TaxTMI 
TaxTMI 
2020 (11) TMI 168
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....ome Tax Act, 1961 for the concerned assessment year is bereft of jurisdiction for not being based on any such incriminating material found during the course of the search conducted at the premises of the "searched person" i.e., Mani Group on 22.06.2016. 2. That the Ld. A.O. has erred in making and the Ld. CIT(A) has erred in upholding the impugned additions when no such incriminating material qua the concerned assessment year has been found during the course of the search conducted at the premises of the "searched person" i.e., Mani Group on 22.06.2016 to warrant any such addition u/s 153C of the Income Tax Act, 1961. 3. That the Impugned Order passed u/s. 143(3)/153C of the Income Tax Act, 1961 is void ab initio and against the settled law decided by Hon'ble Supreme Court in the case of Sinhgad Technical Education Society(2017) 397 ITR 344 (SC). 4. That, without prejudice to the above grounds, the Ld. A.O. and the Ld. C.I.T.(A) have erred in sustaining the impugned addition of Rs. 50,00,000/-as a bogus donation incomplete ignorance of the documents evidencing the valid donation of Rs. 50,00,000/- received from Parthiba Holding Pvt. Ltd. after observing all legal norms as....
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.... law as stipulated u/s. 153C of the Act, so according to assessee the action of AO is ab-initio void. Without prejudice to the above legal challenge, the second challenge (ground nos. 4 to 6) are against the action of the AO to have made the addition of Rs. 50 lakhs without any incriminating material seized from the third party premises where search was conducted on 22.06.2016 and for having erroneously relied upon the statement of Shri C. K. Ladia recorded u/s. 131 of the Act which was admittedly recorded behind the back of the assessee during survey dated 23.09.2016 u/s. 133A of the Act and that too without furnishing a copy of the statement to the assessee before framing of reassessment and relying upon the same for making the addition without affording opportunity to the assessee to cross examine Shri Ladia. The third challenge (ground no. 8, there is no ground no 7, wrongly numbered) is against the action of Ld. CIT(A) to have erroneously assumed that M/s. Parthiba Holding Pvt. Ltd. (donor of donation of Rs. 50 lacs) has disclosed the amount donated to assessee (Rs. 50 lakhs) under the Income Disclosure Scheme 2016 (IDS Scheme 2016). Thus, from the aforesaid discussion, we not....
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....ed that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years] : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : II. Assessment in case of any other persons 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,- (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 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed ove....
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....) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. 5. We note that Section 153A/153C of the Act was introduced by Finance Act, 2003 w.e.f. 1.6.2003. It replaced the provisions relating to block assessment contained in Chapter XIVB and introduced the new procedure for making assessment u/s. 153 of the Act, which is now a part of Chapter XIV of the Act, "Procedure for Assessment" and contains provisions from section 139 - 158A of the Act. The sub-heading of Section 153A of the Act is "Assessment in case of Search or requisition" which is a special provision for assessment in case of an assessee against whom search u/s. 132 or requisition under section 132A of the Act is carried out by the department; Section 153B of the Act presc....
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....record his satisfaction that the money, bullion, jewellery or other valuable articles or things seized or requisitioned belongs to the other person (third party, the assessee foundation in this case) or any books of account or documents seized or requisitioned pertains to the other persons (third party, the assessee in this case) or any information contained therein relates to the other person (third party, the assessee in this case), then the AO of the searched person has to prepare a satisfaction note that during the search u/s. 132 of the Act of a person (Mani Group in this case), the search team has found/un-earthed money, bullion, jewellery or valuable articles or things, which were seized and the AO has found that among the such seized material, certain specific valuable article or thing belongs to a third party (other person as referred in section 153C of the Act who was not searched and in this case, the assessee) or books of account or documents seized contained information, pertained or relates to that of the other person (third party in this case the assessee), and for recording such a satisfaction note the AO of the searched person has to segregate the seized material o....
