TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 746
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....018 With R/SPECIAL CIVIL APPLICATION NO. 19116 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19119 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19121 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20128 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20129 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20143 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20145 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20146 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20149 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20151 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20152 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20154 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20604 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20629 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20632 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 12849 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 18611 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19654 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19657 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19658 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19659 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19661 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19899 of 2018 With R/SPECIAL CIVIL AP....
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....CATION NO. 19325 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19647 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19676 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19844 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 19871 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20221 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20228 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20241 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20244 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20245 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20272 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20276 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20825 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20828 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 20830 of 2018 For The Petitioners : Mr. Sudhir Mehta, Advocate with Ms. Shailee Mehta, Advocate, Mr. Tushar Hemani, Advocate with Ms. Vaibhavi Parikh, Advocate for, Mr. B. S. Soparkar, Advocate, Mr. M.J. Shah, Advocate, Mr. Ketan Shah, Advocate, Mr. S. N. Divatia, Advocate, Mrs. Mauna M. Bhatt, Advocate And Mr. Darshan Patel, Advocate For The Respondent : Mrs. Mauna M. Bhatt, Advocate, Mrs. Mauna M. Bhatt, Advocate, Mrs. Mauna M. Bhatt, Advocate, Mrs. Mauna M. Bhatt, ....
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....n, wherein there was reference of the petitioner's name. 2.3 On receiving the details, the petitioner raised objections to the proceedings under section 153C of the Act with detailed submissions, inter alia, contending that on the basis of the excel sheet data of the computer of the searched person wherein there was only reference to the petitioner's name, the Assessing Officer could not have initiated proceedings against the petitioner under section 153C of the Act inasmuch as the condition precedent for invoking section 153C of the Act as it stood on the date of the search, viz. that the Assessing Officer should be satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned "belongs or belong to" the person other than the searched person was not satisfied. It was further contended that for the purpose of initiating action under section 153C of the Act, independent satisfaction has to be recorded, by the Assessing Officer of the searched person as well as the Assessing Officer of the person other than the searched person; however, on a perusal of the satisfaction note recorded by the Assessing Officer o....
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....f 2018. 2B.1 The petitioner is a company incorporated under the Companies Act, 1956. The respondent issued the impugned notice dated 2.11.2018, under section 153C read with section 153A of the Act for assessment year 2009-10, wherein it is stated that a search action under section 132 of the Act was conducted in the case of accommodation entry provider group (Barter Group and Pradip Birewar Group) on 4.12.2014 during the course of which, certain incriminating documents were found and seized. The Assessing Officer of various persons enlisted in the notice under section 153C read with section 153A of the Act, handed over such seized documents to the respondent since the same allegedly pertained to the petitioner and a bearing on the determination of the total income of the petitioner for the year under consideration. The petitioner was called upon to furnish the return of income under section 153C read with section 153A(1)(a) of the Act. 2B.2 The respondent provided a copy of the satisfaction note recorded by him for the year under consideration on 5.12.2018 along with a notice under section 142(1) of the Act. By a letter dated 7.12.2018, the petitioner raised objections against ....
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....f the previous provisions. Therefore, it is evident that the amended provisions are not substantive but a clarification of the previous wordings of the provisions. Furthermore, even a dictionary meaning of the words pertains/belongs/ relates show that they are synonymous. 3.3 It is further averred that the grounds raised by the assessee are not about taxability of "on money payments" in immovable property acquisition transactions but on the grounds of the procedure of taxation of such transactions in respect of other persons in searched cases. Through the amendment in section 153C(1) of the Act by the Finance Act, 2015, no new liability of the assessee has been created or scope of taxation has not been widened. "On money payments" in immovable property acquisition transactions have always been within the scope of charge of income tax. Thus, the amendment is merely procedural amendment. Every assessee has a vested right in substantive law but no such right exist in procedural law. It is accordingly, contended that the procedural amendment applicable by the legislature with effect from 1.6.2015 also covers notice under section 153C of the Act issued on 12.3.2018. 3.4 It is furthe....
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....r section 153C of the Act when notice is issued after the date of the amendment, that is, 1.6.2015 without any ambiguity. 3.7 It is further averred that on a perusal of the details mentioned in the satisfaction note of the Assessing Officer, it is clear that the Assessing Officer has gone through the available material carefully and recorded reasons after due application of mind. In these satisfaction notes, cogent reasons have been recorded after detailed discussion on the seized documents for invoking provisions of section 153C of the Act in respect of the assessee. 3.8 Reliance has been placed upon the decision of the Supreme Court in Commissioner of Income-tax v. Vijaybhai N. Chandrani, (2013) 35 taxmann.com 580 (SC), to contend that the writ petitions against notices issued under section 153C of the Act are not maintainable. 4. In this batch of petitions, there are in all three different groups relating to different searches. In one group of petitions, the search had been carried out in the case of HN Safal Group; in another group, the search had been carried out at the premises of Barter Group; and in the third group, the search had been carried out at the premises of V....
