TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 686
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....p of companies were promoted by Shri Parminder Singh and the registered office of the group companies was at New Delhi. Shri Parminder Singh Kalra was the main person who was controlling the affairs of the group companies and his sons, namely, Shri Harveer Singh and Sh. Bikramjit Singh Kalra were also associating him in controlling the affairs of the group companies. The group was also engaged in the real estate dealings. 3. The AO observed that during the search operation in M/s Consortium group of cases on 28.7.2011 certain documents were retrieved and it was found that those documents related to Shri Rajeev Behl (page nos. 14 to 36 of Annexure A-8) & (page nos. 94 to 139 of Annexure A-11). The AO has observed that these were mainly MOUs between the promoters of Realtech Group, namely, Sh. Yogesh Gupta, Shri Pankaj Dayal and Shri Rajeev Behl along with some working pertaining to Realtech group. The AO, on examination of MOUs, observed that it appeared that Shri Pankaj Dayal, Sh. Yogesh Gupta and Shri Rajeev Behl were promoters, directors and shareholders in equal proportions in various companies running and functioning under the Realtech Group. The AO referred to page nos. 118 t....
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....he Realtech Group. He pointed out that since Shri Pankaj Dayal, Shri Rajeev Behl and Shri yogesh Gupta were promoter/director/shareholders in equal proportion of Realtech Group of companies and, therefore, had vested interest in the functioning of the group. The AO has further observed as under: "In the view of above facts and looking at revenue implication involved in the case of Shri Rajeev Behl having substantial interest in M/s Realtech Group, I am satisfied that proceeding u/s 153C of the Income Tax Act, I961 are required to be initiated in this case. The case has already been centralize with this office u/s 127 of the I.T. Act, 1961vide CIT, Central-II, New Delhi's order F.No. CIT(C)-II/Cent./2002-13/1368 dt. 06.11.2012." 6. Accordingly, notice u/s 153C was issued on 12.8.2013 for assessment years 2007-08, 2008-09, 2009-10, 2010-11 & 2012-13. Assessee filed returns for all these years as under" Asstt. Yr. Income (Rs.) 2007-08 67,03,657 2008-09 1,56,77,698 2009-10 71,31,946 2010-11 34,67,524 2012-13 31,89,334 7. The AO has pointed out that notice u/s 142(1) of the Income-tax Act along with questionnaire was issued on 13.1.2014 and in compliance to....
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.... had been completed in assessee's case, there could be no abatement of proceedings. The assessee had relied on the decisions in the cases of All Cargo Global Logistics Ltd. Vs. DCIT 23 Taxmann.com 103 (Mum) (SB); Sinhgad Technical Education Society v. ACIT 16 Taxmann.com 101 (Pune); and CIT v. Shaila Agarwal 2011-TIOL-778-HC-All-IT. Ld. CIT(A) further pointed out that vide letter dt. 28.10.2014, the assessee further claimed that he had objected to the issue of notice u/s 153C and had also requested for the copy of the satisfaction note and copy of the seized material from the AO. It was claimed that objection to the 153C proceedings and request for the documents had been made vide letter dated 27.3.2014 addressed to the AO, which had been acknowledged by AO's office on 28.3.2014. In this regard ld. CIT(A) has observed as under: "Copy of this letter, bearing the subject 'Objection to Notice u/s 153C ...." And reference to the AO's notice u/s 153C dated 12.08.2013, which also bore the 'receipt stamp' of the 'Office of the Deputy Commissioner of Income Tax, CC-15, New Delhi' on 28.03.2014, was filed as evidence of the claim that 153C proceedings had been objected by him before the AO....
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....rein their lordships held: Para 11 ... Section 153A which provides for, an assessment in case of search, and was introduced by the Finance Act, !2003 w.e.f 01.06.2003, does not provide that a search assessment has to-be made on the basis of evidence found as a result of search or other documents and such other materials or information as are available with the Assessing Officer and relatable to the evidence found.... ... Section 153A(1)(b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found: in the course of the search or other post- search material or information available with the Assessing Officer which can be related to the evidence found. 15. Accordingly, ld. CIT(A) observed as under:- "4.7. It is thus evident from the two aforementioned decisions of the jurisdictional High Court that u/s 153A, the AO is required to assess the total income of the person in whose case notice U/S 153A or 153C has been issued. In Chet....
