TMI Blog2020 (2) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... correct in law and facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in quashing the order u/s 143(3) for the last year in the period to be covered u/s 153C of the Act. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the date of recording of satisfaction note instead of date of search is to be taken as the base date for calculating the period to be covered u/s 153C of the Act. 4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that no addition can be done u/s 153C in the case of completed assessment, if no incriminating document has been found during search. 2. Briefly the facts of the case are that return of income was filed originally on 21.09.2010 declaring NIL income. The same was processed under section 143(1) of the I.T. Act, 1961. A.O. issued notices under sections 143(2) as well as 142(1) of the I.T. Act, 1961. The A.O. noted that search and seizure operation under section 132 of the I.T. Act, 1961 was carried out in Raj Darbar Group of Cases on 31.07.2008. The assessee was incorporated on 15.03.2004. During the year under consideration, assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., (supra) in the impugned order as under : (i) that in accordance with the provisions of the 1st Proviso to s. 153C read with 2 Proviso to s. 153A(1) of the Act since the AO of the searched person and the person other than the searched person are the same, the date of satisfaction of the AO for initiating proceedings u/s 153C of the Act in the present case would be the date on which the AO assumes possession of the seized assets/documents in his capacity as an AO of the person other than the searched person, i.e., 20.07.2010 in this case; (ii) accordingly, the AO was required to make assessment u/s 153C, in the manner as mentioned in S.153A of the Act, for the AYs 2005-06 to 2010-11 in terms of the date of satisfaction , i.e. 20.07.2010, and not AYs 2003-04 to 2008-09 in accordance with the date of search in the Rajdarbar group of cases as has been done by the AO (in fact assessments were made for AYs. 2005-06 to 2008-09 since the appellant firm was registered on 15.03.2004); (iii) the assessment/reassessment pending on that date (20.07.2010) would abate, and in respect of such assessments which have abated the AO would have the jurisdiction to proceed and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 2nd Proviso to S.153A of the Act and the principles laid down by the Hon ble Delhi High Court in RRJ Securities Ltd. (supra), the assessment of AY 2010-11 as well had abated since the return of income for this year had not become due on 20.07.2010, the date of recording of the satisfaction, and had not been filed. Therefore, the appellant s case for the present assessment year, AY 2010-11, was to be assessed u/s 153C read with S.153A of the Act, but the AO neither recorded any satisfaction for this assessment year in the case of the appellant nor did he make the assessment u/s 153C of the Act, rather the assessment has been made u/s 143(3) of the Act without recording the mandatory satisfaction . The assessment order is, therefore, not sustainable on this account itself. 4.1.6. I may, however, make mention of the fact that S.153A and 153C of the Act are special provisions for assessment or reassessment emanating from search u/s 132/132A of the Act, and the period after the date of search are to be assessed under the normal provisions of the Act. In terms of the provisions of the 1st Proviso to s. 153C of the Act the date of handing over the seized books/documents/assets, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material indicating undisclosed income was available with the AO. However, respectfully following the judgment of the Hon.ble High Court of Delhi in RRJ Securities (supra) I hold that the assessment of the appellant for AY. 2010-11 was to be made u/s 153C of the Act, but the AO neither recorded any satisfaction for this assessment year in the case of the appellant nor did he issue any notice u/s 153C of the Act and make assessment u/s 153C read with S.153A of the Act, rather the assessment has been made u/s 143(3) after issue of notice u/s 143(2) of the Act without recording the mandatory satisfaction . The assessment order is, therefore, not sustainable on this account itself and held to be ab initio void. 3. The Ld. D.R. relied upon the Order of the A.O. and submitted that since it was not year of the search, therefore, A.O. correctly framed the assessment under section 143(3) of the I.T. Act, 1961. He has referred to comments of the A.O, in which, A.O. has highlighted that in previous years i.e., A.Ys. 2005-2006 to 2009-2010, the Ld. CIT(A) has decided the appeals in favour of the Revenue and the Ld. CIT(A) while deciding the appeal of the assessee for the A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Departmental Appeal. It is an admitted fact that search operation was conducted in the case of Rajdarbar Group of cases on 31.07.2018. During the course of search, various papers were found and seized belonging to the assessee. The A.O. recorded satisfaction note in the case of assessee on 23.07.2010. Therefore, the issue would be squarely covered by the Judgment of Hon ble Delhi High Court in the case of RRJ Securities Ltd., (supra) and the assessment year under appeal 2010-2011 would be governed by the provisions of Section 153C of the I.T. Act, 1961. Since no satisfaction note have been recorded for the assessment year under appeal i.e., 2010-2011, therefore, A.O. was not justified in passing the Order under section 143(3) of the I.T. Act, 1961. In preceding A.Y. 2009-2010 similar view have been taken by Hon ble Delhi High Court in the case of assessee and a specific question as noted above have been considered by the Hon ble Delhi High Court and it was held as under : Where in course of search carried out at premises of a third person, a hard disk was seized and on basis of same proceedings under section 153C were initiated against assessee, since Assessing Officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.504/Del./2015 M/s. BNB Investments Properties Ltd.,A.Y. 2012-2013 : 2. Briefly, the facts of the case are that in this case, a search and seizure operation was conducted on M/s Krrish Group of cases on 09.11.2011. A survey u/s 133A of the Act was also carried out on the business premises of the assessee. Assessee earned income from business and other sources. The assessee filed its original return declaring total income of ₹ 2,08,95,242/- on 28.09.2012. In response to notice under section 153A(1) (a] r.w.s 153C, assessee filed revised return declaring total income of ₹ 2,22,43,593/-. Assessment was framed at ₹ 5,22,43,593/- by making addition of ₹ 3 crores as surrendered amount not incorporated in the return of income. Assessee challenged the validity of the assessment proceedings as well as addition on merit before the Ld. CIT(A). However, appeal of the assessee has been dismissed. 