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....learned advocate. the amendment dated 1.6.2015 confers a new power on the Assessing Officer and is, therefore, prospective in effect and hence, could not have been made applicable in the facts of the present case when the amendment was not in force as on the date of the search. 5.1 In support of his submissions, the learned advocate placed reliance upon the decision of the Supreme Court in the case of State of Tamil Nadu v. Star Tobacco Co., (1974) 3 SCC 249, wherein the court held thus: "5. The question for decision is whether the jurisdiction to reopen is a question of procedure or power. Mr Ram Ready contended that it relates only to procedure and on that basis sought to seek support from the decision of this Court in State of Madras v. Lateef Hamid and Co., 28 STC 690. We are unable to accept this contention. In Hamid case this Court was dealing with an alleged infraction of a provision dealing with procedure. Herein we are dealing with a question of power. The question for decision is as to who had the concerned jurisdiction to reopen the assessments. Such a question cannot be considered as a question of procedure. Under the old Rules the assessee had a right to have his ....
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...., on 26-2-1960 the assessment on the accountable person had already been completed. There is a well settled principle against interference with vested rights by subsequent legislation unless the legislation has been made retrospective expressly or by necessary implication. If an assessment has already been made and completed, the assessee cannot be subjected to reassessment unless the statute permits that to be done. Reference may be made to Controller of Estate Duty, West Bengal v. Smt Ila Das, [1981] 132 ITR 720 (Cal.), where an attempt to reopen the estate duty assessment consequent upon the insertion of the new Section 59 of the Estate Duty Act was held infructuous. 9. We hold that Section 59 of the Estate Duty Act is not retrospective in operation and that the reopening of the assessment under Section 59 of the Act is bad in law." 5.3 It was submitted that the words "pertains to" or "any information relates to" have been inserted with effect from 1.6.2015 and therefore, the amendment is prospective unless made specifically retrospective. 5.4 Reference was also made to the decision of this court in the case of Kamleshbhai Dharamshibhai Patel v. Commissioner of Income Tax....
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....Bombay High Court in the impugned judgment as well. The judgment of the Gujarat High Court in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, i.e. the assessee, and, therefore, the said condition precedent for taking action under section 153C of the Act had been satisfied." 5.6 It was submitted that the relevant date for applying the amended section 153C of the Act would be the date of actual search. Reference was made to the provisions of section 292C of the Act, which provides that where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under the Act, be presumed that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person. It was submitted that once the hard-disc has been found from the premises of the searched person, considering the provisions of section clause (i) of sub-section (1) of section 292C of the Act, ....
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....e fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. It was submitted that in the facts of the present case, the proceedings under section 153C of the Act being wholly without jurisdiction, these writ petitions under article 226 of the Constitution of India are maintainable. 7. Mr. S. N. Soparkar, Senior Advocate, learned counsel with Mr. B. S. Soparkar, learned advocate for the petitioner in Special Civil Application No.18346 of 2018, submitted that the question that arises for consideration is whether the amendment of section 153C(1) of the Act with effect from 1.6.2015 is retroactive, retrospective or prospective. It was submitted that since the amendment has been made prospective, it would cover those cases where search is made after the amendment. It was submitted that on the date of search, there was no power to proceed against the petitioner under section 153C of the Act. It was submitted that if under section 153C of the Act as it stood then, the petitioner was not covered at the time of the search; the amended provisions cannot b....
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....reprinted subsequently, the word 'lie' has been defined in connection with suits and proceedings. At page 848 of the Dictionary while dealing with Topic No. 9 under the definition of term 'lie' it is stated as under: "For an action, claim appeal etc. to subsist; be maintainable or admissible." The word 'lie' in connection with the suit, claim or action is not defined by the Act. If we go by the aforesaid dictionary meaning it would mean that such suit, claim or action to get any property declared benami will not be admitted on behalf of such plaintiff or applicant against the defendant concerned in whose name the property is held on and from the date on which this prohibition against entertaining of such suits comes into force. With respect, the view taken that Section 4(1) would apply even to such pending suits which were already filed and entertained prior to the date when the section came into force and which has the effect of destroying the then existing right of plaintiff in connection with the suit property cannot be sustained in the face of the clear language of Section 4(1). It has to be visualised that the legislature in its wisdom has not expressly made Section 4 re....
