TaxTMI 
TaxTMI 
2026 (3) TMI 1106
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....es mutually agreed that the assessments framed for the Assessment Years 2011-12 and 2012-13 by the Learned AO would be outside the block period of 6 Years and in view of the decision of the Hon'ble Jurisdictional High Court in the case of PCIT vs Ojjus Medicare Pvt Ltd reported in 161 taxmann.com 160 (Del HC). Let us now see how the aforesaid decision of Hon'ble Delhi High Court would apply to the facts of the instant case before us for the Assessment Years 2011-12 and 2012-13. A search and seizure operation was carried out u/s 132 of the Act on Shri Rajeev Saxena and Shri Sanjay Jain on 30-06-2019 wherein, many incriminating documents / information were found by the Revenue based on which necessary satisfaction u/s 153C of the Act was recorded on 29-09-2021 by the Learned AO of the assessee on receipt of a satisfaction note dated 25-09-2021 from the AO of Shri Rajiv Saxena. Thereafter, notices u/s 153C r.w.s. 153A of the Act were issued to the assessee on that very date for the 10 AYs 2011-12 to 2020-21. Hence, the date of search qua the assessee herein would be the date of recording of satisfaction note by the Learned AO of the assessee which is 29-09-2021 which falls in Assessme....
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.... DR lead the arguments in all the above appeals filed by the Revenue and stated that during the course of income-tax search on Shri Rajeev Saxena and Shri Sanjay Jain on 30-06-2019, many incriminating documents / information was found by the Revenue based on which necessary satisfaction u/s 153C of the Act was recorded on 29-09-2021 by the AO of the assessee on receipt of a satisfaction note dated 25-09-2021 from the AO of Shri Rajeev Saxena. Thereafter, notices u/s 153C r.w.s. 153A of the Act were issued to the assessee on that very date for the 10 AYs 2011-12 to 2020-21. She then referred to the information copied in all the assessment orders which are identical except wherein in different amount have been assessed as escaped income in the assessment orders passed u/s 153C r.w.s. 143(3) of the Act. The assessee was the Managing Director of IFFCO, one of the premier fertilizer manufacturing entities in the country for more than past 3 decades and accordingly it was alleged that he was in a dominant position to control the prices of the raw material supplied by foreign producers to Indian market. However, during her submissions, she fairly admitted that the entire case of the Reven....
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....jay Jain were for the ultimate beneficial use of Amol Awasthy and Vivek Gahlaut as these funds were subsequently transferred to entities controlled by Amol Awasthy and Vivek Gahlaut, who were the sons of persons holding key decision-making positions in IFFCO and IPL. 7. The Learned CIT DR further stated that even another accomplice, Shri A D Singh, a partner of Shri Sanjay Jain, both being the partners of a firm which was the agent of Uralkali, Russia for the Indian market besides other countries, though denied any such involvement of Shri Awasthi (the assessee herein) initially, but later on after seeing the statement of Shri Rajeev Saxena recorded u/s 132(4) of the Act as above on 03-07-2019, accepted that said considerations were paid overseas for the benefit of the assessee through his son. Per Contra, the Learned AR immediately responded that Shri A D Singh had later denied the contents of his statement dated 3-7-2019 by retracting the same not only before the income-tax department by way of an affidavit dated 29-07-2019 but also in his cross-examination allowed by the Learned AO to the assessee on 10-01-2025 on the instructions of the Learned CIT(A) who followed the observ....
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....the assessee herein is totally flawed inasmuch as there was absolutely no incriminating material or information pertaining or relating or belonging to the assessee herein which was found during the income tax search conducted on Shri Rajeev Saxena, based on which the assessment proceedings under section 153C of the Act stood initiated on the assessee vide satisfaction note dated 29-09-2021. He vehemently submitted that materials on record received by the Assessing Officer of the assessee from the Assessing Officer of Shri Rajeev Saxena did not reflect the name of the assessee in any manner as a beneficiary of any amount. The ld AR placed reliance on the decision of Hon'ble Jurisdictional Delhi High Court in the case of Saksham Commodities vs ITO reported in 101 taxmann.com 485 (Del HC). Against this decision, the Special Leave Petition (SLP) of the revenue was dismissed by the Hon'ble Supreme Court reported in 170 taxmann.com 87 (SC). He also submitted that in the absence of any incriminating material pertaining to the assessee found in any income tax search elsewhere, no action under section 153C of the Act is permissible in the hands of the assessee for which he placed relian....
