AMOLAK SINGH BHATIA,BILASPUR vs. DCIT,CENTRAL CIRCLE-08, DELHI

Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO without mentioning DIN on the body of the Assessment Order as mandated by the CBOT Circular No. 19/2019 dated 14.08.2019. Re: Approval under Section 153D is mechanical and with application of mind therefore, cannot be considered as a valid approval 6. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO without appreciating that the draft Assessment Order was approved by jurisdiction Ld Add/Joint CIT, Range-2 mechanically, without application of mind and in violation of Section 1530 of the Act.

Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO on the basis of approval given by the jurisdictional Addl/Joint CIT-Range 2, under Section 1530 of the Act without mentioning DIN in accordance with CBOT Circular No. 19/2019 dated 14.08.2019. Re: Violation of principles of natural justice 8. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order without giving meaningful opportunity of cross examination to the Appellant.

Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 55,00,00,00/- under Section 69C of the Act as unexplained expenditure without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 3,00,0001- under Section 69B of the Act as unexplained investment without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 1,75,000/- under Section 69B of the Act as unexplained investment without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 57,53,000/- under Section 69A of the Act as unexplained money without appreciating that the Appellant has submitted all documents w.r.t source of such amount however the Ld. AO during the Assessment Proceedings has ignored the same and made the addition.”

At the time of hearing, ld. AR of the assessee submitted as under :- 1. In this case, a search was initiated on the Bhatia Group, including the assessee, on 27.02.2020, and the following premises relating to the assessee and various key persons allegedly connected with the assessee were searched:

The prohibitory order passed under section 132(3) on 01.03.2020 in respect of the wooden almirah was lifted by the DDIT, Unit 1(4), New Delhi, on 20.11.2020, and the statement of the assessee was recorded under section 132(4) of the Act. However, nothing was seized pursuant to the lifting of such order.

Further, apart from the above-mentioned panchnamas, no other panchnama was drawn in relation to the assessee.

As per section 153B(2)(a) of the Act, the authorization referred to in section 153B(1) shall be deemed to have been executed, in the case of a search, on the conclusion of the search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued.

The last panchnama in relation to the assessee was drawn on 01.03.2020. Therefore, the last authorization of search in respect of the assessee shall be deemed to have been executed on 01.03.2020, and accordingly, the time limit for framing the assessment in the case of the assessee would commence from the end of the financial year 2019-20, i.e., 31.03.2021. 6. As per section 153B(1) of the Act, the time limit for framing assessments in cases where the search was conducted in the financial year 2019-20 is 12 months from the end of the financial year in which the last authorization of search was executed, which ended on 31.03.2021. However, by virtue of the extension granted by the CBDT, the period stood extended till 30.09.2021. Therefore, the last date for framing the assessment in the case of the assessee was 30.09.2021. Accordingly, the impugned assessment framed on 31.03.2022 is time-barred. 7. Further, the lifting of PO on 20.11.2020 does not postpone the date of search for the following reasons:

Section 153B of the Act prescribes the time-limit within which an order under section 153A shall be made. It provides that, in the case of a search initiated on or after 01.04.2019, the assessment orders under section 153A “shall be made” within twelve months from the end of the financial year in which the last authorization for search under section 132 of the Act was executed.

Therefore, the question arises as to when an order can be said to be “made.” In this regard, reference may be made to certain judicial decisions wherein the meaning of the word “made” has been examined: i. Collector of Central Excise, Madras v. M/s M.M. Rubber and Co., Tamil Nadu [1991 AIR 2141; 1992 SCC 471] (SC) ii. Govt. Wood Workshop v. State of Kerala [1987] 1 KLT 804 (Ker. HC) iii. Smt. Mema Paul v. Income-tax Officer [2024] 164 taxmann.com 778 (Manipur HC) iv. Commissioner of Agricultural Income-tax v. Kappumalai Estate [1998] 234 ITR 187 (Ker.) and K. Joseph Jacob v. Agricultural ITO [1991] 190 ITR 464 (Ker.) v. B J N Hotels Ltd. (2017) 79 taxmann.com 336 (Kar. HC) vi. Instrumentation Laboratory India Pvt. Ltd. v. DCIT, 2024 (4) TMI 925- ITAT DELHI vii. Dhanterash Sales Pvt. Ltd. v. ITO, 2024 (2) TMI 1554- ITAT KOLKATA viii. Shanti Lal Godawat v. ACIT [2009] 126 TTJ 135 (Jodhpur)

Therefore, in view of the aforesaid judgments of the Hon’ble Supreme Court, various High Courts, and different benches of the Tribunal, it is now well settled that an order can be said to be “made” only when it is issued to the assessee. Issuance occurs when the order is dispatched, i.e., when it goes beyond the control of the Assessing Officer.

In the present case, the impugned order was issued to the assessee via email, which was received on 01.04.2022 at 3:20 AM (copy annexed at P. No. 174 of PB).

Furthermore, the impugned order was not uploaded on the e-filing portal up to 31.03.2022 (12:00 midnight).

Thereafter, an intimation [DIN: ITBA/AST/S/91/2022-23/1042800042(1)] dated 06.04.2022 was issued to the assessee, intimating that the order passed under section 153A on 31.03.2022 bore DIN ITBA/AST/M/1/153A/2022- 23/104255229(1).

Upon authenticating the DIN of the aforesaid intimation letter through the ITBA portal, it was revealed that although the intimation bears the date 06.04.2022, it was in fact issued only on 21.04.2022 (screenshot annexed at P. No. 196 of PB).

Further, the ITBA portal itself reflects that the proceedings were actually closed on 21.04.2022, while the limitation date as per ITBA records was 31.03.2022. (screenshot annexed at P. No. 198 of PB).

To ascertain the actual date of making of the impugned order, the assessee filed an RTI application before the Ld. AO seeking details of the mode and time of service of the order, whether by speed post, email, or ITBA portal. In his reply dated 18.08.2025(P. No. 217-218 of PB), the Ld. AO provided the following information: a. The impugned order was passed on 31.03.2022; b. The impugned order was uploaded on ITBA on 31.03.2022 c. The impugned order was served through ITBA online; d. The order bearing DIN ITBA/AST/M/1/153A/2022-23/104255229(1) was uploaded on ITBA on 31.03.2022 (copy of ITBA case history screenshot annexed).

In this regard, it is submitted that the assertion of the AO that the impugned order bearing DIN ITBA/AST/M/1/153A/2022-23/104255229(1) was uploaded on 31.03.2022 so as to be “issued” on that date, is contradictory and untenable. This is because the DIN of the impugned order itself was generated in FY 2022–23, i.e., after 31.03.2022. The screenshot of the ITBA case history, annexed by the AO in his RTI reply, shows that the order dated 31.03.2022 was generated with DIN ITBA/AST/M/1/153A/2022- 23/104255229(1). The process of DIN generation is automatic and necessarily incorporates the financial year in which it is generated. Therefore, once the DIN itself reflects FY 2022–23, the order could not possibly have been uploaded/issued before 31.03.2022.

This aspect has been directly considered by the Hon’ble Delhi High Court in Acropolis Realty (P.) Ltd. v. ITO [2024] 168 taxmann.com 406 (Delhi), wherein it was held as under: “In the present case, the impugned notice was digitally signed on 01.04.2023. Thus, the process of digitally generating the same on the system was completed on 01.04.2023. Plainly, the impugned notice could not have been issued prior to the same being signed. The fact that the steps to generate the impugned notice commenced on 31.03.2023 cannot be a ground to hold that the impugned notice was issued on 31.03.2023. The date of the said notice is correctly reflected as 01.04.2023. In addition, it is also pointed out that the DIN & Notice Number mentioned in the impugned notice – ITBA/AST/F/148A(SCN)/2023-24/1051828274(1) – also indicates that the impugned notice was issued in the financial year 2023–24.”

In view of the above, it is respectfully submitted that the impugned order under section 153A was issued after the period prescribed under section 153B, and is, therefore, barred by limitation. B. AY 2020-21 BEING THE SEARCH YEAR, ITS ASSESSMENT COULD NOT BEFRAMED U/S 153A 23. Section 153A of the Act provides for the framing of assessments for six assessment years preceding the search year, as well as for the “relevant assessment years” not beyond ten years computed from the end of the search year.

