TaxTMI 
TaxTMI 
2020 (11) TMI 482
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....underdas Vaswani, Shri Ashok Surendras Vaswani Versus The DCIT Cir.1(1) Ahmedabad. (Vice-Versa) And M/s.Sanjeet Motors Finance P.ltd. Versus The DCIT, Cent.Cir.1(1) Ahmedabad. SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER For the Revenue : Shri Virendra Ojha, CIT-DR For the Assessee : Shri Tushar Hemani with Shri ParimalsinhB. Parmar And Shri Vijay Govani, ARs. ORDER PER BENCH:- This is a bunch of 107 appeals; out of which 71 appeals are directed at the instance of the assessee, and 36 at the instance of the Revenue. Thus, in some of the assessment years, and in the case of some of the assessees, there are crossappeals. The facts for the purpose of procedural requirements are concerned, they are common. 2. Brief facts of the case are that the department has carried out searches on the following places: Person Searched as per Panchnama Address of premises searched Date and Time of Initiation of Search Date and Time of Conclusion of Search Ashok Sunderdas Vaswani 1-Rajdeep Villas, B/h. Chimanbhai Patel Institute, Prahladnagar, Ahmedabad 10.03.2015 08:05 A.M. 12.03.2015 07:00 P.M. Deepak Budharma Vaswan....
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.... B/6, Pallavi Apartment Opp: Municipal Market C.G.Road Ahmedabad. 3. In order to give logical end to the search, the ld.AO had issued notice under section 153A, 153C and 148 of the Income Tax Act as required in the particular case of an assessee, and directed them to file their return. The returns were filed. The assessments have been completed, and the appeals have been decided by the ld.CIT(A) vide orders impugned in these appeals. 4. At the time of hearing, we have appraised the parties as to how they would argue the appeals, because, if we look to the total number of appeals, and papers submitted therein, then details on different issues in all these appeals must be running in more than 20,000 pages. The ld.counsel for the assessee has submitted that he has divided his submissions in four compartments, and most of these submissions are related to jurisdictional and legal issues. The adjudication of these jurisdictional grounds would be the basis for proceeding further on merit. Broadly, both the parties have agreed for commencing the hearing in the manner suggested by the ld.counsel for the assessee. Four compartments are - (i) whether the a....
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....searched persons, except that, if the AO of the searched person is satisfied that the seized material belongs to some other persons. Once the AO of the searched person arrives at the decision that material belongs to some other persons, then he would record his satisfaction to that effect, and transmit those materials to the AO having jurisdiction over other such persons. He submitted that prior to 1.6.2015, the section contemplates that material found during the course of search and considered by the AO of the searched person, belongs to some other person. However, after amendment in section 153C w.e.f. 1.6.2015 this expression "belongs" or "belong" to has been restricted with regard to any money, bullion, jewellery and other valuable article or things seized or requisitioned during the course of search. With regard to any books of accounts or documents seized or requisitioned, the expression "belongs to" and "belong to" has been eliminated; and in place of this expression "pertains to" or "pertain to" or any information contained therein relates to, has been used. Thus, according to the ld.counsel for the assessee the expression "pertains" or "pertain" to or any information conta....
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.... the following cases: i) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj); ii) Charmy Sanket Naik Vs. ACIT, SCA No.13374 of 2019 (Guj); iii) Nita Chaitanya Shah, SCA No.14059 of 2019 (Guj). 8. Taking us through the judgment of Hon'ble jurisdictional High Court in the case of Anil Kumar Gopikishna Agrawal Vs. ACIT(supra), he submitted that Hon'ble High Court has considered a large number of writ petitions, and ultimately propounded that amendment in section 153C is prospective and it will be applicable w.e.f. 1.6.2015. Prior to this amendment, search conducted by the Department would be governed by old section. In other words, according to the ld.counsel for the assessee, search conducted upto 1.6.2015, the department has to record a satisfaction that documents found during the course of search belongs or belong to an assessee, after recording such a satisfaction, action under section 153C can be taken. 9. The ld.counsel for the assessee thereafter took us through paragraph-2.4 of the judgments. He pointed out that one of Special Civil Applications bearing no.19647 of 2018 was filed by M/s. Ocean Valves Mfg. Co. The proprietor had fil....
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....tion has been widened. Therefore, the AO has rightly recorded the satisfaction taking into consideration the law as on the date, when he lays his hand on the documents showing undisclosed income of the person other than the searched person. He further submitted that in the present appeals, both the events, that is, recording of satisfaction by the AO of the searched person, and by the AO of these appellants, have happened subsequent to 1.6.2015 because Ld. AO is common. Therefore, new section is applicable. He also submitted that section 153C is a procedural section, and no vested right has been taken away by the amendment. Thus, it will be applicable on the pending assessment. 11. The ld.DR further submitted that the assessee did not cooperate during the assessment proceedings. He took us through para 9.2 at page no.30 of the assessment order. According to him, first facts and conduct of the assessee are to be seen; law will come later on. It was also submitted that responsibility to prove that these documents did not belong to these assessees was upon them, and they did not produce any evidence in this regard. 12. The ld.CIT-DR further took us through pages 38 to 41; 58, 68....
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....e termed as document belong to or belongs to the assessee or entry embedded in them falls within the ambit of expression "pertains to" or "relates to". We have to determine under which clause one has to construe the documents found during the course of search. Therefore, it is imperative upon us to take note of section 153C, which reads as under: 2.2.2 UPTO 01.06.2015: Assessment of income of any other person. - 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 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 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....
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.... persons other than the searched person. However, after 1.6.2015, the Legislature has categorized two situations. As far as recovery of any money, bullion jewellery or other valuable article or thing seized or requisitioned belongs to person other than the searched person, then section 153C would be justified. However, with regard to the recovery of any books of accounts or documents, seized or requisitioned, then if they pertain to other person, or any information contained therein relates to person other than the searched person, then the action under section 153C could be there. The scope of section 153C after 1.6.2015 has been widened; viz. if a person at whose premises search was carried out maintaining certain details in his regular day-to-day business, and that contain certain information exhibiting the undisclosed income of the person other than the searched person, then the action under section 153C could be justified. But prior to 1.6.2015, the documents ought to be belonged to person other than the searched person. There is a clear distinction between both the conditions. Subsequent to 1.6.2015, the information embedded in the document is sufficient for taking action und....
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....ed 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 to the other person. In the present case, the hard-disc containing in the information relating to ....
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....ion 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. 19.12 In Pr. CIT v. Vinita Chaurasia, [2017] 394 ITR 758/248 Taxman 172/82 taxmann.com 153 (Delhi), the Delhi High Court has held that, at the outset, it re....
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.... 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 the case of the two Assessees." 19.14 Thus, it is the date of search that has been considered to be the relevant date for the purpose of applying the amended provisions of section 153C(1) of the Act. 19.15 This court is of the considered ....
