ALPS CONSTRUCTION ,MUMBAI vs. ITO WARD 23(1)(1), MUMBAI

6. The first category of appeal pertains of assessment year 2013-14 and 2014-15. ITA 3862/Mum/2025 for AY 2013-14 & 3950/Mum/2025 for AY 2014-15 6.1 For the aforesaid two appeals the assessee raised a specific issue in Ground No. 1 of the appeal, that the notice issued u/s 153C of the Act and the consequent assessment passed by the Assessing Officer are fundamentally flawed, being without jurisdiction, barred by limitation and passed in violation of the provisions of the Act.

6.2 To elaborate qua the aforesaid anomaly claimed in invoking the provisions of section 153C, Ld. AR submitted a written note before us which is extracted as under:

B. Proceedings for AY 2013-14 and AY 2014-15 are barred by limitation since the commencement point for the purposes of computation of the block of six Assessment years as per 1st Proviso to Section 153C has to be reconned from the date of recording of satisfaction note (Applicable for AY 2013-14 and AY 2014-15): 8

i) Date of Search on Allana Group (searched person): 03.01.2019 ii) Date of recording of satisfaction note (though not supplied to assessee): 22.09.2020 iii) Date of issuance of notice under section 153C: 30.09.2020 (refer para 5 page no 7 of Assessment Order)

"K. SUMMARY OF CONCLUSIONS 119. We thus record our conclusions as follows:

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem A. Prior to the insertion of sections 153A, 153B and 153C, an assessment in respect of search cases was regulated by Chapter XIVB of the Act, comprising of sections 158B to 158BI and which embodied the concept of a block assessment. A block assessment in search cases undertaken in terms of the provisions placed in Chapter XIVB was ordained to be undertaken simultaneously and parallelly to a regular assessment. Contrary to the scheme underlying Chapter XIVB, sections153A, 153B and 153C contemplate a merger of regular assessments with those that may be triggered by a search. ………………………………………………… …………………………………………………………………………………… B. …..…………………………………………………………………………… C. Section 153C, on the other hand, pertains to the non-searched entity and in respect of whom any material, books of account or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of section 153A, section 153Cwas also to apply to all searches that may have been undertaken between the period 01 June 2003 to31 March 2021. In terms of that provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for the six AYs' as well as for "the relevant assessment year". The AYs', which would consequently be thrown open for assessment or reassessment under section 153C follows lines pari materia with section 153A.

D. The First Proviso to section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to section 153C, which significantly shifts the , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem reference point spoken of in section 1534(1), while defining the point from which the period of the "relevant assessment year" is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted.

E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the A.Y. relevant to the year of search. In the case of a search assessment undertaken in terms of section153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under section 1534."

(Emphasis Supplied)

6.3 In rebuttal to aforesaid submissions of the assessee, the revenue also had furnished a written submission, which is extracted here under for the sake of interpretation:

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem Sub: WRITTEN SUBMISSION IN THE CASE OF MOHAMMED SALEEM [ITA NO. 3862/M/2025, ITΑ ΝΟ. 3950-3955/M/2025]

1) Regarding AY 13-14 & AY 14-15, it is respectfully submitted that w.e.f. 01.04.2017, proceedings u/s 153C can be initiated upto 10 years in case of searches conducted on and after April 1, 2017, provided specific conditions are met i.e. if income escaping assessment amounting to Rs. 50 lakhs or more for period beyond 6 years. In appellant case admittedly search was conducted after 1.04.17 and quantum of escapement of income exceeds 50 lakhs. Therefore, it is humbly submitted that order passed u/s 153C for AY 13-14 and AY 14-15 is valid and not time barred. (please refer 4th provision to see 153A of the act).

