TaxTMI 
TaxTMI 
2023 (4) TMI 1055
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....ang/2014 dated 17.10.2016 for the assessment year 2011-12 vide Annexure-C. 2. Heard learned standing counsel Sri K.V. Arvind for appellant / revenue and the learned counsel Shri Mayank Jain for respondent/assessee. Perused the order passed by the Deputy commissioner of Income Tax Central Circle-1(3), Bangalore in respect of assessment order and the order passed by the Commissioner of Income Tax (Appeals)- VI, Bangalore dated 25.08.2014. 3. The factual matrix of this appeal are as under: It is stated in the statement of fact that under Section 132 of the Income Tax Act, 1961 carried out in the case of Sri K. Raghuvacharyulu, Smt. Renuka.G and others on 25.10.2010 certain documents belonging to the assessee was found and seized. Consequently, based on the said evidence, the assessing officer of the searched person recorded the satisfaction note in the case of Gali Janardhan Reddy and issued notice under Section 153C for the assessment year 2005-2006 to 2010-2011 and notice under Section 143(3) for the assessment year 2011-2012. It is further stated that the assessment proceedings under Section 153C read with Section 144 of the Act were concluded for the assessment year 2005-....
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....tion of its order to that extent being mistake apparent from the record. But the Tribunal dismissed the Revenue's contention by solely relying on the decision of Delhi High Court in the case of M/s. RRJ Securities Ltd. Hence, this appeal is preferred by the Revenue / Appellant among the grounds urged therein and seeking for intervention. In view of the grounds urged in this appeal preferred by the Revenue the following substantial questions of law would arise for response to the same: (i) Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that the assessment year relevant to the financial year in which the satisfaction note is recorded under Section 153C of the Act will be taken as the year of search for the purposes of clause (a) and (b) of sub-section 1 of Section 153A by making reference to first proviso to sub-section 1 of Section 153C despite the fact that this first proviso to subsection 153C refers to the second proviso to sub-section 1 of Section 153A specifically and hence, is not applicable at all to all the clauses (a) and (b) of sub-section 1 of Section 153A of the Act? (ii) Whether on the facts and circumsta....
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.... is further contended that Tribunal erroneously set-aside the assessment order passed for the year assessment year 2011-12 holding that there is no satisfaction recorded by the assessing officer of the searched person (153A) in the file of the said person ignoring the intention of legislature and even when the assessing authority has passed assessment order after recording satisfaction as required under Section 153C of the Act. Therefore, the appellant/Revenue in this matter raising all these grounds and also substantial questions of law relating to the order passed by the Tribunal. On all these premises the learned standing counsel is emphatically submitting that intervention of this Hon'ble Court is needs, if not, certainly there shall miscarriage of justice to the Revenue being arraigned as appellant in this appeal. 8. It is further contended by counsel for the appellant keeping in view the notice under Section 142 (1) which was issued on 21.12.2012 calling for the return of income for assessment year 2011-2012. In response to the aforesaid notice, respondent/ assessee filed a letter dated 28.12.2012, which was received on 01.01.2013, in which the assessee has stated that CBI....
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....n Cess @ 3% 43,81,302 Total tax 15,04,24,729 Less: TDS 28,20,543 Balance Tax 14,76,04,186 Less: Advance Tax 7,50,00,000 Balance Tax 7,26,04,186 Add: Interest u/s234A 1,30,68,753-235B -1,59,97,806 2,90,66,559 Total Tax 10,16,70,745 Less: 140A paid 2,00,00,000 Net Amount Payable 8,16,70,745 11. It is further contended by the standing councel for the appellant /Revenue that against the order passed by the Deputy Commissioner of Income Tax, Central Circle 1(3), Bangalore dated 31.03.2013 an appeal was preferred before the Commissioner of Income Tax (Appeals) - VI wherein the appellate order and ground of decision was passed. The assessments under Section 153C read with Section 144 of the IT Act for assessment years 2005-06 to 2010-11 and under Section 154D read with Section 144 for the assessment year 2011-12 were completed following search and seizure action under Section 132 of the IT Act carried out in the case of Sri Madhu, Smt.Renuka, Sri Raghavacharyulu and others on 25.10.2010. 12. These are all the provision that h....
