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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI LALIET KUMAR & SHRI MADHUSUDAN SAWDIA
O R D E R PER LALIET KUMAR, J.M:
This appeal is filed by the Revenue feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals ) – 11, Hyderabad dated 29.03.2023, for the AY 2010- 11.
The grounds raised by the Revenue read as under :
“1.The Ld. CIT(Appeals) erred both in law and on the facts of the case in granting relief to the assessee.
2. The Ld. CIT(Appeals) erred in not following the decision of Hon'ble Supreme Court of India in the case of M/s. Super Malls Private Limited in Civil Appeal No. 2006-07 of 2020, wherein it has held that "in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person."
3. The Ld. CIT(Appeals) erred in not appreciating the fact that the Assessing Officer being one and the same for both the searched person and other person had recorded satisfaction in the file of the other person to the effect that the seized material belonged to the other person, therefore the provisions of section 153C of the Act have been complied with.
The Ld. CIT(Appeals) erred in holding that nothing incriminating has been recorded in the satisfaction note without considering the fact that there is no such requirement under the provisions of section 153C as applicable for the relevant period.”
The brief facts of the case are that a search and seizure operation u/s 132 of the Act was carried out in the case of M/s. MBS Jewellers Private Limited and its group cases on 11.03.2010. During the course of search, certain documents were found and seized relating to assessee. Being the search year, notice u/s 142(1) was issued to the assessee on 14.10.2011. In response, assessee filed return of income on 29.11.2011 declaring total income of Rs.13,57,345/-. Notice u/s 143(2) and 142(1) of the Act and questionnaire was issued to the assessee on 17.11.2011 calling for information. In response, assessee submitted information as called for. After verifying the information furnished by the assessee, Assessing Officer completed the assessment accepting the returned income and interalia made addition of Rs.18,00,000/- towards undisclosed receipts and Rs.2,84,57,496/- towards unexplained advances from customers. Finally, the Assessing Officer passed assessment order u/s 143(3) of the Act on 28.12.2011, assessing the total income of the assessee at Rs.20,98,14,841/-.
4. Feeling aggrieved with the order of Assessing Officer, assessee filed appeal before the LD.CIT(A), who granted relief to the assessee by deleting the addition made by the Assessing Officer. The relevant portion of the order of LD.CIT(A) at pages 29 and 30 of the order, is to the following effect :
“…..In the instant case, the assessment for AY 2010-11 was initiated based on the provisions of Section 153C and the AO has mentioned in the assessment order that notice u/s 142(1) was being issued for AY 2010- 11 as it was the "Search year". However, it is to be noted that vide aforesaid decision in the case of the appellant for AY 2009-10, it has been held that the proceedings u/s 153C are invalid in the case of the appellant and therefore any proceedings as à consequent to 153C proceedings become void ab initio. It is also relevant to note that the above decision of the undersigned in the case of the appellant for AY 2009-10 has been upheld by the Hon'ble jurisdictional ITAT vide Common Order dated 20.12.2021 in to 442/Hyd/2021 and the appeals of the revenue were dismissed. Further, no other criteria for initiation of assessment proceedings was mentioned by the Assessing Officer other than on account of proceedings u/s. 153C of the Act initiated in the earlier years from AY 2004-05 to AY 2009-10 as discussed in the preceding paragraphs.
In view of the above, the action of the AO in initiating assessment for AY 2010-11 is held to be invalid an the notices u/s 153C have not been issued in a proper manner and procedure, which thus renders the proceedings u/s 153C as invalid and therefore the consequent assessment is also liable to be quashed and accordingly the ground no.4 is allowed. 1 The other grounds of appeal are inconsequential for adjudication in view of the relief granted in ground no.4. To sum up the appeal is allowed.”
5. At the time of hearing, the ld.AR for the assessee filed petition for adjournment, which is to the following effect :
“The Assessee Appeals with in respect of VAMSHI MOHAN VALLABANENI has been posted hearing before Hon'ble "B" Bench on 10.12.2024. We would like to submit that, the relevant information in respect of the assessee for the assessment year 2010-11 has not been received from the assessee by our office till today. Hence the above assessce appeal may please be adjourned to any open date, which will be convenient to you, may please be given. Inconvenience caused in this regard is regretted.”
