TMI Blog2023 (3) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of search in the case of some other person, because assessment / reassessment in such case is specifically restricted to the income based on the said incriminating information only. Whereas, in the proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other amounts also if any information about those is on his record over and above the alleged escaped income as per the reasons recorded. The purpose of restriction of assessment for amount of income by taking recourse to the provisions u/s 153C of the Act to alleged incriminating material and not on suspicion has been upheld by the Hon ble Supreme Court in the case of Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] Accordingly, we hold that any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summarized as under: The first legal ground relates to validity of re-opening u/s 147 and 148. Secondly, Assessee has challenged the jurisdiction of the Assessing Officer who has passed the impugned order on the ground that he did not have jurisdiction over Assessee. Thirdly, the additions which have made in the assessment passed u/s 147 could not have been made as cannot be made as same should have been made in the order passed u/s 153A, and Lastly, in respect of one addition of Rs. 56,86,529/- on account of alleged bogus claimed of long term capital gain the same should have been considered u/s 153C and not u/s 147 as per the provisions of the law. 3. Besides this Assessee has challenged following additions on merits: i. Addition of Rs. 75,74,28,000/- for alleged cash loans given by the assessee but added u/s 68 based on some dumb documents at the time of search. ii. Addition of Rs. 56,86,529/- u/s 68 by treating long term capital gain on sale of shares as bogus. iii. Addition of Rs. 7,72,56,840/- on estimate basis of re- characterizing the addition as undisclosed interest income. iv. Addition of Rs. 2,84,326/- u/s 69 C for alleged commission at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four returns of taxable income for the AY 2013-14 (at Rs 10,61,190/-); AY 2014-15 (at Rs 15,28,140/-); AY 2015-16 (at Rs 15,03,060/-); and for the last AY 2016-17 (at Rs 18,97,820/-), as no return of income for the AY 2017-18 had been filed till the date of search which was filed belatedly on 11/02/2019, which was filed also at Rs 11,85,530/-. Accordingly, it was stated before us that, since all the returns of income as above had taxable incomes lower than Rs 20 lakhs and accordingly, the ITO Ward 20(2)(4) Mumbai was holding the assessment jurisdiction on the assessee as the returned income for all the above assessment years was less than Rs 20 lakhs being in the metro cities in view of the above instructions of the CBDT defining the assessment jurisdiction between an ITO and ACIT. 6. The reasons for reopening were provided by the DCIT, Central Circle 4(1) Mumbai to the assessee on his request on 22/11/2018. The assessee filed objections to the same before the DCIT Circle 4(1) Mumbai on 05/12/2018. The said AO disposed off the said objections vide letter dated 07/12/2018 stating that ―though the undersigned is not technically bound to pass a speaking order, yet the same ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the Instruction no. 1/2011 dated 31/01/2011 issued by the CBDT u/s 119 of the Act assigning the assessment jurisdiction u/s 120 of the Act as per the monetary limits and on facts which was binding on the Revenue authorities under all circumstances. Therefore, as per the assessee the assessment order in this appeal is void ab initio having been passed by an AO not having a legal assessment jurisdiction at all. (iii) Lastly, in respect of the addition of Rs 56,86,529/- made alleging bogus claim of a long term capital gain, the contention of the assessee is that the same could only be considered for reassessment by taking recourse to the non obstante provisions of the section 153C of the Act as has been mandated w.e.f. 01/06/2015 and not by taking recourse to the provisions u/s 148 of the Act because the entire information relied therein had emanated in the income-tax searches in the premises of the share brokers / operators of the scrip on which the said LTCG was earned by the assessee as no incriminating material in any manner for the same was detected in the search in the premises of the assessee. 