TMI Blog2016 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Since we have held that the impugned assessment proceedings and assessment order u/s 153C of the Act as void ab initio, the other grounds of the assessee appellant on merits are of no consequence in view of lack of jurisdiction of the AO to proceed with the assessments u/s 153C of the Act. In view of our decision on the legal issue, as noted above, there is no need to espouse the other grounds taken by the assessee agitating other legal issues on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case. 4. The learned Commissioner of Income Tax (A) while dismissing the appeal and confirming the addition in respect of share capital of ₹ 10, 21, 00,000/- has failed to consider the fact that during the course of search no incriminating documents in respect of share capital have been found and the proceedings in this case has already been completed u/s 143(3) of the I.T. Act vide order dated 26.12.08 by Income Tax officer, Ward 1(4), Kolkata. 5. The learned Commissioner of Income Tax (A) while dismissing the appeal has failed to appreciate the fact that all the documentary evidence to prove the identity, genuineness and credit worthiness of the amount of share capital have been submitted during the course of assessment proceeding and the investor companies have filed all the details called for by the Assessing officer. 6. The learned Commissioner of Income Tax (A) has failed to appreciate the fact that the addition made by the Assessing officer has been made simply on the basis of suspicion, assumption, surmises, conjectures and without bringing any cogent material on record. 7. The learned Commissioner of Income Tax (A) has failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether for the sake of convenience and brevity. 5. Briefly stated, the facts of the case, as submitted by the ld. AR in the case of M/s Lairy Distributors Pvt. Ltd are that the assessee filed its original return of income in this case on 09.11.2006 declaring loss of ₹ 7,011/- and the same was processed u/s 143(1) of the Act on 10.08.2007. Subsequently, the case was selected for compulsory scrutiny and assessment u/s 143(3) of the Act was completed vide order dated 26.12.2008 at NIL income by disallowing entire expenses of ₹ 7,011/by disallowing entire expenses of ₹ 7,011/-. The ld. A.R. further submitted that search and seizure operation u/s 132(1) of the Act in this case was carried out on 10.1.2012 at the business as well as residential premises of Minda Group in A.Y 2012-13. All subsequent proceedings were conducted therein u/s 153A of the Act. The ld. Counsel further submitted that in the case of the present appellant, i.e. Lairy Distributors Pvt. Ltd, satisfaction note was recorded on 09.09.2013 in A.Y 2014-15, which is available at page 13 of assessee s relevant paper book and notice u/s 153C of the Act was issued against the assessee on 09.09.2013 callin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese are not incriminating and cannot be taken as basis for recording a valid satisfaction and initiating proceedings u/s 153C of the Act and for making valid and sustainable additions for A.Y 2006-07. The ld. AR has further drawn out attention towards judgment of Hon'ble Jurisdictional High Court in the case of SSP Aviation Ltd [supra] and the judgments/order of ITAT co-ordinate Benches and submitted that alleged incriminating material seized and stated to be pertaining to all six A.Ys did not establish any co-relation of documents with the A.Ys in question, under these circumstances, the general satisfaction, as recorded in the satisfaction note is not enough and in this situation, order passed by the AO u/s 143(3) r.w.s 153C of the Act should be quashed. To support this proposition, the ld. AR also placed reliance on the decision of the Hon ble Bombay High Court in the case of CIT Vs. Singhad Technical Education Society reported at 120 DTR 79 [Bom]. 8. The ld. Counsel for the assessee also placed third proposition and submitted that the documents listed and mentioned in the satisfaction note dated 09.09.2013 do not belong to the assessee as these are photocopies of financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed as reference 'to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:]. (iii) The above proviso refers to second proviso to sub-section (1) of Section 153A. That Section 153A(1) and its first and second provisos read as under:- 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall - (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Jasjit Singh in ITA No. 337/2015 (emphasis supplied) and various benches of tribunal, a copy of same have been placed by assessee - appellant in its PB - III at S. Nos. 1 to 6, however, for the sake of brevity, the same are extracted below: Sr. No. Particulars Page Nos of PB- III. 1. Copy of judgment of Hon ble High Court of Delhi in the case of CIT vs Sh. Jasjit Singh in ITA No. 337/2015. 1-4 2. Copy of order of Hon ble IT AT Delhi in the case of Sh. Jasjit Singh vs ACIT in ITA No. 1436/Del/2012. 