6. Per contra, CIT-DR submitted that identical applications were filed by the ld.AR for the assessee from 18.07.2023 and thereafter, raising identical grounds.
7. Today the following appeals are fixed for hearing before the bench in which the Ld.AR was representing the appellant/respondent : of the assessee 957/H/2019 Srinivas Shah Radraraju 324/H/2023 Vamsi Mohan Vallabhaneni 757/H/2024 R.R. Charitable Trust 758/H/2024 Sanghi Textiles Pvt. Ltd 826/H/2024 Ramgopal Varma Penumatasa 847/H/2024 Madhurai Tuticoran Expressways Limited 1143/H/2024 Madhurai Tuticoran Expressways Limited 1168/H/2024 Venkateswaram Avula (SM-B)
Unfortunately, in all the appeals, the assessee has filed cryptic, stereo-type adjournment applications without assigning any specific reason seeking adjournment.
The present appeal i.e., Revenue feeling aggrieved by the order of ld.CIT(A) and therefore, the said appeal was taken up for hearing and all other appeals were adjourned to the dates mentioned in each case. The ld.AR has sought time and insisted that the appeal of Revenue may be adjourned.
We have heard the argument on the application for adjournment and we do not find any merit in the request of the learned counsel for the assessee as no specific ground was given and we noticed that the assessee was continuously seeking adjournments as pointed out by the CIT-DR. Therefore, the
At this stage, it is relevant to mention here the observation of the Hon’ble Delhi High Court in the case of R.B.Seth Jessaram Hospital Vs. R.B. Seth Workman Union in W.P.C.No.1650/2024 wherein the hon’ble Delhi High Court vide paras 4 to 7 has held as under :
“4. In the case of Yashpal Jain (supra), the Hon’ble Supreme Court held thus: “31. Apart from the above reasons, the other vital reasons include theover-tolerant nature of the courts below while extending their olive branch to grant adjournment at the drop of the hat and thereby bringing the entire judicial process to a grinding halt. It is crucial to understand that the wheels of justice must not merely turn, they must turn without friction, without bringing it to a grinding halt due to unwarranted delay. It is for such reasons that the system itself is being ridiculed not only by the litigant public but also by the general public, thereby showing signs of constant fear of delay in the minds of public which might occur during the resolution of dispute, dissuading them from knocking at the doors ofjustice. All the stakeholders of the system have to be alive to this alarming situation and should thwart any attempt to pollute the stream of judicial process and same requires to be dealt with iron hands and curbed by nipping them at the bud, as otherwise the confidence of the public in the system would slowly be eroded. Be it the litigant public or Member of the Bar or anyone connected in the process of dispensation of justice, should not be allowed to dilute the judicial processes by delaying the said process by in any manner whatsoever. As held by this Court in T. Arivandandam v. T.V. Satyapal AIR (1977) 4 SCC 467 the answer to an irresponsible suit or litigation would be a vigilant judge. This analogy requires to be stretched in the instant case and to all the pending matters by necessarily holding that every stakeholder in the process of dispensation of justice is required to act swiftly, diligently, without giving scope for any delay in dispensation of justice. Thus, an onerous responsibility rests on the shoulders of the presiding officer of every court, who should be cautious and vigilant against such indolent acts and persons who attempt to thwart quick dispensation of justice. A response is expected from all parties involved, with a special emphasis on the presiding officer. The presiding officer must exercise due diligence to ensure that proceedings are conducted efficiently and without unnecessary delays.”
