RIDDHI SIDDHI DEVELOPERS P. LTD.,MUMBAI vs. D.C.I.T. CENT. CIR. - 6(4), MUMBAI

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 1 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

IN THE INCOME TAX APPELLATE TRIBUNAL “D” Bench, Mumbai

Before Shri Ravish Sood, Judicial Member and Shri N.K. Pradhan, Accountant Member ITA Nos.646-647/Mum/2018 (Assessment Years: 2013-14 & 2014-15) Riddhi Siddhi Developers P. Ltd Deputy Commissioner of Income-tax, 45, Maker Chambers-III, Central Circle – 6(4), Room No. 1925, Vs. 223 Nariman Point, 19th Floor, Air India Building, Mumbai – 400 021 Nariman Point , Mumbai – 400 021 PAN – AAACR0426N (Appellant) (Respondent)

Appellant by: Ms. Hema Kataria Respondent by: Shri Manjunatha Swami, CIT D.R Date of Hearing: 10.01.2020 Date of Pronouncement: 16.06.2020 O R D E R PER RAVISH SOOD, JM The present appeals filed by the assessee are directed against the respective orders passed by the Commissioner of Income-tax (Appeals)-54,

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 2 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

Mumbai [for short “CIT(A)”] for A.Y 2013-14 and A.Y 2014-15, dated 23.11.2017,

which in turn arises from the respective assessment orders passed by the Assessing Officer [for short “A.O”] under Sec. 153C r.w.s 143(3) of the Income-

tax Act, 1961, dated 29.12.2016. As common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed off

together by way of a consolidated order. We shall first advert to the appeal for A.Y 2013-14, wherein the impugned order has been assailed before us on the following grounds of appeal :

“1. On the facts and the circumstances of the appellant’s case and in law the learned CIT(A) erred in holding that the A.O has legally assumed jurisdiction u/s 153C despite the fact that no money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to the appellant and no books of accounts or documents seized or requisitioned pertains or pertain to or any other information contained therein relates to the appellant. 2. On the facts and the circumstances of the appellant’s case and in law the learned CIT(A) erred in holding A.O’s action of treating the statement of Shri. Suraj Parmar as the document belonging to the appellant. 3. On the facts and the circumstances of the appellant’s case and in law the learned CIT(A) erred in rejecting/dismissing following two original grounds of appeal raised before him: “(a). On the facts and the circumstances of the appellant’s case and in law the learned Assessing Officer erred in not providing the back up/soft copy of the unaccounted tally data seized from the premises of Cosmos Group. (b). On the facts and the circumstances of the appellant’s case and in law the learned Assessing Officer erred in passing the impugned order in great haste by violating the principles of natural justice and fair play.” 4. On the facts and the circumstances of the appellant’s case and in law, the Ld. CIT(A) erred in confirming the A.O’s action of making addition of 1,74,99,600/- on account of alleged on-money received from Suraj Parmar or Cosmos Group. 5. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal.”

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 3 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 2. Briefly stated, the assessee company which is engaged in the business of a builder and developer had filed its return of income for A.Y 2013-14 on 30.09.2013, declaring its total income at Rs. 14,78,39,320/-. Subsequently, its income was assessed under Sec. 143(3) on 15.01.2016 at the amount of the returned income.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 4 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 systems, mostly at office. As further stated by him, the Tally would be first loaded by him into a pen drive and then run on the computer system. Thereafter the transactions recorded in the pocket diary would be entered into the Tally system and MS-excel sheets would be created on the pen-drive. As stated by him, the entire data including Tally backup and MS-excel sheets would then be uploaded from the pen-drive to the e-mail address rbpt2013@gmail.com and sent to rbptthane@yahoo.co.in and rbpt2013@gmail.com. The pen-drive would thereafter be discarded and the entire data only remained in the e-mail system. The contents of the MS-excel sheets being attachments of e-mails found from the e-mail id rbpt2013@gmail.com during the course of the search proceedings were printed and seized by the department as Annexure “A-1” [Pages 1-195]. Similarly, the contents of the e-mails found from the e-mail id rbptthane@yahoo.co.in were printed and seized as Annexure “A-2” [Pages 1-73].

