TaxTMI 
TaxTMI 
2023 (3) TMI 355
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....ce in figures of addition in each assessment year, therefore the same are disposed of by this common order. 2. IT[SS]A No.177/Ahd/2021 relating to the Asst. Year 2011-12 is taken as the lead case. Brief facts of the case is the assessee is engaged in the business of development and construction of residential and commercial complexes. The assessee follows Project completion method of accounting and filed its Returns of Income of the various projects undertaken by the assessee. There was search action under section 132 of the Act, carried out in the case of Shri Sanket Jitendrabhai Shah on 04.12.2014, wherein MS Axel file named "76 flat list" was found. As per the AO, the above sheet included the details of 76 flats in Vibrant Homes Project carried out by the assessee. Parallelly there was Survey action u/s. 133A of the I.T. Act was conducted in the case of the assessee and no discrepancy was found neither in the books of accounts nor unaccounted cash was found in the business premises of the assessee but certain loose papers were impounded during the course of survey. 3. Subsequently, on the basis of the search proceedings carried out in the case of Shri Sanket Jitendrabhai Shah,....
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....ssment years. Accordingly, the assessment proceedings in the case of the assessee for the assessment years 2009-10 to 2014-15 is hereby initiated u/s. 153C of the Act and notices u/s. 153C for the assessment years 2009-10 to 2014-15 is being issued." 3.3. The assessee also submitted the satisfaction note recorded by the AO on 14-10-2016 in the case of searched person Shri Sanket Jitendrabhai Shah and the relevant extract of the satisfaction note reads is as under: "11. In view of the above facts, I am satisfied that the above mentioned documents seized from the residence of Shri Sanket Jitendrabhai Shah (Vora) and during the course of search at B-406, Wall Street-11, Ellisbridge, Ahmedabad, pertains to or the above information discussed in paras 6 to 8 relates to the assessee M/s. Soniz Procon Private Limited for the assessment year 2009-10 to 2014-15. Since the assessee being other than the person referred to in Section 153A of the Act, I have satisfaction to proceed against the assessee M/s. Soniz Procon Private Limited as per the provisions of Section 153C of the I.T. Act, 1961 as it has bearing on the determination of the total income for the assessment years 2009-10 to 201....
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....eized" and "requisitioned" i.e. reference of section 132 and 132A of the Act. Thus, for the purpose of section 153C of the Act also, there is no reference to section 133A of the Act i.e. survey. 9.17 In view of the above, I am of the considered view that in the scrutiny assessment u/s. 153C r.w.s. 153A of the Act, no addition can be made in respect of the material impounded during the course of survey u/s. 133A of the Act carried out in case of the appellant company. It has no live link or nexus with the seized material mentioned in the satisfaction note of the AO to issue the notice u/s. 153C of the Act. Accordingly, the addition made on the basis of impounded material u/s. 133A of the Act is held to be illegal and contrary to the provisions of section 153C r.w.s. 153A of the Act and therefore the same deserves to be deleted. ......................... 9.32 In view of the above discussion, the legal grounds taken by the appellant is found substance objecting to the initiation of the proceedings u/s. 153C of IT Act not in accordance with the provisions of law. The initiation of proceedings in the years under consideration is without any incriminating documents found. The de....
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....dingly. In other words, on legal grounds the appellant gets the relief. The other grounds on merit did not require separate adjudication. 10. With regard to grounds of appeal No. 2 & 4, no separate adjudication is required to be made since on legal grounds, the addition have been found justified in all the assessment years and hence deleted. This reason/decision is equally applicable in the appeal of other assessment years also. 11. Ground of appeal No.7 is general in nature and no specific submission has been filed by the appellant in this regard. Hence the ground of appeal is dismissed." 5. Aggrieved against the above Common Appellate Order the Revenue is in appeal before us raising the following Grounds of Appeal: 1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the details of the documents found during the course of survey could not be utilized for making the assessment u/s. 153C of the I.T. Act., without appreciating the fact that the case of the assessee company was re-opened on the basis of MS excel File named "76 flat list" containing the details of 76 flats in Vibrant Homes Scheme of M/s. Soniz Procon Pvt. Ltd., fo....
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....ns of section 153C would be applicable. No doubt, the amended provisions has been expressly brought into force with effect from 01.06.2015. However the search action in the case of Shri Sanket Jitendrabhai Shah (Vora) was held on 04.12.2014 which is prior to 01.06.2015. Section 153C was amended by the Finance Act, 2015 w.e.f. 01.06.2015 as follows: 153C [(1)] [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, belongs to; or (b) Any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, related to, 7.1. The pre-amended provisions reads as follows: "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to secti....
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....e Assessing Officer of the person searched and the date of issuance of notice under section 153C have to be followed. [Para 19.4] 5.13 While it is true that section 153C 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, 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 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 suc....
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....to force of the amended provision. The notice under section 153C 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), 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. [Para 19.10] 5.16. If a date other than the date of search is taken to be the relevant date for the purp....
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....ions, 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. [Para 19.15] 5.18 The test would be whether at the first point of time when satisfaction could have been recorded by the Assessing Officer of the person searched, could he have recorded the satisfaction as envisaged under the amended provision. [Para 19.17] 5.19 The CBDT vide Circular No. 24/2015 dated 31-12-2015 has accepted that these guidelines would apply to proceedings under section 153C. Applying these guidelines, it may be ascertained as to whether at the time of or along with the initiation of proceedings against the searched person under section 153A, the Assessing Officer of the searched person could have recorded the requisite satisfaction that the books of account or documents seized or requisitioned pertain to or any information contained therein relates to the other person. If no, it is not permissible for him to record such s....
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....search of M/s. Venus Group on 13.03.2015 has been covered and the 153C notices has been issued on 22.03.2018 and 14.08.2018. Wherein the Hon'ble High Court has clearly arrived at the conclusion that the post amended section would be applicable prospective only on the search conducted on or after 1.6.2015. Hence, prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used by drawing satisfaction and for issuance of notice u/s. 153C. 7.5. This ratio of the above judgements of the Hon'ble Gujarat High Court has been followed by the Hon'ble Gujarat High Court in other cases also which are concluded as under: a) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj), b) Charmy Sanket Naik Vs. ACIT, SCA No.13374 of 2019 (Guj); c) Nita Chaitanya Shah, SCA No.14059 of 2019 (Guj); are reproduced hereunder: ".... 6. Ultimately, the final order which came to be passed by the Court reads as under: "In the light of the above discussion, the petitions succeed, and are accordingly, allowed. The impugned notices issued under section 153C of the Income Tax Act, 1961 in eac....