In the case of Ishwarlal Mali Rathod vs. Gopal & Ors., (2021) 12 SCC 612, the Hon’ble Supreme Court expressed concern thus:
“9. Today the judiciary and the justice delivery system is facing acute problem of delay which ultimately affects the right of the litigant to access to justice and the speedy trial. Arrears are mounting because of such delay and dilatory tactics and asking repeated adjournments by the advocates and mechanically and in routine manner granted by the courts. It cannot be disputed that due to delay in access to justice and not getting the timely justice it may shaken the trust and confidence of the litigants in the justice delivery system. Many a time, the task of adjournments is used to kill justice. Repeated adjournments break the back of the litigants. The courts are enjoined upon to perform their duties with the object of strengthening the confidence of common man in the institution entrusted with the administration of justice. Any effort which weakens the system and shake the faith of the common man in the justice dispensation has to be discouraged. Therefore the courts shall not grant the adjournments in routine manner and mechanically and shall not be a party to cause fordelay in dispensing the justice. The courts have to be diligent and take timely action in order to usher in efficient justice dispensation system and maintain faith in rule of law.
10. We are also aware that whenever the trial courts refused to grant unnecessary adjournments many a times they are accused of being strict and they may face displeasure of the Bar. However, the judicial officers shall not worry about that if his conscience is clear and the judicial officer has to bear in mind his duties to the litigants who are before the courts and who have come for justice and for whom the courts are meant and all efforts shall be made by the courts to provide timely justice to the litigants.
12. Time has now come to change the work culture and get out of the adjournment culture so that confidence and trust put by the litigants in the justice delivery system is not shaken and Rule of Law is maintained.”
In the case of Blue Heavens Garments vs. M/s. Kids Collections, 2010 SCC OnLine Del 1124, a coordinate bench of this Court held thus: “5. I consider that principles of natural justice do not require that a case should be adjourned time and again because defendant's counsel adopt tactics of not appearing in the case on first and second call and then sendsa proxy counsel so as to get the case postponed every time. Whenever a case is fixed for examination of witnesses, witnesses come to the court at 10 a.m. It is obligatory on counsel for the parties to make themselves available for examination/cross-examination of witnesses. The courts do not exist as an employment source for legal professionals alone. The existence of courts is justified only for dispute resolution between the parties in a reasonable time. Any effort by advocate of a party or by a party to drag the case and to harass the witnesses by not cross- examining and seeking adjournments again and again must be deprecated and curbed. It is not the prerogative of the advocate that he will cross-examine the witness when he has time. Counsel is supposed to manage his diary in such a manner that when there is a case for examination/cross-examination of the witnesses, he is there in the court for cross-examination, if not in the morning at 10 a.m. then around 11 a.m. when the miscellaneous matters are over. The court cannot keep on postponing evidence cases. If evidence cases are passed over time and again, ultimate result is that evidence cannot be recorded because of paucity of working time of that day. This result into harassment of the witnesses as they had to go back unexamined. The court management also gets grossly disturbed. Thus, in all evidence cases, counsel for the parties must be there for examination of witnesses latest by 11 a.m. after miscellaneous matters are over. It cannot be expected of the trial court to get the witnesses waiting from 10 a.m. till 2-2:30 p.m. and then start examination of witnesses.”
Falling back to the present case, as reflected from the impugned order, the industrial dispute in which the impugned order was passed is one of the oldest 20 cases pending in that court. Admittedly, the petitioner management is being represented by three authorized representatives before the Industrial Tribunal, out of whom one appeared before the Tribunal on 05.11.2024 in the first call and sought a pass-over, which was granted by the Tribunal. Thereafter in second call, two other authorized representatives joined the hearing through video conferencing and sought yet another pass-over on the ground that another matter of theirs was listed before this Court. The learned Tribunal found it not possible to grant another pass-over, so declined the request and after recording the chief examination of two witnesses, offered the witnesses to both representatives of the petitioner management for cross examination. Despite that, those two authorized representatives refused to cross examine the witnesses and sought adjournment. Observing that there was no ground to adjourn the matter, the learned Tribunal kept in mind the interest of justice and adjourned the matter subject to costs of Rs. 20,000/-, half of which was directed to be paid to the witnesses who were being sent back without being cross examined and the remaining half was to be deposited with DLSA.”
As held by the hon’ble High Court, there is no vested right for the appellant / assessee / petitioner to take the adjournment and as per the decision of Hon'ble High Court in the case of R.B.Seth Jessaram Hospital (supra), the adjournment petition filed is required to be dismissed, if it is motivated, cryptic and without assigning any valid reasons. In view of the above, respectfully, following the decision of Hon'ble High Court in the case of R.B. Seth Jessaram (supra), the petition for adjournment filed by the assessee is dismissed.
As we have dismissed the adjournment application, we directed the parties to make submissions in support of their cases.
Before us, CIT-DR Ms. Narmadha, on behalf of Revenue has drawn our attention to Para 4.1 to 4.8 of the assessment order, which is to the following effect :
“4.1 The major issue that has emanated during the course of search in this group of cases was the deal between M/s. Goldstone Group, represented by Dr. P.S. Prasad and M/s. MBS Group represented by Sri. Sukesh Gupta, relating to sale of land, at Sy. No. 172, Hydernagar (V), Balanagar (M), Ranga Reddy (District) and Sy. No. 78, Hafeezpet (V), Serilingampally (M), Ranga Reddy (District), 4.2 In this regard, an examination of the documents found and seized during the course of search is essential as they, indicate towards higher consideration paid. The important documents found and seized are: i. Pages 1 and 2 of Annexure A/PCG/RES/01 which is an unsigned agreement entered into between Dr. PS. Prasad representing M/s Goldstone group and Sri. Sukesh Gupta representing M/s MBB Impex Pvt Ltd., M/s. MBS Jewellers Pvt Ltd and M/s. Aashi Realtors. The salient features of the documents are as under a. Transfer of Ac. 98.10 Gts of land, at By. No. 172, Hydernagar (V). Kukatpally (M), Ranga Reddy (Dist.), by Goldstone group to M/s. MBS Group. b. Dr. P. S. Prasad confirming the receipt of Rs.230 crores as on 14.11.2009 c. Settlement of Sri. Vaddepalli Narsing Rao d. Rate per acre is fixed at Rs. 3.50 crore. 4.3 The next important document is pages 3 to 9 of Annexure A/PCG/RES/01 which is a memorandum of settlement and agreement executed on a stamp paper on 25.01.2010 and the same is signed by Dr. P.S. Prasad. As can be seen from this MOS, it is a continuation document which also speaks of the deal of the same land and reiterates same issues like: a. Obtaining NOC from Sri Vadepally Narsing Rao b. Obtaining NOC from Sri. V. Vamahi Mohan etc., 4.4 The next document which is relevant and is in continuation of the above two documents is page no. 104 of Annexure A/MBS/04. This is a manuscript in the handwriting of Dr. P.S. Prasad, written on 19.02.2010 which is an agreement arrived between Dr. P.S. Prasad and Sri Sukesh Gupta and signed by both the parties ie., Dr. P.S. Prasad and Sri Sukesh Gupta. a. Sri. Sukesh Gupta will give the shares due to Dr. Prasad of M/s. Goldstone Technologies Ltd, 1.c. Rs. 51.70 lakhs less received Rs. 9 lakhs. b. All the land at Sy. No, 172 ie. 98.10 acres will be transferred to Sri. Sukesh Gupta, in lieu of which Sri. Sukesh Gupta will give further amount of Rs. 50 Crores to Dr. P.S. Prasad. 4.5 The above transactions mentioned gets further creditability from Page No. 101 of Annexure A/MBS/04, which is a summary of the monies paid / settled by MBS group on behalf of M/s. Goldstone group wherein, apart from other payment details an amount of Rs. 18 Crores is shown as paid to Sri. V. Vamshi Mohan and an amount of Rs. 2,54,00,000/- is shown as paid to Sri. Raghu. These two persons being the persons named in the carlier referred document. Thus, this document confirms the payments. made to these two persons as narrated in the documents discussed in the preceding paras. 4.6 In light of the discussions above, it is evident that, Sri. V Vamshi Mohan who was originally sold the land was required to be compensated.
