SHRI DEEPAK BUDHARMAL VASWANI,,AHMEDABAD vs. DCIT, CENTRAL CIRCLE -1(1),, AHMEDABAD

आदेश/O R D E R PERBENCH:-

This is a bunch of 107 appeals; out of which 71 appeals are directed at the instance of the assessee, and 36 at the instance of the Revenue. Thus, in some of the assessment years, and in the case of some of the assessees, there are cross- appeals. The facts for the purpose of procedural requirements are concerned, they are common.

Ashok 1-Rajdeep Villas, 10.03.2015 12.03.2015 Sunderdas B/h. Chimanbhai Patel 08:05 A.M. 07:00 P.M. Vaswani Institute, Prahladnagar, Ahmedabad

Deepak 2-Rajdeep Villa, Opp. 10.03.2015 12.03.2015 Budharma Rivera-11, B/h 06:30 A.M. 10:30 P.M. Vaswani Chimanbhai Patel Institute, Prahladnagar, Ahmedabad. 3-Rajdeep Villa, Opp. Rivera-11, B/h Chimanbhai Patel Institute, Prahladnagar, Ahmedabad. 501, Sapphire Complex, Opp: Ratnam, CG Road, Ahmedabad.

Shri Dilipkumar Lalwani and Others (107 Appeals)

G-9, Gold Souk Complex B/h. Sapphire Bldg. CG Road Ahmedabad.

10, Rajdeep Tilak NagarSociety Old Wadaj,Ashram Road Ahmedabad.

Prakash Building Kalupur Ahmedabad.

Rajesh Rajdeep Villa, 10, Tiilak 10.03.2015 11.03.2015 Sunderdas Nagar Society, Old 06:40 A.M. 11:35 P.M. Vaswani Vadaj, Asram Road, Ahmedabad

Prakash Buildig, Kadia Kui Katni Rang Road Relief Road Kalupur Ahmedabad. M/s i) 801-802, 10.03.2015 12.03.2015 Venus Broadway Business 12:05 P.M 11:20 P.M. Infrastructure Centre, Opp. & Developers (P) Mayor's Bunglow, Ltd (Rajesh Law Garden, Vaswani was Ellisbridge, Ahmedabad available here) ii) 901, Sapphire Complex, Opp. Ratnam, CG Road, Ahmedabad

iii) G-9, Gold Souk Complex, B/h Sapphire building, CG Road, Ahmedabad

iv) A-101, Project site office, Venus Parkland, Near Vejalpur police chowky, Vejalpur, Ahmedabad

Shri Dilipkumar Lalwani and Others (107 Appeals)

v) Terrace of Crystal Arcade, Besides Navrangpura, Tele. Exchange, CG Road, Ahmedabad

vi) D-5, New Garden flats, Ellisbridge, Law garden, Ahmedabad

vii) House of Vasibhai Vasrambhai Desai at village Khadeda, Rabari Vas, Dist. Patan

Ashok i) Terrace of 12.03.2015 13.03.2015 Sunderdas Crystal Arcade Besides 09:30 A.M. 07:20 P.M. Vaswani & Navrangpura Telephone M/s Venus Exchange, C.G. Road, Infrastructure-& Ahmedabad. Developers (P) Ltd ii) 901, Sapphire Complex, Opp. Ratnam, CG Road, Ahmedabad

iii) 307, 3rd floor, Crystal Arcade, Besides Navrangpura Telephone Exchange, CG Road, Ahmedabad

iv) 10, Raj deep Tilak Nagar society, Old Wadaj, Ashram Road, Ahmedabad.

v) 2, Raj deep Villas, Opp. Rivera 11, B/h Chimanbhai Institute, Prahladnagar, Ahmedabad.

vi) Prakash Building, Kadia Kui, Kami Rang Road, Relief Road, Kalupur, Ahmedabad

Shri Dilipkumar Lalwani and Others (107 Appeals)

v) Terrace of Crystal Arcade, Besides Navrangpura, Tele. Exchange, CG Road, Ahmedabad vi) House of Vasibhai Vasrambhai Desai, at village Khadeda, Rabari Vas, Dist. Patan.

Sanjeet Motors 6, Saarthi Bungalows Finance P.Ltd. Prernatirth Derasar Road Satellite, Ahmedabad. 17/B/1, Devendra Society Naranpura Ahmedabad. B/6, Pallavi Apartment Opp: Municipal Market C.G.Road Ahmedabad.

Shri Dilipkumar Lalwani and Others (107 Appeals)

10 these submissions are related to jurisdictional and legal issues. The adjudication of these jurisdictional grounds would be the basis for proceeding further on merit. Broadly, both the parties have agreed for commencing the hearing in the manner suggested by the ld.counsel for the assessee. Four compartments are –

(i) whether the assessment proceeding undertaken under section 153C is sustainable in the eyes of law. For this proposition, the lead matter has been suggested as ITA No.75/Ahd/2019 of the assessee’s appeal, and cross appeal of the Revenue i.e. ITA No.195/Ahd/2019 for the Asstt.Year 2009-10;

(ii) Whether the assessments under section 153A is to be framed strictly on the basis of incriminating material found during the course of search in the case of concerned assessee. The lead matter suggested for the proposition is IT(SS)A.No.95Ahd/2019 and IT(SS)A.No.235/Ahd/2019 for the Asstt.Year 2009-10 in the case of Rajesh Sunderdas Vaswani.

(iii) Whether the assessments completed under section 153A are within the limitation or not. The lead matter suggested by the parties for the proposition is Ashok Sunderdas Vaswani, IT(SS)A.No.88/Ahd/2019 and cross appealbearing no.IT(SS)A.No.241/Ahd/2019 for the Asstt.Year 2009-10;

iv) Ithas been pleaded that whether reopening of the assessment in the Asstt.Year 2008-09 in the case of Ashok Sunderdas Vaswani is justifiable. This is the single assessment order in the case of Ashok Sunderdas Vaswani for the Asstt.Year 2008-09, ITANo.456/Ahd/2019, and ITA No. 806/Ahd/2019 are to be taken together.

Shri Dilipkumar Lalwani and Others (107 Appeals)

11 v) The last compartment of the argument is with regard to the appeal in ITA No.837/Ahd/2019 in the case of Venus Infrabuild for the Asstt.Year 2015-16. It is also to be decided independently on merit.

Shri Dilipkumar Lalwani and Others (107 Appeals)

12 to” or any information contained therein relates to, has been used. Thus, according to the ld.counsel for the assessee the expression “pertains” or “pertain” to or any information contained therein relates to, has wider scope for taking action under section 153C instead of expressions “belongs or belong to” used in the original section prior to its amendment w.e.f. 1.6.2015. The ld.counsel for the assessee further submitted that action under section 153C could be taken against the assessee if during the course of search any money, bullion, jewellery or other valuable article or thing; or any books of account or documents, seized or requisitioned, were found to be belonged to or belong to, other than the searched person. In that situation, the AO of the searched person would recordhis satisfaction that the action is required against other such person with regard to undisclosed income embedded in that evidence. He took us through the satisfaction-note recorded by the AO, for example in the case of Dilipkumar Lalwani [IT(SS)A.No.75/Ahd/2019] and others.

Shri Dilipkumar Lalwani and Others (107 Appeals)

13 provision which has made applicable w.e.f. 1.6.2015. This is contrary to the law laid down by the Hon’ble jurisdictional High Court in the case of Anil Kumar Gopikishna Agrawal Vs. ACIT, (2019) 106 taxmann.com 137 (Guj). Copy of this decision has been placed on record by the ld.counsel for the assessee. He further submitted that subsequently this decision has been followed by the Hon’ble jurisdictional High Court in the following cases:

i) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj); ii) Charmy Sanket Naik Vs. ACIT, SCA No.13374 of 2019 (Guj);

iii) Nita Chaitanya Shah, SCA No.14059 of 2019 (Guj).

Shri Dilipkumar Lalwani and Others (107 Appeals)

14 information about the transactions relating to the petitioners were found. The seized incriminating documents related to unaccounted cash transactions as recorded in the seized unaccounted cash books which were found during the course of search. A reference was also made to the petitioner i.e. proprietor of Ocean Valves Mfg. Co. Notice under section153C was issued and these notices were challenged by the assesees in SCA No.19647 of 2018. Hon’ble Gujarat High Court has quashed these notices by holding that information recorded by the Revenue couldbe termed as relates to or pertains to petitioner. It could not be construed as a document belongs to the petitioner. Similarly, a large number of other cases have been considered by the Hon’ble Gujarat High Court. Thus, according to the ld.counsel for the assessee, this judgment is fully applicable on these 43 appeals, where assessments have been passed under section 153C of the Income Tax Act, 1961.

Shri Dilipkumar Lalwani and Others (107 Appeals)

15 widened. Therefore, the AO has rightly recorded the satisfaction taking into consideration the law as on the date, when he lays his hand on the documents showing undisclosed income of the person other than the searched person. He further submitted that in the present appeals, both the events, that is, recording of satisfaction by the AO of the searched person, and by the AO of these appellants, have happened subsequent to 1.6.2015 because Ld. AO is common. Therefore, new section is applicable. He also submitted that section 153C is a procedural section, and no vested right has been taken away by the amendment. Thus, it will be applicable on the pending assessment.

Shri Dilipkumar Lalwani and Others (107 Appeals)

16 assessments under section 153A or 153C of the Act. Only searching the assessee under section 132 is sufficient. The ld.CIT-DR further submitted that “sufficiency of satisfaction” and “satisfaction” are different thing. It was the satisfaction only or word “belongs” or “pertains to” could not be construed to quash the orders passed by the AO. If the AO was satisfied for taking action under section 153C, then the meaning of words “belongs” or “pertains to” would not change the colour.

Shri Dilipkumar Lalwani and Others (107 Appeals)

17 153C. -[(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned 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 person —[and that Assessing Officer shall proceed against 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]:] 2.2.3 WITH EFFECT FROM 01.06.2015: Assessment of income of any other person. - — 153C. -[(1)] —[Notwithstanding anything contained in section 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, or any information contained therein, 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 person ] —[and that Assessing Officer shall proceed against 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] :] 15. A perusal of the above provisions would reveal that in the case of search action, carried out under section 132 of the Income Tax Act, prior to 1.6.2015, if any money, bullion, jewellery or other valuable article or thing, or books of accounts or documents, seized or requisitioned “belongs” or “belong” to a person other than the person referred to section 153A, then the AO of the searched person while passing assessment order under section 153A or prior to that, record his satisfaction about those documents, and if those documents

Shri Dilipkumar Lalwani and Others (107 Appeals)

18 disclosed undisclosed income of the person other than the searched person. He will transmit those documents along with his satisfaction note to the AO having jurisdiction over that other person. Jurisdiction under section 153C of the Act prior to 1.6.2015 could be invoked only if the material seized during the course of search in the case of third-person “belongs to” to some persons other than the searched person. However, after 1.6.2015, the Legislature has categorized two situations. As far as recovery of any money, bullion jewellery or other valuable article or thing seized or requisitioned belongs to person other than the searched person, then section 153C would be justified. However, with regard to the recovery of any books of accounts or documents, seized or requisitioned, then if they pertain to other person, or any information contained therein relates to person other than the searched person, then the action under section 153C could be there. The scope of section 153C after 1.6.2015 has been widened; viz. if a person at whose premises search was carried out maintaining certain details in his regular day-to-day business, and that contain certain information exhibiting the undisclosed income of the person other than the searched person, then the action under section 153C could be justified. But prior to 1.6.2015, the documents ought to be belonged to person other than the searched person. There is a clear distinction between both the conditions. Subsequent to 1.6.2015, the information embedded in the document is sufficient for taking action under section 153C, but prior to 1.6.2015 action under section 153C could be taken if documents belong to the person other than the searched person was found during the course of search.

Shri Dilipkumar Lalwani and Others (107 Appeals)

19 concluded, whether post-amended section is to be applied in such cases or not; because that would change the very nature of the disputes.

“whether section 153C of the Act as amended w.e.f. 1.6.2015 would be applicable to cases where search initiated prior to that date ?”

After an elaborate discussion, Hon’ble court arrived at the conclusion that this section would be applicable prospectively only on the search conducted after 1.6.2015. We would like to take note of the relevant discussion made in the judgment, which reads as under:

“19.8 While it is true that section 153C of the Act is also a machinery provision for assessment of income of a person other than the person searched, in the opinion of this court, this is not a case where by virtue of the amendment, there is merely a change in the procedural provisions affecting the assessees who were covered by the unamended provision. By the amendment, a new class of assessees are sought to be brought within the sweep of section 153C of the Act, which affects the substantive rights of the assessees and cannot be said to be a mere change in the procedure. Since the amendment expands the scope of section 153C of the Act by bringing in an assessee if books of account or documents pertaining to him or containing information relating to him have been seized during the course of search, within the fold of that section, this question assumes significance, inasmuch as in the facts of the present case, as on the date of search, it was only if such material belonged to a person other than the searched person, that the Assessing Officer of the searched person could record such satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C of the Act as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C of the Act have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at which the amended section 153C of the Act can be made applicable, as to whether it relates to the date of search; or the date of recording of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C of the Act. 19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 2015. Therefore, on the date of the search, the Assessing Officer of the person searched could only have recorded satisfaction to the effect

Shri Dilipkumar Lalwani and Others (107 Appeals)

20 that the seized material belongs or belong to the other person. In the present case, the hard-disc containing in the information relating to the petitioners admittedly did not belong to them, therefore, as on the date of the search, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C of the Act in case of the petitioners, did not exist. It was only on 1st June, 2015 when the amended provisions came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. 19.10 In this backdrop, to test the stage of applicability of the amended provisions, a hypothetical example may be taken. The search is carried out in the case of HN Safal group on 4.9.2013. If the Assessing Officer of the searched person had recorded satisfaction that some of the seized/requisitioned material belongs to a person other than the searched person and forwarded the material to the Assessing Officer of the other person, had issued notice under section 153C of the Act prior to the coming into force of the amended provision. The notice under section 153C of the Act was challenged before the appropriate forum on the ground that the seized material does not belong to such other person and such issue was decided in favour of such person on a finding that the seized material does not belong to the other person. Thereafter, in view of the amendment in section 153C (1) of the Act, since the books of account or documents did not belong to the other person but did pertain to him or the information contained therein related to him, can the Assessing Officer of the searched person once again record satisfaction as contemplated under the amended provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic "no" as the Assessing Officer of the searched person after recording the earlier satisfaction would have already forwarded the material to the Assessing Officer having jurisdiction over the other person, therefore, there would be no question of his again forming a satisfaction as required under the amended provisions of section 153C of the Act. 19.11 In the opinion of this court, if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions.

