TaxTMI 
TaxTMI 
2024 (9) TMI 1772
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.... 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/fertilizer products are procured by them a....
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....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. Singh in the fertilizer trade sector in India. He obse....
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....mmission 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 of the assessee. Whereas, it has to be made on substant....
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....egorically 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 per the AO, the alleged incriminating information was only for the 7 AYs and even otherwise the AO could not assume jurisdiction for any....
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....'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 Act, sent by the AO of Rajiv Saxena being the DCIT, Central Circle-20, New Delhi and not of Jains being the AO of the assessee also being the DCIT, Central Circle-1, New Delhi. The AO has placed his reliance in the ....
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....ion 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 8. Further, no addition u/s 69A of the Act could be made as the said section is not applicable here. The AO has also incorrectly applied the provisions of the section 69A of the Act which are applicable only if and if, any undis....
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....(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 under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years. Provided that....
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....roceed 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 section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: .......................................... (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Asse....
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....ficer 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 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 the sections 153A to 153D are non-obstante provisions brought into the statute for the specific purpose of assessments in consequence to an income-tax search. Had it been not so, then the pro....
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....f 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 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 f....
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....f 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 procedures of assessment / reassessment in pursuance to an income-tax search where incriminating material was found which was earlier provided u/s 148 of the Act for issuing a notice of any escaped income. All such assessment/ reassessment procedures for the assessment, in pursuance to an incometax search, were excluded and thereafter mandated u/s 153A to 153D of the Act. 17. It is also stated that the section 153C of the Act is nowhere mentioned in the section 246A of the Act against which an appeal can be filed to the CIT(A) and therefore, is not....
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...., 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 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 having jurisdiction over such other person 21. Thus, it is clear that the legislature, in an unambiguous language, has mandated that firstly the AO of the person searched must be satisfied that the alleged incriminating information relates to a person (specific person by name) other than the person searched. Thus, it is clear that the first s....
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....essee, 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 the two persons. 25. The concluding paragraph in both the cases are identical as reproduced below: Mentioned in the satisfaction note of the assessee Amol Awasthi "17. After careful analysis of seized documents and provisions of section 153C of the Act, I am satisfied that the above documents relates to Sh. Amol Awasthi who is assessed with DCIT, CC-01, New Delhi and may have a bearing on his Income. Therefore, I am satisfied that Sh. Amol Awasthi is covered under Section 153C of the Income Tax Act, 1961. Accordingly, notices u/s 153C of the L.T.Act, 1961 are issued for AYs 2010-11 to AY 2020-21." Mentioned in the satisfacti....
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....n 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 a surprise and then seized during a search on another person and this proposition has been upheld by the Hon'ble Supreme Court in DCIT v U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC) and PCIT v Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC). It is also submitted that without first determining what was seized/its nature if at all and how was it incriminating to the assessee, the impugned additions have been made on surmises. 30. The DRP also admitted in para (g) page 6 of its directive order the contention of the appellant that a search operation conducted has a surprise element and then a long story has been mentioned therein. Here, the Revenue miserably failed....
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....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 facts. Factually, nothing was found during the search on Saxena. However, the alleged information / evidence found rather handed over by Rajiv Saxena to the revenue officer clearly showed invoices raised by Rajiv Saxena's different companies on Uralkali Gibraltar who had never supplied any material to Indian Potash Ltd (IPL). The MoP (rock potash fertilizer) was supplied by Uralkali, Russia to IPL and the said companies are two independent companies in two independent countries. 32. In para (b) page 8 of the order of the DRP, it has been alleged that some unaccounted commission was due to illegal involvement of Mr Udai Shanker Awasthi, though not admitted otherwise also, then how could it become income ....
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....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 was also launched other connected persons, Sanjay Jain & others. During recording of statements, the data which had been given by Rajiv Saxena prior to the search operation, was recovered from 2 laptops during the search operation, which not only authenticated the information before the department but also gave it a more complete form. Therefore, the fact of the matter is that not only data was submitted by Rajiv Saxena before the department, it was also recovered during search operation and many search operations emanated from the data recovered from the said laptops. Prior to the search operation, during search operation, in post search enquiries, during assessment proceeding, from the data called from other countries throug....
