TMI Blog2021 (8) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... of the professional of the company that does not meant it is a document belonging to the assessee company which can extrapolate to as incriminating. Had there been any document found from searched person indicating that assessee company has arranged some bogus entry or rotated some undisclosed income or any such similar transaction and that document belong to the assessee, then of course Assessing Officer can reach to his satisfaction that undisclosed income for that assessment year needs to be assessed for the assessment years falling within 6 years of section 153C. Nowhere it has been brought on record that there is any statement or disclaimer by Shri N.K. Jain that these documents does not belong to him or pertain to him or based on these documents any adverse inference can be drawn that there is an element of any undisclosed income belonging to or pertained to the assessee. The document which has been referred in the satisfaction note of the seized documents are all legal document in compliance with the company law and professional documents and as stated above, these documents does not indicate any undisclosed income or expenses. Even the ledger account and bank stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 2. Before us, the respondent-assessee has also filed grounds under Rule 27(1) of ITAT Rules by raising following grounds for adjudication:- 1) On the facts and circumstances of the case as well as in Law, the Learned Assessing Office as well as Ld CIT(A) has erred in not appreciating the facts that there is no jurisdiction U/ 153C as there was no books, documents or valuables, cash, jewellery, bullion etc belonging to the assessee were seized from any person searched under section 132 of the I.T. Act. 2) On the facts and circumstances of the case as well as in Law, the Learned Assessing Office as well as Ld CIT(A) has erred in not appreciating the facts that the addition is not sustainable in a non- abated assessment year without any incriminating document found during the course of search. 3. The facts in brief qua the legal issue raised by the parties are that the assessee company was incorporated on 20.03.2009 to carry out the business of Real Estate Development. It had filed its return of income u/s. 139(1) on 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of DSL Properties P Ltd. ITA No 1344/Del/2012 dated 22/03/2013. Ld CIT (A) after verifying the assessment and after recording his finding at page 12 para 3.4 of his order quashed the assessment order passed U/s 153C as without jurisdiction. In sum and substance, the reasoning of ld. CIT (A) was that, firstly, satisfaction note for initiation of proceedings u/s.153C was not recorded in the case of the person searched u/s.132, as seized documents claiming to belonging appellant was found from the premises of Shri N.K. Jain and not from BPTP Group; and secondly, seized document claimed to be belonging to the assessee does not belong to it. Accordingly, he quashed entire proceedings after observing as under:- I have concluded that the satisfaction note is not recorded in the file of the assessee searched u/s.132 and documents claimed to be owned by the appellant was transferred the file of the appellant. Therefore, the jurisdiction assumed u/s.153C in the case of the appellant is not in accordance with the findings of Hon ble ITAT in the case of DSL properties (P) Ltd. cited supra. Therefore, it is concluded that the jurisdiction u/s.153C is not assumed properly and in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD /153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 7. Thus, he submitted that the CBDT circular makes it very clear that even if the Assessing Officer of the search person and other person is the same, then in that situation also, Assessing Officer has to record two separate satisfactions and accordingly the order of the ld. CIT (A) is correct in the light of the CBDT Circular. 8. However, at the time of hearing it was pointed out to the Ld. counsel of the assessee as well as to the ld. CIT-DR that now there is decision of the Hon ble Apex in case of Supermall Pvt. Ltd (423 ITR 281) wherein the Hon ble Apex Court held that if AO of both searched person and other person is same, then one satisfaction note is in due compliance of the requirement of section 153C. In the case of assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be considered for the purpose of 153C jurisdiction as there is no finding from the AO of BPTP group about the documents belonging to the assessee company, which is first and foremost requirement for assuming jurisdiction U/s 153C of the Act. 11. The core issue which has been argued before us is; Whether the document found from possession of Shri N.K. Jain belongs to the assessee company or not; and Whether these are in nature of incriminating documents which can lead to any inference that any undisclosed income has escaped assessment or there is any element of undisclosed income so as to be roped in assessment under section 153C for the assessment year which is unabated. 