TaxTMI 
TaxTMI 
2022 (10) TMI 559
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....years, the decision taken for one year i.e. AY. 2010-11 will decide the fate of the appeals for the other two years i.e. AY 2011-12 & AY 2012-13. Therefore, first we take up the quantum appeal for AY. 2010-11 for adjudication and decide the legal issue raised by the assessee against the jurisdiction by AO of assessee to initiate assessment/re-assessment u/s 153C of the Act. 2. Brief facts pertaining to assessment year 2010--11 is that on 27.10.2014, search under section 132 of the Act took place in the premises of M/s Navjeevan charitable trust. Thereafter the AO of the searched party (M/s. Navjeevan charitable trust) i.e, the DCIT Central Circle--2 (1) Mumbai on 15.3.2017 handed over the satisfaction note under section 153C of the Act [against the assessee] to the AO of the assessee (ITO Ward-4(3), Thane) in order to initiate necessary action as per 153C of the Act. In this regard, the AO of the assessee [ITO Ward 4 (3)] notes that the AO of the searched party [DCIT Central Circle4(3)] while framing the assessment of M/s Navjeevan charitable trust came across Ledger copies viz the ledger account of the assessee in the books of M/s Navjeevan charitable trust, and upon perusal of t....
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....s the handing over of the seized documents of the third party (i.e. assessee in this case) along with satisfaction note to the assessee's AO which should be adopted in contra-distinction to the case of an assessee who has been searched wherein date of search determines the six preceding years falling under assessment u/s 153A of the Act; And since the handing over of the seized documents along with satisfaction note in respect of the present assessee by DCIT-CC-2(1) to assessee's AO [ITO-4(3)] happened on 15.03.2017 i.e. (AY. 2017-18). In such an event, as per the second proviso to Section 153C of the Act, the AO of assessee [ITO-Ward 4(3),Thane] is empowered u/s 153C of the Act to assess/re-assess the assessment of six years preceding AY. 2017-18. And when reckoned from AY. 2017-18 (since documents handed over on 15.03.2017), AY 2010-11 is the seventh (7) assessment year. And therefore according to assessee, the AO erred in framing the assessment u/s 153C of the Act for AY 2010-11 despite the assessment year not falling in the ken of section 153C of the Act. 5. Be that as it may, we will look into the first legal issue raised by assessee i.e regarding the validity of the satisfac....
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....oned shall be handed over to the Assessing Officer having jurisdiction over such other person......................." [Emphasis given by us] 6. In order to adjudicate the legal issue raised by the assessee first we have to examine the satisfaction note prepared by the AO of the searched person (M/s. Navjeevan Trust i.e. DCIT, CC-2(1)] dated 03.03.2017 which reads as under: - "Satisfaction note regarding initiation of proceedings u/s 153C in the case of Shri Nalin J Vyas Prop. M/s. Brijesh Enterprises, PAN: ACWPV5128Q Warrant u/s 132(1) was issued by the Investigation Wing was executed on 27.10.2014. Following the dictum of provisions of Section 153A(1)(a), the notices u/s 153A were issued for assessment years 2009-10 to AY. 2014-15 requiring M/s. Navjeevan Charitable Trust, to furnish returns for the said years. The materials seized the search proceedings was verified and scrutinized. This exercise reveals that the page no. A-1/154 to 156 and A-2/45 which were found and seized in the premises of M/s. Navjeevan Charitable Trust marked Annexure-A-1/154 to 156 and A-2/45 belongs to Shri Nalin J. Vyas Prop. M/s. Brijesh Enterprises, with transaction amount of Rs.2,48,81,200/- ....
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....fice on 15.03.2017 for initiating proceedings u/s.153C of the Income-tax Act,1961 in the case of Shri nalin J. Vyas, as the jurisdiction lies with the ITO ward 4(3), Thane. On examination of the seized documents, it reveals that Shri Nalin J. Vyas Prop. Brijesh Enterprises has made transaction for F.Y.2009-10 of Rs.4,86,64,449/- relevant to A.Y.2010-11 and F.Y.2010-11 of Rs. 2,48,81,200/- relevant to A.Y.2011-12. Therefore, the case of Shri Nalin J. Vyas falls within purview of the provisions of section 153 C of the Income-tax Act,1961 and action is initiated to assess or reassess the income of for the A-Y. 2009-10 to 2014-15 by calling return of income as required for the six assessment years as required u/s. 153A(a) r.w.8.153C of the Income-tax ,1961. The return of income to be filed within 30 days from the date of receipt of the notice. Notices u/s.153C r.w.s.153A(a) of the Income-tax Act,1961 are issued for the A.Ys. 2009-10 to 2014-15. A notice u/s. 142(1) of the income tax Act for A.Y.2015-16 is also issued for filing of return of income. R. R. Patwardhan Income Tax Officer, Ward-4(3), Thane Date 30.03.2017 9. From a perusal of the satisfaction note it reveals that ....
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....cision of the Supreme Court in Commissioner of Income Tax v. Calcutta Knitwears (supra). A perusal of the said decision of the Supreme Court reveals that the question before the Supreme Court was the stage at which the satisfaction note could be prepared. In the facts of the present case, we are concerned with the applicability of the amended provisions which are brought into force with effect from 1.6.2015 as to whether the same would be applicable to cases where the search was conducted prior to that date. Thus, the question is what would be the relevant date for applicability of the amended provision, whether it has to be considered in the context of the date of search or date of recording of satisfaction by the Assessing Officer of the searched person or the date of issuance of notice under section 153C of the Act. 19.6 On behalf of the respondents it has been contended that section 153C of the Act is a machinery provision. In Calcutta Knitwears (supra), the Supreme Court has held that while interpreting a machinery provision, the courts would interpret a provisions in such a way that it would give meaning to the charging provisions and that the machinery provisions are liber....
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....ss Profits Tax, (1955) 27 ITR 20 (SC) and Gursahai Saigal v. CIT, (1963) 48 ITR 1 (SC).)" 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 rights of the assessees and cannot be said to be a mere change in the procedure. Since the amendment expands the scope of section 153C of the Act by bringing in an assessee if books of account or documents pertaining to him or containing information relating to him have been seized during the course of search, within the fold of that section, this question assumes significance, inasmuch as in the facts of the present case, as on the date of search, it was only if such material belonged to a person other than the searched person, that the Assessing Officer of the searched person could record such satisf....
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....or 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 searched person once again record satisfaction as contemplated under the amended provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic "no" as the Assessing Officer of the searched person after recording the earlier satisfaction would have already forwarded the material to the Assessing Officer having jurisdiction over the other person, therefore, there would be no question of his again forming a satisfaction as required under the amended provisions of section 153C of the Act. 19.11 In the opinion of this court, if a date other than the ....
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....ul examination of the said documents (A-1/154 to 156 to A-2/45) which is found placed at page no. 9 to 14 of the paper book, we find that these are merely ledger account of assessee maintained by the searched person (M/s. Navjeevan Trust) in their books i.e of M/s. Navjeevan Trust. So, by no stretch of imagination it can be said to be as "belonging to the assessee". Having found that the ledger copies [copies of seized documents A-1/154 to 156 to A-2/45] forwarded by the DCIT-CC-2(1), Mumbai along with the satisfaction note (supra) to AO of assessee, are only ledger account of transactions between the assessee and (M/s. Navjeevan Trust) recorded by Navjeevan Charitable Trust in its books (M/s. Navjeevan Trust), we find that the conclusion or finding of fact recorded by DCIT-CC-2(1), Mumbai in his satisfaction note that the same belongs to the assessee is per-se erroneous. Since the DCIT-CC-2(1), Mumbai erred in his finding regarding the jurisdictional fact [ i.e, seized documents A-1/154 to 156 to A-2/45 belongs to assessee] the satisfaction note prepared by him to AO of the assessee [ITO-4(3) Thane] is vitiated. Thus we find that the jurisdictional fact [seized material from M/s N....