M/S. LAIRY DISTRIBUTORS PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

PER CHANDRA MOHAN GARG, J.M.

The above captioned appeals by different assessees have been heard together and directed against the separate orders of the ld. CIT(A) for A.Ys. 2006-07, 2007-08, 2007-08 and 2010-11 respectively. We may point out that these appeals are related to search and seizure operations carried out on Minda Group on 10.01.2012. The appellants are challenging the action of the AO initiating the proceedings and issuance of notice u/s 153C of the Income-tax Act, 1961 [‘the Act’ for short]. Except in appeal No. 7061/Del/2014 for A.Y 2010-11, the facts, legal objections/contentions of the assessee in other three appeals, are similar. In ITA No. 7061/Del/2014, the assessee has also challenged the validity of notice and assumption of jurisdiction u/s 153C of the Act. Therefore, these appeals have been clubbed together and being disposed of by this consolidated order for the sake of convenience and brevity.

ITA No. 6947/Del/2014 [A.Y 2006-07]

“1. The order of the learned Commissioner of Income Tax (A) is arbitrary, against law and facts on record. 2. The learned Commissioner of Income Tax (A) before dismissing the appeal has not given a reasonable opportunity of being heard which is against the principle of natural justice and is bad in law and hence liable to be quashed 3. The learned Commissioner of Income Tax (A) has failed to appreciate that the issuance of notices u/s 153C / 142(1)/143(2) of the Income Tax Act, 1961 as well as the proceedings conducted there under is bad in law and is against the facts and circumstances of the case.

fact that during the course of search no incriminating documents in respect of share capital have been found and the proceedings in this case has already been completed u/s 143(3) of the I.T. Act vide order dated 26.12.08 by Income Tax officer, Ward 1(4), Kolkata. 5. The learned Commissioner of Income Tax (A) while dismissing the appeal has failed to appreciate the fact that all the documentary evidence to prove the identity, genuineness and credit worthiness of the amount of share capital have been submitted during the course of assessment proceeding and the investor companies have filed all the details called for by the Assessing officer. 6. The learned Commissioner of Income Tax (A) has failed to appreciate the fact that the addition made by the Assessing officer has been made simply on the basis of suspicion, assumption, surmises, & conjectures and without bringing any cogent material on record. 7. The learned Commissioner of Income Tax (A) has failed to consider the fact that in the statement of Santosh Kumar Jain (quoted in the Assessment order) nothing has been stated with respect to the assessee company and the Assessing officer while passing the order has misinterpreted the statement of Shri Ashok Kumar Minda

statement or outcome of any enquiry relating to Mr. Santosh Kumar Jain to the knowledge of the assessee nor provided any opportunity to confront with the same

making an addition of Rs 5, 10,500/- on account of alleged commission.”

residential premises of Minda Group in A.Y 2012-13. All subsequent proceedings were conducted therein u/s 153A of the Act. The ld. Counsel further submitted that in the case of the present appellant, i.e. Lairy Distributors Pvt. Ltd, satisfaction note was recorded on 09.09.2013 in A.Y 2014-15, which is available at page 13 of assessee’s relevant paper book and notice u/s 153C of the Act was issued against the assessee on 09.09.2013 calling for the return of income and in response to the said notice, the assessee filed its return on02.11.2013 and assessment was framed u/s 143(3) r.w.s 153C of the Act on 13.3.2014. After narrating the aforenoted facts, the ld. AR submitted the first proposition that the notice issued against the assessee u/s 153C of the Act dated 09.09.2013 is bad in law and beyond the limitation period as prescribed by clause (b) of sub-section (1) of section 153A of the Act. The ld. AR vehemently placed his reliance on the judgments/orders of the Hon'ble Jurisdictional High Court at Delhi and co-ordinate Bench of ITAT Delhi and Guwahati which are listed below:

(i) CIT Vs. Jasjit Singh ITA No. 337/2015 [Del] (ii) CIT Vs. Jasjit Singh ITA No. 1436/2012 [Del] (iii) DSL Properties P. Ltd Vs. DCIT 60 SOT 88 [URO] (iv) R.L. Allied Inds. Vs. ITO 167 TTJ 20 [ITAT, Delhi] (v) Chain Roop Baid VS. ACIT 154 ITD 257 [Gau] (vi) SSP Aviation Ltd VS. DCIT 346 ITR 17 [Del]

paper book are documents not related to A.Y 2006-07. These are not incriminating and cannot be taken as basis for recording a valid satisfaction and initiating proceedings u/s 153C of the Act and for making valid and sustainable additions for A.Y 2006-07. The ld. AR has further drawn out attention towards judgment of Hon'ble Jurisdictional High Court in the case of SSP Aviation Ltd [supra] and the judgments/order of ITAT co-ordinate Benches and submitted that alleged incriminating material seized and stated to be pertaining to all six A.Ys did not establish any co-relation of documents with the A.Ys in question, under these circumstances, the general satisfaction, as recorded in the satisfaction note is not enough and in this situation, order passed by the AO u/s 143(3) r.w.s 153C of the Act should be quashed. To support this proposition, the ld. AR also placed reliance on the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Singhad Technical Education Society reported at 120 DTR 79 [Bom].

AR supported this proposition by the judgments/orders the Hon'ble Jurisdictional High Court and the Tribunal and our attention has been drawn to the ratio of the order of the Hon'ble Jurisdictional High Court in the case of Pepsico India Holding [Pvt] Ltd VS. ACIT reported in 370 ITR 295 [Del]. The ld. AR has furnished written submissions in which he has relied on the following propositions which read as under:

“1. With Respect to Ground Nos. 3 and 4 of Assessee’s Appeal, wherein legal grounds have been taken by assessee - appellant. A. First Proposition - Assessment bad in law and without jurisdiction.

(i) That at the outset, the assessee - appellant begs to submit that the issuance of notice under Section 153C is without jurisdiction as AY 2007-08 is beyond the purview for issuance of notice under section 153C.of the Act. That admittedly the satisfaction note for initiating proceedings under Section 153C was recorded on 29.11.2013 and notice under Section 153C was also issued on 29.11.2013. Thus, the seized paper was also handed over by the AO of the searched person (Minda Group) to the AO of such other person (assessee) on the same date i.e. 29.11.2013.

(ii) That on a perusal to provisions of section 153C of the Act and more specifically proviso to section 153C of the Act, it would become evident that the date of search is to be

substituted by the date of receiving the books of account or documents or assets seized for the purposes of framing of assessments under section 153C of the Act. Accordingly, the assessments can be framed for the preceding six years with reference to date 29.11.2013 i.e. AY 2008-09 to AY 2013-14. Whereas, the learned AO has framed assessments for AY 2006- 07 to 2011-12 under section 153C of the Act, which means. AY 2006-07 and 2007-08 are clearly without jurisdiction and beyond the purview of section 153C of the Act. In order to appreciate the aforesaid, the proviso to section 153C (as stood on the date of assessment) is extracted, hereunder, for ready reference: "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 section 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference 'to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:]."

(iii) The above proviso refers to second proviso to sub-section (1) of Section 153A. That Section 153A(1) and its first and second provisos read as under:- "153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other

documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall - (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years- immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate:."

From the above, it would become evident that as per clause (iv) (b) of subsection (1) of Section 153A and second proviso, the Assessing Officer can issue notice for assessment or

reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted. Further, as per proviso to Section 153C. the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the Assessing Officer having jurisdiction over such other person. Since in this case satisfaction is recorded on 29.11.2013 and notice under Section 153C is also issued on the same date, then only conclusion that can be drawn is that the Assessing Officer of such other person has taken over the possession of seized document on 29.11.2013. Accordingly, as per Section 153A(1), the Assessing Officer can issue the notice u/s 143(3) for the previous year in which search is conducted (i.e. for the purpose of Section 153C the document is handed over) and notice u/s 153C for six assessment years preceding such assessment years. Now, in this case, the previous year in which the document is handed over is 1st April, 2013 to 31st March, 2014 i.e. the assessment year would be AY 2014-15. Six preceding previous years and relevant assessment year would be as under:-

Previous Year AssessmentYear 1.4.2007 to 31.3.2008 2008-09 1.4.2008 to 31.3.2009 2009-10 2010-11 1.4.2009 to 31.3.2010 1.4.20J0 to 31.3.2011 2011-12 1.4.2011 to 31.3.2012 2012-13 1.4.2013 to 31.03.2014 2013-14

That, the same view has also been upheld by Hon’ble (v) jurisdictional High Court of Delhi in the case of CIT vs Jasjit Singh in ITA No. 337/2015 (emphasis supplied) and various benches of tribunal, a copy of same have been placed by assessee - appellant in its PB - III at S. Nos. 1 to 6, however, for the sake of brevity, the same are extracted below: Sr. Particulars Page Nos of No. PB- III. 1. Copy of judgment of Hon ’ble High Court 1-4 of Delhi in the case of CIT vs Sh. Jasjit Singh in ITA No. 337/2015. 2. Copy of order of Hon’ble IT AT Delhi in 5-16 the case of Sh. Jasjit Singh vs ACIT in ITA No. 1436/Del/2012. 3. Copy of order of Hon’ble ITA T Delhi in 17-27 the case of DSL Properties (P) Ltd. vs DCIT reported in 60 SOT 88 (URO). 4. Copy of order of Hon’ble ITAT Delhi in 28-32 the case of R.L. Allied Industries vs ITO reported in 167 TTJ 20. 5. Copy of order of Hon ’ble ITA T Gauhati 32A- the case of Chain Roop Paid vs ACIT reported in 154ITD 257. 32D 6. Copy of judgment of Hon ’ble High 33-45 Court of Delhi in the case of SSP Aviation Ltd. vs DCIT reported in 346 ITR 177.

Thus, it is most humbly submitted that the learned Assessing (vi) Officer has wrongly issued notice under Section 153C of the Act for AY 2007 - 08 which is clearly without jurisdiction beyond the purview of provisions of section 153C of the Act. Therefore, issuance of notice-under Section 153C issued by the learned AO

cannot be sustained in view of the aforesaid judgments, more specifically of Hon’ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015 and thus, the impugned notice being without jurisdiction needs to be quashed and consequently, the assessment completed in pursuance to such notice, deserved to be quashed, as well.

B. Second Proposition - Additions made are beyond the scope of assessment, as no addition is made on the basis of seized documents recorded in satisfaction note.

(i) That without prejudice to above, the assessee appellant would seek to submit that a bare perusal of satisfaction note recorded on 29.11.2013 (kindly see page C of this note), would make it amply clear that the documents recorded therein, pertain to AY 2011-12 and 2012-13. and no document- pertaining to impugned AY 2007-08 was found from the searched person and furthermore, assessment for impugned AY 2007-08 was already concluded under section 143(3) of the Act and that too after detailed verification and enquiries with respect to the issue of share capital and share premium (kindly see pgs A to B of this brief note) and as such, nothing was pending or nothing will abate, on the date of handing over of the documents by the AO of the searched person to the AO of the assessee - appellant and thus, the AO was not empowered in law to tinker with the completed assessments and further, to make additions beyond the seized/ incriminating material as referred in the satisfaction note.

(ii) That further, even for assessments for AY 2011-12 and 2012- 13 (kindly see pages E to F and G to J of this note), no additions have been made with reference to the documents so referred in the satisfaction note, which are copies of trial balances and balance sheets (found to be duly recorded in books of accounts) and as such, the additions made under proceedings') u/s 153C of the Act was not validly made, as no document pertaining to 2007-08 was found from the premises of searched person, nor the same was made a basis in the satisfaction note.

That in order to support the aforesaid, the assessee - appellant would seek to place its reliance on following judgments, wherein, it has been held that, “in respect of completed assessments, the AO is only empowered to make additions with respect to documents recorded in the satisfaction note and no further, addition can be made by AO’’ , the said judgments have been provided in paper book - III at S. Nos. 6, 8 to 15:

S.No Judgments Pg Nos. . of PB - 6. Copy of judgment of Hon’ble High 33-45 ' Court of Delhi in the case of SSP Aviation Ltd. vs DCIT reported in 346 8. Copy of order of Hon’ble ITAT Delhi in 53A-53J the case of M/s Brightways Housing & Land Developers Ltd. in ITA No. 5117, 5118/Del/2013. 9. Copy of order of Hon’ble ITAT Delhi in 53K-53U the case of M/s Devi Dayal Petro Chemicals Pvt. Ltd vs DCIT in ITA No. 5435, 5436/Del/2013. 10. Copy of order of Hon’ble ITAT Delhi in 54-65 the case of Natural Products Bio Tech Ltd. v DCIT reported in 153 ITD 58. 11. Copy of order of Hon’ble ITAT Panaji in 66-75 the case of Smt. Sunita Bai vs DCIT reported in 68 SOT 98 (URO). 12. Copy of order of Hon’ble ITAT Panaji in 76-85 the case of Smt. Lakshmi Singh vs DCIT reported in 68 SOT 26 (URO). 13. Copy of order of Hon’ble ITAT Delhi in 86-91 the case of DCIT vs Qualitron Commodities (P) Ltd. reported in 167 14. Copy of order of Hon’ble ITAT Delhi in 92-99 the case of Tanvir Collections (P) Ltd. vs ACIT reported in 168 TTJ 145. 15. Copy of order of Hon’ble ITAT Jaipur in 100-122 the case of Satyam Food Specialities (P) Ltd vs DCIT reported in 68 SOT 449.

iv) Thus, it is most humbly prayed that, since the assessments were already completed in the case of assessee - appellant and nothing was pending on the date of handing over of the documents and thus, additions made by learned AO is beyond the scope as envisaged under section 153C of the Act, and thus, the assessment needs be quashed and additions made therein needs to be deleted.