9. At the outset, the Assessee has challenged the validity of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the issue under consideration here is whether it is covered by the Fourth and the Second Provisos of the Section 153A of the Act. 11. In line of the aforesaid plea taken by the Ld. AR, we have to examine as to whether the conditions laid down in the 4th and 2nd proviso of section 153A are satisfied and to see, whether the assessment should have been framed u/s 153A or u/s 147/148. The reasons recorded by the AO wherein he has referred to various information during the course of search and seizure carried out in the case of M/s Evergreen Enterprises, wherein assessee is one of the partner and it was found that assessee has taken some accommodation entry of bogus /long term capital gains on sale shares of M/s DB International during F.Y 2010-11 and various persons have taken loan from the assessee and M/s Evergreen Enterprises. The reasons recorded by the AO reads as under:- Reasons for reopening of the assessment in case of Nilesh Bharani (PAR- AABPB4581G for AY 2011-12 u/s. 147 of the Act 1. The assessee derives income from salary and business. The assessee has been filing his returns of income from A.Y. 2002-03. The assessee, has filed Return of Income for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to have fabricated the evidence in order to mislead the revenue to believe the apparent as real and underestimated the total income by Rs.76,31.06,529/- 5. Accordingly, from the above facts and information in possession with this office it is understood that the said income of Rs.76,31,06,529/- has escaped assessment within the meaning of section 147 of the 1.T.Act, 1961 for the previous year relevant to AY 2011-12. 6. In view of the above facts and information in possession with this office, there is failure on the part of the assessee to disclose fully and truly all material facts in respect of income of Rs.76,31,06,529/- Therefore, I have reason to believe that income chargeable to tax of Rs.76,31,06,529/- and has escaped assessment within the meaning of section 147 of the IT. Act, 1961 for the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for the previous year relevant to A.Y 2011-12 Hence, it is a fit case for initiation of proceedings u/s.147 of the Income Tax Act. 1961 by issuing notice u/s. 148 of the Income Tax Act, 1961. 7. In this case more than four years have lapsed from the end of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and consequently, the impugned reassessment order is bad in law ab initio, being against the express provisions of the Act. In support he relied on the judgment of the Hon ble Apex Court in Kanwar Singh Saini vs High Court of Delhi (2012) 4 SCC 307 to support the above contention where in para 13, Hon ble Court observed and held as under: 13. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. 14. Ld. A.R. pointed out that, The Hon ble Delhi High Court in PCIT vs. S.S. Con Build Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases 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 and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs or more, the AO should make assessment u/s 153A of the Act. The catch point is that in cases where tangible evidences are found during search and seizure operation and the same is represented in the form of undisclosed investment in any asset , as defined in the Explanation 2 therein, in respect of the extended 4 relevant assessment years, the assessment would be exclusively covered by the Fourth Proviso to the Section 153A (1) of the Act and no notice for reassessment can be issued u/s 148. Now on the facts of the present case, it is seen that the evidences found during the course of search and seizure operation in the case of the assessee and M/s Evergreen Enterprises, wherein assessee was a partner that they have been giving cash loans to various persons for sums more than Rs. 75.74 crores. This cash loan is allegedly out of undisclosed investment or money. Giving of cash loans is certainly an asset within the meaning of Explanation 2 as incorporated above and is represented in the form of undisclosed investment in an asset which reveals undisclosed income escaping assessment. Even in the assessment order has held that assessee has given cash loans based on some entries in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td 398 ITR 145 (Bombay), UAL Industries Ltd [2013] 31 taxmann.com 111 (Kolkata - Trib.) (TM) approved the said law. 19. We further opine that the same legal position would also be applicable u/s 153C of the Act as well and wherever the AO of the searched person handed over the seized material to the AO of the other person , then that AO of the other person is mandatorily required to issue notices u/s 153C of the Act for the ten (six plus four extended) assessment years subject to finding of definite incriminating material disclosing escaped income which pertains to or any information contained therein has bearing on determination of assessable income of such other person for any of those 10 assessment years. Accordingly, the notices u/s 153C of the Act for the first six assessment years can be issued only on the basis of some seized incriminating books pertaining to or information contained therein, but for the earlier 7th to 10th extended relevant assessment years, the condition of any escaped income being minimum of Rs 50 lakhs and that too when such income is represented in the form of an asset must also be met. 20. Now coming to the present facts, it has been pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted fact that the AO had evidence gathered from the search, then suspecting/ detecting the escaped income of more than Rs 50 lakhs at the time of issue of the notice u/s 148 of the Act on 28/03/2018, for initiating the proceedings on the basis of same very evidence coupled with the statements recorded u/s 132(4) of the Act, which are also mentioned in the reasons recorded. 