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Facts
The Revenue filed appeals against the common order of the Ld. CIT(A) who quashed the assessment orders passed under section 143(3) of the Income-tax Act, 1961. The Revenue alleged that the assessee had paid 'on-money' for the purchase of flats and made additions based on information from the Investigation Wing during a search related to M/s Neptune Group. The assessee contended that the assessment should have been done under section 153C of the Act, not 143(3).
Held
The Tribunal held that the assessment proceedings should have been initiated under section 153C of the Act, not section 143(3), as the information originated from a search and seizure action. The Ld. CIT(A) correctly quashed the assessment orders due to procedural infirmity, as the Assessing Officer failed to follow the mandatory procedure laid down under section 153C. The grounds related to merit were remanded to the Ld. CIT(A).
Key Issues
Whether the Assessing Officer erred in making additions under section 143(3) instead of following the procedure under section 153C of the Income-tax Act, 1961, when the information originated from search proceedings.
Sections Cited
143(3), 153C, 147, 148, 153A, 158BD, 132, 132(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
These appeals by the Revenue and cross These appeals by the Revenue and cross-objection objections by the assessee, are directed against are directed against a common order dated 21.02.2024 order dated 21.02.2024 passed by the Ld. Commissioner of Income passed by the Ld. Commissioner of Income-tax (Appeals) tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for Centre, Delhi [in short ‘the Ld. CIT(A)’] for Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment years 2014 2014-15 and 2015-16 respectively. The Ld. CIT(A) 16 respectively. The Ld. CIT(A) has passed a common order for both the assessment years has passed a common order for both the assessment years has passed a common order for both the assessment years therefore, both these appeals and cross therefore, both these appeals and cross-objections are adjudicated by way of this consolidated order for convenience. idated order for convenience.
The identical grounds have been raised in appeals of Revenue The identical grounds have been raised in appeals of Revenue The identical grounds have been raised in appeals of Revenue and cross objections of the assessee for AYs 2014 and cross objections of the assessee for AYs 2014-15 and 2015 15 and 2015-16. Therefore sake of brevity, the Therefore sake of brevity, the grounds raised by the Revenue and grounds raised by the Revenue and cross-objection raised raised by the assessee for assessment year 2014 for assessment year 2014-15 are only reproduced as under: reproduced as under:
Revenue’s Ground
Whether on facts and circumstances of this case, the Ld' CIT(A) Whether on facts and circumstances of this case, the Ld' CIT(A) Whether on facts and circumstances of this case, the Ld' CIT(A) has erred in allowing the appeal of the assessee by quashing the has erred in allowing the appeal of the assessee by quashing the has erred in allowing the appeal of the assessee by quashing the order passed u/s 143(3) by holding that, order passed u/s 143(3) by holding that, the procedure laid under the procedure laid under Chapter XIVB (section 153C) was to be followed instead of Chapter Chapter XIVB (section 153C) was to be followed instead of Chapter Chapter XIVB (section 153C) was to be followed instead of Chapter XIV(section 143(3))."? XIV(section 143(3))."? 2. Without prejudice to above, whether lapse in the adherence to the 2. Without prejudice to above, whether lapse in the adherence to the 2. Without prejudice to above, whether lapse in the adherence to the procedure can be held against the Revenue which ultimately results procedure can be held against the Revenue which ultimately results procedure can be held against the Revenue which ultimately results in non collection of rightful taxes. ? n collection of rightful taxes. ?
Jaj International 3 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024
Whether on facts and circumstances of this case, the Ld' CIT(A) 3. Whether on facts and circumstances of this case, the Ld' CIT(A) 3. Whether on facts and circumstances of this case, the Ld' CIT(A) has erred in allowing the appeal of the assessee without has erred in allowing the appeal of the assessee without has erred in allowing the appeal of the assessee without appreciating the fact that the assessee had contended the stamp appreciating the fact that the assessee had contended the stamp appreciating the fact that the assessee had contended the stamp duty value to be superfluous howev duty value to be superfluous however he had not contested the same er he had not contested the same by filing an appeal to the stamp duty adjudicator."? by filing an appeal to the stamp duty adjudicator."? 4. Whether on facts and circumstances of this case, the Ld' CIT(A) 4. Whether on facts and circumstances of this case, the Ld' CIT(A) 4. Whether on facts and circumstances of this case, the Ld' CIT(A) has erred in allowing the appeal of the assessee without has erred in allowing the appeal of the assessee without has erred in allowing the appeal of the assessee without appreciating the fact that difference between appreciating the fact that difference between the stamp duty value the stamp duty value and agreement value is similar to the amount of On money paid and agreement value is similar to the amount of On money paid and agreement value is similar to the amount of On money paid which Shri Nayan Bheda of Neptune Group has admitted on oath to which Shri Nayan Bheda of Neptune Group has admitted on oath to which Shri Nayan Bheda of Neptune Group has admitted on oath to have received from the assessee.""? have received from the assessee.""? 5. Whether on facts and circumstances of this case, the Ld' CIT(A) 5. Whether on facts and circumstances of this case, the Ld' CIT(A) 5. Whether on facts and circumstances of this case, the Ld' CIT(A) has erred in allowing the appeal of the assessee without red in allowing the appeal of the assessee without red in allowing the appeal of the assessee without appreciating the fact that the date on which On money of Rs. appreciating the fact that the date on which On money of Rs. appreciating the fact that the date on which On money of Rs. 5,43,04,954/- was received by the Neptune Group is same as the was received by the Neptune Group is same as the date of agreement of purchase of the property in question, which date of agreement of purchase of the property in question, which date of agreement of purchase of the property in question, which cannot be a coin cannot be a coincidence."? 6. Whether on facts and circumstances of this case, the Ld' CIT(A) 6. Whether on facts and circumstances of this case, the Ld' CIT(A) 6. Whether on facts and circumstances of this case, the Ld' CIT(A) has erred in allowing the appeal of the assessee by deleting the has erred in allowing the appeal of the assessee by deleting the has erred in allowing the appeal of the assessee by deleting the addition of Rs.5,43,04,954/ addition of Rs.5,43,04,954/- made as unexplained investment made as unexplained investment without appreciating the fact that Shri Nayan Bheda o without appreciating the fact that Shri Nayan Bheda of Neptune f Neptune Group has admitted on oath to have received On money from the Group has admitted on oath to have received On money from the Group has admitted on oath to have received On money from the assessee.? Cross-objection of the assessee objection of the assessee The learned Commissioner of Income Tax (Appeals)Committed a The learned Commissioner of Income Tax (Appeals)Committed a The learned Commissioner of Income Tax (Appeals)Committed a gross error of law and facts in not deleting the impugned unjustified gross error of law and facts in not deleting the impugned unjustified gross error of law and facts in not deleting the impugned unjustified and unsustainable addition of Rs.5,43,04,954/ inable addition of Rs.5,43,04,954/- on various grounds on various grounds raised
by the Appellant on merits of the matter. raised by the Appellant on merits of the matter.
3. Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income for the assessment year return of income for the assessment years 2014-15 and 2015 15 and 2015-16 on 30.09.2014 30.09.2014 and and 30.09.2015 30. 09.2015 declaring declaring total total income income at at Rs.1,95,22,333/- and Rs.4,08,54,660/ and Rs.4,08,54,660/- respectively. Subsequently, respectively. Subsequently, the returns of income filed by the assessee of income filed by the assessee were were selected for scrutiny assessment scrutiny assessment. In the assessment completed u/s143(3) of n the assessment completed u/s143(3) of the Income-tax Act, 1961 (in sh tax Act, 1961 (in short ‘the Act’), the Assessing Officer he Assessing Officer made addition of Rs.5,43,04,954/ made addition of Rs.5,43,04,954/- for assessment year 2014 for assessment year 2014-15 Jaj International 4 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 and Rs.8,44,60,000/ and Rs.8,44,60,000/- for assessment year 2015 for assessment year 2015-16, towards unexplained investment in purchase of flats. The Assessing Officer unexplained investment in purchase of flats. The Assessing Officer unexplained investment in purchase of flats. The Assessing Officer has referred to the finding in has referred to the finding in the case of M/s Neptune Group of the case of M/s Neptune Group of cases, wherein it is held that said group companies received wherein it is held that said group companies received ‘on wherein it is held that said group companies received money’ on sale of commercial premises to the assessee. The on sale of commercial premises to the assessee. The on sale of commercial premises to the assessee. The addition relevant to assessment year 2014 relevant to assessment year 2014-15 has been made on has been made on the basis of the information received the basis of the information received from the Investigation Wing Investigation Wing of Income-tax department tax department that the assessee had paid that the assessee had paid ‘on-money’ of Rs.5,43,04,954/- in cash to M/s Neptune Group towards purchase in cash to M/s Neptune Group towards purchase in cash to M/s Neptune Group towards purchase of commercial premises. Similarly, in assessment year 2015-16, the of commercial premises. Similarly, in assessment year 2015 of commercial premises. Similarly, in assessment year 2015 Investigation Wing informed that assessee paid ‘on-money’ of Investigation Wing informed that assessee paid Investigation Wing informed that assessee paid Rs.8,44,60,000/- to M/s Neptune Group towards purchase of to M/s Neptune Group towards purchase of to M/s Neptune Group towards purchase of commercial premises. The Assessing Officer has further referred mercial premises. The Assessing Officer has further referred mercial premises. The Assessing Officer has further referred that during the search proceedings in the case of M/s Neptune that during the search proceedings in the case of M/s Neptune that during the search proceedings in the case of M/s Neptune Group ‘Shri Nayan Bheda Shri Nayan Bheda’ of M/s Neptune Ventures & Developers of M/s Neptune Ventures & Developers Pvt. Ltd. in the sworn statement recorded u/s 132(4) of the Act has Pvt. Ltd. in the sworn statement recorded u/s 132(4) of the Act has Pvt. Ltd. in the sworn statement recorded u/s 132(4) of the Act has accepted that they had received epted that they had received ‘on-money’ (amount received in (amount received in cash) from the purchaser of the residential and commercial units. cash) from the purchaser of the residential and commercial units. cash) from the purchaser of the residential and commercial units.
On further appeal before er appeal before the Ld. CIT(A), the assessee contested the Ld. CIT(A), the assessee contested the action of the Assessing Officer the action of the Assessing Officer in completing the assessme completing the assessment u/s 143(3) of the Act. According to the assessee since, the u/s 143(3) of the Act. According to the assessee since, the u/s 143(3) of the Act. According to the assessee since, the Assessing Officer has made addition on the basis of information Assessing Officer has made addition on the basis of information Assessing Officer has made addition on the basis of information received during the search in the case of M/s Neptune Group cases, received during the search in the case of M/s Neptune Group cases received during the search in the case of M/s Neptune Group cases therefore, the assessment should have been therefore, the assessment should have been made invoking made invoking section Jaj International 5 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 153C of the Act. On merit, t . On merit, the assessee contested that M/s he assessee contested that M/s Neptune group of the cases opted for settlement before the Neptune group of the cases opted for settlement before the Neptune group of the cases opted for settlement before the Settlement Commission wherein, the additional income of Rs.12.3 Settlement Commission wherein, the additional income of Rs.12.3 Settlement Commission wherein, the additional income of Rs.12.3 crores for assessment year 2014 crores for assessment year 2014-15 and additional income of 15 and additional income of Rs.6.96 crores for assessment year 2015 res for assessment year 2015-16 has been offered and in 16 has been offered and in view of this addition made in the hands of the assessee is much view of this addition made in the hands of the assessee is view of this addition made in the hands of the assessee is higher than additional income in the hands of M/s Neptune higher than additional income in the hands of M/s Neptune higher than additional income in the hands of M/s Neptune Ventures & Developers Pvt. Ltd. Ventures & Developers Pvt. Ltd. held that in the case 5. The Ld. CIT(A) decided the legal issue and The Ld. CIT(A) decided the legal issue and held that in the of the assessee assessment proceedings should have been carried of the assessee assessment proceedings should have been carried of the assessee assessment proceedings should have been carried out invoking section 153C of the Act out invoking section 153C of the Act and thus quashed the and thus quashed the impugned assessment orders passed u/s 143(3) of the Act. The Ld. impugned assessment orders passed u/s 143(3) of the Act impugned assessment orders passed u/s 143(3) of the Act CIT(A) did not adjudicate the issue on the meri CIT(A) did not adjudicate the issue on the merit.
Aggrieved, the Revenue is before us by way of challenging the the Revenue is before us by way of challenging the the Revenue is before us by way of challenging the legal ground on which the Ld. CIT(A) adjudicated the appeal in legal ground on which the Ld. CIT(A) adjudicated the appeal in legal ground on which the Ld. CIT(A) adjudicated the appeal in favour of the assessee. The Revenue has also raised grounds favour of the assessee. The Revenue has also raised grounds favour of the assessee. The Revenue has also raised grounds challenging the merit of the addition whereas the assessee in cross- challenging the merit of the addition whereas the assessee in cr challenging the merit of the addition whereas the assessee in cr objection has raised the issue that the Ld. CIT(A) has not objection has raised the issue that the Ld. CIT(A) has not objection has raised the issue that the Ld. CIT(A) has not adjudicated on the merit of the addition. adjudicated on the merit of the addition.
