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TaxTMI 
TaxTMI 
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2025 (4) TMI 1554
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....searched person referred to in Section 153A for issue of notice u/s 153C in the case of the other person and it was not sufficient if it pertained to the other person. 3. The Ld.CIT(A) failed to appreciate that the assessee himself affirms that the seized material marked as A2/DJPL/4 dated 2.9.2010 do not belong to him. 4. The Ld. CIT(A) erred in not appreciating the fact that the seized material A2/DJPL/4 has not been found to be the material belonging to the assessee but pertaining to the assessee. 5. The Ld.CIT(A) erred in not appreciating the fact that there was no seized material found during the course of the search and seizure proceedings in the case of M/s Davanam Group on the basis of which notice u/s 153C could have been issued. 6. The Ld.CIT(A) erred in not distinguishing between information in the possession of the Assessing Officer as against the possession of material seized during the course of search which belonged to the assessee but was seized from the premises of another person. 7. The Ld. CIT(A) erred in not appreciating the fact that the assessee had admitted that Sri D.V. Harish had been requested by him to procure the 20 shops at Madivala Commercial....
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....er grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order to be restored. Grounds of appeal for Assessment Year 2010-11: 1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. The CIT(A) erred in not appreciating the fact that the prevailing law at the time of reopening, required the seized document to belong to the person other than the searched person referred to in Section 153A for issue of notice u/s 153C in the case of the other person and it was not sufficient if it pertained to the other person. 3. The Ld. CIT(A) erred in not appreciating the fact that there was no seized material found during the course of the search and seizure proceedings in the case of M/s Davanam Group on the basis of which notice u/s 153C could have been issued. 4. The CIT(A) erred in not distinguishing between information in the possession of the Assessing Officer as against the possession of material seized during the course of search. 5. The CIT(A) erred in not appreciating the fact that the Development Right Certificate continued to be in the name of M/s Davanam Constructions Pvt. Ltd. 6. For these and other grounds tha....
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....3.2 On the basis of the above information received from the Investigation Wing and perusal of the seized documents, the AO had reason to believe that income chargeable to tax has escaped assessment for the assessment year 2007-08 and hence the provisions of section 147 were invoked on 20.03.13. The Assessing Officer recorded the reasons and obtained the necessary approval of the Joint Commissioner of Income tax Central Range-1, Bangalore u/s. 151 of the Act on 22.03.13. The assessment was reopened by issue of notice u/s 148 dt. 22.03.13. Further the assessee had sought reasons vide letter filed on 30.01.14 for issue of notice u/s 148 and the same were supplied on 30.01.14. 3.3 The assessee filed objection to the proceedings u/s 148 of the Act vide assessee's letter filed 17.3.2014 and the said objection has been disposed vide this office letter dt. 18.3.2014 and supplied on 18.3.14. 3.4 In response to notice u/s 148 of the Act, the assessee filed a letter dt.30.1.2014 stating that the return filed on 21.4.2008 may be treated as return in response to notice u/s 148. 3.5 Statutory notice u/s 143(2) was issued on 10.3.2014, served on 13.3.14 posting the case for hearing on 1....
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....nbsp; 2970216 SBI KPPL SHREE Sl.No Shop No Measurement 1st Party Name 2nd Party Name Agreement date Sale Price 80% payment P.O.amount & date Premium Balance at the time of Reg. Stamp Duty In the name of 1 72 164.95 Raniamma 3/10/2006 2309465 1847572|HDFC, 659932/- 3/10/06(p.o.no.105289)HDFC K.G.ROAD 1187640 461893 77542.005 DVH 2 78 363.67 B. Lakshminarayanaadiga 4/1/2007 8000740 6400592 1000000/- 7/10/06(chq.no.612746) HDFC. K.G.ROAD 454970/- 4/1/07(chq.no.244314) SBI 4945622 1600148 170960.97 DVH 3 79 321.87 K.M.Amanulla 9/10/2006 4828050 3862440 1287737/- 9/10/06(p.o.no.002752) HDFC. HALASURU. 2574703 965610 151310.1 DVH 4 54 180.41 A.S.Vishnumurthy M.S.Manjunath Adiga 31/8/2006 2525920 2020736 721784/- 24/8/06(p.o.no.336396) SBI 1298952 505184 84810 DVH 5 16 140.92 B.S.Bhaskar 31/8/2006 1973....
