TaxTMI 
TaxTMI 
2021 (8) TMI 652
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....e facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in relying on the decision in the case of Manish Maheshwari vs ACIT & Another (2007) 289 ITR 341 whereas the facts in the relied case was that no satisfaction at all was recorded. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2. Before us, the respondent-assessee has also filed grounds under Rule 27(1) of ITAT Rules by raising following grounds for adjudication:- 1) "On the facts and circumstances of the case as well as in Law, the Learned Assessing Office as well as Ld CIT(A) has erred in not appreciating the facts that there is no jurisdiction U/ 153C as there was no books, documents or valuables, cash, jewellery, bullion etc belonging to the assessee were seized from any person searched under section 132 of the I.T. Act. 2) On the facts and circumstances of the case as well as in Law, the Learned Assessing Office as well as Ld CIT(A) has erred in not appreciating the facts that t....
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....he income was determined at Rs. 385,21,02,120/- vide order dated 28.03.2013 passed u/s.153C. 5. Before the Ld. CIT (A) the assessee took a legal plea that, since there is no satisfaction recorded by the AO of the person searched, i.e., Shri N K Jain, therefore, the order passed U/s 153C is null and void. Reliance was placed on the decision of Hon'ble Delhi ITAT in case of DSL Properties P Ltd. ITA No 1344/Del/2012 dated 22/03/2013. Ld CIT (A) after verifying the assessment and after recording his finding at page 12 para 3.4 of his order quashed the assessment order passed U/s 153C as without jurisdiction. In sum and substance, the reasoning of ld. CIT (A) was that, firstly, satisfaction note for initiation of proceedings u/s.153C was not recorded in the case of the person searched u/s.132, as seized documents claiming to belonging appellant was found from the premises of Shri N.K. Jain and not from BPTP Group; and secondly, seized document claimed to be belonging to the assessee does not belong to it. Accordingly, he quashed entire proceedings after observing as under:- "I have concluded that the satisfaction note is not recorded in the file of the assessee searched u/s....
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....n the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD /153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 7. Thus, he submitted that the CBDT circular makes it very clear that even if the Assessing Officer of the search person and "other person" is the same, then in that situation also, Assessing Officer has to record two separate satisfactions and accordingly the order of the ld. CIT (A) is correct in the light of the CBDT Circular. 8. However, at the t....
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.... be relied upon for the purpose of assessment U/s 153C of the Act, however in the satisfaction note provided by the AO, the documents found from the office premises of the BPTP group were also referred as Annexure 7. Though these documents are in the nature of Trial Balance and ledger accounts of the assessee company, which are duly recorded in the books of the assessee, however the same cannot be considered for the purpose of 153C jurisdiction as there is no finding from the AO of BPTP group about the documents belonging to the assessee company, which is first and foremost requirement for assuming jurisdiction U/s 153C of the Act. 11. The core issue which has been argued before us is; Whether the document found from possession of Shri N.K. Jain belongs to the assessee company or not; and Whether these are in nature of incriminating documents which can lead to any inference that any undisclosed income has escaped assessment or there is any element of undisclosed income so as to be roped in assessment under section 153C for the assessment year which is unabated. 12. For the sake of ready reference, 'Satisfaction' of Assessing Officer and the documents found f....
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....Grover in all the cases) but not by the transferee 75 List of allottees of equity shares of M/s Vision Town Planners Pvt Ltd as on 27.04.2010 76-80 Form No. 2 Return of allotment of M/s Vision Town Planners Pvt Ltd in respect of allotment of shares on 27.04.2010 along with copy of receipt of fees filed with ROC. 81-93, 130-142 Copy of shares certificates of M/s Vision Town Planners Pvt Ltd transferred from Ramprasad Jalal Singh Digvijay Yadav, Nirbhay Kumar Jain SudhanshuTripathi Sunil Kumar Jindal and BPTP International Trade Centre Ltd in the name of Ashok Kumar Jain on 30.04.2010 94 Form No 22A, Consent of share holders for shorter notice- dated 20.04.2010 issued to the Board of Directors of M/s Vision Town Planners Pvt Ltd by BPTP International Trade Centre Ltd 95-115 Form No. 23 Registration of resolution and agreements dated 26.04.2010 along with extracts of Annual General Meeting, explanatory statement and copy of Article of Association of M/s Vision Town Planners Pvt Ltd duly signed by Shri Shri N K Jain as chairman along with copy of receipt of fees filed with ROC. 116-129 Copies of extracts of minutes of meeting of board of directors of....
