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Facts
The assessee filed a return of income for A.Y. 2014-15. A search on a third party (Rakesh Jain Group) led to the discovery of a collaboration agreement pertaining to the assessee, indicating an unrecorded cash payment of Rs. 1.60 crore. Satisfaction notes for initiating Section 153C proceedings against the assessee were recorded by the AO of the searched person on 22.02.2021 and by the assessee's AO on 24.09.2021. Assessment was framed for A.Y. 2014-15, making an addition under Section 69A and levying interest.
Held
Relying on the Supreme Court's ruling in CIT Vs. Jasjit Singh, the Tribunal held that for Section 153C proceedings against a 'person other than the searched person,' the date of search is the date of recording the satisfaction note by the AO of the searched person. As this date was 22.02.2021, the relevant block of six assessment years commenced from A.Y. 2015-16. Since A.Y. 2014-15 fell outside this statutory six-year block, the assessment order was invalid and quashed.
Key Issues
Validity of assumption of jurisdiction under Section 153C and framing of assessment under Sections 153C/143(3) where the assessment year falls outside the prescribed block of six years from the date of satisfaction note, and related addition under Section 69A and interest levies.
Sections Cited
Section 153C, Section 143(3), Section 153D, Section 69A, Section 234A, Section 234B, Section 234D, Section 132, Section 153A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI YOGESH KUMAR U.S
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A) – 28, New Delhi dated 04.05.2023 pertaining to A.Y. 2014-15.
2. The grievances of the assessee read as under:
“1. That the learned Commissioner of Income Tax (Appeals)-28, New Delhi has erred both in law and on facts in upholding the assumption of jurisdiction uls 153C of the Act and, framing of assessment uls 153C/143(3) of the Act
1.1. That both the notice issued uls 153C of the Act and assessment framed uls 153C of the Act were without satisfying the statutory preconditions contained in the Act and therefore without jurisdiction and therefore deserves to be quashed as such ..
1.2. That while upholding the assumption of jurisdiction the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since neither money, bullion, jewellery or other valuable article or thing belonging to the appellant and nor any books of accounts or documents pertaining to the appellant or any information contained therein relating to the appellant were seized as a result of search the assumption of jurisdiction uls 153C of the Act was illegal, invalid and unsustainable.
1.3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the assumption of jurisdiction despite the fact that inabsence of any valid satisfaction having been recorded both in the case of searched person and, the appellant action uls 153C of the Act was in excess of jurisdiction
That since no valid approval has been obtained uls 153D of the Act, order of assessment made uls 153C of the Act is invalid and deserves to be quashed' as such
6. 3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding an addition of Rs. 1,60,00,000-representing alleged unexplained money under section 69A of the Act
3.1. That while confirming the above addition, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the factual substratum of the case, statutory provisions of law and as such, addition so made and sustained is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable.
3.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that impugned seized document IS a cancelled copy of collaboration agreement and no addition can be made on the basis of copy of cancelled agreement, more particularly since the the appellant and Mr. Vijay Gupta which are party to the collaboration agreement has denied any kind of payment/receipt of cash under the agreement in their respective statement recorded during post search proceedings.
3.3 That the learned Commissioner of Income Tax (Appeals) has appreciate that the burden is on revenue U/S 69 of the Act such not been discharged on the facts of the Appellant
4. That the learned Commissioner of Income Tax (Appeals) has also in law and on facts in upholding the levy of of Rs. 1,07,2601- U/S 234A of the Act, interest of Rs. 49,87,598/- U/S 234B of the Act and Rs. 1,2301- U/S 234D of the Act which are not leviable on the facts of the appellant
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 made and sustained by the learned Commissioner of Income Tax (Appeals) along with interest levied be deleted and appeal of the appellant be allowed
Briefly stated, the facts of the case are that return of income was filed by the assessee on 05.12.2014 declaring an income of Rs. 3,99,140/-. A search was conducted on Locker No. 159, Corporation Bank, Green Park Extension, New Delhi in pursuance to warrant in the name of Shri Rakesh Jain and Smt. Renu Jain.
In the search, photocopy of purported Collaboration Agreement dated 10.07.2013 between Smt. Vijay Gupta and Smt. Suman Bala Aggarwal and the assessee was found. The assessee was summoned by the Investigation Wing and statement was recorded in which the assessee denied any payment of cash to Smt. Vijay Gupta. Similarly, when Smt. Vijay Gupta was examined, she also denied receipt of any alleged payment in cash.
A satisfaction note was recorded by the ACIT, Central Circle-16, New Delhi in the case of Shri Rakesh Jain being the “searched person”.
Satisfaction note reads as under:
Satisfaction note was also drawn by the Assessing Officer of the other person [the assessee ] on 24.09.2021 which reads as under:
Assessment proceedings were initiated against the assessee and assessment order was framed u/s 143(3) of the Act on 30.12.2021 by which the returned income of Rs. 3,99,140/- was assessed u/s 153C of the Act at Rs. 1,63,99,140/-.
Challenge is validity of this assessment order framed u/s 153C of the Act for the reason that it is invalid because the impugned A.Y is beyond the block of six A.Ys, as per provisions of the Act.
It is a settled proposition of law that as per provisions of section 153C of the Act, for taking action u/s 153C of the Act, date of search in the case of the other person would be date of receiving books of account or documents or assets allegedly belonging to the other person and seized in the course of search of the searched person. In other words, date of recording of the satisfaction in the case of the searched person qua the other person becomes date of search in the case of other person [the assessee in the present case].
This has been well settled by the Hon'ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437. Relevant findings read as under:
“9. It is evident on a plain interpretation of Section 153C( I) that the Parliamentary interit to enact the prov i was to cater not merely to the question of abatement but also with regard to the date from which the six ~ e period was to be reckoned, in respect of which the returns were to be filed by the third party (whose prerni are not searched and in respect of whom the specific provision under Section 153-C was enacted. The re en arguo/that the proviso [to Section 153(c)(l)] is confined in its application to the question of abatement.”
In light of the aforementioned ruling of the Hon'ble Supreme Court in the case of the assessee, date of search would be 22.02.2021 and the impugned A.Y 2014-15 is beyond the block of six A.Ys starting from A.Y 2015-16.
Considering the facts of the case in totality, in light of the decision of the Hon'ble Supreme Court [supra], we have no hesitation in quashing the impugned assessment order. Ground No. 1 is allowed.
Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on 22.01.2024.