5-16 3. Copy of order of Hon ble ITA T Delhi in the case of DSL Properties (P) Ltd. vs DCIT reported in 60 SOT 88 (URO). 17-27 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 additions with respect to documents recorded in the satisfaction note and no further, addition can be made by AO , the said judgments have been provided in paper book - III at S. Nos. 6, 8 to 15: S.No . Judgments Pg Nos. of PB - 6. Copy of judgment of Hon ble High Court of Delhi in the case of SSP Aviation Ltd. vs DCIT reported in 346 33-45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 153A (i.e.. the searched person). In the impugned satisfaction note, there is nothing therein to indicate 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Smt. Sohani Devi Jain Vs. ITO reported at 109 ITR 130 [FB] [Gau] submitted that when no objection regarding validity of assessment has been raised or taken before the ITO, then this legal objection cannot be raised subsequently in the appellate proceedings. The ld. DR further placing reliance on the judgment of the Patna Hon'ble High Court in the case of Raja Bahadur Kamakhya Narain Singh [Patna] VS. UOI 51 ITR 596 submitted that while the assessee is not raising 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lidity of the assumption of jurisdiction and initiation of proceedings beyond the prescribed limitation time should be rejected for failure of the assessee to challenge the issue within the time provided u/s 124 of the Act which are pertaining to jurisdiction of the AO to assess or reassess u/s 153A and 153C of the Act. The ld. CIT-DR submitted that the ratio of judgments/orders of the Hon'ble Supreme Court and various Hon'ble High Courts are only binding when there is a ratio 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgments of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Chetan Dass Lachhman Dass reported at 254 CTR [Del] 392 submitted that there is no requirement of incriminating material for making any addition because law does not provide such requirements. The ld. CIT-DR further submitted that in the case of Kabul Chawla order dated 28.08.2015 ITA No. 707/Del/2014 the Hon'ble High Court has not dealt with the proposition laid down by it in the case of Filatex 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 Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction by the AO for initiation of proceedings and issuance of notice u/s 153 of the Act a this legal objection was not raised during the assessment proceedings and the assessee cannot raise the same subsequently as per sec. 124 r.w. proviso to section 153C(1) of the Act. ii) The contention of the assessee regarding limitation is not tenable because the proposition/dicta laid down by the Hon'ble Jurisdictional High Court in the case of Jasjit Singh [supra] and order of the ITAT, Delhi 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction can be raised in terms of section 124(2) of the Act and in terms of sub-section (3) of section 124 of the Act and right to raise such objection shall be forgone beyond these stages but these propositions are related to territorial jurisdiction of the assessee and challenge to the initiation of proceedings and assessment of jurisdiction u/s 153A and 153C of the Act is quite different and this contention also gets strong support from the dicta laid down by the Hon'ble Gujarat High Court in the 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] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to paras 37 to 39 of the order of the Hon'ble High Court in the case of Kabul Chawla [supra] and submitted that addition made by the AO are beyond the scope of addition as no addition is made on the incriminating material found as a result of search and as is recorded in satisfaction note dated 09.09.2013. 23. Regarding fourth limb of arguments of the ld. CIT-DR, the ld. AR vehemently contended that for making assessment u/s 153C after precedent is the satisfaction note and with respect to completed 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recluded from raising the issue of jurisdiction at this stage, more particularly when such objections was not raised during the assessment proceedings before the AO and as per provisions of section 124(2) to (4) the assessee is debarred from raising such legal objections before the Tribunal specially when the assessee participated assessment proceedings before the AO and this omission would give raise to a presumption that the assessee has waived or given up the legal jurisdictional issue. On careful consideration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the objection taken by Ld CIT-DR that the assessee's plea is barred by section 124(3) as same is not applicable to present factual situation. 