TaxTMI 
TaxTMI 
2024 (9) TMI 1772
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....ceedings initiated under Section 153C of the Act and the assessment orders passed in pursuance thereof. Since facts involved in all these appeals are more or less identical, for the sake of brevity we take up ITA No.1342/Del/2024 pertaining to A.Y. 2011-12 as the lead appeal and discuss facts obtaining there from. 3. Briefly stated, the assessee is a Non Resident Indian (NRI) individual, being a resident of Dubai in United Arab Emirates (UAE). As discussed by the Assessing Officer (AO), a search was conducted by the Deputy Director of Income Tax, [DDIT)-Investigation, Unit 7(3) on Sanjay Jain and others on 30.06.2019. During the search and seizure operation, incriminating evidence in the form of mail and chat communication was found revealing that Shri Pankaj Jain and his brother Shri Sanjay Jain, in connivance with some other persons, namely, Shri Udai Shankar Awasthi, his son Shri Amol Awasthi, Shri Parvinder Singh Gahlaut, his son Shri Vivek Gahlaut, Shri Amrendra Dhari Singh were working with close proximity to Indian Potash Limited (IPL) and Indian Farmers Fertilizer Co-operative Organization (IFFCO) and have been influencing the fair price/market price at which fertilizer/....
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....n and Shri P.S. Gahlaut. On examination of such material, he found that, though, certain foreign suppliers were willing to supply fertilizers directly to Indian market, however, Shri Sanjay Jain and Shri Gahlaut were not willing for direct supply to Indian market, which would have been a better deal and at a more competitive price. On the contrary, the major buyers in the Indian market viz., IPL and IFFCO prefer to buy fertilizers from foreign suppliers indirectly through intermediaries only for the purpose of keeping certain amount of profit as commission. This resulted in escalation of price of the fertilizer. He observed that the mails and chats revealed that Shri Sanjay Jain and his associate in collusion with the suppliers and Indian buyers manipulate the fertilizer business in India. Such modus operandi was adopted to artificially inflate the price of fertilizer for making significant profit through commission. In this context, he also relied upon the statement recorded from Shri Sanjay Jain by the Enforcement Directorate (ED). 7. Thus, he observed that the seized material clearly revealed the role of Shri Pankaj Jain and Shri Sanjay Jain and their associate Shri A.D. Sing....
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....es created by Shri Rajeev Saxena to pass the said commission are paper companies and no services were provided by them in lieu of money received. According to the AO, Shri Rajeev Saxena is the key person in the business cycle of IFFCO and IPL. 9. From the ledger of assessee appearing in the books of Shri Rajeev Saxena, which according to the AO is a seized material, it was found that commission income has been received by the assessee through various entities in Dubai controlled by the assessee. However, he observed that such commission income was received by the assessee only as a pass through entity as it was ultimately passed onto Shri Udai Shankar Awasthi. In this context, he exhaustively referred to statement recorded from Shri Rajeev Saxena. Thus, based on such information and material, the AO ultimately concluded that the commission income has been received in the accounts of various entities controlled by the assessee as a pass through entity for ultimate benefit of Shri Udai Shankar Awasthi and Shri Parvinder Singh Gahlaut. Thus, he held that since the assessee is a mere pass through entity, addition of commission income has to be made on protective basis at the hands o....
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....assed as per DRP directions, has been mentioned as appealable order; (viii) since, the Legislature categorically directed that an assessment order after a search action u/s 132 of the Act must be passed in accordance with the provision u/s 153A of the Act, even in the case of a person not searched where the assessment proceedings were initiated u/s 153C of the Act, (ix) any order passed u/s 153C of the Act is not at all an assessment order and cannot be put into effect being nullity and void ab initio; x) ( as the draft assessment order passed on 31/03/2023 is a void ab initio order containing not only approval of the Addl. CIT u/s 153D of the Act but was also accompanied with a proper notice of demand, computation of sheet etc. which could not be issued till the final assessment order was passed after proceedings u/s 144C of the Act. 2. The impugned assessment proceedings initiated by the AO u/s 153C of the Act for issuing notices u/s 153A of the Act is bad in law because: (i) it is based on a void ab initio satisfaction note recorded u/s 153C of the Act by the AO of the appellant on 29/09/2021, for 11 assessment years whereas even as p....
