TaxTMI 
TaxTMI 
2026 (9) TMI 484
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....er. For the sake of convenience, the facts are being referred to from assessment year 2011-12 and our findings shall apply mutatis mutandis to assessment year 2012-13 also. 2. The assessee is an individual. A search and seizure action under section 132 of the Act was conducted on 17.09.2019 in the case of Indian Logistic Group and its connected persons, including the assessee. Consequent to the said search, notice under section 153A came to be issued for the impugned assessment years. During the course of assessment proceedings, the Assessing Officer referred to certain seized documents, namely Bundle No.6/Party MN-1 and Bundle No.18/Party AB-1 for assessment year 2011-12 and Bundle No.18 for assessment year 2012-13, which according to him reflected certain cash payments allegedly made towards purchase of land. Relying upon the said seized documents, the Assessing Officer ultimately framed the assessments under section 144 read with section 153A and made additions under section 69B on account of alleged unexplained investment, amounting to Rs. 2,22,01,300/- for assessment year 2011-12 and Rs. 1,35,05,000/- for assessment year 2012-13. 3. During the course of assessment procee....
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....be correct, neither the seized material nor the assessment order establishes that such alleged cash payments culminated into acquisition of any identifiable immovable property or any other asset contemplated under Explanation 2. The additions themselves have ultimately been made under section 69B on account of alleged unexplained investment and not on the footing that any undisclosed asset exceeding the prescribed monetary threshold was found during the course of search. Thus, according to him, the Assessing Officer has completely conflated the jurisdictional requirements of the fourth proviso with the evidentiary requirements for making an addition under section 69B. 6. Elaborating his submissions, the Ld. Counsel drew our attention to the assessment order itself to submit that the assessee had furnished detailed explanations before the Investigation Wing vide replies dated 09.12.2019 and 23.12.2019, explaining the seized documents immediately after the search. During the course of assessment proceedings also, notices issued under section 142(1) merely required the assessee to explain the source of the alleged cash investment reflected in the seized documents. These proceedings....
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....lying beyond the ordinary six assessment years reckoned from the date of search, could at all be brought within the ambit of section 153A. If the assumption of jurisdiction itself is found to be contrary to the statutory mandate, then the entire superstructure erected thereon must necessarily fail, irrespective of the merits of the additions proposed by the Assessing Officer. 9. It is an undisputed factual position that the search under section 132 was conducted on 17.09.2019, falling in the previous year relevant to assessment year 2020-21. Consequently, the ordinary block of six assessment years contemplated under section 153A would extend only from assessment years 2014-15 to 2019-20. Assessment years 2011-12 and 2012-13 admittedly do not fall within the said block. Significantly, even the Assessing Officer has proceeded on this very premise. It is precisely for this reason that instead of invoking the ordinary jurisdiction under section 153A, he has sought to justify the issuance of notice by specifically referring to and reproducing the fourth proviso to section 153A together with the Explanation appended thereto. Thus, the Revenue itself accepts that these assessment years....
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....ome utilised for purchase of an asset" or "income evidenced by documents concerning an asset." The expression used is "income represented in the form of an asset." The word "represented" is neither accidental nor superfluous. It necessarily postulates that the alleged escaped income must have assumed the character of, or become embodied in, one of the specified assets enumerated in Explanation 2. Therefore, before invoking the extraordinary jurisdiction under the fourth proviso, the Assessing Officer was required to demonstrate, on the basis of cogent material available with him, not merely that certain alleged cash payments were reflected in loose papers, but that such alleged undisclosed income had in fact crystallised into or was represented by an identifiable immovable property or any other asset specifically contemplated by Explanation 2. Unless this jurisdictional fact is first established, the gateway provided by the fourth proviso cannot be crossed. 13. When we examine the assessment orders in the light of the aforesaid statutory scheme, we find a fundamental infirmity in the very assumption of jurisdiction. The Assessing Officer has undoubtedly reproduced the fourth pro....
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.... seized document may, if jurisdiction is otherwise validly assumed, furnish evidence for examining whether any unexplained investment has been made. However, the evidentiary foundation for making an addition under section 69B cannot automatically become the jurisdictional foundation for invoking the extended period under section 153A. The Assessing Officer has, in our considered opinion, impermissibly conflated these two distinct concepts. Jurisdiction must precede adjudication on merits; it cannot be derived from the very addition proposed to be made. 16. In fact, the assessment orders themselves demonstrate that the Assessing Officer never proceeded on the footing that any undisclosed asset within the meaning of Explanation 2 had been discovered during the course of search. The additions have ultimately been framed only under section 69B on account of alleged unexplained investment represented by the alleged cash component reflected in the seized documents. Thus, what has ultimately been brought to tax is the alleged unexplained investment itself and not any identified undisclosed asset exceeding the prescribed monetary threshold. This itself demonstrates the fallacy in the ju....
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...., on the same search material, the Revenue itself considered the reassessment provisions to be the appropriate statutory mechanism for assessment year 2013-14, then it is difficult to appreciate how assessment years 2011-12 and 2012-13, which are even older assessment years and equally beyond the normal six-year block, could be brought within section 153A without first satisfying the stringent jurisdictional conditions prescribed under the fourth proviso. The Revenue cannot adopt two inconsistent statutory routes on substantially the same material merely by asserting that notice under section 153A was validly issued. Once the Department itself proceeded under section 148 for assessment year 2013-14, it was incumbent upon it either to adopt the appropriate statutory mechanism for the present assessment years also, subject to limitation and other statutory safeguards, or to demonstrably establish the jurisdictional facts required under the fourth proviso. No such independent satisfaction is discernible from the assessment orders. Consequently, the very assumption of jurisdiction under section 153A for assessment years 2011-12 and 2012-13 becomes legally unsustainable. 19. Having r....
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....possession or acquisition has been established; nor has the Assessing Officer recorded any finding that the alleged escaped income stood represented in any such identified asset. In absence of these foundational jurisdictional facts, the invocation of the fourth proviso cannot be sustained. 21. Equally, we find considerable force in the contention of the assessee that the Assessing Officer has mixed up the jurisdictional requirements of the fourth proviso with the evidentiary requirements for making an addition under section 69B. The assessment orders themselves reveal that the Assessing Officer has proceeded throughout on the premise that the seized documents reflected certain unexplained cash payments and, therefore, additions were liable to be made under section 69B. The entire discussion thereafter revolves around the source and explanation of such alleged investment. Such enquiry undoubtedly pertains to the merits of the proposed additions. However, before embarking upon such enquiry, the Assessing Officer was first required to establish that the statutory jurisdiction under the fourth proviso itself stood attracted. The jurisdictional enquiry and the enquiry on merits oper....