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2013 (11) TMI 1589
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....und and seized. Thereafter, the case of the assessee company was transferred from Central Circle - V, New Delhi, to the present Assessing Officer, who is Dy.Commissioner of Income Tax, Central Circle-12, New Delhi vide order dt. 25.3.2010. 2.2. The Assessing Officer issued a notice u/s 153C of the Act dt. 23.7.2010. The same was returned unserved. Thereafter a fresh notice u/s 153C of the Act dt. 2.8.2010 was issued to the assessee company, at the new address furnished to the department by the A.R. of the assessee. In reply to the notice, the assessee filed a return of income for A.Y. 2004-05 on 13.8.2010 declaring loss of Rs. 1,28,670/-. The return filed by the assessee company was the same as that was filed originally u/s 139 of the Act on 31.10.2004. Thereafter, the Assessing Officer, after considering the detailed replies filed by the assessee disallowed Rs. 1,68,225/-, being a claim made u/s 35D of the Act and completed the assessment computing total income at Rs. 39,555/- for the Assessment Year 2004-05. 2.3. Similarly for the Assessment Year 2005-06 the only disallowance made by the A.O. was the claim of deduction u/s 35'D' of the Act, made by the assessee. 2.4. For....
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....ax (Appeals) has grossly erred both in law and on facts in upholding the order of assessment framed u/s 153C/143(3) of the Act without granting any fair, meaningful and, proper opportunity to the appellant company. 1.1 That the learned Commissioner of Income Tax (Appeals) while disposing of appeal expartee has failed to appreciate that appeal filed by the appellant company was part of a batch of appeals in the case of Rajdarbar group of cases and since counsel for the appellant had duly been appearing in other matters of Rajdarbar group of cases, there remained no occasion to hold that none appeared on behalf of the appellant company in response to notice u/s 250 of the Act and hence, disposal of appeal on expartee basis without granting opportunity to the appellant is unjustified and not valid in law. 2. That even otherwise the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in failing to appreciate that both the notice issued u/s 153C of the Act and, assessment framed u/s 153A/143(3) of the Act were without satisfying the statutory preconditions in the Act and as such, were without jurisdiction and therefore, deserve to be quashed as such. ....
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....see are found. He argued that prima facie the material found should be incriminating and only in such situation a satisfaction note can be recorded by the Assessing Officer who has jurisdiction over the person searched and in whose premises the said documents belonging to the assessee are found and then the material found along with the satisfaction note has to be sent to the officer having jurisdiction over the assessee, who in turn would issue a notice u/s 153 C of the Act. (c) He submitted that once there are no incriminating material found no proceedings u/s 153'C' can be initiated and hence the notice is bad in law. (d) He further submitted that even in a case where notice has been issued u/s 153'C', if the Assessing Officer finds that there is no incriminating material, and no assessment or reassessment proceedings are pending as on the date of conducting the search, the proceedings should be dropped. He submits that in the assessee's case no assessment or reassessment is pending as on the date of search or on the date of issue of notice u/s 153'C', and that under those circumstances there is no abatement. In such situation he submitted that unless there is incriminatin....
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....hat no incriminating material was found during the course of search in the case of Rajdarbar group of companies as is evident from the assessment orders. 8. In reply the Ld.Counsel for the assessee pointed out that for the A.Y. 2006-07 as well as Assessment Year 2007-08/2008-09 the additions made in a regular assessment order passed u/s 143(3) were repeated in the order passed u/s 153'C' r.w.s. 143(3) of the Act. For the A.Y. 2009-10 he submitted that the issue may be set aside to the file of Assessing Officer for fresh adjudication. He prayed that the ad-hoc disallowance be deleted. 9. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below, we hold as follows. 10. The undisputed fact in this case is that there is no incriminating material belonging to the assessee which was found during the course of search in the premises of Rajdarbar group of companies. This fact is evident from the impugned assessment order itself. There is no indication of any material having been found in the course of search and there is no income which was sought to be added based o....
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....ntures Ltd. are recorded was also there in the hard disk. Thus to hold that the hard disk contains books of accounts of M/s V.K.Fiscal Services P.Ltd. is prima facie wrong. Thus, in our view no money, bullion, jewellery or other valuable articles or books of accounts or documents seized belong to the assessee, warranting issual of notice u/s 153'C'. 11.2. Hence we uphold the contention of the assessee that the issual of notice u/s 153'C', under the facts and circumstances, is bad in law. 11.3. We also notice that the A.O. of the assessee is the same as the A.O. of the searched party. We do not know in whose assessment proceedings this satisfaction note was considered. 12. The law on the issue has developed. We refer to some case laws in this regard. The ;procedure to be followed by the Assessing Officer is given in these case laws. We extract the same for ready reference. 12.1. In the case of M/s DSL Properties (P) Ltd. in ITA no.11349/Del/2012 for the A.Y. 2004-05, order dt. 22.3.2013 the ITAT Delhi 'B' Bench held as follows. "15. From a perusal of the said satisfaction note, it is evident that this paper does not indicate in whose case this satisfaction was recorde....
