TaxTMI 
TaxTMI 
2025 (4) TMI 1554
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....d 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) 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 admitt....
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.... 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 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 d....
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....nd documents in respect of the above transactions and the same were seized. The seized material marked as A2/BJPL/4 show that the assessee had paid an amount of Rs. 3.48 crores as additional amount known as Premium for various shops purchased. 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....
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....25486 88218 DKS 4 57 185 M. Thangavalu L. Mohan 16/8/06 2590185 2072148 740148/- 14/8/06 (p.ono. 541762) Andhra Bank 1332000 518037 86967 DKS 5 56 180 P.P.Karunan 30/8/06 2525920 2020736 | 721784/- 24/8/06(p.o.no. 336399)SBI 1298952 505184 84617 DKS Total 907.89 12717107 10173685 6539759 2543422 426794 2970216 SBI KPPL SHREE Sl.No Shop No Measurement 1st Party Name 2nd P....
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.... 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 46 184.27 Basheer Ahmed Khan 19/1/2007 3408995 2727196 73727/ 19-1-07(p.o.no.006467) HDFC. K.G.Road 1989969 681799 86624 DKS 2 19 190.78 M.Narasimha Setty 12/1/2007 2314785 1851828 661452/- 11/1/07 (ch.no244324) SBI, kppl A/c. 1190376 462957 89685 DKS 3 63 253.5| Aswath Kumar 10/2/2007 4200000 3360000 1014203/- 7/2/07 (ch. 229152) SBI 2345796 840000 119169 DKS Total 628.55 9923780 7939024 5526141 1984756 295478 ....
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....the seized material and that it does not represent any income belonging to him. The assessee further stated that he had requested Sri D V Harish to procure 20 shops at Madivala Commercial Plaza and Sri D V Harish was doing the negotiations in this regard. It was also stated that the shops mentioned above were not registered in his till date. The assessee contended the sum of Rs. 3.48 crores by way of premium was neither paid by him nor was payable by him. 4.7 As per the seized document A2/DJPL/4, at page No. 15, it described that the "Premium" was paid in respect of the shops. The "Premium" is the additional amount over and above the purchase cost. In fact, the above "Premium" has been paid towards purchase of shops at Madiwala Commercial Plaza as exemplified by the chart of comparison of "Sale Price" and "Purchase value" given above. Further, the premium has been paid on the sale agreements entered during the current year for purchase of the shops. Hence, the "premium" paid towards purchase of the shops represents the unaccounted investment of the assessee for the current year. Therefore, premium paid mentioned in respect of 20 properties mentioned above is treated as pai....
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....necessarily initiated u/s 153C & not u/s 147 and this initiation of proceedings u/s 147 under the facts & circumstances of the case renders the very initiation bad in law and the entire proceeding is'void ab initio. 9. In this context, the relevant portions of section 153C is reproduced as under :- 'Not withstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A ... ' 10. It is seen from the above that Section 153C starts with a non obstante clause, which actually prohibits initiation of proceedings under any section other than Section 153C under the f....
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.... Kapoor; (c) ITAT Bangalore Bench in ITA Nos 1154 & 1155 / Bang / 2015, vide order dated 27/02/2018 in the case of Shri. Srinivas Rao Hoskote. 13. In may be noted that in the case of Shri. Srinivas Rao Hoskote, the Hon'ble ITAT Bangalore held as under :- 06. In our view the scope of Section 153C and 148 are clear from the bare reading of the two provisions insomuch as Section 153C it starts with 'Notwithstanding nothing containing in Section 139, 147, 148, 149, 151 and 153'. Thus if there is any contradiction between Sections 153C and 148,in that eventuality, Section 148 shall give way to Section 153C. There is a reason for saying so because if a notice u/s. 153C is issued to the third party (assessee), then the AO may assess or reassess the income of the assessee for a period of six years whereas this is not the position in case of Section 148. Further u/s. 153C of the Act, the assessment / reassessment can only be made based on the satisfaction recorded by the AO or the searched person as well as of the third party and further addition can only be made by the AO in respect of the assessment year for which the incriminating documents were fou....
