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TMI Blog2023 (1) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AO erred in passing ex-parte order by invoking the provisions of Sec. 144 of the Income Tax Act, 1961 without providing reasonable opportunity of being heard. 2. On the facts and circumstances of the appellants case and in law the Learned Assessing Officer erred in rejecting the book results u/s. 145(3) of the Income Tax Act, 1961. 3. On the facts and circumstances of the Appellant's case and in law the ld A.O. erred in estimating the gross profit at the rate of 28% amounting to Rs. 31,38,34,088/- as per para 13 of the impugned order. 4. On the facts and circumstances of the Appellant's case and in law the ld. A.O. erred in making the addition of Rs. 10,43,01,079/- on account of alleged unexplained loan creditors by invoking provisions of Section 68 of the Income Tax Act, 1961 as per para 14 of the impugned order. 5. On the facts and circumstances of the Appellant's case and in law the ld. A.O. erred in making an ad-hoc addition of Rs. 10,00,000/- as alleged unexplained cash credit basis by invoking provisions of Section 68 of the Income Tax Act, 1961 as per para 31 of the impugned order." 04. In ITA No. 7683/MUM/2019 the assessee has raised following grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to complete the assessment u/s. 144 of the Act. Even that notice was not complied with. 06. Then, the LD AO proceeded to complete the assessment. The ld. AO noted that assessee is a dealer in papers and has incurred losses of Rs.6,75,42,733/-.Further, assessee has carried forward losses of Rs.8.39 Crores. The ld. AO examined balance-sheet and profit and loss account of the assessee and in absence of any information with respect to the raw material consumed and expenditure incurred as well as the stock statement and books of accounts, the ld. AO rejected books applying the provisions of Section 145(3) of the Act. After rejecting the books of accounts and in absence of delivery challans, transport bills, lorry receipts, expenditure accounts, quantitative details of stock & banks loan which were not produce before the Assessing Officer, he estimated the total income of the assessee at Rs.31,38,34,088/- @ 28% of the total turnover. In absence of any information about the creditors amounting to Rs.10,43,01,079 and unexplained cash credit u/s. 68 of Rs. 10lacs, both these sums were added u/s 68 of the Act. Accordingly, assessment order u/s. 144 of the Act was passed on 28.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see challenged that the assessment should have been u/s. 153C of the Act. The impugned assessment order is passed u/s. 144 of the Act, therefore same is invalid. 014. The ld. AR relied on the decision of the Hon‟ble Delhi High Court in case of PCIT Vs. Sarvar Agency Pvt. Ltd. as well as the decision of the co-ordinate bench in ITA No. 7682 and 7680 in case of Global Paper Impex A dated 22.09.2022 on the similarly issued where on the identical facts and circumstances the assessment passed by the ld. AO u/s. 144 of the Act is held to be not sustainable as same was required to be passed u/s. 153(C) of the Act. He therefore submitted that, issue is squarely covered in favor of the assessee. 015. The ld. DR vehemently supported the orders of the ld.CIT (A) where this issue was raised for the first time. It was submitted that there is no satisfaction and therefore assessee is not entitled to take shelter under the provisions of u/s. 153C of the Act. 016. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case, the assessment order is passed u/s. 144 r.w.s. 143 (3) of the Income Tax Act. The fact shows that, a search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Reliable paper (I) Pvt. Ltd. and its group company, Mumbai during the period 23.02.2010 and 20.04.2010 notice under section 142(1) of the Income Tax Act, 1961 (for short "the Act‟) dated 19.11.2012 was issued and served upon the assessee. However, assessee has not filed the return of income in response to the notice under section 142(1) of the Act. Then notice under section 142(1) dated 11.01.2013 along with questionnaire was issued and duly served upon fixing the next date as 23.01.2013 but none appeared on behalf of the assessee. Thereafter, subsequent notices were issued but assessee failed to comply with the same and consequently Assessing Officer (AO) proceeded to complete the assessment under section 144 of the Act. 4. AO proceeded to assess the income of the assessee on estimation basis by taking sales turnover of the assessee of the previous year and extrapolating the sales turnover by 10% of the previous years which amounts to Rs.9,57,30,405/-. AO by considering the extrapolating the turnover by extra 10% which comes to Rs.1,05,30,34,458/- proceeded to compute the income of the assessee at Rs.29,48,49,648/- being 28% of the total turnover i.e. Rs.1,05,30,34, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abates and notice under section 153C of the Act was required to be issued. 8. In the backdrop of the aforesaid facts and circumstances of the case the Ld. A.R. for the assessee raised legal ground that the assessment for both the years i.e. A.Y. 2010-11 and 2011-12 was required to be framed under section 153C of the Act and not under section 144 of the Act as has been done by the AO and relied upon the decision rendered by co-ordinate Bench of the Tribunal in case of Shri Meer Hassan vs. ITO & ors. in ITA No.1571/Del./2015 & ors. vide order dated 28.02.2019 and in case of DCIT vs. M/s. Specialty Paper Ltd. in ITA No.6869/M/2016 to 6874/M/2016 for A.Ys. 2004-05 to 2009-10 vide order dated 21.03.2018. 9. This issue was decided by the Ld. CIT(A) against the assessee on the sole ground that the entire argument of the assessee is on the assumed date of satisfaction note under section 153C of the Act i.e. 19.11.2012. 10. However, on the other hand, the Ld. D.R. for the Revenue relied upon the order passed by the Ld. CIT(A). 11. On the basis of grounds raised by the assessee, argument addressed by the Ld. Counsels for the parties to the aforesaid appeals the sole legal issue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loor. Further after restructuring records were again shifted to 8th floor. In this process, the satisfaction note appears to have been misplaced. I rely on the provision of section 292B and 292BB of the Income Tax Act, 1961. Therefore it is submitted that notice u/s 153C is properly issued and served on the assessee." 14. The onus to prove the date of recording of the said satisfaction note by the AO was on the Revenue which they have failed to discharge. Moreover, it is amply proved on the record from the order dated 21.03.2018 (supra) passed in case of assessee for A.Y. 2005-06 2009-10 and from the date of search that the satisfaction note was recorded on 19.11.2012 which mandates that the assessment in this case was to be framed under section 153C of the Act for assessment years 2006-07 to 2011-12 (including A.Y. 2010-11 & 2011-12 the years under consideration) 15. Co-ordinate Bench of the Tribunal in case of Shri Meer Hassan vs. ITO & ors. in ITA No.1571/Del./2015 & ors. vide order dated 28.02.2019 decided the identical issue by holding that provisions contained under section 153C of the Act are applicable to initiate the assessment proceedings on the basis of seized mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to subsection (1) of section 153A 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 other person : Provided further that the Central Government may by rules18 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not 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 19[and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated. (2) W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings on the basis of seized material seized in case of some third party, notice issued u/s 148 of the Act and subsequent assessment framed u/s 147 of the Act is void ab initio and as such, assessment framed u/s 147/143(3) of the Act is liable to be quashed." 16. Not only this 1st and 2nd proviso to section 153C and 153A of the Act make it clear that the AO acquires jurisdiction on the date on which satisfaction note has been recorded, which ought to be date of search, and in this case date of recording satisfaction has come on record as 19.11.2012, then proceedings under section 153C are required to be initiated for the preceding six assessment years i.e. 2006-07 to 2011-12. As on 19.11.2012 the assessment for assessment year 2010-11 was not pending. The AO has undisputedly issued the notice under section 142(1) and no notice under section 143(2) of the Act was ever issued, which vitiates the entire assessment proceedings framed under section 144 of the Act, particularly when addition made in these cases is not based on seized material. 17. At the same time, in case of assessment year 2011-12, the assessment was pending and notice under section 143(2) of the Act was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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