SHREE BASAVESHWAR SUGARS LIMITED,VIJAYAPURA vs. ACIT, CENTRL CIRCLE, TRICHIRAPALLI

5 to 1010 &1017/Chny/2022 3.2. Although no minimum time limit has been specified in Secs. 153A or 153Cfor furnishing a return, Sections 1588C (pan materia with Sections 153A and Sec 153C) stipulated a minimum of15 days' time limit. Section 148 originally prescribed a minimum time limit of 30 days. Vide Finance Act, 1996, the said provision stood amended to read as within the time specified in the notice. These are stated here only to submit that in any event 'a reasonable time' has to be given to file a return of income in pursuance of any notice under the Act. 3.3. The notice us. 153C was followed by another notice us 142 dated 11.12.2019 which gives time of 5 days to respond to it. Even before the said time limit of 5 days gets over the AO issues a pre-assessment show cause notice dated 13 December, 2019 proposing to add a sum of Rs 38,89,48,593/ to the returned income. The AO completes the assessment on 25. 12.2019. Thus, between the initiation of proceedings u/s 153C and the completion of assessment on 25. 12.2019 hardly 27 days had gone by. The notice having been issued only in the month of November. 2019 the assessment gets time barred only by 31. I2.2020. It is not known why the AO hushed up the entire assessment within time span of 27 days. 3.4. This discloses the intention of the AO to willy nilly complete a block assessment and slap a huge demand on the appellant throwing to wind all the principles of natural justice and the mandatory provisions of the Income- Tax Act. The A0 says that the JCIT has approved the Assessment. It is not known when the proposal itself was put up to the JCIT and when it was partly or fully approved by the JCIT. It is also not known how many approvals had been accorded by the JCIT during the interregnum period. 3.5 The Assessment Order having been passed in total violation of the provisions of the IT Act and principles of natural justice is liable to be quashed in toto. In this connection we may use fully refer to the decision of the Hon'ble Madras High Court in the case of B. Kubendran -vs- DCIT (supra) wherein the Hon'ble High Court held that the assessment is inproper. In the case before the Madras High Court judgement proceedings was completed in a span of about 2 months whereas in the present case it was completed within a span of less than four weeks. The reason that prompted the A0 to complete the assessment within that short period is unknown. 3.6. The AO is well aware of the fact that the registered and administrative office of the Appellant Company is in Hubbali and all the records pertaining to this company is available only in the administrative office of the company.

6 to 1010 &1017/Chny/2022 Only during November, 2019 the files were centralised and the AO had been conferred with the jurisdiction over this appellant. The records pertaining to this year was at least seven years old and needs to be secured from the administrative office for furnishing the details called for by the AO. It is not as if the appellant has not responded to any of the notices. The Respondent has filed its ROI for this year in response to notice u/s 153C on 19th December, 2019 which has been totally ignored or deliberately not taken cognizance of by the AO. This ROI was never processed before completion of the assessment proceedings. 3.7. In this case the files came to be centralised only during November, 2019 although search took place in February, 2018 and the assessment was completed on 25.12.2019. At least in the case before the Madras high court a detailed questionnaire dated 07. 12.2019 issued by the A0 before framing the assessment. However, in this case not even a questionnaire had been issued but the A0 was building castles in the air notice over notice and the show cause notice. Thus, the assessment framed by AO needs to be annulled as observed by the Hon'ble Madras High Court in that case" The CIT(A) rejected the ground of violation of principals of natural justice by observing in para 6.9.3 to 6.9.5 as under:- 6.9.3 The submission made by the Appellant has been carefully examined. While going through the records it can be seen that the A.O. has issued the notice us 153C on 28.11.2019 and completed the assessment for all the Assessment Years under consideration on 25.12.2019. In this regard, the appellant has relied upon the decision of the Jurisdictional Hon'ble Madras High Court in the case of B.Kubendran vs. DCIT [2021] 126 taxmann.com 107 (Madras), wherein the Hon'ble Court had remanded the matter back to the A.O. 6.9.4 The issue involved in this case is that the Appellant was not provided sufficient opportunity of being heard, and thereby violated the principal of natural justice. The Commissioner of Income Tax (Appeals) is competent enough to entertain new evidence and allow new grounds which was not considered by the A.O. during the course of Assessment Proceedings. In fact, the CIT(A), is empowered to enter into the shoes of the A.O. and decide the issue. The Appellant was given multiple opportunities during the course of Appellate Proceedings to provide additional ground, additional evidence and 7 to 1010 &1017/Chny/2022 submission. It may be appreciated that during the course of Appellate Proceedings, the Appellant has not attempted to provide not even a single evidence, to prove about the genuineness and creditworthiness of the creditors. Instead of providing evidences to support the claim about the creditworthiness, the Appellant has neither raised valid argument nor prayed for provision of additional time to furnish relevant evidence and valid submission. This will prove that the Appellant is not in possession of any valid evidence or argument to adduce. Thus, the A.O. has rightfully decided the issue by treating the creditors as bogus and added the same, to a total income of the Appellant. 6.9.5 In view of the above, I am not inclined to accept the argument of the Appellant that the A.O. has not provided sufficient opportunity of being heard in completing the assessment. Aggrieved, assessee came in appeal before the Tribunal.

