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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI RAM LAL NEGI
Per Rajesh Kumar, Accountant Member: The present appeal has been preferred by the assessee against the order dated 29.11.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.
The assessee has raised the various grounds challenging the order of Ld. CIT(A). The issue challenged in ground No.2 is a jurisdictional issue challenging the order of Ld. CIT(A) by wrongly upholding the order of AO which has been passed under
2 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. section 143(3) read with section 147 by reopening the assessment under section 148 of the Act whereas the assessment should have been framed under section 153C of the Act and therefore the assessment so framed is bad in law.
The assessee also challenged the jurisdictional issue by way of additional ground before the Ld. CIT(A), however, the same was dismissed by the Ld. CIT(A) by observing and holding as under: “4.5 I have considered the submissions carefully. The additional ground 2 assailing the assessment on the basis that assessment should have been completed u/s 153C and not 147 and hence order should be quashed is taken up first. The loose paper in question was found and seized from the residence of Shri Ramesh Shah at 1201, Sumer Heights, 12th Floor, Chowpatty, Mumbai -400007. Section 153 C as it stood at the time when notice for reassessment was issued read as follows: "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or valuable article or thing or books of account or documents seized or requisitioned belongs or belong 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". Now in the present case, the seized paper did no\ belong to the appellant company. This was a bone of contention and in the case of Pepsico Holdings Pvt. Ltd. which was decided by the Hon'ble Delhi High Court. The proceedings initiated u/s 153C was quashed. The Court held that- “lt is nobody's case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer is satisfied that any money, bullion,. jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A ....'In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in
3 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. (Para 14) Secondly, the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong' to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originalsf do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise. (Para 15) Thirdly, the assessing officers should not confuse the expression "belongs to' with the expressions "relates to' or "refers to'. A registered sale deed, for example, "belongs to' the purchaser of the property although it obviously "relates to' or "refers to' the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to' the vendor just because his name is mentioned in the document. In the converse case if the vendor's premises are searched and a copy of the sale deed Is seized, it cannot be said that the said copy "belongs to' the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to "belong to' the petitioner. (Para 16) The ingredients of Section 153C have not been satisfied in this case. Consequently the notices dated 02.08.2013 issued under Section 153C of the said Act were quashed, Kamleshbhai Dharamshibhai Pate/ v. Commissioner of Income Tax; (2013) 214 Taxman 558, Sarvesh Kumar Agarwal Vs. Union of India &0rs. [2013] 353 ITR. 26 (All), distinguished; Commissioner of Income Tax v, Classic Enterprises: (2013) 358 ITR 465, disagree; Peps) Foods Pvt. Ltd. Vs. Assistant Commissioner of Income Tax, WP (C) No.415/2014, dated 07.08,2014, relied on. Conclusion :
4 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. Unless it is established that documents seized, whether they be photocopies or originals, do not belong to searched person, question of invoking Section 153C does not arise and mere finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals. It is further noted that the section 153C was later amended w.e.f. 1,6,2015 when it was substituted by “[(1)] 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, belongs 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][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 six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is "made and"] for the relevant assessment year or years referred to in sub-section (1) of section 153A]” Hence it is clear that section 153C could not have been invoked in the facts of this case on the date the notice u/s 148 was issued. 4.6. The case laws cited by the appellant are decisions of the Hon'ble Tribunals and not of the High Court and has not considered the issue regarding "belongs to" vis-a- vis "pertains to "For instance the ITAT decision in the case of Navratan Kothari referred to in decision in the case of Shri Kalyan Buildmart P Ltd, the section 153C discussed and reproduced is the amended section. Thus with due respect, I find that the same are clearly distinguishable. 4.7. Hence the additional ground of appeal no 2 is dismissed.”