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....ale Price" of the shops is mentioned as "Purchase value". The following chart illustrates that the "Sale Price" mentioned in the chart at page No. 13 to 16 tantamount to "Purchase Value" mentioned at page No. 20 of the seized material mentioned above. Shop No "Sale price" as per page No. 13 to 16 of seized material No. A2/DJPL/4 Premium amount paid as per page No. 13 to 16 of seized material No. A2/DJPL/4 'In the name of 'as per page No. 13 to 16 of seized material No. A2/DJPL/4 85 4726038 2430360 DKS 59 4300780 2658508 DKS 15 5958920 3683479 DKS 11 4722818 1821528 DKS 24 2385771 920160 DKS 22 2510340 1180968 DKS 27 2534181 1193200 DKS 66 3696264 1287011 DKS 58 3722510 2285309 DKS 61 2737056 1607883 DKS 21 2510239 1290888 DKS 29 2463336 1266768 DKS 30 2627427 1351151 DKS 57 2590185 1332000 DKS 56 2525920 1298952 DKS 81 4726000 2430360 DKS 20 2525850 1268916 DKS 46 3408995 1989969 DKS 19 2314785 1190376 DKS 63 4200000 2345796 DKS Total 3,48,33,582 DKS 4.5 The assessee was furnished the seized documents marked as A2/DJPL, page no. 11 to 16 to the assessee, vide order sheet noting ....
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.... of 20 shops at Madiwala Commercial Plaza during the Assessment Year 2006-07 and the said premium was added as unexplained income for this AY in terms of section 69 of the Act and added into the total income of the assesse, and assessed income at Rs. 4,67,40,302/ -. 7. Aggrieved from the above Order, the assessee filed appeal and detailed written submissions were also submitted. The CIT(A), after considering the entire written submissions and documents available before him allowed the appeal of the assessee observing that the notice issued by the AO under section 148 of the Act for reopening the case is bad in the eyes of law and the assessment should have been completed under section 153C instated of section 148 the Act. The observations of the CIT(A) are as under: 7. After careful consideration of the grounds of appeal, statement of facts and written submissions, and legal position, and after considering all materials available on record, the appeal is decided as follows. 8. The appellant has raised a legal issue whether the provisions of section 147 of the Act can be initiated on the facts of the case instead of initiating proceedings under section 153C of the Act which wou....
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.... has not been offered to tax. On the basis of the above information received from the Investigation Wing and perusal of the seized documents, the AO had reason to believe that income chargeable to tax has escaped assessment for the assessment year 2006-07 and hence the provisions of section 147 were invoked. The Assessing Officer recorded the reasons and obtained the necessary approval of the Commissioner of Income Tax Karnataka (Central) Bangalore u/s 151 of the Act on 28.08.2012. The assessment was reopened by issue of notice u/s 148 dt. 28.8.2012 and served on the assessee on 27.11.2012." 11. From the above reading it is clear that since re-assessment in the case of the appellant is being proceeded on the basis of materials found during search proceedings in the case of of M/s Davanam Group, the learned Assessing Officer ought to have issued notice under section 153C of the Act and not under section 148 of the Act, as the impugned material found during the course of search in the residence of a person referred to in section 153 A does not belong to that person but belongs to a person other the person searched. 12. The appellant placed reliance on the following decisions, whi....
