TMI Blog2020 (7) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... Document was seized during the course of the search proceedings from the premises of Cosmos group, therefore, as per Sec. 132(4A)(i) and Sec. 292C(1)(i) of the Act, the normal presumption would be that the said document belonged to the said searched person i.e Cosmos group. Nothing is discernible from the satisfaction note as to how the aforesaid presumption was rebutted by the A.O, and on what basis the seized document which was generated, created, maintained and retrieved from the e-mail account of the assessee, from its office premises, was held by the A.O as belonging to the assessee and not the searched person i.e Cosmos group. CIT(A) while dismissing the appeal of the assessee had proceeded on the fact that the seized document viz. jewels wrkng up to 31.08.2014.xls related to the assessee, and therefore the assumption of jurisdiction by the A.O as per the post-amended Sec. 153C (i.e as applicable w.e.f 01.06.2015), was valid and legal. As observed by us hereinabove, the revenue has accepted the aforesaid observations of the CIT(A). Now, when we have concluded that the assumption of jurisdiction in the case of the assessee before us has to be looked into as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. 2. On the facts and the circumstances of the appellant s case and in law the learned CIT(A) erred in holding A.O s action of treating the statement of Shri. Suraj Parmar as the document belonging to the appellant. 3. On the facts and the circumstances of the appellant s case and in law the learned CIT(A) erred in rejecting/dismissing following two original grounds of appeal raised before him: (a). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in not providing the back up/soft copy of the unaccounted tally data seized from the premises of Cosmos Group. (b). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in passing the impugned order in great haste by violating the principles of natural justice and fair play. 4. On the facts and the circumstances of the appellant s case and in law, the Ld. CIT(A) erred in confirming the A.O s action of making addition of 1,74,99,600/- on account of alleged on-money received from Suraj Parmar or Cosmos Group. 5. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-2 [Pages 1-73]. 4. During the course of the search proceedings Shri. Suraj Parmar, promoter of Cosmos group was asked to explain one of the attachment file viz. Jewels wrkng up to 31.08.14.xls appearing in the email rbpt2013@gmail.com that formed part of the seized document viz. Annexure A-1. In reply, it was stated by him that the aforesaid attachment file contained information as regards the unaccounted cash sales of a project viz. Cosmos Jewels containing the buildings named Sapphire I, Sapphire II, Solitaire I, Solitaire II, Ruby I and Ruby II that were constructed by the Cosmos group in Joint venture with the assessee company viz. M/s Riddhi Siddhi Developers Pvt. Ltd which was the owner of the plot on which the aforesaid buildings were constructed. Shri. Suraj Parmar further stated that as per the terms of the Joint Venture agreement the Cosmos group was to give 40% of the sale component, i.e both cash and cheque to the assessee and none of the cash component of the project formed part of the regular books of accounts or was offered to tax. Observing, that a perusal of the aforesaid seized document viz. Annexure A-1 revealed that M/s Cosmos Lifestyles during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C in October, 2016, therefore, the post-amended provisions of Sec. 153C i.e which had come into effect from 01.06.2015 would be applicable in its case. On the basis of his aforesaid conviction the CIT(A) concluded that if the A.O was satisfied that any money, bullion or jewellery or other valuable article or thing, seized or requisitioned, belongs to; or books of account or documents, seized or requisitioned pertains to or any information contained therein relates to a person other than the person referred to in Sec. 153A, then the conditions for assuming jurisdiction under Sec. 153C stood satisfied. In fact, the CIT(A) observed that in a case under Sec. 153C reference to the date of initiation of search u/s 132 was to be considered as a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the A.O having jurisdiction over such other person. On the basis of his aforesaid conviction the CIT(A) was of the view that as per Sec. 153C the date of search would be the date of requisition of material by the A.O, which in the present had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C which had come i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were seized in the course of the search proceedings conducted on the Cosmos group. Rebutting the aforesaid claim of the assessee, the CIT(A) was of the view that as per Sec. 153C as the date of search would be the date of requisition of material by the A.O, which in the present case had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C, i.e which had come into effect from 01.06.2015 would be applicable. Accordingly, on the basis of his aforesaid conviction the CIT(A) had concluded that as the material received by the A.O on the basis of which notice under Sec. 153C was issued related to the assessee, therefore, the notice therein issued was perfectly valid and legal. 