TaxTMI 
TaxTMI 
2024 (3) TMI 1260
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....nior Standing Counsel for the respondent. 4. The petitioner had filed a regular return of income under Section 139 of the IT Act, 1961 on 28.11.2015 for the assessment year 2015-2016. 5. In the returns filed by the petitioner, the petitioner had declared a gross income of Rs. 165,86,34,375/- and claimed a deduction under Chapter VI-A of Rs. 2,44,62,403/-. Thus, the net taxable income declared by the petitioner for the purpose of payment of tax was arrived at Rs. 163,41,71,970/-. On the aforesaid amount the petitioner offered a total tax of Rs. 56,66,92,704/-. 6. The assessment was completed under Section 143(3) of the IT Act, 1961 on 28.12.2017. The assessment was sought to be reopened by issuance of notice under Section 148 of the IT Act, 1961 on 30.03.2021. 7. Meanwhile, a search proceedings had been initiated against M/s.Mohanlal Jewellers (P) Ltd (hereinafter referred to as searched person) under Section 132 of the IT Act, 1961 on 10.11.2020 in their secret office located at No.16/5, 3rd Floor, Swami Thiru Nilagandanayanar Street near Jain Temple, Kondithope, Chennai - 600 001. 8. Search proceedings lead to recording of statement of one Shri.Rajendra Kothari, the....
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....ent recorded u/s. 131 of Income tax Act, 1961 dated 24.11.2020, has identified the above ledgers belong to the transactions of Shri. G. Rajendran (Chairman of GRT group) and M/s. GRT Jewellers (P) Ltd. Relevant extract of the sworn statement recorded u/s. 131 of Income tax Act, 1961 dated 24.11.2020 from Shri. Rajendra Kothari is reproduced as under:- "4. Please explain the list of parties mentioned under the head "TTT" in the list provided by you (taken from J-Pack). Ans. Sir.AYYA (Rajendran) and Anand (Ornaments account) refers to GRT Jewellers......" Further Shri. Rajendra Kothari, vide his sworn statement recorded u/s. 131 of Income tax Act, 1961 dated 24.11.2020 has stated that ledger named "Anand" refers to GRT Jewellery. Relevant extract of the sworn statement recorded u/s. 131 of Income tax Act, 1961 dated 24.11.2020 from Shri. Rajendra Kothari is reproduced as under: "5. Please provide the details of "Anand" ledger. Please identify the person. Ans. Sir. Anand refers to GRT Jewellers. It is an ornament transaction account. I'm providing summary of complete transactions of both Anand and Ayya for your referen....
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.... 9848778.77 6844971874 10257155.89 9738096.71 6104611211 6. It is seen from the consolidation of the above ledgers tabulated as above that they had given gold (Gross: 10362321.00 grams and Net:9848778.77 grams) and cash Rs. 684,49,71,874/- to Shri.Suresh Khatri. Moreover, Gross of gold about 3257155.97 grams andnet gold 9738093.71 grams were received back from Shri.Suresh Khatri during the FYs. 2016-17 to 2020-21 (upto 09.11.2020). 7. It is also noticed that Shri. Suresh Khatri had been maintaining a ledger named "MC Khata" in the said J.Pack software for recording receipts and payments made in respect of making charges. In this regard, during the course of post search proceedings, Shri.Rajendra Kothari was asked to explain the ledger maintained under the name "MC Khata". Shri. Rajendra Kothari, vide sworn statement recorded u/s. 131 of Income tax Act, 1961 dated 26.11.2020 stated that MC khata account is maintained for recording charges paid to various parties. These charges are made through banking channel and booked as expense in the books of accounts. However, these making charges are received back in cash. Further, Shri. Rajendra Kothari has state....
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....the IT Act, 1961 under a mistaken notion. 16. The proceedings have thereafter culminated in the Impugned Order dated 31.03.2023 for the assessment year 2015-2016. Separate Orders have been passed for the rest of the Assessment Years with which are not conerned in this Writ Petition. 17. A Reading of the Impugned Order and the satisfaction note issued by the Assessing Officer both in the capacity of the Assessing Officer of the "searched person" and in the capacity of the Assessing Officer of the "other person" i.e., the petitioner herein, indicate that the information gathered by the Department were only for the financial year 2015-2016 to 2020-2021 and not for the financial year 2014-2015 / assessment year 2015-2016. Relevant Portion of the Satisfaction reads as under:- "Certain Pen drives were found and seized vide annexure ANN/PV/RK/ED/S from the residential premises of Shri. Rajendra Kothari located at No. 18/2, 2nd Floor, Lawyer Chinnathambi Street, Kondithope, Chennai- 600 001. Further Shri. Rajendra Kothari in his statement recorded u/s 132(4) of Income Tax Act, 1961 dated 10.11.2020, stated that the "J pack" software tool in the Pen drives contain accounts da....
