UPRIGHT ENTERPRISES LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 2, FARIDABAD

briefly discuss the relevant facts. The assessee is a resident

corporate entity deriving income from business and profession. As

stated by the Assessing Officer, a search and seizure operation

under section 132 of the Act was carried out in the

business/office premises of M/s. SRS Group of cases on

09.05.2012. Pursuant to such search and seizure operation,

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proceedings under section 153C were initiated against the

assessee after recording of satisfaction on 18.09.2014. In

response to the notices issued under section 153C of the Act, the

assessee filed its return of income. In course of assessment

proceedings, the Assessing Officer noticed that the assessee had

claimed expenses towards freight charges. In some of the

assessment years under dispute, the Assessing Officer further

noticed that the assessee had earned exempt income by way of

dividend. Insofar as expenses incurred towards freight charges,

the Assessing Officer has alleged that the assessee could not

produce the requisite bills and vouchers. Accordingly, he

disallowed such expenses by invoking the provisions contained

under Explanation to section 37(1) of the Act. Further, the

Assessing Officer also disallowed expenses under section 14A

read with Rule 8D in the assessment years, wherein, the assessee

had earned dividend income. Accordingly, he completed the

assessments for all the assessment years under dispute.

preferred appeals before learned first appellate authority, inter

alia, on the ground that additions having been made without any

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incriminating materials, are unsustainable. The first appellate

authority, however, did not find merit in the submissions of the

assessee. He observed that as per the remand report of the

Assessing Officer, the additions made in the assessment years

were based on seized materials. Thus, ultimately, he sustained

the additions made by the Assessing Officer.

reiterated the stand taken before the departmental authorities. He

submitted, as far as assessment year 2008-09 is concerned, in

terms with proviso to section 153C of the Act, it falls beyond the

block of six years, hence, the Assessing Officer could not have

proceeded to frame the assessment under section 153C of the Act.

In support of such proposition, he relied upon the decision of the

Hon’ble Supreme Court in case of CIT Vs. Jasjit Singh, 458 ITR

437 (SC). Without prejudice, he submitted that none of the

additions made by the Assessing Officer are based on any

incriminating material found as a result of search and seizure

operation.

Officer, learned counsel submitted that, though, the departmental

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authorities have made general observations that large number of

seized materials were found during search and seizure operation

in case of third parties, however, while making additions, no

specific reference has been made to any seized materials. Further

drawing our attention to the paper-books filed by the Department,

learned counsel submitted that no seized material has been

furnished to establish that the additions have been made based

on seized materials. He submitted, in respect of another group

entity, while deciding identical issue arising out of same search

and seizure operation, the Tribunal has deleted similar additions

on the reasoning that they are not based on any incriminating

material found during search and seizure operation. In this

context, he drew our attention to the orders passed by the

Tribunal in case of M/s. Frontier Commercial Co. Ltd. Vs. DCIT,

ITA No.2205/Del/2017, dated 14.02.2020 in assessment year

2009-10 and in ITA No. 7347 & 7348/Del/2017, dated

26.07.2023 in assessment years 2011-12 and 2012-13.

the additions made are not based on any incriminating material

found as a result of search in respect of unabated assessments,

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such additions have to be declared as unsustainable. In support

of such proposition, he relied upon a decision of the Hon’ble

Supreme Court in case of PCIT Vs. Abhisar Buildwell Pvt.

Ltd., (2023) 294 Taxman 70.

Assessing Officer and the first appellate authority have observed

that in course of search and seizure operation, large numbers of

incriminating materials were found. Therefore, it is a fact on

record that the additions are based on incriminating material.

decisions relied upon and perused the materials on record.

Though, in the cause title of the assessment orders, the Assessing

Officer has mentioned that the orders have been passed under

section 153A of the Act, however, in paragraph 2, he himself has

stated that proceedings were initiated under section 153C read

with section 153A of the Act. This presupposes that no search

and seizure operation was carried out in case of the assessee. In

fact, before us, learned Departmental Representative was not in a

position to establish on record that any search and seizure

operation under section 132 of the Act was carried out on the

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assessee. On scanning through two paper-books submitted by the

Revenue on 17.11.2021 and 31.01.2022, we have not found any

search and seizure warrant or panchnama drawn up in the name

of the assessee. What the paper-book filed on 31.01.2022

contains is an authorization of survey under section 133A of the

Act. Thus, it is a fact on record that no search and seizure

operation was carried out on the assessee. This is vindicated from

the fact that on perusal of the assessment record furnished before

us by learned Departmental Representative; it is observed that in

case of the assessee, the Assessing Officer has recorded a

common satisfaction under section 153C on 18.09.2014 for

assessment years 2007-08 to 2012-13.

proceedings were initiated and completed under section 153C of

the Act. As discussed earlier, the Assessing Officer has recorded

the satisfaction note under section 153C of the Act on

18.09.2014. In other words, the satisfaction note was recorded in

financial year 2014-15 corresponding to assessment year 2015-

be 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15.

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Therefore, the assessment year 2008-09 does not fall within the

block of six assessment years, as per the provisions contained

under section 153C read with its proviso applicable to the

assessment year under dispute. In case of CIT Vs. Jasjit Singh

(supra), the Hon’ble Supreme Court has held as under:

“9. It is evident on a plain interpretation of Section 153C (1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153 (c) (1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials. 132 of the search party, under Section would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), prejudice caused to the third party, who would be drawn into the proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.”

aforesaid, clearly applies to the facts of the present appeal.

Therefore, the Assessing Officer could not have proceeded under

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section 153A/153C of the Act to initiate and complete the

assessment. That being the legal position, the assessment order

for the assessment year 2008-09, being void ab-initio is

unsustainable. Hence, deserves to be quashed.

consideration is, whether the additions made in the assessment

orders are sustainable, keeping in view the provisions of section

153C of the Act and the legal position on the issue. It is the case

of the assessee that the additions made are not based on any

incriminating materials found as a result of search. It is beyond

dispute that on the date of search and seizure operation on M/s.

SRS Group, assessment proceedings for the impugned

assessment years had not abated. Therefore, the additions, if any,

have to be made based on seized materials. As discussed earlier,

the additions made in the assessment orders are on account of

disallowance of freight expenses.

the Assessing Officer has made an additional disallowance

relating to section 14A read with Rule 8D. Though, in the

assessment and first appellate orders, the departmental

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authorities have observed that large numbers of incriminating

materials were found, however, the additions do not specifically

refer to any incriminating/seized material. In fact, on perusal of

the satisfaction note recorded under section 153C of the Act on

18.09.2014, it is observed that it is a common satisfaction note

for assessment years 2007-08 to 2012-13. In the said satisfaction

note, the Assessing Officer has not referred to any

seized/incriminating materials found as a result of search and

seizure operation, which belong to the assessee.

record satisfaction note for each assessment year, for which, he

intends to initiate proceedings under section 153C of the Act and

he also has to refer to incriminating/seized materials relating to

such assessment year to justify initiation of proceedings under

section 153C of the Act. In the facts of the present appeals, it is

not the case. In fact, on specific query, learned Departmental

Representative failed to bring to our notice any

seized/incriminating materials, which could have influenced the

present additions. Even, the paper-books filed by the Department

do not contain any seized/incriminating materials.

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and order of first appellate authority certainly gives an impression

that the additions made are based either on the return of income

furnished by the assessee or on certain other documents

furnished by the assessee itself. Thus, uncontroverted facts on

record do clearly reveal that the additions made in the impugned

assessment orders are not based on any incriminating/seized

materials found during search and seizure operation. That being

the factual position emerging on record, the ratio laid down by the

Hon’ble Supreme court in case of PCIT Vs. Abhisar Buildwell Pvt.

Ltd. (supra) would squarely apply.

case of assessee’s group concern arising out of the same search

and seizure operation, the Coordinate Bench in case of M/s.

Frontier Commercial Co. Ltd. Vs. DCIT (supra) has deleted the

additions, as, they were not based on any seized/incriminating

materials found as a result of search and seizure operation. Thus,

on overall consideration of facts and materials on record and on

application of ratio laid down in the judicial precedents cited

before us, we are of the view that the disputed additions having

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been made without reference to any seized/incriminating material

found as a result of search and seizure operation, are

unsustainable. Accordingly, all the additions are deleted.

Order pronounced in the open court on 12th June, 2024

Sd/- Sd/- (NAVEEN CHANDRA) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT Dated: 12th June, 2024. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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