SOCIAL REALTORS (P) LTD,NEW DELHI vs. ACIT, CENTRAL CIRCLE-II, FARIDABAD

3 That since no valid approval has been obtained u/s 153D of the Act, order of assessment made u/s 143(3)/153A(1)(b)/153C of the Act is invalid and deserves to be quashed as such.

4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in law in upholding an addition of Rs. 1,08,16,307/- by applying rate of 1% is figure of Rs. 10,81,63,077/- representing alleged income from commission on total credits and debits reflected in the bank statement of the appellant company.

4.1 That the learned Commissioner of Income Tax (Appeals) has proceeded on arbitrary assumptions and, presumptions and overlooked the evidence and, explanation tendered by the appellant company, the addition thus sustained is based on surmises, conjectures and suspicion and therefore untenable.

4.2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted.

4.3. That in any case and without prejudice that addition made is highly arbitrary and excessive and therefore unsustainable. Prayer

It is therefore, prayed that, it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) be quashed. It be further held that addition sustained by the learned Commissioner of Income Tax (Appeals) is not tenable and therefore be deleted and appeal of the appellant company may kindly be allowed.”

3450/Del/2023 (A.Y 2011-12 & 2012-13)

3. Briefs facts of the case in the above appeals are that, a search and seizure operation u/s 132 of Income Tax Act, 1961 (‘Act’ for short) was conducted on 21/07/2016 at the residential premises of M3M Group of cases. Among the documents seized contained information pertaining to the Assessee and the Assessing Officer recorded his satisfaction that those documents have bearing on the determination of total income of the Assessee. The assessment proceedings have been initiated and the assessment order came to be passed u/s 153A (1)(b) of the Act on 18/12/2018 for Assessment Year 2011-12 and 2012-13 by making certain additions. Aggrieved by the assessment orders for Assessment Year 2011- 12 and 2012-13, the Assessee preferred Appeals before the CIT(A) and the Ld. CIT(A) vide order dated 29/09/2023 upheld the partial addition by applying rate of 1% on the income from commission on total credits and debits reflected in the bank statement of the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 29/09/2023, the Assessee preferred the presentAppeals on the grounds mentioned above.

7. We note that the Learned DR has not been able to controvert such submissions made by the Assessee’s Counsel.

8. We have further considered the CBDT Circular being No.2/2018 dated 15.02.2018 annexed at page 2 of the paper book filed before us, the relevant portion thereof is as follows: “80.1 The provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the Assessing Officer, and provisions of the said Act shall apply accordingly. 80.2 In view of the various representations received from stakeholders, section 197 of the Finance Act, 2016 has been amended so as to omit clause (c) of the said section. 80.3 Applicability: This amendment takes effect retrospectively from 1st June, 2016. 80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed investment in any asset, section 153A of the Income-tax Act relating to search assessments has been amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided up to the tenth assessment year if (i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years(falling beyond the sixth year); (ii) such income escaping assessment is represented in the form of asset; (iii) the income escaping assessment or part thereof relates to such year or years. 80.5 Applicability: The amended provisions of section 153A of the Income- tax Act shall apply where search under section 132 of the Income-tax Act is initiated or requisition under section 132A of the Income-tax Act is made on or after the 1st day of April, 2017. 80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act. 80.7 Applicability: These amendments take effect from 1st April, 2017.”

