TMI Blog2021 (8) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... eal are completed assessment years which has been reproduced in the submissions of the appellant. The tests that the documents belong to the appellant are duly verified. Section 153C of the Act also states that once the assessment is sought to be opened based on the documents belonging to the appellant, further assessment shall be made in accordance with the provisions of section 153A of the Act. There is a further requirement which states that the Assessing Officer must record a satisfaction note that documents must have a bearing on the determination of the total income of the appellant. Both the conditions lead to the conclusion that the documents found must be indicative of escapement of income and that the total income declared by the appellant in its return of income must necessarily be effected by the findings in the seized documents. From the perusal of the satisfaction note, it cannot be held that it is reflective of any undisclosed income or in the nature of incriminating belonging to the assessee the reason being none of the documents either pertained to the impugned assessment years or are already party of regular books of account. This is fairly clear from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been filed before Hon ble Supreme Court. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words 'total income as used in Section 153C/153A would only mean undisclosed income discovered from seized / incriminating material. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153C/153A of the Act. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words total income as used in section 153C/153A would only mean income unearthed during search when the decision of the Hon ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09.08.2014 has held that total income includes income unearthed during search and any other income. 7. That the grounds of appeal are without prejudice to each other. 8. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,59,91,700/- on protective basis. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O. to delete the addition of ₹ 12,79,959/- as unexplained expenditure on account of brokerage. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts by relying on the decision in the case of Sh. Kabul Chawla by the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon ble Supreme Court. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words total income as used in Section 153C/153A would only mean undisclosed income discovered from seized / incriminating material. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153C/153A of the Act. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer which was disposed of by the Assessing Officer. 5. The appellant challenged the satisfaction notes and contended inter-alia that the documents found from the premises of PIL relating to the appellant was those that were duly recorded in the regular books of account of the appellant and were in no manner incriminating in nature. Hence, the appellant contended that since they are not incriminating in nature, no assessment can be made on the basis of these documents because no undisclosed income is discernable out of theseseized documents and the years under consideration are completed assessments. In this regard, the ratio of the judgement of the famous case of the Hon'ble Delhi High Court in the case of Kabul Chawla 61 taxmann.com 412 is squarely applicable. 6. The appellant made detailed submission and contended that a bare perusal of the seized documents would reveal that they do not even pertain to the assessment years in question. Hence, no documents incriminating in nature in respect of impugned assessment year were found in search conducted on PIL. 7. We have perused the copy of the satisfaction note which are attached at page no. 21A to 21D of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong to him, proceedings u/s 153C will not be valid. Only w.e.f 01-06-2015, if the documents/ books seized from the premises of person searched, pertain to, or any information contained therein, relates to such other person , proceedings u/s 153C against such other person will be valid. In the case of the assessee the search was conducted on M/s Prakash Industries Ltd. on 30.10.2012 which is before 01.06.2015. Since the search took place before 01.06.2015, the notice u/s 153C can be issued only if the documents seized from the premises of M/s Prakash Industries Ltd. are found to be belonging to the assessee company. For initiating valid proceedings u/s 153C of the Act, recording of clear and positive satisfaction that money, bullion, jewellery or other valuable article or thing or documents or books of account etc. seized belong to/belongs to person other than searched person, is a sine qua non requirement. The above requirement under the law is due to the provisions of section 132(4A) r.w.s. 292C of the Act which presumes that whenever a document is found from a person who is being searched the said document belongs to that searched person. It is for the Assessing Officer to reb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The satisfaction must reflect rational connection with or relevant bearing between the material available and undisclosed income of the third person. The rational connection postulates and requires satisfaction of the Assessing Officer that a third person has 'undisclosed income' on the basis of evidence or material before him. The material itself should