TaxTMI 
TaxTMI 
2021 (2) TMI 373
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.... and order. 2. For the sake of convenience, the Special Civil Application No.20844 of 2019 is treated as the lead matter. 3. By this writ-application under Article226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:- (A) be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction for quashing and setting aside the impugned notices dated 12/09/2019 u/s.153C of the Income Tax Act, 1961 at Annexure 'A' (Colly) and the order dated 22/10/2019 disposing off the objections at Annexure 'D'; (B) pending admission, hearing and disposal of this petition, adinterim relief be granted and the respondent be ordered to restrain from enforcing compliance of the impugned notices dated 12/09/2019 at Annexure 'A' (Colly) and/or taking any other steps in this regard including ex-parte order or implementation of preliminary order dated 22/10/2019 at Annexure 'D'. (C) Award the cost of this petition. (D) grant such other and further reliefs as this Hon'ble Court deems fit. 4. The facts giving rise to this writ-applicati....
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....ry. In this regard enquiry was also conducted by AIU Rajkot, regarding the ownership of the parcels and asked them to produce the relevant documents to prove the genuineness of the gold intercepted. However, both these persons were unable to explain the same. Therefore proceedings as per income tax act were initiated by Investigation Wing. 4. In this regard statement of Shri Suresh Kumar Jaikishan Bangarwa of the Act on oath recorded by ADIT(Inv), UnitII, Rajkot which started on 27.10.2017 at 05.40 PM at the Air Port, Rajkot. He was asked to produce the supportive evidence in support of the ownership of the parcles but he failed to submit anything in this regard. Therefore, he was given \ample opportunities and sufficient time to gather the documents in support of the parcels' ownership like bills, vouchers, form no. 402 / 403, etc. However, after lapse of considerable time he failed to produce any concrete documentary evidences. After sometime Shir Sureshkumar said that there may be some documents in the parcels which may give details of the real receiver of the parcel and for that he has to open the parcels. Therefore, he was allowed to ope....
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....grams valued at Rs. 1837561/as per valuation report is seized. The said parcel sent by Chhunnu Mal Mahendra Jain of Delhi to below mentioned party / parties of Rajkot mentioned in column B for job work. Details of parties is/are as under: Name and Address of the sender (A) PAN of sender Name and Address of the receiver (B) Parce l Nos. Weight (In grams) Value (In Rs.) Chhunnu Mal Mahendra Jain 1333 Chandni Chowk, Delhi 110006 GSTIN: 07AAAFC46 21R1ZA AAAFC4621R Naimish Adesara Amrut Jewellers Opp. Modi Street Mandvi Chowk, soni Bazar, Rajkot 360 001 GSTIN: 24ACEPA7985N1Z6 J15 622.48 1837561 9. Further appraisal report and the details of investigation done in the matter and statement recorded by the Investigation wing is examined and it is found that the documents furnished to substantiate the transaction by both the parties are failed to prove the genuineness of the transaction and the documents and submissions made by both these parties nothing but more than a futile effort based on after thoughts for coloring the unaccounted transaction visàvis transfer of unaccounted gold bullion. 10. In view of above, I am sat....
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....e notice, I had vide letter dated 01.10.2019 requested to provide a copy of the 'Satisfaction note' recorded by the AO of searched person, based on which you had informed an objective opinion in consonance with the provisions of section 153C of the Act to satisfy yourself that (a) the bullion or other other valuable article or thing seized or requisitioned belongs to the assessee (who is other than the person referred to in section 153A); (b) that the assets seized have a bearing on the determination of the total income of such other person (being the assessee) for six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted. 2.0 With reference to the above, vide letter dated 09.10.2019 your good self has furnished the copy of Satisfaction note recorded on 12.09.2019.Since the satisfaction note is based on incorrect facts and materials and as it suffers from serious legal, factual as well as procedural, flaws, the proceedings initiated u/s. 153C of the Act for the assessment years 2012-13 to 2017-18 deserves to be dropped. 3.0 The facts of the case in brief and objections against the satisfac....
