TaxTMI 
TaxTMI 
2020 (2) TMI 262
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....s of the case, the Ld. CIT(A) has erred in holding that no addition can be done u/s 153C in the case of completed assessment, if no incriminating document has been found during search." 2. Briefly the facts of the case are that return of income was filed originally on 21.09.2010 declaring NIL income. The same was processed under section 143(1) of the I.T. Act, 1961. A.O. issued notices under sections 143(2) as well as 142(1) of the I.T. Act, 1961. The A.O. noted that search and seizure operation under section 132 of the I.T. Act, 1961 was carried out in Raj Darbar Group of Cases on 31.07.2008. The assessee was incorporated on 15.03.2004. During the year under consideration, assessee has claimed deduction of Rs. 2,58,07,534/- under section 80IA of the I.T. Act, 1961 which A.O. has denied and made the addition. The assessment was completed under section 143(3) of the I.T. Act, 1961, Dated 18.03.2013. 2.1. The assessee challenged the addition on merits before the Ld. CIT(A) and also taken additional ground of appeal stating therein that A.O. has erred in assessing the assessee without satisfying the substantive and procedural requirement under section 153C of the I.T. Act, 1961 ....
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....an the searched person, i.e., 20.07.2010 in this case; (ii) accordingly, the AO was required to make assessment u/s 153C, in the manner as mentioned in S.153A of the Act, for the AYs 2005-06 to 2010-11 in terms of the 'date of satisfaction', i.e. 20.07.2010, and not AYs 2003-04 to 2008-09 in accordance with the date of search in the Rajdarbar group of cases as has been done by the AO (in fact assessments were made for AYs. 2005-06 to 2008-09 since the appellant firm was registered on 15.03.2004); (iii) the assessment/reassessment pending on that date (20.07.2010) would abate, and in respect of such assessments which have abated the AO would have the jurisdiction to proceed and make an assessment; (iv) however, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possibility of any income that may have remained undisclosed in the relevant assessment years; (v) for the purpose of making assessments or reassessments u/s 153C the Act, the AO of the searched person has to necessary record a satisfaction to the effect that ....
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....y 'satisfaction' for this assessment year in the case of the appellant nor did he make the assessment u/s 153C of the Act, rather the assessment has been made u/s 143(3) of the Act without recording the mandatory 'satisfaction'. The assessment order is, therefore, not sustainable on this account itself. 4.1.6. I may, however, make mention of the fact that S.153A and 153C of the Act are special provisions for assessment or reassessment emanating from search u/s 132/132A of the Act, and the period after the date of search are to be assessed under the normal provisions of the Act. In terms of the provisions of the 1st Proviso to s. 153C of the Act the date of handing over the seized books/documents/assets, or the date of satisfaction in case the AO is the same as that of the searched personT (hereinafter referred to as the "specified date") shall be construed as the date of search for the purposes of 2nd Proviso to s. 153A(1), meaning thereby that the assessments pending as on the 'specified date' shall abate, and in terms of the principle laid down in Kabul Chawla (supra) and RRJ Securities Ltd. (supra) the completed assessments as on the specified date' (and not the date of....
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...., rather the assessment has been made u/s 143(3) after issue of notice u/s 143(2) of the Act without recording the mandatory 'satisfaction'. The assessment order is, therefore, not sustainable on this account itself and held to be ab initio void." 3. The Ld. D.R. relied upon the Order of the A.O. and submitted that since it was not year of the search, therefore, A.O. correctly framed the assessment under section 143(3) of the I.T. Act, 1961. He has referred to comments of the A.O, in which, A.O. has highlighted that in previous years i.e., A.Ys. 2005-2006 to 2009-2010, the Ld. CIT(A) has decided the appeals in favour of the Revenue and the Ld. CIT(A) while deciding the appeal of the assessee for the A.Y. 2010-2011 under appeal has not considered the decision given by his predecessor in A.Ys. 2005-2006 to 2009-2010. Therefore, the Ld. CIT(A) has given a contrary findings. 4. On the other hand, Learned Counsel for the Assessee, reiterated the submissions made before the authorities below and submitted that though search has taken place under section 132 of the I.T. Act, 1961 on 31.07.2008, the documents were handed over on or the satisfaction by the A.O. of the assessee was rec....
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....l 2010-2011 would be governed by the provisions of Section 153C of the I.T. Act, 1961. Since no satisfaction note have been recorded for the assessment year under appeal i.e., 2010-2011, therefore, A.O. was not justified in passing the Order under section 143(3) of the I.T. Act, 1961. In preceding A.Y. 2009-2010 similar view have been taken by Hon'ble Delhi High Court in the case of assessee and a specific question as noted above have been considered by the Hon'ble Delhi High Court and it was held as under : "Where in course of search carried out at premises of a third person, a hard disk was seized and on basis of same proceedings under section 153C were initiated against assessee, since Assessing Officer of searched person failed to record a specific satisfaction as to how said hard disk belonged to assessee, impugned proceedings under section 153C were unjustified." 6. The ITAT, Delhi A-Bench in the case of M/s. BNB Investment & Properties Ltd., Gurgaon vs., DCIT, Central Circle-1, Faridabad and Shri Ranjan Gupta, New Delhi vs., DCIT, Central Circle-1, Faridabad in ITA.Nos.504 & 503/Del./2015 vide Order Dated 27.06.2018 reported in 68 ITR 567 (Delhi-Tribunal) held as....