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....y of reference, we take note the satisfaction from the lead case of Shri Dilipkumar Lalwani placed at page no.456 to 483. Relevant part of the satisfaction while issuing notice under section 153C is available at page no.457 and we deem it appropriate to take note of this part, which reads as under: 7. Satisfaction of the Assessing Officer of the person referred to in section 153A that the seized material referred to in S.No.5 relates/pertains to the person referred to in S.No.4 As per Annexure - B In view of above facts as mentioned in the Annexure - B. I am satisfied that the documents seized from the premises (i) 801-802, Broadway Business Centre, Opp. Mayor's Bungalows, Law Garden. Ellisbridge, Ahmedabad and (ii) Terrace of Crystal Arcade, Nr. Navrangpura Telephone Exchange, C.G Road, Ahmedabad - contains information,which relates to the assessee, Shri Dilip Kumar Lalwani. Further, I am also satisfied that documents seized have a bearing on the determination of the total income of the assessee, | Shree Dilip Kumar Lalwani for assessment years 2009-10 to 2014-15 The assessee being other than the person referred to in section 153A of the Act. I have satisfaction to pro....
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....on, were observed as "relates to" the assessee. They do not belong to the assessee. When the assessee took this objection before the ld.first appellate authority, the ld.CIT(A) was of the view that since law has been changed, and scope of section 153C w.e.f. 1.6.2015 would be applicable on these cases, because the assessments have not been concluded when the scope of section 153C was widened. The finding of the ld.CIT(A) is worth to note in this connection i.e. in the case of Shri Dilipkumar Lalwani, which reads as under: "4.3. I have carefully considered the facts of the case, assessment order and submission made by the appellant. The Assessing Officer [DCIT, Central Circle-1 (1), Ahmedabad] of M/s. Venus Infrastructure and Developer Pvt. Ltd., in whose case the search was conducted and documents relating to the appellant company was found and seized has recorded his satisfaction note for initiation of assessment proceedings in the case of appellant and forwarded to the ACIT, Circle-50(l), New Delhi, being the Assessing Officer of the appellant. The AO of appellant has recorded his satisfaction and issued notice u/s. 153C of the I. T. Act, 1961. The case of appellant was ....
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....f the case. Appellant's contention that there is no provision for issue of second notice u/s. 153C on the same set of facts is not tenable as the Assessing Officer has withdrawn the earlier notice and issued fresh notice after recording the satisfaction. The Honourable Gujarat High Court in the case of A.G. Group Corporation Vs. Harsh Prakash [2013] [35 Taxmann. com 48] has held that, if in the earlier notice a fatal error has been crept in AO will be free to issue another notice provided jurisdiction and limitation aspects are satisfied." 22. This finding is not in the line of law laid down by the Hon'ble Gujarat High Court in the case of Anilk Kumar Gopikishna Agrawal Vs. ACIT, and further reiterated in other cases. At this stage, it is pertinent to note that, otherwise also, these 43 appeals are directly covered by the decision of Hon'ble jurisdictional High Court in the case of Anilk Kumar Gopikishna Agrawal Vs. ACIT (supra) because on the basis of entries embedded in the documents found at the premises of Venus Infrabuild and Shri Ashok Vaswani, notice under section 153C was issued in the case Ocean Valves Mfg. Co. Proprietor of that concern filed an SCA No.19647 of 201....
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.... Hon'ble Gujarat High Court rendered in the case of Pr.CIT Vs. Saumya Construction P.Ltd. (supra). Similarly, the order of the ITAT referred by the ld.CIT-DR is with respect to the presumption of truth of certain documents found during the course of search. It is not directly on the point. Other arguments raised by the ld.CIT-DR were raised by the ld.Senior standing counsel before the Hon'ble Gujarat High Court in the case of Anil Kumar Gopikishna Agrawal Vs. ACIT (supra) and those arguments have been considered. Though, section 153C is a procedural section, but the jurisdiction to assess an assessee under this section is being invoked with help of the section. The AO will be in a position to pass assessment order only if during the course of search, any money, bullion, jewellery and other valuable article or thing, or the documents found belong to other person prior to 1.6.2015, and the AO of the searched person was satisfied that such documents disclosed undisclosed income. The documents belonged to the appellants considered under this compartment of the arguments were not found, rather certain information relating to the assessees were found to be embedded in these documents, bu....
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....SS)A 115/Ahd/2019 2013-14 Assessee Deepak Budharmal Vaswani IT(SS)A 116/Ahd/2019 2014-15 Assessee Deepak Budharmal Vaswani IT(SS)A 117/Ahd/2019 2015-16 Assessee Deepak Budharmal Vaswani IT(SS)A 248/Ahd/2019 2009-10 Department Deepak Budharmal Vaswani IT(SS)A 249/Ahd/2019 2010-11 Department Deepak Budharmal Vaswani IT(SS)A 250/Ahd/2019 2011-12 Department Deepak Budharmal Vaswani IT(SS)A 251/Ahd/2019 2012-13 Department Deepak Budharmal Vaswani IT(SS)A 252/Ahd/2019 2013-14 Department Deepak Budharmal Vaswani IT(SS)A 253/Ahd/2019 2014-15 Department Deepak Budharmal Vaswani IT(SS)A 254/Ahd/2019 2015-16 Department 25. The ld.counsel for the assessee while impugning orders of the Revenue authorities contended that almost all the Hon'ble High Courts are unanimous on the point that assessment under section 153A is to be framed on the basis of material found during the course of search or requisitioned under section 132A of the Act. Other information gathered during the search and survey carried out on third person, those materials canno....
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.... care of, while framing assessment under section 143(3) r.w. section 153A. Section 143(3) r.w.s. 153A is to be framed strictly on the basis of incriminating material found during the course of search carried out in the case of the assessee. No cognizance is to be taken on any material which was not found during the course of search action. If search action under section 132 of the Act has simultaneously been carried out in the cases of some other assessees, and some material belong to the assessee was found, then such material can be taken into cognizance only for the purpose of proceedings under section 153C of the Act, and not in the proceedings under section 153A of the Act. Thus, according to the ld. counsel for the assessee, material collected during the course of search action carried out in the cases of some third parties, cannot be considered while framing assessment under section 143(3) r.w.s. 153A of the Act. For that purpose, proceedings under section 153C must be initiated. The ld.counsel for the assessee thereafter took us through the assessment orders, and submitted that on the basis of finding recorded in the assessment orders, the assessees have compiled the details....
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....e under section 153A, thereafter, the AO can look into any other aspects for determining taxable income. 29. We have duly considered rival contentions and gone through the record carefully. Before adverting to the facts and alleged seized material considered by the ld.AO for making the addition in the hands of the present three assessees, we deem it appropriate to bear in mind the position of law propounded in various authoritative judgments recording scope of section 153A of the Act. We are of the view that in this regard, there were large numbers of decisions. First we refer to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del). Hon'ble Delhi High Court after detailed analysis has summarized the following legal position: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately p....
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....5 (copy of the decision placed on record) has considered this aspect in its decision. Thereafter, the Tribunal has specifically held that serial no.(iv) of the above proposition, the Hon'ble Delhi High Court has specifically held that assessment under section 153A of the Act has to be specifically made on the basis of seized material. ITAT Delhi Bench was considering an aspect whether the evidence in the shape of books of accounts, money, bullion, jewellery found during the course of search relates to other person than the searched person, can that be considered while making assessment under section 153A of the Act. Like in the present appeals, simultaneous search was carried out at the premises of the Venus Infrastructure and Ashok Sunderdas Vaswani, and the material found during the search of Venus Infrastructure Developers or Ashok Sunderdas Vaswani could be used while framing the assessment of Rajesh Sunderdas Vaswani and Deepak Budharmal Vaswani under section 153A of the Act. ITAT Delhi Bench has specifically held that material recovered from the premises of other person cannot be used in the hands of the searched person. For that purpose an assessment under section 153C or 14....
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....Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so-called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of the documents discovered under any other provision of law, but certainly, not under Section 153A. This goes to the root of the matter." 34. Hon'ble Court has specifically observed for the purpose of section 153A that only seized material is required. However, if there is any other incriminating material belong to the assessee found at the premises of the some other person, then the assessment has to be made under other provisions and not under section 153A of the Act. Hon'ble jurisdictional high Court has also considered the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Hon'ble Gujarat Hi....
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....sing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted....
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....nt was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition,....
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....upra), which we have considered; but paragraph nowhere buttress the case of the ld.CIT-DR. On a detailed analysis of these case laws, it is pertinent to observe that scheme of the Income Tax Act would provide that a regular assessment of the income is to be made under section 143(3)/144. In the case of an escaped income, then a notice under section 148 should be issued and the assessment is to be made under section 147 r.w. section 143(3). In case a search is carried out on an assessee, then that search could give rise to a proceedings viz. under section 153A qua the person who has been searched. The income has to be assessed on the basis of material found during the course of search. The second category of the person is third-party and the assessment could be made under section 153C of the Act. The assessment under section 153C is to be made on a condition that during the course of search any money, bullion, jewellery, assets, documents belonged to the assessee prior to 1.6.2015, and information relates/pertains to assessee after 1.6.2015 was found qua to the person other than the searched person. In that situation, the AO of the searched person would record his satisfaction that ....
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....000 Note - 1 Land at Ognaj, Survey No.1441/11 0 0 11000000 21040000 136500 0 0 32176500 Note - 1 Land at Ognaj, Survey No.1441/12 0 0 5500000 24442250 13700 0 0 29955950 Note - 1 Land at Santej, Survey No.669 0 0 32000000 1000000 0 0 0 33000000 Note - 1 Land at Santej, Survey No.711 0 0 20600000 33200000 0 0 750000 54550000 Note - 1 Land at Shilaj, Survey No.804 0 0 13720000 25000 26000000 5800000 21500 45566500 Note - 1 Land at Thaltej, Survey No.518, 519, FP 84 0 0 30000000 116500000 72050000 10000000 0 228550000 Note - 1 Land at Ranakpur, Survey No.144 0 0 0 6100000 7000000 0 0 13100000 Note - 1 Land at Vejalpur, Survey No.688 0 0 0 3815000 3600000 5875000 20579250 33869250 Note - 1 Land at Santej, Survey No.712 0 0 0 0 3014800 2518000 0 5532800 Note - 1 Land at Ognaj, Survey No.1300/2 0 0 0 0 23930000 0 0 23930000 Note - 1 Land at Ognaj, Survey No.1441/10 0 0 0 0 ....
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....erial" seized from "901, Sapphire complex" which was searched in the case of "ASV" and "VIDPL" (not "RSV") ; & - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "RSV") ; Note - 3: Addition based on - - "information" gathered from "search" and "survey" in the case of "SCS" & "PIL" i.e. completely unconnected third parties (not "RSV") ; & - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "RSV") ; ASV - Ashok Sunderdas Vaswani VIDPL - Venus Infrastructure & Development Pvt. Ltd. RSV - Rajesh Sunderdas Vaswani SCS -Shirish Chandrakant Shah PIL - Prrante Industries Ltd. SANJEET MOTORS FINANCE PVT. LTD. Particulars 2012-13 2013-14 Total Basis of addition Share capital 493300000 500000 493800000 Note - 1 Total 493300000 500000 493800000 Note - 1: Addition based on - - "information" gathered during various search / survey carried out by....
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.... Venus Amadeus & Venus IVY 37839771 32400000 6829800 3957300 3961000 9337450 37348810 131674131 Pgs.42 9-441 Atlantis & Benicia 1941000 38887150 81105770 12148850 29653502 6805000 5308500 175849772 Pgs.44 2-455 Venus Pahel 0 0 31465900 6408700 8800000 45300000 903300 92877900 Pgs.45 6-457 C. G. Square Mall (K - mall) 734800 430000 28446500 200000 150000 2186050 4310000 36457350 Pgs.45 8-459 Venus Parklands and Venus Park Heights 2557500 27923000 16950140 16761192 28639600 14460500 500000 107791932 Pgs.46 0-464 Shyam Residency 4700500 274750 15345575 25863100 49818975 73783250 72775600 242561750 Pgs.46 5-474 VS 1993000 1287900 704000 7642000 9023500 2491300 6250700 29392400 Pgs.47 5-479 Venus Township 0 48790 310330 36600 0 205000 250000 850720 Pgs.48 0-481 Particulars 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Total ( 09-10 to 15-16 ) ....
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.... Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "DBV") ; Note - 4: Addition based on - - "information" gathered during various search / survey carried out by Kolkatta Investigation Wing in cases of completely unconnected third parties (not "DBV") ; - "Material" seized from "901, Sapphire complex" which was searched in the case of "ASV" and "VIDPL" (not "DBV") ; & - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "DBV") ; Note - 5: Addition based on "jewellery" found in the case of "DBV"; ASV - Ashok Sunderdas Vaswani V IDPL - Venus Infrastructure & Development Pvt. Ltd. RSV - Rajesh Sunderdas Vaswani SCS -Shirish Chandrakant Shah PIL - Prrante Industries Ltd. 37. With the assistance of the ld.representatives, we have gone through the record carefully, and material available on record. For the sake of reference, let us take the assessment of Shri Deepak Budharmal Vaswani for the assessment year 2009-10. The assessee has filed his return of income under section 139(1) of th....
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....nsidered in the assessment proceedings under section 153A. They ought to be considered under some other provisions viz. Section 153C or some other sections; but not under this section. 39. On due consideration of the above facts and circumstances, we are of the view that additions made by the AO in the case of Rajesh Sunderdas Vaswani in different assessment years are not sustainable, because they are not based on the seized material found during the course of search carried out at his premises. Similarly, the additions made in the case of Sanjeet Motors and Finance are also not sustainable. As far as addition in the case of Deepak Budharmal Vaswani is concerned the addition in the assessment year 2015-16, amounting to Rs. 44,48,456/- is concerned, it deserves to be confirmed because the material to this effect was found during the course of search carried out at the premises of the assessee. The rest of the additions are not supported by any material which was discovered during the course of search at his premises. Therefore, the appeal for the Asstt.Year 2015-16 is dismissed, whereas all other appeals are partly allowed i.e. IT(SS)A No.117/Ahd/2019 is dismissed, and rest of th....
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.... Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 104/Ahd/2019 2011- 12 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 105/Ahd/2019 2012- 13 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 106/Ahd/2019 2013- 14 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 107/Ahd/2019 2014- 15 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 108/Ahd/2019 2015- 16 Assessee 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 228/Ahd/2019 2009- 10 Department 143(3) r.w.s, 153A 29.12.17 No IT(SS)A 229/Ahd/2019 2010- 11 Department 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 230/Ahd/2019 2011- 12 Department 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 231/Ahd/2019 2012- 13 Department 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 232/Ahd/2019 2013- 14 Department 143(3) r.w.s. 153A 29.12.17 N IT(SS)A 233/Ahd/2019 2014- 15 Department 143(3) r.w.s. 153A 29.12.17 No IT(SS)A 234/Ahd/2019 2015- 16 Department 143(3) r.w.s. 153A 29.12.17 No DEEPAK BUDHARMAL VASWANI Appeal No. Asst. Year Appeal by Section ....
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....his arguments under this compartment would submit that before adverting to the facts for adjudicating this proposition, one has to bear in mind the scheme of Income Tax Act with regard to search action carried out under s.132 of the Act as applicable on the date of the search in the present group of cases i.e. 10.03.2015. Thus, he took us through Sections 132(3), 153A, 153C, 153B & 158BE, Explanation2. He submitted that after the search is carried out and incriminating material unearthed during the search disclosing undisclosed income then, AO will issue notice for six assessment years immediately preceding assessment year relevant to the previous year in which search is conducted and assessed or re-assessed income for such six assessment years. 43. As far as issuance of notice under s.153A upon the appellants herein is concerned, the assessees have not raised any objection but their main grievance is that assessment orders have not been passed within the limitation provided in the Act. For buttressing these contentions, he took us through Section 153B sub Section (1) & (2) and submitted that language of sub Section (2) is verbatim same as Explanation 2 of Section 158BE which ea....
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....l be termed as 'concluded'. The moment authorization was executed and the panchnama was drawn on the date of search or whenever after conducting the search continuously the search team came out after drawing the panchnama. As in the case of assessees all the warrants were executed between 10.03.2015 to 13.03.2015 and panchnamas were drawn thereafter only three prohibitory orders were passed which the learned counsel will be explaining in the second fold of his contention under this compartment in order to appraise us the scope of Section 153B Sub Section (2). The learned counsel submitted that it is verbatim same as the Explanation (2) of Section 158BE. This aspect has been considered by Hon'ble Karnataka High Court in case of C. Ramaiah Reddy vs. ACIT reported in 339 ITR 210 (Kar.). The learned counsel submitted that against this judgment, department went before the Hon'ble Supreme court. The Hon'ble Supreme Court has admitted the SLP, in other words, leave to file appeal against the judgment was granted but Civil Appeal was dismissed. The learned counsel submitted that he is unable to lay his hand on the judgment of the Hon'ble Supreme Court but he placed on record the case statu....
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..... Against these serial numbers, the recovery is shown as Nil. A perusal of this document would indicate that nothing was seized while revoking the prohibitory order. Thus, on the strength of these details, the learned counsel for the assessee submitted that what was the reason for putting the prohibitory order when nothing was to be recovered and what prohibited the department to inspect the alleged premises on the date of search. 48. The learned counsel for the assessee thereafter took us the second prohibitory order. It was placed on 501, Sapphire Complex11th March, 2015 and lifted on 5th May, 2015. This complex relates to Deepak Budharmal Vasvani according to the panchnama 45 pages were found and seized but no additions on the basis of these pages have been made. The contention of the learned counsel for the assessee was that when thousands of pages were seized at the time of search what prohibited the Revenue to take possession of 45 pages. It is a loose file and these documents were not of any use for the department. Similarly, the 3rd prohibitory order was put at 801-802 Broadway Business Centre, this is also connected with VIDPL. Prohibitory order was revoked on 6th May, ....
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.... (2) to Section 158BE which is similar to sub Section (2) to Section 153B. He thereafter put reliance upon the judgment of Hon'ble Delhi High Court in the case of PCCIT vs. PPC business. This judgment has been referred by the assessee also. The learned CITDR further relied upon the decision of Hon'ble Madras High Court in the case of CIT vs. Smt. P. Shanti reported in33 taxmann.com 674. He also relied upon the judgment in the case of DCIT vs. RakeshSarin reported in 362 ITR 619 (Mad.). 50. We have duly considered the rival contentions and gone through the record carefully. Section 153B has a direct bearing on the controversy. Therefore, we take note of the relevant part of this Section. 153B. (1) Notwithstanding anything contained in Section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of 81[sub-Section (1) of] Section 153A, within a period of two years from the end of the financial year in which the last of the authorisations for search under Section 132 or for requisition under Section 132A was executed; (b) in respec....
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....t is not possible to seize for the reasons set out in the aforesaid provisions. It is possible under four circumstances: (a) where it is not possible or practicable to take physical possession of any valuable article or thing ; (b) remove it to a safe place due to its volume, weight; (c) other physical characteristics ; and (d) due to being its dangers nature. 74. Therefore, the law recognizes such a situation and has provided a remedy to tackle such problems. Theauthorised officer has been given a discretion for the reasons to be recorded in writing to pass a restraint order in respect of the articles, books and other material which he could not take physical possession of, i.e., by making an inventory and leaving it to the custody of the assessee and directing him not to part with the same without his permission. 75. Similarly, in circumstances not covered under those provisions, it is open for him to pass a prohibitory order under sub-Section (3) not amounting to seizure which order will be in force for a period of 60 days after securing the possession of the materials, articles, etc., in the aforesaid manner. Action under Se....
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....sions of sub-Section (8A) in Section 132. In order that the restraint order must not be continued indefinitely, sub-Section (8A) of Section 132 provides that the restraint order can be continued only if, before the expiry of 60 days, and for reasons to be recorded, the Commissioner grants an extension. The provisions of sub-Section (8A) cannot be bypassed or rendered nugatory by revoking an order under Section 132(3) and, thereafter, pass another order on the same date. In the nature of things, the search is to be done expeditiously and the undisclosed income is to be unearthed and proceeding has to be initiated against such person and the tax legitimately due to the Government is to be recovered. There cannot be any laxity on the part of the authorised officer in this regard. Any other interpretation would run counter to the scheme of search provision under the Act. Therefore, by passing a restraint order, the time limit available for framing of the order cannot be intended. Once an order under Section 132(3) has been passed, then the limitation period commences and such order cannot be continued unless and until the provisions of Section 132(8A) are satisfied." 53. Though Hon'....
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....the authorised officer to visit the purpose of inspection regarding the material which is the subjectmatter of prohibitory order or the restraint order, even after search. However, the said exercise has to be done expeditiously, as the period of limitation starts from the date of search was concluded as evidenced by the panchnama, as otherwise the very object with which these provisions was introduced would be defeated. 79. Circular No. 772, dated 23rd December, 1998, issued by Central Board of Direct Taxes explains this position as under ([1999] 235 ITR (St.) 35) : "According to Section 158BE, limitation of 2 years has to be counted from the end of the month in which last of the authorisations was executed. Use of the word 'authorisations' implies issue of more than one authorisation. Supposingly two authorisations are issued one after the other and the last authorisation is executed first while the authorisation issued earlier is executed later on. In such case, limitation should be counted from the date of issue of the execution of the last authorisation, though it is executed earlier and not from the execution of the earlier authorisation which is exec....
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....s. But, such a panchnama would not extend the period of limitation. It is because the limitation is prescribed under the statute. If proceedings are not initiated within the time prescribed, the remedy is lost. The assessee would acquire a valuable right. Such a right cannot be at the mercy of the officials, who do not discharge their duties in accordance with law. The procedure prescribed under Section 132 of the Act is elaborate and exhaustive. The said substantive provision expressly provides for search and seizure. In the entire provision there is no indication of that search once commenced can be postponed. What can be postponed is only seizure of the articles. Therefore, once search commences it has to come to an end with the search party leaving the premises whether any seizure is made or not. The limitation for completion of block assessment is expressly provided under Section 158BE which clearly declares that it is the execution of the last of authorisation which is to be taken into consideration. The word "seizure" is conspicuously missing in the said Section. The same cannot be read into the Section for the purpose of limitation. Then it amounts to rewriting the Section ....
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.... to be computed from the end of the month in which the proceeding under Section 132(3) are conclude. If there are more than one warrant limitation will be counted from the execution of the last one. A contrary view is as much possible if one were to consider the spirit of the scheme which envisages expeditious disposal of the search cases and it would be reasonable to interpret that execution of warrant is not tantamount to completion of proceedings under Section 132 or 132A the period during which the proceedings under Section 132(3) remained pending has to be excluded for the purpose of counting limitation of one or two years under Section 158BE. Otherwise, it may lead to absurd results as it may take several years before restraint under Section 132(3) is lifted and it may thus extend the period of one or two years by all those years during which proceedings under Section 132(3) remained pending it may be agreed against this view that Section 132(8A) takes care that there is no extension of proceedings under Section 132(3) and that the view cannot be taken without doing violence to the language of the Act." 82. Therefore, the Explanation added to remove a doubt ....
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....h being the Directors of the entity including JHM. In respect of the authorization of the search of Ashok Vihar premise of first panchnama dated 22ndMarch, 2007 and the warrant was in the case of assessee's brother i.e. Mr. Sanjay Jain. The search was closed on 22ndMarch, 2007 as temporarily concluded. Second panchnama in relation to authorization of Ashok Vihar premises was prepared on 15thMay 2007 when prohibitory order was lifted. One Neena Jain was the person who has made acknowledgement of having received the second panchnama dated 15thMay, 2007 but according to the assessee, the jwellery belonging to Neena Jain at Ashok Vihar premise was valued on 21stMarch, 2007 when the alleged search was temporarily concluded. The case of the assessee was that search was concluded on 22ndMarch, 2007 when panchnama was prepared and restrain order was passed. The case of the Revenue, on the other hand, was that limitation for passing the assessment order is to be seen from the date when prohibitory order was lifted and second panchnama was drawn. The ITAT has held that assessment orders were time barred. Hon'ble Delhi High Court considered the judgment of Hon'ble Karnataka High Court in the ....
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..... K. Katiyal. In this case also, an identical issue came up before the Hon'ble Delhi High Court and Hon'ble Court has considered the judgement of Bombay High Court in the case of Sandhya P. Naik, Kerala High Court in Dr. C. Balakrishnan Nair &hon'ble Karnataka High Court in, C. Ramaiah Reddy, while dealing with its earlier decision in the case of VLS Finance. The Hon'ble Court made following observations: "30. The decision in VLS Finance (supra) also rests on a factual basis which is different from that of the present appeal. First of all, VLS Finance (supra) is a decision rendered in a writ petition under article 226 of the Constitution of India. In exercise of its writ jurisdiction a High Court decides cases on the basis of affidavits. It is open to the High Court to arrive at conclusions of fact (as well as of law) based upon the affidavits. The present case is an appeal from the order of the Tribunal, which is the final fact finding authority under the Income Tax regime. The facts, as determined by the Tribunal, unless they are held to be perverse, form the basis of the substantial questions of law which are to be determined by High Court's in appeals under Section....
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....ew that proposition in VLS Finance based on its facts is altogether different. 58. The next decision which was relied upon by the learned counsel for the assessee is the third member decision in the case of Nandlal M. Gandhi vs. ACIT 115 ITD 1. The facts in this case are that a search and seizure operation was carried out under s.132 of the Act at the residential premises of the assessee on 28th July, 1997 and continued till 02:30 a.m. on 29th July, 1997. During the said search, certain incriminating materials which inter alia included jwellery and shares, were found and the search party prepared an inventory in respect of search material as per para 5 of the panchnama only books of accounts and documents as per Annexure 'A' were seized and no seizure was affected in respect of other materials found during the course of search including jewellery and shares. In para 8 of the panchnama, it was stated that the search was temporarily concluded for the day to be commended subsequently. However, prohibitory order was issued under s.132(3) in respect of jewellery and shares found from the cupboard kept in the bed room of assessee's son Shri Bakul N. Gandhi. The prohibitory order issue....
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....red while revoking the prohibitory order there cannot give rise to second panchnama. The Hon'ble Court in paragraph 26 of the judgment recorded that when nothing new for being seized was found then there would be no occasion to draw up a panchnama at all. It has been demonstrated before us that in the case of Ashok Sundardas Vasvani nothing was recovered when prohibitory order was lifted. 60. The relevant extract of the judgment of Hon'ble Kerala High court in the case of Dr. C Balakrishnan Nair v CIT reported in 237 ITR 70 reads as under: 10. From Ext.P3 second Panchanama dated 10-11-1995 seven items, books of account and other valuable articles were seized. These articles which were available on 27-10-1995 were put in an almirah, according to the 2nd respondent, and sealed since scrutiny could not be completed during the search and investigation and prohibitory order under Section 132 was served on the petitioners. Sub-Section (3) of Section 132 empowers the authorised officer to pass an order on the owner that he shall not remove, part with or otherwise deal with articles and books of account, etc., except with the previous permission of the officer. But this can be ....
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.... the case on hand, we find that on the revocation of the prohibitory orders, the search team has seized only 277 pages which was very much possible to seize them during the search proceedings which were concluded on 13thMarch 2015. The search team has to justify in the order passed under Section 132(3) of the Act that books/documents/valuables are not practicable to seize along with the reasons other than those mentioned in second proviso to Section 132(1). 63. A situation also arises where the authorised officers impose PO considering that the goods found in the search are not practicable to seize. On the subsequent visit, PO is revoked leading to inference that they consider that goods are now practicable to seize. But the authorised officer has not brought anything on record describing in the Panchnama or in the revocation order how it has become practicable to seize the documents. 64. In fact we are of the view that the conditions imposed under Section 132(3) of the Act for passing the prohibitory orders were not complied with. Accordingly, these orders passed under Section 132(3) of the Act have no validity in the eyes of law. 65. Once the prohibitory orders in the ca....
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....T, Cent. Cir.1(1) Ahmedabad Shri Ashok Surendras Vaswani 1, Rajdeep Villa Opp: Rivera- 11 B/h. Chimanbhai Institute Prahalad Nagar, Satellite Ahmedabad PAN No: AAOPV6849A 5. ITA No.461/Ahd/2019 Asst. Year: 2008-09 Shri Deepak Budharmal Vaswani 3, Rajdeep Villa Opp: Rivera-11 B/h. Chimanbhai Institute Prahaladnagar, Satellite Ahmedabad PAN: AAPPV8625F The DCIT, Cir.1(1) Ahmedabad 6. ITA No. 807/Ahd/2019 Asst. Year: 2008-09 DCIT, Cent. Cir1(1) Ahmedabad Shri Deepak Budharmal Vaswani 3, Rajdeep Villa Opp: Rivera-11 B/h. Chimanbhai Institute Prahaladnagar, Satellite Ahmedabad PAN: AAPPV8625F We take ITA No. 456/Ahd/2019 - Shri Ashok Sunderdas Vaswani (A.Y. 2008-09) as the lead case. 70. The assessee has raised the following grounds of appeal: "1. The Ld. CIT (A) has erred on facts and in law upholding the assessment order passed in contravention of specific provisions of Section 153A by reopening the assessment of the appellant under Section 147 of the Income Tax Act, 1961 solely on the basis of documents seized during the course of search. 2. The Ld. CIT (A) has erred on facts and in law in upholding the mechanical reopening of the as....
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....al interpretation of the alleged cash book without establishing that the alleged expenditure pertained to the appellant and the same were incurred by the appellant and without any corroboration or confirmation of the alleged expenditure from the corresponding recipients. 9. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer on account of alleged unexplained investment u/s 69B of the Income Tax Act, 1961 in shops at 3rd Eye Building, Panchwati Road, Ahmedabad amounting to Rs. 1,00,00,000/- solely on the basis of unilateral interpretation of the alleged cash book without any third party evidence. 10. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer on account of alleged unexplained investment u/s 69B of the Income Tax Act, 1961 in Bungalow amounting to Rs. 7,84,085/-, solely on the basis of unilateral interpretation of the alleged cash book even though the appellant did not own the alleged bungalow and had made no investment in the same. 11. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer on account....
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....velopers (P) Ltd. without providing an opportunity of being heard." The assessee has challenged the validity of the assessment framed under Section 147 of the Act for various reasons in the grounds of appeal bearing Nos. 1 to 7. 71. The facts in brief are that the assessee in the present case is an individual and engaged in the business of property development. There was a search carried out under Section 132 of the Act dated 10th and 12th March 2015 on the Vasvani Group. The assessee being a part of the group was also subject to search action carried out under Section 132 of the Act. During the course of search proceedings, various documents of incriminating nature were found out. 72. However, the year under consideration was beyond the period for which the proceeding under Section 153A of the Act could have been initiated. Accordingly, the AO on the basis of the materials found during the search proceedings initiated the income escapement proceedings under Section 147 of the Act. Consequently, the AO issued a notice dated 30th March 2015 under Section 148 of the Act for initiating the proceedings under Section 147 of the Act which were completed vide order dated 11th Aug....
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.... have also argued that the assessment has been reopened beyond four years, and therefore, proviso to Section 147 is applicable where the Assessing Officer has to give a finding that there was a failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. It is seen that the AO has reopened the assessment on the basis of seized material. The unaccounted cash transactions were not disclosed by the appellant in regular return, and therefore, failure was on the part of appellants. Appellant's argument is therefore found not correct and same is rejected. The grounds of appeal are accordingly dismissed." "5.1.3. I have carefully considered the facts of the case, assessment orders and submissions made by the appellant. A search was initiated on 10/03/2015 in the case of appellant at the various premises u/s. 132 of the I.T. Act, 1961. Copy of panchnamas of all the search proceedings were provided to the appellant. The Assessing Officer relying upon Board's Instruction and judicial pronouncements in the case of Jain & Jain V. Union of India [1982] 134 ITR 655 (Bom.), V. K. Jain V. Union of India [1975] 98 ITR 469 (Delhi)] and [Southe....
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....is mind, has just came to the conclusion that the income of the assessee has escaped assessment. 77. On the other hand, the learned DR contended that search proceedings are applicable for the specified years as provided under Section 153A of the Act. Thus to that extent the proceedings can only be initiated under Section 153A of the Act. Any period which is beyond the period specified under Section 153A of the Act and fall within the period provided for income escaping assessment under the provisions of Section 147 of the Act, there can be proceedings which can be initiated under the provisions of Section 147 of the Act. As per the learned DR There is no prohibition for initiating the proceedings under Section 147 of the Act based on the materials found during the course of search carried out under Section 132 of the Act provided such initiation of proceedings is beyond the period specified under Section 153A of the Act. Accordingly the learned DR contended that the assessment framed under Section 147 of the Act is valid and within the frame work of law. 78. The learned DR has also contended that the additions made by the AO in the assessment framed under Section 147 read wit....
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....s no addition with respect to the items which was documented in the reasons recorded but the additions were made with respect to the issues which come into notice of the AO during assessment/re-assessment proceeding under Section 147 of the Act in the final assessment/ reassessment order under Section 147 r.w.s. 143(3) of the Act. 83. The first question arises for our adjudication whether the material found during the search proceedings under Section 132 of the Act can be used for invoking the provisions of income escaping assessment under Section 147 of the Act. At this juncture were inclined to refer the provisions of Section 153A (1) of the Act which deals with the assessment proceedings in case of search being the special proceedings. The provisions of Section 153A (1) reads as under: 153A. (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such perso....
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....tion made will be assessed or reassessed. Thus the situation arises whether the materials discovered during search proceedings for beyond six preceding A.Y. can be used for invoking the provisions of Section 147 of the Act for the period not covered under the provisions of Section 153A of the Act. The answer stands in favour of the Revenue. It is because there is no denial under the provisions of law for using the search material under the provisions of Section 147 of the Act in a situation where the period/year in dispute is not covered within the provisions of Section 153A of the Act. It is not out of place to mention that the conditions precedent to invoking the provisions to Section 147 of the Act have to be complied by the Revenue. In holding so we draw support and guidance from the order of Hon'ble MP High Court in case Ramballabh Gupta vs. ACIT reported in 288 ITR 347 where it was held as under: In order to decide the legality and validity of notice issued under Section 148, it is necessary to see as to whether conditions precedent provided in Section 148 are satisfied or not. Once the conditions prescribed under Section 148 are found present in the notice issued th....
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.... escape assessment could validly be formed for reopening of assessment made for the assessment year 1997- 98. The assessee did not challenge the notice on any of those grounds which alone could be made basis to challenge the impugned notice, it being issued under Section 148 and, hence, there was no difficulty in upholding the impugned notice which was rightly issued in conformity with the requirement of Section 148. [Para 16] In view of the above judicial pronouncement, we hold that material found during the course of search proceedings can be used for invoking the provisions of Section 147 of the Act. However, it is important to note that the provisions of Section 147 of the Act can be invoked only after complying the provisions/conditions as provided under Section 147/148/149/150 and 151 of the Act. 86. We also note that case law referred by the learned AR for the assessee at the time of hearing are distinguishable from the facts of the present case. In view of the above and after considering the facts in totality, we are not inclined to disturb the finding of the authorities below. Hence the contention raised i.e. the provisions of Section 147 of the Act cannot be invoked....
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....hich the Assessing Officer formed the reasons to believe, the process of arriving at such satisfaction could not be a mere repetition of the report of investigation wing. 89. In the assessee's case, the crucial link between the information made available to the Assessing Officer and the formation of belief was absent. The "reasons to believe" recorded were not reasons but only conclusions and a reproduction of the information received from the Director (Investigation). Hence it is nothing but a "Borrowed satisfaction". 90. The AO, in the reasons recorded, discussed in details the materials found by the search team and thereafter initiated the proceedings by observing as detailed under: On the basis of analysis base on above seized documents it has been found that these transaction are done in cash by ASV (Ashok Sunderdas Vaswani) for the relevant assessment year 2008-09. Date Page no./Annexure Receipt (Rs.) Reference of receipt Payment (Rs.) Reference of Payment 5.10.2007 145/A-64 9800000 Vejalpur-1062 71p 61500 ASV 450000 ASV sarafi from Gopal/ishwar - - 08.10.2007 140/A-64 10400000 ....
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....ut without applying the mind. Thus the reasons were merely recorded on the borrowed satisfaction by the AO. The source for all the conclusions was of the investigation report. The tangible material which formed the basis for the belief that income had escaped assessment must be evident from a reading of the reasons. The reasons failed to demonstrate the link between the tangible material and the formation of the reason to believe that income had escaped assessment. The Assessing Officer had not independently considered the tangible material which formed the basis for the reasons to believe that income had escaped assessment. 94. The Hon'ble High Court of Bombay in the case Principal Commissioner of Income-tax-5 v. Shodiman Investments (P.) Ltd. reported in 422 ITR 337 holding that reopening notice on the basis of intimation from DDIT (Investigation) about a particular entity entering into suspicious transactions, was clearly in breach of the settled position of law that reopening notice has to be issued by the Assessing Officer on his own satisfaction and not on borrowed satisfaction. The Hon'ble Court has pronounced as under: "12. The re-opening of an Assessment is....
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....sition in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction." 95. The power to reopen a completed assessment under Section 147 of the Act has been bestowed on the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. However, this belief that income has escaped assessment has to be the reasonable belief of the Assessing Officer himself and cannot be an opinion and/or belief of some other authority. On the basis of the information by itself received from another agency, there cannot be any reassessment proceedings. However, after considering the information/material received from other source, the Assessing Officer is required to consider the material on record in case of the assessee by applying his mind and thereafter is required to form an independent opinion on the basis of the material on record that the information has bearing on the income of the assessee and such income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be an....
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....ilure on the part of the assessee to disclose fully and truly all the material facts. In other words, mentioning by the AO that the assessee has failed to disclose all material facts in the reasons recorded is not sufficient enough. Rather the AO is under the obligation to arrive at such conclusion that the assessee failed to disclose all material facts necessary for the assessment after applying his mind and verification of the facts. But the AO has not done so. In holding so we draw support and guidance from the judgment of Hon'ble Bombay High court in case of Gateway Leasing (P.) Ltd vs. ACIT reported in 117 taxmann.com 442 where it was held as under: 35. Having discussed the above, we may once again revert back to the reasons furnished by Respondent No. 2 for re-opening of assessment under Section 147 of the Act. After referring to the information received following search and seizure action carried out in the premises of Shri Naresh Jain, it was stated that information showed that Petitioner had traded in the shares of M/s. Scan Steels Ltd., and was in receipt of Rs. 23,98,014.00 and therefore, Respondent No. 2 concluded that he had reasons to believe that this amount....
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....getting a satisfactory explanation from the assessee, can validly tax "other items of escaped income" which come to his notice during reassessment proceedings. In this regard, the Courts have noticed that the Parliament has used the words "assess or reassess such income and also any other income chargeable to tax which has escaped assessment", the words "and also" cannot be read as being in the alternative. The correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that the Parliament has not used the word "or". The legislature did not rest content by merely using the word "and". It has been emphasized that the words "and", as well as "also" have been used together and in conjunction. 100. Evidently, therefore, what the Parliament intends by use of the words "and also" is that the AO, upon the formation of a reason to believe under Section 147 and the issuance of a notice under Section 148(2) must assess or reassess: (i) 'such income'; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the Section. The....
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....ve of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the Section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. The Parliament, when it enacted the provisions of Section 147 with effect from 1-4-1989, clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax ....
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.... additions in the reasons recorded as detailed under: On the basis of analysis base on above seized documents it has been found that these transaction are done in cash by ASV (Ashok Sunderdas Vaswani) for the relevant assessment year 2008-09. Date Page no./Annexure Receipt (Rs.) Reference of receipt Payment (Rs.) Reference of Payment 5.10.2007 145/A-64 9800000 Vejalpur-1062 71p 61500 ASV 450000 ASV sarafi from Gopal/ishwar - - 08.10.2007 140/A-64 10400000 Vejalpur-1062 71p 41400 ASV 3300000 ASV - - 15.10.2007 126/A-64 9800000 Vejalpur-1062 71p 2500000 ASV 1700000 ASV 1057600 ASV - - 68837 ASV - - 15000 ASV 24.10.2007 104/A-64 5000000 Vejalpur-1062 71p 11400 ASV 1000000 ASV - - 8.02.2008 81/A-66 5000000 Vejalpur 1062 - - 8.02.2008 81/A-66 500000 ASV - - Total 43980000 3755737 However, the AO has made the addition in the ....
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.... under Section 147/143(3) of the Act. As such the amount of addition viz a viz the basis of re-opening as proposed in the reasons recorded were not matching with the addition made by the AO in the assessment framed under Section 147/143(3) of the Act. Accordingly, we hold that there cannot be any addition in the assessment framed under Section 147/143(3) of the Act in the given facts and circumstances. In view of the above we quash the assessment framed under 147 of the Act. Hence, the grounds of appeal of the assessee are allowed. 104. The assessee in grounds nos. 1 to 18 of the appeal has challenged the additions made by the AO on merit which were partly confirmed by the ld. CIT-A. 105. As the assessment order framed under Section 147 r.w.s. 143(3) of the Act has been held as invalid by us in the paragraph bearing No.78of this order, therefore we are not inclined to decide the issues raised by the assessee on merit. Accordingly, we dismiss the same as infructuous. Coming to the Revenue appeal No.806/Ahd/2019 for A.Y. 2008-09. 106. At the outset we note that the assessment framed under Section 147/143(3) have been held by us as invalid in the appeal filed by the assess....
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....issues raised by the assessee and the Revenue are identical to the issue raised by the assessee ITA No. 456/AHD/2019 which has been decided in favor of the assessee and against the Revenue by us vide paragraph No.87 to 89 of this order. Respectfully following the same, the grounds of appeal raised by the assessee is partly allowed and appeal filed by the Revenue is dismiss as infructuous. 114. In the combined results the appeals filed by the revenue and different assessee are as follows: Sr.No. ITA No. Assessee A.Y Appeal by Result 1. 456/Ahd.2019 Ashok S Vaswani 2008-09 Assessee Partly allowed 2. 806/Ahd/2019 -do- -do- Revenue Dismiss as infructuous 3. 457/Ahd/2019 Rajesh S Vaswani -do- Assesse Partly allowed 4. 805/Ahd/2019 -do- -do- Revenue Dismiss due to low tax effect 5. 461/Ahd/2019 Deepak B Vaswani -do- Assessee Partly allowed 6. 807/Ahd/2019 -do- -do- Revenue Dismiss as infructuous ITA No. 837/Ahd/2019 - M/s. Venus Infrabuild (A.Y. 2015-16) 115. The next proposition no. 5 is that the learned CIT (A) erred in confirming the addition mad....
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....ed unexplained expenditure u/s 69C of the Income Tax Act, 1961 being for the project developed by the appellant at Baroda namely Venus Pahel on peak basis, without establishing that the alleged expenditure was made by the appellant and without any corroboration of the alleged expenditure from the corresponding recipients. 7. The Ld. CIT (A) has erred on facts and in law in confirming the additions on the basis of alleged unaccounted receipts and payments when all these alleged receipts and payments were pertaining to the project and the appellant's accounting of entire expenses in the year under consideration as project work in progress and receipts from the customers as advances was accepted by the Assessing Officer and upheld by the Ld. CIT (A). 8. The Ld. CIT (A) has erred on facts and in law in changing the entire basis of addition without providing adequate opportunity of being heard to the appellant. 9. The Ld. CIT (A) has erred on facts and in law in denying the application of principles of telescoping which resulted into double/multiple taxation. The Ld. CIT (A) has erred on facts and in law in confirming the addition on account of notional ad....
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....the assessee has not debited any interest expenses to the profit and loss account which was incurred on the capital contributed by the partners in the assessment years 2012-13 and 2013-14 respectively. As such, the amount of interest expenses was capitalized in the work-in-progress. However, the assessee in the year under consideration has recognized the income based on percentage of project completion method. As such the assessee has recognized the income for the year under consideration to the tune of 78.18% based on percentage of project completion method. Accordingly the AO was of the view that such interest income on the loans and advances given to the partners as discussed above should have been recognized as income for Rs. 46,45,274.00 being 78.18% of the interest i.e. Rs. 59,41,768.00 and the balance amount of Rs. 12,96,494.00 (Rs. 59,41,768.00-46,45,274.00) should have been reduced from the capital work-in-progress shown in the year under consideration. Consequently, the AO disallowed the sum of Rs. 46,45,274.00 representing the amount of interest that should have been charged on the advances given to the partners and finally added the same to the total income of the asses....
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.... The Assessing Officer, was therefore, justified to make adjustment on account of interest capitalised in the construction work. As regard to appellant's argument on the addition made not on the basis of incriminating material and reliance on the case of PCIT v. Saumya Construction (P.) Ltd. [2017] 81 Taxmann.com 292 (Guj), the same is not applicable in appellant's case as assessment for A. Y. 2015-16 was pending on the date of initiation of search u/s. 132 of the I. T. Act, 1961. As regard to appellant's argument that Assessing Officer has not made addition of interest on debit balance in A. Ys. 2012-13 & 2013-14 is not material as Assessing Officer has power to re-compute the work in progress in A. Y. 2015-16 in which 78.18% of the project has been completed. In view of the above, the addition made by the AO is confirmed. The ground of appeal is accordingly dismissed." Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 124. The learned AR before us submitted that it was not mandatory to charge interest on the amount of the loans and advances given to the partners. As such it was optional to charge interest from the partners ....
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....harge the interest from the partners and the AO cannot direct to do otherwise. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High court in the case ofPr.CIT vs. Alidhra Taxspin Engineers Tax Appeal No. 265 of 2017 wherein it was held as under: "[4.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue. On interpretation of the partnership agreement and considering the wish of the partners reflected in the partnership deed, not to pay /charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the Assessing Officer with respect to the deduction claimed under Section 80IB of the Income Tax Act. As rightly observed by the learned Tribunal, mere incorporation of interest on the partners' capital and remuneration does not signify that the same are mandatory in nature. We concur with the view taken by the learned Tribunal. We see no reason to interfere with the impugned judgment and order passed by the learned tribunal. No substantial questions of law arise in the present Tax Appeal. The present Tax Appeal deserves to be dismissed and is acc....