TaxTMI 
TaxTMI 
2025 (12) TMI 1100
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....er. 3. First, we take the assessee's appeal in ITA No.3141/Del/2025 for AY 2018-19. ITA No.3141/Del/2025 [Assessment Year : 2018-19] 4. Brief facts of the case are that the assessee e-filed her return of income on 30.10.2018, declaring total income of INR 10,35,380/-. A search and seizure operation was carried out at various premises of Shri Kuldeep Bishnoi Group and its associates on 23.07.2019. Various documents/books of accounts etc. were found and seized and statements of various persons were recorded. It was found that some incriminating material found and seized contained some entries related to the assessee. Subsequently, satisfactions were recorded by AO of the searched person as well as AO of the person other than the searched person and, notice u/s. 153C was issued on 07.01.2022. In compliance to the notice issued u/s. 153C, the assessee filed return on 02.02.2022, declaring total income of INR 10,35,380/-. Thereafter, notice u/s. 143(2) alongwith detailed questionnaire was issued followed by various notices issued from time to time to the assessee. After considering the submissions made and material furnished by the assessee, the AO assessed the income of the as....
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.... to the Appellant was without any 'corroboration' is grossly incorrect and contrary to prevailing law. In this regard, it is submitted that there is no mandate of law which requires a retraction to be corroborated unlike the burden cast on the Revenue to obtain corroboration to alleged incriminating statements. Further, the impugned order ignored the significant fact that that during the course of Sh. Bishnoi's earlier statement recorded under S. 132(4) of the Act, the actual contents of the seized dairy were never confronted to him. F. Because the impugned order and the assessment order dated 30.03.2023 had grossly erred in making an addition of Rs. 10,50,000/-as unaccounted business income for the relevant period on the basis of alleged cash receipt of Rs. 15,00,000/- without recording any findings on the manner of computation of gross profit. G. Because the impugned order is contrary to settled law that additions under fiscal statutes cannot be made entirely on the basis of statements. The following judicial precedents unequivocally support the said proposition: a. Shalimar Rubber Industries v. Collector of Central excise, Cochin 2002....
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....possession of Late Shri Sukumar Poria (now deceased) containing certain entries which are appearing at page 4 of the assessment order. Ld.AR submits that as per the said documents, the entries written with "d" were treated as cash payment received by the assessee and addition was made on this account. Ld.AR submits that in the satisfaction note recorded, it is not mentioned by the AO that these documents contained the entries which "have bearing on the total income of the assessee". In the satisfaction note record, AO has observed that these documents are pertained to the assessee however, has failed to record his satisfaction as provided u/s. 153C of the Act that paper should "have bearing on the income determined of the assessee". In this regard, reliance is placed on the judgement of Hon'ble Jurisdictional High Court in the case of Saksham Commodities Ltd reported in (2024) 161 Taxmann.com 485 (Delhi) wherein the Hon'ble Court has held as under:- 48. "In terms of the Second Proviso to Section 153A, all assessment or reassessment proceedings relating to the six AYs' or the "relevant assessment year" pending on the date of search are statutorily envisaged to abate. Ab....
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....d remain is whether the facts and circumstances of a particular case warrant or justify the invocation of that power. It is the aforesaid aspect which bids us to reiterate the distinction between the existence and exercise of power. 50. What we seek to emphasise is that merely because Section 153C confers jurisdiction upon the AO to commence an exercise of assessment or reassessment for the block of years which are mentioned in that provision, the same alone would not be sufficient to justify steps in that direction being taken, unless the incriminating material so found is likely to have an impact on the total income of a particular AY forming part of the six AYs' immediately preceding the AY pertaining to the search year or for the "relevant assessment year". 51. Ultimately Section 153C is concerned with books, documents or articles seized in the course of a search and which are found to have the potential to impact or have a bearing on an assessment which may be undergoing or which may have been completed. The words "have a bearing on the determination of the total income of such other person" as appearing in Section 153C would necessarily have to be confer....
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....ssments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory co....
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....see 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 order in respect of each of the years which were made subject matter of the notice and which would deal with both disclosed and undisclosed income. This too reinforces our view that Section 153C would apply only to such AYs' where the jurisdictional AO is satisfied and has incriminating material for those AYs' and which may be concerned with disclosed and undisclosed income. 58. The aforesaid position stands further fortified from a reading of the First Proviso to Section 153A and which speaks of the power of the AO to assess or reassess the total income in respect of "each assessment year". The aforesaid phraseology stands replicated in Section 153B(1)(a) which again alludes to "each assessment year" falling within the six AYs or the "relevant assessment year". The aforesaid language is then reiterated in Section 153D and which prescribes that no order of assessment or reassessment shall be passed by an AO in respect of "each asse....
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....he 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. As explained herein above, the discovery of material likely to implicate the assessee and impact the assessment of total income for a particular AY is not intended to set off a chain reaction or have a waterfall effect on all AYs' which could form part of the "relevant assessment year". This, more so since none of the Satisfaction Notes record any reasons of how that material is likely to materially influence the computation of income for those AYs'. 62. Hypothetically speaking, it may be possible for the material recovered in the course of a search having the potential or the probability of constituting incriminating material for more than one assessment year. However, even if such a situation were assumed to arise, it would be incumbent upon the AO to duly record reasons in support of such a conclusion. The Satisfaction Notes would thus have to evidence a formation of opi....
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.... or reassessments as the case maybe. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the "relevant assessment year". It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to "have a bearing on the determination of the total income" that a notice under Section 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both the issuance of notice as well as abatement would have to necessarily be preceded by the satisfaction spoken of above being reached by the jurisdictional AO of the non-searched entity. 66. Therefore, and in our opinion, abatement of the six AYs' or the "relevant assessment year" would follow the formation of that opinion and satisfaction in that respect being reached. 67. On an overall consideration of th....
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....n the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs' years immediately preceding the assessment correlatable to the search year or the "relevant assessment year" as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above. 8. The Hon'ble Jurisdictional Delhi High Court in the case of Saksham Commodities (supra) in clear terms held that for initiation of proceedings u/s. 153C of the Act, the AO should satisfy that books of accounts or documents or assets seized or requisition must be pertained to the assessee and the entries contained therein must "have bearing on the determination of the total income of such other person". 9. As observed above, in the instant case, AO has recorded satisfaction that the entries belonged to the assessee and not pertained to the assessee and further has not recorded the satisfaction that such entries "have the bearing on the determination of the income of the assessee". Therefore, by respectfully following the judgement of Hon'ble Delhi High Court ....