TaxTMI 
TaxTMI 
2016 (1) TMI 1284
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....egal objections/contentions of the assessee in other three appeals, are similar. In ITA No. 7061/Del/2014, the assessee has also challenged the validity of notice and assumption of jurisdiction u/s 153C of the Act. Therefore, these appeals have been clubbed together and being disposed of by this consolidated order for the sake of convenience and brevity. ITA No. 6947/Del/2014 [A.Y 2006-07] 2. We shall now take up appeal in ITA No. 6947/Del/2014 since both the parties agreed that this appeal may be taken up for hearing first. The above appeal of the assessee is directed against the order of the CIT(A)-II, New Delhi dated 20.10.2014 in Appeal No. 111/14-15 for A.Y. 2006-07. 3. The assessee has raised the following grounds of appeal: "1. The order of the learned Commissioner of Income Tax (A) is arbitrary, against law and facts on record. 2. The learned Commissioner of Income Tax (A) before dismissing the appeal has not given a reasonable opportunity of being heard which is against the principle of natural justice and is bad in law and hence liable to be quashed 3. The learned Commissioner of Income Tax (A) has failed to appreciate that the issuance....
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....considered the fact that the alleged investigation carried out by the Assessing officer in respect of shareholders were carried out on the back of the assessee without bringing any cogent material on record (if any collected) and without providing an opportunity to confront the same. 11. The learned Commissioner of Income Tax (A) while dismissing the appeal has erred in considering the fact that the parties did not appear for personal deposition before the Assessing officer which is clearly against the fact as no personal deposition were called for by the Assessing officer by issue of notice u/s 133(6) of the Income Tax Act 12. That having regard to the facts and circumstances of the case, learned Commissioner of Income Tax (A) has erred in law and facts in confirming the action of learned Assessing officer in making an addition of Rs. 5, 10,500/- on account of alleged commission." 4. It is relevant to note that Ground Nos. 2 and 3 of the assessees in the appeals bearing ITA No. 7060/Del/2014 and ITA No. 6948/Del/2014 challenging the validity of initiation of proceedings and assumption of jurisdiction for initiation of proceedings u/s 153C of the Act and legal ....
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....R further drew our attention toward the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Jasjit Singh [supra] and submitted that referring to its own decision in the case of SSP Aviation Ltd reported as 346 ITR 177 [Del] their Lordships explicitly held that the date with reference to which proceedings for assessment or reassessment of any assessment year within the period of six A.Ys shall abate shall be the date of initiation of the search u/s 132 of the Act or the requisition u/s 132A in the cases of the other person [like the assessee in the present case], such date will the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person. The ld. AR vehemently pointed out that their Lordships in these cases explicitly held that in the case of other person, the question of abatement of the pending assessment proceedings and completed and their assessment or reassessment of the six A.Ys will be examined with reference to such date on which satisfaction note for initiation of proceedings u/s 153C has been recorded and notice u/s 153C of the Act has been issued in pursuanc....
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.... admittedly the satisfaction note for initiating proceedings under Section 153C was recorded on 29.11.2013 and notice under Section 153C was also issued on 29.11.2013. Thus, the seized paper was also handed over by the AO of the searched person (Minda Group) to the AO of such other person (assessee) on the same date i.e. 29.11.2013. (ii) That on a perusal to provisions of section 153C of the Act and more specifically proviso to section 153C of the Act, it would become evident that the date of search is to be substituted by the date of receiving the books of account or documents or assets seized for the purposes of framing of assessments under section 153C of the Act. Accordingly, the assessments can be framed for the preceding six years with reference to date 29.11.2013 i.e. AY 2008-09 to AY 2013-14. Whereas, the learned AO has framed assessments for AY 200607 to 2011-12 under section 153C of the Act, which means. AY 2006-07 and 2007-08 are clearly without jurisdiction and beyond the purview of section 153C of the Act. In order to appreciate the aforesaid, the proviso to section 153C (as stood on the date of assessment) is extracted, hereunder, for ready reference: ....
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....tely preceding the assessment year relevant to previous year in which search is conducted. Further, as per proviso to Section 153C. the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the Assessing Officer having jurisdiction over such other person. Since in this case satisfaction is recorded on 29.11.2013 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 29.11.2013. Accordingly, as per Section 153A(1), the Assessing Officer can issue the notice u/s 143(3) for the previous year in which search is conducted (i.e. for the purpose of Section 153C the document is handed over) and notice u/s 153C for six assessment years preceding such assessment years. Now, in this case, the previous year in which the document is handed over is 1st April, 2013 to 31st March, 2014 i.e. the assessment year would be AY 2014-15. Six preceding previous years and relevant assessment year would be as under:- Previous Year Assessment Year 1.4.2007 to 31.3.2008 2008-09 1.4.2008 ....
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....nts recorded therein, pertain to AY 2011-12 and 2012-13. and no document- pertaining to impugned AY 2007-08 was found from the searched person and furthermore, assessment for impugned AY 2007-08 was already concluded under section 143(3) of the Act and that too after detailed verification and enquiries with respect to the issue of share capital and share premium (kindly see pgs A to B of this brief note) and as such, nothing was pending or nothing will abate, on the date of handing over of the documents by the AO of the searched person to the AO of the assessee - appellant and thus, the AO was not empowered in law to tinker with the completed assessments and further, to make additions beyond the seized/incriminating material as referred in the satisfaction note. (ii) That further, even for assessments for AY 2011-12 and 201213 (kindly see pages E to F and G to J of this note), no additions have been made with reference to the documents so referred in the satisfaction note, which are copies of trial balances and balance sheets (found to be duly recorded in books of accounts) and as such, the additions made under proceedings') u/s 153C of the Act was not validly made, as....
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....d from the premises of searched person. (i) Here, it is most humbly submitted that, it is necessary that before the provisions of Section 153C of the Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e.. the searched person). In the impugned satisfaction note, there is nothing therein to indicate that the seized documents do not belong to the Minda Group and mere finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals or in whose name they pertain. Possession of documents and possession of photocopies of documents are two separate things. While the Minda Group may be the owner of the photocopies but it does not get established that the same belong to the assessee - appellant. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise and various courts have quashed the proceedings initiat....
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....Guwahati High Court in the case of Smt. Sohani Devi Jain Vs. ITO reported at 109 ITR 130 [FB] [Gau] submitted that when no objection regarding validity of assessment has been raised or taken before the ITO, then this legal objection cannot be raised subsequently in the appellate proceedings. The ld. DR further placing reliance on the judgment of the Patna Hon'ble High Court in the case of Raja Bahadur Kamakhya Narain Singh [Patna] VS. UOI 51 ITR 596 submitted that while the assessee is not raising any ground, challenging the valid assumption of jurisdiction and not raising the ground directly during assessment or reassessment proceedings, then it has to be presumed that the assessee has waived his right to challenge the validity of assumption of jurisdiction for assessment or reassessment. 10. The ld. CIT-DR further contended that the first proposition advanced by the ld. AR is not tenable and sustainable in the light of this proposition and reference cannot be made to the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of Shri Jasjit Singh [supra] because in this case neither the question of law was framed nor answered. Hence, this decision cannot....
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.... AR is challenging the validity of the assumption of jurisdiction and initiation of proceedings beyond the prescribed limitation time should be rejected for failure of the assessee to challenge the issue within the time provided u/s 124 of the Act which are pertaining to jurisdiction of the AO to assess or reassess u/s 153A and 153C of the Act. The ld. CIT-DR submitted that the ratio of judgments/orders of the Hon'ble Supreme Court and various Hon'ble High Courts are only binding when there is a ratio merely prima facie observation cannot be considered as ratio and the same cannot be relied for granting any relief to any party. 13. The ld. CIT-DR reiterated the arguments as advanced in the written submissions and submitted that for A.Y 2007-08 relevant to ITA No. 7060/Del/2014 and 6948/Del/2014 has to be rejected for failure of the assessee to challenge the jurisdictional issue within the time provided u/s 124 of the Act relevant to jurisdiction provisions and ITA No. 6947/Del/2014 also have similar facts and circumstances wherein the assessee has not challenged the validity of jurisdiction during the assessment proceedings and therefore, the assessee is stopped to raise....
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....he Act. Placing reliance on the judgments of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Chetan Dass Lachhman Dass reported at 254 CTR [Del] 392 submitted that there is no requirement of incriminating material for making any addition because law does not provide such requirements. The ld. CIT-DR further submitted that in the case of Kabul Chawla order dated 28.08.2015 ITA No. 707/Del/2014 the Hon'ble High Court has not dealt with the proposition laid down by it in the case of Filatex India Ltd VS. CIT [2014] TIOL -1325-SC-Del-IT and in the case of Madugula Venu Vs. DIT reported at 266 CTR 372 [Del] wherein it was held that the notice issued u/s 153A of the Act calling upon the assessee to file return for earlier six A.Ys cannot be challenged on the ground that it would cause certain degree of hardships to the assessee. The ld. CIT-DR strongly contended that the benefit of the decision of ratio of Hon'ble High Court of Delhi in the case of Kabul Chawla [supra] cannot be extended to the assessee. Furthermore, the ld. CIT-DR submitted that it is factually wrong to say that there was no incriminating material found during the search and seizure ope....
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....al issue of assumption of valid jurisdiction by the AO for initiation of proceedings and issuance of notice u/s 153 of the Act a this legal objection was not raised during the assessment proceedings and the assessee cannot raise the same subsequently as per sec. 124 r.w. proviso to section 153C(1) of the Act. ii) The contention of the assessee regarding limitation is not tenable because the proposition/dicta laid down by the Hon'ble Jurisdictional High Court in the case of Jasjit Singh [supra] and order of the ITAT, Delhi bench in the case of DSL Properties [supra] is not applicable to the present case. iii) There was amply incriminating material against the assessee which has been mentioned in respective satisfaction notes. Therefore, the arguments of the assessee is not tenable that there was no material belonging to the assessee as per satisfaction note prepared by the AO of the other person i.e. the present assessees at the time of initiation of proceedings and issuance of notice u/s 153C of the Act. iv) Ratio or proposition of the judgments/orders of the Hon'ble Supreme Court, various Hon'ble High Court and Tribunal should be seen in the ....
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.... the Act and definitely objection to such jurisdiction can be raised in terms of section 124(2) of the Act and in terms of sub-section (3) of section 124 of the Act and right to raise such objection shall be forgone beyond these stages but these propositions are related to territorial jurisdiction of the assessee and challenge to the initiation of proceedings and assessment of jurisdiction u/s 153A and 153C of the Act is quite different and this contention also gets strong support from the dicta laid down by the Hon'ble Gujarat High Court in the case of CIT Vs. Ramesh D. Patel reported 362 ITR 492. The ld. Counsel also submitted that the issue of inherent lack of jurisdiction can be raised at any stage and the contention of the ld. DR is baseless as in the present case, the ld. CIT(A) has not dealt with the said issues which were raised by the assessee vide its grounds of appeal and written submissions. To support this proposition, the ld. AR placed reliance on various judgments of Hon'ble High Courts including the Hon'ble Jurisdictional High Court in the case of Valvoline Cummins Ltd. Vs. DCIT reported in 307 ITR 103 [Del]. 21. On the second contention, the ld. AR s....
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.... material only. The ld. AR has drawn our attention to paras 37 to 39 of the order of the Hon'ble High Court in the case of Kabul Chawla [supra] and submitted that addition made by the AO are beyond the scope of addition as no addition is made on the incriminating material found as a result of search and as is recorded in satisfaction note dated 09.09.2013. 23. Regarding fourth limb of arguments of the ld. CIT-DR, the ld. AR vehemently contended that for making assessment u/s 153C after precedent is the satisfaction note and with respect to completed assessment the addition has to be based upon the seized documents as mentioned in the seized documents only. Once the AO of the searched person records and hands over the seized documents mentioned therein to the other person, then the answer of the other persons is precluded in considering any other material over and above the material/documents mentioned in the satisfaction note and further more, looking at the documents as well, nothing but mere photocopies of financial statements. The ld. AR placing reliance on the judgment of the Hon'ble High Court of Delhi in the case of Pepsico reported in 370 ITR 295 submitted that th....