C. Third Proposition - Notice issued under section 153C of the Act and Assessment framed thereafter, is bad in law, as no document belonging to the assessee - appellant was found from the premises of searched person. (i) Here, it is most humbly submitted that, it is necessary that before the provisions of Section 153C of the Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e.. the searched person). In the impugned satisfaction note, there is nothing therein to indicate that the seized documents do not belong to the Minda Group and mere finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals or in whose name they pertain. Possession of documents and possession of photocopies of documents are two separate things. While the Minda Group may be the owner of the photocopies but it does not get established that the same belong to the assessee - appellant. Unless it is established that the documents in question, whether they be photocopies or

originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise and various courts have quashed the proceedings initiated under section 153C of the Act on this proposition, and the assessee - appellant also seeks to place reliance on judgments as filed in paper book - III and are extracted below for ready reference:

S.No Judgments Pg Nos. of . PB- III

In view of the foregoing discussion, it is most respectfully submitted that preconditions for issuance of notice Section 153C of the said Act have not been satisfied in the instant case, as no document belonging to the assessee - appellant

have been found from the premises of searched person i.e. Minda Group and consequently, the notice dated 29.11.2013 issued under Section 153C of the Act deserves to be quashed and accordingly, all proceedings pursuant thereto should also be quashed.

III Here it is submitted that once the jurisdictional issue has been argued and heard by the Hon’ble Tribunal, there is no requirement/necessity to decide the other issues on merits, as had also been held by Hon’ble 1TAT Special Bench Nagpur in the case of Rahul Kumar Bajaj vs ITO reported in 69 ITD 1. If however, the Hon’ble Bench is of the view, that the appeal of the assessee needs to be decided on merits, then, in that case an opportunity of hearing may be granted to the assessee - appellant and the case of the assessee - appellant be heard on merits.”

assessment has been raised or taken before the ITO, then this legal objection cannot be raised subsequently in the appellate proceedings. The ld. DR further placing reliance on the judgment of the Patna Hon'ble High Court in the case of Raja Bahadur Kamakhya Narain Singh [Patna] VS. UOI 51 ITR 596 submitted that while the assessee is not raising any ground, challenging the valid assumption of jurisdiction and not raising the ground directly during assessment or reassessment proceedings, then it has to be presumed that the assessee has waived his right to challenge the validity of assumption of jurisdiction for assessment or reassessment.

proviso to clause (b) to sub-section (1) of section 153A of the Act and the AO shall assess or reassess the total income in respect of each A.Y falling within six A.Ys from the date of search and seizure operations u/s 132 of the Act and also in the cases of other person wherein the books of account, other documents or any assets are requisitioned u/s 132A of the Act.

the Hon'ble High Court which directs a temporary employee to be regularised without assigning any reasons. The ld. CIT-DR placing reliance on the decision of the Hon'ble Supreme Court in the case of Mehboob Dawood Shaikh Vs. State of Maharashtra reported as 2 SCC 362 submitted that merely passing reference of court does not constitute a binding effect or precedent. The ld. CIT-DR, challenging the reliability of the documents i.e. satisfaction note dated 09.09.2013, available at assessee’s paper book page 13, submitted that this should be rejected as the same are not certified copies of the assessment record and no relief to the assessee can be granted by considering the same.

ratio and the same cannot be relied for granting any relief to any party.

should be considered in entirety and the same should be given logical meaning r.w.s 153C(2) and 124 of the Act.

ratio of Hon'ble High Court of Delhi in the case of Kabul Chawla [supra] cannot be extended to the assessee. Furthermore, the ld. CIT-DR submitted that it is factually wrong to say that there was no incriminating material found during the search and seizure operation upon the Minda Group which belongs to the assessee because documentary incriminating material found during search and seizure operation has direct linkage with the present appellants.

Chawla should be seen in the right context and perspective. The ld. CIT-DR has also challenged the applicability of proposition in favour of the assessee by the proposition laid down in the case of Kusum Gupta [supra] and submitted that no question of law has been framed in this case and therefore, the proposition does not have binding effect and thus benefit of this proposition cannot be extended to the assessee. The ld. CIT-DR submitted that in the case of DSL Properties [supra] the assessee suppressed the fact that these jurisdictional objections were not raised as provided and mandated as per section 124(3) of the Act and all subsequent judgments/orders of the Tribunal cannot be used as precedent for granting relief to the assessee as any interpretation or provision of the Act cannot be taken into consideration as ratio or proposition to be failure. The ld. CIT-DR also challenged that the proposition laid down by the Tribunal in the case of Satyam Food Specialities P. Ltd 68 SOT Del does not apply to the present case because the Tribunal granted relief on merits and not on the legal ground of validity of section 153C assessment.

i) the assessee cannot challenge the legal issue of assumption of valid jurisdiction by the AO for initiation of proceedings and issuance of notice u/s 153 of the Act a this legal objection was not raised during the assessment proceedings and the assessee cannot raise the same subsequently as per sec. 124 r.w. proviso to section 153C(1) of the Act.

ii) The contention of the assessee regarding limitation is not tenable because the proposition/dicta laid down by the Hon'ble Jurisdictional High Court in the case of Jasjit Singh [supra] and order of the ITAT, Delhi bench in the case of DSL Properties [supra] is not applicable to the present case.

iii) There was amply incriminating material against the assessee which has been mentioned in respective satisfaction notes. Therefore, the arguments of the assessee is not tenable that there was no material belonging to the assessee as per satisfaction note prepared by the AO of the other person i.e. the present assessees at the time of initiation of proceedings and issuance of notice u/s 153C of the Act.

iv) Ratio or proposition of the judgments/orders of the Hon'ble Supreme Court, various Hon'ble High Court and Tribunal should be seen in the right perspective. Mere prima facie remarks for

passing reference do not have binding effect and the same cannot be relied upon for granting relief to the assessee.

the written synopsis filed on 21.10.2015, three propositions were placed by the assessee and all the arguments on behalf of the assessee were based within the ambit of these three propositions viz. assessment is bad in law and without jurisdiction, (ii) additions are made beyond the scope of assessment as no addition is made on the basis of seized documents recorded in the satisfaction note and (iii) notice issued u/s 153C and assessment framed thereafter is bad in law as no documents belonging to the assessee appellant was found from the premises of the searched person i.e. Minda Group. The ld. Counsel for the assessee precisely and briefly pointed out that the submissions and contentions of the ld. DR and segregated the same in six broad arguments and placed written rebuttal of all six arguments which were also briefly reiterated before us while placing rejoinder on behalf of the assessee. The ld. Counsel vehemently pointed out that section 124 of the Act pertains to the jurisdiction of the AO vested clause(1) and (2) of section 124 of the Act and definitely objection to such jurisdiction can be raised in terms of section 124(2) of the Act and in terms of sub-section (3) of section 124 of the Act and right to raise such objection shall be forgone beyond these stages but these propositions are related to territorial jurisdiction of the assessee and challenge to the initiation of proceedings and assessment of

jurisdiction u/s 153A and 153C of the Act is quite different and this contention also gets strong support from the dicta laid down by the Hon'ble Gujarat High Court in the case of CIT Vs. Ramesh D. Patel reported 362 ITR 492. The ld. Counsel also submitted that the issue of inherent lack of jurisdiction can be raised at any stage and the contention of the ld. DR is baseless as in the present case, the ld. CIT(A) has not dealt with the said issues which were raised by the assessee vide its grounds of appeal and written submissions. To support this proposition, the ld. AR placed reliance on various judgments of Hon'ble High Courts including the Hon'ble Jurisdictional High Court in the case of Valvoline Cummins Ltd. Vs. DCIT reported in 307 ITR 103 [Del].

153C of the Act was also issued on the same date then the only conclusion can be drawn that the AO of the other person i.e. the assessee has taken over the possession of seized documents on 09.09.2013 and thus, as per section 153A(1) the AO can issue notice u/s 143(3) of the Act for previous year in which search was conducted and for the purpose of section 153C of the Act for the previous year in which document is handed over and notice u/s 153C of the Act for six A.Ys preceding such A.Ys. The ld. AR took us through paras 3 to 5 of the order of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Jasjit Singh [supra] and submitted that the Hon'ble High Court has categorically held that the question of pendency and abatement of proceedings of assessment or reassessment will be examined with reference to such dates which was in the present case 09.09.2013 and assessments framed for A.Y 2006-07 and 2007-08 beyond the purview of provisions of section 153C of the Act.

misconceived and misplaced reading of statutory provisions of statute and judicial precedents available as it is an agreed aspect. In Kabul Chawla [supra] after analyzing each and every judgment of various Hon'ble High Court on this issue and also the judgments as relied upon by the ld. CIT-DR, VIZ judgment of Delhi High Court in the case of CIT Vs. Chetam Dass Lachman Dass [supra] and Filatex India Ltd [supra] and Madugula Venu [supra] explicitly held that additions as a result of search has to be based on incriminating material only. The ld. AR has drawn our attention to paras 37 to 39 of the order of the Hon'ble High Court in the case of Kabul Chawla [supra] and submitted that addition made by the AO are beyond the scope of addition as no addition is made on the incriminating material found as a result of search and as is recorded in satisfaction note dated 09.09.2013.

precluded in considering any other material over and above the material/documents mentioned in the satisfaction note and further more, looking at the documents as well, nothing but mere photocopies of financial statements. The ld. AR placing reliance on the judgment of the Hon'ble High Court of Delhi in the case of Pepsico reported in 370 ITR 295 submitted that the said documents mentioned in the satisfaction note cannot be said to be belonging to the assessee because the photocopies of the balance sheet and financial statements cannot be held as documents belonging to the assessee and therefore initiation of proceedings u/s 153C and issuance of notice was bad in law and without jurisdiction and the same should be quashed.

bar in raising the same before this Tribunal unless and until the same are involved in fresh consideration of facts and therefore factually incorrect submissions of the ld. DR should be rejected.

negated or ignored while passing the orders and while adjudicating the applicability of dicta and precedents relied upon by the parties.

“4. Before parting with the matter, we would like to deal with the contention of Ld CIT-DR that extant plea of amalgamation as raised by assessee is hit by provisions of section 124(3) of the Act. In this regard, he vociferously argued and tried to persuade us that said provision clearly comes in the way of assessee to

raise the plea of assessment on non existing company without raising the same before AO at a later stage and heavily relied on Full Bench decision of Guwathi High Court in Smt. Sohani Devi Jain reported in 109 ITR 130. After much deliberation, we are unable to subscribe to the views of Ld CIT-DR for the simple reason that Hon'ble Jurisdictional Delhi High Court in the case of S.S.Ahluwalia in ITA 255/2002 (order dated 14/3/2014) reported in 2014 (88) CCH (158) Delhi H.C. in turn relying on another Delhi High court decision in case of K.K. Loomba reported in 241 ITR 152 has clearly held that section 124 has applicability to only territorial jurisdiction issue and not to other jurisdictional issues when there is inherent lack of jurisdiction. Further, we wish to commemorate the trite principle that an order which is nullity in the eyes of law, plea relating to the same can be raised at any stage even during collateral proceedings as explained in leading case law of Gujarat High court in case of P.V.Doshi 113 ITR Pg 22.

order was valid unless set aside in the manner known to law by laying a challenge, subject to law of limitation. The following portion of Hira Lal Patni Vs. Kali Nath, AIR 1962 SC 199 was quoted:

....The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seisin of the case because the subject matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the court entirely lacking in jurisdiction in respect of the subject matter of the suit or over the parties to it.

assessee but it is challenging the validity of assumption of jurisdiction for initiation of proceedings and issuance of notice u/s 153C of the Act and thus said legal objection of ld CIT-DR is rejected.

the ld. CIT-DR is misleading and factually incorrect and thus the same is dismissed. It would also be relevant to point out that in the case of Volvoline Cummins Ltd Vs. DCIT [supra] it was held that participation in the proceedings without raising legal objections does not automatically debar the assessee to raise the same during the appellate proceedings and hence we are inclined to hold that this legal contention of the assessee is baseless an unacceptable.

1.1 Vide its Ground No.3 & 4 the appellant, apart from terming the proceedings conducted to be bad in law, has pointed out that the additions made by the Assessing Officer are not referable to the incriminating material found during the search.

By grounds of appeal & especially thepropositions assessees in a way are trying to say that; the AO had no jurisdiction to assess the income which was (i) not referable to seized documents or search material; the AO had no jurisdiction to assess the income u/s 153C (ii) in respect of certain previous years to be considered in reference to the date of handing over of the documents. (ii) the AO had no jurisdiction to assess the income of certain years which had not abated i.e. which stood completed earlier. (iv) the AO had no jurisdiction to proceed u/s 153C because the Satisfaction Note prepared by him does not show denial of certain documents by the person from whom they were found.

1.2 At the outset, it is pointed out thatbefore the AO never ever there was any challenge to his jurisdiction. Even before the CIT(A) or the ITAT there is no specific ground challenging AO’s jurisdiction that the AYrs assessed were beyond the period of 6 AYrs contemplated in law or that these certain years had already abated. However, very strangely in the garb of propositions made out in the Written submissions these jurisdictional issues have been raised. Before the AO this

objection was not raised till the end of the assessment proceedings for the simple reason that there was a bar as provided u/s 124 to rake up this issue later when the assessee had already failed to challenge the jurisdiction within the statutory period prescribed under the Act.

