SHRI MOHAN THAKUR,MUMBAI vs. A.C.I.T. CENT. CIR. 8(4), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM आयकर अपील सं/ I.T.A. No.7413 /Mum/2017 (ननधधारण वर्ा / Assessment Years: 2008-09) बनधम/ Shri Mohan Thakur ACIT, Central Circle-8(4) 6th Floor Aayakar Bhavan, 4, Flora Vila, 35, St. Vs. M.K. Road, Mumbai- Andrews Road, Bandra 400020. (W), Mumbai-400050.

स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. :AAAPT2966N (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue by: Shri Durga Dutt/ Akhtar H. Ansari (DR) Assessee by: Dr. K. Shivaram सुनवाई की तारीख / Date of Hearing: 15/11.2019 घोषणा की तारीख /Date of Pronouncement: 09/01/2020 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 30.10.2017 passed by the Commissioner of Income Tax (Appeals)-50, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2008- 09. 2. The assessee has raised the following grounds of appeal: - “The Learned CIT(A) erred in upholding the validity of Notice u/s 148 where the proceedings u/s 153C had already been initiated which were dropped and immediately the reassessment proceedings had been initiated without any fresh material on record and hence reopening is void- ab - initio Merit : Addition of Rs.237.00.000/- based on entries in diary of Third person: 2. No addition can be made based on entries found in the books in third party's premises since no search u/s 132 had taken place on the Assessee and hence S.132(4A) would not be applicable to the present facts of the case. In view of the same the entire addition may be deleted.

2 ITA No.7413/M/2017 A.Y. 2008-09 3. The Learned CIT(A) erred in confirming the addition of Rs.2,37,00,000/- made by the AO merely on the basis of entries found in the Diary of Mr. Jitendra Mehta by neither providing the entire copy of the diary to cross verify the veracity of such entries to the assessee nor could the assessee have an opportunity to cross examine the person giving the statement (since deceased), hence the entire addition may be deleted. Merit: Addition of Rs.3,02,17,593/- based on information received from Australian Tax authorities. 4. No addition can be made based on mere information received from foreign authorities without any evidence on record, hence the entire addition is bad and may be deleted. 5. The CIT(A) erred in confirming the addition of Rs.3,02,17,593/- based on information received from DDIT (I&CI), via Australian Tax Office that there was receipt of money through alleged hawala system by the Appellant's Son from various parties, all of whom were living outside India, which was assumed to be transferred from the Appellant to his son without any evidence on record and a statement given by the appellant's son before the Australian tax authorities, the copy of which had not been provided to the Assessee and on mere suspicion and conjectures and hence the addition made should be deleted. 6. The CIT(A) erred in not appreciating that no transaction has taken place between appellant and his son and also that the transactions, which would be repaid by the Appellant's son and not the appellant himself, as confirmed by the parties providing loans, were outside the Jurisdiction of the Income Tax Act, where no provision have been provided under which such foreign transactions could be taxed, and hence the said addition should be deleted. 7. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.” 3. The assessee has also raised the following additional grounds: - “Without prejudice to ground no. 1 to 7 Ld. CIT(A) erred in confirming the order of the AO being Deputy Commissioner of Income tax, where no sanction had been taken from the joint Commissioner of Income tax prior to issuing notice under section 148 since such notice was issued beyond 4 years which is bad in law and hence the no assessment could have been made under section 143(3) r.w.s. 147 of the Income tax Act. The appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.” 4. The brief facts of the case are that the case of the Assessee was reopened by issuance of notice dated 31.03.2014 u/s 148 of the I. T. Act, after recording necessary reason to believe that an income chargeable to tax has escaped Assessment and after obtaining the prior approval of higher authorities. In response to the notice, the assessee has filed the return of

3 ITA No.7413/M/2017 A.Y. 2008-09 income on 23.04.2014 declaring the total income to the tune of Rs.4,25,15,255/-. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The reasons for reopening of the case were supplied to the assessee who filed the objection and the objection of the assessee was disposed of. A search and seizure action u/s 132 of the I. T. Act, 1961 was carried out at the residences and business premises of the Rohan Group related entities on 26.05.2011 by the Dy. DIT(Inv.), Unit- III(3), Mumbai. During the course of search and seizure action at the residence of late Jitendra N. Mehta at 2601, Shivtapi, Harishachandra Goregaonkar Marg, Gamdevi, Mumbai-400007, certain documents were found and seized. On page no. 7 & 8 of annexures no. 1, various abbreviations were mentioned. While recordings the statements u/s 132(4) of the Act of late Jitendra N. Mehta, it came into notice that transaction appearing on that page related with Mysore property purchased by the Rohan Group. On the same paper an abbreviation „MT‟ was reflected against which various transactions were appearing. Some of them were carrying cheque numbers and some of them were without cheque numbers which were actually cash transaction which were not recorded in books of account. The abbreviation „MT‟ has been identified as Mr. Mohan Thakur who was an interested party in Mysore property purchase. It was written that „MT‟ who was actually Mr. Mohan Thakur had received Rs.2,37,00,000/- in three parts i,e Rs.1,27,50,000/- & 84,50,000/- on 21.10.2007 and Rs.25,00,000/- on 03.11.2007 in cash, therefore, show- cause-notice was issued and after the reply of the assessee the amount was added to the income of the assessee. 4. The information was received from Australian Tax office that Mr. Mohan Thakur sent funds amounting to Rs.12,97,122/- Australian Dollar (Rs.5 crore approx.) to Mr. Shagun Thakur and other family members i.e. Shri Shikhar Thakur (son) & Smt. Desiree Ann Thakur (wife) through

4 ITA No.7413/M/2017 A.Y. 2008-09 Hawala System for the period w.e.f 2007-08 to 2012-13. Mr. Shagun Thakur claimed before Australian Tax office that funds received were the gifts from his father to buy a property situated at Australia. Mr. Shagun Thakur also stated that on account of foreign exchange restrictions which was currently existed in India, his father had instructed to his friends and business associates at overseas to send the funds to him under the Hawala system. The details were received from Mr. Shagun Thakur, Shri Shikhar Thakur and Smt. Desiree Ann Thakur during F.Y. 2007-08 were as under.: - Date Amount Country Ordering AY Exchange Amount in AU$ customers rate Rs. 24.07.2007 12,298 USA Tilani Ent Lic 2008- 35.5335 4,36,990 09 18.07.2007 3,41,582 United Arab Labdhi 2008- 35.2141 1,20,28,502 Emirates International Fze 09 16.07.2007 5,668 United The Katy Bakery 2008- 35.1963 1,99,492 Kingdom Agency 09 26.06.2007 2,35,349 United Arab Labdhi 2008- 34.6777 81,61,362 Emirates International 09 24.05.2007 49,982 United Arab Komal Ashok 2008- 33.3736 16,68,079 Emirates Rupani 09 Total A 6,44,879 Funds given by Mohan Thakur to Desiree Ann Thakur 20.03.2008 43,407 Ireland Hugo Merry 2008-09 37.5367 16,29,355 Stud Farm 18.03.2008 10,713 Unknown Callbrated 2008-09 37.7547 4,04,466 colur 07.11.2007 1,30,659 Hong Kong Golden 2008-09 36.3154 47,44,933 Dragon 01.10.2007 7,982 Unknown London Lady 2008-09 35.3270 2,81,980 14.09.2007 21,982 Unknown 2008-09 33.9731 7,46,796 Total B 2,14,743 78,07,530

5 ITA No.7413/M/2017 A.Y. 2008-09 6. Under this issue the assessee has challenged the validity of notice u/s 148 of the Act specifically in the circumstances when the proceeding u/s 153C of the Act initiated against the Assessee has been ordered to be dropped. The Ld. Representative of the assessee has argued that the proceeding u/s 153C of the Act was initiated and subsequently dropped on account non-satisfaction and thereafter the proceeding u/s 148 of the Act was initiated on similar grounds which is not justifiable, hence, the proceeding u/s 148 of the Act is liable to be set aside in the interest of justice. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The revenue has submitted the letter dated 05.02.2019 before us in which it has been specifically conveyed that the proceeding was initiated u/s 153C of the Act by virtue of notice dated 14.01.2013 and was subsequently dropped on account of non- satisfaction drawn by the AO. It is admission on the part of the revenue that the proceeding initiated u/s 153C of the Act was withdrawn on account of non-satisfaction. Subsequently, the notice u/s 148 of the Act was issued on similar grounds. Where the provisions u/s 153C of the Act is applicable then it excludes the application of the provision u/s 147/148 of the Act. In this regard we also find support of law settled in the case of ITO Vs. Arun Kumar Kapoor (2011) 16 taxmann.com 373 (Amritsar) which is hereby reproduced as under:- 7. We have heard the rival submissions and have perused the relevant material available on record. 7.1 The contention of the learned Departmental Representative 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 of M/s. P.R. Infrastructure Ltd. was determined at Rs. 2,041 as against the transfer cost price at face value of Rs. 10 by the directors of that company. In