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 6 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 5. Aggrieved, the assessee assailed the assessment order before the CIT(A). It was inter alia submitted by the assessee that the A.O had wrongly assumed jurisdiction under Sec. 153C of the Act, despite the fact that no money, bullion, jewellery or other valuable article or thing or any books of accounts or documents belonging to the assessee were seized during the course of the search proceedings conducted at the premises of Cosmos group. It was the claim of the assessee before the CIT(A) that an analysis of the “satisfaction note” of the A.O revealed that the satisfaction had been derived by him on the basis of viz. (i). MS-excel file named “Jewels wrkng upto 31.08.2013.xls”; (ii). the tally data found from the e-mail accounts; (iii). the statement of Shri. Suraj Parmar (since deceased) recorded under Sec. 132(4) of the Act; and (iv). the statement of Shri. Bharat Jhunjhunwala recorded by the DDIT(Inv), Unit-1(4), Mumbai. Relying on the pre- amended Sec. 153C(1) of the Act (i.e as was available prior to its amendment w.e.f 01.06.2015), it was the claim of the assessee that as no money, bullion, jewellery or other valuable article or thing or any books of accounts or documents belonging to the assessee were seized in the course of the search proceedings conducted on Cosmos group on 24.09.2014, therefore, no jurisdiction under Sec. 153C could have validly been assumed by the A.O in its case.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 7 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 6. Observing, that the A.O had issued the notice under Sec. 153C dated 13.10.2016 which was received by the assessee on 22.10.2016, the CIT(A) was of the view that as the A.O had assumed jurisdiction in the case of the assessee under Sec. 153C in October, 2016, therefore, the post-amended provisions of Sec. 153C i.e which had come into effect from 01.06.2015 would be applicable in its case. On the basis of his aforesaid conviction the CIT(A) concluded that if the A.O was satisfied that any money, bullion or jewellery or other valuable article or thing, seized or requisitioned, belongs to; or books of account or documents, seized or requisitioned pertains to or any information contained therein relates to a person other than the person referred to in Sec. 153A, then the conditions for assuming jurisdiction under Sec. 153C stood satisfied. In fact, the CIT(A) observed that in a case under Sec. 153C reference to the date of initiation of search u/s 132 was to be considered as a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the A.O having jurisdiction over such other person. On the basis of his aforesaid conviction the CIT(A) was of the view that as per Sec. 153C the date of search would be the date of requisition of material by the A.O, which in the present had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C which had come into effect from 01.06.2015 would be applicable. As such,

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 8 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 the CIT(A) backed by his aforesaid view concluded that as the material received by the A.O on the basis of which notice under Sec. 153C was issued related to the assessee, therefore, the notice therein issued was perfectly valid and legal. Also, it was observed by the CIT(A) that the statement of Shri. Suraj Parmar was not treated by the A.O as a document belonging to the assessee, but in fact, it was a material which related to the assessee. Further, the CIT(A) observed that there was a lot of information pertaining to the assessee found in e-mail accounts of the Cosmos group which formed the basis of the ‘satisfaction note’ of the A.O. Accordingly, the CIT(A) upheld the validity of the jurisdiction assumed by the A.O under Sec. 153C of the Act. Also, the CIT(A) not being persuaded to subscribe to the contentions advanced by the assessee as regards the merits of the case, declined to accept the same. On the basis of his aforesaid deliberations the CIT(A) not finding favour with the appeal of the assessee dismissed the same.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 9 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 before us, therefore, we shall first advert to the same. The issue involved in the present appeal lies in a narrow compass i.e as to whether the validity of jurisdiction assumed by the A.O under Sec. 153C of the Act has to be looked into as per the pre-amended provisions (i.e applicable prior to 01.06.2015) as claimed by the assessee or as per the post-amended provisions (i.e applicable w.e.f 01.06.2015) as is the claim of the revenue. As observed by us hereinabove, the assessee drawing support from the pre-amended provisions of Sec. 153C (i.e applicable prior to 01.06.2015), had claimed, that the A.O had wrongly assumed jurisdiction under Sec. 153C of the Act, despite the fact that no money, bullion, jewellery or other valuable article or thing or any books of accounts or documents belonging to the assessee were seized in the course of the search proceedings conducted on the Cosmos group. Rebutting the aforesaid claim of the assessee, the CIT(A) was of the view that as per Sec. 153C as the date of search would be the date of requisition of material by the A.O, which in the present case had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C, i.e which had come into effect from 01.06.2015 would be applicable. Accordingly, on the basis of his aforesaid conviction the CIT(A) had concluded that as the ‘material’ received by the A.O on the basis of which notice under Sec.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 10 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

153C was issued related to the assessee, therefore, the notice therein issued was perfectly valid and legal.

