Search-triggered assessment for AY 2020-21 and cash seizure dispute: jurisdiction challenge fails; third-party cash additions deleted, own cash upheld.

The Tribunal held that the impugned assessment for AY 2020-21 was validly framed under s.153A r.w.s. 143(3) because, besides the search triggering the s.153A notice, a subsequent authorization brought the year within the six-year block; the assessee's objection to treatment as a "regular" s.143(3) assessment was rejected. It further held that a transfer of jurisdiction under s.127(2) could not be assailed before the Tribunal and, in any event, no material showed the order to be legally unsustainable; the challenge failed. Additions under s.69A r.w.s. 115BBE founded on material from a third party's premises were deleted, as such action required s.153C proceedings. However, cash found/seized at the assessee's premises was sustained by applying the s.292C presumption and lack of satisfactory explanation.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the assessment for the relevant year was liable to be framed under section 153A read with section 143(3), or whether it ought to have been treated as a "regular" assessment under section 143(3).

(ii) Whether a transfer of jurisdiction under section 127(2) could be substantively assailed before the Tribunal on the record placed.

(iii) Whether additions as "unexplained money" under section 69A read with section 115BBE could be sustained where the underlying evidence/cash was found from premises not belonging to the assessee, and whether such additions required recourse to section 153C.

(iv) Whether cash found/seized at the assessee's own premises could be presumed to belong to the assessee under section 292C in the absence of a cogent explanation, justifying addition under section 69A read with section 115BBE.

2. ISSUE-WISE DETAILED ANALYSIS

(i) Nature of assessment: applicability of section 153A

Legal framework (as discussed): The Tribunal examined the assessment having been framed under section 153A read with section 143(3) and whether the relevant year fell within the block of six assessment years covered by section 153A.

Interpretation and reasoning: The Tribunal considered the record indicating that, apart from the search dated 27.02.2020 which was followed by issuance of notice under section 153A, there was also issuance of another warrant of authorization dated 19.11.2020. On this basis, the Tribunal treated the relevant assessment year as covered within the block period contemplated under section 153A.

Conclusion: The Tribunal rejected the assessee's legal objection seeking to treat the assessment as a "regular" assessment under section 143(3) and upheld framing of assessment under section 153A read with section 143(3) on the finding that the year was covered under section 153A.

(ii) Challenge to transfer order under section 127(2)

Legal framework (as discussed): The Tribunal addressed the objection to a jurisdictional transfer order under section 127(2) and whether such a transfer could be made a subject of challenge before it.

Interpretation and reasoning: The Tribunal found no material on record to indicate that the transfer order was unsustainable in law. It further held that such transfer of jurisdiction could not form the subject matter of challenge before the Tribunal in the manner raised.

Conclusion: The challenge to the section 127(2) transfer order was rejected.

(iii) Additions under section 69A read with section 115BBE based on evidence/cash from third-party premises; requirement of section 153C

Legal framework (as discussed): The Tribunal evaluated whether additions under section 69A read with section 115BBE could be made in the assessee's case where the evidence/cash was recovered from premises belonging to another entity, and applied the principle that such material requires action through section 153C.

Interpretation and reasoning: On perusal of the record, the Tribunal found that two of the impugned sums (the larger addition and one of the cash sums) were based on evidence collected from official premises belonging to a third party and not from the assessee's possession. The Tribunal applied its earlier decision in the assessee's own case and held that, even if recovered in the same search action, an addition premised on material found from a third party's premises could be made only by taking recourse to section 153C proceedings, not by direct addition in section 153A assessment of the assessee.

Conclusion: The Tribunal deleted the additions that were founded on evidence/cash recovered from premises not belonging to the assessee, solely on the ground that the proper statutory route was section 153C.

(iv) Cash seized from assessee's own premises; presumption under section 292C and addition under section 69A read with section 115BBE

Legal framework (as discussed): The Tribunal invoked section 292C to draw a presumption regarding ownership of cash found/seized, and examined sustainment of addition under section 69A read with section 115BBE.

Interpretation and reasoning: The Tribunal noted that a remaining cash amount was found/seized at the assessee's own premises, and that this fact was not effectively disputed. In these circumstances, the Tribunal applied section 292C to presume that the cash belonged to the assessee. As the assessee failed to offer any cogent explanation for the cash, the Tribunal confirmed the treatment as "unexplained money."

Conclusion: The addition relating to cash found at the assessee's own premises was sustained under section 69A read with section 115BBE on the basis of presumption under section 292C and absence of satisfactory explanation.

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