TaxTMI 
TaxTMI 
2024 (7) TMI 716
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.....04.2005 whereas after 01.04.2005 153C notice can be issued when AO is satisfied that seized material has a bearing on the assessment of income of other person. 2. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that there was no incriminating material for the issuance of notice u/s 153C, without appreciating that in the satisfaction note the AO had brought out the facts and circumstances, which indicated that the Assessee company has entered into transactions which remained unexplained hence such documents constituted "incriminating material" for the purpose "of the issue of notice u/s 153C in the context of assessee. 3. Whether on facts and circumstances of the case and in law, the Ld CIT(A) erred in not appreciating that after 01.4.2005 the test of issue of notice u/s 153C is availability of seized material Which has bearing on assessment of income which has to be only in nature of prima facie belief having live nexus & not in nature of absolute evidence based on detailed investigation. 4. That the appellant craves leave to add or amend any other more ground of appeal as state above as and when needs....
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.... ii. That the notice issued u/s 153C is bad-in-law and without jurisdiction as no satisfaction as required u/s 153C of the Act has been recorded by the assessing officer of the searched person. iii. That the notice issued u/s 153C is bad-in-law and without jurisdiction as no document(s) belonging to the assesses was found and seized during the course of search. iv. That the proceedings initiated u/s 153C and the consequent assessment order passed are liable to be quashed as no incriminating documents material has been found and there is no co-relation of year wise incriminating documents mentioned in the assessment order. v. The additions made by the A.O. are beyond the scope of jurisdiction of section 153C of Income Tax Act, 1961. The Ld. A.R. of the appellant has also submitted that after the decision of Hon'ble Supreme Court in the case of PCIT-III, Pune Vs. Sinhgad Technical Education Society, the law is crystal clear, that issue of notice u/s 153C without incriminating material for the' relevant assessment year is legally not sustainable. 5.2 Upon the legal challenge of Id. A.R., the AO, vide this office letter F. No. CIT (A)-IV/KNP....
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.... 3. That the notice issued u/s 153C is bad-in-law and without jurisdiction as no document(s) belonging to the assessee was found and seized during the course of search. 4. That the proceedings initiated u/s 153C and the consequent assessment order passed are liable to be quashed as no incriminating documents material has been found and there is no co-relation of year wise incriminating documents mentioned in the assessment order. 5. The additions made by the A. O. are beyond the scope of jurisdiction of section 153C of Income Tax Act, 1961. In the remand report, the A.O. has not rebutted the appellant's submission. The A.O. has only made vague remarks without bringing on record any incriminating material or evidence. In our submission we have referred to provisions of law and various judicial pronouncements including those of Hon'ble Apex Court. The assessing officer has not made any rebuttal. As a matter of fact, in the remand report the A.O. has realized that on legal issues the order passed by him is not sustainable and therefore as per para 8 of the remand report the A. O. has mentioned that Quote on the legal issues raised by the appellant your....
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....lfilled. 3. In para 4 of the satisfaction Note the A.O. has referred to Annexure LP-2J & LP-22 and LP-I to LP-18. In this regard, it is submitted that in the entire satisfaction Note the A.O. has not recorded any satisfaction that these seized annexures belong to the assessee. Without prejudice to the above, it is submitted that (here is nothing incriminating in the aforesaid seized-material. The page wise description / contents of the aforesaid seized material is given separately and it is self-evident that there is nothing incriminating in these documents. As a matter of fact, the assessing officer has not made any addition in the assessment order based on these documents. 4. In para 5 of satisfaction Note the A.O. has referred to annexure LP-I and LP-2 page No. 23 to 33 stating them to be transactions with offshore units in Hongkong & Malasiya. In this regard it is submitted that in the satisfaction Note, the A.O. has nowhere recorded that these documents belong to the assessee company. Without prejudice to the above, it is submitted that the observation made by the assessing officer are factually erroneous. Page No. 23 to 33 of LP-1 contains draught s....
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.... appeal record. From the page wise detailed analysis Id. A.R. of the appellant has submitted that, the seized document neither belong to the appellant company nor it is incriminating in nature. Thus, the twin imperative conditions as stipulated under provision of section u/s 153C of the Act are not satisfied in the present facts of the case. 5.6 The undersigned has carefully gone through the assessment order, written submission, remand report by Assessing Officer and rejoinder filed as well as verbal arguments of the Ld. A.R. For the sake of brevity satisfaction note recorded by the A,0, is scanned and reproduced here-in-under: 5.7 Detailed perusal and scanning of the satisfaction note recorded by the AO reveals the following facts: i. AO has not mentioned the assessment years for which, it belongs to. There appears to be only one satisfaction note recorded by AO in relation to appellant company. Thus it is presumed that, satisfaction note is common for all the A.Y. 2009-10 to A.Y. 2014-15 (6 Years). ii. AO has not mentioned the specific Seized documents, which belongs to the appellant company. Thus, no satisfaction is recorded by the AO of searc....
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....nt as a result of search which 'belong to' the appellant company. The investments reflected in the balance sheet of M/s. Apple Commodities Ltd. cannot be taken as incriminating because these are the part of its regular books of account and already disclosed by the investing company as well as M/s. Apple Commodities Ltd in the return of income. All additions made by the Assessing Officer are either from balance sheet or from profit A loss account, for which, no incriminating document was found and seized during search action. Hence, it is concluded that there exist no incriminating seized material for these relevant assessment year to justify issue of notice u/s 153C of the Act. The AO has not made any addition on the basis of any incriminating document found and also, additions made by AO does not co-relate with satisfaction noted by him. In absence of incriminating seized material relating to assessment year under consideration, action u/s 153C of the Act cannot be treated as valid in the eye of law. 5.8 The proceedings u/s 153C of the Act are very specific and clearly explained in the Act. For the sake of clarity, relevant previsions of Act is as under; "153C. [....
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....perative jurisdictional condition for issue of notice 153C of the Act is not satisfied. 5.9 Hon'ble Supreme Court in the case of PCIT-3, Pune Vs Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) has held that the nexus between issue of notice u/s 153C and the incriminating material found as a result of search must exist. Hon'ble Supreme Court in para 13 of the order has observed that one of the jurisdictional conditions precedent to the issue of a notice u/s 153C of the Act is that "money, bullion, jewellery or other valuable article or thing" or any "books of account or document must be seized or requisitioned for the relevant assessment year for issue of notice u/s 153C of the Act." The observation of the Supreme Court in para 18 of the order mentioned here in above is reproduced below: "The ITAT permitted this additional ground by giving a reason that it jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question ....
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....order to reopen the assessment of other person u/s 153C of the Act for the assessment year earlier to the year of search, direct correlation must exist between existence of incriminating material and relevant assessment years. In the instance case, admittedly, additions are not based on any incriminating document found, as a result of search. Further, AO has not recorded the satisfaction for these relevant assessment years, as envisaged u/s 153C of the Act. In fact, no assessment year is mentioned in the satisfaction note recorded by the AO. 5.11 In view of the detailed discussion mentioned here in above end respectfully following the judgement of the Supreme Court in the case of Sinhgad Technical Educational Society, it is concluded that notice u/s 153C issued by the AO need to be treated as ab-initio invalid and legally not sustainable, therefore, assessment framed on the basis of legally unsustainable notice is hereby quashed and annulled. Thus, these legal grounds of appeals i.e. for A.Y. 2009- 10 to A.Y. 2014-15 are decided in favour of the appellant." 6. It could be observed from the above, it is the finding of the Ld.CIT(A) that there is no seized materials impou....
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.... 2009-10 to AY 2014-15. He further submitted that in a case of "person other than the searched person" (like the case of assessee where no search has been conducted but the proceedings have been initiated on the ground that documents relating to the assessee has been found from the searched person) provisions of section 153C are applicable and in such case, the block of 6 years will be immediately preceding the year in which satisfaction u/s. 153C of was recorded. It was the further say of the Ld. AR that in the instant case the AO has recorded satisfaction on 2.12.2016, therefore, at the earliest, it is the date of 2.12.2016, when the AO can be presumed to have got the documents in his capacity as AO of the assessee, on the basis of which proceedings u/s. 153C have been initiated. This date of 2.12.2016 falls in the previous year 2016-17 releavnt to AY 2017-18. The immediately preceding six years are AY 2011-12 to AY 2016-17. Thus, the AY 2009-10 and AY 2010-11 are clearly out of block of 6 years. Hence, he requested to quash the assessment. In support of his contention, he relied upon the following decisions:- i) CIT vs. Jasjit Singh 2023 (10) TMI 572 (SC). ii) ....
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....ate (relatable to the period for which six years returns were to be filed by the assessee) was to be from the date when the search and seizure proceedings were conducted, in respect of the main assessee under Section 132. 5. The impugned order upheld the order of the Income Tax Appellate Tribunal (hereinafter referred to "ITAT") which in turn 2 affirmed the assessee's arguments. 6. It is submitted on behalf of the revenue by Ms. Bagchi, learned counsel that the impugned order is erroneous because the date referred under proviso to Section 153(1) is relatable to the second proviso to Section 153A, only as far as it concerns abatement. The revenue relied upon the ruling of a Division Bench of the Delhi High Court, reported as "SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax" reported in (2012) 346 ITR 177. 7. Sections 153A and Section 153C of the Income Tax Act, 1961 to the extent they are relevant are extracted below:- "153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, oth....
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....nce with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 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 referred to in sub-section (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 subsection 4 (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 f....
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....rs will be examined with reference to such date." 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 153(c)(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 own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into 6 proceedin....
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....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 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 per....
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.... Court as well as by this court. Thirdly, the recent amendment to Section 153 C(1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective. 12. Consequently, no substantial question of law arises from the impugned order of the ITAT. The appeal is, accordingly, dismissed." 9.5 The Coordinate Bench of the Delhi Tribunal in the case of Apple Sponge and Power Ltd. Vs. DCIT (ITA No. 7638/Del/2018 AY 2015-16) - vide its decision dated 25.5.2022 has held as under:- "8. Having heard the rival contentions, we have carefully perused the orders of the authorities below. We are of the considered view that in the case of a person other than a "Searched Person", provisions of section 153C of the Act are applicable and in such a case, the date of search or date of requisition, as referred to in Section 153A of the Act is substituted by the date of handing over of documents by the Assessing Officer of the "Searched Person" to the Assessing Officer of the "Other Person". 9. Since the date of recording satisfaction is 02.12.2016....
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....ctor 33, Nolda Phone: 0120-2504005, Email noida [email protected] Dated: 22.11.2018 TTCC-II/Noida/flemand Report 2015-19/1223 The Commissioner of Income Tax(A)-IV 16/104-A, 2 Floor Siddhi Vinayak Building Civil Lines Karur Sub: Remand report Us 25014) of the Income Tax Act in the case of M/s Apple Commodities P. Lid for the A.Y. 2011-12 to 2013-14 (3 years) PAN AAADCA0300K-rezording. Kindly refer to your letter dated 09.10.2018 on the above mentioned subject. 8. Search and seizure operation u/s 132(1) of Income Tax Act, 1961 has been conducted it the case of Tirupatl Sunworld Group of companies on 11.1112014. In view of the search operation, the case was centralized to the Assessing Officer on 09.02.2015 9. Perusal of seized material prima facie shows that these are related to M/s Apple Commodlile: Ltd. which is incriminating in nature: Based on the incriminating materials found and seize during the search belonging to the Assessee Company, requisite Satisfaction was recorde before the commencement of proceeding u/s 153C of the Act and notice w's:153C of the dul Issued and served to the assessee (Copy of the same....
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....nown as 'Apple Group of Companies (AGC) is a diversified group with multiple business interests and was established in 2000 as Apple Group of Companies. The group Is presently crigaged in various businesses & deal in various different fields like metol (mainly Iron & steel), coal, construction, commodities trading (mainly Includes steel & Iron, coal & Iron ore etc. at Noida (where its Corporate office & Headquarters are located), Bellary (Karnataka), Anantpur( Andhra Pradesh), Hyderabad, Mumbal etc. M/s Apple Commodities Limited is one of the Group companies. BPhone.ths course of search. disk found from office premise of the Apps, Group at B.16;sector 2 Nolda AW-5A-7HDD of AMIT choudhary, to was found that huge share premium has been received- As per seized materials, share capital / share premium of has been obtained. On query, no detalls of Identity of the share holder/ share applicant, PAN complete address and coples of his bank statement for the relevant period was provided. Charts showing summary of share capital and share premium received by following assessee company and outstanding as on 31/03/2013 pre tabulated below as under:- ....
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..... In order to provide another opportunity, show cause noice vide F.No.DDIT-1/NOIDA/Apple/2014-15/312 dated 24.02.2015 have been issued to Sh. Ashish Garg, CEO of Apple Group of companies to prove the identity, creditworthiness and genuineness of the shareholders from whom the above companies have taken such huge amount of share capital and share premium. But, he falled to provide the details ,36,8,,!,,,!,35%;3NED,2"-2;'D;En*¥i>ZRSES 3. The hard risks seked where stepped (namely, Herd dit me. // ORSH AGILE scanned Choudhary computer) and on perusal of the books ar accounts, It has been gathered that following assessee have taken unsecured loans which were outstanding as on 31/03/2014: Sr.No Apple Commodities Ltd Particulars AmritvarshaIspat Pvt. Ltd. Apple Iron Enterprises Pvt Ltd Ashima Gupta ال الدراما Electra Therm India, Ltd Namco Corp Ltd.YRIGHT Neekunj Power Pvt Ltd.Loan & Nishu International Ltd.U/L S.M.Edibles Pvt. Ltd. Yuven Steels Pvt Ltd. Total .. -Amount (Rs.) 1,500,000 $5,000,000 3,000,000 000,000 889,404. 12,131,274 120,410,000 22,191 ....
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...., was found that there are mines. In Indonesia which pre managed or controlled by the persons resident of ordinary resident of India and the same is Cabulated below as under of Address Shareholde Directors Page Sc Name Company. N о Remarks Date Referenc e.. PT. MULTI Setiabu M/s Apple Sh. Ashish 105 to Resolution 20.05.201 CIPTA. di INVESTAM Atrium, Indo Garg and 110 of for Energy Ltd Sh. Nikunj LP-4 relcasino 4 A 2nd and M/s Krishankum floor, ar Goyal.. Suite 209A JL.HR. Rasuna Sald Kav. 62,Sub- District of Pacific Capital Ltd Resources Karet. District of Setlabu di South Jakarta- Nischal Jain from directorshi D 12920 PT. INTI The PT. MULTI Ashish PUTERA KANAAN Plaza Plaza Office Tower, 29th Garg, 99 to Resolution 25.05.201 104 of for CIPTA INVESTAM Octavia Bud LP-4 A and M/s Raharjo and Pacific floor, Fl Capital Unit E, Resources Thamrin Ltd .. Kav: 28- 30, Jakarta Nikunj Krishankum releasing Ashish Garg from directorshi ar Goyal. P Rise Mr. Luv 9....