2) Regarding controversy of block years to applied from date of search of searched person or date of receiving documents/materials by Assessing Officer of third party having jurisdiction over that assessee u/s 153C of act, it is respectfully submitted in this case warrant was issued also in the case of assessee so seventh year has to be done u/s 143(3) of the Act only, irrespective of whether assessment was done u/s 153A or 153C of the Act for block year. Further with effect from 01.04.17, an amendment has been brought in 153C(1) itself. The same is as under: "[Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151, section 153, where the assessing officer is satisfied that.-

A) Any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or B) Any books of account or documents, seized or requisitioned pertains or pertain to, or any information contained there in, relates to,

A person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person *[for six assessment years immediately preceeding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment years or years referred to in sub section (1) of section 153A]

* Inserted by the Finance Act, 2017, w.e.f 1-4-2017.

Decision of Hon'ble Supreme Court in Jasjit Singh is distinguished as matter was involved prior to amendment brought into the Act.

Therefore, it is respectfully submitted that decision of Apex Court may not be applicable in present case.

3) Regarding Net Profit @0.5% made by Assessing Officer, it is respectfully submitted that assessee was not doing business on commission basis. This fact was confirmed by purchaser also on statement u/s 132(4) of the Act and it is also a fact that no TDS has been deducted by purchaser on payment against purchase from appellant. Although turnover exceeds the prescribed limit for tax audit, it is admitted fact that no books of account are maintained by appellant and audited." It is also admitted fact that no stock register, purchase register and sale register was maintained.

Therefore, his version of Rs. 0.15/kg cannot be accepted. Further, working of monetary term on sale of Rs. 0.15/kg was not given before Assessing Officer as well as concerned CIT(A) and before Hon'ble bench also.

Assessing Officer has rightly rejected books of account and estimated profit on sales turnover.

The same is submitted for kind consideration.”

6.4 On a thoughtful to the aforesaid submissions by both the parties, we find substance in the argument of the revenue that after 01.04.2017, pursuant to amendment in section 153C r.w.s. 153A and its proviso‟s defining “income represented in the form of asset, escaped assessment amounts to or likely to amount to fifty Lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years”. For this purpose, as per explanation 1 to sub section (1) of section 153A “relevant assessment year” means assessment years which falls beyond six years from the end of AY relevant to previous year in which the search is conducted or requisition is made. However, the years beyond 6 assessment years could be brought to reassessment u/s 153C only on fulfilment of certains conditions laid in the statute. To test the aforesaid conditions on the facts of the present case, we observe as under:

6.5 Search in the present case on the Allana Group was conducted on 03.01.2019, satisfaction note as per assessment , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem order was recorded on 22.09.2020 and the notice u/s 153C were issued to assessee on 30.09.2020, all are occasioned after 01.04.2017, so the period of assessment u/s 153C r.w.s.153A(1) can be extended up to 10 years, subject to fulfilment of conditions prescribed u/s 153A, its proviso‟s and explanations thereto.

6.6 On a perusal of the facts in present case, to bring the case of assessee within the parameters of “relevant year” to reopen the assessments beyond six preceding years, which in present case shall be reckoned from the date on which the seized material was handed over to the Jurisdictional AO of the assessee (other person), as held in the case of CIT Vs. Jasjit Singh (2023) 458 ITR 437(SC)and other decisions referred to supra, accordingly, the assessment year relevant to the search/ requisition made, in instant case would be AY 2021-22 (being satisfaction note was recorded on 22.09.2020 – FY 2020-21) and the block of six preceding assessment years as per section 153A(a) would be AYs 2015-16 to 2020-21. Consequently, AY 2013-14 and 2014-15 falls out side the block of six years, but falls within the meaning of “relevant assessment year”, which allows the Ld. AO to stretch span of assessment u/s 153C r.w.s. 153A upto 10 years. However, for 4 assessment years, beyond 6 preceding assessment years, the AO has to have in his possession books of accounts or other document or evidence, which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or likely to amounts to Rs. Fifty Lakh or more in the relevant assessment year or in 17 , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem aggregate in relevant assessment years. As per assessment order for AY 2013-14 and 2014-15, the addition made was Rs. 8,53,345 and Rs. 22,78, 569/-, which are neither independently nor collectively exceed the amount of Rs. 50 Lakh, neither it was the case of the ld. AO, as per entire assessment order that such amount is likely to exceed Rs. 50 Lakh, so the proviso and explanation to bring these two years (AY 2013-14 and 2014-15) within the meaning of “relevant assessment years”, as per provisions of section 153(1)(a) r.w.4th proviso and explanation 1 of the said sections fails and the assumption of jurisdiction by the Ld. AO, would be construed as beyond his jurisdiction for the years beyond six preceding assessment years. Accordingly, we hold that the preconditions to reopen the assessment u/s 153C for AY 2013-14 and 2014-15 could not adhered to by the ld. AO to assume valid jurisdiction, as per provisions of section 153C r.w.s. 153A(1) of the Act., while treating AY 2013-14 and 2014-15, to qualify as “Relevant Assessment Year”, falling beyond the block of 6 assessment years from the end of the assessment year relevant to the previous year in which the search is conducted or requisition is made (in present case AY 2021-22, as discussed supra), having quantum of escaped income less than Rs. 50 Lakh. We, thus,in terms of above discussion, are of the view that the assessment order dated 28.09.2021and 27.97.2921 for AY 2013-14 and 2014-15 passed without valid assumption of jurisdiction by the Ld. AO, cannot survive, so are liable to be struck down.

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem 6.8 In result, appeal of the assessee in ITA 3682 and 3950/MUM/2025 for AY 2013-14 and 2014-15, are allowed in terms of our aforesaid observations.

7.2 A written submission to substantiate the aforesaid claim is filed before us by the Ld AR, which is extracted as under:

C. Proceedings for AY 2019-20 could not have been made under section 143(3) since AY 2019-20 falls withing the six preceding assessment years and assessment if at all ought to have been made by issuing notice under section 153C of the Act. (Argument Applicable for on AY 2019-20)

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem 23. The above legal position has been affirmed by this very tribunal in case of Ramrao Adik Education Society v. DCIT, Central Circle- 7(1), in (ITAT Mumbai), the aforesaid decision rendered by the coordinate bench of which the Hon'ble JM was a member has followed the ration laid down in Jasjit Singh (SC) (supra) and unambiguously held that when an AY falls within the block of six assessment years the assessment cannot be done under section 143(3) and same has to be done under section 153C of the Act. (Copy of the said has been submitted in the course of hearing refer para 11 and 12)

Similar View has been expressed in the following judgements:

 Bijay Kumar Soni v. DCIT, & 2144/Del/2023, Delhi Bench 'H', order dated 06.09.2023 Held that where an assessment year falls within the block governed by section 153C, framing assessment under section 143(3) is without jurisdiction and liable to be quashed.  Esha Kedia v. ACIT, Delhi Bench 'B', order dated 27.02.2025-Reiterated that the six-year block under section 153C is to be reckoned from the date of handing over of seized

ITA no. 3862, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem material and that assessments for any AY falling within 6 AY's or dehors section 153C are invalid.  Seema Jain v. DCIT, Delhi Bench 'G', order dated 04.11.2024 Following Jasjit Singh (SC) and Ojjus Medicare (Del HC), held that assessment framed under section 143(3) for a year forming part of the 153C block is non est in law.  Radha Rani v. ACIT, Amritsar Bench, order dated 10.01.2024 Held that where seized material is used against a non-searched person, then if the AY falls with immediately six preceding years reckoned for the substituted dated of serach as per first proviso to section 153C, the assessment must necessarily be framed under section 153C and not under section 143(3).  Rakesh Kumar Kataria v. DCIT, ITA No. 159/Chd/2020, Chandigarh Bench 'B', order dated 15.04.2024- Held that where seized material belonging to a non-searched person is used, the assessment must necessarily be framed under section 153C, and an assessment framed under section 143(3) without following section 153C is void ab initio, further holding that for a non-searched person the six-year block is to be reckoned from the date of handing over of material as per the first proviso to section 153C, following Jasjit Singh (SC) (Supra).”

7.3 Per contra Ld. CITDR, representing the revenue, on the issue of assessment completed u/s 143(3) instead of section 153C, vehemently supported the orders of revenue authorities.

7.4 The issue of completing the assessment u/s 143(3) instead of 153C, in the cases falling within six assessment years to be assessed under section 153C r.w.s. 153A of the Act, are liable to be quashed, is squarely covered by the decisions relied upon by the Ld. AR (referred to supra) in his aforesaid submissions, we 22 , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem thus concur with same and are inclined to hold that the assessment for AY 2019-20 in present case completed u/s 143(3) was in contradiction to the settled position of law, accordingly it is liable to be quashed.

7.5 Consequently, appeal of assessee in ITA 3955/MUM/2025 stands allowed, in terms of our aforesaid observations.

8.2 A satisfactory note and reasons for issue notice u/s 153C of the IT Act in the case of the assessee were recorded vide order sheet noting dated 22.09.2020 and a notice u/s 153C of the Act was issued to the assessee on 30.09.2020 and duly served upon the assessee calling for returns of income for AY 2013-14 to 2018-19.

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem 8.3 The assessee is claimed to be one of the purchase parties of Allana Group in his individual capacity as well as in the name of his partnership firm i.e. M/s. Nanhe Gulzar & Co. During the search & seizure action carried out in case of M/s. Allanasons Pvt. Ltd. & others group, premise of the assessee, at 6395, Quresh Nagar, Basti Chitanki was also covered. During the search proceedings, a statement on oath was recorded of Shri Md. Saleem in which he claimed that he sells animal son commission of Rs. 0.25 per kg to Allana Group of entities. He also claimed that he purchases animal on credit from farmers and sells them to slaughter house of Allana group in Ghazipur. And, from the payments received through cheques/RTGS from Allana group, he makes payments to farmers in cash. On being asked about the PAN of the purchase parties, the assessee showed his inability to provide the same. On being queried as to how books of accounts are prepared for the financial transactions entered into by him with Allana group, hestated that he provides weighment slip and payment voucher provided by Allana group to his CA which is being incorporated in books of accounts. He also stated that he has been supplying animals to Allana group in his individual capacity as well as in the name of its partnership firm namely, M/s. Nanne Gulzar & Co. (AALFN4781E). And, nature of transactions in the said firm is similar to the one explained by him.

8.4 The disputed transactions by the assessee and the basis of assessment has been summarized by the AO, as under:

, 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem 1. The assessee is claimed to be into the commission business and supplying Buffaloes to the Allana group of entities after procuring from farmers. Also, he has been given a small place to work in the slaughter house at Ghazipur run by Allana group.

2. PAN, Address and other relevant details of purchase parties could not be provided by the assessee.

3. He failed to provide purchase invoices, purchase order, and purchase register in respect of the purchases claimed to be made by the assessee.

4. The assessee failed to substantiate its purchase and sale transactions with complete documentary evidences.

In view of the above finding, it is clearly established that assessee has failed to conclusively prove its claim of being a supplier of animals.

8.5 Before the Ld. AO, assessee furnished following documents:

3. Copy of agreement entered into with purchaser Allana group of entities.

8.6 After lengthy discussions, wherein the assessee claimed himself to be a be kaccha arahtia, whereas Ld. AO treated him to be pacca arahtia, the assessment was completed by the Ld. AO with an estimated addition under identical finding for all the AY‟s under consideration, for illustration the observations for the AY 2015-17 are extracted, as under:

8.7 As per the findings of search proceedings in case of Allana Group and submission made by Allana Group of entities during the assessment proceedings, total sales made by the assessee to Allana Group of entities for the year under consideration are found to the tune of Rs. 32,63,15,489/-. Therefore, considering the facts & circumstances of the case and nature of business of the assessee, I am satisfied that net profit of 0.5% of total sales made by the assessee, should be taxable in the hands of the assessee. Accordingly, an amount of Rs. 16,31,577/- is found to be income of the assessee and is taxable in the hands of the assessee as business income for the year 26 , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem under consideration over and above the income offered by the assessee in the return of income.

8.8 Before us Ld. AR of the assessee, while submitting on the merits have submitted that the estimation done by the Ld. AO was without any basis, not fair and unjustified in terms of facts and figure of the assessee, who had declared a gross profit ranging between 0.07% to 0.26% of total credits in his bank account for the years under consideration. It is also submitted that if a fair average % would be estimated, the assessee, inspite of having legal grounds thorough which the entire addition may have deleted, would agree to offer the additional income based on fair estimation to settle the litigation.

8.9 It is also submitted that for AY 2017-18, no GP rate estimation should have been done, since the return income of that year was accepted by the revenue under scrutiny assessment proceedings and no new fact or incriminating material was found during the search.

8.10 A chart showing, returned income of the assessee, credit in bank account, commissioned earned, net profit, addition made, assessed income etc submitted before us, the same is extracted here under for better appreciation of the facts:

Mohamad Saleem - BIHPS6247K AY 2013-14 to AY 2019-20 S. A.Y Section Total Bank Commissi Gross Net Net Returned Assessed Addition Demand Date Of No. of Credits on Profit Profit profit Income Income Order Assess Income/ Ratio Ratio ment Gross Profit Ratio 1 2013- 153C 169040525 338081 0.20 210191 0.12 210190 1063535 853345 309446 28-09- 14 2021 2 2014- 153C 446443746 892887 0.20 283805 0.06 283810 2562380 2278569 1165286 27-09- 15 2021 3 2015- 153C 844965 0.20 415922 0.10 365520 1997100 1631577 765012 27-09- 16 2021 4 2016- 622178123 1135362 0.18 548485 0.09 498090 3286220 2788128 1355459 27-09- 17 153C 2021 5 2017- 153C 2878950656 1893285 0.07 913282 0.03 1124150 15442230 14318079 7925092 27-09- 18 2021 6 2018- 153C 555395642 1436776 0.26 0.09 950440 3748890 2798450 1229247 27-09- 19 2021 7 2019- 143(3) 1359437117 2324759 0.17 913136 0.07 1206520 7290562 6084042 2787739 27-09- 20 r.w.s 2021 153C 8.11 Per contra Ld. CITDR, representing the revenue, on the issue of assessment completed u/s 143(3) instead of section 153C, vehemently supported the orders of revenue authorities.

8.12 We have considered the rival submissions and facts on records. Amidst the request of assessee to estimate the GP rate of assessee on a fair basis, taking figures of assessee‟s business for relevant years, without adjudicating remaining contentions may it be on legal aspect or on merits, we are of the considered view that the fair ration of GP to be adopted can be arrived by , 3950, 3951,3952, 3953,3954 & 3955/MUM/2025 Mohammad Saleem taking the average of GP rate of years under consideration. As per chart furnished before us (extracted supra) the average comes to (0.20+0.20+0.20+0.18+0.07+0.26+0.17 / 7yrs = 0.18% approx), so the justified rate of GP for estimating the profit of assessee would be 0.18% of the credit in bank account or a higher rate if already declared by the assessee.

8.13 Further, the contention of assessee, that the AY 2017- 18 was subjected to scrutiny and returned income was accepted, so no estimation should be done, cannot be accepted, as this would lead to further verification of facts, that whether any incriminating material was surfaced during the search or not, while the legal grounds are not pressed by the ld. AR, thus are rendered being dismissed as withdrawn. Accordingly, the estimate of profit for AY 2014-15 to AY 2018-19 would be 0.18% or the declared GP by assessee whichever is higher shall be adopted. Ld. AO is directed accordingly, to give effect to this order after factual verifications.

8.14 In result the appeal of assessee in 3950 to 3954/Mum/2025 for AY 2015-16 to 2018-19, are partly allowed for statistical purposes.

Order pronounced in open court on 30.12.2025.