AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 322
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....tances of the case and in law, the Ld. CIT (A) erred in confirming the Order of the AO in reopening the case of the Appellant u/s 147 of the Income Tax Act and the Ld. AO ought to have made the assessment u/s. 153C. 2. Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the proceedings u/s. 147 in spite of admitting that the documents being whatsapp messages seized from third party pertains/relates to the Appellant and there being specific provisions prevailing at the time when papers are seized to assess such documents u/s. 153C. Confirming the proceedings u/s. 147 and having not followed the procedure u/s. 153C is bad in law and the entire addition needs to be deleted. 3. Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that the AO had valid reasons to initiate reassessment proceedings. The Ld. CIT(A) ought to have quashed the notice issued u/s. 148 of the Act and consequential assessment order which is based on dumb document. 4. Without prejudice to the above and without adm....
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.... the Act on 15/12/2017 wherein the assessee was saddled with addition of unexplained cash credit u/s 68 for Rs. 25.20 Lacs. The original return was filed on 30/03/2012 which was processed u/s 143(1). The assessee being resident HUF was stated to be engaged in construction business during the year. During the year, the assessee was developing a project titled as Vishrani Niwas / Vivaria, the project consultancy services of which were being rendered by M/s Goshar Ventures Pvt. Ltd., an associated concern run by one Shri Pankaj Goshar. 3.2 The reassessment proceedings stem from the fact that a search action was carried out u/s 132 on 10/09/2015 in the case of Shri Pankaj Dhanji Goshar (PG) and his associated concerns. Based on search findings, the assessee's case was reopened vide notice u/s 148 on 14/03/2017. The reasons for reopening were duly supplied during the course of assessment proceedings which were objected to by the assessee. However, all these objections were disposed-off vide rebuttal order dated 30/10/2017. 3.3 During the course of search action, page nos. 1 to 3 as per Annexure-1 were seized by the department, a copy of which was supplied to the assessee. The imag....
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.... was under duress and the same has subsequently been retracted by him on 11/12/2015, 13/01/2016 & 19/02/2016. He further submitted that his associated concern M/s Goshar Ventures Pvt. Ltd. was engaged as project management consultant for the said project which would include seeking permission from Municipal Corporation, execution of job work, procurement of material required for construction, assisting the buyers and certifying bills for payments. Shri Pankaj Goshar also submitted that image found on the mobile was sent by somebody and wrongly stored in the folder. He also denied having undertaken any financial transaction with Shri Umakant Manania during last more than 10 years. Shri Nimesh Manania, upon cross examination, submitted as under: - I have agreed to purchase the flat in Vishrani Niwas at lumsum price of Rs. 3,50,00,000/- in the year 2012 necessary flat agreement has already registered on 18.12.2013. So far I have paid Rs. 50 lakhs by cheque in the month of April, 2012. Secondly I have not made any cash payment / on money payment towards purchase of flats to Kalyanji Velji (HUF) or Pankaj Goshar on behalf of Kalyanji Velji (HUF). Similar was the statem....
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....to the preamended provisions of Sec.153C. Relying on the decision of Hon'ble Gujarat High Court in the case of Vijaybhai N.Chandrani V/s ACIT (333 ITR 436), it was held that notice u/s 153C would not be valid if money, jewellery or other valuable article or thing or books of accounts or documents seized or requisitioned do not belong to such person. Since the seized documents were found from the mobile of a third-party, the same did not belong to the assessee. There was only a reference about the unaccounted cash transactions entered into by the Manania family and the assessee in the seized document. Thus, it could not be held that the seized document belonged to the assessee. Since statutory conditions of Sec. 153C were not satisfied, reopening was rightly resorted to by Ld.AO. 5.3 Proceeding on merits, it was noted that the seized page contained both the accounted as well as unaccounted transactions. The seized page had to be read in totality and if the figures related to accounted entries noted on the seized document are found to be correct then the unaccounted cash entries noted on the same seized paper was also to be considered as true. The seized document had correct numer....