2.1 As mentioned, by raising these ground basically the assessee has tried to challenge the jurisdiction of the AO which is not possible now because of the bar provided u/s 124(3) °f the Act as per which after the finalization of the assessment proceedings it is not open to the assess to challenge the jurisdiction of the AO to assess it. As held in Smt. Sohani Devi Jain v. ITO {109 ITR 130 FB Gau } section 124 does not deal merely with ‘territorial jurisdiction’. Lack of jurisdiction may be due to -jurisdiction over the place;

-in respect of person;

-it may be due to lack of authority under the law;

-it may be due to want of proper constitution of the tribunal or the court etc. The High Court clearly says that all types of jurisdictional issues get covered by the bar provided u/s 124 of the Act. Kindly appreciate that section 124(2) to (4) have been devised to outline a procedure ensuring that the assessee gets a right to be

assessed by the proper officer, safeguarding the Revenue at the same time by insisting that the objections to jurisdiction are possible only within 124(3) time. Such an objection cannot be raised for the first time in appeal as held in Bahadur Seth Teomal 36 ITR 9 SC.

2.1.2 Clearly, no challenge to AO’s jurisdiction and consequent participation means that the assessee acquiesced and when it was so it (assessee) is estopped now from raking up this issue later and in this connection reliance is placed on Sushil Kumar Jalan v. ITO ITA 34/Gau/20ll-order dated 03-02- 2012 where it was held that participation in the proceedings amounts to acquiescence and thereby the assessee is estopped from contending the issue further. Likewise, Patna High Court in Raja Bahadur Kamakhya Narain Singh 51 ITR 596 (Pat) held that non-raising of objection within the time, would amount to waiver of objection.

2.1.3 In summation, it is submitted that since the assessee failed to challenge the jurisdiction of the AO (on all the counts i.e. addition not being referable to incriminating material found in search including the point of abatement; and also the ground of AY involved being beyond 6 years) etc. within the prescribed period it is estopped from challenging it now.

B. Assessment bad in law & without jurisdiction. (AY was outside the block of 6 years):

2.1 Before adverting to the arguments and the decisions relied it is considered necessary to point out the relevant legal position as contained in proviso to section 1530(1) which is as under;

Provided that in case of such other person, the reference to the date of initiation of the search u/s 132 or making requisition u/s 132A in the second proviso to sub-section (1) of section 153A shall be construed as'reference to the date of receiving the books of account or document or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.

2.2 Before showing the absurdity of the argument advanced, it is considered necessary to point out that the law does not require as to the time limit within which the documents need to be handed over to the other AO. Going by the details of present appeals, it would be noticed that the search took place on 10- 01-2012 (PY 11-12) which was yet to end. The date of handing over of document is 29-11-2013 and the AR submits that this date has to be deemed to be the date of search. As per this date the 6 AYrs would inter alia include PY 12-13, n-12 & the 7th year would be in reference to date of handing over of the material. By AR’s argument it would mean that depending upon the date of hand over of the seized material the period of 6 years+7'h year may also include the AYrs which have not even begun or whose financial transactions have not yet taken place. How search can be there to cover transactions which take place only in future. The interpretation of the AR gives clearly the absurd results and hence has to be just discarded.

2.3 The only reasonable and irresistible interpretation is that the law, when it provides for substitution of hand over date as the date of search it only means that as on the date of hand over whatever assessment proceedings are pending they will abate. This is the interpretation which even the Delhi Tribunal has taken in the case of Apoorva Extrusion P. Ltd. (dated 09-10- 2014) where on the identical issue of number of assessments to be framed after recording of satisfaction was involved it was held that number of assessments to be framed u/s 153A or u/s 153C have to be same (6 years).

2.4 The aspect that the 6 previous assessment years and the 7th assessment year involved relevant to the date of search would become more clear from the bare reading of sub- section (2) of section 153C which clearly provides that in a case where the documents etc. are received by the AO after the due date for filing the return of the year in which search took place then even if no return is filed or no notice u/s 143(2) has been issued within the limitation, AO would still be required to assess the income of that period. This only shows that the years to be assessed u/s 153C have to be the same as they would be while proceeding u/s 153A in the case of the person who has been subjected to search or requisition issued u/s 132 or 132A of the Act. On this point qua the argument that impugned AY is beyond the prescribed period of 6 years as mentioned in section 153C it is pointed out that decisions/judgments relied are not applicable.

3.1 Delhi Tribunal decision in DSL Properties (P) Ltd. etc. have to be ignored as this decision runs contrary to co- ordinate ‘A’ Bench later decision in the case of Apoorva Extrusion P. Ltd. (dated 09-10-2014) where on the identical issue of number of assessments to be framed after recording of satisfaction was involved where it was held that number of assessments to be framed u/s 153A or u/s 153C have to be same. Further, this DSL decision is based upon additional grounds which were not even taken up before the lower authorities which again is contrary to law and also the Rule 11 of the AT Rules. Further, this decision entertains an

alternative contention not raised before the lower authorities which entertainment is contrary to the well laid down law as also explained by Kerala High Court in CK Gopinath { 260 ITR 213 Ker}. In short, for all these reasons the decision has to be held to be not applicable especially in view of the bar contained u/r II

3.2 Delhi High Court judgment in Jasjit Singh in ITA No.337/2015 etc. also are not available as precedents to be used because in this case (as seen from para 5 of the order) the question of law was neither framed nor answered as required u/s 260A of the Act. It is a settled proposition of law that for applying any judgment of the High Court it is necessary that it must formulate the question of law and then it should be answered either way. In support of this ready reference is drawn to the Supreme Court judgments in the case of Mehboob Dawood Sheikh v. State of Maharashtra (2004) 2 SCC 362 para 12 and Surinder Kumar v. State of Punjab v. {194 ITR 434 SC)} where it was held that a decision is available as precedent only if it decides a question of law. Since, in the above case no question of law was decided it cannot at all be relied upon even indirectly.

3.3 Same way, Delhi High Court judgment in SSP Aviation Ltd. {346 ITR 177} is also not available as a precedent for the simple reason that there main controversy before the High Court as pointed in para 7 of the judgment was

“..The main contention of the petitioner is that the Assessing Officer has illegally assumed jurisdiction u/s 153C read with Section 153A of the Act, that there was no undisclosed income to he assessed in the petitioner’s hands and therefore a writ of certiorari should he issued to quash the proceedings as null and void”.

Clearly, there was no controversy before the High Court as to which 6 years are to be considered while making assessment u/s 153C of the Act and hence this judgment cannot be relied or referred to while deciding the present appeal.

3.4 It is submitted that the decisions/judgments relied on the issue by the AR are not available inter alia for various reasons advanced while making oral arguments few of which for convenience sake, in short are also given in Annexure A-I to these Written submissions. C. Proposition that assessments can not be qua the additions not referable to search material:

D. Proposition that assessment u/s 153C cannot be on incomes not borne out of documents shown in the satisfaction Note.

E. The additions had already been made in earlier 143(3) assessment:

1.1 Qua the proposition/argument of the AR that ‘‘assessments cannot he qua the additions not referable to search material” Hon’ble Bench is requested to kindly appreciate that had the legislature intended to restrict the scope of assessment u/s 153A/153C only to the seized material it would have been indicated so as was done by it earlier u/s 158BC or u/s 158BD. One must appreciate that mandate of section 153A/153C is assessment of total income and when it is so the computation of total income cannot be restricted to detection of incriminating evidences alone.

Further, as a matter of rule & practice search u/s 132 is always preceded by a proper Satisfaction Note recording the facts, circumstances and making out of a prima facie case justifying the conduct of a search action. When it is so, non recovery of incriminating material cannot make the Satisfaction Note non- existent. Even if incriminating material is not found facts and circumstances narrated in the Satisfaction Note would still require examination/consideration later on in reference to various disclosures made by the Assessee in the return of income. Requirement of any incriminating material before an addition is made u/s 153A cannot be assumed when unambiguously it is not there and such an attempt will amount to reframing the legislation which is the exclusive domain of the legislature. It needs to be appreciated that when unambiguously requirement of addition always to be solely based on seized material is not there and to restrict addition only qua the seized documents/material will amount to

reframing the legislation & in this context useful reference can be made of

the State of Kerala v. Mathai Verghese {(1986) 4 SCC 746 (a) p.749} where it was observed that the Courts cannot reframe the legislation for the very good reasons that it has no power to legislate. In a taxing Act one has to look merely what is clearly said. (b) There is no room for any intendment. There is no equity about a tax. Nothing is to be read in, nothing is to be implied. { CIT v, Keshavlal AIR 1965 SC 866.p}. When intention to tax is clear, it cannot be defeated by a (c) mere defect in phraseology on the ground that the provision could have been more artistically drafted. {CWT, Bihar v. Kripashankar, AIR 1971 SC 2463, p.2466}.

1.2 The CIT(A) has very rightly held after placing reliance on jurisdictional High Court judgments in SSP Aviations Ltd. {346 ITR 177 Del.}; Chetan Das Lachhman Das {25 Taxman.com 227} & Anil Kumar Bhatia { 24 Taxmanncom 98} that there is no law that assessment has to be referable to the incriminating material found during the search. In the case of Anil Bhatia where, the Hon’ble High Court being very conscious that the job of the judiciary is to interpret the law and never to write it and since restricting the additions u/s 153A/153C only in reference to incriminating material would have amount to writing the law (an exclusive domain of the Legislature), refused to enter into

this debate which is very clear from the contents of para 23 which read as under;

“We are not concerned with a case where no incriminating material was found during the search conducted u/s 132 of the Act. We, therefore, express no opinion as to whether section 153A can he invoked even in such a situation.’’

In the light of the plain language of the law, view of the High Court was very clear as echoed in CIT v. Chetan Dass Lachhman Dass {25 Taxmann.com 227 } that there is no requirement to base assessment only on search material. In this context, where ( para 11) High Court held as under; “To repeat, there is no condition in this section that additions should he strictly made on the hasis of evidence found in the course of the search or other post-search material or information available with the AO which can he related to the evidence found.”

In view of the above it is prayed to reject plea of the assessees by holding that there is no requirement u/s 153A or u/s 153C to always necessarily refer to the search material while making additions.

1.3.1 In so far as reliance placed by the assessee on various decisions of the Tribunal and the High Court (especially including MGF Automobiles and Kabul Chawla) is concerned it is submitted that they are not available as precedents inter alia for various reasons given in short in Annexure A-l to these submissions and also in view of the jurisdictional High Court judgments and the arguments referred to by the CIT(A) as well as what is mentioned in the present submissions specifically in view of Delhi High Court judgments in SSP Aviations Ltd; Chetan Das Lachhman Das; Anila Bhatia; Madugula Venu { 29 Taxmann.Com 200 Del} & Filatex India Ltd { 49 Taxmann.Com 465 Del}. 3. Qua the proposition that “in the earlier innings the additions made on account share capital had been subjected to investigation or verification and hence the same ought not to have been visited u/s 153C of the Act”, it is submitted that search action had revealed that the share capital received by the assessee companies were in the nature of accommodation entries. The statements of the Entry Provider SK Tain and that of Ashok Minda as recorded during the course of search showed that the share capital received was not genuine.

This search material {search statements recorded u/s 132(4)} had to be necessarily taken note of when in the earlier inning the AO was not having this material at all. In view of the new search material it cannot be said to be a case of revisiting or reviewing the earlier concluded issues.

F. Proposition that no document belonging to the assessee was found in search: 1.1 The AR has argued that it is necessary that before invoking 153C the AO must be satisfied that the seized material does not belong to the person referred in section 153A and since in the impugned Satisfaction Note there is nothing therein to indicate that the seized documents do not belong to Minda Group proceedings have to be quashed. In that context, reliance has been placed on various decisions/judgments referred to in Annuexure A-X to the present submissions which as shown there (Annexure A-i) are not available as precedent.

