TaxTMI 
TaxTMI 
2020 (7) TMI 152
X X X X Extracts X X X X
X X X X Extracts X X X X
...."1. On the facts and the circumstances of the appellant's case and in law the learned CIT(A) erred in holding that the A.O has legally assumed jurisdiction u/s 153C despite the fact that no money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to the appellant and no books of accounts or documents seized or requisitioned pertains or pertain to or any other information contained therein relates to the appellant. 2. On the facts and the circumstances of the appellant's case and in law the learned CIT(A) erred in holding A.O's action of treating the statement of Shri. Suraj Parmar as the document belonging to the appellant. 3. On the facts and the circumstances of the appellant's case and in law the learned CIT(A) erred in rejecting/dismissing following two original grounds of appeal raised before him: "(a). On the facts and the circumstances of the appellant's case and in law the learned Assessing Officer erred in not providing the back up/soft copy of the unaccounted tally data seized from the premises of Cosmos Group. (b). On the facts and the circumstances of the appellant's case and in law the learned Asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... [email protected]. The pen-drive would thereafter be discarded and the entire data only remained in the e-mail system. The contents of the MS-excel sheets being attachments of e-mails found from the e-mail id [email protected] during the course of the search proceedings were printed and seized by the department as Annexure "A-1" [Pages 1-195]. Similarly, the contents of the e-mails found from the e-mail id [email protected] were printed and seized as Annexure "A-2" [Pages 1-73]. 4. During the course of the search proceedings Shri. Suraj Parmar, promoter of Cosmos group was asked to explain one of the attachment file viz. "Jewels wrkng up to 31.08.14.xls" appearing in the email [email protected] that formed part of the seized document viz. Annexure A-1. In reply, it was stated by him that the aforesaid attachment file contained information as regards the unaccounted cash sales of a project viz. "Cosmos Jewels" containing the buildings named Sapphire I, Sapphire II, Solitaire I, Solitaire II, Ruby I and Ruby II that were constructed by the Cosmos group in Joint venture with the assessee company viz. M/s Riddhi Siddhi Developers Pvt. Ltd which was the owner of the plo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments belonging to the assessee were seized in the course of the search proceedings conducted on Cosmos group on 24.09.2014, therefore, no jurisdiction under Sec. 153C could have validly been assumed by the A.O in its case. 6. Observing, that the A.O had issued the notice under Sec. 153C dated 13.10.2016 which was received by the assessee on 22.10.2016, the CIT(A) was of the view that as the A.O had assumed jurisdiction in the case of the assessee under Sec. 153C in October, 2016, therefore, the post-amended provisions of Sec. 153C i.e which had come into effect from 01.06.2015 would be applicable in its case. On the basis of his aforesaid conviction the CIT(A) concluded that if the A.O was satisfied that any money, bullion or jewellery or other valuable article or thing, seized or requisitioned, belongs to; or books of account or documents, seized or requisitioned pertains to or any information contained therein relates to a person other than the person referred to in Sec. 153A, then the conditions for assuming jurisdiction under Sec. 153C stood satisfied. In fact, the CIT(A) observed that in a case under Sec. 153C reference to the date of initiation of search u/s 132 was to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-amended provisions (i.e applicable w.e.f 01.06.2015) as is the claim of the revenue. As observed by us hereinabove, the assessee drawing support from the pre-amended provisions of Sec. 153C (i.e applicable prior to 01.06.2015), had claimed, that the A.O had wrongly assumed jurisdiction under Sec. 153C of the Act, despite the fact that no money, bullion, jewellery or other valuable article or thing or any books of accounts or documents belonging to the assessee were seized in the course of the search proceedings conducted on the Cosmos group. Rebutting the aforesaid claim of the assessee, the CIT(A) was of the view that as per Sec. 153C as the date of search would be the date of requisition of material by the A.O, which in the present case had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C, i.e which had come into effect from 01.06.2015 would be applicable. Accordingly, on the basis of his aforesaid conviction the CIT(A) had concluded that as the 'material' received by the A.O on the basis of which notice under Sec. 153C was issued related to the assessee, therefore, the notice therein issued was perfectly valid and legal. 8. Before advertin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the same would suffice for assumption of jurisdiction by the A.O under Sec. 153C of the Act. Insofar the case before us is concerned, as observed by the CIT(A), the information/material which was received by the A.O and had formed the basis of recording the 'satisfaction note' and issue of notice under Sec. 153C did not belong to the assessee but related and pertained to it. The observations of the CIT(A) are reproduced as under: "5.4.1 The Act is very clear that in a case u/s 153C reference to the date of initiation for search u/s 132 shall be considered a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the Ld. A.O having jurisdiction over such other person. There is no ambiguity in the provisions of Sec. 153C. The date of search would be the date of requisition of material by the Ld. A.O., in this case it is in October,2016. Therefore, the section which is in vogue clearly demonstrates that the material has to pertain or relate to the person and not just belonging to the person. Therefore, I have no hesitation in stating that the information which was received by Ld. A.O on the basis of which notice u/s 153C has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shri. Suraj Parmar, in the project Cosmos Jewels containing the building named Sapphire