8. Before adverting any further, it would be relevant to cull out the provisions of Sec. 153C i.e pre-amended (i.e applicable prior to 01.06.2015) and also the post-amended (i.e applicable w.e.f 01.06.2015), relevant extract of which reads as under: (i). Sec. 153C (as was available on the statute upto 31.05.2015) i.e pre-amended : 153C(1). Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the date of initiation for search u/s 132 shall be considered a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the Ld. A.O having jurisdiction over such other person. There is no ambiguity in the provisions of Sec. 153C. The date of search would be the date of requisition of material by the Ld. A.O., in this case it is in October,2016. Therefore, the section which is in vogue clearly demonstrates that the material has to pertain or relate to the person and not just belonging to the person. Therefore, I have no hesitation in stating that the information which was received by Ld. A.O on the basis of which notice u/s 153C has been issued relates to the assessee and notice u/s 153C is perfectly valid and legal. 5.4.2 The ld. Counsel also raised the issue that the statement of Shri. Suraj Parmar was treated as document belonging to the appellant and notice u/s 153C issued. However, as discussed already and also seen from the remand report of the Ld. A.O, the statement of Shri Suraj Parmar was not treated as document belonging to the appellant. It is one of the material which relates to the appellant and there was a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddhi Developers Pvt. Ltd. and none of the cash component of the project formed part of the regular books of accounts nor was offerd to tax from the project. In view of the above facts, in order to examine whether M/s Riddhi Siddhi Developers Pvt. Ltd. whose key person is Shri Bharat Jhunjhunwala had offered the revenue of cheque and cash component received from Cosmos Group on sale of flats/shops in the project, Cosmos Jewels, a separate file was opened in the case of M/s Riddhi Siddhi Developers Pvt. Ltd. Summons u/s 131 of the IT. Act was issued to M/s Riddhi Siddhi Developers Pvt. Ltd., asking to file certain details. In response to the notice u/s 131, M/s Riddhi Siddhi Developers Pvt. Ltd. filed the requisite details vide its letter dated 28.09.2015. Also, a statement on oath u/s 131 was recorded of Shri. Bharat Jhunjhunwala on 12.10.2015. Though Shri Bharat Jhunjhunwala denied to have received any cash amount from Cosmos group, the seized data clearly indicate the amount of cash received by M/s Riddhi Siddhi Developers Pvt. Ltd., which is prepared as Table 1. In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al pronouncements: (i). CIT Vs. Arpit Land (P) Ltd.(2017)78 393 ITR 276 (Bom) : It was observed by the Hon ble Jurisdictional High Court that as per the preamended Sec. 153C of the Act (i.e prior to 01.06.2015), the proceedings could only be initiated against the assessee i.e a person other than the person searched, only if the document seized during the course of the search proceedings belonged to such other person. It was observed by the Hon ble Jurisdictional High Court, as under: 6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACIT 333 ITR Pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown to be perverse, the question as raised does not give rise to any substantial question of law and thus not entertained. ( ii).PCIT(Central)-2 Vs. Index Securities Pvt. Ltd. (2017) 86 taxmann.com 84 (Delhi) It was observed by the Hon ble High Court of Delhi that the essential jurisdictional requirement for assumption of jurisdiction under Sec. 153C of the Act (as it stood prior to its amendment with effect from 1st June, 2015) qua the other person was that the seized document forming the basis of the satisfaction note must not merely pertain to the other person but must belong to the other person . Observing, that as in the case before them the document though pertained to the assessee, but the same did not belong to them, the High Court concluded that the essential jurisdictional requirement to justify the assumption of jurisdiction under Sec. 153C was not satisfied. In the aforesaid case the Hon ble High Court held as under: 28.4 The Supreme Court also agreed with the decision of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel (supra) to the extent it held that it is an essential condition precedent that any money, bullion or jewellery or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2017) 394 ITR 758 (Del) : Adopting a similar view, the Hon ble High Court of Delhi had observed that as per the pre-amended Sec. 153C (i.e prior to 01.06.2015), it was obligatory on the part of the revenue to show that the document seized during the course of the search proceedings belonged to the assessee i.e a person other than the person searched, and it was not open for the revenue to point out that the document in question pertained to or related to the assessee. It was observed by the Hon ble High Court, as under: 16. At the outset, it requires to be noticed that the search in the present case took place on 19th June 2009 i.e., prior to the amendment in Section 153 C (1) of the