TaxTMI 
TaxTMI 
2023 (6) TMI 354
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....16 for the assessment year 2011-12 vide Annexure-C. 2. Heard learned standing counsel Sri K.V.Aravind 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 2005-06 to 2010-11 and under S....
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....t 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. 5. 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 circumstances of the case, the Tribun....
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....ended 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 for the appellant/revenue, emphatically submits to seek intervention of this court to avoid the miscarriage of justice to the Revenue being arraigned as appellant in this appeal. 10. 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 has seized all the relev....
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....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 13. It is further contended by the standing counsel for the appellant, that against the order passed by the Deputy Commissioner of Income Tax, Central Circle 1(3), Bangalore dated 31.03.2013, further 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 153D 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. During the course of search proceedings, various documents be....
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....I, Hyderabad, as the appellant did not file her return of income in response to the notices issued. The appellant is in appeal against the said 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 question were 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 be....
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....he satisfaction before issuing notice under Section 153C, sufficient compliance has been made by the assessing officer as required under the provisions of the statute. 19. The satisfaction note dated 14.12.2012 was reproduced by the Tribunal, in the said note, it is stated as, the search under Section 132 was conducted on 25.10.2010. Even in the impugned order passed by the ITAT dated 18.10.2016 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 contentio....
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....ngaluru in MP No.152/Bang/2016 (in ITA No.1457/Bang/2014) dated 06.03.2018 for Assessment year 2011-12 as per Annexure-D and confirm the order of Appellate Commissioner confirming 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 Annexure-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 2005-06 to 2010-11 after recording satisfaction required under section 153C of the Act. Hence, setting aside of the assessment for the Assessme....
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....te 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 other person. Therefore, on a combined reading of section 153A(1)(b), first and second proviso to section 153A of the Act, Section 153C and the first proviso to Section 153C of the Act would mandate that period of six assessment years for the purposes of section 153Aand 153C of the Act is one and the same and would not alter in respect of both the provisions. The above understanding is further strengthened by the language of section 153C(1) of the Act wherein issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act is provided. Even if the proceedings under section 153C of the Act are initiated, the procedure is contemplated under section 153A of the Act. In view of the abo....
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....t 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 mandates the point of abatement with respect to period of six assessment years referred to in section 153A(1)(b) of the Act. Further, the Delhi High Court has not considered the implication of reference made to section 153A of the Act in section 153C of the Act enabling issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act. Further the Delhi High Court has not specifically held that the period of six assessment years would be difference for the purpose of section 153A and 153C of the Act. Assuming without admission if the contention of the assessee that period of six years has to be recorded with reference to the date of receiving the books of account or documents or asset seize....
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.... 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. 26. Learned counsel would further contend that the reasons assigned by the Tribunal in the common order dated 18.10.2016 for the Assessment year 2005-06 and 2006-07 would be incorrect and contrary to the stand taken by the assessee. The satisfaction recorded in terms of Section 153C of the Act as has been reproduced at para-6 of the order of ITAT dated 18.10.2016 would clearly indicate that the satisfaction was recorded for the Assessment year 2005-06 and 2010-11. While examining the correctness of the said satisfaction, the Tribunal has set aside the order of assessment for the Assessment year 2005-06 and 2010- 11 for non-compliance of conditions contemplated under Section 153C of the Act. If the finding of the Tribunal in the order against Miscellaneous Petition is to be presumed to be correct, then the finding recorded in the main order dated 18.10.2016 is incorrect. This would substantiate the inconsistent stand / reasoning of the Tribunal. On....
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....ence 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 furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the "....
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....s 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 concluded by the Assessing Officer by initiation of proceedings under Section 153A, the legal effect is the assessment proceedings and reassess the total, income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section 153A of the Act, the legal ef....
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.... 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 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 subsection (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 valuable assets seized or requisitioned by the Assessing ....
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.... 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 income. Therefore, assessment of income of the assessee was unwarranted. Consequently, no satisfaction was recorded in the case of the assessee. We answer the substantial question of law No. 2 by holding that the Tribunal was not correct in holding that the assessment under section 153C was valid despite there being no satisfaction recorded to the effect that the documents found during the search on June 17, 2008 were incriminating in nature and prima facie represented undisclosed income." 3) (2012) 346 ITR 177 (Delhi) - SSP Aviation Ltd., vs. DCIT; held as under: "12. The ld. sr. standing counsel for the incom....
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....ort 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 other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under Section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other....
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....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 reflected in the seized documents namely, the Collaboration Agreement dated 24.8.2006 and the Assignment Agreement dated 21.7.2006, had already been taken note of in the account books of the petitioner. This is a debatable issue as is apparent from the submission of the Revenue. They have submitted to the contrary. It cannot be said that the seizure of the documents was unwarranted or contrary to law. As noticed above, Revenue has highlighted that finalization and audit of accounts was after the date of the search. The accounts for the year ended 31.03.2009 now relied upon by the petitioner, were finalized after the search on 05.01.2009. Sei....
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....3(SC) - Commissioner of Income Tax - III vs. Calcutta Knitwears held as under: 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, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false]". 22. Section 158BC speaks of procedure for assessment of a person searched under Section 132 of the Act or books of accounts, other documents or assets are requisitioned under section 132A. The limitation for the purpose of completion of t....
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....s/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 requisition of books were made under Section 132A of the Act and thereafter, transmit the records for assessment of such other person. Therefore, the short question that falls for our consideration and decision is at what stage of the proceedings should the satisfaction note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158BC for the completion of the assessments of the searched person under Section 132 and 132A of the Act or during the course of the assessment proceedings under Sect....
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....y observing that in the facts of the present case, the AO of the searched person who has to handover the documents and the AO of the Assessee was one and the same person. In our view, this distinction is not relevant in the scheme of Section 153C of the Act and the CIT(A) erred in proceeding on the basis that the period of six years was to be reckoned from the end of the financial year preceding the financial year in which the search was conducted. 21. As discussed hereinbefore, once the AO of the searched person is satisfied that the seized assets/documents belong to another person and the said assets/documents have been transferred to the AO of such other person, the proceedings for assessment/reassessment of income of the other person has to proceed in accordance with provisions of Section 153A of the Act. Section 153A requires that where a search has been initiated under Section 132 of the Act, the AO is required to issue notice requiring the noticee to furnish returns of income in respect of six assessment years relevant to the six previous years preceding the previous year in which the search is conducted. As discussed hereinbefore, by virtue of second proviso to Sec....
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....#39;total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original ass....
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....son, 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 the contention that in any view of the matter, as....
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....sessment 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. Union of India this C....
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....10-11 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.1451- 1457/BANG/2014. The ITAT vide order dated 18.10.2016 allowed the appeal and set aside the assessment orders for A.Y.2005-06 TO 2011-12. The 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 of order dated 18.10.2016 u/s 254(2) of the Act passed in ITA No.1450/BANG/2014 on the ground that the assessment proceedings for A.Y. 2011-12 were complet....
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....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 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 ....
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....peal 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 penal statutes and taxation statutes, the Court has to apply strict rules of interpretation of Article 265 of the Constitution which prohibits the State ....
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.... 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 against the 'searched person' under Section 153A. At the time of initiation of such proceedings against the 'searched person' or durin....
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....ote was not recorded by the AO of the searched person and thus, the 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 person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under S....
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....9;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 end of the month in which the notice under Chapter XIV-B was served on such other person in respect of search initiated or bo....
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....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 strictly interpreted in favour of the revenue/state. 42. In the background of the contentions made by the learned Standing Cou....
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.... 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 received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the....
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....g 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 subsection (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 earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to t....
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....1-12 seeking rectification of order dated 18.10.2016 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. 47. The Income Tax Department had challenged the aforesaid order passed by the Income Tax Appellate Tribunal under Section 260-A of the IT Act. But it is relevant to note that, upon the objection raised by th....
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....w 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 153-C 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. 51. 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). In the aforesaid judgment, it was held that the period of 6 years stipulated in Section 153-C of the IT Act has to be construed with reference to the date of handing over the documents to the....
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.... 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.1451-1457/BANG/2014 vide order dated 18.10.2016, 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 153-C of the Act on account of lack of jurisdiction of the Department to proceed against Respondent / Assessee. 54. 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.1451-1457/BANG/2014 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 which is filed challenging the impugned order by urging various grounds and framing substantial questions of law, cannot arise for response mere....
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....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. 58. 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, the recording of satisfaction is still a must as the same is the foundation upon which subsequent proceedings against the other person is i....
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.... 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. 60. 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 158- BE(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 AO to proceed under S.158-BD against any such person other than the searched person - Limitation period, if any B. Income Tax Ac....
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....ficer 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. 62. 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. 63. 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, relates to a person other than the person referred to in Section 153A, then, the books of account or documents or assets, seized or req....