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....e provisions would override other provisions of the act governing framing of assessment since the provisions of Sec, 153C start with non-obstante clause. The failure to do so would render the assessment illegal and bad in law. 8. We find that the search leading to seizure of incriminating document, took place on 10/09/2015 and therefore, the provisions of Sec. 153C as amended w.e.f. 01/06/2015 were applicable to the fact of the case. The new provisions would read as under: - 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,- (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 over to the Assessing Officer having jurisdiction over such ....
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....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. We find that the provisions of Sec.153C start with non-obstante clause and overrides the provisions of various Sections as mentioned therein including the provisions of Sec.147 & 148. In terms of sub-clause (b) of Sec.153C(1), where any books of accounts 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 Sec.153A then said material shall be handed over to the Assessing Officer having jurisdiction over such other person. Accordingly, Ld. AO shall proceed against such other person and issue notice to assess or reassess the income of the other person in accordance with the provision....
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....r any books of account or documents seized or requisitioned pertain to, or any information contained therein, relates to, any person, other than the person referred to in section 153A of the Income-tax Act, 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 income of such other person in accordance with the provisions of section 153A. 39.3 Applicability: This amendment has taken effect from the 1st day of June, 2015. Thus, as per amended provisions w.e.f. 01/06/2015, if any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a third person then it would be obligatory on the part of Ld. AO to issue notice u/s 153C and frame an assessment in accordance with Section 153A. The provisions of Sec.153C override the application of certain other provisions including the provisions of Sec.147 & 148. The failure to do so would vitiate the assessment proceedings as held by Pune Tribunal ....
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....d under section 153C of the Act as per prescribed procedure and no proceedings can be initiated under section 147 / 148 of the Act. The said proposition has been held by the Pune Bench of Tribunal in the case of Joshi Wadewale Hadapsar Vs. DCIT in ITA Nos.105 & 106/PUN/2016, relating to assessment years 2009-10 & 2010-11 with lead order in the case of Mrs. Vasundhara Shailesh Joshi Vs. DCIT in ITA Nos.95 & 96/PUN/2016, relating to assessment years 2009-10 & 2010-11, vide consolidated order dated 27.03.2018. The relevant findings of the Tribunal are as under:- ― 28. The first issue which arises is whether the assessment in such circumstances was to be made under section 153C or 148 of the Act and connected issue is whether such an issue of assessment being completed under a particular section was valid or not, can be raised while deciding the issue of levy of penalty under section 271(1)(c) of the Act against the income assessed in the hands of assessee. In this regard, the learned Authorized Representative for the assessee has pointed out that the issue stands covered by the ratio laid down in ITO Vs. Shri Shailendra B. Agrawal (supra) and in bunch ....
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....r 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. 29. Section 153C of the Act very clearly lays down that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing seized or requisitioned, belongs to; or 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, such 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 the Assessing Officer shall proceed against such other person and issue notice and assess or reassess the income of other person in accordance with provisions of section 153A of the Act. Section thus, very clearly lays down the procedure to be followed when during the course of search on a person any money, bullion,....
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....ssessee under section 147 / 148 of the Act are not warranted. The Assessing Officer after receipt of information belonging to the assessee should have invoked provisions of section 153C of the Act and not section 147 / 148 of the Act. Accordingly, we hold so. Consequently, re-assessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same. Consequently, the additional ground of appeal raised by the assessee is allowed and we hold that assessment framed by the Assessing Officer is null and void. Consequently, the issue raised on merits by the assessee and the Revenue becomes academic in nature and the same are dismissed. The Ld. CIT(A), in our considered opinion, has erred in overlooking the amendment brought in by Finance Act, 2015 in Sec.153C and carried away by the fact that the seized document must belong to the assessee for application of Sec.153C. However, as already noted the said words stood replaced by words belongs or belong to. The seized document, in the present case, undisputedly pertains to the assessee and the same form the very basis of making additions in the hands of the assessee. In vie....