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....g expanded, such an amendment cannot be regarded as clarificatory in nature and any attempt to rely upon the amended provision is impermissible. 7.3 Reliance was placed upon the decision of the Supreme Court in Commissioner of Income Tax-19, Mumbai v. Sarkar Builders, [2015] 375 ITR 392 as well as the decision of this court in Tata Teleservices v. Union of India and others, [2016] 385 ITR 497, for the proposition that whether the prospective or retrospective rule of construction should apply depends on the nature of the new statute or the amending statute. If it is purely a procedural statute and does not deal with substantive rights, then the retrospective rule of construction should apply. But where the statute deals with substantive rights, or deals with both procedural and substantive rights, then the prospective rule of construction is applicable. The court further placed reliance upon the decision of the Supreme Court in Zile Singh v. State of Haryana, (2004) 8 SCC 1, wherein the court observed that it is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operatio....
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....rovided become barred. It was submitted that what was impermissible in law because of bar of limitation would not become permissible on account of amendment, unless the amendment expressly extends the period of limitation. 7.5 Reliance was also placed upon the decision of the Supreme Court in the case Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana, (2014) 6 SCCC 444, wherein the court, in the context of section 158BD of the Act, has held that a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the record to the other Assessing Officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages:(a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. 7.6 It was submitted that while section 158BD of the Act requires satisfaction as regards undisclosed income, section 153C of the Act relates to satisf....
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....ior to its amendment, section 153C of the Act provided that satisfaction be recorded by the Assessing Officer of the searched person that any money, bullion, jewellery or other valuable article or thing or books of account or document seized or requisitioned belong or belongs to the person other than the searched person, whereas after the amendment of section 153C (1) with effect from 1.6.2015, the scheme is substituted. Before the amendment, the person in whose case the search took place and the other person to whom the material seized or requisitioned belong, were covered. Therefore, the provision gets frozen as on the date of the search or requisition and it is the law as on that date that is required to be taken into consideration and that the amended section 153C cannot be superimposed into the old scheme. It was submitted that after 1st June, 2015, a completely new scheme has been introduced as it brings completely new persons within its ambit namely that a person who could not be proceeded against is now brought into its purview and that the entire scheme in relation to assessment of person other than the person searched is changed. It was contended that therefore, the amend....
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.... proceedings and the original date of search is not given a go-bye. It was submitted that if the date on which the Assessing Officer of the other person receives the material were the relevant date, there was no need for clauses (a) and (b) in the proviso that applies to section 153C of the Act. It was submitted that there is no separate date of search insofar as the proceedings under sections 153A and 153C of the Act are concerned and that the date of search even in the case of proceedings under section 153C is the date of original search and conceptually, the date of search is only one. 9.1 Reliance was placed upon the decision of the Supreme Court in Commissioner of Income Tax v. Vatika Township P. Ltd., [2014] 367 ITR 466, for the proposition that of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force a....
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....ify whether such articles belong to the searched person or some other person. The Assessing Officer of the searched person cannot wait for the adjudication of the searched person for recording satisfaction that some of the seized material belongs to another person. 10.1 It was submitted that the search is conducted by the Investigating Officer and not the Assessing Officer and that the Investigating Officer prepares the appraisal report and sends it along with relevant seized material to the Assessing Officer, based on which the Assessing Officer conducts inquiry and frames the assessment. The time limit for submitting appraisal report is two months from the date of the last panchnama. 10.2 It was contended that the notice under section 153C of the Act is bad because the Assessing Officer of the searched person is required to hand over the material found during the search concerning (belonging to or relating to) the petitioner immediately after the search action and the receipt of documents from the Investigating Officers. Therefore, when the search took place on 4.9.2013, the law as it stood at that point of time, allowed him to hand over only the material belonging to the pet....
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....action under section 153C of the Act, such satisfaction is required to be recorded immediately after the search (or the receipt of documents from the Investigating Officers), more so, because unlike the requirement under section 158BD of the Act of "undisclosed income", under section 153C of the Act, the scope of satisfaction is narrower. The Assessing Officer of the searched person is required to only look at the material received from the Investigating Officer and such material which does not belong to the searched person but belong or belongs to other persons need to be sent to the Assessing Officer of such other persons. 10.5 It was further submitted that the time limit for assessment under section 153C of the Act read with proviso to sub-section (1) of section 153B, is a period of twenty one months from the end of the financial year in which search was conducted, or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over. Since the search was conducted in September 2013, the end of the financial year would be 31st March, 2014 and twenty one months from the end of such financial year would be 31.1....
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....tion of material in the hard disk and therefore, the impugned notice under section 153C of the Act is time barred. 11. Mr. M. J. Shah, learned advocate for the petitioner in Special Civil Application No.20081 of 2018, invited the attention of the court to the provisions of section 153C of the Act, to submit that prior to its amendment, section 153C provided that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person. It was submitted that after the amendment, section 153 provides that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any money, bullion, jewellery or other valuable article or th....
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.... - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACIT 333 ITR 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent - assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court....
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.... of suit, such an operation cannot be said to be procedural. It has also been seen that the rule against retrospective construction is not applicable merely because a part of the requisites for its action is drawn from a time antecedent to its passing. For these reasons, the rule against retrospectivity has also been stated avoiding the classification of statutes into substantive and procedural and avoiding use of words like existing or vested." "(e) Fiscal statutes Fiscal legislation imposing liability is generally governed by the normal presumption that it is not retrospective and it is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. The above rule applies to the charging section and other substantive provisions such as a provision imposing penalty and does not apply to machinery or procedural provisions of a taxing Act which are generally retrospective and apply even to pending proceedings. But a procedural provision, as far as possible, will not be so construed as to affect finality of tax assessment or to open up liability which had become barred. Asses....
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....st June, 2015, it was submitted that it has been synchronized with the date of search and it is the date of search which is the relevant point while considering the validity of the impugned notice issued under section 153C of the Act. 14. Mr. Darshan Patel, learned advocate for the petitioner in Special Civil Application No.19841 of 2018 submitted that the date of the search is the relevant date which has to be taken into consideration for applying the amendment which has been brought into effect from 1.6.2015 which is supported by the C.B.D.T. Circular No.2/2018 dated 15.2.2018, issued in the context of the amendments made in section 153A with effect from 1st April, 2017. It was pointed out that paragraph 80.5 of the said circular clearly states that the amended provisions of section 153A of the Act shall apply where search under section 132 is initiated or requisition under section 132A has been made on or after 1st April, 2017. Reliance was placed upon the decision of the Delhi High Court in the case of Canyon Financial Services Ltd. v. Income Tax Officer, [2017] 399 ITR 202 (Delhi), to submit that the court has observed that the date of search has to be taken into considerati....
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....r section 132A was executed. As per section 153B(2), the authorization referred to in clause (a) of sub-section (1) shall be deemed to have been executed in case of the search, on conclusion of search when the last panchnama is drawn in the case of search. In the present case, the last panchnama was drawn on 07/09/2013 (pg. 48 of the petition) and therefore, the time limit to pass assessment order under section 153A in case of the searched person would end on 07/06/2015 (being 21 months from 07/09/2013). The petitioner therefore places reliance on Circular No.24/2015 issued by the CBDT (which was issued after taking into consideration the Hon'ble Supreme Court's decision in the case of M/s Calcutta Knitwears) which provides guidelines for recording of satisfaction under section 158BD / section 153C. As per para-2 of the said circular, satisfaction note could be prepared at any of the following stages: [a] at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; or [b] in the course of the assessment proceedings under section 158BC of the Act; or [c] immediately after the assessment proceedings are compl....
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....case. Immediate or belated issuance of notice is a question of fact and may not be amenable to the writ jurisdiction of this court. Further, in the absence of any limitation having been prescribed under the provisions of the Act, belated satisfaction or belated notice per say will not be a jurisdictional issue. 16.2 It was submitted that there are a few petitions which are filed subsequent to the assessment order under section 153A read with section 153C of the Act being passed, which are not maintainable in view of the fact that there is an efficacious alternative remedy of appeal available against such assessment orders. 16.3 In support of her submissions, the learned counsel placed reliance upon the decision of this court in the case of Rajhans Builders v. Deputy Commissioner of Income Tax, [2014] 46 taxmann.com 34 (Gujarat), wherein the petitioner therein had challenged the notice under section 153C of the Act as well as the reference made by the Assessing Officer to the District Valuation Officer to opine on the valuation of certain immovable properties of the petitioner to ascertain the investment made by the petitioner in such properties. The court has opined that at thi....
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....ct. 16.5 Reliance was also placed upon the decision of this court in the case of Rajesh Sunderdas Vaswani v. Assistant Commissioner of Income Tax, [2016] 76 taxmann.com 311 (Gujarat), wherein the court referred to the decision of the Supreme Court in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, [2013] 357 ITR 357, and ultimately after having glanced through the appraisal report, observed that the material on record would persuade it to hold that this was not a case where the satisfaction recorded by the Assessing Officer of the searched person could be stated to be based on no material. The court held that thus, there was prima facie material to suggest that incriminating documents seized during the search belonged to the petitioner therein and refused to interfere with the pending assessments. 16.6 Reliance was also placed upon the decision of the Supreme Court in Commissioner of Income Tax v. Chhabil Dass Agarwal (supra), wherein the court has held thus: 15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the e....