“(i). Sec. 153C (as was available on the statute upto 31.05.2015) i.e pre-amended : 153C(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 any money, bullion, jewellery or other valuable article or thing or books of account or document 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...........” “(ii). Sec. 153C (as is available on the statute w.e.f 01.06.2015) i.e post-amended : 153C(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.......................” **

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On a perusal of the pre-amended vis-a-vis post-amended provisions of Sec. 153C of the Act, it stands revealed that prior to 01.06.2015 it was only where the books of account or document seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, that jurisdiction under Sec. 153C in respect of such other person could be assumed. However, the legislature in all its wisdom, vide the Finance Act, 2015 w.e.f 01.06.2015 carried out an amendment, as per which, where 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 same would suffice for assumption of jurisdiction by the A.O under Sec. 153C of the Act. Insofar the case before us is concerned, as observed by the CIT(A), the information/material which was received by the A.O and had formed the basis of recording the ‘satisfaction note’ and issue of notice under Sec. 153C did not belong to the assessee but related and pertained to it. The observations of the CIT(A) are reproduced as under:

“5.4.1 The Act is very clear that in a case u/s 153C reference to the date of initiation for search u/s 132 shall be considered a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the Ld. A.O having jurisdiction over such other person. There is no ambiguity in the provisions of Sec. 153C. The date of search would be the date of requisition of material by the Ld. A.O., in this case it is in October,2016. Therefore, the section which is in vogue clearly demonstrates that the material has to pertain or relate to the person and not just belonging to the person. Therefore, I have no hesitation in stating that the information

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 12 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 which was received by Ld. A.O on the basis of which notice u/s 153C has been issued relates to the assessee and notice u/s 153C is perfectly valid and legal. 5.4.2 The ld. Counsel also raised the issue that the statement of Shri. Suraj Parmar was treated as document belonging to the appellant and notice u/s 153C issued. However, as discussed already and also seen from the remand report of the Ld. A.O, the statement of Shri Suraj Parmar was not treated as document belonging to the appellant. It is one of the material which relates to the appellant and there was a lot of information pertaining to the appellant found in e-mail accounts of the Cosmos group which formed the basis of satisfaction note of the Ld. A.O. In view of the above discussion, these grounds of appeal are dismissed.”

On the basis of the aforesaid observations of the CIT(A) which having been accepted by the revenue had thus attained finality to the extent the latter is concerned, the information/material which was received by the A.O and formed the basis for issue of notice under Sec. 153C was issued only related to the assessee and did not belong to it.

“A search and seizure action was carried out in Cosmos Group of cases on 24th September, 2014. During the search action, statement of Shri Suraj Parmar, one of the promoters of Cosmos Group was recorded u/s 132(4) of Income tax Act on 26.09.2014 at his residential premises at Parmar House, Plot No. 73, Balsunder CHSG, Near Navpada Police Station, Thane (W) – 400 602. It was Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 13 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 seen during the search operations that the Cosmos Group had created a buffer in 2 email accounts which contained the cash transactions of the Cosmos Group. During the course of search proceedings, Shri Suraj Parmar, the Director of the Cosmos Group was asked to explain one of the file “jewels wrkng up to 31.08.2014.xls” appearing in the email rbpt2013@gmail.com. As per the aforesaid statement of Shri. Suraj Parmar, in the project Cosmos Jewels containing the building named Sapphire I, Sapphire II, Solitaire I, Solitaire II, Ruby I and Ruby II, the plot on which these buildings were made belonged to M/s Riddhi Siddhi Developers Pvt. Ltd. and this project was constructed vide a joint venture between Cosmos Group and M/s Riddhi Siddhi Developers Pvt. Ltd. Shri Suraj Parmar further stated that as per the terms of the JV, the Cosmos Group would give 40% of the sale component , both cash and cheque to M/s Riddhi Siddhi Developers Pvt. Ltd. and none of the cash component of the project formed part of the regular books of accounts nor was offerd to tax from the project. In view of the above facts, in order to examine whether M/s Riddhi Siddhi Developers Pvt. Ltd. whose key person is Shri Bharat Jhunjhunwala had offered the revenue of cheque and cash component received from Cosmos Group on sale of flats/shops in the project, Cosmos Jewels, a separate file was opened in the case of M/s Riddhi Siddhi Developers Pvt. Ltd. Summons u/s 131 of the IT. Act was issued to M/s Riddhi Siddhi Developers Pvt. Ltd., asking to file certain details. In response to the notice u/s 131, M/s Riddhi Siddhi Developers Pvt. Ltd. filed the requisite details vide its letter dated 28.09.2015. Also, a statement on oath u/s 131 was recorded of Shri. Bharat Jhunjhunwala on 12.10.2015. Though Shri Bharat Jhunjhunwala denied to have received any cash amount from Cosmos group, the seized data clearly indicate the amount of cash received by M/s Riddhi Siddhi Developers Pvt. Ltd., which is prepared as Table 1. In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e, the assessee, other than the person referred to in section 153A within the meaning of provisions of section 153C of the Act. Accordingly proceedings u/s 153C of the Act is initiated in the case of the assessee.” On a perusal of the aforesaid ‘satisfaction note’, we find that reference is therein made of two documents, as under:

