ACIT, NEW DELHI vs. M/S. VISION TOWN PLANNERS PVT. LTD., NOIDA

IN THE INCOME TAX APPELLATE TRIBUNAL [DELHI BENCH “C”: NEW DELHI] BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (Through Video Conferencing) ITA. No. 4461/Del/2014 (Assessment Year: 2011-12) ACIT, M/s. Vision Town Planners Central Circle : 23, Vs. Pvt. Ltd., New Delhi. B–116, Sector : 44, Noida – 201 301. PAN: AACCV9600Q (Appellant) (Respondent)

Assessee by : Shri Rakesh Joshi, C. A.; Department by: Ms. Sunita Singh [CIT] – D. R.; Date of Hearing : 17/09/2021 Date of pronouncement : 18/11/2021

O R D E R PER AMIT SHUKLA , J. M.

has erred in law and on facts in law and on facts in holding that the assessment was initiated u/s 153C of the Act. 5. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in law and on facts in holding that assessment cannot be made u/s 143(3) when assessment was initiated u/s 153C. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in law and on facts in holding that the impugned assessment order for the A.Y. 2011-12 as per para 1 of the order shows that the Ltd. Assessing Officer has issued notice u/s 153C requesting it to file return of income on 27.07.2012 and in response to the notice u/s 153C, the appellant filed return of income on 15.10.2012; whereas no such mention is there in the order. 7. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in law and on facts in relying on the assessee‟s version without calling for the basic evidence like proof of filing of return u/s 153C as claimed by the assessee whereas no such return was filed by the assessee. 8. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 9. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. “ 3. Brief facts of the case shows that assessee is a subsidiary of BPTP international trade Centre Ltd. It is engaged in the business of real estate development. It filed its return of income u/s 139 (4) on 31/3/2012 declaring total income of ₹ 53,735/–. 4. A search and seizure operation was carried out at the various premises of the BPTP group and associated concerns on 7/12/2010, which finally concluded on 5/2/2011. During the search, documents pertaining to the assessee company were found and seized. On 27/7/2012, the learned assessing officer recorded satisfaction note that certain documents related to the assessee company were found. Hence, the case has been taken for the assessment u/s 153C of the income tax act in notice was issued on 27/7/2012. In response to the above notice, the AO was intimated on 15/10/2012 to treat the return of income filed u/s 139 (4) as return filed in response to notice u/s 153C of the act.

act 1961” instead of “u/s 153C of the income tax act, 1961” and in the same order the para 7.2 is rectified as „assessed at ₹ 267,527,280 u/s 143 (3) of the act” instead of “assessed at ₹ 267,527,280/– u/s 153C of the act” 8. The learned CIT – A concluded that the satisfaction not is not recorded in the file of the assessee search u/s 132 and the documents claim to be owned by the appellant was transferred to the file of the appellant. Therefore, the jurisdiction assumed u/s 153C in the case of the appellant is not in accordance with the findings of the honourable ITA T in case of DSL properties (private) Ltd cited supra. Therefore, it is concluded that the jurisdiction u/s 153C is not assumed properly and in accordance with the law as per the decision of the honourable ITAT cited supra. Accordingly, the assessment order passed u/s 153C for both the assessment years are hereby quashed. 9. Further the learned CIT – A also noted that “The order u/s 154 of the act has been passed. He noted that the date of initiation of search is 7/12/2010. Therefore, assessment year 2011 – 12 is the search assessment year. Hence, the assessment is not required to be made u/s 153C read with Section 153A, as assessment u/s 153A is applicable for six assessment years prior to search assessment year. In the impugned assessment order for assessment year 2011 – 12, as per para 1 of the order which is common for both the assessment years reproduced in earlier paragraph 3.1 shows that the learned assessing officer has issued notice u/s 153C requesting it to file return of income on 27/7/2012. In response to the notice u/s 153C, the appellant filed return of income on 15/10/2012. Therefore, the return filed by the appellant is not voluntary return u/s 139. In the original order dated 28/3/2013, the Section for assessment invoke these 153C. Though present order u/s 154, the learned assessing officer has tried to change the assessment u/s 143 (3) which was framed u/s 153C of the income tax act. As the assessment was initiated on return filed in response to notice u/s 153C of the IT act. In my view, the assessment cannot be framed u/s 143 (3). Through rectification order, the substantive assessment made u/s 153C is converted u/s 143 (3). As assessment should have been made u/s 13 (3) for assessment year 2011 Page | 4