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.... the petitioner recorded his satisfaction on 8.2.2018 and the notices were also issued on 8.2.2018. It was submitted that the term immediate being relative has to be read in the context of the facts of this case. In support of such submission, reliance was placed upon the decision of the Delhi High Court in Commissioner of Income-tax v. Sudhir Dhingra, [2015] 373 ITR 555 (Delhi), wherein the notice under section 158BD of the Act was issued to the assessee after expiry of five months from the satisfaction recorded by the Assessing Officer of the person searched. The court held that it could not be concluded that there was unreasonable delay in issuing the said notice and that the same was fatal to the block assessment proceedings initiated against the assessee. 16.8 It was next submitted that section 153C of the Act starts with a non obstante clause and therefore, the other provisions of the Act have no application. Furthermore, there are two mandatory requirements for issuance of notice under section 153C of the Act. Firstly, satisfaction by the Assessing Officer of the searched person that the documents belong to/relate to/pertain to, the person other than the person searched. A....
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....t behind inserting sections 153A, 153B and 153C by Finance Act, 2003, with effect from 1.6.2003, is to tax undisclosed income in the search proceedings. Therefore, once the Assessing Officers are satisfied that the documents seized belong to/pertain to/relate to the person other than the person searched and have a bearing on the determination of the total income of such other person, the provision being a machinery provision shall have to be read so as to make the charging section workable. 16.12 It was submitted that in the present case, the search entity, viz., Safal Group went before the Settlement Commission and accepted that they had accepted cash as referred to in the seized documents and that such cash is their undisclosed income. Therefore, the contention of the petitioners-assessees that they have not paid any cash is factually incorrect. In support of her submissions, the learned senior standing counsel placed reliance upon the decision of the Supreme Court in Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana (supra). Reliance was placed upon the decision of this court in Kamleshbhai Dharamshibhai Patel v. Commissioner of Income Tax-3 (supra), for the meani....
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.... was not bound by the unamended provision since the same had already been amended long before the final date for serving of notice even as per the unamended provision had expired. This is therefore, not a case where a vested right is being taken away by amendment in the statute. The notice under section 143(2) of the Act had not yet become time barred by the time amendment in the statute took place." 16.13 It was submitted that though the search was carried out on 4.9.2013, the satisfaction note was recorded by the Assessing Officer of the searched person on 25.4.2017 and the notices under section 153C of the Act were issued in February, 2018. Thus, the satisfaction note and assumption of jurisdiction under section 153C of the Act are after 1st June, 2015, that is, after the amended provision came into force. It was submitted that in the present case the assumption of jurisdiction starts subsequent to the amendment and that before the Assessing Officer of the searched person records satisfaction, there is no point at which the action is required to be taken. The date of search has no relevance for assumption of jurisdiction, and it is the date on which the notice is issued which ....
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.... of satisfaction. It was submitted that the contention of the petitioner-assessee that the point of satisfaction would be on the date of seizure is misplaced, inasmuch as, once the search takes place, the authorized officer is required to transfer the records to the concerned Assessing Officer having jurisdiction and from that point of time, the limitation prescribed in the first proviso to section 153B of the Act starts. Besides, section 153C of the Act talks about satisfaction of the respective Assessing Officers and not that of the authorized officers. 16.16 It was further submitted that when the Assessing Officer recorded satisfaction and when the notice was issued, the amendment was there on the statute book. Since section 153C of the Act is a procedural provision, it has to be construed in the manner as held by the Supreme Court in Calcutta Knitwears (supra). It was submitted that the decision of the Supreme Court in Commissioner of Income Tax v. Vatika Township (P) Ltd., (2015) 1 SCC 1, on the contrary, helps the revenue. It was submitted that as per the literal interpretation of section 153C of the Act, the amended provisions would be applicable to the facts of the presen....
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....diction and issue notices for six assessment years. The Assessing Officer thereafter analyses the data and only at the time of section 153A assessment, this satisfaction regarding belonging to would have to be recorded. It was submitted that in this view of the matter, the provisions applicable at the time of assumption of jurisdiction are relevant. It was submitted that the Settlement Commission passed the order on 1.8.2016 after the amendment came into force. This is a case where proceedings have been initiated under sections 153A and 153C of the Act and there are more than hundred proceedings under section 153C of the Act. As per the provisions of section 153C of the Act, when the details are received by the Assessing Officer of the other person, it will be the starting point. To say that it has to relate to the date of the search is factually incorrect and legally impermissible. What is relevant is as on the date when the Assessing Officer received the books, what was the position of law. It was submitted that therefore, there is no delay. Moreover, the delay is not a jurisdictional issue as no time limit is prescribed under section 153C of the Act for issuance of notice. It wa....
