TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1420
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....he condonation petition, we are inclined to condone the delay and admit the appeal of the assessee for adjudication. 3. The first identical issue involved in this appeal is challenging the validity of assumption of jurisdiction under section 153C of the Act by the Learned AO. Since this goes to the root of the matter, we deem it fit and appropriate to address the same. 4. We have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2015-16 was filed by the assessee company on 29-09-2015 declaring total income of Rs. 78,540/ -. Notice under Section 153C of the Act stood issued to the assessee on 18-03-2021. Return was filed pursuant to the notice under Section 153C of the Act on 18-03-2021 and a letter intimating the Learned AO with filing of return and requesting for reason for the instant assessment proceeding being undertaken was duly submitted. Subsequently, the Learned AO vide copy of Performa for recording satisfaction intimated that a search and seizure operation under Section 132 of the Act was conducted in one Jindal Bullion Limited (JBL) Group and in the course of the said operation, some digital data....
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....red in the course of assessment by the Learned AO. It was submitted before the Learned CITA that this inaction on the part of the Learned AO clearly demonstrates that the department has no instrument whatsoever to link the alleged transactions with the assessee herein. Accordingly, it was submitted that no incriminating document with respect to the assessee was seized from the premises of the JBL group and as such, the proceedings initiated under Section 153C of the Act is arbitrary, illegal and bad in law. The assessee submitted that the order passed in pursuance of the said notice need to be quashed. 5. For the sake of convenience, the satisfaction note recorded by the Learned AO of the searched person is reproduced below :- Office of the Dy. Commissioner of Income tax, Central Circle-7, Delhi PERFORMA FOR RECORDING OF SATISFACTION ABOUT SEIZED ASSETS BELONGING/PERTAINS/RELATES TO PERSON OTHER THAN THE PERSONS SEARCHED (To be filled by the Assessing Officer of searched assessee) 1 Name of the group, if any, searched Jindal Bullion Ltd 2 Name of the assessee in whose case assets (money, bullion, jewellery or other valuable article or thing) or papers (bo....
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.... channels are reflected in the Tally books of accounts of JBL whereas the cash transactions are not reflected in the same. The returns of income have been filed by JBL on the basis of books of accounts maintained on Tally software. A comparison of the two accounts data viz. the one maintained in seized Johri-Hazir software and the one maintained in Tally software, rev :als a number of discrepancies between the two sets of accounting data pertaining to JBL: i Most of the ledger accounts maintained in HazirJohri software are in code names and a relation was established between the ledger account of the actual entity which was found in the tally accounts and the ledger account of the same entity as per Hazir-Johri accounts. ii. The identification of the said Hazir accounts has been done on the basis of a number of criteria like of statements given by Shri Parul Ahluwalia, Kusharg Jindal Directors of JBL and also on the basis of banking transactions appearing in the Hajir Ledger accounts, details filed during the course of the assessment proceedings, field enquiries made by the Investigation Wing and names as actually recorded i.e., without codes. ii....
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....receipt of documents : 05.03.2021 Satisfaction Note for issuing notice u/s 153C of the I.T Act: A search and seizure operation u/s 132 of the I.T.Act, 1961 was conducted in the Jindal Bullion Ltd (JBL) Group on 05.01.2017. During the course of the search, Digital data maintained in a software called Hazir Johri, was seized at the residential cum business premises of Sh Kusharg Jindal (promoter and director of JBL) at Plot No.25, Vaishali Enclave, Pitampura, Delhi, in a dongle (Seized as Annexure A-25, Party No JKR vide Panchnama dated 08.01.2017). Assessment proceedings u/s 143(3)/153A have been completed in the case of the searched person in December, 2019. Analysis of the seized Hazir Johri software revealed Ledger account(s) with code name(s) '01sd ji & SHARD JI TRADING'. This Ledger account has been identified to pertain to M/s/Sh/Smt SRS Panchrattan Diamonds P. Ltd. 1244, Kucha Mahajani, Chandni Chowk, Delhi PAN AAJCS8125N (other person) as per the satisfaction note of DCIT, CC-7, New Delhi (AO of searched person) forwarded to this office for action u/s 153C. I have gone through the satisfaction note of AO of searched person and also the ledg....
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....d for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant/Revenue." 7. It is pertinent to note that the Special Leave Petition (SLP) preferred by the revenue against this order had been dismissed by the Hon'ble Supreme Court which is reported in 165 taxmann.com 846 (SC) by observing as under:- "ORDER 1. Delay condoned. 2. Heard the learned Senior Counsel appearing for the appellants. 3. We are not inclined to interfere with the impugned judgment and order passed by the High Court of Karnataka at Bengaluru in Writ Appeal No. 831/2022 (T-IT) dated 22-01-2024/ Deputy Commissioner of Income-tax v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) . 4. The Special Leave Petition is dismissed. 5. Pending application(s), if any, shall stand disposed of. 8. The Learned DR before us vehemently relied on the decision of the Hon'ble Jurisdictional High Court in the case of Indian National Congress vs DCIT reported in 463 ITR 431 (Del) dated 22-03-2024 w....
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....receding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with....
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....elevant 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 conferred pre- eminence. Therefore, and unless the AO is satisfied that the material gathered could potentially impact the determination of total income, it would be unjustified in mechanically reopening or assessing all over again all the ten AYs' that could possibly form part of the block of ten years. 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....
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....e 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. 60. Before concluding, we also deem it imperative to briefly notice certain aspects which emerge from a reading of the Satisfaction Notes themselves. As is manifest from a reading 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.....
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....l pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the "relevant assessment year". 64. In our considered view, abatement of the six AYs' or the "relevant assessment year" under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material r....