TaxTMI 
TaxTMI 
2024 (4) TMI 135
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.... 84 ? 3. Whether the ld. JM erred in law in accepting the assessment framed u/s 143(3) r.w.s 153C of the Act as a typographical error thereby improving the assessment order and not considering the fact that the Assessing Officer should have suo motto rectified the alleged typographical error u/s 154 of the Act. 4. Whether the ld. JM erred in ignoring the ground taken by the assessee in respect of validity of the assessment order framed u/s 143(3) r.w.s 153C of the Act ? 5. Whether the ld. JM erred on facts in remitting the matter to the file of the Ld. CIT(A) to revisit same facts thereby giving second innings to the first appellate authority to adjudicate upon the same set of facts considered earlier ? 6. Whether the ld. JM erred on facts in not appreciating that the cash found to be deposited in the bank account was of a stranger and not related to the assessee ?" 3. The question proposed by the Ld. Judicial Member are as under:- "1.) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in confirming the framing of Assessment Order by the AO dated 29-12-2019 for the Assessment year 2017.18 u/s 1....
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....plicable to the facts of the present case or not (for A.Y. 2017-18)? 6). Whether merely wrong mentioning of the Section '153C' in the First page of the Assessment Order will vitiate the entire Assessment Order? or being a last fact-finding Authority, the Tribunal is bound to read the entire Assessment Order and come to the just conclusion when the correct section which is Section 143(3) of the Act has clearly been mentioned in the assessment order by the AO ? 7). Without prejudice to the above, on facts and circumstances of the case, whether the Ld. CIT(A) justified in sustaining the additions of Rs. 4,67,50,000/- cash deposited in Kotak Mahindra Bank of Ringing Bells Pvt. Ltd. on 23/11/2016 on the basis of material evidence and statement of searched person and also the admission of the partners of the Assessee. ? 8). Whether on facts and circumstances of the case, the Ld. CIT(A) justified in sustaining the proportionate addition of Rs. 21,63,486/- out of total addition of Rs. 1,52,00,000/- made by Ld. AO in the hands of Assessee on account of commission paid to Mohit Goel u/s 69C read with Section 115 BBE of the Act?. 9). Whether on the ....
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....one hand and deleting the addition of Rs. 28,14,40,000/- and Rs. 1,30,36,514/-on the other hand, both of which emanates from similar facts and circumstances and the same statements and the evidences? 7.) In the facts and circumstances of the case and considering the principle of natural justice, the Assessing should have been given an opportunity of cross examining the witnesses by following the recent binding Judgment dated 12-02-2020 of the Hon'ble Supreme Court on India in the case of I.C.D.S. Ltd. Vs. CIT (2020) 273 Taxmann 12/194 DTR 18/316 CTR 679 (SC) ?" 4. In addition to the questions proposed by the Ld. Members, in course of hearing before me, the Ld. Counsel appearing for the assessee as well as Ld. Standing Counsel appearing for the Revenue have proposed their own sets of question. Questions proposed from assessee's side are as under:- "(i) "Whether on the facts and circumstances of the case, the addition of Rs. 32,81,90,000/- being cash deposited in the specified bank accounts of Ringing Bells Private Limited ("RBPL") made u/s 69A r.w.s 115BBE of the Act, ought to be deleted in law and on the basis of the facts on record? (ii) Whether on th....
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....before the CIT(A) that the impugned assessment order for AY 2017- 18 should have been passed u/s 143(3) and not u/s 153C keeping in view the amendment made in Finance Act, 2017 and subsequently taking a completely opposite stand before Ld. ITAT that the said assessment order is bad in law since it has been passed without fulfilling the requirements of Section 153C of the Act? E. Whether on the facts and circumstances of the case and in law, the impugned assessment order for AY 2017-18 passed u/s 143(3) of the Act can be stated as invalid only for the reason that the heading of the said order also includes the words" r/w Section 153C" which is a curable defect and therefore cannot vitiate the assessment proceedings? F. Whether on the facts and circumstances of the case and in law, the decision of Hon'ble Delhi High Court in case of CIT Vs RRJ Securities Ltd [2016] 380 ITR 612 (Del) is applicable to present case in view of the fact that the Assessing officer was aware of the fact at the time of issuing notice u/s 143(2) of the Act for AY 2017-18 on 28.09.2018 and at the time of recording satisfaction note that the Parliament has made an amendment under Section 1....