not be vague, indefinite, distinct or remote. If there is no rational or intangible nexus between the material and the satisfaction that a third person has 'undisclosed income', the conclusion would not deserve acceptance. Then the satisfaction is vitiated. It is to this limited extent that the satisfaction can be gone into and examined. The satisfaction, though subjective, must meet the aforesaid criteria. [Para 21] 12. From the above discussion, following requirements emerge out to initiate valid action u/s 153C: a. First, Assessing Officer of the person searched is to record satisfaction that seized material/documents etc. belong to /belongs to the person other than the searched person. b. Such satisfaction note along with seized material belonging to the person other than searched person mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. 2. The assessee also relies upon the decision of Hon ble High Court of Delhi in the case of Pepsi Foods Pvt. Ltd. Vs. ACIT (52 taxmann.com 220) which is also discussed and approved by the Hon ble Supreme Court in the case of Super Malls(supra) wherein it has been held that: It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word satisfaction or the words I am satisfied in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Whether the document can be said to be belonging to the assessee Whether pertains to the assessment year in question Whether the seized documents are incriminating or suggest any escapement of income A 2 47 1. This is the trial balance of the assessee company for the period 01.04.2012 to 08.10.2012. 2. Documents already recorded in the books of the assessee. However the copy of trial balance cannot be said to be incriminating. 3. It pertains to the A.Y. 2013-14 and does not pertain to the assessment year in question and has no co-relation with the addition made by the Ld. AO and cannot be said to be incriminating material. NO Copy of trial balance cannot be said to belonging to the assessee. NO This document pertains to A.Y. 2013-14 Supreme Court - Singhad Technical Education Society Documents must relate to the A.Y. whose assessments are sought to be reopened . NO The transactions in the seized document have alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggest any escapement of income by the assessee. High Court of Delhi Sunny InfraprojectsLtd: seized material must have some nexus or relevance to the additions sought to be made A 8 10-12 1. Trial balance and accounting policies for the period 01.04.2011 to 10.02.2012. NO NO Documents pertain to A.Y. 2012-13 Supreme Court - Singhad Technical Education Society Documents must relate to the A.Y. whose assessments are sought to be reopened. NO The transactions in the seized documents have already been recorded in the books of the assessee company. The Ld. AO failed to link these seized documents with the additions. High Court of Delhi Sunny Infraprojects Ltd: seized material must have some nexus or relevance to the additions sought to be made A 12 28, 58-64, 81-88 1. Certified copy of board resolution, statement of holding and pledge master report YES NO A.Y. 2012- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be made 6. Your Honours, unless the above three conditions mentioned in the above table completes, the Ld. AO does not get jurisdiction to issue notice and initiate proceedings under section 153C of the Act. 7. The description of the above documents clearly indicates that these are the statutory documents already available in Public Domain. 8. It is a settled legal position that the trial balance, ROC data, income tax returns, balance sheets and other statutory documents which are available in public domain cannot be said to belonging to the assessee. For the said preposition assessee relies upon the following decisions of High Courts: a. Hon ble High Court of Delhi in the case of Nikki Drugs and Chemicals Pvt. Ltd (64 taxmann.com 309) It is apparent from the above that the first step for initiation of proceedings under Section 153C of the Act is for the assessing officer of the searched person to be satisfied that the assets or documents seized do not belong to the searched person but to the assessee sought to be assessed under Section 153C of the Act. Once the assessing officer of the searched person is so satisfied, he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in favour of the Department by relieving it of the burden of having to demonstrate that the aforementioned document belongs to the DEPL. But here the Department seeks to be relieved of the burden of demonstrating that the said document in fact does not belong to DEPL but to the Assessee. That is not possible on a collective reading of Section 132 (4A) and Section 292 C of the Act. These provisions do not dilute the obligation on the Department and in particular the AO of the searched person, under Section 153 C (1) of the Act as it stood prior to 1st April 2015 of showing that the seized document belongs to the other person (here, the Assessee) and not the searched person from whom it was seized. The other documents are copies of Form-32 of the Assessee, copies of the return of income of the Assessee, copy of its director's report, copy of certificate of incorporation and memorandum of association. These were documents furnished by the Assessee to DEPL and found in the possession of DEPL. Here, again, it cannot be presumed that such documents having being found in the possession of the DEPL did not belong to DEPL but to the Assessee. Here again, while the documents m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AO while concluding his findings only relied upon the blank cheque book of the assessee found from the premises of M/s Prakash Industries. Your Honours blank undated cheque book does not pertain to any assessment year and cannot be made basis for reopening of assessment under section 153C of the Act. 5. You Honour may see that none of the document mentioned in the satisfaction note pertains to the assessment year in question except for the ITR, balance sheet and ROC data of which even otherwise is available with the department and not in the nature of incriminating document. 