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TMI Blog2024 (5) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act, 1961 ["Act"], which was conducted on 07 December 2010 on M/s BPTP Ltd. group of companies and was concluded on 05 February 2011. On 30 September 2011, the respondent- assessee companies filed their Income Tax Return ["ITR"] declaring the income to be nil in the cases of M/s Pavitra Realcon Pvt. Ltd. and M/s Delicate Realtors Pvt. Ltd., whereas, a total loss of INR 3254/- was declared in the case of M/s Design Infracon (P) Ltd. 3. During the course of search, it came to light that the respondent- assessee companies had shown a total amount of INR 325.23 crores as advance against property, from the three companies namely, M/s Attractive Finelease Pvt. Ltd., M/s Ashish Capital Pvt. Ltd. and M/s Aquiss Pvt. Ltd. ["Jain group of companies"]. 4. Consequently, when the Directors of the respondent-assessee companies were confronted with the information that the Jain group of companies are merely accommodation entry providing companies, they accepted that they were not in a position to explain the receipts of abovenoted amount and came up with a voluntary disclosure of INR 325.23 crores to be their unaccounted income for AY 2011-12. 5. As per the statement dated 08 April 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143 (3) read with 153C of the Act. 11. He further submitted that as per the AO's understanding, the date of the search i.e., 05 February 2011, was taken to be the date for initiation of assessment proceedings. Therefore, on a bona fide belief that notice under Section 153C was to be sent from the date of the search for six preceding AYs i.e., 2005-06 to 2010-11, it was issued and hence no notice for AY 2011-12 was sent. 12. He, however, submitted that the statement of Mr. Jain, owner of Jain group of companies was not provided to the respondent-assessee companies and no opportunity of cross-examination was given. He also contended that the ITAT has erroneously held that the statement recorded under Section 132 (4) of the Act by itself is not sufficient and an independent corroborative material should have been relied upon by the AO while passing the assessment order. 13. He lastly submitted that although no notice under Section 153C of the Act was ever sent to the respondent-assessee companies, however, it was contended that the assessment order under Section 143 (3) read with Section 153C of the Act was a rectifiable mistake under Section 292B of the Act, but the said content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132 (4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132 (4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee. [Emphasis supplied] 22. Further, the position with respect to whether a statement recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucation Society (2018) 11 SCC 490 and held as follows: - "18. Further, while writing the order it has come to our notice that the Hon'ble Apex Court in the case of Sinhgad Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143 (3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. And M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned." 25. Also, the Supreme Court in the case of CIT v. Abhisar Buildwell (P) Ltd. 2023 SCC OnLine SC 481, has clarified that in case no incriminating material is found during the search conducted under Section 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant paragraph is reproduced herein below: - "36.4. In case no incriminating mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex-abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be, in respect of the six AYs' immediately preceding the AY relevant to the year of search as also in respect of the "relevant assessment year", an expression which stands defined by Explanation 1 to Section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments as a consequence of which curtains come down on regular assessments. B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of "relevant assessment year" and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase "immediately preceding the assessment year relevant to the previous year" of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it "from the end of the assessment year". This distinction would have to necessarily be acknowledged in light of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial to refer to the decision of the Supreme Court in the case of Andaman Timber Industries v. CCE 2015 SCC OnLine SC 1051, wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - "6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." [Emphasis supplied] 33. Further, the argument of learned counsel for the Revenue that this mistake is curable under Section 292B of the Act lacks merit as the plain language of the said Section makes it abundantly clear that this provision condones the invalidity which may arise merely by mistake, defect or omission in notice. The said Section reads as under: - 292-B. Return of income, etc., not to be invalid on certain grounds.-No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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