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....d assessment. The claim of the appellant in appeal is that this income, if any, is share income from partnership firm and is not taxable. However, in absence of any further details or evidences furnished either before the assessing officer(who has provided sufficient opportunity) or during the course of appeal, the findings of the assessing officer and the inference drawn do not deserve any interference and therefore, the assessment made is in order and is upheld. In the result, the appeals for all the assessment years in equation are dismissed. This order has been passed by the Commissioner of Income Tax (Appeals) - VI, Bangalore. The same is also appraised by the learned standing counsel Sri K.V. Aravind by referring to the aforesaid provision and also seeks for intervention of this Court, if not, there will be miscarriage of justice to the appellant / Revenue. 17. The Assessee namely Smt. G. Lakshmi Aruna preferred appeals against the combined order of CIT(A) - VI, Bangalore dated 25.08.2014 for the assessment years 2005-06 to 2011-12 before the Income Tax Appellate Tribunal, Bangalore Bench 'B' Bangalore in ITA No. 1451 to 1457 (Bang) 2014 (Assessment years 2005-06 to 2011-1....
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.... of the statute. 19. The satisfaction note dated 14.12.2012 was reproduced by the Tribunal, In the said note, it is stated that search under Section 132 was conducted on 25.10.2010. Even in the impugned order passed by the ITAT by clubbing all the seven appeal matters. This contain instruments of partnership deed entered on 8.1.2006 between Sri B.Srinivas Reddy, Sri Parameshwara Reddy, Sri B.Sreeramulu, Sri G Karunakar Reddy, Sri Somashekar Reddy, Smt. G. Lakshmi Aruna in the name and style of Hotel Nagarjun. A search under Section 132 was also conducted on 25.10.2010 in the case of Smt. G. Renuka at 'Rishikesh'. Wherein it is indicated that these pages contain trial balance of Gali Janardhana Reddy for the financial year 2009-10. Accordingly, being satisfied that the documents and book account belonging to Gali Janardhana Reddy have been found and seized from the searched premises of Sri Raghavacharyulu and Smt. G. Renuka. Notice was issued under Section 153C of the Income Tax Act, 1961. These are all the contentions made by learned standing counsel Sri K.V. Arvind referring to the aforesaid provisions and also various grounds. It is observed that before initiating proceedings ....
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....ing the order passed by the Deputy Commissioner of Income Tax Central Circle-1(3) Bengaluru. The said order has been challenged under this appeal by urging various ground seeking intervention, if not, there shall be miscarriage of justice as against appellant / Revenue. The substantial questions of law requires to be considered in a given facts and circumstances of the case. Therefore, learned standing counsel Sri Arvind K.V. emphatically and also forcefully submitting that impugned orders as per Annexures-C and D may be set-aside. 20. Apart from the contentions, the learned standing counsel has also filed written submission contending that the search under Section 132 was conducted on 25.10.2010 in the case of Shri. K. Raghavacharyulu. Pursuant to the search, proceedings under section 153C of the Act wee initiated in the case of the assessee for the Assessment Year 2005-06to 2010-11 after recording satisfaction required under section 153C of the Act. Assessments were completed under section 153C of the Act for the Assessment Year 2005-06 to 2010-11. The Assessment Year 2011-12 being the year of search, assessment proceedings were completed under section 144 read with Section 15....
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....ny assessment pending as on the date of search with reference to 6 assessment years referred to in 153A(1)(b) of the Act would get abated. 22. He further contends that Section 153C of the Act provides for assessment in the case of other person and issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act subject to conditions contemplated therein. First proviso to section 153C of the Act refers to second proviso of section 153A(1) of the Act for determination of abatement of assessments in the case of proceedings being initiated under section 153C of the Act. The date of search for the purpose of abatement referred to in section 153A of the Act is provided to be the date of receiving the books of account or documents or asset seized or requisitioned by the Assessing Officer having jurisdiction over such other person. The effect of the first proviso is that the assessment pending in respect of the six assessment years referred to in section 153A(1)(b) of the Act would get abated on the date of receipt of books of accounts or documents or asset seized by the Assessing Officer having jurisdiction over such oth....
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.... the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 24. He further contends that the reliance of the assessee on the judgment of the Delhi High Court in the case of RRJ securities Ltd is incorrect and the same has not dealt with the proposition canvassed above. The Delhi High Court has not considered the limited purpose of second proviso to section 153A and first proviso to section 153C of the Act, which mandat....
