TaxTMI 
TaxTMI 
2025 (2) TMI 1145
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....th hereinbelow: - WPC No. A.Y. 11156/2023 2015-16 11157/2023 2017-18 11185/2023 2019-20 11192/2023 2016-17 11193/2023 2021-22 11194/2023 2020-21 11197/2023 2018-19 2. The petitioner's solitary ground of challenge to the initiation of action under Section 153C proceeds on the premise that the material gathered had no correlation or connection with the individuals who were subjected to the search. They would thus contend that in the absence of the evidence gathered being pertinent or relevant to the persons named in the search authorization, the commencement of action under Section 153C against the writ petitioners would not sustain. 3. For the purposes of appreciating the challenge which stands raised, we deem it apposite to take note of the following essential facts. 4. On 28 December 2020, a search action is stated to have been undertaken by the respondents. In terms of the warrant of authorization, we find that the same was drawn in the names of Mr. Ajay Jain, Mr. Saurabh Jain, Mr. Mahesh Goyal, Mr. Manoj Sehgal and Mr. Fakir Chand. The petitioners seek to lay stress on the panchnama of the said proceedings being confined t....
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....to be found from the premises. Consequently, an amount of Rs. 18,00,000/- was seized from the premises and deposited in the PD account and statement of Sh. Shiv Kumar Bansal was recorded. Further, during the course of post search enquiries, statement of Sh. Shiv Kumar Bansal was again recorded on 17-06-21 wherein he was again failed to offer any explanation to the source of the cash seized during the course of the search action. 4. Further, during the course of Search & Seizure action at the premises situated at ND-8, Pitampura, Delhi - 110034, jewellery valued at Rs. 1,22,44,522/- was found and during the operation of lockers jewellery valued at Rs. 57,90,589/- was found from the lockers. In all, total jewellery amounting to Rs. 1,80,35,111/- was found in the possession of the assesses and his family members viz his wife, his two sons and two daughters-in-law, his unmarried daughter, his mother, his grandson and two granddaughters. As per the calculation made in accordance with directions of the CBDT dated 1st December 2016, jewellery of 254.69 grams with a value of Rs. 12,33,576/- was found to be in excess of the threshold provided for release by the Board. The assessee ....
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....ed or to whom cash has been paid. 5.3 The entries for transactions have been maintained party wise and date wise by Shiv Prakash Bansal. Transactions from 1-07-2020 to 28-12-2020 (date of search) have been recorded in this Sheet named 'SKY'. For the entire period, quantum for each name in the 'FROM/TO" column was calculated as part of the post search enquiries and was tabulated in order to arrive at party wise quant um of transactions. 5.4 Further, certain mobiles phones belonging to family members as well as staff working a t the premises of the Shiv Prakash Bansal had also been cloned as digital evidences. A mobile named 'Huawei Y7 prime' was seized from one Amber Madan and the cloned data was annexurised as A13. Amber Madan is an employee of Shiv Prakash Bansal who maintains record in the excel workbook 'SKY' as per the direction of Shiv Prakash Bansal. It was found from the data of the said phone that there was a whatsapp group named 'Office' with members Ankur Bansal, DG, Manoj and Amber Madan. Ankur Bansal is the son of Shiv Prakash Bansal. DG and Manoj are the employees of Shiv Prakash Bansal as admitted by him in his sta....
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....er a day or two as they no longer serve any purpose for us. However, the transactions are recorded date-wise in a worksheet named "SKY" of the Excel Workbook named "SKY.xlsx" stored in the said Pen Drive which was seized and annexurised as Annexure A1, during the course of Search & Seizure Action conducted at my residence, ND-8, Pitampura, Delhi - 34 on 28.12.2020. This worksheet named "SKY" serves as a cashbook for my business of Agricultural Commodities. The main purpose to maintain this record is to keep de tails of cash balance and not the detail sellers and buyers which is of no significance for me. 5.8 Since no evidence of any trading in agricultural commodities was found either during the course of the search action or on perusal of the seized record, he was asked to provide evidences such as receipt of buying and selling, in support of his claim that the transactions pertained to his business activity of trading in agricultural commodities. However, he could not provide a single piece of evidence to back his claim of business in agro commodities. Excerpt of his statement arc presented below: Q. 24 Please provide the proof of carrying out the trade of Agric....