Before he gave the NOC, as was discussed in the documents referred above Accordingly, his name figured in the agreement entered between Dr. P.S. Gupta and Sri. Sukesh Gupta with regards to the Sy. No. 172. settlement sale of land at 4.7 Though, when specifically asked, Bri. V Vamshi Mohan has denied having received the said amount, but from the evidences found and in light of the sequence of events as narrated above it is quite probable that Sri V Vamshi Mohan, was paid the said amount as mentioned at page 101 of A/MBS/04, 4.8 As seen from the return of income, filed for A.Y. 2010-11, as the assessee has failed to disclose the receipt of the above amount of Rs.18,00,00,000/-, the same is assessed as his undisclosed income.”
It was submitted by the CIT-DR that in the present case, the search in the case of M/s. MBS Jewellers Private Limited was carried out on 11-03-2010, and during the course of search, some incriminating material was found which is belonging to the assessee and accordingly, the said document was used by the AO for making the addition in the hands of the assessee, while passing the assessment order under Section 143(3) of the Act.
The CIT-DR has submitted that as per provisions of section 142 read with section 143(3), it is essential for the AO to take into account all the documents / evidence collected by the AO, or came into possession of the AO, for the purpose of making the addition. It was contended that in the present case, the search action was initiated in the hands of M/s. MBS Jewellers Private Limited, and the information of the documents pertaining to the assessee were available with the AO at the time of passing of the order, and therefore, it was submitted that the AO was right in making the addition, and the order of the Assessing Officer was correct. As the LD.CIT(A) has relied upon the orders of LD.CIT(A), ITAT, with respect to the other search years which are falling under the search. The CIT-DR submitted that the order of ld.CIT(A) has to be set aside being contrary to law as the ld.CIT(A) has failed to take notice of the fact that the Assessing Officer has passed the order u/s 143(3) of the Act.
On the other hand, no submissions were made by the ld.AR for the assessee.
We have heard the rival submissions and perused the material available on record. Section 142 of the Act provides as under :
Inquiry before assessment.
(1) For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 115WD or section 139 or in whose case the time allowed under sub-section (1) of section 139 for furnishing the return has expired a notice requiring him, on a date to be therein specified,— (i) where such person has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or : Provided that where any notice has been served under this sub- section for the purposes of this clause after the end of the relevant assessment year commencing on or after the 1st day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section, (ii) to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require, or (iii) to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the Assessing Officer may require : Provided that— (a) the previous approval of the Joint Commissioner shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts; (b) the Assessing Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year. (2) For the purpose of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such inquiry as he considers necessary. (2A) If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Principal
Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require : Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard. (2B) The provisions of sub-section (2A) shall have effect notwithstanding that the accounts of the assessee have been audited under any other law for the time being in force or otherwise. (2C) Every report under sub-section (2A) shall be furnished by the assessee to the Assessing Officer within such period as may be specified by the Assessing Officer : Provided that the Assessing Officer may, suo motu, or on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub- section (2A) is received by the assessee. (2D) The expenses of, and incidental to, any audit under sub-section (2A) (including the remuneration of the accountant) shall be determined by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner (which determination shall be final) and paid by the assessee and in default of such payment, shall be recoverable from the assessee in the manner provided in Chapter XVII-D for the recovery of arrears of tax : Provided that where any direction for audit under sub-section (2A) is issued by the Assessing Officer on or after the 1st day of June, 2007, the expenses of, and incidental to, such audit (including the remuneration of the Accountant) shall be determined by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with such guidelines as may be prescribed and the expenses so determined shall be paid by the Central Government. (3) The assessee shall, except where the assessment is made under section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub-section (2) or any audit under sub-section (2A) and proposed to be utilised for the purposes of the assessment. (4) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.
