TaxTMI 
TaxTMI 
2021 (9) TMI 886
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....as filed 6 cross objections [CO] in these appeals filed by the learned AO. 03. Since the issues involved in the Appeals and Cross-Objections for all these Assessment Years (A.Ys) are based on common facts and are interconnected, parties also made common submission before us, therefore all these appeals and Cos are disposed of by this common order. 04. The learned AO has raised the following grounds of appeal in ITA No. 5401/Del/2019 for the Assessment Year 2006-07:- "1. Ld. CIT (A) erred both in law & on facts in deleting the addition on account of cash transaction of Rs. 22,80,39,000/- in assessee's hands on protective basis, only on the basis that cash book found in Pen drive do not belong to assessee company, sole basis of such finding was order of Hon'ble Settlement Commission u/s 245 D(4) of the I.T.Act in case of Yadu Hari Dalmia, Gautam Dalmia, Puneet Dalmia & Jai Hari Dalmia, without realizing the facts that on the basis of same cash book found in pen drive, these 4 individuals accepted unaccounted income of Rs. 90 Crores & that employees of the company who maintained such cash book of unaccounted cash transaction namely Joy deep Basu, N. K. Berry, Sanjay Mit....
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....ss etc. d. Under a scheme of arrangement and demerger approved by the Hon'ble High Court of Madras vide its order dated 29.07.2010, a. its cement business was demerged to Avnija Properties Ltd., b. refractory business was demerged to Dalmia Bharat Enterprises Ltd. c. Thermal power business was transferred to DCB Power Ventures Ltd. (a sub-subsidiary of Dalmia Bharat Enterprises Ltd) effective from 01.04.2010. e. On 31.12.2010, the name of M/s. Avnija Properties Ltd. was changed to M/s. Dalmia Cement (Bharat) Ltd. (PAN AADCA9414C) and it became a wholly owned subsidiary of Dalmia Bharat Enterprises Ltd. [now known as Dalmia Bharat Ltd. (DBL)]. Its name stands changed to Dalmia Cement (Bharat) Ltd. (PAN AADCA9414C) w.e.f 31.12.2010. f. Assessee company herein is Dalmia Bharat sugar industries Ltd i.e. DBSIL (i.e. erstwhile Dalmia cement Bharat Limited- PAN AAACD2281K). g. Search and seizure operations u/s 132 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') was conducted in the 'Dalmia Group of cases' including the cases of Dalmia Bharat Enterprises Ltd & the Dalmia cement Bharat the limited (new) and th....
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....Bharat Enterprises Limited and [3] Dalmia Sugar & Industries Limited [Assessee before us]. vi. Mr. YaduHari Dalmia along with three other applicants filed a petition before Income tax Settlement commission owning the contents of pen drive and disclosing a sum of Rs. 90 Crores. Assessee claims that all impugned amounts involved in these appeals are included by Mr. Yadu Hari Dalmia and Mr. Gautam Dalmia in their application before Income tax Settlement Commission [ITSC]. ITSC passed an order u/s 245D (4) on 13/02/2015. It held that the contents of the impugned cashbook in the seized pen-drive belonged to Sri Yaduhari Dalmia & Sri Gautam Dalmia, (i.e. the promoters of the Dalmia group of companies) in their individual capacity. The ITSC vide its final order u/s 245D(4) had accepted the disclosure made by the said Mr. Yaduhari and Mr. Gautam Dalmia on the basis of the impugned pen-drive and the said order has attained finality by virtue of provision of section 245-I of the Act. vii. Further Substantive addition in the hands of Dalmia Cement Bharat Limited and protective addition s made in the hands of [1] Shri Joydeep Basu & [2] Dalmia Bharat Enterprises Limited were ....
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....while deleting the quantum additions made by the Ld. A.O. did not adjudicate on the legal ground raised by the Assessee challenging the jurisdiction assumed by the Ld. A.O. u/s 153C of the Act, but deleting the quantum additions made on protective basis by the Ld. A.O., the Assessee has agitated the jurisdiction assumed by the Ld. A.O. u/s 153C vide its Cross-Objections. 11. As stated, a pen drive was found from the premises of Mr. Joydeep Basu. On the content of pen drive, statements of the employees of the group companies were recorded. Based on data contained in the pen drive as well as statements of employees of the group, LD AO in case of Dalmia cement Bharat limited held that the pen drive contains the data belonging to Shri Puneet Dalmia, which shows details of unaccounted cash received, and cash payment. Statement of suppliers of bags was also recorded. The AO of that company was also of the view that cement is the only business of the group earning money and therefore the cash is generated from cement business. Therefore, the learned AO of Dalmia cement Bharat Limited extrapolated the data of the pen drive and made an addition to the total income of Dalmia cement Bharat....
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....ok and that of the pen drive belonged to Shri Y H Dalmia and Sri Gautama Dalmia d. Income contained in the pen drive was owned by Sri Yaduhari Dalmia and other applicants e. Pen drive does not belong to those assesses in whose hand substantive addition as well as protective additions are made. 19. Admittedly, the revenue has not challenged these orders of the learned CIT (A). These facts were also confirmed by the learned Asst Commissioner of income tax circle - 1, Trichy to the learned CIT (A) 22 in confirming that no second appeal has been preferred by revenue against the order of CIT (A), 29 in case of Dalmia cement Bharat Limited as well as Dalmia Bharat Enterprises Ltd and Mr. Joydeep Basu. 20. However, ld AO of assessee was of the view that the pen drive as well as the data contained therein belongs to the assessee. Therefore, he issued notices u/s 153C on 31/3/2014 for assessment year 2006 - 07 to assessment year 2011 - 12 based on the satisfaction note dated 25/3/2014 received from The Deputy Commissioner Of Income Tax, central circle - 2 contending that the impugned pen drive and the content thereof belong to the assessee company. The assessee quest....
