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Income Tax Appellate Tribunal, DELHI BENCH: C, NEW DELHI
Before: SHRI G.S. PANNU, HONBLE
This bunch of appeals and connected cross objections filed by the Revenue and the Assessee respectively are arising out of the common order dated 21.07.2017 passed by the Ld. CIT(A)-27, New Delhi under section 143(3) r.w.s. 153 of the Income Tax Act, 1961(hereinafter referred as "the Act") relating to assessment years 2009-10, 2010-11 and 2011-12. Since all the matters are relating to the common search proceedings and a common order has been passed, these are heard analogously and are being disposed of by a common order for the sake of convenience.
C.O. No. 8/Del/2021 (AY 2009-10^ & C.O. No. 09/Del/2021 fA.Y. 2010- 11: -
2. The initiation of the proceedings u/s. 153C of the Act and the further completion of assessment under section 153C/143(3) of the Act has been challenged before us by the appellant. The other grounds preferred by the appellant has not been pressed. Since the very jurisdiction of initiation of the proceeding has been challenged by the appellant before us we would like to address the same at the threshold. Thus we take up both CO Nos. 8/Del/2021(AY 2009-10) and CO No. 9/Del/2021 (AY 2010-11).
The brief facts leading to the case is this that a search and seizure operation u/s. 132/133A of the Act was conducted by the Directorate of Income Tax (Inv.-II), New Delhi in Jagat Group of cases, its directors, other individual and connected associates at business and residential premises on 14.09.2010. Consequently, the notice u/s. 153A of the Act was issued on 04.11.2011 upon the assessee for the block assessment years 2005-06 to 2010-11. The assessee filed its return of income u/s. 139(1) of the Act on 30.9.2009 declaring total income at Rs. 90,97,192/-. However, the assessee filed its reply dated 08.02.2012 stating that the return filed u/s. 139 of the Act may be treated in response to notice u/s. 153A of the Act. Further that it was submitted by the assessee by and under a letter 3 dated 23.11.2012 that in the case of the assessee firm/survey u/s. 133A was undertaken at the office premises of M/s Jagat Overseas situated at 5568, 1st floor, Lahori Gate, Naya Bazar, Delhi - 110 006 on 14.9.2010 and no search u/s. 132 of the Act was carried out. On the basis of the correctness of such submissions made by the assessee the proceedings u/s. 153A was then dropped on 31.01.2013. However, during the course of assessment proceedings, u/s. 153A in the case of Sant Lai Aggarwal pursuant to the search and seizure operation u/s. 132 of the Act conducted on 14.9.2010 in the premises of Shri Sant Lai Aggarwal and Shri Satish Kumar Pawa wherein documents belonging to the appellant were claimed to have been found and seized thereon, a satisfaction note for invoking provision under section 153C of the Act was recorded in the file by the DCIT, Central Circle-9 and the same along with the copies of the seized documents were provided to the assessee by and under a letter being No. 1200 dated 31.01.2013. As such notice under section 153C of the Act was issued on 31.01.2013 for AY 2005-06 to 2011-12 along with notices under section 142 (1) and the same were served upon the assessee. Such assessment proceedings were finalised upon making addition .Being aggrieved by and/or dissatisfied with the said assessment, the assessee preferred an appeal before the Ld. CIT(A) and raised objection against the jurisdiction in initiating the proceedings u/s. 153C of the Act. However such objection regarding the maintainability/jurisdiction of the Ld. AO in initiating the proceeding was not found acceptable and the same was rejected by the Ld. CIT(A). However the appeal was partly allowed on merit. Hence, the assessee is before us.
At the time of hearing of the matter, Ld. Counsel appearing for the assessee submitted before us that the proceeding under challenge is without jurisdiction and barred by limitation. The assessee filed its return of income on 30.9.2009 and therefore the time limit to issue notice u/s. 143(2) expired on 30.9.2010. Secondly in a concluded proceeding before invoking the provision under section 153C the Assessing Officer must have satisfied that there must be incriminating material belonging to the assessee seized in course of search. The Ld. AR submitted that no such incriminating material has been found during search on the basis of which the Ld. AO could invoke jurisdiction under section 153C. In this regard he drew our attention to page no. 28 of the Ld. CIT(A)'s order where the satisfaction note has been reproduced. The documents relied upon by the Ld. AO neither relate to the assessment year 2009-10 and 2010-11, Precisely there is no mentioning of any incriminating material in the satisfaction note recorded by the Ld AO as regards the Assessment Years 2009-10 and 2010-11 as the argument advanced by the Ld. AR. Apart from that he also brought to our notice that the satisfaction note was drawn by the Ld. AO on 31.01.2013 followed by the issuance of notice under section 153C during the pendency of the proceeding already initiated under section 153A. According to the Ld AR, parallel proceeding under section 153(C) cannot be initiated under any provision of law. Relying on this it was the contention of the Ld AO that the &6193/Del/2017 C.O. Nos. 08&09/Del/2021 & 15/Del/202l A.Ys. 2009-10 & 2010-11 & 2011-12 addition is beyond the scope, ambit and purview of the assessment under section 153C of the Act.
In support of his contention, he relied upon the following decisions: CIT vs, Sinhgad Technical Education Society reported in (2017) 84 taxmann.com 290 (SC) passed by the Hon'ble Supreme Court of India
CIT vs. RRK Securities Ltd., reported in (2015) 62 taxmann.com 391 (Delhi) passed by Hon'ble Delhi High Court
CIT vs. Kabul Chawla (2015) 61 reported in taxmann.com 412 (Delhi)passed by Hon'ble Delhi High Court
On the contrary, Ld. CIT(DR) vehemently argued in favour of the order passed by the Ld. AO . She also relied upon the findings of the Ld. CIT(A) in para 12.4 of the order impugned in support of reopening of assessment.
We have heard the rival submissions made by the respective parties; we have further perused the relevant materials available on record including the orders passed by the authorities below and the decisions/judgments of the 7 IT A Nos. 6192&6193/Del/2017 C.O. Nos. 08&09/Del/2021 & 15/Del/2021 A.Ys. 2009-10 & 2010-11 & 2011-12 Hon'ble Supreme Court of India as well as Hon'ble Delhi High Court, as aforesaid.
As far as the present C.Os. are concerned the question is whether the Ld. AO's assumption of jurisdiction under Section 153C of the Act qua the assessee was justified in the facts and circumstances of the case.
The fact as called out from the order passed by the Ld. AO is this that the assessee filed its return of income on 30.09.2009 and the last date of issuing notice under section 143(2) of the Act was 30.09.2010. However, the notice under Section 153C was issued on 31.01.2013 by the Ld. AO upon the assessee. It is a settled principle of law that concluded assessment cannot be interfered with under section 153A of the Act unless incriminating material belonging) to the assessee qua the Assessment Year has been seized in course of search.
For the aforesaid purposes it must be noted that the satisfaction note of the Ld. AO for assumption of jurisdiction qua the assessee under Section 153C of the Act reads as under:- "Satisfaction u/s. 153 of the Income Tax Act; 1961 in the case of M/s Jagat Overseas Ltd., PAN No. AAAFJ8256F, 5586, Illrd floorf Lahori Gate, Naya Bazar, Delhi - 110 006. &6I93/Del/20J7 C.O. Nos. 08&09/Del/2021 & 15/Del/202I A.Ys. 2009-10 & 2010-11 & 2011-12
During the course of assessment proceedings under section 153A in the case o f Sant Lai Aggarwal, it is noticed that search and seizure operation u/s. 132 was undertaken on 14.9.2010 in the case of Sh. Sant Lai Aggarwal at D-31, Pushpanjali Enclave, Pitampura, Delhi. Documents belonging to Jagat Overseas were found and seized from the above premises. Page No. 1 to 11 of Annexure A-18 is a copy of sale deed executed between Pramod Garg and Jagat Overeseas in respect of built up property bearing no. 1, area measuring 203.52 sq. meters, Block-A, Pocket -2, Sector-17, Dwarka Residential Scheme, Dwarka, New Delhi for a consideration of Rs. 12,00,000/-. The said sale deed was executed on 26. th day of April, 2007, the documents pertain to previous year 2007- OS relevant for assessment year 2008-09. Apart from the above, during the course o f, assessment proceedings under section 153A in the case of Sh. Satish Pawa, page no. 18 of Annexure A-8 was found and seized during search operation u/s. 132 on 14.9.2010 at D- 842, New Friends Colony, New Delhi from the residence of Sh. Satish Kumar Pawa. This document refers to advance to farmers for purchase of paddy as on 31.8.2010 to the tune of Rs. 59.00 crores. Statement of Sh. Satish Pawa was recorded on 15.9.2010 during the course of search operation u/s. 132 o f the Act. He admitted that this amount o f Rs. 59.00 crores was advanced in cash by M/s Jagat Overseas and also that these payments were not reflected in the regular books of accounts of M/s Jagat Overseas. He declared this amount of Rs. 59.00 cores as unaccounted income of M/s Jagat Overseas for the financial year 2010-11 and 2011-12.