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....n u/s 144C of the Act, but which GsOA are not pressed. Void ab initio Satisfaction notes u/s 153C of the Act 5. However, at the threshold the assessee submits by relying judgment of the Hon'ble jurisdictional Delhi High Court in the case of PCIT vs Ojjus Medicare (P) Ltd and others [2024] 161 taxmann.com 160 (Delhi) [DoD: 03/04/2024] wherein it has been categorically stated in para 86 onwards, particularly in the table given in para 90 therein that where a satisfaction note u/s 153C of the Act was recorded at a date falling within the FY 2021-22 (as is here recorded on 10/06/2021), being a date relevant to the AY 2022-23, then the ten years period backwards for the purpose of initiating proceedings u/s 153C of the Act would commence from the AY 2013-14. Therefore, the impugned proceedings for the AYs before AY 2013-14 here i.e. for the two AYs 2011-12 and 2012-13 were illegally initiated and void ab initio. The same must be quashed, though the impugned satisfaction note perse is void as the same was recorded without application of mind by the AO. 6. The impugned satisfaction note on the assessee, is based on a satisfaction note made u/s 153C of the Ac....
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....tion collected during another search on Sanjay Jain, A D Singh and Alankit Group is grossly irrelevant to the impugned proceedings at all as separate notice u/s 153C of the Act was to be issued on the basis of satisfaction notes received from the AOs of the other persons by abating the pending assessment proceedings initiated earlier u/s 153C of the Act, a procedure specifically codified for the purpose. Since, the impugned satisfaction note was prepared after considering impermissible and irrelevant material, the said satisfaction note is vitiated as influence of irrelevant cannot be determined therein. It is trite law that when irrelevant material has been taken into consideration, entire proceeding is vitiated as held in Ascu Arch Timber Protection Ltd 2004 taxmann.com 1408 (SC), Dhirajlal Girdharilal Vs. CIT 26 ITR 736 (SC), Sagar Enterprises (2002) 124 Taxman 641 (Guj), Indian Metals And Ferro Alloys Limited Vs UOI 195 ITR 539 (Ori), Choithram Begraj Lalvaney Vs CIT 197 ITR 302 (Bom). Thus, the impugned satisfaction note is illegal ab initio and the consequent all assessment orders in appeal need to be quashed. No such addition u/s 69A of the Act is permissible ....
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...., make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Section 153A in the Act 153A. Assessment in case of search or requisition. (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 but on or before the 31st day of March, 2021, 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....
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....s of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 1534, 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 the other person in accordance with the provisions of section 1534, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in subsection (1) of section 1534: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of se....
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.... legislated to complete assessment of income in consequence to an income-tax search or requisition and were simultaneously introduced by the Finance Act, 2003 w.e.f. 01/06/2003. 11. Further, it can also be seen that the section 143(3) of the Act, mentions that the assessing officer shall by an order in writing make an assessment of the total income or loss of the assessee. Similarly, the section 153A(1)(b) of the Act states the assessing officer shall assess or reassess the total income of the six years immediately preceding the assessment year....... and for the relevant assessment year under this section. Thereafter, the first proviso u/s 153A of the Act also mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years. 12. Thus, when two separate specific provisions are mentioned to make an assessment of the total income, then the AO has to adopt the provisions which have been specifically mandated u/s 153A of the Act by the Legislature for search related assessments. The AO does not have any power even with the consent of t....
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.... assessment proceedings post an income-tax search elsewhere as otherwise for the normal course of assessment/ reassessment such provisions already exist u/s 142(1) of 148 of the Act. Thus, it is mandatory for an AO, after recording a satisfaction u/s 153C of the Act, to initiate assessment proceedings, to mandatorily issue a notice u/s 153A of the Act seeking return of income for the particular period and then to proceed to make an assessment only and only u/s 153A of the Act. There is no ambiguity in the language and the courts are bound to follow the mandate of the legislated jurisdictional issue as per the Hon'ble Apex Court in many judgments relied hereinabove. In fact, there is also no requirement u/s 153A of the Act to issue any notice u/s 143(2) of the Act or similar to commence assessment proceedings in pursuance thereto as has also been held in Ashok Chaddha (2012) 20 taxmann.com 387 (Del) by the Hon'ble jurisdictional Delhi High Court, distinguishing the legal requirement of the same which did exist u/s 158BC of the Act earlier, prescribing procedures of block assessments post search from 01/07/1995 till 31/05/2003 as below: Section 158BC in the Act ....
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....1) of the Act which is as below: 142. Inquiry before assessment. (1) For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 115WD or section 139 or in whose case the time allowed under sub-section (1) of section 139 for furnishing the return has expired a notice requiring him, on a date to be therein specified.- (i) where such person has not made a return within the time allowed under sub- section (1) of section 139 or before the end of the relevant assessment year, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or 16. Thus, while enacting special provisions for income-tax assessment in pursuance to an income-tax search, provisions of the sections 142 and 143 of the Act were specifically excluded from application besides the requirement of the section 139 of the Act to file a return of income as the same have been specifically provided u/s 153A of the Act and also the pr....
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....ch prescribes to pass any assessment order by making additions on protective basis in an assessment-proceedings initiated in pursuance to a notice issued u/s 153C of the Act and thus, the same is void ab initio and beyond the mandate of the legislature. Therefore, cannot be upheld. 20. The legislature in its worthy wisdom has specifically mandated in the section 153C of the Act that where the AO is satisfied (a).................................... (b) any books of account or documents, seized or acquisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 1534, 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 the Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if. that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the t....
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....of the searched person was definitely not sure to whom out of the two persons, the same belonged to and proves the contention of the assessee that no material seized at all was seized by the revenue anywhere so as to incriminate the assessee nor his father Mr U S Awasthi. Interestingly to make a mockery of the law, there is no mention also of any protective assessment of any income in any of the two satisfaction notes on the said facts/amounts and/or that a similar satisfaction has already been recorded two days earlier on the same material and same amount in the case of the assessee. 24. Further, interestingly the AO of the assessee, who is also the AO of Mr Udai Shanker Awasthi, father of the assessee, recorded two separate satisfaction notes at his end simultaneously on 29/09/2021, the same day, on the same set of identical information, where the Performa and the Annexure A thereto are completely identical till para 12 and except a few sentences in the closing paras changed to suit the requirements on facts. This proves that still at the same time with the same pen stroke, the AO of the assessee and his father, could not decide to whom the said income belonged to out of....
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....seas can be said to accrue to an NRI in India who has no business/ profession/ employment in India and who has taken absolutely no part in sale /purchase/ price fixation of the fertiliser's transactions by the concerned seller/ buyer where none had even alleged that the NRI was ever a party to the impugned transactions. Further, it is also brought to the notice that as per the satisfaction note dated 29/09/2021, the AO contends in the conclusion that "may have bearing on his income" whereas the section 153C of the Act requires "have a bearing on total income" which is definite. Thus, the invocation of the strict section 153C of the Act for reopening an assessment has to be based on specific evidence, not on preponderance of probabilities otherwise the presumption u/s 132(4) would hold good that the same pertained to the person searched. No incriminating material seized anywhere to instigate the provisions of the section 153C of the Act or to make any addition therein 29. Further, addition in a case of assessment proceedingsinitiated u/s 153C of the Act is possible where the proceedings are initiated only and only on the basis of incriminating material found as....
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....e has nothing to disprove the alleged information as there was no information with the Revenue which was found to proceed u/s 153C of the Act as the same is completely an illegal-proceedings. The allegation of the DRP is completely baseless rather far from the truth on record as no such information was ever maintained by Rajiv Saxena nor was ever detected in any surprise action. This tampered information was prepared in Dubai on the specific directions of the Authorised Officers of the revenue since he was brought to India without any laptop or such information in January 2019 by the ED and during the course of enquiries before the search and then in the search on him from 30/06/2019 when Rajiv Saxena collected the same from Dubai office on email and then handed over to the authorized officer thereafter with no supporting evidence. Nowhere the Revenue has shown the flow of the alleged funds in the bank accounts of the assessee. 31. The averment of the AO that during the search operation on Saxena, it was found that these companies did not render / provide any services in lieu of the money and the transactions are not supported with any evidence in any manner is vague on fa....
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....he assessee with Mr Udai Shanker Awasthi, which cannot be a reason to consider the unproven remittance by Saxena as income of the assessee or his father Mr Udai Shanker Awasthi in assessment proceedings-initiated u/s 153C of the Act in their cases without any material seized which could be claimed to have been found in a surprise check. The jurisdiction to apply the said provision is strictly restricted to the material seized in an income-tax search elsewhere and neither on any information available through any other source or on hearsay or on guess. 34. The DRP also states that it has been gathered by the panel that in January 2019, Rajiv Saxena was deported from Dubai and brought by ED to India in relation to high profile corruption cases like Augusta Westland, VVIP Chopper money laundering case. Initially Rajiv Saxena was being called to the Investigation Unit of the Income Tax department to record his statement u/s 131 of the Act. During recording of statements, he submitted data as supporting documents. Subsequently, in order to procure the entire data, in its authentic form, a search and seizure operation was conducted on him on 30.06.2019. Simultaneously operation w....
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....e papers / evidence before the government authorities to mislead the authorities. This application was filed after the alleged facade of the income-tax search by 03/07/2019 had already been created by the revenue, then how could such information given by him in such a cloudy and suspicious manner be considered reliable and in fact worthy of any consideration. 37. Undisputedly, nothing was found in the hotel room of Saxena at the time of search. The very statement of Rajiv Saxena itself records that every document/ detailed were produced by him which clearly demonstrates beyond doubt and any apprehension that those were not at found by the search party. Please refer to: Ans. 5: Copy of passport, chart of companies etc. produced marked as Exhibit 1, Ans. 9: Agreement with Midas etc. produced and the same 'I have been made part of Annexure 1', Answers 10-11-12 and 31 etc. A very important fact is clear from the above that the said information was not at all found and seized but was provided by Rajiv Saxena on the directions of the revenue officers given earlier after collecting those details from his Dubai office before recording of the said statement as the revenue o....
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....pressure and to make him voluntarily hand over document after obtaining from his Dubai staff as has been mentioned in the above statement and this search in a hotel room for 86 hours with one DDIT, one ADIT, Four Inspectors, two panchas, Digital experts, Saxena and his wife Mrs Shivani could make Saxena state that sun rises in the west. No evidentiary value for such a statement under pressure, especially when cross examination was not provided. 41. Such voluntarily produced documents cannot at all be treated as 'seized' under section 132 of the Act. Mr. Saxena was not in possession of these documents at the time of search nor these were available in the hotel room and thus, no question of any seizure within the provisions of the section 132 of the Act arises. As held in Laxmipat Choraria [1971] 82 ITR 306 (Calcutta) approved by the Hon'ble Apex Court in CIT v Tarsem Kumar [1986] 161 ITR 505 (SC) "The expression used here for the recovery of the possession is "seizure". Seizure is again an expression which implies a forcible exaction or taking possession from either the owner or one who has the possession and who is unwilling to part with possession." Kind refer....