1.2 The Hon’ble Bench is prayed to kindly consider that during the search at the premises of Minda Group in addition to the documents mentioned in the Satisfaction Note there were many other documents which were found which belonged to the parties under consideration in the present appeals. At a glance attention is invited to the following important documents which belonged to these assesses;

AR'3 Party-at D-6 to 11 Sec.59, Noida of Minda Group companies A-4/79- Copy of Sch. of Balance Sheet at 31-03-2011 & P&L A/c for 81 P & L A/c ended on 31-03-2011 of Lairy Distributors P. 82 B/Sheet on 31-03-2011 of Lairy Distributors P. Ltd. 83-85 Audit Report, 2003 of Lairy Distributors P. Ltd. 86-87 Auditors Report Lairy Distributors P. Ltd. 88-120 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. 121 Copy of IT Return for AY n-12-Lairy Distributors P. Ltd. A-5/36 Annexure Par-A and B of Sunny Infra Projects Ltd. 37'45 Form 3 CD -Sunny Infra Projects Ltd. 47 Balance Sheet & company’s General Profile of Sunny Infra 48-52 Sch. 1 to 2 of Balance Sheet on 31-03-2011 & P & L A/c of 53 Cash Flow Statement of Sunny Infra. Projects. Ltd. 54 P&L for 31-03-2011 of Sunny Infra. Projects. Ltd. 55 Balance Sheet on 31-03-2011 of Sunny Infra. Projects. Ltd. 56-58 Auditors Report to Sunny Infra. Projects. Ltd. dt. 26-08-2011 59 Computation Sheet of Balram Vinimay P. Ltd. AY 11-12 60 Balance Sheet abstract & Gen. profile of Balram Vinimay 61-63 B/Sheet on 31-03-2011 & P & L of Balram Vinimay P. Ltd. 64 P & L of Balram Vinimay P. Ltd. on 31-03-2011 65 Copy of B. Sheetr as at 31-03-2011 of Balram Vinimay P. 66 Income Computation of Balram Vinimay P. Ltd. AY 11-12 67-69 Ann. of Report of Balram Vinimay P. Ltd. Hans Raj Chug & 70-71 Auditors Report Balram Vinimay P. Ltd. 72-105 ITR for AY n-12 of Balram Vinimay P. Ltd- Date of 106 ITR of Balram Vinimay P. Ltd A-12/13 Trial Balance Sheet 1-4-n to 31-12-11 of Sunny Infro Projects 14 Trial Balance Sheet 1-4-n to 31-12-11 of Balram Vinimay P 16 Trial Balance Sheet 1-4-n to 31-12-n of Lairy Distributors P. A-13/86 Pay Voucher of Rs.25 lac-Sunny Infraprojects dt. 2-12- 87 Pay Voucher of Rs.655 lac-Sunny Infraprojects dt. 1-12- 88 Pay Voucher of Rs.5 lac-Sunny Infraprojects dt. 30-11- 89 Pay Voucher of Rs.3.23 Cr. -Sunny Infraprojects dt. 2-12- A-18/21 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Sunny 22 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Balram Vinmay 23 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Balram Vinmay 26 Trial Balance Sheet 1-4-2011 to 30-11-2011 of Lairy 64 Balance Sheet 1-4-2011 to 31-03-2008- Lairy Distributors 78 General Document of Balram Vinimay P. Ltd. 79 General Document of Investment of Lairy Distributors P.

1.1.3 Undisputedly, the assessee under consideration are belonging to Minda Group and they are the ones which had been used by the Minda Group to bring in its books its unaccounted income in the garb of share capital, loans etc. During the search statement of the Entry Operator S.K. Jain was recorded wherein he had admitted to have provided accommodation entries. The

statement of S.K. Jain is being enclosed as Annexure A-z to these submissions. That apart, statement of Shri Ashok Minda was also recorded on the date of search wherein he had admitted unaccounted income belonging to various entities of its Group totalling to 40 crores. For ready reference copy of this statement recorded on 11-01-2012 is being enclosed as Annexure A-3 to these submissions. Apart from the documents mentioned in the Satisfaction Note and also as mentioned in para 1.1.2 above, these statements were also of incriminating nature and were partly (if not fully) definitely belonging to the assesses under consideration when undisputedly these assessees too belong to main ‘Minda’ Group. Thus the argument of the AR that in these appeals that there was no search material so as to make addition or for that matter for proceeding u/s I53 C has to be just rejected.

2.1.1 Without prejudice to the above, it is pointed out that the Law does not require ‘recording of Satisfaction Note’ on AO’s part in writing etc. Merely, because AO has recorded a Note which is not even contemplated in law it cannot be a ground with the assessee to dispute its contents. If at all the assessee disputes the AO’s action it is for it to bring tangible material on record to rebut the satisfaction of the AO that the document does not belong to it. How AO can be made a witness in his own case. Without prejudice to the above, suffice would it be to say that since the assessee has failed to challenge the jurisdiction of the AO within prescribed period as prescribed u/s 124 of the Act on the ground that the documents did not belong to it, the argument or the ground has to be just rejected.

2.1.2 It be appreciated that bald & self serving claim in the Statement of Fact that documents do not belong to the assessees is not enough. In the absence of evidence backed denial of this material fact in the Statement of Fact (which was an exclusive burden of the assessee to be discharged) or in the Grounds of appeal, it has to be inferred that the documents do belong only to the assessees. If documents did not belong to the assessees evidences were required to be adduced to show as to whom these belonged (if not to them).

2.2 About the major reliance placed by the AR on the Delhi High Court judgment in Pepsico India Holdings relied by the assesses cannot be pressed into service as a binding ‘precedent’ because this judgment is firstly obtained by way of Writ and secondly this judgment is fundamentally based on facts, concessions. Further, as would be shown later in this para, this was obtained by misrepresentation.

2.2.1. It would be noticed that there in that case there were following three types of documents in all Copies of shares whose originals were with that company (i) (Pepsico). Unsigned Cheques (in the cheque books of Jaipuria Group); (ii) Photo copy of Agreement (between assessee Pepsico & one (iii) Pearl Drinks). 2.2.2 The High Court held that mere photo copies of share certificate so found cannot necessarily belong to it (Pepsico)

because it is the original document which can be said to be belonging to it and in that context the High Court as an illustration explained that a registered sale deed belongs to the purchaser. Likewise, in the context of the cheques it was held that unsigned cheque cannot be held to be belonging to a person just because its (Pepsico) name is mentioned as the payee. Same way copy of the Supply and Loan Agreement was found to belonging to the persons from whose possession it was found because original was with the petitioner Pepsico Holdings Ltd. With the above observations, the Writ petitions were allowed holding the ingredients of section 153C to not to have been satisfied.

2.2.3 From the reading of the High Court order coupled with the Writ petition so filed it becomes apparent that ‘the belongingness of these documents’ was not questioned by the petitioner (Pepsico) on the ground that they are just the photo copies or that the cheques were unsigned ones. High Court at its own (probably to do substantial justice & apparently following the principles of equity) instead of answering the five questions of law so posed allowed the petition holding none of the documents to be belonging to the petitioner. Thus, non answering of five questions posed that too when there were no averment about the nature of a document (like whether photo copy or whether a unsigned document/cheque etc. can be said to be belonging to assume jurisdiction) goes to show that the judgment is basically based on equity and fundamentally on facts and not on law especially when law does not restrict

invocation of jurisdiction only when original or signed document is found.

2.2.4 Further, in the Writ petitioners had approached the High Court saying “the petitioners have no other equally efficacious remedy hut to approach this Hon’ble Court vide the present petition”. However, for deciding the issues raised in Writ petition which centred around the issue of AO’s assumption of jurisdiction u/s 153C statutory alternative remedies were already available. Against AO’s action assessees could have easily resorted to alternative remedy as provided u/s 144A praying the Supervisory Officer (Range Head) to intervene and examine legality or correctness of AO’s actions and to issue necessary directions (including dropping of proceedings so initiated) to the AO which, as provided in law, would have been binding on him. What assessees got by way of Writ would have been obtained had petition before the Range Head u/s 144A been moved.

2.2.5 Without commenting much as to why the assessee did not make the High Court aware of the existing equally efficacious remedy in so far as Income Tax Act, 1961 is concerned it is important to note that in most of the income-tax cases equally effective alternative remedies are always provided about which High Court is at times not made aware. As mentioned, the relief which the Writ petitioner got by way of Writ Order would have otherwise been got if petition u/s 144A had been moved. At the

same time, it cannot be said that High Court was not aware about these equally effective alternative remedy provisions and when it is so one can infer that in the facts of the case, in its discretionary powers, High Court only granting concession allowed writs. If it is so, one can say that such an order is fundamentally based on concessions and hence it is inappropriate to apply that concession based decision in other suits or appeals and in this context useful reference can be made of Kulwant Kaur v. Gurdial Singh Mann {(2001) 4 SCC 262, 267 (para 2)} where it was laid down that concession based judgment cannot be termed as a binding precedent.

2.2.6 In this very context, it is apt to mention that the Supreme Court has repeatedly held that in Writ petitions relief cannot be granted to those who are not before the Court as parties to the Writ petitions. Ready reference can be made of Apex Court judgment in New Friends Cooperative House Building Society Ltd {(2004) 5 SCC 795'96(para 4)} where order of the High Court in granting relief to non-parties was found to be faulty and suffering from non-application of mind. If Writ Orders are allowed to be taken help of even by those who were not before the High Court it will lead to by-passing the dictum of the Supreme Court and conferring indirectly some powers quite similar to Writs on authorities which they do not in fact have.

2.3 Because of the above reasons, the judgments or the decisions in which Pepsico judgment in turn is relied upon, also become inapplicable.

G. Argument that in the facts and circumstances of the case proceedings had not abated:

About the argument of the Id. AR it is pointed out that fundamental principle qua any justice administration system which finds echo even in the Civil Procedure Code 1908 is that parallel proceedings have to be avoided. Multiplicity of proceedings or for that matter parallel proceedings do not serve any purpose excepting causing delays, chaos and uncertainties. If 2nd proviso to section 153AOO had not been there in the Act there would have been fear as well as doubts in the minds of the Tax papers as well as the Tax Administrators as to what would happen in a case/year where out of six years to be assessed u/s 153A consequent upon search in one or two years or in all the years assessment proceedings because of normal initiation of proceedings by issuing notice u/s 143(2) or because of reopening u/s 147 etc. are already pending before the Assessing Officer. In the absence of the 2nd proviso there would have been fear in the minds of the assessees as well as the Assessing Officers of framing 2 assessment orders for certain years one under normal provisions u/s 143(3)/147 etc. and again u/s 153A of the Act. Such an exercise besides brining chaos would have resulted in sheer wastage of precious time, energy and resources. To allay these fears qua the possibility of multiple proceedings 2" proviso has been inserted providing for automatic abatement of

assessments proceedings in respect of certain years which are pending but otherwise fall within the block of 6 years which get covered for assessment u/s 153A of the Act.

the issue of abatement only to the finding of incriminating material in the search which is not even indicated in the law as contained u/s 153A or u/s 153C. Tribunal Benches while deciding the cases have unfortunately failed to appreciate that legislative intent as getting deciphered from the language of section 153A is abatement of the pending proceedings just to avoid multiple proceedings and nothing more which even finds support from the Delhi High Court judgment dated 07-08-2012 in the case of Anil Bhatia where it held that “u/s 153A AO is empowered to assess or reassess the total income of 6 assessment years in separate assessment orders which means there can he only one assessment order i.r.o each of 6 assessment years in which hoth disclosed and undisclosed income would he brought to tax.” 4 Very clearly interpretation given by the Tribunal is not in conformity with the High Court judgment in Anil Bhatia case. Tribunal Benches have not appreciated that even u/s 147 whose scope is still narrower the Law, as repeatedly explained even by the Supreme Court, also provides for the assessment of income not even indicated in the reasons recorded to re-open.

In view of the above Revenue prays to adjudicate the present appeal in view of the specific facts and submissions as brought out in the present submission.”

“I. Before adverting to the judgments/decisions relied by the AR, Hon’ble is prayed to kindly note that

-- a decision is available as a precedent only if it decides question of law: as held in (i) Mehboob Dawood Sheikh v. State of Maharashtra{ (2004) 2 SCC 362 para 12} (ii) Surinder Kumar v. State of Punjab v. {194 ITR 434 SC)}. --(i) Only ratio decidendi is binding; --(ii) Observations (obiter dicta) have no binding force: as held in (i) Rekha Mukerjee v. Ashish K. Das (2005) 3 SCC 427; 440-47 (para 29); (ii) Orient Paper and Inds. Ltd. v. State if Irussa AIR 1991 SC 672}. (iii) UOI Vs. Bhanwanti Devi (1996) 6 SCC 44 para 9; (iv) Divisional Controller, KSRTC v. Mahadeva Shetty (2003) 7 SCC 197, 206 (para 23);

--decision applicable to facts of the case is not to be treated as a precedent: as held in

(i) National Ins. Co. Ltd. v. Swarna Singh (2004) 3 SCC 297.

--observation or simply what was done in a given case, without laying down the law cannot be read as a precedent, as held in Common Cause v. Uol (2004) 5 SCC 222, 223 (para 6)}. --Judgment to be applied should not be per incuriam: as held in Mukesh K. Tripathi v. Sr. DM LIC (2004) 8 SCC 387 396 (para 23). --Judgment to be applied should not be ‘sub silentio’. as held in State of UP Synthetics & Chemicals (1991) 4 SCC 139 SC; (i) Amrit Das v. State of Bihar (2000) 5 SCC 488 para 20. (ii)

II The decisions being relied upon by the AR as being discussed below are the ones which were obtained by suppressing the vital fact that before the AO there was no challenge to his jurisdiction on the grounds in these case (i) that there was no incriminating material or (ii) that years in which assessment were framed were outside the purview of 6 years contemplated u/s 153C or (iii) that there was no document found which belonged to them so as to invoke 153C.

Since the jurisdiction of the AO hovering around the above aspects was not challenged within the time prescribed u/s 124 it was not permissible to raise these issues later before the CIIT(A)/ITAT/HC. (ii) Tribunal decisions cannot be used as precedent because they run contrary to Tribunal’s own decision in Apoorva Extrusions P. Ltd. (on whether assesstt was hey and 6 years mentioned u/s 153C etc.) and also contrary to what was held by the jurisdictional High Court in (i)SSP Aviations Ltd; (ii) Chetan Das Lachhman Das; (iii) Madugula Venu; (iv) Filatex India Ltd; (v) Anila Bhatia. (ii) SSP Aviation Ltd. (346 ITR 177 Delhi High Court). Para 17 of the order relied by the AR “ ..Assessing officer having jurisdiction over the other person to follow the procedure prescribed hy section 153A in an attempt to ensure that the income reflected hy the document has been accounted for hy such other person. If he is so satisfied after obtaining the returns from such other person for the 6 assessment years, the proceedings will have to be closed.” are clearly obiter and this would become clear from (i) para 15 where High Court clearly held that “...there is no requirement in Section 153C(i) that the Assessing Officer should also be satisfied that such valuable articles or books of accounts or documents belonging to the other person must be shown to conclusively reflect or disclose any undisclosed income,

and (ii) para 7 “..The main contention of the petitioner is that the Assessing Officer has illegally assumed jurisdiction u/s 153C read with Section 153A of the Act, that there was no undisclosed income to the assessed in the petitioner’s hands and therefore a writ of certiorari should he issued to quash the proceedings as null and void”.

(iii) If the High Court wanted to hold so (as contended by the AR), the proceedings/assessment for the years for which there was no seized material as referred in Satisfaction Note at all would have been quashed.

(iv) There was no controversy before the High Court as to which 6 years are to be considered while making assessment u/s 153C of the Act and hence judgment cannot be relied or referred to while deciding the present appeal.

Important fact to be taken note of jurisdiction of is that the AO to go ahead with the assessment was questioned because of the absence of incriminating material. Further in the Satisfaction note drawn by the AO (i) Documents referred were only pertaining to AY 07-08 & 08- 09 (ii) Satisfaction Note did not show any denial qua documents on the part of the party subjected to 132.

(iii) Satisfaction Note does not show any satisfaction recorded in the case of party subjected to 132. (iii) Kurele Paper Mils P. Ltd. (Delhi High Courtorder dated 06-07-2015) (iv) Jasjit Singh (Delhi High Court in ITA No.337/2015) (v) GRG Steel P. Ltd. (Delhi High Court order dated 04-08-2013) (vi) Vrindavan Farms P. Ltd. (Delhi High Court order 12-08-2015) These are not applicable as in these cases neither question of law was formulated nor answered and for this reliance is placed on (i) K.L. Manhas { W.P.(c) No. 4079/2013} in para 9 holding that mere prima facie observation of the Court, not dealing with the issue on merits, does not constitute a binding precedent.

(ii) Mehboob Dawood Sheikh v. State of Maharashtra (2004) 2 SCC 362 para 12 (iii) Satwant Singh v. State of Punjab v. {194 ITR 434 SC)} -where it was held that a decision is available as precedent only if it decides a question of law.

(vii) MGF Automobiles Ltd. Delhi High Court (order dt. 13-08-2015) in ITA No.13/2014 & 14/2014.

This was the case where the order of the AO was absolutely silent on the important fact as to on what material or evidence the addition/disallowance was based and this prompted the High Court to dismiss Revenue’s appeal. Clearly, the judgment is more on facts than on law. This judgment besides being inconsistent with its own earlier decisions in SSP Aviations, Filtax Ltd; Chetan Das Lacchman Das and Anil Bhatia etc. is the one case where no case law, no legal provisions are found referred or discussed & hence cannot be taken as a binding precedent as held in CIT v. B.R. Constructions { 202 ITR AP FB}.

(viii) Kabul Chawla. Delhi High Court (Order dated 28- 08-2013): Judgment cannot be relied as a binding precedent because;

(i) In this judgment (which deals with jurisdictional issues of incriminating material etc. whereby AO’s authority is being challenged) is in ignorance of applicable provisions of 124 which act as a bar to rake up jurisdictional issues later. Since this decision is rendered without reference to the statutory bars, it cannot be used as a binding precedent as held in State v. Ratan Lai Arora (2004) 4 SCC 590. (ii) Unlike the present appeals, this judgment is not in the context of section 153C. (iii) Judgment neither shows formulation of questions nor

shows as to what all questions of law were raised by the Revenue. (iv) It does not considers its own judgment in SSP Aviation Ltd which was directly on section 153C. (v) It holds something not even indicated in the law & hence goes against the plain words of law. (vi) It relied heavily on certain portions from its judgments in Chetan Das Lachhman Das & Anil Bhatia’s case which were mere observations i.e. obiter and not the statements of law as stated in its earlier judgments in SSP Aviations Ltd; Madugula Venu & Filatex Ltd. (vii) Material aspect that proceedings for AY 6-07 were not complete because time for issuing notice u/s 143(2) was still available with the AO, got ignored. (viii) Important aspect got ignored that Kabul Chawla while accepting the addition made of 50 lacs on account of gifts which too was not referable to incriminating material found during the search on the other addition made u/s 2(z2)(e) was being challenged on plea that it was not referable to search finding.

(vi) Unlike Kabul Chawla’s case where there was no search material, in the present appeals (as seen from AO’s order) there was material in

the shape of statements recorded u/s 132(4) during the search and also the other material collected during the currency of the search itself.

(ix) Kusum Gupta Delhi HC: Cannot be relied upon because (a) Here in this case no Substantial Question of Law was formulated as required u/s 260A. (b) It just follows its judgment in Kabul Chawla( which is shown to be not applicable in this note). (x) Pepsico India Holdings P Ltd f 370 ITR 29'i Delhi High Court). As already submitted in para 2.2(page 5 of Written Note) the above decision was given in a Writ and was fundamentally on facts where the High Court found no documents to be belonging to the petitioner. Judgment being on facts, concession and also for the reason that this neither shows as to what all questions of law were raised nor formulates substantial questions of its own, is not available to be used as a binding precedent. DSL Properties Delhi Trib; (i) RL Allied Industries {167 TTT 201; (ii) Chain Roop Baid 134 ITD 237 Deb (iii)

Not available as precedents because;

(a) These are the decisions (e.g. DSL) obtained by suppressing the fact that the Grounds ( on challenging the validity of Satisfaction Note or the issue of Limitation ( year falling beyond 6 years ) were of the nature of additional ground as they were never raised before AO/CIT(A) and hence required specific leave of ITAT which was not obtained. (b) These decisions (DSL) runs contrary to Delhi High Court order in SSP Aviations Ltd. where too similar Satisfaction Note was involved. (c) The DSL decision is seen obtained by suppressing the fact that these jurisdictional objections were not raised within time mentioned u/s 124. (d) This is contrary to later decision of the Tribunal in Apoorva Extrusion Ltd.

Without prejudice to the above this decision is found to be resulting in absurdity whereby by the search action certain years/transactions would get covered which by the time of 153C had not even taken place.Especially in case of RL Allied Industries it would be noticed that adjudication done by the ITAT is not even borne out of the grounds (that order is time barred) raised before the ITAT.

(xiv) Jasjit Singh Delhi Trib.flTA 1436/Del/2012}: Not available as a precedent because

(a) It is obtained by suppressing the fact that AO’s jurisdiction was not challenged within 124 time; (b) Controversy there was different about whether order to be passed u/s 143(3) or u/s 153C. (c) Adjudications of 6 years travels beyond the controversy ( even in addl. Ground) raised before ITAT (xv) Brightways Housing & Land Developers Ltd. (ITA 5117-18/Del/2013 (xvi) Devi Dayal Petro Chemicals P. Ltd. ITA No. 4335-36/Del/2013 Not available as precedent because these are

(a) Obtained by suppressing the fact that AO’s jurisdiction was not challenged within 124 time; (b) Run contrary to Delhi High Court order in SSP Aviation Ltd. where too Satisfaction Note drawn just referred documents concerning two AYs & still the High Court did not allow the Writ petitions. (xvii) Sunita Bai { 68 SOT 98 URO- Cannot be relied because it is (a) Contrary to its finding in para 13 “section does not require the document must he incriminating document’’. (b) Relied on certain observations given in Delhi High judgments in Chetandas Lacchman Das & Anil Bhatia which were accepted to be obiter but strangely stilled relied on

them in adjudication without appreciating that these observations did not carry precedential value.

(c) Adjudication that ‘addition is not the result of incriminating document.’ travel beyond the grounds raised. (d) Objection not raised within section 124 time.

(xviii ) Lakshmi Singh { 68 SOT 26}: Not applicable for the reasons given in case of Sunita Bai above,

(xix ) Natural Products Tech {153 ITD s8{ : Not applicable because;

(a) Before ITAT only two relevant grounds were that (i) order is not based on incriminating material and (ii) order is without jurisdiction; and relief given in view of ratio decidendi in Pepsi Holdings without appreciating that there was no ratio there because this decision was just on peculiar facts.

(b) Here in the present appeals additions/order is based upon incriminating material being Statements recorded u/s 132(4) of the Entry Operator and also of Ashok Minda.

(c) DSL Properties decision of Delhi ITAT relied was not available as a precedent. (d) Runs contrary to SSP Aviations (Delhi High Court) where too similar Satisfaction was involved.

(e) Objection to jurisdiction was not raised within 124 prescribed time.

(xx) Qualitron Commodities Ltd {167 TTT 3S3 Del}: Cannot be relied upon for the reasons that;

(i) COs of the assessee were entertained because of suppression of the crucial fact that CO was not arising out of the order of the CIT(A) whereby pure legal question challenging the validity of assessment was being challenged. {Refer Ahmedabad ITAT decision in Sandeep M Patel 22 Taxman.com 288}.

(ii) CO filed was late and without giving any reason for delay it was entertained.

(iii) Runs contrary to Delhi High Court order in SSP Aviation Ltd.

(iv) Material fact that AO’s jurisdiction was not challenged earlier within 124 time was suppressed.

(v) Decision relies on Delhi High Court order (Pepsico Holdings) which was not available as precedent.

(xxi) Tanvir Collections P. Ltd. 168 TTT US Deb Not applicable because;

(a) It runs contrary to Delhi High Court order in SSP Aviations Ltd;

(b) It relied on certain portion of SSP Aviation Ltd. which was just obiter not to be used as a precedent.

(c) It relied on its decision in Inlay Marketing & Akash Arogya which were obtained on suppression of material fact that objection was not raised within 124 time and that evidences being adduced were of the nature of additional evidence.

(d) Objection challenging the jurisdiction of the AO was raised within 124 time. Satyam Food Specialities P. Ltd {68 SOT (xii) Del}:

Not relevant and applicable at all because there relief is given on merits and not on the legal ground of validity of 153C assessment.”

That the assessee is precluded from raising the issue of (i) jurisdiction at this stage, more particularly when such objection was not raised before the learned assessing officer and as per the provisions of section 124(2) to (4),

the assessee - appellant is debarred from raising such issues before Hon’ble ITAT and further, participation/ acquiescence by assessee before learned AO will results in giving up the jurisdictional issue.

That AY 2006-07 and 2007-08 are not beyond the purview (ii) of provisions of section 153C of the Act, as the cut - off date has to be reckoned from the date of search and not from the date of handing over of the documents by the AO of searched person to the AO of other person, in stating so, learned CIT DR placed reliance on provisions of section 153C(2)(a) of the Act and also on the order of Hon’ble ITAT, Delhi in the case of DCIT vs Apoorva Extrusion Pvt. Ltd. in ITA No. 6964/Del/2014 and also stated that judgment of Hon’ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015 is not available as precedent as neither question of law was framed nor answered as required under section 260A of the Act.

That there is no requirement or mandate in law to make (iii) additions on the basis of incriminating material found as a result of search, rather, total income has to be assessed by learned assessing officer and thus, additions can be made beyond incriminating material as well and in doing so, the learned CIT DR relied on judgments of Hon’ble Delhi High Court on the cases of CIT vs Chetan Dass Lachman Dass reported in 211 Taxman 61 and Filatex India Ltd. vs CIT reported in 229 Taxman 555 and also on Madugula Venu vs CIT reported in 215 Taxman 298.

That there were many other documents found during the (iv) course of search on Minda group, which have not been recorded in the satisfaction note and as such, the argument of the assessee - appellant that no document

belonging to assessee - appellant was found during the course of search in Minda group is not correct.

That no such arguments were raised by assessee - (v) appellant in statement of facts and grounds of appeal before learned CIT (A).

Learned CIT DR also distinguished the case laws being (vi) referred by the assessee - appellant and further, placed reliance on various case laws which would be distinguished by the assessee - appellant in subsequent paragraphs. 3 REBUTTAL OF THE ASSESSEE - APPELLANT: 3.1 That first and foremost, the argument of learned CIT DR that the assessee is precluded from raising the issue of jurisdiction at this stage, more particularly when such objection was not raised before the learned assessing officer and as such, as per the provisions of section 124(2) to (4), the assessee - appellant is debarred from raising such issues before Hon’ble ITAT is contrary to the statutory provisions of the Act, as section 124 of the Act pertains to territorial jurisdiction of an Assessing Officer vested under sub-section (1) or (2) of section 120. An objection to such jurisdiction can be raised in terms of section 124(2) and in terms of sub-section (3) of section 124, right to raise such objection shall be foregone beyond the stages mentioned therein. The said provisions are clearly concerning with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and has no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A of the Act is concerned and thus, when assessee - appellant contends that the assessments made by learned AO are beyond the purview of section 153C of the Act and additions made are beyond the scope of provisions of section 153C of the Act r.w.s. 153 A of the Act there is no issue of

territorial jurisdiction involved, rather it is a challenge to inherent jurisdiction of learned AO and there is no bar in law to challenge such jurisdiction at any stage of judicial hierarchy. In support of the aforesaid, the assessee - appellant would seek to place its reliance on following judgments:

CIT vs Ramesh D Patel (Gujarat High Court) reported in (i) 362 ITR 492. Para 8. Section 124 vertains to territorial jurisdiction of an Assessing Officer vested under sub-section (1) or (2) of section 120. An objection to such jurisdiction can be raised in terms of section 124(2). In terms of subsection (3) of section 124. right to raise such objection shall be foregone beyond the stages mentioned therein. The said provisions are clearly concerned with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and have no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A is concerned, when no search authorization under section 132 was issued or requisition under section 132A was made.

M/s Computer Engineering Services India (P) Ltd. vs (ii) ACIT (Delhi ITAT) in ITA Nos. 5874 to 5878/Del/2015 (Enclosed as Annexure - A).

Para 34. Before parting with the matter, we would like to deal with the contention of Ld CIT-DR that extant plea of amalgamation as raised by assessee is hit by provisions

of section 124(3) of the Act. In this regard, he vociferously argued and tried to persuade us that said provision clearly comes in the way of assessee to raise the plea of assessment on non existing company without raising the same before AO at a later stage and heavily relied on Full Bench decision of Guwathi High Court in Smt. Sohani Devi Jain reported in 109 ITR 130. After much deliberation, we are unable to subscribe to the views of Ld CIT-DR for the simple reason that Hon’ble Jurisdictional Delhi High Court in the case of S.S.Ahluwalia in ITA 255/2002 (order dated 14/3/2014) reported in 2014 (88) CCH (158) Delhi H. C. in turn re Ivins on another Delhi Hish court decision in case of K.K. Loomba reported in 241 ITR 152 has clearly held that section 124 has applicability to only territorial jurisdiction issue and not to other jurisdictional issues when there is inherent lack of jurisdiction. Further, we wish to commemorate the trite principle that an order which is nullity in the eyes of law, plea relating to the same can be raised at any stage even during collateral proceedings as explained in leading case law of Gujarat High court in case of P. V.Doshi 113 ITR Page 22.

The Hon’ble Delhi High Court in the case of S.S. Ahluwalia (Supra) has held as under:

of jurisdiction might vitiate proceedings rendering the orders passed and exercise thereof a nullity. But a mere error in exercise of jurisdiction would not vitiate the legality and validity of the proceedings and the said order was valid unless set aside in the manner known to law by laying a challenge, subject to law of limitation. The following portion of Hira Lai Patni Vs. Kali Nath, AIR 1962 SC 199 was quoted ....The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seisin of the case because the subject matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the court entirely lacking in jurisdiction in respect of the subject matter of the suit or over the parties to it.

Para 36. In the light of the above binding jurisdictional high court precedents, we do not approve the objection taken by Ld CIT-DR that the assessee’s plea is barred by section 124(3) as same is not applicable to present factual situation.

(iii) K.K. Loomba reported in 241 ITR 152 (Delhi HC), has clearly held that section 124 has applicability to only territorial jurisdiction issue and not to other jurisdictional issues when there is inherent lack of jurisdiction.

: 1.1 That second limb of first argument by learned CIT DR was that “participation/ acquiescence by assessee before learned AO will result in giving up the jurisdictional issue by the assessee ”, which is contrary to the views expressed by various courts, which have stated that issues of inherent lack of jurisdiction can be raised at any stage and moreover, the said argument of learned CIT DR falls flat, as learned CIT (Appeals) has dealt with the said issues which were raised before learned CIT (A) by assessee vide its grounds of appeal and written submissions. That in support of the aforesaid proposition the assessee - appellant would seek to place reliance on following judgments:

Valvoline Cummins Ltd. vs DCIT (Delhi HC) reported (i) in 307 ITR 103. CIT vs Pai Vaibhav Hotels (Karnataka HC) in ITA No. (ii) 2638/ 2005 (enclosed as Annexure - B). P.V. Doshi vs CIT (Gujarat HC) reported in 113 ITR 22. (iii) Inventors Industrial Corpn. Ltd. vs CIT (Bom HC) (iv) reported in 194 ITR 548. Hemal Knitting Industries vs ACIT (Chennai TM) (v) reported in 127 ITD 160.

That the second argument of learned CIT DR that “AY 2006- 07 and 2007-08 are not beyond the purview of provisions of section 153C of the Act, as the cut - off date has to be reckoned from the date of search and not from the date of handing over of the documents by the AO of searched person to the AO of other person and judgment of Hon ’ble Delhi High Court in the case of CIT vs Jasjit Singh in IT A No. 337/2015 is not available as precedent as neither question of

law was framed nor answered as required under section 260A of the Act”, is again based on misconceived reading of law and incorrect reading of judgment of Hon’ble Delhi High Court in the case of CIT vs Jasjit Singh in ITA No. 337/2015, wherein, Hon’ble High Court has categorically held that cut - off date for issuance of notices under section 153C of the Act has to be reckoned from the date of handing over of the books of accounts by the AO of searched person to the AO of other person and if the said finding is applied to the facts of the assessee - appellant than AY 2006-07 and 2007-08 will be found to be beyond the purview of provisions of section 153C of the Act as satisfaction note in the instant is recorded on 09.09.2013 and notice under Section 153C is also issued on the same date, then only conclusion that can be drawn is that the Assessing Officer of such other person has taken over the possession of seized document on 09.09.2013. Accordingly, as per Section 153AG), the Assessing Officer can issue the notice u/s 143(3) for the previous year in which search is conducted (i.e. for the purpose of Section 153C the document is handed over) and notice u/s 153C for six assessment years preceding such assessment years. Now, in this case, the previous year in which the document is handed over is 1st April. 2013 to 31st March, 2014 i.e. the assessment year would be AY 2014-15. Six preceding previous years and relevant assessment vear would be as under:

1.4.2007 to 31.3.2008 2008-09 1.4.2008 to 31.3.2009 2009-10

1.4.2009 to 31.3.2010 2010-11 1.4.2010 to 31.3.2011 2011-12 1.4.2011 to 31.3.2012 2012-13 1.4.2012 to 31.3.2013 2013-14

3.2.1 The argument of learned CIT DR that in the matter of CIT vs Jasjit Singh (supra), Hon'ble High Court has neither framed any question of law and neither answered it and as such, the said judgment cannot be taken as a precedent, is completely misconceived and is based on complete misreading of the judgment of Hon’ble jurisdictional high court, as Hon’ble High Court has dismissed the appeal of Revenue in the aforesaid matter and has held as follows:

“Para 3. The question raised before the ITAT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) "such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and

abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.Para 4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in ITA No. 585 of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31st March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under:

"The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction/reason before issuing notice under Section 153C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such other person. In case, the AO of the searched person exercises jurisdiction over the other person also, appropriate referencing should be made in the relevant assessment records of such other person. Para 5. It may be noted that in the present case satisfaction note was prepared by the AO on 25th February 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY

2009-10 was not valid, calls for no interference . No substantial question of law arises in the facts and circumstances of the present case.

Para 6. Accordingly, the appeal is dismissed." Thus a bare perusal of the aforesaid judgment of Hon’ble High Court of Delhi would make it amply clear that the Hon’ble High Court has categorically held that the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date" and as such, assessments framed for AY 2006-07 and 2007-08 are beyond the purview of provisions of section 153C of the Act.

That further, even if Hon’ble High Court dismisses an appeal by holding that no substantial question of law is involved even then it is submitted that the order of the Tribunal on the issue which was agitated by the appellant before the High Court stands merged in the order of the High Court, and for all intents and purposes it is the decision of the High Court which is operative and which is capable of being given effect to. It is not open to any person (in the instant case it s learned CIT DR) to contend that there is no decision of the High Court and the subordinate forum is entitled to take a contrary view than the one affirmed by the High Court by a process of dismissal of the appeal simpliciter and in order to ?upport the said proposition the assessee - appellant would seek to place its reliance on following judgments:

(a) Nirma Industries Ltd. vs DCIT (Gujarat HC) reported in 283 ITR 402.

That the learned CIT DR also argued that assessee - appellant has suppressed the provisions of section 153C(2)(a) and in the

judgments relied on by assessee - uppellant, the counsel for the assessee’s have also suppressed the provisions of section 153C(2)(a) and also section 124 before various benches of Hon’ble Tribunal. In stating so, learned CIT DR has failed to appreciate the basic fact that statutory provisions cannot be suppressed and in all the cases relied on by assessee - appellant even the department could have argued and mentioned about the provisions of section 153C(2)(a) but they didn’t (does it mean that department even suppressed the said provisions), as the reading of the said provision would make it amply clear that in case of search being conducted on an individual, if document belonging to other person is found, than the search year of the searched person (as also for the case of other person) should not go Scott free and the said assessment year needs to be assessed under the normal provisions of section 153C read with section 153 A of the Act. That the third argument of learned CIT DR that there is no requirement of making addition on the basis of incriminating material found as a result of search, rather and total income has to be assessed by learned assessing officer and thus, additions can be made beyond incriminating material as well, is again based misconceived and misplaced reading of statutory provisions of statute and judicial precedents available, as it is an agreed aspect between the learned CIT DR and the assessee - appellant that assessments under section 153C of the Act has to be made as per the provisions and procedures laid down in section 153A of the Act and the provisions of the said section have been interpreted by various high courts and very recently Hon’ble jurisdictional high court in the case of CIT vs Kabul Chawla reported in 126 DTR 130 after analyzing each and every judgment of various high courts on this issue and also the judgments as relied on by learned CIT DR {judgment of Hon ’ble Delhi High Court on the cases of CIT vs Chetan Dass Lachman

Dass reported in 211 Taxman 61 and Filatex India Ltd. vs CIT reported in 229 Taxman 555 and also of Madugula Venu vs CIT reported in 215 Taxman 298) and Hon’ble High Court has held as follows: Para 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(l) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by theAOs as a fresh exercise. Hi. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be

related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. vi. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vii. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. viii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.

Conclusion Para 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Para 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. ”

Thai, in view of the aforesaid, it is most humbly submitted that the arguments of earned CIT DR are against the mandate and judgment of Hon’ble jurisdictional right court and once Hon’ble High Court after analyzing all the available case 5 on the issue involved has held that addition as a result of search has to be based upon incriminating material only, than nothing remains and it is prayed that in view of the above, it be held that additions made by learned AO are beyond the : re of assessment, as no addition is based on any incriminating material found a result of search, as is recorded in the satisfaction note.

That the fourth argument of learned CIT DR that “there were many other documents found during the course of search on Minda group and also statements a - persons searched in Minda group, which have not been recorded in the satisfaction note and as such, the argument of the assessee - appellant that no document belonging to assessee - appellant was found during the course of march in Minda group is not correct” is again

misconceived in law, as for taking an assessment under section 153C of the Act, the condition precedent is the satisfaction note and with respect to completed assessments, addition has to be raised upon seized documents as mentioned in the seized documents only, thus, the argument of learned CIT DR that there are other seized documents as well is immaterial and irrelevant as, once all the documents were before the officer of searched person nothing stopped him to record all the said seized documents in ±e satisfaction note, however, once the assessing officer of searched person records a satisfaction note and hands over the seized documents mentioned therein to the officer of other person than the learned officer of other person is recorded in considering any other material over and above the material/ document mentioned in the satisfaction note and furthermore, looking at the documents as well, they are nothing but mere photocopies in the shape of financial statements and trial balances and in view of the judgment of Hon’ble High Court of Delhi in the case of Pepsico India Holdings (P) Ltd. vs ACIT reported in 370 ITR 295, the said documents cannot be said to be belonging to the assessee - appellant. That further in support of the aforesaid proposition

the assessee - appellant would seek to place reliance on following judgments:

S.No Judgments Pg Nos. of . PB - III 6. Copy of judgment of Hon’ble High 33-45 Court of Delhi in the case of SSP Aviation Ltd. vs DCIT reported in 346 ITR 177. 8. Copy of order of Hon’ble ITAT Delhi in 53A-53J the case of M/s Brightways Housing & Land Developers Ltd. in ITA No. 5117, 5118/Del/2013. 9. Copy of order of Hon’ble ITAT Delhi in 53K-53U the case of M/s Devi Dayal Petro Chemicals Pvt. Ltd vs DCIT in ITA No. 5435, 5436/Del/2013. 10. Copy of order of Hon’ble ITAT Delhi in 54-65 the case of Natural Products Bio Tech Ltd. va DCIT reported in 153 ITD 58. 11. Copy of order of Hon’ble ITAT Panaji 66-75 in the case of Smt. Sunita Bai vs DCIT reported in 68 SOT 98 (URO). 12. Copy of order of Hon’ble ITAT Panaji 76-85 in the case of Smt. Lakshmi Singh vs DCIT reported in 68 SOT 26 (URO). 13. Copy of order of Hon’ble ITAT Delhi in 86-91 the case of DCIT vs Qualitron Commodities (P) Ltd. reported in 167 TTJ 553. 14. Copy of order of Hon’ble ITAT Delhi in 92-99 the case of Tanvir Collections (P) Ltd. vs ACIT reported in 168 TTJ 145. 15. Copy of order of Hon’ble ITAT Jaipur 100-122 in the case of Satyam Food Specialities (P) Ltd vs DCIT reported in 68 SOT 449.

That the fifth argument of learned CIT DR that “no such legal argument was raised by assessee - appellant in statement of facts and grounds of appeal before ld. CIT (A)”, is factually incorrect, as vide ground nos. 1 to 2, the assessee appellant clearly raised the said pleas before learned CIT (A) which were also are b> learned CIT (A) vide para nos. 6 to 6.7 of the impugned order. That furthermore, the issues involved in the instant appeals are since purely legal in nature involve consideration of aspects of inherent jurisdiction, thus, there is no bar raising the same before Hon’ble Tribunal, unless and until the same involve fresh consideration of facts, which apparent is not required in the instant appeals and as such, it is prayed that the aforesaid argument of learned CIT DR be negated

3.6 As regards, judgments relied upon by learned CIT DR, the submission of the assessee is as under:

Mehmood The proposition laid down in the said Dawood judgments are not applicable to the Sheikh vs facts of the assessee - appellant as State of first of all the said judgments are not Maharashtra in context of section 260A of the reported in Income Tax Act and Hon’ble Gujarat (2004) 2 SCC HC in the case of Nirma Industries Ltd. 362 vs DCIT (Gujarat HC) reported in 283 ITR 402 has held that “even if High Surinder Kumar vs Court dismisses an appeal by holding State of Punjab that no substantial question of law is reported in 194 ITR involved even then the order of the 434 Tribunal on the issue which was agitated by the appellant before the High Court stands merged in the order of the High Court, and for all intents and purposes it is the decision of the High Court which is operative and which is capable of being given effect to. It is not open to any person to contend that there is no decision of the High Court and the subordinate State of Kerala vs Not applicable to the facts of the Mathai Verghese impugned case, as the purpose and enactment of provisions of section (1986) 4 SCC 746 153A and section 153C have been CIT vs explained by Hon’ble High Court of Keshavlal AIR Delhi in the case of CIT vs Kabul 1965 SC 866 Chawla reported in (2015) taxmann.com 412, wherein, Hon’ble CWT, Bihar vs High Court has held that addition in Kripashankar AIR pursuance to search cannot be made 1971 SC 2473 beyond incriminating material found Hindustan Ideal as a result of search in respect of Insurance Co. Ltd. vs completed assessments and since, LIC (AIR 1963 1083 assessment under section 153C has to be made in pursuance to the provisions as envisaged under section 153 A of Chetan Das All these judgments have been considered by Hon’ble Delhi High Court Lachman Das in the case of CIT vs Kabul Chawla (DelHC) CIT vs Anil reported in (2015) taxmann.com 412, wherein, Hon’ble High Court has held Kumar Bhatia that addition in pursuance to search DelHC)Filatex cannot be made beyond incriminating India Ltd. \s material found as a result of search in CIT reporVed respect of completed assessments and in229 Taxman since, assessment under section 153C 555 has to be made in pursuance to the

.needs to be applied to the facts of the instant case as well. Madugula Venu 95 vs CIT reported in 215 Taxman 298.

That further, the judgments relied on by assessee - appellant have been distinguished by the learned CIT DR in a very casual and cursory manner and is tafcru on —.isconceived and misplaced understanding of the provisions of law. li 1 grc of the aforesaid, the appeal filed by the revenue may kindly be dismissed and the order passed by learned CIT (A) be upheld.”

34 We have anxiously and thoughtfully considered the written submissions placed on record by the ld. CIT-DR Shri Ramesh Chander. It has left us bewildered and perplexed that whether the given arguments running contrary to the well settled position of law u/s 153C of the Act can be taken by a person judicially instructed on law and facts. To be fair to the ld. CIT-DR, we record our displeasure that on an issue which is squarely covered by a catena and plethora of judgments in assessee’s favour a feeble and valiant attempt has been made to upset the entire jurisprudence settled by the Hon'ble Supreme Court, various Hon'ble High Court including the Hon'ble Jurisdictional High Court of Delhi. There is a commonality in the arguments of the

ld. CIT-DR that all these decisions have been rendered on alleged and suggested suppression of crucial and vital facts contrary to assessee has withheld that jurisdiction is not alleged before the AO. On this ground, the ld. CIT-DR has painfully argued that all the precedents on given issue are distinguishable on this ground. We are of the consistent view that at multiple occasions it has been consistently and repeatedly held that the issue relating to jurisdiction of the AO can be raised at any stage even in collateral proceedings because the same strikes at the root of the matter. We are reminded of the classical and land mark decision of the Hon'ble Supreme Court [Four Judges Bench] in the case of Raja Textiles Ltd VS. ITO 87 ITR 539 wherein it was held that :

“It was contended by Mr. Manchanda, the learned Counsel for the revenue, that the appellant had a right of appeal to the Appellate Assistant Commissioner under Section 30(1A). He argued that if only he had deposited the amount computed by the Income-tax Officer, then he would have had a right of appeal to the Appellate Assistant Commissioner. Assuming that Section 30(1A) applied to facts of the case, then before having recourse to that provision a person seeking to file an appeal under that provision must comply with two requirements, namely, that he must have first deducted the tax due from the non-resident assessee and must have paid the same to the Government. This provision cannot apply to the case of a person who contends that the firm to whom he made the payment is not

a non-resident firm. If he is right in his contention, then he could not have deducted the tax due from the firm to whom he made the payment.

a) Hon'ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 [Guj]

b) Hon'ble Jurisdictional High Court in K.K.Lumba 241 ITR 152 [Delhi]

c) DHC – S.S. Ahluwalia [2014] 82 CCH [158] [Del]

“Another doctrine broached by ' another eminent counsel I cannot pass by without a comment. That learned counsel described the advocate as the mere mouthpiece of his client,

he told us that the speech of the counsel was to be taken as that of the client; and thence seemed to conclude that the client only was answerable for its language and sentiments. Such, I do conceive, is not the office of an advocate. His office is a higher one. To consider him in that light is to degrade him. I would say of him as I would say of a member of the House of Commons - he is a representative, but not a delegate. He gives to his client the benefit of his learning, his talents and his judgment; but all through he never forgets what he owes to himself and to others. He will not knowingly misstate the law- he will not wilfully misstate the facts, though it be to gain the cause for his client. He will ever bear in mind that if he be the advocate of an individual, and retained and remunerated (often inadequately) for his valuable services, yet he has a prior and perpetual retainer on behalf of truth and justice; and there is no Crown or other licence which in any case, or for any party or purpose, can discharge him from that primary and paramount retainer. ” (Emphasis supplied)

last word and the last word, once spoken, is loyally accepted. The Hon'ble Supreme Court in this judgment has itself quoted from the decision of House of Lords as follows”

“We desire to add and as was said in Cassell & Co. Ltd. vs. Broome (1972) AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of Courts" which exists in our country, "it is necessary for each lower tier" "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchical system of Courts that there are decisions of the Supreme appellate Tribunal which do not attract the unanimous approval of all members of the judiciary... But the judicial system only works if someone is allowed to have the last word, and that last word, once spoken, is loyally accepted. "...The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system." (Emphasis by underlining supplied by us)

decline to accept the contentions of the ld. CIT-DR about non- applicability of the ratio of the decisions /judgments cited as relied by the ld. Counsel of the assessee and we proceed to consider other legal objections of the assessee.

“Para 3. The question raised before the IT AT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) “such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment

years will be examined with reference to such date.

been satisfied as no document belong to the assessee have been found from the premises of the searched person i.e Minda Group and consequently, the notice u/s 153C of the Act deserve to be quashed and all proceedings pursuant thereto should also be quashed. The ld. Counsel has also placed reliance on the following decisions/orders of the Hon'ble Jurisdictional High Court and co-ordinate benches of the Tribunal:

i) Kurele Paper Mills P Ltd [Delhi High Court] order dtd 06.07.2015 ii) MGF Automobiles Ltd [Delhi High Court] in ITA No. 13 & 14/2014 order dated 13.08.2015 iii) Pepsico India Holdings P. Ltd 370 ITR295 [Delhi High Court] iv) Chain Roop Baid 154 ITD 257 Delhi v) Brightways Housing & Land Developers Ltd ITA No. 5117- 18/Del/2013

assessee vide ground Nos. 1 and 2 agitated before the ld. CIT(A) pertains to this legal objection which were wrongly adjudicated by the ld. CIT(A) in para 6 to 6.7 of the impugned order.

for ITA No. 7060/Del/2014. The satisfaction Annexure A [supra] reveals that the basis of initiation of proceedings and issuance of notice u/s 153C of the Act was based on copies of Tax Audit report and Financial statement for A.Y 2011-12. The satisfaction note Annexure B reveals that the basis of initiation of proceedings and issuance of notice u/s 153C of the Act was based on Trial Balance Sheet from 1.4.2011 to 30.11.2011; copies of computation of income for A.Y 2011-12; copy of balance sheet extracts, company’s general business profit, copy of schedules, annexures as on 31.3.2011; copy of balance sheet, computation of auditor’s report and return and copy of trail balance sheet for the period 1.4.2011 to 31.12.2011 and from Annexure C satisfaction note we note that the basis of action u/s 153C of the Act was financial transaction recorded pertains to A.Y 2011-12 which was Tax Audit Report and Financial Statement and Trail Balance for A.Y 2011-12. These documents mentioned in all three appeals do not pertain to A.Y 2006-07 and 2007-08 which are the years under consideration in these three appeals.

belong to the respective assessees and even documents mentioned therein are not relevant to A.Y 2006-07 or 2007-08 then we note that from all three Annexures A, B and C it is amply clear that these documents are mainly copies of the return, balance sheet, trail balance sheet and other financial statements which are related to A.Y 2011-12 and not pertaining to either A.Y 2006-07 or 2007-08. In the case of Pepsico Holdings [P] Ltd [supra], the Hon'ble Jurisdictional High Court held that the AO of the searched person comes to the satisfaction that the documents or material found during search belong to a person other than the searched person, it is necessary that he arrive at the satisfaction that the said document or material do not belong to search person. We are unable to see any satisfaction note of the AO of the searched person i.e. Minda Group to show that such required exercise was undertaken by the AO of the searched person. However, from Annexures A,B and C it is vividly clear that these are the notes recorded by the AO of the other person. In the instant case, it is nobody’s case that the person searched i.e. Minda Group disclaimed documents mentioned in the respective satisfaction notes.

the searched person, the provisions of section 153C do not get attracted because the very expression used by the legislation in this section is that “where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitions belongs or belong to a person referred in section 153A of the Act”, their Lordhships further held that in view of the mandate of the said provision, it is necessary that before the provisions of section 153C of the Act can be invoked, the AO of the searched person must be satisfied that he seized material [which included documents] does not belong to the person referred to in section 153A of the Act i.e. the searched person. In the present case, the ld. CIT-DR could not assist us as to whether the AO of the searched persons recorded any satisfaction as required u/s 153C of the Act. Hence we have no alternative but to accept this contention of the assessee that no satisfaction notes have been recorded by the AO of the searched person i.e. Minda Group which is a mandatory first step and precondition for assumption of valid jurisdiction of initiate proceedings and to issue notice u/s 153C of the Act.

153 C of the Act further enhanced as besides “belong to” the words “pertains to” and “relates to” have been inserted hence copies of the balance sheet, T/B and financial statements etc clearly pertain to and relate the respective assessees against whom the proceedings were initiated and notices u/s 153 of the Act have been issued. On this contention of the ld. CIT-DR, we note that the amended provisions of section 153C of the Act is prospectively applicable w.e.f. 1.6.2015 thus amended provisions would not apply retrospectively by any stretch of imagination. Therefore, pre-amendment provision of section 153C of the Act would apply to the present case and amended provision has no application to the present case. At the same time, respectfully following the dicta laid down by the Hon'ble High Court of Delhi in the case of Pepsico Holding [supra] we observe that the photocopies of the balance sheet, trial balance and other financial statements are not belonging to the assessee as neither they are originals nor has been signed by any office bearers of the companies and these were not disowned by the searched person i.e. Minda group and the ratio of the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of Pepsico Holding [supra] is squarely applicable to the present case in favour of the assessee as in the impugned satisfaction notes, there is nothing therein to indicate that the seized documents mentioned in the

satisfaction note [supra] do not belong to Minda Group and mere filing of photocopies of balance sheet, trial balance, etc in the possession of the searched person does not necessarily mean and imply they belong to the person who had the originals.

“9.1 It was contended by the learned counsel that the documents mentioned by the Assessing Officer in the satisfaction note i.e. documents at pages 1 to 25 of Annexure A-5 are only the counterfoil of the cheque book which is duly accounted for in the books of account. He had also contended that the counterfoil belonged to the year 2008-09 and, therefore, the proceedings under Section 153C could not have been initiated for

the years to which the documents do not belong and even after initiating proceedings to the year to which the documents belonged, the Assessing Officer ought to have dropped the proceedings because all transactions reflected by the counterfoils by the cheques is duly accounted for. In support of this contention, he had relied upon the decision of Hon'ble Jurisdictional High Court in the case of SSP Aviation Ltd. - 346 ITR 177. At page 189 of the report in paragraph 17, their Lordships held as under:-

"The section merely enables the Revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not ITA NOS. 5430-5436/Del/2013 & CO NOS. 83-88/DEL/2014 escape assessment in the hands of any other person merely because he has not been searched under section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has searched the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six

assessment years, the proceedings will have to be closed. If the returns filed by the other person for the period of six years does not show that the income reflected in the document has been accounted for, additions will be accordingly made after following the procedure prescribed by law and after giving adequate opportunity of being heard to such other person. That, in sum and substance, is the position."

