TMI Blog2020 (11) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... belonged to the present appellants were found at the premises of searched person/entity. Though, section 153C is a procedural section, but the jurisdiction to assess an assessee under this section is being invoked with help of the section. The AO will be in a position to pass assessment order only if during the course of search, any money, bullion, jewellery and other valuable article or thing, or the documents found belong to other person prior to 1.6.2015, and the AO of the searched person was satisfied that such documents disclosed undisclosed income. The documents belonged to the appellants considered under this compartment of the arguments were not found, rather certain information relating to the assessees were found to be embedded in these documents, but prior to 1.6.2015, jurisdiction under section 153C cannot be invoked on the basis of such information. - Decided against revenue. Whether the assessment under section 153A is to be framed directly based on incriminating material found during the search carried out in the cases of the concerned assessee? - HELD THAT:- For the purpose of section 153A that only seized material is required. However, if there is any other in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocation order how it has become practicable to seize the documents. Conditions imposed under Section 132(3) of the Act for passing the prohibitory orders were not complied with. Accordingly, these orders passed under Section 132(3) of the Act have no validity in the eyes of law. Once the prohibitory orders in the case on hand has been held as invalid then the search concluded in the month of March 2015 shall be taken as the base for calculating the period of passing the assessment order as provided under Section 153B of the Act. In other words the time limit in the case on hand expires for passing the order as on 31 March 2017. Therefore, in the present case the orders have been framed beyond the time prescribed under the provisions of law. Bank lockers with respect to which prohibitory orders were passed under Section 132(3) of the Act were belonging to the other parties who are the income tax assessee. On this count only the prohibitory orders passed by the authorised officer in the name of the assessee in connection with the lockers held by other parties, though related to the assessee cannot be used for extending the time for the assessment provided under Section 153B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer to reopen the assessment? - In the assessee's case, the crucial link between the information made available to the Assessing Officer and the formation of belief was absent. The reasons to believe recorded were not reasons but only conclusions and a reproduction of the information received from the Director (Investigation). Hence it is nothing but a Borrowed satisfaction . There is no mention in reasons recorded with respect to the fact that whether the assessee has filed original return or weather assessment under Section 143(3) was made earlier or not. if assessment under Section 143(3) completed earlier then how it was failure on the part of the assessee to disclose all material facts fully and truly during assessment proceeding for initiating reassessment proceeding after expiry of 4 year from the end of relevant assessment year. In the present case the search information received from the investigation wing was used to form the reason to believe by the AO but without applying the mind. Thus the reasons were merely recorded on the borrowed satisfaction by the AO. The source for all the conclusions was of the investigation report. The tangible m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities below and therefore decline to uphold the same. Thus we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. - Decided in favour of assessee. - ITA Nos.118 to 123/Ahd/2019, 124 to 129/Ahd/2019 - - - Dated:- 12-11-2020 - SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER Revenue by: Shri Virendra Ojha, CIT-DR Assessee by: Shri Tushar Hemani with Shri ParimalsinhB. Parmar And Shri Vijay Govani, ARs. ITA Nos.118 to 123/Ahd/2019, 124 to 129/Ahd/2019, 130 to 135/Ahd/2019, 204 to 206/Ahd/2019, 278 and 279/Ahd/2019, 280 to 284/Ahd/2019, 834 to 836/Ahd/2019, 75 to 80/Ahd/2019, 195 to 200/Ahd/2019, 88 to 94/Ahd/2019, 241 to 247/Ahd/2019, 102 to 108/Ahd/2019, 228 to 234/Ahd/2019, 111 to 117/Ahd/2019, 248 to 254/Ahd/2019, 95 to 101/Ahd/2019, 805/Ahd/2019, 235 to 240/Ahd/2019, 109 and 110/Ahd/2019, 456 /Ahd/2019, 806/Ahd/2019, 457/Ahd/2019, 461/Ahd/2019, 807/Ahd/2019, 837/Ahd/2019 (Asstt.Years : 2008-10 to 2014-16) Shri Hitesh Ashok Vaswani, Smt.Vanita Dilip Vaswani, Smt.Mamata Ashok Vaswani, Smt.Harsha Deepak Vaswani, M/s.Shri Sai Siddhi Corporation, M/s.Venus Township India P.Ltd., M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Opp. Mayor's Bunglow, Law Garden, Ellisbridge, Ahmedabad ii) 901, Sapphire Complex, Opp. Ratnam, CG Road, Ahmedabad iii) G-9, Gold Souk Complex, B/h Sapphire building, CG Road, Ahmedabad iv) A-101, Project site office, Venus Parkland, Near Vejalpur police chowky, Vejalpur, Ahmedabad v) Terrace of Crystal Arcade, Besides Navrangpura, Tele. Exchange, CG Road, Ahmedabad vi) D-5, New Garden flats, Ellisbridge, Law garden, Ahmedabad vii) House of Vasibhai Vasrambhai Desai at village Khadeda, Rabari Vas, Dist. Patan 10.03.2015 12:05 P.M 12.03.2015 11:20 P.M. Ashok Sunderdas Vaswani M/s Venus Infrastructure- Developers (P) Ltd i) Terrace of Crystal Arcade Besides Navrangpura Telephone Exchange, C.G. Road, Ahmedabad. ii) 901, Sapphire Complex, Opp. Ratnam, CG Road, Ahmedabad iii) 307, 3rd floor, Crystal Arcade, Besides Navrangpura Telephone Exchange, CG Road, Ahmedabad iv) 10, Raj deep Tilak Nagar society, Old Wadaj, Ashram Road, Ahmedabad. v) 2, Raj deep Villas, Opp. Rivera 11, B/h Chimanbhai Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Asstt.Year 2009-10 in the case of Rajesh Sunderdas Vaswani. (iii) Whether the assessments completed under section 153A are within the limitation or not. The lead matter suggested by the parties for the proposition is Ashok Sunderdas Vaswani, IT(SS)A.No.88/Ahd/2019 and cross appeal bearing no.IT(SS)A.No.241/Ahd/2019 for the Asstt.Year 2009-10; iv) It has been pleaded that whether reopening of the assessment in the Asstt.Year 2008-09 in the case of Ashok Sunderdas Vaswani is justifiable. This is the single assessment order in the case of Ashok Sunderdas Vaswani for the Asstt.Year 2008-09, ITANo.456/Ahd/2019, and ITA No. 806/Ahd/2019 are to be taken together. v) The last compartment of the argument is with regard to the appeal in ITA No.837/Ahd/2019 in the case of Venus Infrabuild for the Asstt.Year 2015-16. It is also to be decided independently on merit. 5. Thus, as agreed by the ld.representatives, we have heard first proposition canvassed by the ld.counsel for the assessees on 25.8.2020. The issue under the first proposition is, whether the proceedings initiated under section 153C are valid? According to the ld.counsel for the assessee, this proposition would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson would recordhis satisfaction that the action is required against other such person with regard to undisclosed income embedded in that evidence. He took us through the satisfaction-note recorded by the AO, for example in the case of Dilipkumar Lalwani [IT(SS)A.No.75/Ahd/2019] and others. 7. The ld.counsel for the assessee drew our attention towards page no.456 to 483 of the paper book, wherein the satisfaction note recorded by the AO of the searched person is placed on record. He also pointed out that the AO of the searched person as well as all the present assessees is common, but according to the requirement of law, he has to record satisfaction first while examining these documents in the capacity of AO of the searched person, thereafter, fresh satisfaction was to be recorded while issuing notice under section 153C. While taking us through this satisfaction, he contended that a perusal of the satisfaction would indicate that the AO nowhere recorded a finding that documents belong to the assessees were found at the premises of the searched person. In all of his narrations, he has only recorded that documents contained information which relates to the assessee. From the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . proprietor of Ocean Valves Mfg. Co. Notice under section153C was issued and these notices were challenged by the assesees in SCA No.19647 of 2018. Hon ble Gujarat High Court has quashed these notices by holding that information recorded by the Revenue couldbe termed as relates to or pertains to petitioner. It could not be construed as a document belongs to the petitioner. Similarly, a large number of other cases have been considered by the Hon ble Gujarat High Court. Thus, according to the ld.counsel for the assessee, this judgment is fully applicable on these 43 appeals, where assessments have been passed under section 153C of the Income Tax Act, 1961. 