6. Hon ble High Court of Delhi in the case of Index Securities Pvt. Ltd. (86 taxmann.com 84) has held that: In the present case, the two seized documents referred to in the Satisfaction Note in the case of each Assessee are the trial balance and balance sheet for a period of five months in 2010. In the first place, they do not relate to the AYs for which the assessments were reopened in the case of both assessees. Secondly, they cannot be said to be incriminating. Even for the AY to which they related, i.e. AY 2011-12, the AO finalised the assessment at the returned income qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason that a document belonging to the Assessee, which has no bearing on the assessments of the Assessee for the years preceding the search, was seized from the possession of the searched persons. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not possibly reflect any undisclosed income. This being the undisputed position, no investigation was necessary. Thus, the provisions of section 153C, which are to enable an investigation in respect of the seized asset, could not be resorted to; the AO had no jurisdiction to make the reassessment under Section 153C of the Act. b. Hon ble Delhi High Court in the case of ARN Infrastructure India Ltd. (81 taxmann.com 260) has held that: As regards the other document seized, and mentioned in the Satisfaction Note viz., the extract of the ledger account maintained by the Petitioner concerning the payments of commission made by it to RGEPL, even if it is held to 'belong' to the Petitioner, it could hardly be said to be an 'incriminating' document. This was a document relevant only for the AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that in absence of any incriminating material, the AO does not have any jurisdiction to interfere in concluded assessments. 6. The aforesaid principles would be equally applicable to proceedings initiated under Section 153C of the Act as Section 153C(1) of the Act expressly provides that once the AO has received money, bullion, jewellery or other valuable articles or thing or books of account or documents seized from the AO of the searched person, he would proceed to assess or reassess the income of the person to whom such assets/books belong in accordance with Section 153A of the Act. This has been held by the Hon ble High Court of Delhi in the case of RRJ Securities Ltd.(380 ITR 612) that As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. Merely because a valuable article or document belonging to an Assessee is seized from the possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of handing over of material by the AO of the searched person to the AO of the assessee company i.e, on 19.09.2014. Details of which are as under: Assessment Year Date of filing of return Notice u/s 143(2) issued before Assessment order under section 143(3) passed on 2009-10 29.09.2009 30.09.2010 12.12.2011 assessment order attached at page no. 56- 57 of the paper book 11. After completion of assessment under section 143(3) the assessee did not receive any notice under section 148 of the Act in respect of assessment year in question. Hence assessment year under consideration is completed assessment year on the date of handing over of material. 12. Therefore the assessment year in question can only be interfered if any incriminating material is found belonging to the assessee during the course of search on the person searched. 13. Hon ble High Court of Delhi in the case of Kabul Chawla 61 taxmann.com 412 has also explained the meaning of incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, there was any new or fresh material which could form the basis for the AO for re-opening the assessments. Mr. Shivpuri submitted that the trial balances were not available earlier. However, he could not deny that it is these very trial balances that led to the preparation of the balance sheet, which were already available with the AO and that there was no new information contained in the trial balance which justified the additions. Consequently, the Court is of the view that the above documents could not constitute incriminating material which could justify the making of the additions in exercise of the powers under Section 153C of the Act. It has been repeatedly stressed by this Court in several judgments including CIT v. Anil Kumar Bhatia 352 ITRA 493 (Del.); CIT v. Kabul Chawla 380 ITR 573 (Del.); Dayawanti through Legal Heir Sunita Gupta v. CIT (2016) 390 ITR 496 (Del.) and CIT-VII v. RRJ Securities Limited (2016) 380 ITR 612 that the seized material must have some nexus or relevance to the additions sought to be made and must be relevant for the belief formed regarding income having escaped assessment. As far as the present cases are concerned, the documents a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to the AYs for which the assessments were reopened in the case of both