28. In this regard, firstly, we may point out that on vigilant reading of section 124 of the Act, it is clear that this provision is related to territorial jurisdiction of the AO and the time frame regarding right of assessee to raise objection to the territorial jurisdiction of the AO and time frame or limitation prescribed in this regard but in the present case the assessee is 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 juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to say that; (i) the AO had no jurisdiction to assess the income which was not referable to seized documents or search material; (ii) the AO had no jurisdiction to assess the income u/s 153C in respect of certain previous years to be considered in reference to the date of handing over of the documents. (ii) the AO had no jurisdiction to assess the income of certain years which had not abated i.e. which stood completed earlier. (iv) the AO had no jurisdiction to proceed u/s 153C because the Satisfaction Note prepared by him does not 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 sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it is estopped from challenging it now. B. Assessment bad in law without jurisdiction. (AY was outside the block of 6 years): 1. The Assessee has made a proposition that AY 7-8 (Sunny Infra etc.) falls beyond the block period to be reckoned inreference on the date of recording of the Satisfaction. The AR says that documents were handed over in FY 13-14 i.e. AY 14-15 and accordingly 6 previous years would be AY 08- 09 to 2013-14 and as per this AY 07-08 falls beyond 6 previous years contemplated under the law. In this context, the AR has placed reliance on judgments inter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding u/s 153A in the case of the person who has been subjected to search or requisition issued u/s 132 or 132A of the Act. On this point qua the argument that impugned AY is beyond the prescribed period of 6 years as mentioned in section 153C it is pointed out that decisions/judgments relied are not applicable. 3.1 Delhi Tribunal decision in DSL Properties (P) Ltd. etc. have to be ignored as this decision runs contrary to coordinate A Bench later decision in the case of Apoorva Extrusion P. Ltd. (dated 09-10-2014) where on the identical issue of number of assessments to be framed after recording 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments cannot he qua the additions not referable to search material Hon ble Bench is requested to kindly appreciate that had the legislature intended to restrict the scope of assessment u/s 153A/153C only to the seized material it would have been indicated so as was done by it earlier u/s 158BC or u/s 158BD. One must appreciate that mandate of section 153A/153C is assessment of total income and when it is so the computation of total income cannot be restricted to detection of incriminating evidences alone. Further, as a matter of rule practice search u/s 132 is always preceded by a proper Satisfaction Note recording the facts, circumstances 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in this section that additions should he strictly made on the hasis of evidence found in the course of the search or other post-search material or information available with the AO which can he related to the evidence found. In view of the above it is prayed to reject plea of the assessees by holding that there is no requirement u/s 153A or u/s 153C to always necessarily refer to the search material while making additions. 1.3.1 In so far as reliance placed by the assessee on various decisions of the Tribunal and the High Court (especially including MGF Automobiles and Kabul Chawla) is concerned it is submitted that they are not available as precedents 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88-120 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. 121 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. A-5/36 Annexure Par-A and B of Sunny Infra Projects Ltd. 37'45 Form 3 CD -Sunny Infra Projects Ltd. 47 Balance Sheet company s General Profile of Sunny Infra 48-52 Sch. 1 to 2 of Balance Sheet on 31-03-2011 P L A/c of 53 Cash Flow Statement of Sunny Infra. Projects. Ltd. 54 P L for 31-03-2011 of Sunny Infra. Projects. Ltd. 55 Balance Sheet on 31-03-2011 of Sunny Infra. Projects. Ltd. 56-58 Auditors Report to Sunny Infra. Projects. Ltd. dt. 26-08-2011 59 Computation Sheet of Balram Vinimay P. Ltd. AY 11-12 60 Balance Sheet abstract Gen. profile of Balram Vinimay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccounted income in the garb of share capital, loans etc. During the search statement of the Entry Operator S.K. Jain was recorded wherein he had admitted to have provided accommodation entries. The statement of S.K. Jain is being enclosed as Annexure A-z to these submissions. That apart, statement of Shri Ashok Minda was also recorded on the date of search wherein he had admitted unaccounted income belonging to various entities of its Group totalling to 40 crores. For ready reference copy of this statement recorded on 11-01-2012 is being enclosed as Annexure A-3 to these submissions. Apart from the documents mentioned in the Satisfaction Note and also as mentioned in para 1.1.2 above, these statements were also of incriminating nature and were partly (if not fully) definitely belonging to the assesses under consideration when undisputedly these assessees too belong to main Minda Group. Thus the argument of the AR that in these appeals that there was no search material so as to make addition or for that matter for proceeding u/s I53 C has to be just rejected. 