GHANSHYAM MADHUSUDAN SONI,,AHMEDABAD vs. ITO, WARD-3(3)(7), AHMEDABAD

The assessee has raised identical grounds in both these appeals. Firstly taking up the appeal filed by the assessee for the Assessment Year 2009-10 i.e.

The assessee has also raised the following additional grounds:-

The assessee has taken additional ground in respect of the specific bar provided under Section 153A/153C of the Act and hence, the Ld. AR submitted that the proceedings initiated under Section 147 of the Act are not valid in law. The Ld. AR further submitted that the assessment made in pursuance of the invalid proceedings under Section 147 of the Act and illegal notice under Section 148 of the Act is void ab initio and, therefore, liable to be annulled. The Ld. AR further submitted that the Assessing Officer in reason for reopening the assessment, referred to the alleged incriminating documents, being a Promissory Note and individual ledger account in the name of Madhusudan Modasa found during the search in the case of Narayan Sai and Asaram Bapu and requisitioned under Section 132A of the Act. The Ld. AR submitted that the specific provisions enacted in Chapter-XIV under the title Assessment in case of search or requisition, being Sections 153A, 153B, 153C & 153D were attracted. The provisions of Section 153A were also applicable to the searched person whereas the provisions of Section 153C applied to the person other than the searched person. Both these Sections i.e. Section 153A & Section153C, provided that Sections 139, 147, 148, 149, 151 & 153 would have no application in the assessment of search and requisition case. The Ld. AR submitted that provisions of Section 153C of the Act were applicable in the assessee’s case, being the other person to whom, according to the Assessing Officer, documents found during the search in case of Narayan Sai and Asaram Bapu pertained or the information contained therein related to. The Assessing Officer was, therefore, not justified in resorting to Section 147 of the Act which is specifically barred from applicability by the special provisions enacted for search and requisition cases. The Ld. AR relied upon the decision of Sanjay Singhal (HUF) vs. DCIT (2020) 207 TTJ 853 (Chandigarh Tribunal), ITO vs. Vikram Sujitkumar Bhatia, 453 ITR 417 (SC).

The Ld. DR submitted that search in the case of Narayan Sai was carried out on 09.03.2015 i.e. before Section 153C was amended (w.e.f. 01.06.2015). Section 153 was amended before the amendment of Section 153C it was possible to invoke Section 153C only if material found belong to third person. In the case & 1717/Ahd/2019 Assessment Years: 2009-10 & 2011-12 Page 5 of 7 of Narayan Sai, documents found belonged to Narain Sai only and not by the assessee. Therefore, it was not possible to invoke Section 153C of the Act in the case of the assessee. Documents found contained some information about assessee which was intimated to the Assessing Officer of the assessee and accordingly assessment was reopened by issuing notice under Section 148 of the Act. The Hon’ble Delhi High Court in the case of Pepsico India (2014) 50 taxmann.com 299 held that material cannot be said to be belonging to third person if some copy of document related to the assessee was found in search. Because of this decision, Section 153C was amended w.e.f. 01.06.2015. Since search was carried out before the date of amended provision phrase belongs to was applicable. Since material found did not belong to the assessee, it was not possible to issue notice under Section 153C of the Act. In the case of the assessee, since information in respect of assessee on the basis of material found was received by the Assessing Officer of the assessee, assessment was reopened by issuing notice under Section 148 of the Act. The Ld. DR further submitted that the decision of Hon’ble Supreme Court in the case of Sujitkumar Bhatia (supra) held that amendment in Section 153C was retrospective by that time the appeal was decided by the CIT(A) and, therefore, the decision of Hon’ble Supreme Court was not applicable till first appeal was decided. The Ld. DR submitted that as per the position available at the time of issuance of notice under Section 148 of the Act was fully justified.

Heard both the parties and perused all the relevant material available on record. The additional ground taken by the assessee that the Assessing Officer should have been given invocation of Section 153C in assessee’s case in light of the decision of Hon’ble Supreme Court in the case of ITO vs. Vikram Sujitkumar Bhatia (supra), it appears that the Assessment Order was passed on 30.11.2016 and the appeal of the assessee was decided by the CIT(A) vide order dated 18.12.2017 but the decision of Hon’ble Supreme Court is that of 06.04.2023. Assuming that Section 153C of the Act should have been invoked in the present assessee’s case, the Assessing Officer of the assessee received requisition report and on the basis of that the Assessing Officer reopened the case of the assessee as per Section 147 of the Act which was applicable when the notice under Section 148 was issued on 31.03.2016. The contention of the Ld. AR that provisions of & 1717/Ahd/2019 Assessment Years: 2009-10 & 2011-12 Page 6 of 7 Section 153C of the Act are applicable in the assessee’s case being other person to whom according to the Assessing Officer documents found during the search in case of Narayan Sai and Asaram Bapu pertaining to or information contained therein related to, appears correct preposition of law as the Assessing Officer was very well aware about Section 153C of the Act while issuing the notice under Section 148 of the Act which was in the year of 2016 i.e. after the amendment i.e. 01.06.2015. The decision of the Hon’ble Supreme Court though is subsequent to the order passed by the CIT(A), ultimately it is the provisions of Section contemplated and which incorporated in the Act which was in the year 2015 which is much prior to the decision of the CIT(A). Thus, the additional ground taken by the assessee is allowed.

As regards to merit of the case, though the additional ground being legal ground decided in favour of the assessee, it appears that the comments related to the merits of the case is also important as in the present case the documents found cannot be held as incriminating documents as the name contemplated in the said document is that of Madhusudan Modasa and Ghanshyam Madhusudhan Soni which never give any clear picture about who has given the money to the other person i.e. Vanibhai. Thus, there is no signature of the assessee and in fact the details filed by the assessee during the assessment proceedings clearly set out that the assessee did not have any transaction and do not have related ledger in respect of repayment of loan. Thus, the material found by the Assessing Officer in case of search operation of Narayan Sai and Asaram Bapu cannot be stated to be that of the assessee and in fact the document does not have value as incriminating material in assessee’s case. These aspects were totally ignored by the Assessing Officer on merit also.

In the result, appeal of the assessee being for Assessment Year 2009-10 is allowed.

As regards to Assessment Year 2011-12, the same is identical as stated by the Ld. AR and Ld. DR. Therefore, the observations made in Assessment Year 2009-10 in is & 1717/Ahd/2019 Assessment Years: 2009-10 & 2011-12 Page 7 of 7 applicable for Assessment Year 2011-12 as well. Thus, Assessment Year 2011-12 is allowed.

In the result, both the appeals filed by the assessee are allowed.