TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 894
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....63 of the Income Tax Act, 1961 in the case of the appellant in failing to take cognizance of the replies filed dated 03/03/2020 & 19/03/2020 and without considering & dealing with the objections raised in the aforesaid replies. 3. The Ld. PCIT has erred on facts and in law in passing order u/s 263 of the Income Tax Act, 1961 ignoring the fact specifically brought to his attention that the assessment sought to be reviewed by him was already quashed by the Hon'ble Income Tax Appellate Tribunal, Ahmedabad. 4. The Ld. PCIT has erred on facts and in law in passing order u/s 263 of the Income Tax Act, 1961 directing the AO to adopt sale value as per section 50C of Act ignoring the settled law that additions in an unabated assessment order passed under section 153C of the Act can be made only on the basis of incriminating documents found and seized during the course of search. 5. The Ld. PCIT has erred on facts and in law in passing order u/s 263 of the Income Tax Act, 1961 without considering the factual position that land under consideration is of a farmhouse falling under agriculture zone and the stamp duty was charged adopting the circle rate of non-agriculture land on sale ....
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....missioner has rightly taken cognizance under Section 263 of the Act and has rightly decided the issue. 4. We have duly considered the rival contentions and gone through the record carefully. The learned Commissioner has initiated the proceedings under Section 263 of the Act in the year under consideration by issuance of notice under Section 263 of the Act on 11.02.2020. The show-cause notice issued by him reads as under:- "Subject: Notice u/s. 263 of the I.T. Act in your case for A.Y. 2010-11 - Giving an opportunity of being heard - regarding Please refer to the subject mentioned above. 2. It is noticed that in your case assessment order u/s.. 143(3) r.w.s. 153C r.w.s. 153A(1)(b) of the Act was passed on 26/12/2017 wherein income was assessed at Rs. 2.04,61,980/-. 3. On perusal of the case records, it is noticed that you had sold land at Sargashan, vide sale deed No.10480 dated 24.09.2009 for a consideration of Rs. 52,05,200/- and offered Short Term Capita! Gain amounting to Rs. 42,51,445/- on the same. Further, it is noticed from copy of sale deed that stamp duty of Rs. 6,55,900/- was levied thereon. As stamp duty in Gujarat is levied @4.9%, the value of property as per i....
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.... 5.1 The contention of the assessee that since the ITAT has quashed the assessment order therefore the proposed notice and assessment u/s 263 of the Act is bad in law is not correct. The basic features of sec. 263 are that the Pr. Commissioner may revise any order of assessment provided it. is erroneous and prejudicial to the interests, of the revenue, that the revision order can be passed within two years from the end of the financial year in which the order sought to be revised was passed and the assessee must be given an opportunity of being heard before any proceedings under the section are taken. The pre-conditions for assessment under section 263 have been satisfied. Moreover, the Department has not accepted the order of the ITAT and contemplating to file Miscellaneous Application before the Hon'ble ITAT in this regard. The order under revision is challenged on account of validity of order u/s 153C, whereas this order is for non-application of provisions of Section 50C on sale of immovable property. Therefore issues are different. Even though these issues are interlinked, but to keep the issue alive and in the interest of revenue, this proceedings are completed. Further,....
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.... the Act would reveal that it contemplates that the Principal Commissioner or learned Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after conducting an inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. It is pertinent to observe that for instituting a valid proceeding under Section 263 of the Act, there should be a valid legal proceeding before the Assessing Officer. Once the assessment order was quashed on the ground that it was passed after limitation provided in the Act for passing such order, then it is to be construed that no assessment order is available on which learned Commissioner could form an opinion as to whether any error is available in such order or not. Section 263 of the Act specifically contemplates that there should be an error either in the procee....
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....hing contained in section 139. section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, ~ belongs to; or (b) any books of account or documents, seized or requisitioned, or any information contained therein, 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 the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 15. A perusal of the above provisions would reveal that in the case of search action, carried out under section 132 of the In....
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....ning thereby, if search was conducted prior to 1.6.2015, but assessments were not concluded, whether post-amended section is to be applied in such cases or not; because that would change the very nature of the disputes. 17. Hon'ble Gujarat High Court has formulated the following question "whether section 153C of the Act as amended w.e.f. 1.6.2015 would be applicable to cases where search initiated prior to that date ?" After an elaborate discussion, Hon'ble court arrived at the conclusion that this section would be applicable prospectively only on the search conducted after 1.6.2015. We would like to take note of the relevant discussion made in the judgment, which reads as under: "19.8 While it is true that section 153C of the Act is also a machinery provision for assessment of income of a person other than the person searched, in the opinion of this court, this is not a case where by virtue of the amendment, there is merely a change in the procedural provisions affecting the assessees who were covered by the unamended provision. By the amendment, a new class of assessees are sought to be brought within the sweep of section 153C of the Act, which affects the substantive rig....