22. The ld. AR also drew our attention to the Fourth Proviso to 153A of the Act and pointed out that it does not at all refer to any seized material for initiating a reassessment proceeding for the relevant extended 4 years. It just refers to information /material which suggest which reveals income in the form of an asset which has escaped assessment of income of Rs 50 lakhs and more for the said extended period. This could be either books of account or documents or evidence in any manner, not necessary seized from the assessee but should be with the AO in some manner which could be a document by way of a report sent by the investigation unit also. He also stated that there is a difference of application of the two non obstante sections 153A and 153C of the Act after the search. The section 153A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and for the relevant 4 assessment year or years being part of the extended four assessment years beyond the mandatory preceding six assessment years from the date of search if the prescribed conditions there in are fulfilled and then to assess the income based on those fresh returns of income and the material available with him. The second proviso therein specifically states that any assessment or re-assessment of income for any of the assessment year out of the said 10 assessment years pending on the date of search shall compulsorily abate. It is because after the search, a reassessment could only be made u/s 153A of the Act for the 10 assessment years preceding the date of search and not under any other section. The ld. AR also vehemently stressed the importance of the same by referring to the Hon ble Apex Court in Sinhgard Technical Education Society 2017-TIOL-309-SC-IT holding that an assessment after a search is a jurisdictional fact and which can only be derived from the legislature and not by the courts or even the parties by consent as has been held by the Hon ble Apex Court in Kanwar Singh Saini (2012) 4 SCC 307. 26. It was also stated by the ld. A.R. by referri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly u/s 153A of the Act. 28. The AR also supported the above submissions because on query from the Bench during the hearing as to when the books of account seized from the assessee by the investigation wing during the said search were handed over to the Central Circle Mumbai, the CIT DR filed a letter dated 15/11/2022 with evidence showing that the same was handed over on 31/10/2018 to the ACIT Central Circle 4(1) Mumbai by the Investigation Wing and a copy of which was also given to the assessee then. Thus, undisputedly, and as per the categorical admission of the revenue as above, the seized material of the assessee for this relevant assessment year was received by the AO, DCIT, CC 4(1) Mumbai before the date of completion of this assessment vide the assessment order dated 30/12/2018. The ld. AR further pointed out that admittedly, the AO has admitted in the reasons recorded by 28/03/2018 that the information received by him from the Investigation Unit was based on a search on the assessee where complete figures and seized information was duly mentioned besides referring to the statements of 4 employees of the assessee, recorded u/s 132(4) of the Act at that time of search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got vested with the ACIT Circle 20(2) Mumbai, when the earlier notice u/s 148 of the Act was issued by the ITO Ward 20(2)(4) Mumbai. No copy of any mandatory assessment jurisdiction transfer order u/s 127(1) of the Act was ever given to the assessee. However, only during the hearing of the appellate proceedings that too on the directions of the Hon ble Bench, the ld. CIT DR provided a copy of the Memo dated 20/04/2018 by which the ITO Ward 20(2)(4) Mumbai sent the assessment record for the relevant assessment year to the ACIT 20(2) Mumbai. In the covering letter thereto filed before the Bench, the revenue has categorically admitted that no mandatory assessment jurisdiction transfer order u/s 127(1) of the Act was ever passed for the purpose by the PCIT 20 Mumbai but the same was transferred by the ITO suo moto and which is totally illegal, because any assessment jurisdiction from an existing AO can only be transferred to another AO even under the charge of the same PCIT by passing a speaking and reasoned order u/s 127(1) of the Act by the PCIT as per the section 127(1) of the Act. The Ld. A.R. also admitted though there is no necessity at all to give an opportunity of hearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged information on the basis of the PAN location on the web portal of the income-tax department but also because the latest last 4 returns of income were also with him being the net assessable income of the assessee less than Rs 20 lakhs in each assessment year. He drew the attention of the Bench to the acknowledgements of filing those returns of income placed in the PB, where the jurisdiction of the AO is mentioned as of the ITO Ward 20(2)(4) Mumbai which was automatically picked up by the income-tax returns