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....ia cement Bharat Ltd on substantive basis. Learned assessing officer passed an order u/s 153C of the income tax act wherein the addition of Rs. 228,039,000/- was made in the hands of the assessee whereas the assessee originally filed its return of income at Rs. 613,939,731 /- which was assessed u/s 143 (3) or u/s 250 of the act at Rs. 71,17,88,899/- assessing income of the assessee at Rs. 939,827,900/-. Identical additions were also made in the hands of the assessee for assessment year 2007 - 08 to 2011 - 12. 23. The assessee preferred an appeal before the learned CIT - A challenging the order of the learned AO. Assessee contended that the i. satisfaction recorded by the assessing officer in the case of searched person was not brought on record by the AO of the assessee and only a summary was provided to the assessee. ii. impugned pen drive did not belong to the assessee since the same was neither seized from the possession of the assessee nor any of its promoters but from the residence of Mr. Joydeep Basu iii. Mr. Basu is not at all related to the assessee or an employee of the assessee iv. Provisions of Section 153C are not satisfied. ....
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.... the higher forum. Therefore, these orders of the learned CIT - A in those cases have become final. Further, the order of the settlement commission has not been also challenged by the revenue and therefore the addition in the hands of the assessee cannot be made. 25. However , learned CIT appeal did not adjudicate the other grounds of the assessee is arguments regarding satisfaction note raised as per ground number 1, the issue that the material do not belong to the assessee as per ground number 2 and non application of mind as per ground number 3. Therefore, the assessee is also aggrieved as the learned CIT - A did not adjudicate on the legal arguments with respect to the validity of the assessment challenged before him. 26. On the merits and legal grounds ld Cit (A) held as under :- "6. The relevant portion of the AO is as under: The AO has framed-assessment. by placing reliance on the statement of the various officials recorded during search and survey operations, findings, observations of the DCIT, Central Circle - 26, New Delhi in the assessment order of Dalmia Cement Bharat ltd for the AY 2006-07 in connection with the proceedings u/s 153A of the Act in the cas....
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....t Bharat Limited - searched entity, wherein aforesaid additions were made on substantive basis. I have also gone through the order of CIT (A)-29, New Delhi in the case of Dalmia Bharat Limited - searched entity, wherein aforesaid additions were made on substantive basis. 7.2 It would be useful to refer to the facts and findings recorded by CIT(A)-29 in his order in Appeal no. 136/2014-15/CIT(A)-29, AY 2006-07, wherein the aforesaid addition made on substantive basis has been discussed threadbare in detail. Extract from same is as under: I have also perused the order of Settlement Commission dated 03.03.2015, issued -under section 245D(4), in respect of settlement application filed by S/Sh Yadu Hari Dalmia, Gautam Dalmia, Puneet Dalmia, Jai Hari Dalmia, (Directors in Dalmia group). I have also CIT-in (Central) report dated 16.05.2014, 07.07.2014 and 12.09.2014 wherein CTT-m (Central) on the basis of evidence and statement recorded during the search of key employees etc. have time and again emphasized that:- (a) the entries in cash book and 125 pages found in pen drive which was seized from the residence of Mr. Joydeep Basu, belonged to the appella....
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....e above companies have filed appeals- against the above assessment orders, which are stated to be pending before the Income Tax appellate Tribunal. We may mention that the above two companies of Dalmia group have not filed any settlement applications before the ITSC. Hence, we refrain from giving any finding in respect of the ownership, information contained in the seized pen drive other than disclosed in these application, pertaining to the above two companies and their implications from income tax angle. However, we cannot ignore or brush aside the explanation/clarifications furnished by the above applicants, particularly in respect of 125 pages of the above seized pen drive of which printouts were furnished to the applicant by the department, as the applicants have compared and correlated various transactions appearing in the cash book in the seized pen drive vis-a-vis the settlement applications filed in their cases, particularly with reference to the working and basis of the unaccounted income arising from the same, which mainly constitutes the additional income offered by the above applicants before the commission.. It is true that the CIT (DR) and. the AO have brought to our....
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....is of which the AO has made the additions in the year under consideration) with the entries in the cash book which was filed by the 2 applicants (on the basis of which they surrendered Rs. 90 crore) no adverse findings were brought to the notice of the Hon'ble Settlement Commission. Hence, in view of the above findings of the Settlement Commission that the entries in the cash book and 125 pages found from the files stored in the pen drive, seized from the residence of Mr. Joydeep Basu, does not belong to the appellant, the addition of Rs. 22,80,39,000 made in the appellant's hand on the said "pen drive'' deserves to be deleted. 8.1 In the result, the appeal is allowed." 7.3 During the course of appellate proceedings, AR of the appellant further submitted that the department has not preferred any appeal against the following orders; * Order of the settlement commission dated 03.03.2015, issued under section 245D(4), in respect of settlement application filed by S/Sh. Yadu Hari Dalmia Gautam Dalmia, Puneet Dalmia, Jai Hari Dalmia (Directors in Dalmia group) * Various orders passed by CIT (A)-29 in respect of all substantive....
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....id ab initio. 28. Meanwhile the assessee has raised an additional ground for assessment year 2006 - 07 and 2007 - 08 as Under:- A.Y. 2006-07 "That without prejudice to the primary ground raised by the Assessee earlier in its Memorandum of Cross Objections, the assessment framed by the A.O u/s 153C r.w.s 143(3) of the Income-tax Act, 1961 (the Act) for A.Y 2006-07 is beyond the scope of section 153C of the Act inasmuch as A.Y. 2006-07 is beyond the period of six Assessment Years (being A.Y. 2008-09 to A.Y. 2013-14) to be reckoned with reference to the date of receiving of the seized assets/books of account/documents by the A.O having jurisdiction over the Assessee in terms of the first proviso to section 153C(1) of the Act and such seized assets/documents could come into the possession of the AO of the Assessee only after the recording of satisfaction by the A.O of the searched person which in the instant case is 25.03.2014 and hence the Assessment so framed u/s 153C for A.Y. 2006-07 is barred by limitation, without jurisdiction, non-est and void ab-initio." A.Y. 2007-08 That without prejudice to the primary ground raised by the Assessee earlie....
