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TMI Blog2024 (11) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C of the Act and assessment framed u/s 153C of the Act were without satisfying the statutory preconditions contained in the Act and therefore without jurisdiction and therefore deserves to be quashed as such.. 1.2. That while upholding the assumption of jurisdiction the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since neither money, bullion, jewellery or other valuable article or thing belonging to the appellant and nor any books of accounts or documents pertaining to the appellant or any information contained therein relating to the appellant were seized as a result of search the assumption of jurisdiction u/s 153C of the Act was illegal, invalid and unsustainable. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the assumption of jurisdiction despite the fact that in absence of any valid satisfaction having been recorded both in the case of searched person and, the appellant action u/s 153C of the Act was in excess of jurisdiction. 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that addition made and upheld was without jurisdiction since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n additions. Aggrieved by the assessment orders for Assessment Year 2011- 12 and 2012-13, the Assessee preferred Appeals before the CIT(A) and the Ld. CIT(A) vide order dated 29/09/2023 upheld the partial addition by applying rate of 1% on the income from commission on total credits and debits reflected in the bank statement of the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 29/09/2023, the Assessee preferred the present Appeals on the grounds mentioned above. 4. The Ld. Counsel for the Assessee vehemently submitted that in the years under consideration, the satisfaction has been recorded on 25/09/2018, but the block years were opened for the period Assessment Year 2011-12 to 2016-17, considering the amendment brought to Section 153C of the Act, vide Finance Act, 2017 w.e.f. 01/04/2017, the assessment order passed for the Assessment Years under consideration (A.Y 2011-12 & 2012-13) are void ab initio. Further the Ld. Counsel has also relied on the order of the Co-ordinate Bench in the case of Marconi Infratech Vs. ACIT in ITA No. 3126 to 3132/Del/2023, thus, sought for setting aside the impugned assessment orders. 5. Per contra, the ld. Assessee's Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows: "80.1 The provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the Assessing Officer, and provisions of the said Act shall apply accordingly. 80.2 In view of the various representations received from stakeholders, section 197 of the Finance Act, 2016 has been amended so as to omit clause (c) of the said section. 80.3 Applicability: This amendment takes effect retrospectively from 1st June, 2016. 80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was recorded in the case of the Assessee on 19.08.2009 by the ld AO which is placed at page No. 17 to 20 of the PB. However, on 19.08.2009 itself, notice u/s 153C of the Act were issued to the Assessee for Assessment Years 2005-06, 2006-07 and 2007-08. Admittedly, no notice u/s 153C was issued for Assessment Year 2009-10 and assessment was concluded on 15.12.2011 u/s 143(3) of the Act. In case of Shri Jasjit Singh (supra) the revenue challenged the order of the coordinate bench dated 05.11.2014 wherein, it was held that in case of the assessee the date of receipt of the seized material would be the date of search and six-year period would be reckoned from that date. The coordinate bench in that case quashed the assessment framed u/s 143(3) of the Act for Assessment Year 2009-10 where the satisfaction note was recorded and material belonging to the assessee was received on 16.06.2009. The Hon'ble Delhi High Court on appeal upheld the order of the coordinate bench quashing the assessment. In the present case also identical facts are on record. The satisfaction was recorded on 19.08.2009 and assessment for Assessment Year 2009-10 is passed u/s 143(3) of the Act. Therefore, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in section 153A is substituted by the "date of handing over of documents by the assessing officer of searched person to the assessing officer of other person". 6. On this premise, he continues to submit that, the assessing officer in his capacity as A.O. of the searched person has recorded satisfaction on 29.03.2019, which establishes that, at the earliest, it is the date of 29.03.2019, when the assessing officer can be presumed to have got the documents in his capacity as assessing officer of the appellant, on the basis of which proceedings u/s 153C have been initiated. Since the date of such recording of satisfaction on 29.03.2019 falls in previous year 2018-19 relevant to A.Y. 2019- 20, the immediately preceding six years are A.Y. 2013-14 to A.Y. 2018-19, and, therefore, the notice u/s 153C for A.Y. 2012-13 could not have been issued by the learned Assessing Officer, as the same are barred by limitation. 7. Per contra, Ld. DR submits that the implementation provisions have to be interpreted in consonance with the charging provision and there cannot be any anomalous situation created by the interpretation of the implementation provision; that the provisions under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the learned Assessing Officer of the assessee on 15/5/2019 falls in the assessment year 2020-21 in which case the immediately preceding 6 assessment years would be the assessment years from 2014- 15 to 2019-20. 10. It is, therefore, clear that when we reckon the 6 assessment years with reference to the recording of satisfaction by the learned Assessing Officer of the searched person or with reference to the recording of satisfaction by the learned Assessing Officer of the other person, in either case the assessment year 2012-13 is well beyond such period. So far as this factual position is concerned, it remains unassailable. 11. In respect of the starting point for computation of the block period, the Hon'ble Delhi High Court in the case of Pr. CIT v Sarwar Agency (P.)Ltd. [2017)185 taxmann.com 269 (Delhi) clearly held that in case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person. It was further held by the Hon'ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12 and 2012-13 are allowed." 8. In the present case, the satisfaction has been recorded on 26/09/2018 by the A.O. of the Assessee which falls in the Assessment Year 2018-19, the immediate preceding six years would be Assessment Year 2013-14 to 2018-19, thus, in our considered opinion, the notice issued by the A.O. u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 are beyond the jurisdiction of the A.O. Further we have also considered the fact of the amendment to Section 153C of the Act w.e.f 01/04/2017 having prospective effect as clarified by the CBDT Circular of 2/2018 dated 15/02/2018, thus we find no reason to justify the action of the A.O. to issue notice u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 as the same are not filing in the 'previous six years', accordingly, we are of the opinion that assumption of jurisdiction in reopening of assessment u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 are void ab initio. Thus the impugned assessment orders for Assessment Year 2011-12 and 2012-13 are hereby quashed. 9. In the result, the appeal of the Assessee in ITA Nos. 3449/Del/2023 and 3450/Del/2023 are allowed. ITA No. 3451, 3452, 3453 & 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e beating on the determination of total income for the A.Y. 2011-12 ST 2017-18 0 M/s Social Realtoch Pvt. Ltd. Accordingly, after consideration, it is decided to issue such other person (M/s Social Realtech Pvt. Ltd.) notice as per provisions of section 153C read with section 153A of the Act. Date: 25.09.2018 Sd/- (Sudeep Dabas) Asstt. Commissioner of Income Tax Central circle-II, Faridabad 26.09.2018: Notice u/s 153C r.w. Section 153A of the Act issued. Sd/- ACIT" 13. From the above satisfaction note, it is observed that A.O. failed to narrate the specific documents which he was relying upon for initiating the proceedings u/s 153C of the Act and not year wise satisfaction was recorded so as to assess or reassess the total income of the Assessee for the years under consideration. It is found that the A.O. satisfied with the documents seized containing the information relating to 'searched person' and decided to issue notice to 'other person' who is Assessee u/s 153C r.w. Section 153A of the Act. Thus the satisfaction note fails to depict the details of information. In the case of the one of the Company which was also subject to the proceedings u/s 153C of the Act p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the material being Annexure A-3 belonging to M3M Group was seized during the search and seizure operation under Section 132 of the Act carried out at Chamber No. Paras Twin Towers, Tower-B, 6th Floor, Golf Course Road, Sector - 54, Gurgaon - 122002. It was further noted by the Learned AO that he is satisfied by the said documents seized containing information relating to the Marconi Infratech Pvt. Ltd. and the same have bearing on the determination of the total income for the A.Ys. 2011-12 to 2017-18 of M/s. Marconi Infratech Pvt. Ltd. and therefore, decided to issue notice to that other person being the assessee before us under Section 153C r.w.s 153A of the Act. The satisfaction note is, thus admittedly fails to demonstrate the details of the information contained in the Annexure A-3 which could lead to recording of satisfaction that the same have bearing on the determination of the total income of the assessee. The reason assigned to the satisfaction note is, thus, not found to be logical, rather vague. 18. A decision of the Hon'ble Supreme Court in the case of CIT vs. Singhad Technical Education Society [2017] taxmann.com 146 (Delhi) as relied upon by the Learned AO alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervation, the order passed by Tribunal quashing the notice under Section 153C of the Act was upheld. 20. In the case in hand the satisfaction note simply referred the seized material i.e. Annexure A-3 seized during the search and seizure operation carried out on 21.07.2016 at Chamber No. Paras Twin Towers, Tower-B, 6 th Floor, Golf Course Road, Sector - 54, Gurgaon - 122002. Whereas from the plain reading of the language of Section 153C of the Act and judicial pronouncement cited hereinabove it is abundantly clear that in order to reopen assessment of the other person under Section 153C of the Act for the Assessment Year earlier to the year of search, direct co relation must exist between existence of incriminating material and relevant Assessment Year. Therefore, the reasoning should be logical while recorded satisfaction; the same must be valid having regard to the provision of Section 153C of the Act. The Annexure A-3 as relied upon by the Learned AO being the seized document neither even speaks about the issue in respect of the respective Assessment Year sought to be reopened which could ultimately be said to be unexplained and addition thereon could be made. It is an undispu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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