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.....f 01.10.2014 which reads "and that assessing officer shall proceed against each such other person and 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". [Emphasis given by us] 8. Thus, we note that by the aforesaid amendment brought in section 153C of the Act, the Parliament has stipulated another condition-precedent before the Assessing Officer of the third party, (i.e, the assessee in this case) can resort to issue notice u/s 153C read with 153A of the Act only when he (AO) is satisfied from a perusal of the books of account or documents or assets seized or requisitioned have a bearing in the determination of the total income of the such other person (third party, the assessee in this case) then he should proceed as per sec. 153C(2) of the Act and assess or reassess the total income of such other person, (the assessee in this case )in the manner provided in section 153A of the Act. So in this case before us, since the AO of....
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....ction' and the same interpretation has been given by various courts. [refer 55 [2019] taxmann.com 202 (Gujarat) PCIT v. Himanshu Chandulal Patel (Para 20, 21)]. 10. It is noted from the scheme of the Act u/s. 153A of the Act, the Assessing Officer gets jurisdiction to assess six assessment years prior to the previous year on which search is conducted. The assessment under section 153A of the Act can be broadly divided in two categories, one is in respect of "completed assessment" on the date of search by the AO already made under section 143(3)/147/153A/153C and will also cover those years which period of notice u/s. 143(2) of the Act has expired and only processing of return u/s. 143(1) of the Act has been made. The second category "Pending Assessment" is related to the years for which the assessments are pending before the AO on the date of search meaning notices have been issued by the AO u/s. 143(2)/ 148 have been issued. For determining the abated/unabated assessment the date of search is significant since as per second proviso to Section 153A of the Act, if any, assessment year falling within the period of six assessment years of an assessee who has been subjected to sea....
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....h the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. v....
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.... 153C of the Act, the reference to the date of initiation of the search in the second proviso to Section 153A has to be construed as the date on which the AO receives the documents or assets from the AO of the searched person. Thus, by virtue of second proviso to Section 153A of the Act as it applies to proceedings under Section 153C of the Act, the assessment/reassessment pending on the date on which the assets/documents are received by the AO would abate. In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. 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. This Court in CIT v. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) has held that completed assessments could only be interfered with by the AO on the basis of any incriminating material unearthed during the course of the search or requisition of the documents. In absence of any incriminating material, the AO does not have any j....
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.... AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.' 22. The aforesaid principles would be equally applicable to proceedings initiated under Section 153C of the Act as Section 153C(1) of the Act expressly provides that once the AO has received "money, bullion, jewellery or other valuable articles or thing or books of account or documents seized" from the AO of the searched person, he would proceed to assess or reassess the income of the person to whom such assets/books belong in accordance with Section 153A of the Act. 23. In the present case, the Assessee had claimed that the assessments for the concerned assessment years were not pending on the date of recording of satisfaction by the AO and, therefore, would not abate by virtue of the second proviso to Section 153A of the Act. Further, the period of six years would also have to b....
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....in, learned Advocate appearing for the assessee, submitted as follows: (a) The assessment under section 153C read with section 153A read with section 144 of the Income Tax Act was altogether without jurisdiction because such assessment was made for all the five years on the basis of survey conducted under section 133A of the Income Tax Act. He submitted that the power under section 153C read with section 153A cannot be exercised on the basis of any discovery made during survey under section 133A. (b) His next submission was that in any event, during the survey, no incriminating material was found which may have led the revenue to exercise power under section 153C read with section 153A. 4. He contended that even when assessment is made on the basis of a search under section 132 or a requisition made under section 132A, the power can only be resorted to provided any incriminating material is found. Existence of incriminating material is necessary before exercising power under the aforesaid sections. He, in support of his submission, relied upon the words "have a bearing on the determination of the total income of such other person". If the search or requisition did not unearth....