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....coming to the CO and Appeal of Revenue, learned authorised representative extensively referred to the facts of the case. He also referred to the order of the settlement commission passed in case of Sri YH Dalmia and Shri Puneet Dalmia. He further referred to the assessment orders in case of Mr. Joydeep Basu and Dalmia cement (Bharat) Limited for assessment year 2006 - 07. He further referred to the assessment order paragraph number 12.4 at page number [6] wherein the assessment proceedings of Dalmia cement (Bharat) Limited for assessment year 2006 - 07 on the same issue was reproduced by the learned assessing officer. He further referred to page number 12 of the assessment order wherein question number 10 pertaining to the statement recorded of Mr. Joydeep Basu is reproduced wherein the question was asked that a pen drive was found from his possession seized by the search party and to whom this pen drive particularly belongs. In case it belongs to him what are the contents of the pen drive. In the response to that question, he categorically replied that pen drive belongs to him and it contains the data belonging to Dalmia group. He therefore submitted that whether on the basis of t....
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....mited and Dalmia Bharat Limited to confirm whether any appeal has been filed by the income tax Department against the aforesaid orders of the ld CIT (A) 29. The learned AO of that assessee has sent a letter dated 31/1/2019 confirming that no appeal has been filed before any appellate authority in respect of the orders of CIT - A - 29, New Delhi. He submitted that for these reasons the learned CIT - A has deleted the addition in the hands of the assessee, which was made on protective basis. He also referred to letter written by the ld CIT (A) to the ld AO, Replies of the ld AO to CIT (A) based on inquiry from SEBI and other parties. In the remand, report there is no adverse inference by the ld AO but has accepted the pointed question of ld CIT (A). He submitted that on this count, there is no infirmity in the order of the learned CIT - A and therefore the addition could not have been made in the hands of the assessee and therefore the order of the learned CIT - A deserves to be upheld. He thuds stated that there is no infirmity in the order of the ld CIT (A) in deleting the addition on the merits of the case. 33. With respect to the challenge to the jurisdiction assumed by the le....
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.... Bharat limited for assessment year 2006 - 07 to 2012 - 13 substantive additions were made based on the data contained in the cashbook found in the impugned pen drive. In case of Dalmia enterprises, Bharat limited for assessment year 2011 - 12 and 2012 - 13 and in the case of Mr. Basu for assessment year 2006 - 07 to 2012 - 13 protective additions were made of the same income. v. On 31st of March 2014, notice u/s 153C was issued to the assessee company alleging that the impugned pen drive and the content thereof belong to the assessee company. vi. Meanwhile on 16 May 2014 the revenue filed rule [9] report u/s 245D (3) before the settlement commission in the case of those applicants. vii. In addition, on 26th may 2014 the settlement commission directed the learned CIT to verify the cashbook submitted by the applicants with the parallel cashbook that of the impugned pen drive seized by the Department. viii. On 7 July 2014, the CIT submitted his report for verification wherein apart from challenging the treatment of certain entries in the cashbook and working filed by the applicants, no dispute was with respect to the data contained in application w....
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.... March 2014 and the [6] assessment years for which the assessment of reassessment can be reopened considering that date. Therefore according to him the [6] assessment years that can be covered by the provisions of Section 153C read with Section 153A would be starting from assessment year 2008 - 09 to assessment year 2013 - 14. Therefore, he submitted that the assessment order passed u/s 153C for assessment year 2006 - 07 and 2007 - 08 are barred by limitation. For this proposition he referred the decision of the honourable Delhi High Court in CIT versus RRJ securities Ltd (2016) 380 ITR 612, SSP aviation Ltd versus Deputy Commissioner Of Income Tax (2012) 346 ITR 177, Principal Commissioner Of Income Tax versus sarvar Agencies Private Limited (2017) 397 ITR 400 and host of other judicial precedents of the coordinate benches. Therefore, he submitted that the assessment order passed u/s 153C of the act for assessment year 2006 - 07 and 2007 - 08 are barred by limitation and therefore the learned CIT - A is not correct in not adjudicating this issue before him. ii. For assessment year 2011 - 12 he submitted that no satisfaction is recorded by the Deputy Commissioner of income....
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....ncerned assessing officers, Sri Y H Dalmia and Mr. Gautam Dalmia, the applicants had filed a settlement application before the income tax settlement commission on 28/10/2013 owning of the entire content of the impugned cash book contained in the pen drive seized from the premises of Mr. Basu. Based on that they have offered an additional income of Rs. 90 crores. Thus, even before the recording of the satisfaction that this pen drive belonged to the assessee; the settlement commission was seized of the matter where the ownership of the pen drive was owned by the applicants before the settlement commission. v. In proceedings before settlement commission the learned CIT representing revenue wherein computed the undisclosed income of rupees 495 crores on the basis of the entries in the seized pen drive by considering only the receipts side of the cash book. Considering this aspect the settlement commission proceeded with the matter and ultimately accepted the disclosure made therein by the applicant. vi. settlement commission is vested with the exclusive jurisdiction to exercise the powers and perform the function of an income tax authority in relation to the matters ....