3. Assessee in the present appeal, challenged the validity of the proceedings under section 153C of the I.T. Act and addition of ₹ 3 crores. The assessee also moved an application for admission of additional grounds in which assessee raised the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of National Thermal Power Co. Ltd., (1998) 229 ITR 383 (SC) and Gedore Tools Pvt. Ltd., 238 ITR 268 (Del.). 4. On the other hand, Ld. D.R. submitted that additional grounds have no merit and the same may be rejected. The assessment has been rightly framed under section 153A(1)(b) of the I.T. Act, 1961. 5. After considering the rival submissions, we are of the view that the additional grounds are legal in nature and no new facts shall have to be considered. The additional grounds go to the validity of the assessment proceedings under section 153C of the I.T. Act, therefore, the same should be admitted for deciding the appeal. The Hon ble Punjab Haryana High Court in the case of VMT Spinning Co Ltd., vs. CIT (2016) 389 ITR 326 (P H) considering various decisions including the decision of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., (1998) 229 ITR 383 (SC) held that the Tribunal could decide the appeal on a ground neither taken in the Memorandum of Appeal nor by seeking its leave. The only requirement was that the Tribunal could not rest its decisions on any other ground unless the party who might be affected had sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional A.O. shall have to be construe as date of initiation of search. Since the books of account/impounded documents have been received by the A.O. on 29.08.2013, therefore, A.Y. 2014-2015 will be the year of search and assessments under section 153C of the I.T. Act should have been computed for A.Ys. 2008-2009 to 2013-2014. Since, no notice under section 153C have been issued for assessment year in appeal, therefore, the assessment order is illegal, void and bad in law. He has relied upon the Judgment of Hon ble Delhi High Court in the case of Pr. CIT vs. Sarwar Agency P. Ltd., (2017) 397 ITR 400 (Del.), Order of ITAT, Delhi, B-Bench in the case of ACIT vs. Empire Casting Pvt. Ltd., New Delhi in ITA.No.4018/Del./2011 and C.O.No.207/Del./2012 dated 21.11.2017 and Order of ITAT, Delhi, C-Bench in the case of PavitraRealcon Pvt. Ltd., New Delhi vs. ACIT, Central Circle-32, New Delhiin ITA.Nos. 3185, 3186 3253/Del./2015 dated 04.10.2017. He has also referred to Memorandum explaining Finance Bill 2017 in which it is provided that Amendment in Section 153C shall apply in respect of search conducted or requisition made on or after 1st day of April, 2017. 6. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A : 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 153A shall be 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. [Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section pending on the date of initiation of the search under section 132, would abate. In CIT v. RRJ Securities Ltd. [2016] 380 ITR 612 (Delhi), the court held that in the context of proceedings under section 153C of the Act, the reference to the date of initiation of the search in the second proviso to section 153A has to be construed as the date on which the Assessing Officer receives the documents or assets from the Assessing Officer of the searched person, that further proceedings, by virtue of section 153(1) of the Act, would have to be in accordance with section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow' that the six assessment years for which assessments or reassessments could be made under section 153C of the Act would also have to be construed with reference to the date of handing aver of assets or documents to the Assessing Officer of the assessee. The amendment in section 153C of the Act by the Finance Act, 2017 with effect from April 1, 2017 to the effect that the Block Period for the person in respect of whom the search was conducted as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment year 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de u/s 153C of the Act would also have to be construed as from the reference date of handing over of assets/documents to the Assessing Officer of the assessee. In the case in hand, it would be the date of recording satisfaction under section 153 of the Act i.e. 2nd November, 2009, and therefore, six assessment years which would eligible for assessment/reassessment would commence from assessment year 2004-05 to assessment year 2009-10. The assessment/re-assessment in respect of assessment year 2003-04 would, thus, be beyond the period of six assessment year as reckoned with reference to the date of satisfaction recorded by the Assessing Officer of the searched person. We, therefore, hold that the learned CIT(A) was quite justified in considering the assessment for assessment year 2003-04 as outside the scope of section 153C of the Act, being barred by limitation and without jurisdiction. Accordingly, the impugned assessment order is liable to be quashed. We decide accordingly. 7.3. The ITAT, Delhi, C-Bench, in the case of Pavitra Realcon Pvt. Ltd., New Delhi vs. ACIT, C.C.32, New Delhi (supra) under the same circumstances held that assessment completed under section 143(3) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ACIT, C.C.2, New Delhi and Pavitra Realcon Pvt. Ltd., New Delhi vs. ACIT, C.C.32, New Delhi (supra). The A.O, therefore, should have framed the assessment under section 153C of the I.T. Act in the case of the assessee and at the time of initiating the proceeding against the assessee, should have issued notice under section 153C of the I.T. Act which have not been done in this case. The issue of notice under section 153C is mandatory and a condition precedent for taking action against the assessee under section 153C of the I.T. Act. The assessment order, therefore, vitiate, void, illegal and bad in law and cannot be sustained. The contention of the Ld. D.R. have already taken care in the above judgments. 9. Considering the totality of the facts and circumstances of the case, we set aside the orders of the authorities below and quash the same and allow the additional grounds of appeals. Resultantly, all additions stands deleted. Since the assessment order is set aside on legal grounds, therefore, there is no need to decide the addition on merit which has been left with academic discussion only. 10. In the result, ITA.No.504/Del./2013 of the Assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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