ITANos. 6192&6193/Del/2017 C.O. Nos. 08&09/Del/2021 & 15/Del/2021 A.Ys. 2009-10 & 2010-11 <& 2011-12
The case of M/s Jagat Overseas, was centralized with this office vide letter CIT- 19/0 rder u/s. 127(2)/2012-13 dated 9.1.2013 issued by the CIT-19, Mumbai. I am therefore satisfied that the documents s e i z e d a s referred to above, belong to M/s Jagat Overseas warranting action u/s. 153C in this case."
It appears that in the first limb of satisfaction note drawn by the Ld. AO referred the documents found and seized during the search and seizure operation under Section 132 conducted on 14.09.2010 in the case of Shri Shant Lai Aggarwal at D 31, Pushpanjali Enclave, Pitampura, Delhi. The Ld. AO further clarified that Page No. 1 to 11 of particular document being the sale deed executed between Pramod Garg and Jagat Overseas in respect of built up property bearing No. 1, admeasuring 203.52 Sq. Meters, Block-A, Pocket-2, Sector-17, Dwarka Residential Scheme, Dwarka, New Delhi for a consideration of Rs. 12,00,000/-. The Ld. AO specified that the said sale deed was executed on 26.04.2007; the documents pertain to previous year 2007-08 relevant for Assessment Year 2008-09. Therefore, admittedly the said document does not pertain to the impugned Assessment Year 2009-10.
The second limb of satisfaction note referred the advanced payment made to the farmers. In this regard, the Ld. AO relied upon the statement of Shri Satish Pawa recorded on 1TA Nos. 6 192&6193/Del/20l 7 C.O. Nos. 08&09/Del/2021 & 15/Del/202l A.Ys. 2009-10 & 2010-11 & 2011-12
15.09.2010 during course of search operation under Section 132 of the Act conducted at D-842, New Friends Colony, New Delhi at residence of Sh. Satish Kumar Pawa wherein he has deposed that an amount of Rs. 59.00 crores was advanced in cash by M/s. Jagat Overseas and these payments were not reflected in the regular books of accounts of M/s. Jagat Overseas, the appellant before us. Shri Pawa further declared that these amounts of 59.00 crores was the unaccounted income of Jagat Overseas for the F.Y. 2010-11 and 2011-12. Therefore, admittedly the document relied upon does not pertain to Assessment Year 2010-11. Thus, we find these documents have no relevance for the purpose of determining escapement of income if at all of the assessee for the A.Ys. 2009-10 & 2010-11 in question which thus leads to no incriminating documents/materials qua in the A.Ys. 2009-10 & 2010- 11.
On this aspect we have also considered the judgement of the Hon'ble Supreme Court of India in the case of CIT vs. Sinhgad Technical Education Society reported in, (2017) 84 taxmann.com 290 (SC) wherein, the Hon'ble Apex Court has been pleased to hold that as per section 153C of the Act the incriminating material seized during search had to pertain to assessment year in question. In the case in hand admittedly, the materials which was mentioned in the satisfaction note does not refer to the Assessment Year 2009-10 or 2010-11.
IT A Nos. 6192&6193/Del/20l 7 C.O. Nos. 08&09/Del/2021 & lS/Del/2021 A.Ys. 2009-10 & 2010-11 & 2011-12 Moreso, no mentioning of any such document is forthcoming from the order passed by the Ld. AO.
We have carefully considered the judgment passed by the Hon'ble Jurisdictional High Court in the case of CIT vs. RRJ Securities Ltd. reported in, [2015] 52 taxmann.com 391 (Delhi) where it has been held that in terms of Section 153C, concluded assessment of assessee cannot be interfered with under Section 153A unless incriminating material belonging to the assessee has been seized in the course of search of any other person. While deciding the issue the Hon'ble Court has been pleased to observe as follows:-
"36. The decision in SSP Aviation Ltd. (supra) cannot be understood to mean that the AO has the jurisdiction to make a reassemen't in every case, where seized assets or documents are handed over to the AO. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the AO after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the Assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the AO to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an Assessee before commencing an enquiry under Section 153C of the Act, it would be impermissible for him to commence such enquiry if it is apparent that the documents/assets in question have no bearing on the income of the Assessee for the relevant assessment years.
As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. /\s indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not possibly reflect any undisclosed income. This being the undisputed position, no investigation was necessary. Thus, the provisions of section 153C, which are to enable an investigation in respect of the seized asset, could not be resorted to; the AO had no jurisdiction to make the reassessment under Section 153C of the Act.
In view of the above, the third question framed, whether the proceedings under Section 153C of the Act could be initiated against the Assessee, is answered in favour of the Assessee and against the Revenue.
In view of the above, it is not necessary for us to examine the other questions. The appeals are, accordingly, dismissed. In the circumstances, the parties are left to bear their own costs."
In our considered opinion the Ld. AO would not proceed to commence an enquiry under Section 153C of the Act if it was apparent that the documents in question had no bearing on the income of the assessee for the relevant Assessment Years. So far as the sale deed executed on 26.04.2007 is concerned the same pertains to Assessment Year 2008-09 and not 2009-10 which has been sought to be reopened by the Ld. AO. As far as the statement of Shri Satish Pawa recorded on 15.09.2010 is concerned it was not in any way connected with the undisclosed income, if at all of the assessee for the relevant A.Y. 2010-11 as discussed hereinbefore.
We have further considered the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in, (2015) 61 taxmann.com 412 wherein, it was held that if no incriminating material was found during the course of search in respect of the issue, no addition in respect of that issue can be made to the assessment u/s. 153A and 153C of the Act. Thus, it is clear that concluded assessment can be interfered with by the Ld. AO while making the assessment u/s. 153A only on the basis of the some incriminating material found and seized during the course of search or acquisition of document 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 assessment proceedings. The ratio of the said judgments in fact applies to the present case in hand in favour of the assessee.
Taking into consideration the entire aspect of the matter and the ratio laid down in the relevant judgments, we find no merit in interfering with the concluded assessment of assessee under Section 153A of the Act by the Ld. AO in the absence of incriminating material belonging to the assessee qua the Assessment Year seized during the course of search of any other person. Therefore, on the facts and circumstances of the case and the provisions of the law the proceeding initiated under Section 153C of the Act is without jurisdiction and also time barred and as such the assessment orders passed in ITANos. 6 192&6193/Del/2017 C.O. Nos. 08&09/Del/2021 & 15/Del/202l A.Ys. 2009-10 & 2010-11 & 2011-12
consequence thereof are also become without jurisdiction, barred by limitation and hence unsustainable. Therefore, the entire proceeding is hereby quashed. The Cross Objections filed by the assessee are, thus, allowed accordingly.
Since the very maintainability and/or jurisdiction of initiation of proceeding under Section 153C/143(3) of the Act has been decided in favour of the assessee upon quashing the same, it is not necessary for us to examine the ground raised in the appeal preferred by the Revenue on merit. The appeals, therefore, preferred by Revenue are accordingly rejected.
Cross Objection No. 15/Del/2021 (AY 2011-12):-
At the time of hearing, the Ld. Counsel appearing for the appellant submitted^ before us that the appeal being (A.Y. 2011-12) preferred by the Revenue was dismissed as withdrawn on 21.6.2021 on the prayer made by the assessee since the assessee availed the facility of Vivad Se Vishwas Scheme, 2020. In that view of the matter the Ld. Counsel for the assessee fairly submitted that the Cross Objection No. 15/Del/20121 (AY 2011-12) filed against the said appeal being ITA No. 6207/Del/2017 for AY 2011-12 has become infructuous. Taking into consideration the above fact we dismiss the cross objection of the assessee for the AY 2011- 12 as infructuous.
15 ITANos. 6192&6193/Del/2017 C.O. Nos. 08&09/Del/2021 & 15/Del/2021 A.Ys. 2009-10 & 2010-11 & 2011-12
In the result, both the Revenue appeals for the Assessment Years 2009-10 & 2010-11 are dismissed and the cross objections filed by the assessee for the Assessment Years 2009-10 & 2010-11 are allowed and cross objection for Assessment Year 2011-12 stands dismissed in the aforesaid manner.
The decision is pronounced in the Open Court on 28.06.2021, upon conclusion of virtual hearing.