Court dismisses AO's appeals, upholds assessee's objections, quashes assessment orders, deletes additions. Settlement Commission's decision final.

The court dismissed all six appeals of the AO and allowed all six cross-objections of the assessee. The assessment orders under Section 153C for AY 2006-07 and 2007-08 were quashed, and the protective additions in the hands of the assessee were deleted. The Settlement Commission's order is conclusive for the applicants before it, and no further additions can be made based on the same pen drive data.

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Issues Involved:
1. Validity of assessment orders under Section 153C for AY 2006-07 and 2007-08.
2. Jurisdiction of assessment order under Section 153C for AY 2011-12.
3. Ownership of pen drive and its contents.
4. Validity of satisfaction recorded by AO of the searched person.
5. Independent application of mind by AO.
6. Conclusiveness of Settlement Commission’s order under Section 245I.
7. Sustainability of protective assessment when substantive addition is deleted.
8. Effect of deletion of substantive addition on protective addition.
9. Adequacy of disclosure before Settlement Commission.

Detailed Analysis:

1. Validity of Assessment Orders under Section 153C for AY 2006-07 and 2007-08:
The search took place on 20th January 2012, and the satisfaction note was recorded on 25th March 2014. According to Section 153C, the six assessment years should be counted from the date of receiving the seized documents, which in this case would be AY 2008-09 to 2013-14. Thus, assessments for AY 2006-07 and 2007-08 are beyond the scope of Section 153C and are quashed.

2. Jurisdiction of Assessment Order under Section 153C for AY 2011-12:
The satisfaction note recorded by the AO of the searched person on 25th March 2014 excluded AY 2011-12. However, the AO of the other person (assessee) is responsible for determining the relevant assessment years. Thus, the assessment order for AY 2011-12 is valid.

3. Ownership of Pen Drive and Its Contents:
The pen drive was seized from an employee of Dalmia Bharat Enterprises Ltd. Four individuals owned the contents before the Settlement Commission, which accepted their disclosure. The Settlement Commission’s order, being a higher authority, prevails, and the pen drive does not belong to the assessee company.

4. Validity of Satisfaction Recorded by AO of the Searched Person:
The satisfaction recorded by the AO of the searched person did not display reasons or material for concluding that the pen drive belonged to the assessee. The satisfaction was defective as it did not justify why the pen drive did not belong to the searched person but to the assessee.

5. Independent Application of Mind by AO:
The AO of the assessee merely copied the assessment order of Dalmia Cement Bharat Ltd. without independent reasoning. This indicates non-application of mind and reliance on another officer’s findings, making the assessment order unsustainable.

6. Conclusiveness of Settlement Commission’s Order under Section 245I:
The Settlement Commission’s order is conclusive and final as to the matters stated therein. However, it protects only the applicants before the Settlement Commission and not the whole world. Thus, the order does not provide blanket protection to the assessee.

7. Sustainability of Protective Assessment When Substantive Addition Is Deleted:
When substantive additions in the hands of Dalmia Cement Bharat Ltd. were deleted by the CIT(A), the protective addition in the hands of the assessee cannot survive. The protective assessment should be kept in abeyance until the main case is finalized.

8. Effect of Deletion of Substantive Addition on Protective Addition:
The deletion of substantive additions in the hands of another entity means the protective addition in the hands of the assessee cannot be sustained. Protective addition alone cannot stand without substantive addition.

9. Adequacy of Disclosure Before Settlement Commission:
The Settlement Commission covered the complete data of 125 pages found in the pen drive and accepted the disclosure of Rs. 90 crores as full and true. The revenue could not show any leakage of income from the seized data. Thus, the disclosure before the Settlement Commission is adequate.

Conclusion:
All six appeals of the AO are dismissed, and all six cross-objections of the assessee are allowed. The assessment orders under Section 153C for AY 2006-07 and 2007-08 are quashed, and the protective additions in the hands of the assessee are deleted. The Settlement Commission’s order is conclusive for the applicants before it, and no further additions can be made based on the same pen drive data.

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