ACIT, CENTRAL CIRCLE-18, NEW DELHI vs. GAURAV AGGARWAL, NEW DELHI

This appeal is preferred by the Revenue against the order dated 21.07.2017 of the Commissioner of Income-tax (Appeals)-27, New Delhi CO No.13/Del/2021 (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.105/17-18/405/13-14 arising out of the appeal before it against the order dated 28.03.2013 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle-09, New Delhi (hereinafter referred to as the Ld. AO). The assessee has filed Cross Objection.

On hearing both the sides, we find that by way of Cross Objections, the assessee has challenged the assumption of jurisdiction itself and for convenience, the grounds of the Cross Objections are reproduced below:- “1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the initiation of proceedings under section 153C of the Act and, further completion of assessment under section 153C/143(3) of the Act without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act. 2 That the learned Commissioner of Income Tax (Appeals) has further grossly erred in law and on facts in overlooking the basic fact that no addition was made based on the satisfaction note, and the assessment as contemplated under section 153C is not a denovo assessment and as such the additions so made by assessing officer which are beyond satisfaction note are liable to be deleted in totality, as the same are outside the scope of assessment made under section 153C of the Act.”

It was submitted by the ld. counsel that a search in the case of M/s Jagat Commodities, part of Jagat Group of cases on 14.09.2020. However, in the case of the assessee, a satisfaction note was recorded on 24.01.2013 and that is legally the date of search in case of assessee and search years happens to be AY 2013-14. So present AY falls in block of six assessment years for which CO No.13/Del/2021 assessment should have been completed u/s 153C of the Act and not u/s 143(3) of the Act.

We find that the assessment order dated 28.03.2013 makes it very apparent that the case of the assessee was centralized u/s 127 of the Act for being part of the search conducted on Jagat Group of cases. The assessment order mentions that during the course of assessment proceedings in the case of Sant Lal Aggarwal, incriminating documents pertaining to the assessee were found and seized which contained a transaction of 32.252 crores which was confronted to Shri Sant Lal Aggarwal, who had admitted that the payments recorded were made in cash to farmers for procurement of paddy and surrendered this amount in the hands of M/s Gaurav Enterprises, a proprietorship concern of his son Gaurav Aggarwal as these payments were made by Gaurav Aggarwal. A statement of Shri Gaurav Aggarwal was recorded wherein he confirmed the payments were made by him as advance to farmers for procurement of paddy in cash and he offered the same for taxation in the name of Gaurav Enterprises. However, the same was retracted subsequently. The AO specifically mentions that satisfaction note u/s 153C was drawn on 04.01.2013 and the assessee filed return of income on 04.01.2013. A perusal of the assessment order reveals that notice u/s 143(2) was issued on 13.09.2012.

On examining the copy of satisfaction note on record, and which is also reproduced in the impugned order of CIT(A), we find that the AO has reopened 3 CO No.13/Del/2021 the six assessment years going by the year of search in the case of Jagat Group noted on the handing over of the documents in the case of the assessee and for that reason, the assessment has been completed u/s 143(3) of the Act instead of Section 153C of the Act. The ld. CIT(A) has observed that mentioning u/s 143(3) in the assessment order is a technical breach. However, he accepts that AY 2011-12 to which this appeal relates, falls in the block of six assessment years 2007-08 to 2012-13 whereas the ld. AO has taken the block to be 2005-06 to 2010-11 and should have been assessed u/s 153C of the Act. The law in this regard is settled by the Judgement of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh, 458 ITR 437 and of the Hon’ble Delhi High Court decision in CIT vs. RRJ Securities Ltd., 380 ITR 612. Thus findings of CIT(A) to sustain the assessment concluded u/s 143(3) of the Act, cannot be sustained.