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....thstanding anything contained' in section 139, section 147, section 148, section 149, section 151 and section 153 made it clear that provisions of these sections are not made applicable to the assessments covered by the provisions o. section 153A. Prior to the introduction of these three sections, there was a separate chapter XIV -B of the Act, by section 158BC to 158BE which governs the search assessments which is popularly known as Block assessment. The earlier provisions provides for single assessment to be made in respect of undisclosed income of Block period consisting of 10 assessment years immediately preceding the assessment year in which search took place and the broken period of up to the date of search was also included in the block period. After the introduction of new sections, i.e. section 153A to 153C, the single block assessment concept was done way with the new scheme of assessment of search cases where the Assessing Officer is to assess or reassess the total income of each of the assessment years falling within the period of six assessment years immediately preceding the assessment year in which the search is conducted. Therefore, under the new scheme, the Ass....
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....aforesaid period which includes disclosed and undisclosed income. Therefore, the new provisions has given wide powers to the Assessing Officer to assess or reassess the total income of six assessment years falling within the period of those six assessment years immediately preceding the assessment year in which search is conducted. Under the new provisions of section 153A, the statute is provides wide powers to the Assessing Officer in respect of assessments already completed u/s 143(1) or 143(3). If such orders is already in existence prior to the initiation of search, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, found during the course of search. For this purpose, the restrictions imposed on the Assessing Officer by way of sections 148 to 153 to reopen the assessment ITA.1154 & 1155/Bang/2015 Page - 11 u/s 147 has been removed by the non abstante clause used in section 153A. 14. In the present case on hand, admittedly, the Assessing Officer has reopened the assessment based on a search conducted in a third party case. The AO formed the opinion based on the statement recorded from the ....
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....ord shall to begin with section 153A, made it mandatory that the Assessing Officer bound to issue notice u/s 153A or 153C, thereafter proceed to assess or reassess the total income, where search is conducted u/s 132 or requisition is made u/s 132A. Therefore, in our opinion, the AO is not justified in reopening the assessment u/s 147 and his order is illegal and arbitrary. In view of the above and in view of the decision relied upon by the assessee, we do not find any merit in the appeals filed by Revenue.' 14. In the case of N Suryanarayana, the Hon'ble ITAT Bangalore vide its order ITA Nos 1708 & 1709 /Bang/2017 AYs 2010-11 & 2011-12 dated 01/12/2017 held as under : '6. In the present case also, this is noted by the AO in the assessment order that during the course of search operation carried out u/s. 132 of the Act in the case of ARPL on 03.12.2010, seized material marked as A/NSN/1 was found which reflected that there was unexplained investment of Rs. 9,90,145/- made by the assessee. On the basis of this evidence found in the course of search, the AO invoked the provisions of section 147 after duly recording the reasons for reopening of the assessment and a noti....
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....ders are passed before the amendment to section 153C which comes into effect from 01/06/2015. Prior to the amendment the Act mandated that Section 153C is to be pressed into action only if the seized material found, belongs to the Other Person i. e. a person other than the searched person'. It is only post amendment that the Act, mandates, that Section 153C is to be pressed into action even if the seized material may not belong to the Other Person, but, relates or pertains to him. The AO is not expected to do what he was not permitted to do under the Act, as it stood then, and hence, he was correct in initiating action under section 147 of the Act. He relied on the following judgments and gist of the judgements countering by the learned Authorised Representative (AR) are as under :- (i). CIT Vs. Singhad Technical Education Society reported in 84 taxmann.com 290 (Supreme Court) -The learned Standing Council for the Revenue submitted that in this case the proposition dealt & approved by the Hon'ble Supreme Court is that initiation of proceeding under section 153C of the Act in respect of an assessment year can be done only if there was seized material, pertaining to such ass....
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....id not start with a non obstante clause. This decision does not help the cause of the Revenue in the present case of this assessee. (v). Amar Jewellers Ltd vs ACIT, [2022] 137 taxmann.com 249 (Gujarat) :- The learned Standing Council for the Revenue submitted that in this case the Gujarat High Court held that an order which is passed under section 153A of the Act can be subjected to a reopening under section 147, if the preconditions for reopening under section 147 of the Act is satisfied. The learned AR contended that this proposition was also upheld by the Jurisdictional Karnataka High Court in the case of CIT Vs. Rinku Chakraborty 242 CTR 425, which decision was reversed by the Full Bench of the Karnataka High Court in Dell India Pvt Ltd Vs. CIT in 432 ITR 212. In any case this proposition is not the subject matter for consideration in the present case of this appellant. (vi). Shailesh S Patel Vs. ITO [2018] 97 taxmann.com 570 (Ahmedabad - Trib) The learned Standing Council for the Revenue submitted that in this case the Tribunal relied upon the decision of the Delhi High Court in Pepsico India Holdings (P) Ltd vs ACIT 370 ITR 295, held that in order to bring to tax the incom....
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....reopening under section 147 of the Act as the time limit to initiate proceedings under section 158BD of the Act had expired. The learned AR contented that this case law does not help the Revenue in the present case of this Assessee as it was noticed in an earlier case, Section 153C of the Act starts with a non obstante clause, whereas section 158 BD of the Act, did not. (ix). Janaki Exports International vs Union of India [2005] 145 taxman.82 (Delhi). The learned Standing Council for the Revenue submitted that in this case the Delhi High Court upheld the action of the AO in resorting to reopening under section 147 of the Act as the time limit to initiate proceedings under section 158BD of the Act had expired. The learned AR contended that this case law does not help the Revenue in the present case of this assessee as submitted supra (x). Anil Kumar Gopikishan Agrawal vs ACIT [2019] 106 taxmann. Com 137 (Gujarat) The learned Standing Council for the Revenue submitted that in this case the Gujarat High Court held that the amendment to section 153C of the Act, carried out w.e.f. 01.06.2015, was prospective in nature & the same cannot be applied to searches conducted prior to the a....
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....e Hon'ble Supreme Court in Para 10.8 of this order states that the amendment to Section 153C by substituting the words 'Belongs or Belong To' with the words 'Pertains or Pertain to', was done to remedy the mischief that was noted pursuant to the decision of the Delhi Court in the Pepsico case cited supra. The Court goes on to observe that if the amendment provision is held to be prospective, it would then frustrate the very object of substitution and the very object and purpose of section 153C shall be frustrated. In Para 11 of the order the Hon'ble Supreme Court holds that the amendment to section 153C would apply to searches conducted before 01/06/2015. One important aspect which is to be taken note of, is that this decision is rendered on the applicability of the amended provisions of Section 153C to searches conducted before 01/06/2015 also. The Proviso to section 153C clearly specifies that the date on which search is conducted on a person, other than the searched person, shall be the date on which the assessing officer of such other person receives the seized material that pertains to/relates to such other person. Thus, by virtue of this decision, the ....
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....ll available with this AO itself. The notice under section 148 has been issued by this AO after centralisation of the assessee's file. (b). As regards A.Y. 2008-09, even though the assessment order is passed by ACIT Circle - (6)(3)(1) Bangalore, which is after decentralization of the assessee's file, the notice under section 148 was issued on 27/03/2015, by the AO in the Central Circle, prior to decentralization. The Date of Search in the case of Sobha Group being conducted on 10/10/2013, and the notice under section 148 issued on 27/03/2015, after a gap of more than 17 months, indicates that the AO was in possession of the seized material when he issued notice under section 148 of the Act. (c). That apart, the Investigation wing cannot act as a post office & distribute seized material to the different assessing officers who have jurisdiction over different persons who are in some way or other connected to the person searched. In all such cases, despite their being incriminating material found & seized in a search, no notice need be issued under section 153C of the Act & all cases can be covered by section 147 of the Act. If this practice is encouraged & given a stamp o....
