SANJAY JAIN,NEW DELHI vs. PCIT (CENTRAL) -3, NEW DELHI

ORDER PER S.RIFAUR RAHMAN, AM: 1. Both the appeals have been filed by the Assessee against the orders of Principal Commissioner of Income Tax (Central), Delhi-3

[“Ld. PCIT”, for short], dated 30/03/2024 for Assessment Year

2013-14 & 2015-16. appeals and common written submissions have been placed on record by the assessee as well as by the revenue, a consolidated common order is being passed in this case.

3. The Assessee has raised the following grounds before the bench: - “For A.Y. 2013-14

1. That on the facts and in the circumstances of the case, the orders passed by the assessing officer u/s 153A of the Act as well as the Ld. PCIT(Central) u/s 263 of the Act are bad in law, violative of principles of natural justice and void-ab-initio.

2. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law and on facts in initiating revisionary proceedings u/s 263 of the Act against an invalid and void-ab-initio assessment order u/s 153A of the Act as the Ld. PCIT(Central) cannot exercise powers u/s 263 of the Act to revise an assessment order which is non est in the eyes of law.

3. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in invoking provisions of Sec. 263 of the Act totally against the principles of natural justice and without any merit as there is/was no occasion to initiate the revisionary proceedings u/s 263 of the Act.

4. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in directing the Ld. AO to adjudicate the alleged cash loan amounting to Rs. 2,00,00,000/- based on mere surmises, conjectures and on his own whims & fancies vide order dated 30.03.2024 u/s 263 of the Income Tax Act.

5. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in assuming jurisdiction u/s 263 of the Act beyond the reasonable period of time and without properly satisfying & demonstrating as to how the twin conditions for invoking the provisions of Sec. 263 of the Act were met as prescribed u/s 263 of the Act.

6. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in framing an adverse order u/s 263 of the Act without providing a reasonable opportunity of being heard to the appellant which is a mandatory pre-requisite before passing order u/s 263 of the Act.

8. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law and on facts by making wrong allegation of Cash Loan of Rs. 2 Crores without any supporting corroborative material or evidence on record and therefore, the order u/s 263 of the Act is devoid of merits and against the principles of natural justice.

9. That the order so framed by the Ld. Assessing Officer as well as the Ld. PCIT(Central) are bad in law and on facts (to the extent as elaborated above) and needs to be quashed.

10. That the appellant craves to add, amend, alter or withdraw any Ground or Grounds of Appeal.”

For A.Y. 2015-16

1. That on the facts and in the circumstances of the case, the orders passed by the assessing officer u/s 153A of the Act as well as the Ld. PCIT(Central) u/s 263 of the Act are bad in law, violative of principles of natural justice & void-ab-initio.

2. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law and on facts in initiating revisionary proceedings u/s 263 of the Act against an invalid and void-ab-initio assessment order u/s 153A of the Act as the Ld. PCIT(Central) cannot exercise powers u/s 263 of the Act to revise an assessment order which is non est in the eyes of law.

3. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in invoking provisions of Sec. 263 of the Act totally against the principles of natural justice and without any merit as there is/was no occasion to initiate the revisionary proceedings u/s 263 of the Act.

4. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in directing the Ld. AO to adjudicate the alleged fund transfer amounting to Rs. 10,53,99,925/- based on third party averments without any corroborative material or evidence on record as well as without providing the opportunity of cross examination to the appellant to rebut the wrong testimony of the third party.

5. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in assuming jurisdiction u/s 263 of the Act beyond the reasonable period of time and without properly satisfying & demonstrating as to how the twin conditions for invoking the provisions of Sec. 263 of the Act were met as prescribed u/s 263 of the Act.

6. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law in framing an adverse order u/s 263 of the Act without providing a reasonable opportunity of being heard to the appellant which is a mandatory pre-requisite before passing order u/s 263 of the Act.

7. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law by distorting the facts as the direction has been issued vide order dated 30.03.2024 based on a mere third party averments whereas as per the first Show Cause Notice dated 15.03.2024 issued u/s 263 of the Act, it was asserted that the aforesaid allegation is being made based on the perusal of the material seized during the course of search which was totally not the case for invoking provisions of Sec. 263 of the Act as no such material was seized which would suggest that the appellant has made such fund transfers as the material which has relied upon by the Ld. PCIT(Central) does not bear the name or signature or any reference of the appellant.

8. That on the facts and in the circumstances of the case, the Ld. PCIT(Central) has erred in law and on facts by making wrong allegation of alleged fund transfer amounting to Rs. 10,53,99,925/- just on the basis of some vague averments made by some third party in his submissions during the course of his assessment proceedings without any supporting corroborative material on record and that too without providing the opportunity of confronting the said third party which makes the impugned

9. That the order so framed by the Ld. Assessing Officer as well as the Ld. PCIT(Central) are bad in law and on facts (to the extent as elaborated above) and needs to be quashed.

10. That the appellant craves to add, amend, alter or withdraw any Ground or Grounds of Appeal.”

Pursuant to the aforesaid search action, Ld. Assessing Officer (A.O.) framed the assessments u/s 153A of the Income Tax Act, 1961 for AY 2009-10 to AY 2019-20 vide his orders all dated 23-04-2021 in case of the assessee. The assessee has preferred appeals before the Ld. CIT(A) against all the said orders framed u/s 153A of the Act for AY 2009-10 to AY 2019-20 and the said appeals are pending for adjudication. Subsequently, on 15.03.2024, Ld. PCIT initiated proceedings u/s 263 of the Act for AY 2013-14 and AY 2015-16 and 30.03.2024 by deeming the order passed u/s 153A of the Act by the Assessing Officer as erroneous and prejudicial to the interests of revenue against which orders, the assessee is in appeal before us.

H.L. Forex Pvt. Ltd.” and not in the case of the assessee himself.

During the course of hearing and vide the written submissions and Synopsis, the assessee has submitted the copy of the Warrant no. 7263 and the copy of the Panchnama which are reproduced hereunder:-

WARRANT NO. 7263 DATED 06.02.2019 the Act, which provision of income tax law strictly mandates that the assessment shall be framed u/s 153A of the Act, only, in the case of a person in case of whom the search warrant is issued u/s 132 of the Act, the relevant contents of Sec. 153A(1) of the Act are reproduced hereunder: -

“Notwithstanding anything contained in ssection139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall—(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed …………………”

153A was violation of law and accordingly, vide Para 73(i) of the said decision held that the assessments framed on the assessee under section 153A are non-est, void-ab-initio & invalid assessments. The relevant paras of the aforementioned decision are reproduced herein below: -

45.“There also the search warrants are in the name of Shri Sandeep Bansal only and are not in the name of the appellant-company. Thus, prerequisite condition of search being initiated in the case of appellant is not fulfilled…………. There may be a valid search in the case of said Shri Sandeep Bansal but assessment under section 153A could be made only in his hands and not in the case of appellant……………… Such defect in framing the assessment is a jurisdictional defect which cannot be cured and assessment has to be held to be invalid because the Assessing Officer did not have any jurisdiction to assess the appellant.” Further held at Para 73(i): “To sum up our conclusions are:— (i) That the assessments framed on the appellant under section 153Aare invalid assessments as discussed in the body of this order. ………………………………..”

The Ld. AR also brought on record that no material or 7. document was found during the course of search which pertains to names Warrant no. 7263 was in fact issued, i.e., “Avtar Singh Kochar, Gagandeep Singh Kochar, Hari Singh Kochar, M/s. H.L.

Forex Pvt. Ltd.”. Further, Ld. AR also demonstrated during the course of hearing that no addition whatsoever has been made in the impugned orders u/s 153A pertaining to any document belonging to the aforementioned parties.

“In respect of the above issue raised by the assessee, detailed arguments were made by the undersigned during the course of hearing. As desired by the Hon'ble Bench, the same are being summarized as under.

Further, importantly, the assessee did not submit such documents even before learned PCIT during the course of proceedings under section 263 of the Act. Therefore. the learned PCIT had no occasion to examine such documents and connected claim of the assessee. In view of the above factual matrix, above two documents (copy of Warrant of authorisation and Panchnama) being produced by the assessee now before the Hon’ble Bench definitely constitute ‘additional evidence’ for the purpose of instant proceedings before Hon'ble Tribunal within the meaning of Rule 29 of ITAT Rules.

29.The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause. or. if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by the, the Tribunal. for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit wo be filed or may allow such evidence to be adduced.”

As per the above rule, none of the parties to the appeal is entitled to produce additional evidence before the Hon'ble Tribunal. The assessee has not substantiated that sufficient opportunity was not allowed to it to produce or it was prevented due to some reasonable cause from producing documents before Ld. PCIT during proceeding under section 263 of the Act. These documents were available with the assessee at the time of proceedings under section 263 of the Act and assessee had made multiple submissions before learned PCIT during the course of proceedings under section 263 of the Act. Such submissions made on 20.03.2024, 26.03.2024, 27.03.2024 and 28.03.2024 are forming part of paper book filed by the assessee (Pg. No. 61-63, 68-80. 135-136 and 137-139 respectively of the Paper Book filed by the assessee). It is noteworthy that during the course of hearing before Hon’ble Bench, the learned A.R. of the assessee has not given any reason at all explaining as to why above documents could not be produced/ before the learned PCIT.

Therefore, in my respectful submission, Hon'ble bench is requested not to admit above mentioned additional evidence in the form of copy of warrant of authorisation and copy of Panchnama as it is in contravention of Rule 29 of ITAT Rule.

It is, further submitted that objection raised by the assessee with regard to validity of the assessment under section 153A of Income-tax Act and consequent proceeding under section 263 of the Act may kindly be dismissed and appeal may be heard on merit.

reasons, the assessee did not want to highlight and contest the issue of non-issuance of warrant and panchnama in its name at the stage of proceedings before Ld. PCIT. Irrespective of whatever was the reason for such an approach adopted by the assessee, two points are evident from conduct of the assessee, firstly the learned PCIT had no occasion to examine the claim of the assessee and no failure on this count can be attributed to Learned PCIT. Secondly, both above mentioned documents will qualify as additional evidence in terms of Rule 29 of ITAT Rule.

4. Without prejudice to above objection against admission of additional evidence, if Hon’ble bench is of considered view that above discussed documents are required to be taken into consideration to enable it to pass the order, it is respectfully submitted that in the interest of natural justice, matter may be remanded back to learned PCIT to examine the claim of the assessee on this point as such documents were not before Ld. PCIT. It will also provide an opportunity of being heard to the Revenue on this issue. Here, it would be pertinent to mention that even though Warrant of authorisation and Panchnama produced as part of the paper book by the assessee do not bear name of the assessee, it cannot be ruled out that there may be some other Warrant of authorisation and Panchnama having name of the assessee. During the course of such operations, multiple Warrants are issued and multiple Panchnama are prepared. Therefore, production of above two documents by the assessee does not conclusively prove that no warrant of authorization was issued in the name of the assessee. If the case is remanded back to learned PCIT, all these aspects will get examined. There are catena of decisions of Hon’ble Tribunal and Hon’ble Courts, where issues have been remanded back to the concerned lower authorities once additional evidence is admitted. One of such latest decisions on which reliance is placed is decision in the case of FR. Sauter AG vs. ITO(International tax) (2024), 158 Taxmann.com 161 the (Delhi- Tribunal), wherein Hon’ble Tribunal restored the additional evidences filed by assessee to the file of the Ld. CIT(A) for deciding the grounds of appeal afresh after considering additional evidences so failed.

5. Since, during the course of hearing before Hon'ble Bench, only the issue of absence of warrant of authorisation and Panchnama in the name of the assessee was discussed and argued, I am restricting my submission at this stage to the said issue only. Further submission will be made by the undersigned if and when Hon'ble bench decides to hear the appeal on merit and other points.”

challenged the entire proceedings framed u/s 263 of the Act on the basis of a Search Warrant bearing no. 7263 which may have not found a place in the records of the Ld. PCIT while examining the assessment records and he may have started examining the issue from the assessment order u/s 153A of the Act upfront in presumption that the Ld. Assessing Officer must have appropriately dealt with the matter of jurisdiction.

“II. COUNTER ARGUMENTS/REBUTTAL AGAINST WRITTEN SUBMISSIONS FILED BY LD. CIT(DR) II(i). The Ld. CIT(DR), Bench-G, ITAT, Delhi has filed his written submission. II(ii). The appellant would like to submit his counter arguments against the written submissions filed by the Ld. DR as aforesaid. II(iii). On appraisal of the said written submissions, it has been observed that the arguments of the Ld. DR are threefold which have no legs in the eyes of law as demonstrated herein below: - a) That appellant did not raise the issue of warrant of search before the Ld. PCIT during the course of proceedings u/s 263 of the Act Rebuttal:

With respect to the first argument of the Ld. DR, it is most respectfully submitted that the said argument that the appellant did not raise the relevant issue before Ld. PCIT does not hold good as the appellant has duly raised the said issue before the Ld. PCIT that no warrant of search has been issued in the case of the appellant during the course of proceedings u/s 263 of the Act vide his letter dated 26.03.2024 for both the assessment years (as imaged below for your honors’ ready reference: -

For AY 2013-14

AY 2015-16

Even otherwise, without prejudice to the above factual position, the Hon’ble Apex Court of the Country in the case of NTPC v. CIT [1998] 97 Taxman 358 (SC) vide order dated 04.12.1996 has held that the appellate authorities have jurisdiction to examine any ground having a bearing on the tax liability of the assessee which goes to the roots of the matter in accordance with law and reason and the same cannot be overlooked.

In view of the above, the first argument of the Ld. CIT (DR) is devoid of any merit, baseless, vague and invalid in toto.

29 1588/Del/2024 Sanjay Jain vs. PCIT (Central) b) That the Warrant of Search and Panchnama are additional evidence for the Ld. PCIT and therefore, the matter should be remanded back

Rebuttal: It is quite surprising that the documents which form part & parcel of the assessment records and that too very much in the possession of the Ld. Assessing Officer himself as well as available before the Ld. PCIT are being described as the additional evidences put forward by the appellant which documents are the creation of the department itself and not a new material or evidence which have been brought on record. In fact, these are the documents which are the basis of the entire proceedings which took place in case of the appellant. The appellant has just pointed out the relevant material which was lying in their own records and which was available to both the Ld. AO while framing the assessment u/s 153A of the Act and to the Ld. PCIT while examining the records u/s 263 of the Act.

The Ld. CIT DR by his aforementioned argument is just praying before the Hon’ble Bench to give the Ld. PCIT an opportunity to examine their own records in the interest of natural justice – Quite a lame & shallow argument.

30 1588/Del/2024 Sanjay Jain vs. PCIT (Central) How a document obtained by the appellant from the revenue authorities can be termed as an additional/new evidence for the revenue authorities itself. It is sheerly an attempt of the Ld. DR to delay/ prolong the litigation/appellate proceedings as otherwise the department has no merits in its case. ’ The appellant has duly disclosed the fact that no warrant of search was issued in the name of the appellant in “black & white” before the Ld. PCIT as already stated above. ,,, Even it is assumed that the appellant did not enlighten the Ld. PCIT about the aforesaid fact, it was the duty of the Ld. PCIT to peruse all the relevant documents including the Warrant of Search &Panchnama before taking any adverse inference against the appellant while framing impugned order u/s 263 of the Act. , Further to the above, the Ld. DR argued that the Ld. PCIT must have started looking into the documents from the Assessment Order but failed to appreciate the fact that the Ld. PCIT challenged the assessment order framed u/s 153A of the Act by referring to the Seized Material and Search Proceedings as the Ld. PCIT categorically quoted the Annexure number in his Show Cause Notice dated 15.03.2024 from which it can also be presumed that the Ld. PCIT had gone through the Panchnama

31 1588/Del/2024 Sanjay Jain vs. PCIT (Central) drawn in the case of the appellant – This assumption is clearly possible but the arguments of the appellant are absolutely backed by facts as well as the law for which no assumption is warranted as against the arguments raised by the Ld. CIT(DR) which are solely based on the assumptions & presumptions which have no defined limits and hence, arbitrary & baseless.

In view of the above, the second argument of the Ld. CIT (DR) is also devoid of any merit, baseless, vague and invalid in toto. c) That there may be any other Warrant of Search in the name of the appellant

Rebuttal: ,, The Ld. DR argued that in a search action, there may be multiple warrants and therefore, has put forward his presumption & assumption without any evidence or supporting material on record that in the instant case of the appellant as well, there may be some other warrant which was issued in the name of the appellant - There cannot be any assumption / presumption of some more panchnama.

In this regard, it is most respectfully submitted that the Hon’ble Bench provided reasonable opportunity to the Ld. DR to bring on record if there is any other warrant issued in the name of the 32 1588/Del/2024 Sanjay Jain vs. PCIT (Central) appellant but the Ld. DR failed to produce any warrant which was issued in the name of the appellant. ,,,, It is again reiterated that no warrant of search was issued in the name of the appellant and all the arbitrary additions made while framing assessment u/s 153A of the Act have been made based on the material seized during the course of search action conducted at the residential premises of the appellant at 17/71, Punjabi Bagh West, New Delhi – 110026 under Warrant no. 7263 dated 06.02.2019 which was issued in the name of “Avtar Singh Kochar, Gagandeep Singh Kochar, Hari Singh Kochar, M/s. H.L. Forex Pvt. Ltd.” to search the premises of the appellant as there was no warrant of search issued in case of the appellant in his individual capacity/ in his own case.

In view of the above, the third argument of the Ld. CIT (DR) is also devoid of any merit, baseless, vague and invalid in toto.”

Therefore, the decision of the coordinate bench in case of FR Sauter AG v. ITO (Intl. Tax) (2024), 158 Taxmann.com 161 the (Delhi- Tribunal) as relied upon by the Ld. DR does not holds good in the instant case as the Revenue cannot term its own file/ documents available in the assessment records forming part of the revisionary proceedings u/s 263 of the Act as “Additional Evidence” under any stretch of imagination. Accordingly, the copy of search warrant and consequent panchnama relied upon by the assessee which were qualify as Additional Evidences in terms of Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963.

Order pronounced in open Court on 22nd May, 2024.