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....cted. In other words the other person under section 153C of the Act cannot be placed in a worse/disadvantage position than the person subjected to search under section 132 of the Act and where the proceedings under Section 153A of the Act being initiated. Without prejudice to the above contentions, it is submitted that the issue of the period of six assessment years for the purposes of section 153C of the Act being the fresh ground raised by the assessee in the course of hearing of the Miscellaneous Petition, the same was outside the purview of Section 254(2) of the Act which could not have been entertained. Even if such a fresh ground is to be examined by the Tribunal, the order dated 17.10.2016 requires to be recalled and the fresh ground has to be examined in the appeal on restoration. Consideration of the fresh ground in he application under section 254(2) of the Act that to especially in the application filed by the revenue would be beyond the jurisdiction of the Tribunal. 25. Learned counsel would further contend that the reasons assigned by the Tribunal in the common order dated 17.10.2016 for the Assessment year 2005-06 and 2006-07 would be incorrect and contrary to the ....
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....o the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furn....
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.... of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. Therefore, it is clear even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid subsection on the date of initiation of the search under section 132, the said proceeding shall abate. If such proceedings are already co....
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....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 valuable 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 valuable 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. Sub-section (2) of Section 153C states that where books of account or documents or valuable 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 condu....
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....leted under section 153C of the Act, recording of satisfaction is required. 55. If the observations made by the Tribunal are considered in this regard, it is noted by the Tribunal that it is not necessary that satisfaction should be recorded that documents or valuable assets found in the course of search showed undisclosed income. In view of the aforesaid discussion, we do not think that such can be the correct position of law. 56. Further, in the judgments referred to by the learned counsel for the Revenue, where incriminating material leading to undisclosed income of another assessee was detected in a search operation, in those cases, reopening of the concluded assessment have taken place. There has been no single decision cited by the learned counsel for the Revenue where the assumption of jurisdiction of the Assessing Officer is in the absence of any incriminating material or undisclosed income having been detected during the course of search leading to reopening of a concluded assessment. In the instant case, though documents belonging to the assessee were seized at the time of search operation, there was no incriminating material found leading to undisclosed....
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....ear relevant to the previous year in which the search is conducted, in which the "total income" of the assessee will be assessed or reassessed. It should be remembered that only the pending assessment or reassessment proceedings in respect of any those six assessment years that will abate; in case the assessment or reassessment for any of those 6 years have already been completed as on the date of search then there is no question of any of them abating for the simple reason that what can abate is only what remains pending. 17. The judgment of this court in Saraya Industries Ltd. (supra) was relied upon by Mr. Bajpai, in support of his contention that the seizure of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person ....
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....er that any "undisclosed income" belongs to any person other than the searched person, Section 153C(1) in contrast refers merely to the satisfaction of the Assessing Officer that the valuable article or books of account or document "belongs" to a person other than the searched person. The latter provision does not refer to any undisclosed income at all. The machinery provided in Sections 153C read with 153A merely facilitates an enquiry regarding the existence or otherwise of undisclosed income in the hands of the person other than the searched person. The starting point of the enquiry is the seizure of the valuable article or books of account or document, which according to the satisfaction reached by the Assessing Officer, belongs to a person other than the searched person. It is necessary to notice the difference between the two provisions in order to deal with the contention put forward by the ld. counsel for the petitioner that the seizure itself is invalid or illegal on the ground that there could not have been any satisfaction before issuing the warrant of authorization under Section 132 of the Act that the petitioner had earned undisclosed income because the income reflecte....
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.... having jurisdiction over the searched person reaches the satisfaction that the document belongs to a person other than the searched person, it is not necessary for him to also reach a firm conclusion/ opinion that the document shows undisclosed income belonging to such other person. That is a matter for enquiry, which is to be conducted in the manner prescribed by Section 153C. The fact that the procedure envisaged by Section 153C is somewhat cumbersome and that the person other than the searched person is put to some inconvenience cannot be an argument to hold that the entire proceedings are bad in law. 20. Section 158B of the Act is the dictionary clause. It provides for the definition of "block period" and "undisclosed income". For the purpose of this case, a reference to the definition of the "undisclosed income" as provided for in Section 158B(b) is necessary and, therefore, it is noticed. The same reads as under: "Undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thin....