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....k assessment and the new scheme of assessment is separate provisions created for assessment of search cases where the search is conducted u/s 132 or requisition was made u/s 132A of the Act. 12. Under the provisions of section 147, the Assessing Officer is having power to re-open the assessment, if he is of the opinion that the income chargeable to tax has escaped assessment. Before doing so, the Assessing Officer should satisfy himself that, there is material which suggests that there is an ITA. 1154 & 1155/Bang/2015 Page - 10 escapement of income. The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessment by way reasons for reopening of assessment, time limit for issue of notice and provision for obtaining sanction of higher authority in certain circumstances. Under the provisions of section 153A to 153C these hurdles are cleared by using the non abstante clause in the said section. In other words, under the new provisions of section 153A, the AO is n....
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....which comes under the assessment year 2009-10. The Assessing Officer reopened the assessment year 2008-09, which is falling within those six assessment years immediately preceding the assessment year in which search is conducted. The assessee case falls within the provisions of section 153C, as the incriminating document seized in the case of search in another case. The Assessing Officer, on satisfying the above condition is under obligation to issue notice to the person requiring him to furnish the return for the six assessment years immediately preceding the assessment year in which search is took place. Thereafter, the Assessing Officer has to assess or reassess the total income of those six assessment years. The word "shall" used in section 153A made it clear that the Assessing Officer has no option, but to issue notice and proceed thereafter to assess or reassess the total income. In the instant case, the Assessing Officer issued notice u/s 148 to reopen the assessment. Therefore, in view of the non- obstante clause begin with section 153A, the Assessing Officer has no jurisdiction to issue notice u/s 148 reopen the assessment of those six assessment year which falls within th....
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...., for Assessment Year 2010-11, section 153C can be invoked but for Assessment Year 2011-12 being the year of search, section 153C cannot be invoked and therefore, in respect of Assessment Year 2010-11,these Tribunal orders cited by Id. AR of assessee are applicable and respectfully following the same, I hold that the assessment order framed by the AO u/s. 147 for Assessment Year 2010-11 is bad in law because the same should have been made by the AO u/s. 153C. Since in AY 2010 - 11, the assessment order itself is quashed, the issue on merit do not call for any adjudication. Accordingly the assessment order in Assessment Year 2010-11 is quashed.' 15. It may be noted that the three ITAT benches have categorically held that where an assessment /reassessment is sought to be made on the basis of incriminating material found in the search of third party, provisions of 153C ought to be invoked and are applicable and further such circumstances exclude application of section 147 and hence notice issued u/s 148 and proceedings u/s 147 are illegal and void ab initio and AO not having followed procedure u/s 153 C, order under 147 is to be rightly quashed. 16. In the light ....
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....se, has held that incriminating seized material pertaining to one year does not give jurisdiction to reopen an assessment under section 153C of another assessment year. (ii). CIT vs Renu Constructions reported in 99 taxmann.com 426 (Delhi) :- The learned Standing Council for the Revenue submitted that in this case the Delhi High Court, following the decision of its coordinate bench in the case of Pepsico India Holdings (P) ltd vs ACIT 370 ITR 295 held that the amendment to section 153C of the Act, carried out w.e.f. 01/06/2015, was prospective in nature and the same cannot be applied to searches conducted prior to the amendment. The learned AR contented that this decision of the Delhi High Court is no longer good law in view of the decision of the Hon'ble Supreme Court in the case of ITO vs Vikram Sujitkumar Bhatia reported 149 taxmann.com 123, which has been explained in detail in the later part of these submissions. (iii). Kamaleshbhai Dharamshibhai Patel Vs. CIT (Gujarat High Court) - 31 taxmann.com 50 (Gujrat) :- The learned Standing Council for the Revenue submitted that in this case the Gujarat High Court held that the Term 'Belong to', not being defined,....
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....ssary to invoke the provisions of section 153C of the Act, but recourse can be had to section 147 as well, to tax the same. In this case the Tribunal also gave a finding that the time limit to initiate proceeding under section 153C of the Act having expired also justified the initiation of proceedings under section 147 of the Act. The learned AR Contended that the decision of the Delhi High Court in the case of Pepsico India Holdings (P) Ltd, referred to in this decision, is no longer good law in view of the decision of the Hon'ble Supreme Court in the case of ITO Vs. Vikram Sujitkumar Bhatia 149 taxmann.com 123. (vii). Pr.CIT Vs. Abhisar Buildwell (P) Ltd [2023] 149 taxmann.com 399 (SC) The learned Standing Council for the Revenue submitted that in a case where the Revenue has material indicating income having escaped taxation, which is not forming part of material found and seized in a search proceeding, the Revenue can take recourse to initiating proceeding under section 147 of the Act, to bring the same to tax, provided the preconditions for reopening under section 147 are satisfied. The learned AR contented that this case does not help the Revenue in the present c....