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....maintained by me. Q. 30 Every business maintains proper Books of Accounts viz. Balance Sheet, Profit & Loss Account etc. Please state how your business is an exception to this? Ans. In our business there is very low margin and hence, we do not have any formal system of maintaining any Balance Sheet, Profit & Loss Account etc. We only maintain de tails of payments received and payments made in a Cashbook which is stored in a Pen Drive, as explained in Answer to Q. 26 of this statement. Q. 31 During the course of Search & Seizure Action conducted at your premise, ND-8, Pitamputa, Delhi-34 on 28-12-2020, not a single piece of document was found pertaining to your said business of Agricultural Commodities. How can you claim that you have been carrying this trading of Agricultural Commodities from this premises? Ans. As explained earlier that in our trade practice, we note down details of every transaction on rough Notepad on daily basis and once the business is finished for the day, these said details are destroyed after a day or two. Therefore, for this reason only, no document was found during the Search & Seizure action. 5.9 Shiv Prakash ....
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.... Prime' and the transactions recorded in Worksheet "SKY". He was shown entry wise conversation in Whatsapp group "Office" and Worksheet "SKY". In his reply he stated that da y to da y transactions have been discussed in the Whatsapp group and the same has been recorded in the worksheet "SKY". Excerpts of his statement is presented below: Q.64 I am now showing you a message sent by the user ([email protected] Manoj Ji(admin)) in the Whatsapp group "Office", referred to in the previous question, screenshot of which is given below. The message reads "5.325 rcvd from ankurkapoor". On referring to the entries made in the Worksheet "SKY" on 26.12.2020 "(table produced below), it is seen that the entry in the 10th row (highlighted) shows "Ankur Kapoor" in the FROM/TO column and 532500 in the RCVD col umn. Please explain the relation between this message in the whatsapp group "office" and the corresponding entry made in the worksheet 'SKY'. Ans. As stated earlier by me, the table containing the entries made on 26.12.2020 in the Worksheet "SKY" pertain to my business of Agricultural Commodities. The entry made in Row No. 10 seems to correspond to sale of Agricult....
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....ignificant aspect of our business operations and therefore, customer details are noted on a rough notepad, at the time of trade, are destroyed after a day or two as they no longer serve any purpose for us. For this very reason, customer de tails are neither recorded in the Worksheet "SKY" nor in the Whatsapp group "Office". 5.12 The Assessee acknowledged of the fact that the total inflow and total outflow amount to Rs. 265,19,72,535/- and Rs. 206,84,58,730/- as per the transactions recorded in Worksheet "SKY" he challenged and submitted the following Profit & Loss Account along with the working: 5.13 Hence, as per his submission, the assessee Sh. Shiv Prakash Bansal has declared a profit of Rs. 27,21,980/- out of his claimed business of Agro trading. The assessee has also declared that the percentage of profit earned by him on facilitating these transactions of sale and purchase is .25 to .30%. However, the claim of the assessee was not found tenable since, he has not been able to provide evidences in support of the same despite having been provided adequate opportunities. The only fact which is certain is that cash is received and paid as recorded in the excel sh....
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....020 from Wunderbaked and similarly, Entry 3 & Entry 4, marked in the screenshot, de note the amount of money received by K G Cool on 08.12.2020 from Prateek Jaiswal. These entries in the first screenshot match with the transactions registered in the bank account of KG Cool on 08.12.2020, as can be seen in the second screenshot where the corresponding entries (Entry 1, Entry 2, Entry 3, Entry 4) have been marked. Similarly, it can be seen in the 'TO' Column that amount have been paid to Ratan Traders, Vintage forex, Liquid studios and Green Apple logistics. Same Transactions can be found in the screenshot of Bank Statement: 5.18 Transactions recorded in BANK excel sheet has also been found in Ambar Madan's Whatsapp conversation. Amber Madan is a trusted employee of Shiv Prakash Bansal who helps him in his operations. During the search operation, two phones were seized which belongs to Amber Madan. One of the phones was Huawei Y7 prime marked as Annexure A13. In that phone Amber Madan was a member of a Whatsapp group called 'office bank'. In this group membe rs (Amber Mada n, Ankur Bansal, Manoj, DG) have conversation regarding transaction....