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....tentions of the ld. CIT-DR that the assessee is precluded from raising the issue of jurisdiction at this stage, more particularly when such objections was not raised during the assessment proceedings before the AO and as per provisions of section 124(2) to (4) the assessee is debarred from raising such legal objections before the Tribunal specially when the assessee participated assessment proceedings before the AO and this omission would give raise to a presumption that the assessee has waived or given up the legal jurisdictional issue. On careful consideration of above, from the operative paras 34 to 36 of the order of the ITAT, Delhi in the case of Computer Engineering Services India [Pvt] Ltd [supra] similar contentions of the ld. CIT-DR Shri Ramesh Chander were rejected with the following observations: "4. Before parting with the matter, we would like to deal with the contention of Ld CIT-DR that extant plea of amalgamation as raised by assessee is hit by provisions of section 124(3) of the Act. In this regard, he vociferously argued and tried to persuade us that said provision clearly comes in the way of assessee to raise the plea of assessment on non existing compan....
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....f the above binding jurisdictional high court precedents, we do not approve the objection taken by Ld CIT-DR that the assessee's plea is barred by section 124(3) as same is not applicable to present factual situation." 28. In this regard, firstly, we may point out that on vigilant reading of section 124 of the Act, it is clear that this provision is related to territorial jurisdiction of the AO and the time frame regarding right of assessee to raise objection to the territorial jurisdiction of the AO and time frame or limitation prescribed in this regard but in the present case the assessee is not challenging the territorial jurisdiction of the assessee but it is challenging the validity of assumption of jurisdiction for initiation of proceedings and issuance of notice u/s 153C of the Act and thus said legal objection of ld CIT-DR is rejected. 29. We further observe that the Tribunal in the order in the case of Computer Engineering Services [supra] has referred to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of K.K. Loomba [supra] wherein it was held that section 124 of the Act has applicability to only territorial jurisdiction issue and ....
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....By grounds of appeal & especially the propositions assessees in a way are trying to say that; (i) the AO had no jurisdiction to assess the income which was not referable to seized documents or search material; (ii) the AO had no jurisdiction to assess the income u/s 153C in respect of certain previous years to be considered in reference to the date of handing over of the documents. (ii) the AO had no jurisdiction to assess the income of certain years which had not abated i.e. which stood completed earlier. (iv) the AO had no jurisdiction to proceed u/s 153C because the Satisfaction Note prepared by him does not show denial of certain documents by the person from whom they were found. 1.2 At the outset, it is pointed out thatbefore the AO never ever there was any challenge to his jurisdiction. Even before the CIT(A) or the ITAT there is no specific ground challenging AO's jurisdiction that the AYrs assessed were beyond the period of 6 AYrs contemplated in law or that these certain years had already abated. However, very strangely in the garb of propositions made out in the Written submissions these jurisdictional issues have been raised. ....
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.... in search including the point of abatement; and also the ground of AY involved being beyond 6 years) etc. within the prescribed period it is estopped from challenging it now. B. Assessment bad in law & without jurisdiction. (AY was outside the block of 6 years): 1. The Assessee has made a proposition that AY 7-8 (Sunny Infra etc.) falls beyond the block period to be reckoned inreference on the date of recording of the Satisfaction. The AR says that documents were handed over in FY 13-14 i.e. AY 14-15 and accordingly 6 previous years would be AY 08- 09 to 2013-14 and as per this AY 07-08 falls beyond 6 previous years contemplated under the law. In this context, the AR has placed reliance on judgments inter alia including of Delhi High Court in Jasjit Singh (ITA No.337/2015); & ITAT Delhi decision in DSL Properties P. Ltd. {60 SOT 88 URO} etc. 2.1 Before adverting to the arguments and the decisions relied it is considered necessary to point out the relevant legal position as contained in proviso to section 1530(1) which is as under; Provided that in case of such other person, the reference to the date of initiation of the search u/s 132 or making ....
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....O would still be required to assess the income of that period. This only shows that the years to be assessed u/s 153C have to be the same as they would be while proceeding u/s 153A in the case of the person who has been subjected to search or requisition issued u/s 132 or 132A of the Act. On this point qua the argument that impugned AY is beyond the prescribed period of 6 years as mentioned in section 153C it is pointed out that decisions/judgments relied are not applicable. 3.1 Delhi Tribunal decision in DSL Properties (P) Ltd. etc. have to be ignored as this decision runs contrary to coordinate 'A' Bench later decision in the case of Apoorva Extrusion P. Ltd. (dated 09-10-2014) where on the identical issue of number of assessments to be framed after recording of satisfaction was involved where it was held that number of assessments to be framed u/s 153A or u/s 153C have to be same. Further, this DSL decision is based upon additional grounds which were not even taken up before the lower authorities which again is contrary to law and also the Rule 11 of the AT Rules. Further, this decision entertains an alternative contention not raised before the lower authorities which e....
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....not borne out of documents shown in the satisfaction Note. E. The additions had already been made in earlier 143(3) assessment: 1.1 Qua the proposition/argument of the AR that ''assessments cannot he qua the additions not referable to search material" Hon'ble Bench is requested to kindly appreciate that had the legislature intended to restrict the scope of assessment u/s 153A/153C only to the seized material it would have been indicated so as was done by it earlier u/s 158BC or u/s 158BD. One must appreciate that mandate of section 153A/153C is assessment of total income and when it is so the computation of total income cannot be restricted to detection of incriminating evidences alone. Further, as a matter of rule & practice search u/s 132 is always preceded by a proper Satisfaction Note recording the facts, circumstances and making out of a prima facie case justifying the conduct of a search action. When it is so, non recovery of incriminating material cannot make the Satisfaction Note nonexistent. Even if incriminating material is not found facts and circumstances narrated in the Satisfaction Note would still require examination/consideration later on ....
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.... in CIT v. Chetan Dass Lachhman Dass {25 Taxmann.com 227 } that there is no requirement to base assessment only on search material. In this context, where ( para 11) High Court held as under; "To repeat, there is no condition in this section that additions should he strictly made on the hasis of evidence found in the course of the search or other post-search material or information available with the AO which can he related to the evidence found." In view of the above it is prayed to reject plea of the assessees by holding that there is no requirement u/s 153A or u/s 153C to always necessarily refer to the search material while making additions. 1.3.1 In so far as reliance placed by the assessee on various decisions of the Tribunal and the High Court (especially including MGF Automobiles and Kabul Chawla) is concerned it is submitted that they are not available as precedents inter alia for various reasons given in short in Annexure A-l to these submissions and also in view of the jurisdictional High Court judgments and the arguments referred to by the CIT(A) as well as what is mentioned in the present submissions specifically in view of Delhi High Court j....