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....K Jain 13-20 Form No.22B- Form of return to be filed with-the Registrar of M/s Vision Town Planners Pvt. Ltd along with receipt of payment of challan to ROC 22-39 Copies of cheques of ABN Amro bank dated 20/03/2009 for Rs. 50,000/- each, issued by Digvijay Yadav and NK Jain to M/s Vision Town Planners Private Ltd 23 Receipt of payment of the learned to ROC for inspection of public documents of M/s Vision Town Planners Pvt Ltd.. 25-28 Form No. 32- Particulars of appointment of Managing Directors, Director, Manager and Secretary and the change among them or consent of candidate to act as a Managing Director or director or manager or secretary of a company and/or undertaking to take and pay for qualification shares of M/s Vision Town Planners Pvt Ltd. submitted by Shri Digvijay Yadav 29-31 Form No. 18 - Notice of situation or change of situation of registered office of M/s Vision Town Planners Pvt. Ltd along with receipt of fees filed with ROC 32-37 Form No. 1A- Application form for availability or change of name, incorporating a new company in the name of Vision Town Planner Pvt. Ltd by ShDigvijay Yadav along with receipt of fees of Rs. 5001. filed....
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....Vision Town Planners Pvt Ltd submitted by Shri Kabul Chawla. 110-114 Form No. 2 - Return of allotment of M/s Vision Town Planners Private Ltd along with receipt of payment of challan to ROC. 115-122 Form No. 5 -Notice of consolidation, division etc or increase in share capital or increase in number of number- of M/s Vision Town Planners Private Ltd along with copy of the ordinary resolution dated 30/10/2009 of the company along with receipt of payment of challan to ROC. 123-127 Copy of Board Resolution dated 01/09/2009 of M/s Karishma Industries Ltd for subscribing for equity shares of M/s Vision Town Planners Private Ltd and duly signed by its Director Naresh Kumar Gupta along with letter dated 17/09/2009 of M/s Karishma Industries; Ltd addressed to the Board of Directors of M/s Vision Town Planners Private Lt4, for subscribing to the equity shares of Rs. 10 each at a premium of Rs. 50 each of MIs Vision Town Planners Pvt Ltd and duly signed by its director Naresh Kumar Gupta and directors of M/s Vision Town Planners Private Ltd and M/s BPTP International Trade Centre Ltd. 138-142 Copy of Board Resolution dated 01/08/2009 of M/s Ad-Fin Capital Services Indi....
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.... of Vision Town Planners Private Ltd. 15-19 Copy of Board Resolution dated 01/08/2009 of M/s Ad-Fin Capital Services India Pvt. Ltd for subscribing for equity shares of M/s Vision Town Planners Private Ltd and duly signed by its Director Nirahjan along with letter dated 13/08/2009 of M/s Ad-Fin Capital Services India Pvt. Ltd addressed to the Board of Directors of M/s Vision Town Planners Private Ltd, for subscribing to the equity shares of Rs. 10 each at a premium of Rs. 50 each of M/s Vision Town Planners Pvt Ltd and duly signed by its director Niranjan Kumar Sharma and directors of M/s Vision Town Planners Private Ltd and M/s BPTP International Trade Centre Ltd. 20 Original undated letter of M/s Euro Asia Mercantile Pvt. Ltd and duly signed by its director Naresh Kurt Gupta, addressed to the Board of Directors of M/s Vision Town Planners Private Ltd, thereby giving its approval for increase of the capitalisation of Vision Town Planners Private Ltd. 21-25 Copy of Board Resolution dated 01/09/2009 of M/s Euro Asia Mercantile Pvt. Ltd for subscribing for equity shares of M/s Vision Town Planners Private Ltd and duly signed by its Direct & Naresh Kumar Gupta along ....
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....unts of M/s BPTP International Trade Cejjtre Ltd, M/s Ad-Fin Capital Services India Private Limited, M/s Euro Asia Mercantile Private Ltd, M/s Karishma Industries Ltd and M/s Sunny Cast and Forge Ltd for the period from 01/04/2009 to 31/03/2011 in the books of M/s Vision Town Planners Pvt. Ltd. 217 Ledger account of summary of bank accounts of M/s. Vision Town Planners Pvt. Ltd. for the period 0l/04/2009 to 05/03/2010. 218 Trial Balance of M/s. Vision Town Planners Pvt. Ltd for the period from 01/04/2009 to 05/03/2010. In view of above, it is established beyond, doubt that many books of accounts or documents seized during the course of search and seizure action on BPTP group of cases belong to M/s Vision Town Planners Pvt. Ltd i.e. the assessee company and hence prerequisite condition to initiate proceedings u/s 153C of the Income Tax Act, 1961, is fulfilled. Therefore, I am satisfied that case of M/s Vision Town Planners Pvt Ltd is a fit case for initiation of proceedings u/s 153C of the Income Tax Act, 1961. Accordingly, notices u/s 153C r/w 153A of the Income Tax Act, 1961 are issued for AY 2005-06 to 2010-11, in the case of M/s Vision Town Planners Pvt Ltd ....
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....high Court is squarely applicable in this case as well. Since the document does not belong to the assessee company, proceedings u/s 153C cannot be initiated against the assessee company. Therefore, the assessment is without jurisdiction and null and void ab-initio. 15. In the second ground raised u/r 27, the assessee contends that the documents found are not in the nature of incriminating documents. These were all legal documents in compliance with the Company law provisions. None of the documents indicate any undisclosed income or expenses. In such case even if notice U/s 153C is issued, no addition can be made as the impugned assessment year is not an abated assessment year. Even documents found from the premises of BPTP group marked as annexure A-7 in the satisfaction note, are also in the nature of ledger accounts and Trial Balance from the audited books of the assessee company. Nowhere in the assessment order, has Assessing Officer referred these documents while making huge additions. The seized documents must be incriminating and must relate to the assessment years whose assessments are sought to be reopened. He submitted that now the decision of the Supreme Court in Sinhg....
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....andum of association, copy of resolution passed by Board Meeting of the assessee company, copy of notice given to the members for EGM along with explanatory notice, copy of the register of Members, register of share/debenture, transfer register of share application and allotment, etc, copy of share transfer forms, return of allotment, list of allottees, consent of shareholders, form no.22A, form no. 23, copy of extract of minutes, signed audited reports and balance sheet, profit and loss account, receipt of payment to ROC for inspection of public documents of the assessee company, form no. 32, appointment of Management and Directors and Secretaries, etc. and various other forms and letters, addressed to ROC. All these documents were found from Shri N.K. Jain in his professional capacity as he was the Company Secretary of the assessee company. None of these documents can be remotely inferred as incriminating which can remotely deduce that there is any element of undisclosed income or any income which has escaped assessment. Most of these documents are available in public domain and easily accessible to all which can be downloaded from website of Ministry of Corporate Affairs. In so ....
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....supra) has observed as under: "The finding of photocopies in the possession of a searched person does not necessarily mean and imply that they 'belong' to the person who holds the originals. Possession of documents, and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents, it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking section 153C does not arise. The Assessing Officers should not confuse the expression 'belongs to' with the expressions 'relates to' or 'refers to'. A registered sale deed, for example, 'belongs to' the purchaser of the property although it obviously 'relates to' or 'refers to' the vendor. In this example if the purchaser's, premises are searched and the registered sale deed is seized, it cannot be said that it 'belongs to' the vendor just because his name is mentioned in the document. In the converse case if....
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....the time of recording of the satisfaction, therefore, one has to see, whether these documents are in the nature of incriminating documents in order to warrant any addition on account of undisclosed income. The document which has been referred in the satisfaction note of the seized documents are all legal document in compliance with the company law and professional documents and as stated above, these documents does not indicate any undisclosed income or expenses. Even the ledger account and bank statement as mentioned in Annexure A-7 are duly disclosed in the audited accounts and nowhere is it indicating any undisclosed income not disclosed in the books of the assessee company or audited accounts. There is not a single document mentioned right from the Annexure A1 to Annexure A7 to point out that the share application money received by four companies were either non genuine or bogus or there is any material that these all are in the nature of accommodation entry. 23. Apart from that, one very important fact to be noted here is that nowhere in the assessment order the Assessing Officer has referred to these documents while making the additions u/s. 68 nor there is any adverse inf....
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....or the relevant assessment years. If the seized money, bullion, jewellery or other valuable article or thing seized as handed over to the Assessing Officer of the assessee, are duly disclosed and reflected in the returns filed by the assessee, no further interference would be called for. Similarly, if the books of account/documents seized do not reflect any undisclosed income, the assessments already made cannot be interfered with. Merely because valuable articles and/or documents belonging to the assessee have been seized and handed over to the Assessing Officer of the assessee would not necessarily require the Assessing Officer to reopen the concluded assessments and reassess the income of the assessee. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the Assessing Officer after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the Assessing Officer....
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....ses where the seized documents/assets could possibly reflect any undisclosed income of the assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the Assessing Officer to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an assessee before commencing an enquiry under section 153C, it would be impermissible for him to commence such enquiry if it is apparent that the documents/assets in question have no bearing on the income of the assessee for the relevant assessment year. Ld CIT Dr failed to appreciate the fact that the verification of documents found from the premises of S K Jain brothers is part of further investigation on the matter which cannot be achieved without satisfying the condition that the seized material is in the nature of incriminating documents or not. 26. Regarding completed assessment for unabated assessment year, we are unable to agree to the proposition of Ld. CIT DR that only if assessment completed U/s 143(3) can only be treated as completed assessment. The language used in second proviso to section 153A refers th....
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.... proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 27. As far as reliance on decision of Supreme Court in case of NRA Iron and Steel P Ltd. is concerned, the applicability of this decision is on merits/ quantum addition u/s 68 of the Act and not on the legal ground raised by the assessee company, hence the same is irrelevant while adjudicating legal issues. 28. In view of our observation and finding given hereinabove, we hold that firstly, none of the documents mentioned in the satisfaction n....