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....e son of P.S. Gahlaut who is the CEO of Indian Potash Ltd. As already stated in my statement dated 23.06.2019 that the payments from Uralkali could not be directly paid to Pankaj Jain as he was the authorized dealer for Uralkali. As can be seen from the above facts, significant part of the payments received by my group companies from Uralkali as commission for Pankaj Jain and Sanjay Jain were for the ultimate beneficial use of Amol Awasthy and Vivek Gahlaut as these funds were subsequently transferred to entities controlled by Anmol Awasthy and Vivek Gahlaut, who were the sons of persons holding key decision-making positions in IFFCO and IPL. 11. The Learned AR submitted that during the course of assessment proceedings, the Learned AO did not offer any opportunity of cross examination of Shri Rajeev Saxena to the assessee. This opportunity of cross examination was provided to the assessee at the behest of the Learned CIT(A) on 25.02.2025 wherein, the Learned AR himself cross examined Shri Rajeev Saxena on behalf of the assessee. He relied on the relevant questions posted to Shri Rajeev Saxena and answers given by Shri Rajeev Saxena therein which are as under:- "Q. 21 I ....
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....e payments made out of those funds. Please also provide details of bank accounts used for these receipts and payments. Ans. I state that I do not have this data readily available since all documents and electronic data were seized by ED, IT and CBI in search and seizure proceedings. However, I would try to locate the same and provide it to you by 18.06.2021. Q 15. Please provide transaction wise details of money received from Rare Earth Group in the entities under your control and transaction wise payments made out of those funds. Please also provide details of bank accounts used for these receipts and payments. Ans. I state that I do not have this data readily available since all documents and electronic data were seized by ED, IT and CBI in search and seizure proceedings. However, I would try to locate the same and provide it to you by 18.06.2021. " 13. The Learned AR further relied on yet another statement of Shri Rajeev Saxena recorded by Enforcement Directorate on 5-6-2021 which is enclosed in pages 258 to 260 of the Paper Book wherein, when Shri Rajeev Saxena was confronted with the documents numbering pages 1 to 131 taken out from digital device....
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.... has been clarified that the said document has been created by his staff to answer the questions by the ED. The relevant part of the statement dated 05.06.2021 reads as under: "Page 121 to 131 is a working paper created by my staff to give the details to Enforcement Directorate during the FEMA investigation as stated in my answer no.1." 79. The paper/Excel sheet which has been handed over by Rajeev Saxena to the respondent is not a document or regularly kept accounts in the course of business according to a set of rules or system in terms of Section 34 of the Evidence Act but it is simply a paper created by the staff of Rajeev Saxena for the investigating agencies. It is thus, not a contemporaneous document and the entries contained therein are prima facie not admissible." 14. The Learned AR also placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Shri Amol Awasthi Vs. DCIT in ITA Nos. 1342 to 1348/Del/2024 consisting for Assessment Years 2011-12 to 2018-19 except AY 2017-18 dated 13-09-2024 wherein identical facts were involved and the appeals of the assessee were allowed both on merits as well as on invalid assumption of ju....
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.... while framing assessment u/s 153C of the Act in case of the assessee, as, he was doubtful as to whether the assessee is the real beneficiary of the alleged commission income found from the information/documents seized from Sh. Rajeev Saxena. At this stage, we must observe, learned Departmental Representative has relied upon a judicial precedent to submit that identical satisfaction note can be made in case of two persons. However, on careful examination we have found that the said decision refers to satisfaction notes recorded by the Assessing Officers of searched person and non searched person and not by Assessing officers of two non searched persons. 35. In fact, to put it simply, the Assessing Officer has recorded a finding of fact that the assessee is not the real owner of the income and only a pass-through entity. Thus, when the Assessing Officer was himself not sure as to whether the information/seized document reveal any of undisclosed income of the assessee and when he himself has expressed the view that the assessee is merely a pass-through entity, he could not have assumed jurisdiction u/s 153C of the Act at all. Inasmuch as, proceedings u/s 153C of the Act coul....
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....h the provisions of section 153A of the Act. While considering somewhat similar issue, the Hon'ble Delhi High Court in case of Indian National Congress Vs. DCIT, [2024] 160 taxmann.com 606 (Del) has observed as under: "16. It must at the outset be noted that the Satisfaction Note which has been drawn in unambiguous terms, and more particularly in paragraph 140 thereof, recites that the AO was satisfied that this was a fit case for initiating proceedings u/s 153C read with Section 153A of the Act for AY 2014-15 to AY 2020-21. There is thus an explicit reference not only to Section 153A but also to the block of ten assessment Years which were proposed to be made subject matter of the impugned proceedings. The submission, therefore, that Section 153A was not invoked is untenable." 39. In case of M/s. Nilesh Bharani Vs. DCIT, ITA No. 612/Mum/2020, dated 28.03.2020, the Coordinate Bench analyzing the provisions contained u/s 153C and 1 53A of the Act has held as under: "55. Thus, on a bare perusal of the plain language of the above explanation in respect of the amendment introduced in the section 153C of the Act w.e.f 01/06/2015, we find that it mandates that ....
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....e Act, it is apparent that after the amendment w.e.f. 01/06/2015 therein, if the AO of the person not searched comes into possession of any information, which may not be the books of account but by way of any other document pertaining to or any information contained therein relating to the assessee not searched, then the only course available with the AO of the said non-searched person is to only proceed by recording a satisfaction u/s 153C of the Act to make a reassessment of income u/s 153A of the Act even for an extended assessment year after 31/03/2017. 86 During the course of hearing of this appeal, the above facts were not at all disputed by the CIT DR, because the CIT(A) has mentioned those very explicitly in his appellate order. It has also been observed that when an amendment in the section 153C of the Act was made by the law makers therein w.e.f. 01/06/2015, changing applicability of the provisions of the said section, no simultaneous corresponding amendment in any manner was made u/s 153A of the Act. It has also been noted that whenever amendments were made in the section 153C of the Act on other occasions, then simultaneous amendments were also made u/s 153A of....
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....sessee. This is a jurisdictional fact which needs to be strictly adhered to and any lapse on jurisdictional issue cannot validate the action. 90. Even for the sake of argument, we do not go by the proposition that no such intimation can be passed on or given by the Investigation Unit of the income-tax department to the AO of the person not searched as the sole domain for remitting the said information to the said AO is only with the AO of the person searched as discussed above in terms of section 13(9A); but then also, if the information has otherwise been received by the AO of the person not searched from the Investigation Unit or any other AO which has come into the knowledge of the Revenue in a search conducted, then in that case, the only course available to the AO of the person not searched is to take recourse to the provisions of the section 153C of the Act for any assessment or reassessment of the said amount. Any proceedings initiated based on the said information u/s 148 of the Act cannot be held to be legal as it will be beyond the codified provisions of the law. Because, the legislature has mandated assumption of jurisdiction in such cases to assess or reassess ....
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.....s. 153A of the Act. Thus, the assessment of the said amount of LTCG, which was claimed to be exempt u/s 10(38) of the Act by the assessee, made u/s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C. 93 If on overall appreciation of the scheme of assessment / reassessment of income after the income-tax searches on the assessee searched and also for the persons not searched based on detection of some incriminating information during the said searches conducted upto 31/03/2021, the following legal course of action is open for the AOs, which can be summed up, in the following manner: "(i) It is mandatory for the AO of the person searched to make an assessment / reassessment of income of the said assessee u/s 153A of the Act for the 6 assessment Years prior to the date of search and also for the extended 4 relevant assessment Years, subject to fulfillment of the prescribed conditions for the same, on the basis of an income-tax search conducted on him. (ii) However, in the assessment / reassessment orders passed within the scope of section 153A of the Act, the AO cannot consider any undisclosed income detected by way of....
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....f the assessee for various Assessment Years, admittedly does not contain the name of the assessee. The excel sheet in several places mentioned "to be identified". While this is so, it is not known how the revenue is able to attribute the transaction reported by the staff of Shri Rajeev Saxena as "to be identified" to be attributable to assessee herein. Further, it is a fact that name of the assessee's son Shri Amol Awasthi has been mentioned in the excel sheet. But the excel sheet reflects payment made by Shri Amol Awasthi to Shri Rajeev Saxena, whereas the Income Tax Department is alleging that monies have been received by Shri Amol Awasthi from Shri Rajeev Saxena on behalf of the assessee in order to make addition in the hands of the assessee. He submitted that the entire excel sheet is a dumb document which was given in person by Shri Rajeev Saxena which had no corroborative evidence in support of the allegations that the same represents commission received by Shri Amol Awasthi at the behest of assessee herein from Shri Rajeev Saxena in connection with import of goods by India Potash from Uralkali, Russia. Further, he submitted that excel sheet contains transactions prepared for....
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....el sheet cannot be construed as incriminating in nature qua the assessee as it does not belong, pertain or relate to the assessee. Accordingly, it cannot have any bearing on the determination of total income of the assessee. Hence, the very basis of assumption of jurisdiction u/s 153C of the Act qua the assessee is totally flawed. It is very strange to note that the income tax department while recording the statement u/s 132(4) of the Act from Shri Rajeev Saxena on 02-07-2019 during the course of his income tax search, had, vide Question No. 4 had put a direct question seeking details about Uralkali, Russia trading transactions. It is pertinent to note that the first three questions are very general in nature. This very question vide Q. No. 4 thereon itself goes to prove that there was absolutely no seizure of any information or any material or any document made by the Income Tax Department during the course of Income Tax Search and that the income tax department was only trying to seek clarifications from Shri Rajeev Saxena on the information already available with it in the statement recorded u/s 132(4) of the Act. Accordingly, the fact of existence of no incriminating material f....