9. Along with the judgement relied upon by the Learned AR, we have also considered the judgment passed by the Co-ordinate Bench in the matter of Shalimar Town Planners Pvt. Ltd. (supra) as relied upon by the Learned AR wherein the identical issue has been discussed in the following manner: “32. Before answering these question certain facts further need to be noted. On 03.09.2008 notice u/s 153A was issued by the ld AO in case of BPTP Ltd for Assessment Year 2003-04 to 2007-08. This company was incorporated on 11.08.2003 so the effective years were assessment Asst.Years : 2011-12 to 2017-18 - 7 - year 2004-05 to 2007-08. No satisfaction note was recorded by the ld. AO in the file of BPTP Ltd with respect to the documents belonging to the Assessee. For this proposition, the Assessee has shown the order sheet of BPTP Ltd as well as letter dated 04.01.2016 of the ld. AO, wherein, in response to RTI Query, it was stated that since the ld. AO of BPTP Ltd and the Assessee was same, therefore, no separate satisfaction was recorded in the file of BPTP Ltd before assuming jurisdiction in case of Assessee u/s 153C of the Act. Further satisfaction was recorded in the case of the Assessee on 19.08.2009 by the ld AO which is placed at page No. 17 to 20 of the PB. However, on 19.08.2009 itself, notice u/s 153C of the Act were issued to the Assessee for Assessment Years 2005-06, 2006-07 and 2007-08. Admittedly, no notice u/s 153C was issued for Assessment Year 2009-10 and assessment was concluded on 15.12.2011 u/s 143(3) of the Act. In case of Shri Jasjit Singh (supra) the revenue challenged the order of the coordinate bench dated 05.11.2014 wherein, it was held that in case of the assessee the date of receipt of the seized material would be the date of search and six-year period would be reckoned from that date. The coordinate bench in that case quashed the assessment framed u/s 143(3) of the Act for Assessment Year 2009-10 where the satisfaction note was recorded and material belonging to the assessee was received on 16.06.2009. The Hon'ble Delhi High Court on appeal upheld the order of the coordinate bench quashing the assessment. In the present case also identical facts are on record. The satisfaction was recorded on 19.08.2009 and assessment for Assessment Year 2009-10 is passed u/s 143(3) of the Act. Therefore, respectfully following the decision of the Hon'ble Delhi High Court for CIT Vs. Jasjit Singh [supra] we quashed the order passed by the ld AO u/s 143(3) of the Act for impugned assessment order. In view of this, additional ground raised

by the assessee is allowed.”

10. In this matter we find that the Hon’ble Delhi High Court in Revenue’s appeal confirmed the order passed by the Coordinate Bench which was further confirmed by the Hon’ble Apex Court by under the judgement and order dated 21 March 2024 in favour of the assessee. Thus the ratio laid down therein to this effect that the starting point of computation of block period under Section 153C of the Act would be the date of recording of satisfaction on the basis of seized documents and notice issued to the assessee has attained finality.

11. The assessee further relied upon a judgment passed by the Coordinate Bench of Tribunal in the case of Karina Airlines International Ltd. vs. ACIT in dated 09.06.2021. On this issue the relevant discussion made by the Bench is as follows: “5. Insofar as the issue of limitation covered by ground No. 1 is concerned, it is argued by the Ld. AR that in case of a “searched person”, provisions of section 153A are applicable, in accordance with which, the assessing officer is to assess or reassess total income of “searched person” for six assessment years immediately preceding the assessment year relevant to the assessment year in which search is conducted or requisition is made; whereas the second proviso to subsection (i) of section 153A also provides that assessment or reassessment of these six assessment years, if pending on the date of initiation of search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate. On this basis he submits that, inasmuch as the search u/s 132 was conducted in the case of Sh Harvansh Chawla on 07.04.2016, the date of search falls in A.Y. 2017-18 in the case of Sh Harvansh Chawla, and consequently, the assessing officer in the case of Sh Harvansh Chawla was empowered to initiate the proceedings u/s 153A for immediately preceding six years from A.Y. 2011-12 to A.Y. 2016-17. He, however, submits that in case of the assessee who happens to be the “person other than the searched person”, provisions of section 153C are applicable and in such case, the “date of search or date of requisition” as referred to in section 153A issubstituted by the “date of handing over of documents by the assessing officer of searched person to the assessing officer of other person”. - 6. On this premise, he continues to submit that, the assessing officer in his capacity as A.O. of the searched person has recorded satisfaction on 29.03.2019, which establishes that, at the earliest, it is the date of 29.03.2019, when the assessing officer can be presumed to have got the documents in his capacity as assessing officer of the appellant, on the basis of which proceedings u/s 153C have been initiated. Since the date of such recording of satisfaction on 29.03.2019 falls in previous year 2018-19 relevant to A.Y. 2019- 20, the immediately preceding six years are A.Y. 2013-14 to A.Y. 2018-19, and, therefore, the notice u/s 153C for A.Y. 2012-13 could not have been issued by the learned Assessing Officer, as the same are barred by limitation.

7. Per contra, Ld. DR submits that the implementation provisions have to be interpreted in consonance with the charging provision and there cannot be any anomalous situation created by the interpretation of the implementation provision; that the provisions under sections 153A of the Act and 153C of the Act have to be construed in such a harmonious way that there will not be any different sets of 6 years for reopening of the assessments in case of the person searched and the other person. She also referred to the amendment brought by the Finance Act, 2017 w.e.f. 1/4/2017 to the effect that the 6 assessment years to be reckoned shall be the 6 previous years immediately preceding the assessment year relevant to the previous year in which the search was conducted. The sum and substance of the argument of Ld. DR is that there cannot be two sets of 6 years for the purposes of section 153A of the Act and 153C of the Act respectively.

9. We have gone through the record in the light of the submissions made on either side. Insofar as the facts are concerned there is no dispute. Search in the case of Harvesh Chawla took place on 7/4/2016, the satisfaction by the learned Assessing Officer of the searched person was recorded on 29/3/2019 and the seized material was handed over to the learned Assessing Officer of the assessee who had recorded his satisfaction on 15/9/2019. It is clear that the date of search had fallen in the A.Y. 2017-18 which is relevant for the case of the person searched; whereas the satisfaction recorded by the learned Assessing Officer of the searched person on 29/3/2019 had fallen in the assessment year 2019-20 in which case the immediately preceding 6 assessment years would be assessment years 2013-14 to 2018-19; and the date of satisfaction recorded by the learned Assessing Officer of the assessee on 15/5/2019 falls in the assessment year 2020-21 in which case the immediately preceding 6 assessment years would be the assessment years from 2014- 15 to 2019-20.

12. We find that the order passed on the identical issue in the case of Pr. CIT vs. Sarwar Agency P. Ltd (supra) as relied upon by the Learned AR has been duly taken care of in the above matter and the issue has been decided in favour of the Assessee.

8. In the present case, the satisfaction has been recorded on 26/09/2018 by the A.O. of the Assessee which falls in the Assessment Year 2018-19, the immediate preceding six years would be Assessment Year 2013-14 to 2018-19, thus, in our considered opinion, the notice issued by the A.O. u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 are beyond the jurisdiction of the A.O. Further we have also considered the fact of the amendment to Section 153C of the Act w.e.f 01/04/2017 having prospective effect as clarified by the CBDT Circular of 2/2018 dated 15/02/2018, thus we find no reason to justify the action of the A.O. to issue notice u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 as the same are not filing in the ‘previous six years’, accordingly, we are of the opinion that assumption of jurisdiction in reopening of assessment u/s 153C of the Act for Assessment Year 2011-12 and 2012-13 are void ab initio. Thus the impugned assessment orders for Assessment Year 2011-12 and 2012-13 are hereby quashed.

, 3452, 3453 & 3454/Del/2023 (A.Y 2013-14 to 2016-17)

10. In the above captioned appeals for (Assessment Year 2013-14 to 2016-17) the Assessee aggrieved by the order of the Ld. CIT(A) in upholding the partial addition by applying rate of 1% representing the income from commission and total credits and debits reflected in the bank statement of the Assessee company.

11. The Ld. Counsel for the Assessee submitted that the Ld. CIT(A) has erred in both law and in facts in upholding the assumption of jurisdiction despite the fact that in absence of any valid satisfaction having been recorded both in the case of searched person and the Assessee u/s 153C of the Act. Further submitted that in identical case in one of the Companies, similarly situated like the Assessee out of five Companies searched in connection with the search and seizure operation conducted in the group of M3M cases dated 21/07/2016 the Co-ordinate Bench of the Tribunal has quashed the assessment as invalid, thus by seeking the parity, sought for quashing the assessment orders.

“Reasons/Satisfaction note for taking up the case of M/s Social Realtech Pvt. Ltd., under section 1530 of the Income Tax Act, 1961:- Name and address of the M/s Social Realtech Pvt. Ltd. Assessee Asst. Year 2011-12 to 2017-18

PAN AALCS5871M

Status Соmраnу By virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, a Search & Seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter called the Act) was carried out on 21.07.2016 at the residential/business premises of the persons associated with the M/s MSM Group 2. During search & seizure operation u/s 182 of the Income Tax Act carried out at Chamber No: Paras Twin Towers, Tower-B, 6 Floor, Golf Course Road, Sector-54, Gurgaon-122002 belonging to M3M Group seized material te, Annexure A-3 was seized from the aforementioned premises.

26.09.2018: Notice u/s 153C r.w. Section 153A of the Act issued.