I, Sapphire II, Solitaire I, Solitaire II, Ruby I and Ruby II, the plot on which these buildings were made belonged to M/s Riddhi Siddhi Developers Pvt. Ltd. and this project was constructed vide a joint venture between Cosmos Group and M/s Riddhi Siddhi Developers Pvt. Ltd. Shri Suraj Parmar further stated that as per the terms of the JV, the Cosmos Group would give 40% of the sale component , both cash and cheque to M/s Riddhi Siddhi Developers Pvt. Ltd. and none of the cash component of the project formed part of the regular books of accounts nor was offerd to tax from the project. In view of the above facts, in order to examine whether M/s Riddhi Siddhi Developers Pvt. Ltd. whose key person is Shri Bharat Jhunjhunwala had offered the revenue of cheque and cash component received from Cosmos Group on sale of flats/shops in the project, Cosmos Jewels, a separate file was opened in the case of M/s Riddhi Siddhi Developers Pvt. Ltd. Summons u/s 131 of the IT. Act was issued to M/s Riddhi Siddhi Developers Pvt. Ltd., asking to file certain details. In response to the notice u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the A.O under Sec. 153C on the basis of impugned information pertaining to or relating to the assessee in the documents seized during the course of the search proceedings conducted on Cosmos group would be well in order under the postamended provisions (i.e as applicable w.e.f 01.06.2015), however, we are afraid that de hors the 'belonging' of such seized documents by the assessee, the A.O could not have validly assumed jurisdiction under the pre-amended Sec. 153C (i.e prior to 01.06.2015). Our aforesaid view is fortified by the following judicial pronouncements: (i). CIT Vs. Arpit Land (P) Ltd.(2017)78 393 ITR 276 (Bom) : It was observed by the Hon'ble Jurisdictional High Court that as per the preamended Sec. 153C of the Act (i.e prior to 01.06.2015), the proceedings could only be initiated against the assessee i.e a person other than the person searched, only if the document seized during the course of the search proceedings belonged to such other person. It was observed by the Hon'ble Jurisdictional High Court, as under: "6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the respondent - assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic. 8. In view of the above reasons and particularly the finding of fact that seized document which forms the basis of the present proceedings, do not belong to the petitioner and the same not being shown to be perverse, the question as raised does not give rise to any substantial question of law and thus not entertained." (ii).PCIT(Central)-2 Vs. Index Securities Pvt. Ltd. (2017) 86 taxmann.com 84 (Delhi) It was observed by the Hon'ble High Court of Delhi that the essential jurisdictional requirement for assumption of jurisdiction under Sec. 153C of the Act (as it stood prior to its amendment with effect from 1st June, 2015) qua the 'other person' was that the seized document forming the basis of the 'satisfaction note' must not merely 'pertain' to the other person but must belong to the 'other person'. O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eets 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 the case of the two Assessees." (iii). PCIT Vs. Vinita Chaurasia (2017) 394 ITR 758 (Del) : Adopting a similar view, the Hon'ble High Court of Delhi had observed that as per the pre-amended Sec. 153C (i.e prior to 01.06.2015), it was obligatory on the part of the revenue to show that the document seized during the course of the search proceedings belonged to the assessee i.e a person other than the person searched, and it was not open for the revenue to point out that the document in question pertained to or related to the assessee. It was observed by the Hon'ble High Court, as under: 16. At the outset, it requires to be noticed that the search in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asons or basis for the conclusion that the Assessing Officer of the searched person was satisfied that the seized documents belonged to a person other than the searched person. The Hon'ble High Court while concluding as hereinabove, held as under : "5. We have considered the submissions made by the counsel for the parties. Before proceeding any further it would be necessary to set out the relevant provisions of the said Act as applicable to the assessment years under consideration:- "153C. (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 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 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 pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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, it may be presumed- (i) That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; xxxx xxxx xxxx xxxx" "292C.(1) 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 this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to su....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction". 7. This would be the appropriate stage to consider the decisions referred to by the learned counsel for the Revenue. The decision referred to in Kamleshbhai Dharamshibhai Patel (supra) is of no relevance insofar as the present case is concerned. In that case certain documents were said to have belonged to the petitioners therein but a plea had been taken that as the land, in relation to which the documents were, no longer belonged to the petitioners therefore the said documents could not be regarded as belonging to the petitioners. That is an entirely different situation and the facts of that case are clearly distinguishable from the facts of the present case. Insofar as the decision of the Allahabad High Court in Classic Enterprises (supra) is concerned, we are, with respect, unable to agree with the observations that as the proceedings are at the very initial stage the "satisfaction" is neithe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11-12 02.08.2013 Satisfaction Note for issue of Notice u/s 153C of Income Tax Act, 1961 in the case of M/s Pepsi Foods Pvt. Ltd, for the Assessment Years 2006-07 to 2011-12. Satisfaction Note A search and seizure operation u/s 132(1) of the I.T. Act was carried out at the various