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....e Ld. CIT(A). However, appeal of the assessee has been dismissed. 3. Assessee in the present appeal, challenged the validity of the proceedings under section 153C of the I.T. Act and addition of Rs. 3 crores. The assessee also moved an application for admission of additional grounds in which assessee raised the following additional grounds : 1. Additional Ground No. 1 "That under the facts and circumstances, in the absence of issuance and service of notice U/s. 153 C r/w. Sec. 153A of the I.T.Act, the jurisdiction for framing the impugned Asstt. has been wrongly assumed, hence, the impugned Asstt. is without jurisdiction, illegal and unsustainable in law." Additional Ground No. 2 "That without prejudice, As the seized documents in search of a 3rd party have been received by the AO of the assessee on 29.08.2013, therefore, in view of Sec. 153C(1) (first proviso), the search year is A.Y. 2014-2015 and not impugned A.Y. 2012-2013, hence, in case, if impugned Asstt. has been framed U/s. 153 B (1) (b) treating A.Y. 2012-2013 as the search year, the whole Asstt. Proceedings stands vitiated in law and unsustainable because the A.Y. 201....
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.... the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., (1998) 229 ITR 383 (SC) held that "the Tribunal could decide the appeal on a ground neither taken in the Memorandum of Appeal nor by seeking its leave. The only requirement was that the Tribunal could not rest its decisions on any other ground unless the party who might be affected had sufficient opportunity of being heard given on that ground. Therefore, the Tribunal ought to have exercised its discretion in view of the fact that assessee intended raising only a legal argument without reference to any disputed question of facts." 5.1. Considering the issue in the light of the fact that additional grounds are legal in nature and shall have bearing on the validity of the assessment proceedings, therefore, the same is admitted for the purpose of disposal of the appeal. 5.2. Learned Counsel for the Assessee submitted that search was conducted in the case of M/s Krrish Group of cases on 09.11.2011. A survey u/s 133A of the Act was also carried out on 22.11.2011 at the business premises of the Assessee-Company and its Director. The seized/impounded documents in the group were received by the A.O....
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.... case of PavitraRealcon Pvt. Ltd., New Delhi vs. ACIT, Central Circle-32, New Delhiin ITA.Nos. 3185, 3186 & 3253/Del./2015 dated 04.10.2017. He has also referred to Memorandum explaining Finance Bill 2017 in which it is provided that "Amendment in Section 153C shall apply in respect of search conducted or requisition made on or after 1st day of April, 2017." 6. On the other hand, Ld. D.R. submitted that Section 153A(1) deals with the years of reopening in the case of search proceeding and as per Section 153C(1) after the satisfaction, the A.O. shall proceed in accordance with provisions of Section 153A(1) of the I.T. Act. Section 153A(1)(b) is very clear that "A.O. shall assess or re-assess the total income of 06 assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted". No where the Section contains the word "Date of initiation of the Search" which are referred to by the First Proviso to Section 153C of the I.T. Act. Hence, the First Proviso to Section 153C of the I.T. Act is only referring to the abatement of the existing proceedings mentioned in the Second Proviso to Section 153A(1) of the I.T. Act, as clearly....
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....ch other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment....
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....sessments or reassessments could be made under section 153C of the Act would also have to be construed with reference to the date of handing aver of assets or documents to the Assessing Officer of the assessee. The amendment in section 153C of the Act by the Finance Act, 2017 with effect from April 1, 2017 to the effect that the Block Period for the person in respect of whom the search was conducted as well as the "other person" would be the same six assessment years immediately preceding the year of search is prospective. A search under section 132 of the Income-tax Act, 1961 took place on November 11,2010 in the T group of cases. The documents pertaining to the assessee were forwarded along with a satisfaction note by the Assessing Officer of the party in respect of which the search was conducted to the Assessing Officer of the*assessee on January 3, 2013. The Assessing Officer of the assessee issued notice to the assessee under section 153C of the Act on January 4,2013 for the assessment year 2006-07. The Tribunal held that the notice issued to the assessee under section 153C of the Act for the assessment year 2006-07, was without jurisdiction since the assessm....
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.... the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong....
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....sment for assessment year 2003-04 as outside the scope of section 153C of the Act, being barred by limitation and without jurisdiction. Accordingly, the impugned assessment order is liable to be quashed. We decide accordingly." 7.3. The ITAT, Delhi, C-Bench, in the case of Pavitra Realcon Pvt. Ltd., New Delhi vs. ACIT, C.C.32, New Delhi (supra) under the same circumstances held that "assessment completed under section 143(3) is invalid". The relevant para-16 of the order is reproduced as under : 16. "We find the year for which the impugned assessment order has been passed u/s 143(3) is for assessment year 2011-12. This year falls within the period of six years when counted from the date of recording of satisfaction note u/s 153/153C of the I.T. Act which is deemed date of search. The Act h as been amended recently by the Finance Act, 2017 with prospective effect i.e., from assessment year 2018-19. Thus, the period is same now only for the searched parties as well as the other person as per the amended provisions of the said section. In view of the above, we hold that the assessment completed u/s 143(3) is invalid." 8. It is not in dispute that search was ....