filing software of the income-tax department when the PAN is filled therein. Thus, as per him, undisputedly the assessment jurisdiction was correctly lying with the ITO ward 20(2)(4) Mumbai when the impugned reassessment proceeding was initiated on 28/03/2018 by issuing the notice u/s 148 of the Act. 33. It was also pleaded on behalf of the assessee that in case, the revenue pleads that the correct jurisdiction for the purpose was with the ACIT Circle 20(2) Mumbai only at that time then the alleged notice issued u/s 148 of the Act by itself becomes void ab initio as having been issued by a non-jurisdictional assessing officer, i.e., the ITO Ward 20(2)(4) Mumbai and could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, (b) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per restructuring of jurisdiction . The Ld. AR stated that even on query from the Bench to the CIT DR, no explanation as to which restructuring of the jurisdiction was referred to therein be given. As per him, undisputedly, as per the last four returns of income submitted by the assessee, his assessable income in each of the assessment year was lower than Rs 20 lakh and therefore, the assessee could only be assessed with the ITO and not by the ACIT/DCIT as per the instruction no. 1 of 2011 dated 31/01/2011 of the CBDT which was valid till they said date. He also averred that the said transfer memo also clearly indicated that there was no assessment jurisdiction transfer order passed by the PCIT-20, Mumbai for the purpose as was mandatory u/s 127(1) of the Act. 38. The Ld. AR finally concluded his submissions on this issue by stating that thus, on overall perusal of the law as submitted above by him, it is apparent that definitely there was a violation of the said law by the revenue authorities. They were bound to follow the Statute and not to have exercise jurisdiction worked as per their sweet will Since, this mandatory legal requirement to assume jurisdiction by the ACIT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , were searched and the company itself was not involved in the alleged LTCG affairs management. Therefore, as per the ld. AR, an adverse cognizance could only be taken on the basis of the income-tax searches in the premises of those brokers / operators. It is also stated by the ld. AR that the company D B (International) Stick Brokers Ltd was not included in the alleged list of 84 companies prepared by the Kolkata Investigation Unit engaged in the alleged scam of LTCG as has been alleged by the CIT(A) in para 7.2 of his appellate order under this appeal. 40. The ld. AR, further, submitted that the impugned issue could only be considered by taking recourse to the mandatory non-obstante provisions u/s 153C of the Act and not u/s 147/148 of the Act. The Ld. A.R. also submitted that the structural amendment made u/s 153C of the Act w.e.f. 01/06/2015, which altogether changed the scenario of its application in the case of the person not searched, does not at all specify anywhere that it would solely be applicable only in respect of the searches conducted w.e.f. the said date. The ld. AR vehemently submitted that any information received by the AO of the non-searched person after 31/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable where the search is initiated on or after 01/04/2017. Similarly, the consequential amendment u/s 153C of the Act vide the clause (61) was made which also specifically refers that it is applicable in respect of a search initiated on or after 01/04/2017. 43. He further stated that similarly, the Memoranda vide clause (36) therein explaining the proposed amendment by the Finance Bill, 2015 in the definition of 153C of the Act also does not at all state anywhere that it was applicable only in respect of the searches initiated w.e.f. 01/06/2015, particularly when there was no corresponding amendment in the section 153A of the Act. This clearly proves that this amendment was very much applicable in respect of the searches conducted earlier also but for which the requisite information as mentioned u/s 153C of the Act was received by the AO of the non-searched person after 31/05/2015 or from 01/06/2015. Similarly, this is also clear from the clause (36) of the Notes to the amendment proposed in the Finance Bill 2015. 44. The ld. AR also stated that since, as per the CIT (A), the impugned addition is based on the search operations carried out by the Directorate of Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or making of requisition under section 132A in the second proviso to sub-section (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 rules 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 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) 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 releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. 