DY CIT ,CC-1(2), MUMBAI vs. M/S. HIRANANDANI PALACE GARDENS P. LTD., (IN LIQUIDATION THROUGH MS. CHETNA P. SUTARIA, OFFICIAL LOQUIDATOR)

The appeal of the Revenue in 2008-09 along with C.O. No.158/Mum/2021 is taken as lead case, hence, the facts are narrated from the said appeal.

Ms. Kinjal Bhuta appearing on behalf of the assessee /respondent narrating the facts of the case submitted that a search and seizure action under section 132 and survey action under section 133A of the Act was initiated in the case of Hiranandani Group on 11/03/2014. In search action residential premises, business premises and bank lockers of Hiranandani Group were covered. Post search, satisfaction under section 153C of the Act common for assessment years 2008-09 to 2013-14 was recorded, the same is at page – 1 of the paper book. Thereafter, assessment under section 153C r.w.s. 143(3) of the Act was completed making addition of interest income. The Authorized Representative of the assessee referring to the satisfaction note para-7 pointed that as per seized documents there were entries indicating investments and raising of debts and foreclosure from Mauritius entities. The alleged incriminating documents found and seized as per Annexure 1 to Panchnama dated 10/3/2014 are at pages 5 to 23 of the paper book. The seized documents are the letters exchanged between assessee and Burke 1 Limited on a proposal for investment of fresh capital by Burke 1 Ltd, Mauritius in the assessee company. The Authorized Representative of the assessee pointed that a perusal of letters at page 5 to 23 of the paper book would show that all the letters are dated between March, 2013 to October 2013. None of the letters pertain to the assessment year 2008-09 to 2012-13. Since, there is no date specific incriminating material for the assessment years 2008-09 to 2012-13 no addition could have been made by the Assessing Officer in the said assessment years. The ld. Authorized Representative of the assessee placed reliance on the decision rendered in the case of Sinhgad Technical Education Society vs. ACIT reported as 16 taxamann.com 101 (Pune –ITAT) to contend that in the absence of assessment year specific incriminating material assessment under section 153A/153C are not sustainable.

Per contra, Shri Ajay Chandra representing the Department defended the assessment order. The ld. Departmental Representative fairly admitted that the additions assailed by the Department in appeal were earlier deleted by the Tribunal in regular assessment proceedings and the order of CIT(A) was upheld by the Tribunal.

We have heard the submissions made by rival sides and have examined the orders of authorities below. We will first address the legal issue raised by the assessee in Cross Objections. The assessee in Cross objections has raised following grounds: “1. The Ld. CIT(A) erred in confirming the order passed by Assessing officer despite the fact that there was no incriminating material found during the search proceedings. That the initiation of assessment proceedings u/s. 153C of the Income Tax Act, 1961 and the subsequent assessment order is without jurisdiction and bad in law and ought to be quashed.

From perusal of the satisfaction note (at page-1 of the paper book) it is evident that a common satisfaction note has been prepared for the assessment years 2008-09 to 2013-14. No assessment year specific seized material has been mentioned in the satisfaction note. On examination of the seized incriminating documents provided by the Assessing Officer to the assessee (at pages 5 to 23 of the paper book), which are part of Panchanama as Annexure- A1 shows that all the documents/letters were either issued in the year 2013 or thereafter. The earliest seized letter is dated 22/3/2013, written by assessee to Burke 1 Ltd. Mauritius, seeking investment in assessee company by way of infusing fresh capital. There is no seized document on record relevant/pertaining to assessment year 2008-09, much less any incriminating material which would have provided jurisdiction to the Assessing Officer for making assessment under section 153C of the Act.

Further, we observe that in the satisfaction note there is no mention of assessment year specific incriminating material found and seized during search action. The Co-ordinate Bench of the Tribunal in the case of Sinhgad Technical Education Society (supra) in similar circumstances where there was no reference to assessment year specific incrementing material in the satisfaction note held the assessment bad in law. The Hon’ble High Court upheld the order of Tribunal. Thereafter, the Hon’ble Supreme Court of India affirmed the view of Tribunal in an appeal filed by the Revenue in CIT vs. Sinhgad Technical Education Society reported 397 ITR 344/ 250 Taxman 225. The Hon’ble Apex Court held: “18.The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and. therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section I53C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001 -02 was even lime barred.

It is no more res-integra that in the absence of incriminating material in the case of non-abated/concluded assessments no additions can be made in the proceedings under section 153C of the Act. [Re: CIT vs. Gurinder Singh Bawa (supra)]. A perusal of the documents on record in the instance case makes it obvious that no incriminating document was found and seized pertaining to the relevant assessment year i.e. AY 2008-09. Further, we find that no addition was made by the assessing officer in assessment proceedings on the basis of any incriminating document found during search action. It is an un-rebutted fact that there was no pending assessment at the time of search, hence, no addition could have been made except for addition based on incriminating material found during search. We find force in the second contention raised by the assessee, as well.

In view of our above findings, the assessee succeeds on legal ground raised

Both sides are unanimous in stating that the facts germane to all these appeals are identical to the facts in assessment year 2008-09. We find that the assessee in all these Cross Objections has raised identical grounds assailing validity of assessment proceedings under section 153C of the Act. Since, facts are identical, the detailed findings given by us while adjudicating the Cross Objections of the assessee and appeal by Revenue for assessment year 2008- 09 would mutatis mutandis apply to the aforementioned assessment years. For parity of reasons, the appeals of Revenue are dismissed and Cross Objections for the respective assessment years are allowed.

To sum up, appeals by the Revenue for assessment years 2008-09 to 2012-13 are dismissed and corresponding Cross Objections by the assessee are allowed.