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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI S. RIFAUR RAHMAN, HONBLE & MS KAVITHA RAJAGOPAL, HONBLEv. Shri Neelkant Khandelwal
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-52, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 22.05.2019 for the A.Y. 2016-17.
2. At the outset, it is noticed that the appeal of the assessee is time barred by 880 days. Before us, the Ld. Counsel filed the affidavit of the (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., Assessee explaining the reasons for condonation of delay. The averment made in the affidavit reads as under: - “1. that we came to know of the order of the CIT(A) dated 22.05.2019 for income-tax assessment year 2016-17 only on 22nd November, 2021 and the appeal to the Income-tax Appellate Tribunal is within time; 2. that if the date of receipt of the CIT(A)’s order is treated to be 22.05.2019, that is, the date of the order, then the appeal was due to be filed on 20.07.2019; 3. that the appeal is now being filed on 16th December, 2021 after a delay of 880 days. The said delay has occurred for the following reasons – a. The order dated 22.05.2019 of the CIT(A) was uploaded on the e-filing portal; however, no intimation regarding such order being uploaded was received either through e-mail or on mobile. b. Previously, the appeals before the CIT(A) were disposed of by sending the order of the CIT(A) to the appellant(s) through post and accordingly, we were under a bona fide belief that the aforesaid appeal is pending and not disposed of. c. Thereafter, in February, 2020, Covid-19 broke out and the Company started working with a skeleton staff. In March, 2020, World Health Organisation (WHO) declared the COVID-19 as pandemic disease and subsequently, nationwide lockdown was announced by the Government of India and the Government of Maharashtra; however, gradually the lockdown was eased subject to various guidelines/ restrictions imposed by the Government of India and the Government of Maharashtra. d. Thereafter, on 25th September, 2020 the Income- tax Department announced the faceless appeal scheme, wherein the appeals were to be disposed of through electronic means without any human intervention, akin to the faceless assessment scheme.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., e. Further, in the month of June 2021, the Department launched new e-filing portal; however, there were various issues/ glitches in the new portal and the Company could not trace the status of the impugned appeal pending with the CIT(A). f. Later, the office of the Company resumed in the month of August, 2021 after the second wave of COVID-19 and subject to the staff being partially or fully vaccinated. g. Thereafter, the auditors of the Company enquired regarding the appeal status for the year under reference and on checking the e-filing portal, to our surpirse, we found the order of the CIT(A) was uploaded on the e-filing portal. The impugned order was immediately sent to Messrs R.S. Khandelwal & Associates, Chartered Accountants and on their advice the appeal is being filed, though belatedly. 4. that there is absolutely no mala fide intention on the part of the Company for the aforesaid delay. No benefit would accrue to us on account of not filing of appeal within the due date.”
The Ld.AR of the assessee during the course of hearing submitted that in the interest of justice, the delay should be condoned, and the appeal should be disposed of on merits. He also relied on various decisions including the decision of the Hon’ble Supreme Court in the case of Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471, 472-73]. Accordingly, he submitted that a liberal approach should be taken, and the delay should be condoned.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., 4. On the other hand, Ld DR objected to the submissions made by the Ld.AR and submitted that the order of Ld.CIT(A) was uploaded hence this is assessee’s fault for not following it up. The delay is very abnormal and should not be condoned.
Considered the submissions and have gone through the records. After considering the facts and circumstances and the reasons given in the affidavit for condonation of delay, there appears to be sufficient cause for the delay in filing of appeal as the assessee was not aware of the impugned order. We also agree that no benefit would accrue to the assessee for not filing the appeal in time. As such, in the interest of justice the various courts in particular Hon’ble Supreme Court repeatedly held as under: - "The Legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act, 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on "merits". The expression 'sufficient cause' in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which sub-serves the ends of justice that being the life purpose of the existence of institution of Courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. A justifiably liberal approach has to be adopted on principle. And such a liberal approach is adopted on principle as it is realised that - (1) Originally, a litigant does not stand to benefit by lodging an appeal late.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., (2) Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner. (4) When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so."
Therefore, we hereby condone the delay in filing of appeal by the assessee and proceed to adjudicate the appeal on merit.