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....ll the consignees were again served with the Notice u/s 153C of the Act for AY 2012-13 to 2017-18. (ix) After receipt of the above stated notices for six assessment yeas, all the consignees have requested to avail satisfaction note (i) which was recorded by AO of person searched and (ii) AO of person other than the person searched i.e. the assessee, recorded prior to issue of notice u/s 153C. The said satisfactions dated 12.09.2019 were communicated on 01.10.2019. 3.2 Objection against the satisfaction recorded and issue of notices u/s 153C of the Act for AY 2012-13 to 2017-18 (i) At the outset it is submitted that in the cases of search, the AO of persons searched must issue notice u/s 153A of the Act for the six years prior to the year in which search took place. (ii) However, in case the asset / gold bullion etc. found or seized is to be belong to any other person, i.e. other than the person searched, than the AO of person searched has first to draw satisfaction and transfer the said materials / gold seized to the AO of that other person. Thereafter, the AO of that other person has to satisfy himself that the books of account or documents or a....
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....dropped and the same may kindly be dropped. (x) Thirdly, to reduce infructuous & unnecessary proceedings under the Act in the cases where search has been conducted and cash and other assets are seized during the election period, and where no evidence is available and / or investigation is required, for any assessment year other than the assessment year relevant to the previous year in which search is conducted or requisition is made, under such circumstances, CBDT circular No. 10/2012 dated 31.12.2012 (Copy attached at page 111 of common paperbook) is relevant as per which the AO should refrain himself from issue of notice u/s 153C / 153A of the Act for irrelevant period. In the Satisfaction note, the AO has clearly satisfied that, the interception was made at Rajiot airport by the AIU on 2.10.2017 during their duty related to Election Expenditure Monitoring. In the case under consideration, the gold was found / seized in AY 201819 and no other proof or evidence in available for preceding six years. Therefore, the notice issued u/s 153C of the Act is bad in law and requires to be dropped and may kindly be dropped. For ready reference copy of Schedule for the General Electi....
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....no violation so far as Income tax proceedings are concerned as this may be a mere technical offence under state law, i.e. VAT/GST. Barring this, the AO has failed to quote a single instance in support of his satisfaction that the assessee is resorting to coloring the unaccounted transaction. (xiii) The truth is that, the gold in question was part of sale/supply for which copy of invoice/voucher/delivery challan, as the case may be had been issued by consigner. Documentary evidence of such invoice/voucher/challan along with proof of payment or indirect tax, stock register showing availability of stock and confirmation of the consignors had already been placed on record during postsearch inquiry. Therefore, the satisfaction derived by the AO is biased and predetermined. (xv) Furthermore, for the validity of proceedings u/s.153C of the Act, two separate satisfactions has to be recorded, i.e. (i) recording of satisfaction by the AO of person searched that assets/documents seized belongs or pertains tot he "Other Person" and (ii) recording of satisfaction by he AO of "other person" that said assets/documents pertains to belongs to such "Other Person". Therefore, it is ....
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....ta Di Air Service. Since, the Gold parcel was sent by Chhunnu Mal Mahendra Jain for jobwork (making of gold ornaments) under the cover of issue voucher/delivery challan, it cannot be said that the said Gold seized belongs to me and that value of such seized gold is having bearing on my taxable income. Hence, when it is clear that the Gold seized was sent by Chhunnu Mal Mahendra Jain, Delhi and the same fact had also been confirmed by sender, issue of notices u/s.153C of the Act in my case is infructuous. (xxi) Further, by issuing notices u/s.153C of the Act in my case explicitly clears that no such notices have been issued or shall be issued to the sender since the prerequisite condition for issue of notice u/s. 153C is that the concerned asset seized has to be handed over by the AO of "person searched" tot he AO of "other person" to which asset belongs to. Since, the asset seized cannot be handed over to multiple AO, ti implies that no satisfaction has been recorded in the case of "Sender/Consignor Assessee" and in that case, source of Gold sent by the sender/consignor stands explained. Once, the source of asset in the hands of sender/consignor is explained, ther....
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....y considering the release application filed by the Courier persons before appropriate authority and decision of Hon'ble High Court of Gujarat in the case of Nadim Dilipbhai Panjvani Vs. ITO in SCA No.13374 of 2015 (copy attached at page 144 of common paper-book). 4.4 The objections referred to above were considered by the respondent and vide order dated 22.10.2019 those came to be rejected. 4.5 Thereafter, a notice was served to the writ-applicant dated 12/09/2019 under Section143(2) of the Act for the Assessment Year 201819. 5. Being dissatisfied with the aforesaid action, the writ-applicant is here before this Court with the present writ-application. 6. On 26.11.2019, a Coordinate Bench of this Court passed the following order. 1. Mr. Darshan Patel, learned advocate for the petitioner invited the attention of the court to the satisfaction note recorded by the Assessing Officer for issuing the impugned notices for assessment years 2012-13 to 2017-18, to submit that it is recorded therein that the parcels seized during the course of search contained a parcel sent by Chhunnu Mal M. Jain of Delhi to the petitioner for job work. It was submitted that on the ba....
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....tion 153C of the Act for assessment years 2012-13 to 2017-18 are hereby stayed. Direct service is permitted. Submissions on behalf of the writ-applicant : 7. Mr. Darshan Patel, the learned counsel appearing for the writ-applicant vehemently submitted that the jewellery in question was seized under Section132 of the Act in the course of a search conducted at the Rajkot Airport on 27.10.2017, and therefore, the case of the writ-applicant would fall under Section173(2)(a) of the Act. He would submit that as per Section153C (2)(a) of the Act, if any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to a person other than the person referred to in Section 153A of the 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. He would argue that as the jewellery seized at the Rajkot Airport does not belong to the writ-applicant , the initiation of proceedings under Section153C could be said to be without jurisdiction. 8. According to Mr. Patel, the gold which came to be seized at the Rajkot Airport belongs to one Shr....
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....the case of Commissioner of Incometax, Gujarat Vs. Vijaybhai N. Chandrani; [2013] 35 taxmann.com 580 (SC). 16. Mr. Bhatt further submitted that the Assessing Officer is more than prima-facie satisfied as is evident from the satisfaction note that the gold seized at the Rajkot Airport has a bearing on the determination of the total income of the writ-applicant . Mr. Bhatt, would submit that there is no merit in the contention canvassed on behalf of the writ-applicant that the Assessing Officer himself has accepted that the gold was sent by Chhunumal Jain for the purpose of job work. According to Mr. Bhatt, the contents of Paragraph8 of the satisfaction note are completely misconstrued by the learned counsel appearing for the writ-applicant . What is important is the satisfaction as recorded in paragraph9 of the satisfaction note. 17. Mr. Bhatt, invited the attention of this Court to few relevant averments made in the affidavitinreply filed on behalf of the respondent. The averments reads as under:- 3. At the further outset, I most respectfully submit that the petition is filed at a premature stage in as much as only notices under Section 153C of the Income Tax Act ....
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....2.48 gms. valued at Rs. 18,37,561/belongs to the petitioner and the information contained on the parcels, statements recorded relates to the petitioner. 5. I humbly submit that upon receipt of the above documents/ assets seized, the respondent being the Assessing Officer of the petitioner recorded satisfaction to the effect that the gold seized and statement recorded/information have a bearing on the determination of the total income of the petitioner and accordingly, issued the impugned notices under Section 153C of the Act for Assessment Years 2012-13 to 2017-18. 6. Without prejudice to the above, the para wise reply to the contentions raised by the petitioner is as under. (i) With reference to paragraphs (I)1 to 8 of the petition, the contents to the extent it does not form part of the record are denied. I submit that the impugned notices are issued after following the due procedural requirements as contemplated under the Act and after recording satisfaction and, therefore, the impugned notices are legal and valid. (ii) With reference to paragraphs II(1) to II (9), the petitioner has contended that the gold seized at Rajkot Airport does not be....
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.... there is incriminating material which goes to show that the seized gold belongs to the petitioner and the information/ statement relates to the petitioner. The case on merits will be dealt with during the course of assessment proceedings after affording adequate opportunities of hearing to the petitioner. (iii) With reference to paragraphs II (10) to II(11), the petitioner has contended that addition can only be made in the relevant Assessment Year 2018-19 and not in any other Assessment Year and therefore, invoking of the provisions under Section 153C for assessing six assessment years is completely unjust. I submit that once proceedings are initiated under Section 153C, the assessing officer has to follow the mandate of the statute to reopen the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted. Therefore, the assessing officer has issued the impugned notice for A.Y. 2012-13 to 2017-18. I submit that assessment under Section 143(3) r.w. 153C of the Act for A.Y.201819 came to be framed on 19.12.2019. The assessing officer has made additions on protective basis. (iv) Wit....