The facts in brief are that the assessee filed the return of income on 29.02.2012 declaring total income of Rs.84,66,352/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act after recording reasons under section 148(2) after
5 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. issuing notice under section 148 on 13.03.2013 which was duly served upon the assessee. Pertinent to state that assessee is engaged in the business of construction of real estate projects. The case of the assessee was reopened after a search action on the residential premises of Mr. Ramesh Shah on 23.12.2010 a director of the assessee company during which some incriminating loose papers were found and impounded. Loose paper No.39 in Annexure A(3) reveals one entry of 5 in cash. Thus the search has been conducted on Mr. Ramesh Shah in whose possession some incriminating material was impounded which has contained the entry of cash Rs.5 in respect of the assessee in question. Therefore the issue before us is whether the assessment in this case of the assessee is to be framed under section 143(3) read with section 147 which has actually been done or it should have been framed under section 153C of the Act as in this case the assessee is as person other than the searched person from whose possession some documents were impounded which reveals entry relating to the assessee. The assessee claimed that the Shri Ramesh Shah has been one of the directors on the assessee company and therefore the documents belonged to the assessee.
The Ld. A.R. vehemently submitted before us that the present assessment is the outcome of the search action carried on the Mr. Ramesh Shah on 23.12.2010 who is the director of the assessee company and therefore the assessment was required to be framed under section 153C read with section 153A of the Act and not under section 143(3) read with section 147 of the Act as has done in the present case. The ld AR
6 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. submits that assessment so framed is bad in law and void ab- initio. The second proposition of the Ld. A.R. was that the document which is found in the possession of Mr. Ramesh Shah on the basis of which the present reassessment proceedings were initiated was admittedly belonging to Mr. Ramesh Shah as director of the company as per the finding of Ld. CIT(A) in the appellate order. The Ld. A.R. submitted that in this case the loose papers have been impounded from the possession of Mr. Ramesh Shah who is the director of the assessee company which contains information qua some payments made by the assessee and therefore the only option before the AO was to frame assessment under section 153C read with section 153A of the Act of the Act and not under section 147 read with section 148 of the Act. The Ld. A.R. therefore, submitted that the said assessment order is bad in law and is invalid and may kindly be quashed. In defence of his arguments the Ld. A.R. relied on the following decisions: 1. ITO vs. Arun Kumar Kapoor (2011) 16 taxmann.com 373 (Amritsar)/(2012) 50 SOT 87 (Amritsar) (URO)/(201) 140 TTJ 249 (Amritsar) 2. ACIT vs. Shri Srinivas Rao Hoskote in ITA No.1154 & 1155/Bang/2015. The Ld. A.R. therefore submitted that the order of Ld. CIT(A) may kindly be set aside and the assessment so framed by the AO under section 143 read with section 147 may kindly be quashed as being bad in law and is invalid in the eyes of law.
The Ld. D.R., on the other hand, relied heavily on the order of AO and Ld. CIT(A) and submitted before the Bench that all these propositions as raised by the Ld. Counsel before the Bench
7 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. have been dealt with by Ld. CIT(A) in detail and passed a very reasoned order by considering the position prior to and post amendment to section 153C of the Act by Finance Act, 2015 which is effective from 01.06.2015. The Ld. D.R. submitted that prior to the documents found during the course of search on a person other than the assessee has to be belonged to the assessee only then the provisions of section 153C of the Act comes into play and not otherwise. In the present case, the documents seized from the possession of Mr. Ramesh Shah, director of the assessee company were apparently documents belonging to Mr. Ramesh Shah which contains entries relating to the assessee and therefore the AO has rightly initiated the reassessment proceedings under section 147 of the Act and framed the assessment under section 143(3) read with section 147 of the Act. The Ld. D.R. prayed that only post amendment the legal provision has slightly changed which provides that assessment under section 153C has to be framed where the documents found as a result of search and seizure action under section 132 on a person other than the assessee which pertains to or relates to the assessee and have information qua the income or transaction with the assessee. In the present case, the case of the assessee undisputedly relates to the assessment year 2011-12 which is a year that falling prior to the amendment to section 153C of the Act and therefore there was no requirement to frame the assessment under section 153C as no documents belonging to assessee were found in the possession of searched person. The Ld. D.R. therefore prayed before the Bench that the order of Ld. CIT(A) may kindly be upheld. Ld. D.R. also submitted that it has been specifically stated by the
8 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. Ld. CIT(A) that decision cited by the assessee were of co-ordinate bench of the Tribunal and not of High Court which has not considered the issue of belonging to vis-à-vis pertaining to and therefore distinguished the decision relied upon by the assessee. Ld DR on the hand strongly opposed the contentions and arguments of the ld AR by submitting that the assessment was rightly re-opened by the AO u/s 147 of the Act after search on Shri Ramesh Shah Director of the assessee company. The ld Dr submitted that section 153 of the Act applies to six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted and not to the assessment year relevant to the previous year in which the search is conducted. The ld DR submitted that since the search was conducted on 23.12.2010 which falls in AY 2011-12 then assessment u/s 153C of the Act has to be framed for six years ending with AY 2010-11 not AY 2011-12. The ld Dr in defense of his arguments relied on the coordinate bench decision in the case of Shri Cherian Abraham Vs DCIT ITA No. 1575/Bang/2016 AY 2012-13 order dated 21.11.2017. The ld Dr also pleaded that the decisions as relied on by the ld AR are not applicable to the facts of the present case and therefore the ground raised on jurisdictional issue may kindly be dismissed.
In the rejoinder the ld. Counsel of the assessee submitted that this is a settled issue by the Hon’ble Bombay High Court in the case of CIT Vs M/S Lavanya Land Pvt Ltd. ITA No. 72 of 2014 and others order dated 23.06.2017.The ld AR submitted that the Hon’ble High court has that assessment framed u/s 153C for the assessment year relevant to the previous year in
9 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. which the search is conducted is valid. Therefore the ld AR submitted that the appeal of the assessee may be allowed.
We have heard the rival submissions of both the parties and perused the material on record. The undisputed facts are that a search was conducted on Mr. Ramesh Shah who is a director of the assessee company belonging to Sumer group but not on the assessee on 23.12.2010 under section 132 during which certain loose papers were found and impounded loose paper No.39 in Annexure A(3) which has noting in handwriting which reflects entry in cash of Rs.5 which was treated by the AO as Rs.5 crore paid by the assessee to Maharani Chamba, Mrs. Divya Devi. A statement of Mr. Ramesh Shah was also recorded on 23.12.2010 in which Mr. Ramesh Shah in answer to query No.16 has stated that payment of Rs.15 crore has already been made to Maharani Chamba, Mrs. Divya Devi, however, the agreement has already been cancelled by Mrs. Divya Devi. Now the issue before us is under which provision of the Act the assessment should be framed. In the present case before us we observe that the loose paper found in the possession of Mr. Ramesh Shah contains entry of payments by the assessee. Thus we find merit in the contentions of the Ld. A.R. that the assessment should have been framed under section 153C read with section 153A of the Act as in the searched cases there is a specific provision provided under the Act for framing the assessments. We also find merit in the submissions of the Ld. A.R. that post amendment to Section 153C by Finance Act, 2015, the scope of the section has been widened and enlarged. Thus in our opinion, once it is established on the basis of
10 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. documents seized during the course of search conducted under section 132 of the Act on a person covered under section 153A which contains information relating to the third party other than the person covered under section 153A, in that event the assessment has to be framed under section 153C of the Act. The case of the assessee also finds support from the decision of the co-ordinate benches of the Tribunal in the case of ITO vs. Arun Kumar Kapoor (supra) and ACIT vs. Shri Srinivas Rao Hoskote (supra) as discussed below:. In the case of ITO vs. Arun Kumar Kapoor (supra) the facts are quite similar where during the course of search some documents were impounded which revealed information about Mr. Arun Kumar Kapoor having some transactions. The AO initiated the reassessment proceedings under section 147 and framed assessment under section 143(3) read with section 147 of the Act which were held to be invalid. The operative part of the decision of the co-ordinate bench of the Tribunal is reproduced as under:
“7.1 The contention of the learned D.R. is contrary to the facts narrated in the assessment records. From paras 2.1, 3.1.1 (a) and (b) and 3.1.3 of the assessment order, it is crystal clear that incriminating documents relating to the assessee were found during the course of search. Paras 2.1, 3.1.1(a) and (b) and 3.1.3 read as under:- "2.1 On the basis of evidence found during the course of search and assessment proceedings, the cost price of each share M/s.P.R. Infrastructure Ltd. was determine at Rs.2041/- as against the transfer cost price at face value of Rs.10/- by the directors of that company. In the report, it was elaborated that M/s.P.R. Infrastructure Ltd. had transferred the share holding of the directors alongwith management of the companies to M/.Today Home and Infrastructure (P) Ltd. for a total consideration of Rs.12.25 crore.
11 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. 3.1.1 During the course of search and seizure conducted on M/s.Today Homes & Manufacturing (P) Ltd. certain documents were seized & it is found that: a) Receipt dated 03-8-2005 issued & signed by Sh. Arun Kapoor Director of M/s.P.R. Infrastructure Ltd. shown that they have received Rs.51 lacs by cheque and Rs.7 lacs in cash from M/s.Today Homes & Infrastructure (P) Ltd. as part payment on account of sale consideration of land at Rs.12.25 crore. b) As per undertaking/affidavit signed by Sh. Arun Kapoor director of M/s.P.R. Infrastructure Ltd. on14-8-2005. It was further found that M/s.P.R. Infrastructure Ltd. has received further sum of Rs.42 lacs from M/s.Today Homes & Infrastructure (P) Ltd. towards the part payment of sale consideration of Rs.12.25 crore. Thus, till 14-8- 2005, Sh. Arun Kapoor had received Rsw.1 crore in cheque and in cash as part payment of total sale consideration of land at Rs.12.25 crore. 3.1.3 Sh. Arun Kapoor had transferred 10000 shares of M/s. P.R. Infrastructure Ltd. owned by him at face value of Rs.10/- whereas market value of each share was determined at Rs.2041/-. Assessee has not shown any capital gain on account of transfer of shares in his return of income for assessment. As such income to the tune o Rs.2,02,10,000/- (204100000 sale price - 100000 cost price) has thus escaped assessment for the A.Y. 2006-07." In view of the above, we reject the contention of the learned D.R. that no incriminating documents relating to the assessee were found during the course of search. 7.2 The undisputed facts are that a search was conducted under section 132 of the Act in the case of M/s.Today Homes & Infrastructure Pvt. Ltd. on 28-3-2006, during the course of which certain incriminating documents were allegedly seized. It is also a matter of record that the DCIT, Central Circle- 22, New Delhi intimated the AO of the assessee about seizure of certain documents pertaining to the assessee during search and enclosed copy of those documents requesting him to take appropriate action under section 153C/148 of the Act. It is after that during the course of appellate proceedings before the CIT(A) the assessee took an additional ground of appeal to the effect that the reassessment proceedings initiated by the AO u/s.148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the A.O. should have issued notice under section 153C of the Act and should have framed the assessment under section 153C read with section 153 of the Act. Section 153C of the Act reads as under:-
12 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. "153C. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong 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 and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A." 8. On a perusal of the above provisions, it would be clear that the provisions of section 153C of the Act were applicable, which supersedes the applicability of provisions of sections 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under section 132 of the Act and the same was sent to the assessee's A.O. at Amritsar by the Officer at Delhi. In our view, the learned CIT(A) has correctly observed that only the provisions in which any assessment could be made against the assessee in the Income tax Act was section 153C read with section 153 of the Act. It is also apparent from the record that the Officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under section 153C/148 of the Act. Hence, notice issued under section 148 of the Act and proceedings under section 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of section 153C of the Act, section 147/148 stand ousted. In the instant case, the procedure laid down under section 153C has not been followed by the A.O. and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari Vs. ACIT and another, reported in (2007) 289 ITR 341, wherein it has been held that if the procedure laid down in section 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of section 153C are exactly similar to the provisions of section 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do not find any merit in the submissions of the learned DR that during the course of search, it was found at premises of M/s.Today Homes & Infrastructure Pvt. Ltd. pertaining to M/s.P.R. Infrastructure Ltd. and not the assessee. In this regard, we may point out that the contention raised by the learned D.R. is factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dated 30-12-2008. In view of the above factual discussion, we do not find any merit and
13 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. substance in the contention of the learned D.R. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos.1 to 4 of the appeal. 9. Since we have upheld the order of the CIT(A) in quashing the reassessment order and, therefore, we do not think it necessary to go into the merits of the case.” Similarly, in the case of ACIT vs. Shri Srinivas Rao Hoskote (supra) it is held by the co-ordinate bench of the Tribunal that if there is a contradiction between 153C and 148 of the Act in that scenario section 148 has to give way to section 153C of the Act. The co- ordinate bench of the Tribunal has held that if AO is allowed to proceed under section 147 of the Act to reopen the assessment then there would be no relevance of section 153A which were inserted in the Act to exclusively deal with the search cases. The operative part of the decision is reproduced below:
“06. We have heard the rival contentions and perused the record. In our view the scope of Section 153C and 148 are clear from the bare reading of the two provisions insomuch as Section 153C it starts with 'Notwithstanding nothing containing in Section 139, 147, 148, 149, 151 and 153'. Thus if there is any contradiction between Sections 153C and 148 ,in that eventuality, Section 148 shall give way to Section 153C. There is a reason for saying so because if a notice u/s.153C is issued to the third party (assessee), then the AO may assess or reassess the income of the assessee for a period of six years whereas this is not the position in case of Section 148. Further u/s.153C of the Act, the assessment / reassessment can only be made based on the satisfaction recorded by the AO or the searched person as well as of the third party and further addition can only be made by the AO in respect of the assessment year for which the incriminating documents were found with the search person belonging to the third party. Therefore in our view the finding of the CIT(A) is in accordance with law, as the proceeding should have been initiated under section 153C of the Act, as it were based on material found during the search from the premises of searched person other than assessee and not under section 148 of the Act. Further we are of the opinion that this issue raised by the parties is no more res integra as the coordinate bench in the matter
14 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. of G. Koteshwara Rao v. DCIT [(2015) 64 taxmann.com 159] in para 11 to 14 has held as under : 11. A careful study of section 153A to 153C and also the circular issued by the CBDT explaining the procedure of assessment in search cases, it shows that these are separate provisions independent of other provisions relating to reassessment, because of the non obstante clause begins with the said sections. The language used in these sections, i.e. 'notwithstanding anything contained' in section 139, section 147, section 148, section 149, section 151 and section 153 made it clear that provisions of these sections are not made applicable to the assessments covered by the provisions of section 153A. Prior to the introduction of these three sections, there was a separate chapter XIV -B of the Act, by section 158BC to 158BE which governs the search assessments which is popularly known as Block assessment. The earlier provisions provides for single assessment to be made in respect of undisclosed income of Block period consisting of 10 assessment years immediately preceding the assessment year in which search took place and the broken period of up to the date of search was also included in the block period. After the introduction of new sections, i.e. section 153A to 153C, the single block assessment concept was done way with the new scheme of assessment of search cases where the Assessing Officer is to assess or reassess the total income of each of the assessment years falling within the period of six assessment years immediately preceding the assessment year in which the search is conducted. Therefore, under the new scheme, the Assessing Officer is required to exercise the normal assessment powers in respect of the previous year in which the search took place. From these facts, one thing is clearly emerged that both i.e. earlier concept of Block assessment and the new scheme of assessment is separate provisions created for assessment of search cases where the search is conducted u/s 132 or requisition was made u/s 132A of the Act. 12. Under the provisions of section 147, the Assessing Officer is having power to re-open the assessment, if he is of the opinion that the income chargeable to tax has escaped assessment. Before doing so, the Assessing Officer should satisfy himself that, there is material which suggests that there is an escapement of income. The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessment by way reasons for reopening of assessment, time limit for issue of notice and provision for obtaining sanction of higher authority in certain circumstances. Under the provisions of section 153A to 153C these hurdles are cleared by using the non
15 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. abstante clause in the said section. In other words, under the new provisions of section 153A, the AO is not required to satisfy these conditions before issue of notice. The only requirement is that there should be a search action u/s 132 or books of account, other documents or any other asset are requisitioned under section 132A. Therefore, we are of the opinion that though, the Assessing Officer from both sections empowered to tax the income escaped from tax, both are works in a different situations, i.e. section 147 comes in to operation where there is an escapement of income chargeable to tax and section 153A comes in to operation where there is search u/s 132. 