10. The ld.CIT-DR, on other hand, submitted that the assessment proceeding of the searched person was pending when the amendment in section 153C was made. The position of law for the purpose of section 153C is that during the course of search, if any material belongs to some other person was found and seized, and the AO of the searched person was satisfied that this material belongs to the person other than the searched person, then he would record his satisfaction about the undisclosed income embedded in those documents and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese judgments, it was contended that the moment search is conducted, then a valid notice under section 153A should be issued, even on non-disclosure of any incriminating material, which could reveal undisclosed income. Thus, according to the ld.CIT-DR there is no necessity of incriminating material unearthing the undisclosed income for assessments under section 153A or 153C of the Act. Only searching the assessee under section 132 is sufficient. The ld.CIT-DR further submitted that sufficiency of satisfaction and satisfaction are different thing. It was the satisfaction only or word belongs or pertains to could not be construed to quash the orders passed by the AO. If the AO was satisfied for taking action under section 153C, then the meaning of words belongs or pertains to would not change the colour. 13. In rebuttal, the ld.counsel for the assessee submitted that the Hon ble jurisdictional High Court in the case of Pr.CIT Vs. Saumya Construction P.Ltd. 387 ITR 529 (Guj) has held that addition under section 153A can be made only on the basis of incriminating material found during the course of search. Decision of Hon ble Kerala High Court is not in line of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or requisitioned, ~ belongs to; or (b) any books of account or documents, seized or requisitioned, or any information contained therein, 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 notice and assess or reassess the income of the other person in accordance -with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 15. A perusal of the above provisions would reveal that in the case of search action, carried out under section 132 of the Income Tax Act, prior to 1.6.2015, if any money, bullion, jewellery or other valuable article or thing, or books of accounts or documents, seized or requisitioned belongs or belong to a person other than the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putes. 17. Hon ble Gujarat High Court has formulated the following question whether section 153C of the Act as amended w.e.f. 1.6.2015 would be applicable to cases where search initiated prior to that date ? After an elaborate discussion, Hon ble court arrived at the conclusion that this section would be applicable prospectively only on the search conducted after 1.6.2015. We would like to take note of the relevant discussion made in the judgment, which reads as under: 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 the amendment expands the scope of section 153C of the Act by bringing in an assessee if books of account or documents perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, 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 provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi), on which reliance had been placed on behalf of the petitioners, the Delhi High Court has held thus: 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 valuable articles or thing or books of account or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. The Supreme Court observed: This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. 28.5 The above categorical pronouncement of the Supreme Court cannot, by any stretch of imagination, be termed as obiter as has been suggested by Mr. Manchanda. Even the obiter dicta of the Supreme Court is binding on this Court. 29. The search in the case before the Supreme Court was prior to 1st June 2015. Apart from the fact the Supreme Court approved the above decision of the Gujarat High Court holding that the seized documents should 'belong' to the other person, the legal posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice such fact during the course of assessment proceedings. Therefore, whether the satisfaction is recorded immediately after the search, after initiation of proceedings under section 153A of the Act or after assessment is framed under section 153A of the Act in the case of the searched person, the trigger point remains the same, viz., the search and, therefore, the statutory provision as prevailing on that day would be applicable. While it is true that sections 153A and 153C of the Act are machinery provisions, but the same cannot be made applicable retrospectively, when the amendment has expressly been given prospective effect. Besides, though such provisions are machinery provisions, the amendment brings into its fold persons who are otherwise not covered by the said provisions and therefore, affects the substantive rights of such person. In the opinion of this court, the decision of the Supreme Court in M.A. Merchant (supra) would be squarely applicable to the facts of the present case wherein it was held thus: 18. This judgment has been followed by the Hon ble Gujarat High Court in the cases of i) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj); ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entativs, we have gone through all these pages. We would like to take note of relevant part of the satisfaction viz. para- 7.3, which reads as under: 7.3 On the basis of discussion in the preceding paragraphs, it is noticed that XXX account mentioned in various documents seized during the course of search in the Venus Group refers to Shri Dilip Kumar Lalwani and the information contained therein relates to Shri Dilip Kumar Lalwani. There are various transaction recorded in the cash book and related cash vouchers. .. .. .. 10. In view of above facts as mentioned above, I am satisfied that the above mentioned documents seized from the from the premises (i) 801-802, Broadway Business Centre, Opp. Mayor's Bungalows, Law Garden. Ellisbridge. Ahmedabad and (ii) Terrace of Crystal Arcade, Nr. Navrangpura Telephone Exchange, C. G. Road, Ahmedabad contains information which relates to the assessee, Shri Dilip Ku/riar Lalwani. Further, I am also satisfied that satisfied that documents seized have a bearing on the determination of the total income of the assessee, Shree Dilip Kumar Lalwani for assessment years 2009-10 to 2014-15. The assessee being other than the person r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued did not belong to the appellant. The appellant has also contended that there is no provision in the Income Tax Act either to drop the proceedings u/s. 153C or to issue second set of notices. The appellant has also relied upon the case laws in the case of Pepsico India Holding Pvt. Ltd. Vs. ACIT, RRJ Securities Ltd. [62 Taxmann.com 391] (2015) Sinhgad Technical Education Society [84 Taxmann.com 290]. The AO has dealt with the argument raised by the appellant in Para 4.9, 4.10 Para 5 of assessment order. The provision of Section 153C has been amended with effect from 01/06/2015 where if the Assessing Officer is satisfied that any books of account or documents seized pertains to, or any information contained therein relates to any person, other than the person referred to in Section 153A of the Income Tax Act, then books of account or document shall be handed over to the Assessing Officer having jurisdiction over such other person and the AO shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Earlier scope of section 153C was in the cases where the documents s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year 2012- 13. 2A In case of Venus Group, reference is made to the facts as appearing in Special Civil Application No. 19647 of 2018. 2A.1 The petitioner, who is an individual and proprietor of M/s. Ocean Valves Mfg. Co. filed his return of income for assessment year 2012-13 on 14.3.2013 declaring total income of ₹ 7,27,700/-. A search came to be conducted on various premises of Shri Ashok Sundardas Vaswani, M/s. Venus Infrastructure and Developers P. Ltd. on 13.3.2015. During the course of search various documents were seized in which information about transactions relating to the petitioner was found. The seized incriminating documents related to unaccounted cash transactions which were analysed and correlated with other seized documents. Among the cash transactions as recorded in the seized unaccounted cash book which was found during the course of search, reference was also made to the petitioner. Based on such seized material, the Assessing Officer initiated proceedings under section 153C of the Act by issuing the impugned notices dated 22.3.2018 and 14.8.2018. Subsequently notices have been issued to the petitioner under section 142(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the assessment under section 153A is to be framed directly based on incriminating material found during the search carried out in the cases of the concerned assessees. Under this fold of arguments, we take up the following appeals: Assessee Appeal No. Asst. Year Appeal by Rajesh Sunderdas Vaswani IT(SS)A 95/Ahd/2019 2009-10 Assessee Rajesh Sunderdas Vaswani IT(SS)A 96/Ahd/2019 2010-11 Assessee Rajesh Sunderdas Vaswani IT(SS)A 97/Ahd/2019 2011-12 Assessee Rajesh Sunderdas Vaswani IT(SS)A 98/Ahd/2019 2012-13 Assessee Rajesh Sunderdas Vaswani IT(SS)A 99/Ahd/2019 2013-14 Assessee Rajesh Sunderdas Vaswani IT(SS)A 100/Ahd/2019 2014-15 Assessee Rajesh Sunderdas Vaswani IT(SS)A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Deepak Budharmal Vaswani IT(SS)A 249/Ahd/2019 2010-11 Department Deepak Budharmal Vaswani IT(SS)A 250/Ahd/2019 2011-12 Department Deepak Budharmal Vaswani IT(SS)A 251/Ahd/2019 2012-13 Department Deepak Budharmal Vaswani IT(SS)A 252/Ahd/2019 2013-14 Department Deepak Budharmal Vaswani IT(SS)A 253/Ahd/2019 2014-15 Department Deepak Budharmal Vaswani IT(SS)A 254/Ahd/2019 2015-16 Department 25. The ld.counsel for the assessee while impugning orders of the Revenue authorities contended that almost all the Hon ble High Courts are unanimous on the point that assessment under section 153A is to be framed on the basis of material found during the course of search or requisitioned under section 132A of the Act. Other information gathered during the search and survey carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143(3) r.w. section 153A. Section 143(3) r.w.s. 153A is to be framed strictly on the basis of incriminating material found during the course of search carried out in the case of the assessee. No cognizance is to be taken on any material which was not found during the course of search action. If search action under section 132 of the Act has simultaneously been carried out in the cases of some other assessees, and some material belong to the assessee was found, then such material can be taken into cognizance only for the purpose of proceedings under section 153C of the Act, and not in the proceedings under section 153A of the Act. Thus, according to the ld. counsel for the assessee, material collected during the course of search action carried out in the cases of some third parties, cannot be considered while framing assessment under section 143(3) r.w.s. 153A of the Act. For that purpose, proceedings under section 153C must be initiated. The ld.counsel for the assessee thereafter took us through the assessment orders, and submitted that on the basis of finding recorded in the assessment orders, the assessees have compiled the details in tabular forms exhibiting the additions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 29. We have duly considered rival contentions and gone through the record carefully. Before adverting to the facts and alleged seized material considered by the ld.AO for making the addition in the hands of the present three assessees, we deem it appropriate to bear in mind the position of law propounded in various authoritative judgments recording scope of section 153A of the Act. We are of the view that in this regard, there were large numbers of decisions. First we refer to the decision of Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del). Hon ble Delhi High Court after detailed analysis has summarized the following legal position: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically held that serial no.(iv) of the above proposition, the Hon ble Delhi High Court has specifically held that assessment under section 153A of the Act has to be specifically made on the basis of seized material. ITAT Delhi Bench was considering an aspect whether the evidence in the shape of books of accounts, money, bullion, jewellery found during the course of search relates to other person than the searched person, can that be considered while making assessment under section 153A of the Act. Like in the present appeals, simultaneous search was carried out at the premises of the Venus Infrastructure and Ashok Sunderdas Vaswani, and the material found during the search of Venus Infrastructure Developers or Ashok Sunderdas Vaswani could be used while framing the assessment of Rajesh Sunderdas Vaswani and Deepak Budharmal Vaswani under section 153A of the Act. ITAT Delhi Bench has specifically held that material recovered from the premises of other person cannot be used in the hands of the searched person. For that purpose an assessment under section 153C or 147 is to be made. At this stage, in order to fortify ourselves, we would like to make reference to the following paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so-called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of the documents discovered under any other provision of law, but certainly, not under Section 153A. This goes to the root of the matter. 34. Hon ble Court has specifically observed for the purpose of section 153A that only seized material is required. However, if there is any other incriminating material belong to the assessee found at the premises of the some other person, then the assessment has to be made under other provisions and not under section 153A of the Act. Hon ble jurisdictional high Court has also considered the decision of Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Hon ble Gujarat High Court framed the following question of law in the case of Pr.CIT Vs. Saumya Construction (supra): [A] Whether the order of Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observe that scheme of the Income Tax Act would provide that a regular assessment of the income is to be made under section 143(3)/144. In the case of an escaped income, then a notice under section 148 should be issued and the assessment is to be made under section 147 r.w. section 143(3). In case a search is carried out on an assessee, then that search could give rise to a proceedings viz. under section 153A qua the person who has been searched. The income has to be assessed on the basis of material found during the course of search. The second category of the person is third-party and the assessment could be made under section 153C of the Act. The assessment under section 153C is to be made on a condition that during the course of search any money, bullion, jewellery, assets, documents belonged to the assessee prior to 1.6.2015, and information relates/pertains to assessee after 1.6.2015 was found qua to the person other than the searched person. In that situation, the AO of the searched person would record his satisfaction that such material belongs to third-person, and he would transmit that material along with his satisfaction to the AO having jurisdiction on such other person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6500000 0 0 0 0 9000000 Note - 1 Land at Santej, Survey No.654 0 7000000 6757900 0 0 0 0 13757900 Note - 1 Land at Ambai - FP/22 0 28120000 0 0 0 0 0 28120000 Note - 1 Land at Ognaj, Survey No.1441/11 0 0 11000000 21040000 136500 0 0 32176500 Note - 1 Land at Ognaj, Survey No.1441/12 0 0 5500000 24442250 13700 0 0 29955950 Note - 1 Land at Santej, Survey No.669 0 0 32000000 1000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Expenses related to projects: Venus Amadeus Venus IVY 0 0 2078200 1800000 0 0 0 3878200 Note - 1 Atlantis Benicia 0 778250 6689750 0 0 0 0 7468000 Note - 1 Particulars 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Total ( 09-10 to 15-16 ) Basis of addition Investment in sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book seized from terrace of Crystal Arcade (i.e. Annexure A-1 to 142) searched in case of ASV VIDPL ( not RSV ); Note - 2: Addition based on - - information gathered during various search / survey carried out by Kolkatta Investigation Wing in cases of completely unconnected third parties ; (not RSV ) ; - Material seized from 901, Sapphire complex which was searched in the case of ASV and VIDPL (not RSV ) ; - cash book seized from terrace of Crystal Arcade (i.e. Annexure A-1 to 142) searched in the case of ASV and VIDPL (not RSV ) ; Note - 3: Addition based on - - information gathered from search and survey in the case of SCS PIL i.e. completely unconnected third parties (not RSV ) ; - cash book seized from terrace of Crystal Arcade (i.e. Annexure A-1 to 142) searched in the case of ASV and VIDPL (not RSV ) ; ASV - Ashok Sunderdas Vaswani VIDPL - Venus Infrastructure Development Pvt. Ltd. RSV - Rajesh Sunderdas Vaswani SCS -Shirish Chandrakant Shah PIL - Prrante Industries Ltd. SANJEET MOTORS FINANCE PVT. LTD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rabhi 0 0 0 0 0 346544 161300 507844 Pgs.37 1-373 Transactions with Thakore family 0 2000000 8500000 18515000 46750000 13800000 9800000 99365000 Pgs.37 4-376 Investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pgs.46 0-464 Shyam Residency 4700500 274750 15345575 25863100 49818975 73783250 72775600 242561750 Pgs.46 5-474 VS 1993000 1287900 704000 7642000 9023500 2491300 6250700 29392400 Pgs.47 5-479 Venus Township 0 48790 310330 36600 0 205000 250000 850720 Pgs.48 0-481 Particulars 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Total ( 09-10 to 15-16 ) Basis of addition Investment in shops at 3rd Eye building, Panchwati Road, Ahmedabad 7460000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note 4 Jewellery 0 0 0 0 0 0 4448456 4448456 Note 5 Total 669611628 383735729 1284943444 1355844286 1085897862 657126869 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2 of the assessment order for the Asstt.Year 2009-10 in the case of Deepak Budharmal Vaswani would reveal that this addition has been made on the basis of the details of cash payments recorded in unaccounted cash book seized from Terrace of Crystal Arcade . The following observation of the AO would make it clear: On the basis of the above incriminating material seized evidences, it is noticed that details of cash payment have been found recorded in unaccounted cash book seized from Terrace of Crystal Arcade, C.G.Road, Ahmedabad and upon correlation of seized documents, it has been established that the land at Nidhrad, Chekhla villages have been purchased by Vaswani family members/Venus group concerns/Thakor family members. The land was purchased in the name of Thakor family members but the funds were made available by Vaswani family members and Venus group concerns. The on-money has been paid over and above the registered value of the land. 38. Thus, the AO is talking of on-money which has been unearthed, according to him, during the course of search, on the basis of alleged cash book. This cash book was not found from the premises of the assessee. It was found from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Hon ble jurisdictional High Court, therefore, we do not deem it necessary to deal with other grounds. 40. The proposition No. 3 is, whether the assessments framed under Section 153A of the Act were within the limitation or not? Under this fold of arguments, we take up the following appeals: ASHOK SUNDERDAS VASWANI Appeal No. Asst. Year Appeal by Section Date of Asst. Order Within limitation ? IT(SS)A 88/Ahd/2019 2009-10 Assessee 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 89/Ahd/2019 2010-11 Assessee 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 90/Ahd/2019 2011-12 Assessee 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 91/Ahd/2019 2012-13 Assessee 143(3) r.w.s. 153A 26.12.17 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No IT(SS)A 105/Ahd/2019 2012- 13 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 106/Ahd/2019 2013- 14 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 107/Ahd/2019 2014- 15 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 108/Ahd/2019 2015- 16 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 228/Ahd/2019 2009- 10 Department 143(3) r.w.s, 153A 29.12.17 No IT(SS)A 229/Ahd/2019 2010- 11 Department 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 230/Ahd/2019 2011- 12 Department 143(3) r.w.s. 153A 29.12.17 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-11 Department 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 250/Ahd/2019 2011-12 Department 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 251/Ahd/2019 2012-13 Department 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 252/Ahd/2019 2013-14 Department 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 253/Arid/2019 2014-15 Department 143(3) r.w.s. 153A 26.12.17 No IT(SS)A 254/Ahd/2019 2015-16 Department 143(3) r.w.s. 153A 26.12.17 No 41. The learned AR for the assessee before us submitted that the provisions of Section 153B(1)(a) of the Act mandate that assessment for six assessment years referred under Section 153A(1)(b) of the Act should be completed within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Act, 1997) w.e.f. 01.01.1997.We will be taking cognizance of both the provisions. 44. The learned counsel further submitted that as far as time period for passing the assessment provided in sub-Section (1) of Section 153B is concern, there is no dispute between the parties. This Section contemplates that assessment order would be passed within two years from the end of the financial year in which the last of the authorization for search under s.132 of the Act or requisition under s.132A of the Act was executed. It means that in the present appeals, the search actions started on 10.03.2015. Search was concluded on 13.03.2015 meaning thereby last of the authorization was executed before the end of the FY 2014-15 i.e. 31st March, 2015. The assessment was required to be passed before the 31stMarch, 2017 i.e. within two years from 31st March 2015 but prohibitory orders were put on certain items/premises while executing the authorization of warrants. In the present case, these orders were put under s.132(3) on 11th March 12th March, 2015. According to the Revenue, prohibitory orders were lifted in the month of May and thus it is to be construed that search was concluded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in the case of Dr. C. Balakrishnan Nair vs. CIT reported in 237 ITR 70 (Ker.) as well as upon the judgment of Hon ble Bombay High Court in the case of CIT vs. Sandhya P. Naik 253 ITR 534 (Bombay). He placed on record copies of all these judgments. 46. In the second fold of argument in this compartment, he contended that no doubt Section 132 sub Section (3) authorizes Authorized Officer for putting prohibitory orders, however, such power cannot be exercised according to the whims of the Officer it can only be exercised under the circumstances namely; (a) it is not practicable to seize any books of accounts, other documents, money, bullion, jewellery or other valuable articles or things (b) reasons for the same that is why it is not practicable to seize ought to be recorded by the concerned Officer. In other words, the Officer ought to have recorded his satisfaction as to why he wants to put the prohibitory orders. He further submitted that if prohibitory order is put with the intention to prolong the alleged search under the impression that it will keep the search proceeding open and department will have a longer period of limitation for passing assessment order th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er period of limitation for passing the assessment order. For buttressing his contentions, he relied upon the following judgments and also placed on records of copies of the judgments: 1. PCIT vs. PPC Business Products (P.) Ltd. - (2017) 398 TTR 71 (Delhi) 2. CIT vs. S. K. Katyal - (2009) 308 ITR 168 (Delhi) 3. CIT vs. Sarb Consulate Marine Products (P.) Ltd. -(2007) 294 ITR 444 (Delhi) 4. CIT vs. Deepak Aggarwal - 308 ITR 116 (Del) 5. CIT vs. D. D. Axles (P.) Ltd. - 323 ITR 558 (Del) 6. A. Rakesk Kumar Jain vs. JCIT - (2013) 31 taxmann.com 312 (Madras) 7. ACIT vs. Shree Ram Lime Products Ltd. - 137 ITD 220 (Jodhpur) (SB) 8. Bharat Sekhsaria vs. DCIT - (2015) 60 taxmann.com 476 (Mumbai - Trib.) 9. DCIT vs. Sushil Kumar Jain - 127 ITD 264 (Indore) 10. Nandlal M. Gandhi vs. ACIT - 1 15 ITD 1 (Mumbai) 11. Plastika Enterprises vs. ACIT - (2007) 161 Taxman 163 (Mumbai) (MAG.) 12. Smt. NeenaWadlrwa vs. DCIT - (2003) 128 Taxman 149 (Delhi) (MAG.) 13. CIT vs. Om PrakashMandora - (2013) 37 taxmann.com 426 (Rajasthan) 14. Woodword Governors India vs. CIT - 253 ITR 745 (Del.) 49. On the other hand, learned CITDR relied upon the findings of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under Section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 51. A bare perusal of Section would reveal that it start with a non obsenate clause notwithstanding anything contained in Section 153 An assessment order has to be passed within two years from the end of the FY in which the last of the authorization for and each under s.132 of the Act was executed or requisition under s.132A is executed. The expression last of the authorization has been explained in sub Section (2). The explanation of expression last of the authorization provided in sub Section (2) is identical in Explanation (2) of Section 158BE which read as under: 'Explanation 2.-For the removal of doubts, it is hereby declared that the authorisation referred to in sub-Section (1) shall be deemed to have been executed,- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is open for the authorised officer to visit the place for the purpose of investigation securing further particulars. Under the scheme, the law provides for such procedure. But not when he visits the premises for further investigation for the materials already secured. It does not amount to search as the materials to be looked into and investigated is already known and is the subject-matter of a prohibitory order or a restraint order. Though it isj not seizure or deemed seizure, it amounts to deemed possession. What is in your possession is to be looked into to find out, is there any incriminating material. It does not amount to search as understood under Section 132 of the Act. It is only because of paucity of time he has gone back and wants to come back and look into the matter leisurely. There is no provision in the Criminal Procedure Code or in the Income-tax Act or the rules for postponing the search for a long period. Then, the concept of search as understood either under the provisions of the Criminal Procedure Code or the Act which are made applicable expressly, would lose its meaning. If such a course is attracted, it is open to an authorised officer to keep the authorisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the use of the building, etc., in the singular sense. Section 132(1) uses building/place/vessel/vehicle/aircraft in singular sense. Further, clause (a) in Form 45 uses the word, to enter and search, the said building/place/vessel/vehicle/aircraft. When there are multiple places to search and such places are far off, it is impractical to have a single authorisation. Different persons will be carrying out search and each one of them is required to be authorised through the search authorisation. In other words, search authorisation should authorise a particular official for executing the search. Therefore, when there are different places to be searched, , separate search authorisation should be drawn with reference to each place of search. The said authorisations may be issued on different dates in which case, the last of such authorisations is to be looked into for the purpose of limitation. However, it is possible that there may be more than one authorisation on the same day. Then the question is which is the last of such authorisations for the purpose of limitation. When all the authorisations are executed there will be one panchnama in respect of each such authorisation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the warrant of authorisation has been issued ; (b) in the case of requisition under Section 132A, on the actual receipt of the books of account or other documents or assets by the authorised officer.' According to this Explanation, limitation is to be counted with reference to the last panchnama drawn on execution of a warrant of authorisation as referred to in Section 158BE. The main attribute of the panchnama is stated to be that it should record the conclusion of search. 80. The law does not contemplate the authorised officer to set out in any of the panchnama that he has finally concluded the search. If for any reason the authorised officer wants to search the premises again, it could be done by obtaining a fresh authorisation. There is no prohibition in respect of the same premises. It is open to the empowered authority to issue authorisation but when the authorisation is issued once, the authorised officer cannot go on visiting the premises under the guise of search. Therefore, it is clear once .n pursuance of an authorisation issued the search commences, it comes to an end with the; drawing of a ranchnama. When the authorised officer enters the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll necessary formalities ; to make and sign a contract; to sign and deliver a notes.' The word 'execution' is defined at page 510 of the said Law Dictionary as follows : Carry out some act or course of conduct to its completion. Northwest Steel Rolling Mills v. Commissioner of Internal Revenue, C.C.A. Wash., 110 F.2d 286, 290 : completion of an act : putting into force : completion fulfilment : perfecting of anything or carrying it into operation and effect Execution a process in action to carry into effect the directions in a decree or judgment Foust v. Foust, 47 Cal. 2d 121, 302 p.2d 11, 13.' In the light of the above definition of the words 'execute' and 'execution', one may argue that until and unless the final act is performed, the warrant of authorisation should not be treated asexecuted and it order or for any other reason may not be treated as 'execution' of the warrant. But this interpretation would behypertechnical and it needs detailed discussion as is done in the following paras. The question arises as to whether execution of a warrant of authorisation or requisition refers to the conclusion of the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded, when the searching party comes out of the premises, which is evidenced by drawing up a panchnama. When there are multiple places to search and when multiple authorisations are issued, on different dates or on the same date or in respect of the same premises more than one authorisation is issued on different dates, the last panchnama drawn in proof of conclusion of search in respect of the authorisation is to be taken into consideration for the purpose of limitation for block assessment. Conclusions (1) The Tribunal has got powers to look into all aspects of search and a valid search is sine qua non for initiating block assessment. (2) Materials seized during an invalid search cannot be used in block assessment proceeding but can be used in other assessment proceedings under the Act. (3) The power to put prohibitory order under Section 132(3) is under law but the reasons for doing so has to be recorded in writing and are justiciable. (4) The period of limitation starts on the date on which the last of authorisation has been executed and not when the authorised officer states that the search is finally concluded. Putting a prohibitory order un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. We may point out that the appellants never challenged subsequent visits and searches of their premises by the respondents on the ground that in the absence of a fresh authorisation those searches were illegal, null and void. Notwithstanding the same, it was argued that at least for the purpose of limitation the subsequent searches could not be taken into consideration, as according to the learned counsel, the legal position was that the authorisation dated 19th June, 1998, was executed on 22nd June, 1998 and the search came to an end with that when the search party left the premises on 23rd June, 1998 after making seizure of certain documents etc and issuing restraint order under Section 132(3) of the Act in respect of certain items which they allegedly could not seize due to impracticability on that day. Some judgments of various High Courts are relied upon to support this proposition. It was also argued that there was no concept of 'revalidation of authorisation' provided under the Act, which has been applied by the High Court in the impugned judgment, which according to the learned counsel for the appellants, amounts to legislating a new concept which is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search concluded on 05.08.1998 and not on 22.06.1998. The court also found that the search was also not unduly prolonged. The court held:- Consequently, we are of the opinion that the respondents did not complete the search on 22-6-1998, as alleged by the petitioners, nor did they unduly prolong it. The search concluded on 5-8-1998, and so in terms of Explanation 2 to Section 158BE of the Act the period of limitation would begin from the end of August, 1998, that is, 31-8-1998 onwards (p. 297) 31. The factual basis of the decision in VLS Finance (supra) is entirely different to that of the present case. On law, there is nothing in VLS Finance (supra) which contradicts what we have explained above. If the search concluded on 5-8-1998, as held by the court, and the panchnama of that date was the last of the string of 16 panchnamas, obviously this would be the date on which the search was concluded and the date on which the warrant of authorization for search was executed. But, in the present appeal, no search whatsoever was conducted on 03.01.2001. Hence, the panchnama drawn up on 3-1-2001 cannot be regarded as a document evidencing the conclusion of a search. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search was executed was required to be computed. The bench who heard the matter had divided in its opinion. The hon ble Judicial Member has assigned four reasons for concluding that the subsequent panchnama is not a valid panchnama for computing the limitation because there is no search carried out in September 1997 but the panchnama is prepared and this panchnama cannot be treated as a panchnama for the purpose of Section 158BE read with Explanation (2). The hon ble Accountant Member did not concur with and treated the second panchnama valid for computing the limitation. The dispute referred to the third member for his opinion and the question formulated 602 the third member was; Whether in the facts and circumstances of the case, the order under s.158BC made by the AO is time barred within the meaning of Section 158BE of the Act.? 59. The third member has taken into consideration the judgment of Hon ble Bombay High Court in the case of Sandhya P. Naik and Hon ble Kerala High Court in case of Dr. C Balakrishnan Nair. The Hon ble third member concur with the Judicial Member and held that issue in dispute is covered by the decision of hon ble Bombay High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k and the jewellery found and ultimately seized were few in number and the statement that the scrutiny could not be completed, nor practicable to seize, is impossible to accept on the face of it. It is in this context the allegation made against the second respondent that he carried away certain documents in his bag unauthorisedly on 27-10-1995 and brought them back on 10-11-1995 assumes significance. However, the action of the search party headed by the second respondent in collecting the documents and various items from different parts of the premises and again putting them in the almirah in the bed room of the first floor of the residential premises is unreasonable and no provision is relied on for such a cause of action. Rule 112(4C) of the Income-tax Rules, 1962 empowers the authorised officer to serve an order on the owner that he shall not remove, part with or otherwise deal with it except with the previous permission only in cases where it is not practicable to seize the article or thing or any books of account or document. Therefore, the action of the second respondent and his members in dumping the documents, etc., seized in the almirah cannot be supported, but violates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longing to the other parties who are the income tax assessee. On this count only the prohibitory orders passed by the authorised officer in the name of the assessee in connection with the lockers held by other parties, though related to the assessee cannot be used for extending the time for the assessment provided under Section 153B of the Act. As we have held that assessment orders has been framed beyond the time provided under the statute which has no validity in the eyes of law, accordingly we quash the same. 67. As we have decided the technical ground in favour of the assessee as discussed above, we are not inclined to refer the issue on merit. Accordingly we dismiss the grounds of appeal raised by the assessee on merit as infructuous. 68. In the result, the appeals filed by the assessee are partly allowed whereas the appeals filed by the revenue are dismissed. 69. The next proposition no. 4 is against the validity of the proceedings under Section 147 of the Act for various reasons specified in the grounds of appeal bearing Nos. 1 to 7. Under this fold of arguments, we take up the following appeals: Sr. No. IT(SS)A. No. Asst. Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment beyond the statutory period of 4 years as laid down by the Proviso to Section 147 of the Income Tax Act, 1961. 4. The Ld. CIT (A) has erred on facts and in law upholding the issue of notice u/s 148 of the Income Tax Act, 1961 beyond the time limit laid down u/s 149 of the Act. 5. The Ld. CIT (A) has erred on facts and in law in upholding the inference drawn by the Assessing Officer that the loose paper found and seized from the Terrace of Crystal Arcade CG Road Ahmedabad represented the alleged unaccounted cash book of Venus Group, that the signature found on the documents were of the appellant, that the date of transactions were recorded in the coded form to disguise the relevant date of transactions, that the entries were recorded in such a way that two zero at end of each entry were omitted and that the word 'estimate' had been mentioned against the actual transactions. 6. The Ld. CIT (A) has erred on facts and in law in upholding the various additions u/s 69, 69A, 69B and 69C of the Income Tax Act, 1961 relying on the alleged cash book which was not even alleged to be belonging to the appellant especially in view of the AO own findings t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditures under the aforesaid said two groupings for peak working ignoring the fact that the additions were made by the Assessing Officer solely on the basis of alleged signature by the appellant based on his unilateral interpretation of the alleged cash book without establishing that the alleged expenditures pertained to the appellant and the same were incurred by him. 12. The Ld. CIT (A) has erred on facts and in law in partly upholding the additions made by the Assessing Officer u/s 69A of the Act on account of alleged negative peak balance of certain groupings of transactions amounting to ₹ 1,22,49,000/- on the basis of unilateral interpretation of the Assessing Officer of the alleged cash book. 13. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer under Section 69B of the Income Tax Act, 1961 amounting to ₹ 33000/- on account of 'Swapanlok' relying upon the loose sheets seized from the Terrace of Crystal Arcade C.G. Road Ahmedabad. 14. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer under Section 69C of the Income Tax Act, 1961 amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 147/143(3) of the Act besides challenging the additions on merit before the ld. CIT-A. However, the ld. CIT-A upheld the assessment order of the AO by observing as under: 4.3. I have carefully considered the facts of the case, re-assessment orders and submissions made by the appellants. The Assessing Officer has issued notice u/s. 148 of the I. T. Act, 1961 on 30/03/2015 after duly recording the reasons. The appellants were provided copy of reasons recorded. The appellants have objected the reopening proceedings which were disposed off by passing a speaking order by the Assessing Officer. Shri Ashokkumar Sunderdas Vaswani has filed Special Civil Application No, 2550 of 2016 before Honourable Gujarat High Court against the notice u/s. 148. The Honourable Court has upheld the reopening of assessment as under:- 14. The second issue pertains to recording of reasons before issuance of notice. In this context, we have perused the original files. We notice that relevant material was placed before the Assessing Officer on 30.3.2015. Upon perusal of such material, considering the fact that the process of reopening would get time-barred soon, on the very same date, he recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat warrant must be produced by the authority before the commencement of the proceeding of search and the same has been done. I agree with the findings of the Assessing Officer that AO is not required to provide a copy of warrant of authorisation before assuming jurisdiction u/s. 153A. The ground of appeal is accordingly dismissed. Now the assessee in the ground of appeal before us has challenged the validity of the assessment framed under Section 147 of the Act. 74. The learned AR before us contended that search proceedings are the special proceedings as provided under Section 153A of the Act which has overriding effect over Section 147 of the Act. Thus in the search proceedings any material found having bearing on the income of the assessee, there can be proceedings under Section 153A of the Act. Accordingly, the revenue is barred to take the shelter for taxing the income based on the search materials under any other provisions of law i.e. 143(3), 263, 147 of the Act. The learned AR in support of his contention relied on the following judgments: Amar Jewellers Ltd. SCA 17598 of 2019 (Guj) Ishwarlal mahidas Bhut Vs. ITO SCA 18983 of 2019 (Guj) Vikram M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the additions which were not documented in the reasons recorded. As such the additions represented in the 2nd compartment signifies those items of additions, representing the escapement of income which were not documented in the reasons recorded but were found by the AO during the assessment proceedings. The learned DR in support of his contention has filed the summary of the additions representing the addition which were documented in the reasons recorded viz a viz not documented in the reasons recorded under Section 147 of the Act. 79. As per the ld. DR, once any addition documented in the reasons recorded under Section 147 of the Act has been sustained, then other addition (nondocumented in the reasons recoded) shall survive under the provision of Section 147 of the Act. Consequently, the assessment framed under Section 147 of the Act cannot be challenged on the reasoning that there was no addition made to the total income of the assessee as proposed/ documented in the reasons recorded. 