premises of M/s Jaipuria Group on 27.03.2012. The group is also into various other business viz. Raymond Retail franchisee, real estate and construction, fast foods, mining, education, ayurvedic products, information technology and medical services. One of the major allegations against the Jaipuria Group is that the assessee group in order to reduce its taxable profit indulged in enhancing the cost of raw material purchased. On examination of the accounts of various concerns, it is noticed that raw material are procured from fixed vendors. Since bulk purchases are made, rates should have been lower. However raw material are being procured on a high rates resulting in lower taxable income. The bottler shall buy all units of concentrate required for the manufacture f the beverage from PFL (Pepsi Foods Ltd.), or a manufacturer approved in writing by PFL (Pepsi Foods Ltd.) at a price and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Delhi" 11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "I am satisfied" in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any "satisfaction" of the kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to a person other than the person referred to in section 153A ...." In view of this phrase, it is necessary that before the provisions of Section 153C of the said 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 Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the 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. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is establi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case of such other person under Sec. 153C would be satisfied. In sum and substance, the CIT(A) held a conviction that as in a case under Sec. 153C the reference to the date of initiation of search u/s 132 shall be considered as a reference to the date on which the A.O having jurisdiction over the person other than the searched person had received the books of accounts or documents or assets seized or requisitioned, which in the case before him had taken place in October, 2016, therefore, the post-amended Sec. 153C (i.e as amended w.e.f 01.06.2015) would be applicable. We have given a thoughtful consideration to the aforesaid observations of the CIT(A) and are unable to persuade ourselves to subscribe to the same. In fact, we find that a similar issue had came up before the Hon'ble High Court of Gujarat in AnilKumar Gopikishan Agrawal Vs. CIT (2019) 418 ITR 25 (Guj). In the backdrop of its exhaustive deliberations the Hon'ble High Court concluded that it is the date of search that has to be considered to be the relevant date for the purpose of applying the amended provisions of Sec. 153C(1) of the Act, observing as under: " The moot question that arises for consideration i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions 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 that section 158-BD of the Act is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson. 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 the search, the Assessing Officer of the person searched could only have recorded satisfaction to the effect that the seized material belongs or belong ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 any another case after the coming into force of the amended provisions." Accordingly, respectfully following the aforesaid view taken by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) cannot be sustained and is liable to be vacated. At the same time, as the seized document jewels wrkng up to 31.08.2014.xls" admittedly does not 'belong' to the assessee, therefore, the jurisdictional requirement to justify the assumption of jurisdiction under the pre-amended Section 153C of the Act (i.e prior to 01.06.2015) is not found to have been satisfied. In the backdrop of our aforesaid observations, the assumption of jurisdiction by the A.O under Sec. 153C is vacated for want of jurisdiction. 13. As we have quashed the assessment framed by the A.O under Sec. 153C r.w.s 143(3) for want of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the assessee insofar the merits of the case are concerned, which thus are left open. 14. The appeal of the assessee is allowed in terms of our aforesaid observations. A.Y 2014-15 ITA 647/Mum/2018 15. We shall now advert to the appeal of the assessee for A.Y 2014-15. The impugned order has been assailed on the following grounds of appeal before us : "1. On the facts and the circumstances of the appellant's case and in law the learned CIT(A) erred in holding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the CIT(A) has carried the matter in appeal before us. As the facts and the issue involved in the present appeal of the assessee remains the same as were there before us in its appeal for A.Y 2013-14 in ITA No. 646/Mum/2018, therefore, our order therein passed while disposing off the appeal of the assessee for A.Y 2013-14 shall apply mutatis mutandis for disposing the present appeal for A.Y 2014-15 in ITA No. 647/Mum/2018. Accordingly, the order passed by the CIT(A) is set aside and the assessment framed by the A.O under Sec. 153C r.w.s 143(3), dated 29.12.2016 is vacated on the same terms. 19. The appeal filed by the assessee is allowed in terms of our aforesaid observations. 20. Resultantly, the appeals filed by the assessee for A.Y 2013-14 in ITA 646/Mum/2018 and A.Y 2014-15 in ITA No. 647/Mum/2018, are allowed in terms of our aforesaid observations. 21. Before parting, we may herein deal with a procedural issue that though the hearing of the captioned appeal was concluded on 10.01.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income-tax Appellate Tribunal Rules, 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before us was necessitated by any "extraordinary" circumstances. 22. We find that the aforesaid issue after exhaustive deliberations had been answered by a coordinate bench of the Tribunal viz. ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai Vs. JSW Limited & Ors. [ITA No. 6264/Mum/18; dated 14/05/2020, wherein it was observed as under: "Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. The epidemic situation being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more d....