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....nt or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. 19.10 In this backdrop, to test the stage of applicability of the amended provisions, a hypothetical example may be taken. The search is carried out in the case of HN Safal group on 4.9.2013. If the Assessing Officer of the searched person had recorded satisfaction that some of the seized/requisitioned material belongs to a person other than the searched person and forwarded the material to the Assessing Officer of the other person, had issued notice under section 153C of the Act prior to the coming into force of the amended provision. The notice under section 153C of the Act was challenged before the appropriate forum on the ground that the seized material does not belong to such other person and such issue was decided in favour of such person on a finding that the seized material does not belong to the other person. Thereafter, in view of the amendment in section 153C (1) of the Act, since the books of account or documents did not belong to the other person but did pertain to him or the information contained therein related to him, can the Assessing Officer of the....
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....asia [2018] 98 taxmann.com 414/259 Taxman 88 (SC) condoned the delay and dismissed the special leave petition. 19.13 In Pr. CIT v. Index Securities (P.) Ltd. , [2017] 86 taxmann.com 84 (Delhi), on which reliance had been placed on behalf of the petitioners, the Delhi High Court has held thus: "28.4 The Supreme Court also agreed with the decision of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel (supra) to the extent it held that "it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of account or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act." The Supreme Court observed: "This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well." 28.5 The above categorical pronouncement of the Supreme Court cannot, by any stretch of imagination, be termed as obiter as has been suggested by Mr. Manchanda. Even the obiter dicta of the Supreme Court is binding on this Court. 29. The search in the case before the Supreme Court was prior to 1st June 2015. Apart from....
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....son would be based on the material seized during the course of the search or requisition and not the assessment made in the case of the searched person, though he may notice such fact during the course of assessment proceedings. Therefore, whether the satisfaction is recorded immediately after the search, after initiation of proceedings under section 153A of the Act or after assessment is framed under section 153A of the Act in the case of the searched person, the trigger point remains the same, viz., the search and, therefore, the statutory provision as prevailing on that day would be applicable. While it is true that sections 153A and 153C of the Act are machinery provisions, but the same cannot be made applicable retrospectively, when the amendment has expressly been given prospective effect. Besides, though such provisions are machinery provisions, the amendment brings into its fold persons who are otherwise not covered by the said provisions and therefore, affects the substantive rights of such person. In the opinion of this court, the decision of the Supreme Court in M.A. Merchant (supra) would be squarely applicable to the facts of the present case wherein it was held thus:.....
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....assistance of the ld.representativs, we have gone through all these pages. We would like to take note of relevant part of the satisfaction viz. para-7.3, which reads as under: 7.3 On the basis of discussion in the preceding paragraphs, it is noticed that XXX account mentioned in various documents seized during the course of search in the Venus Group refers to Shri Dilip Kumar Lalwani and the information contained therein relates to Shri Dilip Kumar Lalwani. There are various transaction recorded in the cash book and related cash vouchers." ..... ..... ..... 10. In view of above facts as mentioned above, I am satisfied that the above mentioned documents seized from the from the premises (i) 801-802, Broadway Business Centre, Opp. Mayor's Bungalows, Law Garden. Ellisbridge. Ahmedabad and (ii) Terrace of Crystal Arcade, Nr. Navrangpura Telephone Exchange, C. G. Road, Ahmedabad contains information which relates to the assessee, Shri Dilip Ku/riar Lalwani. Further, I am also satisfied that satisfied that documents seized have a bearing on the determination of the total income of the assessee, Shree Dilip Kumar Lalwani for assessment years 2009-10 to 2014-15. The assessee be....
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....which notice u/s. 153C was issued did not belong to the appellant. The appellant has also contended that there is no provision in the Income Tax Act either to drop the proceedings u/s. 153C or to issue second set of notices. The appellant has also relied upon the case laws in the case of Pepsico India Holding Pvt. Ltd. Vs. ACIT, RRJ Securities Ltd. [62 Taxmann.com 391] (2015) & Sinhgad Technical Education Society [84 Taxmann.com 290]. The AO has dealt with the argument raised by the appellant in Para 4.9, 4.10 & Para 5 of assessment order. The provision of Section 153C has been amended with effect from 01/06/2015 where if the Assessing Officer is satisfied that any books of account or documents seized pertains to, or any information contained therein relates to any person, other than the person referred to in Section 153A of the Income Tax Act, then books of account or document shall be handed over to the Assessing Officer having jurisdiction over such other person and the AO shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Earlier scope of section 153C was in the case....
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....153C of the Act for assessment year 2012-13." 2A In case of Venus Group, reference is made to the facts as appearing in Special Civil Application No. 19647 of 2018. 2A.1 The petitioner, who is an individual and proprietor of M/s. Ocean Valves Mfg. Co. filed his return of income for assessment year 2012-13 on 14.3.2013 declaring total income of Rs. 7,27,700/-. A search came to be conducted on various premises of Shri Ashok Sundardas Vaswani, M/s. Venus Infrastructure and Developers P. Ltd. on 13.3.2015. During the course of search various documents were seized in which information about transactions relating to the petitioner was found. The seized incriminating documents related to unaccounted cash transactions which were analysed and correlated with other seized documents. Among the cash transactions as recorded in the seized unaccounted cash book which was found during the course of search, reference was also made to the petitioner. Based on such seized material, the Assessing Officer initiated proceedings under section 153C of the Act by issuing the impugned notices dated 22.3.2018 and 14.8.2018. Subsequently notices have been issued to the petitioner under section 142(1) of ....