It is significant to note that section 153A does not provide for framing the assessment of the search year itself (i.e., the assessment year in which the search was conducted). The assessment for the search year is required to be completed under the normal procedure prescribed in section 143(3). However, the limitation period for completion of the search year assessment is still governed by section 153B, similar to the preceding six years or relevant assessment years.

Where the assessment of the search year has been erroneously framed by invoking section 153A, such assessments have consistently been held to be invalid by the Hon’ble Tribunal in the following decisions: a) Upendra Kumar Sharma v. DCIT [2010 (4) TMI 1190 – ITAT Delhi] b) A.N. Rangaswamy v. ACIT [2009 (2) TMI 516 – ITAT Bangalore] c) Rajiv Kumar v. ACIT [2016 (12) TMI 1722 – ITAT Chandigarh] d) Deepak Jain v. ACIT, CC-1, Ludhiana [2020 (1) TMI 1034 – ITAT Chandigarh] e) M/s. Mundra Jain and Marbles v. DCIT [2018 (6) TMI 1448 – ITAT Jaipur] f) Mahesh Jain v. ACIT [2017 (12) TMI 1744 – ITAT Chandigarh] g) Ajay Kumar v. ITO [2023 (7) TMI 979 – ITAT Amritsar] 26. This ground was specifically raised before the CIT(A), contending that AY 2020-21 being the search year ought to have been assessed under section 143(3) and not under section 153A. It was also pointed out that the assessee had filed its return of income for AY 2020-21 under section 139 on 17.03.2021, and since no notice under section 143(2) was issued up to 30.06.2021, the assessment could not have been reopened under section 153A. Instead, a notice under section 153A was wrongly issued for the impugned year.

The CIT(A) called for a remand report from the AO on this ground. In his report (reproduced at P. No. 39–40 of the CIT(A)’s order), the AO admitted that till the issuance of notice under section 153A on 07.09.2021, the time limit for issuing a notice under section 143(2) had already expired, and further, that the seized material was received only on 17.09.2021. The AO contended, however, that since the assessee had filed a return in response to notice under section 153A, and a notice under section 143(2) was subsequently issued, the defect was cured by operation of sections 292B and 292BB of the Act. It is noteworthy that the AO never disputed the fact that AY 2020-21 is the search year. In reply, it was submitted before the CIT(A) that sections 292B and 292BB cannot cure a jurisdictional defect, as they apply only to procedural irregularities.

The CIT(A), while adjudicating upon this ground, accepted the fact that AY 2020-21 is indeed the search year. However, relying on the decisions of the Hon’ble Madras High Court in A.R. Safiullah v. ACIT [W.P.(MD) No. 4327 of 2021, dated 24.03.2021] and of the Hon’ble Delhi High Court in PCIT v. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Delhi), the CIT(A)

In this regard, it is respectfully submitted that the reliance of the CIT(A) on A.R. Safiullah is misplaced. The issue before the Hon’ble Madras High Court in that case was confined to the computation of “relevant assessment years” as per Explanation 1 to section 153A, where it was held that such computation must be from the end of the search year. The Court did not hold that the assessment of the search year itself could be framed under section 153A.

Similarly, the reliance placed on Ojjus Medicare is also misconceived. As is evident from the relevant portion and table reproduced by the CIT(A), the Hon’ble Delhi High Court computed the block period under section 153C only after specifically excluding the search year. Thus, the judgment in fact supports the assessee’s contention rather than the Department’s case. Nowhere has it been held by the High Courts that the assessment of the search year can be framed by invoking section 153A instead of section 143(3).

In view of the above discussion, it is respectfully submitted that the assessment for AY 2020-21 being the search year could not have been framed under section 153A of the Act. The legislative scheme of sections 153A and 153B clearly envisages assessment of six preceding assessment years and other “relevant assessment years” but not the search year itself, which continues to be governed by the normal provisions of section 143(3). The consistent judicial view of various Benches of the Hon’ble Tribunal, as cited above, fortifies this interpretation. The reliance placed by the CIT(A) on the decisions of Hon’ble High Courts in A.R. Safiullah and Ojjus Medicare is misplaced and does not support the Department’s stand. Accordingly, the assessment framed under section 153A for AY 2020-21 is bad in law and deserves to be quashed. Thus in the light of the above-mentioned facts and law, it is humbly prayed that the assessment order dated 31.03.2022 may kindly be quashed.”

On the other hand, ld. DR of the Revenue submitted as under :- “Ld. AR of the assessee has taken several legal grounds on the basis of which it has been claimed that the assessment made U/S 153A is barred by limitation. Assessee's grounds as well as my submissions on them are as under: 1. Assessee's ground is that the date of Search is 27.02.2020 and consequent to that a Prohibitory order was placed on 1.03.20 on one of the premises. However, no Panchnama was drawn and the restraint expired on 30.9.2020. Hence the time limit for completion of Assessment order was 30.9.2021. As the order was passed on 31.3 .2022, the same is time barred.

Assessee claims that as the present year under consideration i.e., A Y 2020-21 is the Search Year, assessment should have been framed u/s 143(3) rather than 153A. As is obvious from above discussion in point 1, the date of second search was 21.11.2020, hence the Search year was A Y 2021-22 and not the present year 2020-21. Hence the assessment has been rightly framed u/s 153A.

Another ground of the assessee is that the order u/s 153A was received on 1.4.2022 hence it is time barred. This again is an infructuous ground as section 153B mandates that the assessment order should be passed within the time limit. In this case the assessment order was passed on 31.3 .2022 and uploaded on the ITBA portal on the same date i.e. 31.3.2022. A screenshot of the same is enclosed for your kind perusal. Hence the mandate of the section has been fully complied with and the argument taken up by the assessee is baseless.

Another legal ground taken by the assessee is that the approval granted by the Range Head is mechanical and without application of mind.

Assessee has also raised the legal ground that Assessment order was passed on the basis of statements made and various inadmissible digital evidences without giving any meaningful opportunity to cross examine. This, again is a meaningless argument for the reason that 2 additions of 55 Cr and 4.75 lakhs were made on the basis of assessee's own statement, hence the issue of giving opportunity for cross examination doesn't arise. The only addition made of Rs 57.53 lakhs was made on the basis of statement of Sri Yadubansh Prasad Prajapati, assessee's Manager who handled all the cash of the assessee. However, considering the fact that this addition was based not only on the statement, but the hard cash of Rs 57.53 lakhs found during Search, the addition cannot be said to be not corroborated by evidence. Further, it is not evident anywhere from the record that the assessee actually asked for cross examination of Sri Prajapati, and AO denied it. Hence, if no cross examination is asked for, the plea for no opportunity given cannot be taken at a later date. Reliance is further placed on the following decisions wherein various Courts have ruled that the opportunity for cross examination is not a part of Natural justice. As long as the party charged has a fair and reasonable opportunity to see, comment and criticize the evidence, the demands and test of natural justice are satisfied. a) Nokia India Pvt Ltd (ITAT Delhi) b) Motilal Padampat Udyog 160 taxman 233 c) Nova promoters and Finlease (Delhi HC) 342 ITR 169 d) Udit Kalra (Delhi HC) ITA 220/2019 and CM No 10774/2019 6. Assessee has taken another legal ground that as no Notice u/s 143(2) has been issued during assessment proceedings, therefore notice u/s 153A is bad in law. On this issue, reliance is placed on the decision of Hon'ble Delhi High Court in the case of Ashok Chaddha (2012) 20 taxmann.com 387 wherein Hon'ble high court has held that issuing notice U/S 143(2) in 153A proceedings is not mandatory. In view of above discussions, it is requested that the various legal grounds taken by the assessee may be dismissed and the case may be decided on merits.”

Considered the rival submissions material placed on record. First, we shall deal with the issues raised on the grounds 2 to 4 raised by the assessee. We observed from the records submitted before us, the relevant dates of search operation for initiation and completion of the search proceedings, since the relevant grounds raised by the assessee towards which is the relevant assessment year of search, whether the assessment should be completed u/s 143(3) or 153A, they are as under :- (i) Search was initiated on 27.02.2020 (ii) Last pachnama was raised on 01.03.2020 (iii) Prohibitory order (PO) was passed on 01.03.2020 (iv) As per records, the above PO was lifted on 20.11.2020 (v) Statement of the assessee was recorded u/s 132(4) on 20.11.2020 (vi) Second search was initiated on 19.11.2020 (as submitted by the Ld DR) (a) The second search was completed on 21.11.2020 (b) Notice u/s 153A was issued on 07.09.2021 (c) Assessment order u/s 153A was passed on 31.03.2022.

