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2017 (9) TMI 585

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..... led analysis has been undertaken by the CIT (A) of the materials produced by the Assessee which justified the deletion of such additions. Even on this score, no interference is warranted with the impugned order of the CIT (A). - ITA No. 566/2017, ITA No. 567/2017, ITA No. 568/2017, ITA No. 569/2017, ITA No. 570/2017, ITA No. 571/2017, - - - Dated:- 4-9-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Appellant Through: Mr. Ashok K. Manchanda, Senior Standing counsel with Mr. Anand Chaudhuri, Advocate. Respondent Through: Mr. Salil Agarwal with Mr. Ravi Pratap, Advocates. O R D E R Dr. S. Muralidhar, J.: 1.Notice. Mr. Salil Agarwal, learned counsel accepts notice on behalf of the Respondent. With the consent of learned counsels for the parties, these appeals are disposed of finally. 2. These appeals by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act ) are directed against the impugned orders passed by the Income Tax Appellate Tribunal ( ITAT ) in two set of appeals involving two different Assessees but arising out of more or less the same set of facts and involving identical questions of law. Consequently, these appeals are being disposed .....

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..... the period 1st April 2010 to 13th September 2010. 2. The case of M/s. Index Securities Research Pvt Ltd. has been centralized to this Circle vide letter F.No. CIT(C)-III/127/CC/201111/2553 dated 5th February 2013. I am satisfied that the documents referred to above belong to M/s. Index Securities Research Pvt. Ltd. warranting action under Section 153C in this case. 8. On 13th February 2013, notice under Section 153C was issued to ISRPL seeking to reopen the assessment for the AYs 2005-06 to 2010-11. 9. The objection by ISRPL to the reopening of the assessments for the aforementioned AYs was rejected by the AO and an assessment order dated 28th March 2013 under Section 143 (3) read with Section 153C of the Act was passed separately for each of the AYs. As far as AY 2007-08 was concerned, the AO made an addition of ₹ 48,51,87,000 representing the share application money received from 16 investors. As far as AY 2008-09 was concerned, the AO made an addition of ₹ 55 crores representing share application money received from two investors and ₹ 3,24,95,000 representing unsecured loan received from one lender. As far as AY 201011 was concerned, the .....

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..... heet were already perused by the AO when he framed the assessment for the said AYs under Section 143 (3) of the Act. (c) As far as AY 2010-11 was concerned, the return had been processed under Section 143 (1) of the Act. In any event, the said documents which pertained to the Assessee but did not belong to it were not relevant for AY 2010-11 but to AY 2011-12. The documents not at all incriminating documents and further, these loose pages did not indicate any undisclosed or concealment of income which called for addition . (d) Even for AY 2011-12, the AO, in the assessment order dated 28th March 2013, made no addition to the returned income. Therefore, even for the AY 2011-12 the said documents were not found to be incriminating. (f) On merits, the CIT (A) observed that the AO in his remand report did not make any comments on the documents submitted by the Assessee. The AO did not bring on record any adverse material to disprove the documents submitted by the Assessee. Further, the CIT (A) observed that it is also surprising to find that, the Assessing Officer did not mention a word about the enquiry that has been conducted by him by issuing summons u/s 131 .....

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..... not be applied in the present case. Order of the ITAT in the appeals concerning ISRPL 13. In the Revenue's appeals before it, the ITAT first took up for consideration the question relating to the validity of assumption of jurisdiction by the AO under Section 153C of the Act. The ITAT relied upon the decision of this Court in Commissioner of Income Tax-7 v. RRJ Securities Limited [2016] 380 ITR 612 (Del) and held that the CIT (A) was justified in holding that the proceedings initiated under Section 153C of the Act were not valid. 14. The ITAT found that, in the first place, the documents at Pages 97 and 98 of Annexure A-17 which were seized from the premises of the searched person did not 'belong' to the Assessee. Further, the said documents did not relate to the AYs in question i.e. AYs 2007-08, 2008-09 and 2010-11. Also, the said documents viz., the trial balance and balance sheet for the period 1st April to 13th September 2010, did not constitute incriminating material. They were relevant for AY 2011-12 and in fact on that basis no addition was made even for that AY by the AO. No addition could have been made on the basis of the said documents for AY .....

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..... 500/- representing share application money received from 26 investors. 18. Against the above assessment orders, the Assessee VSIPL filed appeals before the CIT (A). By separate orders, all dated 30th September 2013, the CIT (A) came to the conclusion that the assumption of jurisdiction by the AO was bad in law since the AO had failed to prove that the documents seized belonged to the Assessee or that they constituted incriminating documents qua each of the AYs in question. Here again, it was found that no addition was, in fact, made by the AO on the basis of the seized documents for the AY to which they related i.e. AY 2011-12. 19. It must be noted that the original assessments in all the three AYs concerning VSIPL were under Section 143 (3) of the Act. All the three assessments were completed even before the date of the search. 20. The CIT (A) held that the documents seized did not constitute incriminating material for each of the AYs in question. On merits, it was found that there was no basis for making any of the additions as the Assessee had furnished information regarding for each of the investors/groups viz., copies of confirmation letters, bank statements, income t .....

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..... Assessee 25. Mr. Salil Aggarwal, learned counsel for the Assessees presented the relevant documents and detailed charts giving in chronological sequence of events in each of the cases of ISRPL and VSIPL. He submitted that prior to the amendment to Section 153 C with effect from 1st June 2015, the legal requirement was that in order to justify the assumption of jurisdiction against the 'other person' under Section 153 C the seized document had to be shown to 'belong' to the other person. It was not enough to show that it pertained to the other person. He relied on the decision in Pepsico India Holdings (P) Ltd. v. ACIT [2014] 370 ITR 295 (Del). He pointed out that the decisions relied upon by the Revenue had been discussed and distinguished by the decision of this Court in Principal Commissioner of Income Tax v. Vinita Chaurasia [2017] 394 ITR 758 (Del). 26. He submitted that the decision of the Supreme Court in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society (supra) placed it beyond controversy that in order to reopen the assessments of the 'other person' under Section 153 C of the Act for the AYs earlier to t .....

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..... der Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the satisfaction note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also give its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the Respondent, argued that notice in respect of assessment years 2000-01 and 2001-02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, .....

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..... ments forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VSIPL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees, they did not belong to them. Therefore, one essential jurisdictional requirement to justify the assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees. 31. As regards the second jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the AYs whose assessments are sought to be reopened, the decision of the Supreme Court in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society (supra) settles the issue and holds this to be an essential requirement. The decisions of this Court in CIT .....

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