2.1.1 Without prejudice to the above, it is pointed out that the Law does not require recording of Satisfaction Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person just because its (Pepsico) name is mentioned as the payee. Same way copy of the Supply and Loan Agreement was found to belonging to the persons from whose possession it was found because original was with the petitioner Pepsico Holdings Ltd. With the above observations, the Writ petitions were allowed holding the ingredients of section 153C to not to have been satisfied. 2.2.3 From the reading of the High Court order coupled with the Writ petition so filed it becomes apparent that the belongingness of these documents was not questioned by the petitioner (Pepsico) on the ground that they are just the photo copies or that the cheques were unsigned ones. High Court at its own (probably to do substantial justice apparently following the principles of equity) instead of answering the five questions of law so posed allowed the petition holding none of the documents to be belonging to the petitioner. Thus, non answering of five questions posed that too when there were no averment about the nature of a document (like whether photo copy or whether a unsigned document/cheque etc. can be said to be belonging to assume jurisdiction) goes to show that the judgment is basically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions. Ready reference can be made of Apex Court judgment in New Friends Cooperative House Building Society Ltd {(2004) 5 SCC 795'96(para 4)} where order of the High Court in granting relief to non-parties was found to be faulty and suffering from non-application of mind. If Writ Orders are allowed to be taken help of even by those who were not before the High Court it will lead to by-passing the dictum of the Supreme Court and conferring indirectly some powers quite similar to Writs on authorities which they do not in fact have. 2.3 Because of the above reasons, the judgments or the decisions in which Pepsico judgment in turn is relied upon, also become inapplicable. G. Argument that in the facts and circumstances of the case proceedings had not abated: About the argument of the Id. AR it is pointed out that fundamental principle qua any justice administration system which finds echo even in the Civil Procedure Code 1908 is that parallel proceedings have to be avoided. Multiplicity of proceedings or for that matter parallel proceedings do not serve any purpose excepting causing delays, chaos and uncertainties. If 2nd proviso to section 153AOO had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has mixed up and linked the issue of abatement only to the finding of incriminating material in the search which is not even indicated in the law as contained u/s 153A or u/s 153C. Tribunal Benches while deciding the cases have unfortunately failed to appreciate that legislative intent as getting deciphered from the language of section 153A is abatement of the pending proceedings just to avoid multiple proceedings and nothing more which even finds support from the Delhi High Court judgment dated 07-08-2012 in the case of Anil Bhatia where it held that u/s 153A AO is empowered to assess or reassess the total income of 6 assessment years in separate assessment orders which means there can he only one assessment order i.r.o each of 6 assessment years in which hoth disclosed and undisclosed income would he brought to tax. 4 Very clearly interpretation given by the Tribunal is not in conformity with the High Court judgment in Anil Bhatia case. Tribunal Benches have not appreciated that even u/s 147 whose scope is still narrower the Law, as repeatedly explained even by the Supreme Court, also provides for the assessment of income not even indicated in the reasons reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment found which belonged to them so as to invoke 153C. Since the jurisdiction of the AO hovering around the above aspects was not challenged within the time prescribed u/s 124 it was not permissible to raise these issues later before the CIIT(A)/ITAT/HC. (ii) Tribunal decisions cannot be used as precedent because they run contrary to Tribunal s own decision in Apoorva Extrusions P. Ltd. (on whether assesstt was hey and 6 years mentioned u/s 153C etc.) and also contrary to what was held by the jurisdictional High Court in (i)SSP Aviations Ltd; (ii) Chetan Das Lachhman Das; (iii) Madugula Venu; (iv) Filatex India Ltd; (v) Anila Bhatia. (ii) SSP Aviation Ltd. (346 ITR 177 Delhi High Court). Para 17 of the order relied by the AR ..Assessing officer having jurisdiction over the other person to follow the procedure prescribed by section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the 6 assessment years, the proceedings will have to be closed. are clearly obiter and this would become clear from (i) para 15 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent only if it decides a question of law. (vii) MGF Automobiles Ltd. Delhi High Court (order dt. 13-08-2015) in ITA No.13/2014 14/2014. This was the case where the order of the AO was absolutely silent on the important fact as to on what material or evidence the addition/disallowance was based and this prompted the High Court to dismiss Revenue s appeal. Clearly, the judgment is more on facts than on law. This judgment besides being inconsistent with its own earlier decisions in SSP Aviations, Filtax Ltd; Chetan Das Lacchman Das and Anil Bhatia etc. is the one case where no case law, no legal provisions are found referred or discussed hence cannot be taken as a binding precedent as held in CIT v. B.R. Constructions { 202 ITR AP FB}. (viii) Kabul Chawla. Delhi High Court (Order dated 2808-2013): Judgment cannot be relied as a binding precedent because; (i) In this judgment (which deals with jurisdictional issues of incriminating material etc. whereby AO s authority is being challenged) is in ignorance of applicable provisions of 124 which act as a bar to rake up jurisdictional issues later. Since this decision is rendered without reference to the statutory ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fact that the Grounds ( on challenging the validity of Satisfaction Note or the issue of Limitation ( year falling beyond 6 years ) were of the nature of additional ground as they were never raised before AO/CIT(A) and hence required specific leave of ITAT which was not obtained. (b) These decisions (DSL) runs contrary to Delhi High Court order in SSP Aviations Ltd. where too similar Satisfaction Note was involved. (c) The DSL decision is seen obtained by suppressing the fact that these jurisdictional objections were not raised within time mentioned u/s 124. (d) This is contrary to later decision of the Tribunal in Apoorva Extrusion Ltd. Without prejudice to the above this decision is found to be resulting in absurdity whereby by the search action certain years/transactions would get covered which by the time of 153C had not even taken place. Especially in case of RL Allied Industries it would be noticed that adjudication done by the ITAT is not even borne out of the grounds (that or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 because of suppression of the crucial fact that CO was not arising out of the order of the CIT(A) whereby pure legal question challenging the validity of assessment was being challenged. {Refer Ahmedabad ITAT decision in Sandeep M Patel 22 Taxman.com 288}. (ii) CO filed was late and without giving any reason for delay it was entertained. (iii) Runs contrary to Delhi High Court order in SSP Aviation Ltd. (iv) Material fact that AO s jurisdiction was not challenged earlier within 124 time was suppressed. (v) Decision relies on Delhi High Court order (Pepsico Holdings) which was not available as precedent. (xxi Tanvir Collections P. Ltd. 168 TTT US Deb Not applicable because; (a) It runs contrary to Delhi High Court order in SSP Aviations Ltd; (b) It relied on certain portion of SSP Aviation Ltd. which was just obiter not to be used as a precedent. (c) It relied on its decision in Inlay Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) That no such arguments were raised by assessee - appellant in statement of facts and grounds of appeal before learned CIT (A). (vi) Learned CIT DR also distinguished the case laws being referred by the assessee - appellant and further, placed reliance on various case laws which would be distinguished by the assessee - appellant in subsequent paragraphs. 3 REBUTTAL OF THE ASSESSEE - APPELLANT: 3.1 That first and foremost, the argument of learned CIT DR that the assessee is precluded from raising the issue of jurisdiction at this stage, more particularly when such objection was not raised before the learned assessing officer and as such, as per the provisions of section 124(2) to (4), the assessee - appellant is debarred from raising such issues before Hon ble ITAT is contrary to the statutory provisions of the Act, as section 124 of the Act pertains to terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 re Ivins on another Delhi Hish court decision in case of K.K. Loomba reported in 241 ITR 152 has clearly held that section 124 has applicability to only territorial jurisdiction issue and not to other jurisdictional issues when there is inherent lack of jurisdiction. Further, we wish to commemorate the trite principle that an order which is nullity in the eyes of law, plea relating to the same can be raised at any stage even during collateral proceedings as explained in leading case law of Gujarat High court in case of P. V.Doshi 113 ITR Page 22. The Hon ble Delhi High Court in the case of S.S. Ahluwalia (Supra) has held as under: 36. In Budhia Swain and Or s. Vs. Gopinath De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 (Chennai TM) reported in 127 ITD 160. That the second argument of learned CIT DR that AY 200607 and 2007-08 are not beyond the purview of provisions of section 153C of the Act, as the cut - off date has to be reckoned from the date of search and not from the date of handing over of the documents by the AO of searched person to the AO of other person and judgment of Hon ble Delhi High Court in the case of CIT vs Jasjit Singh in IT A 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 , is again based on misconceived reading of law and incorrect reading of judgment of Hon ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015, wherein, Hon ble High Court has categorically held that cut - off date for issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment years will be examined with reference to such date.Para 4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in ITA No. 585 of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31st March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 section 153C(2)(a) and also section 124 before various benches of Hon ble Tribunal. In stating so, learned CIT DR has failed to appreciate the basic fact that statutory provisions cannot be suppressed and in all the cases relied on by assessee - appellant even the department could have argued and mentioned about the provisions of section 153C(2)(a) but they didn t (does it mean that department even suppressed the said provisions), as the reading of the said provision would make it amply clear that in case of search being conducted on an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment has to be made under this Section only on the basis of seized material. v. vi. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vii. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the judgment of Hon ble High Court of Delhi in the case of Pepsico India Holdings (P) Ltd. vs ACIT reported in 370 ITR 295, the said documents cannot be said to be belonging to the assessee - appellant. That further in support of the aforesaid proposition the assessee - appellant would seek to place reliance on following judgments: S.No Judgments Pg Nos. of PB - III 6. Copy of judgment of Hon ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be negated 3.6 As regards, judgments relied upon by learned CIT 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 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire jurisprudence settled by the Hon'ble Supreme Court, various Hon'ble High Court including the Hon'ble Jurisdictional High Court of Delhi. There is a commonality in the arguments of the ld. CIT-DR that all these decisions have been rendered 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 deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law- he will not wilfully misstate the facts, though it be to gain the cause for his client. He will ever bear in mind that if he be the advocate of an individual, and retained and remunerated (often inadequately) for his valuable services, yet he has a prior and perpetual 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On this issue, at the very outset, we observe that the order of the Tribunal in the case of Apoorva [supra] was passed on 09.10.2014, while decision of the Hon'ble Jurisdictional High Court was rendered on 11.8.2015 hence the binding decision of Hon'ble Jurisdictional High Court was 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 ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred and not sustainable in law. The ld. Counsel for the assessee has also placed second broad preposition that notice issued u/s 153C of the Act and assessment framed thereafter is bad in law as no document belonging to the assessee was found in the premises of the searched person. The ld. AR vehemently 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 [Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, we note that the assessee raised similar legal objection by raising Ground Nos. 1 and 2 before the first appellate authority and the same were adjudicated by the ld. CIT(A) in para 6 to 6.7 of the impugned order. Thus the first contention of the ld. CIT-DR is dismissed that the assessee did not raise 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s do not belong to the searched person, the provisions of section 153C do not get attracted because the very expression used by the legislation in this section is that where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitions 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of DCIT Vs. M/s Devi Dayal Petro Chemicals Ltd dated 10.09.2014 wherein it was held thus: 9.1 It was contended by the learned counsel that the documents mentioned by the Assessing Officer in the satisfaction note i.e. documents at pages 1 to 25 of Annexure A-5 are only the counterfoil of the cheque book which is duly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 the proceedings initiated under Section 153C. However, if for the year to which the seized documents belonged, the transaction reflected by the seized documents is not recorded in the books of account, the proceedings under Section 153C will continue and the Assessing Officer will make the assessment afresh in accordance 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of incriminating material found as a result of search. Rather, the total income has to be assessed by the AO. Thus additions can be made beyond incriminating material as well. The ld. Counsel vehemently contended and also eagerly point out that these arguments of the ld. CIT-DR are based on misconceived and misplaced reading of the statutory 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue notices calling upon the searched person to furnish returns for the six AYs immediately preceding the AYs relevant to the previous year in which the search was conducted. Under Section 153A, the AO was required to exercise normal assessment powers in respect of the previous year in which the search took place. Another significant feature was that 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 reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open. 21. Therefore it is clear that the decision in CIT v. Anil Kumar Bhatia (supra) does not deal with a situation where, as in the present case, no incriminating material was found during the search conducted under Section 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the search was conducted. The Court was not entering into a discussion on whether any additions could be made in the assessment by the AO in the absence of any incriminating material unearthed during search. On the other hand, it left it open to the Assessee to raise all contentions in the assessment proceedings. The Court observed in case he has evidence or material to show that 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 Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se where some material was unearthed during the search. Further, the High Court was clear that the addition to the income already disclosed would have to be based on some material unearthed during the search. This is clear from the observation in para 9 of the decision to the effect: The AO is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, 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 foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and should not be arbitrary.... 30. The above passage in Filatex India Ltd. (supra), paraphrases inter alia, the following line in CIT v. Chetan Das Lachman Das (supra): This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material . However, the immediately next line in CIT v. Chetan Das Lachman Das (supra)reads: 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 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search 36. Ultimately in Continental Warehousing (supra), the Bombay High Court answered the question framed by it as under: a. In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153Afor which assessments shall be made for each of the six assessment years 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 200607.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. 52. This preposition was also noted and followed by the Hon'ble High Court. At this stage, it is also relevant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments/order : a) DSL Properties (P) Ltd VS. DCIT 60 SOT 88 [URO] [Del] b) Pepsico India Holdings P. Ltd VS. ACIT 370 ITYR 295 [Del] c) Natural Products Bio Tech Ltd VS. DCIT 153 ITD 58 [Del] d) DCIT Vs. Qualitron Commodities P. Ltd 167 TTJ 553 [Del] e) Satyam Food Specialities P. Ltd VS. DCIT 68 SOT 449 57. The ld. AR parted with the arguments that preconditions for issuance of notice u/s 153C of the Act have not been satisfied in the instant case, as no document belonging to the assessee have been found from the premises 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 Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction note was recorded by the AO of the searched person. Therefore, the case of the assessee is clearly covered in its favour by the judgment of the Delhi Hon'ble High Court in the case of Pepsico Holding India P. Ltd. [supra]. 60. On careful consideration of the above submissions of both the sides, at the very outset, we note that on 29.11.2013, the AO of the present assessee recorded satisfaction note for initiation of proceedings u/s 153C of the Act and issuance of notice under the same provision. For the sake of clarity, in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is provision, it is first of all mandatory that the AO of the searched persons who recorded is satisfied that the document etc does not belong to the searched person and if the first step has not been followed by the AO of the searched person, all subsequent proceedings in pursuance thereto are futile and deserve to be quashed. 65. This proposition has been reiterated several times by the Hon'ble High Court and co-ordinate benches of the Tribunal and counsel of the assessee has relied on plethora of decisions/order to support this proposition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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