The assessee has raised the following grounds of appeal in the memorandum of appeal filed in Form no 36 :–
“The following grounds of appeal are independent of and without prejudice to one another –
1. The Assistant Commissioner of income-tax, Central Circle- 4(4), Mumbai (hereinafter referred to as the Assessing Officer) erred in framing the order under section 143(3) of the Act.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., The appellants contend that on the facts and in the circumstances of the case and in law, the Assessing Officer ought not to have framed the impugned order under section 143(3) of the Act inasmuch as the said order is framed on the basis of certain alleged incriminating documents found at the premises of the “person searched” and hence, the impugned assessment order ought to have been framed under section 153C of the Act; and having not done so, renders the impugned order bad in law. The appellants further contend that on the facts and in the circumstances of the case and in law, the Assessing Officer has not obtained approval from the appropriate authority under section 153D and as such, the impugned order is bad in law.
The Assessing Officer erred in not providing the satisfaction note recorded by her before framing the assessment. The appellants contend that on the facts and in the circumstances of the case and in law, the Assessing Officer ought to have provided the appellants with the satisfaction note recorded by her regarding the documents received from the Assessing Officer of the “person searched”, that such documents relate to the appellants and have a bearing on the determination of total income of the appellants and having not provided the same, there is gross violation of principles of natural justice.
3. The Commissioner of Income-tax (Appeals) – 52, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action of the Assessing Officer in making an addition of Rs 3,42,00,000 under section 69A of the Act, on account of membership fees received in cash from the business of fitness hub and spa activities of the appellants. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition inasmuch as he has not correctly appreciated the facts of the case in its entirety. Without prejudice, the CIT(A) has failed to appreciate that the appellants in their regular books of account have already credited a sum of Rs 300 lacs, being part amount of the impugned addition and hence, amounts to double addition to the tune of Rs 300 lacs; accordingly, the addition ought to be restricted to Rs 42,00,000. The appellants crave leave to add to, alter or amend the aforestated grounds of appeal.”
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., 8. In Ground of Appeal no 1, the assessee has challenged the validity of order passed by the Assessing Officer under section 143(3) of the Act.
Brief facts of the issue raised in the ground no 1 are, the assessee filed its original return of income on 15.10.2016 declaring a total income of ₹. Nil. The assessee is in the business of Motion Picture Production. A search action u/s 132 was carried out on Nadiadwala Group on 08.12.2015. The flagship company of Nadiadwala Group is M/s. Nadiadwala Grandson Entertainment P. Ltd. (NGEPL). In course of the search action, certain incriminating evidence were found from the premises of NGEPL which revealed that the assessee has given accommodation entry to NGEPL of sale of remake rights of one Telugu movie ‘Varsham’ for an amount of ₹.3 crores. The evidence found revealed that during the relevant year the assessee has earned cash receipts on account of membership fees of ₹.3.42 crores from its operation of running Fitness Hub & Spa at Powai. In course of the search action, it was admitted by Shri Rakesh Malhotra, CEO of Nadiadwala group and also Shri Nusrat Javed Khan, Chief Accountant, that out of the said cash receipts of ₹.3.42 crores, an amount of ₹.3 crores were handed over to (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., NGEPL and in turn, the assessee received a cheque of the same amount which was shown to be on account of remake right sale of the Telugu movie ‘Varsham’. In the course of assessment proceedings, the assessee was asked to show cause and explain as to why the undisclosed cash receipts of ₹.3.42 crores on account club membership fees should not be added to its total income. In response, the assessee submitted that against the said cash receipts of ₹.3.42 crores, an amount of ₹.3 cores in the form of sale of remake rights of the film ‘Varsham’ have duly been offered for taxation and therefore, atleast to the extent of ₹.3 crores, no addition can be made. However, the Assessing Officer did not accept the contentions of the assessee and after noting that the assessee has not disclosed the said club membership fees received in cash of ₹.3.42 crores, proceeded to add the same to its total income by framing an order under section 143(3) of the Act.
During the course of hearing, the Ld.AR of the assessee submitted that the Assessing Officer ought to have framed the assessment order dated 29.12.2017 under section 153C of the Act and not under section 143(3). He referred to the show cause notice dated 07.12.2017 issued by the Assessing Officer, which is also reproduced in Para No. 9.1 of the (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., assessment order and stated that an agreement dated 3.11.2015 was found in the premises of Nadiadwala group pertaining to sale of rights to remake Telugu film “Varsham”. It was then submitted that the addition has been made on the basis of seized material and hence, the assessment order ought to have been framed under section 153C of the Act. The Ld.AR continued his submissions and referred to first proviso to section 153C(1) and submitted that the date of search for the purpose of making the assessment under section 153C r.w.s. 153A has to be construed as the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer of the other person, the other person being the assessee in the case on hand. He further submitted that the case of the assessee was centralized on 21.11.2016 and even if this date is considered as date of receiving of books of account, documents or assets, the 6 years that are to be assessed will be A.Y. 2011-12 to A.Y.2016-17. He also relied on the decision of co-ordinate bench of Tribunal in the case of Mr RamavtarMandavewala (ITA No 6314/Mum/2017). As such, he submitted that the assessment for A.Y. 2016-17 ought to have been made under section 153C and not 143(3) and hence, the impugned assessment order is bad in law and should be quashed on this ground itself.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., 11. The Ld. DR on the other hand argued that the Assessing Officer has correctly assumed jurisdiction under section 143(3) of the Act. He has also filed a note on the issue, which has been reproduced below –
“In its Ground of appeal No. 1, the assessee has contended that the impugned assessment Order ought to have been framed u/s 153C and not u/s 143(3). This is contended on the basis of the provisions of first proviso to sub-section (1) of section 153C(1). as per which the reference to date of initiation of search in the 2nd proviso of section 153A(1) is to be construed as the date of receiving the books of account or documents by the AO of the 'other person'. It is contended by the AR of the assessee that since jurisdiction itself was assigned to the AO only on 21.11.2016, he could have received the documents only after 21.11.2016 i.e. during F.Y. 2016-17 and that therefore, the assessment year, relevant the date of search in the assessee's case was AY. 2017-18 and the assessment year in the present case i.e A.Y. 2016-17 fell in the six years prior to the year of search and that therefore the assessment order ought to have been passed by the AO u/s 153C and not u/s 143(3) for this assessment year. Rebuttal of assessee's contention 2.1 it is submitted while making this contention, the assessee has ignored the plain provisions of section 153C(2). It is pertinent to mention here that this sub-section (2) of section 153C was inserted by the same Finance Act, 2005 by which the first proviso to sub- section (1) of section 153C(1) was inserted. 2.2 It is submitted that as per section 153C(1), in a case where the conditions as specified 153C(1) are satisfied. the AO shall assess the income of the`other person' in accordance with the provisions of section 153A. 2.3 In this regard, it is the section 153C(2) which particularly specifies as to for which assessment year the assessment shall be made by the AO in the manner provided in section 153A. It is therefore necessary to see as to whetherthe present case falls in the categories/ situations mentioned in sub-section (2) of section 153C. 2.4 For the sake of ready reference, the provision of sub-section (2) of section 153C are reproduced hereunder :-
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., "(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income or the assessment year relevant to the previous year in which search is conducted under section132 or requisition is made under section 132A and in respect of such assessment year-- a. no return of income has been furnished by such other person and no notice under sub-section of section 142 has been issued to him, or b. a return of income has been furnished by such other person but no notice under sub-section of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or c. assessment or reassessment, if has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." 2.5 None of the situations mentioned in the section 153C(2) apply to the present case. Situation (a) does not apply as it is not a case of 'no return'. Situation (b) does not apply as the notice u/s 143(2) was served on 21.09.2017 i.e. before the limitation date for serving the notice u/s 143(2) which was 30.09.2017. Finally, the situation (c) also does not apply as it is not a case where assessment or reassessment had been made earlier. Therefore, in view of the provisions of section 153C(2) and the facts of the present case, the assessment for the present assessment year i.e. for A.Y. 2016-17 was not required to be made in the manner provided in section 153A and therefore AO was right in passing the order u/s 143(3) in the present case. 2.6 It may also be mentioned here that the assessment year mentioned in the first part of sub-section (2) of section 153C has to be understood as the assessment year relevant to the year in which the search is actually conducted since the situations mentioned in section 153C(2) will arise in such a case only. The assessment year mentioned in the section 153C(2) cannot be interpreted to be the deemed year of search as per first proviso of section 153C(1) since
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., in case of such an interpretation, the situations mentioned in section 153C(2) can never arise. For example, in the present case, if the assessment year relevant to search year is taken as A.Y. 201718 as per this interpretation, then there is no question of expiry of limitation date for service of notice u/s 143(2) as the limitation date would 30.09.2018. Similarly, there is no question of completion of an earlier assessment in such a case. 2.7 Hence as in the present case, the date of search was 08.12.2015, the assessment year mentioned in section 153C(2) is A.Y.2016-17 and as none of the situations mentioned in section 153C(2) are applicable to this year in view of the facts of the present case as discussed above, therefore, the AO was not required to assess the income for this assessment year in the manner provided u/s 153A and accordingly the assessment made by the AO u/s 143(3) is perfectly in order. Therefore, this ground of appeal of the assessee deserves to rejected.”
Considered the rival submissions and material placed on record. The brief issue before us is that whether the order for A.Y. 2016-17 was to be passed under section 153C or section 143(3). It is pertinent to refer to the provisions of section 153C(1) and the first proviso to section 153C(1) as it stood then –
“153C. (1) Notwithstanding in section anything contained 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 personand that Assessing Officer shall proceed against
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub- section (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:”
It is an undisputed fact that the case of the assessee was selected for scrutiny for the reason that certain papers were found during the course of search on Nadiadwala group on 08.12.2015. It is also undisputed that notices under section 153C were issued to the assessee for A.Y. 2010-11 to 2015-16. The crux of the issue before us is as to which 6 years are to be considered for issuing notices under section 153C. The first proviso to section 153C(1), as it stood then, is very clear that date of search in case of other person, that is the assessee, has to be considered as the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the assessee. Further, as per the provisions of section 153A, the assessment years for which assessment has to be done is six assessment
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.
14. Reading the provisions of section 153A in conjunction with first proviso to section 153C(1), it becomes clear that the assessment under section 153C has to be completed for six assessment years immediately preceding the assessment year relevant to the previous year in which the books of account or documents or assets seized or requisitioned are received by the jurisdictional AO. The Ld AR for the assessee pointed out that the case of the assessee was centralized by the Assessing Officer on 21.11.2016 and as such, the date of receipt of documents has to be after 21.11.2016. We find force in this argument of the Ld AR, more so that the Ld. DR also failed to point out anything which would suggest otherwise. Even if the date of receipt of documents by the Assessing Officer is considered as 21.11.2016, the six assessment years covered under section 153C would have to be reckoned from that day. Thus, in our opinion, the six assessment years ought to have been A.Y. 2011-12 to A.Y. 2016-17.
15. The Ld. DR in his submissions has referred to the provisions of section 153C(2). We agree with Ld. DR that none of the situations
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., mentioned in the section 153C(2) apply to the present case, however, we do not agree with the DR that it can be read to imply that the provisions of section 153C(1) and the provisos thereto should also not apply. The Ld. DR failed to controvert the arguments stated above. Thus, we find that the assessment for the year under reference, that is, A.Y. 2016-17 ought to have been framed under section 153C of the Act and that the action of the AO to assume jurisdiction under section 143(3) is bad in law.
We find that similar issue came up before the co-ordinate bench of the Tribunal in the case of Mr Ramavtar Mandavewala (ITA No 6314/Mum/2017). The relevant extract of the decision is reproduced below – “9. The aforesaid factual position remains uncontroverted before us. As per section 153A(1) of the Act, for assessing or reassessing the income of the searched person, the AO has jurisdiction to issue notice calling for return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. In other words, in the search year regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years proceedings have to be initiated under section 153A of the Act. The procedure laid down in section 153A of the Act is also applicable to section 153C which provides for assessment in case of persons other than the searched person, relating to whom some information/material was found in course of the search and seizure operation. However, the first proviso to section 153C stipulates that for the purpose of section 153C of the Act, the reference to the date of initiation of search as provided in section 153A(1) shall be construed with reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other persons. Meaning thereby, in case
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., of a person to whom section 153C applies, the search assessment year would be the assessment year in which the AO received books of account, documents, assets etc. Thus, in the search year regular assessment has to be made under section 143(3) of the Act. Whereas, for the six immediately preceding years, proceedings have to be initiated under section 153C of the Act. In the facts of the present appeal, undisputedly, the books of account/documents/assets found during the search and seizure operation were received by the AO having jurisdiction over the assessee on 21.08.2013 i.e. in the previous year 2013-14 relevant to the assessment year 2014-15. Thus, as per the provision contained under section 153C r.w.s. 153A of the Act, for assessment year 2014- 15 regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years viz. assessment years 2008-09 to 2013-14 assessment proceedings have to be initiated under section 153C of the Act. Undisputedly, in case of the present assessee, assessment for assessment year 2013-14 i.e. impugned assessment year, has been completed under section 143(3) of the Act. Neither the AO has recorded any satisfaction nor issued any notice as contemplated under section 153C of the Act. Therefore, the short issue arising for consideration is, whether the impugned assessment order is sustainable. While dealing with an identical issue in case of Jasjit Singh vs. ACIT (supra), the coordinate Bench has held as under:- 13. We find that there is no dispute on the relevant facts of the case that search and seizure operation u/s 132 of the Act in the case of Koutons was conducted on 19/02/2009 which is relevant to the F.Y. 01/04/2008 to 31/03/2009 and the relevant assessment year is 2009-10. It is also undisputed that the case of the assessee was centralized by ld. CIT u/s 127 of the Act and the jurisdiction of the assessee from Ward 25(3) to Central Circle 11 was transferred on 16/06/2009, hence previous year would be 01/04/2009 to 31/03/2010 and the A.Y. will be 2010-11. On the basis of these facts the contention of the assessee in the additional ground is that the assessment order framed u/s 143(3) of the Act for the assessment year in question is not valid and not maintainable. As per him, the date of search in the case of the present assessee would be the date i.e. 16/06/2009 when documents belonging to the assessee (found during the course of search) were handed over and jurisdiction for framing the assessment was transferred to the AO having jurisdiction for the assessment on the assessee. Taking into account the date 16/06/2009 as date of search in the case of the assessee, (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., the contention of the ld. AR remained that the search year in the case of assessee would be A.Y. 2010-11 and six previous assessment years would be 2009-10 to 2003-04. In other words, the regular assessment u/s 143(3) of the Act in the present case should have been framed for the assessment year 2010- 11 and the assessment for the assessment year under consideration should have been framed u/s 153C read with 143(3) of the I.T. Act. In support the above cited decisions were relied upon by the ld. AR.
The contention of the ld. CIT(DR) on the contrary remained that the reference of proviso 1 of section 153C is only in relation to the second proviso to sub-section 1 of section 153A which speaks about the abatement of the pending proceedings of six assessment years and not regarding the assessment of the preceding six assessment years which will be the same as in section 153A as well as in section 153C of the Act. In this regard she placed reliance on the decision of SSP Aviation Ltd. vs DCIT (supra).
We find that an identical issue has been decided by Delhi Bench of the Tribunal in the case of DSL Properties P. Ltd. (supra) in favour of the assessee accepting the similar contention of the assessee. Similar view has been expressed by the Delhi Bench of the Tribunal in the case of V.K. Fiscal (supra) holding that the date of receiving of the seized documents would become the date of search and six years period would be reckoned from this date. For a ready reference para no. 19, 21, 22 & 23 of the decision of Delhi Bench of the Tribunal in the case of DSL Properties (supra) are being reproduced hereunder: 19. “We have carefully considered the rival submissions. Proviso to section 153C reads as under: Provided in case of such other persons, the reference to the date of initiation of the search u/s 132 or making of requisition u/s 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person”
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., 20. The above proviso refers to second proviso to sub-section (1) of section 153A. That section 153A(1) and its first and second provisions read as under: - “153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated u/s 132 or books of account, section 132A after the 31st day of May, 2003, the AO shall – (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished u/s 139; (b) Asseess or reassess the total income or six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search u/s 132 or making of requisition u/s 132A, as the case maybe, shall abate”
From the above, it is evident that as per clause (b) of subsection (1) of section 153A and second proviso, the AO can be issue notice for assessment or reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted. As per proviso to (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the AO having jurisdiction over such other person. Ld. DR has stated that since the AO of the person searched and the AO of such other person was the same, no handing over or taking over of the document was required. That section 153C(1) and its proviso have to be read together in a harmonious manner. While interpreting section 153C, we have already held that for initiating valid jurisdiction u/s 153C, even if the AO of the person searched and t he AO of such other person is the same, he has to first record the satisfaction in the file of the person searched and thereafter, such note alongwith the seized document/books of account is to be placed in the file of such other person. The date on which this exercise is done would be considered as the date of receiving the books of account or document by the AO having jurisdiction over such other person. Though while examining the facts of the assessee’s case we arrived at the conclusion that no such exercise has been properly carried out and, therefore, initiation of proceedings u/s 153C itself is invalid, however, since both the parties have argued the issue of period of limitation also, we deem it proper to adjudicate the same. Since in this case satisfaction is recorded on 21st June, 2010 and notice u/s 153C is also issued on the same date, then only conclusion that can be drawn is that the AO of such other person has taken over the possession of seized document on 21st June, 2010. Accordingly, as per section 153(1), the AO can issue the notice for the previous year in which search is conducted (for the purpose of Section 153C the document is handed over) and six assessment years preceding such assessment year. Now, in this case, the previous year in which the document is handed over is 1st April, 2010 to 31st March, 2011. The assessment year would be A.Y. 2011-12. Six preceding previous years and relevant assessment year would be as under:
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., Previous Year Assessment Year 1.4.2009 to 31.3.2010 2010-11 1.4.2008 to 31.3.2009 2009-10 1.4.2007 to 31.3.2008 2008-09 1.4.2006 to 31.3.2007 2007-08 1.4.2005 to 31.3.2006 2006-07 1.4.2004 to 31.3.2005 2005-06 22. The AO has issued notice u/s 153C for A.Y. 2004-05 which is clearly barred by limitation. Therefore, issue of notice u/s 153C issued by the Revenue cannot be sustained on both the above counts, i.e., it is legally not valid as conditions laid down u/s 153C has not been fulfilled and it is barred by limitation. In view of the above, we quash the notice issue du/s 153C and consequently, the assessment completed in pursuance to such notice, is also quashed.
Since we have quashed the assessment order itself, the additions challenged by the assessee by way of other grounds of appeal
do not survive, and, therefore, do not require any adjudication”
16. We thus, find that the issue raised in the additional ground has been answered in favour of the assessee, by the Coordinate Delhi Bench of the Tribunal in the case of DSL Properties (supra).
17. So far as decision of Hon’ble Delhi High Court in the case of SSP Aviation Ltd. vs. DCIT (supra) relied upon by the ld. CIT(DR) is concerned, we find that it is not helpful to the revenue as in that case also in para no. 14 of the judgment it has been held as under: 14. “Now there can be a situation when during the search conducted on one person u/s 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the AO has to first be satisfied u/s 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the AO having jurisdiction over the other person. Thereafter, the AO having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of section 153A. Now a question may arise as to the applicability of the second proviso to section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search u/s 132 or the requisition u/s 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the AO having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.”
18. In view of the above finding, the assessment framed u/s 143(3) of the Act for the A.Y. 2009-10 in the present case is not valid. Respectfully following the above cited decisions on an identical issue, the additional ground no. 4 in the present case is decided in favour of the assessee and in the result the assessment order is quashed as void.
10. It is worth mentioning, the aforesaid decision of the coordinate Bench was upheld by the Hon’ble Delhi High Court while deciding revenue’s appeal (supra). The Hon’ble Court while upholding the decision of coordinate Bench held as under: “3. The question raised before the ITAT was with reference to the first proviso to Section 153C (1). The (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) “such date will be the date of receiving the books of account Or. documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.
4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31° March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under: The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction reason before issuing notice under Section 133C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such ‘other person. In case, the AO of the searched person exercises jurisdiction over (A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., the other person also, appropriate referencing should be made in the relevant assessment records of such other person.
5. It may be noted that in the present case satisfaction note was prepared by the AO on 25thFebruary 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY 2009-10 was not valid, calls for no interference . No substantial question of law arises in the facts and circumstances of the present case. “ 11. If we apply the ratio laid down in the decision of the co-ordinate Bench and the Hon’ble Delhi High Court, as referred to above, there cannot be two opinion that the impugned assessment order passed under section 143(3) of the Act is invalid. No contrary decision of a higher Court has been brought to our notice by learned Departmental Representative for enabling us to deviate from the view expressed in the aforesaid decision of the coordinate Bench. In view of the aforesaid, we hold that the AO having wrongly assumed jurisdiction under section 143(3) of the Act to complete the assessment, the impugned assessment order is invalid, hence, deserves to be quashed. Accordingly, we do so.”
17. Thus, following the above decision, we hold that the Assessing Officer ought not to have assumed jurisdiction under section 143(3) and ought to have framed the assessment under section 153C, and having not done so, we find the assessment order to be invalid in the eyes of law. Accordingly, we hereby quash the impugned assessment order and direct the Assessing Officer to delete all the additions made therein. Accordingly, Ground No. 1 raised by the assessee is Allowed.
(A.Y: 2016-17) Viiking Media & Entertainment Pvt Ltd., 18. In Ground of Appeal No. 2, the assessee has challenged the action of the AO in not providing the satisfaction note recorded by her under section 153C. It is seen in the above discussions that the AO, though ought to have, did not assume jurisdiction under section 153C, as such, there is no question of recording of satisfaction. Hence, this ground of appeal becomes infructuous, and hence, is being treated as dismissed.
In Ground of Appeal No. 3, the assessee has challenged the addition of ₹.3.42 crores on merits. Since we have already quashed the assessment, this ground of appeal becomes academic, and hence, is not being adjudicated.
In the result, appeal filed by the assessee is partly allowed as indicated above.
Order pronounced in the open court on 20th February, 2023