(i). Excel file “jewels wrkng up to 31.08.2014.xls” appearing in the email rbpt2013@gmail.com of Cosmos Group, that was printed and seized in the course of the search proceedings conducted on Cosmos group; and Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 14 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 (ii). Statement of Shri. Suraj Parmar recorded under Sec. 132(4), dated 26.09.2014. As discussed by us at length hereinabove, the Excel sheet “jewels wrkng up to 31.08.2014.xls” that was an attachment of the e-mail id rbpt2013@gmail.com of Cosmos Group (seized as Annexure “A-1” - Pages 1-195) though allegedly contained information pertaining or relating to the assessee, but undisputedly, the same did not belong to the assessee. Similarly, the statement of Shri. Suraj Parmar recorded u/s 132(4) during the course of search proceedings on 26.09.2014 also cannot be held to be a document belonging to the asseseee.

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under Sec. 153C on the basis of impugned information pertaining to or relating to the assessee in the documents seized during the course of the search proceedings conducted on Cosmos group would be well in order under the post- amended provisions (i.e as applicable w.e.f 01.06.2015), however, we are afraid that de hors the ‘belonging’ of such seized documents by the assessee, the A.O could not have validly assumed jurisdiction under the pre-amended Sec. 153C (i.e prior to 01.06.2015). Our aforesaid view is fortified by the following judicial pronouncements:

(i). CIT Vs. Arpit Land (P) Ltd.(2017)78 393 ITR 276 (Bom) :

It was observed by the Hon’ble Jurisdictional High Court that as per the pre- amended Sec. 153C of the Act (i.e prior to 01.06.2015), the proceedings could only be initiated against the assessee i.e a person other than the person searched, only if the document seized during the course of the search proceedings belonged to such other person. It was observed by the Hon’ble Jurisdictional High Court, as under:

“6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 16 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 Vijaybhai Chandrani vs. ACIT 333 ITR Page 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent – assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion on the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal. 7. The grievance of the Revenue as submitted by Mr.Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent – assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be ignored at the altar of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent – assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic. 8. In view of the above reasons and particularly the finding of fact that seized document which forms the basis of the present proceedings, do not belong to the petitioner and the same not being shown to be perverse, the question as raised does not give rise to any substantial question of law and thus not entertained.”

(ii).PCIT(Central)-2 Vs. Index Securities Pvt. Ltd. (2017) 86 taxmann.com 84 (Delhi)

It was observed by the Hon’ble High Court of Delhi that the essential jurisdictional requirement for assumption of jurisdiction under Sec. 153C of the Act (as it stood prior to its amendment with effect from 1st June, 2015) qua the ‘other person’ was that the seized document forming the basis of the ‘satisfaction

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 17 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

note’ must not merely ‘pertain’ to the other person but must belong to the ‘other person’. Observing, that as in the case before them the document though pertained to the assessee, but the same did not belong to them, the High Court concluded that the essential jurisdictional requirement to justify the assumption of jurisdiction under Sec. 153C was not satisfied. In the aforesaid case the Hon’ble High Court held as under:

“28.4 The Supreme Court also agreed with the decision of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel (supra) to the extent it held that "it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act." The Supreme Court observed: "This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well." 28.5 The above categorical pronouncement of the Supreme Court cannot, by any stretch of imagination, be termed as obiter as has been suggested by Mr. Manchanda. Even the obiter dicta of the Supreme Court is binding on this Court. 29. The search in the case before the Supreme Court was prior to 1st June 2015. Apart from the fact the Supreme Court approved the above decision of the Gujarat High Court holding that the seized documents should 'belong' to the other person, the legal position in this regard where the search has taken place prior to 1st June 2015 has been settled by the decision of this Court in Pepsico India Holdings (P) Ltd. v. ACIT (supra). In Commissioner of Income Tax v. Vinita Chaurasia (supra), this Court reiterated the above legal position after discussing the decisions in Principal Commissioner of Income Tax v. Super Malls (P) Limited (supra) and Commissioner of Income Tax (Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra). The essential jurisdictional requirement for assumption of jurisdiction under Section 153C of the Act (as it stood prior to its amendment with effect from 1st June 2015) qua the 'other person' (in this case the assessees) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VSIPL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees, they did not belong to them. Therefore, one essential jurisdictional requirement to justify the assumption

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 18 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees.”