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....ort falls within the ambit of the expression "belongs to" or "pertains to" or "relates to". Before adverting to the rival submissions canvassed on either side, we may first take note of section 153C of the Act, 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 that the books of account or documents or assets seized or requisitioned have a bearing on the determination of ....
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....egorized two situations. If the 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 enlarged; i.e. if a person at whose premises search was carried out, has been 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 under section 153C, but prior to 1.6.2015 action under section 153C could be take....
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.... Authority has furnished him with the copies of documents seized under Section 132A. The assessee being dissatisfied with the said documents instead of filing his explanation/reply to the Show Cause Notices, has filed a Writ Petition before the High Court impugning the said notices. 14. In our considered view, at the said stage of issuance of the notices under Section 153C, the assessee could have addressed his grievances and explained his stand to the Assessing Authority by filing an appropriate reply to the said notices instead of filing the Writ Petition impugning the said notices. It is settled law that when an alternate remedy is available to the aggrieved party, it must exhaust the same before approaching the Writ Court. In Bellary Steels & Alloys Ltd. v. CCT, (2009) 17 SCC 547, this Court had allowed the assessee therein to withdraw the original Writ Petition filed before the High Court as the said proceedings came to be filed against the showcause notice and observed that the High Court should not have interfered in the matter as the Writ Petition was filed without even reply to the show cause notice. This Court further observed as follows: "3....In the ci....
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....ade by the High Court while disposing of the Writ Petition. If, for any reason, the assessment order goes against the assessee, he/it shall avail and exhaust the remedies available to him/it under the Act, 1961. 23. Thus, the Supreme Court took the view that the assessee should have filed his reply/objections to the satisfaction note and if any assessment order is passed, it would be open for the assessee to avail and exhaust the remedy available to him under the Act, 1961. The only distinguishing feature in the case before the Supreme Court compared to the case on hand is that in the case on hand, the reply/objections were filed by the writ-applicant and those were duly considered and rejected, whereas, in the case of Vijaybhai N. Chandrani (supra) even without filing any reply/objections, the assessee came straight to the High Court with a writ-application. However, what is important to note is that the Supreme Court made itself very clear that the assessee should file his reply/objections and thereafter, file the return for the assessment year in question. As regard the assessment order, the Supreme Court said that it would be open for the writ-applicant to avail and exhau....
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....the gold seized and statement recorded have a bearing on the determination of the total income of the assessee, Jitendra Mansukhlal Adesara Prop. Of Amrut Jewellers, Hence, I am sttisfied that it is a fit case for issuing notice u/s. 153C of the Incometax Act, 1961 and n otice u/s. 153C of the Act is issued for A.Y. 2012-13, 2013-14, 2015-16, 2016-17 and 2017-18 accordingly. 25. The satisfaction note referred to above reveals that initially i.e. 27.10.2017, it was a case of survey, which was converted to search. During the course of search, the statements under Section132(4) were recorded on oath wherein as no proper or satisfactory explanation for gold was given, the said assets were seized. 26. As per Section153A r/w. Section 153C, such being the position, notice is mandatorily required to be issued to furnish return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted. Since the search is dated 27.10.2017, the preceding six assessment years would be A.Y.2012-13 to 2017-18 relevant to previous years 2011-12 to 2016-17 for which the notice under Section 153C has to be issued. F....
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....sdiction of the Assessing Officer in issuing the notices, even for the six years i.e. A.Y. 2012-13 To 2017-18. 30. The Supreme Court in the case of Super Malls Private Limited (Supra) had the occasion to consider Section153C of the Act. The relevant observations are as under:- 6. This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the ju....
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.... other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. 6.2. Now let us consider from the satisfaction note recorded by the Assessing Officer, in the present case. Whether there is a sufficient compliance of Section 153C of the Act or not. The satisfaction note reads as under: "Name and address of the assessee : M/s Super Malls (P) Ltd. Sector 12, HUDA, Karnal Regd. Office at 51, Transport Centre Punjabi Bagh, New Delhi. PAN : AAICS2163F Status : Company Reasons/Satisfaction note f....