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TMI Blog2024 (8) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) r.w.s. 153C of the Act on 29.03.2016 at total income of Rs.11.06 Crores. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order. The Ld. CIT(A) had deleted the addition of Rs. 11 Crore in respect of share application money by holding that addition was not based on any incriminating material found during the search. 4. Now, the Revenue is in appeal before us. The following grounds have been taken in this appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of share application money of Rs. 11,00,00,000/- on account of addition u/s 68 of the Act 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of 6,00,000/- made by the AO on purchase and sale of shares treating the same as bogus loss. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co-ordinate Bench of this Tribunal has also taken an identical view in the case of Ushaben Jayantilal Patel vs. ITO in IT(SS)A No. 12/Ahd/2024 dated 01.07.2024 [authored by one of us (Accountant Member)]. As the notice under Section 153C of the Act was issued in this case on 11.01.2016, it prima facie transpired that the six years for which proceeding under Section 153C of the Act could have been initiated in this case were the A.Ys. 2015-16 to 2010-11 only. Thus, the proceeding under Section 153C of the Act initiated for the A.Y. 2008-09 in this case was found to be not in order and beyond the permissible period. Therefore, the matter was fixed for clarification on this issue. This matter was heard on 15t h July, 2024 and thereafter on 6t h August, 2024. The submissions filed by the Revenue and the assessee in this regard have been taken on record. 8. The issue regarding proceeding under Section 153C of the Act for the A.Y.2008-09, being beyond the permissible period of six years was not raised by the any of the parties. The assessee also has not taken any specific ground in this regard. Nevertheless, this issue goes to the root of jurisdiction of the AO to initiate proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Jignesh Parikh, Ld. AR for the assessee submitted that it was a settled legal principle that consent can't confer jurisdiction when the jurisdiction could be created only by fulfilment of the precedent conditions and he placed reliance in this regard on the decision of the jurisdictional High Court in the case of P V Doshi Vs. CIT (113 ITR 22) (Gujarat). He further submitted that following the decision of the Supreme Court in the case of Jasjit Singh (supra) the proceeding u/s 153C couldn't have been initiated in the case of the assessee for the A.Y. 2008-09. The Ld. Counsel submitted that the issue of jurisdiction goes to the root of the matter and that under the provisions of the Act the Ld. ITAT had powers to examine this issue even if no specific ground was taken by the assessee in this regard. 11. We have given a thoughtful consideration to the issue and deeply pondered over the rival submissions. The contention of the Revenue is that the AO of the searched person and the AO of the other person was the same in this case and there was no requirement to transfer the seized documents belonging /pertaining to the assessee. Therefore, according to the Revenue, only the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was carried out on 18.12.2013 M/s. Suraj Limited being one of the entities of the group was also covered in the search. During the course of search proceedings, various indiscriminating documents belonging to the assessee i.e. M/s. Suraj Limited was found and seized. Accordingly, the centralization was recommended by the Investigation Officer to DCIT Central Circle 1(3), Ahmedabad vide DGIT(Inv) Ahmedabad's order No. DGIT(Inv.)/HQ/Ahd/Centr-Suraj Gr/2013-14 dated 07/03/2014. Further, in the centralization proposal itself, M/s. Suraj Limited was recommended to be assessed u/s 153C of the Income Tax Act based on post search findings. Thus, deriving clear cut satisfaction drawn by the Investigation Officer, seized material and based on specific recommendation of action under section 153C of the IT Act proceedings u/s 153C were initiated as per the law by issuing notice u/s. 153C of the I.T. Act following due procedure.Satisfaction drawn by the Investigation Officer, facts narrated in the appraisal report on seized material and specific recommendations for initiation of proceedings u/s 153C of the act, are enclosed to this effect. Therefore, the AO has taken due cogniza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of satisfaction by the AO of the searched person is sine qua non to initiate proceeding u/s 153C of the Act, even in a case where the AO of the searched person and AO of the other person is common. To quote from the order of the Hon'ble Supreme Court: 6. This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person.... 6.1.... At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date of recording of satisfaction by the common AO. Since, the Revenue has not produced the satisfaction note recorded by the common AO in this case, one can only presume that satisfaction was recorded immediately prior to the issue of notice under Section 153C of the Act. As per standard practice of the Department the notice u/s 153C is issued immediately after recording of satisfaction. Since the notice under Section 153C of the Act was issued on 11.01.2016 in this case, the year in which the satisfaction note was recorded and the documents were deemed to be transferred to the AO of the present assessee has to be taken as the financial year 2015-16 relevant to A.Y. 2016-17. Therefore, the six preceding years for which proceeding under Section 153C of the Act could have been validly initiated in this case were A.Ys. 2015-16 to 2010-11 only. The proceeding under Section 153C of the Act for A.Y. 2008-09 as initiated in this case is, therefore, not found within the permissible limit of 6 years from the date of deemed handing over of documents by the AO of the searched person to the AO of the other person. 16. It will be relevant to refer to first proviso of Section 153C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch returns were to be filed by third party whose premises were not searched and in respect of whom specific provision of section 153C was enacted. 18. In view of the above legal position, there is no ambiguity that for the proceedings under Section 153C of the Act, the year of search shall be substituted by the year of receipt of books or documents by the AO of the other person and thereafter the period of six years has to be counted backwards from that year. In the instant case, seized documents were deemed to be transferred to the common AO on the date of recording of satisfaction by the common AO in F.Y. 2015-16 relevant to A.Y. 2016-17. Therefore, the proceeding u/s 153C could have been validly initiated in the case of the assessee for the six years preceding the A.Y. 2016-17 i.e. for the A.Y.2015-16 to A.Y.2010-11 only. 19. In view of the above facts, we are of the considered opinion, that the AO had no jurisdiction to initiate proceeding under Section 153C of the Act for the A.Y. 2008-09. As the issue of jurisdiction goes to the root of the matter the order of the AO passed under Section 153C r.w.s. 143(3) of the Act, is found to be beyond jurisdiction and is liable to be q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is found relevant to decide the appeal pending before it. 23. It is amply evident from the provision of Section 254 of the Act and Rule 11 of ITAT Rules that the power of Tribunal while dealing with the appeal is expressed in the widest possible terms. The Tribunal has jurisdiction to go into every aspect of the assessment proceedings before the taxing authorities. The Tribunal also has a jurisdiction to examine a question of law which arose from the facts as found by the taxing authorities which has a bearing on the tax liability of the assessee. Section 254 of the Act doesn't put any fetters on the power of the Tribunal to consider an issue which may arise in any appeal. It was held by the Hon'ble jurisdictional High Court in the case of Gautam Harilal Gotecha vs. DCIT, [2006] 281 ITR 283 (Guj) that the Tribunal is final fact finding body in the hierarchy of the appellate jurisdiction under the Act and its order is supposed to reflect not only the facts and contentions of the rival parties before it but also the issues which arise for its consideration and the reasons for deciding the issues one way or the other. 24. It was held by the Hon'ble Gauhati High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se incorporated in the memorandum of appeal though the party urging the said ground had neither appealed before it nor had filed a cross-objection in the appeal filed by the other party.... 25. It was held by the Hon'ble Kerala High Court in the case of Common Wealth Trust of India Ltd., [221 ITR 474] that the Tribunal was justified in holding suo-motto that the initiation of the re-assessment proceeding was barred by limitation because such initiation fell under the then Section 147(b) of the Act and not under the then Section 147(a) of the Act. According to the Court, even though limitation was not specifically set up as a defence, a barred proceeding had to be dismissed and such was the mandate of Section 3 of the Limitation Act, 1963. The Court emphasized that the approach has to be justice- oriented and the relevant provisions of the law of procedure require meaningful appreciation. The relevant portion of the order is reproduced below: 15. It is needless to emphasize the regulatory (sic) principle in regard to the general law of limitation that even though limitation is not specifically set up as a defence, a barred proceeding has to be dismissed and such is the mandate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered opinion that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below. The Tribunal has the power to examine the question of jurisdiction, which goes to the root of the matter and which doesn't involve further investigation in facts, and this power is apparent from plain reading of Rule 11 of Appellate Tribunal Rules, 1963. Article 141 of the Constitution of India establishes the binding precedence of judgements delivered by the Supreme Court and declares that "the law declared by the Supreme Court shall be binding on all courts within the territory of India." The law as declared by the Hon'ble Supreme Court in the case of Jasjit Singh (supra) is binding and we can't shut our eyes to the fact that the proceeding initiated u/s 153C of the Act in this case was not in accordance with the law as laid down by the Hon'ble Court in that case. After carefully examining the facts as available in the assessment order itself, we have already held that the AO had no jurisdiction to initiate proceedings under Section 153C of the Act for the A.Y. 2008-09, as it was beyond the permissible period of six years from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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