(iii). PCIT Vs. Vinita Chaurasia (2017) 394 ITR 758 (Del) :

Adopting a similar view, the Hon’ble High Court of Delhi had observed that as per the pre-amended Sec. 153C (i.e prior to 01.06.2015), it was obligatory on the part of the revenue to show that the document seized during the course of the search proceedings belonged to the assessee i.e a person other than the person searched, and it was not open for the revenue to point out that the document in question pertained to or related to the assessee. It was observed by the Hon’ble High Court, as under:

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 19 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 Chaurasia [Special Leave Petition (Civil) Diary No. 27566 of 2018, daTed 20.08.2018].

(iv). Pepsi Foods Pvt. Ltd. Vs ACIT [2015] 231 Taxman 58(Del): In its aforesaid judgment the Hon’ble High Court of Delhi by drawing support from Sec. 132(4A)(i) and Sec. 292C(1)(i), had observed, that the same envisaged that where any ‘document’ is found in the possession or control of any person in the course of search proceedings, the normal presumption is that the said ‘document’ belongs to such person. In the backdrop of the aforesaid settled position of law, it was observed by the High Court that if the A.O was to hold otherwise, then he was obligated to rebut the said presumption on the basis of some cogent material available with him and come to a conclusion or “satisfaction” that the said ‘document’ belonged to somebody else. It was further observed by the High Court that rebuttal of the said presumption cannot be based on surmises and conjectures. Adverting to the facts involved in the case before them, it was noticed by the High Court that there was nothing discernible from the “satisfaction note” as to how the presumption was rebutted by the A.O. It was observed by the High Court that the “satisfaction note” itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person was satisfied that the seized documents belonged to a person

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 20 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

other than the searched person. The Hon’ble High Court while concluding as hereinabove, held as under : “5. We have considered the submissions made by the counsel for the parties. Before proceeding any further it would be necessary to set out the relevant provisions of the said Act as applicable to the assessment years under consideration:- “153C. (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 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, 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: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 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 Assessing Officer having jurisdiction over such other person: (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year– (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 21 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 income of such other person of such assessment year in the manner provided in section 153A.” “132. (1) xxxx xxxx xxxx (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed– (i) That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; xxxx xxxx xxxx xxxx”

“292C.(1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed– (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; xxxx xxxx xxxx xxxx” 6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be “satisfied” that inter alia any document seized or requisitioned “belongs to” a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re-assess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is – after such satisfaction is arrived at – that the document is handed over to the Assessing Officer of the person to whom the said document “belongs”. In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or “satisfaction” that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 22 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 searched person but to somebody else. Surmise and conjecture cannot take the place of “satisfaction”. 7. This would be the appropriate stage to consider the decisions referred to by the learned counsel for the Revenue. The decision referred to in Kamleshbhai Dharamshibhai Patel (supra) is of no relevance insofar as the present case is concerned. In that case certain documents were said to have belonged to the petitioners therein but a plea had been taken that as the land, in relation to which the documents were, no longer belonged to the petitioners therefore the said documents could not be regarded as belonging to the petitioners. That is an entirely different situation and the facts of that case are clearly distinguishable from the facts of the present case. Insofar as the decision of the Allahabad High Court in Classic Enterprises (supra) is concerned, we are, with respect, unable to agree with the observations that as the proceedings are at the very initial stage the “satisfaction” is neither required to be firm or conclusive. We say so because we are of the view that this conclusion of the Allahabad High Court is premised on a consideration of the provisions of Section 158BD of the said Act which are entirely different from Section 153C. Under Section 158BD the Assessing Officer’s satisfaction is with regard to “undisclosed income‟ belonging to a person other than the searched person. It is obvious that such satisfaction under Section 158BD by its very nature has to be prima facie and tentative. The same methodology cannot be imported into Section 153C where, in our view, the Assessing Officer is required to arrive at a conclusive satisfaction that the document belongs to a person other than the searched person because such Assessing Officer has to rebut the normal presumptions which are suggested by the statute under Sections 132(4A)(i) and 292C(1)(i) of the said Act. Therefore, the decision of the Allahabad High Court in the case of Classic Enterprises (supra) would not come to the aid of the Revenue. 8. Insofar as the decision in the SSP Aviation Ltd. (supra) is concerned we do not find anything therein which militates against the view that we are taking. In fact the very distinction between Section 153C and 158BD (although Section 158BD is not mentioned) is indicated by the following observations of the Division Bench in SSP Aviation Ltd. (supra):- “It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income.” 9. It is only in this context that the Division Bench was of the view that the issuance of the 153C notice was only first step in the process of enquiry. 10. The only thing that remains to be examined now is the satisfaction note itself. The satisfaction note dated 02.08.2013 is in respect of the assessment years 2006-07 to 2011-12 and the same reads as under:- “M/s Pepsi Foods Pvt. Ltd. AY 2006-07 to 11-12