49. Further, the Hon ble Apex Court in its judgment dated 14/02/2020 in ACIT vs Pankajbhai Jaysukhlal Shah (2020) 120 taxmann.com 318 (SC) dismissed the SLP of the revenue against the judgment of the Hon ble Gujarat High Court in the said case (2019) 110 taxmann.com 51 (Guj), which had quashed the assessment order passed on the strength of a notice issued by a non-jurisdictional assessing officer, though the assessment order was passed by a jurisdictional assessing officer. Here also the impugned notice u/s 148 of the Act was issued beyond jurisdiction as for the purpose of assessment of an income on any material relating to an assessee seized d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section w.e.f. 01/04/2017 and, the section shaped and which remained in the statute till 31/03/2021 mentioned above. c) The amendments brought in section 153C was only to protect the revenue and not to resort to rigours of section 148 and whenever in cases of search in case of a person, any material or information pertaining to such other person is found AO can initiate 153C and can make addition or assessment for the relevant assessment year or years. 52. On perusal of the above section amended from time to time, it is clear that the provisions of the said section could only be applied till 31/05/2015 when from the premises of the searched person, some books of account and/or valuables or documents seized or requisitioned belongs to a person other than the person searched. Which meant that a document or books of account, valuables or asset seized etc belonging to the other person not searched should have been found in a physical form from the premises of the person searched. Any information contained in the material so seized from the premises of the person searched which did not belong to the non-searched person but contained therein any information relating to the non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e existing provisions contained in section 153C provide that in the course of an assessment proceeding, in the case of a person in whose case search action under section 132 or action under section 132A have been conducted, and whether the Assessing Officer is satisfied that the assets or books of account or documents seized belong to another person, then, the assets or books of account or documents seized shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person, if he is satisfied that the books of accounts or documents or assets seized have a bearing on determination on the total income of such other person. It is proposed to amend sub-section (1) of the said section so as to provide that 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation unit directly but definitely in an illegal manner beyond the prescribed jurisdiction for the purpose by the law. This is the precise information to be used by the revenue to initiate proceedings of reassessment by issuing a notice u/s 153C of the Act instead erroneously u/s 148 of the Act. 57. We agree with the contention of the assessee that, since, section 153C of the Act overrides the provisions of the sections 147, 148,149, 151 and 153 of the Act, it was absolutely mandatory for the Assessing Officer of the person searched to send the same to the AO of the non-searched person and thereafter, the concept of verification of it being incriminating or not is in the sole domain of the Assessing officer of the person not searched who if after verification finds that the information received by him from the AO of the person searched is incriminating and contains details of some escaped income for one or more assessment years, he will record a satisfaction to the said effect and proceed to reassess the same u/s 153A of the Act which is clear by the words if that AO (of the non-searched assessee) is satisfied that the information so received has a bearing on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he non-searched person. The legislature in its wisdom has specifically mentioned separately year and years therein clearly restricting its application only to the assessment period for which the incriminating information was found and not for the period of six years, and secondly, there can be more than one reassessment proceedings for the same assessment year by taking recourse to the provisions of the section 153C of the Act as the action may follow on finding incriminating information for the same period but from different persons searched and at different locations or different times. In such a situation, every time when such information is found in a new search, a fresh proceeding u/s 153C of the Act will ensue irrespective of the earlier action(s). There is no limit to multiple reassessments in such cases as is in the case of reassessment proceedings u/s 148 of the Act,(3) The Hon ble Apex Court in Sinhgad Technical Education Society 2017-TIOL-309-SC-IT (para 18)has also elaborated the above law as below: 18) The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re somehow akin to the provisions of the section 153A and section 153C of the Act, although the operation of these two sets of sections are applicable in different situations. Section 148 of the Act comes into picture where any information of an escaped income received by the Assessing officer did not flow from any search anywhere. It could be also on the basis of information already on the record of the AO as was mentioned in the section 147 of the Act at the relevant time. It could also be received from the Assessing officer of any other assessee not searched but during the course of normal assessment proceedings of the said assessee, his AO discovers some escapement. In any of such situation, then after recording a satisfaction of an escapement of income by way of reasons u/s 148 of the Act, a reassessment u/s 147 of the Act is made. The said reasons u/s 148 of the Act could also be recorded on a prima facie escapement of income and which may not necessarily be beyond doubt. 