From the above information available on record, we observed that PO was passed on 01.03.2020, as per the provisions of section 132(8A) of the Act, the above PO ceased to be in force after expiry of 60 days. That being the case, the search proceedings deem to have completed on 30.04.2020. Even though the search was deemed to have concluded on 30.04.2020, as per the provisions of section 153B(2)(a), as it states, “in the case of search, on the conclusion of search as recorded in the last panchnama drawn in whose case the warrant of authorisation has been issued”. Therefore, in the given case, the last panchnama was drawn on 01.03.2020. Hence, the search assessment year in the given case would be only AY 2020-21.

As per the assessment order, the AO had recorded that the another warrant of authorisation was issued on 21.11.2020. We observed from the statement recorded u/s 132(4)/133A of the Act on 20.11.2020, which is placed on record. From the statement recorded, we observed that the officer informed the assessee in Q3 that the restraint order passed u/s 132(3) had been placed on the Almira in the room, which was lifted today (20.11.2020) and above said Almira was searched and found some papers which are identified as A-1. Which are loose papers recovered from the Almira and the assessee was asked to explain the details of the contents of each pages of Annexure A-1.

From the above facts on record, in our considered view, since the department issued another warrant of search and executed on 21.11.2020, the department consciously abated the earlier search conducted on 27.02.2020. The consequences of the same are, the material found during the first search cannot be treated as incriminating material for the second search. The incriminating material found during the search can also be used to initiate proceedings only u/s 147/148, the same material cannot be used to initiate proceedings u/s 153A of the Act after execution of second search. We observed that the AO had initiated the proceedings u/s 153A by reckoning the date of search on 21.11.2020. Accordingly, the AO had completed the assessment u/s 153A in the year under consideration i.e., AY 2020-21. In our view, this is not the correct procedure and the department has deemed to have lifted the PO on 30.04.2020, any action subsequent to the above date are illegal and moreover, the statement was recorded with the assessee on 20.11.2020 u/s 132(4), when the search itself is concluded on 30.04.2020, there is no room to take statement u/s 132(4) of the Act.

Further, the AO can proceed with the assessment u/s 153A based on the material found during the second search, that is loose papers found in the Almira on 21.11.2020 and can frame as well as complete the assessment u/s 143(3) in the search assessment year and if there is any impact of those material in the proceedings assessment years, can initiate proceedings u/s 153A for immediately preceding 6 assessment years. The relevance is the new incriminating materials found in the second search proceedings that are the loose papers found in the Almira. They cannot utilise any of the incriminating materials found in the first search in the assessment proceedings-initiated u/s 153A for the second search initiated on 21.11.2020. As discussed above, the alternative available to the department is only to initiate the proceedings under the provisions of the section 147 of the Act.

From the records we observed that the AO had completed the assessment u/s 153A only based on the material seized during the first search to complete the assessment year under consideration on the various issues as under:

All the above additions are found during the first search conducted on 27.02.2020. Therefore, the materials utilised to make addition which was found during the first search are illegal as the department had initiated the second search, they have abated the first search and the incriminating material found during the first search are material cannot be utilised to complete the proceedings u/s 153A initiated in the second search proceedings. Even on the merit, the assessee has a case that the proceedings-initiated u/s 153A is bad in law. The material found during the second search i.e., the loose sheets alone can be considered as incriminating material to initiate the proceedings u/s 153A for the second search.

Considering the peculiar facts on record, in our considered view, the proceedings initiated for the impugned assessment year under consideration u/s 153A is bad in law in both counts, a) the search AY for the first search is AY 2020-21, therefore the proceedings should have been initiated u/s 143(3) not under section 153A. b) if we take the second search as key to initiate proceedings based on the material found during the second search, the incriminating material found during the second search is only the loose papers, the proceedings initiated should be only on the above incriminating material and using the incriminating material of the first search is wrong since the department had already abated the first search proceedings. The assessment can only be done u/s 147/148 utilising the material found during the first search, hence the proceeding- initiated u/s 153A for the year under consideration is bad in law. The revenue is in catch 22 situation and both the counts, the proceedings initiated under section 153A for the AY 2020-21 is bad in law.

In the result, the relevant grounds raised