– 12, on this ground also the jurisdiction exercised by the assessing officer is improper and therefore quashed.” 10. Therefore, the learned assessing officer was aggrieved with the order and has preferred this appeal. 11. At the time of hearing, the ld. Counsel on behalf of the respondent – assessee has filed an additional ground under Rule 27 of the ITAT Rules, vide letter dated 4.08.2021, which reads as under:- " On the facts and circumstances of the case as well as in Law, the order passed U/s 143(3) for the impugned assessment year is bad in law and the same is null & void ab initio. " 12. This ground is also similar to the ground raised by the Revenue vide ground No. 5 as reproduced above. 13. We have heard both the parties at length on the legal issue, which has been raised by the respondent – assessee in its additional ground read as ground No. 5 as raised by the Revenue. 14. Brief facts of the case are that the said legal issues are that the assessee company had filed regular return of income on 31.03.2012. Prior to that, a search and seizure operation was carried out at various places on BPTP group and associated persons on 7.12.2010. As per the Assessing Officer, during the course of search certain documents pertaining to the assessee company were found and seized and accordingly a satisfaction note was recorded by the Assessing Officer on 27.07.2012 stating that certain documents relating to the assessee company were found and accordingly, notice under Section 153C was issued on the same date i.e. 27.07.2012, in response to which the assessee submitted that return filed on 31.03.2012 should be treated as return filed in response to notice under Section 153C of the Act. The ld. Assessing Officer proceeded to make the assessment captioned as 153C and made additions for sums aggregating to Rs. 26,78,00,000/- on account of unexplained plus notional commission @ 3% of Rs.78 lakhs. 15. One very important fact, which was brought on record, was also argued by the parties after the passing of the assessment order. The Assessing Officer passed a rectification order under Section 154 on 31.10.2013 wherein he treated that the assessment order passed under Section 153C should be treated as order passed under Section 143(3) of the act. Page | 5

This, inter alia, changed the complexion of the order passed by the Assessing Officer in the sense that now the order which was captioned as order passed under Section 153C to be read as order passed under Section 143(3) treating it to be assessment for the year of search i.e. which was 7.12.2010 in the case of BPTP group whereas proceedings under Section 153C were initiated independent recording of satisfaction of issuance of notice under Section 153C on 27.07.2012. 16. Against such order passed u/s 154 of the income tax act that the above order passed though u/s 153C of the act should not be considered as passed u/s 143 (3) of the act, assessee preferred an appeal before the learned CIT – A. The ld. CIT (Appeals) held that order was correctly passed under Section 153C of the act. 17. The Revenue then preferred an appeal before the Tribunal against the said proceedings under Section 154 on the ground that the assessment order passed by the Assessing Officer was in fact order under Section 143(3) and not under Section 153C. The Revenue‟s case also has been that since the assessment was for the year of surrender, therefore, the correct assessment should have been under Section 143(3) and not under Section 153C. 18. The Tribunal vide order dated 19.03.2019 decided this issue in favour of the Department by observing and holding as under:-

“10. In the present case, the learned assessing officer has rectified the defect of mentioning the section under which the order has been passed. The rectification order has been passed stating that the order has been passed under section 143 (3) of the income tax act and not under section 153C of the act. The identical issue has been considered by the coordinate bench in case of Sri Cherian Abraham V s. DCIT in ITA number 1575/bang/2016 for assessment year 2012 - 13 dated 21/11/2017 wherein it has been held in para number 4 as under:- "4. Having considered the rival submissions as well as the relevant material on record, we find that the undisputedly when the search was carried out on 6/3/2012 then the provisions of section 153C are not applicable for the assessment year under consideration i.e. 2012 - 13, therefore, the assessment framed in question for the assessment year under consideration will be treated only under section 143 (3) and mere mention of section 153C in Page | 6 the assessment Page | 6

order will not render the assessment invalid or void ab initio. It is apparent that this is a case of only a mistake of mentioning the assessment framed under section 143 (3) read with section 153C and no other material are procedural defect either pointed out are found on the record to suggest that the assessing officer has not followed the procedure for framing the assessment u/s 143 (3). Hence this ground raised by the assessee is devoid of any merit and accordingly we dismiss the ground number 1 of the additional ground." 11. In the present case, the learned Commissioner of income tax appeals has quashed impugned order under section 154 of the income tax act only for the reason that the notice has been issued under section 153C of the act. However he failed to appreciate that the notice u/s 143 (2) of the income tax act on 13/9/2012 was issued to the assessee. He should have appreciated that in case of search assessment there is no requirement of issuing any notice u/s 143 (2) of the income tax act. Therefore respectfully following the decision of the coordinate bench cited before us by the learned CIT DR and the fact of issue of notice u/s 143 (2) of the income tax act by the assessing officer during the course of assessment proceedings, Page | 7 we do not have any other option but to sustain the order of the learned assessing officer. 12. We are also supported by several judicial precedents that because a wrong reference to the power under which an order is made does not per se vitiate the order if there is some other power under which the order could lawfully be made [P.M. Bharucha & Co. v. G.S. Venkatesan, (1969) 74 ITR 513(Guj) ; Giridharilal Jhajharia v. CIT, (1970) 78 ITR 133(Cal) ; VR. C. RM. Adaikkappa Chettiar v. CIT, (1970) 78 ITR 285(Mad) ; Bidyut Prova Raha v. ITO, (1971) 79 ITR 187(Assam) ; Indra Co. Ltd. v. ITO, (1971) 80 ITR 400(Cal) ; CIT v. Satnam Transport Co. (Pr.) Ltd, (1973) 92 ITR 42(Punj) ; CIT v. Madurai Knitting Co., (1976) 104 ITR 36(Mad) ; Addl. CIT v. Dalmia Magnesite Corporation, (1979) 117 ITR 930(Mad) ; CIT v. Srikishan Dass, (1980) 125 ITR 730(Del) ; Addl. CIT v. Pakco Engg. Pr. Ltd., (1983) 143 ITR 415(Bom) ]. 13. It is well-settled that mere quoting of a wrong section should not deprive a party or a litigant of a deserving relief [ Bata India Ltd. v. Deputy CIT, (1996) 217 ITR 871, 875(Cal) , relying on P. Balakotaiah v. Union of India, AIR 1958 SC 232, 236, J.K. Steel Ltd. v. Union of India, AIR 1970 SC 1173, 1188 and CST v. Anoop Wines, AIR 1988 SC 2042, 2044].

assessment year 2012-13. However Whereas the assessment year 2011- 12 would fall within the period of six years as stipulated in Section 153A and 153C of the Act. This is clear from the first proviso to Section 153C which reads as under:-

“Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153Ashall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. “

Thus, preceding assessment year here in this case would be from 10. assessment year 2007-08 to assessment year 2012-13. This proposition of reckoning the six year of search and this previous assessment year in the case of 153C is now squarely covered by the decision of Hon‟ble jurisdictional High Court in the case of RRJ Securities [2015] 62 taxmann.com 391 (Delhi)/[2016] 380 ITR 612 (Delhi):-

requiring the noticee to furnish returns of income in respect of six assessment years relevant to the six previous years preceding the previous year in which the search is conducted. As discussed hereinbefore, by virtue of second proviso to Section 153A, the assessment/reassessment pending on the date of initiation of search abate. In the context of proceedings under Section 153C of the Act, the reference to the date of initiation of the search in the second proviso to Section 153A has to be construed as the date on which the AO receives the documents or assets from the AO of the searched person. Thus, by virtue of second proviso to Section 153A of the Act as it applies to proceedings under Section 153C of the Act, the assessment/reassessment pending on the date on which the assets/documents are received by the AO would abate. In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. However, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possibility of any income that may have remained undisclosed in the relevant assessment years.‟

The above decision of the honourable High Court which has been 11. followed in the following decisions by the Hon‟ble jurisdictional High Court:-

i. Principal Commissioner of Income Tax (Centralj-1 v. Raj Buildworth (P.) Ltd 113 taxmann.com 600 (Delhi) ii. Principal Commissioner of Income Tax v. Sarwar Agency (P.) Ltd. 397 ITR 400 (Delhi) iii. ARN Infrastructure India Ltd. v. Asst. CIT (394 ITR 569) (Delhi)

that even in ground No. 5, the Revenue has challenged that the ld. CIT (Appeals) has erred in law and facts in holding that assessment cannot be made under Section 143(3) when the assessment was initiated under Section 153C. Since this matter has attained finality from the stage of the Tribunal, ground No. 5 as raised by the Revenue allowed in favour of the Revenue. Consequently, the impugned assessment order is to be read as passed u/s 143(3) of the Act. 26. Now coming to the additional second ground raised by the respondent – assessee and the contentions raised by the parties, first of all we have to see whether the assessment for the assessment year 2011-12 is to be treated as assessment passed for the year of search or it falls within the period of 6 years as stipulated under Section 153A or 153C and, therefore, whether the assessments, which have been passed under Section 153C or under 143(3). 27. Section 153C which provides for assessments in the case of person other than the person subjected to search as has been referred under Section 153A of the Act it provides as Under:- Assessment of income of any other person.8 8a 153C.9[(1)] 9a[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, 9bbelongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person]10[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] :] 11[Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 12[sub- section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets Page | 12

seized or requisitioned by the Assessing Officer having jurisdiction over such other person :]

represent or indicate any undisclosed income or possibility of any income that may have remained undisclosed in the relevant assessment years. 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee.”

satisfaction under Section 153C. Here in this case, the reference states the date as 27.07.2012. This is the reference date in terms of Section 153C, then the period of 6 assessment years for the purpose of making the assessment preceding year the year of search would be from assessment year 2007-08 to assessment year 2012-13. Obviously, the assessment for the assessment year 2011-12 will fall within the block of 6 years and the year of search would be assessment year 2013-14. Accordingly, we hold that assessment order should have been passed under Section 153C of the act and not under Section 143(3) of the Act. 19. Now coming to the contention of the ld. [CIT] – DR that Amendment brought in Section 153C by the Finance Act, 2017, with effect from 1.04.2017 has to be reckoned as clarificatory and retrospective, such contention cannot be accepted in view of the decision of the Hon‟ble jurisdictional High Court in Principal Commissioner of Income Tax v. Sarwar Agency (P.) Ltd. 397 ITR 400 (Delhi) . 20. Thus, the impugned assessment order is un-sustainable in law and null and void and, therefore, is hereby quashed.

Order pronounced in the open court on 18/11/2021. -Sd/- -Sd/- ( PRASHANT MAHARISHI) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 18/11/2021. *MEHTA* Copy forwarded to 1. Appellant; 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi