TMI Blog2022 (4) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... The captioned appeals filed by the assessee are directed against the respective orders passed by the CIT(Appeals)-1, Raipur, dated 26.03.2015, which in turn arises from the respective orders passed by the A.O under Sec. 143(3) r.w.s 153C of the Income-tax Act, 1961 (in short the Act ) for assessment years 2004- 05 2005-06. As common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed off by way of a consolidated order. We shall first take up the appeal for A.Y 2004-05 wherein the impugned order has been assailed before us on the following grounds: 1. In the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of ₹ 10,00,000/- made by the AO u/s.68 on account of loans received by the Appellant. 2. Ld. CIT(A) erred in confirming the addition of ₹ 2,52,000/- made by the AO u/s.68 on account of gifts received by the appellant. The addition is not justified. 3. Without prejudice to above grounds of appeal, the AO erred in invoking section 153C and in passing assessment order. The notice u/s.153C issued by the AO and the consequent assessment order is illegal, without jurisdiction, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to verify the genuineness and veracity of the aforesaid loan transactions the Assessing Officer called upon the assessee to substantiate the same on the basis of supporting documentary evidence. In reply, it was submitted by the assessee that the aforesaid loans aggregating to ₹ 10 lacs were duly considered by his father, viz. Shri. Ramesh Kedia in his income disclosed before the Hon'ble Settlement Commission, Kolkata Bench. However, the aforesaid explanation of the assessee did not find favour with the Assessing Officer. It was observed by him that during the course of the search operations conducted on 29.03.2006 at the premises of Shri Ramesh Kedia (supra) cheque leaves and bank passbooks of 27 bank accounts a/w. PAN cards of the aforesaid persons were found from his possession. Backed by the aforesaid facts the Assessing Officer was of the view that the bank accounts of the aforesaid persons were opened in order to launder the assessee s unaccounted money in the garb of loan transactions in their names. It was further observed by the Assessing Officer that the income-tax returns of the aforementioned employees were filed with an intent to give a colo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een received by the assessee were persons of no financial means. It was noticed by the CIT(A) that the gross annual income of each of the employees i.e. the alleged lenders was just little above of the respective loans which were stated to have been advanced by them to the assessee. Also, it was observed by him that the assessee had failed to place on record the bank statements of the aforementioned lenders a/w the source from where the respective loans were advanced by them. Backed by the aforesaid facts, the CIT(Appeals) was of the view that a perusal of the documents seized during search proceedings revealed beyond doubt that the bank statement of the aforementioned employees were opened and income-tax returns were prepared only for the purpose of routing the unaccounted money of Shri Ramesh Kedia, proprietor of Seth Banshidhar Kedia Rice Mills. Pvt. Ltd., Baloda bazaar and that of the assessee. Accordingly, the CIT(Appeal) being of the view that the assessee had failed to establish the creditworthiness and genuineness of the creditors, thus, upheld the addition of ₹ 10 lacs (supra) made by the Assessing Officer. As regards the addition of ₹ 2,52,000/- (supra) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was made by the A.O by referring to the bank accounts, cheque leaves, bank passbook, PAN cards etc. which were found during the course of search proceedings conducted on 23.02.2006 at the premises of Shri Ramesh Kedia (supra) and not on the basis of any incriminating material/document belonging to the assessee found during the course of the said proceedings. As regards the addition of the gift transactions of ₹ 2,52,000/- (supra) made u/s.68 of the Act, it was submitted by the Ld. AR that the same was made by the Assessing Officer, for the reason, that the assessee had in the course of the assessment proceedings failed to place on record requisite documents to substantiate the authenticity of the gift transactions in question. Backed by the aforesaid facts it was vehemently submitted by the Ld. AR that as the respective additions made by the Assessing Officer were not made on the basis of contents of any incriminating material/document belonging to the assessee that was seized during the course of search proceedings, therefore, the A.O had wrongly assumed jurisdiction and framed the assessment under Sec. 143(3) r.w.s 153C of the Act, dated 31.12.2007. Apart from that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.w.s.153C of the Act. Rebutting the claim of the assessee that no addition was called for considering the merits of the case, for the reason that the Assessing Officer had observed that the bank accounts of the employees were opened and the income-tax returns were created to route the unaccounted money of Shri. Ramesh Kedia (supra), it was submitted by the Ld. DR that the said observations clearly referred to the unaccounted money of the assessee and not that of his father, viz. Shri Ramesh Kedia. On being confronted with the fact that the CIT(Appeals) had categorically observed that the bank accounts of the aforesaid lenders were opened and income-tax returns were created to route the unaccounted money of Shri. Ramesh Kedia (supra) the Ld. DR could not rebut the same. At this stage we may herein observe, that while confronting the aforesaid observations of the CIT(Appeals) we had initially failed to observe that the reference as regards the routing of unaccounted money through the bank accounts of the employees was not only in context of Shri Ramesh Kedia (supra) but also in context of the assessee before us. It was stated by the Ld. DR that as the assessee had failed to substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........... (ii). Sec. 153C (as is available on the statute w.e.f 01.06.2015) i.e post-amended : 153C(1). Notwithstanding anything contained in section 139, section 147, section 148, section149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates 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....................... On a perusal of the pre-amended vis-a-vis post-amended provisions of Sec.153C of the Act, it stands revealed that prior to 01.06.2015 it was only where the books of account or document seized or requisitioned belongs or belong to a person other than the person referred to in section 153A that jurisdiction under Sec. 153C in respect of such other person could be assumed. However, the legislature in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion on the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal. 7. The grievance of the Revenue as submitted by Mr. Kota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act. The Supreme Court observed: This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. 28.5 The above categorical pronouncement of the Supreme Court cannot, by any stretch of imagination, be termed as obiter as has been suggested by Mr. Manchanda. Even the obiter dicta of the Supreme Court is binding on this Court. 29. The search in the case before the Supreme Court was prior to 1st June 2015. Apart from the fact the Supreme Court approved the above decision of the Gujarat High Court holding that the seized documents should 'belong' to the other person, the legal position in this regard where the search has taken place prior to 1st June 2015 has been settled by the decision of this Court in Pepsico India Holdings (P) Ltd. v. ACIT (supra). In Commissioner of Income Tax v. Vinita Chaurasia (supra), this Court reiterated the above legal position after discussing the decisions in Principal Commissioner of Income Tax v. Super Malls (P) Limited (supra) and Commissioner of Income Tax (Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra). The essential jurisdictional requirement f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he document in question does not belong to Mr. Lalit Modi i.e. the searched person, he does not indicate on what basis he proceeds as if the document belonged to the Assessee. In this regard, it would be relevant to point out that the Special Leave Petition (for short SLP ) filed by the revenue against the aforesaid order of the High Court had been dismissed by the Hon ble Supreme Court in PCIT Vs. Vinita Chaurasia [Special Leave Petition (Civil) Diary No.27566 of 2018, dated 20.08.2018] (iv). Pepsi Foods Pvt. Ltd. Vs ACIT [2015] 231 Taxman 58(Del): In its aforesaid judgment the Hon ble High Court of Delhi by drawing support from Sec. 132(4A)(i) and Sec. 292C(1)(i), had observed, that the same envisaged that where any document is found in the possession or control of any person in the course of search proceedings, the normal presumption is that the said document belongs to such person. In the backdrop of the aforesaid settled position of law, it was observed by the High Court that if the A.O was to hold otherwise, then he was obligated to rebut the said presumption on the basis of some cogent material available with him and come to a conclusion or satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. 132 (1) XXX XXX XXX (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing 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 searched person but to somebody else. Surmise and conjecture cannot take the place of satisfaction . 7. This would be the appropriate stage to consider the decisions referred to by the learned counsel for the Revenue. The decision referred to in Kamleshbhai Dharamshibhai Patel (supra) is of no relevance insofar as the present case is concerned. In that case certain documents were said to have belonged to the petitioners therein but a plea had been taken that as the land, in relation to which the documents were, no longer belonged to the petitioners therefore the said documents could not be regarded as belonging to the petitioners. That is an entirely different situation and the facts of that case are clearly distinguishable from the facts of the present case. Insofar as the decision of the Allahabad High Court in Classic Enterprises (supra) is concerned, we are, with respect, unable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07 to 2011-12 and the same reads as under:- M/s Pepsi Foods Pvt. Ltd. AY 2006-07 to 11-12 02.08.2013 Satisfaction Note for issue of Notice u/s 153C of Income Tax Act,1961 in the case of M/s Pepsi Foods Pvt. Ltd, for the Assessment Years 2006-07 to 2011-12. Satisfaction Note A search and seizure operation u/s 132(1) of the I.T. Act was carried out at the various premises of M/s Jaipuria Group on27.03.2012. The group is also into various other business viz. Raymond Retail franchisee, real estate and construction, fast foods, mining, education, ayurvedic products, information technology and medical services. One of the major allegations against the Jaipuria Group is that the assessee group in order to reduce its taxable profit indulged in enhancing the cost of raw material purchased. On examination of the accounts of various concerns, it is noticed that raw material are procured from fixed vendors. Since bulk purchases are made, rates should have been lower. However raw material are being procured on a high rates resulting in lower taxable income. The bottler shall buy all units of concentrate required for the manufacture f the beverage from PF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 153A. In view of facts narrated above, I am satisfied that the case of M/s Pepsi Foods Pvt. Ltd. is a fit case for issue of notice u/s 153C of the I.T. Act, 1961. Notice u/s 153C dated 02.08.2013 is issued requiring the assessee to file return of income for the A.Y. 2006-07 to 2011-12. (Pukini Lokho) Asstt. Commissioner of Income Tax, Central Circle-12, New Delhi 11. 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 the searched person is satisfied that the seized documents belong to a person othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that 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 .... In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction and framed assessment in the hands of the assessee u/s.143(3) r.w.s 153C of the Act. Backed by our aforesaid observations we are unable to uphold the assessment framed by the Assessing Officer u/s.143(3) r.w.s.153C of the Act for want of jurisdiction on his part. We, thus, in terms of our aforesaid deliberations quash the assessment for want of jurisdiction on the part of the Assessing Officer. As we have quashed the assessment framed by the A.O under Sec. 143(3) r.w.s 153C, dated 31.12.2007, therefore, we refrain from adverting to and therein adjudicating the other contentions advanced by the ld. A.R i.e both on the legality of the assessment framed, as well as the merits of the additions made in the hands of the asseseee, which, thus are left open. 11. In the result, the appeal of the assessee in ITA No.105/RPR/2015 for the assessment year 2004-05 is allowed in the terms observed hereinabove. ITA No.106/RPR/2015 A.Y. 2005-06 12. We shall now take up the appeal of the assessee for assessment year 2005-06 wherein the impugned order has been assailed before us on the following grounds : 1. Ld. CIT(A) erred in confirming disallowance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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