13. Under the provisions of section 153A, the Assessing Officer is bound to issue notice to the assessee to furnish the returns of income for each assessment years falling within the six assessment years immediately preceding the assessment year in which search or requisition is made. Another significant feature of this section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid period which includes disclosed and undisclosed income. Therefore, the new provisions has given wide powers to the Assessing Officer to assess or reassess the total income of six assessment years falling within the period of those six assessment years immediately preceding the assessment year in which search is conducted. Under the new provisions of section 153A, the statute is provides wide powers to the Assessing Officer in respect of assessments already completed u/s 143(1) or 143(3). If such orders is already in existence prior to the initiation of search, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, found during the course of search. For this purpose, the restrictions imposed on the Assessing Officer by way of sections 148 to 153 to reopen the assessment u/s 147 has been removed by the non abstante clause used in section 153A. 14. In the present case on hand, admittedly, the Assessing Officer has reopened the assessment based on a search conducted in a third party case. The AO formed the opinion based on the statement recorded from the assessee, consequent to post search proceedings taken up by the DDIT(Inv), which shows undisclosed income which is the very basis of reopening the assessment. The search is conducted on 22-8-2008 which comes under the assessment year 2009-10. The Assessing Officer reopened the assessment year 2008-09, which is falling within those six assessment years immediately preceding the assessment year in which search is conducted. The assessee case falls within the provisions of section 153C, as the incriminating document seized in the case of search in another case. The Assessing Officer, on satisfying the above condition is under obligation to issue notice to
16 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. the person requiring him to furnish the return for the six assessment years immediately preceding the assessment year in which search is took place. Thereafter, the Assessing Officer has to assess or reassess the total income of those six assessment years. The word "shall" used in section 153A made it clear that the Assessing Officer has no option, but to issue notice and proceed thereafter to assess or reassess the total income. In the instant case, the Assessing Officer issued notice u/s 148 to reopen the assessment. Therefore, in view of the non-obstante clause begin with section 153A, the Assessing Officer has no jurisdiction to issue notice u/s 148 reopen the assessment of those six assessment year which falls within the exclusive jurisdiction of section 153A. Though, both provisions of the Act empowers the Assessing Officer to assess or reassess the income escaped from assessment, both sections are dealing with different situations. Section 147 comes into operation when, the Assessing Officer believes that there is an escapement of income chargeable to tax, either from the return already filed or through some external material evidence came to his knowledge, which shows the escapement of income. Whereas, section 153A comes into operation when there is search u/s 132 or books of accounts, or any other asset or other documents requisitioned u/s 132A. If Assessing Officer justified in proceeding with section 147 to reopen the assessment, then there would be no relevance to section 153A, which was inserted in to the Act to deal exclusively with search cases. The legislators in their wisdom clearly spelt out the provisions of law applicable to search cases by using the word shall to begin with section 153A, made it mandatory that the Assessing Officer bound to issue notice u/s 153A or 153C, thereafter proceed to assess or reassess the total income, where search is conducted u/s 132 or requisition is made u/s 132A. Therefore, in our opinion, the AO is not justified in reopening the assessment u/s 147 and his order is illegal and arbitrary. In view of the above and in view of the decision relied upon by the assessee, we do not find any merit in the appeals filed by Revenue.” 9. We also find that the issue has been decided by the jurisdictional High Court in the case of CIT Vs Lavanya Land Pvt Ltd. (Supra) and various coordinate benches as discussed above holding that the assessment has to be framed u/s 153C of the Act even for the assessment year relevant to the financial year in which the search is conducted. In view of the facts of the case of the assessee and the ratio laid down by the co-ordinate bench of
17 ITA No.580/M/2019 M/s. Sumer Builders Pvt. Ltd. the Tribunal and the Hon’ble Bombay High Court, we are inclined to set aside the order of Ld. CIT(A) by holding that the assessment framed under section 143(3) of the Act read with section 147 is bad in law as the same was required to framed u/s 153C of the Act and is accordingly quashed. The ground no. 2 is allowed.
Since we have allowed the appeal of the assessee on jurisdictional issue, the other grounds raised by the assessee need not be adjudicated.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 08.01.2021.
Sd/- Sd/- (Ram Lal Negi) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 08.01.2021. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [ By Order
Dy/Asstt. Registrar, ITAT, Mumbai.