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....s Report Lairy Distributors P. Ltd. 88-120 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. 121 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. A-5/36 Annexure Par-A and B of Sunny Infra Projects Ltd. 37'45 Form 3 CD -Sunny Infra Projects Ltd. 47 Balance Sheet & company's General Profile of Sunny Infra 48-52 Sch. 1 to 2 of Balance Sheet on 31-03-2011 & P & L A/c of 53 Cash Flow Statement of Sunny Infra. Projects. Ltd. 54 P&L for 31-03-2011 of Sunny Infra. Projects. Ltd. 55 Balance Sheet on 31-03-2011 of Sunny Infra. Projects. Ltd. 56-58 Auditors Report to Sunny Infra. Projects. Ltd. dt. 26-08-2011 59 Computation Sheet of Balram Vinimay P. Ltd. AY 11-12 60 Balance Sheet abstract & Gen. profile of Balram Vinimay 61-63 B/Sheet on 31-03-2011 & P & L of Balram Vinimay P. Ltd. 64 P & L of Balram Vinimay P. Ltd. on 31-03-2011 65 Copy of B. Sheetr as at 31-03-2011 of Balram Vinimay P. 66 Income Computation of Balram Vinimay P. Ltd. AY 11-12 67-69 Ann. of Report of Balram Vinimay P. Ltd. Hans Raj Chug & 70-71 Auditors Report Balram Vinimay P. Ltd. 72-105 ITR....
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....e' on AO's part in writing etc. Merely, because AO has recorded a Note which is not even contemplated in law it cannot be a ground with the assessee to dispute its contents. If at all the assessee disputes the AO's action it is for it to bring tangible material on record to rebut the satisfaction of the AO that the document does not belong to it. How AO can be made a witness in his own case. Without prejudice to the above, suffice would it be to say that since the assessee has failed to challenge the jurisdiction of the AO within prescribed period as prescribed u/s 124 of the Act on the ground that the documents did not belong to it, the argument or the ground has to be just rejected. 2.1.2 It be appreciated that bald & self serving claim in the Statement of Fact that documents do not belong to the assessees is not enough. In the absence of evidence backed denial of this material fact in the Statement of Fact (which was an exclusive burden of the assessee to be discharged) or in the Grounds of appeal, it has to be inferred that the documents do belong only to the assessees. If documents did not belong to the assessees evidences were required to be adduced to show as to who....
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.... that the judgment is basically based on equity and fundamentally on facts and not on law especially when law does not restrict invocation of jurisdiction only when original or signed document is found. 2.2.4 Further, in the Writ petitioners had approached the High Court saying "the petitioners have no other equally efficacious remedy hut to approach this Hon'ble Court vide the present petition". However, for deciding the issues raised in Writ petition which centred around the issue of AO's assumption of jurisdiction u/s 153C statutory alternative remedies were already available. Against AO's action assessees could have easily resorted to alternative remedy as provided u/s 144A praying the Supervisory Officer (Range Head) to intervene and examine legality or correctness of AO's actions and to issue necessary directions (including dropping of proceedings so initiated) to the AO which, as provided in law, would have been binding on him. What assessees got by way of Writ would have been obtained had petition before the Range Head u/s 144A been moved. 2.2.5 Without commenting much as to why the assessee did not make the High Court aware of the existing equally efficac....
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....ainties. If 2nd proviso to section 153AOO had not been there in the Act there would have been fear as well as doubts in the minds of the Tax papers as well as the Tax Administrators as to what would happen in a case/year where out of six years to be assessed u/s 153A consequent upon search in one or two years or in all the years assessment proceedings because of normal initiation of proceedings by issuing notice u/s 143(2) or because of reopening u/s 147 etc. are already pending before the Assessing Officer. In the absence of the 2nd proviso there would have been fear in the minds of the assessees as well as the Assessing Officers of framing 2 assessment orders for certain years one under normal provisions u/s 143(3)/147 etc. and again u/s 153A of the Act. Such an exercise besides brining chaos would have resulted in sheer wastage of precious time, energy and resources. To allay these fears qua the possibility of multiple proceedings 2" proviso has been inserted providing for automatic abatement of assessments proceedings in respect of certain years which are pending but otherwise fall within the block of 6 years which get covered for assessment u/s 153A of the Act. 2. Thu....
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....or the assessment of income not even indicated in the reasons recorded to re-open. In view of the above Revenue prays to adjudicate the present appeal in view of the specific facts and submissions as brought out in the present submission." 32. The ld. CIT-DR also submitted written objections regarding decisions relied by the ld. AR qua applicability of dicta on propositions or ratio of these judgments and orders of Hon'ble Supreme Court, Hon'ble High Court and Hon'ble Jurisdictional High Court of Delhi, which are being reproduced below for the sake of completeness: "I. Before adverting to the judgments/decisions relied by the AR, Hon'ble is prayed to kindly note that -- a decision is available as a precedent only if it decides question of law: as held in (i) Mehboob Dawood Sheikh v. State of Maharashtra{ (2004) 2 SCC 362 para 12} (ii) Surinder Kumar v. State of Punjab v. {194 ITR 434 SC)}. --(i) Only ratio decidendi is binding; --(ii) Observations (obiter dicta) have no binding force: as held in (i) Rekha Mukerjee v. Ashish K. Das (2005) 3 SCC 427; 440-47 (para 29); (ii) Orient Paper and....