6 ITA No.7413/M/2017 A.Y. 2008-09 the report, it was elaborated that M/s. P.R. Infrastructure Ltd. had transferred the shareholding of the directors along with management of the company to M/s. Today Home & Infrastructure (P.) Ltd. for a total consideration of Rs. 12.25 crores. 3.1.1 During the course of search and seizure conducted on M/s. Today Homes & Manufacturing (P.) Ltd. certain documents were seized and it is found that: (a) Receipt dt. 3rd Aug., 2005 issued and signed by Sri. Arun Kumar 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 crores. (b) As per undertaking/affidavit signed by Sh. Arun Kapoor director of M/s. P.R. Infrastructure Ltd. on 14th Aug., 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 crores. Thus, till 14th Aug., 2005, Sh. Arun Kapoor had received Rs. 1 crore in cheque and in cash as part- payment of total sale consideration of land at Rs. 12.25 crores. 3.1.3 Sh. Arun Kapoor had transferred 10,000 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. 2,041. 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 of Rs. 2,02,10,000 (20,41,00,000 sale price-1,00,000 cost price) has thus escaped assessment for the asst. yr. 2006-07." In view of the above, we reject the contention of the learned Departmental Representative 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 s. 132 of the Act in the case of M/s. Today Homes & Infrastructure (P.) Ltd. on 28th March, 2006, during the course of which certain incriminating documents were allegedly seized. It is also a matter of record that the Dy. CIT, 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 s. 153C/148 of the Act. It is after that 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 under s. 148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the AO should have issued notice under s. 153C of the Act and should have framed the assessment under s. 153C r/w s. 153A of the Act. Sec. 153C of the Act reads as under :

7 ITA No.7413/M/2017 A.Y. 2008-09 "153C. Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO 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 s. 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO 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 s. 153A." 8. On a perusal of the above provisions, it would be clear that the provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under s. 132 of the Act and the same were sent to the assessee's AO at Amritsar by the officer at Delhi in our view, the learned CIT(A) has correctly observed that only the provision in which any assessment could be made against the assessee in the IT Act was s. 153C r/w s. 153A 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 s. 153C/148 of the Act. Hence, notice issued under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of s. 153C of the Act, s. 147/148 stands ousted. In the instant case, the procedure laid down under s. 153C has not been followed by the AO 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 v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 wherein it has been held that if the procedure laid down in s. 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of s. 153C are exactly similar to the provisions of s. 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 Departmental Representative that during the course of search, it was found at premises of M/s. Today Homes & Infrastructure (P.) 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 Departmental Representative is factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dt. 30th Dec, 2008. In view of the above factual discussion, we do not find any merit and substance in the contention of the learned Departmental Representative. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos. 1 to 4 of the appeal.” 7. On appraisal of the above mentioned finding, we noticed that there was no new material with the AO to initiate the proceeding u/s 148 of the

8 ITA No.7413/M/2017 A.Y. 2008-09 Act. When the proceeding u/s 153C of the Act has been initiated and subsequently dropped, thereafter on the similar grounds the provisions u/s 147/148 of the Act is not liable to be invoked. The Hon‟ble ITAT Visakhapatanam in case titled as G. Koteswara Rao Vs. DCIT (2015) 64 taxmann.com 159 (Visakhapatnam-Trib) has also decided the matter of controversy which is hereby reproduced as under.:- “7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 in the premises of Sri. N. Suryanarayana Reddy and others. During the course of search, certain incriminating documents were seized from the premises of M/s Sai Lakshmi Township Pvt. Ltd., Visakhapatnam, which indicates that the assessee along with others have invested an amount of Rs. 230 lacs for purchase of lands. Consequent to search, during the post search proceedings the DDIT(Inv), summoned the assessee. The assessee appeared before the DDIT(Inv) and his statement was recorded. The assessee admitted before the DDIT(Inv) that he has source for investments to the extent of Rs. 206 lacs and the balance amount of Rs. 24 lacs was declared as unexplained investment. The Assessing Officer, based on the assessee statement issued notice u/s 148 to reopen the assessment and completed the assessment u/s 143(3), r.w.s. 147. The assessee contention is that the assessment cannot be reopened u/s 147 but, the Assessing Officer can issue notice u/s 153C r.w.s. 153A and proceed to assess or reassess the total income of each of assessment year falling within six assessment years as referred to in section 153A. 8. Now, the question before us is (i) whether the Assessing Officer is right in reopening the assessment u/s 147, 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 to a person other than the person referred to in section 153A. The Income tax Act, 1961, by section 153A, 153B and 153C provides for new scheme of assessment of cases, where the search is taken place on or after 31st Day of May 2003. Until, insertion of section 153A to 153C, the search assessments was governed by separate provisions of Block assessment under section 158BC and as per the said provisions, the concept of block assessment was in force. The amendment brought in to the statue w.e.f. 1-6-2003, replaces the existing provisions with the new section, i.e. 153A to 153C governed the new scheme of search assessments, which abundantly clear that search assessment are separate provisions governed by these sections is independent from any other provisions of the Act. 9. The Income tax Act, 1961, by sections 153A, 153B and 153C provides for new scheme of assessment of search cases where the

9 ITA No.7413/M/2017 A.Y. 2008-09 search is taken place on or after 31st Day of May 2003. The relevant provision reads as under: "153C. Assessment of income of any other person.—(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 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 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 the relevant assessment year or years referred to in sub-section (1) 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 income of such other person of such assessment year in the manner provided in section 153A." 10. Section 153C deals with cases of persons other than the persons referred to in section 153A. As per the provisions of section 153C,

10 ITA No.7413/M/2017 A.Y. 2008-09 where the Assessing Officer satisfied that any money, bullion, jewellery or valuable article or thing or books of account or other documents seized or requisitioned belongs to a person other than the person referred to in section 153A, then the books of accounts or documents shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed in accordance with the provisions of section 153A. The CBDT issued a circular No.7 of 2003 dated 5-9-2003 reported in CIT v. B. Narasimha Rao [2003] 263 ITR 62/132 Taxman 821 (AP) explained the new scheme of assessment procedure in the following manner: 65. The special procedure for assessment of search cases under Chapter XIV-B be abolished 65.1 The existing provisions of the Chapter XIV-B provide for a single assessment of undisclosed income of a block period, which means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. 65.2 The Finance Act, 2003 has provided that the provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after 31st May, 2003 by inserting a new section 158BI in the Income-tax Act. 65.3 Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. 65.4 The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after 31st May, 2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. 65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other

11 ITA No.7413/M/2017 A.Y. 2008-09 provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time-limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be completed within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed. 65.8 It also provides that in computing the period of limitation for completion of such assessment or reassessment, the period during which the assessment proceeding is stayed by an order or injunction of any Court; or the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub- section, or the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee of being reheard under the proviso to section 129, or in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing on the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded. If, after the exclusion of the aforesaid period, the period of limitation available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the period of limitation shall be deemed to be extended accordingly. 65.9 The new section 153C provides 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

12 ITA No.7413/M/2017 A.Y. 2008-09 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. 65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from 1st June, 2003. 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 abstante 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

13 ITA No.7413/M/2017 A.Y. 2008-09 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 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

14 ITA No.7413/M/2017 A.Y. 2008-09 the above condition is under obligation to issue notice to 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-abstante 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. 15. A similar issue came up for consideration before the Special Bench of this tribunal and the special bench had an occasion to deal with the interpretation of section 153A of the Act in the case of All Cargo Global Logistics Ltd. v. Dy. CIT [2012] 137 ITD 287/23 taxmann.com 103 (Mum) (SB). The Special Bench after considering the provisions of section 153A and CBDT circular has held as under: '52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to asses or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The

15 ITA No.7413/M/2017 A.Y. 2008-09 assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merged into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- (a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O. (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search."

16 ITA No.7413/M/2017 A.Y. 2008-09 Prior to, the introduction of these three Sections, there was Chapter XIV- B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as block assessment because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as block period. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income' of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition,

17 ITA No.7413/M/2017 A.Y. 2008-09 the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate'. The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the 'six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the total income of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee s total income and such orders

18 ITA No.7413/M/2017 A.Y. 2008-09 are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. 20. Applying the ratio of the above decisions to the facts of the present case, we find that there is no dispute that the original assessment for the A.Y. 2001-02 was completed u/s 143(3) on 13-2-2004 determining the total income at Rs. 26354942360/-. Thereafter, a search and seizure action was initiated in assessee's case by the Department on 2- 7-2005 on which date the assessment for the A.Y. 2001-02 was not pending. Therefore, in view of the non- obstinate clause with which sub section (1) of section 153A opens, the A.O. has no jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A of the Act and accordingly the A.O. was not justified in issuing notice u/s 148 on 28-8-2006 and in completing the impugned assessment u/s 143(3) r.w.s. 147 of the Act on 31-10-2006. The A.O. instead of complying with the requirement of section 153A proceeded with the provisions of section 147/148 which are not applicable in the assessment u/s 153 A of the Act, therefore, the impugned assessment completed u/s 143(3) r.w.s. 147 of the Act is a nullity and as such the assessment order dtd. 31-10-2006 passed u/s 143(3) r.w.s. 147 of the Act is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed." 17. Considering the facts and circumstances of the case and also applying the ratios of the above mentioned decisions, we are of the considered opinion that the Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction.

19 ITA No.7413/M/2017 A.Y. 2008-09 Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed.”

Order pronounced in the open court on this 09/01/2020. Sd/- Sd/- (SHAMIM YAHYA) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 09/01/2020 Vijay Pal Singh/Sr. PS

20 ITA No.7413/M/2017 A.Y. 2008-09

Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. BY ORDER, 6. Guard file. सत्यापपत //True Copy// (Sr. Private Secretary) ITAT, Mumbai