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....e through the orders of the Departmental Authorities, materials on record, the respective orders of Ld. Members as well as questions proposed, I am of the view that only two core issues arise for consideration. Whereas, all other issues/questions proposed are ancillary and incidental to these two issues. The core issues arising for consideration are as under:- (i) Whether in the facts and circumstances of the case, the assessment order dated 29/12/2019 passed u/s 143(3) r.w.s 153C of the Income Tax Act, 1961 can be said to be a valid order. (ii) Whether in the facts and circumstances of the case, the Assessing Officer had validly made addition of Rs. 32,81,19,000 u/s 69A r.w.s. 115BBE of the Act. 7. Before I proceed to decide the core issues as well as the ancillary issues arising therefrom, it is necessary to briefly deal with relevant facts. The assessee, a resident corporate entity, is stated to be engaged in the business of gold bullion/jewellery. For the Assessment Year under dispute, the assessee filed its return of income on 07/11/2017 declaring total income of Rs. 34,63,730/-. A search and seizure operation u/s 132 of the Act was carried out on 22/12/20....
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....es of Sh. Rajesh Chawala purportedly were seen carrying bags full of old currency, the Assessing Officer ultimately held that cash amounting to Rs. 32,81,90,000/- deposited in various bank accounts of M/s RBPL post demonetization was actually given by the assessee. He also held that for depositing cash in the bank accounts of M/s RBPL through Mohit Goel, the assessee had paid commission of Rs. 1.52 crores to Sh. Mohit Goel. So, ultimately, he held that the cash deposits of Rs. 32,81,19,000/- and commission paid of Rs. 1,52,00,000/- have to be treated as assessee's income u/s 69A of the Act and, accordingly, added back to the income of the assessee. Besides the aforesaid additions, the Assessing Officer made couple of other additions amounting to Rs. 6,65,670/- representing labour expenses and Rs. 1,16,62,097/- representing unexplained liability on account of sundry creditors and unexplained purchases. 10. Contesting the aforesaid additions, the assessee filed an appeal before Ld. First Appellate Authority. Based on submissions made in course of first appellate proceedings, both on the issue of validity of assessment order as well as on merits, Ld. First Appellate Authority calle....
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.... the Assessing Officer has recorded satisfaction u/s 153C of the Act for Asst. Years 2011-12 to 2016-17. No satisfaction for initiation of proceedings u/s 153C of the Act has been recorded for the impugned assessment year. Thus, following the decisions of the Hon'ble Jurisdiction High Court in cases of RRJ Securities 380 ITR 612, Index Securities Pvt. Ltd. 86 Taxmann.com 84, and Vinita Chaurasia, 394 ITR 758, he held that the assessment order is bad in law, hence, deserves to be quashed. 12. Having held so he proceeded to decide the appeal on merits as well. While dealing with the merits of the issue Ld. Accountant Member observed that the addition made by the Assessing Officer and part of it sustained by Ld. CIT was entirely on the basis of CCTV footages of Kotak Mahindra Bank on 23/11/2016. Whereas, he observed that cash was found to have been deposited in various other bank accounts and there is no evidence or any adverse finding as to who deposited cash in the other bank accounts. He observed, even if the CCTV footage shows two close relatives and driver of the assessee entered the bank with bags in their hands, however, there is no evidence to show that the bag contained de....
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....ee that the Assessing Officer has committed error in not providing the copy of the CCTV footage of the assessee along with certificate issued u/s 65B of the Indian Evidence Act. He also agreed with the assessee that the Assessing Officer should have provided opportunities of cross examination to the assessee before making the disputed addition. Accordingly, he restored the issues relating to the said additions to the First Appellate Authority with a direction to provide opportunities of cross examination of witnesses and also to provide CCTV footage along with certificate issued u/s 65B of the Indian Evidence Act. As regards couple of other additions, Ld. Judicial Member held that in absence of any documentary evidences, addition of Rs. 6,65,670/- has to be sustained. Whereas, in respect of addition of Rs. 1,16,62,097/- he restored back the issue to Ld. First Appellate Authority. 16. Before me, Ld. Counsel appearing for the assessee submitted that assessment order passed u/s 143(3) r.w.s 153C of the Act is invalid as the Assessing Officer has not recorded any satisfaction note for assumption of jurisdiction u/s 153C of the Act for the impugned assessment year. He submitted, in t....
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....15 (Del. Trib.) (xii) M/s Ambawatta Buildwell Pvt. Ltd. v. DCIT, ITA No.2592/Del/2015 (Del. Trib.) (xiii) Pavitra Realcon (P.) Ltd. v. ACIT [2017] 87 taxmann.com 142 (Del. Trib.) (xiv) ACIT v. M/s. N.S. Software, ITA No.3161/Del/2016 (Del. Trib.) (xv) ACIT v. Empire Casting Pvt. Ltd., ITA No.4018/Del/2011 (Del. Trib.) (xvi) Abhay Kumar Shroff v. CIT [2007 ] 290 ITR 114 (Jharkhand HC) (xvii) Fragrance Constructions v. ACIT, ITA No.2311/Del/2013 & Ors. (Del. Trib.) (xviii) CIT v. Kabul Chawla [2016] 380 ITR 573 (Del. HC) 18. Per contra, Ld. Standing Counsel appearing for the Revenue strongly contested the submissions of the assessee. He submitted, undoubtedly the assessment order has been passed u/s 143(3) of the Act and not u/s 143(3) r.w.s 153C of the Act. Drawing my attention to section 153C of the Act, he submitted that the said provision does not override section 143(3) of the Act. Thus, he submitted, because of section 153C of the Act, the Assessing Officer does not lose his jurisdiction u/s 143(3) of the Act. He submitted, on the date of search on 23/12/2016 the assessee had not filed its return of income for A.....
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....-20. Therefore, in terms with the first proviso to section 153C(1) of the Act, the Assessing Officer has to initiate proceedings u/s 153C of the Act for a block of six assessment years immediately preceding the assessment year wherein the search and seizure operation had taken place. However, for the purpose of section 153C of the Act, date of search has to be taken as the date of satisfaction note. 21. In the facts of the present appeal, undisputedly, the date of recording of satisfaction u/s 153C is 24/09/2018. Therefore, the block of six immediately preceding assessment years would be assessment years 2012-13 to 2017-18. Therefore, considering the fact that the assessments are based on incriminating material found as a result of search, the Assessing Officer should have initiated proceedings u/s 153C of the Act for the impugned assessment year as well. However, the Assessing Officer has failed to do so. Thus, in my view, the Assessing Officer has acted in complete violation of the statutory mandate contained u/s 153C of the Act. 22. In case of RRJ Securities (supra), the Hon'ble Jurisdictional High Court, in no uncertain terms, has held that for assumption of jurisdicti....
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....C of the Act by Finance Act, 2017 is applicable only to search and seizure operation conducted after 01/04/2017 and not prior to it. Since, in the facts of the present appeal, the search and seizure operation was conducted prior to 01/04/2017, as per the existing statutory provisions, the date of search has to be reckoned from the date of recording of satisfaction for the purpose of section 153C of the Act. This view has been very clearly expressed in the following decisions:- (i) CIT vs. RRJ Securities Ltd. (supra) (ii) PCIT vs. Sarwar Agencies Pvt. Ltd. (supra) (iii) Karina Airlines International Limited vs. ACIT (supra) 24. In any case of the matter, not only the Assessing Officer has mentioned in the body of the assessment order that the order has been passed u/s 143(3) r.w.s 153C of the Act but Ld. First Appellate Authority has also held that the assessment order, indeed, has been passed u/s 143(3) r.w.s 153C of the Act. Admittedly, the Revenue has not challenged the aforesaid finding of Ld. First Appellate Authority. It is evident, the Assessing Officer has not recorded any satisfaction u/s 153C of the Act for A.Y. 2017- 18. Therefore, in absence....
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....art from the statement of Sh. Mohit Goel, the only other piece of evidence on which the Assessing Officer has heavily relied upon is the CCTV footage of 23.11.2016 obtained from Kotak Mahindra Bank, Noida, which revealed that three persons closely associated with Sh. Rajesh Chawla carried bag containing old currency notes for depositing in the account of RBPL. 27. The Assessing Officer has observed that the three individuals who entered the bank branch, as revealed from the CCTV footage, are Sh. Akshay Chawala (Nephew of Rajesh Chawla), Sh. Anmol Chawala (Son of Rajesh Chawla) and Shri Manpreet Singh, Driver of Rajesh Chawal. He has observed that after reaching the bank these three persons met Sh. Anmol Goel, Director of RBPL, who was waiting in a separate room. Thereafter, all the four persons entered the bank and after few minutes Sh. Anmol Chawla along with Sh. Akshay Chawla were seen leaving the bank branch. However, Sh. Manpreet Singh, the Driver of Sh. Rajesh Chawla stayed behind till later in the day and was seen leaving the bank branch with empty bags. The Assessing Officer has also referred to SMS conversion between Sh. Rajesh Chawla and Smt. Dharna Goel and some other ....
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....t of the deposit slips, or employees of the concerned bank to ascertain the identity of the person who carried cash and deposited in the bank account. Thus, in my view, the CCTV footage obtained from the bank only leads to a presumption and does not contain any conclusive evidence to establish that the close relatives and associates of Sh. Rajesh Chawla were carrying demonetized cash for depositing in the bank account of M/s RBPL. It is fairly well settled, presumption howsoever strong cannot be substitute for evidence. No addition can be made purely on the basis of presumption and suspicion unless there are evidences on record to justify the addition. In the facts of the present appeal, the Assessing Officer has not brought any conclusive evidence to establish beyond reasonable doubt that it is the assessee who has given demonetized cash for depositing in the bank accounts of M/s RBPL. 30. It is also relevant to observe, the Assessing Officer has placed strong reliance upon the statement recorded u/s 132(4) of the Act from Sh. Mohit Goel, erstwhile Director of M/s RBPL. It is established on record that on the date of search i.e., 23/12/2016, when statement u/s 132(4) of the Act....
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....tial burden is entirely on the person from whose possession the money was found to establish through proper evidence that either it does not belong to him or it is from explainable source. 33. It is interesting to note, despite such statutory mandate given to the Assessing Officer, no such presumption was drawn against M/s RBPL or its director. In fact, in assessment proceedings of M/s RBPL, in spite of complete non-cooperation from the side of RBPL, the Assessing Officer has virtually given a clean chit by adding the cash deposits in bank accounts on protective basis while completing assessment u/s 144 of the Act. This is something which does not appeal to common sense. It is relevant to observe, in course of proceedings before the First Appellate Authority, the entire evidence available on record was again examined and remand report was called from the Assessing Officer. After examining the evidences and the remand report of the Assessing Officer, Ld. First Appellate Authority has recorded the following factual findings. (i) The statement recorded u/s 132(4) of the Act from Sh. Mohit Goel is of limited validity as he was not the Director of M/s RBPL at the time of dep....
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....p for the cash deposited in the bank accounts of M/s RBPL by ignoring the statutory mandate of Section 132(4A) r.w.s 292C of the Act. The Assessing Officer should have directed his energy in conducting enquiry with M/s RBPL and with people closely associated with it to ascertain the source of cash deposits in the bank accounts of M/s RBPL. Instead of doing that the Assessing Officer has simply relied upon the statement recorded u/s 132(4) of the Act from Sh. Mohit Goel, who was no way connected with M/s RBPL and is a person of questionable integrity, considering the fact that he was involved in fraud and absconded for a considerable period before being arrested by law enforcement agency. 36. It is not a fact that the Assessing Officer was not conscious of the credentials of Sh. Mohit Goel as he himself has rejected assessee's request for cross examination of Sh. Mohit Goel on the reasoning that he was absconding. Another crucial fact which needs mention is, as per CCTV footages of Kotak Mahindra Bank dated 23/11/2016, three closely associated persons of Sh. Rajesh Chawla were found entering the Kotak Mahindra Bank branch carrying bags. Though, the Assessing Officer was very much....
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....ity with a direction to provide opportunity of cross examination to the assessee and also to provide copy of CCTV footage along with certificate issued u/s 65B of the Indian Evidence Act. Thus, to certain extent, Ld. Judicial Member has also accepted the fact that the addition made was not within legal frame work. Be that as it may, the Departmental Authorities had sufficient time to make proper enquiry and investigation on the issue. In fact, from the stage of assessment proceedings itself the assessee has repeatedly requested for cross examination of witnesses whose statements have been relied upon. However, no opportunity of cross examination has been granted. In fact, before the first Appellate Authority the evidences were again examined and remand report was called from the Assessing Officer. Thus, the aforesaid facts reveal that Assessing Officer had got opportunities twice to make necessary enquiry, which he failed to do. 39. Thus, at this stage, restoring the issue again back to the Departmental Authorities would not be fruitful, as nothing much is going to turn with such restoration. Therefore, upon considering the totality of facts and circumstances of the case, I agre....