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....her person for the 6 assessment years, the proceedings will have to be closed." are clearly obiter and this would become clear from (i) para 15 where High Court clearly held that "...there is no requirement in Section 153C(i) that the Assessing Officer should also be satisfied that such valuable articles or books of accounts or documents belonging to the other person must be shown to conclusively reflect or disclose any undisclosed income, and (ii) para 7 "..The main contention of the petitioner is that the Assessing Officer has illegally assumed jurisdiction u/s 153C read with Section 153A of the Act, that there was no undisclosed income to the assessed in the petitioner's hands and therefore a writ of certiorari should he issued to quash the proceedings as null and void". (iii) If the High Court wanted to hold so (as contended by the AR), the proceedings/assessment for the years for which there was no seized material as referred in Satisfaction Note at all would have been quashed. (iv) There was no controversy before the High Court as to which 6 years are to be considered while making assessment u/s 153C of the Act and hence judgment cannot be ....
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....erial etc. whereby AO's authority is being challenged) is in ignorance of applicable provisions of 124 which act as a bar to rake up jurisdictional issues later. Since this decision is rendered without reference to the statutory bars, it cannot be used as a binding precedent as held in State v. Ratan Lai Arora (2004) 4 SCC 590. (ii) Unlike the present appeals, this judgment is not in the context of section 153C. (iii) Judgment neither shows formulation of questions nor shows as to what all questions of law were raised by the Revenue. (iv) It does not considers its own judgment in SSP Aviation Ltd which was directly on section 153C. (v) It holds something not even indicated in the law & hence goes against the plain words of law. (vi) It relied heavily on certain portions from its judgments in Chetan Das Lachhman Das & Anil Bhatia's case which were mere observations i.e. obiter and not the statements of law as stated in its earlier judgments in SSP Aviations Ltd; Madugula Venu & Filatex Ltd. (vii) Material aspect that proceedings for AY 6-07 were not complete because time for issuing notice u/s 143(2) was still available with the ....
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....e this decision is found to be resulting in absurdity whereby by the search action certain years/transactions would get covered which by the time of 153C had not even taken place. Especially in case of RL Allied Industries it would be noticed that adjudication done by the ITAT is not even borne out of the grounds (that order is time barred) raised before the ITAT. (xiv) Jasjit Singh Delhi Trib.f ITA 1436/Del/2012}: Not available as a precedent because (a) It is obtained by suppressing the fact that AO's jurisdiction was not challenged within 124 time; (b) Controversy there was different about whether order to be passed u/s 143(3) or u/s 153C. (c) Adjudications of 6 years travels beyond the controversy ( even in addl. Ground) raised before ITAT (xv) Brightways Housing & Land Developers Ltd. (ITA 5117-18/Del/2013 (xvi) Devi Dayal Petro Chemicals P. Ltd. ITA No. 4335-36/Del/2013 Not available as precedent because these are (a) Obtained by suppressing the fact that AO's jurisdiction was not challenged within 124 time; (b) Run contrary to Delhi High Court order in SSP Aviation Ltd. where too Satisfaction No....
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....uppressed. (v) Decision relies on Delhi High Court order (Pepsico Holdings) which was not available as precedent. (xxi Tanvir Collections P. Ltd. 168 TTT US Deb Not applicable because; (a) It runs contrary to Delhi High Court order in SSP Aviations Ltd; (b) It relied on certain portion of SSP Aviation Ltd. which was just obiter not to be used as a precedent. (c) It relied on its decision in Inlay Marketing & Akash Arogya which were obtained on suppression of material fact that objection was not raised within 124 time and that evidences being adduced were of the nature of additional evidence. (d) Objection challenging the jurisdiction of the AO was raised within 124 time. (xii) Satyam Food Specialities P. Ltd {68 SOT Del}: Not relevant and applicable at all because there relief is given on merits and not on the legal ground of validity of 153C assessment." 33. The ld. AR placed written rejoinder and rebuttal to the above noted written submissions and the contentions of the ld. CIT-DR which is being reproduced below: (i) That the assessee is precluded from raising the issue of jurisdiction at this sta....
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....LLANT: 3.1 That first and foremost, the argument of learned CIT DR that the assessee is precluded from raising the issue of jurisdiction at this stage, more particularly when such objection was not raised before the learned assessing officer and as such, as per the provisions of section 124(2) to (4), the assessee - appellant is debarred from raising such issues before Hon'ble ITAT is contrary to the statutory provisions of the Act, as section 124 of the Act pertains to territorial jurisdiction of an Assessing Officer vested under sub-section (1) or (2) of section 120. An objection to such jurisdiction can be raised in terms of section 124(2) and in terms of sub-section (3) of section 124, right to raise such objection shall be foregone beyond the stages mentioned therein. The said provisions are clearly concerning with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and has no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A of the Act is concerned and thus, when assessee - appellant contends that the assessments made by learned AO are beyond the purview of section 153C....
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....ot to other jurisdictional issues when there is inherent lack of jurisdiction. Further, we wish to commemorate the trite principle that an order which is nullity in the eyes of law, plea relating to the same can be raised at any stage even during collateral proceedings as explained in leading case law of Gujarat High court in case of P. V.Doshi 113 ITR Page 22. The Hon'ble Delhi High Court in the case of S.S. Ahluwalia (Supra) has held as under: 36. In Budhia Swain and Or s. Vs. Gopinath Dev and Or s. (1999) 4 SCC 396, it was highlighted that distinction exists and was well recognized between lack of jurisdiction and mere error in exercise of jurisdiction. Lack of jurisdiction strikes at the very root of the action/act and want of jurisdiction might vitiate proceedings rendering the orders passed and exercise thereof a nullity. But a mere error in exercise of jurisdiction would not vitiate the legality and validity of the proceedings and the said order was valid unless set aside in the manner known to law by laying a challenge, subject to law of limitation. The following portion of Hira Lai Patni Vs. Kali Nath, AIR 1962 SC 199 was quoted ....The validity ....
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....ng over of the documents by the AO of searched person to the AO of other person and judgment of Hon'ble Delhi High Court in the case of CIT vs Jasjit Singh in IT A No. 337/2015 is not available as precedent as neither question of law was framed nor answered as required under section 260A of the Act", is again based on misconceived reading of law and incorrect reading of judgment of Hon'ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015, wherein, Hon'ble High Court has categorically held that cut - off date for issuance of notices under section 153C of the Act has to be reckoned from the date of handing over of the books of accounts by the AO of searched person to the AO of other person and if the said finding is applied to the facts of the assessee - appellant than AY 2006-07 and 2007-08 will be found to be beyond the purview of provisions of section 153C of the Act as satisfaction note in the instant is recorded on 09.09.2013 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 09.09.2013. Accordingly, as p....
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.... in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31st March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under: "The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction/reason before issuing notice under Section 153C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such other person. In case, the AO of the searched person exercises ....
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....e suppressed and in all the cases relied on by assessee - appellant even the department could have argued and mentioned about the provisions of section 153C(2)(a) but they didn't (does it mean that department even suppressed the said provisions), as the reading of the said provision would make it amply clear that in case of search being conducted on an individual, if document belonging to other person is found, than the search year of the searched person (as also for the case of other person) should not go Scott free and the said assessment year needs to be assessed under the normal provisions of section 153C read with section 153 A of the Act. That the third argument of learned CIT DR that there is no requirement of making addition on the basis of incriminating material found as a result of search, rather and total income has to be assessed by learned assessing officer and thus, additions can be made beyond incriminating material as well, is again based misconceived and misplaced reading of statutory provisions of statute and judicial precedents available, as it is an agreed aspect between the learned CIT DR and the assessee - appellant that assessments under section 153C....
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....mpleted assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vii. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. viii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion Para 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating materi....
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....reported in 370 ITR 295, the said documents cannot be said to be belonging to the assessee - appellant. That further in support of the aforesaid proposition the assessee - appellant would seek to place reliance on following judgments: S.No Judgments Pg Nos. of PB - III 6. Copy of judgment of Hon'ble High Court of Delhi in the case of SSP Aviation Ltd. vs DCIT reported in 346 ITR 177. 33-45 8. Copy of order of Hon'ble ITAT Delhi in the case of M/s Brightways Housing & Land Developers Ltd. in ITA No. 5117, 5118/Del/2013. 53A-53J 9. Copy of order of Hon'ble ITAT Delhi in the case of M/s Devi Dayal Petro Chemicals Pvt. Ltd vs DCIT in ITA No. 5435, 5436/Del/2013. 53K-53U 10. Copy of order of Hon'ble ITAT Delhi in the case of Natural Products Bio Tech Ltd. va DCIT reported in 153 ITD 58. 54-65 11. Copy of order of Hon'ble ITAT Panaji in the case of Smt. Sunita Bai vs DCIT reported in 68 SOT 98 (URO). 66-75 12. Copy of order of Hon'ble ITAT Panaji in the case of Smt. Lakshmi Singh vs DCIT reported in 68 SOT 26 (URO). 76-85 13. Copy of order of Hon'ble ITAT Delhi in the case of DCIT vs Qualitron Commodities (P) Ltd. repor....
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....plicable to the facts of the e subordinate impugned case, as the purpose and enactment of provisions of section 153A and section 153C have been explained by Hon'ble High Court of Delhi in the case of CIT vs Kabul Chawla reported in (2015) taxmann.com 412, wherein, Hon'ble High Court has held that addition in pursuance to search cannot be made beyond incriminating material found as a result of search in respect of completed assessments and since, assessment under section 153C has to be made in pursuance to the provisions as envisaged under section 153 A of the Act. Chetan Das Lachman Das (DelHC) CIT vs Anil Kumar Bhatia DelHC) Filatex India Ltd. \s CIT reporVed in229 Taxman 555 Madugula Venu vs CIT reported in 215 Taxman 298. All these judgments have been considered by Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2015) taxmann.com 412, wherein, Hon'ble High Court has held that addition in pursuance to search cannot be made beyond incriminating material found as a result of search in respect of completed assessments and since, assessment under section 153C has to be made in pursuance to the needs to be applied to the facts of the instant cas....
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....seeking to file an appeal under that provision must comply with two requirements, namely, that he must have first deducted the tax due from the non-resident assessee and must have paid the same to the Government. This provision cannot apply to the case of a person who contends that the firm to whom he made the payment is not a non-resident firm. If he is right in his contention, then he could not have deducted the tax due from the firm to whom he made the payment. 5. For the reasons mentioned above, we allow this appeal, set aside the order of the Appellate Bench of the Allahabad High Court and remand the case back to that Court for deciding the appeal afresh. It is open to the assessee to urge all the points that he has taken in the case. " 35. These observations of the Hon'ble Supreme Court have been echoed in various subsequent decisions of various courts and few of these are respectfully mentioned below: a) Hon'ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 [Guj] b) Hon'ble Jurisdictional High Court in K.K.Lumba 241 ITR 152 [Delhi] c) DHC - S.S. Ahluwalia [2014] 82 CCH [158] [Del] 36. To sum up, we have ....
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....system of Courts" which exists in our country, "it is necessary for each lower tier" "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchical system of Courts that there are decisions of the Supreme appellate Tribunal which do not attract the unanimous approval of all members of the judiciary... But the judicial system only works if someone is allowed to have the last word, and that last word, once spoken, is loyally accepted. "...The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system." (Emphasis by underlining supplied by us) 38. Furthermore, in the case of CIT Vs. Godavari Devi Saraf [1978] 113 ITR 589 [Bombay] the Hon'ble Bombay High Court held that an authority like the Tribunal has to respect the law laiddown by the Hon'ble High Court, though of a different state, so long as there is no contrary decision on that issue by the other High Court. Hence we decline to accept the contentions of the ld. CIT-DR about nonapplicability of the ratio of the decisions/judgments cited as relied by the ld. Counsel of the assessee and we proceed to consider other....
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....f account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date. 41. In the present case in ITA No. 6947/Del/2014 i.e. assessee's appeal for A.Y 2006-07 undisputedly and admittedly the AO of the other person recorded satisfaction for initiation of proceedings and issuance of notice u/s 153C of the Act on 09.09.2013 and when the ld. CIT-DR could not assist about the receiving of documents etc. by the AO of the other person the date of recording satisfaction i.e. 09.09.2013 is treated as date of receiving documents etc. Thus limitation period for calculation of A.Ys under the ambit of section 153C should be reckoned from 09.09.2013 relevant to F.Y. 2013-14 and A.Y 2014-015 and hence the six years under scanner would be A.Y 200809 to 2013-14 as per the dicta laid down by the Hon'ble High Court in the case of SSP Aviation [supra] and Jasjit Singh [supra]. In this situation and under above noted preposition the assumption of juris....
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....igh Court] iv) Chain Roop Baid 154 ITD 257 Delhi v) Brightways Housing & Land Developers Ltd ITA No. 511718/Del/2013 43. The ld. Counsel also pointed out that even without prejudice to above argument the documents mentioned in the respective satisfaction notes are not pertaining to either A.Y 2006-07 and 2007-08 and therefore the AO did not have valid jurisdiction to issue notices u/s 153C of the Act for A.Y 2006-07 and 2007-08 in all three cases and the same should be held as bad in law and void an initio and only on this ground deserve to be quashed. 44. The ld. CIT-DR supported the action of the AO and contended that the citations as relied by the assessee not have binding effect and they do not support the contentions of the assessee. The ld. CIT-DR also stressed that there were many other documents found during the course of search and Minda Group which have not been recorded in the satisfaction note and the argument of the assessee that no document belonging to assessee was found during the search in Minda Group is not correct. It was also pointed out that no such argument was raised by the assessee before the ld. CIT(A) in statement of facts and groun....
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....pies of computation of income for A.Y 2011-12; copy of balance sheet extracts, company's general business profit, copy of schedules, annexures as on 31.3.2011; copy of balance sheet, computation of auditor's report and return and copy of trail balance sheet for the period 1.4.2011 to 31.12.2011 and from Annexure C satisfaction note we note that the basis of action u/s 153C of the Act was financial transaction recorded pertains to A.Y 2011-12 which was Tax Audit Report and Financial Statement and Trail Balance for A.Y 2011-12. These documents mentioned in all three appeals do not pertain to A.Y 2006-07 and 2007-08 which are the years under consideration in these three appeals. 48. In view of the above noted facts and circumstances, when we analyze the legal objection of the assessee that the documents recorded and mentioned in the respective satisfaction note do not belong to the respective assessees and even documents mentioned therein are not relevant to A.Y 2006-07 or 2007-08 then we note that from all three Annexures A, B and C it is amply clear that these documents are mainly copies of the return, balance sheet, trail balance sheet and other financial statements which are re....
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.... C of the Act further enhanced as besides "belong to" the words "pertains to" and "relates to" have been inserted hence copies of the balance sheet, T/B and financial statements etc clearly pertain to and relate the respective assessees against whom the proceedings were initiated and notices u/s 153 of the Act have been issued. On this contention of the ld. CIT-DR, we note that the amended provisions of section 153C of the Act is prospectively applicable w.e.f. 1.6.2015 thus amended provisions would not apply retrospectively by any stretch of imagination. Therefore, pre-amendment provision of section 153C of the Act would apply to the present case and amended provision has no application to the present case. At the same time, respectfully following the dicta laid down by the Hon'ble High Court of Delhi in the case of Pepsico Holding [supra] we observe that the photocopies of the balance sheet, trial balance and other financial statements are not belonging to the assessee as neither they are originals nor has been signed by any office bearers of the companies and these were not disowned by the searched person i.e. Minda group and the ratio of the decision of the Hon'ble Juri....
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....ed at ensuring that income does not ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014 escape assessment in the hands of any other person merely because he has not been searched under section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has searched the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed. If the returns filed by the other person for the period of six years does not show that the income reflected in the document has been accounted for, additions will be accordingly made after following the procedure prescribed by law and after giving adequate opportunity of being heard to such other....
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....ch the seized document do not belong. In the present case, when the documents mentioned in the satisfaction notes [supra] do not belong to A.Y 2006-07 to 2007-08 then proceedings has to be dropped or closed for the year to which the documents do not belong. This conclusion also supports the case of the assessee and thus we are inclined to hold that the AO was not correct and justified in proceeding to frame re assessment when there was no document before the AO for A.Y 2006-07 and 2007-08 found mentioned in the relevant satisfaction notes 53. At this juncture, it would be relevant and appropriate to consider the ratio of the decision of the Hon'ble High Court of Bombay in the case of CIT vs. Singhad Technical Education Society since reported as [2015] 120 DTR 79 [Bombay] wherein their Lordships held that if it is not clear that to which A.Y the document belong then the proceedings to initiate proceedings and issuance of notice u/s 153C of the Act would vitiate. In the present case, on the basis of foregoing discussion we reach to a fortified conclusion that the proceedings against the present three assessee for A.Ys 2006-07 and 2007-08 are not sustainable and the same now vi....
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....on the same date that the Court rendered another decision in CIT v. Chetan Das Lachman Das (supra). However, in neither case was the Court considering a situation where there was absolutely no material unearthed during the search, much less any incriminating material. 16. In CIT v. Anil Kumar Bhatia (supra), pursuant to the search conducted in the Assessee‟s residence and business premises on 13 th December 2005 under Section 132 of the Act, the AO issued notices under Section 153A calling upon the Assessee to file returns for the six assessment years prior to the year in which the search took place. Notices were also sent under Section 142(1) and 143(2) of the Act to the Assessee on 20th November, 2007 along with detailed questionnaire. In response thereto the Assessee on 29th November, 2007 submitted an explanation. Thereafter the AO made additions to the income including a sum of Rs. 1.50 lakh given by the Assessee as loan to one Mrs. Mohini Sharma on 10th February, 2003. The information regarding giving of the loan was available from a document seized from the premises during search and found undisclosed in the return filed for AY 2003-2004. Concluding that the l....
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....e Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens." 19. The Court then explained that the concept of time-limit for completion of assessment or reassessment under Section 153 had been done away with in a case covered by Section 153A and "with all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an Assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be." The Court then dealt with the second proviso to Section 153A, which states that pending assessment or reassessment proceedings in relation to any AY falling out of the period of six AYs previous to the search shall abate. In such cases all pending assessments, the Court explained that once those proceedings abate, the decks were cleared, for the AO to pass assessment orders for each of those six years determining the total income of the Assessee. Such 'total income' would include "both the income declared ....
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....dings of the CIT(A) were justified. Consequently the decision in CIT v. Chetan Das Lachman Das (supra) does not deal with the fact situation that arises in the present case. 23. Nevertheless it is interesting to note that in CIT v. Chetan Das Lachman Das (supra) the Court underscored the need for to Department to have unearthed material during search justifying the assessment sought to be made, in the following words: "11. ....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. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material...." Th....
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....The DCIT). There the Assessee, which was carrying on real estate business filed its return for AY 2008-2009. His case was taken up under Section 143(3) of the Act and an order came to be passed on 31st December, 2010. Subsequently a search took place in the premises of the Assessee under Section 132 of the Act on 12th April, 2011. The judgement notes "in the course of search, incriminating material leading to undisclosed income was seized." The notice was issued to the Assessee under Section 153A(1) of the Act to file return of income on 13th January, 2012. Even while the return was under consideration, the CIT initiated proceedings under Section 263 of the Act on the ground that the order passed on 31st December, 2010 under Section 143(3) of the Act was prejudicial to the interests of the Revenue. When the CIT negated the objections of the Assessee to the said order, the Assessee appealed to the ITAT. The ITAT negated the plea of the Assessee that by virtue of the proceedings initiated under Section 153A of the Act, the assessment for six years stood reopened and it is for the assessing authority to pass appropriate order on the basis of the return filed under Section 153A(1)(a) o....
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....th January, 2006 and subsequent dates. This included a statement of the General Manager (Marketing). On the basis of the said material and statement additions were made to the disclosed income under Section 115 JB although no material was found specific to such addition. The Court held that under Section 153A "the additions need not be restricted or limited to the incriminating material, which was found during the course of search." Consequently even if no incriminating material was found for the addition under Section 115JB of the Act, since there was some incriminating material found which would sustain additions made and since the 'total income' had to be computed, they were sustained by the High Court. 29. In Filatex India Ltd. the Court sought to explain the observations in CIT v. Chetan Das Lachman Das (supra) in the following manner: "3. Learned counsel for the appellant-assessee has relied on the decision of this Court in CIT v. Chetan Das Lachman Das [20121 211 Taxman 61/25 taxmann.com 227. The said decision notices insertion of Section 153A by Finance Act, 2003, its purpose and object, and the earlier proceedings for block assessment under Chapte....
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....ele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirmed by the ITAT, deleting the addition, was not interfered with. The decision in Jai Steel India 33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: "22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with searc....
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....based on any incriminating material found during the course of search? It was held that no addition could be made in respect of the assessments that had become final in the event no incriminating material was found during search. The Bombay High Court relied on the earlier decision in CIT v. M/s. Murli Agro Products Ltd. (supra) and discussed the scope and ambit of the proceedings for assessment and reassessment of total income under Section 153A (1) of the Act and the provisos thereto. One of the specific pleas taken by the Assessee was that if no incriminating material was found during the course of search in respect of an issue then no addition in respect of any issue can be made to the assessment under Sections 153A and 153C. It was observed that the assessment or reassessment under Section 153A arises only when a search has been initiated and conducted and, therefore, "such an assessment has a vital link with the initiation and conduct of the search." The Court then reproduced and affirmed the decision of the Special Bench of the ITAT in All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax [2012] 23 taxmann.com 103 (Mum.) (SB) and answered the question as regar....
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....s place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say 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 AO which can be related to the evidence found, it does not mean that t....
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.... u/s 153C of the Act. Therefore, other grounds of the assessee in all three appeals on merits become academic and infructuous and we dismiss the same without any further deliberations. ITA No. 7061/Del/2014. M/s Sunny Infra Projects Ltd [A.Y 2010-11 54. This appeal by the assessee is directed against the order of the ld. CIT(A) -XXVI, New Delhi dated 9.12.2014 in appeal No. 107/2014-15 for A.Y 2010-11. 55. Although the assessee has raised as many as 13 grounds of appeal, but as per the request of both the parties, first of all we take up the legal objections of the assessee consisting Ground Nos. 2 and 3 which read as under: "2. The ld. CIT(A) before dismissing the appeal has not given a reasonable opportunity of being heard which is against the principle of natural justice and is bad in law and hence liable to be quashed. 3. The ld. CIT(A) has failed to appreciate that the issuance of notices u/s 153C/142(1)/143(2) of the Act as well as the proceedings conducted thereunder is bad in law and is against the facts and circumstances of the case." 56. We have heard the rival submissions and have perused the relevant material on record. The ld. AR submitted....
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.... this issue was not raised before the ld. CIT(A) therefore, the assessee cannot raise this issue before the Tribunal as section 124 of the Act put a rider on agitating the same before the Tribunal. The ld. DR pointed out that in the satisfaction note dated 29.11.2013, there is a mention of seized documents viz financial transactions recorded and pertains to Sunny Infra Projects and financial transactions which are tax audit report, financial statements and trial balances, belonging to the assessee. Therefore, notice u/s 153C of the At was rightly issued and subsequent proceedings thereto, cannot be held as bad in law. The ld. DR further submitted that during the search and seizure operations at Minda Group, number of documents belonging to the present assessee were seized. Therefore, it cannot be said that the notice u/s 153C of the Act was issued by the AO without any incriminating material belonging to the assessee. 59. The ld. Counsel for the assessee placed rejoinder to the above submission and contentions of the ld. DR and submitted that section 124 of the Act is related to territorial jurisdiction of the AO and the legal objection of the assessee is not related to the terr....
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.... that there was no document relevant to A.Y 2010-11 before the AO of the searched person i.e. present assessee neither at the time of recording satisfaction u/s 153C of the Act on 29.11.2013 nor at the time f passing the impugned reasoned order u/s 143(3) r.w.s 153C of the Act. 62 Next question posed by the ld. CIT-DR is that the assessee is prevented by section 124 of the Act for raising jurisdiction issue when the assessee has not raised any objection before the AO and the ld. CIT(A) on this count. On bare reading of section 124 of the Act, it is amply clear that this provision is related to territorial jurisdiction of the assessee which is not the controversy before us and we have already discussed in the earlier part of this order that this legal objection of the ld. DR is not tenable and maintainable. Further, as we have to decide the legal objection of the assessee as to whether at the time of initiation of proceedings and issuance of notice u/s 153C of the At there was any document etc. with the AO of the assessee i.e. the other person pertaining to A.Y 2010-11 and in the grounds raised before the ld. CIT(A) it is clear that the assessee challenged assumption of jurisdict....