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....the act is illegal and contrary to the provisions of Section 245F read with Section 245D (6) and Section 245I of the income tax act and deserves to be annulled at the very threshold. 36. He further submitted that even the requisite condition of provisions of Section 153C are also not satisfied as the pen drive could not be said to be belonging to the assessee. He reiterated that there is no search carried out on the assessee under the provisions of Section 132 of the income tax act. Alleged pen drive has been seized from the premises of Mr. Basu who is not at all connected with the assessee. He submitted that the AO of the searched person has recorded for satisfaction that the entries in the pen drive belong to Dalmia cement Bharat Limited and substantive additions have been made therein. Protective additions were made in the hands of Dalmia Bharat Enterprises Ltd and Mr. Basu. He extensively referred to the assessment order passed in case of all these persons. Therefore e-submission was that when it is clearly held that the entries in the impugned pen drive belong to Dalmia cement Bharat Limited and having made substantial addition on the said basis in the hands of Dalmia cemen....
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....ve addition whereas substantive addition has been made in some other assessee's case. He submitted that though the practice of making a protective addition in the case of regular assessment proceedings has found judicial acceptance however making a protective addition in search cases itself is vitiated. He referred to the decision of the honourable Bombay High Court in case of DHFL venture capital fund versus ITO 358 ITR 471 wherein the protective addition is considered and it is held that it lacks the jurisdictional requirement for reopening of an assessment u/s 147 of the act. He also supported this view by the decision of the honourable Gujarat High Court in case of Vinodbhai Jivrajbhai Rabadiya versus ITO (2020) 114 taxmann.com 535. He therefore submitted that identical situation applies to the provisions of Section 153C of the act. Therefore, the protective addition made in the hands of the assessee also lacks the jurisdictional requirement. 38. He further contested the addition stating that the copy of the satisfaction note has recorded by the AO of searched person was not provided to the assessee despite specific request by the assessee. He stated that merely a summary th....
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....the paper book stating that the pen drive belong to him in the debtor contained therein related to the Dalmia group. When confronted Sri Puneet Dalmia in statement recorded, u/s 131 of the act has categorically admitted that the entries recorded therein pertain to certain cash transactions undertaken by him and his family in their personal capacity and not to Dalmia cement Bharat Limited or the Romney enterprises Bharat Limited. Therefore, the ownership of the pen drive has already been established and now it cannot be said that the pen drive belonged to the assessee. Thus he submitted that the satisfaction of the learned assessing officer of the assessee that the impugned pen drive belong to the assessee company is based on no material except the isolated mention of the assessee shares in a communication in the alleged pen drive. He therefore submitted that mere mention of the name of the assessee could not lead to a conclusion that the alleged pen drive belonged to assessee so as to justify the initiation of proceedings u/s 153C of the act for over these years. 41. He even otherwise submitted that the purported email, which is used by the learned assessing officer for recordin....
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....ngs to the assessee company. 44. He further extensively referred to the statement of Mr. Puneet Dalmia and Mr. Basu and Mr. Berry to show that that the various transactions of the receipt and payment of the cash is found in the alleged pen drive are nothing but personal transaction of Dalmia family which was offered as additional income before the settlement commission. 45. Even on the quantum of addition which is challenged in the grounds of appeal of the ld AO he submitted that That i. The order of the Hon'ble ITSC allegedly does not categorically state whether the disclosure of Rs. 90 crores covers all the entries in the impugned cashbook found in the seized pen-drive. ii. total of the entries in the unaccounted cashbook as per the Director of the Assessee Company was Rs. 649.18 cr as against the disclosure of Rs. 90 crores made by the Applicants before the Hon'ble ITSC. iii. Employees of the company who maintained such cashbook of unaccounted cash transaction namely Joydeep Basu, N.K. Berry, and Sanjay Mitra & Director of the company Sh. Puneet Dalmia accepted such unaccounted transactions in their statements. iv. order of the Hon'ble I....
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....he other family members, Sh. Yadu Hari Dalmia (father of Sh. Puneet Dalmia), Sh. Jai Hari Dalmia (uncle of Sh. Puneet Dalmia) and Sh. Gautam Dalmia (cousin of Sh. Puneet Dalmia) have also gone to settlement commission disclosing an amt of Rs. 45 cr each in the hands of Sh. Yadu Hari Dalmia and Sh. Gautam Dalmia. In total, the four members have disclosed Rs. 95.0 crores. However as clearly seen from the details mentioned in the preceding paras, (contents of the cashbook), the cash receipt is much higher than the amounts disclosed by these four family members. All these events show that the assessee company's management and directors did not want to explain the contents of the cashbook and preferred to go to settlement commission. 8.34...Further, it has been observed from the application of the individuals u/s 245C of the Act filed before the Settlement Commission that an overall disclosure of around Rs. 90 crore has been made by them. However, aggregate receipts as per the parallel cash book amounts to Rs. 367 crore over the period of 6 yrs. Thus, considering the facts of the case in entirety, it is concluded that Rs. 367 crores requires to be added in the hands of DBCL, be....
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....ok' cannot be considered as full and true and that the said disclosure has not been correlated with the data in the pen-drive - thus the question of adequacy of disclosure made by the Applicants on the basis of the impugned cash book also arose in course of the settlement proceedings. (vi) At para 5.8, the Department has suggested an undisclosed income of Rs. 495 crores in the hands of the Applicants as against disclosure of Rs. 95 crores made in their Settlement Applications. The figure of Rs. 495 crores has been arrived at by the Department by adding up all the entries of the credit side of the 'parallel cash book' (including the transfer of cash amongst different lockers) and totally ignoring the corresponding outflow. ix. He further referred to various charts placed before settlement commission by revenue and assessee both tabulating the figures of amount of entries in cash book and offer made by the assessee as disclosure before ITSC. He therefore submitted that ITSC after considering the various reports dated 16.05.2014 , 07.07.2014 , 12.09.2014, 17.09.2014 filed by the CIT(C)-III and after giving the Department an opportunity of verifying the entries record....
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.... 46. In the end, he submitted that this issue even otherwise on merits is covered in favour of the assessee by the decision of Honourable Gujarat High court in the case of B. Nanji Enterprise Ltd. Vs. DCIT [2017] 84 taxmann.com 155 (Gujarat),the Hon'ble Gujarat High Court held that where sum seized from bank locker of assessee company during search was disclosed by director of company as his unaccounted income in application for settlement before Settlement Commission which was allowed by passing of final order of settlement and tax was also paid on such income, same could not be added to income of assessee-company. 47. In view of this he submitted that the cross objection of the assessee should be allowed as the proceedings u/s 153C of the income tax act was initiated by the learned assessing officer is without any basis. It was further stated that the learned CIT - A has erred in not deciding the same but deciding the issue on other aspects. 48. The learned CIT DR vehemently supported the order of the learned assessing officer and submitted that i. reliance by the assessee on the order of the settlement commission is devoid of any merit as assessee is not a part....
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....his, it was submitted that the order of the learned CIT - A is not sustainable in law. 49. In rejoinder and dealing with the appeal of the revenue, the learned authorised representative submitted that the i. learned CIT - A has relied upon the decision of the learned CIT - A - 29 in the case of Dalmia cement Bharat Limited wherein the substantive additions have been made. He extensively referred to the appellate order and submitted that following the order of the settlement commission the addition has been deleted. He further submitted that the order of the learned CIT - A - 29 has been accepted by the revenue wherein the substantive addition has been deleted. He stated that this fact has been verified by the learned CIT - A with respect to the report of the assessing officer of Dalmia cement Bharat Limited who clearly state that no further appeal has been preferred and therefore the order of the learned CIT - A - 29 deleting the addition on substantive basis in the hands of Dalmia cement Bharat Limited has become final. He submitted that such substantive addition has been deleted by the learned CIT - A - 29 in case of Dalmia cement Bharat Limited holding that the conte....
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.... made to the impugned pen drive. He referred to paragraph number 5 wherein has been stated that the disclosure of additional income was made by the applicants before the settlement commission based on the content of the impugned pen drive. He further referred to the various Excel sheets mentioned in the report to show that a complete analysis of the impugned pen drive was made and Year wise sum involved in that cashbook was taken into consideration by the settlement commission. On the basis of table 5 submitted in his written submission on which is also reconciliation of the amount stated in rule 9 report of the learned CIT - A based on which the settlement commission agreed for the disclosure of Rs. 90 crores he submitted that details of the entries of the perils cash book including the dates and the receipts matches with the excel sheets position with the data to be related by the assessing officer at page number 10 and 11 of the assessment order. Therefore he submitted that the cashbook refers to the same cashbook based on which the impugned addition is been made in the hands of the assessee. He therefore submitted that there is no infirmity in any of the figures of disclosure m....
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....Dalmia Bharat Enterprises Limited and Mr. Joydeep basu where in the identical additions are deleted. We have also considered and perused various judicial precedents cited before us by the sides. 51. Now the questions arising before us in this group of appeals are as Under:- i. Whether assessment framed u/s 153C read with Section 143 (3) for assessment year 2006 - 07 and 2007 - 08 are barred by the limitation. ii. Whether the assessment order passed for assessment year 2011 - 12 u/s 153C is without jurisdiction and void ab initio as no satisfaction has been recorded by the assessing officer of the searched person iii. whether the pen drive seized from the premises of one of the employees of the group concern can be said to be 'belonging to' the assessee when four different applicants have owned it before the settlement commission and settlement commission has accepted the above proposition after considering the objections of revenue before it and thereafter accepting the disclosure made by those four applicants passed an order settling the dispute and accepting additional income offered. iv. As the satisfaction recorded by the AO of the searche....
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....r the disclosure made before ITSC covers the amount of data involved in the pen drive. 52. Now we first address the first question that whether the assessment order passed for assessment year 2006 - 07 and 2007 - 08 are sustainable and are not beyond the scope of the provisions of Section 153C of the act and whether such assessment years are barred by the limitation or not. i. The facts, at the cost of repetition, shows that the search took place u/s 132 of the income tax act in case of Dalmia group of cases on 20 January 2012 which got concluded on 17th of March 2012 and on 28th of January 2012 and impugned pen drive seized from the premises of one of the employees of the group concern Shri Joydeep Basu. The assessee was not part of the search. ii. On 25th of March 2014, the satisfaction note was recorded by the Deputy Commissioner Of Income Tax, Central Circle - 2 being the assessing officer of the searched person, contending that the contents pertaining to the impugned pen drive pertaining to assessment year 2006 - 07 to 2010 - 11 'belong to' the assessee company. iii. On 27th of March 2014, satisfaction was recorded by the assessing officer of the ....
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....econd proviso to 5[sub-section (1) of] section 153A shall be construed as reference to 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 :] viii. These provisions were amended by the Finance Act 2017 with effect from 1/4/2017 as under :- Assessment of income of any other person. ^77 ^78 153C. ^79[(1)] ^80[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, 81belongs 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 other person] ^82[and that Assessing Officer shall proceed against each such other person and issue not....
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.... the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C (1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the....
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....ril 2017. xiii. Thus, it is apparent that Assessment year which can be assessed u/s 153C of the act in this case is only from AY 2008-09. Thus, the assessments made by the ld AO u/s 153C of the act for AY 2006-07 and 2007-08 are beyond time prescribed u/s 153C of the act and are quashed. Thus, First question is answered in favour of the assessee. 53. Second question is whether the assessment order passed for assessment year 2011 - 12 u/s 153C is without jurisdiction and void ab initio, as no satisfaction has been recorded by the assessing officer of the searched person. The facts on this issues shows that i. Assessee has contended that in so far as A.Y. 2011-12 is concerned, on a perusal of the Satisfaction Note dated 25.03.2014 recorded by the Ld. DCIT, CC-2 i.e. the A.O of the searched person which is placed at pages 8-9 of the Paper book it may be seen that he has categorically excluded A.Y. 2011-12 from his satisfaction with respect to the alleged ownership of the data in the impugned pen drive by the Assessee-Company. ii. Satisfaction note by the ld AO of the searched person is as under :- "25.03.2014 SATISFACTION NOTE (Dalmia Bhara....
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....e name of trio company M/s Dalmia Cement (Bharat) Ltd was changed to M/s Dalmia Bharat Sugar & Industries Ltd, which was having cement business from FYs 2005-06 to 2009-10, i.e. AYs 2006-07 to 2010-11, which is assessed to tax with DCIT, LTU. 6. After going through the data of the seized pen drive, I am satisfied that the contents pertaining to AY 2006-07. 2007-08. 2008-09. 2009-10 and 2010-11 belong to the company M/s Dalmia Bharat Sugar & industries Ltd As the company is assessed to tax with you, notice u/s 153C of the Income tax Act, 1961 may kindly be issued in the case of M/s Dalmia Bharat Sugar & Industries Ltd. (GP Singh) DCIT, Central Circle-2, New Delhi iii. Further it is also necessary to examine the satisfaction recorded by the assessing officer of the assessee which is as Under:- Satisfaction Note Dalmia Bharat Sugar and Industries Ltd. 27.03.2014 The pen-drive is received from DCIT, CC -2. New Delhi along with the satisfaction note. The DCIT, CC-2 in its Satisfaction note dated 25.03.2014 has stated that the contents in the given pen-drive belongs to M/s Dalmia Bharat Sugar and Industries Lid which is assessed to....
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....91,881 shares of DBSIL (CMP Rs. 25/- per sh" CMV Rs. 48 lacs) and 1,12,950 shares of OCL (CMP Rs. 104/- per sh., CMV Rs. 117 lacs ). We propose to buy back the same during the first week of April by way of market transactions. After the closure of the arrangement an amount of Rs. 594 lacs (approx - on today's market price) would be receivable from your end, the same will be taken by us in the form of an ICD in Cradle Finance, as has been discussed and agreed by your Sh Jain Sahab and Puneet Dalmia. The balance sheet of Cradle Finance Is attached herewith for your perusal. Please confirm the above. Thanks and regards, Sanjay Mittra " "DBSIL-' is the abbreviation for Dalmia Bharat Sugar and Industries Ltd. the share of which is held by another company abbreviated as "GFL"'. In the statement "We propose to buy bock the same during the first week of April by way of market transactions" the words "We propose to bay buck the same" clearly establish that the transaction arc in respect of the Assessee company "Dalmia Bharat Sugar and Industries Ltd shares' which the person belonging to the Assessee organization speaks of buying back. Therefor....
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....he law. Therefore the argument of the learned authorised representative is rejected that when the AO of the searched person has specifically not included assessment year 2011 - 12, the authority of the assessing officer of the other person is curtailed in issuing notice for assessment year 2011 - 12 and hence the assessment order passed Under Section 153C of the act for assessment year 2011 - 12 is liable to be quashed. Hence, we reject this argument of the learned AR. In view of this, we are of the opinion that the assessment order passed for assessment year 2011 - 12 cannot be quashed at least on this count. Thus, second question is answered against the assessed. 54. Question no 3, 4 and 5 that arises are a) whether the pen drive seized from the premises of one of the employees of the group concern can be said to be belonging to the assessee when four different applicants have owned it before the settlement commission and settlement commission has accepted the above proposition after considering the objections of revenue before it and thereafter accepting the disclosure made by those four applicants passed an order settling the dispute and additional income offered. ....
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.... of the satisfaction. It was also shown to us that the revenue has also used the data contained in the alleged pen drive and the accounting entries contained therein at the time of furnishing of the report u/s 245D (2B) on 02/12/2013 to alleged that the these two persons has not made any untrue disclosure of income. The income tax settlement commission after analysis of the report of the revenue and the reply of the applicant before it, reached at a conclusion that the claim made by the revenue was not acceptable and accepted the application of the applicants by passing an order u/s 245D (2C) on 18th/12/2013 copy of which is placed in the paper book page number 677 - 691. At page number 13 of the order of the settlement commission passed u/s 245D (2C) has also noted that the disclosure made by the applicants on the basis of the impugned pen drive and undisclosed income of Rs. 495 crores was worked out by the learned CIT before it by only considering the receipt site and excluding the entries on the payment side. Thus it is apparent that at the time of recording the satisfaction on 25th of March 2014 in the case of the assessee the impugned pen drive and the content thereof already ....
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.... He should have made it on substantive basis. He made it on substantive basis in the hands of another person. It is very unusual that if that pen drive 'belongs to' the Assessee Company and addition is made in the hands of somebody else on 'substantive bases. That itself shows that the satisfaction of the learned assessing officer of searched person in holding that pen drive belong to the assessee is defective. Had the pen drive belong to the assessee only, the addition would have been made in the hands of the assessee on 'substantive basis' and could not have been made on 'protective basis' in the hands of anybody else. The satisfaction of 'belonging to' is an exclusive satisfaction with respect to one person unless in case of joint holding of the property or joint ownership of certain documents. That is not the case here. 58. In the instant case, admittedly there was no search carried out on the assessee company. The alleged pen-drive was purportedly seized from the premises of Sri Joydeep Basu (who was an employee of Dalmia Bharat enterprise Ltd and not the Assessee Company) in the course of the inter-connected search and seizure operations carried out on various dates in the....