Shri Dilipkumar Lalwani and Others (107 Appeals)

21 19.12 In Pr. CIT v. Vinita Chaurasia, [2017] 394 ITR 758/248 Taxman 172/82 taxmann.com 153 (Delhi), the Delhi High Court has held that, at the outset, it requires to be noticed that the search in the present case took place on 19th June, 2009, i.e., prior to the amendment in section 153C(1) of the Act with effect from 1st June, 2015. Therefore, it is not open to the Revenue to seek to point out that the document in question 'pertains to' or 'relates to' the assessee. Against this decision the revenue filed a special leave petition before the Supreme Court being Pr. CIT v. Vinita Chaurasia [2018] 98 taxmann.com 414/259 Taxman 88 (SC) condoned the delay and dismissed the special leave petition. 19.13 In Pr. CIT v. Index Securities (P.) Ltd. , [2017] 86 taxmann.com 84 (Delhi), on which reliance had been placed on behalf of the petitioners, the Delhi High Court has held thus: "28.4 The Supreme Court also agreed with the decision of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel (supra) to the extent it held that "it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of account or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act." The Supreme Court observed: "This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well." 28.5 The above categorical pronouncement of the Supreme Court cannot, by any stretch of imagination, be termed as obiter as has been suggested by Mr. Manchanda. Even the obiter dicta of the Supreme Court is binding on this Court. 29. The search in the case before the Supreme Court was prior to 1st June 2015. Apart from the fact the Supreme Court approved the above decision of the Gujarat High Court holding that the seized documents should 'belong' to the other person, the legal position in this regard where the search has taken place prior to 1st June 2015 has been settled by the decision of this Court in Pepsico India Holdings (P.) Ltd. v. ACIT (supra). In Commissioner of Income Tax v. Vinita Chaurasia (supra), this Court reiterated the above legal position after discussing the decisions in Principal Commissioner of Income Tax v. Super Malls (P) Limited (supra) and Commissioner of Income Tax(Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra). The essential jurisdictional requirement for assumption of jurisdiction under Section 153 C of the Act (as it stood prior to its amendment with effect from 1st June 2015) qua the 'other person' (in this case the assessees) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VSIPL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees, they did not belong to them. Therefore, one

Shri Dilipkumar Lalwani and Others (107 Appeals)

22 essential jurisdictional requirement to justify the assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees." 19.14 Thus, it is the date of search that has been considered to be the relevant date for the purpose of applying the amended provisions of section 153C(1) of the Act. 19.15 This court is of the considered view that the trigger for initiating action whether under section 153A or 153C of the Act is the search under section 132 or requisition under section 132A of the Act and the statutory provisions as existing on the date of the search would be applicable. The mere fact that there is no limitation for the Assessing Officer of the searched person to record satisfaction will not change the trigger point, namely, the date of the search. The satisfaction of the Assessing Officer of the searched person would be based on the material seized during the course of the search or requisition and not the assessment made in the case of the searched person, though he may notice such fact during the course of assessment proceedings. Therefore, whether the satisfaction is recorded immediately after the search, after initiation of proceedings under section 153A of the Act or after assessment is framed under section 153A of the Act in the case of the searched person, the trigger point remains the same, viz., the search and, therefore, the statutory provision as prevailing on that day would be applicable. While it is true that sections 153A and 153C of the Act are machinery provisions, but the same cannot be made applicable retrospectively, when the amendment has expressly been given prospective effect. Besides, though such provisions are machinery provisions, the amendment brings into its fold persons who are otherwise not covered by the said provisions and therefore, affects the substantive rights of such person. In the opinion of this court, the decision of the Supreme Court in M.A. Merchant (supra) would be squarely applicable to the facts of the present case wherein it was held thus:…” 18. This judgment has been followed by the Hon’ble Gujarat High Court in the cases of i) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj); ii) Charmy Sanket Naik Vs. ACIT, SCA No.13374 of 2019 (Guj); iii) Nita Chaitanya Shah, SCA No.14059 of 2019 (Guj).

Shri Dilipkumar Lalwani and Others (107 Appeals)

23 available at page no.457 and we deem it appropriate to take note of this part, which reads as under: 7. Satisfaction of the Assessing Officer As per Annexure – B of the person referred to in section In view of above facts as mentioned in the 153A that the seized material Annexure - B. I am satisfied that the documents referred to in S.No.5 relates/pertains seized from the premises (i) 801-802, to the person referred to in S.No.4 Broadway Business Centre, Opp. Mayor’s Bungalows, Law Garden. Ellisbridge, Ahmedabad and (ii) Terrace of Crystal Arcade, Nr. Navrangpura Telephone Exchange, C.G Road, Ahmedabad - contains information,which relates to the assessee, Shri Dilip Kumar Lalwani. Further, I am also satisfied that documents seized have a bearing on the determination of the total income of the assessee, | Shree Dilip Kumar Lalwani for assessment years 2009-10 to 2014-15 The assessee being other than the person referred to in section 153A of the Act. I have satisfaction to proceed against the assessee Shri Dilip Kumar Lalwani as per the provisions of Section 153C of the Income Tax Act, 1961. Therefore, it is fit case for initiation of proceeding u/s 153C of the I.T.Act . 8. Assessment years involved A.Y. 2009-10 to A.Y.2014-15

7.3 On the basis of discussion in the preceding paragraphs, it is noticed that XXX account mentioned in various documents seized during the course of search in the Venus Group refers to Shri Dilip Kumar Lalwani and the information contained therein relates to Shri Dilip Kumar Lalwani. There are various transaction recorded in the cash book and related cash vouchers.” ….. ….. …..

Shri Dilipkumar Lalwani and Others (107 Appeals)

24 10. In view of above facts as mentioned above, I am satisfied that the above mentioned documents seized from the from the premises (i) 801-802, Broadway Business Centre, Opp. Mayor's Bungalows, Law Garden. Ellisbridge. Ahmedabad and (ii) Terrace of Crystal Arcade, Nr. Navrangpura Telephone Exchange, C. G. Road, Ahmedabad contains information which relates to the assessee, Shri Dilip Ku/riar Lalwani. Further, I am also satisfied that satisfied that documents seized have a bearing on the determination of the total income of the assessee, Shree Dilip Kumar Lalwani for assessment years 2009-10 to 2014-15. The assessee being other than the person referred to in section 153A of the Act. I have satisfaction to proceed against the assessee Shri Dilip Kumar Lalwani as per the provisions of Section 153C of the Income Tax Act, 1961. Therefore, it is fit case for initiation of proceeding u/s 153Cof the l.T. Act.

“4.3. I have carefully considered the facts of the case, assessment order and submission made by the appellant. The Assessing Officer [DCIT, Central Circle-1 (1), Ahmedabad] of M/s. Venus Infrastructure and Developer Pvt. Ltd., in whose case the search was conducted and documents relating to the appellant company was found and seized has recorded his satisfaction note for initiation of assessment proceedings in the case of appellant and forwarded to the ACIT, Circle-50(l), New Delhi, being the Assessing Officer of the appellant. The AO of appellant has recorded his satisfaction and issued notice u/s. 153C of the I. T. Act, 1961. The case of appellant was subsequently transferred to the ACIT, Central Circle -1(1), Ahmedabad. The appellant had raised objection before the new Assessing Officer against the earlier notice issued by DCIT, Circle -50(1), New Delhi, u/s. 153C of the I. T. Act,1961. The AO who was also AO of M/s. Venus Infrastructure

Shri Dilipkumar Lalwani and Others (107 Appeals)

25 and Developer Pvt. Ltd. has withdrawn the earlier notice and issued fresh notice duly recording the satisfaction. The appellant has contended that the notice issued u/s. 153C of the Act was not valid as the seized material on the basis of which notice u/s. 153C was issued did not belong to the appellant. The appellant has also contended that there is no provision in the Income Tax Act either to drop the proceedings u/s. 153C or to issue second set of notices. The appellant has also relied upon the case laws in the case of Pepsico India Holding Pvt. Ltd. Vs. ACIT, RRJ Securities Ltd. [62 Taxmann.com 391] (2015) & Sinhgad Technical Education Society [84 Taxmann.com 290]. The AO has dealt with the argument raised by the appellant in Para 4.9, 4.10 & Para 5 of assessment order. The provision of Section 153C has been amended with effect from 01/06/2015 where if the Assessing Officer is satisfied that any books of account or documents seized pertains to, or any information contained therein relates to any person, other than the person referred to in Section 153A of the Income Tax Act, then books of account or document shall be handed over to the Assessing Officer having jurisdiction over such other person and the AO shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Earlier scope of section 153C was in the cases where the documents seized belong to the assessee, but subsequently the provision of Act has been amended by adding the word 'relating to' in the section 153C. The AO in the present case has issued notice after first day of June, 2015, therefore, the amended provision is applicable in appellant's case. The AO in the satisfaction note has referred the material relating to the appellant found during the course of search in M/s. Venus Infrastructure and Developer Pvt. Ltd. The appellant has relied on the case laws which are on the 'belonging to' prior to the amended provisions of 153C w.e.f. 01/06/2015, therefore, not relevant to the facts of the case. Appellant's contention that there is no provision for issue of second notice u/s. 153C on the same set of facts is not tenable as the Assessing Officer has withdrawn the earlier notice and issued fresh notice after recording the satisfaction. The Honourable Gujarat High Court in the case of A.G. Group Corporation Vs. Harsh Prakash [2013] [35 Taxmann. com 48] has held that, if in the earlier notice a fatal error has been crept in AO will be free to issue another notice provided jurisdiction and limitation aspects are satisfied.” 22. This finding is not in the line of law laid down by the Hon’ble Gujarat High Court in the case of Anilk Kumar Gopikishna Agrawal Vs. ACIT, and further reiterated in other cases. At this stage, it is pertinent to note that, otherwise also, these 43 appeals are directly covered by the decision of Hon’ble jurisdictional High Court in the case of Anilk Kumar Gopikishna Agrawal Vs. ACIT (supra) because on the basis of entries embedded in the documents found at the premises of Venus Infrabuild and Shri Ashok Vaswani, notice under

Shri Dilipkumar Lalwani and Others (107 Appeals)

26 section 153C was issued in the case Ocean Valves Mfg. Co. Proprietor of that concern filed an SCA No.19647 of 2018. This was lead case, and notice issued under section 153C of the Act was quashed. The above facts are contained in paragraph-2.4 of the Hon’ble High Court’s decision. For ready reference, we take note of this fact from there. It reads as under:

“2.4 By an order dated 23.7.2018, the Assessing Officer rejected the objections filed by the petitioner." Being aggrieved, the petitioner has approached this court by way of present petition challenging the impugned notice dated 8.2.2018 issued by the Assessing Officer under section 153C of the Act for assessment year 2012- 13.” 2A In case of Venus Group, reference is made to the facts as appearing in Special Civil Application No. 19647 of 2018. 2A.1 The petitioner, who is an individual and proprietor of M/s. Ocean Valves Mfg. Co. filed his return of income for assessment year 2012-13 on 14.3.2013 declaring total income of Rs.7,27,700/-. A search came to be conducted on various premises of Shri Ashok Sundardas Vaswani, M/s. Venus Infrastructure and Developers P. Ltd. on 13.3.2015. During the course of search various documents were seized in which information about transactions relating to the petitioner was found. The seized incriminating documents related to unaccounted cash transactions which were analysed and correlated with other seized documents. Among the cash transactions as recorded in the seized unaccounted cash book which was found during the course of search, reference was also made to the petitioner. Based on such seized material, the Assessing Officer initiated proceedings under section 153C of the Act by issuing the impugned notices dated 22.3.2018 and 14.8.2018. Subsequently notices have been issued to the petitioner under section 142(1) of the Act to which the petitioner has responded.” 23. In the appeals of the present assessees, identical situation is there. A perusal of the satisfaction note would indicate that the AO nowhere held that documents belonged to the present appellants were found at the premises of searched person/entity. As far as case laws relied upon by the ld.CIT-DR are concerned they are not directly on the point. He put emphasis on the decision of Hon’ble Kerala High Court cited (supra) for buttressing his contentions that no incriminating material is required for proceedings under section 153A or 153C. This proposition is contrary to the decision of Hon’ble Gujarat High Court rendered in the case of Pr.CIT Vs. Saumya Construction P.Ltd. (supra).

Shri Dilipkumar Lalwani and Others (107 Appeals)

27 Similarly, the order of the ITAT referred by the ld.CIT-DR is with respect to the presumption of truth of certain documents found during the course of search. It is not directly on the point. Other arguments raised by the ld.CIT-DR were raised by the ld.Senior standing counsel before the Hon’ble Gujarat High Court in the case of Anil Kumar Gopikishna Agrawal Vs. ACIT (supra) and those arguments have been considered. Though, section 153C is a procedural section, but the jurisdiction to assess an assessee under this section is being invoked with help of the section. The AO will be in a position to pass assessment order only if during the course of search, any money, bullion, jewellery and other valuable article or thing, or the documents found belong to other person prior to 1.6.2015, and the AO of the searched person was satisfied that such documents disclosed undisclosed income. The documents belonged to the appellants considered under this compartment of the arguments were not found, rather certain information relating to the assessees were found to be embedded in these documents, but prior to 1.6.2015, jurisdiction under section 153C cannot be invoked on the basis of such information. Therefore, we allow this preliminary ground of appeal raised by these 43 appellants (assessees) and quash all these assessment orders passed in the appeals mentioned at serial no.1 to 43 of the cause title of this order. Thus all the appeals of the assessee are partly allowed whereas the Revenue’s appeal are dismissed.