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....nvocation of section 153C and completion of assessment u/s 153A in the case of the appellant is held to be in order. The additional ground of appeal relating to the 153C proceedings is therefore dismissed." 16. Ld. CIT(A) has also pointed out that the assessee in order to save himself from the application of the provisions of section 292BB claimed that he had objected to the 153C proceedings for AY 2006-07 to AY 2011-12 through six separate letter dated 27.3.2014 which had been duly acknowledged by the office of the AO on 28.3.2014. However, ld. CIT(A) has rejected the assessee's claim by elaborately referring to various defects in para 4.10 of her order. Ld. CIT(A) pointed out that since the assessee never objected to the proceedings u/s 153C, therefore, in view of the provisions of section 292BB, the additional ground of appeal relating to 153C proceedings did not survive. Ld. CIT(A) after elaborate consideration of facts concluded that assessee had been given reasonable opportunity of being heard. 17. On merits, ld. CIT(A) after rejecting the assessee's application for admission of additional evidence under Rule 46A, after detailed discussion, confirmed the additions made by A....
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....153C and thereby causing immense and deep harassment to assessee, which is preyed to be visited with costs vide powers available to Hon'ble ITAT in section 254(2B) of the Income Tax Act, 1961. On merits deduction of untenable and incorrect additions sustained by CIT(A) That on the facts and in the circumstance of the case and in law, Ld CIT(A) erred in not deleting the addition made Ld AO on adhoc basis which is impermissible, on a/c of telephone, car running and maintenance expenses etc without any defect in supporting voucher and audited ledger acc etc. 6. That on the facts and in the circumstances of the case and in law, Ld CIT(A) erred in not deleting the addition made Ld AO u/s 68 (alleged unexplained cash credit) being genuine loans where Ld AO remained sitted with folded hands and failed to make any meaningful enquiry u/s 131/133(6) and no adverse material is brought on records to discredit assessee's copious evidence. That on the facts and in the circumstances of the case and in law, Ld CIT(A) erred in not deleting the addition made by ld. AO u/s 68 (alleged unexplained cash credit) being genuine loans by citing inapplicable precedents which are on share app....
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....ating material. 22. As regards AY 2012-13, ld. counsel pointed out that AO has passed the assessment order u/s 143(3) on 29.3.2014 but since this assessment year fell within the block with reference to the construed date of search viz. 6.11.2012, therefore, the assessment order should have been passed u/s 153C and not u/s 143(3). 23. Ld. CIT(DR) submitted that the construed date of search as per first proviso to section 153C is only for the purpose of second proviso to section 153A and, therefore, relevant only for deciding which assessments are to be considered as pending assessments on date of search. She submitted that this deeming provision cannot be extended beyond the purpose for which it has been incorporated in the Act to decide under which section assessment is to be completed. She, therefore, submitted that assessment framed u/s 143(3) for AY 2012-13 was a valid assessment. 24. We have considered the rival submissions and have perused the record of the case. The first plea of ld. counsel for the assessee, regarding validity of assessment u/s 153C is in regard to not recording of satisfactgion by AO in terms of section 153C. 25. The submission of ld. counsel is that th....
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.... should not be reopened, merely if the documents related to that person are found but only when those documents have a bearing on the determination of the total income. This is so mandated by legislature so that proceedings in case of persons other than searched person are not reopened without due application of mind by AO of person other than searched person. One of the submissions of ld. counsel for the assessee in the context of this part of section 153C was that unless the AO of a person other than the searched person reaches the conclusion that the seized document represents incriminating material, the proceedings u/s 153C cannot be initiated. In our considered opinion, this is not the intention of legislature. A heavier burden has been imposed on the AO of the person other than the searched person, because the AO has to satisfy himself that the seized material has bearing on the total income, meaning thereby that AO should have formed a prima facie belief that the seized material has a bearing on the total income but he is not required to conclusively establish at the stage of issuing notice u/s 153C that the seized document represented incriminating material. The purpose of ....
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....he AO of the person other than the one searched also, is not, at the stage of issuing notice .~ under Section 153CII53A of the Act, required to conclude that the assets/documents handed over to him by the AO of the searched person represent or indicate any undisclosed income of the Assessee under his jurisdiction. As explained in SSP Aviation (supra), Section 153C only enables the AO of a person other than the one searched, to investigate into the documents seized and/or the assets seized and ascertain that the same do not reflect any undisclosed income of the Assessee (i.e. a person other than the one searched) for the relevant assessment years. If the seized money, bullion, jewellery or other valuable article or thing seized as handed over to the AO of the Assessee, are duly disclosed and reflected in the returns filed by the Assessee no further interference would be called for. Similarly, if the books of accounts/documents seized do not reflect m1y undisclosed income, the assessments already made cannot be interfered with. Merely because valuable articles and/or documents belonging to the Assessee have been seized and handed over to the AO of the Assessee would not necessarily r....
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....ppointed arbitrators. These three promoters were issued summons but only Shri Yogesh Gupta appeared before the Investigation Wind. The AO has noticed that he remained evasive on various replies. The books of a/c were not produced to corroborate the various entries in the seized documents. Under such circumstances, it cannot be said that AO could not arrive at the satisfaction as contemplated u/s 153C that the valuation ( assets minus liabilities), arrived at in these documents had bearing on the total income of the three promoters including assessee, more particularly because assessee failed to explain the seized documents before the AO. 32. We, therefore, uphold the initiation of proceedings u/s 153C. 33. The next limb of ld. counsel for the assessee's argument, based on the decision of Hon'ble Delhi High Court in the case of RRJ Securities Ltd. (supra), is that the assessment proceedings for AY 2007-08 were wrongly initiated. We find considerable force in this argument of ld. counsel for the assessee in view of observations of Hon'ble Delhi High Court in para 24, which is reproduced hereunder: 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a ref....
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....a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than tile one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year. 34. The block period, in view of first proviso to section 153C, had to be determined for the purposes of second proviso to section 153A from the date when the books of a/c were handed over to the AO of person other than the searched person. Respectfully following the aforementioned decision of Hon'ble Delhi High Court in the case of RRJ Securities Ltd. (supra)we hold that assessment for AY 2007-08 was outside the ambit of the block period and the AO had no jurisdiction to make assessment of the assessee's income for that year. Accor....
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....ay Shanker Gaikwad Rs. 500000/- 18. Benu Agarwal Rs. 500000/- 19. Yagya P Gupta Rs. 500000/- 20. Achla Aggarwal Rs. 1000000/- 21. Nandni Paints P. Ltd. Rs. 500000/- Total: Rs. 28050000/- 39. Further, at page 130 we find that the details of loans received by Realtech Group were as under: "There is an existing liability of Rs. 3.67 crore (Rs. Three core sixty seven lac only) on account of loans received on interest on behalf of Realtech group. The details are mentioned hereunder: Nijhawan Rs. 50,00,000/- Ravinder Ahuja Rs. 1,50,00,000/- Sandeep Mehta Rs. 35,00,000/- Sanjay Garg Rs. 72,00,000/- Adarsh India Rs. 60,00,000/- 40. A bare perusal of these details clearly shows that none of the parties in respect of which additions have been made were mentioned in the seized documents. 41. At this juncture we may observe that though the AO has noticed that inspite of repeated opportunities the assessee neither furnished the necessary details nor explained the seized documents but has not made any addition with reference to seized documents. In this regard we notice that the AO in para 4 has observed that the details filed by the....
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....koned from the daters) when the returns were filed. In Calcutta Discount Company Limited vs. Income-tax Officer & others, AIR 1961 SC 372, the Supreme Court had ruled that an assessment proceeding commences from the date when the assessee files its return. The terminus quo therefore would be the last date by which the Assessing Officer can legally pass an order. Once that period lapses, the officer loses jurisdiction and authority to issue any order .... ." 44. Determination of this aspect is necessary in order to find out whether the assessment for a particular will abate or not. If it is a case of pending assessment, then in view of second proviso to section 153A, the assessment will abate but if it is a case of completed assessment, then the assessment will not abate. In this assessment year we find that return of income had been filed on 1.10.2010 and, therefore, notice u/s 143(2) could be issued up to 30.9.2011. Up to this date the assessment could be treated as pending assessment in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Income Tax Settlement Commission (supra), an assessment is to be considered as a pending assessment if on the ....
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.... 153A. This is clearly evident from the provisions of section 153C(2), which reads as under: "(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total i....