62. However, w.e.f. 01/06/2015, after an income tax search u/s 132 of the Act on any person, if any incriminating information in any manner much less any material in physical form or even otherwise in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant information as found by the revenue which even relates to another person not searched to the AO of the non-searched person who thereafter conducts his proceedings under same procedure, i.e., the AO of the said assessee verifies it from the information on his record, determines its character, whether incriminating or not and being an escaped income, then records satisfaction by way of a note u/s 153C of the Act, issues a notice u/s 153C to file a return of income for reassessment, then he makes an assessment / reassessment of such income u/s 153A of the Act. 65. Now, the entire procedure is the same except under different sections having two separate contingencies. In our opinion, the Legislature has not left any discretion on the revenue officers to make the assessment /reassessment under any of the said set of provisions as per their choice. This is a jurisdictional aspect and goes to the root of the assessment. 66. We also notice that, the Legislature for enforcement of the provisions of the assessment after an income-tax search, has specifically provided u/s 132(9A) of the Act, that the seized material during the course of a search would be handed over to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as is permitted u/s 132(1) of the Act and then to proceed further as mentioned therein only after undertaking the search action. In case, the officers of investigation unit desire to extend their domain for undertaking further action on the persons not searched but who are suspected to have concealed their incomes as per the information gathered in any search, they can search those assessees or any survey action and then send the information gathered therein directly to the AOs of the persons consequently later searched but who had not been searched earlier. Thus, sending of any intimation by the officers of the investigation unit on the basis of the material found in a search in respect of the non-searched persons directly to the AOs of the non-searched persons is apparently contrary to section 132(9A), whether pre or post amendment the 153C of the Act. Even in the pre amendment provision up to 31/05/2015, this intimation could only be sent by the AO of the searched person to the AOs of the non-searched person to take necessary action u/s 148 of the Act or any other applicable provision of the Act, as the officers of the investigation unit were not at all authorized for the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly his concealed income so detected had escaped assessment and which needed to be brought to tax. In his submissions, the ld. CIT DR also submitted that even otherwise also an assessee must not be allowed to evade payment of due government income-taxes on technicalities of application of the different provisions of the law. The ld. CIT DR also stated that reassessment proceedings initiated by issue of the notice u/s 148 of the Act on 28/03/2018 for this assessment year could not at all be abated as the said proceedings were not pending as on the date of the search in October 2017 but were initiated much thereafter, and also admittedly much before receipt of the seized books of account from the investigation wing by the AO on 31/10/2018. 70. The ld. CIT DR also stated that it is a normal established practice in the income-tax department to transfer the assessment records of assesses from an AO to another AO in the same PCIT charge without any specific order u/s 127(1) of the Act for the purpose. The assessee cannot have any grievance to the same as he is not at affected by such transfer because it is for the revenue to decide as to will be his assessing officer within the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped income u/s 147 of the Act must be affirmed as on facts and in law existed as on the said date, there was no illegality at all therein. 