Compartment No.2 of the arguments:

Shri Dilipkumar Lalwani and Others (107 Appeals)

28 Assessee Rajesh Sunderdas Vaswani IT(SS)A 96/Ahd/2019 2010-11 Rajesh Sunderdas Vaswani IT(SS)A 97/Ahd/2019 2011-12 Assessee Rajesh Sunderdas Vaswani IT(SS)A 98/Ahd/2019 2012-13 Assessee Rajesh Sunderdas Vaswani IT(SS)A 99/Ahd/2019 2013-14 Assessee Rajesh Sunderdas Vaswani IT(SS)A 100/Ahd/2019 2014-15 Assessee Rajesh Sunderdas Vaswani IT(SS)A 101/Ahd/2019 2015-16 Assessee

Rajesh Sunderdas Vaswani IT(SS)A 235/Ahd/2019 2009-10 Department Rajesh Sunderdas Vaswani IT(SS)A 236/Ahd/2019 2011-12 Department Rajesh Sunderdas Vaswani IT(SS)A 237/Ahd/2019 2012-13 Department Rajesh Sunderdas Vaswani IT(SS)A 238/Ahd/2019 2013-14 Department Rajesh Sunderdas Vaswani IT(SS)A 239/Ahd/2019 2014-15 Department Rajesh Sunderdas Vaswani IT(SS)A 240/Ahd/2019 2015-16 Department Sanjeet Motors Finance P. Ltd. IT(SS)A 109/Ahd/2019 2012-13 Assessee Sanjeet Motors Finance P. Ltd. IT(SS)A 110/Ahd/2019 2013-14 Assessee

Deepak Budharmal Vaswani IT(SS)A 111/Ahd/2019 2009-10 Assessee Deepak Budharmal Vaswani IT(SS)A 112/Ahd/2019 2010-11 Assessee Deepak Budharmal Vaswani IT(SS)A 113/Ahd/2019 2011-12 Assessee Deepak Budharmal Vaswani IT(SS)A 114/Ahd/2019 2012-13 Assessee Deepak Budharmal Vaswani IT(SS)A 115/Ahd/2019 2013-14 Assessee Deepak Budharmal Vaswani IT(SS)A 116/Ahd/2019 2014-15 Assessee Deepak Budharmal Vaswani IT(SS)A 117/Ahd/2019 2015-16 Assessee

Deepak Budharmal Vaswani IT(SS)A 248/Ahd/2019 2009-10 Department Deepak Budharmal Vaswani IT(SS)A 249/Ahd/2019 2010-11 Department Deepak Budharmal Vaswani IT(SS)A 250/Ahd/2019 2011-12 Department Deepak Budharmal Vaswani IT(SS)A 251/Ahd/2019 2012-13 Department Deepak Budharmal Vaswani IT(SS)A 252/Ahd/2019 2013-14 Department Deepak Budharmal Vaswani IT(SS)A 253/Ahd/2019 2014-15 Department Deepak Budharmal Vaswani IT(SS)A 254/Ahd/2019 2015-16 Department

Shri Dilipkumar Lalwani and Others (107 Appeals)

29 on third person, those materials cannot be used for the purpose of section 153A. The AO ought to have framed assessment orders either under section 153C with such material or under section 147 of the Act as the case may be. Taking us through the facts, he pointed out that in hands of these three assessees, the additions have been made based on followings viz.

i) “Cash book” seized from “Terrace of Cystal Arcade” Ashok Sunderdas Vaswani and Venus Infrastructure and Development P.Ltd. ii) “Material” seized from “901, Sapphire Complex”, search in the case of Ashok Sunderdas Vaswani and Venus Infrastructure and Development P.Ltd. iii) Information gathered during various “search” and “survey” carried out in the case of Shirish Chandrakant Shah & Prraneta Industries Ltd., i..e completely unconnected third parties; iv) Information gathered during various “search” and “survey” carried out by Kokatta Investigation Wing” in the case of completely unconnected third parties; 26. The ld.counsel for the assessee first appraised us with the scheme of assessments in the case of search. He took us through section 153A as well as 153C. Thereafter, he took us through the judgments of Hon’ble jurisdictional High Court in the case of Pr.CIT Vs. Saumya Construction 387 ITR 529 (Guj). He particularly took us through paragraph no15 onwards. Apart from this judgment, he relied upon the following other decisions:

i) DCIT vs. Smt. Shivali Mahajan and others –ITA 5585/Del/2015 and others ii) Krishna Kumar Singhania vs. DCIT - 168 ITD 271 (KolkattaTrib.) iii) Pavitra Realcon Pvt. Ltd. vs. ACIT - (2017) 87 taxmann.com 142 (Delhi Trib.) iv) CIT vs. Pinaki Mishra – 392ITR 347 (Delhi) v) DIT vs. Lalitkumar M. Patel - (2013) 36 taxman.com 554 (Gujarat) vi) PCIT vs. Subhash Khattar - ITA 60/2017 (Del. HC) vii) SubhagKhattar vs. ACIT - ITA 902/Del/2015 viii) Asha Rani Lakhotia vs. ACIT - ITA 424/Del/2015 ix) Krishna Bhagwan vs. ACIt - ITA 423/Del/2015

Shri Dilipkumar Lalwani and Others (107 Appeals)

30 x) Sushila Lakhotia vs. ACIT - ITA 770/Del/2015 Copies of these decisions have been placed on record. After appraising us the scope of assessment under section 153A vis-à-vis section 153C, he contended that when search action under section 132 of the Act is carried out in the case of particular assessees, then the following aspects are to be taken care of, while framing assessment under section 143(3) r.w. section 153A. Section 143(3) r.w.s. 153A is to be framed strictly on the basis of incriminating material found during the course of search carried out in the case of the assessee. No cognizance is to be taken on any material which was not found during the course of search action. If search action under section 132 of the Act has simultaneously been carried out in the cases of some other assessees, and some material belong to the assessee was found, then such material can be taken into cognizance only for the purpose of proceedings under section 153C of the Act, and not in the proceedings under section 153A of the Act. Thus, according to the ld. counsel for the assessee, material collected during the course of search action carried out in the cases of some third parties, cannot be considered while framing assessment under section 143(3) r.w.s. 153A of the Act. For that purpose, proceedings under section 153C must be initiated. The ld.counsel for the assessee thereafter took us through the assessment orders, and submitted that on the basis of finding recorded in the assessment orders, the assessees have compiled the details in tabular forms exhibiting the additions made in a particular year, and basis on which, such addition was made. These details have been placed on the paper book. Taking us through these details, he specifically submitted that none of the additions was made on the basis of material found during the course of search carried out in the case of these three assessees. The additions are made mainly on the basis of four materials extracted (supra) viz.

xi) “Cash book” seized from “Terrace of Cystal Arcade” Ashok Sunderdas Vaswani and Venus Infrastructure and Development P.Ltd.

Shri Dilipkumar Lalwani and Others (107 Appeals)

31 xii) “Material” seized from “901, Sapphire Complex”, search in the case of Ashok Sunderdas Vaswani and Venus Infrastructure and Development P.Ltd. xiii) Information gathered during various “search” and “survey” carried out in the case of Shirish Chandrakant Shah & Prraneta Industries Ltd., i..e completely unconnected third parties; xiv) Information gathered during various “search” and “survey” carried out by Kokatta Investigation Wing” in the case of completely unconnected third parties; 27. He also took us through the copy of panch nama drawn in the case of Ashok Sunderdas Vaswani in order to demonstrate that the cash book was found from his premises, and other material used was also found in the search carried out at his premises viz. 901, Sapphire Complex.

i) DR.A.V.Sreekumar Vs. CIT, 90 taxmann.com 355 (Ker) ii) Sunny Jacob Jewellers and Wedding Centre Vs. DCI, 48 taxmann.com 347 (Ker.) iii) CIT Vs. St.Francis Clay Décor Tiles, 70 taxmann.com 234 (Ker) iv) E.N.Gopakumar Vs. CIT, 75 taxmann.com 215 (Ker) v) Pr.CIT Vs. Saumya Construction P.Ltd., 387 ITR 529 (Guj) vi) Par Excellence Leasing & Financial Services P.Ltd. Vs. ACIT, 115 taxmann.com 38 (Delhi-Trib) vii) Pravinbhai Keshavbhai Patel Vs. DCIT, 45 taxman.com 533 (Ahd-Trib.) He submitted that Hon’ble Kerala High Court has held that for the purpose of assessment required to be made under section 153A, it is not necessary that search should yield incriminating material. The role of the search is only to issue notice under section 153A, thereafter, the AO can look into any other aspects for determining taxable income.

Shri Dilipkumar Lalwani and Others (107 Appeals)

32 29. We have duly considered rival contentions and gone through the record carefully. Before adverting to the facts and alleged seized material considered by the ld.AO for making the addition in the hands of the present three assessees, we deem it appropriate to bear in mind the position of law propounded in various authoritative judgments recording scope of section 153A of the Act. We are of the view that in this regard, there were large numbers of decisions. First we refer to the decision of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del). Hon’ble Delhi High Court after detailed analysis has summarized the following legal position: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO 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 AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A 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 AO 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 the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings.

Shri Dilipkumar Lalwani and Others (107 Appeals)

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.”

Shri Dilipkumar Lalwani and Others (107 Appeals)

34 “15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person.” 31. Order of the ITAT Delhi Bench in other cases viz. Asha Rani Lakhotia vs. ACIT and Subhag Khattar Vs. ACIT are on the same line.

"Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law? " 33. After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: “6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the ITAT. The ITAT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016] 380 ITR 573. 7. A question was posed to the learned counsel for the Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so-called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the

Shri Dilipkumar Lalwani and Others (107 Appeals)

35 Assessee on the basis of the documents discovered under any other provision of law, but certainly, not under Section 153A. This goes to the root of the matter.” 34. Hon’ble Court has specifically observed for the purpose of section 153A that only seized material is required. However, if there is any other incriminating material belong to the assessee found at the premises of the some other person, then the assessment has to be made under other provisions and not under section 153A of the Act. Hon’ble jurisdictional high Court has also considered the decision of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Hon’ble Gujarat High Court framed the following question of law in the case of Pr.CIT Vs. Saumya Construction (supra): "[A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?"

Shri Dilipkumar Lalwani and Others (107 Appeals)

36 saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which

Shri Dilipkumar Lalwani and Others (107 Appeals)

37 was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed.” 36. As far as decisions relied upon by the ld.CIT-DR are concerned, we have already considered the decision in the case of E.N. Gopakumar (supra). Other decisions are also on the similar line, but they are not in coherence with the position of law propounded by the Hon’ble jurisdictional High Court. Therefore, Tribunal being subordinate to the Hon’ble Gujarat High Court, is required to first follow Hon’ble Supreme Court and thereafter Hon’ble jurisdictional High Court.

Shri Dilipkumar Lalwani and Others (107 Appeals)

38 If no ratio of the law is available from Hon’ble Supreme Court as well as Hon’ble jurisdictional high Court, then the decision of non-jurisdictional High Court is to be followed. Therefore, we do not deem it necessary to recapitulate the decisions of Hon’ble Kerala High Court and make discussion on them. Ld.CIT-DR was unable to bring any authoritative decision from the Hon’ble Supreme Court or from the Hon’ble jurisdictional High Court to support the case of the Revenue. He made reference to para-18 of the Pr.CIT Vs. Saumya Construction (supra), which we have considered; but paragraph nowhere buttress the case of the ld.CIT-DR. On a detailed analysis of these case laws, it is pertinent to observe that scheme of the Income Tax Act would provide that a regular assessment of the income is to be made under section 143(3)/144. In the case of an escaped income, then a notice under section 148 should be issued and the assessment is to be made under section 147 r.w. section 143(3). In case a search is carried out on an assessee, then that search could give rise to a proceedings viz. under section 153A qua the person who has been searched. The income has to be assessed on the basis of material found during the course of search. The second category of the person is third-party and the assessment could be made under section 153C of the Act. The assessment under section 153C is to be made on a condition that during the course of search any money, bullion, jewellery, assets, documents belonged to the assessee prior to 1.6.2015, and information relates/pertains to assessee after 1.6.2015 was found qua to the person other than the searched person. In that situation, the AO of the searched person would record his satisfaction that such material belongs to third-person, and he would transmit that material along with his satisfaction to the AO having jurisdiction on such other person. The AO thereafter issue notice under section 153Cafter recording his satisfaction and the assessment proceedings under section 153C r.w. section 153A would commence. One more situation would arise, which we are going to discuss in this very group in the later part of the order that material was found during the course of search, but six years have

Shri Dilipkumar Lalwani and Others (107 Appeals)

expired, then the assessment could be reopened. In other words, the material belonged to some other person was found during the course of search. Prior to 1.6.2015, a possible angle could be that such material is to be construed, whether the income has escaped assessment or not. Broadly, these are basic parameters for making assessment under different sections. In the present group of three assessees in different assessment years, search was conducted, but the additions have been made on the basis of the material found during the search relating to some third person. In other words, the AO has not made the addition on the basis of material found during the course of search of these three assessees. We will discuss the material considered by the AO in the subsequent part of his order. Primarily, after looking the material considered by the AO and compiled in tabular form by the ld.counsel for the assessee, we have verified that these additions are not based on the material found during the course of search conducted at the premises of these three assessees. Let us take note of the material considered by the AO for making the addition. These details have been compiled in tabular form and they read as under:

RAJESH SUNDERDAS VASWANI Basis of Total addition 2011 2012- 2013- 2014- 2015- Particulars 2009-10 2010-11 ( 09-10 to -12 13 14 15 16 15-16 ) Investment in land property: Land at Ambali FP - 22 72500000 0 0 0 0 0 0 72500000 Note - 1 Land at Santej, Survey 650000 No.618 0 2500000 0 0 0 0 0 9000000 Note - 1 Land at Santej, Survey 675790 No.654 0 7000000 0 0 0 0 0 13757900 Note - 1 Land at Ambai - FP/22 0 28120000 0 0 0 0 0 28120000 Note - 1 Land at Ognaj, Survey 110000 2104000 No.1441/11 0 0 00 0 136500 0 0 32176500 Note - 1 Land at Ognaj, Survey 550000 2444225 No.1441/12 0 0 0 0 13700 0 0 29955950 Note - 1 Land at Santej, Survey 320000 No.669 0 0 00 1000000 0 0 0 33000000 Note - 1 Land at Santej, Survey 206000 3320000 No.711 0 0 00 0 0 0 750000 54550000 Note - 1 Land at Shilaj, Survey 137200 2600000 No.804 0 0 00 25000 0 5800000 21500 45566500 Note - 1

Shri Dilipkumar Lalwani and Others (107 Appeals)

Land at Thaltej, Survey 300000 1165000 7205000 1000000 No.518, 519, FP 84 0 0 00 00 0 0 0 228550000 Note - 1 Land at Ranakpur, Survey No.144 0 0 0 6100000 7000000 0 0 13100000 Note - 1 Land at Vejalpur, Survey 2057925 No.688 0 0 0 3815000 3600000 5875000 0 33869250 Note - 1 Land at Santej, Survey No.712 0 0 0 0 3014800 2518000 0 5532800 Note - 1 Land at Ognaj, Survey 2393000 No.1300/2 0 0 0 0 0 0 0 23930000 Note - 1 Land at Ognaj, Survey 2260000 No.1441/10 0 0 0 0 0 0 0 Note - 1

412900 Other land transactions 166667 0 0 19633 1250 6200 0 4322750 Note - 1

Expenses related to projects: Venus Amadeus & Venus 207820 IVY 0 0 0 1800000 0 0 0 3878200 Note - 1 668975 Atlantis & Benicia 0 778250 0 0 0 0 0 7468000 Note - 1

- "information" gathered during various search / survey carried out by Kolkatta Investigation Wing in cases of completely unconnected third parties ; Shri Dilipkumar Lalwani and Others (107 Appeals) Note - 1: Additions based on "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in case of "ASV" & "VIDPL" ( Basis of addition Note - 1 Note - 1 Note - 1 Note - 1 Note - 2 Note - 1 Note - 3 - "information" gathered from "search" and "survey" in the case of "SCS" & "PIL" i.e. completely unconnected third parties (not "RSV") ; & - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "RSV") ; - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "RSV") ; 95862572 69061866 329427204 516754285 213634521 75043621 62033717 1361817786 2273164 52743280 80394190 22741150 283019000 15400000 243369152 ( 09-10 to 15-16 ) Total - "Material" seized from "901, Sapphire complex" which was searched in the case of "ASV" and "VIDPL" (not "RSV") ; & 354 9897843 12597300 9717070 15100220 11199280 0 15933650 952383 0 0 2015-16 155308 3091050 0 0 2014-15 567608 4544693 0 59725567 3333333 0 2013-14 41814 524910 9029055 2300000 0 219250000 8400000 69266623 2012-13 0 1055493 7120165 4507500 3666667 0 174102529 2011-12 41 16080 9630436 7211300 21017100 0 0 0 2010-11 VIDPL - Venus Infrastructure & Development Pvt. Ltd. 1492000 14492605 0 0 0 0 2009-10 LTCG from sale of shares of Prraneta Industries RSV - Rajesh Sunderdas Vaswani ASV - Ashok Sunderdas Vaswani SCS -Shirish Chandrakant Shah Note - 2: Addition based on - Note - 3: Addition based on - PIL - Prrante Industries Ltd. Investment in shops at 3rd Eye building, Investment / Expense at Bungalow Transactions of personal nature (not "RSV") ; Panchwati Road, Ahmedabad Payment to Prakash Tekwani not "RSV" ); Total SMFPL & SSAHPL Misc. transactions Particulars Ltd.

- "information" gathered during various search / survey carried out by Kolkatta Investigation Wing in cases of completely unconnected third parties (not Shri Dilipkumar Lalwani and Others (107 Appeals) - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annnexure A-1 to 142) searched in the case of "ASV" and "VIDPL" (not "SMFPL") ; - "Annexure A-1" seized from "901, Sapphire complex" searched in the case of "ASV" and "VIDPL" (not "SMFPL") ; & SANJEET MOTORS FINANCE PVT. LTD. Basis of addition Note - 1 Total 493300000 500000 493800000 493300000 500000 493800000 Total 2013-14 42 VIDPL - Venus Infrastructure & Development Pvt. Ltd. 2012-13 SMFPL - Sanjeet Motors Finance Pvt. Ltd. ASV - Ashok Sunderdas Vaswani Note - 1: Addition based on - Share capital "SMFPL" ); Particulars

Shri Dilipkumar Lalwani and Others (107 Appeals) 4-365 6-367 8-370 1-373 4-376 7-393 9-441 2-455 6-457 8-459 Pgs. of Note / Pgs.36 Pgs.36 Pgs.36 Pgs.37 Pgs.37 Pgs.37 Pgs.39 4-428 Pgs.42 Pgs.44 Pgs.45 Pgs.45 DR's P/B 54636000 12590000 33869250 507844 99365000 83490500 1175428070 163484290 2620159406 131674131 175849772 92877900 36457350 ( 09-10 to 15-16 ) Total 43136000 0 20579250 161300 9800000 37348810 5308500 903300 4310000 2015-16 11500000 0 5875000 346544 13800000 165404970 257513000 9337450 6805000 45300000 2186050 2014-15 0 1025000 3600000 0 46750000 352579600 359395385 3961000 29653502 8800000 150000 DEEPAK BUDHARMAL VASWANI 2013-14 0 4065000 3815000 0 18515000 389277000 505642204 3957300 12148850 6408700 200000 2012-13 0 7500000 0 0 8500000 113426000 674366872 6829800 81105770 31465900 28446500 2011-12 43 2000000 20250000 195205900 32400000 38887150 430000 0 0 0 0 0 2010-11 0 0 0 0 0 51000000 464551755 37839771 1941000 0 734800 2009-10

Other land transactions / Expenses related to Investment in land at Nidhrad and Chekla Land at Bodakdev, Survey No.166/1 Land at Vejalpur, Survey No.688 Transactions with Thakore family Venus Amadeus & Venus IVY Land at Shilaj, Survey No.56 C. G. Square Mall (K - mall) Expenses related to projects: Investment in land property: Expenses for Saurabhi Atlantis & Benicia Venus Pahel Particulars land

Shri Dilipkumar Lalwani and Others (107 Appeals) 0-464 5-474 5-479 0-481 Pgs.46 Pgs.46 Pgs.47 Pgs.48 107791932 242561750 29392400 850720 500000 72775600 6250700 250000

14460500 73783250 2491300 205000 28639600 49818975 9023500 0

16761192 25863100 7642000 36600 16950140 15345575 704000 310330 44 27923000 274750 1287900 48790 2557500 4700500 1993000 0

Venus Parklands and Venus Park Heights Shyam Residency Venus Township VS

Shri Dilipkumar Lalwani and Others (107 Appeals) Basis of addition Pgs.482-485 Pgs.486-496 Pgs.497-498 Pgs.499-500 Pgs.501-517 Pgs.518-560 Note 2 Note 3 Note 4 Note 5 558414381 5995574199 11365824 52743280 365000 5100000 66675161 493264062 15400000 249181891 283019000 4448456 ( 09-10 to 15-16 ) Total 1772 12597300 0 0 8367080 83749140 0 0 952383 4448456 2015-16 776542 9897843 0 0 14988970 19364400 0 0 3091050 0 657126869 2014-15 2838042 4544693 0 5000000 8547925 108511740 3333333 0 59725567 0 1085897862 2013-14 209068 524910 0 0 16462770 63425622 8400000 53239970 219250000 0 1355844286 2012-13 0 1055493 0 0 11531808 87796668 3666667 195941921 0 0 383735729 1284943444 2011-12 45 80400 9630436 365000 3950341 51002062 0 0 0 0 0 2010-11 7460000 14492605 0 100000 2826267 79414430 0 0 0 0 669611628 2009-10

Investment in shops at 3rd Eye building, LTCG from sale of shares of Prraneta Investment / Expense at Bungalow B-45, Sarvoday Nagar expenses Transactions of personal nature Total Panchwati Road, Ahmedabad Payment to Prakash Tekwani Law Garden / New garden SMFPL & SSAHPL Misc. transactions Industries Ltd. Particulars Jewellery

- "information" gathered from "search" and "survey" in the case of "SCS" & "PIL" i.e. completely unconnected third parties (not - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and - "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in the case of "ASV" and Note - 2: Additions based on "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in case - "Material" seized from "901, Sapphire complex" which was searched in the case of "ASV" and "VIDPL" (not "DBV") ; & - "information" gathered during various search / survey carried out by Kolkatta Investigation Wing in cases of completely are based on "cash book" seized from "terrace of Crystal Arcade" (i.e. Annexure A-1 to 142) searched in Note - 1: Pages mentioned in the last column are of DR's paperbook running into 4203 pages; All these additions Note - 5: Addition based on "jewellery" found in the case of "DBV"; 46 case of "ASV" and "VIDPL" (not "DBV") VIDPL - Venus Infrastructure & Development Pvt. Ltd. unconnected third parties (not "DBV") ; of "ASV" & "VIDPL" ( not "DBV" ); RSV - Rajesh Sunderdas Vaswani ASV - Ashok Sunderdas Vaswani Note - 3: Addition based on - Note - 4: Addition based on - SCS -Shirish Chandrakant Shah "VIDPL" (not "DBV") ; "VIDPL" (not "DBV") ; PIL - Prrante Industries Ltd. "DBV") ; &

Dilipkumar Lalwani & Others (107 appeals) 47

“On the basis of the above incriminating material seized evidences, it is noticed that details of cash payment have been found recorded in unaccounted cash book seized from Terrace of Crystal Arcade, C.G.Road, Ahmedabad and upon correlation of seized documents, it has been established that the land at Nidhrad, Chekhla villages have been purchased by Vaswani family members/Venus group concerns/Thakor family members. The land was purchased in the name of Thakor family members but the funds were made available by Vaswani family members and Venus group concerns. The on-money has been paid over and above the registered value of the land.” 38. Thus, the AO is talking of on-money which has been unearthed, according to him, during the course of search, on the basis of alleged cash book. This cash book was not found from the premises of the assessee. It was found from the premises of Ashok Sunderdas Vaswani and Venus Infrastructure and Developers. Similarly, the ld.counsel for the assessee took us through various conclusions of the AO in other assessment orders, and the basis of the documents considered by the AO. None of the additions, except addition of jewellery in the assessment year 2015-16 in the case of Deepak Budharmal

Shri Dilipkumar Lalwani and Others (107 Appeals)

48 Vaswani was made on the basis of seized material. As far as the case of Sanjeet Motors and Finance Ltd. is concerned, these additions are based on the basis of certain information gathered during the various investigation carried out by Kolkatta Investigation Wing in the case of completely an unconnected third- person. So these materials could not be considered in the assessment proceedings under section 153A. They ought to be considered under some other provisions viz. Section 153C or some other sections; but not under this section.

Shri Dilipkumar Lalwani and Others (107 Appeals)

ASHOK SUNDERDAS VASWANI Date of Within Asst. Appeal No. Appeal by Section Asst. limitation Year Order ?

IT(SS)A 2009-10 Assessee 143(3) r.w.s. 153A 26.12.17 No 88/Ahd/2019

IT(SS)A 2010-11 Assessee 143(3) r.w.s. 153A 26.12.17 No 89/Ahd/2019

IT(SS)A 2011-12 Assessee 143(3) r.w.s. 153A 26.12.17 No 90/Ahd/2019

IT(SS)A 2012-13 Assessee 143(3) r.w.s. 153A 26.12.17 No 91/Ahd/2019

IT(SS)A 2013-14 Assessee 143(3) r.w.s. 153A 26.12.17 No 92/Ahd/2019

IT(SS)A 2014-15 Assessee 143(3) r.w.s. 153A 26.12.17 No 93/Ahd/2019

IT(SS)A 2015-16 Assessee 143(3) r.w.s. 153B 26.12.17 No 94/Ahd/2019

IT(SS)A241/Ahd/20 2009-10 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A242/Ahd/20 2010-11 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A243/Ahd/20 2011-12 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A244/Ahd/20 2012-13 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A245/Ahd/20 2013-14 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A246/Ahd/20 2014-15 Department 143(3) r.w.s. 153A 26.12.17 No 19 IT(SS)A247/Ahd/20 2015-16 Department 143(3) r.w.s. 153B 26.12.17 No 19

Shri Dilipkumar Lalwani and Others (107 Appeals)

VENUS INFRASTRUCTURE &DEVELOPERS PVT. LTD. Within Asst. Date of Asst. Appeal No. Appeal by Section limitati Year Order on? IT(SS)A 102/Ahd/2019 2009- 143(3) r.w.s. Assessee 29.12.17 No 10 153A IT(SS)A 103/Ahd/2019 2010- 143(3) r.w.s. Assessee 29.12.17 No 11 153A IT(SS)A 104/Ahd/2019 2011- 143(3) r.w.s. Assessee 29.12.17 No 12 153A IT(SS)A 105/Ahd/2019 2012- 143(3) r.w.s. Assessee 29.12.17 No 13 153A IT(SS)A 106/Ahd/2019 2013- 143(3) r.w.s. Assessee 29.12.17 No 14 153A IT(SS)A 107/Ahd/2019 2014- 143(3) r.w.s. Assessee 29.12.17 No 15 153A IT(SS)A 108/Ahd/2019 2015- 143(3) r.w.s. Assessee 29.12.17 No 16 153A IT(SS)A 228/Ahd/2019 2009- Department 143(3) r.w.s, 29.12.17 No 10 153A IT(SS)A 229/Ahd/2019 2010- Department 143(3) r.w.s. 29.12.17 No 11 153A IT(SS)A 230/Ahd/2019 2011- Department 143(3) r.w.s. 29.12.17 No 12 153A IT(SS)A 231/Ahd/2019 2012- Department 143(3) r.w.s. 29.12.17 No 13 153A IT(SS)A 232/Ahd/2019 2013- Department 143(3) r.w.s. 29.12.17 N 14 153A IT(SS)A 233/Ahd/2019 2014- Department 143(3) r.w.s. 29.12.17 No 15 153A IT(SS)A 234/Ahd/2019 2015- Department 143(3) r.w.s. 29.12.17 No 16 153A

DEEPAK BUDHARMAL VASWANI Date of Within Appeal No. Asst. Year Appeal by Section Asst. limitation? Order 143(3) r.w.s. IT(SS)A lll/Ahd/2019 2009-10 Assessee 26.12.17 No 153A IT(SS)A 143(3) r.w.s. 2010-11 Assessee 26.12.17 No 112/Ahd/2019 153A

Shri Dilipkumar Lalwani and Others (107 Appeals)

51 IT(SS)A 143(3) r.w.s. 2011-12 Assessee 26.12.17 No 113/Ahd/2019 153A IT(SS)A 143(3) r.w.s. 2012-13 Assessee 26.12.17 No 114/Ahd/2019 153A IT(SS)A 143(3) r.w.s. 2013-14 Assessee 26.12.17 No 115/Ahd/2019 153A IT(SS)A 143(3) r.w.s. 2014-15 Assessee 26.12.17 No 116/Ahd/2019 153A IT(SS)A 143(3) r.w.s. 2015-16 Assessee 26.12.17 No 117/Ahd/2019 153A

IT(SS)A Department 143(3) r.w.s. 2009-10 26.12.17 No 248/Ahd/2019 153A IT(SS)A Department 143(3) r.w.s. 2010-11 26.12.17 No 249/Ahd/2019 153A IT(SS)A Department 143(3) r.w.s. 2011-12 26.12.17 No 250/Ahd/2019 153A IT(SS)A Department 143(3) r.w.s. 2012-13 26.12.17 No 251/Ahd/2019 153A IT(SS)A Department 143(3) r.w.s. 2013-14 26.12.17 No 252/Ahd/2019 153A IT(SS)A Department 143(3) r.w.s. 2014-15 26.12.17 No 253/Arid/2019 153A IT(SS)A Department 143(3) r.w.s. 2015-16 26.12.17 No 254/Ahd/2019 153A

Shri Dilipkumar Lalwani and Others (107 Appeals)

52 42. The learned counsel for the assessee while elaborating his arguments under this compartment would submit that before adverting to the facts for adjudicating this proposition, one has to bear in mind the scheme of Income Tax Act with regard to search action carried out under s.132 of the Act as applicable on the date of the search in the present group of cases i.e. 10.03.2015. Thus, he took us through Sections 132(3), 153A, 153C, 153B & 158BE, Explanation2. He submitted that after the search is carried out and incriminating material unearthed during the search disclosing undisclosed income then, AO will issue notice for six assessment years immediately preceding assessment year relevant to the previous year in which search is conducted and assessed or re-assessed income for such six assessment years.

Shri Dilipkumar Lalwani and Others (107 Appeals)

53 year in which the last of the authorization for search under s.132 of the Act or requisition under s.132A of the Act was executed. It means that in the present appeals, the search actions started on 10.03.2015. Search was concluded on 13.03.2015 meaning thereby last of the authorization was executed before the end of the FY 2014-15 i.e. 31st March, 2015. The assessment was required to be passed before the 31stMarch, 2017 i.e. within two years from 31st March 2015 but prohibitory orders were put on certain items/premises while executing the authorization of warrants. In the present case, these orders were put under s.132(3) on 11th March & 12th March, 2015. According to the Revenue, prohibitory orders were lifted in the month of May and thus it is to be construed that search was concluded in F.Y. 2015-16 i.e. before 31st March, 2016. The time limit would be two years from this date and i.e. available up to 31st March, 2018. The assessment orders have been passed in December 2017 and thus the department has treated all the assessment orders passed within the time limit. The area of dispute between the parties relates to this aspect.

Shri Dilipkumar Lalwani and Others (107 Appeals)

54 the scope of Section 153B Sub Section (2). The learned counsel submitted that it is verbatim same as the Explanation (2) of Section 158BE. This aspect has been considered by Hon’ble Karnataka High Court in case of C. Ramaiah Reddy vs. ACIT reported in 339 ITR 210 (Kar.). The learned counsel submitted that against this judgment, department went before the Hon’ble Supreme court. The Hon’ble Supreme Court has admitted the SLP, in other words, leave to file appeal against the judgment was granted but Civil Appeal was dismissed. The learned counsel submitted that he is unable to lay his hand on the judgment of the Hon’ble Supreme Court but he placed on record the case status report from the Hon’ble Supreme Court showing that Civil Appeal was dismissed against this judgment. Copies of these details have been annexed as ‘Annexure A’ with the brief synopsis submitted by the learned counsel for the assessee under the head ‘Additional Note’. He particularly took us through paragraph no. 76. He further relied upon the judgment of Hon’ble Kerla High Court in the case of Dr. C. Balakrishnan Nair vs. CIT reported in 237 ITR 70 (Ker.) as well as upon the judgment of Hon’ble Bombay High Court in the case of CIT vs. Sandhya P. Naik 253 ITR 534 (Bombay). He placed on record copies of all these judgments.

Shri Dilipkumar Lalwani and Others (107 Appeals)

55 impression that it will keep the search proceeding open and department will have a longer period of limitation for passing assessment order then that intention has to be truncated.

Shri Dilipkumar Lalwani and Others (107 Appeals)

56 3rd prohibitory order was put at 801-802 Broadway Business Centre, this is also connected with VIDPL. Prohibitory order was revoked on 6th May, 2015 and two annexures containing 69 pages and 163 pages were recovered from this place but none of the page was used for assessing or re-assessing the income of the assessee. These were not incriminating papers. According to the learned counsel for the assessee, this aspect would show that these prohibitory orders were put only in order to explore the possibility of longer period of limitation for passing the assessment order. For buttressing his contentions, he relied upon the following judgments and also placed on records of copies of the judgments:

Shri Dilipkumar Lalwani and Others (107 Appeals)

57 from this date, then, assessment could be passed upto 31stMarch, 2018. These were passed in the month of December 2017. Therefore, they are within the limitation. He further contended that a similar situation was considered by the Hon’ble Supreme Court in the case of VLS Finance Ltd. Vs. CIT reported in 384 ITR 1. He placed on record the copy of the judgment taken from Taxman and the citation is (2016) 68 taxmann.com 368. He submitted that in this judgment Hon’ble Supreme Court considered Explanation (2) to Section 158BE which is similar to sub Section (2) to Section 153B. He thereafter put reliance upon the judgment of Hon’ble Delhi High Court in the case of PCCIT vs. PPC business. This judgment has been referred by the assessee also. The learned CITDR further relied upon the decision of Hon’ble Madras High Court in the case of CIT vs. Smt. P. Shanti reported in33 taxmann.com 674. He also relied upon the judgment in the case of DCIT vs. RakeshSarin reported in 362 ITR 619 (Mad.).

153B. (1) Notwithstanding anything contained in Section 153, the Assessing Officer shall make an order of assessment or reassessment,— (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of 81[sub-Section (1) of] Section 153A, within a period of two years from the end of the financial year in which the last of the authorisations for search under Section 132 or for requisition under Section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under Section 132 or requisition is made under Section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under Section 132 or for requisition under Section 132A was executed : (2) The authorisation referred to in clause (a) and clause (b) of sub-Section (1) shall be deemed to have been executed,— (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under Section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer.

Shri Dilipkumar Lalwani and Others (107 Appeals)

Shri Dilipkumar Lalwani and Others (107 Appeals)

investigation securing further particulars. Under the scheme, the law provides for such procedure. But not when he visits the premises for further investigation for the materials already secured. It does not amount to search as the materials to be looked into and investigated is already known and is the subject-matter of a prohibitory order or a restraint order. Though it isj not seizure or deemed seizure, it amounts to deemed possession. What is in your possession is to be looked into to find out, is there any incriminating material. It does not amount to search as understood under Section 132 of the Act. It is only because of paucity of time he has gone back and wants to come back and look into the matter leisurely. There is no provision in the Criminal Procedure Code or in the Income-tax Act or the rules for postponing the search for a long period. Then, the concept of search as understood either under the provisions of the Criminal Procedure Code or the Act which are made applicable expressly, would lose its meaning. If such a course is attracted, it is open to an authorised officer to keep the authorisation in his pocket like a season ticket and go on visiting the premises according to his whims and fancies. It seriously affects the valuable right of the assessee conferred under the Constitution. To keep the affected parties in a suspended animation about the probable continuation of search would be agonising. It is invading the right and freedom of the petitioners for a period more than required or necessary. The orders which are passed under Section 132(3) may have a very far-reaching effect on the business of an assessee. The order of restraint may adversely affect the business and, therefore, adequate safeguards are sought to be provided in the Act by the insertion of the provisions of sub-Section (8A) in Section 132. In order that the restraint order must not be continued indefinitely, sub-Section (8A) of Section 132 provides that the restraint order can be continued only if, before the expiry of 60 days, and for reasons to be recorded, the Commissioner grants an extension. The provisions of sub-Section (8A) cannot be bypassed or rendered nugatory by revoking an order under Section 132(3) and, thereafter, pass another order on the same date. In the nature of things, the search is to be done expeditiously and the undisclosed income is to be unearthed and proceeding has to be initiated against such person and the tax legitimately due to the Government is to be recovered. There cannot be any laxity on the part of the authorised officer in this regard. Any other interpretation would run counter to the scheme of search provision under the Act. Therefore, by passing a restraint order, the time limit available for framing of the order cannot be intended. Once an order under Section 132(3) has been passed, then the limitation period commences and such order cannot be continued unless and until the provisions of Section 132(8A) are satisfied.”

Shri Dilipkumar Lalwani and Others (107 Appeals)

is for removal of that doubts that the Explanation is inserted. For the purpose of computing the limitation, it is the one year from the end of the month in which the last of the authorisations was executed. If there are more than one authorisation issued on the same day, then the last panchnama drawn in relation to thewarrant of authorisation issued on the same day. As the period commences from the end of the month of the execution of the authorisation, the law has provided for the authorised officer to visit the purpose of inspection regarding the material which is the subject- matter of prohibitory order or the restraint order, even after search. However, the said exercise has to be done expeditiously, as the period of limitation starts from the date of search was concluded as evidenced by the panchnama, as otherwise the very object with which these provisions was introduced would be defeated. 79. Circular No. 772, dated 23rd December, 1998, issued by Central Board of Direct Taxes explains this position as under ([1999] 235 ITR (St.) 35) : "According to Section 158BE, limitation of 2 years has to be counted from the end of the month in which last of the authorisations was executed. Use of the word 'authorisations' implies issue of more than one authorisation. Supposingly two authorisations are issued one after the other and the last authorisation is executed first while the authorisation issued earlier is executed later on. In such case, limitation should be counted from the date of issue of the execution of the last authorisation, though it is executed earlier and not from the execution of the earlier authorisation which is executed later. This anomalous situation is intended to be removed by insertion of Explanation 2 below Section 158BE with effect from July I, 1995, by the Finance (No. 2) Act, 1998. This Explanation reads as follows 'Explanation 2.-For the removal of doubts, it is hereby declared that the authorisation referred to in sub-Section (1) shall be deemed to have been executed,- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued ; (b) in the case of requisition under Section 132A, on the actual receipt of the books of account or other documents or assets by the authorised officer.' According to this Explanation, limitation is to be counted with reference to the last panchnama drawn on execution of a warrant of authorisation as referred to in Section 158BE. The main attribute of the panchnama is stated to be that it should record the conclusion of search." 80. The law does not contemplate the authorised officer to set out in any of the panchnama that he has finally concluded the search. If for any reason the authorised officer wants to search the premises again, it coould be done by obtaining a fresh authorisation. There is no prohibition in respect of the same premises. It is open to the empowered authority to issue authorisation but when the authorisation is issued once, the authorised officer cannot go on visiting the premises under the guise of search. Therefore, it is clear once .n pursuance of an authorisation issued the search commences, it comes to an end with the; drawing of a ranchnama. When the authorised officer enters the premises, normally, the panchnama is written when he comes out of the premises after completing the job entrusted to him. Even if after such scare he visits the premises again, for investigation or inspection of the subject-matter of restraint order or proiibitory order, ifa panchnama is written, that would not be the panchnama which has to be looked into for the purpose of computing the period of limitation. But, such a panchnama would only record what transpires on a re-visit to the premises and the incriminating material seized would become part of the search conducted in pursuance of the authorisation and would become the subject-matter of block assessment proceedings. But, such a panchnama would not extend the period of limitation. It is because the limitation is prescribed under the statute. If proceedings are not initiated within the time prescribed, the remedy is lost. The assessee would acquire a valuable right. Such a right cannot be at the mercy of the officials, who do not discharge their duties in accordance with law. The procedure prescribed under Section 132 of the Act is elaborate and exhaustive. The said substantive provision expressly provides for search and seizure. In the entire provision there is no indication of that search once commenced can be postponed. What can be postponed is only seizure of the articles. Therefore, once search commences it has to come to an end with the search party leaving the premises whether any seizure is made or not. The limitation for completion of block assessment is expressly provided under Section 158BE which clearly declares that it is the execution of the last of authorisation which is to be taken into consideration. The word "seizure" is

