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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR
O R D E R
PER SAKTIJIT DEY, JM
This is an appeal by the assessee against order dated 28.09.2017 of learned Commissioner of Income Tax (Appeals)-48, Mumbai. Though, in the impugned order learned Commissioner (Appeals) has disposed of appeals for multiple assessment years, however, presently we are concerned with assessment year 2013-14 only.
In addition to the main grounds, the assessee has raised the following additional ground: “1. On the facts and in the circumstances of the case and in law the assessment under section 143(3) of the Act is void ab initio and as such bad in law as the appellant is covered under the first proviso of section 2 Assessment Year: 2013-14 153C of the Act and the assessment ought to have been completed applying the provisions of section 153C r.w.s. 153A of the Act. Without prejudice 1. On the facts and in the circumstances of the case and in law the notice under section 153C of the Act is bad in law as the requisite satisfaction as contemplated under provisions of section 153C of the Act has not been recorded by the assessing officer of the person searched before initiating the proceedings in the case of the appellant. 2. On the facts and in the circumstances of the case and in law the addition made by the assessing officer is bad in law as the addition is not based on any incriminating material found during the course of search. 3. On the facts and in the circumstances of the case and in law the assessment is bad in law as no satisfaction of the Joint Commissioner as contemplated under section 153D of the Act has been recorded before finalizing the assessment. ”
The additional grounds are purely on legal and jurisdictional issues questioning the validity of the assessment order. Further, since the adjudication of the additional grounds do not require investigation into fresh facts, we are inclined to admit the additional grounds for adjudication.
The short issue arising in additional ground no. 1 is, whether the assessing officer (AO) has validly assumed jurisdiction for completing the assessment under section 143(3) of the Act instead of section 153C of the Act. 5. The learned Counsel for the assessee submitted, a search and seizure operation under section 132 of the Act was carried out in case of M/s Gold Sukh Safety Tools Ltd. on 08.11.2012. In course of the said search and seizure operation locker no.122 containing cash of Rs. 15 lac was found. On verification, it was found that the said locker was allotted in the name of the present assessee. Based on such information, statement under section 132(4)
3 Assessment Year: 2013-14 of the Income Tax Act, 1961 was recorded from the assessee and the assessee also admitted the ownership of the locker as well as the cash kept inside. In consequence to the search and seizure operation carried out in case of M/s Gold Sukh Safety Tools Ltd., proceedings under section 153C of the Act was initiated in case of the assessee for assessment years 2007-08 to 2012-13. Whereas, for the impugned assessment year, the assessing officer (AO) initiated regular assessment proceedings under section 143(3) of the Act and also completed the assessment under the said provision.
The learned counsel for the assessee submitted, the documents/papers etc. found in course of the search and seizure operation were transferred to the AO having jurisdiction over the assessee on 21.08.2013 vide order dated 21.08.2013, passed under section 127 of the Act. Thus, he submitted, since the documents/papers/books of accounts etc. belonging to the assessee found during the search and seizure operation were transferred to the AO having jurisdiction over the assessee on 21.08.2013 falling in financial year 2013-14 relevant to assessment year 2014-15, assessments for immediately preceding six years have to be completed under section 153C of the Act. Drawing our attention to the proviso to section 153C, learned counsel submitted, in case of a person other than the person in whose case search and seizure operation was carried out, the date of search under section 132 has to be construed with reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the AO having jurisdiction over the searched person. Thus, he submitted, since the AO instead of initiating proceeding under section 153C of the Act has wrongly initiated proceeding for regular assessment under 4 Assessment Year: 2013-14 section 143 and has also passed the order under the said provision, it is invalid. In support of such contention, learned counsel relied upon the following decisions:
1. 1. Jasjit Singh vs. ACIT, & 1707/Del/2012 dated 05.11.2014.
2. CIT vs. Shri Jasjit Singh, ITA No. 375/2015 judgment dated 11.08.2015 of Delhi High Court.
7. The learned Departmental Representative submitted, though, there is no dispute regarding the factual aspect of the issue, however, the additional rounds raised by the assessee should not be entertained and the appeal may be decided on merits.
8. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. Facts emanating from record reveal that a search and seizure operation was conducted in case of M/s Gold Sukh Safety Tools Ltd. on 08.11.2012. In course of search and seizure operation, a locker containing some cash and valuables was found. Ultimately, the assessee owned up the locker along with its contents. It is a fact on record that as a consequence of the search and seizure operation, the search related assessments were centralized vide order dated 08.03.2013 and the seized documents/materials were handed over to the AO having jurisdiction over the assessee vide order passed under section 127(2) of the Act on 21.08.2013. In fact, the satisfaction note for initiating proceeding under section 153C of the Act in case of the assessee was recorded by the AO only on 26.11.2013. However, such satisfaction note for initiating proceedings under section 153C of the Act was for assessment years 2007-08 to 2012-13. 5 Assessment Year: 2013-14 9. The aforesaid factual position remains uncontroverted before us. As per section 153A(1) of the Act, for assessing or reassessing the income of the searched person, the AO has jurisdiction to issue notice calling for return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. In other words, in the search year regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years proceedings have to be initiated under section 153A of the Act. The procedure laid down in section 153A of the Act is also applicable to section 153C which provides for assessment in case of persons other than the searched person, relating to whom some information/material was found in course of the search and seizure operation. However, the first proviso to section 153C stipulates that for the purpose of section 153C of the Act, the reference to the date of initiation of search as provided in section 153A(1) shall be construed with reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other persons. Meaning thereby, in case of a person to whom section 153C applies, the search assessment year would be the assessment year in which the AO received books of account, documents, assets etc. Thus, in the search year regular assessment has to be made under section 143(3) of the Act. Whereas, for the six immediately preceding years, proceedings have to be initiated under section 153C of the Act. In the facts of the present appeal, undisputedly, the books of account/documents/assets found during the search and seizure operation were received by the AO having jurisdiction over 6 Assessment Year: 2013-14 the assessee on 21.08.2013 i.e. in the previous year 2013-14 relevant to the assessment year 2014-15. Thus, as per the provision contained under section 153C r.w.s. 153A of the Act, for assessment year 2014-15 regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years viz. assessment years 2008-09 to 2013-14 assessment proceedings have to be initiated under section 153C of the Act. Undisputedly, in case of the present assessee, assessment for assessment year 2013-14 i.e. impugned assessment year, has been completed under section 143(3) of the Act. Neither the AO has recorded any satisfaction nor issued any notice as contemplated under section 153C of the Act. Therefore, the short issue arising for consideration is, whether the impugned assessment order is sustainable. While dealing with an identical issue in case of Jasjit Singh vs. ACIT (supra), the coordinate Bench has held as under:- “13. We find that there is no dispute on the relevant facts of the case that search and seizure operation u/s 132 of the Act in the case of Koutons was conducted on 19/02/2009 which is relevant to the F.Y. 01/04/2008 to 31/03/2009 and the relevant assessment year is 2009-10. It is also undisputed that the case of the assessee was centralized by ld. CIT u/s 127 of the Act and the jurisdiction of the assessee from Ward 25(3) to Central Circle 11 was transferred on 16/06/2009, hence previous year would be 01/04/2009 to 31/03/2010 and the A.Y. will be 2010-11. On the basis of these facts the contention of the assessee in the additional ground is that the assessment order framed u/s 143(3) of the Act for the assessment year in question is not valid and not maintainable. As per him, the date of search in the case of the present assessee would be the date i.e. 16/06/2009 when documents belonging to the assessee (found during the course of search) were handed over and jurisdiction for framing the assessment was transferred to the AO having jurisdiction for the assessment on the assessee. Taking into account the date 16/06/2009 as date of search in the case of the 7 Assessment Year: 2013-14 assessee, the contention of the ld. AR remained that the search year in the case of assessee would be A.Y. 2010-11 and six previous assessment years would be 2009-10 to 2003-04. In other words, the regular assessment u/s 143(3) of the Act in the present case should have been framed for the assessment year 2010- 11 and the assessment for the assessment year under consideration should have been framed u/s 153C read with 143(3) of the I.T. Act. In support the above cited decisions were relied upon by the ld. AR.
The contention of the ld. CIT(DR) on the contrary remained that the reference of proviso 1 of section 153C is only in relation to the second proviso to sub-section 1 of section 153A which speaks about the abatement of the pending proceedings of six assessment years and not regarding the assessment of the preceding six assessment years which will be the same as in section 153A as well as in section 153C of the Act. In this regard she placed reliance on the decision of Hon‟ble Delhi High Court in the case of SSP Aviation Ltd. vs. DCIT (supra).
We find that an identical issue has been decided by Delhi Bench of the Tribunal in the case of DSL Properties P. Ltd. (supra) in favour of the assessee accepting the similar contention of the assessee. Similar view has been expressed by the Delhi Bench of the Tribunal in the case of V.K. Fiscal (supra) holding that the date of receiving of the seized documents would become the date of search and six years period would be reckoned from this date. For a ready reference para no. 19, 21, 22 & 23 of the decision of Delhi Bench of the Tribunal in the case of DSL Properties (supra) are being reproduced hereunder: 19. “We have carefully considered the rival submissions. Proviso to section 153C reads as under: “Provided that in case of such other person, the reference to the date of initiation of the search u/s 132 or making of requisition u/s 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person.”
The above proviso refers to second proviso to sub-section (1) of section 153A. That section 153A(1) and its first and second provisions read as under: - “153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated 8 Assessment Year: 2013-14 u/s 132 or books of account, section 132A after the 31st day of May, 2003, the AO shall – (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished u/s 139; (b) Asseess or reassess the total income or six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate.”
From the above, it is evident that as per clause (b) of subsection (1) of section 153A and second proviso, the AO can be issue notice for assessment or reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted. As per proviso to section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the AO having jurisdiction over such other person. Ld. DR has stated that since the AO of the person searched and the AO of such other person was the same, no handing over or taking over of the document was required. That section 153C(1) and its proviso have to be read together in a harmonious manner. While interpreting section 153C, we have already held that for initiating valid jurisdiction u/s 153C, even if the AO of the person searched and t he AO of such other person is the same, he has to first record the satisfaction in the file of the person searched and thereafter, such note alongwith the seized document/books of account is to be placed in the file of such other person. The date on which this exercise is done would be considered as the date of receiving the books of account or document by the AO 9 Assessment Year: 2013-14 having jurisdiction over such other person. Though while examining the facts of the assessee‟s case we have arrived at the conclusion that no such exercise has been properly carried out and, therefore, initiation of proceedings u/s 153C itself is invalid, however, since both the parties have argued the issue of period of limitation also, we deem it proper to adjudicate the same. Since in this case satisfaction is recorded on 21st June, 2010 and notice u/s 153C is also issued on the same date, then only conclusion that can be drawn is that the AO of such other person has taken over the possession of seized document on 21st June, 2010. Accordingly, as per section 153(1), the AO can issue the notice for the previous year in which search is conducted (for the purpose of Section 153C the document is handed over) and six assessment years preceding such assessment year. Now, in this case, the previous year in which the document is handed over is 1st April, 2010 to 31st March, 2011. The assessment year would be A.Y. 2011-12. Six preceding previous years and relevant assessment year would be as under: Previous Year Assessment Year 1.4.2009 to 31.3.2010 2010-11 1.4.2008 to 31.3.2009 2009-10 1.4.2007 to 31.3.2008 2008-09 1.4.2006 to 31.3.2007 2007-08 1.4.2005 to 31.3.2006 2006-07 1.4.2004 to 31.3.2005 2005-06 22. The AO has issued notice u/s 153C for A.Y. 2004-05 which is clearly barred by limitation. Therefore, issue of notice u/s 153C issued by the Revenue cannot be sustained on both the above counts, i.e., it is legally not valid as conditions laid down u/s 153C has not been fulfilled and it is barred by limitation. In view of the above, we quash the notice issue du/s 153C and consequently, the assessment completed in pursuance to such notice, is also quashed.
Since we have quashed the assessment order itself, the additions challenged by the assessee by way of other grounds of appeal
do not survive, and, therefore, do not require any adjudication.”
16. We thus, find that the issue raised in the additional ground has been answered in favour of the assessee, by the Coordinate Delhi Bench of the Tribunal in the case of DSL Properties (supra).
17. So far as decision of Hon‟ble Delhi High Court in the case of SSP Aviation Ltd. vs. DCIT (supra) relied upon by the ld. CIT(DR) is 10 Assessment Year: 2013-14 concerned, we find that it is not helpful to the revenue as in that case also in para no. 14 of the judgment it has been held as under: 14. “Now there can be a situation when during the search conducted on one person u/s 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the AO has to first be satisfied u/s 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the AO having jurisdiction over the other person. Thereafter, the AO having jurisdiction over the other person has to proceed against him and issue notice to that per5son in order to assess or reassess the income of such other person in the manner contemplated by the provisions of section 153A. Now a question may arise as to the applicability of the second proviso to section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search u/s 132 or the requisition u/s 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the AO having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.”
18. In view of the above finding, the assessment framed u/s 143(3) of the Act for the A.Y. 2009-10 in the present case is not valid. Respectfully following the above cited decisions on an identical issue, the additional ground no. 4 in the present case is decided in 11 Assessment Year: 2013-14 favour of the assessee and in the result the assessment order is quashed as void.”
10. It is worth mentioning, the aforesaid decision of the coordinate Bench was upheld by the Hon’ble Delhi High Court while deciding revenue’s appeal (supra). The Hon’ble Court while upholding the decision of the co- ordinate Bench held as under: “3. The question raised before the ITAT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) “such date will be the date of receiving the books of account Or. documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, „the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.
4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31° March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under: “The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a 12 Assessment Year: 2013-14 copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction reason before issuing notice under Section 133C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such „other person. In case, the AO of the searched person exercises jurisdiction over the other person also, appropriate referencing should be made in the relevant assessment records of such other person.
It may be noted that in the present case satisfaction note was prepared by the AO on 25th February 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY 2009-10 was not valid, calls for no interference . No substantial question of law arises in the facts and circumstances of the present case.”
If we apply the ratio laid down in the decision of the co-ordinate Bench and the Hon’ble Delhi High Court, as referred to above, there cannot be two opinion that the impugned assessment order passed under section 143(3) of the Act is invalid. No contrary decision of a higher Court has been brought to our notice by learned Departmental Representative for enabling us to deviate from the view expressed in the aforesaid decision of the coordinate Bench. In view of the aforesaid, we hold that the AO having wrongly assumed jurisdiction under section 143(3) of the Act to complete the assessment, the impugned assessment order is invalid, hence, deserves to be quashed. Accordingly, we do so.