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TMI Blog2024 (6) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the fact that one single satisfaction note recorded is sufficient compliance for initiating proceedings u/s 153C since the Assessing Officer of both the searched person and the other person are one and the same. 2. That whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made on unexplained capital investment in the absence of incriminating documents without appreciating the fact that the statute nowhere makes it conditional that the Department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under Section 153A/153C of the Act. 3. That the undersigned craves to leave of your honour to take additional ground(s) of appeal and/or to modify grounds of appeal before or at the time of hearing." 2.1. The assessee has raised the following grounds of appeal in the cross-objection:- "1. For that in absence of computer-generated Document Identification Number (DIN) having been quoted in the body of order of assessment dated NIL passed under section 143(4$) r.w.s. 153C of the Income-tax Act, 1961 having been passed after 01.10.2019 and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available with M/s. Dayanidhi Commercial Ltd and even though it was claimed by the assessee that it is a group concern and partner of the LLP has sufficient creditworthiness to make the investment, he was of the view that the assessee has entered into sham transactions with the knowledge so as to convert its unaccounted money and completed the assessment making addition u/s 68 of the Act of Rs. 10.46 Crores in the hands of the assessee. 3.1. Aggrieved the assessee preferred appeal before the ld. CIT(A) raising grounds on merits stating that out of the alleged sum, only Rs. 3.72 Crores has been received by the assessee company and that too in preceding year from its partner who had sufficient creditworthiness to make the investment. Legal issues were also raised firstly stating that since no proper satisfaction was recorded by the ld. Assessing Officer and the jurisdiction assumed u/s 153C of the Act is bad in law and the assessment order deserves to be quashed. Secondly, that the impugned addition has been made without corroborating it with any incriminating material found during the course of search and since the assessment year in question is a completed and non-abated year, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have heard rival contentions and perused the material placed before us. Revenue is aggrieved with the finding of the ld. CIT(A) deleting the addition made for undisclosed income at Rs. 10.64 Crores. We observe that the assessee LLP is incorporated on 27/01/2015. For the impugned Assessment Year, the ld. Assessing Officer has made the addition of Rs. 10.64 Crores. From the records we notice that the addition has been made for the capital contribution of the partner of the assessee LLP, namely, M/s. Dayanidhi Commercial Ltd.. The ld. Assessing Officer based on the investigation and other statements recorded in the course of search came to a conclusion that M/s. Dayanidhi Commercial Ltd., is a paper/shell company and has been utilised as a tool for converting the unaccounted money into the accounted one and that M/s. Dayanidhi Commercial Ltd., received huge share capital during the Assessment Year 2012-13 and those funds have been utilised by M/s. Dayanidhi Commercial Ltd. as an accommodation entry provider and the alleged funds have been given by M/s. Dayanidhi Commercial Ltd. as a capital contribution. The ld. Assessing Officer has reproduced the scanned copy of the audited fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioned. There is no proper satisfaction to the effect that whether the ld. Assessing Officer of the searched persons and of the assessee LLP is same. If they are not same then, two satisfactions notes are required as held by the Hon'ble Apex Court in the case of CIT vs Calcutta Knitwears [(2014) 362 ITR 673 (SC)] and in case the ld. Assessing Officer of both the searched person and other person is same, then also a proper reference of the nature of seized material and the relevant page no./annexure no. or any digital identification of such documents should have been given. Even there is no reference of any assessment years. We fail to understand that how the proceedings u/s 153C of the Act has been initiated for Assessment Year 2016-17. Now, examining the defects in the reasons recorded we need to go through the CBDT Circular No. 24/15 dt. 31/12/2015, issued for valid recording of satisfactions, which reads as follows:- CIRCULAR NO. 24/2015 F.No.279/Misc./140 /2015/ITJ Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 31s December, 2015 Subject: Recording of satisfaction note under section 158BD/153C of the Act - reg.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of a person other than the searched person u/s 153C of the Act. Further on considering the contents of the satisfaction note, we find that it cannot be termed as a satisfaction note which could give power to the ld. Assessing Officer to assume jurisdiction u/s 153C of the Act for the Assessment Year in question. Neither the assessment year is mentioned nor any specific details of seized material is mentioned. Even no date of search is mentioned and neither any details of the ld. Assessing Officer of the searched/person other than the searched is appearing. Therefore, since there is no paper satisfaction note as required by the provisions of law, assumption of jurisdiction u/s 153 of the Act for Assessment Year 2016- 17 is invalid void ab initio, and bad in law. 10. We find that the Hon'ble Andhra Pradesh High Court in the case of CIT vs. Settys Pharmaceuticals & Biologicals Ltd. {(2015) 57 taxmann.com 282 (A.P.)], wherein the Hon'ble Court has observed as under:- "6. It is therefore clear that firstly satisfaction has to be recorded by the Assessing Officer who conducted search, that any money, bullion, jewellery or other valuable article or thing or books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has been referred by the ld. Assessing Officer for making the impugned addition, which falls under the category of completed and unabated Assessment Year, no addition can be made in the hands of the assessee. The ld. Counsel for the assessee has referred to the recent judgment of the Hon'ble Apex Court in the case of Abhisar Buildwell (P) Ltd. (supra) wherein the Hon'ble Court has laid down the following propositions of law:- "5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under section 158BA of the Act, 1961. The erstwhile scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment 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 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs." 13. Now, examining the facts of the instant case, in the light of the above judgment, firstly we note that the Assessment Year 2016-17, falls in the category of completed and unabated Assessment Year because assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FY 2014-15. We, therefore, in view of the above discussion fail to find any merit in the action of the ld. Assessing Officer making addition u/s 68 of the Act and finding of ld. CIT(A) needs no interference. Accordingly, Ground Nos. 1 and 2 raised by the revenue are dismissed. 15. Ground No. 3, being general in nature needs no adjudication. 16. In the result, appeal of the revenue is dismissed. 17. Now, we take up the cross-objection. Ground No. 1 of the cross-objection challenges the validity of the assessment order on the ground that no DIN No. has been mentioned. During the course of hearing, ld. Counsel for the assessee submitted that he is not pressing this Ground in view of the judgment of the Hon'ble Apex Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [2024] 158 taxmann.com 247 (SC), wherein the Hon'ble Court has granted interim stay on the issue of validity of an assessment order due to lack of DIN mentioned on the body of such order. Accordingly, Ground No. 2 of the cross-objection is dismissed as not pressed. 18. Ground No. 2 is merely in support of the finding of the ld. CIT(A) where it has been already held that assuming jurisdiction u/s 153C of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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