72. In rejoinder, the Ld. A.R. while reiterating his submissions made earlier stressed that it is not at all open to the revenue officer to apply the codified law by twisting or ignoring the said provisions as per their convenience or the past practices, which may be unchallenged so far. They are strictly bound to follow the law legislated in the same spirit in which the same has been crafted by the Legislature. The provisions of the law are not just guiding principles to collect the revenue but are the actual road map to be strictly adhered to in the letter and spirit by its adjudicators. None including any revenue officer can be permitted to perpetuate some wrongdoings as per the past usages which had gone unnoticed till questioned. There is option with them in any manner to violate the same. The revenue is also not permitted to presume something to have existed in the statute when the law has been crafted in an unambiguous and plain words with no if and buts, particularly with reference to the Memoranda explaining the insertion of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and M/s Evergreen Enterprises for sums aggregating to Rs. 75.74 crores. 74. The moot question before us is, whether there was any escapement or whether any income representing in the form of asset which has escaped assessment amounts to Rs. 50 lakhs or more. If any such escaped assessment for Rs. 50 lakhs or more which is in the form of asset based on any books of account or document or evidence, whether AO can initiate proceedings u/s 148. The conditions for invoking the 4th proviso read with Explanation 1 thereto is that the relevant assessment years relevant to previous year in which search is conducted which falls beyond the 6 assessment years, but not later than 10 assessment years, the AO has to necessarily frame the assessment u/s 153A and the statute bars the AO to issue any notice for assessment or re-assessment. Here in this case, from the perusal of the reasons recorded as incorporated earlier part of the order, we have already noted that AO has given a finding that based on search conducted in the case of M/s Evergreen Enterprises wherein assessee is one of the partner, it was found that assessee has taken bogus /LTCG for sale of penny stock. Another important ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the forthcoming paragraphs. 75. As analyzed by us in the foregoing paragraphs, section 153A of the Act as it came into the Statute book w.e.f. 01/04/2017, providing that an assessment or reassessment of income of the person searched is to be made mandatorily u/s 153A of the Act for the 6 assessment years before the date of search which in this case were the AYs 2012-13 to 2017-18; and also mandatorily u/s 153A of the Act for the 4 earlier assessment years beyond the said 6 assessment years as above if and only if when the undisclosed income found in the material seized was Rs 50,00,000/- and above and which was represented by an asset defined in the Explanation 2 in the said section as below which categorically included loans also given by the assessee. Asset shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in the bank account. 76. The alleged addition made by the AO in the assessment order and also mentioned in the said notice u/s 148 of the Act was Rs. 85 crores approximately which was far more than Rs 50,00,000/- and admittedly as per the AO, the same was in the form of loans given by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed income under section 68, when there are lending also, as observed by the AO that there were borrower and lender ledger accounts were found. How can it be not held that in these circumstances that in this case loan is not an asset as stipulated in explanation 2. If it is both, then how addition can be made only for cash loans and why not commission is added, if it is undisclosed transaction. Thus, in these circumstances, we hold that looking to the documents and evidence which was in possession of the AO prima facie revealed that income representing in the form of asset which has escaped assessment which was more than 50 lakhs and in view of the amending provision AO was debarred from taking any action and for reassessment u/s 147/148. 78. The important phrase use in 4th proviso in Clause (a) is that AO should be in possession of ., which revealed that income representing in the form of asset which has escaped assessment . The asset or liability is a part of balance sheet. If the AO based on evidence or documents found that these assets are in fact in the nature of income which has escaped assessment, the AO can acquire jurisdiction for going beyond the period of 6 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for an amount of Rs 50,00,000/- and above, which admittedly here, the AO had received and was in his possession before issuing the notice u/s 148 of the Act on 28/03/2018. 81. Secondly, the legislature has also not prescribed any period of limitation to issue any notice for assessment / reassessment u/s 153A of the Act though there is a specific period of limitation after the search to complete the said assessment. The AO can also issue notice(s) u/s 153A of the Act at different times for different assessment year(s) within the limitation period, off course by adhering to the settled principles of law and natural justice by allowing sufficient reasonable time to the assessee for compliances required as per the law. The Act does not prescribe anywhere that all the notices u/s 153A of the Act must be issued simultaneously at the same time. Since, here the fact of the search had already come to the knowledge of the AO by 28/03/2018, the AO either