8 to 1010 &1017/Chny/2022 The ld.counsel for the assessee drew our attention to communication received form PCIT rejecting assessee’s contention for deferment of assessment proceedings for all the assessment years and he stated in his communication dated 04.12.2019 issued vide letter No.ITBA/COM/F/17/2019-20/1021610491(1) and the relevant para 7 reads as under:- “7. Though the 153C assessment is a separate proceeding technically, for all practical purposes, it is very much part and parcel of the 153A proceedings which is getting time barred shortly, on 31.12.2019. As far as the request for postponement of assessment is concerned, the same cannot be entertained at this point of time.” 4.1 The ld.counsel for the assessee stated that notice u/s.153C of the Act was issued to the assessee for calling for return of income to be filed within 7 days on 28.11.2019 as against which the PCIT rejected the assessee’s contention vide dated 04.12.2019 as noted above. The AO issued notice u/s.142(1) of the Act calling for return of income to be filed within 5 days dated 11.12.2019 and consequently, show cause notice was issued proposing addition vide dated 13.12.2019. The assessee filed return of income in response to notice u/s.153C of the Act on 20.12.2019 and objections were also filed by the assessee to the proposed additions on 21.12.2019. The AO rejected all the objections and framed assessment u/s.144 r.w.s. 153C of the Act vide order dated 25.12.2019. According to ld.counsel, this happened because PCIT was of the view that the 9 to 1010 &1017/Chny/2022 assessment on the searched party u/s.153A of the Act was getting time barred on 31.12.2019 and consequently, petitioner’s assessment also getting time barred u/s.153C of the Act. The ld.counsel drew our attention to the submissions made before the CIT(A) as regards to erroneous assessment order and the relevant is reproduced in para 5 vide sub-para 3.8, 3.9 & 3.10, which read as under:- 3.8 Further, the assessment has been initiated by issue of a notice u/s 153C of the IT Act Sine qua non for non-initiation of proceedings u/s l53C is unearting of incriminating material belonging to the Appellant which disclosed un-explained income. Before issue of notice u/s 153C the AO has to record the satisfaction note as required u/s 153C of the IT Act. Secondly the satisfaction note should also disclose the materials that made the AO believe that income that had not been disclosed hitherto had been found consequent upon the search. 3.9. The satisfaction note to be recorded was neither furnished to the appellant nor made a part of the Assessment Order. Therefore, it is not clear as to whether am satisfaction note was recorded at all and if so on what date and what are the contents of it. The AO states that the reasons have been approved by the Joint CIT. There is no requirement of any approval by any superior authority with regard to the satisfaction note. If the reasons have originally been recorded by the Joint CIT himself which was then passed on to the AO for follow up, even then it does not meet the requirements of law. It is the AO and the AO only who needs to record satisfaction. 3.10 The learned Commissioner (Appeals) may kindly call for the records of the AO. In the absence of any satisfaction note the assessment is liable to be quashed as ab initio void. We place reliance on the decision of the Supreme Court in the case of CIT vs. Calcutta Knitwears 362 ITR 673 and in the light of the CBDT Circular No.24/2015 dated 31-12-2015. If there is one, the AO may be directed to furnish a copy of the satisfaction note along with enclosures if any to complete our submissions.

10 to 1010 &1017/Chny/2022 4.2 The ld.counsel stated that exactly on identical facts, Hon’ble High Court of Madras in the case of B.Kubendran vs. DCIT [2021] 126 taxmann.com 107 (Madras) wherein the Hon’ble High Court has discussed the facts that the time allowed in this case was two months and this fact is recorded by Hon’ble High Court in para 25 & 26 as under:- 25. On the question of adherence to the principles of natural justice, the relevant sequence of dates and events is that a notice under Section 153C was issued on 25.10.2019 in regard to a search conducted in 2017. Unfortunately neither the affidavit filed in support of the writ petitions nor the impugned orders of assessment anywhere mention the date of search and it was only in the course of the submissions made orally that the date of search was noted by me as 07.11.2017. The limitation for completion of assessments would be the 31st of December, 2019. The impugned orders state that centralization of the assessments took place only on 24.09.2019 and pursuant to the centralization, notices under Section 153C were issued on 25.10.2019, leaving barely a period of a little over two months for completion of six search assessments.

12 to 1010 &1017/Chny/2022 5. When these facts were confronted to ld.CIT-DR, he started arguing on merits of the case that these are all these are agreed additions and completion of assessment is just merely a formality. He argued that in any eventuality the matter has to sent back, if the bench desire so, to the file of the CIT(A) because under challenge is the order of CIT(A). At this point, the ld.counsel for the assessee drew our attention to another decision of Hon’ble High Court of madras in the case of V. Tillainatesan vs. ACIT, [2021] 133 taxmann.com 131 wherein the Hon’ble High Court has considered this aspect as to whom the matter has to be sent and who has violated the principles of natural justice. The Hon’ble High Court considered this issue in para 10 & 11 as under:- 10. The other question, which may arise, is whether the opportunity, which can be afforded to the appellant-assessee by the Appellate Authority, would be sufficient? In this regard, we are guided by the decision of the Hon-ble Supreme Court in Tin Box Company vs. Commissioner of Income-tax reported in [2001] 116 Taxman 491 (SC). In the said decision, the Hon-ble Supreme Court held that opportunity of hearing by the Appellate Authority or the Tribunal or the Court can be of no substitute to that of the opportunity that will be provided by the Assessing Officer, at the first instance.