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....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 officers never stated in any question therein that we have found or some similar words but were always demanding to provide the information and very importantly not a reply. Further, Saxena categorically stated that he had collected the same from his Dubai office in the last 2-3 days as far as possible, reference Answer 33,35.36.37. Answer to Question 64 was" I am providing some of the details which have been obtained and the same have been seized... 38. The Table on para 45 page 31 of the Assessment order- serial numbers 10 to 13 'to be identified' and serial numbers 53 to 55. 57, 60 to 61 on subsequent pages with narration 'details awaited' leaves not an iota of doubt that the entire seizure cum production was a drama enact....
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....t 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 reference to Bafna Textiles [1975] 98 ITR 1 (Karnataka) 7 G.M. Agadi (1973) 2 MysLJ, 1973 32 STC 243 Kar. No addition in the hands of a Non-resident under the Act alleging income received overseas 42. The assessee undisputedly is a Non-Resident under the Income-tax Act for the last 20 years and thus, cannot at all be assessed in respect of his alleged overseas income though the said income is not at all admitted as per the revenue who has just presumed the same to be his income earned with his business connection in India though no evidence has been brought on record. Merely, the father of the assessee has been Managing Director of IFFCO who also did not purchase any rock MoP from Uralkali Russia, is no reason to presume the same. Thus, the assessee cannot be assess....
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....hat 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 2015-TIOL-2063ITAT-MUM approved by the Bombay High Court in 2019- TIOL-464-HC-MUM-IT. 47. Thus, the impugned assessment order passed u/ss 153C/144C/143(3) of the Act must be quashed as illegal and void ab initio." 11. Propositions put forward by learned counsel for the assessee can be summarized as under: Proposition 1 - The initiation of proceedings and completion of assessment under Section 153C of the Act is void ab initio as the AO had powers to initiate the proceedings under Section 153C of the Act for a block of 10 assessment years prior to the Financial Year 2021-22 corresponding to A.Y. 2022-23. Therefore, initiation of proceedings and completion of assessment under Section 153C of the Act for A.Y. 2011-12 and A.Y. 2012-13 are void ab initio. The decision relied upon in the case of PCIT vs. Ojjus ....
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....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 to 153D are overriding provision starting with non obstante clause brought to the statute for a specific purpose for assessment in consequence to search and seizure operation. He submitted that when the registration in his wisdom has mandatorily provided for assessment under Section 153A of the Act, the AO should have completed the assessment under the said provision and not under Section 153C of the Act. In this context, he relied upon the following decisions: * Kanwar Singh Saini vs. High Court of Delhi (2012) 4 SCC 307 * PCIT vs. S.S. Con Build Pvt. Ltd., 2022-TIOL-656HC-DEL-IT * CIT vs. Sinhgad Technical Education Society, 2017TIOL-309-SC-IT; * Ashok Chaddha vs. ITO, (2012) 20 taxmann.com 387 (Del) Proposition 5 - Based on same material satisfaction note could not have been recorded in respect of two differen....
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....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 document, the Assessing Officer can initiate proceedings under section 153C of the Act in respect of more than one persons. In support of such contention, he relied upon the decision of the Hon'ble Gujarat High Court in case of Bhagwandas Rupchand Parwani Vs. ACIT, [2024] 160 taxmann.com 7(Gujarat). He submitted, section 153C also does not require recording of separate satisfaction note for each assessment year, for which, proceedings under section 153C were initiated. He submitted, a composite satisfaction note can be recorded referring to the details of materials gathered in course of search pertaining to assessment year forming part of block as a whole. For such proposition, he relied upon a decision of Hon'ble Delhi High Court in case of Indian National Congress Vs. Deputy Commissioner of Income-tax, [2024] 160 taxmann.com 606 (Delhi). Opposing contention of lear....
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....lier, 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 proceedings initiated under section 153C of the Act against the assessee is the satisfaction note recorded by the Assessing Officer of searched person, Sh. Rajiv Saxena. This is so because, though, the Assessing Officer has also referred to a search and seizure operation conducted in case of Alankit group, however, the satisfaction note based on which proceedings under section 153C were initiated against the assessee, do not refer to any incriminating/seized materials found in the said search and seizure operation. On a reading of the satisfaction note recorded in case of searched person, namely, Sh. Rajiv Saxena, it is observed that it was recorded by the Assessing Officer on 23.09.2021. Through this satisfaction note, the Assessing Officer of the searched person, viz., Sh. Rajiv Saxena, sent the seized materials to the Assessing Officer of the assessee. 17. After re....
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....eceived 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 2022-23. Therefore, the relevant assessment year for the purpose of computing 10 year block has to be reckoned from assessment year 2022-23 till assessment year 2013-14. In other words, the block of 10 assessment years for the purpose of section 153C would be assessment years 2013-14 to 2022-23. Hence, the Assessing Officer could have assumed jurisdiction under section 153C of the Act for the aforesaid block of 10 assessment years and not beyond that. Whereas, in the facts of the present appeals, the Assessing Officer has gone beyond the block of 10 assessment years and instituted proceedings under section 153C of the Act in respect of assessment years 2011-12 and 2012-13, as well. This, in our view, is against the statutory mandate. 20. While considering identical issue in case of PCIT vs. Ojjus Medicare Pvt. Ltd. & Ors. [2024] 161 taxmann.com 160 (Delhi), the Hon'ble Jur....
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....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 at AY 2016-17. 88. Section 153A replicates the basis on which the six AYs' are to be identified and computed with the solitary distinction being that in the case of the searched person, the six AYs' are liable to be computed from the AY pertaining to the FY in which the search was conducted. The starting point for the purposes of identifying the six AYs' in the case of Section 153A would thus turn upon the year of search as opposed to the handover of material which is spoken of in the First Proviso to Section 153C. If one were to therefore assume that a search took place on a person between 01 April 2021 to 31 March 2022, the pertinent AY would become AY 2022-23 and the corresponding six AYs' would be as follows:- 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 89. Tha....
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....ourse 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 Year 2017-18 4th Year 2016-17 5th Year 2015-16 6th Year 2014-15 7th Year 2013-14 8th Year 2012-13 9th Year 2011-12 10th Year 2010-11 The case on hand pertains to AY 2009-10. It is obviously beyond the ten year outer ceiling limit prescribed by the statute. The terminal point is the tenth year calculated from the end of the assessment year relevant to the previous year in which search is conducted. The long arm of the law can go up to this terminal point and not one day beyond. When the statute is clear and admits of no ambiguity, it has to be strictly construed and there is no scope for looking to the explanatory notes appended to statute or circular issued by the department. 10. In the case on hand, the statute has prescribed one mode of computing the six years and another mode for computing the ten years. Section 153A(1)(b) states that the assessing officer shall assess or reassess the total income of six years immediately preceding the assessment year relevant to the previous year in which search is conducted. Ap....
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....relevant block of six AYs' when computed for the period of 01 April 2023 to 31 March 2024 would be the following: Computation of the sixyear block period as provided under section 153C of the Act No. of years AY 2023-24 1 AY 2022-23 2 AY 2021-22 3 AY 2020-21 4 AY 2019-20 5 AY 2018-19 6 94. Similarly, and in light of what has been held by us hereinabove, the relevant block of ten AYs' when computed for the period 01 April 2022 - 31 March 2023, and where the Satisfaction Note was drawn by the AO of the non-searched person between those two dates, would be as under:- Computation of the tenyear block period as provided under section 153C read with Section 153A of the Act No. of years AY 2023-24 1 AY 2022-23 2 AY 2021-22 3 AY 2020-21 4 AY 2019-20 5 AY 2018-19 6 AY 2017-18 7 AY 2016-17 8 AY 2015-16 9 AY 2014-15 10 95. The relevant block of ten AYs' when computed for the period 01 April 2023 - 31 March 2024, with the date of the Satisfaction Note drawn by the AO of the non-searched person falling within that period, would come to be identified as under: Computation of the tenyear block period as provided under section 153C read with ....
