DCIT, NEW DELHI vs. M/S. S R CREDITS PVT. LTD., DELHI

this order of the Hon’ble Delhi High Court was dismissed by the Hon’ble Apex Court in the case of Pr.CIT vs. Meeta Gutgutia reported in 257 Taxman 441 (SC). Reliance was also placed on the order of ITAT Delhi Bench in the case of Trilok Chand Choudhary vs. ACIT in and another case of DCIT vs. Shivali Mahajan in ITA No.5585/Del/2015.

4.1 The Ld. Authorized Representative submitted that the search was conducted only at 4828/24, Prahlad Lane, Ansari Road, Daryaganj, New Delhi whereas the documents were found at A-85, Sec.2, Noida. He also drew our attention to the fact that even in the Panchnama, name of the assessee did not appear. He drew our attention to copy of the Panchnama placed at page-9 of the Paper Book, it was submitted that in view of the settled judicial precedents, the impugned assessment deserved to be quashed.

5.0 In response, the Ld. CIT-DR vehemently supported the assessment framed u/s 153A of the Act and said that the warrant contained the name of the assessee and, therefore, the assessment framed was correct in law.

6.0 We have heard the rival submissions and have also perused the material on record. We have also perused copy of the Panchnama through which the documents in dispute was seized. On perusal of the Panchnama, we find that the Panchnama is not containing the name of the assessee. Therefore, it is evident that the material relied upon for making the impugned addition was not found from the premises of the assessee.

We also note that during relevant period, for using any material found from the premises of the third party during the course of the search in the assessment proceedings of the assessee, the Assessing Officer of the third

. party was required to record satisfaction as the material belonging to the assessee in terms of section 153C of the Act and was then required to proceed as per the provisions of section 153C of the Act. In the instant case, it is evident that addition in dispute has been made in the assessment completed under section 153A of the Act. The Act has provided separate provisions for making assessments in case of material found in the course of the search from the premises of the assessee as well as the material found in the course of search at the premises of the third party. The Assessing Officer is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure. In our considered opinion, when the case of the assessee is covered under the provision of section 153 of the Act and if reliance is placed on the incriminating material found during the course of search of third-party, then provisions of section 153C of the Act would be applicable and have to be adhered to.

6.1.1 In the case of Shivani Mahajan (supra), identical question was raised before the Tribunal as under:

“9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, following two questions arise for our consideration:

(i) Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under 153A of the assessee.

6.1.2 The Tribunal after considering arguments of the parties held as under:

“14. From a reading of the above decisions of Hon'ble Jurisdictional High Court, it is evident that completed assessment can be interfered with by the Assessing Officer on the basis of any incriminating material unearthed during the course of search. If in relation to any assessment year no incriminating material is found, no addition or disallowance can be made in relation to that year in exercise of power under Section 153 of the Act. Obviously, the reference to the incriminating material in the above decisions of Hon'ble Jurisdictional High Court is in regard to incriminating material found as a result of search of the assessee's premises and not of any other assessee. The legislature has provided Section 153C by invoking the same the Revenue can utilize the incriminating material found in the case of search of any other person to the different assessee. …… 15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course

. of search of the assessee only can be utilized and not the material found in the search of any other person.”

6.2 Further, the Hon’ble Delhi High Court in the case of Pr. CIT vs. Meeta Gutgutia reported in 395 ITR 526 (Del.) has held that the invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. The Revenue’s SLP against this order of the Hon’ble Delhi High Court was dismissed by the Hon’ble Apex Court in the case of Pr.CIT vs. Meeta Gutgutia reported in 257 Taxman 441 (SC). Apparently, in the present case, no incriminating material was found qua the assessment year in question.

Therefore, the assessment framed by the Assessing Officer in violation of the procedure provided in the Act is bad in law and void ab initio and cannot be sustained. Therefore, placing reliance on the above mentioned judicial precedents, we quash the impugned assessment order.

Accordingly, the Cross Objection of the assessee stands allowed.

6.3 Since, we have allowed the Cross Objection of the assessee and have quashed the assessment, the appeal of the Department does not survive and it is dismissed as in fructuous.

7.0 In the final result, the Cross Objection of the assessee stands allowed whereas the appeal of the Department stands dismissed.

Order pronounced on 26/05/2020.