12. For the sake of ready reference, Satisfaction of Assessing Officer and the documents found from the premises of Shri N.K. Company Secretary of BPTP Group are incorporated hereunder:- A search and seizure operation was carried at the business premises as well as the residential premises of BPTP group of cases on 07.12.2010 and was finally concluded on 05.02.2011. During the course of search and seizure operation at the various premises of BPTP group of cases following documents belongin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List of allottees of equity shares of M/s Vision Town Planners Pvt Ltd as on 27.04.2010 76-80 Form No. 2 Return of allotment of M/s Vision Town Planners Pvt Ltd in respect of allotment of shares on 27.04.2010 along with copy of receipt of fees filed with ROC. 81-93, 130-142 Copy of shares certificates of M/s Vision Town Planners Pvt Ltd transferred from Ramprasad Jalal Singh Digvijay Yadav, Nirbhay Kumar Jain SudhanshuTripathi Sunil Kumar Jindal and BPTP International Trade Centre Ltd in the name of Ashok Kumar Jain on 30.04.2010 94 Form No 22A, Consent of share holders for shorter notice- dated 20.04.2010 issued to the Board of Directors of M/s Vision Town Planners Pvt Ltd by BPTP International Trade Centre Ltd 95-115 Form No. 23 Registration of resolution and agreements dated 26.04.2010 along with extracts of Annual General Meeting, explanatory statement and copy of Article of Association of M/s Vision Town Planners Pvt Ltd duly signed by Shri Shri N K Jain as chairman along with copy of recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K Jain of M/s Vision Town Planners Private Ltd thereby giving details of share holdings of M/s Vision Town Planners Pvt Ltd as on 02/12/2009. ANNEXURE A-3: Page No. Description 1-12 Memorandum and Article of association of M/s Vision Town Planners Pvt. Ltd. And copy of certificate of incorporation dated 20/03/2009 duly signed by the director Shri NK Jain 13-20 Form No.22B- Form of return to be filed with-the Registrar of M/s Vision Town Planners Pvt. Ltd along with receipt of payment of challan to ROC 22-39 Copies of cheques of ABN Amro bank dated 20/03/2009 for ₹ 50,000/- each, issued by Digvijay Yadav and NK Jain to M/s Vision Town Planners Private Ltd 23 Receipt of payment of the learned to ROC for inspection of public documents of M/s Vision Town Planners Pvt Ltd.. 25-28 Form No. 32- Particulars of appointment of Managing Directors, Director, Manager and Secretary and the change among them or consent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of Profit and Loss account and other documents with the Registrar, of -M/s Vision Town Planners Pvt Ltd along with notice dated 23/05/2009 and Directors' Report dated 31/3/2009. 86-93 Form No.-20B- Form for filing annual return by a company having share capital with the Registrar of M/s Vision Town Planners Pvt. Ltd along with receipt of payment of challan to ROC. 94-103 Auditor's report, balance sheet and P L account and other schedules forming part of the final accounts as on 31/3/2009 of M/s Vision Town Planners Pvt. Ltd please signed by the auditor Sanjay Batra and the directors of the company- Sudhanshu Tripathi and NK Jain. 104-108,131-136 Form No. 32- Particulars of appointment of Managing Directors, Director. Manager and Secretary and the change among them or consent of candidate to act as a Managing Director or director or manager or secretary of a company and/or undertaking to. take and pay for qualification shares of Vision Town Planners Pvt Ltd submitted by Shri Kabul Chawla. 110-114 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Town Planners Pvt Ltd and M/s BPTP International Trade Centre Ltd. 148-152 Copy of Board Resolution dated 01/09/2009 of M/s Euro Asia Mercantile Pvt. Ltd for subscribing for equity shares of M/s Vision Town Planners Private Ltd and duly signed by its Director Naresh Kumar Gupta along with letter dated 05/09/2009 of M/s Euro Asia Mercantile Pvt. Ltd addressed to the Board of Directors of M/s Vision Town Planners Private Ltd, for subscribing to the equity shares of ₹ 10 each at a premium of ₹ 50 each of M/s Vision Town Planners Pvt Ltd and duly signed by its director Naresh Kumar Gupta and directors of M/s Vision Town Planners Private Ltd and M/s BPTP International Trade Centre Ltd. 153-171 Copy of the minute book of meeting of Board of Directors of M/s Vision Town Planners Pvt. Ltd on various dates duly signed by the Chairman Shri NK Jain and copy of minutes of meeting of the Board of Directors of M/s Vision Town Planners Pvt. Ltd. ANNEXURE A-5: Page No. Description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of Board Resolution dated 01/09/2009 of M/s Karishma Industries Ltd for subscribing for equity shares of M/s Vision Town Planners Private Ltd and duly signed by its Director Naresh Kumar Gupta along with letter dated 17/09/2009 of M/s Karishma Industries Ltd addressed to the Board of Directors of M/s Vision Town Planners Private Ltd, for subscribing to the equity shares of ₹ 10 each at a premium I of ₹ 50 each of M/s Vision Town Planners Pvt Ltd and duly signed by its director Naresh Kumar Gupta and directors of M/s Vision Town Planners Private Ltd and M/s BPTP International Trade Centre Ltd. 32 Original undated letter of M/s Sunny Cast Forge Ltd and duly signed by its director Prem Kumar Mehto, addressed to the Board of Directors of M/s Vision Town Planners Private Ltd, thereby giving its approval for increase of the capitalisation of Vision Town Planners Private Ltd. 33-37 Copy of Board Resolution dated 01/10/2009 of M/s Sunny Cast Forge Ltd for subscribing for equity shares of M/s Vision Town Planners Private. Ltd and duly signed by its Director Prem Kumar Mehto along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retary by profession was in possession of these Company law related documents of the assessee company in his professional capacity and accordingly these documents relate to him and not to the assessee company. Most of these documents are available in public domain and anybody by paying a nominal fee for inspection can download all these documents from the website of Ministry of Corporate Affairs (MCA). Most of these documents are copies of original. Further Section 132(4A)(i) clearly stipulates that when inter alia any document is found from the possession or control of any person in the course of a search, then it is presumed that such document belongs to such person. It is similarly provided in Section 292C (1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or satisfaction that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... searched person would proceed in accordance with the provisions of section 153A. The concluded assessments cannot be interfered with under section 153A unless the incriminating material belonging to the assessee has been seized. This contention also get supported from the decision of Hon ble Delhi High Court in case of CIT Vs. Kabul Chawla (380 ITR 573()(Delhi). 17. On the other hand, Ld CIT DR contented that all the documents found from the premises of Shri N K Jain in fact belongs to the assessee company and therefore, the AO has rightly invoked jurisdiction U/s 153C of the Act. Regarding incriminating documents, Ld CIT DR stated that the AO has given full finding and co-related the addition based on seized material found from the premises of S K Jain brothers, who are hawala operator. Therefore, it cannot be said that addition is not based on seized material. She also relied upon the decision of NRA Iron steel P Ltd (412 ITR 611) and justified the addition made U/s 68 of the Act. She further contended that the word unabated does not find any place in the Act. As per Ld CIT DR, the impugned assessment was only processed U/s 143(1) of the Act hence cannot be treated as comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re A7, i.e., ledger account that at best can be said to belong to assessee. 19. On scrutiny of documents and the nature of documents which are the basis for acquiring the jurisdiction and recording of satisfaction u/s.153C, if analysed deeply, it cannot lead to a satisfaction that these documents belong to the assessee or it is capable of drawing any inference that there is any element of undisclosed income which can be held as incriminating. At best it may be reckoned as pertaining to Assessee Company. If the documents were found from the possession of Shri N.K. Jain, then presumption is that the documents belonged to the said persons from whose possession the same was found. There has to be some prima facie reason and cogent material that the seized documents does not belong to the searched person but to someone else. Any statutory record or Company Law requirement documents are found from the possession of the professional of the company that does not meant it is a document belonging to the assessee company which can extrapolate to as incriminating. Had there been any document found from searched person indicating that assessee company has arranged some bogus entry or rotat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, in the case of CIT vs. RRJ Securities Ltd. (supra), Hon ble Jurisdictional High Court has observed as under: It was contended on behalf of the revenue that the hard disk contained data pertaining to the assessee and, therefore, it was rightly held that the hard disc belong to the assessee. Concededly, this contention would not be sustainable in view of the principles laid down with regard to the interpretation of the words 'belongs to' in section 153C of the Act. The hard disk was recovered from the computer belonging to 'B' which contained soft copies of working papers and balance sheet pertaining to the assessee for its income tax filing. It has been contended that 'B' is a Chartered Accountant and had the data pertaining to the assessee in his professional capacity. Merely because such data pertained to the assessee who claims to be a client of 'B' the hard disk could not be stated to belong to the assessee. It is not disputed that the said hard disk also did not contain any incriminating material as the data on the hard disc only supported the return filed by the assessee. This apart, as the hard disc did not belong to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has mentioned that Annexure A1 to A5 of party R-3 seized from the resident of Shri N.K. Jain reveal the modus operandi of financing for acquisition of property seven acres of Vision Town Pvt. Ltd., is far from correct, because the nature of documents mentioned in the Annexure A1 to A7 which have been incorporated above and also part of the satisfaction recorded, nowhere there is any reference of any such modus operandi of financing. If the Assessing Officer has made this allegation the he was required to specify such documents and bring out categorically that there was some document/s found from possession of N.K. Jain which remotely also indicated such modus operendi of financing of share application money or any entry provider was involved. In that case certainly Assessing Officer would have been justified in acquiring jurisdiction u/s 153C. Reference of some other search not related to the assessee in case of S.K. Jain will not justify any addition here. All these observations in the assessment order are not flowing either from the satisfaction note or from the seized documents. It is a well settled law that seized documents must be incriminating and must relate to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the seized documents belonging to the assessee, and no additions can be made where the assessments are framed u/s.153C for unabated year. The seized documents must at least clearly point out that there is some undisclosed income, which here in this case, even for the sake of repetition, it is reiterated that none of the documents are in the nature of incriminating material so as to warrant any additions. 25. In so far as the submissions made by ld. CIT-DR that the documents belongs to Assessee Company is contrary to the decision of jurisdictional High Court as referred to above. Secondly, regarding incriminating documents, Ld CIT DR could not rebut that in the assessment order, AO has not linked any of the documents found from the searched premises of BPTP group. However, she contended that AO has linked the addition with the documents found during the search action on S.K. Jain Brothers. At the outset, the documents found from S.K. Jain is neither the basis of satisfaction u/s 153C nor any material or information relating to the assessee company was found from the possession of searched person. It is relevant to note here that the proceeding U/s 153C has been initiated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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