TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1240
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....[Act] in respect of assessment years [AY] 2015-16 to 2020-21. The said notices were premised on material found during the search and seizure operations conducted on 07.04.2019 under Section 132 of the Act in the case of Moser Baer Group and other related parties. The Assessee is related to one of the Directors and Promoter of Moser Baer Group of Companies. 2. During the search proceedings conducted at 43B, Okhla Phase-III, New Delhi certain documents were found which related to purchase of lands. These documents were seized and examined. The Assessing Officer [AO], exercising jurisdiction in respect of the searched persons, recorded a Satisfaction Note on 06.07.2023 expressing his satisfaction that the information contained in the seized documents, which were mentioned in the Satisfaction Note, related to the Assessee (being a person other than the searched person). The said documents were also forwarded to the AO, exercising jurisdiction in the case of the Assessee. The AO examined the said documents as well as the Satisfaction Note dated 06.07.2023 on the very same date and recorded his satisfaction to the effect that the information contained in the documents had a bearing on t....
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....documents also enclose sale deeds in respect of the lands in question, which were executed in December, 2013. The AO also noted that seized documents contained the details of the transactions for sale and purchase of land "in December, 2013". Additionally, it is also conceded that payments in cash, as reflected in the documents, were made on various dates between 06.12.2013 to 03.01.2014. We also consider it apposite to reproduce Paragraph 3.2 of the Satisfaction Note which sets out the details of the payments made in cash. The same is set out below: "3.2 It is seen from the above documents that the details of payments through banking channels available in the sheets i.e., pages No. 87 to 92 of Annexure A-1 seized from 438, Okhla Phase-III, New Delhi are exactly matching with the details of payments made through banking channels mentioned in the copy of sale deeds seized from the same premise. With respect to Land No. 1, Page numbers 92, 84 and 81 of the seized records are relevant and interconnected. The details of payment made through banking channels are exactly matching with the details of payments made through banking channels mentioned in the sale deed. Similarly in the c....
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.... is fit case for initiating proceedings u/s 153C of the Income Tax Act, 1961 for the AY 2014-15 to 2020-21." 6. It is important to note that the impugned notices are premised on the singular satisfaction note as referred to above. It is also clear from the contents of the satisfaction note that there is no material, which has any bearing on the income of the Assessee for the AYs 2015-16 to 2020-21. Assuming that the allegations as noted in the satisfaction note to the effect that the consideration of certain immovable properties purchased in the name of the Assessee's wife, were paid partly in cash, is correct; the same does not provide any ground to assume that the income chargeable to tax during the AYs 2015-16 to 2020-21 had escaped assessment. 7. The immoveable properties were purchased in the name of the Assessee's wife. However, it is not necessary to examine whether the purchase of the properties in the name of the Assessee's wife could have a bearing on the income of the Assessee. This is because, in any view of the matter, the said transaction has no bearing on the income chargeable to tax during the AYs 2015-16 to 2020-21. As noted above, the alleged payments in cash we....
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....risdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153-C of the Act, incriminating material which was seized had to pertain to the assessment years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement under Section 153-C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153-C of the Act. Para 9 of the order of the ITAT reveals that ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imp....
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....ncome of the assessee even where no incriminating material have been found during the course of the search. We consider it apposite to set out the following extract from the said decision: "26. In Kabul Chawla [CIT v. Kabul Chawla, 2015 SCC OnLine Del 11555 : (2016) 380 ITR 573], the Delhi High Court, while considering the very issue and on interpretation of Section 153-A of the 1961 Act, has summarised the legal position as under: (SCC OnLine Del para 38) "Summary of the legal position 38. On a conspectus of Section 153-A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under Section 132 of the Act, notice under Section 153-A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. (iii) The AO will exercise normal assessment ....
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....ny incriminating material, no addition can be made by the AO and the AO has no jurisdiction to reopen the completed assessment. In paras 15 and 16, it is held as under : (Saumya Construction case [CIT v. Saumya Construction (P) Ltd., 2016 SCC OnLine Guj 9976 : (2016) 387 ITR 529], SCC OnLine Guj) "15. On a plain reading of Section 153-A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under Section 132 or a requisition under Section 132-A of the Act. Once a search or requisition is made, a mandate is cast upon the assessing officer to issue notice under Section 153-A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under Section 153-A of the Act is linked with search and requisition under Sections 132 and 132-A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the s....
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....ment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition viz. incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of Section 153-A of the Act, in every case where there is a search or requisition, the assessing officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in Jai Steel (India) v. CIT [Jai Steel (India) v. CIT, 2013 SCC OnLine Raj 1939], the earlier assessment would have to be reiterated. In case where pending assessments have abated, the assessing officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income....
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....annot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153-A/153-C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. *** *** *** 34. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153-A of the Act is linked with the search and requisition under Sections 132 and 132-A of the Act. The object of Section 153-A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six....
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.... 431 : 2019 SCC OnLine Del 11148], [CIT v. Dhananjay International Ltd., 2019 SCC OnLine Bom 13405], [CIT v. Best Infrastructure (India) (P) Ltd., 2017 SCC OnLine Del 13053], [CIT v. Caprihans (India) Ltd., 2019 SCC OnLine Bom 13406], [ARN Infrastructure (India) Ltd. v. CIT, (2017) 394 ITR 569 : 2017 SCC OnLine Del 8081] by the High Court. However, Shri N. Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in CIT v. Abhisar Buildwell (P) Ltd. [CIT v. Abhisar Buildwell (P) Ltd., (2024) 2 SCC 433], more particularly, paras 33 and 35, has prayed to observe that the Revenue may be permitted to initiate reassessment proceedings under Sections 147/148 of the Act as in the aforesaid decision, the powers of the reassessment of the Revenue even in case of the block assessment under Section 153-A of the Act have been saved. 2. As observed hereinabove, as no incriminating material was found in case of any of the assessees either from the assessee or from the third party and the assessments were under Section 153-C of the Act, the High Court has rightly set aside the assessment order(s). Theref....
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.... concluded assessments cannot be interfered with mechanically and solely for the reason that a document belonging to the assessee, which has no bearing on the assessments of the assessee for the years preceding the search, was seized from the possession of the searched persons. *** *** *** 36. The decision in SSP Aviation (supra) cannot be understood to mean that the Assessing Officer has the jurisdiction to make a reassessment in every case, where seized assets or documents are handed over to the Assessing Officer. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the Assessing Officer after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the Assessing Officer to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an assessee before commencing an enquiry under section 153C of the Act, it would be im....
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....on is concerned. 49. That takes us to the principal question and which pertains to the nature of the incriminating material that may be obtained and the years forming part of the block which would merit being thrown open. Regard must be had to the fact that while Section 153C enables and empowers the jurisdictional AO to commence assessment or reassessment for a block of six AYs' or the "relevant assessment year", that action is founded on satisfaction being reached that the books of accounts, documents or assets seized "have a bearing on the determination of the total income of such other person". We in this regard bear in mind the well settled distinction which the law recognizes between the existence of power and the exercise thereof. Section 153C enables and empowers the jurisdictional AO to assess or reassess the six AYs' or the "relevant assessment year". The Act thus sanctions and confers an authority upon the AO to exercise the power placed in its hands for up to a maximum of ten AYs'. Despite the conferral of that power, the question which would remain is whether the facts and circumstances of a particular case warrant or justify the invocation of that power. It is the a....
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....frastructure and which annulled an action aimed at reopening assessments for years to which the incriminating document which was found did not relate. 53. Sinhgad Technical Education Society also constitutes a binding precedent in respect of the aforesaid proposition as would be evident from the Supreme Court noticing that the material disclosed pertained only to AY 2004-05 or thereafter and that consequently the Section 153C action initiated for AYs' 2000-01 to 2003-04 would not sustain. It was this position in law as enunciated in that decision which came to be reiterated by our Court in Index Securities. 54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to first....
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....f power, or to put it differently, one which is uninformed by a consideration of the factors indicated above. 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to "necessarily" be reopened under Section 153C and that those assessments are not liable to be revised unless the material obtained have a bearing on the determination of the total income. This aspect was again emphasised in para 38 of RRJ Securities with the Court laying stress on the existence of material that may be reflective of undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income for a particular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice to furnish ROIs' for the six AYs' or the "relevant assessment year". All that the two provisions mandate is that notwithstanding the submission of those ROIs', the AO would frame one assessment ....
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....g of the Satisfaction Note drawn by the jurisdictional AO of the assessee in W.P. (C) 1459/2024, after noticing the material which was recovered during the search and related to FYs' 2009-10, 2010-11 and 2011-12 [corresponding AYs' thus being AYs' 2010-11, 2011-12 and 2012-13], it has proceeded to observe that the assessments which were liable to abate or be reopened would be AYs' 2010-11 to 2020-21. A similar note appears in W.P. (C)1117/2024. Here again, after referring to the material pertaining to FY 2009-10 [and thus relating to AY 2010-11], the AO proceeded to seek approval for initiating action under Section 153C in respect of AYs' 2010-11 up to 2020-21. 61. A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs' appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the "relevant assessment year" as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. ....
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.... qualified with the condition that it must have a bearing on the income of the non-searched person. He contended that therefore, there was no requirement that the information contained in the seized material which relates to a non-searched person should have a bearing on his income for the AO to assume the jurisdiction under Section 153C of the Act. 18. It is relevant to refer to Sub-section (1) of Section 153C of the Act. The same is set out below: "153C. Assessment of income of any other person. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (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, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed agai....