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....ch the search is conducted. In this case, search was conducted on 4.9.2013 and, therefore, the previous year is 2013-14. Consequently, the assessment year relevant to the previous year in which search was conducted is 2014-15. Therefore, 2008-09 to 2013-14 are the six assessment years covered for assessment under section 153A/153C of the Act. Therefore, the notices can be issued under section 153A/153C of the Act for assessment years 2008-09 to 2013-14. It was submitted that the contention raised on behalf of some of the petitioners that six years from the date when the Assessing Officer of the other person received the records may be taken into consideration and therefore, the assessment years 2010- 11 and 2011-12 were out of the purview of section 153C of the Act is not correct. 16.22 It was submitted that the first proviso to section 153C of the Act was inserted by Finance Act, 2005 with effect from 1.6.2003. The first proviso was inserted only for the purpose of counting limitation and for abatement of proceedings. It was submitted that (i) Explanatory note to the Finance Act, 2005; (ii) Memo explaining Bill 2003 and (iii) Notes on Clauses to Finance Bill 2005 explain the sam....
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....ich are jurisdictional notices, inasmuch as it is upon issuance of the notices under section 153C of the Act, that the Assessing Officer of the person other than the person searched assumes jurisdiction. In the present case, the notices under section 153C of the Act have been challenged on various grounds, but principally on a purely legal ground that as on the date of the search, the amended provisions under section 153C of the Act were not in existence and therefore, the amended provisions of section 153C of the Act which were brought into force with effect from 1st June, 2015, would not be applicable and hence, the notices issued under section 153C of the Act based on the amended provisions are without jurisdiction. 18.2 On behalf of the respondents, reliance has been placed upon the decision of the Supreme Court in Commissioner of Income Tax v. Vijaybhai N. Chandrani (supra) for contending that the present petitions are not maintainable as the same challenge the notices under section 153C of the Act. In this regard, a perusal of the said decision reveals that in the facts of the said case, the petitioners therein had directly approached the High Court against the notice under....
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....e alternative remedy has been consistently held by the court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights; or where there has been a violation of the principles of natural justice; or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the facts of the present case, main contentions raised in these petitions is that the proceedings initiated by issuance of notice under section 153C of the Act are wholly without jurisdiction. Under the circumstances, this case clearly falls within the exceptions carved out by the Supreme Court in the case of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai (supra) and hence, the contention that these petitions under article 226 of the Constitution of India are not maintainable, cannot be accepted. Moreover, as noticed earlier, there are a few petitions in which the assessment orders have already been passed. In those cases also, the petitioners have challenged the notices under section 153C of the Act on the ground of lack of jurisdiction. While against the assessment order, ther....
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....ant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. Explanation.-For the removal of doubts, it is hereby declared that, - (i) save as otherwise provided in this section, Section 153-B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153-B. Time limit for completion of assessment under Section 153-A.- (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in ....
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....money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153-A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153-A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132-A in the second proviso to section 153-A shall be construed as reference to 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. (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 fur....
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....assess or reassess the income of the other person in accordance with the provisions of section 153-A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153-A:" 19.2 Sub-section (1) of section 153C of the Act as it stands at present, reads thus: 153-C. Assessment of income of any other person.-(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153- A, then, the books of account or doc....
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....of the Act and asses or reassess his income. However, by virtue of the amendment in section 153C of the Act which was brought into force with effect from 1st June, 2015, the scope of the section was widened by providing that if the Assessing Officer of the searched person is satisfied that (a) any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; (b) or books of account or documents or documents pertain to, or any information contained therein, relate to any person other than the searched person he shall hand over the books of account or documents or assets seized to the Assessing Officer having jurisdiction over such other person. The amendment further provided that that Assessing Officer shall issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A. 19.4 Section 153C of the Act is a machinery prov....
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....t would give meaning to the charging provisions and that the machinery provisions are liberally construed by the courts; and that it is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose, the section should be liberally construed. The court has further held that wherever the intention to impose liability is clear, the courts ought not to be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. It is contended that the legislature having the clear intent to bring in persons other than the person searched within the ambit of section 153C of the Act even if the books of account or documents seized or requisitioned pertain to or any information therein relates to such other person, the amended provisions should be so construed as would effectuate the object and purpose of the statute and not defeat the same, namely to tax the total income of the assessee. 19.7 In Calcutta Knitwears (supra) the Supreme Court has held....
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....hed person, that the Assessing Officer of the searched person could record such satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C of the Act as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C of the Act have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at which the amended section 153C of the Act can be made applicable, as to whether it relates to the date of search; or the date of recording of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C of the Act. 19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 2015. Therefore, on the date of ....
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....ction 153C of the Act. 19.11 In the opinion of this court, if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in a....