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....ment belongs to. It is that satisfaction that the document in fact belongs to somebody else there must be some material available with the assessing officer before he arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Further the satisfaction note itself must clearly display the reasons based on the conclusion that the AO of the searched person was satisfied that the seized documents belongs to a person other than searched person. Thus, he has to first justify that the document found during the course of search does not belong to the person searched. Then he has to find and record a satisfaction that it belongs to another person. Thus, he cannot throw away material to assessing officers of multiple persons and say that this material belongs to many persons. Such a kind of vague satisfaction is not permitted. The decision of the honourable Delhi High Court on this issue in Pepsi foods private limited versus ACIT 367 ITR 112 has clearly held that surmises and conjectures cannot take the place of satisfaction. It is further held that the satisfaction note itself must display the reasons on the basis for the conclusion that....
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.... the first week of April by way of market transactions. After the closure of the arrangement an amount of Rs. 594 laxs (approx.-on today's market price) would be receivable from your end, the same will be taken by us in the form of an ICD in Cradle Finance, as has been discussed and agreed by your Sh. Jain Sahab and Puneet Dalmia. The balance sheet of Cradle Finance is attached herewith for your perusal. Please confirm the above. Thanks and regards, Sanjay Mittra." 63. Based on the above the AO noted that DBSIL is the abbreviation for Dalmia Bharat sugar industries Ltd, the shares of which is held by another company abbreviated as GFL. In addition, there are transactions of buy back of the shares. The claim of the assessee is that this is merely a conjecture and surmises are no such transaction is taken place. The assessee has also submitted that there are certain flaws in the conclusion drawn by the AO and therefore on this basis the impugned satisfaction recorded by the learned assessing officer that the pen drive belongs to the assessee company is based on no material. 64. On careful perusal of the same, it is noted that it is a communication addressed by....
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....mia enterprises Bharat limited. The settlement commission also held that entries in the impugned cashbook belong to the promoters in the individual capacity and accepted the disclosure thereon. The content of the impugned pen drive in all these proceedings have never been claimed by the person from whom pen drive was found and the person who owned the pen drive belonging to the assessee company. 66. Interestingly a contention has been raised that in the hands of the assessee protective assessments/additions have been made based on the entries recorded in the impugned pen drive seized from the possession of 3rd party by invoking the provisions of Section 153C of the act. It is argued that the protective assessment can only be made where the assessing officer has a doubt as to the person in whose hand the income is taxable or also the year in which is taxable. It is also claim that such an exercise is permissible only in the case of the regular assessment. The argument is placed that in case of reopening of the assessment where the specific satisfaction is to be recorded that the income of the assessee escaped assessment i.e. u/s 148 of the act there cannot be any protective asses....
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....ned Deputy Commissioner of income tax, central circle - 2 in the case of Dalmia cement Bharat Ltd. The assessment order passed by the learned assessing officer in case of all the assessment years makes the following reference:- "11. A letter dated 09.03.2015 was sent to DCIT, Central Circle-26 (prior to cadre restructuring, designated as DCIT, Central Circle-2, New Delhi), New Delhi requesting him to provide copy of search assessment order for the relevant assessment years. The Ld. DCIT, Central Circle-26, New Delhi vide letter dated 09.03.2015 provided copies of assessment orders of Dalmia Cement Bharat Ltd. (PAN AADCA9414C) and Dalmia Bharat Enterprises Ltd. (PAN AAJCS7366K) for the A.Ys 2006-07 to 2011-12. 11.1 I have placed reliance on the statement of the various officials recorded during search and survey operations, findings, observations of the DCIT, Central Circle-26, New Delhi in the assessment order of Dalmia Cement Bharat Ltd. for A.Y. 2010-11 in connection with the proceedings u/s 153C of the Act in the case of the assessee company for A.Y. 2010-11. ...... 12.4. The Ld. Deputy Commissioner of Income Tax (AO) Central Circle-26, New Delhi while....
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.... of the statements, it is apparent that Mr. Puneet Dalmia has categorically answered that the content of the pen drive belongs to him and his family in their personal capacity and has nothing to do with Dalmia cement Bharat Limited or Dalmia Bharat Enterprises Ltd. The statement of Mr. Joydeep Basu has categorically stated that pen drive belonged to him and that the contained therein belonging to Dalmia group. Mr. N K Berry has categorically stated that that belongs to Dalmia brothers Enterprises Ltd. There is no such group company by the name of Dalmia brothers Enterprises Ltd. Further Mr. Sanjay Mitra stated that this belongs to Dalmia group as well as Dalmia Bharat Enterprises Ltd on 27th of January 2012 and on seventh of February 2012, he stated that he does not know whom these transactions belong to. In the proceedings before the settlement commission each and every entry in the impugned cash book was analyzed by the applicant by offering an additional income and by the revenue contesting that there is no full and true disclosure by the applicants the categorical finding that has been reached by the settlement commission is that this pen drive and that the content therein belo....
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.... shall, save as otherwise provided Under Chapter XIX A. In any proceedings Under this act or Under any other law for the time being in force, can be questioned. It is also submitted that only remedy lies Under the provisions of Section 245D (6) wherein it has been stated that the order passed by the settlement commission shall be void if it is subsequently found by the settlement commission that it has been obtained by fraud or misrepresentation of facts. Therefore the contention of the assessee is that when the income involved in the data contained in the pen drive has already been held to be chargeable to tax in the hands of the four applicants before the settlement commission, now, this income cannot once again either on protective or for any other basis, be charged to tax in the hands of any other assessee. For this proposition the assessee has relied on the decision of the honourable Allahabad High Court in CIT versus Srimati Disksha Singh 13 taxmann.com 29, Honourable Delhi High Court in Sukhmani associates private limited versus settlement commission 189 CTR 103. Thus, it was argued that the order made by the settlement commission u/s 245I of the act was conclusive and final....