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....Assessing Officer of such other person, he has to issue the notice under Section 153A read with Section 153C The Assessing Officer of the person searched and such other person may be the same but these are two different assessees and, therefore, the Assessing Officer has to carry out the dual exercise, first as the Assessing Officer of the person searched in which he has to record the satisfaction, during the course of assessment proceedings of the person searched. After recording such satisfaction note in the file of the person searched, the same is to be placed in the file of such other person. Then, in his capacity as the Assessing Officer of such other person, he should take cognizance of such satisfaction note and thereafter issue notice under Section 158C. In this case, this exercise of recording the satisfaction during the assessment proceedings of the person searched has not been carried out. On the other hand, the Assessing Officer recorded the satisfaction in the case of such other person which does not satisfy the condition of assuming jurisdiction under Section 153C Moreover, no original satisfaction note is available on record. The photocopy of the satisfaction note pr....
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.... person was the same, there is no question of handing over and taking over of the document, therefore, for the purpose of limitation, the date of search would be relevant and not the date of initiation of proceedings under Section 153C. Since in this case satisfaction is recorded on 21st June, 2010 and notice under Section 153C is also issued on the same date, then only conclusion that can be drawn is that the Assessing Officer of such other person has taken over the possession of seized document on 21st June, 2010. Accordingly, as per Section 153(1), the Assessing Officer can issue the notice for the previous year in which search is conducted (for the purpose of Section 153C the document is handed over) and six AYs preceding such Assessment Year. Now, in this case, the previous year in which the document is handed over is 1st April, 2010 to 31st March 2011. The assessment year would be AY 2011-12. Six preceding previous years and relevant assessment year would be as under:- Previous Year Assessment Year 1.4.2009 to 31.3.2010 2010-11 lA.2008 to 31.3.2009 2009-10 1.4.2007 to 31.3.2008 2008-09 1.4.2006 to 31.3.2007 2007-08 1.4.2005 to 31.3.2006 ....
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....the assessment with respect to Assessment Year 2005-06 and considering the same ratio and ratio modus operandi with respect to Assessment Year 2006-07 and 2007-08 rightly added undisclosed income on the sale of plots of land admeasuring 6426.10 sq.mtrs. sold during the year under consideration being extra sale profits received on sale of plots of land at the rate of RS.575/- per sq.mtrs. as done in the A. Y. 2006-07 and 2007-08. 3.01. Mr.Pranav G. Desai, learned counsel appearing on behalf of the revenue has further submitted that the tribunal has not properly appreciated the decision of Andhra Pradesh High Court on the issue in the case of Gopal Lal Bhadruka Versus Deputy Commissioner of Income- Tax, reported in [2012] 346 ITR 106 (AP). It is submitted that the tribunal has materially erred in distinguishing the facts of case before the Andhra Pradesh High Court in the aforesaid decision. 4.02. Now so far as the reliance placed upon the decision of the Andhra Pradesh High Court in the case of Gopal Lal Bhadruka (supra) is concerned, it is required to be noted that in the case before the Andhra Pradesh High Court, the land sale transaction was in the very assessment year in which t....
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....., Ltd., held as under. JUDGMENT: (Per the Hon'ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred and sought to be admitted on the following suggested question of law. "Whether on the facts and circumstances of the case, the Tribunal is correct in law in holding that the computation of undisclosed income u/s 153A/153C of the Act should be confined only to the material found during the course of search proceedings?" In our opinion, the aforesaid question is very vague, as the undisclosed income shall be computed always on the basis of the material, which is found during the course of search. No material, which was disclosed at the time of regular assessment or block assessment period, can be relied on to arrive at the undisclosed income. The learned counsel for the appellant has drawn our attention to Section 158BI of the Income Tax Act, 1961, which reads as under: "158BI. The provisions of this chapter shall not apply where a search is initiated under Section 132, or books of account, other documents or any assets are requisitioned under Section 132A after the 31st day of May, 2003." (Emphasis ours) In this present appeal, there is no st....
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.... concluded u/s 143{1} {a}. How these are different from the proceedings commenced and concluded u/s 143(3) of the Act. There is no doubt that once the proceeding u/s 143(3) are completed and concluded then there is nothing which will abate as per provisions of section 153A of the Act. 9. In our considered opinion, section 153A referred to "pending" "assessment" or "reassessment" and not "assessment orders". The assessment may not be pending even though there is no formal order u/s 143(l)(a). The moment return is filed and acknowledgement or intimation issued, the proceedings initiated by filing the return are closed, unless they are again triggered by issuing notice u/s 143(2) of the IT Act. In the case under consideration, the period for issuing the notice u/s 143(2) elapsed. The process has attained the finality which can only be assailed u/s 148 or 263 of the IT Act. Such proceedings can never be initiated u/s 143(2) when the time period for issuing notice u/s 143(2) has expired ... The issues arises from those processed return can be raised only when some materials found against the assessee. The Hon'ble Delhi High Court in the case of Anil Kr. Bhatia sited it supra h....