Similarly, Section 143 of the Act provides as under :
Assessment. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; [***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; [(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80- IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub- section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:] 84[Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018;] (b) the tax 85[, interest and fee], if any, shall be computed on the basis of the total income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax 85[, interest and fee], if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax 86[, interest or fee]; (d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax 86[, interest or fee] is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. Explanation.—For the purposes of this sub-section,— (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). (1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section. (1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub-section (1A), the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March, 2012. (1C) Every notification issued under sub-section (1B), along with the scheme made under sub-section (1A), shall, as soon as may be after the notification is issued, be laid before each House of Parliament. 87[(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2): Provided that the provisions of this sub-section shall not apply to any return furnished for the assessment year commencing on or after the 1st day of April, 2017.] (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.] (3) 88[On the day specified in the notice issued under] sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Provided that in the case of a— (a) research association referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10;
(e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no order making an assessment of the total income or loss of such research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, shall be made by the Assessing Officer, without giving effect to the provisions of section 10, unless— (i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, by such research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, where in his view such contravention has taken place; and (ii) the approval granted to such research association or other association or fund or trust or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institution has been rescinded : Provided further that where the Assessing Officer is satisfied that the activities of the university, college or other institution referred to in clause (ii) and clause (iii) of sub-section (1) of section 35 are not being carried out in accordance with all or any of the conditions subject to which such university, college or other institution was approved, he may, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned university, college or other institution, recommend to the Central Government to withdraw the approval and that Government may by order, withdraw the approval and forward a copy of the order to the concerned university, college or other institution and the Assessing Officer: Provided also that notwithstanding anything contained in the first and the second provisos, no effect shall be given by the Assessing Officer to the provisions of clause (23C) of section 10 in the case of a trust or institution for a previous year, if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in such previous year, whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded. 89[(3A) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3) so as to impart greater efficiency, transparency and accountability by— (a) eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment with dynamic jurisdiction. (3B) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (3A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to assessment of total income or loss shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2020. (3C) Every notification issued under sub-section (3A) and sub-section (3B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.] (4) Where a regular assessment under sub-section (3) of this section or section 144 is made,— (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (5) [Omitted by the Finance Act, 1999, w.e.f. 1-6-1999.]
From the conjoint reading of sections 142 and 143 of the Act, it is amply clear that the AO is required to pass order in writing, making the admission of total income or loss of the assessee and thereby determines the amount total payable by the assessee, however, at the time of passing of the order, the evidences as produced by the assessee or such other evidence, as the AO may require or specified, or such other material, which he has gathered or came to his possession were required to be considered.
Undoubtedly, in the present case, the documents showing the payment of Rs. 18 crores were found at the time of search in the premises of M/s. MBS Jewellers Private Limited, and the very said document was used by the AO of the assessee for making the addition in the hands of the assessee. As mentioned by the Assessing Officer / CIT-DR that the assessment for the year under consideration is the search year and therefore, the rigors of Section 153C of the Act are not attracted. In our view, the additions are required to be made by the Assessing Officer within four corners of Section 143(3) of the Act. Furthermore, we noticed that AO in the present case has passed the order under Section 143(3) of the Act, being the search year, and not under Section 153C of the Act, there is a difference between the powers of the AO when the AO is passing the order under Section 143(3) and the order passed by the AO under Section 153C, read with Section 143(3) of the Act. For the purposes of Section 153C, there has to be some satisfaction recorded by the AO before using the information in respect of the orders.
In the present case, the ld.CIT(A) without applying his mind and without considering the fact that the assessment year under consideration is the search year, has deleted the addition on the wrong understanding that the requirement under section 153C of the Act are required to be fulfilled and for that purposes, the ld.CIT(A) has wrongly relied upon the order passed by the Tribunal for the assessment years which are covered by the search. We cannot countenance the same being contrary to Act. Therefore, in our view, the finding of ld.CIT(A) is without any basis and accordingly, we set aside the order of ld.CIT(A).
As we have annulled and set aside the order passed by the ld.CIT(A), we noticed that the ld.CIT(A) has not adjudicated the grounds raised by the assessee on merit and therefore, for the purposes of deciding the issues on merit, we deem it appropriate to remand back the matter to the file of LD.CIT(A) to decide the issue afresh on merit. Accordingly, the appeal of Revenue is allowed for statistical purposes.
In the result, the appeal of Revenue is allowed for statistical purposes.
Order pronounced in the Open Court on 10th December, 2024.