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....r discussing the decisions in Principal Commissioner of Income Tax v. Super Malls (P) Limited (supra) and Commissioner of Income Tax (Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra). The essential jurisdictional requirement for assumption of jurisdiction under Section 153 C of the Act (as it stood prior to its amendment with effect from 1st June 2015) qua the 'other person' (in this case the assessees) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VSIPL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees, they did not belong to them. Therefore, one essential jurisdictional requirement to justify the assumption of jurisdiction under Section 153 C of the Act was not met in ....
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.... property escaping assessment. The provision is analogous to Section 34 of the Indian Income Tax Act, 1922 and Section 147 of the Income Tax Act, 1961. It seems to us that the new Section 59 endeavours to cover a substantially different area from that treated by the old Section 62. The only area which seems common to the two provisions relates to the "omission of any property", but it seems to us that the incidents of the power under Section 62 relate to a situation materially different from the incidents of the power contemplated under Section 59. The High Court has closely analysed the provisions of the two sections and has come to the conclusion that the power or re-assessment conferred by the new Section 59 is quite different from the power conferred by the old Section 62. We are in agreement with the High Court. The contention on behalf of the revenue based on the identity alleged between the new Section 59 and the old Section 62, and that, therefore, the new section should be regarded as retrospective cannot be accepted. 7. As it stands, there are no specific words either which confer retrospective effect to Section 59. To spell out retrospectivity in Section 59, then, the....
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.... assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment fa....
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.... or requisition under section 132A of the Act is made on or after 1st day of April, 2017. It is further stated therein that section 153C of the Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income Tax Act. It is also stated therein that thus, the amendment will take effect from 1st April, 2017. Therefore, even the CBDT, in the context of the amended provisions of section 153A of the Act, has clarified that it would apply when search or requisition is made after the date of the amendment. Evidently, therefore, even the amended provisions of section 153C of the Act would apply when search or requisition is made after the amendment. 19.20 In Commissioner of Income Tax v. Vatika Township (P) Ltd., (supra), the Supreme Court has discussed the general principles concerning retrospectivity and has observed that, of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. La....
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....mended: "This amendment will take effect retrospectively from 1st June, 2003 and will, accordingly, apply in relation to a search initiated under section 132 or in relation to books of account, other documents or any assets requisitioned under section 132A after 31st May, 2003". Thus, when the legislature thought it fit to make the amendment in section 153B of the Act relating to time limit of assessment under section 153A of the Act retrospective from a particular date, it provided that such retrospectivity would relate to cases where the search is initiated or books of account, documents or other assets are requisitioned, from such date. Thus, even the legislature has considered the initiation of search or making of requisition as the trigger point for applying the provisions of section 153B of the Act to assessment under section 153A of the Act. Under section 153C of the Act also, ultimately, assessment or re-assessment is required to be made in accordance with section 153A of the Act. Thus, when the amended provisions of section 153C (1) of the Act have been brought into force with effect from 1st June, 2015, it has to be construed that such amended provisions would apply ....
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.... limitation is a procedural law and the provision or the limitation period stipulated on the date when the suit is filed applies. (see, Mathukumalli Ramayya and Ors. v. uppalapati Lakshmayya, AIR 1942 PC 54 and C. Beepathuma v. Velasari Shankaranarayana Kadambolithaya, AIR 1965 SC 241). 9. In T. Kaliamurthi v. Five Gori Thaikkal Wakf, (2008) 9 SCC 306, it has been held as under:- "40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as also to proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the new provisions came into force. However, it must be noted that there is an important exception to this rule also. Where the right of suit is barred under the law of limitation in force before the new prov....
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.... where a vested right was being taken away by an amendment in the statute and the notice under section 143(2) of the Act had not yet become time barred by the time the amendment in the statute took place. In the facts of the present case, the legislature has specifically made the amended provisions of section 153C of the Act applicable with prospective effect from 1.6.2015. If such amended provisions are made applicable to searches carried out prior to 1.6.2015, they affect the substantive rights of persons who are brought within the ambit of section 153C of the Act by virtue of such amendment, and hence, the above decision would have no applicability to the facts of the present case. (III) WHETHER THE NOTICES UNDER SECTION 153C OF THE ACT ARE BARRED BY LIMITATION 20. Another contention raised on behalf of the petitioners is that the time-limit for assessment under section 153C read with the proviso to section 153B (1) of the Act is a period of twenty one months from the end of the financial year in which the search was conducted or nine months from the end of the financial year in which the books of account or documents or assets seized or requisitioned are handed over. It was....