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.... the books of accounts. No material was on the record on the basis which income of assessee could be further assessed by Assessing Officer. Therefore, the assessing officer has no jurisdiction to make or to resort to roving and fishing inquiries to find out whether any income has escaped assessment during these reassessment proceedings. Particularly, when there is no incriminating material found and seized during the course of search u/s 132(1) of the Act and nothing is available in record to reassess the income of assessee. In view of the above, this is not a fit case for making the addition in the year und consideration, the same are deleted. (Emphasis ours) 12.7. In the case of Kusum Gupta vs. DCIT for which one of us is a party in ITA 4873/Del/09 and other appeals order dt. March,2013, the Delhi "D" Bench of the Tribunal from para6 to 8 held as under. "6. Having gone through the orders of the authorities below we find that the Ld. CIT(A) has decided the issue raised in the ground in favour of the assessee following his earlier order on identical issue in the case of assessee for assessment year 2004-05. In that year also the only issue raised was as to whether while asses....
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....ed with the finding of the Tribunal that no material was found during the search. The Hon'ble High Court observed in that case, that in the entire case and arguments before the departmental authorities as well as the Tribunal had proceeded on the basis that no document embodying the transaction with Mohni Sharma was recovered from the assessee. The same is not correct the reason being that in the order of the Tribunal itself it was mentioned that no document much less incriminating material was found during the search of the assessee's premises, except unsigned undertaking for loan. The Hon'ble High Court taking note of this material fact held that if it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered . Once the Section is triggered, it is mandatory for the Assessing Officer to issue notices u/s 153A calling upon the assessee to file returns for the six assessment years prior to the year in which the search took place. The contention of the Ld. A.R remained that under this premises that some document was found in the course of the search of the assessee's premises, the Hon'ble High Court was pleased to justif....
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....arch/requisition, still Assessing Officer is empowered to reopen those proceedings u/s 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. The appeal was however, allowed in favour of the Revenue because the Hon'ble High Court did not concur with the finding of the Tribunal on fact that no material was found during the search, whereas the document embodying the transaction with 'M' was recovered from the assessee in search but the same was ignored by the Tribunal on the plea that the document was not signed by 'M'. the Hon'ble High Court was pleased to hold that mere fact that the undertaking was not signed by 'M' did not absolve the assessee from the duty of satisfactorily explaining the possession of the documents. The amount was stated therein to have been advanced in cash. Thus an inference can be drawn from those decisions of the Tribunal and the Hon'ble High Court that there is no scope of debate on the ratio that taking note of undisclosed income, if any, unearthed during the search and even if assessment order had already been passed in respect of all on any of those six assessment years, either u/s 143(1) (....
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....oks of account and other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search. In the present case, the assessment had been completed under summary scheme u/s 143(1) and time limit for issue of notice u/s 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. 7. Following the decision of Special Bench in the case of Alcargo Global Logistic Ltd. (Supra) and ors, the Bombay Bench of the Tribunal in the case of Gurinder Singh Bawa (Supra) held that in search assessment pertaining to six immediately preceding assessment years which abet due to pendency, Assessing Officer can make additions even if no incriminating materials is found during search, but when all assessments are complete and no assessment has abated, Assessing Officer can only made addition on the basis of either incriminating material found during search or undisclosed income/property disclosed during search. In tha....
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.... P.Ltd. were in progress or not, at that point of time and that the A.O. during the course of that proceedings recorded this satisfaction. The procedure contemplated under the Act was not followed. (c ) The satisfaction is recorded on 23rd July,2010. The relevant A.Y. would be 2011-12. The six preceding AYs relevant to this A.Y. would be 2005-06/2006- 07/2007-08/2008-09/2010-11. Thus the notice issued u/s 153'C' for the A.Y. 2004-05 is clearly barred by limitation. (d) Even otherwise, as there is no incriminating material found during the course of search, the A.O. should have dropped the proceedings initiated u/s 153'C' of the Act. (e) As there is no dispute that no assessment or reassessment has abated in this case for the reason that, the date of search which in the case on hand would be 25.3.2010, by virtue of First Proviso to S.153'C', i.e. the date of passing an order u/s 127 transferring the cases of the assessee to the present Assessing Officer no assessment or reassessment was pending. When no assessment has abated, the question of making any addition or making disallowance which are not based on only material found during search is bad in law. 14. For the A.Y.....