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....hat, let us revert to discussion of Section 158BD of the Act. The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under Sections 132 or 132A of the Act. Under Section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to a other person other than the searched person under Sections 132 or 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc to the assessing officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Act, the other provisions of XIV-B shall apply. 39. The opening words of Section 158BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a re....
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....d but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept ....
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....ing the original assessment proceeding, which had acquired finality, is not only erroneous but also against the phraseology of Section 147 of the Act and the object of reassessment proceedings. Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In Madhav Rao Jiwaji Rao Scindia Bahadur and Ors. v. Un....
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.... to 2010-11 and u/s 143(2) for A.Y. 2011-12. The assessment proceedings were concluded vide orders dated 31.03.2013 for A.Y. 2005-06 to 2010-11 under Section 153C of the Act and the assessment order for A.Y. 2011-12 was passed under Section 144 read with Section 153D of the Act. The income of the respondent - assessee was assessed at Rs. 98,01,82,062/-. Being aggrieved by the aforesaid assessment order, the respondent - assessee preferred an appeal before the Lt. Commissioner of Income Tax (Appeal)-11, Bangalore. The CIT (A) vide common order dated 25.08.2014 confirmed the additions for A.Y. 2005-06 to 2011-12. The respondent-assessee challenged the aforesaid order passed by the CIT(A) before the ITAT, Bangalore Bench in ITA Nos. 1444-1450/BANG/2014. The Hon'ble ITAT vide order dated 17.03.2016 allowed the appeal and set aside the assessment orders for A.Y.2005-06 TO 2011-12. The Hon'ble Tribunal held that there is no satisfaction recorded by the Assessing Officer of the searched person which is mandatorily required for issuing notice u/s 153C of the Act. Thereafter, the Department filed MP No. 149/BANG/2016 in ITA No. 1450/BANG/2014 pertaining to A.Y. 2011-12 seeking rectification....
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....w that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment year 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much ....
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.... of the respondent-assessee has attained finality. 34. Further it is contended that the principal ground urged by the department in the present appeal is that the case of CIT vs. RRJ Securities Ltd., relied upon by the ITAT in the impugned order dated 06.03.2018 has not attained finality as the same was challenged by the department before the Hon'ble Supreme Court. It is contended that the aforesaid ground raised by the department no longer survives as the Civil Appeal preferred by the department against the judgment of the Hon'ble Delhi High Court in CIT vs. RRJ Securities Ltd., was dismissed by the Hon'ble Supreme Court vide order dated 24.04.2018. Thus, it can be concluded that there is no judgment of any other High Court which has taken a contrary view to the ratio laid down in the case of CIT vs RRJ Securities. Furthermore, the Civil Appeal preferred by the department against the aforesaid judgment has been dismissed. Therefore, it is submitted that there is no error in law in the impugned order passed by the ITAT seeking intervention as there is no illegalities or error committed by the ITAT. 35. Further, it is contended that it is settled law that while construing pena....
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..... By referring to the decision of the Allahabad High Court in the case of CIT vs. Gopi Apartment, 2014 SCC OnLine All 16050 wherein it is held that recording of satisfaction before initiating proceedings is a sine qua non and must be recorded at the time of handing over of documents to the AO having jurisdiction over such other person. The initiation of proceedings against such other person is dependent upon the satisfaction being recorded and the same must be recorded before issuance of notice to such other person u/s 153C of the Act. It was further held that even in a case where AO of both the persons is the same and there is no requirement of physical handing over of documents, the recording of satisfaction is still a must as the same is the foundation upon which subsequent proceedings against the other person is initiated. In the aforesaid case of CIT vs. Gopi Apartment, the Allahabad High Court held as under:- "(1) The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated aga....