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....ooks of account or documents seized or requisitioned and does not depend on the determination of the income of the searched person. 20.3 In the context of the above submission, it may be germane to refer to the definition of "undisclosed income" as defined under section 158B of the Act, which reads thus: "(b) "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false." Therefore, while section 158BD of the Act uses the expression "undisclosed income belongs to", which expression includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, section 153C of the Act employs the words "any money, bullion, jewell....
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....provide for any limitation. 20.4 Sub-section (1) of section 153C of the Act provides that after the Assessing Officer of the searched person records the requisite satisfaction that any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to or books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein relates to a person other than the person searched, he shall hand over the books of account or documents or assets seized or requisitioned to the Assessing Officer having jurisdiction over the other person, who upon recording satisfaction that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person shall issue notice and assess or re-assess the income of such other person in accordance with section 153A of the Act; whereas section 158BD of the Act provides that after the Assessing Officer of the searched person records the requisite satisfaction that any undisclosed income belongs to any person other than the person in respect of whom search was made under section 132 or whose books of account, other ....
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....note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158-BC for the completion of the assessments of the searched person under Sections 132 and 132-A of the Act or during the course of the assessment proceedings under Section 158-BC of the Act or after completion of the proceedings under Section 158-BC of the Act. 37. The Tribunal and the High Court are of the opinion that it could only be prepared by the assessing officer during the course of the assessment proceedings under Section 158-BC of the Act and not after the completion of the said proceedings. The courts below have relied upon the limitation period provided in Section 158-BE(2)(b) of the Act in respect of the assessment proceedings initiated under Section 158-BD i.e. two years from the end of the month in which the notice under Chapter XIV-B was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after 1-1-1997. We would examine whether the Tribunal or the High Court are justified in coming to the aforesaid conclusion. 38. We would certainly say that before initiating proceedings und....
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....rson, namely, S.K. Bhatia were completed on 30-3- 2005. As we have already noticed, the Tribunal and the High Court are of the opinion that since the satisfaction note was prepared after the proceedings were completed by the assessing officer under Section 158-BC of the Act which is contrary to the provisions of Section 158-BD read with Section 158-BE(2)(b) and therefore, have dismissed the case of the Revenue. In our considered opinion, the reasoning of the learned Judges of the High Court is contrary to the plain and simple language employed by the legislature under Section 158-BD of the Act which clearly provides adequate flexibility to the assessing officer for recording the satisfaction note after the completion of proceedings in respect of the searched person under Section 158-BC. Further, the interpretation placed by the courts below by reading into the plain language of Section 158-BE(2)(b) such as to extend the period of limitation to recording of satisfaction note would run counter to the avowed object of introduction of the Chapter to provide for cost-effective, efficient and expeditious completion of search assessments and avoiding or reducing long-drawn proceedings. ....
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....tation. In this regard it may be pertinent to note that that in case of the other person referred to in section 153C, the first proviso to section 153B of the Act provides for two periods of limitation. (i) The period of limitation for making assessment or reassessment referred to in clause (a) or clause (b) of that subsection; or (ii) nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person. The proviso further provides that whichever of the two periods of limitation is later shall be the period of limitation. Thus while computing the period of limitation one has to consider the period of limitation provided under clause (a) or clause (b) of sub-section (1) of section 153B of the Act, as well as the alternative limitation of nine months from the end of the financial year in which the books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later. Therefore, when the statute itself provides for an....
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....f the searched person on 2.8.2016, whereafter the said Assessing Officer recorded satisfaction on 25.4.2017, that is, after a period of more than eight months from the date of receipt of the order of the Settlement Commission. In the opinion of this court, such satisfaction can by no stretch of imagination be stated to have been recorded immediately after the assessment proceedings are over in the case of the searched person. Not only that, the Assessing Officer of the searched person handed over the record to the Assessing Officer of the other person on 25.4.2017, however, the said Assessing Officer recorded his satisfaction only on 8.2.2018, that is after a period of more than nine months from the date of receipt of the record. Therefore, the satisfaction note does not appear to have been prepared at any of the stages at which could it have been prepared in terms of the above decision of the Supreme Court. Be that as it may, since on the main issue, viz. on the question of assumption of jurisdiction of the Assessing Officer under section 153C of the Act, this court has held in favour of the petitioners, it is not necessary to dwell on the issue any further. Similarly, this court ....
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....r and setting forth such other particulars as may be prescribed and the provisions of the Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. 21.2 On a plain reading of section 153A of the Act, it is evident that the trigger point for issuance of notice under that section is a search under section 132 or a requisition under section 132A of the Act. Notice is required to be issued to the searched person calling upon him to file return of income for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, insofar as computation of the six assessment years in respect of which notice is required to be issued is concerned, the relevant date is the immediately preceding assessment year relevant to the previous year in which such search is conducted or requisition is made. 21. Accordingly, in terms of clause (b) of sub-sectio....