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.... of crypto trading. His job was limited to studying the crypto market whereas 'DG' manages all the wallets used for crypto trading and the bank accounts linked to that. As per Shiv Prakash Bansal 'DG' is also the person who manages the two account s na mely Amit Industries and KG Cool Enterprises. On further being asked about the details of DG Shiv Prakash stated that DG has fled the place after search action and Shiv Prakash has lost all the contacts with him. Shiv Prakash was exhibited content from worksheet 'Bank' to explain each entry appearing in the worksheet BANK for further clarity. Shiv Prakash Bansal was asked to provide the details of his clients on behalf of whom he has traded in crypto currency. However, he could not provide the details of a single customer/client since the details were maintained by his employee who was handling the wallets and the bank accounts for him, and who has fled the place. Excerpt of his statements are presented below: Q.67 You are now being shown the clones data displaying entire worksheet named "BANK" of the Excel Workbook named "SKY.xlsx" stored in the Pen Drive mentioned in the Q. No. 17 of this statement.....
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....ous question Rs. 9,40,000 has been received In the bank account of Amit Industries through the Payment facilitator WUNDERBAKED and repayment of Rs. 1,31,614 has been do ne to SAC HIN KUMAR who had invested in Crypto Currency through me. IT may be noted here that the payment received and the repayment done will not have one-to-one correspondence and the reason being, my clients ask me to invest in certain number or fraction of Cryptocurrencies and I invest in bulk. At the time of realization that is when the proceeds of sale of Crypto Currencies is received in Bank account Amit, amount is transferred in different amounts to different clients as proportionate to their investment in Crypto Currency. The modus operandi of my business is as follows: I do crypto-trading on behalf of my clients. I do not ow n any Cryptocurrency pertaining to the transactions entered in worksheet named "BANK" of the Workbook named "SKY.xlsx". I have earned only commission income during such Crypto transaction on be half of my clients. I study crypto market regularly to know the appropriate time of buying & selling of Crypto Currency so that I can maximize the profits of my clients. However, the technicalit....
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..... In the entire operation, my job was limited to bringing in potential investors, studying the crypto market, directing DG or Manoj to buy and sell crypto currency according to the market sentiment. I don't have any information regarding the wallets. The transaction in wallets is looked after by DG and Manoj and the information about the Wallet details, they only know. However, it may be stated here that I am spearheading the operation. I charge the commission of Rs. 500-1000 for each bitcoin traded by me. Q. 76 I am reminding you that your statement is being recorded under oath, and any false information provided by you or concealment of information by you, will attract penal provisions as per the Section 181 of the Indian Penal Code and Section 277 of the Income Tax Act, 1961. Do you wish to stand by your answer to the previous question that you don't have any information about the Crypto Wallets being used by you and your team for trading in Crypto Currencies? Ans. Yes, I understand and I stand by my previous answer that I don't have any information about the Crypto Wallets being used for trading in Crypto Currencies on behalf of my clients. Q. 77 Plea....
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....can be seen that he is facilitating transactions for other parties, in light of the same, the closing balance of the Worksheet 'Bank' Rs. 16,00,000/- is the surplus in the hands of the assessee after facilitating the transfers and is to be treated as the income of the Assessee. The taxability in this regard will be examined as per the provisions of the law. 5.24 Another Excel sheet named 'DJ' was also found in the same workbook. In the excel sheet' DJ' record of different amounts having been received from a person named "DJ". One Screenshot of the entire Excel Sheet 'DJ' is presented below for illustration: 5.25 Since no details were provided by the assessee during the course of the search, and even during the Post-Search enquires, assessee could not provide any evidence to prove otherwise, in light of the same, the closing balance of the Worksheet 'DJ' Rs. 62,00,955/- is the surplus in the hands of the assessee and is to be treated as the income of the Assessee, Sh. Shiv Prakash Bansal. The taxability in this regard will be examined as per the provisions of the law. 5.26 Another Excel sheet named 'AB' was also found in the same wo....
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.... excel sheets such as "SKY" and "BANK" containing cash transactions found & seized from the premises ND-8, Pitampura, Delhi - 110 034 pertain or relate to the assessee Sh. Shiv Prakash Bansal, source and details of which could not be explained by him. 7. After examining the documents and statements, I am satisfied that the above referred seized cash and jewellery, incriminating documents in the form of digital evidences in the form of whatsapp chats and excel sheets such as "SKY" and "BANK" containing cash transactions found & seized in Annexure A-1 to A-20 pertain to Sh. Shiv Prakash Bansal, person other than searched person and have a bearing on the determination of the income of Sh. Shiv Prakash Bansal. I am further satisfied that action u/s 153C of the I.T. Act is required to be taken in the case of Sh. Shiv Prakash Bansal for A.Y. 2015-16 to AY 2021-22. DATED: 06.10.2020 (HARISH KUMAR TAN WAR) Deputy Commissioner of Income Tax Central Circe - 14, New Delhi" 7. As is manifest from a reading of that Satisfaction Note, the material unearthed in the course of the search of the Pitampura premises is stated to have resulted in the unearthing of evidence....
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....f the Act in the context of the legitimacy of ordering a Block-Assessment. This provision has also been relied upon before us in order to vindicate the stance of the Revenue that information that can be gleaned from the seized computers belonging or relating to other clients of the Petitioner, even those who have had no dealings whatsoever with the assesses against whom the search and seizure operations are directed, can legitimately be demanded and acted upon. The argument is that the Act contemplates that all such information should be forwarded by the Authority carrying out the search and seizure to the Assessing Officer of those third parties. We are unable to accept such an extreme stand. The words "other person" employed in the Section must only be construed as referring to the 'other person' having dealings or transactions with the party who is being searched or whose material is being seized. Otherwise, the provisions may well be seen as violative of the fundamental rights enshrined in Articles 14 and 19. xxxx xxxx xxxx 16. Mr. Vikas Singh, learned Senior Counsel for the Revenue has also referred to Section 153C of the Act, which essentially prescribes the....
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.... altogether with the former works out of the 3rd Floor, and a courier with a parcel of document walks into the 2nd Floor at that awkward or inopportune time. It appears to be absurd that that parcel could be confiscated by the raiding revenue regiment for being forwarded to the Assessing Officer of the 3rd Floor person. However, as already observed above this provision does not of itself shed any light on the question whether even a person unconnected with the assessee who is the subject of the raid, having no dealings with it, is envisaged in any manner with the consequences of that operation." 10. It becomes pertinent to note that S.R. Batliboi was a judgment which was concerned with the invocation of block assessment contemplated under the erstwhile Section 158BD and which owed its genesis to the seizure of two laptops belonging to the employees of the petitioner before the Court. Mr. Sinha would contend that S.R. Batliboi is an authority for the proposition that the phrase 'other person' wherever occurring, must be construed as referring to a person who had dealings or transactions with the party who had been subjected to search. It is in the aforesaid context that Mr. Sinha....
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....as abated under the second proviso), specify the class or classes of cases 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] [Provided also that no notice for assessment or reassessment sha ll be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-s....
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....uch other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or 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 [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 t....
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....he previous year in which such search was conducted as well as for the relevant assessment years as defined. 13. By virtue of the Fourth Proviso appended to Section 153A, no notice for assessment or commencement of action can be validly issued unless the AO of the searched entity be satisfied that the books of account or other documents gathered in the course of the search reveals that income represented in the form of an asset had escaped assessment and which income amounts to or is likely to amount to INR 50 Lakhs or more. The second aspect on which satisfaction must be recorded is with respect to such income having escaped assessment for either the six years block period or the relevant assessment years as defined. 14. Section 153C, on the other hand, caters to a contingency where the search may lead to the unearthing of money, bullion, jewellery or other valuable article or thing or for that matter, books of account or documents which belong or pertain to a person other than the one referred to in Section 153A. The Section 153C action is thus aimed at a reopening of an assessment made in respect of a person other than the one referred to in Section 153A and such person be....