assessees. Secondly, they cannot be said to be incriminating. Even for the AY to which they related, i.e. AY 2011-12, the AO finalised the assessment at the returned income qua each Assessee without making any additions on the basis of those documents. Consequently even the second essential requirement for assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees. e. Hon ble High Court of Delhi in the case of ARN Infrastructure India Ltd. (81 taxmann.com 260) While examining the documents has held that: the ledger account extract may be relevant for assessment year 2010-11, it cannot be said to be incriminating material warranting re-opening of the assessment. The return originally filed by the petitioner for the said assessment year 2010-11 was picked up for scrutiny and finalised by an assessment order under section 143(3). The payments of commission to RGEPL as reflected in the ledger account was already disclosed in the Petitioner's accounts which were examined while finalising the regular assessment. Therefore, the ledger account cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case of Anil Kumar Bhatia 24 Taxmann.com 98 dated 07.08.2012 of Hon ble Delhi High Court (Page No. 23 to 26 of Paper Book no. 2) Discussion of amendment in the Act with effect from 01.06.2003 and introduction of new section 153A and circular No. 7/2003 of CBDT in Para 17 of the order. Jurisdiction of Assessing Officer u/s 153A and procedure thereon A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIVB of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as 'block assessment' because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. (Para 19) Assessing Officer is empowered to reopen the proceedings u/s 143(1)(a) or u/s 143(3) to re-assess the total income, taking note of the undisclosed income , if any. The assessing officer is entrusted with the duty of brining to tax the total income of an assessee whose case is covered by Section 153A, by even making re-assessments A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E, IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE ASSESSEE WHICH ARE PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING REQUISITION SHALL ABATE . ONCE THOSE PROCEEDINGS ABATE, THE DECKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PASS ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POSITION THUS EMERGING IS THAT WHERE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE PENDING COMPLETION WHEN THE SEARCH IS INITIATED OR REQUISITION IS MADE, THEY WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASES WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon ble Delhi High Court has decided in para 2 that The contention raised by the appellant-assessee is that the addition, which is the subject matter of questions No.(ii) and (iii), was/is not justified in the assessment order under Section 153A, as no incriminating material was found concerning the addition under Section 115 JB of the Act. The said argument has no substance and has to be rejected. Under Section 153A of the Act, the additions need not be restricted or limited to the incriminating material, which was found during the course of search. There cannot be multiple assessments, once Section 153A of the Act is applicable. Section 153A(1) postulates one assessment, computing the total income of six assessment year. Immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made. Total income is assessed or reassessed n the order under Section 153A of the Act and the Section applies notwithstanding Sections 139, 147, 148, 149, 151 and 153 of the Act. Further Hon ble Delhi High Court has clarified the decision of Chetan Dass, LaxmanDass decided earlier by observing in para 3 that Learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating material was found during the course of search, thus ignoring the provisions of law as contained in section 153A which required the Assessing Officer to assessee or reassess the total income as defined n section 2(45) of the income Tax Act, 1961. Whether the order of the ITAT is perverse in as much as it has ignored the provisions of law as contained in proviso (c) of sub-sec(1) 153A which required the Assessing Officer to assessee or reassess the total income. Hon ble Allahabad High Court has decided at the end in favour of revenue which is reproduced as under:- Consequently we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The assessing officer, while exercising the power under section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of enquiry under Section 153A is to be confirmed only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power under Section 263. In the entire scheme of 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided under section 153A of the Act the Assessing Officer shall assessee or reassess the total Income of six assessment years which means they said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and that assessing authority shall take note of the sad income also in determining the total income of the assessee when the earlier proceedings are reopened and that income also shall become the subject matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years 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: 7. On circumspection of the clause (a) of the above provision, it is amply clear that the AO shall issue notice to such person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years as referred to in clause (b) and, the latter clause, provides that the Assessing Officer shall assesss or reassess the total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year in which such search is conducted or requisition is made. As the legislature has not made the making of such assessment or reassessment for all the six assessment years subject to any condition of finding of any incriminating material or otherwise, we are unable to accept such contention of the Ld. AR which, if accepted, would lead to legislating a proposition which is obviously not tenable. 8. We can reject the contention of the assessee from another angle as well. It is relevant to note that the expression books of account or documents employed in section 153C (1) is accompanied by the works money, bullion, jewellery or other valuable articles or things . It is axiomatic that money or jewellery etc. belonging to the other person found from the premises of the person searched cannot per se be related to a particular assessment year. If we test the contention of the Ld. AR on the touchstone of money or jewellery etc., belonging to the assessee found from the person searched, then it will be very difficult at the stage of initiation of assessment or reassessment of the other person to relate it to a particular year, there by jeopardizing the whole scheme of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss total income of such other person of such assessment year in the manner provide in section 153A . 11. On going through the plain language of sub-section (2) of section 153C, it becomes manifest that this deals with the assessment for the assessment year relevant to the previous year in which is conducted under section 132 or requisition is made under section 132A. this subsection simply provided that where books of account or documents, etc., have been received by the AO having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted u/s 13, etc., then the AO shall issue notice and assess or reassess total income of the other person of such assessment year in the manner provided in section 153A. the expression such assessment year used in subsection (2) of section 153C refers to the assessment year relevant to the previous year in which search is conducted u/s 132 or requisition is made u/s 132A. Thus, it is amply clear that whereas sub-section (2) of section 153C deals with the assessment for the assessment year relevant to the previous year in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of PCIT Vs Gahoi Foods (P) Ltd (117 taxmann.com 118(SC)) was granted by the Honb le Apex court against the decision of High Court upholding decision of ITAT that assessment under section 153A of the Income Tax Act, addition only on basis of some incriminating material unearthed during search or requisition of documents . SLP filed by Revenue in case of PCIT vs Dhananjay Intl. Ltd., and PCIT vs Devi Dass Garg has been granted by Hon ble SC in similar Situations. iv) Further reliance is also placed on the decision of Honb le Supreme Court in the case of B Kishore Kumar Vs DCIT 62 taxmann.com215(SC) where statement on oath recorded under section 132(4) was held to constitute incriminating material for the purpose of making assessment under section 153A. Smt Dayawanti Gupta Vs CIT (Delhi HC) where Honb le court after considering the decision of Kabul Chawla has held that statement recorded under section 132(4) during search proceedings in absence of any other material would in itself constitute incriminating material giving leeway to AO to make additions in search assessment. 16. We have heard the rival submissions and also perused the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order passed u/s 153C of the Act. The facts of the appellant are, squarly covered by the ratios laid down in the above 2 decisions of the Hon ble Jurisdictional High Court of Delhi. In view of these facts and circumstances, in my considered opinion, now it is not required to adjudicate the grounds No. 5 to 8 and therefore, same are considered, as deemed to have been allowed. Accordingly, ground No. 5 to 8 are hereby allowed. 17. Thus, the ld. CIT(A) had held that nothing is incriminating in the documents found and, therefore, the issue is covered by the judgement of the jurisdictional Delhi High Court in the case of Kabul Chawla applies which states that in respect of completed assessments, additions cannot be made if no incriminating documents exist and no undisclosed income found during the course of search. 18. We have carefully perused the satisfaction note, written submissions of the appellant and also the contentions of the Ld. CIT (DR). A chart was furnished by the appellant, which is reproduced above in this order,wherein every seized document was described as to its nature and it was emphasized that all the documents are either statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the Tribunal that as per the provisions of section 153C, incriminating material which was seized had to pertain to the assessment years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement undersection 153C is essential for assessment under that provision, it becomes a jurisdictional fact. This reasoning appears to be logical and valid, having regard to the provisions of section 153C. Order of the Tribunal reveals that the Tribunal had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to assessment year 2004-05 or thereafter. After taking note of the material and discussing it, it was specifically recorded that the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, the respondent, ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
