TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1050
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....ad case. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from business / profession and "income from other sources". She filed her return of income on 15.10.2016 disclosing income of Rs. 15,61,200/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). A search and survey action u/s 132 of the Act was conducted in the Yuvraj Dhamale group of cases on 26.09.2017. During the search action, certain incriminating documents were found and seized from the various premises covered under such search action. According to the details as per page No.11 of Bundle No.55 seized from the premises of Shri Pravin Gawali, it was gathered that the assessee had booked the flat No.1004, 'B' Building in the project Rajgruhi Residency. The total cost of the said flat as per the seized documents was found to be Rs. 1,15,94,200/-. From the analysis of excel sheet at page 11 it was seen that the assessee has paid Rs. 40,01,000/- till June, 2017. As per the above seized paper the assessee had made a total cash payment of Rs. 10,00,000/- and cheque payment of Rs. 30,01,000/- for purchase of the said flat. The above f....
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.... premises of Shri Pravin Gawali belongs to him and the entries mentioned therein were maintained by his accountant Shri Umakant Kuwar as per his directions. He further explained that the entries made in these pages contain the names of customers, flat number, area, type, cost of flat, infra charges + MSEB, total cost of flat, amount received in cheque, amount received in cash, total received etc. He also stated that these sheets contain the details of customers who had booked the flats in tower A & B of Rajgruhi Residency, a project developed by M/s. Wellbuild Merchant Pvt. Ltd. at Kondhwa. 6. The Assessing Officer noted from the seized excel sheets that page No.10 of the Bundle No.55 contain the name of the assessee along with noting of the following transaction details: Flat holder name Flat area Flat no. Total cost of flat Received by cheque Received in cash Total received Total balance Chitra Parmar 1626 1004 (B Building) 1,15,94,200 30,01,000 10,00,000 40,01,000 75,93,200 7. Similarly, he noted that the noting of on-money was also found from the residential premises of Shri Umakant Kuwar. The scanned copies of the said pages were reproduced by the Assessi....
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.... Wellbuild Merchants Pvt. Ltd., wherein entries of cash receipts were made. From the hand written note it is clear that the appellant has paid Rs. 25,00,000/- in cash for the purchase of Flat during AY 2016-17 and Rs. 20,00,000/- during AY 2017-18. Sr. No. Location from where the Page Seized Bundle No Page No Amount Date Relevant A.Y. 1 Residence of Gawali B 15 P 17 10 lakh 10.07.2015 2016-17 2 Residence of Gawali B 22 P 08 P 09 Rs.15 lakh 25.01.2016 13.02.2016 2016-17 3 Residence of Umakant B 01 76 Rs.5 lakh 4.05.2016 2017-18 4 Residence of Umakant B 01 P 123 Rs.5 lakh 6.8.2016 2017-18 5 Residence of Umakant B 01 P 148 Rs.5 lakh 4.10.2016 2017-18 6 GK-01 Camp office B 05 P 15 Rs.5 lakh 11.11.2016 2017-18 v. Shri Pravin Gawli and Shri Umakant Kuwar, both being employees of Shri Yuvraj Dhamale, had accepted in the statements recorded u/s 132(4) of the Act that these seized sheets contain the details of money received on sale of flats and were maintained as per the instructions of Shri Yuvaraj Dhamale. vi. Further, the statement of Shri Yuvaraj Dhamale was also recorded U/s 132(4) of the Act, wherein he had also accepted t....
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....vailable in the instant case, The search was conducted not only on employees of Shri Yuvraj Dhamale but also at the residential business premises of Shri Yuvraj Dhamale. The documents, or information contained in the documents, found from the business premises of Shri Yuvraj Dhamale relates to the appellant. Hence, the AO had jurisdiction to make assessment of the appellant on the basis of material found at the business premises of Shri Yuvraj Dhamale as specifically provided by the provisions of section 163C of the Act. The provisions of section 153C of the Act are reproduced below for ready reference. "Assessment of income of any other person. 153C (1) Notwithstanding anything contained in section 139, section 147, section 140, section 149, section 151 and section 153, where the Assessing Officer is satisfied that- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, sei....
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....y the AO is correct. Therefore, the addition made by the AO for the concerned AY is upheld. 4.2.5 In view of the above, it is held that the appellant has made undisclosed Investment of Rs 25,00,000/- for AY 2016-17 and Rs. 20,00,000/- during AY 2017-18 in cash for purchase of flat in 'Rajgruhi Residency', a project of M/s Wellbulld Merchants Pvt. Ltd. which has been corroborated from the documents seized during search at the premises of the company and the related parties which were also accepted in the statements recorded u/s 132(4) of the Act and due taxes was paid on such undisclosed income. Therefore, the addition made by the AO of Rs. 25,00,000/- for AY 2016-17 and Rs. 20,00,000/- for AY 2017-18 are upheld and the ground no.1 of appeal taken by the appellant is dismissed. 4.2.6 Vide letter dated 10.02.2024, the appellant submitted that the Addl. CIT, Central has granted approval u/s 153D of the Act without following the mandatory procedures laid down and without applying his mind, resulting in vitiating the assessment order and this may be considered as additional ground of appeal. The appellant has tried to take technical ground without furnishing any substance, e....
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....ourts on the point, assessment u/s 153C in case of Appellant may please be overruled/cancelled. 6. Appellant contends that, jurisdiction assumed by learned AO was invalid, considering reference to Settlement Commission by Mr. Yuvraj Dhamale & M/s Wellbuild Merchants Pvt. Ltd. Appellant contends that, on 11/11/2020, learned AO was not the "Assessing Officer as referred to u/s 153C(1), of the above two persons, considering section 245F(2) of ITA, 1961, which grants exclusive jurisdiction to the Honorable Settlement Commission only Appellant further contends that, "satisfaction note" recorded on 11/11/2020 is faulty and non-est. 7. Appellant contends that, jurisdiction assumed by learned DCIT, Central Circle 2(3), Pune was invalid considering the non-transfer of alleged seized material to the jurisdictional AO of the Appellant on 11/11/2020, and other related technical aspects. 8. Appellant contends that the Learned Additional CIT Central Range-2, Pune erred in granting the approval u/s 153D of the ITA, 1961 in a mechanical manner. 12. The Learned Counsel for the assessee referring to the above additional grounds submitted that the additional grounds raised are purely legal in ....
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....tion as regards some search material pertaining to / belonging to / relating to some other person. Since the jurisdiction has now vested with the Settlement Commission, therefore, the satisfaction recorded on 11.11.2020 was bad in law. 17. Referring to the decision of Lucknow Bench of the Tribunal in the case of Krishna Sugar Corporation v. CIT reported in 16 taxmann.com 237 (Lucknow), he submitted that the Tribunal in the said decision has held that when the search matter relating to Jain Grup was before the Settlement Commission, satisfaction u/s 158BD (old provisions) recorded by the then Assessing Officer is not in accordance with law. He accordingly submitted that in absence of jurisdiction with the DCIT, Central Circle 2(3), Pune to record the satisfaction, such 153C notice is invalid. 18. Referring to the decision of Hon'ble Madras High Court in the case of Adhiprasakthi Charitable, Medical, Educational & Cultural Trust vs. DGIT (2021) 277 Taxman 355 (Mad), he submitted that the Hon'ble High Court in the said decision has held that when application under section 245C made by trust is allowed to be proceeded with Settlement Commission (ITSC), then ITSC alone would have excl....
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.... i) Income-tax Settlement Commission vs. Agson Global (P.) Ltd. (2022) 145 taxmann.com 606 (SC) ii) Agson Global (P.) Ltd. vs Income-tax Settlement Commission (2016) 380 ITR 342 (Del) 24. The Ld. Counsel for the assessee in his another plank of argument referred to the satisfaction note by the DCIT, Central Circle 2(3), Pune on 11.11.2020, copy of which is placed at pages 14 to 18 of the paper book and submitted that the Assessing Officer has passed a consolidated satisfaction note for various assessment years. 25. Referring to the decision of the Hon'ble Karnataka High Court in the case of DCIT v. Sunil Kumar Sharma reported in 159 taxmann.com 179 (Kar.), he submitted that the satisfaction u/s 153C ought to be on a year-to-year basis and absence of year-by-year satisfaction vitiates the proceedings. 26. Referring to the decision of the Coordinate Bench of the Tribunal in the case of Shri Rajendra Rameshlal Gugale vs. PCIT vide ITA No.1676/PUN/2024, for assessment year 2017-18, order dated 30.12.2024, he submitted that the Tribunal in the said decision has held that the assessment framed u/s 153C of the Act is void being not in accordance with law on account of combined sati....
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....Referring to the decision of the Hon'ble Orissa High Court in the case of ACIT v. Serajuddin & Co. (2023) 454 ITR 312 (Ori), he submitted that the Hon'ble High Court in the said decision has held that where assessment orders passed in case of assessee were totally silent about Assessing Officer having written to Additional Commissioner seeking his approval or of Additional Commissioner having granted such approval, Tribunal was correct in holding that in present cases such approval was granted mechanically without application of mind by Additional Commissioner resulting in vitiating assessment orders. 32. He submitted that the Hon'ble Supreme Court dismissed the SLP filed by the Revenue against the order of the Hon'ble Orissa High Court which has been reported in (2024) 299 Taxman 448 (SC). 33. Referring to the decision of the Pune Bench of the Tribunal in the case of SMW Ispat (P.) Ltd. vs. ACIT (2024) 112 ITR (T) 224 (Pune-Trib.), he submitted that the Tribunal in the said decision has held that approval under Section 153D is a mandatory and not procedural requirement and approving authority needs to carefully review evidence and documents before granting approval, as mecha....
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....uring the financial year commencing on or after 01.04.2019, the period of limitation for assessment or reassessment under Section 153C of the Act has been specified as twelve months from the end of financial year during which the last authorisation to search under section 132 of the Act or requisition under section 132A of the Act, was executed." 37. The Ld. Counsel for the assessee submitted that typically, the jurisdiction u/s 127 is assigned in favour of the "Central Circle" when the search / survey is initiated. As per clarification u/s 153C, the search in case of "any other person" is initiated on such a date when the incriminating material is shifted by the Assessing Officer of the searched person to the Assessing Officer holding jurisdiction on "any other person". Only when the search is so initiated, the mechanism of assigned jurisdiction u/s 127 can trigger. However, in the instant case, events have reached in a circular loop leading to a fallacy. 38. Referring to the 127 order dated 08.03.2021, he submitted that the jurisdiction was transferred to Central Circle 2(3), Pune for a coordinated investigation with Dhamale Group cases. The said 127 order also reveals that the....
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....vitiates the addition made by the Assessing Officer and sustained by the Ld. CIT(A). 42. The Ld. Counsel for the assessee filed the following table and submitted that if the addition made by the Assessing Officer is sustained by the Ld. CIT(A) is concerned, then the effective rate per square feet varies from Rs. 12,000/- to Rs. 18,500/- which is not possible at the relevant time and not even today. Calculation of Per Square Foot Rate After Considering Addition as per Assessment Order (Fantastic Rate) Date of Agreement Name Flat No. Area (Sq Ft) Amount of Addition Consideration as per Regt. ATS As per Stamp Duty As per AO AY 2016-17 AY 2017-18 AY 2018-19 Total Value Effective Rate Value Effective Rate Value Effective Rate 21/11/2015 Ramanlal Bhikulal Shah A- 1201 1155.51 46,79,500 1,02,00,000 - 1,48,79,500 65,00,000 5,625 60,32,081 5,220 2,13,79,500 18,502 24/11/2016 Adish Shantilal Solanki B- 1701 1097.84 - 67,55,000 - 67,55,000 86,00,000 7,834 60,90,820 5,548 1,53,55,000 13,987 31/08/2018 Ashok Bharati Goswami B- 1201 1021.17 10,00,000 - 5,00,000 15,00,000 1,06,71,500 ....
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....o jurisdiction to decide a case other than the settlement application filed by Dhamale group for settlement of their cases. He submitted that the powers of the Settlement Commission are brought within the context of reaching a settlement in accordance with the provisions of the Act. Therefore, merely because Dhamale group of cases had approached the Settlement Commission for settlement of their cases, there is no complete cessation of the Assessing Officer's powers upon the filing of an application to issue notice u/s 153C after following due procedure. 48. So far as the argument of the Ld. Counsel for the assessee that the Assessing Officer has passed a consolidated satisfaction note for which the assessments have to be quashed is concerned, he submitted that practicality and administrative burden has to be kept in mind. He submitted that issuing separate satisfaction notes for each assessment year especially when dealing with a single search operation that reveals material relevant to multiple years creates an undue administrative burden on the tax authorities. It is more efficient and practical to consolidate the satisfaction regarding the relevance of seized material across al....
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....ment of the Ld. Counsel for the assessee that the approval u/s 153D has been given in a mechanical manner is concerned, he submitted that the Assessing Officer interacts with the Joint Commissioner / Addl. Commissioner on a regular basis and finally when the draft orders are forwarded to the Addl. Commissioner / Joint Commissioner, he gives his approval. The approval is not given on the last day and it is a continuous process of communication between the Assessing Officer and the Range Head. Therefore, the argument of the Ld. Counsel for the assessee does not have much weight and has to be rejected. 53. Referring to the decision of the Hon'ble Supreme Court in the case of Income-tax Settlement Commission vs. Agson Global (P.) Ltd. (2022) 145 taxmann.com 606 (SC), the Ld. DR submitted that the Hon'ble Supreme Court has dismissed the SLP filed against order of High Court where it was held that Settlement Commission does not have power to direct a special audit under section 142(2A) in course of settlement proceedings under Chapter XIX-A. 54. Referring to the decision of the Hon'ble Supreme Court in the case of Super Malls (P.) Ltd. vs. PCIT (2020) 423 ITR 281 (SC), the ....
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....nt Commission and (d) non handing over of the seized material by the Assessing Officer of the searched party, who was waiting for jurisdiction to be transferred to him in the case of the assessee. Even on merit also, his submission is that the addition is not required since the Assessing Officer has held the cheque payments as on-money paid in cash and there are additions of the same amount which amounts to double addition. 57. A perusal of the first satisfaction note issued by the Assessing Officer dated 11.11.2020, copy of which is placed at pages 62 to 65 of the paper book shows that the Assessing Officer at para 4 has recorded as under: "Satisfaction of the Assessing Officer of the person referred to in section 153A that the seized material referred to in Sr. No.5 pertains to the person referred to in Serial No.4. 1. A search and seizure u/s 132 of Income-tax Act, 1961 was conducted on 26/09/2017 and subsequent dates in the case of Yuvraj Dhamale Group, engaged in real estate business. 2. The search and seizure action u/s 132 of act was also conducted in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd at residential premise of Shri Pravin Gawali a....
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.... residence premise of Shri Pravin Gawali, mainly containing the details of flat holder, flat area, cheque and cash amount paid for booking of flat in the project Rajgruhi Residency (proejct developed by company M/s Wellbuild Merchants Pvt Ltd). As per entry on page no 11 of said Excel Sheet, Smt. Chitra Narendra Parmar has booked flat in 'B' building in the project 'Rajgruhi Residency' for which he has made cash payment of Rs. 10,00,000/-. C. On examination of the seized material and the facts of the case, I am satisfied that entries on page page no 11 of Bundle no 55 seized from residence premise of Shri Pravin Gawali at 35/10, Shivajirao Kadam Nagar, Ambegaon Pathar Near Raje Chowk, Pune relates to Assessee and it has a bearing on determination of total income in case of Assessee for six assessment years immediately preceding the AY 2018-19 and for AY 2018-19. Hence, in view of the provision of section 153C of the Income Tax Act, 1961, it is necessary to initiate proceedings u/s 153C rws 153A of the Income Tax Act, 1961 for A.Yrs 2012-13 to A.Y. 2018-19. (emphasis supplied by us) Sd/- (Swapnil Sharadrao Patil) Deputy Commissioner of Income Tax, Central Circle 2(3....
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....the Ld. DR in his written submissions has cited the decision of the Hon'ble Supreme Court in the case of CIT vs. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC) where the Hon'ble Supreme Court at page 240 has observed as under: "If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law." 63. Further, the Hon'ble Supreme Court recently in the case of M/s. A.P. Electrical Equipment Corporation vs. The Tahsildar & Ors. (supra) has held that if two decisions of this Court appear inconsistent with each other, the High Courts are not to follow one and overlook the other, but should try to reconcile and follow that decision whose facts appear more in accord with those of the case at hand. Following the above principle and considering the fact that the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue in the case of DCIT vs. Sunil Kumar Sharma (supra), therefore, we follow the decision of the Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra) and hold that the satisfaction note is required to b....
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....e learned counsels appearing on behalf of the parties and perused the record. 10. Before embarking upon the analysis of the factual scenario of the instant appeal, we deem it apposite to examine the underlying intent of the relevant provision of the Act i.e., Section 153D, which is culled out as under:- "153-D. Prior approval necessary for assessment in cases or requisition.--No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of Section 153-A] or the assessment year referred to in clause (b) of sub-section (1) of Section 153-B, except with the prior approval of the Joint Commissioner : Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] under sub-section (12) of Section 144-BA." 11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for "each as....
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....le for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for "each assessment year" for "each assessee" separately. 13. Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- "22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" ....
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.... which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessee's, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together." 17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a....
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....s, which would have taken the assessed income well beyond what was crystalised by the AO i.e. Rs. 1,65,07,560/-, the ACTT failed to notice the error. 12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. 12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: "17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind he would not have approved the draft assessment order, where the returned income of Rs. 87,20,580. Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income....