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 23 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

02.08.2013 Satisfaction Note for issue of Notice u/s 153C of Income Tax Act, 1961 in the case of M/s Pepsi Foods Pvt. Ltd, for the Assessment Years 2006-07 to 2011-12. Satisfaction Note A search and seizure operation u/s 132(1) of the I.T. Act was carried out at the various premises of M/s Jaipuria Group on 27.03.2012. The group is also into various other business viz. Raymond Retail franchisee, real estate and construction, fast foods, mining, education, ayurvedic products, information technology and medical services. One of the major allegations against the Jaipuria Group is that the assessee group in order to reduce its taxable profit indulged in enhancing the cost of raw material purchased. On examination of the accounts of various concerns, it is noticed that raw material are procured from fixed vendors. Since bulk purchases are made, rates should have been lower. However raw material are being procured on a high rates resulting in lower taxable income. The bottler shall buy all units of concentrate required for the manufacture f the beverage from PFL (Pepsi Foods Ltd.), or a manufacturer approved in writing by PFL (Pepsi Foods Ltd.) at a price and in accordance with the terms and conditions established by the seller. Being the sole supplier of concentrate to Jaipuria Group, Pepsi Foods Pvt. Ltd. is closely associated to Jaipuria Gr. During the post search investigation, summons were issued to M/s Pepsi Foods Pvt. Ltd. to furnish certain details. The complete details were not furnished. The following documents were also found and seized during the course of search and seizure action u/s 132(1) of I.T. Act, 1961 belonging to (PFL) M/s Pepsi Foods Pvt. Ltd. (PAN:AAACP1557E) over which the jurisdiction lies with the undersigned:

Ann/Page No. Description of Annexure C-4/A-2/77 This page contains summary of PFL Claims as on 29-11-2011 (Claims upto 31/10/2011) C-4/A-4/18-20 These pages contain a detail of DVAT impact (April’10 – June’10) Vs PFL Support report and MRP Plan. C-4/A-4/21-23 These pages contain a details of discount per C/S PDL VS PFL. C-4/A-4/27 These pages contain a details of discount per C/S PDL VS PFL. C-4/A-5/54 This page contains details of concentrate stock summary as on 31.12.2010. Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 24 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

C-4/A-5/99 This page contains a summary of PFL Claims as on 8/9/2011. Claims upto 31/8/2011. C-4/A-5/100 This page contains a detail of PFL Support year 2011 Accordingly, section 153C of the I.T. Act, 1961 is applicable to M/s Pepsi Foods Pvt. Ltd. which state that “where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs 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 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.” In view of facts narrated above, I am satisfied that the case of M/s Pepsi Foods Pvt. Ltd. is a fit case for issue of notice u/s 153C of the I.T. Act, 1961. Notice u/s 153C dated 02.08.2013 is issued requiring the assessee to file return of income for the A.Y. 2006- 07 to 2011-12. (Pukini Lokho) Asstt. Commissioner of Income Tax, Central Circle-12, New Delhi” 11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word “satisfaction” or the words “I am satisfied” in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any “satisfaction” of the kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under Section 153C are liable to be quashed. It is ordered accordingly. The writ petitions are allowed as above. There shall be no order as to costs.”

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 25 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 (v). Pepsico India Holdings Pvt. Ltd. Vs. ACIT & Anr. (2015) 370 ITR 295 (Del): In the aforesaid judgment the Hon’ble High Court of Delhi reiterated the view that was earlier taken by it in the case of Pepsi Foods Pvt. Ltd.(supra). It was observed by the High Court that unless and until it is established that the ‘document’ in question do not belong to the searched person, the provisions of Section 153C of the said Act would 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 was observed that before the provisions of Section 153C are 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 Section 153A (i.e., the searched person). It was further observed, that the assessing officers should not confuse the expression “belongs to” with the expressions “relates to” or “refers to”. The High Court had arrived at the aforesaid conclusion, observing as under : “13. Having set out the position in law in the decision of this Court in the case of Pepsi Foods Pvt. Ltd. (supra), it must be seen as to whether the Assessing Officer of the searched person (the Jaipuria Group) could be said to have arrived at a satisfaction that the documents mentioned above belonged to the petitioners.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 26 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 28 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

Agrawal Vs. CIT (2019) 418 ITR 25 (Guj). In the backdrop of its exhaustive deliberations the Hon’ble High Court concluded that it is the date of search that has to be considered to be the relevant date for the purpose of applying the amended provisions of Sec. 153C(1) of the Act, observing as under: “ The moot question that arises for consideration in the present case is as to what is relevant date from which the amended provisions of section 153C of the Act would be applicable. While the amended provisions have been expressly brought into force with effect from 1.6.2015, the controversy in the present case arises because the searches in all these case had been conducted prior to 1.6.2015, whereas the proceedings under section 153C of the Act have been initiated after that date and it is in this backdrop that the validity of the impugned notices has been called in question. It is the case of the petitioners that the proceedings under section 153C of the Act are triggered by the search, and hence the provisions of law as existing on the date of the search have to be followed, while it is the case the respondents that the provisions of law as existing on the date of recording of satisfaction by the Assessing Officer of the person searched and the date of issuance of notice under section 153C of the Act have to be followed. 19.5 On behalf of the respective parties, reliance has been placed upon the decision of the Supreme Court in Commissioner of Income Tax v. Calcutta Knitwears (supra). A perusal of the said decision of the Supreme Court reveals that the question before the Supreme Court was the stage at which the satisfaction note could be prepared. In the facts of the present case, we are concerned with the applicability of the amended provisions which are brought into force with effect from 1.6.2015 as to whether the same would be applicable to cases where the search was conducted prior to that date. Thus, the question is what would be the relevant date for applicability of the amended provision, whether it has to be considered in the context of the date of search or date of recording of satisfaction by the Assessing Officer of the searched person or the date of issuance of notice under section 153C of the Act. 19.6 On behalf of the respondents it has been contended that section 153C of the Act is a machinery provision. In Calcutta Knitwears (supra), the Supreme Court has held that while interpreting a machinery provision, the courts would interpret a provisions in such a way that it would give meaning to the charging provisions and that the machinery provisions are liberally construed by the courts; and that it is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose, the section should be liberally construed. The court has further held that wherever the intention to impose liability is clear, the courts ought not to be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. It is contended that the legislature having the clear intent to bring in persons other than the person searched within the ambit of section 153C of the Act even if the books of account or documents seized or requisitioned pertain to or any information therein relates to such other person, the Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 29 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 amended provisions should be so construed as would effectuate the object and purpose of the statute and not defeat the same, namely to tax the total income of the assessee. 19.7 In Calcutta Knitwears (supra) the Supreme Court has held that section 158-BD of the Act is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under sections 132 or 132A of the Act. The court has referred to its earlier decision in the case of J.K. Synthetics Ltd. v. CTO, (1994) 4 SCC 276, wherein it has been held thus: “16. It is well known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. … Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC, 1926 AC 37 (HL), CIT v. Mahaliram Ramjidas, (1940) 8 ITR 442, Indian United Mills Ltd. v. Commr. of Excess Profits Tax, (1955) 27 ITR 20 (SC) and Gursahai Saigal v. CIT, (1963) 48 ITR 1 (SC).)” 19.8 While it is true that section 153C of the Act is also a machinery provision for assessment of income of a person other than the person searched, in the opinion of this court, this is not a case where by virtue of the amendment, there is merely a change in the procedural provisions affecting the assessees who were covered by the unamended provision. By the amendment, a new class of assessees are sought to be brought within the sweep of section 153C of the Act, which affects the substantive rights of the assessees and cannot be said to be a mere change in the procedure. Since the amendment expands the scope of section 153C of the Act by bringing in an assessee if books of account or documents pertaining to him or containing information relating to him have been seized during the course of search, within the fold of that section, this question assumes significance, inasmuch as in the facts of the present case, as on the date of search, it was only if such material belonged to a person other than the searched person, that the Assessing Officer of the searched person could record such satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C of the Act as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C of the Act have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at which the amended section 153C of the Act can be made applicable, as to whether it relates to the date of search; or the date of recording of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C of the Act. 19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 2015. Therefore, on the date of the search, the Assessing Officer of the person

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 30 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 searched could only have recorded satisfaction to the effect that the seized material belongs or belong to the other person. In the present case, the hard disc containing in the information relating to the petitioners admittedly did not belong to them, therefore, as on the date of the search, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C of the Act in case of the petitioners, did not exist. It was only on 1st June, 2015 when the amended provisions came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. 19.10 In this backdrop, to test the stage of applicability of the amended provisions, a hypothetical example may be taken. The search is carried out in the case of HN Safal group on 4.9.2013. If the Assessing Officer of the searched person had recorded satisfaction that some of the seized/requisitioned material belongs to a person other than the searched person and forwarded the material to the Assessing Officer of the other person, had issued notice under section 153C of the Act prior to the coming into force of the amended provision. The notice under section 153C of the Act was challenged before the appropriate forum on the ground that the seized material does not belong to such other person and such issue was decided in favour of such person on a finding that the seized material does not belong to the other person. Thereafter, in view of the amendment in section 153C (1) of the Act, since the books of account or documents did not belong to the other person but did pertain to him or the information contained therein related to him, can the Assessing Officer of the searched person once again record satisfaction as contemplated under the amended provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic “no” as the Assessing Officer of the searched person after recording the earlier satisfaction would have already forwarded the material to the Assessing Officer having jurisdiction over the other person, therefore, there would be no question of his again forming a satisfaction as required under the amended provisions of section 153C of the Act. 19.11 In the opinion of this court, if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions.” Accordingly, respectfully following the aforesaid view taken by the Hon’ble High Court, we are of the considered view that it is the date of search that has to be Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 31 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 considered to be the relevant date for the purpose of applying the amended provisions of Sec. 153C(1) of the Act. As such, in the case before us as the search proceedings were conducted on Cosmos group on 24.09.2014, therefore, the provisions of pre-amended Sec. 153C (i.e prior to amendment w.e.f 01.06.2015) would be applicable. On the basis of our aforesaid observations, we vacate the view taken by the CIT(A) to the contrary that the post-amended Sec. 153C would applicable in the present case.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 32 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 maintained and retrieved from the e-mail account of the assessee, from its office premises, was held by the A.O as belonging to the assessee and not the searched person i.e Cosmos group. Be that as it may, the CIT(A) while dismissing the appeal of the assessee had proceeded on the fact that the seized document viz. jewels wrkng up to 31.08.2014.xls” related to the assessee, and therefore the assumption of jurisdiction by the A.O as per the post-amended Sec. 153C (i.e as applicable w.e.f 01.06.2015), was valid and legal. As observed by us hereinabove, the revenue has accepted the aforesaid observations of the CIT(A). Now, when we have concluded that the assumption of jurisdiction in the case of the assessee before us has to be looked into as per the pre-mended Sec. 153C (i.e applicable prior to 01.06.2015), therefore, the aforesaid view so taken by the CIT(A) cannot be sustained and is liable to be vacated. At the same time, as the seized document jewels wrkng up to 31.08.2014.xls” admittedly does not ‘belong’ to the assessee, therefore, the jurisdictional requirement to justify the assumption of jurisdiction under the pre-amended Section 153C of the Act (i.e prior to 01.06.2015) is not found to have been satisfied. In the backdrop of our aforesaid observations, the assumption of jurisdiction by the A.O under Sec. 153C is vacated for want of jurisdiction.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 33 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 34 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 5. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal.”

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 35 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15 647/Mum/2018. Accordingly, the order passed by the CIT(A) is set aside and the assessment framed by the A.O under Sec. 153C r.w.s 143(3), dated 29.12.2016 is vacated on the same terms.

Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. As such, “ordinarily” the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression “ordinarily” has been used in the said rule itself. This rule was inserted as a result of directions of Hon’ble High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein it was inter alia, observed as under:

“We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment”.

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 37 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

In the rule so framed, as a result of these directions, the expression “ordinarily” has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether or not the passing of this order, beyond a period of ninety days in the case before us was necessitated by any “extraordinary” circumstances.

“Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. The epidemic situation being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 38 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed “while calculating the time for disposal of matters made time bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by the Hon’ble High Court and Hon’ble Supreme Court also indicate that this period of Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 39 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case.” We have given a thoughtful consideration to the aforesaid observations of the tribunal and finding ourselves to be in agreement with the same, therein respectfully follow the same. As such, we are of the considered view that the period during which the lockout was in force shall stand excluded for the purpose of working out the time limit for pronouncement orders, as envisaged in Rule 34(5) of the Appellate Tribunal Rules, 1963. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board. (N.K Pradhan) JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक 16.06.2020

Riddhi Siddhi Developers Pvt. Ltd. Vs. DCIT Central Circle 6(4), Mumbai 40 ITA Nos. 646-647/Mum/2018 – A.Y 2013-14 & A.Y 2014-15

आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : 1. अपीऱाथी / The Appellant 2. प्रत्यथी / The Respondent. आयकर आयुक्त(अपीऱ) / The CIT(A)- 3. आयकर आयुक्त / CIT 4. 5. विभागीय प्रतततिधि, आयकर अपीऱीय अधिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईऱ / Guard file. सत्यावपत प्रतत //// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt.