TMI Blog2021 (7) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... the search. It does not talk of information. Otherwise also a statement under section 131 dated 13.5.2014 was not recorded during the course of search; it is after the conclusion of the search. Statement recorded on 24.3.2014 is concerned, it is a presearch statement i.e. before the commencement of search, and in this statement the investigating officer has no where asked any such question, because upto that stage, documents were not discovered i.e. Annexure A/1 and Annexure-A/2. Therefore, Shri Sargam Gupta could not be asked to explain this. These documents were put to him in the statement under section 132(4). We have taken cognizance of that part of the statement. As observed that statement recorded under section 131(1A) of the Act after conclusion of the search i.e. on 13.5.2014 is concerned, this can be an information for evaluating whether any income has escaped assessment or under section 147 for reopening of the assessment; but for taking action under section 153C this statement cannot be used. A perusal of the satisfaction note extracted(supra) would indicate that the AO has vaguly made reference of statement under section 131(1A) of the Act, but he has not referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hd/2018 And ITA No.1206/Ahd/2018, ITA No.1286/Ahd/2018 - - - Dated:- 13-7-2021 - Shri Rajpal Yadav, Vice-President And Shri Amarjit Singh, Accountant Member For the Assessee : Shri U.S. Bhati, with Shri Abhimanyu Singh Bhati, ARs For the Revenue : Shri O.P. Sharma, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT: Present four appeals are directed against common order of the ld.CIT(A)-12, Ahmedabad dated 13.3.2018 passed for the Asstt.Year 2012-13 to 2014-15. Out of the above four appeals, ITA No.1286/Ahd/2018 is a cross appeal at the instance of the Revenue in the Asstt.Year 2014-15; rest three appeals are by the assessee. Since common issues are involved, therefore, we heard all these appeals together and deem it appropriate to adjudicate them by this common order. 2. First we take IT(SS)A.No.145 and 146/Ahd/2018 i.e. appeals of the assessee for the Asstt.Year 2012-13 and 2013-14. In both these years, the assessee has revised its grounds of appeal and the grounds of appeal taken by the assessee read as under: IT(SS)A.No.145/Ahd/2018 Asstt.Year 2012-13: 1. The Id. CIT(A) erred in law and on facts in upholding the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, the assessee has challenged assumption of jurisdiction under section 153C of the Income Tax Act, 1961 by the AO. This ground has been taken in both these years before the ld.CIT(A) also. Perusal of the original grounds of appeal would indicate that this issue has been agitated under ground no.1 by the assessee in both these years. We take these preliminary grounds first. 4. Brief facts of the case are that the assessee, M/s.SBG Infrastructure LLP (in short SBG Infra ) earlier was a company under the name and style M/s.SBG Infrastructure Pvt. Ltd. incorporated on 25.3.2008 and was converted into a limited liability partnership (LLP) vide conversion dated 10.2.2011. The ld.CIT(A) has observed that neither the company nor the LLP had any substantial commercial activity. A survey under section 133A of the Act was carried out at the business premises of M/s.BRG Infrastructure Ltd. on 24.03.2014 which was converted into search action under section 132 of the Act. According to the AO, during the course of search, certain documents were found which were inventorised as Annexure A/1, A/2 and A/3. The AO is common qua the search group as well as to the assessee. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not admitted that the seized papers belong to SBG Infra. In other words, as per the Ld AR there was no statement by the partner that the seized documents pertained to the appellant SBG Infra and hence there was no case of proceedings u/s 153C against the appellant. 9.3 In CIT Vs Gopi Apartment (2014) 46 taxmann.com 280 (All.) it has been held that even where AO of both 'searched person' and 'other person' is same, recording of satisfaction (i.e. that the seized material belongs to other person) is still required and mandatory, so as to initiate proceeding (u/s 153C) against such other person. Along with this, I have also perused the case laws relied upon by the appellant specially Vijaybhai N Chandrani Vs ACTT, Pepsi Food P. Ltd. Vs AOT and Pepsico India Hording Ltd Vs ACTT and find that those judgments were pronounced in relation to the pre-amended 153C(1) where under the AO is required to be satisfied that any money, bullion, jewellery and other valuable article or thing or books or document seized or requisitioned belong to a person other than 'the person referred to in section 153A. Subsequent to the amendment (wef 01/06/2015), section 153C{1) stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra only. Further I am of the considered opinion that once the partner(s) of a firm have admitted the source of unaccounted cash advances and cash expenses, proceedings u/s 153C can lie against the person who is the source of such money. Thus the action of the AO u/s 153C to the case of appellant Is upheld. It needs no emphasis that the statement u/s 132(4) has evidentiary value and stands on higher footing than any other and subsequent statement and affidavits. The ground of there being no jurisdiction a/s 153A is dismissed. 5. While impugning the finding of the ld.Revenue authorities, the ld.counsel for the assessee submitted that cognizance under section 153C can be taken up by the AO if the AO of searched person was satisfied that during the course of search any money, bullion, jewellery or other valuable article or things were sized or requisitioned belongs to a person other than the person referred to section 153A, then the books of accounts, documents, assets seized and requisitioned shall be handed over to the AO having territorial jurisdiction of such other person who will issue notice under section 153C of the Act. Thus, the basic foundation for taking cognizanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 1-6-2015. The scope of section after amendment and pre-amendment had fallen for consideration before the Hon ble jurisdictional High Court in the case of Anil Kumar Gopikishan Agrawal Vs. ACIT, reported in (2019) 106 taxmann.com 137. According to the decision of Hon ble High Court, where search had taken place before 1-6-2015 old section 153C would apply. Since the search in the present case taken place on 24.3.2015 which is prior to 1.6.2015, therefore, the section as it stood on 24.3.2014 would apply to the facts of the present case. For appreciating and understanding the distinction between the pre and post-amended provisions, and their scope in a more scientific way, we take note of the relevant part of the provisions of both the sections as under: Pre-amendment: 153C. [(1)]Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 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 boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of section 153C, the new amended provision provides that if any incriminating information was found in those documents, relating to the assessee or pertaining to the assessee, then action under section 153C would also be taken up. Hon ble High Court has explained the situation by recording a hypothetical example in paragraph 19.10. For better appreciation and understanding, we deem it appropriate to take note of the relevant discussion made by the Hon ble jurisdictional High Court in this regard. It 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provision and forward the material to the Assessing Officer of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d PANo. of the person in whose case action under section 153C is proposed M/s. SBG Infrastructure LLP 4/1 Goverdhan Appartrnent Karelibaug, Vadodara. PAN: ABXFS 2792 K 5. Specific details of the seized material on the basis of which action under section 153C is proposed : (a) Nature of the seized material{money/Bullion /jewellery/ other valuable article of thing /books of account /documents) (b) Description of the seized material (c) Address of premise/place from where such material was seized (d) Date of seizure of such material (e) Particulars Panchnama of the relevant Books of accounts/documents Loose paper files containing various documents 1.M/s-BRG infrastructure Ltd. Sargam House , 2nd Floor, 'B' wing, Trident Complex, Opp. GERI Compound, Race Course Baroda. 24.03.2014 24.03.2014 (f) Annexure/ S.Mo./ Page number etc. (Particulars to be specified) Seized from the premises of M/s.BRG Infrastructure Ltd., Sargam House , 2nd 'B' wing, Trident Complex, Opp. GERI Compound, Race Course Baroda. Ann.A-1 i) Page No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch action u/s 132 was initiated, were seized. During the course of search proceedings, in the statement recorded u/s 132{4) as well as 131(1) of the Act, Shri Sargam Gupta, one of the partner of M/s. SBG Infrastructure LLP accepted the fact that in the documents seized are of transaction done by M/s. SBG Infra LLP and based upon which he had made disclosure of ₹ 12.00 crores in the hands of SBG Infrastructure LLP for F.Y. 2013-14. Section 153C of the Act provides that where the Assessing Officer is satisfied that any money, buFlion7 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. In the instant case, the books of account and documents belonging to the present assessee we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lakh Fifty Eight Thousand Five Hundred Only) as advance to acquaintances \ and relatives which is my net undisclosed income, I am disclosing the same and agree to pay the tax thereon. Q.16 I am showing page no. 5 of Annexure 1. Please explain the same, Ans. Annexure A/1, Page 5 contains the details of cash expenses incurred on our land situated on Sun Pharma Road, Tandalja. This land is of 4-5 : lakhs sq. ft which is in dispute and there is encroachment in such land. For the removal of encroachment and dispute, we have incurred cash expenses from our unaccounted income. The total of such unaccounted income is ₹ 549.50 Lakhs which is disclosed as net income. On the amount of the income of ₹ 549.50 lakhs, I shall pay the tax as per the income-tax regulations. Let us take note of page 3, Annexure A/2 and page 5 of Annexure A/1. They read as under: ANNEXUREA/2 (PAGE 3) English Translation Cash Given 31/12/2011 75,00,000 31/12/2012 9,00,000 31/12/2013 75,00,000 2/6/13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the above document would reveal that nowhere it has been alleged that Annexure A/1, page no.5 or page no.3 of annexure A/2 belongs to the assessee. We have carefully gone through original page of Annexure A/2 as well as A/1. They do not contain any name of the assessee; they do not contain as to how they be construed as documents belonging to the assessee. A document can be construed as belonging to the assessee, if it has been obtained from the premises of the assessee under authorized signature. For example, an SMS sent by the partner to any other person, a fax message of page of any books of accounts, copy of any agreement signed by the assessee or by the authorized person of the assessee or any other documents, which forming part of the assessee s books of accounts or some unexplained transaction. On both these pages there are certain notings which on a prima facie perusal do not goad any adjudicating authority to reach at a firm conclusion unless explained by author. Now according to the Revenue these are being authored by Sargam Gupta and these pages put to him during the course of search, while recording statement under section 132(4) of the Act. Shri Sargam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an information for evaluating whether any income has escaped assessment or under section 147 for reopening of the assessment; but for taking action under section 153C this statement cannot be used. A perusal of the satisfaction note extracted(supra) would indicate that the AO has vaguly made reference of statement under section 131(1A) of the Act, but he has not referred which statement i.e. pre-search statement or consequent to the conclusion of the search. It is also pertinent to note that there are three paragraphs in this note; in the first para, he made reference of the facts, and in the second para he wrote that books of the accounts belonging to the assessee .. can these pages i.e. A1(5) or A2(3) in page no.3 and 3 of the alleged seizure referred by the AO be construed as books of accounts belonging to the assessee. These documents do not contain names; even page no.3 of Annexure A/2 did not reflect to whom cash was given. There is no reference to this page. Therefore, on the basis of these documents, adjudicating authority could not goad to reach any firm conclusion that these documents belonging to the assessee. Thus, on a detailed analysis of the evidence available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitute or withdraw any of the grounds of appeal hereinabove. ITA No.1286/Ahd/2018 (Revenue s Appeal for A.Y.2014-15) GROUNDS OF APPEAL (1) On the facts and in the circumstances of the case, the Ld. CIT(A)- 12, Ahmedabad has erred in deleting addition to the tune of ₹ 6,50,58,500/-. The addition was based on the seized material and the statement of the managing partners of the LLP on oath during and after the search proceedings. On the basis of an affidavit filed by the managing partners of LLP, after 650 days of giving the statement, the addition has been deleted. Hence, the addition has erroneously been deleted by the Ld.CIT(A)-12, Ahmedabad. (2) On the facts and in the circumstances of the case, the Ld. CIT(A)- 12, Ahmedabad has erred in deleting the entire addition of ₹ 5,49,60,000/-. The addition was based on the seized material and the statement of the managing partners of the LLP on oath during and after the search proceedings. However, the same has been negated on the basis of DVO's report. Hence, the addition has erroneously been deleted by the Ld.CIT(A)-12, Ahmedabad. (3) It is, therefore, prayed that the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act were to be initiated; but all of a sudden, he became silent and proceeded under section 142(1) of the Act. He took us through paragraph no.1 and 2 of the assessment order. 17. We have duly considered rival contentions, and gone through the record carefully. We have reproduced satisfaction recorded by the AO in the earlier part of this order. A perusal of this satisfaction would indicate that there is no satisfaction recorded for the Asstt.Year 2014-15 for taking cognizance under section 153C of the Act. At this stage, we would like to make reference to opening paragraph of the assessment order, which reads as under: ASSESSMENT ORDER Consequent to search u/s 132 of the I. T. Act in the case of M/s. BRG Infrastructure Ltd. on 24.03.2014, provisions of section 153C were attracted in the case of the assessee and proceedings u/s 153C of the Act were initiated. Accordingly, the case was selected for scrutiny as per Board's guidelines as well as per provisions of section 153B(2) of the Act. Since the assessee has not filed copy of return of income u/s 139(1) of the Act, notice u/s 142(1) of the Act was issued to the assessee on 03.11.2014 requiring it to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order framed under section 143(3) under the premise that the Asstt.Year 2012-13 is to be treated as search year under section 153B(i)(b) of the Act. 20. With these factual backgrounds, let us take note of the discussion made by the Tribunal after taking note of section 153C. The Tribunal has made reference to the decision of Hon ble Delhi High Court and the order of the Tribunal, Delhi Bench read as under: 7.1. The Hon'ble Delhi High Court in the case of Pr. CIT vs. Sarwar Agency P. Ltd., (2017) 397 ITR 400 (Delhi.) (HC) (supra), considering the identical issue held as under : Sub-section (1) of section 153C of the Income-tax Act, 1961 provides that the assessment or reassessment of the income of the other person would be in accordance with the provisions of section 153A. The first proviso to sub- section (1) of section 153C further states that, in case of such other person, the reference to the date of initiation of search in the second proviso to section 153A(l) 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 othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07, was without jurisdiction since the assessment year was beyond the purview of issuance of notice in terms of the provision under section 153C of the Act. On appeal: Held accordingly, dismissing the appeal, that the Tribunal was justified in holding that the notice issued to the assessee under section 153C of the Act for the assessment year 2006-07 was without jurisdiction since the assess- ment year was beyond the purview of issuance of notice in terms of the provision. 7.2. The ITAT, Delhi, B-Bench in the case of ACIT, C.C.-2, New Delhi vs. Empire Casting Pvt. Ltd., New Delhi (supra), held in paras 5 and 5.1 as under: 5. We have heard the rival submission on this issue and also perused the judgment dated 30th October, 2015 of the Hon'ble jurisdictional High Court in the case of CIT Vs RRJ Securities in ITA No. 164/2015 and ITA No. 175 to ITA.No.1772015. For ready reference, the relevant Para of the judgment is reproduced as under: 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year. 5.1. The fact that satisfaction u/s 153C of the Act in the case was recorded on 2nd November, 2009, is not disputed by both the parties. In the judgment cited above, the Hon'ble High Court has held that when the Assessing Officer of searched person and such other person in whose case proceedings under section 153C are initiated, is the same officer, then the date of recording of satisfaction would be construed as the date of handing over of the seized records by the Assessing Officer of searched person to the Assessing Officer of such other person in whose case proceedings under section 153C are initiated. Since the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is invalid. 8. It is not in dispute that search was conducted on Krrish Group of cases on 09.11.2011. The impounded documents have been received by the A.O. on 29.08.2013. The satisfaction under section 153C have been recorded on 03.10.2013. The A.O. passed the assessment order under section 153B(1)(b) of the I.T. Act, considering the assessment year under appeal i.e., A.Y. 2012-2013 to be the year of search. However, the First Proviso to Section 153C of the I.T. Act provides that the 06 assessment years for which assessments or re- assessments could be made under section 153C of the I.T. Act, would also have to be construed with reference to the date of handing-over of the assets or documents to the A.O. of the assessee. Therefore, the 06 assessment years under section 153C of I.T. Act in the case of assessee would be A.Y. 2008-2009 to 2013-2014. The A.O, therefore, shall have to pass the assessment order under section 153C of the I.T. Act. However, A.O. has not issued any notice under section 153C of the I.T. Act before initiating the proceedings against the assessee which is also admitted by the A.O. in reply to the assessee under RTI Act. The Amendment in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first proviso to section 153C w.e.f. 1.4.2017 and held that it is prospective in nature. In the present case also, the ld.AO failed to assess the income under section 153C, and therefore, the assessment order is not sustainable, and accordingly quashed. 23. During the course of hearing, one more alternative contention was raised with regard to jurisdiction of the AO. It was submitted that even for the purpose of a regular assessment proceeding under section 144, the ld.AO has not followed the correct procedure. The scheme of the Income Tax Act contemplates that an assessee would be required to file return of taxable income by his own within the time limit provided under section 139(1) of the Act. If an assessee failed to file the return, and an information came in the possession the Revenue about the taxable income, then before the end of assessment year i.e. time limit to file return under section 139(1) ends, the assessee could be asked to file a return under section 142(1). After the end of relevant assessment year, but within the time limit provided in section 149, a notice under section 148 could be issued after recording reasons. The ld.counsel for the assessee at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner75 and setting forth such other particulars as may be prescribed, or : Provided that where any notice has been served under this subsection for the purposes of this clause after the end of the relevant assessment year commencing on or after the 1st day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section: *** **** *** 26. The assessment has been framed under section 144 of the Income Tax Act. This section would also have bearing on the issue. Therefore, we take note of relevant part of this section also. It reads as under: 144. (1) If any person- (a) fails to make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative. Yours faithfully, Sd/- (Mugdha Kiran Sardeshpande) Dy. Commissioner of Income-tax, Central Circle-2, Baroda. 28. Broadly scheme of the Income Tax Act permits assessment in three formats; (i) acceptance of returned income, (ii) acceptance of returned income subject to permissible adjustments under section 143(1) of the Act, and (iii) a scrutiny assessment under section 143(3) of the Act. It is pertinent to note that where an assessee has taxable income, he is supposed to file his returned income under section 139(1) of the Act within the due date provided under this clause. If an assessee does not file his return, and an information came to the possession of the Revenue about the assessable income in the hands of such person, then before the end of the relevant assessment year i.e. assessment year in which due date for filing of the return came to an end, the AO can issue a notice under section 142(1) of the Act directing such person to file return of income in the time given in the notices. If the relevant assessment year came to an end and no such notice was issued upon an assessee, but Revenue has been possessing information abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in respect of which he is assessable under this Act. In other words, before commencing an inquiry for collecting information for the purpose of scrutinizing the return, he is required to first provide an opportunity to the assessee to file his return under section 142(1) of the Act. After filing of such return, a notice under section 143(2) would be given. In a given case, in spite of opportunity given by the AO an assessee may fail to comply with the notice issued under section 142(1) and did not file the return. In such cases no notice under section 143(2) would be required for scrutinising the return. The dispute in the present case is that according to the assessee it has filed return under section 139(4); i.e. it did not file return under section 139(1) within the time frame, but filed such return on 28.9.2015 i.e. before the end of the relevant assessment year 2014-15. According to the assessee, it is a valid return for all purpose, and for making scrutiny assessment, the ld.AO should have issued a notice under section 143(2) of the Act. The AO did not issue any notice under section 143(2), and passed ex parte assessment order under section 144 of the Act. 30. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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