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.... to have a bearing on the determination of the total income of such other person. 19. Thus, the AO of the searched person has to merely examine the documents or articles unearthed from the point of view of examining whether they pertain to the searched entity or are concerning someone who may not have been named in the search warrant. Once the said AO comes to the conclusion that the document or asset belong or pertain to a non-searched entity, it has to merely transmit the same to the concerned AO and who may then examine whether further action in terms of Section 153C is warranted. 20. Thus, the entire edifice of Section 153C is built on incriminating material that may be gathered in the course of a search. The submission that action under Section 153C must be premised upon some connection between the searched and the non-searched entity or for that matter on the material gathered having some link with the searched person is clearly misconceived. If the material that had been gathered were to have a link or connect to the searched persons, it would clearly not fall within the scope of Section 153C at all. This, since the commencement of action under that provision is itself....
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....tion 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT v. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal. 7. The grievance of the Revenue as submitted by Mr. Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent - assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non-satisfaction of the condition precedent viz. the seized document must belong to the respondent - assessee is a jurisdictional issue and non-satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic." 23. We firstly, find ourselves unable to ap....
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....MUR ATTAN NOW B P Tax-x P 1599 Document 2 [email protected] 10 45 rcvd company bal from manoj ji by avi Participant Delivered 919310215245 26-12-2020 Read 26-12-2020 D) 26-12-2020 @s.whatsapp.n 06.36 53(UTC+06.36 53(UTC+ et DG 01 918882938300 0) 26-12-2020 @swhatsapp n 06:04 10(UTC+ 06:04 10(UTC+ et AB 01 919310213560 0) 26-12-2020 0 0) 26-12-2020 D @whatsapp n 06:04:18(UTC+ 06.04.18(UTC+ et Manoj J Status Sent Platform: PC Played 26-12-2020 06 04 07(UTC+0) Document 3 26-12-2020 S.No. RCVD PAID FROM/TO 1 1045000 2 8326480 COMPANY BALANCE COMPANY BALANCE 3 5000 OFFICE EXP/NEW MOBILE/AVI 4 1700 5 4200 6 1200 DIVYANSHU JI/AVI EKADASHI OFFICE EXPENSES/POLYTHENES 7 5733600 BHATIA JI 400000 RAJAT JAIN 950550 ARVINDER JI 10 532500 ANKUR KAPOOR 11 39100 GOYAL TRAVELS 12 5000 OFFICE EXP. TOTAL 9903980 7140350 BALANCE 2763630 Document 4 5325 revd from ankur kapoor Platform Motale. 26-12-2020 S.No. RCVD PAID 1 2 1045000 83264....
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....G/INDB0000005/25997152845 DEPOSIT MPSP2A034314890550102000016361ESM FOOL173034114890557760 KTGS IN RTGSCIC4200012081735223/PRATESK RTOS IN RTOMACICR4202012080073-4807/PRATEEX JAISWALIC000104/2541055002210URGENT 8,00,000.00 17,10,042.67 ENTRY 1 9.00.000.00 26.10.042.67 ENTRY 2 7,36,400.00 7,38,700 00 5,33,700.00 oner ENTRY 3 ENTRY 4 Income New De Cirds-14. 1895.64267 11,34,94267 5,71.242.67 6000:00 3,7724267 10,76.34267 95,000.00 15,71.242.67 Document 7 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 08/12/2020 RTGS OUT RTGS/ESMFRS2020120800000171LIQUID STUDIOS/YESB0000636/063663300002507 RTOS OUT RTOS/ESMFRS2020120800000172/LIQUID STUDIOS/YESB0000636/063663300002507 RTGS OUT RTGS/ESMFRS2020120800000174/GREEN APPLE LOG/INDB0000005/259971528845 RTGS INRTGS/YESBR52020120876697316/WUNDERBAKED TECHNOLOGIES PVT LTD NO/YESB0000001/059461100000//NONE///KG COOL ENTER RTGS IN RTGS/YESBR52020120876697346/WUNDERBAKED TECHNOLOGIES PVT LTD NOVYESB0000001/0....