On the grounds challenging the validity of the assessment u/s On the grounds challenging the validity of the assessment u/s On the grounds challenging the validity of the assessment u/s 143(3) of the Act by the assessee 143(3) of the Act by the assessee, the Ld. CIT(A) has adjudicated as the Ld. CIT(A) has adjudicated as under:
“4.3 Grounds of Appeal on Procedural Infirmity: nds of Appeal on Procedural Infirmity:
Jaj International 6 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 4.3.1 The Appellant has through the Grounds of Appeal has contended The Appellant has through the Grounds of Appeal has contended The Appellant has through the Grounds of Appeal has contended that the Assessment Orders passed for AY 2014 that the Assessment Orders passed for AY 2014-15 and AY 2015016 are AY 2015016 are without jurisdiction as the additions to Total Income, in respect of the without jurisdiction as the additions to Total Income, in respect of the without jurisdiction as the additions to Total Income, in respect of the alleged on-money payments made outside the books of account emanating money payments made outside the books of account emanating money payments made outside the books of account emanating from search proceedings, cannot be under taken in an order u/s 143(3) from search proceedings, cannot be under taken in an order u/s 143(3) from search proceedings, cannot be under taken in an order u/s 143(3) without resorting to the provisions of section 153C. Even otherwise, without resorting to the provisions of section 153C. Even otherwise, without resorting to the provisions of section 153C. Even otherwise, according to the appellant, the addition is not sustai according to the appellant, the addition is not sustainable as the same nable as the same was made without extending the mandatory requirement of cross was made without extending the mandatory requirement of cross was made without extending the mandatory requirement of cross- examination of the witness, being the person searched. It was further examination of the witness, being the person searched. It was further examination of the witness, being the person searched. It was further expressed that the information lacks evidentiary value and cannot result in expressed that the information lacks evidentiary value and cannot result in expressed that the information lacks evidentiary value and cannot result in addition and when made the sam addition and when made the same is arbitrary. All the three procedural e is arbitrary. All the three procedural aspects are dealt together in this order. aspects are dealt together in this order. The undisputed facts of the case that pertains to these additions to total The undisputed facts of the case that pertains to these additions to total The undisputed facts of the case that pertains to these additions to total income have emanated as a result of search action in the case of M/s. income have emanated as a result of search action in the case of M/s. income have emanated as a result of search action in the case of M/s. Neptune group of Builders, w Neptune group of Builders, where in it surfaced that the appellant had here in it surfaced that the appellant had allegedly paid an on allegedly paid an on-money of Rs. 5,43,04,954/- for AY 2014 for AY 2014-15 and Rs. 8,44,60,000 for AY 2015 8,44,60,000 for AY 2015-16 in respect of the acquisition of immovable 16 in respect of the acquisition of immovable properties from the said real properties from the said real-estate developer. Secondly, the informatio Secondly, the information was received directly from the officer of the n was received directly from the officer of the Investigation Wing and not from the jurisdictional Assessing Officer of the Investigation Wing and not from the jurisdictional Assessing Officer of the Investigation Wing and not from the jurisdictional Assessing Officer of the searched person. searched person. Thirdly, the opportunity to cross examine the witness was not accorded to Thirdly, the opportunity to cross examine the witness was not accorded to Thirdly, the opportunity to cross examine the witness was not accorded to the appellant. Fourthly, when a noting in Fourthly, when a noting in the absence of any corroborative evidence the absence of any corroborative evidence cannot possess evidentiary value, the assessing officer, according to the cannot possess evidentiary value, the assessing officer, according to the cannot possess evidentiary value, the assessing officer, according to the appellant does not possess jurisdiction to undertake any addition, merely appellant does not possess jurisdiction to undertake any addition, merely appellant does not possess jurisdiction to undertake any addition, merely on surmises, suspicions and conjectures. on surmises, suspicions and conjectures. 4.3.2 Assumption of inc 4.3.2 Assumption of incorrect jurisdiction without resorting to the orrect jurisdiction without resorting to the provisions of S. 153C: provisions of S. 153C: According to the appellant, the process of undertaking the corresponding According to the appellant, the process of undertaking the corresponding According to the appellant, the process of undertaking the corresponding these additions, irrespective of the genuineness of the averment made by these additions, irrespective of the genuineness of the averment made by these additions, irrespective of the genuineness of the averment made by the officer in the Investigation Wing, has the officer in the Investigation Wing, has to be undertaken resorting to the to be undertaken resorting to the provisions of section 153C after drawing necessary satisfaction by the AO provisions of section 153C after drawing necessary satisfaction by the AO provisions of section 153C after drawing necessary satisfaction by the AO of the searched person followed by the satisfaction drawn by the AO of the of the searched person followed by the satisfaction drawn by the AO of the of the searched person followed by the satisfaction drawn by the AO of the person other than the searched person, being the AO of the appellant and person other than the searched person, being the AO of the appellant and person other than the searched person, being the AO of the appellant and not u/s 143(3) of the Act. When this statutory procedure is not complied, not u/s 143(3) of the Act. When this statutory procedure is not complied, not u/s 143(3) of the Act. When this statutory procedure is not complied, the addition has to be treated as null and void. the addition has to be treated as null and void. The facts of the case in the light of the contention expressed by the The facts of the case in the light of the contention expressed by the The facts of the case in the light of the contention expressed by the appellant were carefully considered. It is not in dispute tha appellant were carefully considered. It is not in dispute tha appellant were carefully considered. It is not in dispute that the corresponding addition to total income is made based on the information corresponding addition to total income is made based on the information corresponding addition to total income is made based on the information directly received from the Investigation wing and not routed through the directly received from the Investigation wing and not routed through the directly received from the Investigation wing and not routed through the Assessing Officer of the person searched during the course of the relevant Assessing Officer of the person searched during the course of the relevant Assessing Officer of the person searched during the course of the relevant scrutiny proceedings and furth scrutiny proceedings and further that the information has emanated from a er that the information has emanated from a Jaj International 7 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 record or document seized at the ongoing scrutiny proceedings without record or document seized at the ongoing scrutiny proceedings without record or document seized at the ongoing scrutiny proceedings without drawing any satisfaction. drawing any satisfaction. 4.3.3 The procedure which has to be followed in case of search cases and The procedure which has to be followed in case of search cases and The procedure which has to be followed in case of search cases and information that emanates from the search a information that emanates from the search are to be undertaken as per the re to be undertaken as per the procedure laid down under CHAPTER XIVB of the Income Tax Act which is procedure laid down under CHAPTER XIVB of the Income Tax Act which is procedure laid down under CHAPTER XIVB of the Income Tax Act which is titled "Special procedure for assessment of search cases". Obviously, titled "Special procedure for assessment of search cases". titled "Special procedure for assessment of search cases". anything connected with search and the information that anything connected with search and the information that anything connected with search and the information that emanates from the seized reco emanates from the seized records have to undertake u/s 153C only rds have to undertake u/s 153C only and not under regular assessment. and not under regular assessment. Chapter XIV of the Income Tax Act deals with regular assessment and both Chapter XIV of the Income Tax Act deals with regular assessment and both Chapter XIV of the Income Tax Act deals with regular assessment and both the proceedings are independent, distinct and cannot be intertwined. the proceedings are independent, distinct and cannot be intertwined. the proceedings are independent, distinct and cannot be intertwined. Reliance is placed on the following decisio Reliance is placed on the following decisions: Manish Maheswari vs ACIT (2007) 159 Taxman 258 (SC) Manish Maheswari vs ACIT (2007) 159 Taxman 258 (SC) Manish Maheswari vs ACIT (2007) 159 Taxman 258 (SC) / [2007] 289 ITR 341 (SC) / 159 Taxman 258 (SC) [2007] 289 ITR 341 (SC) / 159 Taxman 258 (SC) [2007] 289 ITR 341 (SC) / 159 Taxman 258 (SC) - On analogous provision of sec 158BD On analogous provision of sec 158BD Delhi Tribunal in the case of Rajat Shubra Chatterji v. ACIT Delhi Tribunal in the case of Rajat Shubra Chatterji v. ACIT Delhi Tribunal in the case of Rajat Shubra Chatterji v. ACIT [ITA.2430/Del/2015, dt.20.05.2016] in para 7 [ITA.2430/Del/2015, dt.20.05.2016] in para 7 Amritsar Amritsar Tribunal in the case of ITO vs Arun Kumar Kapoor Tribunal in the case of ITO vs Arun Kumar Kapoor (2011) 140 TTJ (ASR) 249 (2011) 140 TTJ (ASR) 249 The 'B' Bench of Bangalore ITAT in the case of Srinivasa Rao The 'B' Bench of Bangalore ITAT in the case of Srinivasa Rao The 'B' Bench of Bangalore ITAT in the case of Srinivasa Rao Hoskote in ITA.1154 & 1155/Bang/2015 dated Hoskote in ITA.1154 & 1155/Bang/2015 dated 21.02.2018 Further, different Benches of the ITAT have held that section 153 Further, different Benches of the ITAT have held that section 153 Further, different Benches of the ITAT have held that section 153C begins with non-obstante clause and has an overriding effect on section 147/148. obstante clause and has an overriding effect on section 147/148. obstante clause and has an overriding effect on section 147/148. It has been held that as per the scheme of section It has been held that as per the scheme of section 153C, AO has no 153C, AO has no discretion or choice to invoke the provisions of section discretion or choice to invoke the provisions of section 148. In the case of Arun Kumar Kapur (Supra), i In the case of Arun Kumar Kapur (Supra), it has been held that t has been held that "On a perusal of section 153C, it would be clear that the provisions "On a perusal of section 153C, it would be clear that the provisions "On a perusal of section 153C, it would be clear that the provisions of this section are applicable, which supersedes the applicability of of this section are applicable, which supersedes the applicability of of this section are applicable, which supersedes the applicability of provisions of sections 147 and 148. In the instant case, the provisions of sections 147 and 148. In the instant case, the provisions of sections 147 and 148. In the instant case, the documents were seized during the se documents were seized during the search under section 132 and arch under section 132 and the same were sent to the Assessing Officer of the assessee and, the same were sent to the Assessing Officer of the assessee and, the same were sent to the Assessing Officer of the assessee and, thus, the Commissioner (Appeals) has correctly observed that only thus, the Commissioner (Appeals) has correctly observed that only thus, the Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the the provision in which any assessment could be made against the the provision in which any assessment could be made against the assessee was section 153C, read wi assessee was section 153C, read with section 153A. th section 153A. It was also apparent from the apparent from the record that the officer in the case of 'T' Ltd. had record that the officer in the case of 'T' Ltd. had mentioned in his letter that the necessary action may be taken as mentioned in his letter that the necessary action may be taken as mentioned in his letter that the necessary action may be taken as per law under section 153C/148. Hence, notice issued under per law under section 153C/148. Hence, notice issued under per law under section 153C/148. Hence, notice issued under section 148 and proceedings unde section 148 and proceedings under section 147 by the Assessing r section 147 by the Assessing Officer were illegal and void ab initio. In view of the provisions of Officer were illegal and void ab initio. In view of the provisions of Officer were illegal and void ab initio. In view of the provisions of section 153C, section 147/148 stands ousted. In the instant case, section 153C, section 147/148 stands ousted. In the instant case, section 153C, section 147/148 stands ousted. In the instant case, the procedure laid down under section 153C has not been followed the procedure laid down under section 153C has not been followed the procedure laid down under section 153C has not been followed by the Assessing Officer by the Assessing Officer and, therefore, assessment has become and, therefore, assessment has become invalid. The Commissioner (Appeals) was justified in following the invalid. The Commissioner (Appeals) was justified in following the invalid. The Commissioner (Appeals) was justified in following the Jaj International 8 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 ratio laid down by the Supreme court in the case of Manish ratio laid down by the Supreme court in the case of Manish ratio laid down by the Supreme court in the case of Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 wherein it has been held that wherein it has been held that if the procedure laid down in section if the procedure laid down in section 158BD is not followed, block assessment proceedings would be 158BD is not followed, block assessment proceedings would be 158BD is not followed, block assessment proceedings would be illegal. The Commissioner (Appeals) has correctly observed that the illegal. The Commissioner (Appeals) has correctly observed that the illegal. The Commissioner (Appeals) has correctly observed that the provisions of section 153C are exactly similar to the provisions of provisions of section 153C are exactly similar to the provisions of provisions of section 153C are exactly similar to the provisions of section 158BD in bloc section 158BD in block assessment proceedings. Thus, considering k assessment proceedings. Thus, considering the entire facts and the circumstances of the case, the the entire facts and the circumstances of the case, the the entire facts and the circumstances of the case, the Commissioner (Appeals) was fully justified in quashing the Commissioner (Appeals) was fully justified in quashing the Commissioner (Appeals) was fully justified in quashing the reassessment order." reassessment order." The above view was taken and reopening u/s 148 was quashed. The above view was taken and reopening u/s 148 was quashed. The above view was taken and reopening u/s 148 was quashed. Subsequently, th Subsequently, the said decision has been followed by different Benches of e said decision has been followed by different Benches of ITAT inter alia in the following cases: ITAT inter alia in the following cases: G G G Koteshwar Koteshwar Koteshwar Rao Rao Rao v v v DCIT DCIT DCIT [2015] [2015] [2015] 64taxmann.com159 64taxmann.com159 64taxmann.com159 (Vishakhapatnam Trib.) (Vishakhapatnam Trib.) Navrattan Kothari v ACIT [ITA No. 425/JP/2017, order dated Navrattan Kothari v ACIT [ITA No. 425/JP/2017, order dated Navrattan Kothari v ACIT [ITA No. 425/JP/2017, order dated 13.12.20171, ITAT, Jaipur 13.12.20171, ITAT, Jaipur Adarsh Agarwal v ITO [ITA No 777/ Del/2019; order dated Adarsh Agarwal v ITO [ITA No 777/ Del/2019; order dated Adarsh Agarwal v ITO [ITA No 777/ Del/2019; order dated 14.01.20201,ITAT, Delhi 14.01.20201,ITAT, Delhi Though these verdicts have been rendered in the context of section 147, Though these verdicts have been rendered in the context of section 147, Though these verdicts have been rendered in the context of section 147, they equitably apply to the process of regular assessment involving they equitably apply to the process of regular assessment involving they equitably apply to the process of regular assessment involving additions that emanates from seized additions that emanates from seized records at the time of search. records at the time of search. Therefore, the addition irrespective of its validity has to be undertaken Therefore, the addition irrespective of its validity has to be undertaken Therefore, the addition irrespective of its validity has to be undertaken only as procedure laid under CHAPTER XIVB and not under CHAPTER XIV only as procedure laid under CHAPTER XIVB and not under CHAPTER XIV only as procedure laid under CHAPTER XIVB and not under CHAPTER XIV of the Act. Having omitted to undertake the same legitimately u/s 153C, of the Act. Having omitted to undertake the same legitimately u/s 153C, of the Act. Having omitted to undertake the same legitimately u/s 153C, there is a serious flaw made in these assessment orders while making the serious flaw made in these assessment orders while making the serious flaw made in these assessment orders while making the said additions for AY 2014 said additions for AY 2014-15 and AY 2015-16. 4.3.4 Necessity to record satisfaction by the AO: 4.3.4 Necessity to record satisfaction by the AO: Another essential condition while making the addition is that the Another essential condition while making the addition is that the Another essential condition while making the addition is that the AO has to record his satisfacti AO has to record his satisfaction first. A careful reading of the provisions of on first. A careful reading of the provisions of section 153C will imply that recording of satisfaction is an indispensable section 153C will imply that recording of satisfaction is an indispensable section 153C will imply that recording of satisfaction is an indispensable procedure to be followed. For easier comprehension the contents of section procedure to be followed. For easier comprehension the contents of section procedure to be followed. For easier comprehension the contents of section 153C is reproduced below: 153C is reproduced below: Assessment of income of any oth Assessment of income of any other person. 153C. (1) Notwithstanding anything contained in section 139, section 147, 153C. (1) Notwithstanding anything contained in section 139, section 147, 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the section 148, section 149, section 151 and section 153, where the section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing (a) any money, bullion, jewellery or other valuable article or thing (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or or requisitioned, belongs to; or Jaj International 9 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 (b) any books of account or documents, seized or requisitioned, pertains or (b) any books of account or documents, seized or requisitioned, pertains or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books a person other than the person referred to in section 153A, then, the books a person other than the person referred to in section 153A, then, the books of account or documents or assets, of account or documents or assets, seized or requisitioned shall be handed requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person over to the Assessing Officer having jurisdiction over such other person over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and that Assessing Officer shall proceed against each such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reass and issue notice and assess or reassess the income of the other person in ess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is accordance with the provisions of section 153A, if, that Assessing Officer is accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or satisfied that the books of account or documents or assets assets seized or requisitioned have a have a bearing on the determination of the total income o determination of the total income of such other person for six assessment years immediately preceding the such other person for six assessment years immediately preceding the such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is assessment year relevant to the previous year in which search is assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or conducted or requisition is made and for the relevant assessment year or conducted or requisition is made and for the relevant assessment year or years referred to in sub years referred to in sub-section (1) of section 153A With regard to the aspect of making an addition without recording the With regard to the aspect of making an addition without recording the With regard to the aspect of making an addition without recording the satisfaction, the Hon'ble Supreme Court in the case of Manish Maheshwari satisfaction, the Hon'ble Supreme Court in the case of Manish Maheshwari satisfaction, the Hon'ble Supreme Court in the case of Manish Maheshwari (supra) has laid down a proposition that the Assessing Officer making the (supra) has laid down a proposition that the Assessing Officer making the (supra) has laid down a proposition that the Assessing Officer making the assessment of the searched person assessment of the searched person has to necessarily record in writing the has to necessarily record in writing the specific objective satisfaction which is mandatory to the effect that the specific objective satisfaction which is mandatory to the effect that the specific objective satisfaction which is mandatory to the effect that the undisclosed income found by him, on the basis of seized material, belongs undisclosed income found by him, on the basis of seized material, belongs undisclosed income found by him, on the basis of seized material, belongs to some person other than the searched person. Hon'ble Apex court to some person other than the searched person. Hon'ble Apex court to some person other than the searched person. Hon'ble Apex court further held that assumption of jurisdiction and framing of assessment by the held that assumption of jurisdiction and framing of assessment by the held that assumption of jurisdiction and framing of assessment by the Assessing Officer Assessing Officer without recording such satisfaction is void ab initio. without recording such satisfaction is void ab initio.”
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant materi dispute and perused the relevant material on record. As far as al on record. As far as provisions of section 153C of the Act is concerned, the action is provisions of section 153C of the Act is concerned, the action is provisions of section 153C of the Act is concerned, the action is required to be initiated in case of persons other than searched initiated in case of persons other than searched initiated in case of persons other than searched person when any asset belonging to the assessee is found in the person when any asset belonging to the assessee is found in the person when any asset belonging to the assessee is found in the search of the search search of the searched person or any books of accounts ooks of accounts or the documents pertaining to the other person or any information documents pertaining to the other person or any documents pertaining to the other person or any contained therein relating to the other person is found during the contained therein relating to the other person is found during the contained therein relating to the other person is found during the course of the search of the searched person. If above condition is course of the search of the searched person. If above condition is course of the search of the searched person. If above condition is satisfied then the Assessing Officer o satisfied then the Assessing Officer of the searched person is f the searched person is required to send assets seized belonging to the other person or assets seized belonging to the other person or assets seized belonging to the other person or the books of accounts or or the documents pertaining to the other person pertaining to the other person Jaj International 10 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 to the Assessing Officer of the other person after recording a to the Assessing Officer of the other person after recording a to the Assessing Officer of the other person after recording a satisfaction that books of accounts or documents of the assets satisfaction that books of accounts or documents of the assets satisfaction that books of accounts or documents of the assets belongs to or pertains to other person. Thereafter, the Assessing belongs to or pertains to other person. Thereafter, the Assessing belongs to or pertains to other person. Thereafter, the Assessing Officer of the other person Officer of the other person record a satisfaction that said book record a satisfaction that said books of accounts of the asset seized have a bearing on the determination of accounts of the asset seized have a bearing on the determination of accounts of the asset seized have a bearing on the determination of the total income of such other person. For ready reference section the total income of such other person. For ready reference section the total income of such other person. For ready reference section 153C of the Act is reproduced as under: 153C of the Act is reproduced as under:
“153C (1)Notwithstanding anything contained in section 139, section 147, (1)Notwithstanding anything contained in section 139, section 147, (1)Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the tion 148, section 149, section 151 and section 153, where the tion 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, Assessing Officer is satisfied that,— (a)any money, bullion, jewellery or other valuable article or thing, seized or any money, bullion, jewellery or other valuable article or thing, seized or any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs requisitioned, belongs to; or (b)any books of account or documents, seized or requisitioned, pertains or any books of account or documents, seized or requisitioned, pertains or any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, 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 of account or documents or assets, seized or requisitioned shall be handed of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person over to the Assessing Officer having jurisdiction over such other person over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and that Assessing Officer shall proceed against each such other person and that Assessing Officer shall proceed against each such other person and issue notice an and issue notice and assess or reassess the income of the other person in d assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is accordance with the provisions of section 153A, if, that Assessing Officer is accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or satisfied that the books of account or documents or assets seized or satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of t requisitioned have a bearing on the determination of the total income of he total income of such other person for six assessment years immediately preceding the such other person for six assessment years immediately preceding the such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is assessment year relevant to the previous year in which search is assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or conducted or requisition is made and for the relevant assessment year or conducted or requisition is made and for the relevant assessment year or years referred to in sub years referred to in sub-section (1) of section 153A : Provided that in case of such other person, the reference to the date of Provided that in case of such other person, the reference to the date of Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under initiation of the search under section 132 or making of requisition under initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub section 132A in the second proviso to sub-section (1) of section 153A shall section (1) of section 153A shall be construed as reference to the date of receiving the books of account or rued as reference to the date of receiving the books of account or rued as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer documents or assets seized or requisitioned by the Assessing Officer documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : having jurisdiction over such other person : Provided further that the Central Government may by rules30 made by it Provided further that the Central Government may by rules30 made by it Provided further that the Central Government may by rules30 made by it and published in the Official Gazette, specify the class or classes of cases and published in the Official Gazette, specify the class or classes of cases and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be in respect of such other person, in which the Assessing Officer shall not be in respect of such other person, in which the Assessing Officer shall not be required to issue notice for as required to issue notice for assessing or reassessing the total income for sessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant six assessment years immediately preceding the assessment year relevant six assessment years immediately preceding the assessment year relevant Jaj International 11 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 to the previous year in which search is conducted or requisition is made to the previous year in which search is conducted or requisition is made to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub and for the relevant assessment year or years as referred to in sub and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment (1) of section 153A except in cases where any assessment or reassessment (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned 2) Where books of account or documents or assets seized or requisitioned 2) Where books of account or documents or assets seized or requisitioned as referred to in sub as referred to in sub-section (1) has or have been received by the section (1) has or have been received by the Assessing Officer hav Assessing Officer having jurisdiction over such other person after the due ing jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to date for furnishing the return of income for the assessment year relevant to date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or the previous year in which search is conducted under section 132 or the previous year in which search is conducted under section 132 or requisition is made under section 132A requisition is made under section 132A and in respect of such assessment such assessment year- (a) no return of income has been furnished by such other person and no (a) no return of income has been furnished by such other person and no (a) no return of income has been furnished by such other person and no notice under sub notice under sub-section (1) of section 142 has been issued to him, or section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no (b) a return of income has been furnished by such other person but no (b) a return of income has been furnished by such other person but no notice under sub notice under sub-section (2) of section 143 has been served and limitation on (2) of section 143 has been served and limitation of serving the notice under sub of serving the notice under sub-section (2) of section 143 has expired, or section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets before the date of receiving the books of account or documents or assets before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over seized or requisitioned by the Assessing Officer having jurisdiction over seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and such other person, such Assessing Officer shall issue the notice and such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment assess or reassess total income of such other person of such assessment assess or reassess total income of such other person of such assessment year in the manner provided in section 1 year in the manner provided in section 153A.] [(3) Nothing contained in this section shallapply in relation to a search [(3) Nothing contained in this section shallapply in relation to a search [(3) Nothing contained in this section shallapply in relation to a search initiated under section 132 or books of account, other documents or any initiated under section 132 or books of account, other documents or any initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, assets requisitioned under section 132A on or after the 1st day of April, assets requisitioned under section 132A on or after the 1st day of April, 2021]” The Hon’ble Kerela High Court in the case of CIT vs Sh 8.1 The Hon’ble Kerela High Court in the case of The Hon’ble Kerela High Court in the case of Promy Kuriakose in of 2013 Promy Kuriakose in ITA No. 296 of 2013 also observed as under: also observed as under:
10.A comparative analysis of the provisions contained in 10.A comparative analysis of the provisions contained in sections 10.A comparative analysis of the provisions contained in 153A and 153C reveal that jurisdiction under reveal that jurisdiction under section 153C section 153C can be invoked by the Assessing Officer only when money, bullion, jewellery or invoked by the Assessing Officer only when money, bullion, jewellery or invoked by the Assessing Officer only when money, bullion, jewellery or other valuable article or thing or books of account or documents are other valuable article or thing or books of account or documents are seized or requisitioned and it is found that the seized or re seized or requisitioned and it is found that the seized or requisitioned seized or requisitioned and it is found that the seized or re articles belongs or belong to a person other than the person referred to belong to a person other than the person referred to in section 153A. In such a case, the Assessing Officer shall hand over . In such a case, the Assessing Officer shall hand over . In such a case, the Assessing Officer shall hand over Jaj International 12 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 the books of account or documents or assets seized or requisitioned to the the books of account or documents or assets seized or requisitioned to the the books of account or documents or assets seized or requisitioned to the Assessing Officer having jurisdiction over such other person. Thereupon, Assessing Officer having jurisdiction over such other person. Thereupon, Assessing Officer having jurisdiction over such other person. Thereupon, it is for the Assessing Officer having jurisdiction to proceed against such it is for the Assessing Officer having jurisdictio n to proceed against such other person by issuing notice and complete assessments or re other person by issuing notice and complete assessments or re- other person by issuing notice and complete assessments or re assessments as the case may be, in accordance with assessments as the case may be, in accordance with section 153A. assessments as the case may be, in accordance with Therefore, the fundamental jurisdictional requirement for invoking the Therefore, the fundamental jurisdictional require ment for invoking the powers under section 153C section 153C is the seizure or requisitioning of books of is the seizure or requisitioning of books of account or documents or assets which belong to a person other than the account or documents or assets which belong to a person other than the account or documents or assets which belong to a person other than the person referred to in section 153A. Otherwise, the Assessing Officer has person referred to in . Otherwise, the Assessing Officer has no jurisdiction at all to proceed under section 153C. Therefore, the no jurisdiction at all to proceed under . Therefore, the conclusion of the Tribunal that in the absence of search material, conclusion of the Tribunal that in the absence of search material, proceedings under section 153C cannot be initiated by the Assessing cannot be initiated by the Assessing Officer, which finding is consistent with the precedents referred to by the Officer, which finding is consistent with the precedents referred to by the Officer, which finding is consistent with the precedents referred to by the Tribunal itself, does not spell out any illegality. Tribunal itself, does not spel 8.2 In view of the above, In view of the above, for initiating of proceedings u/s 153C of for initiating of proceedings u/s 153C of are required to be the Act conditions specified in said the Act conditions specified in said provision are required to be fulfilled. As far as the instant case s far as the instant case is concerned, the initial condition the initial condition required to be satisfied i required to be satisfied is that whether any books of accounts or s that whether any books of accounts or documents seized in the case of M/s Neptune Group of cases documents seized in the case of M/s Neptune Group of cases documents seized in the case of M/s Neptune Group of cases pertains to assessee or any information contained therein relates to to assessee or any information contained therein relates to to assessee or any information contained therein relates to the assessee. Before us, the Ld. counsel for the assessee has only the assessee. Before us, the Ld. counsel for the assessee has only the assessee. Before us, the Ld. counsel for the assessee has only referred to the state referred to the statement of ‘Shri Nayan Bheda’ on the basis of on the basis of which the Assessing Officer has assessed which the Assessing Officer has assessed ‘on-money money’ There is no reference to any document seized in the case of M/s Neptune Group any document seized in the case of M/s Neptune Group any document seized in the case of M/s Neptune Group of cases which pertain of cases which pertained to the assessee or any infor to the assessee or any information contained therein is is relating to the assessee. This condition is his condition is sine- Jaj International 13 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 que non for invoking for invoking section 153C of the Act. Unless this condition . Unless this condition is satisfied, the Assessing Officer is not authorized to initiate action the Assessing Officer is not authorized to initiate action the Assessing Officer is not authorized to initiate action u/s 153C of the Act. In our opinion in view of the information by u/s 153C of the Act. In our opinion in view of the information by u/s 153C of the Act. In our opinion in view of the information by way of statement of Shri Nayan Bheda way of statement of Shri Nayan Bheda ,which is neither which is neither arising out of any documents or any books of accounts pertaining to the of any documents or any books of accounts pertaining to the of any documents or any books of accounts pertaining to the assessee and therefore, he has validly assessed the assessment u/s essee and therefore, he has validly assessed the assessment u/s essee and therefore, he has validly assessed the assessment u/s 143(3) of the Act. In the case of Arun Kumar Kapur( supra), relied In the case of Arun Kumar Kapur( supra), relied In the case of Arun Kumar Kapur( supra), relied upon by the ld CIT(A) , documents pertaining to the other person upon by the ld CIT(A) , documents pertaining to the other person upon by the ld CIT(A) , documents pertaining to the other person i.e. respective assessee was found in the search of the searched i.e. respective assessee was found in the search of the sea i.e. respective assessee was found in the search of the sea person, whereas in the instant case, no material pertaining to the person, whereas in the instant case, no material pertaining to the person, whereas in the instant case, no material pertaining to the assessee or information contained thereon relating to assessee has assessee or information contained thereon relating to assessee has assessee or information contained thereon relating to assessee has been found or seized. The relevant finding of the Tribunal in the been found or seized. The relevant finding of the Tribunal in the been found or seized. The relevant finding of the Tribunal in the case of Arun Kumar kapur(supra) is reproduced as under: case of Arun Kumar kapur(supra) is reproduced as u case of Arun Kumar kapur(supra) is reproduced as u 7.2 The undisputed facts are that a search was conducted 7.2 The undisputed facts are that a search was conducted 7.2 The undisputed facts are that a search was conducted under section 132 of the Act in the case of M/s.Today Homes under section 132 of the Act in the case of M/s.Today Homes under section 132 of the Act in the case of M/s.Today Homes & Infrastructure Pvt. Ltd. on 28-3-2006, during the course of & Infrastructure Pvt. Ltd. on 28 2006, during the course of which certain incriminating documents were allegedly seized. which certain incriminating documents were allegedly seized. which certain incriminating documents were allegedly seized. It is also a matter of record that the DCIT, Central Circle o a matter of record that the DCIT, Central Circle- 22, o a matter of record that the DCIT, Central Circle New Delhi intimated the AO of the assessee about seizure of New Delhi intimated the AO of the assessee about seizure of New Delhi intimated the AO of the assessee about seizure of certain documents pertaining to the assessee during search certain documents pertaining to the assessee during search certain documents pertaining to the assessee during search and enclosed copy of those documents requesting him to take and enclosed copy of those documents requesting him to take and enclosed copy of those documents requesting him to take appropriate action under section 153C/148 of the Act. It is appropriate action un der section 153C/148 of the Act. It is after that during the course of appellate proceedings before the after that during the course of appellate proceedings before the after that during the course of appellate proceedings before the CIT(A) the assessee took an additional ground of appeal to the CIT(A) the assessee took an additional ground of appeal to the CIT(A) the assessee took an additional ground of appeal to the effect that the reassessment proceedings initiated by the AO effect that the reassessment proceedings initiated by the AO effect that the reassessment proceedings initiated by the AO u/s.148 are illegal and void ab initio. In the instant case, the u/s.148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the A.O. should learned CIT(A) has correctly observed that the A.O. should learned CIT(A) has correctly observed that the A.O. should have issued notice under section 153C of the Act and should have issued notice under section 153C of the Act and should have issued notice under section 153C of the Act and should Jaj International 14 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 have framed the assessment under section 153C read with have framed the assessment under section 153C read with have framed the assessment under section 153C read with section 153 of the Act. Section 153C of the Act reads as under: section 153 of the Act. Section 153C of the Act reads as under:- "153C. Notwithstanding anything contained in section 139, "153C. Notwithstanding anything contained in section 139, "153C. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section section 147, section 148, section 149, section 151 and section section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, 153, where the Assessing Officer is satisfied that any money, 153, where the Assessing Officer is satisfied that any money, bullion or other valuable article or thing or books bullion or other valuable article or thing or books of account or bullion or other valuable article or thing or books documents seized or requisitioned belongs or belong to a documents seized or requisitioned belongs or belong to a documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then person other than the person referred to in section 153A, then person other than the person referred to in section 153A, then the books of account or documents or assets seized or the books of account or documents or assets seized or the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer requisitioned shall be handed over to the Assessing Officer requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing urisdiction over such other person and that Assessing urisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue Officer shall proceed against each such other person and issue Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person notice and assess or reassess income of such other person notice and assess or reassess income of such other person in accordance with the provisions of section such other person in accordance with the provisions of section such other person in accordance with the provisions of section 153A."
8. On a perusal of the above provisions, it would be clear that usal of the above provisions, it would be clear that usal of the above provisions, it would be clear that the provisions of section 153C of the Act were applicable, the provisions of section 153C of the Act were applicable, the provisions of section 153C of the Act were applicable, which supersedes the applicability of provisions of sections which supersedes the applicability of provisions of sections 147 and 148 of the Act. As we have already noted hereinabove 147 and 148 of the Act. As we have already noted hereinabove 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under that the documents wer e seized during the search under section 132 of the Act and the same was sent to the assessee's section 132 of the Act and the same was sent to the assessee's section 132 of the Act and the same was sent to the assessee's A.O. at Amritsar by the Officer at Delhi. In our view, the A.O. at Amritsar by the Officer at Delhi. In our view, the A.O. at Amritsar by the Officer at Delhi. In our view, the learned CIT(A) has correctly observed that only the provisions learned CIT(A) has correctly observed that only the provisions learned CIT(A) has correctly observed that only the provisions in which any assessment could be made against the assessee in which any assessment could be made against the assessee in the Income tax Act was section 153C read with section 153 in the Income tax Act was section 153C read with section 153 in the Income tax Act was section 153C read with section 153 of the Act. It is also apparent from the record that the Officer at of the Act. It is also apparent from the record that the Officer at of the Act. It is also apparent from the record that the Officer at Delhi has mentioned in his letter that the necessary action may Delhi has mentioned in his letter that the necessary action may Delhi has mentioned in his letter that the necessary action may be taken as per law under section 153C/148 of the Act. Hence, be taken as per law under section 153C/148 of the Act. Hence, notice issued under section 148 of the Act and proceedings notice issued under section 148 of the Act and proceedings notice issued under section 148 of the Act and proceedings under section 147 of the Act by the AO are illegal and void ab under section 147 of the Act by the AO are illegal and void ab under section 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of section 153C of the Act, initio. In view of the provisions of section 153C of the Act, initio. In view of the provisions of section 153C of the Act, section 147/148 stand ousted. In the instant case, t section 147/148 stand ousted. In the instant case, the section 147/148 stand ousted. In the instant case, t procedure laid down under section 153C has not been followed procedure laid down under section 153C has not been followed procedure laid down under section 153C has not been followed by the A.O. and, therefore, assessment has become invalid. We by the A.O. and, therefore, assessment has become invalid. We by the A.O. and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio also observe that the CIT(A) was justified in following the ratio also observe that the CIT(A) was justified in following the ratio Jaj International 15 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 laid down by the Hon'ble Supreme Court in the case of Manish laid down by the Hon'ble Supreme Court in the case of Manish laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari Vs. ACIT and another, reported in (2007) 289 ITR eshwari Vs. ACIT and another, reported in (2007) 289 ITR eshwari Vs. ACIT and another, reported in (2007) 289 ITR 341, wherein it has been held that if the procedure laid down 341, wherein it has been held that if the procedure laid down 341, wherein it has been held that if the procedure laid down in in in section section section 158BD 158BD 158BD is is is not not not followed, followed, followed, block block block assessment assessment assessment proceedings would be illegal. The CIT(A) has correctly observed proceedings would be illegal. The CIT(A) has correctly observed proceedings would be illegal. The CIT(A) has correctly observed that the provisions of section 153C are exactly similar to the that the provisions of section 153C are exactly similar to the provisions of section 158BD of the Act in block assessment provisions of section 158BD of the Act in block assessment provisions of section 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the proceedings. Thus, considering the entire facts and the proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was circumstances of the present case, we hold that the CIT(A) was circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do fully justified in quashing the reass essment order. We also do not find any merit in the submissions of the learned DR that not find any merit in the submissions of the learned DR that not find any merit in the submissions of the learned DR that during the course of search, it was found at premises of during the course of search, it was found at premises of during the course of search, it was found at premises of M/s.Today Homes & Infrastructure Pvt. Ltd. pertaining to M/s.Today Homes & Infrastructure Pvt. Ltd. pertaining to M/s.Today Homes & Infrastructure Pvt. Ltd. pertaining to M/s.P.R. Infrastructure Ltd. and not the assessee. In t M/s.P.R. Infrastructure Ltd. and not the assessee. In this M/s.P.R. Infrastructure Ltd. and not the assessee. In t regard, we may point out that the contention raised by the regard, we may point out that the contention raised by the regard, we may point out that the contention raised by the learned D.R. is factually incorrect and contrary to the learned D.R. is factually incorrect and contrary to the available records of seized documents specifically mentioned available records of seized documents specifically mentioned available records of seized documents specifically mentioned in the assessment order dated 30-12-2008. In view of the in the assessment order dated 30 2008. In view of the above factual discussion, we do not find any merit and above factual discu ssion, we do not find any merit and substance in the contention of the learned D.R. Therefore, we substance in the contention of the learned D.R. Therefore, we substance in the contention of the learned D.R. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos.1 to uphold the order of the CIT(A) and dismiss the ground Nos.1 to uphold the order of the CIT(A) and dismiss the ground Nos.1 to 4 of the appeal. 8.3 We may also note that the Hon’ble Delhi High Court in the We may also note that the Hon’ble Delhi High Court in the We may also note that the Hon’ble Delhi High Court in the case of CIT vs Harjiv Agg Harjiv Aggrawal in ITA 8/2004 held that statement held that statement u/s 132(4) of the Act u/s 132(4) of the Act is not in the nature of the not in the nature of the ‘incriminating material’ found during the course of the search. found during the course of the search. Further, neither Further, neither the Assessing officer of searched person has recorded any the Assessing officer of searched person has recorded any the Assessing officer of searched person has recorded any satisfaction for invoking section 153C of the Act nor handed over invoking section 153C of the Act nor handed over invoking section 153C of the Act nor handed over any material pertaining to the assessee to the Assessing officer of any material pertaining to the assessee to the Assessing officer of any material pertaining to the assessee to the Assessing officer of the assessee.
Jaj International 16 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 8.4 In view of the above discussion, we set aside the finding of the In view of the above discussion, we set aside the finding of the In view of the above discussion, we set aside the finding of the Ld. CIT(A) on the issue Ld. CIT(A) on the issue in dispute.
As far as groun As far as grounds raised by the assessee in cross ds raised by the assessee in cross-objection and the grounds raised by the Revenue appeal related to merit is and the grounds raised by the Revenue appeal related to merit is and the grounds raised by the Revenue appeal related to merit is concerned the Ld. CIT(A) as under: concerned the Ld. CIT(A) as under:
“4.4.2 On careful consideration of the facts, it is found that but for the 4.4.2 On careful consideration of the facts, it is found that but for the 4.4.2 On careful consideration of the facts, it is found that but for the statement of Shri Nayan Beda, no statement of Shri Nayan Beda, no corroborative evidence is brought on corroborative evidence is brought on record. The coincidence between the quantum of alleged on record. The coincidence between the quantum of alleged on record. The coincidence between the quantum of alleged on-money payment to that of the difference between actual consideration paid and FMV of the to that of the difference between actual consideration paid and FMV of the to that of the difference between actual consideration paid and FMV of the property for AY 2014 property for AY 2014-15 did not prove the theory for the AY 2015 15 did not prove the theory for the AY 2015-16. The AO did not establish the case successfully and satisfactorily that the AO did not establish the case successfully and satisfactorily that the AO did not establish the case successfully and satisfactorily that the assessee had actually paid the on assessee had actually paid the on-money. The decision rendered by the Hon'ble The decision rendered by the Hon'ble Supreme Court in the Supreme Court in the case of K.P. Varghese 131 ITR 597 is squarely applicable to the facts in the present Varghese 131 ITR 597 is squarely applicable to the facts in the present Varghese 131 ITR 597 is squarely applicable to the facts in the present case, which held that: case, which held that: "It is a well settled rule of law that the onus of establishing that the "It is a well settled rule of law that the onus of establishing that the "It is a well settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue. conditions of taxability are fulfilled is always on the Revenue. conditions of taxability are fulfilled is always on the Revenue. To throw the burden of showing that there is no understatement of the throw the burden of showing that there is no understatement of the throw the burden of showing that there is no understatement of the consideration, on the ass consideration, on the assessee would be to cast an almost essee would be to cast an almost impossible burden upon him to establish the negative, namely that impossible burden upon him to establish the negative, namely that impossible burden upon him to establish the negative, namely that he did not receive any consideration beyond that declared by him". he did not receive any consideration beyond that declared by him". he did not receive any consideration beyond that declared by him". The situation in the case of the appellant remains the same and the exact The situation in the case of the appellant remains the same and the exact The situation in the case of the appellant remains the same and the exact circumstances circumstances being showcased in the aforementioned case law are similar being showcased in the aforementioned case law are similar in nature and the action of the AO to make an addition, in the absence of in nature and the action of the AO to make an addition, in the absence of in nature and the action of the AO to make an addition, in the absence of corroborative evidence does not find favour. corroborative evidence does not find favour. Moreover, the assessment order framed, has been invalidated due to serious Moreover, the assessment order framed, has been invalidated due to serious Moreover, the assessment order framed, has been invalidated due to serious procedural discrepancy as well as not in accordance with the provisions of cedural discrepancy as well as not in accordance with the provisions of cedural discrepancy as well as not in accordance with the provisions of the Income Tax Act, 1961, as detailed in the earlier part of this order when the Income Tax Act, 1961, as detailed in the earlier part of this order when the Income Tax Act, 1961, as detailed in the earlier part of this order when the grounds of appeal of the appellant relate to the procedural lapses on the grounds of appeal of the appellant relate to the procedural lapses on the grounds of appeal of the appellant relate to the procedural lapses on part of the assessing officer has part of the assessing officer has been allowed, the necessity to adjudicate been allowed, the necessity to adjudicate thread-bare into the merits of the case stands unwarranted and hence bare into the merits of the case stands unwarranted and hence bare into the merits of the case stands unwarranted and hence refrained from even though the contentions of the AO are not supported by refrained from even though the contentions of the AO are not supported by refrained from even though the contentions of the AO are not supported by the material evidence on record as relied by him. the material evidence on record as relied by him.” 8.1 We find that the Ld. CIT(A) has specifically mentioned that e Ld. CIT(A) has specifically mentioned that e Ld. CIT(A) has specifically mentioned that he has refrained from adjudicating has refrained from adjudicating on merit and therefore, we feel it on merit and therefore, we feel it appropriate to restore this issue of deciding the addition on merit to appropriate to restore this issue of deciding the addition on merit to appropriate to restore this issue of deciding the addition on merit to Jaj International 17 & 2146 & CO No. 107 & 2147 & 2146 & CO No. 107 & 108/MUM/2024 the file of the Ld. CIT(A). In the result, the grounds relating to merit the file of the Ld. CIT(A). In the result, the grounds relating to mer the file of the Ld. CIT(A). In the result, the grounds relating to mer on cross-objection of the assessee and appeal of the Revenue are objection of the assessee and appeal of the Revenue are objection of the assessee and appeal of the Revenue are allowed for statistical purposes. allowed for statistical purposes.
In the result, the appeals of the Revenue are allowed partly for 10. In the result, the appeals of the Revenue are allowed partly for In the result, the appeals of the Revenue are allowed partly for statistical purposes whereas cross statistical purposes whereas cross-objections of the assessee are objections of the assessee are allowed for statistical purposes. tical purposes.
Order pronounced in the open Court on nounced in the open Court on 24/07/2024. /07/2024.