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....n of the Hon'ble Supreme Court in the case of ITO vs Vikram Sujitkumar Bhatia [2023] 149 taxmann.com 123(SC). (xi). ITO vs Vikram Sujitkumar Bhatia [2023] 149 taxmann.com 123 (SC) The Learned DR has placed reliance on para 10.3, 10.8 and other paras of this order where the Hon'ble Supreme Court observes that in the case of this particular assessee i.e. Vikram Sujitkumar Bhatia, the books of accounts or documents or assets were seized by the AO of the non searched person only on 25/04/2017, which is after the amendment to section 153C, which is w.e.f. 01/06/2015. It is to be noted that the case of Vikram Sujitkumar Bhatia was one among the many cases disposed off by the Hon'ble Supreme Court, by a common order and not the only case. The facts of these cases would certainly be different to one another. The learned DR further contends that this factual observation fortifies the proposition that the amendment is prospective & not retrospective and does not apply to searches conducted before 01/06/2015. The learned AR of the assessee submited that this proposition canvassed by the learned DR is entirely wrong and is opposed to the decision of the Hon'ble Supreme Co....
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....h material before 01/06/2015. There was no need for the Supreme Court to adjudicate in a case where such material is received after 01/06/2015, as the amended provision, if applied prospectively, would suffice to ensure applicability of Section 153C. It was only because there was a need to adjudicate cases whether the amended provision ought to be applied retrospectively, where such material is received before 01/06/2015, that the Hon'ble Supreme Court felt the need to adjudicate on the same. The Hon'ble Apex Court discussed the issue involved in depth and after considering several relevant judicial pronouncements held that the amendment is by way of substitution which has the effect that the amendment introduced is deemed to have existed on the statute ever since section 153C came to be on the statute. 10. The learned AR during the course of hearing further submitted that the learned Standing Council for the Revenue has urged that the information about the seized material was received from the investigation department & not from the AO of the person searched & hence the AO of this assessee could not have initiated proceedings under section 153C of the Act, in absence of....
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....trated & rendered otiose & any such action of the executive should not be countenanced. (d). The Hon'ble Supreme Court in para 10.8 of its order in the case of Vikram Sujitkumar Bhatia have clearly held that it has always been the duty of the courts to ensure that the object & purpose of a statute should not be allowed to get frustrated. When such is the duty cast on courts, the executive has no business to frustrate the intent & purpose of a statute. 11. The learned Counsel for the assessee has contended that the non obstante clause present in both sections 153A and 153C reads thus; "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153. ... ". It has been contended that the non obstante clause starts with the words "notwithstanding anything contained", as opposed to the words "notwithstanding anything to the contrary contained", which, according to the learned Counsel, changes diametrically, the nature of the clause as it is and as it would have been had there existed the words "to the contrary" in the clause. The learned Counsel has stated that the Legislature, it is trite, chooses its words with utm....
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....ncome Tax Appellate Tribunal in the case of M/s Ickon Projects vs ITO in ITA No's 771 & 772/Bang/2017, where the ITAT held that the decision of the Supreme Court in the case of Vikram Sujitkumar Bhatia clearly mandates that the amended Section 153C is deemed to have been on the statute since the very inception of that section & thus, if any material which is seized in a search conducted u/ 132 is to be used to assess a person who is not searched, the AO would have to necessarily initiate proceedings under section 153C of the Act, in order to do the same & proceeding, if initiated under section 147, to assess the same is bad in law. The coordinate bench has relied upon para 10.8 of the Supreme Court order to come to its conclusion. 13.3.2 It is also important to take note of the fact that it was the stand of the Revenue in the case of Vikram Sujitkumar Bhatia that the amendments to section 153C, by way of substitution was to be given effect retrospectively and that the same is to be treated as having been on the statute ever since the section was introduced on the statute. The Hon'ble Supreme Court agreed with this proposition of the Revenue and decided the case in favour....
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.... in ITA Nos.1708 & 1799/Bang/2017, Assessment Years 2020-11 & 2011-12 dated 01/12/2017 and in the case of Shri Srinivas Rao in ITA Nos.1154 & 1155/Bang/2015, Order dated 27/02/2018. The learned Standing Council for the Revenue was unable to prove that both these orders travel to the Hon'ble High Court. Here it is necessary to examine the Provisions of Sub section (1) of Section 153C, before & after the amendment w.e.f. 01/06/2015. Sub Section (1) of Section 153C as it was before the amendment: 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or any books of account or documents seized or requisitioned, belongs to; or belong to a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of th....
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....lso, notice has to be issued by the AO to the other person under section. 153A of IT Act although such AO gets the jurisdiction under section. 153C of IT Act. Now we also reproduce the provisions of section 153A of IT Act which are as under .- "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, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years ' [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reasses....
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....h falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2 .- For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.] (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation - For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of thi....
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....e total income of such other person for six Assessment Years immediately preceding the Assessment Year relevant to previous year in which search is conducted and requirement is made. Hence it is seen that for issuing notice under section 153A of the Act in the case of a person other than the searched person, the AO issuing such notice has to record satisfaction that books of accounts or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person. But in the case of searched person, there is no such requirement prescribed under section. 153A of the Act. Since even in the case of a person other than the searched person, notice has to be issued by AO to such other person under section. 153A of the Act. 16.2 In the case of the assesse was centralized on 03.07.2012, whereas search was conducted on 02.09.2010 and in case of search conducted on 10.10.2013 in case of Shobha Group the notice was issued on 27.03.2015 after of 17 months. The period for issue of notice under section 153C was not expired. In this case prima-facie appears that the revenue officers have not properly followed the Instruction No, 1927 dated 21.07.1995 ....
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....block assessments under section 153A are triggered by conducting of a valid search under section 132 of the Act, 1961; that the very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in the ordinary course of regular assessment; that thus, the foundation for making search assessments under sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search; that on a plain reading of section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same; that as per the provisions of section 153A, in case of a search under section 132 or requisition under se....
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....ections 147/148 of the Act, as in such a situation, the Revenue cannot be left with no remedy; that therefore, even in case of block assessment under section 153A of the Act and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy; that if the submission on behalf of the Revenue, that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material, is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law; that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act; that the object of section 153A of the Act is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition; that therefore, only in a case where the undisclosed inco....
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....tion 147 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under section 147/148 of the Act and those powers are saved. 17.2 It was in view of the conclusion so arrived at, that the appeals and Review Petition filed by the Department were dismissed by the Hon'ble Supreme Court in "Abhisar Buildwell (P.) Ltd.". 18. Now coming to the case of the assessee the search was conducted on 02/09/2010 & 10/10/2013 in the case of Davanam Jewellers and Sobha Developers and incriminating materials were found and seized and it was marked as A2/DJPL/4 Page No. 13 to 16 and AO has quantified totaling to Rs. 3,48,33,582/- which is clear from the AO's order at Para No. 4.2 to 4.4. noted supra. During the search it was found and seized by the Investigation Wing in respect of transactions carried out for purchase of the Madiwala Commercial Plaza and noted that huge premium have been paid by the assessee and it was not recorded by the assessee. Consequently, the case of the assessee came to be centralized on 03/07/2012. The AO has received information and perused the seized documents thereafter the AO has issued a notice under section 148 after the date of centrali....
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....ring 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 assessment stood abated. AO also entitled to assess entire income and not just issue A. Scope of assessment under section 153A must be restricted to: (a) grounds on which proceedings reopened; and (b) issue A detected during search. AO not entitled to reopen entire assessment and undertake roving/fishing enquiries. Assessment under section 153A to be restricted to Issue A relating to which incriminating material is found during search. Original concluded assessment which has attained finality cannot be disturbed, in context of issues in relation to which no documents are found in search. iv. Incriminating material found during search only on Issue 'A' Other information/material available or found from any external sources (not in search) in respect of Issue 'B'. AO entitled to assess entire income including Issue A and/or Issue B. Scope of assessment under section 153A must be restricted to: (a) grounds on which proceedings reopened; and (b) issue A detected during search; and ....
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....n 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 that the observation made by the Delhi High Court in the case of Pepsico India Holdings (P.) Ltd. (supra) led to a situation where, though incriminating material pertaining to third party was found during the search proceedings under section 132, the Revenue could not proceed against the third parties, it was observed that the said observation made by the Delhi High Court in the aforesaid decision was coming in the way of suppressing the very mischief which the legislature intended to suppress, which necessitated the amendment in section 153C. Thus, it is a case of substitution of the words by way of amendment. 10.2. 10.3. 10.4 As observed hereinabove, section 153C has been amended by way of substitution whereby the words "belongs or belong to" have been substituted by the words "pertains or pertain to". As observed and held by this Court in the case of Shamrao V. Parulekar (supra) that amendment by substitution has the effect of wiping the earlie....
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....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 doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended .... An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69). 15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation. In the ....
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....; ** ** 20. In Bengal Immunity Co. Ltd. v. State of Bihar [(1955) 2 SCR 603 : AIR 1955 SC 661], Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] was cited with approval. Their Lordships have said: (SCR pp. 632-33) "It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] was decided that - '... for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered- 1st. What was the common law before the making of the Act. 2nd. What was the mischief and defect for which the common law did not provide. 3rd. What remedy Parliament hath resolved and appointed to cure the disease of the Commonwealth, and 4th. The true reason of the reme....
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....ive 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 Chapter: Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return; (b) the assessing officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158-BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply; (c) the assessing officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132-A shall be dealt with in accordance with the provisions of section 132-B. *** ....
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..... 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.'" ** ** ** 34. It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose. Wherever the intention to impose liability is clear, the courts ought not be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same (Whitney v. IRC [1926 AC 37 (HL)], CIT v. Mahaliram Ramjidas [(1939- 40) 67 IA 239 : (1940) 52 LW 234....
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....) 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 the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See R.S. Raghunath v. State of Karnataka [(1992) 1 SCC 335 : AIR 1992 SC 81].) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006].) 20. Whenever it is possible to do so, it must be done to construe the provisions which appear to con....
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.... 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 namely, for assessment of income of any other person (other than the searched person) shall be frustrated. 11. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court is held to be unsustainable and the question, i.e., "Whether the amendment brought to section 153C of the Income-tax Act, 1961 vide Finance Act, 2015 would be applicable to searches conducted under section 132 of the Act, 1961 before 1-6-2015, i.e., the date of amendment?", is answered in favour of the Revenue and against the assessees and is answered accordingly. Therefore, it is observed and held that the amendment brought to section 1....
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.... 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 that when material which is seized in a search proceeding, is to be used to assess a person, other than the searched person, the AO has to necessarily initiate proceedings under section 153C of the Act & cannot initiate proceedings under section 147 of the Act, relying on such material. It is important to note that in this case the assessment had been completed before the amendment to section 153C of the Act was carried out and even before the Judgement in the case of Vikram Sujithkumar Bhatia was rendered. 19.3 The Judgment of the Jurisdictional Karnataka High Court in the case of PCIT Vs. VSL Mining Company (P) Ltd in ITA No. 32 of 2020, order dated 20/09/....
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....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, the AO has to proceed under Section 153C. The two pre- requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A. 26. Sp....
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....r 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. In other words the basis for initiation of section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group. 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 con....
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....hat 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 seized during the search or requisition. 31. The other aspect of the matter is that under section 153A and 153C, 'the total income' is to be assessed. The total income includes returned income (if any), undisclosed income unearthed during the search or requisitioning and information possessed from the other sources. For Illustration :- An assessee had returned income of Rs. 100, undisclosed income of Rs. 200 is unearthed during search and there is information from annual information statement of n....
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....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 mistake apparent on record and that all facts were duly considered before passing the order. The CIT(A) also went on to hold that the issue raised by the revenue was debatable in nature and the same was not amenable to rectification under section 154 of the Act. The Revenue, after a change in incumbent in the office of the CIT(A), filed one more application for rectification under section 154 of the Act, on the ground that the previous CIT(A) had erred in dismissing the rectification applicat....
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....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 justice and hence the order passed by the learned Commissioner of Income-tax [Appeals], requires to be set aside as bad in law, on the facts and circumstances of the case. 8. The Appellant craves leave to add, alter, amend, delete or substitute any of the grounds urged above. 9. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be al....
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....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 favour of the Revenue that it was correct in initiating proceeding under section 153C of the Act. Thus, the decision of the Gujarat High Court in this case actually supports the case of this assessee and the second rectification application under section 154 of the Act also, ought to have been dismissed. The incumbent CIT(A) has also relied upon the decisions rendered in the case of CIT Vs. Renu Constructions 99 ....