Act with effect from 1st June 2015. Therefore, it is not open to the Revenue to seek to point out that the document in question, pertains to or relates to the Assessee. The example given by this Court in Pepsico India Holding Ltd. (supra) is that of a photocopy of a sale deed which contains the names of the vendor and the vendee being found with the broker. The mere fact that such photocopy of the sale deed was found with the broker would not lead to the conclusion that such a document ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other 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: (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re-assess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is after such satisfaction is arrived at that the document is handed over to the Assessing Officer of the person to whom the said document belongs . In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) clearly stipulates that when inter alia any document is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed person because such Assessing Officer has to rebut the normal presumptions which are suggested by the statute under Sections 132(4A)(i) and 292C(1)(i) of the said Act. Therefore, the decision of the Allahabad High Court in the case of Classic Enterprises (supra) would not come to the aid of the Revenue. 8. Insofar as the decision in the SSP Aviation Ltd. (supra) is concerned we do not find anything therein which militates against the view that we are taking. In fact the very distinction between Section 153C and 158BD (although Section 158BD is not mentioned) is indicated by the following observations of the Division Bench in SSP Aviation Ltd. (supra):- It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 29-11-2011 (Claims upto 31/10/2011) C-4/A-4/18-20 These pages contain a detail of DVAT impact (April 10 June 10) Vs PFL Support report and MRP Plan. C-4/A-4/21-23 These pages contain a details of discount per C/S PDL VS PFL. C-4/A-4/27 These pages contain a details of discount per C/S PDL VS PFL. C-4/A-5/54 This page contains details of concentrate stock summary as on 31.12.2010. C-4/A-5/99 This page contains a summary of PFL Claims as on 8/9/2011. Claims upto 31/8/2011. C-4/A-5/100 This page contains a detail of PFL Support year 2011 Accordingly, section 153C of the I.T. Act, 1961 is applicable to M/s Pepsi Foods Pvt. Ltd. which state that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, then the books of account, or documents or assets, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not belong to the searched person, the provisions of Section 153C of the said Act would not get attracted because the very expression used in Section 153C of the said Act is that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A .... . In view of this phrase, it was observed that before the provisions of Section 153C are invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). It was further observed, that the assessing officers should not confuse the expression belongs to with the expressions relates to or refers to . The High Court had arrived at the aforesaid conclusion, observing as under : 13. Having set out the position in law in the decision of this Court in the case of Pepsi Foods Pvt. Ltd. (supra), it must be seen as to whether the Assessing Officer of the searched person (the Jaipuria Group) could be said to have ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises are searched and the registered sale deed is seized, it cannot be said that it belongs to the vendor just because his name is mentioned in the document. In the converse case if the vendors premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy belongs to the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement can be said to belong to the petitioner. 17. In view of the foregoing discussion, we do not find that the ingredients of Section 153C of the said Act have been satisfied in this case. Consequently the notices dated 02.08.2013 issued under Section 153C of the said Act are quashed. Accordingly all proceedings pursuant thereto stand quashed. 18. The writ petitions are allowed 11. Now, we shall advert to the observations of the CIT(A), wherein he had concluded that though the search was conducted on Cosmos group on 24.09.2014, however, as the A.O had issued the notice under Sec. 153C on 13.10.2016, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners that the proceedings under section 153C of the Act are triggered by the search, and hence the provisions of law as existing on the date of the search have to be followed, while it is the case the respondents that the provisions of law as existing on the date of recording of satisfaction by the Assessing Officer of the person searched and the date of issuance of notice under section 153C of the Act have to be followed . 19.5 On behalf of the respective parties, reliance has been placed upon the decision of the Supreme Court in Commissioner of Income Tax v. Calcutta Knitwears (supra). A perusal of the said decision of the Supreme Court reveals that the question before the Supreme Court was the stage at which the satisfaction note could be prepared. In the facts of the present case, we are concerned with the applicability of the amended provisions which are brought into force with effect from 1.6.2015 as to whether the same would be applicable to cases where the search was conducted prior to that date. Thus, the question is what would be the relevant date for applicability of the amended provision, whether it has to be considered in the context of the date of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal provisions meant to deal with defaulters. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC, 1926 AC 37 (HL), CIT v. Mahaliram Ramjidas, (1940) 8 ITR 442, Indian United Mills Ltd. v. Commr. of Excess Profits Tax, (1955) 27 ITR 20 (SC) and Gursahai Saigal v. CIT, (1963) 48 ITR 1 (SC).) 19.8 While it is true that section 153C of the Act is also a machinery provision for assessment of income of a person other than the person searched, in the opinion of this court, this is not a case where by virtue of the amendment, there is merely a change in the procedural provisions affecting the assessees who were covered by the unamended provision. By the amendment, a new class of assessees are sought to be brought within the sweep of section 153C of the Act, which affects the substantive rights of the assessees and cannot be said to be a mere change in the procedure. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein relates to the petitioners. 19.10 In this backdrop, to test the stage of applicability of the amended provisions, a hypothetical example may be taken. The search is carried out in the case of HN Safal group on 4.9.2013. If the Assessing Officer of the searched person had recorded satisfaction that some of the seized/requisitioned material belongs to a person other than the searched person and forwarded the material to the Assessing Officer of the other person, had issued notice under section 153C of the Act prior to the coming into force of the amended provision. The notice under section 153C of the Act was challenged before the appropriate forum on the ground that the seized material does not belong to such other person and such issue was decided in favour of such person on a finding that the seized material does not belong to the other person. Thereafter, in view of the amendment in section 153C (1) of the Act, since the books of account or documents did not belong to the other person but did pertain to him or the information contained therein related to him, can the Assessing Officer of the searched person once again record satisfaction as contemplated under the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the considered view that although the excel file jewels wrkng up to 31.08.2014.xls appearing in the e-mail rbpt2013@gmail.com of Cosmos group, print out of which was seized as Annexure A-1. [Pages 1-195] during the course of search proceedings conducted on Cosmos group might have pertained to or related to or referred to the assessee, the same however did not belong to the latter i.e the assessee. In fact, we find that as the aforesaid document was seized during the course of the search proceedings from the premises of Cosmos group, therefore, as per Sec. 132(4A)(i) and Sec. 292C(1)(i) of the Act, the normal presumption would be that the said document belonged to the said searched person i.e Cosmos group. Nothing is discernible from the satisfaction note as to how the aforesaid presumption was rebutted by the A.O, and on what basis the seized document which was generated, created, maintained and retrieved from the e-mail account of the assessee, from its office premises, was held by the A.O as belonging to the assessee and not the searched person i.e Cosmos group. Be that as it may, the CIT(A) while dismissing the appeal of the assessee had proceeded on the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law the learned CIT(A) erred in rejecting/dismissing following two original grounds of appeal raised before him: (a). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in not providing the back up/soft copy of the unaccounted tally data seized from the premises of Cosmos Group. (b). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in passing the impugned order in great haste by violating the principles of natural justice and fair play. 4. On the facts and the circumstances of the appellant s case and in law, the Ld. CIT(A) erred in confirming the A.O s action of making addition of 6,55,64,120/- on account of alleged on-money received from Suraj Parmar or Cosmos Group. 5. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal. 16. Briefly stated, the assessee company had filed its return of income for A.Y 2014-15 on 21.11.2014, declaring its total income at ₹ 33,91,97,240/-. On the basis of search and seizure proceedings conducted under Sec. 132 on 24.09.2014 in the case of Cosmos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. As such, ordinarily the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression ordinarily has been used in the said rule itself. This rule was inserted as a result of directions of Hon ble High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein it was inter alia, observed as under: We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate shall be added and time shall stand extended accordingly , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders with ..... 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