Shri Dilipkumar Lalwani and Others (107 Appeals)

conspicuously missing in the said Section. The same cannot be read into the Section for the purpose of limitation. Then it amounts to rewriting the Section by the court, which is impermissible in law. 81. The aforesaid Circular No. 772, dated December 23, 1998 (see [1999] 235 ITR (St.) 35) refers to this dilemma faced by the Department. "127. Execution of last of the authorisation or requisition The word 'execute' is defined in Black's Law Dictionary, fifth edition, page 509 as follows: 'to complete ; to make ; to sign ; to perform ; to do ; to carry out according to its terms ; to follow up ;to fulfil the command or purpose of ; to perform all necessary formalities ; to make and sign a contract; to sign and deliver a notes.' The word 'execution' is defined at page 510 of the said Law Dictionary as follows : Carry out some act or course of conduct to its completion. Northwest Steel Rolling Mills v. Commissioner of Internal Revenue, C.C.A. Wash., 110 F.2d 286, 290 : completion of an act : putting into force : completion fulfilment : perfecting of anything or carrying it into operation and effect "Execution" a process in action to carry into effect the directions in a decree or judgment –Foust v. Foust, 47 Cal. 2d 121, 302 p.2d 11, 13.' In the light of the above definition of the words 'execute' and 'execution', one may argue that until and unless the final act is performed, the warrant of authorisation should not be treated asexecuted and it order or for any other reason may not be treated as 'execution' of the warrant. But this interpretation would behypertechnical and it needs detailed discussion as is done in the following paras. The question arises as to whether execution of a warrant of authorisation or requisition refers to the conclusion of the proceedings under Section 132 and/or 132A or it refers only to the execution of thewarrant even though as a result of such execution the proceedings under Section 132 or 132A are yet to he completed. The latter situation will include a case in which a restraint order132(3) is passed. In such a case, it can be said that though the warrant of authorisation has been executed, proceedings under Section 132(3) are pending. Since the word 'execute', also means 'to complete’, one has to wait for conclusion of the proceedings under Section 132(3) for the purpose ofcomputation of limitation under Section 158BE(1) and the period of one year has to be computed from the end of the month in which the proceeding under Section 132(3) are conclude. If there are more than one warrant limitation will be counted from the execution of the last one. A contrary view is as much possible if one were to consider the spirit of the scheme which envisagesexpeditious disposal of the search cases and it would be reasonable to interpret that execution of warrant is not tantamount to completion of proceedings under Section 132 or 132A the period during which the proceedings under Section 132(3) remained pending has to be excluded for the purpose ofcounting limitation of one or two years under Section 158BE. Otherwise, it may lead to absurd results as it may take several years before restraint under Section 132(3) is lifted and it may thus extend the period of one or two years by all those years during which proceedings under Section 132(3) remained pending it may be agreed against this view that Section 132(8A) takes care that there is no extension of proceedings under Section 132(3) and that the view cannot be taken without doing violence to the language of the Act."

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62 (1) The Tribunal has got powers to look into all aspects of search and a valid search is sine qua non for initiating block assessment. (2) Materials seized during an invalid search cannot be used in block assessment proceeding but can be used in other assessment proceedings under the Act. (3) The power to put prohibitory order under Section 132(3) is under law but the reasons for doing so has to be recorded in writing and are justiciable. (4) The period of limitation starts on the date on which the last of authorisation has been executed and not when the authorised officer states that the search is finally concluded. Putting a prohibitory order under Section 132(3) does not elongate the starting point of limitation.” 54. The Revenue challenged this order before the Hon’ble Supreme Court SLP was admitted but ultimately Civil Appeal was dismissed. The next judgment which has been put in service by both the parties is the judgment of Hon’ble Delhi High court in the case of PCIT vs. PPC Business & Products Pvt. Ltd. In this case, two places were searched one authorization was for the search to be undertaken Pithampura, Delhi and other premise Ashok Vihar, Delhi. In the authorization both the premises were shown to be in possession of the assessee and his brother both being the Directors of the entity including JHM. In respect of the authorization of the search of Ashok Vihar premise of first panchnama dated 22ndMarch, 2007 and the warrant was in the case of assessee’s brother i.e. Mr. Sanjay Jain. The search was closed on 22ndMarch, 2007 as temporarily concluded. Second panchnama in relation to authorization of Ashok Vihar premises was prepared on 15thMay 2007 when prohibitory order was lifted. One Neena Jain was the person who has made acknowledgement of having received the second panchnama dated 15thMay, 2007 but according to the assessee, the jwellery belonging to Neena Jain at Ashok Vihar premise was valued on 21stMarch, 2007 when the alleged search was temporarily concluded. The case of the assessee was that search was concluded on 22ndMarch, 2007 when panchnama was prepared and restrain order was passed. The case of the Revenue, on the other hand, was that limitation for passing the assessment order is to be seen from the date when prohibitory order was lifted and second panchnama was drawn. The ITAT has held that assessment orders were time barred. Hon’ble Delhi High Court considered the judgment of Hon’ble

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63 Karnataka High Court in the case of C. Ramy Reddi also considered the Explanation (2a) to Section 158BE and observed that this Explanation (2a) is pare materia with sub-Section (2a) of Section 153B. The Hon’ble Court put reliance upon the judgment of C. Ramya Reddi and upheld the order of the ITAT.

“27. We may point out that the appellants never challenged subsequent visits and searches of their premises by the respondents on the ground that in the absence of a fresh authorisation those searches were illegal, null and void. Notwithstanding the same, it was argued that at least for the purpose of limitation the subsequent searches could not be taken into consideration, as according to the learned counsel, the legal position was that the authorisation dated 19th June, 1998, was executed on 22nd June, 1998 and the search came to an end with that when the search party left the premises on 23rd June, 1998 after making seizure of certain documents etc and issuing restraint order under Section 132(3) of the Act in respect of certain items which they allegedly could not seize due to impracticability on that day. Some judgments of various High Courts are relied upon to support this proposition. It was also argued that there was no concept of 'revalidation of authorisation' provided under the Act, which has been applied by the High Court in the impugned judgment, which according to the learned counsel for the appellants, amounts to legislating a new concept which is contrary to law.”

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while dealing with its earlier decision in the case of VLS Finance. The Hon’ble Court made following observations:

“30. The decision in VLS Finance (supra) also rests on a factual basis which is different from that of the present appeal. First of all, VLS Finance (supra) is a decision rendered in a writ petition under article 226 of the Constitution of India. In exercise of its writ jurisdiction a High Court decides cases on the basis of affidavits. It is open to the High Court to arrive at conclusions of fact (as well as of law) based upon the affidavits. The present case is an appeal from the order of the Tribunal, which is the final fact finding authority under the Income Tax regime. The facts, as determined by the Tribunal, unless they are held to be perverse, form the basis of the substantial questions of law which are to be determined by High Court's in appeals under Section 260A of the said Act. It ought to be remembered that the Tribunal was of the view that the search and seizure, in the present case, was completed on 17.11.2000. The Tribunal also held that the panchnama of 03.01.2001 was ―merely a release orderǁ. Secondly, in VLS Finance (supra), the search and seizure operations commenced on 22.06.1998 and continued till 05.08.1998. As many as 16 panchnamas were drawn upon in respect of the visits made to the assessee's premises. There was a mass of documents which were searched and seized from time to time. The court found that the search concluded on 05.08.1998 and not on 22.06.1998. The court also found that the search was also not unduly prolonged. The court held:- “Consequently, we are of the opinion that the respondents did not complete the search on 22-6-1998, as alleged by the petitioners, nor did they unduly prolong it. The search concluded on 5-8-1998, and so in terms of Explanation 2 to Section 158BE of the Act the period of limitation would begin from the end of August, 1998, that is, 31-8-1998 onwards…” (p. 297) 31. The factual basis of the decision in VLS Finance (supra) is entirely different to that of the present case. On law, there is nothing in VLS Finance (supra) which contradicts what we have explained above. If the search concluded on 5-8-1998, as held by the court, and the panchnama of that date was the last of the string of 16 panchnamas, obviously this would be the date on which the search was concluded and the date on which the warrant of authorization for search was executed. But, in the present appeal, no search whatsoever was conducted on 03.01.2001. Hence, the panchnama drawn up on 3-1-2001 cannot be regarded as a document evidencing the conclusion of a search. If that be so, 3-1-2001 cannot be regarded as the date on which the warrant of authorization was executed. Moreover, while in VLS Finance (supra), the court held that the search was not unduly prolonged, in the present case the gap between 17-11-2000 and 3-1-2001 is unexplained.”

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65 carried out under s.132 of the Act at the residential premises of the assessee on 28th July, 1997 and continued till 02:30 a.m. on 29th July, 1997. During the said search, certain incriminating materials which inter alia included jwellery and shares, were found and the search party prepared an inventory in respect of search material as per para 5 of the panchnama only books of accounts and documents as per Annexure ‘A’ were seized and no seizure was affected in respect of other materials found during the course of search including jewellery and shares. In para 8 of the panchnama, it was stated that the search was temporarily concluded for the day to be commended subsequently. However, prohibitory order was issued under s.132(3) in respect of jewellery and shares found from the cupboard kept in the bed room of assessee’s son Shri Bakul N. Gandhi. The prohibitory order issued under s.132(3) of the Act in respect of jewellery therefore lifted on 1st August, 1997 at 04:00 p.m. while prohibitory order in respect of share certificates was lifted on 08th September, 1997. On 08th September, 1997, another panchnama was prepared wherein it was stated the search is finally concluded and no other comments/remarks were recorded therein. The dispute arose whether it is to be construed that search was concluded on 28th July 1997 or it was concluded on 08th September, 1997. The period of two years from the end of the month in which warrant of authorization of search was executed was required to be computed. The bench who heard the matter had divided in its opinion. The hon’ble Judicial Member has assigned four reasons for concluding that the subsequent panchnama is not a valid panchnama for computing the limitation because there is no search carried out in September 1997 but the panchnama is prepared and this panchnama cannot be treated as a panchnama for the purpose of Section 158BE read with Explanation (2). The hon’ble Accountant Member did not concur with and treated the second panchnama valid for computing the limitation. The dispute referred to the third member for his opinion and the question formulated 602 the third member was;

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66 “Whether in the facts and circumstances of the case, the order under s.158BC made by the AO is time barred within the meaning of Section 158BE of the Act.?”

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67 were few in number and the statement that the scrutiny could not be completed, nor practicable to seize, is impossible to accept on the face of it. It is in this context the allegation made against the second respondent that he carried away certain documents in his bag unauthorisedly on 27-10-1995 and brought them back on 10-11-1995 assumes significance. However, the action of the search party headed by the second respondent in collecting the documents and various items from different parts of the premises and again putting them in the almirah in the bed room of the first floor of the residential premises is unreasonable and no provision is relied on for such a cause of action. Rule 112(4C) of the Income-tax Rules, 1962 empowers the authorised officer to serve an order on the owner that he shall not remove, part with or otherwise deal with it except with the previous permission only in cases where it is not practicable to seize the article or thing or any books of account or document. Therefore, the action of the second respondent and his members in dumping the documents, etc., seized in the almirah cannot be supported, but violates the mandatory requirement.

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68 on record describing in the Panchnama or in the revocation order how it has become practicable to seize the documents.

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Satellite Ahmedabad PAN: AAPPV8625F 6. ITA No. 807/Ahd/2019 DCIT, Cent. Cir1(1) Shri Deepak Budharmal Asst. Year: 2008-09 Ahmedabad Vaswani 3, Rajdeep Villa Opp: Rivera-11 B/h. Chimanbhai Institute Prahaladnagar, Satellite Ahmedabad PAN: AAPPV8625F

We take ITA No. 456/Ahd/2019 – Shri Ashok Sunderdas Vaswani (A.Y. 2008-09) as the lead case. 70. The assessee has raised the following grounds of appeal: “1. The Ld. CIT (A) has erred on facts and in law upholding the assessment order passed in contravention of specific provisions of Section 153A by reopening the assessment of the appellant under Section 147 of the Income Tax Act, 1961 solely on the basis of documents seized during the course of search. 2. The Ld. CIT (A) has erred on facts and in law in upholding the mechanical reopening of the assessment u/s 147 of the Income Tax Act, 1961 without any independent application of mind. 3. The Ld. CIT (A) has erred on facts and in law in upholding the reopening of the assessment beyond the statutory period of 4 years as laid down by the Proviso to Section 147 of the Income Tax Act, 1961. 4. The Ld. CIT (A) has erred on facts and in law upholding the issue of notice u/s 148 of the Income Tax Act, 1961 beyond the time limit laid down u/s 149 of the Act. 5. The Ld. CIT (A) has erred on facts and in law in upholding the inference drawn by the Assessing Officer that the loose paper found and seized from the Terrace of Crystal Arcade CG Road Ahmedabad represented the alleged unaccounted cash book of Venus Group, that the signature found on the documents were of the appellant, that the date of transactions were recorded in the coded form to disguise the relevant date of transactions, that the entries were recorded in such a way that two zero at end of each entry were omitted and that the word 'estimate' had been mentioned against the actual transactions. 6. The Ld. CIT (A) has erred on facts and in law in upholding the various additions u/s 69, 69A, 69B and 69C of the Income Tax Act, 1961 relying on the alleged cash book which was not even alleged to be belonging to the appellant especially in view of the AO own findings that the alleged cash book belonged to Venus group and also without identifying the corresponding asset or investment or expenditure pertaining/relating to the appellant. 7. The Ld. CIT (A) has erred on facts and in law in upholding the additions made by the Assessing Officer on the basis of the alleged signature of the appellant especially when the investment or expenses were not even alleged to be belonging/pertaining/related to the appellant as that was against the specific law laid down for assessing income under the Income Tax Act, 1961. 8. The Ld. CIT (A) has erred on facts and in law in partly upholding the additions made by the Assessing Officer on account of alleged unexplained expenditure u/s 69C of the Income Tax Act, 1961 under the group named as Other land transactions/expenses related to land amounting to Rs. 1,14,87,884/-applying the peak principle ignoring the fact that the additions were made purely on the basis of alleged signature of the appellant on the unilateral interpretation of the alleged cash book without establishing that the alleged expenditure pertained to the appellant and the same were incurred by the appellant and without any corroboration or confirmation of the alleged expenditure from the corresponding recipients.