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....essing officer are not sustainable. Issue number [8] is When the additions made in the hands of the other entity on 'substantive basis' is deleted by the learned CIT - A, can the protective addition in the hands of the assessee is sustainable 73. The facts clearly shows that on the same material contained in the pen drive the additions have been made by the revenue on 'substantive basis' in the hands of Dalmia cement Bharat Limited and on 'protective basis' in case of (1) Dalmia Bharat Enterprises Ltd, (2) Joydeep Basu and (3) Dalmia Bharat Sugar and industries Ltd. 74. on the facts on record placed before us it is apparent that the substantive addition has been made in the case of Dalmia cement Bharat Limited and the addition on protective basis is been made in the hands of the assessee. The fact shows that the substantive addition made in the case of Dalmia cement Bharat Limited are deleted by the learned CIT - A - 29, New Delhi with a categorical finding that the undisclosed income arising from the impugned cash book in the seized pen drive pertain to the applicants before Income Tax Settlement Commission and not to any of the companies of the Dalmia group including the as....
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....sal of the order of Settlement Commission since categorical findings have been given by the Hon'ble Settlement Commission (which is a body superior to the undersigned) that the entries in the cash book and 125 pages which is found in the pen drive on the basis of which addition of Rs. 3,67,96,02,924 is made in the hands of the appellant in Assessment Years 2006-07 to 2012-13 and also cash in the lockers are held to be belonging to S/Sh Yadu Hari Dalmia and Gautam Dalmia and not to the appellant, hence the A.O's action in adding Rs. 22,80,39,000 made on the basis of pen drive (cash book and 125 pages) does not appear to be on sound footing. It is also pertinent to mention here that while giving the above finding the department was given due opportunity to verify the transactions recorded in the cash book and 125 pages in Pen drive [on the basis of which the AO has made the additions in the year under consideration] with the entries in the cash book which was filed by the 2 applicants (on the basis of which they surrendered Rs. 90 crore) no adverse findings were brought to the notice of the Hon'ble Settlement Commission. Hence, in view of the above findings of the S....
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....29 in case of Dalmia cement Bharat Limited and therefore now before us, there is no other option but to delete the protective addition as protective addition alone cannot have any legs to stand on when substantive addition has been deleted holding that the pen drive neither belonged to the assessee in whose hands the substantive addition is made. 77. Our attention has also been drawn towards instruction number 1842 dated 28th of March 1990 issued by the central board of direct action with respect to the appeals before the CIT appeals in case of protective assessments where it has been stated that the protective assessments and be kept in abeyance before the appellate authorities till the proceedings in the main cases are finalized. In the present case, the main case has concluded, as the revenue has not agitated the order of the learned CIT - A further. 78. It is also a settled precedent that when the substantive additions are deleted, the protective additions also cannot survive. It can survive in one of the situation where there is a finding in the case of the person in whose hands 'substantive addition' is made that the income belongs to the person in whose hands 'protecti....
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....verification of the cashbook submitted by the applicants with the cashbook available with the Department and other documents. The applicants filed detailed submissions dated 14.7.2014 on the report of the CIT in respect of each of the issues raised by the CIT in his report dated 7.7.2014. 7.1 All the issues raised in the CIT's report dated 7.7.2014 as summarized above were discussed at length during the course of hearing u/s 254D(4) and thereafter we asked the Department to report as to whether the Department can prove that the entire income as depicted in the 125 pages of the pen drive owned up by the Applicants and a copy of which was made available to the Applicants, belongs to the company and not to the individuals. The CIT furnished his report on 12.09.2014 and the applicants' replies dated 15/17.9.2014 thereto were filed before us on 17.9.2014. The Bench has gone through these replies and rejoinders accordingly.... 8. Shri S.K Tulsiyan, the learned Counsel has also submitted before us that in the letter dated 12.12.2013, addressed to the Commission in respect of the cases of Shri Yadu Hari Dalmia and Shri Gautam Dalmia, it has been explained in detail that t....
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.... a protective basis in the hands of Shri Joydeep Basu also. To our specific query made during the course of the present proceedings, whether, the Commission should ignore the additional income offered by the applicants, having correlation with various transactions appearing in pages 1-125 which have been owned up as discussed earlier in the seized pen-drive, in view of the department's consistent stand that the seized pen drive belongs to Dalmia group of Companies only, there was no affirmative and categorical response from the side of the department. In view of the facts and circumstances of the case as discussed above, we accept the disclosures made in the SOF of the applicants Shri Yadu Hari Dalmia and Sri Gautam Dalmia including 125 pages of the pen drive." 81. From the above findings, it is clear that i. all 125 pages, which are referred in the case of the assessee and other companies, are considered for the purposes of making disclosure. ii. Further, there was a clear finding of the ITSC that, Revenue has only considered one side of the cashbook found and ignored the other side of cashbook. Thus only receipt side of cash statements were considered by the ....
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.... and as such, the disclosures made in the S.O.F was accepted. Thus , it is established that ITSC, after considering the arguments raised by both the sides concluded that the Department's stance of considering only the receipts side of the parallel cash book (which as per the Department's calculation aggregated to Rs. 495 crores) was inappropriate and that the Applicant's working of undisclosed income of Rs. 90 crores (in the cases of Sri YH Dalmia and Sri Gautam Dalmia) after considering both the receipts and payments side was full and true and thus accepted. viii. Further ld DR could not show us, that which entries are excluded or not taken in to consideration by ITSc while accepting the disclosure of Rs. 90 Crores as full and true. 82. In view of this we find that ITSC has covered, the complete data of 125 pages found from the pen drive, deduced the income of Rs. 95 crores, and held that such a disclosure is full and true. In absence of any infirmities pointed out by revenue about any leakage of income from the seized data, we find that revenue is not in a position to controvert findings of ITSC on adequacy of income offered for taxation. Thus, Issue no [9] is decided....