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....the fact that in the Assessment orders passed for all the assessment years from 2006-07 to 2010-11, the AO in each one of those assessment orders mentions that reopening under section 147 of the Act, by issue of notice under section 148 of the Act is based on material seized in the search proceedings. In view of this averment by the AO in the assessment orders it is not correct on the part of the Revenue to take a stand that reopening under section 147 was based on information received & not on the basis of material seized in a search. The Reasons Recorded for the Issue of notice under section 148, for each of these impugned assessment years, also has reference to seized material. This defense of the Revenue is against the admitted facts of the case & needs to be rejected outright. 13.2 The assessee strongly relies upon the decision of the Hon'ble Supreme Court noted above in the case of Vikram Sujitkumar Bhatia which clearly has ruled that the amendment is retrospective in nature & applies to all cases right from the date on which section 153C was brought on the statute. 13.3 The learned AR also relies upon the following decisions and submitted that these are binding upon th....
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....tice under section 148 of the Act, for all the assessment years, which are before us, are as under: (i) The Learned CIT A erred in not appreciating the fact that the prevailing law at the time of reopening, required the seized document to belong to the person other than, the searched person referred to in section 153A, for issue of notice under section 153C in the case of the other person, and it was not sufficient that it pertained to the other person. (ii) The Learned CIT A erred in not appreciating that the seized material relied upon to reopen the assessments has not been found to be the material belonging to the assessee but pertaining to the assessee. (iii) The Learned CIT A erred in not distinguishing between information in the possession of the assessing officer as against possession of material seized during the course of a search. 15. We find from the orders of the learned CIT(A) for all four Assessment Years i.e., 2007-08, 2008-09, 2009-10 & 2010-11, that the First appellate authority, allowed the appeals of the assessee that assessment proceeding had to be initiated under section 153C and not under section 147 of the Act, relying on decisions of two coordinate Banga....
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....rson 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 : 16. From the above provisions of section 153C(1) in the light of judgment relied upon by both the parties in the case of Vikram Sujitkumar Bhatia cited supra, it is seen that if the AO of the searched person is satisfied that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or 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 searched person 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A. Hence it is seen that even in the case of proceedings initiated on a person other than the se....
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....ceding 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]: 11[Provided also that no notice for assessment or reassessment shall 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-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten asses....
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....arch person should satisfy that any money, bullion, jewelry or other valuable article or thing, seized or requisitioned, belongs to; or 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 searched person and then only he has to hand over the assets or documents to the AO having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act if that AO 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. Hence it is seen that in the cases covered by section 153C of the Act notice has to be issued to other person under section. 153A of the Act but before issuing such notice, he has to satisfy 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 Yea....
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....ed assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income; that secondly, the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113, whereas income other than 'undisclosed income' was required to be assessed under the regular assessment procedure and was taxable at the normal rate; that therefore, section 153A came to be inserted and brought on the Statute; that under the section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the 'undisclosed' income too at the normal rate of tax, as against at any special rate; that thus, after introduction of section 153A and in case of search, there shall be block assessment for six years; that search assessments/block assessments under section 153A are triggered by conducting of a valid search under section 132 of t....
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....k assessment period; that the intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search; that therefore, on a true interpretation of section 153A of the Act, if in case of a search under section 132 of the Act or a requisition under section 132A of the Act, any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, however, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/148 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148 of the Act, as in such a situation, the Revenue cannot be left with no remedy; that there....
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....e AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material 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 section 147 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under section 147/148 of the Act and those powers are....
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..... No assessment under section 153A in absence of any incriminating material. Originally concluded assessment which has attained finality cannot be disturbed more so when no material found in search. ii. No incriminating material found in search. Information/document from sources other than search available with AO AO entitled to assess entire income, as pending regular assessment stood unabated. Scope of assessment under section 153A must be restricted to: (a) grounds on which proceedings reopened; and (b)additional specific information coming to knowledge AO through modes other than search. AO not entitled to reopen entire assessment and undertake roving/fishing enquiries. Assessment under section 153A in absence of any incriminating material may be dropped. Post dropping of proceedings under section 153A, Revenue may, basis other information, proceed under section 147 and/or 263 subject to satisfaction of jurisdictional conditions under the said provisions. iii. Incriminating material found during search only on issue 'A'. No other information/material available or found from any external sources. AO entitled to assess entire income, as pending regular asses....
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....ject and purpose of the amendment to section 153C introduced vide Finance Act, 2015 w.e.f. 1-6-2015 is required to be considered. 10.1 As observed hereinabove, in the pre-amended section 153C, the words used were "belongs or belong to" a person other than the searched person. In the case of Pepsico India Holdings (P.) Ltd. (supra), the Delhi High Court interpreted the expression "belong to" and observed and held that there is a difference and distinction between "belong to" and "pertain to". It was observed and held that on the basis of the registered sale deed seized from the premises of the searched person, it cannot be said that it "belongs to" the vendor. Therefore, the High Court view gave a very narrow and restrictive meaning to the expression/word "belongs to" and held that the ingredients of section 153C have not been satisfied. To remove the basis of the observation made by the Delhi High Court in the case of Pepsico India Holdings (P.) Ltd. (supra), now, section 153C came to be amended w.e.f. 1- 6-2015 by substituting the words "belongs or belong to" with the words "pertains or pertain to" insofar as the books of account and documents are concerned. Thus, having found t....
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....al case [(1996) 5 SCC 60] this Court upheld the legislative practice of an amendment by substitution being incorporated in the text of a statute which had ceased to exist and held that the substitution would have the effect of amending the operation of law during the period in which it was in force. In Koteswar case [(1969) 1 SCC 255] a three-Judge Bench of this Court emphasised the distinction between "supersession" of a rule and "substitution" of a rule and held that the process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place." 10.5 In the said decision, in paragraphs 14, 15, 18 and 20 with respect to the presumption against retrospective operation, it is observed and held as under :- "14. The presumption against retrospective operation is not applicable to declaratory statutes .... In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up....
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....ords used must expressly provide or clearly imply retrospective operation; (ii) the retrospectivity must be reasonable and not excessive or harsh, otherwise it runs the risk of being struck down as unconstitutional; (iii) where the legislation is introduced to overcome a judicial decision, the power cannot be used to subvert the decision without removing the statutory basis of the decision. There is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. A validating clause coupled with a substantive statutory change is only one of the methods to leave actions unsustainable under the unamended statute, undisturbed. Consequently, the absence of a validating clause would not by itself affect the retrospective operation of the statutory provision, if such retrospectivity is otherwise apparent. ** ** ....
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....ad as under: "158BC. Procedure for block assessment .- Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132-A, in the case of any person, then- (a) the assessing officer shall - (i) in respect of search initiated or books of accounts or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the block period: Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapte....
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.... for its calculation are to be construed by ordinary rule of construction. Whereas a liability has been imposed on a dealer by the charging section, it is well settled that the court would construe the statute in such a manner so as to make the machinery workable. 26. In J. Srinivasa Rao [(2006) 12 SCC 607] this Court noticed the decisions of this Court in Gursahai Saigal v. CIT [(1963) 48 ITR 1 (SC)] and Ispat Industries Ltd. v. Commr. of Customs [(2006) 12 SCC 583]. '17. In Gursahai Saigal [(1963) 48 ITR 1 (SC)] the question which fell for consideration before this Court was construction of the machinery provisions vis-à-vis the charging provisions. The Schedule appended to the Motor Vehicles Act is not machinery provision. It is a part of the charging provision. 18. By giving a plain meaning to the Schedule appended to the Act, the machinery provision does not become unworkable. It did not prevent the clear intention of the legislature from being defeated. It can be given an appropriate meaning.'" **  ....
