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Income Tax Appellate Tribunal, A BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & HONBLE SHRI PRABHASH SHANKAR
Date of Hearing 13.05.2025 Date of Pronouncement 11.06.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
1. The present appeal has been filed by the assessee challenging the impugned order 30.09.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2017-18.
All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in upholding the additions in the hands of the assessee u/s 153C of the Act.
We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that, as per the facts of the case the assessee being an individual, who is working as President - Processing Food Division of the Allana Group had filed his return of income declaring total income, which was processed u/s 143(1) of the Act. However, a search and seizure operation u/s 132 of the Act was conducted on Allana Sons Pvt Ltd, on 03.01.2019 including the residence of the assessee.
Subsequent thereafter, assessee received notice u/s 153C of the Act dated 16.11.2020 for filing of the return of income and consequently assessment u/s 153C of the Act was completed on 25.09.2021 thereby making additions of Rs. 3,60,00,000/- in the hands of the assessee on account of ‘unaccounted money’ received in cash by only relying upon the statement of Nabilal Shaikh and Javed Merchant.
First of all, after appreciating the factual and legal preposition and after evaluating the records of this case, we noticed that notice u/s 153C of the Act issued upon the present assessee is in gross violation of the mandatory requirement of Sec. 153C of the Act as the prerequisite conditions for issuance of the notice has not at all been complied with in the absence of any ‘incrementing material’ against the assessee.
From the perusal of the order of assessment, it is apparent that the impugned notice issued u/s 153C has been issued without there being any material found to be incrementing against the assessee.
7. Even otherwise there is no mention of “satisfaction recorded” by AO to the effect that any money, bullion, jewellary or other valuable article or thing seized or requisitioned belongings to, or that any books of account or documents seized or requisitioned pertain to, or any information contained therein relates to, a person other than the person referred to in Sec. 153A. Thus, the requirement of law is that ‘incriminating material’ must be found, in the form of money, bullion, jewellery, other valuable article or thing, or books of account or documents, or information contained therein, which pertains to or relates to the person to whom notice under Section 153C of the Act has been issued The appellant had raised objection in this regard before Ld. CIT(A) to the effect that there is no evidence against the appellant. Whereas Ld. CIT(A) had rejected the stand of the appellant in its order at para No. 20 stating that. 'No evidence comes with the words "incriminating" written on it. It is the decision arrived based on the availability of relevant materials and the appreciation of entire set of evidences including the deposition made by various persons. 'The stand of the ld. CIT(A) is contrary to law laid down by various courts.
Apart from the above, we also noticed that the additions have been made solely upon the statements recorded during the search, without reference to any corroborative material if any found during the search, thus in our view mere statement cannot be treated as “incrementing material” and hence do not empower the AO to make additions u/s 153A of the Act for this preposition, reliance is being placed upon the decisions of Coordinate Benchof the Tribunal (Delhi) in the case of Olive Overseas Private Limited vs. DCIT in wherein it was held that “a bare statement of a person recorded during the course of search, without any corroboration, cannot be regarded as incriminating material per se. In the absence of incriminating material found during the course of search, the legal foundation for making additions under Section 153A in unabated assessments does not exist”. Further, it has been held that a mere statement recorded under Section 132(4) of the Act, without being supported by any material found during the search, cannot by itself be treated as “incriminating material” found in the course of search.
Now at this stage taking into consideration, the statement of the third party, even that do not disclose anything incrementing against the assessee. A perusal of the statement of Mr. Nabilal Shaikh clearly shows that the alleged cash was stated to have been given by Shri Javed Merchant in old currency. The statement further refers to "Kaala Dhan" of the Allana Group. Thus, by no stretch of imagination can the said amount be linked to the employee of the said group, much less to the Assessee.
Moreover, the assessment order lacks any cogent findings that as to how the alleged amount of addition made in the hands of the appellant / Assessee of Rs. 3,60,00,000/- has any links with the appellant which goes to show that AO has made the impugned addition, on the basis of presumptions which is impermissible in law and in this regard reliance is being placed on the decision of …..
I. Commissioner of Income-tax-7 vs. RRJ Securities Ltd. [2015] 62 taxmann.com 391 (Delhi)/[2016] 380 ITR 612 (Delhi)
Para 13. The first and foremost step for initiation of proceedings under Section 153C of the Act is for the AO of the searched person to be satisfied that the assets or documents seized belong to the Assessee (being a person other than the searched person). The AO of the Assessee, on receiving the documents and the assets seized, would have jurisdiction to commence proceedings under Section 153C of the Act. The AO of the searched person is not required to examine whether the assets or documents seized reflect undisclosed income. All that is required for him is to satisfy himself that the assets or documents do not belong to the searched person but to another person. Thereafter, the AO has to transfer the seized assets/documents to the AO having jurisdiction of the Assessee to whom such assets/documents belong. Section 153C(1) of the Act clearly postulates that once the AO of a person, other than the one searched, has received the assets or the documents, he is to issue a notice to assess/re- assess the income of such person - that is, the Assessee other than the person searched - in accordance with provisions of Section 153A of the Act.
II. Principal Commissioner of Income-tax, Central-1 vs. Specialty Paper Ltd. [2024] 167 taxmann.com 409 (Bombay) [14-08-2024] - Para 6 - Mr. Suresh Kumar, learned counsel for the Revenue, has drawn our attention to the decision of the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212 (SC) to submit that the issue involving interpretation of the provisions of Section 153A read with Sections 132 and 143 had fallen for consideration of the Supreme Court, which had arisen from the decision of this Court as well as from decisions of other High Courts. The Supreme Court held that in respect of completed assessments/unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A. It is also, however, held that completed/unabated assessments can be reopened by the Assessing Officer in exercise of powers under Section 147/148 subject to fulfillment of the conditions as envisaged under Section 147/148 and those powers were saved. The conclusions of the Supreme Court as set out in paragraph 14 are required to be noted, which read thus:
"14. In view of the above and for the reasons stated above, it is concluded as under:
(i) That in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under Section 153A; (ii) All pending assessments/reassessments shall stand abated; (iii) In case any incriminating material is found/unearthed, even in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be reopened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved.
The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs."
III. Principal Commissioner of Income-tax, Bengaluru vs. Smt. Lakshmi Singh [2017] 78 taxmann.com 207 (Karnataka) [13-01-2017] -
A bare perusal of the impugned order clearly reveals that the learned Tribunal was seized with only the issue, whether the power under Section 153C of the Act could be invoked or not, specially when there was no incriminating document or evidence discovered during the search under Section 132 of the Act, against the assessee? Admittedly, the Revenue has not produced any evidence either before the Assessing Officer, or before this Court to show that any incriminating evidence was discovered against the assessee during the search on 25.03.2008. In the absence of any incriminating evidence, the Assessing Officer was not justified in invoking his power under Section 153C of the Act. The learned Tribunal has also noticed that this opinion has been expressed by other courts. Therefore, a mere passing observation made by the learned Tribunal that the said power could not be invoked, for regular assessment that had already been completed under Section 143(3) of the Act, would not give rise to a substantial question of law. The issue is not with regard to the scope and ambit of Section 143(3) of the Act; it is specifically with regard to the power prescribed under Section 153C of the Act. To the limited issue of the ambit and scope of Section 153A of the Act, the learned Tribunal has correctly expressed its opinion.
IV. Pepsi Foods (P.) Ltd. vs. Assistant Commissioner of Income-tax [2014] 52 taxmann.com 220 (Delhi)/[2015] 231 Taxman 58 (Delhi)[07-08-2014] II. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "I am satisfied" in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any "satisfaction" of the kind required under Section 153C of the said Act. In addition to the above reliance is also placed on the following decisions V. Deputy Commissioner of Income-tax vs. U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC)/[2023] 294 Taxman 72 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023] VI. Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/[2023] 454 ITR 212 (SC)[24-04-2023] VII. Commissioner of Income-tax-III, Pune vs. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC)/[2017] 250 Taxman 225 (SC)/[2017] 397 ITR 344 (SC)/[2017] 297 CTR 441 (SC)[29-08-2017] VIII. Ashok Commercial Enterprises vs. Assistant Commissioner of Income Taxation [2023] 154 taxmann.com 144 (Bombay)/[2023] 459 ITR 100 (Bombay) [04-09- 2023]
11. Therefore, considering the entire facts and circumstances of the present case as discussed above and also keeping in view the settled judicial precedents, we are of the considered view that the impugned notices issued u/s 153C and the consequential assessment order passed u/s 153C of the Act are liable to be quashed and set aside. Thus ordered accordingly.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 11.06.2025.
Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 11/06/2025 KRK, PS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / The CIT(A) 3. आयकर आयु�(अपील) / Concerned CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मु�बई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�ािपत �ित //True Copy//
उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�बई मु�बई / ITAT, Mumbai मु�बई मु�बई