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....he satisfaction note was prepared after the proceedings were completed by the assessing officer conditions on the period of limitation for preparation of the satisfaction note under Section 158-BD and consequent issuance of notice to the other person. under Section 158-BC of the Act which is contrary to the provisions of Section 158-BD read with Section 158-BE(2)(b) and therefore, have dismissed the case of the Revenue. In our considered opinion, the reasoning of the learned Judges of the High Court is contrary to the plain and simple language employed by the legislature under Section 158-BD of the Act which clearly provides adequate flexibility to the assessing officer for recording the satisfaction note after the completion of proceedings in respect of the searched person under Section 158- BC. Further, the interpretation placed by the courts below by reading into the plain language of Section 158- BE(2)(b) such as to extend the period of limitation to recording of satisfaction note would run counter to the avowed object of introduction of the Chapter to provide for cost-effective, efficient and expeditious completion of search assessments and avoiding or reducing long-drawn proc....
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.... other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall:- a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection pending on....
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.... Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after May 31, 2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedi....
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....with the date on which the order under subsection (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded. If, after the exclusion of the aforesaid period, the period of limitation available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the period of limitation shall be deemed to be extended accordingly. The new section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. An appeal against the order of assessmen....
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....ssessment 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 "total income" of the six assessment years in question in separate assessment orders. 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. 21. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or section 143(3) of theAct. If such an order is already in exis....
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....as been provided in the second proviso of subsection (1) of section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abate....
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....Tribunal has stated that it has analyzed "the subject document carefully, recovered from search" suggesting that the document was recovered during the search from the assessee. The Tribunal has even proceeded to delete the addition of Rs. 1,50,000 as well as the notional interest on the merits, holding that the document was unsigned, that Mohini Sharma was not examined by the Income-tax authorities and there was no corroboration of the unsigned document. If it is not in dispute that the document was found in the course of the search of the assessee, then section 153A is triggered. Once the section is triggered, it appears mandatory for the Assessing Officer to issue notices under section 153A calling upon the assessee to file returns for the six assessment years prior to the year in which the search took place. There are contradictions in the order of the Tribunal. We are unable to appreciate how the Tribunal can say in paragraph 9.6 that no material was found during the search and at the same time in paragraph 10 deal with the merits of the additions based on the document recovered during the search which allegedly contain the loan transaction with Mohini Sharma. Therefore, both t....
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....rial found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs." 27. Therefore, the proceedings initiated under Section 148 of the IT Act, 1961 on 30.03.2021 could abate in view of the notice issued under Section 153C of the IT Act, 1961 on 20.03.2022, if there incriminating material for relevant Assessment Year. 28. Section 153A of the IT Act, 1961 was introduced along with Section 153B and 153C of the IT Act, 1961 and deleted the special procedure for assessment of search cases under Chapter XIV-B of the IT Act, 1961. 29. As far as the 'other person' like the petitioner who was issued a notice under Section 153C of the IT Act, 1961 is concerned, there is no speci....
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....on, the reference to the date of initiation of the search under Section 132 or making of requisition under Section 132-A in the second proviso to[subsection (1) of Section 153-A] 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:] 32. Thus, as per proviso to section 153C(1) of the IT Act, 1961 limitation is from the date of receiving the books of accounts or documents or assets seized or requisitioned to the Assessing Officer having the jurisdiction over the "other person" viz., the petitioner. 33. If the limitation prescribed as per the main provision is construed, the Assessing Officer can issue a notice for the Assessment Year from 10.11.2020, herein the date of search at the premises of the "searched person". 34. If the proviso is applied, six years is to be construed from the date of receipt of Books of Account, documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the other person like the petitioner herein, in which case the proceeding under Section 153(C) of the IT Act, 1962 can be ini....
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....son, 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." 39. This view has been affirmed by the Hon'ble Supreme Court recently in Commissioner of Income-tax-14 vs. Jasjit Singh, [2023] 155 taxmann.com 155 (SC).Where it was held as under:- "9. It is evident on a plain interpretation of Section 153C(1) that the parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153C(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials - of the search party, under Section 132 - would take his ow....