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.... or absurdities. On interpretation of the statute, it is observed in paras 17 to 21 in the case of Hindustan Bulk Carriers (supra) as under :- "17. If the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility, and should rather accept the bolder construction, based on the view that Parliament would legislate only for the purpose of bringing about an effective result. (See Nokes v. Doncaster Amalgamated Collieries [(1940) 3 All ER 549 : 1940 AC 1014 : 109 LJKB 865 : 163 LT 343 (HL)] referred to in Pye v. Minister for Lands for NSW [(1954) 3 All ER 514 : (1954) 1 WLR 1410 (PC)] .) The principles indicated in the said cases were reiterated by this Court in Mohan Kumar Singhania v. Union of India [1992 Supp (1) SCC 594 : AIR 1992 SC 1]. 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 19. The court must ascertain the intention of the legislature by directing its attention not merely to t....
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....e could not proceed against such a third party, which necessitated the legislature/Parliament to clarify by substituting the words "belongs or belong to" to the words "pertains or pertain to" and to remedy the mischief that was noted pursuant to the judgment of the Delhi High Court. Therefore, if the submission on behalf of the respective respondents - assessees that despite the fact that the incriminating materials have been found in the form of books of account or documents or assets relating to them from the premises of the searched person, still they may not be subjected to the proceedings under section 153C solely on the ground that the search was conducted prior to the amendment is accepted, in that case, the very object and purpose of the amendment to section 153C, which is by way of substitution of the words "belongs or belong to" to the words "pertains or pertain to" shall be frustrated. As observed hereinabove, any interpretation, which may frustrate the very object and purpose of the Act/Statute shall be avoided by the Court. If the interpretation as canvassed on behalf of the respective respondents is accepted, in that case, even the object and purpose of section 153C n....
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....tes to or pertains to such person. The Department challenged the decision of the High Court taking the stand that it is not necessary that incriminating seized material must belong to such person on whom proceeding under section 153C of the Act is initiated & proceeding initiated under section 153C of the Act would be valid even if the material does not belong to such person but is relating or pertaining to such person & where material pertains to or relates to such person initiation of proceeding under section 153C of the Act is mandatory. The Hon'ble Supreme Court upheld the contention of the Revenue & overturned the decisions of the respective High Courts on the ground that the amendment was made by way of substitution & thus is deemed to have been on the statute, ever since the Section was brought on the Statute. In view of this the above judgment does not help to the Revenue but supports the arguments of the learned AR of the assesse. 19.2 The Judgment of the Jurisdictional Karnataka High Court in the case of Dinakar Suvarna vs DCIT Central Circle in ITA No. 16 of 2015 relied by the learned AR also supports the case of the assessee, where the Hon'ble High Court held t....
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.... follows: "10. Admittedly no proceedings were initiated under Section 153C of the Act. Thus, there is patent nonapplication of mind. It is relevant to note that the author of the diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income. 11. Further, the Assessing Officer has not recorded his satisfaction with regard to escapement of income. On the other hand, he has based Revenue's case entirely on the statement of assessee ....... " (emphasis supplied) 14. A Division Bench of the Rajasthan High Court in the case of Shyam Sunder Khandelwal v. Asstt. CIT [2024] 161 taxmann.com 255 has held as follows: "24. In the case where search or requisition is made, the AO under Section 153A mandatorily is required to issue notices to the assessee for filing of income tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition,....
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....gh Court in the case of Shyam Sunder Khandelwal vs ACIT, 161 taxmann.com 255 (Rajasthan), order dated 19/03/2019 relied by learned AR, wherein the Rajasthan High Court concurring with the view taken by the Karnataka High Court in the case of Dinakar Suvarna. This case is related to the assessment year 2014-15 prior to amendment in section 153C of the Act w.e.f. 01.06.2015. On the similar facts the AO issued notice under section 148 of the Act and completed the assessment under section 147 of the Act, there was incriminating materials were found during the search conducted under section 132 of the Act at the premises of 'Manihar' Group. During the course of search, certain documents including pen drives were seized. On writ filled by the assessee the Hon'ble High Court held as under :-, 23. The reasons supplied in case in hand for initiation of proceedings under section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest earned thereon were unaccounted. I....
