TaxTMI 
TaxTMI 
2025 (7) TMI 1050
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....7 in case of Chitra Narendra Parmar as the lead 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. 30,01,0....
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....e Nos.10 to 14 of Bundle No.55 from the residential 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....
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.... cost of the flat, amount received in cheque and cash and the outstanding amount. iv. Further a hand written note was also found and seized Bundle of the Panchanama in the case of Shri Yuvaraj Sitaram Dhamale, 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 s....
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....s combined order for ITA Nos.898 to 905/PUN/2022 in the case of (a) Bharat M. Jain and others. However, the same is distinguishable on facts as the seized documents in the instant case are not only recovered from the employees' residential premises but also from Shri Yuvraj Dhamale's premises. Hence, the presumption u/s 132(4A) is available 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....
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....g bearing on his income and therefore, the AO had correctly assumed jurisdiction by issue of notice u/s 153C of the Act and made the assessment u/s 153C of the Act. As discussed above, the AO made addition in the case of the appellant on the basis of the incriminating material found during the course of search and therefore, the assumption of jurisdiction as well as addition made by 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.....
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....earned AO of Appellant, recorded common "satisfaction" on 21/4/2021 for multiple years after receiving alleged incriminating material Appellant contends that, such combined recording of "satisfaction" for multiple years is contrary to law, as so held in following cases- A) DCIT v. Sunil Kumar Sharma 469 ITR 271 (SC) B) Rajendra Rameshlal Gugale v. PCIT-ITA No.1676/Pune/2024 (Pune ITAT) Appellant contends that considering ratio of various courts 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, Cen....
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....iction is so assumed by the Settlement Commission, as a sequel, the jurisdiction of the Assessing Officer is suspended. 16. He submitted that the DCIT, Central Circle 2(3), Pune vide satisfaction note dated 11.11.2020 has recorded a satisfaction that some of the alleged incriminating material relates to the assessee Mrs. Chitra Parmar. He submitted that as per clear wording of section 153C of the Act, it is only the Assessing Officer who holds jurisdiction over the searched person can record a satisfaction 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 absenc....
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....lusive jurisdiction to deal with matter relating to violation of section 269ST also. 22. Referring to the decision of Hon'ble Delhi High Court in the case of Gupta Perfumers (P.) Ltd. vs. ITSC (2012) 348 ITR 86 (Del), he submitted that the Hon'ble High Court in the said decision has held that where in a settlement application certain seized papers were referred to which belonged to third persons, such seized papers can be used and utilized against such third persons. 23. He also relied on the following decisions: 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....
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....s. Anuj Bansal (2024) 466 ITR 251 (Del), he submitted that the Hon'ble High Court in the said decision has held that where ACIT granted approval under section 153D without noticing discrepancy in assessment order or search material, such a mechanical approval without application of mind would be invalid in eyes of law. 30. He submitted that when the Revenue challenged the above decision of the Hon'ble Delhi High Court, the Hon'ble Supreme Court dismissed the SLP filed by the Revenue which has been reported in (2024) 466 ITR 254 (SC). 31. 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'....
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.... case such hiatus indeed took place which is contrary to the mechanism u/s 153C. He drew the attention of the Bench to the said decision where it has been held as under: "10. The main body of Section 153C(1) of the Act and the proviso do not contemplate a hiatus between the handing over of the documents by the AO having jurisdiction over such person and receipt of the same by the AO having jurisdiction over person other than the searched person. In terms of Section 153B(1) of the Act read with third proviso to said Section, in case of the search executed during 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....
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..... The only charge was payment of alleged on-money cash payment. Therefore, the addition of Rs. 25 lakh is uncalled for. 41. The Ld. Counsel for the assessee further submitted that the second entry in the table containing Rs. 15 lakh which is captured from page 9 of Bundle No.22 seized from the residence of Mr. Gawali would show that the two top entries of Rs. 5 lakh each are very same / duplicate entries on page 18 of Bundle No.15 seized from the residence of Mr. Gawali. Thus, there is double addition of Rs. 10 lakh. Further, no opportunity of cross examination was given to the assessee which also 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) Am....
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....pproached the Settlement Commission. The Assessing Officer of the entities who have approached the Income Tax Settlement Commission and the Assessing Officer of the entities referred to in the present appeal who have approached the ITAT are the same. 47. So far as the various decisions relied on by Ld. Counsel for the assessee are concerned, the Ld. DR submitted that the issue u/s 245F must be considered keeping in mind the distinction between assessment and settlement. He submitted that these are distinct in nature. Merely because Dhamale group had approached the Settlement Commission for settlement of their cases, it cannot be said that the Assessing Officer of Dhamale group has no jurisdiction to issue notice u/s 153C of the Act on the basis of certain seized material belonging to a party other than the searched person. He submitted that Dhamale group had approached the Settlement Commission and the Settlement Commission is required to pass the order on the basis of disclosure made by Dhamale group. They have no 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 Settleme....
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....the taxing provision is ambiguous or reasonably capable of more meanings than one which is material. If the court does not think so, the fact that two different opinions have been expressed by the parties or accepted by some Tribunal or High Court by itself will not be sufficient to attract the principle of beneficiary interpretation. 51. Referring to the decision of the Hon'ble Supreme Court in the case of M/s. A.P. Electrical Equipment Corporation vs. The Tahsildar & Ors. etc. vide Civil Appeal Nos.4526-4527 of 2024, judgment dated 27.02.2025, he submitted that the Hon'ble Supreme Court in the said decision 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 respect them both and follow the decision whose facts appear more in accord with those of the case at hand. He accordingly submitted that on the issue of combined satisfaction also, assessments cannot be quashed. 52. So far as the argument 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 Office....
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....papers pertaining to or information contained in papers / documents related to the assessee Smt. Chitra Narendra Parmar were found during the course of search on 26.09.2017, issued notice u/s 153C of the Act on the basis of satisfaction note dated 11.11.2020 and 21.04.2021. We find the Assessing Officer completed the assessment making addition of Rs. 25 lakh as on-money paid for purchase of flat No.B-1004 for assessment year 2016-17 and Rs. 20 lakh for assessment year 2017-18. We find the Ld. CIT(A) upheld the action of the Assessing Officer in making the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that 153C proceedings are not valid on account of (a) combined satisfaction note issued for different assessment years; (b) mechanical approval u/s 153D; (c) the jurisdiction does not lie with the Assessing Officer to issue notice u/s 153C in view of the admission of the settlement application filed by Dhamale group of cases by the Settlement 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 t....
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.... Narendra Parmar A. The search and seizure action u/s 132 of act was conducted in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd at the residence premise of Shri Pravin Gawali (one of Director in the company M/s Wellbuild Merchants Pvt Ltd) at 35/10, Shivajirao Kadam Nagar, Ambegaon Pathar Near Raje Chowk, Pune. During the search proceedings, several incriminating materials and documents were seized. While examining the documents and seized material at the time of finalizing the assessment in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd, it was noted that the certain documents/lose papers pertain to or the information contained in papers/documents pertains to Assessee i.e. Smt. Chitra Narendra Parmar. B. A satisfaction note was drawn by the AO during the proceedings u/s 153A in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt. Ltd that documents/papers/materials pertain to or information contained therein relates to Smt. Chitra Narendra Parmar. The details of seized documents are as below: (i) An Excel Sheet has been seized as per Bundle no 55 from the residence premise of Shri Pravin ....
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....eme Court in SLP (Civil) Diary No.21526 of 2024 vide order dated 20th August, 2024 dismissed the SLP filed by the Revenue. 61. We find following the above decision, the Co-ordinate 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 has quashed the assessment proceedings by observing as under: "8.7. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-2013 to 2018-2019, therefore, the consolidation satisfaction note being not in accordance with law, therefore, the entire assessment proceedings is liable to be quashed. We hold accordingly and quash the assessment." 62. So far as the decision of the Hon'ble Delhi High Court in the case of Indian National Congress vs. DCIT (supra) relied on by Ld. DR is concerned, we find no doubt there is a favourable decision in favour of the Revenue on the issue of combined satisfaction. However, it has been held in various decisions that when there are two views possible on an issue and there is no decision of the jurisdictional High Court on that issue, then the view which is favou....
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....ion and whether the Assessing Officer has jurisdiction to issue notice u/s 153C by recording satisfaction when the jurisdiction was ceased with the Assessing Officer has not been considered by the JCIT. A perusal of the order passed u/s 127 of the Act shows that the jurisdiction was transferred to Central Circle 2(3), Pune for a coordinated investigation with Dhamale group of cases. It is also an admitted fact that the cases of Dhamale group were concluded by the Settlement Commission u/s 245D(4) of the Act vide order dated 07.01.2021. Therefore, what type of coordinated investigation was conducted by the Assessing Officer is not understood. It is also an admitted fact that certain cheque payments have been considered as on-money cash payments for which the additions have been made. This shows that the JCIT / Addl.CIT in a mechanical manner has given the approval u/s 153D of the Act. It has been held in various decisions that the approval given u/s 153D in a mechanical manner vitiates the assessment proceedings for which the assessments have been held to be not in accordance with law and have been quashed. 65. We find the Hon'ble Delhi High Court in the case of PCIT vs. Shiv Kum....
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....ive and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A." [Emphasis supplied] 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view t....
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....er dated 28.11.2023 in SLP (C) Diary no. 44989/2023. 15. A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case....
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....ppeal concerns Assessment Year (AY) 2017-18. 6. The appellant/revenue via this appeal seeks to assail the order dated 29.04.2022 passed by the Income Tax Appellate Tribunal [in short, Tribunal"] 7. The Tribunal has via the impugned order set aside the additions made qua the income of the respondent / assessee inter alia, on the ground that there was no application of mind by the Additional Commissioner of Income Tax [In short, "ACIT"] in granting approval under Section 153D of Income Tax Act, 1961, [in short, The Act'] 8. To be noted, an assessment order was framed qua the respondent/assessee under Section 153A, read with Section 143(3) of the Act. 8.1 This order was carried in appeal by the respondent/assessee, right up till the Tribunal. 9. Insofar as the Assessing Officer (AO) was concerned, he made certain additions against the returned income. 9.1 The respondent had declared an income amounting to Rs. 87,20,580/-. However, while making the additions, strangely, the AO noted that the returned income was Rs. 11,00,460/- 10. There were two additions made by the AO. The first addition was made qua cash deposited in....
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.... of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed". [Emphasis is ours] 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal. 17. Accordingly, the appeal is closed." 67. We find when the Revenue challenged the ab....