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....ILR 1966 Bom 420....... 45. It has been held in Prakash Cotton Mills Pvt. Ltd. AIR 1982 Bom 387 that the contents or the truthfulness of the contents of a document can be proved only by the executor of the document. The Supreme Court in Madan Mohan Singh v. Rajni Kant (2010) 9 SCC 209 examined various pronouncements of the Supreme Court and held that "13. In State of Bihar & Ors. Vs. Radha Krishna Singh & Ors. AIR 1983 SC 684, this Court dealt with a similar contention and held as under: - "Admissibility of a document is one thing and its probative value quite another these two aspects carinot be combined. A document may be admissible and yet may not carry any conviction and weight of its probative value may be nil. 46. UNSIGNED DOCUMENTS VALUELESS Further, it is also an admitted position that various statements/documents/exhibits were called by Saxena from his Dubai Office during the course of searches but these are unsigned by the author. It is established law that unsigned documents have little evidentiary value. Unless signed by author, veracity cannot be vetted by the party against whom these unsigned documents are used as has been held in HASSAN ALI KHAN 201....
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....that even Section 246A of the Act provides for an appeal against an assessment order passed under Section 153A of the Act and not under Section 153C of the Act. He further submitted when the AO proceeds under Section 153C r.w. Section 153A of the Act, there is no need for him to make an assessment under Section 143(3). Thus, he submitted that the AO having not completed the assessment under Section 153A of the Act, the assessment order is void ab initio. Decisions relied upon in the case of ITO vs. Vikram Sujit Kumar Bhatia, (2023) 149 taxmann.com 123 (SC); CIT vs. Calcutta Knitwear (2014) 362 ITR 673 (SC). He submitted that when two separate specific provisions are mentioned to make an assessment, the AO has to adopt the provisions which have been specifically mandated under Section 153A of the Act by the legislature for search related assessments. The AO does not have any power even with the consent of the assessee to make an assessment in any section other than the Section 153A of the Act relating to assessment proceedings in consequence to an income tax search which is a code in itself and has to be mandatorily applied in assessment proceedings post search because Sections 153A....
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....ficer is empowered to initiate the assessment proceedings under section 153C of the Act in respect of a person, other than the searched persons, he has rightly invoked such power. He submitted, section 153C of the Act is machinery provisions provided for assessment of a person, other than the searched persons, however, the procedure to be followed for such assessment is as prescribed under section 153A of the Act. Therefore, there is no need for the Assessing Officer to pass the assessment order under section 153A of the Act. He further submitted that in course of search and seizure operation in case of Sh. Rajeev Saxena, various incriminating materials were seized, which revealed undisclosed income of the assessee. He submitted, merely because the satisfaction notes recorded in respect of two different persons referred to same incriminating material, it will not invalidate the proceedings as per the requirement of section 153C of the Act. It is sufficient for the Assessing Officer to note in the satisfaction note that document seized from searched person belong to other persons. He submitted, the document seized may belong to more than one persons. Therefore, based on such documen....
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....on 153C of the Act, but the additions made under section 69A of the Act are also valid. 15. We have carefully considered rival submissions in the light of decisions relied upon and perused materials placed on record. The first issue which arises for consideration is what can be the block of 10 years for which the Assessing Officer could have assumed jurisdiction under section 153C of the Act. At the time of hearing, learned counsel for the assessee has placed before us the relevant facts concerning this issue and has taken us through various materials placed in the paperbooks, including the satisfaction notes recorded by the Assessing Officer of the searched person as well as by the Assessing Officer of the assessee. As discussed earlier, though, based on a search and seizure operation carried out on the assessee, proceedings under section 153A were initiated earlier, however, subsequently, based on the satisfaction note recorded by the AO of Sh. Rajeev Saxena, a person searched under section 132 of the Act, proceedings under section 153C were initiated against the assessee. Whereas, proceedings earlier initiated under section 153A were dropped. 16. Thus, the fulcrum of the p....
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....the search and seizure operation was carried out on a date posterior to the amendment brought to section 153A read with section 153C of the Act by virtue of Finance Act, 2017. Therefore, the amended provisions of section 153C read with section 153A would be applicable. Hence, the relevant assessment year would constitute a block of 10 assessment years comprising of the assessment year, wherein, the search and seizure operation has taken place and preceding 9 assessment years. However, in case of a person other than the searched person, the date of search would be reckoned to be the date on which the Assessing Officer received seized material and recorded satisfaction in terms with section 153C of the Act. Since, the assessee is not the searched person but the other person, the date of search would be reckoned to be the date on which the Assessing Officer of the assessee received the seized material and recorded satisfaction. 19. Undisputedly, the materials placed on record clearly demonstrate that the Assessing Officer of the assessee has recorded the satisfaction note under section 153C of the Act on 29.09.2021 falling in Financial Year 2021-22 corresponding to assessment year ....
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....21 to 31 March 2022, the same would essentially constitute FY 2021-22 as being the previous year of search for the purposes of the nonsearched entity. As a necessary corollary, the relevant AY would become AY 2022-23. AY 2022-23 would thus constitute the starting point for the purposes of identifying the six years which are spoken of in Section 153C. The six AYs' are envisaged to be those which immediately precede the AY so identified with reference to the previous year of search. It would thus lead us to conclude that it would be the six AYs' immediately preceding AY 2022-23 which could have formed the basis for initiation of action under Section 153C. Consequently, and reckoned backward, the six relevant AYs' would be:- Computation of the six-year block period as provided under section 153C of the Act No. of years AY 2021-22 1 AY 2020-21 2 AY 2019-20 3 AY 2018-19 4 AY 2017-18 5 AY 2016-17 6 Computation of the six-year block No. of years period as provided under Section 153C of the Act Consequently, AY 2021-22 would become the first of the six preceding AYs' and would as per the table set out hereinabove terminate ....
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.... 9 AY 2013-14 10 91. Tested on the aforesaid precepts, it would be manifest that AY 2022-23 would form the first year of the block of ten AYs' and with the maximum period of ten AYs' terminating in AY 2013-14. We, in this regard also bear in consideration the following instructive passages as appearing in the decision handed down by a learned Judge of the Madras High Court in A.R. Safiullah. We deem it appropriate to extract the following paragraphs from that decision:- "9. Explanation-I is clear as to the manner of computation of the ten assessment years. It clearly and firmly fixes the starting point. It is the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. There cannot be any doubt that since search was made in this case on 10.04.2018, the assessment year is 2019-20. The end of the assessment year 2019-20 is 31.03.2020. The computation of ten years has to run backwards from the said date ie., 31.03.2020. The first year will of course be the search assessment year itself. In that event, the ten assessment years will be as follows : 1st Year 2019-20 2nd Year 2019-20 3rd....
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....eyond the ambit of the provision, the respondent has no jurisdiction to issue the impugned notice. Once lack of jurisdiction has been established, the maintainability of the writ petition cannot be in doubt." In our considered opinion, the decision in A.R. Safiullah correctly expounds the legal position and the interpretation liable to be accorded to the identification of the ten AYs' which are spoken of in Sections 153A and 153C. 92. List II, forming part of this batch pertains to cases where Satisfaction Notes of the AO of the non-searched person were drawn between the period 01 April 2022 to 31 March 2023 and 01 April 2023 to 31 March 2024. Tested on the principles enunciated by us in the preceding passages of this judgment, we come to the conclusion that the relevant six AYs' would comprise the following years, when computed for the period 01 April 2022 to 31 March 2023:- Computation of the sixyear block period as provided under section 153C of the Act No. of years AY 2022-23 1 AY 2021-22 2 AY 2020-21 3 AY 2019-20 4 AY 2018-19 5 AY 2017-18 6 93. The relevant block of six AYs' when computed for the ....
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....ning of assessments pertaining to AYs' 2010-11, 201112, 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs' as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List II pertain to the aforenoted AYs' 2010-11, 2011-12, 2012-13 and 2013-14 98. We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List I and insofar as they pertain to AYs' 2010-11, 2011-12 and 2012-13 would not sustain being beyond the "relevant assessment year" which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List II and insofar as they pertain to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of "relevant assessment year", being the ten year block, would be liable to be set aside on this score alone." 21. Thus, keeping in view the ratio laid down by Hon'ble Jurisdictional High Court reproduced above, since, assessment years 2011-12 and 2012-13 fall outside the net of relevant assess....
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....und from the possession of Sh. Sanjay Jain/Sh. Pankaj Jain to implicate assessee's father or the assessee. 24. Basis of entire addition is primarily the statement recorded from Sh. Rajeev Saxena and other information furnished by him to the Authorised Officer, including the alleged ledger copy, though, apparently a statement pertaining to the assessee was compiled to handover to the Authorised Officer. Therefore, it is quite clear that the assessment orders in case of the assessee are based on the materials handed over in the search and seizure operation carried out in case of Sh. Rajeev Saxena. 25. It is the allegation of the Assessing Officer that as per the statement recorded from Sh. Rajiv Saxena, the commission income received from various foreign parties selling fertilizer to IFFCO/IPL were transferred to beneficiaries' accounts held in the name of various entities controlled by the assessee. However, the Assessing Officer has not made any discussion, whatsoever, in the assessment orders regarding assessee's relationship/role in the entities in whose bank accounts the alleged commission income was transferred for onward transmission to India. Though, the Assessing Offic....
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.... was strongly relied upon by the Assessing Officer to make the assessment, is in gross violation of Rules of Natural Justice, hence, cannot be countenanced. Therefore, as per the ratio laid down by Hon'ble Supreme Court in case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II (2015, 62 taxmann.com 3 SC), the addition made without following the Principles of Natural Justice is unsustainable. 28. Even otherwise also, at more than one place in the assessment order, the Assessing Officer has specifically and categorically stated that the assessee is merely a pass-through entity and the real beneficiary is someone else in India. The Assessing Officer has also observed that the commission income has ultimately been transferred to the real beneficiary in India. That being the factual finding of the Assessing Officer himself, in our view, no addition under section 69A could have been made at the hands of the assessee even on protective basis. 29. Pertinently, in the statement recorded in course of search and seizure operation, Sh. Rajiv Saxena has repeatedly stated that the commission from Uralkali was received in the accounts of the entities controlled by ....
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....ns on protective basis. In other words, the Assessing Officer was more or less convinced that the income does not belong to one of the two assessees at whose hands additions were made. Even though, the Assessing Officer has alleged that the commission is meant for the real beneficiaries in India, however, he has failed to establish the money trail. The Assessing Officer has not brought on record any material to even demonstrate that the alleged commission received in the accounts of the entities allegedly controlled by the assessee have been transferred to India in any manner and if so, to which accounts they have been transferred and such accounts were controlled by whom. Nothing in this regard has been discussed by the Assessing Officer in the assessment order. 32. It is relevant to note that in the assessment order as well as in DRP's directions, it has been observed that the statement given by Sh. Rajiv Saxena and evidences furnished by him regarding receipt of commission has been corroborated through the evidences collected in course of search on Mr. A.D. Singh, Mr. Sanjay Jain and Alankit group. However, not only the statement recorded from Sh. A.D. Singh and Sh. Sanjay Ja....
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....day Shankar Awasthi is the same person. The aforesaid facts reveal that the Assessing Officer, while initiating proceedings under section 153C of the Act was himself not sure, whether the seized documents belong/pertain to the assessee or Sh. Uday Shankar Awasthi and whether such documents would have a direct bearing on the income of either the assessee or Sh. Uday Shankar Awasthi. Since, the Assessing Officer was ambivalent as to whether the seized materials belong/pertain to the assessee or Sh. Uday Shankar Awasthi, he was not certain whether such information/document would have a direct bearing on the income of either the assessee or Sh. Uday Shankar Awasthi. That is why, the Assessing Officer has stated that such information/documents 'MAY' (emphasis by us) have a bearing on the income of the assessee or Sh. Uday Shankar Awasthi. In fact, such uncertainty in the mind of the Assessing Officer has percolated into the assessment proceedings and while framing assessment under section 153C of the Act in case of the assessee, as, he was doubtful as to whether the assessee is the real beneficiary of the alleged commission income found from the information/documents seized from Sh. Raj....
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....essment under section 153C read with section 143(3) of the Act. It is the say of the assessee that though the Assessing Officer can initiate proceedings in case of non-searched person under section 153C of the Act, however, he has to pass the assessment order under section 153A read with section 153C of the Act. 38. In the context of these submissions of assessee, on perusal of the satisfaction note recorded under section 153C of the Act, the notice issued under section 153C of the Act and the final assessment order, we have noted that the Assessing Officer has nowhere referred to section 153A of the Act. After carefully considering the submissions of learned counsel for the assessee, we find some merit in them. On a conjoint reading of section 153A, 153C and 153D of the Act, it becomes clear that in case of non-searched persons, the Assessing Officer has to initiate assessment proceedings under section 153C of the Act. However, after initiating the proceedings, he has to assess or reassess the income of the non-searched person in accordance with the provisions of section 153A of the Act. While considering somewhat similar issue, the Hon'ble Delhi High Court in case of Indian Na....
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....n not searched to the AO of the non-searched person who thereafter conducts his proceedings under same-of the Act. I.T.A.No. 612/Mum/2020 Mr. Nilesh Bharani procedure, i.e., the AO of the said assessee verifies it from the information on his record, determines its character, whether incriminating or not and being an escaped income, then records satisfaction by way of a note u/s 153C of the Act, issues a notice u/s 153C to file a return of income for reassessment, then he makes an assessment / reassessment of such income u/s 153A of the Act. ....................................................................................... 85. Further, it is also not disputed that as per the order of the CIT (A) in this case, the Revenue came in possession of the said information in some searches carried out by the Investigation Unit on the brokers / operators of the listed scrip DB International (Stockbrokers) Ltd. Further, as noted by AO in his reasons recorded in para 2 of reasons that, this information surfaced from the search of M/s Evergreen Enterprises, so all the more it was an information pertaining to the assessee found during the course of search of a person covered....
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.... as is compulsorily for the assessee searched till 31/03/2021, even for the searches conducted prior to 01/06/2015 where the AO of the person not searched receives the alleged incriminating information after 31/5/2015. 88. However, in the case of a person not searched, the AO is permitted to issue the said notice u/s 153C r.w.s. 153A of the Act, only for the assessment year for which any definite incriminating information was found during the course of search for any of the preceding 6 assessment years. But for the extended 4 relevant assessment years therein, the said notice u/s 153C of the Act can be issued only when the incriminating material points escapement of income backed by an undisclosed asset of Rs 50 lakh and above and the said incriminating may not be the seized material in physical form belonging / pertaining to the assessee not searched. 89. Further, since the section 153C of the Act begins with a non- obstante wording overriding the application of the sections 147/148/149/151 of the Act, the AO is legally bound to take recourse to section 153C of the Act only in case of receipt of any information about any undisclosed income in any material found/ ....
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....information only. Whereas, in the proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other amounts also if any information about those is on his record over and above the alleged escaped income as per the reasons recorded. The purpose of restriction of assessment for amount of income by taking recourse to the provisions u/s 153C of the Act to alleged incriminating material and not on suspicion has been upheld by the Hon‟ble Supreme Court in the case of Sinhgad Technical Education Society (supra). 92. Accordingly, we hold that any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initiated u/s 148 of the Act in respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio as the same c....