should have issued a notice on 28/03/2018 u/s 153A of the Act for this assessment year to make a reassessment of income or should have made further enquiries from the Investigation Unit seeking other details including the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im over the assessee at the relevant time and which was definitely and could only be with the ITO, Ward-20(2)(4), Mumbai, as per the mandatory and binding instruction no. 1/2011 dated 31/01/2011 of the CBDT issued u/s 119 of the Act defining the assessment jurisdiction u/s 120 of the Act. According to the Ld. AR, the jurisdiction to make an assessment of income of the assessee on the date of the said assessment jurisdiction transfer order was only with the ITO, Ward-20(2)(4), Mumbai and his PAN was also located with the ITO, Ward-20(2)(4), Mumbai and as per which the AO issued the notice u/s 148 of the Act on 28/03/2018, though may be incorrectly u/s 148 of the Act and not u/s 153A of the Act, after the AO received the alleged information of the search from the Investigation Unit based on the location of the PAN of the assessee with him. Since, we have already allowed the appeal on the other legal issues, therefore we are not deciding this issue and the same is treated as academic. 84. Now, in respect of the second plea of the assessee that the reassessment of income declared in the return of income as long-term capital gain could not be made by taking recourse to the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions harmonious for the period to which these two non-obstante sections applied. For example, in the years 2003 and 2017, substantial amendments were made in the search assessment provisions and applicability of dates of those amendments were specifically inserted therein for the searches conducted after 31/05/2003 and 31/03/2017 respectively. 87. However, while amending the provisions of the section 153C of the Act applicable w.e.f. 01/06/2015 there was no reference at all that the same is to be applied only in respect of the searches conducted after 31/05/2015 as has been specifically provided therein by the legislature on two other occasions as above. Thus, the provisions of the section 153C of the Act have to be seen by the AO as on the date when he receives the material from the AO of the person searched may be at any date and then apply accordingly. Therefore, it is also held that application of the provisions of the section 153C of the Act will be compulsory for all the assessment years extendable up to 10 years in the case of a non-searched person as is compulsorily for the assessee searched till 31/03/2021, even for the searches conducted prior to 01/06/2015 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 153C of the Act, by carving out non-obstante clause for applicability of section 147 and other sections. 91. We have already observed in our earlier paragraphs that the entire procedure to make an assessment or reassessment of income of the alleged escaped income either u/s 148 or section 153C of the Act practically is the same except the jurisdiction and root cause which are different. The legislature has specifically carved out scope of assessment / reassessment of income of a person not searched of such alleged escaped income based on some incriminating information found during a search on some other person searched by taking recourse to the section 153C of the Act. The AO has not been empowered to extend the scope of an assessment/ reassessment u/s 153A read with the section 153C of the Act beyond the alleged incriminating material found during the course of search in the case of some other person, because assessment / reassessment in such case is specifically restricted to the income based on the said incriminating information only. Whereas, in the proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search conducted in the premises of some other assessee(s), even conducted at the same time or in some connected matter. In such a case where AO gets any information or material about any assessee from the search of some other person, he can, make assessment of the undisclosed income/ amount emanating from such information or material for the assessment / re assessment vide separate assessment / reassessment orders to be passed u/s 153A by taking recourse to the provisions of the section 153C of the Act. Because the cause of action for the said incriminating information for different amounts had originated in different search(es) in the different premises of other assessees and for the same, the mandatory route legislated u/s 153C of the Act must be followed. (iii) Further, an assessee can also be assessed multiple times u/s 153C r.w.s 153A of the Act, despite having already been assessed u/s 153A of Act on the basis of an income-tax search in his premises, where the incriminating information has been received u/s 153C of the Act by the AOs of the searched person as well as of the person not searched, which information originates in different searches at different times on diff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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