80. The learned DR further contended that the AO has recorded the reasons for income escaping assessment under Section 147 of the Act after applying his mind and after verification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years : The above provisions begins with the non obstante clause overriding the provisions of Section 147 of the Act. The provisions of Section 153A (1)(a) of the Act provides that once the search under Section 132 of the Act is conducted or requisition is made under Section 132A of the Act in the case of a person, the AO shall require such person to file return of income under for six preceding assessment year immediate to the assessment year in which search or requisition was made. Similarly the provision of Section 153A(1)(b) empowers the AO to assess or reassess the income for such six assessment year preceding to the A.Y. in which search cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 153A because both Sections operate in different field and sphere. [Para 10] The Assessing Officer does not have jurisdiction to issue notice under Section 148 in respect of those six assessment years which fall within the exclusive jurisdiction of Section 153A. Such was not the case in the instant case. [Para 11] Admittedly, the Assessing Officer had not issued notice of reassessment under Section 153A in respect of six assessment years, i.e., 2003-04 to 1998-99 whereas he had issued impugned notice of reassessment for the assessment year 1997-98 under Section 148 which was the subject-matter of the instant writ. [Para 12] The submission of the assessee that in cases of search, Section 148 had no application and, secondly, no order for reassessment could be passed beyond six years as provided in Section 153A could not be accepted. [Para 13] Section 148 being an independent Section, powers exercised by the Assessing Officer cannot be curtailed if the impugned notice otherwise satisfies the requirement of Section 148. The only fetter put on the powers of the Assessing Officer in taking recourse to Section 148 is that notice under said Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, we note that the power of reassessment is conferred on the Assessing Officer by the provisions of Section 147/148 of the Act. But such power is subject to the certain conditions laid down under Section 147/148/149/151 of the Act. One of the very first condition is that before issuing notice under Section 148 of the Act for reassessment proceeding under Section 147 of the Act the AO must have reason to believe that income has been escaped assessment. Thus the AO for that purpose has to record a satisfaction note which must fulfill the parameters of the undefined expression 'reason to believe'. The expression reason to believe occurring in Section 147 of the Act has been interpreted by various Hon'ble High Courts as well as the Hon'ble' Supreme Court of India in numerous cases. The question in the present case is as to whether the information received from the investigation wing/search team would constitute 'reason to believe' empowering the Assessing Officer to reopen the assessment. Indeed the 'reason to believe' being a condition precedent for reopening the assessment is a question of jurisdiction. 88. The expression 'reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.10.2007 140/A-64 10400000 Vejalpur-1062 71p 41400 ASV 3300000 ASV - - 15.10.2007 126/A-64 9800000 Vejalpur-1062 71p 2500000 ASV 1700000 ASV 1057600 ASV - - 68837 ASV - - 15000 ASV 24.10.2007 104/A-64 5000000 Vejalpur-1062 71p 11400 ASV 1000000 ASV - - 8.02.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngible material which formed the basis for the belief that income had escaped assessment must be evident from a reading of the reasons. The reasons failed to demonstrate the link between the tangible material and the formation of the reason to believe that income had escaped assessment. The Assessing Officer had not independently considered the tangible material which formed the basis for the reasons to believe that income had escaped assessment. 94. The Hon'ble High Court of Bombay in the case Principal Commissioner of Income-tax-5 v. Shodiman Investments (P.) Ltd. reported in 422 ITR 337 holding that reopening notice on the basis of intimation from DDIT (Investigation) about a particular entity entering into suspicious transactions, was clearly in breach of the settled position of law that reopening notice has to be issued by the Assessing Officer on his own satisfaction and not on borrowed satisfaction. The Hon ble Court has pronounced as under: 12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 147 of the Act has been bestowed on the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. However, this belief that income has escaped assessment has to be the reasonable belief of the Assessing Officer himself and cannot be an opinion and/or belief of some other authority. On the basis of the information by itself received from another agency, there cannot be any reassessment proceedings. However, after considering the information/material received from other source, the Assessing Officer is required to consider the material on record in case of the assessee by applying his mind and thereafter is required to form an independent opinion on the basis of the material on record that the information has bearing on the income of the assessee and such income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be any reassessment. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons recorded is not sufficient enough. Rather the AO is under the obligation to arrive at such conclusion that the assessee failed to disclose all material facts necessary for the assessment after applying his mind and verification of the facts. But the AO has not done so. In holding so we draw support and guidance from the judgment of Hon ble Bombay High court in case of Gateway Leasing (P.) Ltd vs. ACIT reported in 117 taxmann.com 442 where it was held as under: 35. Having discussed the above, we may once again revert back to the reasons furnished by Respondent No. 2 for re-opening of assessment under Section 147 of the Act. After referring to the information received following search and seizure action carried out in the premises of Shri Naresh Jain, it was stated that information showed that Petitioner had traded in the shares of M/s. Scan Steels Ltd., and was in receipt of ₹ 23,98,014.00 and therefore, Respondent No. 2 concluded that he had reasons to believe that this amount had escaped assessment within the meaning of Section 147 of the Act. 36. First of all it would be evident from the materials on record that Petitioner had disclosed the above informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced that the Parliament has used the words assess or reassess such income and also any other income chargeable to tax which has escaped assessment , the words and also cannot be read as being in the alternative. The correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that the Parliament has not used the word or . The legislature did not rest content by merely using the word and . It has been emphasized that the words and , as well as also have been used together and in conjunction. 100. Evidently, therefore, what the Parliament intends by use of the words and also is that the AO, upon the formation of a reason to believe under Section 147 and the issuance of a notice under Section 148(2) must assess or reassess: (i) 'such income'; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the Section. The words 'such income' refer to the income which became the basis for recording reasons and issue of notice u/s. 148. The expression any other income refers to such escaped income which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the Section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. The Parliament, when it enacted the provisions of Section 147 with effect from 1-4-1989, clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter. [Para 11] Similarly the Hon ble Karnatak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assessment year 2008-09. Date Page no./Annexure Receipt (Rs.) Reference of receipt Payment (Rs.) Reference of Payment 5.10.2007 145/A-64 9800000 Vejalpur-1062 71p 61500 ASV 450000 ASV sarafi from Gopal/ishwar - - 08.10.2007 140/A-64 10400000 Vejalpur-1062 71p 41400 ASV 3300000 ASV - - 15.10.2007 126/A-64 9800000 Vejalpur-1062 71p 2500000 ASV 1700000 ASV 1057600 ASV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual addition made by the AO in the assessment order, we note that there was no addition made by the AO in the assessment order which was proposed in the reasons recorded by the AO in actuality. 102. The learned DR at the time of hearing has submitted that the following addition made by the AO in the assessment framed under Section 147 /143(3) of the Act were also proposed in the reasons recorded. On analysis of cash book (total 142 annexure), it was noticed that (i) ₹ 8,29,49,396/- is in nature of payment in cash was recorded in name of the assessee. (ii) ₹ 1,35,60,365/- is in nature of payment in cash which was paid to others. The above payments made by the assessee were remained unexplained and following additions were made: Sr. No Particulars Amount in Rs. 1 Unexplained expenditure towards payment made in cash (personal nature) 8,29,49,396 2 Unexplained expenditure (miscellaneous transaction) 1,35,60,365 In view of the above, the learned DR con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re identical to the issue raised by the assessee in ITA No. 456/AHD/2019 which has been decided in favor of the assessee by us vide paragraph No.107 of this order. Respectfully following the same, the appeal filed by the assessee is partly allowed. Now coming to the Revenue appeal bearing No. ITA No.805/Ahd/2019 for A.Y. 2008-09 109. At the time of hearing, it was submitted by the Ld.AR for the assessee that appeal filed by the Revenue is hit by recently issued CBDT Circular No.17 of 2019 dated 08/08/2019 revising the previous thresholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at ₹ 50 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding ₹ 50 lakhs and therefore appeal of the Revenue is required to be dismissed in limine. 110. The Learned DR for the Revenue fairly admitted the applicability of the CBDT Circular No. 17 of 2019. Accordingly, appeal of the Revenue is dismissed as not maintainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO for ₹ 46,45,274.00 on account of interest free loans and advances provided to the partners in ITA No. 837/Ahd/2019 M/s. Venus Infrabuild (A.Y. 2015-16). 116. The assessee has raised the following grounds of appeal: 1. The Ld. CIT (A) has erred on facts and in law in holding that the jurisdiction under Section 153C of the Income Tax Act, 1961 was correctly assumed by the Assessing Officer without dealing with various infirmities of facts and law with regard to the assumption of jurisdiction u/s 153C having been pointed out by the appellant. 2. The Ld. CIT (A) has erred on facts and in law in upholding the assessment order u/s 143(3) r.w.s 153A(1) of the Income Tax Act, 1961 passed by the Assessing Officer on 26.12.2017 which is beyond the time limitation as laid down u/s 153B of the Act. 3. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer relying on the alleged incriminating material which was neither seized from a place covered by search in the case of appellant nor even alleged to be belonging to the appellant in contravention of the settled law on the scope of assessment u/s 153A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of interest amounting to ₹ 46,45,274/- when the partnership deed itself provided that charging of interest on debit balance is not mandatory. 11. The Ld. CIT (A) has erred on facts and in law in confirming the addition on account of notional interest without giving a corresponding direction for claim of expenditure of the interest by the partners of the aforesaid interest / amount. 12. The appellant craves for liberty to add fresh ground(s) of appeal and also to amend, alter, modify any of the grounds of appeal. The assessee in ground No. 1 to 3 has challenged the validity of the assessment framed under Section 143(3) of the Act on account of various reasons. 117. At the outset the learned AR for the assessee before us submitted that he has been instructed by the assessee not to press impugned grounds of appeal. Accordingly we dismiss the same as not pressed. 118. The issues raised by the assessee in ground No. 4 to 9 are against various additions made by the AO which were subsequently partly confirmed by the learned CIT (A). 119. At the outset the learned AR for the assessee before us submitted that he has been instructed by the assessee not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advances given to the partners and finally added the same to the total income of the assessee. 123. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under: 10.4. Decision: I have carefully considered the facts of the case, assessment order and submission filed by the appellant. The Assessing Officer in the assessment order has noted that there is a debit balance of ₹ 44,23,493/-of partner Shri Narandas N. Hamrajani and ₹ 46,07,443/- of M/s. Venus Infrastructure and Developers Pvt. Ltd. in A. Y. 2012-13. Similarly, there is debit balance of partners capital in respect of Shri Dhanraj G. Manglani, ₹ 86,01,167/-, Shri Kamleshkumar D. Manglani of ₹ 77,41,047/-, Shri Narandas N. Hamrajani of ₹ 4,98,21,976/- and ₹ 8,67,46,820/- of M/s. Venus Infrastructure and Developers Pvf. Ltd. in A. Y. 2013-14. Appellanthas not charged interest on partners on the debit balance. The Assessing Officer has noted that appellant was required to charge interest @ 12% on the debit balance in A. Y. 2012-13 2013-14 and accordingly the interest cost on project will decrease by ₹ 59,41,76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of the loans and advances given to the partners. As such it was optional to charge interest from the partners which can be verified from the partnership deed. 125. Alternatively, the learned AR contended that amount of interest treated as income by the AO in the year under consideration pertains to the assessment year 2012-13 and 2013-14. Therefore if at all an addition is to be made or the effect of the same has to be given by reducing the capital work-in-progress that can be done in the respective assessment years i.e. 2012-13 2013-14 and not in the year under consideration. 126. On the other hand the learned DR vehemently supported the order of the authorities below. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute in the facts of the case on hand which have already been discussed in the preceding paragraph. Therefore, for the sake of brevity and convenience, we are not inclined to repeat the same. At this juncture we are tending to refer the relevant clause as incorporated in the deed of partnership which was submitted by the assessee before the learned CIT (A) during the proceedings. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l questions of law arise in the present Tax Appeal. The present Tax Appeal deserves to be dismissed and is accordingly dismissed. We also find force in the alternate contention of the learned AR for the assessee. The amount of interest which is in dispute pertains to the earlier assessment year. At all any adjustment if need to be made , then the AO can do so in the respective assessment years 2012-13 and 2013-14 without disturbing the same in the year under consideration. 128. In view of the above, we are not impressed with the finding of the authorities below and therefore decline to uphold the same. Thus we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 129. In the combined result: 1. ITA No. 118 to 123/A/2019 appeal filed by the assessee is partly allowed. 2. ITA No. 124 to 129/A/2019 appeal filed by the assessee is partly allowed. 3. ITA No. 130 to 135/A/2019 appeal filed by the assessee is partly allowed. 4. ITA No. 204 to 206/A/2019 appeal filed by the assessee is partly allowed. 5. ITA No. 278 279/A/2019 appeal filed by the assessee is partl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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