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....at though the material with regard to unaccounted loan advanced by the petitioner was received, the earning of interest on unaccounted loan was derivation of the AO from the material received. The submission is that the derived conclusion cannot be acted upon under section 153C. The submission lacks merit and shall defeat the concept of single assessment order for each of relevant preceding years for assessing 'total income' in case of incriminating material found during search or requisition. 30. The argument that by enactment of section 153A to 153D has not eclipsed section 148 does not enhance the case of respondent to initiate the proceedings under section 148. On fulfillment of two conditions for invoking section 153C the proceeding in accordance with section 153A are to be initiated. The operating field of and section 153A to 153D and section 148 are different. Applicability of section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is s....
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....idering the case laws noted supra. we find that the learned CIT (A) has done good reasoned order and there is no any infirmity. The AO should not have issued notice under section 148 of the Act. In the result the appeals filed by the Revenue are dismissed in above terms. 23. ITA No 205/B/2022: This appeal filed by the Assessee pertains to the Assessment Year 2006-07. The assessee challenged the Assessment Order on the ground of jurisdiction stating that reopening under section 147 of the Act was bad in law and the correct way to do the same was by initiating proceeding under section 153C of the Act. The assessee succeeded before the CIT(A). The Revenue, did not file appeal on the order of the CIT(A) before the ITAT, filed an application under section 154 of the Act before the CIT(A) on the ground that CIT(A) had not considered certain important facts on record while passing the Appellate Order and requesting the CIT(A) to rectify the error and pass a fresh order after rectification. The CIT(A) after hearing both sides passed an order dated 30/07/2021, in ITA No. 387/CIT(A)- 11/BNG/2014-15, dismissing the rectification application, by categorically holding that there was no mistak....
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.... issues sought to be rectified under section 154 of the Act by the learned assessing officer, against the original appellate order passed by the predecessor Commissioner of Income-tax [Appeals], is bad in law in as much as the issue sought to be rectified, required a long drawn process of verification and debatable issue, consequently the learned Commissioner of Income-tax [Appeals] did not have jurisdiction or power to review the original appellate order passed by his predecessor, on the facts and circumstances of the case. 6. The impugned order of recalling passed by the learned Commissioner of Income-tax [Appeals] is bad in law as he has traversed beyond his scope and consequently passed a perverse order by recalling the original appellate order passed by his predecessor, on the facts and circumstances of the case. 7. The order of rectification passed by the learned Commissioner of Income-tax [Appeals], is in haste and not affording sufficient and reasonable opportunity to the appellant and further has not provided the submissions made by the learned assessing officer during the second rectification proceedings, which is in grave violation of the principles of natural justic....
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....n to reopen an assessment under section 153C of another assessment year. 28. No doubt the Hon'ble Supreme Court has made a reference to the order of the Gujarat High Court in the case of Kamleshbhai Dharamshibai Patel Vs. CIT 31 taxmann.com 50 and observed that the Gujarat High Court has rendered that decision correctly, holding that the documents seized belonged to the assessee in that case and initiation of proceeding under section 153C of the Act was in order. 29. The CIT(A) concluded that initiation of proceedings under section 153C of the Act can be done only if the seized material belongs to the assessee and not otherwise even if it were to relate to or pertain to the assessee. The CIT(A) concluded incorrectly in as much as the Gujarat High Court held that the Term 'Belong to', not being defined, the impugned document, relied upon to initiate proceedings under section 153C of the Act, pertained to or related to the person in whose case the proceeding under section 153C of the Act was initiated & the said proceeding was in order. In this case the Gujarat High Court expanded the meaning of 'Belong To' to include "Have Relation or Reference To" and held in ....