singh v. State of Punjab v. {194 ITR 434 SC)} -where it was held that a decision is available as precedent only if it decides a question of law. (vii) MGF Automobiles Ltd. Delhi High Court (order dt. 13-08-2015) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present appeals (as seen from AO's order) there was material in the shape of statements recorded u/s 132(4) during the search and also the other material collected during the currency of the search itself. (ix) Kusum Gupta Delhi HC: Cannot be relied upon because (a) Here in this case no Substantial Question of Law was formulated as required u/s 260A. (b) It just follows its judgment in Kabul Chawla( which is shown to be not applicable in this note). (x) Pepsico India Holdings P Ltd f 370 ITR 29'i Delhi High Court). As already submitted in para 2.2(page 5 of Written Note) the above decision was given in a Writ and was fundamentally on facts where the High Court found no documents to be belonging to the petitioner. Judgment being on facts, concession and also for the reason that this neither shows as to what all questions of law were raised nor formulates substantial questions of its own, is not available to be used as a binding precedent. (i) DSL Properties Delhi Trib; (ii) RL Allied Industries {167 TTT 201; (iii) Chain Roop Baid 134 ITD 237 Deb Not available as precedents because; (a) These are the decisions (e.g. DSL) obtained by suppressing the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 'addition is not the result of incriminating document.' travel beyond the grounds raised. (d) Objection not raised within section 124 time. (xviii) Lakshmi Singh { 68 SOT 26}: Not applicable for the reasons given in case of Sunita Bai above, (xix ) Natural Products Tech {153 ITD s8{ : Not applicable because; (a) Before ITAT only two relevant grounds were that (i) order is not based on incriminating material and (ii) order is without jurisdiction; and relief given in view of ratio decidendi in Pepsi Holdings without appreciating that there was no ratio there because this decision was just on peculiar facts. (b) Here in the present appeals additions/order is based upon incriminating material being Statements recorded u/s 132(4) of the Entry Operator and also of Ashok Minda. (c) DSL Properties decision of Delhi ITAT relied was not available as a precedent. (d) Runs contrary to SSP Aviations (Delhi High Court) where too similar Satisfaction was involved. (e) Objection to jurisdiction was not raised within 124 prescribed time. (xx Qualitron Commodities Ltd {167 TTT 3S3 Del}: Cannot be relied upon for the reasons that; (i) COs of the assessee were entertained bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi in the case of DCIT vs Apoorva Extrusion Pvt. Ltd. in ITA No. 6964/Del/2014 and also stated that judgment of Hon'ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015 is not available as precedent as neither question of law was framed nor answered as required under section 260A of the Act. (iii) That there is no requirement or mandate in law to make additions on the basis of incriminating material found as a result of search, rather, total income has to be assessed by learned assessing officer and thus, additions can be made beyond incriminating material as well and in doing so, the learned CIT DR relied on judgments of Hon'ble Delhi High Court on the cases of CIT vs Chetan Dass Lachman Dass reported in 211 Taxman 61 and Filatex India Ltd. vs CIT reported in 229 Taxman 555 and also on Madugula Venu vs CIT reported in 215 Taxman 298. (iv) That there were many other documents found during the course of search on Minda group, which have not been recorded in the satisfaction note and as such, the argument of the assessee - appellant that no document belonging to assessee - appellant was found during the course of search in Minda group is not correct. (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one beyond the stages mentioned therein. The said provisions are clearly concerned with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and have no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A is concerned, when no search authorization under section 132 was issued or requisition under section 132A was made. (ii) M/s Computer Engineering Services India (P) Ltd. vs ACIT (Delhi ITAT) in ITA Nos. 5874 to 5878/Del/2015 (Enclosed as Annexure - A). Para 34. Before parting with the matter, we would like to deal with the contention of Ld CIT-DR that extant plea of amalgamation as raised by assessee is hit by provisions of section 124(3) of the Act. In this regard, he vociferously argued and tried to persuade us that said provision clearly comes in the way of assessee to raise the plea of assessment on non existing company without raising the same before AO at a later stage and heavily relied on Full Bench decision of Guwathi High Court in Smt. Sohani Devi Jain reported in 109 ITR 130. After much deliberation, we are unable to subscribe to the views of Ld CIT-DR for the simple reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 124 has applicability to only territorial jurisdiction issue and not to other jurisdictional issues when there is inherent lack of jurisdiction. 1.1 That second limb of first argument by learned CIT DR was that "participation/acquiescence by assessee before learned AO will result in giving up the jurisdictional issue by the assessee ", which is contrary to the views expressed by various courts, which have stated that issues of inherent lack of jurisdiction can be raised at any stage and moreover, the said argument of learned CIT DR falls flat, as learned CIT (Appeals) has dealt with the said issues which were raised before learned CIT (A) by assessee vide its grounds of appeal and written submissions. That in support of the aforesaid proposition the assessee - appellant would seek to place reliance on following judgments: (i) Valvoline Cummins Ltd. vs DCIT (Delhi HC) reported in 307 ITR 103. (ii) CIT vs Pai Vaibhav Hotels (Karnataka HC) in ITA No. 2638/2005 (enclosed as Annexure - B). (iii) P.V. Doshi vs CIT (Gujarat HC) reported in 113 ITR 22. (iv) Inventors Industrial Corpn. Ltd. vs CIT (Bom HC) reported in 194 ITR 548. (v) Hemal Knitting Industries vs ACIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recedent, is completely misconceived and is based on complete misreading of the judgment of Hon'ble jurisdictional high court, as Hon'ble High Court has dismissed the appeal of Revenue in the aforesaid matter and has held as follows: "Para 3. The question raised before the ITAT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) "such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of provisions of section 153C of the Act. That further, even if Hon'ble High Court dismisses an appeal by holding that no substantial question of law is involved even then it is submitted that the order of the Tribunal on the issue which was agitated by the appellant before the High Court stands merged in the order of the High Court, and for all intents and purposes it is the decision of the High Court which is operative and which is capable of being given effect to. It is not open to any person (in the instant case it s learned CIT DR) to contend that there is no decision of the High Court and the subordinate forum is entitled to take a contrary view than the one affirmed by the High Court by a process of dismissal of the appeal simpliciter and in order to ?upport the said proposition the assessee - appellant would seek to place its reliance on following judgments: (a) Nirma Industries Ltd. vs DCIT (Gujarat HC) reported in 283 ITR 402. That the learned CIT DR also argued that assessee - appellant has suppressed the provisions of section 153C(2)(a) and in the judgments relied on by assessee - uppellant, the counsel for the assessee's have also suppressed the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by theAOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and as such, the argument of the assessee - appellant that no document belonging to assessee - appellant was found during the course of march in Minda group is not correct" is again misconceived in law, as for taking an assessment under section 153C of the Act, the condition precedent is the satisfaction note and with respect to completed assessments, addition has to be raised upon seized documents as mentioned in the seized documents only, thus, the argument of learned CIT DR that there are other seized documents as well is immaterial and irrelevant as, once all the documents were before the officer of searched person nothing stopped him to record all the said seized documents in +/-e satisfaction note, however, once the assessing officer of searched person records a satisfaction note and hands over the seized documents mentioned therein to the officer of other person than the learned officer of other person is recorded in considering any other material over and above the material/document mentioned in the satisfaction note and furthermore, looking at the documents as well, they are nothing but mere photocopies in the shape of financial statements and trial balances and in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR, the submission of the assessee is as under: Mehmood Dawood Sheikh vs State of Maharashtra reported in (2004) 2 SCC 362 Surinder Kumar vs State of Punjab reported in 194 ITR 434 The proposition laid down in the said judgments are not applicable to the facts of the assessee - appellant as first of all the said judgments are not in context of section 260A of the Income Tax Act and Hon'ble Gujarat HC in the case of Nirma Industries Ltd. vs DCIT (Gujarat HC) reported in 283 ITR 402 has held that "even if High Court dismisses an appeal by holding that no substantial question of law is involved even then the order of the Tribunal on the issue which was agitated by the appellant before the High Court stands merged in the order of the High Court, and for all intents and purposes it is the decision of the High Court which is operative and which is capable of being given effect to. It is not open to any person to contend that there is no decision of the High Court State of Kerala vs and the subordinate. State of Kerala vs Mathai Verghese (1986) 4 SCC 746 CIT vs Keshavlal AIR 1965 SC 866 CWT, Bihar vs Kripashankar AIR 1971 SC 2473 Hindustan Ideal Insurance Co. Ltd. vs LIC (AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on alleged and suggested suppression of crucial and vital facts contrary to assessee has withheld that jurisdiction is not alleged before the AO. On this ground, the ld. CIT-DR has painfully argued that all the precedents on given issue are distinguishable on this ground. We are of the consistent view that at multiple occasions it has been consistently and repeatedly held that the issue relating to jurisdiction of the AO can be raised at any stage even in collateral proceedings because the same strikes at the root of the matter. We are reminded of the classical and land mark decision of the Hon'ble Supreme Court [Four Judges Bench] in the case of Raja Textiles Ltd VS. ITO 87 ITR 539 wherein it was held that : "It was contended by Mr. Manchanda, the learned Counsel for the revenue, that the appellant had a right of appeal to the Appellate Assistant Commissioner under Section 30(1A). He argued that if only he had deposited the amount computed by the Income-tax Officer, then he would have had a right of appeal to the Appellate Assistant Commissioner. Assuming that Section 30(1A) applied to facts of the case, then before having recourse to that provision a person seeking to fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al retainer on behalf of truth and justice; and there is no Crown or other licence which in any case, or for any party or purpose, can discharge him from that primary and paramount retainer. " (Emphasis supplied) 37. At this stage, it is necessary and relevant to respectfully remind the preposition laid down by the Hon'ble Supreme Court in the case of ACCE VS. Dunlop India Ltd [1985] 154 ITR 172 [SC] that the judgments/orders of the Hon'ble Supreme Court/Hon'ble High Court have binding effect on the Tribunal and the orders of the Tribunal have persuasive value or effect on the other Benches of the Tribunal. Speaking for the Hon'ble Supreme Court of India, their Lordships held that the judicial system only works if someone is allowed to have the last word and the last word, once spoken, is loyally accepted. The Hon'ble Supreme Court in this judgment has itself quoted from the decision of House of Lords as follows" "We desire to add and as was said in Cassell & Co. Ltd. vs. Broome (1972) AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of Courts" which exists in our country, "it is necessary for each low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not in existence when the Tribunal passed order in the case of Apoorva [supra]. Thus, we respectfully hold that the benefit of the ratio of the Tribunal order [supra] is not available for the Revenue in the light of preposition laid down by the Hon'ble High Court of Delhi in the case of Jasjit Singh [supra] wherein speaking for the Hon'ble Jurisdictional High Court their Lordship held as under: "Para 3. The question raised before the IT AT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) "such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemently pointed out that the satisfaction notes in all three appeals do not reveal any documents belonging to the assessee as copies of the balance sheet abstracts and companies 'General Business Profits', copy of trial balance sheet can be considered as pertains to the assessee but same cannot be considered as belonging to the assessee. The ld. Counsel further submitted that the precondition for issuance of notice u/s 153C of the Act have not been satisfied as no document belong to the assessee have been found from the premises of the searched person i.e Minda Group and consequently, the notice u/s 153C of the Act deserve to be quashed and all proceedings pursuant thereto should also be quashed. The ld. Counsel has also placed reliance on the following decisions/orders of the Hon'ble Jurisdictional High Court and co-ordinate benches of the Tribunal: i) Kurele Paper Mills P Ltd [Delhi High Court] order dtd 06.07.2015 ii) MGF Automobiles Ltd [Delhi High Court] in ITA No. 13 & 14/2014 order dated 13.08.2015 iii) Pepsico India Holdings P. Ltd 370 ITR295 [Delhi High Court] iv) Chain Roop Baid 154 ITD 257 Delhi v) Brightways Housing & Land Developers Ltd ITA No. 511718/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these legal ground in statements of facts and grounds agitated before the ld. CIT(A). 47. Next question on this controversy is that whether the documents mentioned in the respective satisfaction notes are not belonging to the assessee and these noted do not reveal or unearth any document relevant to A.Y 2006-07 or 2008-09 and thus notices u/s 153C of the Act was bad in law and void ab initio. For the sake of clarity in our findings and conclusion firstly we enclose the respective and relevant three satisfaction notes to this order as Annexure A for ITA No. 3694/Del/2014, Annexure B for ITA No. 6948/Del/2014 and Annexure C for ITA No. 7060/Del/2014. The satisfaction Annexure A [supra] reveals that the basis of initiation of proceedings and issuance of notice u/s 153C of the Act was based on copies of Tax Audit report and Financial statement for A.Y 2011-12. The satisfaction note Annexure B reveals that the basis of initiation of proceedings and issuance of notice u/s 153C of the Act was based on Trial Balance Sheet from 1.4.2011 to 30.11.2011; copies of computation of income for A.Y 2011-12; copy of balance sheet extracts, company's general business profit, copy of schedules, annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions belongs or belong to a person referred in section 153A of the Act", their Lordhships further held that in view of the mandate of the said provision, it is necessary that before the provisions of section 153C of the Act can be invoked, the AO of the searched person must be satisfied that he seized material [which included documents] does not belong to the person referred to in section 153A of the Act i.e. the searched person. In the present case, the ld. CIT-DR could not assist us as to whether the AO of the searched persons recorded any satisfaction as required u/s 153C of the Act. Hence we have no alternative but to accept this contention of the assessee that no satisfaction notes have been recorded by the AO of the searched person i.e. Minda Group which is a mandatory first step and precondition for assumption of valid jurisdiction of initiate proceedings and to issue notice u/s 153C of the Act. 50. The ld. CIT-DR contended that as per the amended section 153C of the Act as amended by the Finance Act, 2015 the mandate of section 153 C of the Act further enhanced as besides "belong to" the words "pertains to" and "relates to" have been inserted hence copies of the balance sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y accounted for in the books of account. He had also contended that the counterfoil belonged to the year 2008-09 and, therefore, the proceedings under Section 153C could not have been initiated for the years to which the documents do not belong and even after initiating proceedings to the year to which the documents belonged, the Assessing Officer ought to have dropped the proceedings because all transactions reflected by the counterfoils by the cheques is duly accounted for. In support of this contention, he had relied upon the decision of Hon'ble Jurisdictional High Court in the case of SSP Aviation Ltd. - 346 ITR 177. At page 189 of the report in paragraph 17, their Lordships held as under:- "The section merely enables the Revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014 escape assessment in the hands of any other person merely because he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. Since we have set aside all the years under appeal, the Revenue's appeals on merits do not require any adjudication and they are also deemed to be allowed for statistical purposes. The Assessing Officer will proceed to make the assessment afresh only in the year where proceedings under Section 153C can validly continue in the light of the above decision of Hon'ble Jurisdictional High Court." 52. The relevant satisfaction notes have been enclosed to this order as Annexure A, B and C which reveals that no documents pertains to A.Y 2006-07 and 2007-08 have been mentioned therein and however the ld. CIT-DR, in his written submissions has mentioned number of documents but as per proposition laid down by the co-ordinate bench of ITAT Delhi in the case of M/s Devi Dayal Petro [supra] there would be no justification for continuation of the proceedings u/s 153C of the Act to which the seized document do not belong and therefore, the AO will drop the proceedings initiated u/s 153C of the Act to which the seized document do not belong. In the present case, when the documents mentioned in the satisfaction notes [supra] do not belong to A.Y 2006-07 to 2007-08 then proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory provisions of the Act and judicial precedents available on the issue. As the ld. CIT-DR and the ld. AR are agreed that assessment or re assessment has to be made u/s 153C r.w.s 143(3) of the Act as per provisions and procedure laid down by section 153A of the Act and obviously the provisions of section 153A and 153C of the Act have been interpreted by various Hon'ble High Courts and Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Kabul Chawla after referring to the decision of the Hon'ble High Court of Delhi in the case of CIT Vs. Chetan Dass Lachman Dass [supra] and the decision of the same Hon'ble High Court in the case of Madugula Venu Vs. CIT reported in 215 Taxmann 298, as relied by the ld. CIT-DR, categorically held as follows: "5. At the outset this Court would like to observe that an analysis of the provisions of Section 153A of the Act has been undertaken by this Court in the decision in CIT v. Anil Kumar Bhatia (supra), which decision was given on the same date that the Court rendered another decision in CIT v. Chetan Das Lachman Das (supra). However, in neither case was the Court considering a situation where there was absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO had power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. This meant that there could be only one Assessment Order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". 