2023 (3) TMI 285

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....(A) has erred in law and on facts in deleting addition of Rs. 2,57,00,000/- made on account of credits in the bank account of the assessee. (4) The Ld. CIT(A) has erred in law and on facts in deleting addition of Rs. 2,00,000/- made on account of unexplained purchases of shares. (5) On the facts and circumstances, the Id. CIT(A) ought to have upheld the order u/s.144 r.w.s. 153C of the I.T. Act, 1961 passed by the Assessing Officer. (6) It is therefore prayed that the order of the Id. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent. (7) It is further prayed that the tax effect of this case is Rs. 88,03,410/-,which is more than the monetary limit specified in the Instruction No. of CBDT Circular No. 3/2018, F. No. 279/Misc. 142/2007-ITJ(Pt) dated 11.07.2018 & recently issued Circular No. 17/2019 dated 08/08/2019, hence the appeal be decided on merits." 3. The brief facts of the case are that the search action under section 132 of the Act was carried out in the Suraj Group of cases on 18-12-2013. During the course of search, certain incriminating documents were found, which as per the assess....

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....27. In view of the aforesaid findings and respectfully following the judgments/decisions of Jurisdictional High Court, Jurisdictions! Tribunal and other Courts, wherein it has been held that in absence of incriminating material/evidences found at the place of appellant, addition /-disallowance cannot be sustained within the pale of section 153C of the Act. In my considered opinion, the action of the AO for making addition not justified. This ground of appeal is allowed. 28. The second ground of appeal is against the addition of Rs.2,57,00,000/- made u/s.68 of the IT Act, 1961 on facts and law. I have considered the facts of the case, remand report of the AO and the submission and rejoinder of the appellant carefully. Since the initiation of proceedings u/s. 153C is held to be not in accordance with the provisions of law and accordingly no addition was justified as has been held in the first ground of appeal. Thus, this ground of appeal is not required to be decided on merits. The grounds of appeal are allowed." 5. The Department is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) setting aside the assessment order on the groun....

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.... reproduce the relevant extracts of the aforesaid ruling which are relevant to the issue under consideration before us: 19.4 Section 153C of the Act is a machinery provision which is inserted in the statute book for the purpose of carrying out assessments of a person other than the person searched under sections 132 and 132A of the Act. The moot question that arises for consideration in the present case is as to what is relevant date from which the amended provisions of section 153C of the Act would be applicable. While the amended provisions have been expressly brought into force with effect from 1.6.2015, the controversy in the present case arises because the searches in all these case had been conducted prior to 1.6.2015, whereas the proceedings under section 153C of the Act have been initiated after that date and it is in this backdrop that the validity of the impugned notices has been called in question. It is the case of the petitioners that the proceedings under section 153C of the Act are triggered by the search, and hence the provisions of law as existing on the date of the search have to be followed, while it is the case the respondents that the provisions of law....

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....Therefore, on the date of the search, the Assessing Officer of the person searched could only have recorded satisfaction to the effect that the seized material belongs or belong to the other person. In the present case, the harddisc containing in the information relating to the petitioners admittedly did not belong to them, therefore, as on the date of the search, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C of the Act in case of the petitioners, did not exist. It was only on 1st June, 2015 when the amended provisions came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. 6.2 In the case of Index Securities (P.) Ltd[2017] 86 taxmann.com 84 (Delhi), the Delhi High Court held that the essential jurisdictional requirement for assumption of jurisdiction under section 153C (prior to its amendment with effect from 1-6-2015) qua 'other person' is that seized documents forming basis of satisfaction note must not merely 'pertain' to other person but ....

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....e has held that since assessment was not framed on the basis of any incriminating documents "belonging to" the assessee found during the course of search, then in light of the various judicial precedents, including the jurisdictional Gujarat High Court decision on this subject, the additions are not liable to be sustained. Additions for Unabated assessment year can only be made on the basis of incriminating material found during the course of search. 6.8 We observe that Ld. CIT(Appeals) while disposing of the objections raised by the in respect of initiation of proceedings under section 153C of the Act, has categorically held that there was no incriminating material which formed the basis of assessment framed under section 153C of the Act. The same is evident from the relevant paragraphs of Ld. CIT(Appeals) order disposing of the objections raised by the assessee in respect of initiation of proceedings under section 153C of the Act. The relevant extracts of the order passed by Ld. CIT(Appeals) are reproduced below for reference: "26 It is an undisputed fact that on the date of initiation of the search no assessment proceedings were pending in this assessment year. Th....

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....com 292 (Gujarat), the Gujarat High Court held that under section 153A, an assessment has to be made in relation to search or requisition, namely, in relation to material disclosed during search or requisition; if no incriminating material is found during search, no addition can be made on basis of material collected after search. 6.14 In the case of PCIT v. Dipak Jashvantlal Panchal[2017] 88 taxmann.com 611 (Gujarat), the Gujarat High Court held that only undisclosed income and undisclosed assets detected during search can be brought to tax in assessment under section 153A of the Act. 6.15 In the case of PCIT v. Devangi [2017] 88 taxmann.com 610 (Gujarat), after the search conducted at the assessee's premises, the Assessing Officer initiated proceedings under section 153A of the Act on the basis of the incriminating material seized for the period of the assessment year 2004-05 onwards, and made the addition for the assessment years 2000- 01 to 2004-05. The Tribunal deleted the addition holding that only undisclosed income and undisclosed assets detected during the search could be brought to tax and in assessee's case no incriminating material was found with respect t....