9.2 Considering the facts of the case and the arguments of both the sides, we set aside the matter to the file of the Assessing Officer for re-examination of the issue in the light of the above decision of Hon'ble Jurisdictional High Court i.e., the Assessing Officer will first verify the years to which the seized documents belonged. There would be no justification for continuation of the proceedings under Section 153C to which the seized documents do not belong. Therefore, the Assessing Officer will drop the proceedings initiated under Section 153 of the years to which the seized documents do not belong. For the year to which the seized documents belonged, he will verify whether the transaction reflected by the seized documents are duly accounted for in the books of account. If the transactions are duly accounted for in the books of account, as contended by the learned counsel, the Assessing Officer will drop ITA NOS. 5430- 5436/Del/2013 & CO NOS. 83-88/DEL/2014 the proceedings initiated under Section 153C. However, if for the year to which the seized documents belonged, the transaction reflected by the seized documents is not recorded in the books of account, the proceedings under Section 153C will continue and the Assessing Officer will make the assessment afresh in accordance with law.

Since we have set aside all the years under appeal, the Revenue's appeals on merits do not require any adjudication and they are also deemed to be allowed for statistical purposes. The Assessing Officer will proceed to make the assessment afresh only in the year where proceedings under Section 153C can validly continue in the light of the above decision of Hon'ble Jurisdictional High Court.”

assessment when there was no document before the AO for A.Y 2006-07 and 2007-08 found mentioned in the relevant satisfaction notes

Chawla dated 28.8.2015 in ITA Nos. 707/Del/2014 in the case of CIT Vs. MGF Automobiles Ltd dated 13.8.2015 in ITA No. 13/Del/2014 and subsequent decision in the case of DCIT Vs. Smt. Kusum Gupta and submitted that the additions made are beyond the scope of assessment as no addition has been made on the basis of seized documents recorded in the satisfaction note for any A.Y under consideration i.e. A.Y 2006-07 and 2007-08. The ld. CIT-DR has contended that there is no requirement of making addition on the basis of incriminating material found as a result of search. Rather, the total income has to be assessed by the AO. Thus additions can be made beyond incriminating material as well. The ld. Counsel vehemently contended and also eagerly point out that these arguments of the ld. CIT-DR are based on misconceived and misplaced reading of the statutory provisions of the Act and judicial precedents available on the issue. As the ld. CIT-DR and the ld. AR are agreed that assessment or re assessment has to be made u/s 153C r.w.s 143(3) of the Act as per provisions and procedure laid down by section 153A of the Act and obviously the provisions of section 153A and 153C of the Act have been interpreted by various Hon'ble High Courts and Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Kabul Chawla after referring to the decision of the Hon'ble High Court of Delhi in the case of CIT Vs.

Chetan Dass Lachman Dass [supra] and the decision of the same Hon'ble High Court in the case of Madugula Venu Vs. CIT reported in 215 Taxmann 298, as relied by the ld. CIT-DR, categorically held as follows:

“5. At the outset this Court would like to observe that an analysis of the provisions of Section 153A of the Act has been undertaken by this Court in the decision in CIT v. Anil Kumar Bhatia (supra), which decision was given on the same date that the Court rendered another decision in CIT v. Chetan Das Lachman Das (supra). However, in neither case was the Court considering a situation where there was absolutely no material unearthed during the search, much less any incriminating material.

the premises during search and found undisclosed in the return filed for AY 2003-2004. Concluding that the loan was given out of unaccounted income, the AO added it to the income for AY 2003-2004. After the CIT (A) confirmed the addition, the Assessee appealed to the ITAT. The ITAT agreed with the Assessee that since no material was found in the search pertaining to the addition made, it was not sustainable in law. The ITAT noted that the document recovered in the search during the search did not bear the signature of the assessee or Mrs. Mohini Sharma, the alleged borrower who was also not examined by the Department. The question before the Court, therefore, was whether the AO had wrongly invoked Section 153A of the Act since no material had been found during the search to justify the addition made ?

one Assessment Order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".

"21. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens."

proceedings in relation to any AY falling out of the period of six AYs previous to the search shall abate. In such cases all pending assessments, the Court explained that once those proceedings abate, the decks were cleared, for the AO to pass assessment orders for each of those six years determining the total income of the Assessee. Such 'total income' would include "both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition." Therefore, merely because the returns of income filed by the Assessee for the AYs previous to the date of the search already stood processed under Section 153A(1)(a) of the Act it could not be held that the provisions of Section 153A could not be invoked.

"24. We are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open."

The decision in Chetan Das Lachman Das

"11. ....Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material...."

The decision in Madugula Venu

the Act, it was mandatory for the AO to issue notice to the person searched requiring him to furnish returns of income for the six AYs immediately preceding the AY relevant to the previous year in which the search was conducted. The Court was not entering into a discussion on whether any additions could be made in the assessment by the AO in the absence of any incriminating material unearthed during search. On the other hand, it left it open to the Assessee to raise all contentions in the assessment proceedings. The Court observed "in case he has evidence or material to show that he has not earned any income which is not disclosed to the income tax authorities or to rebut the material gathered during the search, it is perfectly open to him to do so." One observation in the said judgement is, however, important. While explaining Section 153A of the Act, the Court observed "it is not merely the undisclosed income that will be brought to tax in such assessments, but the total income of the assessee, including both the income earlier disclosed and income found consequent to the search, would be brought to tax." The Court, however, did not answer the question of whether a finding of undisclosed income would have to be based on some material unearthed during the search.

The decision in Canara Housing

143(3) of the Act and an order came to be passed on 31st December, 2010. Subsequently a search took place in the premises of the Assessee under Section 132 of the Act on 12th April, 2011. The judgement notes "in the course of search, incriminating material leading to undisclosed income was seized." The notice was issued to the Assessee under Section 153A(1) of the Act to file return of income on 13th January, 2012. Even while the return was under consideration, the CIT initiated proceedings under Section 263 of the Act on the ground that the order passed on 31st December, 2010 under Section 143(3) of the Act was prejudicial to the interests of the Revenue. When the CIT negated the objections of the Assessee to the said order, the Assessee appealed to the ITAT. The ITAT negated the plea of the Assessee that by virtue of the proceedings initiated under Section 153A of the Act, the assessment for six years stood reopened and it is for the assessing authority to pass appropriate order on the basis of the return filed under Section 153A(1)(a) of the Act.

six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order."

The decision in Filatex India Ltd.

the case were that there was incriminating material found during the course of search conducted in the premises of the Assessee on 18th January, 2006 and subsequent dates. This included a statement of the General Manager (Marketing). On the basis of the said material and statement additions were made to the disclosed income under Section 115 JB although no material was found specific to such addition. The Court held that under Section 153A "the additions need not be restricted or limited to the incriminating material, which was found during the course of search." Consequently even if no incriminating material was found for the addition under Section 115JB of the Act, since there was some incriminating material found which would sustain additions made and since the 'total income' had to be computed, they were sustained by the High Court.

"3. Learned counsel for the appellant-assessee has relied on the decision of this Court in CIT v. Chetan Das Lachman Das [20121 211 Taxman 61/25 taxmann.com 227. The said decision notices insertion of Section 153A by Finance Act, 2003, its purpose and object, and the earlier proceedings for block assessment under Chapter XIVB, the difficulties and the legal issues which had arisen on the difference between regular assessment and block assessment. It is in this context that in the case of Chetan Das Lachman Das (supra), the Division Bench, [to which one of us (Sanjiv Khanna, J) was a party], has observed that Section

153A(1)(b) provides for assessment or re- assessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. It was emphasized that there is no condition in this Section that the additions should be strictly made on the basis of evidence found during the course of the search or other post search material or information available with the Assessing Officer, related to the evidence found. Subsequent observation to the effect that the assessment under section 153A should not be arbitrary or made without any relevance or nexus with the seized material, is basically clarificatory that the assessment under Section 153A emanates and starts on the foundation of the search, which is the jurisdictional precondition. The additions cannot and should not be arbitrary...."

Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search.

The decision in Jai Steel India

"22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made."

"26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in

isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents."

The decision in Continental Warehousing

the course of search in respect of an issue then no addition in respect of any issue can be made to the assessment under Sections 153A and 153C. It was observed that the assessment or reassessment under Section 153A arises only when a search has been initiated and conducted and, therefore, "such an assessment has a vital link with the initiation and conduct of the search." The Court then reproduced and affirmed the decision of the Special Bench of the ITAT in All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax [2012] 23 taxmann.com 103 (Mum.) (SB) and answered the question as regards the scope of the assessment of total income as under:

"53. ....We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results: (a) Insofar as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated

assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search"

"a. In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153Afor which assessments shall be made for each of the six assessment years separately; b. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search."

Summary of the legal position

i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the

person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings.

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.

vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.

Conclusion

ITA No. 7061/Del/2014. M/s Sunny Infra Projects Ltd [A.Y 2010-11

“2. The ld. CIT(A) before dismissing the appeal has not given a reasonable opportunity of being heard which is against the principle of natural justice and is bad in law and hence liable to be quashed. 3. The ld. CIT(A) has failed to appreciate that the issuance of notices u/s 153C /142(1)/143(2) of the Act as well as the proceedings conducted thereunder is bad in law and is against the facts and circumstances of the case.”

searched person does not necessarily mean and imply that they belong to the person who held the originals or in whose name they pertain. The ld. AR further pointed out that the possession of documents and possession of photocopies of the documents are two separate things. While the Minda Group may be the owner of the photocopies but it does not get established that the same belong to the assessee – appellant. Unless it is established that the documents in question whether they be photocopies or originals, do not belong to the searched person, the question of invoking section 153C of the said Act does not arise and various courts have quashed the proceedings initiated u/s 153C of the Act on this proposition. The ld. AR of the assessee appellant placed reliance on following judgments/order :

a) DSL Properties (P) Ltd VS. DCIT 60 SOT 88 [URO] [Del]

b) Pepsico India Holdings P. Ltd VS. ACIT 370 ITYR 295 [Del]

c) Natural Products Bio Tech Ltd VS. DCIT 153 ITD 58 [Del]

d) DCIT Vs. Qualitron Commodities P. Ltd 167 TTJ 553 [Del]

e) Satyam Food Specialities P. Ltd VS. DCIT 68 SOT 449

proceedings thereto, cannot be held as bad in law. The ld. DR further submitted that during the search and seizure operations at Minda Group, number of documents belonging to the present assessee were seized. Therefore, it cannot be said that the notice u/s 153C of the Act was issued by the AO without any incriminating material belonging to the assessee.

satisfaction note of the searched person and the AO of the other person, then the same cannot be consider as basis for valid assumption of jurisdiction u/s 153C of the Act. The ld. AR vehemently pointed out that the AO proceeded to issue notice u/s 153C of the Act for A.Y 2010- 11 and there was no document or any other thing with the AO neither at the time of issuing of notice u/s 153C of the Act nor at the time of passing of the impugned order. The ld. Counsel vehemently pointed out that the AO had no valid jurisdiction to issue notice u/s 153C of the Act and the ld. DR could not point out that any satisfaction note was recorded by the AO of the searched person. Therefore, the case of the assessee is clearly covered in its favour by the judgment of the Delhi Hon'ble High Court in the case of Pepsico Holding India P. Ltd. [supra].

61 Undisputedly and admittedly, the present case is related to A.Y 2010-11 and from the satisfaction note, Annexure D, it is amply clear that the financial transactions recorded in page 36 to 56 and page 13 are tax audit reports, financial statements and trial balances pertaining to A.Y 2011-12. This facts also gets support from the written submission of the ld. DR dated 21.10.2015. Hence we are inclined to hold that there was no document relevant to A.Y 2010-11 before the AO of the searched person i.e. present assessee neither at the time of recording satisfaction u/s 153C of the Act on 29.11.2013 nor at the time f passing the impugned reasoned order u/s 143(3) r.w.s 153C of the Act.

62 Next question posed by the ld. CIT-DR is that the assessee is prevented by section 124 of the Act for raising jurisdiction issue when the assessee has not raised any objection before the AO and the ld. CIT(A) on this count. On bare reading of section 124 of the Act, it is amply clear that this provision is related to territorial jurisdiction of the assessee which is not the controversy before us and we have already discussed in the earlier part of this order that this legal objection of the ld. DR is not tenable and maintainable. Further, as we have to decide the legal objection of the assessee as to whether at the

time of initiation of proceedings and issuance of notice u/s 153C of the At there was any document etc. with the AO of the assessee i.e. the other person pertaining to A.Y 2010-11 and in the grounds raised before the ld. CIT(A) it is clear that the assessee challenged assumption of jurisdiction u/s 153C of the Act before the ld. CIT(A) in Ground Nos. 1 and 2 before the first appellate authority and these arguments of the ld. CIT-DR becomes baseless and incorrect in view of the copy of Form No. 35 placed on record before us.

searched person i.e. Minda Group did not record any satisfaction before handing over the impugned documents to the AO of the present assessee. Therefore, in our considered opinion, in the absence of such satisfaction note by the AO of the searched person, the AO of the searched person miserably failed to confer any lawful and valid jurisdiction on the AO of the present assessee to proceed with the initiation of proceedings and issuance of notice u/s 153C of the Act. Hence, we set aside the initiation of proceedings and issuance of notice u/s 153C of the Act and also hold that the impugned assessment order passed in pursuance thereto is void ab initio.

The decision is pronounced in the open court on 27.01.2016.

Sd/- Sd/- (L.P. SAHU) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27th January, 2016

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