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The assessee has challenged the validity of the assessment framed under Section 147 of the Act for various reasons in the grounds of appeal bearing Nos. 1 to 7.

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carried out under Section 132 of the Act. During the course of search proceedings, various documents of incriminating nature were found out.

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73 material. The unaccounted cash transactions were not disclosed by the appellant in regular return, and therefore, failure was on the part of appellants. Appellant’s argument is therefore found not correct and same is rejected. The grounds of appeal are accordingly dismissed.” “5.1.3. I have carefully considered the facts of the case, assessment orders and submissions made by the appellant. A search was initiated on 10/03/2015 in the case of appellant at the various premises u/s. 132 of the I.T. Act, 1961. Copy of panchnamas of all the search proceedings were provided to the appellant. The Assessing Officer relying upon Board's Instruction and judicial pronouncements in the case of Jain & Jain V. Union of India [1982] 134 ITR 655 (Bom.), V. K. Jain V. Union of India [1975] 98 ITR 469 (Delhi)] and [Southern Herbals Ltd. v. DIT (Investigation) [1994] 207 ITR 55 (Kar.)] has held that there is no provision of the Act for providing copy of authorisation of warrant to the assessee. The law only requires that warrant must be produced by the authority before the commencement of the proceeding of search and the same has been done. I agree with the findings of the Assessing Officer that AO is not required to provide a copy of warrant of authorisation before assuming jurisdiction u/s. 153A. The ground of appeal is accordingly dismissed.”

Now the assessee in the ground of appeal before us has challenged the validity of the assessment framed under Section 147 of the Act.

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74 76. The learned AR further contended that the AO before issuing notice under Section 148 of the Act for income escaping assessment has to form prima facie opinion that the income of the assessee has escaped assessment based on some tangible materials and that too after verification of such materials. But in the present case, the AO without verifying the details received from the search team and without applying his mind, has just came to the conclusion that the income of the assessee has escaped assessment.

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75 were not documented in the reasons recorded but were found by the AO during the assessment proceedings. The learned DR in support of his contention has filed the summary of the additions representing the addition which were documented in the reasons recorded viz a viz not documented in the reasons recorded under Section 147 of the Act.

(1) Whether in case of search under Section 132 of the Act, the proceeding under Section 153A of the can only be initiated without resorting to the provisions of Section 147 of the Act. (2) Whether the AO can initiate the re-assessment proceeding under Section 147 of the Act on the basis of information received from the Investigation wing but without application of his mind on such materials.

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76 (3) Whether the order under Section 147 of the Act survives in a situation where there was no addition with respect to the items which was documented in the reasons recorded but the additions were made with respect to the issues which come into notice of the AO during assessment/re-assessment proceeding under Section 147 of the Act in the final assessment/ reassessment order under Section 147 r.w.s. 143(3) of the Act.

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 under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A after the 31st day of May, 2003, the Assessing Officer 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 and for the relevant assessment year or 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 under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years :

The above provisions begins with the non obstante clause overriding the provisions of Section 147 of the Act. The provisions of Section 153A (1)(a) of the Act provides that once the search under Section 132 of the Act is conducted or requisition is made under Section 132A of the Act in the case of a person, the AO shall require such person to file return of income under for six preceding assessment year immediate to the assessment year in which search or requisition was made. Similarly the provision of Section 153A(1)(b) empowers the AO to assess or reassess the income for such six assessment year preceding to the A.Y. in which search conducted or requisition made. Thus in other words, the assessment under Section 153A of the Act as a result of search is applicable for the specified number of 6 years.

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77 To illustrate the above provision, if a search was conducted dated 11th 84. June 2015 falling under P.Y. 2015-16 relevant to A.Y. 2016-17, then, the following number of assessment years will be subject to assessment or reassessment under the special proceedings (search assessment) under Section 153A of the Act.

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the order of Hon’ble MP High Court in case Ramballabh Gupta vs. ACIT reported in 288 ITR 347 where it was held as under:

In order to decide the legality and validity of notice issued under Section 148, it is necessary to see as to whether conditions precedent provided in Section 148 are satisfied or not. Once the conditions prescribed under Section 148 are found present in the notice issued then, in that event, the notice has to be upheld being issued in conformity with the requirement of Section 148. [Para 9] While deciding the legality of notice issued under Section 148, it is not necessary to look to the provisions of Section 153A because both Sections operate in different field and sphere. [Para 10] The Assessing Officer does not have jurisdiction to issue notice under Section 148 in respect of those six assessment years which fall within the exclusive jurisdiction of Section 153A. Such was not the case in the instant case. [Para 11] Admittedly, the Assessing Officer had not issued notice of reassessment under Section 153A in respect of six assessment years, i.e., 2003-04 to 1998-99 whereas he had issued impugned notice of reassessment for the assessment year 1997-98 under Section 148 which was the subject-matter of the instant writ. [Para 12] The submission of the assessee that in cases of search, Section 148 had no application and, secondly, no order for reassessment could be passed beyond six years as provided in Section 153A could not be accepted. [Para 13] Section 148 being an independent Section, powers exercised by the Assessing Officer cannot be curtailed if the impugned notice otherwise satisfies the requirement of Section 148. The only fetter put on the powers of the Assessing Officer in taking recourse to Section 148 is that notice under said Section cannot be issued in relation to those six assessment years which are defined in Section 153A. This fetter is due to use of non obstante clause in Section 153A. In all other cases and for all other assessment years, Section 148 can always be resorted to subject of course to the condition that it must satisfy the requirement specified in Section 148. [Para 14] It was not the case of the assessee that the impugned notice did not satisfy the requirement of Section 148. On the other hand, it clearly appeared that firstly, notice under Section 148 could be issued for the assessment year 1997-98 being well within time, secondly, the Assessing Officer was empowered and had an authority to issue such notice. Thirdly, notice contained reasons as required under Section 148 and same were supplied to the assessee and lastly, on the strength of the material collected in the raid conducted in the premises of the assessee, a formation of belief for escape assessment could validly be formed for reopening of assessment made for the assessment year 1997- 98. The assessee did not challenge the notice on any of those grounds which alone could be made basis to challenge the impugned notice, it being issued under Section 148 and, hence, there was no difficulty in upholding the impugned notice which was rightly issued in conformity with the requirement of Section 148. [Para 16]

In view of the above judicial pronouncement, we hold that material found during the course of search proceedings can be used for invoking the provisions of Section 147 of the Act. However, it is important to note that the provisions of Section 147 of the Act can be invoked only after complying the provisions/conditions as provided under Section 147/148/149/150 and 151 of the Act.

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79 86. We also note that case law referred by the learned AR for the assessee at the time of hearing are distinguishable from the facts of the present case. In view of the above and after considering the facts in totality, we are not inclined to disturb the finding of the authorities below. Hence the contention raised i.e. the provisions of Section 147 of the Act cannot be invoked in view of the fact that there was special proceedings under Section 153A of the Act in case of search, by the assessee is dismissed. Thus the contention of the assessee is hereby dismissed.

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Officer has to be processed and, on the basis, thereof an opinion has to be formed objectively before issuing notice under Section 148 of the Act to an assessee. In other words the information received from the investigation wing cannot be said to be tangible material per se without a further inquiry being undertaken failing which the decision of the Assessing Officer in issuing notice for reopening of assessment would be a result of borrowed satisfaction and notices would be as a result of assumption of jurisdiction.

While the report of the Investigation Wing might have constituted material on the basis of which the Assessing Officer formed the reasons to believe, the process of arriving at such satisfaction could not be a mere repetition of the report of investigation wing.

On the basis of analysis base on above seized documents it has been found that these transaction are done in cash by ASV (Ashok Sunderdas Vaswani) for the relevant assessment year 2008-09.

Date Page Receipt (Rs.) Reference of Payment (Rs.) Reference of no./Annexure receipt Payment 5.10.2007 145/A-64 9800000 Vejalpur-1062 61500 ASV 71p 450000 ASV sarafi - - from Gopal/ishwar 08.10.2007 140/A-64 10400000 Vejalpur-1062 41400 ASV

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71p 3300000 ASV - - 15.10.2007 126/A-64 9800000 Vejalpur-1062 2500000 ASV 71p 1700000 ASV 1057600 ASV - - 68837 ASV - - 15000 ASV 24.10.2007 104/A-64 5000000 Vejalpur-1062 11400 ASV 71p 1000000 ASV - - 8.02.2008 81/A-66 5000000 Vejalpur 1062 - - 8.02.2008 81/A-66 500000 ASV - - Total 43980000 3755737

In view of the above facts, I have reason to believe that income amounting to Rs. 4,77,35,737/- chargeable to tax has escaped assessment within the meaning of Section 147 of the Act by reason of the failure of the assessee to disclose fully and truly all material facts necessary for assessment.” 91. Thus what is inferred from the satisfaction recorded by the AO is that there was no application of the mind of the AO which was pre-requisite for acquiring the jurisdiction under Section 147/148 of the Act. As such the AO in the reason recorded nowhere mentioned how he reached to believe that the information received form the investigation wing represent income of the assessee and such income has escaped assessment. There is no mention in reasons recorded with respect to the fact that whether the assessee has filed original return or weather assessment under Section 143(3) was made earlier or not. if assessment under Section 143(3) completed earlier then how it was failure on the part of the assessee to disclose all material facts fully and truly during assessment proceeding for initiating reassessment proceeding after expiry of 4 year from the end of relevant assessment year.

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82 92. Further, we note that search under Section 132 of Act was conducted as on 10th and 12th March 2015 in case of assessee group. The last date of Panchnama was made as on 6th and 8th May 2015. From this what doubt arises is that there was no material available before the AO as on the date of issue of notice under Section 148 of the Act to analyze and form a prima facie believe that the income has escaped assessment for the year under consideration.

"12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re- opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwal Das [1976] 103 ITR 437 had laid down that the reasons to

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83 believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this case, the reasons as made available to the Respondent- Assessee as produced before the Tribunal merely indicates information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. However, that material is not further linked by any reason to come to the conclusion that the Respondent-Assessee has indulged in any activity which could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped Assessment. It is for this reason that the recorded reasons even does not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. 14. Further, the reasons clearly shows that the Assessing Officer has not applied his mind to the information received by him from the DDIT (Inv.). The Assessing Officer has merely issued a re- opening notice on the basis of intimation regarding re-opening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction."

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84 'independent' and not 'borrowed' or 'dictated' satisfaction. Law in this regard is now well-settled.

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the conclusion that there was of failure on the part of the assessee to disclose fully and truly all the material facts. In other words, mentioning by the AO that the assessee has failed to disclose all material facts in the reasons recorded is not sufficient enough. Rather the AO is under the obligation to arrive at such conclusion that the assessee failed to disclose all material facts necessary for the assessment after applying his mind and verification of the facts. But the AO has not done so. In holding so we draw support and guidance from the judgment of Hon’ble Bombay High court in case of Gateway Leasing (P.) Ltd vs. ACIT reported in 117 taxmann.com 442 where it was held as under: 35. Having discussed the above, we may once again revert back to the reasons furnished by Respondent No. 2 for re-opening of assessment under Section 147 of the Act. After referring to the information received following search and seizure action carried out in the premises of Shri Naresh Jain, it was stated that information showed that Petitioner had traded in the shares of M/s. Scan Steels Ltd., and was in receipt of Rs. 23,98,014.00 and therefore, Respondent No. 2 concluded that he had reasons to believe that this amount had escaped assessment within the meaning of Section 147 of the Act. 36. First of all it would be evident from the materials on record that Petitioner had disclosed the above information to the Assessing Officer in the course of the assessment proceedings. All related details and information sought for by the Assessing Officer were furnished by the petitioner. Several hearings took place in this regard where-after the Assessing Officer had concluded the assessment proceedings by passing assessment order under Section 143 (3) of the Act. Thus it would appear that Petitioner had disclosed the primary facts at its disposal to the Assessing Officer for the purpose of assessment. He had also explained whatever queries were put by the Assessing Officer with regard to the primary facts during the hearings. 37. In such circumstances, it cannot be said that Petitioner did not disclose fully and truly all material facts necessary for the assessment. Consequently, Respondent No. 2 could not have arrived at the satisfaction that he had reasons to believe that income chargeable to tax had escaped assessment. In the absence of the same, Respondent No. 2 could not have assumed jurisdiction and issued the impugned notice under Section 148 of the Act In view of the above, we hold that the initiation of proceedings under Section 147/148 of the Act are not valid in the eyes of law and liable to be quashed for the reason that the AO failed to apply his mind. Thus the reasons were merely recorded on the borrowed satisfaction by the AO. The source for all the conclusions was of the investigation report. Accordingly, we quash the same.

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86 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this Section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. The issue arises whether AO on having dropped the item of escaped income, on the basis of which reasons to believe were formed and notice u/s. 148 was issued, after getting a satisfactory explanation from the assessee, can validly tax "other items of escaped income" which come to his notice during reassessment proceedings. In this regard, the Courts have noticed that the Parliament has used the words "assess or reassess such income and also any other income chargeable to tax which has escaped assessment", the words "and also" cannot be read as being in the alternative. The correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that the Parliament has not used the word "or". The legislature did not rest content by merely using the word "and". It has been emphasized that the words "and", as well as "also" have been used together and in conjunction.

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Interpreting the provision as it stands without adding or deducting from the words used by the Parliament, it is clear that upon formation of a reason to believe under Section 147 and following the issuance of a notice under Section 148, the Assessing Officer has the power to assess or reassess the income which he has reason to believe had escaped assessment and also any other income chargeable to tax. The words 'and also' cannot be ignored. The interpretation which the Court places on the provision should not result in diluting the effect of these words or rendering any part of the language used by the Parliament otiose. The Parliament having used the words "assess or reassess such income and also any other income chargeable to tax which has escaped assessment", the words 'and also' cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard these words as being conjunctive and cumulative. It is of some significance that the Parliament has not used the word 'or'. The Legislature did not rest content by merely using the word 'and'. The words 'and' as well as 'also' have been used together and in conjunction. Evidently, therefore, what the Parliament intends by use of the words 'and also' is that the Assessing Officer, upon the formation of a reason to believe under Section 147 and the issuance of a notice under Section 148(2), must assess or reassess: (i) 'such income'; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the Section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language used by the Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the Section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. The Parliament, when it enacted the provisions of Section 147 with effect from 1-4-1989, clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter. [Para 11] Similarly the Hon’ble Karnataka High Court in case of N Govindraju v ITO reported in 377 ITR 243 held as under:

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ground is not found or does not survive, then the assessment or reassessment of 'any other income' which is chargeable to tax and has escaped assessment, cannot be made.

On the basis of analysis base on above seized documents it has been found that these transaction are done in cash by ASV (Ashok Sunderdas Vaswani) for the relevant assessment year 2008-09. Date Page Receipt (Rs.) Reference of Payment (Rs.) Reference of no./Annexure receipt Payment 5.10.2007 145/A-64 9800000 Vejalpur-1062 61500 ASV 71p 450000 ASV sarafi - - from Gopal/ishwar 08.10.2007 140/A-64 10400000 Vejalpur-1062 41400 ASV 71p 3300000 ASV - - 15.10.2007 126/A-64 9800000 Vejalpur-1062 2500000 ASV 71p 1700000 ASV 1057600 ASV - - 68837 ASV - - 15000 ASV 24.10.2007 104/A-64 5000000 Vejalpur-1062 11400 ASV 71p 1000000 ASV - - 8.02.2008 81/A-66 5000000 Vejalpur 1062 - - 8.02.2008 81/A-66 500000 ASV - - Total 43980000 3755737

However, the AO has made the addition in the assessment framed under Section 147/143(3) of the Act as detailed under:

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Sr.No. Item of Addition Amount (in Rs.) 1. Parmanand Khattar 1,05,00,000/- 2. Investment in Shop in 1,00,00,000/- 3rd Eye 3. Investment in 10,45,410/- Bungalows 4. Golden 4,16,35,050/- 5. Swapnalok 33,000/- 6. Abhishek 6,28,200/- 7. Transaction of 8,29,49,396/- Personal Nature 8. Transaction marks as 28,30,01,684/- “against EC/Sarafi etc’’ 9. Transaction related to 37,31,117/- Projects 10. Other land 74,25,715/- Transaction 11. Miscellaneous 1,35,60,365/- Transactions

On comparison to the above additions documented by the AO in the reasons recorded with the actual addition made by the AO in the assessment order, we note that there was no addition made by the AO in the assessment order which was proposed in the reasons recorded by the AO in actuality.

On analysis of cash book (total 142 annexure), it was noticed that

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90 (i) Rs.8,29,49,396/- is in nature of payment in cash was recorded in name of the assessee. (ii) Rs.1,35,60,365/- is in nature of payment in cash which was paid to others. The above payments made by the assessee were remained unexplained and following additions were made: Sr. No Particulars Amount in Rs. 1 Unexplained expenditure 8,29,49,396 towards payment made in cash (personal nature) 2 Unexplained expenditure 1,35,60,365 (miscellaneous transaction)

In view of the above, the learned DR contended before us that the assessment framed under Section 147/143(3) of the Act is valid as 2 addition which were proposed in the reasons recorded were also actually added to the total income of the assessee.

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91 105. As the assessment order framed under Section 147 r.w.s. 143(3) of the Act has been held as invalid by us in the paragraph bearing No.78of this order, therefore we are not inclined to decide the issues raised by the assessee on merit. Accordingly, we dismiss the same as infructuous.

Coming to the Revenue appeal No.806/Ahd/2019 for A.Y. 2008-09.

Coming to the ITA No. 457/Ahd/2019, an appeal filed by the assessee for A.Y. 2008-09

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92 dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.50 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.50 lakhs and therefore appeal of the Revenue is required to be dismissed in limine.

Now coming to the ITA no.461/Ahd/2018 appeal filed by the assessee and ITA No.807/Ahd/2019 appeal filed by the revenue for A.Y. 2008-09. 113. At the outset, we note that issues raised by the assessee and the Revenue are identical to the issue raised by the assessee ITA No. 456/AHD/2019 which has been decided in favor of the assessee and against the Revenue by us vide paragraph No.87 to 89 of this order. Respectfully following the same, the grounds of appeal raised by the assessee is partly allowed and appeal filed by the Revenue is dismiss as infructuous.

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Sr.No. ITA No. Assessee A.Y Appeal by Result 1. 456/Ahd.2019 Ashok S Vaswani 2008-09 Assessee Partly allowed 2. 806/Ahd/2019 -do- -do- Revenue Dismiss as infructuous 3. 457/Ahd/2019 Rajesh S Vaswani -do- Assesse Partly allowed 4. 805/Ahd/2019 -do- -do- Revenue Dismiss due to low tax effect 5. 461/Ahd/2019 Deepak B Vaswani -do- Assessee Partly allowed 6. 807/Ahd/2019 -do- -do- Revenue Dismiss as infructuous

ITA No. 837/Ahd/2019 – M/s. Venus Infrabuild (A.Y. 2015-16) 115. The next proposition no. 5 is that the learned CIT (A) erred in confirming the addition made by the AO for Rs. 46,45,274.00 on account of interest free loans and advances provided to the partners in ITA No. 837/Ahd/2019 – M/s. Venus Infrabuild (A.Y. 2015-16).

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The assessee in ground No. 1 to 3 has challenged the validity of the assessment framed under Section 143(3) of the Act on account of various reasons.

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95 120. The last issue raised by the assessee in ground no. 10 and 11 is that learned CIT (A) erred in confirming the addition made by the AO for Rs. 46,45,274.00 on account of interest free loans and advances provided to the partners.

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under consideration. Consequently, the AO disallowed the sum of Rs. 46,45,274.00 representing the amount of interest that should have been charged on the advances given to the partners and finally added the same to the total income of the assessee.

“10.4. Decision: I have carefully considered the facts of the case, assessment order and submission filed by the appellant. The Assessing Officer in the assessment order has noted that there is a debit balance of Rs.44,23,493/-of partner Shri Narandas N. Hamrajani and Rs.46,07,443/- of M/s. Venus Infrastructure and Developers Pvt. Ltd. in A. Y. 2012-13. Similarly, there is debit balance of partners capital in respect of Shri Dhanraj G. Manglani, Rs.86,01,167/-, Shri Kamleshkumar D. Manglani of Rs.77,41,047/-, Shri Narandas N. Hamrajani of Rs.4,98,21,976/- and Rs.8,67,46,820/- of M/s. Venus Infrastructure and Developers Pvf. Ltd. in A. Y. 2013-14. Appellanthas not charged interest on partners on the debit balance. The Assessing Officer has noted that appellant was required to charge interest @ 12% on the debit balance in A. Y. 2012-13 & 2013-14 and accordingly the interest cost on project will decrease by Rs.59,41,768/- in A. Y. 2015-16. As 78.16% of the project has been completed during the year, AO has made the addition of Rs.46,45,274/- being 78.16% of the interest chargeable from partners of Rs.59,41,768/- in A. Y. 2015-16. Appellant has contended that Assessing Officer has assumed that interest on partners capital is to be charged mandatory @ 12% though it has been specifically mentioned in Clause - 6 of the partnership deed that interest may be charged on the debit balance as per mutual understanding or the partners. It has also been mentioned that interest can be increased or decreased at the mutual understanding of partners. The Assessing Officer has not made any addition of interest chargeable on partners in A. Y. 2012-13 & 2013-14 but has given effect of interest in A. Y. 2015-16 which is contrary to his own stand. The appellant has also submitted that there is no incriminating material relating to nationally computed interest, therefore, no addition can be made u/s. 153C. Appellant has relied on various case laws. It is seen that appellant has paid interest on the partner's capital @ 12%, but has not charged interest on the debit balance of the partners. The appellant has been paying interest on the capital on one hand and advancing money to other partners interest free. The Assessing Officer, was therefore, justified to make adjustment on account of interest capitalised in the construction work. As regard to appellant's argument on the addition made not on the basis of incriminating material and reliance on the case of PCIT v. Saumya Construction (P.) Ltd. [2017] 81 Taxmann.com 292 (Guj), the same is not applicable in appellant's case as assessment for A. Y. 2015-16 was pending on the date of initiation of search u/s. 132 of the I. T. Act, 1961. As regard to appellant's argument that Assessing Officer has not made addition of interest on debit balance in A. Ys. 2012-13 & 2013-14 is not material as Assessing Officer has power to re-compute the work in progress in A. Y. 2015-16 in which 78.18% of the project has been completed. In view of the above, the addition made by the AO is confirmed. The ground of appeal is accordingly dismissed.”

Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us.

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97 124. The learned AR before us submitted that it was not mandatory to charge interest on the amount of the loans and advances given to the partners. As such it was optional to charge interest from the partners which can be verified from the partnership deed.

We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute in the facts of the case on hand which have already been discussed in the preceding paragraph. Therefore, for the sake of brevity and convenience, we are not inclined to repeat the same. At this juncture we are tending to refer the relevant clause as incorporated in the deed of partnership which was submitted by the assessee before the learned CIT (A) during the proceedings. The relevant clause reads as under: “In our partnership firm partners can bring capital by mutual understanding and as per the need of the business according to the sharing of partnership ratio and as per the Section 40(b) of the Income Tax Act, 1961 interest will be given @ 12 % simple interest on capital account/loan account in every accounting year and as per the mutual understanding of the partners the interest can be increased or decreased and in the same way on debit balance of the partners, the firm can charge the interest as per the mutual understanding of the partners it can be increased or decreased. As well as if any extra capital is required for business that can be brought from outside with interest or without interest by way of loan from the bank or sarafi from the private parties and '. interest on the same will be debited to the profit and loss account of the firm" 127. On perusal of the above clause, we find that it was not mandatory to charge the interest on the amount of loans and advances given to the partners, rather it was based on the mutual acceptance of the partners. Accordingly, to our

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98 understanding, the assessee has not charged any interest from the partners on the amount of loan/advances provided to the partners. It was the wisdom of the assessee not to charge the interest from the partners and the AO cannot direct to do otherwise. In holding so we draw support and guidance from the judgment of Hon’ble Gujarat High court in the case ofPr.CIT vs. Alidhra Taxspin Engineers Tax Appeal No. 265 of 2017 wherein it was held as under: “[4.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue. On interpretation of the partnership agreement and considering the wish of the partners reflected in the partnership deed, not to pay /charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the Assessing Officer with respect to the deduction claimed under Section 80IB of the Income Tax Act. As rightly observed by the learned Tribunal, mere incorporation of interest on the partners' capital and remuneration does not signify that the same are mandatory in nature. We concur with the view taken by the learned Tribunal. We see no reason to interfere with the impugned judgment and order passed by the learned tribunal. No substantial questions of law arise in the present Tax Appeal. The present Tax Appeal deserves to be dismissed and is accordingly dismissed. “ We also find force in the alternate contention of the learned AR for the assessee. The amount of interest which is in dispute pertains to the earlier assessment year. At all any adjustment if need to be made , then the AO can do so in the respective assessment years 2012-13 and 2013-14 without disturbing the same in the year under consideration.

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99 3. ITA No. 130 to 135/A/2019 appeal filed by the assessee is partly allowed. 4. ITA No. 204 to 206/A/2019 appeal filed by the assessee is partly allowed. 5. ITA No. 278 & 279/A/2019 appeal filed by the assessee is partly allowed. 6. ITA No. 280 to 284/A/2019 appeal filed by the assessee is partly allowed. 7. ITA No. 834 to 836/A/2019 appeal filed by the assessee is partly allowed. 8. ITA No. 75 to 80/A/2019 appeal filed by the assessee is partly allowed. 9. ITA No. 195 to 200/A/2019 appeal filed by the Revenue is dismissed. 10. ITA No. 88 to 94/A/2019 appeal filed by the assessee is partly allowed. 11. ITA No. 241 to 247/A/2019 appeal filed by the Revenue is dismissed. 12. ITA No. 102 to 108/A/2019 appeal filed by the assessee is partly allowed. 13. ITA No. 228 to 234/A/2019 appeal filed by the Revenue is dismissed. 14. ITA No. 111 to 117/A/2019 appeal filed by the assessee only ITA No. 117/A/2019 is dismissed and remaining are partly allowed. 15. ITA No. 248 to 254/A/2019 appeal filed by the Revenue is dismissed. 16. ITA No. 95 to 101/A/2019 appeal filed by the assessee is partly allowed. 17. ITA No. 805/A/2019 appeal filed by the Revenue is dismissed.

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100 18. ITA No. 235 to 240/A/2019 appeal filed by the Revenue is dismissed. 19. ITA No. 109&110/A/2019 appeal filed by the assessee is partly allowed. 20. ITA No. 456/A/2019 appeal filed by the assessee is partly allowed. 21. ITA No. 806/A/2019 appeal filed by the Revenue is dismissed. 22. ITA No. 457/A/2019 appeal filed by the assessee is partly allowed. 23. ITA No. 461/A/2019 appeal filed by the assessee is partly allowed. 24. ITA No. 807/A/2019 appeal filed by the Revenue is dismissed. 25. IT(SS)A No. 837/A/2019 appeal filed by the assessee is partly allowed.. Order pronounced in the Court on 12th November, 2020 at Ahmedabad.

Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT Ahmedabad; Dated12/11/2020 TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण / DR, ITAT, 6. गाड� फाईल / Guard file. आदेशानुसार/BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad