TMI Blog2021 (9) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... orate discussion, has quashed the assessment orders. Commissioner has committed an error in holding that Even though these issues are interlinked, but to keep the issue alive and in the interest of revenue, this proceedings are completed . Therefore, in view of the above discussions, the impugned order is not sustainable in the eyes of the law. Accordingly, we quash the order passed under Section 263 of the Act for the year under consideration and allow the appeal of the assessee. - ITA No.133/Ahd/2021 - - - Dated:- 17-9-2021 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Tushar Hemani, Sr. Advocate, Shri Parimalsinh B Parmar, AR And Shri Vijay Govani, AR For the Revenue : Shri Virendra Ojha, CIT-DR ORDER PER RAJPAL YADAV, VICE PRESIDENT : The present appeal is directed at the instance of the assessee against the order of the learned Principal Commissioner of Income Tax (Central), Ahmedabad dated 28.03.2021, passed under Section 263 of the Income Tax Act, 1961 (in short the Act ), for Assessment Year 2010-2011. The assessee has taken 7 grounds of appeal which read as under:- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the appellant s case. 2. The learned Counsel for the assessee, at the very outset, submitted in brief that the assessee has been challenging the action taken by the learned Commissioner under Section 263 of the Act. At the outset, he submitted that a search and seizure operation was carried out at the premises of Venus Group on 10.03.2015 and, in connection with the search and survey proceedings, a notice u/s. 153C of the Act was issued to the assessee on 14.07.2016. Assessment was subsequently completed u/s 143(3) r.ws. 153C r.ws. 153A(1)(b) of the Income Tax Act on 26.12.2017. The validity of the assessment order was challenged before the learned CIT(A) and ultimately the issue travelled up to the Hon ble Tribunal and the Tribunal vide its order dated 12.11.2020 has quashed the assessment order on the ground that the order was not passed within the time period provided in the Act. Learned Counsel for the assessee further submitted that since the assessment order itself has been quashed, there cannot be any subsequent proceedings against the assessee even under Section 263 of the Act. He further submitted that this aspect was brought to the notice of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, therefore, given an opportunity of being heard in this regard. You are requested to attend my office in person or through your authorized representative along with your submissions, if any, in this regard. The hearing for this purpose is fixed on 24/02/2020 at 4.00 pm at the above mentioned address. .. 5. During the course of hearing before the learned Commissioner, the assessee brought to his notice that these proceedings has no legs to stand because proceedings under Section 263 of the Act can only be initiated if same validity proceedings are pending before the Assessing Officer. The assessment order, which has been based by the learned Commissioner to construe the error crept in the proceedings which has caused prejudice to the interest of the Revenue, has already been quashed by the Tribunal vide order dated 12.11.2020. The learned Commissioner took cognizance of this fact and recorded the following findings:- 5. I have carefully and thoroughly gone through the submission of the assessee. The contentions of the assessee stated in its reply are not acceptable as the order passed by the assessing officer is not in accordance with law. As per section 50C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seen from the copy of sale deed that stamp duty of ₹ 6,55,900/- was levied through franking of Nutan Nagrik Sahkari Bank on 24.09.2009. The stamp duty in Gujarat is levied at the rate of 4.9%, accordingly the value of property was determined at ₹ 1,33,85,714/-. In the course of assessment proceedings ₹ 1,33,85,714/- ought to have been taken as sale consideration under section 50 C of the Act for computation of income of the assessee. Later on market value of the property was sought from SRO Gandhinagar and as per the report of the SRO the value of property was calculated at ₹ 1,33,84,800/-. Therefore, the order u/s 143(3) r.w.s. 153C r.w.s. 153A(1)(b) of the Act dated 26/12/2017 passed by the AO is erroneous and prejudicial to the interest of the revenue. 6. In the light of facts and circumstances narrated above, I hold that the AO has erred in making a proper assessment in this case. The assessment order is, therefore, erroneous in as much as it is prejudicial to the interest of Revenue. Hence, in exercise of power conferred in me u/s.263 of the Act, I set aside the assessment order passed u/s. 143(3) r.w.s. 153C r.w.s. 153A(1)(b) of the Act n 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore we embark upon an inquiry, whether the material found at the premises of the searched person, would indicate that these documents falls in the category of documents, which could be termed as document belong to or belongs to the assessee or entry embedded in them falls within the ambit of expression pertains to or relates to . We have to determine under which clause one has to construe the documents found during the course of search. Therefore, it is imperative upon us to take note of section 153C, which reads as under: 2.2.2 UPTO 01.06.2015: Assessment of income of any other person. - 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 153C of the Act prior to 1.6.2015 could be invoked only if the material seized during the course of search in the case of third person belongs to to some persons other than the searched person. However, after 1.6.2015, the Legislature has categorized two situations. As far as recovery of any money, bullion jewellery or other valuable article or thing seized or requisitioned belongs to person other than the searched person, then section 153C would be justified. However, with regard to the recovery of any books of accounts or documents, seized or requisitioned, then if they pertain to other person, or any information contained therein relates to person other than the searched person, then the action under section 153C could be there. The scope of section 153C after 1.6.2015 has been widened; viz. if a person at whose premises search was carried out maintaining certain details in his regular day-to-day business, and that contain certain information exhibiting the undisclosed income of the person other than the searched person, then the action under section 153C could be justified. But prior to 1.6.2015, the documents ought to be belonged to person other than the sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C of the Act as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C of the Act have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at which the amended section 153C of the Act can be made applicable, as to whether it relates to the date of search; or the date of recording of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C of the Act. 19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 2015. Therefore, on the date of the search, the Assessing Officer of the person searched could only hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited (supra) and Commissioner of Income Tax(Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra). The essential jurisdictional requirement for assumption of jurisdiction under Section 153 C of the Act (as it stood prior to its amendment with effect from 1st June 2015) qua the 'other person' (in this case the assessees) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VSIPL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees, they did not belong to them. Therefore, one essential jurisdictional requirement to justify the assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees. 19.14 Thus, it is the date of search that has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst his satisfaction in the capacity of searched person s AO, and thereafter he recorded his satisfaction in the capacity of the AO of the present assessees. For the facility of reference, we take note the satisfaction from the lead case of Shri Dilipkumar Lalwani placed at page no.456 to 483. Relevant part of the satisfaction while issuing notice under section 153C is available at page no.457 and we deem it appropriate to take note of this part, which reads as under: 7. Satisfaction of the Assessing Officer of the person referred to in section 153A that the seized material referred to in S.No.5 relates/pertains to the person referred to in S.No.4 As per Annexure B In view of above facts as mentioned in the Annexure - B. I am satisfied that the documents seized 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 Kumar Lalwani. Further, I am also satisfied that documents seized have a bearing on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that these documents belonged to the assessee i.e. Shri Dilipkumar Lalwani. He only observed that these documents contained information which relate to the assessee. Thus, it could be construed that documents seized during the course of search; again carried out in the cases of concerned third person, were observed as relates to the assessee. They do not belong to the assessee. When the assessee took this objection before the ld.first appellate authority, the ld.CIT(A) was of the view that since law has been changed, and scope of section 153C w.e.f. 1.6.2015 would be applicable on these cases, because the assessments have not been concluded when the scope of section 153C was widened. The finding of the ld.CIT(A) is worth to note in this connection i.e. in the case of Shri Dilipkumar Lalwani, which reads as under: 4.3. I have carefully considered the facts of the case, assessment order and submission made by the appellant. The Assessing Officer [DCIT, Central Circle-1 (1), Ahmedabad] of M/s. Venus Infrastructure and Developer Pvt. Ltd., in whose case the search was conducted and documents relating to the appellant company was found and seized has recorded his satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material relating to the appellant found during the course of search in M/s. Venus Infrastructure and Developer Pvt. Ltd. The appellant has relied on the case laws which are on the 'belonging to' prior to the amended provisions of 153C w.e.f. 01/06/2015, therefore, not relevant to the facts of the case. Appellant's contention that there is no provision for issue of second notice u/s. 153C on the same set of facts is not tenable as the Assessing Officer has withdrawn the earlier notice and issued fresh notice after recording the satisfaction. The Honourable Gujarat High Court in the case of A.G. Group Corporation Vs. Harsh Prakash [2013] [35 Taxmann. com 48] has held that, if in the earlier notice a fatal error has been crept in AO will be free to issue another notice provided jurisdiction and limitation aspects are satisfied. 22. This finding is not in the line of law laid down by the Hon ble Gujarat High Court in the case of Anilk Kumar Gopikishna Agrawal Vs. ACIT, and further reiterated in other cases. At this stage, it is pertinent to note that, otherwise also, these 43 appeals are directly covered by the decision of Hon ble jurisdictional High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the ld.CIT-DR are concerned they are not directly on the point. He put emphasis on the decision of Hon ble Kerala High Court cited (supra) for buttressing his contentions that no incriminating material is required for proceedings under section 153A or 153C. This proposition is contrary to the decision of Hon ble Gujarat High Court rendered in the case of Pr.CIT Vs. Saumya Construction P.Ltd. (supra). Similarly, the order of the ITAT referred by the ld.CIT-DR is with respect to the presumption of truth of certain documents found during the course of search. It is not directly on the point. Other arguments raised by the ld.CIT-DR were raised by the ld.Senior standing counsel before the Hon ble Gujarat High Court in the case of Anil Kumar Gopikishna Agrawal Vs. ACIT (supra) and those arguments have been considered. 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 1.6.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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