TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 200
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....6,529/- on account of alleged bogus claimed of long term capital gain the same should have been considered u/s 153C and not u/s 147 as per the provisions of the law. 3. Besides this Assessee has challenged following additions on merits: i. Addition of Rs. 75,74,28,000/- for alleged cash loans given by the assessee but added u/s 68 based on some dumb documents at the time of search. ii. Addition of Rs. 56,86,529/- u/s 68 by treating long term capital gain on sale of shares as bogus. iii. Addition of Rs. 7,72,56,840/- on estimate basis of re- characterizing the addition as undisclosed interest income. iv. Addition of Rs. 2,84,326/- u/s 69 C for alleged commission at the rate of 5% paid for bogus long term capital gain. 4. The background of the case in brief are that, here in this case the original return of income was filed by the assessee on 19/09/2011 at an assessable income of Rs. 25,01,840/- and which was processed u/s 143(1) of the Act. No assessment order u/s 143(3) of the Act was passed for this assessment year. As per available information on record, a search and seizure action u/s 132(1) was carried out at the place of the assessee on 06-07/10/2017 and the conseque....
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....s holding the assessment jurisdiction on the assessee as the returned income for all the above assessment years was less than Rs 20 lakhs being in the metro cities in view of the above instructions of the CBDT defining the assessment jurisdiction between an ITO and ACIT. 6. The reasons for reopening were provided by the DCIT, Central Circle 4(1) Mumbai to the assessee on his request on 22/11/2018. The assessee filed objections to the same before the DCIT Circle 4(1) Mumbai on 05/12/2018. The said AO disposed off the said objections vide letter dated 07/12/2018 stating that ―though the undersigned is not technically bound to pass a speaking order, yet the same are rebutted as under". 7. We heard, both the parties at length, Mr. Vinod Kumar, on behalf of the Assessee and the ld. CIT DR, Mr. Murli Mohan, on behalf of the Revenue, who also replied to the queries raised from time to time by the Bench seeking many clarifications on the arguments presented during the course of hearing. Since, the grounds taken by the assessee are on law and also on merits; it was decided by the Bench to first to take up legal grounds.. Since, all the legal grounds taken by the assessee go to the r....
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....al gain, the contention of the assessee is that the same could only be considered for reassessment by taking recourse to the non obstante provisions of the section 153C of the Act as has been mandated w.e.f. 01/06/2015 and not by taking recourse to the provisions u/s 148 of the Act because the entire information relied therein had emanated in the income-tax searches in the premises of the share brokers / operators of the scrip on which the said LTCG was earned by the assessee as no incriminating material in any manner for the same was detected in the search in the premises of the assessee. 9. At the outset, the Assessee has challenged the validity of the assessment order passed by the DCIT Central Circle 4(1) Mumbai u/s 147 of the Act as against the correct assessment jurisdiction to assess the same u/s 153A of the Act after the search in his premises. It was submitted on behalf of the assessee that, since this is the jurisdictional issue and goes to the root of the validity of the assessment order, therefore, it can be raised at any stage. We agree that this is purely a legal issue and is arising out of facts and material on record, therefore, same is admitted for adjudication. ....
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....se of M/s Evergreen Enterprises, wherein assessee is one of the partner and it was found that assessee has taken some accommodation entry of bogus /long term capital gains on sale shares of M/s DB International during F.Y 2010-11 and various persons have taken loan from the assessee and M/s Evergreen Enterprises. The reasons recorded by the AO reads as under:- Reasons for reopening of the assessment in case of Nilesh Bharani (PAR- AABPB4581G for AY 2011-12 u/s. 147 of the Act 1. The assessee derives income from salary and business. The assessee has been filing his returns of income from A.Y. 2002-03. The assessee, has filed Return of Income for the A.Y: 2011-12 on 19/09/2011 declaring total income of Rs.25,01,840/- in the Individual capacity. The ROI was processed u/s 143(1) of the 1.T. Act, 1961 on 25/09/2012. The case was not selected for scrutiny for the A.Y. 2011-12. 2. In this case, information has been received from the Deputy Directorate of Investigation, Unit-5(4), Mumbai that during the course of search and seizure action u/s.132 was carried out in the case of M/s. Evergreen Enterprises wherein assessee is one of the partner. The assessee has taken accommodation entr....
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....ped assessment within the meaning of section 147 of the IT. Act, 1961 for the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for the previous year relevant to A.Y 2011-12 Hence, it is a fit case for initiation of proceedings u/s.147 of the Income Tax Act. 1961 by issuing notice u/s. 148 of the Income Tax Act, 1961. 7. In this case more than four years have lapsed from the end of assessment year under consideration. The case is put up before the Pr. CIT.-20, Mumbai for his kind sanction to issue notice u/s 148 in the light of proviso to sub-section 1 of section 151 of 1.T. Act, 1961. (NEELAM V. KORGAONKA) Income tax Officer-20(2)(4), Mumbai. 12. From the aforesaid reasons, it can be seen that, the AO has noted that based on search and seizure action in the case of M/s Evergreen Enterprises and materials on record had come to reason to believe that, firstly, assessee has taken bogus /LTCG in a penny stock; and secondly, various individual and business concerns have borrowed cash loans through M/s Evergreen Enterprises and through Nilesh Bharani (assessee) which is from undisclosed income which has escaped income ....
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.... stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. 14. Ld. A.R. pointed out that, The Hon'ble Delhi High Court in PCIT vs. S.S. Con Build Pvt. Ltd 2022-TIOL-656-HC-DEL-IT, following the above judgment of the Hon'ble Apex Court and again jurisdictional Bombay High Court in Mavany Brothers vs. CIT 2015 SCC Online Bombay 1686/ (2015) 62 taxmann.com 50 (Bom), held an identical view as above. Thus, in view of this specific direction / order of the Hon'ble Apex Court and the High Courts, the impugned reassessment proceedings are meaningless due to an invalid and illegal jurisdiction assumed by the AO in complete violation of the specific law for the purpose. 15. To appreciate the legal issue raised before us, we shall discuss the position of law in section 153A of the Act as has been amended in the statute w.e.f. 01/04/2017 and whether, under the facts and circumstances of the case the assessme....
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....levant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. ....
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....an is allegedly out of undisclosed investment or money. Giving of cash loans is certainly an asset within the meaning of Explanation 2 as incorporated above and is represented in the form of undisclosed investment in an asset which reveals undisclosed income escaping assessment. Even in the assessment order has held that assessee has given cash loans based on some entries in diary and documents. In any case, what is material as of now is the evidence which has been referred in the reasons, which was giving of cash loan and not receiving of cash loan and investment and sale of shares which was by way of alleged accommodation entry in the form of sale of an asset, i.e., shares as bogus LTCG. It has been thus submitted before us in light of these facts that the AO has erred in law in passing the impugned assessment order u/s 147 of the Act for the AY 2011-12, which definitely fell within the extended period of 4 relevant assessment years beyond the six assessment years before the date of search. Neither, the assessee nor the AO had any discretion even by consent in this regard being the jurisdictional matter, because language of the law is clear and unambiguously worded. It is injudic....
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....e basis of some seized incriminating books pertaining to or information contained therein, but for the earlier 7th to 10th extended relevant assessment years, the condition of any escaped income being minimum of Rs 50 lakhs and that too when such income is represented in the form of an asset must also be met. 20. Now coming to the present facts, it has been pointed out by the ld. AR that, in para 4 of the reasons recorded on 28/03/2018, the AO has categorically held that after verification of the material available on record, it is certain that there is enough reason to believe that the assessee has not shown or offered this income (as mentioned in para 2 and 3 therein) to tax in her ROI filed for the AY 2011-12, (though the assessee is a male). However, undisputedly verification of the material available on record by the AO is an affirmative averment by the AO and the contention of the revenue that the AO did not have any material on its record as on the date of issue of the said notice u/s 148 of the Act, then the question arises, what verification was done by the AO in absence of the seized material vis a vis the reasons recorded, which was based purely on the seized material a....
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....nt or documents or evidence in any manner, not necessary seized from the assessee but should be with the AO in some manner which could be a document by way of a report sent by the investigation unit also. He also stated that there is a difference of application of the two non obstante sections 153A and 153C of the Act after the search. The section 153A of the Act applies irrespective of any incriminating material found during the search and an assessment therein of the searched person is must, which included the extended period of 4 relevant AYs also but that in case only, when any document or evidence or books of account disclosing the same represented by an asset of Rs 50 lakhs or more, was with the AO. However, the section 153C of the Act could be applied only and only if there was any incriminating material found during a third-party search about the undisclosed income. 23. The ld. AR also averred that thus, undisputedly, the AO of the assessee had the complete information of the search and the material found therein from the assessee not only at the time of completion of assessment as has been admitted in the letter dated 15/11/2022 filed by the CIT DR during the hearing of t....
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....hgard Technical Education Society 2017-TIOL-309-SC-IT holding that an assessment after a search is a jurisdictional fact and which can only be derived from the legislature and not by the courts or even the parties by consent as has been held by the Hon'ble Apex Court in Kanwar Singh Saini (2012) 4 SCC 307. 26. It was also stated by the ld. A.R. by referring to the relevant sections legislated for the purpose that no time limit has been prescribed by the statute anywhere to issue a notice u/s 153A of the Act requiring the person searched to furnish the return of income therein for assessment / reassessment as is prescribed for issuing a notice u/s 148 of the Act. The limitation stipulated by the legislature is only for the time by which the said assessment u/s 153A of the Act must be completed. Thus, as per the ld. AR, the AO is well within legal jurisdiction to issue such notice(s) for the 6 assessment years preceding the date of search and for any of the extended 4 relevant assessment years beyond those 6 assessment years separately as soon as the AO receives the requisite information of the search having taken place and for escaped income of Rs 50 lakhs and above represented by ....
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....y, the AO has admitted in the reasons recorded by 28/03/2018 that the information received by him from the Investigation Unit was based on a search on the assessee where complete figures and seized information was duly mentioned besides referring to the statements of 4 employees of the assessee, recorded u/s 132(4) of the Act at that time of search and reliance was also placed on those statements in the said reasons. Thus, the ld. AR emphasizes on the fact of not only a search having taken place on the assessee before the date of issue of the said notice u/s 148 of the Act but definite evidence in respect of the alleged escaped income being Rs 50 lakh and above as is mentioned in the said reason was very well known to the AO then. Thus, he pleaded that in view of the above settled and unambiguous law that the revenue officers or even otherwise the courts, can assume jurisdiction only as per the legislative mandate and not by convenience or whims including by consent of the parties to the lis, the impugned assessment order passed u/s 147 of the Act instead u/s 153A of the Act is void ab initio and must be accordingly declared. Second Legal Objection taken by the assessee on the juri....
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....l, because any assessment jurisdiction from an existing AO can only be transferred to another AO even under the charge of the same PCIT by passing a speaking and reasoned order u/s 127(1) of the Act by the PCIT as per the section 127(1) of the Act. The Ld. A.R. also admitted though there is no necessity at all to give an opportunity of hearing for the same to the assessee yet for the sake of even appreciation, the PCIT may also not pass a reasoned order, yet passing an assessment jurisdiction transfer order u/s 127(1) of the Act is mandatory by the PCIT as no AO can at all suo moto transfer the assessment jurisdiction to another officer even under the same PCIT charge. This is a jurisdictional matter, goes to the root of the assessment proceedings and has to be governed by the legislature as has been held by the Hon'ble Apex Court (supra). 31. The ld. AR then stated that thus, on perusal of the legal provisions as above, the AO Central Circle 4(1) Mumbai while passing the assessment order in this appeal did not possess any valid and legal jurisdiction on the assessee and following the judgment of the Hon'ble Apex Court in Kanwar Singh Saini (supra), the same must be quashed as voi....
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....of the assessee that in case, the revenue pleads that the correct jurisdiction for the purpose was with the ACIT Circle 20(2) Mumbai only at that time then the alleged notice issued u/s 148 of the Act by itself becomes void ab initio as having been issued by a non-jurisdictional assessing officer, i.e., the ITO Ward 20(2)(4) Mumbai and could not at all be proceeded with in any manner. The ld. AR also stated that thus, as per the prevalent income-tax returns filed for the four AYs till the AY 2016-17 and the location of the PAN of the assessee with the ITO, Ward 20(2)(4) Mumbai, as on the date of issuing the said notice u/s 148 of the Act, the correct assessment jurisdiction officer of the assessee was the ITO, Ward 20(2)(4) Mumbai who later on illegally transferred the same voluntarily to the ACIT Circle 20(2) Mumbai by a transfer Memo dated 20/04/2018 which he could not at all have done himself. For this exercise, an order u/s 127(1) of the Act by the PCIT was must even if no hearing was to be granted or no reasoned order was to be passed by the PCIT. This could only be transferred under the signature of the PCIT. 34. The ld. AR also relied on a latest judgment of the Hon'ble Del....
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.... General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation.-In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued there under, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on o....
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.... as submitted above by him, it is apparent that definitely there was a violation of the said law by the revenue authorities. They were bound to follow the Statute and not to have exercise jurisdiction worked as per their sweet will Since, this mandatory legal requirement to assume jurisdiction by the ACIT Circle 20(2) Mumbai whom from the impugned assessment jurisdiction transfer order was passed on 11/09/2018 by the PCIT 20 Mumbai was completely non-existent, any order to transfer the same from the ACIT Circle 20(2) Mumbai to the ACIT, Central Circle 4(1) Mumbai was a nullity ab-initio, because what one does not have, the same cannot be transferred to another from him by any authority. It was necessary for the PCIT 20 Mumbai to transfer the same from the ITO Ward 20(2)(4) Mumbai to the ACIT Central Circle 4(1) Mumbai. Consequently, as per the ld. AR, no valid assessment jurisdiction at all existed with the DCIT Central Circle 4(1) Mumbai who passed the assessment order in this appeal. Therefore, he pleaded that the impugned assessment order must be declared void ab initio as passed by an AO without a valid and legal jurisdiction following the judgment of the Hon'ble Apex Court in ....
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....rio of its application in the case of the person not searched, does not at all specify anywhere that it would solely be applicable only in respect of the searches conducted w.e.f. the said date. The ld. AR vehemently submitted that any information received by the AO of the non-searched person after 31/05/2015 from the AO of the searched person in respect of a search conduced even before 01/06/2015 after that date will definitely be covered by the provisions of the section 153C of the Act as has been mentioned in the Proviso therein. 41. The ld. AR submitted as a corollary that the section 153B (2) of the Act also states that date of execution of the search will be the date when the last panchnama of the last search warrant is drawn. In this case, as per the order of the CIT (A) the impugned searches were conducted by the Investigation unit till the year 2015. However, in this case, the information was received by the AO of the assessee in March 2018. Therefore, the provisions of the section 153C of the Act as applicable on that day only were applicable here, as it is an independent section than the section 153A of the Act and in which there was no similar amendment as such w.e.f. ....
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....5 or from 01/06/2015. Similarly, this is also clear from the clause (36) of the Notes to the amendment proposed in the Finance Bill 2015. 44. The ld. AR also stated that since, as per the CIT (A), the impugned addition is based on the search operations carried out by the Directorate of Investigation New Delhi, on the persons who were involved in the business operations / other affairs of the said companies when the alleged relied information was found / seized in those searches. This proves beyond doubt that the alleged notice u/s 148 of the Act is based on the search proceedings undertaken by the revenue. 45. The ld. AR also submitted as is undisputedly apparent from the impugned assessment order that the same is the consequence of an income-tax search conducted by the investigation units of the income-tax department throughout the country when not only the alleged incriminating material was discovered and seized but statements of several persons searched besides many others were recorded by the revenue under the provisions of the Act. 46. For sake of ready reference, the prevalent section 153C of the Act w.e.f. 01/06/2015 at the time of issue of the notice u/s 148 of the Act o....
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....ccount or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. (3) Nothing contained ....
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....the assessment order was passed by a jurisdictional assessing officer. Here also the impugned notice u/s 148 of the Act was issued beyond jurisdiction as for the purpose of assessment of an income on any material relating to an assessee seized during a search on some other person, the legislature has specifically prescribed the law to assume jurisdiction by an AO, overriding the provisions of the section 147/148 of the Act by legislating in its thoughtful wisdom under the mandatory provisions of the sections 153A/153C of the Act. The same can only be assumed when first the AO of the searched person records his satisfaction u/s 153C of the Act in respect of the said information and hands over the said information and the relevant material to the AO of the non-searched person and thereafter, when the AO of the said non-searched person records his satisfaction u/s 153C of the Act, a legal and valid jurisdiction is assumed by the AO of the non-searched person to whom the said material relates to, to pass an assessment order u/s 153A of the Act (and not u/s 147 of the Act). Thus, here the impugned assessment order was passed beyond jurisdiction by the AO and cannot at all be validated u....
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....es of the person searched. Any information contained in the material so seized from the premises of the person searched which did not belong to the non-searched person but contained therein any information relating to the non- searched person did not authorize the revenue to take an action u/s 153C of the Act. In that case, the only course available to the revenue till 31/05/2015 was to issue a notice u/s 148 of the Act because the information/ material seized did not belong to the non-searched person. There was a specific emphasis to the words BELONGS OR BELONG TO A PERSON other than the person searched. In this case, admittedly, during the course of the said searches in the premises of share brokers or others, no material in physical form of the assessee was found. Therefore, upto 31/05/2015, in absence of any physical seizure belonging to a non-searched person, no assessment proceedings could be initiated by taking recourse to the provision u/s 153C of the Act. 53. Now, after the amendment therein w.e.f. 01/06/2015, we find that, the concept of belonging was just restricted to the valuables found in any form u/s 153C(1)(a) of the Act, but a new sub clause (b) has been inserted ....
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.... 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 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. This amendment will take effect from 1st June, 2015. 55. Thus, on a bare perusal of the plain language of the above explanation in respect of the amendment introduced in the section 153C of the Act w.e.f. 01/06/2015, we find that it mandates that in case any information is found during the course of any search anywhere in respect of a person not searched, then for the purpose of....
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....ect and proceed to reassess the same u/s 153A of the Act which is clear by the words - if that AO (of the non-searched assessee) is satisfied that the information so received has a bearing on the determination of total income of the said person for the relevant year or years, which means that a satisfaction to the effect of escapement of such income may be for one year or more after verification of the material received, because in some cases it may be that the person searched may not be recording the relevant transaction in his books of account leading to an incrimination but the non-searched person might have properly disclosed the said transaction in his books of account, where it can no more remain incriminating in his hands. In such case, no reassessment proceedings can be initiated under the provisions of the section 153C of the Act of the non-searched person. Here in this case as noted above the information of alleged bogus LTCG was gathered from the search of Evergreen Enterprises and other searches of entry operators. Thus, the only recourse for the AO was to initiate 153C of the Act qua this addition, and even rope into this issue or addition in the assessment made u/s 15....
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....above law as below: 18) The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges there from is discussed in para 10. It was specifically recorded that the counsel for the De....
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....06/2015, after an income tax search u/s 132 of the Act on any person, if any incriminating information in any manner much less any material in physical form or even otherwise in any manner, is found therein relating (and not belonging) to a non-searched person then the Legislature, in its wisdom, created a special provision overriding the applicability of the sections 147/148 of the Act, thereafter, legislating assessment of any escaped income on the basis of the alleged definite incriminating material only and only u/s 153A of the Act by taking recourse to the provisions of the section 153C of the Act. It needs to be kept in mind that this is a jurisdictional issue and mandatory to assume jurisdiction to make an assessment / reassessment of any escaped income in consequence to a search. Relevancy of the provisions of the sections 147/148 of the Act becomes somehow redundant only in so far as the assessment / reassessment of any escaped income on the basis of discovery in a search proceeding. 63. Thus, in our opinion, both the above set of provisions attract action of assessment / reassessment of the alleged escaped income but definitely under the two different situations on facts....
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....assessment after an income-tax search, has specifically provided u/s 132(9A) of the Act, that the seized material during the course of a search would be handed over to the Assessing Officer of the person searched and in further rhythm thereto, the Assessing officer of the person searched would examine the seized material including any information contained therein relating to a person not searched, and then will hand over the same to the Assessing officer of the person not searched as has been prescribed u/s 153C of the Act. The section 132 (9A) reads as under: (9A) Where the authorized officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub- section (1), the books of account or other documents or assets seized under that sub-section shall be handed over by the authorized officer to the Assessing Officer having jurisdiction over such person, within a period of fifteen days of such seizure and thereupon the powers exercisable by the authorised officer under sub- section (8) or sub- section (9) shall be exercisable by such Assessing Officer. 67. Thus, from a reading of the aforesaid section, in our opinion, the Legislature has categ....
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....ke necessary action u/s 148 of the Act or any other applicable provision of the Act, as the officers of the investigation unit were not at all authorized for the same. At least we do not find any provision of the Act, which authorizes the officers of the investigation unit to send the information found during a search to the assessing officers of the persons not searched in any manner. Be that as may be, we are not going on the aspect or adjudicating this issue about legality of the manner in which investigation wing can send any information gathered from the search of a person to the AO"s of the other person (i.e., non searched person), as we only trying to sychronise the provision of section 153C and 132(9A). 68. Ergo, the officers of the investigation unit are just to assist the assessing officers and wherever they search an assessee, then the provisions of the section 153A and 153C of the Act gets triggered up to 31/03/2021 by overriding all other provisions which is a jurisdictional aspect and has to be followed. 69. Before us, on behalf of the assessee, the ld. CIT DR vehemently supported the orders of the lower authorities and stated that the notice issued u/s 148 of the A....
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....any grievance to the same as he is not at affected by such transfer because it is for the revenue to decide as to will be his assessing officer within the same territorial jurisdiction. Thus, he stated that the assessment jurisdiction was legally held by the ACIT Circle 20(2) Mumbai on 11/09/2018 when the PCIT 20 Mumbai passed the assessment jurisdiction transfer order over the assessee from him to the ACIT Central Circle 4(1) Mumbai. 71. As regards the third plea of the assessee, the ld. CIT DR submitted that the income-tax department after a thorough investigation / searches/ surveys etc pan India on the brokers /operators engaged in providing bogus Long Term Capital Gains on listed scrips of Indian companies and thereby assisting several thousand assesses to evade payment due income-tax on their unaccounted money, broke the said scam and brought to the tax the said escaped false claims which have also been admitted by several assesses across the country by paying due income-tax on the escaped income so detected. Thus, the assessee should also not be permitted to escape his income-tax liability on the bogus claim made by way of an exempt LTCG in his return of income which was de....
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....he law has been crafted in an unambiguous and plain words with no if and buts, particularly with reference to the Memoranda explaining the insertion of the same in the statute, showing intentions of the Legislature. The sections 153A, 127 and 153C of the Act are worded absolutely in a simple language with no ambiguity at all in any manner to appreciate the meaning and purpose of the same, besides uniformity of adherence by the revenue officers who are duty bound to follow the said provisions as directed by the legislature. The ld. AR also submitted that the revenue has not been able to rebut in any manner the legal contentions raised and submitted by the assessee are not correct. He also stated that there is no bar to collect the due taxes from any person but for which the legislature has not granted unbridled and unfettered powers to the law administrators to adopt any method to levy taxes, not legislated or to use the same as per their own conveniences with presumptions or by twisting the same. However, the suspicion of evasion of taxes may be strong, yet the provisions of the legislated law, as those are codified, to be applied for levy. If the revenue officer failed to adhere t....
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....Evergreen Enterprises wherein assessee is one of the partner, it was found that assessee has taken bogus /LTCG for sale of penny stock. Another important fact which has been noted on the information from the said search and also consequently from the search conducted in the case of the assessee as has been referred to in the assessment order, it is seen that certain individuals and business concerns have borrowed cash loan from /through Nilesh Bharani / M/s Evergreen Enterprises for sum aggregating to Rs. 75,74,20,000/- in the FY 2010-11. This loan definitely represents the "asset" which in the belief of the AO has escaped assessment. What the proviso speaks about is that, books of account or other document or the evidence revealed that income in the form of an asset has escaped assessment. The income in the form of an asset can include share and securities and loans & advances, etc. as defined in Explanation 2. As observed and held by us in the foregoing paragraphs, the evidences found during the course of search and seizure operation in the case of the assessee and M/s Evergreen Enterprises, wherein assessee was a partner, it was found that that they have given cash loans to vari....
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.... 85 crores approximately which was far more than Rs 50,00,000/- and admittedly as per the AO, the same was in the form of loans given by the assessee though out of the books of account. Here in this case, the said Proviso definitely applies and the correct course for the AO was to undertake the reassessment proceedings under the mandatory provisions of the non-obstante section 153A of the Act for this assessment year which falls in the extended 4 relevant assessment years. 77. Even in the assessment order, AO has mentioned that diaries were found and seized at the premises of M/s Evergreen Enterprises wherein various documents were found and seized which revealed that cash transaction were both for lending and borrowing by the various individuals and entities through Nilesh Bharani and M/s Evergreen Enterprises has been made. The cash loan ledgers were found and seized at the premises of the assessee and M/s Evergreen Enterprises are involved in lending and borrowing cash loans. The AO in his order has given finding and held that the material and evidences gathered revealed that assessee has lending and borrowing cash loans to various persons and has drawn adverse inference. He ha....
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....t these assets are in fact in the nature of income which has escaped assessment, the AO can acquire jurisdiction for going beyond the period of 6 years for further period of 4 years from the end of the assessment year relevant to previous in which search was conducted and then he has to mandatorily pass assessment order for that relevant assessment year u/s 153A and he is debarred from taking any action under section 148. As noted above, the asset also includes loans and advances which the same has been found to be non-genuine, is treated as income of the assessee. 79. Accordingly, the submissions made by the Ld. Counsel of the assessee during the course of the hearing of this appeal as discussed herein above, which we have also analysed in light of the relevant provision hereinfore, we are in tandem with him, in so far as the legal position is concerned. In view of our analysis of the provisions of the law, we are of the opinion that the correct legal course for the AO in this case was to issue a notice u/s 153A of the Act for this assessment year as well as relevant assessment year out of the 4 such extended relevant assessment year beyond the 6 assessment years and should have ....
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.... make a reassessment of income or should have made further enquiries from the Investigation Unit seeking other details including the books of account etc. if thought necessary by him and then the AO should have proceeded to issue the notices u/s 153A of the Act for the 6 assessment years plus the above relevant extended assessment year, because the limitation to complete the assessment / reassessment of income based on the date of search as mentioned in the records was 31/12/2019 and when the AO has already issued notices u/s 153A of the Act for the said 6 assessment years on 19/01/2019 and completed the assessments of incomes for the said 6 assessment years vide order dated 31/12/2019 passed u/s 153A of the Act. Thus, the assessment of income for this assessment year including the 6 said assessment years was to be passed either simultaneously or separately u/s 153A of the Act by 31/12/2019 and not at all in any manner u/s 147 of the Act for this assessment year. 82. We have also noted the unambiguously worded language of the section 153A of the Act for the 4 extended relevant assessment years w.e.f. 01/04/2017 which uses the relevant provision in the Fourth Proviso as under: "P....
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....essment of income declared in the return of income as long-term capital gain could not be made by taking recourse to the section 148 of the Act and the same must have been made as per the provisions of the section 153C of the Act, it is not the case of the revenue that the AO did not have the requisite information in his possession, received from the Investigation Unit of the department, found during the course of search because the same is very much clearly spelt in the reasons recorded to issue the notice u/s 148 of the Act on 28/03/2018 that the said income had escaped assessment earlier in the normal course due to some incorrect claim made by the assessee. 85. Further, it is also not disputed that as per the order of the CIT (A) in this case, the Revenue came in possession of the said information in some searches carried out by the Investigation Unit on the brokers / operators of the listed scrip DB International (Stockbrokers) Ltd. Further, as noted by AO in his reasons recorded in para 2 of reasons that, this information surfaced from the search of M/s Evergreen Enterprises, so all the more it was an information pertaining to the assessee found during the course of search of....
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....n as is compulsorily for the assessee searched till 31/03/2021, even for the searches conducted prior to 01/06/2015 where the AO of the person not searched receives the alleged incriminating information after 31/5/2015. 88. However, in the case of a person not searched, the AO is permitted to issue the said notice u/s 153C r.w.s. 153A of the Act, only for the assessment year for which any definite incriminating information was found during the course of search for any of the preceding 6 assessment years. But for the extended 4 relevant assessment years therein, the said notice u/s 153C of the Act can be issued only when the incriminating material points escapement of income backed by an undisclosed asset of Rs 50 lakh and above and the said incriminating may not be the seized material in physical form belonging / pertaining to the assessee not searched. 89. Further, since the section 153C of the Act begins with a non-obstante wording overriding the application of the sections 147/148/149/151 of the Act, the AO is legally bound to take recourse to section 153C of the Act only in case of receipt of any information about any undisclosed income in any material found/ seized during th....
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....e proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other amounts also if any information about those is on his record over and above the alleged escaped income as per the reasons recorded. The purpose of restriction of assessment for amount of income by taking recourse to the provisions u/s 153C of the Act to alleged incriminating material and not on suspicion has been upheld by the Hon'ble Supreme Court in the case of Sinhgad Technical Education Society (supra). 92. Accordingly, we hold that any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initiated u/s 148 of the Act in respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio as the same can be considered only by taking recourse to th....