18. This Court in CIT v. Anil Kumar Bhatia (supra) posed the question as under: "21. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 of the Act. The decision in Chetan Das Lachman Das 22. On the same date as it rendered the above decision, this Court also pronounced its decision in CIT v. Chetan Das Lachman Das (supra). In the latter case, again, a search was undertaken in the Assessee‟s premises under Section 132 of the Act on 13th December, 2005. The decision itself notes: "in the course of the search certain documents were found which according to the Assessing Officer suggested gross under invoicing of sales and suppression of production/yield of Hing." Consequently that was again not a case where there was no material unearthed during the search. The judgement also notes that it is on the basis of the material unearthed that the AO made additions of suppressed sale value of Hing and compound Hing. The High Court interfered with the order of the ITAT on the ground that it had failed to examine the seized material itself to find out if the findings of the CIT(A) were justified. Consequently the decision in CIT v. Chetan Das Lachman Das (supra) does not deal with the fact situation that arises in the present case. 23. Nevertheless it is interesting to note that in CIT v. Chetan Das Lachman Das ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he has not earned any income which is not disclosed to the income tax authorities or to rebut the material gathered during the search, it is perfectly open to him to do so." One observation in the said judgement is, however, important. While explaining Section 153A of the Act, the Court observed "it is not merely the undisclosed income that will be brought to tax in such assessments, but the total income of the assessee, including both the income earlier disclosed and income found consequent to the search, would be brought to tax." The Court, however, did not answer the question of whether a finding of undisclosed income would have to be based on some material unearthed during the search. The decision in Canara Housing 25. The Court would also like to refer to a judgement of the Karnataka High Court dated 25th July, 2014 in ITA No.38/2014 (M/s. Canara Housing Development Company v. The DCIT). There the Assessee, which was carrying on real estate business filed its return for AY 2008-2009. His case was taken up under Section 143(3) of the Act and an order came to be passed on 31st December, 2010. Subsequently a search took place in the premises of the Assessee under Section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, if any, unearthed during the search." It was further observed that in the facts of that case if the CIT had come across any income that the AO had not taken note of while passing the earlier order, "the said material can be furnished to the assessing authority" who will take note of it while determining total income. The decision in Filatex India Ltd. 28. In Filatex India Ltd. v. CIT-IV (supra), one of the questions framed was whether the ITAT erred on facts and in law in not holding that re- computation of book profit, de-hors any material found during the course of search, in the order passed under Section 153A of the Act was without jurisdiction, being outside the scope of proceedings under that Section? The facts of the case were that there was incriminating material found during the course of search conducted in the premises of the Assessee on 18th January, 2006 and subsequent dates. This included a statement of the General Manager (Marketing). On the basis of the said material and statement additions were made to the disclosed income under Section 115 JB although no material was found specific to such addition. The Court held that under Section 153A "the additions n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Obviously an assessment has to be made under this Section only on the basis of seized material...." 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra) and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents." The decision in Continental Warehousing 35. In Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 Taxmann.Com 78 (Bom) the question addressed by the Bombay High Court was whether the scope of assessment under Section 153A encompasses additions, not based on any incriminating material found during the course of search? It was held that no addition could be made in respect of the assessments that had become final in the event no incriminating material was found during search. The Bombay High Court relied on the earlier decision in CIT v. M/s. Murli Agro Products Ltd. (supra) and discussed the scope and ambit of the proceedings for assessment and reassessment of total income under Section 153A (1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately; b. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant to note that these documents mentioned in the satisfaction note of the AO of the other persons i.e. present assessee do not belong to A.Y 2006-07 or 2007-08, thus, initiation of proceedings and issuance of notice is bad in law and void ab initio. Accordingly, Ground Nos. 2 and 3 in all the three appeals of the assessee are allowed. 53. Since by earlier part of this order we have allowed legal ground Nos. 2 and 3 and came to a conclusion that initiation of proceedings and issuance of notice u/s 153C of the Act was ab initio void and the same was not valid assumption of jurisdiction for proceedings u/s 153C of the Act. Therefore, other grounds of the assessee in all three appeals on merits become academic and infructuous and we dismiss the same without any further deliberations. ITA No. 7061/Del/2014. M/s Sunny Infra Projects Ltd [A.Y 2010-11 54. This appeal by the assessee is directed against the order of the ld. CIT(A) -XXVI, New Delhi dated 9.12.2014 in appeal No. 107/2014-15 for A.Y 2010-11. 55. Although the assessee has raised as many as 13 grounds of appeal, but as per the request of both the parties, first of all we take up the legal objections of the assessee consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of the searched person i.e. Minda Group and consequently the notice dated 29.11.2013 issued under section 153C of the Act deserves to be quashed and accordingly, all the proceedings pursuant thereto also be quashed. The ld. AR lastly contended that the above jurisdictional issue is covered by various judgements/orders of the Hon'ble High Court and Tribunal including the recent judgment of the ITAT Specail Bench Nagpur in the case of Rahul Kumar Bajaj Vs. ITO reported in 69 ITD 1. 58. Replying to the above, the ld. DR submitted that this issue was not raised before the ld. CIT(A) therefore, the assessee cannot raise this issue before the Tribunal as section 124 of the Act put a rider on agitating the same before the Tribunal. The ld. DR pointed out that in the satisfaction note dated 29.11.2013, there is a mention of seized documents viz financial transactions recorded and pertains to Sunny Infra Projects and financial transactions which are tax audit report, financial statements and trial balances, belonging to the assessee. Therefore, notice u/s 153C of the At was rightly issued and subsequent proceedings thereto, cannot be held as bad in law. The ld. DR further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our findings, the said satisfaction note is being enclosed to this order as Annexure D, which would form part of this order. 61 Undisputedly and admittedly, the present case is related to A.Y 2010-11 and from the satisfaction note, Annexure D, it is amply clear that the financial transactions recorded in page 36 to 56 and page 13 are tax audit reports, financial statements and trial balances pertaining to A.Y 2011-12. This facts also gets support from the written submission of the ld. DR dated 21.10.2015. Hence we are inclined to hold that there was no document relevant to A.Y 2010-11 before the AO of the searched person i.e. present assessee neither at the time of recording satisfaction u/s 153C of the Act on 29.11.2013 nor at the time f passing the impugned reasoned order u/s 143(3) r.w.s 153C of the Act. 62 Next question posed by the ld. CIT-DR is that the assessee is prevented by section 124 of the Act for raising jurisdiction issue when the assessee has not raised any objection before the AO and the ld. CIT(A) on this count. On bare reading of section 124 of the Act, it is amply clear that this provision is related to territorial jurisdiction of the assessee which is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including the recent order of the ITAT Delhi Bench in the case of Tanvir Collections P. Ltd. VS. ACIT reported in 168 TTJ 145. On a specific query from the Bench, the ld. CIT-DR could not assist us as to whether any satisfaction note was recorded before handing over the impugned documents to the AO of the searched person i.e. the present assessee. Thus, in the absence of any document or any other contention on record before us, it is safely presumed that the AO of the searched person i.e. Minda Group did not record any satisfaction before handing over the impugned documents to the AO of the present assessee. Therefore, in our considered opinion, in the absence of such satisfaction note by the AO of the searched person, the AO of the searched person miserably failed to confer any lawful and valid jurisdiction on the AO of the present assessee to proceed with the initiation of proceedings and issuance of notice u/s 153C of the Act. Hence, we set aside the initiation of proceedings and issuance of notice u/s 153C of the Act and also hold that the impugned assessment order passed in pursuance thereto is void ab initio. 66. Since we have held that the impugned assessment proceedings a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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