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....ined in Section 119 of the Act. Learned counsel also contends that it is an admitted position that the satisfaction note was not recorded by the AO of the searched person and thus, the Hon'ble Tribunal correctly quashed the assessment on account of lack of jurisdiction to proceed against the respondent - assessee u/s 153C of the Act. 39. These are all the contentions made by counsel for respondent/assessee apart from the written submissions made. Therefore, it is prayed for dismissal of the appeal preferred by the appellant/Revenue on the premise that the grounds urged by the appellant/revenue does not have any substance calling interference of this Court and the appeal being devoid of merits is liable to be dismissed. 40. In support of his contentions, learned counsel for the respondent has relied on the following decisions: 1) 2014 SCC OnLine All 16050: (2014) 365 ITR 411: (2014) 270 CTR 447 Commissioner Of Income Tax vs M/S Gopi Apartment "25. Thus, there are two stages: (1) The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as 'the searched pers....
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....ed or from any other order, note or record maintained by the Assessing Officer of the 'searched person'. The word 'satisfaction' refers to the state of mind of the Assessing Officer of the person searched, which gets reflected in a tangible shape/ form, when it is reduced into writing. It is the conclusion drawn or the finding recorded on the foundation of the material available. In this regard, reference may be made to the pronouncements in the case of C.I.T. Vs. Radhey Shyam Bansal, (2011) 337 ITR 217 (Delhi) and the Division Bench judgment of this Court in the case of C.I.T. Vs. Classic Enterprises, (2013) 358 ITR 465 (All)". 2) (2014) 6 SCC 444 - Commissioner of Income Tax - III vs. Calcutta Knitwears, Ludhiana "37. The Tribunal and the High Court are of the opinion that it could only be prepared by the assessing officer during the course of the assessment proceedings under Section 158BC of the Act and not after the completion of the said proceedings. The Courts below have relied upon the limitation period provided in Section 158BE(2)(b) of the Act in respect of the assessment proceedings initiated under Section 158BD, i.e., two years from the ....
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....1.01.1997. The said section does neither provides for nor imposes any restrictions or conditions on the period of limitation for preparation the satisfaction note under Section 158BD and consequent issuance of notice to the other person". 3) (2018) 9 SCC 1 - Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Co., held as under: Taxation - concession/exemption/ incentive/ rebate/ subsidy - exemption notification or exemption clause - strict interpretation of, and , burden of proving applicability of exemption - benefit of ambiguity in case of an exemption notification or exemption clause - interpretation of, in favour the revenue/state, as exemptions from taxation have a tendency to increase the burden on the unexempted class of taxpayers - general principle that in case of ambiguity a taxing statute should be construed in favour of the assessee - inapplicability of, to an exempting provision - held, every taxing statute including, charging, computation and exemption clauses, at the threshold state should be interpreted strictly - further, though in case of assessee, but for an exemption notification or exemption clause the benefit of ambiguity must be stri....
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....tion (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to 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: Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been receive....
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....ng made a return, fails to comply with all the terms of a notice issued under sub- section (2) of section 143, the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub- section (1) of section 142 has been issued prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any ear....
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....rily required for issuing notice. Thereafter, the Department filed MP No. 149/BANG/2016 in ITA No. 1450/BANG/2014 pertaining to A.Y. 2011-12 seeking rectification of order dated 17.10.2016 u/s 254(2) of the Act on the ground that the assessment proceedings for A.Y. 2011-12 were completed u/s 144 read with Section 153D of the Act. The learned counsel has emphatically taken us through the scope of Section 144 read with Section 153-D of the IT Act, 1961 referred to supra for the purpose of consideration of the grounds urged in this appeal and so also the counter arguments advanced by the learned counsel for the respondent / assessee. It was the case of the department that the assessment for A.Y. 2011-12, being the year of search could not have been quashed on the basis that satisfaction as required u/s 153C of the Act was not recorded by the AO of the searched person as A.Y. 2011-12 was the year of search. The ITAT vide impugned order dated 06.03.2018 dismissed the aforesaid MP No.149/BANG/2016 by relying upon the judgment of the Delhi High Court in the case of CIT vs. RRJ Securities Ltd., (2016) 380 ITR 612. 46. The Income Tax Department has challenged the aforesaid order passed b....
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....sfaction under Section 153-C of the IT Act. 51. In the instant appeal, in the facts and circumstances of the case, the Tribunal is right in law in holding that the order of assessment made for the Assessment year 2011-12 is liable to be set aside for non-compliance of the conditions under Section 153C of the Act, when the assessment is made under the normal provisions of the Act as the same was not falling within six years of search as referred to under Section 153-A and 153-C of the Act. These are the substantial questions of law proposed by the Department wherein the appeal has been preferred by the appellant / revenue by challenging the order passed by the Income Tax Appellate Tribunal by urging various grounds. 52. In the given peculiar facts and circumstances of this matter and so also initiation of proceedings relating to certain incriminating materials found during the course of search against the respondent / assessee and consequence upon that, notice was issued under Section 153-C of the IT Act. Whereas the learned counsel for the respondent in this matter facilitated the judgment of CIT vs. RRJ Securities Ltd. (supra). 53. In the aforesaid judgment, it was held t....
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....tion note was recorded on 14.12.2012 and therefore, the six years previous to the year in which handing over of documents took place would be of Assessment year 2007-08 to Assessment year 2012-13. Thus, the relevant assessment year 2011-12 would fall within the purview of Section 153-C of the Act. Accordingly, the Tribunal while allowing the appeal in ITA No. 1444-1450/BANG/2016 vide order dated 17.10.2016, held that satisfaction is mandatorily required under Section 153-C of the Act to be recorded by the Assessing Officer of the searched person in the facts and circumstances of the present case. The Income Tax Appellate Tribunal proceeded to quash the assessments under Section 153C of the Act on account of lack of jurisdiction of the Department to proceed against Respondent / Assessee. 55. It is further contended that the order passed by the Income Tax Appellate Tribunal for the Assessment years 2005-06 to 2010-11 that is I.T.A.No. 1444-1449/BANG/2016 were never challenged and the finding that the satisfaction note was absent and there was lack of jurisdiction under Section 153-C of the Act, in the case of the respondent / assessee, had attained finality. Therefore, this appeal....
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.... other person. Several Hon'ble High Courts have held that the provisions of Section 153C of the Act are pari materia to the provisions of Section 158BD of the Act, which was the subject matter of interpretation before the Hon'ble Supreme in the case of CIT vs. Calcutta Knitwears(supra). The aforesaid reliance are squarely applicable to the present case on hand in the given facts and circumstances of the case wherein certain incriminating materials were found during the course of search against the respondent / Assessee as alleged. 59. Insofar as the case of CIT vs. Gopi Apartment, 2014 SCC OnLine All 16050, the Allahabad High Court has held that recording of satisfaction before initiating proceedings is a sine qua non and must be recorded at the time of handing over of documents to the AO having jurisdiction over such other person. The initiation of proceedings against such other person is dependent upon the satisfaction being recorded and the same must be recorded before issuance of notice to such other person u/s 153C of the Act. It was further held that even in a case where AO of both the persons is the same and there is no requirement of physical handing over of documents, t....
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..... In the facts of the present case, it is an admitted position that the satisfaction note was not recorded by the Assessing Officer of the searched person and thus, the Income Tax Appellate Tribunal passed an order quashing the assessment on account of lack of jurisdiction to proceed against the respondent / assessee under Section 153-C of the Act. The said order does not suffer from any infirmities but the Tribunal has rightly quashed the assessment on account of lack of jurisdiction. These are the contentions that have been made by the learned counsel for the respondent / assessee. Therefore, the learned counsel for the respondent / assessee prays for dismissal of this appeal preferred by the appellant / Revenue. 61. Learned counsel for the respondent places reliance in the case of Commissioner of Income Tax-III vs. Calcutta Knitwares, Ludhiana (2014) 6 SCC 444, wherein it is held in the Headnotes A, B and C thus: "A. Income Tax Act, 1961 - Ss. 158-BD and 158BE(2)(b) - Initiation of proceedings against any other person other than searched person - stages at which satisfaction note may be prepared by AO as to undisclosed income to transmit documents to Jurisdictional A....
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....ned under Section 132-A after 31st Day of May 2003 but on or before 31.03.2021, the aforesaid provision provided that the Assessing Officer shall assess or re-assess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years. Provided further that assessment or re-assessment if any relating to any assessment year falling within the period of six assessment year and for the relevant assessment year or years. 63. The Learned Standing counsel for the appellant / Revenue namely Shri Arvind K.V. has emphatically submitted and contended insofar as the aforesaid provision of Income Tax Act, 1961 as regards response to substantial questions of law. 64. Section 153-C of the IT Act, 1961 relates to assessment of income of any other person. 153-C (1): Notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 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, r....