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....he Act is unsustainable. Hence, the assessment orders passed in consequence thereof have to be declared as void. That being the legal position, we hold that the assessment orders passed under section 153C of the Act for assessment years 2011-12 and 2012-13 are legally unsustainable, hence, quashed. 22. Having held so, we can move to the other contentions put forward by the assessee. It is the case of the assessee that the disputed additions are not based on any incriminating materials found as a result of search and seizure operation. It has further been submitted that since no undisclosed movable assets, viz., cash, bullion, jewellery, cash etc. were recovered from the possession of the assessee, no addition could have been made under section 69A of the Act based on certain book entries made by a third party, which was not found from the possession of the assessee. As found from the materials on record, initially a search and seizure operation was conducted in case of Sh. Sanjay Jain, his brother Sh. Pankaj Jain. Simultaneously, a search and seizure operation was also conducted in case of assessee's father, Sh. Uday Shankar Awasthi, which continued till 03.07.2019. Even though, t....
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....n demonstrated through cogent evidence. It is also quite surprising to note that, though, the commission income has not directly come to the assessee or credited to assessee's individual account, but, as alleged, has been credited in the bank accounts standing in the name of various entities in Dubai, however, the Assessing Officer has not made any effort to find out the real identity of the entities and their promoters. It further appears that no proceeding has been initiated against those entities, though, as per the Assessing Officer's own version, the commission income was transferred to the accounts of these entities, allegedly, controlled by the assessee. Though, the Assessing Officer has mentioned that information was received through FT &TR, however, what is the nature of such information and its relevancy with the assessee, has not been discussed by him. 26. A careful reading of the entire assessment order would reveal that the Assessing Officer has made assessment primarily relying upon the statement recorded from Sh. Rajiv Saxena and the materials furnished by him at the time of search or during post search proceeding. At this stage, it will be material to note that the....
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.... by Sh. Pankaj Jain; the second set of beneficiary is entity controlled and managed by assessee and the third set of beneficiary is entities held and controlled by Sh. Vivek Gehlot, s/o Sh. Parvinder Singh Gahlaut, MD of IPL. These observations have been made by the Assessing Officer in paragraph 51 of the assessment order. Thus, as could be seen from the aforesaid observations, the alleged commission income came directly to the entities controlled by Sh. Rajeev Saxena and thereafter, as alleged, were transferred to entities controlled by various beneficiaries. Thus, it is very much clear that even as per the statement of Sh. Rajeev Saxena, alleged commission did not come directly to the assessee. 30. The identity of the entities allegedly controlled by the assessee has not been disclosed by the Assessing Officer. Who are the promoters of those entities have not been discovered. Even, what is assessee's relationship and stake in the said entities have not been discussed at all. Though, the Assessing Officer has observed that information has been collected through FT&TR, however, what is the nature of such information and whether such information contained the details of entities, ....
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....hankar Awasthi. Insofar as the search on Alankit group is concerned, the Assessing Officer has not even recorded a satisfaction note qua the said search and seizure operation. These facts clearly reveal that no incriminating materials concerning the assessee were found in course of such search and seizure operation. Even, the assessment orders demonstrate such fact, as, while making additions, the only evidences relied upon by the Assessing Officer are the statement recorded from Sh. Rajeev Saxena and some other documents furnished by him including the so called ledger in the name of the assessee appearing in his books of account, though, no such books of account were found during the search on Sh. Rajiv Saxena. Thus, it is telltale that no direct evidence was available in the record of the Assessing Officer to establish that the assessee received commission income from Uralkali either directly or through intermediaries. 33. At this stage, it would be apposite to look into the satisfaction note recorded by the Assessing Officer of Sh. Rajiv Saxena as well as the Assessing Officer of the assessee and Sh. Uday Shankar Awasthi. On a perusal of the said satisfaction notes, it is obser....
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....submit that identical satisfaction note can be made in case of two persons. However, on careful examination we have found that the said decision refers to satisfaction notes recorded by the Assessing Officers of searched person and non searched person and not by Assessing officers of two non searched persons. 35. In fact, to put it simply, the Assessing Officer has recorded a finding of fact that the assessee is not the real owner of the income and only a pass-through entity. Thus, when the Assessing Officer was himself not sure as to whether the information/seized document reveal any of undisclosed income of the assessee and when he himself has expressed the view that the assessee is merely a pass-through entity, he could not have assumed jurisdiction under section 153C of the Act at all. Inasmuch as, proceedings under section 153C of the Act could not have been initiated for merely making protective additions. 36. Thus, in our considered opinion, the satisfaction note recorded by the Assessing Officer, while assuming jurisdiction under section 153C of the Act, is mechanical without making any inquiry or investigation and by merely relying upon the statement recorded from Sh. Ra....
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.... Satisfaction Note which has been drawn in unambiguous terms, and more particularly in paragraph 140 thereof, recites that the AO was satisfied that this was a fit case for initiating proceedings under Section 153C read with Section 153A of the Act for AY 2014-15 to AY 2020-21. There is thus an explicit reference not only to Section 153A but also to the block of ten assessment years which were proposed to be made subject matter of the impugned proceedings. The submission, therefore, that Section 153A was not invoked is untenable." 39. In case of M/s. Nilesh Bharani Vs. DCIT, ITA No. 612/Mum/2020, dated 28.03.2020, the Coordinate Bench analyzing the provisions contained under section 153C and 153A of the Act has held as under: "55. Thus, on a bare perusal of the plain language of the above explanation in respect of the amendment introduced in the section 153C of the Act w.e.f. 01/06/2015, we find that it mandates that in case any information is found during the course of any search anywhere in respect of a person not searched, then for the purpose of reassessment of income on the basis of the same, it can only be considered by taking recourse to the provisions of the section 153....
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....possession of any information, which may not be the books of account but by way of any other document pertaining to or any information contained therein relating to the assessee not searched, then the only course available with the AO of the said non-searched person is to only proceed by recording a satisfaction u/s 153C of the Act to make a reassessment of income u/s 153A of the Act even for an extended assessment year after 31/03/2017. 86. During the course of hearing of this appeal, the above facts were not at all disputed by the CIT DR, because the CIT (A) has mentioned those very explicitly in his appellate order. It has also been observed that when an amendment in the section 153C of the Act was made by the law makers therein w.e.f. 01/06/2015, changing applicability of the provisions of the said section, no simultaneous corresponding amendment in any manner was made u/s 153A of the Act. It has also been noted that whenever amendments were made in the section 153C of the Act on other occasions, then simultaneous amendments were also made u/s 153A of the Act to make applicability of the both the provisions harmonious for the period to which these two non-obstante sections a....
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.... 90. Even for the sake of argument, we do not go by the proposition that no such intimation can be passed on or given by the Investigation Unit of the income-tax department to the AO of the person not searched as the sole domain for remitting the said information to the said AO is only with the AO of the person searched as discussed above in terms of section 13(9A); but then also, if the information has otherwise been received by the AO of the person not searched from the Investigation Unit or any other AO which has come into the knowledge of the Revenue in a search conducted, then in that case, the only course available to the AO of the person not searched is to take recourse to the provisions of the section 153C of the Act for any assessment or reassessment of the said amount. Any proceedings initiated based on the said information u/s 148 of the Act cannot be held to be legal as it will be beyond the codified provisions of the law. Because, the legislature has mandated assumption of jurisdiction in such cases to assess or reassess any alleged undisclosed income found during the course of search anywhere under section 153C of the Act, by carving out non-obstante clause for applic....
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....s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C. 93. If on overall appreciation of the scheme of assessment / reassessment of income after the income-tax searches on the assessee searched and also for the persons not searched based on detection of some incriminating information during the said searches conducted upto 31/03/2021, the following legal course of action is open for the AOs, which can be summed up, in the following manner: (i) It is mandatory for the AO of the person searched to make an assessment / reassessment of income of the said assessee u/s 153A of the Act for the 6 assessment years prior to the date of search and also for the extended 4 relevant assessment years, subject to fulfillment of the prescribed conditions for the same, on the basis of an income-tax search conducted on him. (ii) However, in the assessment / reassessment orders passed within the scope of section 153A of the Act, the AO cannot consider any undisclosed income detected by way of an incriminating information pertaining / relating to the said assessee, during an income-tax search conducted in the premises of some other assessee(s), even condu....