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....are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. 9. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. 10. We find no infirmity in the aforesaid act of the learned Tribunal. The appeal is, therefore, dismissed."(emphasis supplied) 13. In the light of the aforesaid discussion and case laws let us examine the legal issue raised before us. In order to test the validity of the jurisdiction of AO to legally usurp the jurisdiction u/s. 153C against a third party who has not been searched as well as to test whether Assessing Officer satisfied the condition-precedent before issue of notice u/s. 153A read with Section 153C of the Act, we need to examine the 'satisfaction note'. We have to examine the 'Sat....
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....ded by the AO. This analogy/ratio decidendi of the Hon'ble High court is applicable to the 'Satisfaction- Note' prepared by the AO when he recorded his satisfaction note in respect of a third person (assessee in this case) against whom he/AO proposed to invoke the special provision and issue notice under section 153C of the Act. For that the AO of the searched person (Mani Group in this case) is duty bound to record his satisfaction that during search conducted on those persons, the third party (assessee's) assets which belongs to it (assessee) or documents pertained/relates to the third party/ other person/assessee as envisaged in section 153C of the Act was seized and therefore need to be proceeded against the said party(assessee in this case). The Satisfaction Note spelling out these facts are sine qua non for usurping the jurisdiction u/s. 153C of the Act and an additional condition precedent is required to be satisfied by the AO of the assessee w.e.f. 01.10.2014 which has been discussed (supra) by virtue of Finance Act, 2014, (refer para 8 supra) which is required to be satisfied before the AO of the assessee issue notice u/s. 153C of the Act i.e. these assets/documents seize....
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....f which form part of the books of accounts of the Appellant for the said FY. In order to substantiate/corroborate this fact, the Ld. AR drew our attention to the documents below: 1. The ledger copies of the Appellant Society for the period between 19.12.2013 to 28.03.2014 (copies of which are found placed at Annexure W of the Paper Book at Pgs.117- 119). 2. Bank statements of the Appellant evidencing the receipt of the said donations from the various parties during the said period (copies of which are attached herewith at Annexure 0 of the Paper Book at Pgs. 120-137). 3. We have carefully examined the ID-MSL/3, and we find that this is the contribution/donation receipt book of assessee for the AY 2014-15 and this material is counterfoils of the money receipts issued to the donors and the all of which form part of the books of account of the assessee for AY 2014-15 and cannot be called as a new discovery of material during search and so cannot be termed as incriminating material. 2 ID Marked MSL/4 (copy of which are attached herewith at Annexure L of the P.B at Pgs 109A(46)-109A(78) We note that these materials are described in the Panchnama dt. 23.06.2016 as 'A contributi....
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....erewith at Annexure S of the Paper Book at Pgs.145-169). 3. We have carefully examined the ID-MSL/5, and we find that this is the contribution/donation receipt book of assessee foundation for the AY 2014-15 and this material is counterfoils of the money receipts issued to the donors and the all of which form part of the books of account of the assessee for AY 2014-15 and cannot be called as a new discovery of material during search and so cannot be termed as incriminating material. 15. From a perusal of the aforesaid finding of fact it can be seen that these documents are in no way related to AY 2016-17 and so it cannot be termed as incriminating material for AY 2016-17[we will discuss in detail (infra) about AY 2016-17]. Further from the perusal of the aforesaid chart, wherein we have discussed about each seized material (ID MSL- 3/4/5) which according to AO was of incriminating nature qua the assessee qua AY 2014-15 and we have given our finding of fact based on corroborative material/evidence mentioned therein; and so from the aforesaid finding, it is clear that the assessee has received donation from several entities, which fact has been duly recorded in its books of account ....
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....document-wise with the assessment year in question. In other words, the tribunal concluded that the present matter indicates that the issue of notice could be on the basis that there is specific incriminating information in possession of the Assessing Officer. It is in these circumstances that the tribunal found and as indicated in paragraph 8 of the impugned order that the revenue's assertion that the Assessing Officer is empowered under the statute to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted and therefore the satisfaction which is recorded in the satisfaction note is enough, is erroneous. Therefore, the notice cannot be upheld and such stand of the revenue cannot be accepted. The reasons, therefor are to be found in paragraph 9 and 10 of the impugned order. If certain items pertain to assessment year 2004-05 or thereafter then it cannot be assumed, that the documents seized or incriminating material giving information are specific and to all assessment years. The tribunal found that they were concluded assessments. They could not have been disturbed. Th....
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....minating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barre....
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.... lacs to the assessee for the AY 2014-15. According to Ld. CIT DR, in the survey u/s. 133A of the Act, the statement of Shri Chandra Kant Ladia, Director of M/s. PHPL was recorded on oath u/s. 131 of the Act wherein he admitted that M/s. PHPL had donated Rs. 50 lakhs to M/s. SPS Synergy Foundation (now assessee foundation) and in lieu of the donation given, cash was received back from them. It was pointed out by the Ld. D.R that the donor (M/s. PHPL) had admitted of doing this in order to reduce its tax liability. According to Ld. D.R, based on this discovery of relevant fact, and the material seized during the search ID- MSL 3/4/5, the AO had prepared the 'satisfaction note' and then issued notice dated 03.09.2019 to assessee u/s. 153C of the Act and pursuant to the same the assessee filed return of total income at Nil (ROI dated 01.10.2018). Thus, according to Ld. CIT DR, the Assessing Officer after due process of law framed the assessment in which he reproduced the statement of Shri Ladia of M/s. PHPL which was recorded during survey u/s. 131 of the Act, then the AO concluded that the donation of Rs. 50 lacs received by the assessee is bogus donation. According to Ld. CIT, DR ev....
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....assessee for AY 2017-18, so he wondered as to how it (Rs. 40 lakhs cash) can be termed as incriminating in nature for AY 2014-15. And since Rs. 40 lakhs seized does not pertain to AY 2014-15 which is under consideration before us, this seizure of Rs. 40 lakhs found during search on 22.06.2016 cannot by any stretch of imagination be linked to this A.Y. (AY 2014-15) and be termed as incriminating material qua against the assessee for AY 2014-15. 19. The Ld. AR also contended that in any case, the statement of Shri Ladia of M/s. PHPL cannot be relied upon by the AO since the same was recorded behind the back of assessee; And a copy of which was not furnished to the assessee despite asking for it till the reassessment order u/s. 153A/153C/143(3) was framed on 31.12.2018; And the assessee was not provided an opportunity to cross-examine Shri Ladia, so the statement of Shri Ladia cannot be relied upon by the AO to draw adverse inference against the assessee and relied on the Hon'ble Supreme Court's decision in Andaman Timber Industries vs.CCE Vs. Andaman Timber Industries 127 DTR 241 (SC)./(Civil Appeal No. 4228 of 2006, order dated Sept., 02, 2015). And according to Ld. AR, the stateme....
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.... factor in confirming the order of the AO, according to Ld AR was devoid of any merit. According to ld. A.R., this fact of M/s PHPL offering the undisclosed income by utilizing the Income Declaration Scheme, 2016 (in short IDS, 2016) was not taken note by the AO while preparing satisfaction note on 03.09.2018 and has not made a whisper about the same while framing the assessment order u/s 153A / 153C / 143(3) dated 31.01.2018. According to Ld. A.R., this fact of the donor M/s PHPL disclosing their undisclosed income through IDS Scheme, 2016 came to light during the remand proceedings when the Ld CIT(A) called for the remand report from the AO. It was pointed out by the ld. A.R. that perusal of page 8 and 9 of the ld. CIT(A)'s impugned order will reveal that M/s PHPL has declared Rs. 71.25 lacs. for AY 2013-14 to 2015-16 and has declared only Rs. 25 lacs in AY 2014-15 which goes on to show that there is per-se contradiction in the statement given by Shri Ladia that during the survey on 23.09.2016 that the assessee has given back Rs. 50 lacs to it. According to Ld. A.R if there was ring of truth in the statement of Shri Ladia , M/s PHPL should have declared Rs. 50 lacs as it's undisc....
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....ssment u/s 143(3) on 31.12.2016, so when the satisfaction note was prepared by the Assessing Officer u/s. 153C against the assessee on 03.09.2018 the assessment for AY 2014-15 was not pending before the AO, so AY 2014-15 is an unabated assessment. So according to settled position of law any addition ought to have been made by the AO only on the basis of incriminating material as held by the Hon'ble Supreme Court in Singhal Technical Education (supra) and by the jurisdictional High Court in Veeraprabhu Marketing Ltd. (supra). And we have already while adjudicating the legal issue (supra) raised before us had considered the legal validity of "Satisfaction Note" on a standalone basis for enabling the AO to usurp the of jurisdiction u/s 153C of the Act, in the light of the ratio decidendi of the Hon'ble High Court of Bombay in Hindusthan Lever Ltd. (supra) and have held that the seized documents (ID MSL-3/4/5) pertaining to assessee qua this assessment year which was alleged by the AO in the "Satisfaction Note" as incriminating material was erroneous and that it cannot be termed as incriminating material and consequently we held that action of AO is ab initio void. 22. However, as obs....
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.... 03.09.2018; and after the issue of notice u/s. 153C of the Act against the assessee, the Assessing Officer for the first time by notice dated 10.10.2018 brought to the notice of assessee that survey u/s 133A of the Act was carried out at M/s PHPL on 23.09.2016 and that the director Shri Ladia had made an admission of receiving back in cash the donation they gave to assessee. (b) Pursuant to the notice of AO dated 10.10.2018, it is noted that the assessee/appellant filed its response to the Notice u/s. 143(2) vide Letter dt. 03. 12.2018, a copy of which is found placed at a pg. 90-93 of the paper book and the assessee also filed another response dt. 07.12.2018 to the Notice u/s. 142(1), a copy of which is found placed at Pgs. 102-103 of the paper book, wherein it is noted that the assessee/appellant asserted and reiterated that the donation of Rs. 50 lakhs received from M/s. Pratibha Holdings (M/s. PHPL) in FY 2013-2014 was through proper banking channel and form part of its regular books of accounts and has already been disclosed to the Income-tax authorities and that the scrutiny assessment for AY 2014-15 u/s. 143(3) of the Act was completed by AO way back in 31-12- 2016. We al....
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....on if any against the assessee which according to AO, have been discovered during survey. And further, the AO should have provided an opportunity to assessee to cross examine Shri Ladia to test the veracity of the statement of Shri Ladia, which was not done by AO before framing the reassessment order dated 31.12.2018. Therefore, there is per-se violation of Natural Justice and so the non furnishing of statement of Shri Ladia to the assessee before framing of reassessment order dated 31.12.2018 and not giving an opportunity to assessee to cross examine Shri Ladia vitiates the action of Assessing Officer to rely upon the statement of Shri Ladia to draw adverse inference against the assessee in respect of donation of Rs. 50 lakhs. For this finding of ours, we rely on the ratio of the decision of the Hon'ble Supreme Court in Andaman Timber Industries vs. CCE (2015) 62 taxmann.com 3/52 GST 355(SC), wherein that case the addition was made against the assessee (Andaman Timber Industries) by the AO by relying on the statement of two witnesses namely Sri Sreeram Tekriwal and Sri Laxmidas Panchmati. Even though the assessee pleaded for cross-examination of these two witnesses, the AO did n....
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....n. That apart. the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-li t itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal 0.2216 of 2000. order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above. we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issumg the Show-Cause Notice. 9. We, thus. set aside the impugned order as passed by the Tribunal and al....
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....fession are or is kept. (2) An income-tax authority may enter any place of business or profession referred to in subsection (1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset. [(2A) Without prejudice to the provisions of sub-section (1), an income-tax authority acting under this sub-section may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter XVII or under subheading BB of Chapter XVII, as the case may be, enter, after sunrise and before sunset, any office, or any other place where business or profession is carried on, within the limits of the area assigned to him, or any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated, where books of account or documents are kept and require the deductor or the collector or any other person who may at that time and place be attending in any manner to such work,- (i) to afford him the necessary facility to inspect su....
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....ent so recorded may thereafter be used in evidence in any proceeding under this Act. (6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under [sub-section (1) of section 131] for enforcing compliance with the requirement made : [Provided that no action under sub-section (1) shall be taken by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be.] Explanation.-In this section,- [(a) "income-tax authority" means a [Principal Commissioner or] Commissioner, a Joint Commissioner, a [Principal Director or] Director, a Joint Director, an Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Officer, and for the purposes of clause (i) of sub-section (1), clause (i) of sub-section (....
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....nder sub-section (3) of section 133A, the ITO could place marks of identification of the books of account, or other documents inspected by him, or could make inventory of any cash, stock or other valuable article or thing checked or verified by him, or record the statement of any person which may be useful for, or relevant to any proceedings under the Act. It is again admitted that the petitioner caused no impediment for the ITO to exercise power under subsection (3) of section 133A. 4. Sub-sections (4) and (6) of section 133A read: "(4) An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any books of account or other documents or any cash, stock or other valuable article or thing." "(6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-sections (1) and (2) of section 131 for e....
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....81,000. Both the assessee and the Revenue challenged the order of the Commissioner of Income-tax (Appeals) before the Tribunal. The Tribunal found that the reference to the DVO was made by issue of a commission under section 131(l)(d) of the Act on November 29, 1989, whereas the return of income for the said year was filed on January 31, 1991; and that the notice under section 143(2) for initiation of assessment proceedings was issued on November 30,1992. Thus, no proceeding relating to the assessment year 1990-91 was pending as on November 29,1989, when the reference was made to the DVO. The Tribunal was of the view that a commission under section 131(1)(d) of the Act could be issued only during the pendency of the assessment proceeding and that reference by the Assessing Officer to the DVO on November 29,1989, being long prior to the initiation of the assessment proceeding, was not valid. Consequently, the Tribunal held that the valuation report of DVO should be ignored. As the assessee had produced the valuation report from a Government approved valuer showing the entire cost of construction as Rs. 8,50,000, the Tribunal directed the Assessing Officer to adopt the cost of constr....
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.... pending before him or any other income-tax authority'. Absence of this non obstante clause in section 131(1) is significant. Reading section 131(1) and section 131 (1A) together, it is obvious that whereas an officer mentioned in sub-section (1) can exercise powers thereunder only if a proceeding is pending before him, the officer mentioned in section 131 (1A), viz., the Assistant Director of Inspection, can exercise such powers notwithstanding that no proceedings are pending before him or before any other officer ... Also relevant to the context is the form of the summons under section 131(1) which commences with the words: 'whereas your attendance is required in connection with the proceedings under the Income-tax Act in your case'.... The form also assumes and presupposes the existence of a pending proceeding before the concerned officer. Further, Explanation 2 to section 132 of the Act also indicates that but for its artificial and extended definition of the word 'proceeding', proceeding would mean one actually pending and not one completed and concluded." In Rina Sen v. CIT [1999] 235 ITR 219 the Patna High Court held as follows (placitum) (headnote)....
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....the touch stone of cross examination, the veracity/correctness/truthfulness of the statement not being verified, cannot be the basis for drawing adverse inference against the assessee and in any case, we have held that the testimony of Shri Ladia, is null in the eyes of law cannot be the basis for drawing adverse inference against the assessee in respect of donation of Rs. 50lakhs of M/s PHPL. And once Shri Ladia's statement is removed or if the statement of Shri Ladia was discredited by the assessee during cross-examination, then there was no other material with the Revenue on the basis of which the Assessing Officer could have justified his action of addition of Rs. 50 lakhs. Since the AO's re-assessment order u/s. 153A/153C/143(3) of the Act dated 31-12-2018 was based only on the uncorroborated and not cross examined statement of Shri Ladia, therefore, the addition made against the assessee is untenable. It has to be noted that though the provisions of Indian Evidence Act are not strictly applicable to the proceedings under the Income-tax Act, but the broad principles of law of evidence do apply to such proceedings. Further an entry in the books of account maintained in the regu....
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....ch were unearthed during search qua the assessee/appellant foundation qua AY 2014-15, which would conclusively show that Rs. 50 lakhs was transferred from one side to another, we find the contention raised by the Ld. CIT DR are devoid of merits on this contention and so is rejected. 28. Lastly coming to the contention of Ld. CIT, DR that the Ld. CIT(A) has taken note of the fact that M/s PHPL has availed the IDS Scheme, 2016 and has declared its undisclosed income of Rs. 25 lacs for AY 2014-15 and this fact corroborates the statements of Shri Ladia of M/s PHPL, cannot be accepted by us for the following reasons. We note from a perusal of 'Satisfaction Note' dated 03.09.2018 [supra] for invoking jurisdiction u/s 153C against the assessee foundation, there is no whisper about M/s PHPL availing the IDS, 2016. And from a perusal of the reassessment order u/s 153A / 153C / 143(3) of the Act dated 31.12.2018, we also note that there was no mention about the fact that M/s PHPL has availed IDS Scheme, 2016. We note for the first time this fact M/s PHPL availing the IDS Scheme, 2016 came to light when the ld. CIT(A) called for the remand report from AO on the objections raised by the asses....
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....tion of AO to invoke section 153C of the Act was without jurisdiction and, therefore, the impugned action of AO to issue notice u/s. 153C of the Act is null in the eyes of law and therefore ab-initio void and so it is quashed. Coming to AY 2016-17 29. The Ld. AR of the assessee foundation/appellant has brought to our notice that the Ld. CIT(A) in his impugned order dated 15.11.2019 has partly allowed the appeal preferred by the assessee foundation by granting full reliefs on merits (subject to verification of the AO). It has been brought to our notice that assessee before the Ld. CIT(A) had raised similar legal issue wherein it challenged the jurisdiction of AO to invoke section 153C of the Act against the assessee for AY 2016-17 on the ground that there was no incriminating material unearthed from the premises of the searched person (Mani Group) which belongs to/pertains to/relates to appellant/assessee (third party) which in turn had a bearing on the determination of the total income of the assessee qua AY 2016-17 and therefore the usurpation of jurisdiction by AO u/s. 153C read with Section 153A of the Act was bad in law. It was brought to our notice that the time limit for is....
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....1, 4, 17 to 36) are the counterfoils which are in the nature of donation receipts issued by the assessee society (formerly known as M/s. SPS Synergy Foundation for FY 2013-14 (AY 2014-15) and FY 2014-15 (AY 2015-16). Thus, we note that these materials referred by the AO in the 'Satisfaction Note' are not incriminating in nature as the said donations are made through account payee cheques/RTGS and forms a part of regular books of accounts of the appellant/assessee foundation for earlier years and most importantly not in respect of the relevant assessment years (AY 2016-17) in question. Thus, we find that the seized material i.e. ID mark MSL 3, 4 and 5 which are attached at paper book pages 105 to 109A (111) does not pertain to the AY 2016-17. Since these facts were discussed in detail in the chart (supra) when we were adjudicating the issue of jurisdiction vis-a-vis the satisfaction note prepared by the AO dated 03.09.2O18 (for AY 2014-15) which will dispel any doubt that there was no incriminating material against the assessee foundation for AY 2016-17 which was seized from the Mani Group while carrying out the search. Since there was no incriminating material qua the assessee foun....