SHREE GOPAL LANDCRAFT P.LTD,NEW DELHI vs. ACIT, CENTRAL CIRCLE-13, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G: NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos.1657 to 1661 & 1663/Del/2022 Assessment Years: 2011-12 to 2016-17

M/s Shree Gopal Landcraft (P) Ltd. The ACIT, Central Circle-13, New Delhi 512, Surya Kiran Building, K.G Marg, Barakhamba Road, Delhi 110001 vs. PAN AALCS 9634 G (Appellant) (Respondent) For Assessee: Dr. Rakesh Gupta, Adv. Shri Somil Agarwal, Adv. For Revenue : Shri H K Choudhary, CIT(DR) Date of Hearing : 14.09.2023 Date of Pronouncement : 19.10.2023

ORDER PER CHANDRA MOHAN GARG, J.M. ITA No. 1657/Del/2022 for AY 2011-12 This appeal has been filed by the assessee against the order of CIT(A) -26, New Delhi dated 17.06.2022 for AY 2011-12. 2. The ld. CIT(DR) agreed to the prayer of ld. counsel of assessee that at the outset, he wish to argue ground no. 1 to 3 which are as follows:-

ITA Nos.1657 to 1661 & 1663/Del/2022

seized material based upon which action u/s 153C was initiated, were not supplied despite specific requests made. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned assessment order u/s 153C/143(3), is bad in law and against the facts and circumstances of the case, more so when no incriminating material was found as a result of search. 3. That in any case and in any view of the matter, the jurisdictional conditions for initiating proceedings u/s 153C and for passing the impugned assessment order were not complied with and hence the assessment order is bad, more so when there was no books of account and documents relating/pertaining to the assessee were found in search and that too for the year under consideration. 3. Apropos above grounds 1 & 3, the ld. counsel submitted that having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in framing the impugned assessment order u/s 153C/143(3) for A.Y. 2011-12 without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without complying with the other mandatory conditions as envisaged under the Act, more so when even the alleged seized material based upon which action u/s 153C was initiated, were not supplied despite specific requests made. The ld. counsel further pointed out that in any case and in any view of the matter, the mandatory jurisdictional conditions for initiating proceedings u/s 153C of the Act and for passing the impugned assessment order were not complied with and hence the assessment order is bad, more so when there was no books of account and documents relating/pertaining to the assessee were found in search and that too for the year under consideration. 4. The ld. Counsel for the assessee submitted that the assessment proceedings initiated u/s 153C of the Act were bad in law, without jurisdiction and barred by limitation and, accordingly, the assessment proceedings initiated and the assessment order passed are liable to be quashed and the CIT(A) has grossly erred in not holding so. The ld. Counsel further submitted that the issuance of notice u/s 153C of the Act and recording of satisfaction are contrary to the provisions of law and, thus, the assessment proceedings and the assessment order passed u/s 153C r.w.s. 143(3) on

ITA Nos.1657 to 1661 & 1663/Del/2022

the foundation of such invalid notice are liable to be quashed. The ld. Counsel placed vehement reliance on the order of the ITAT Delhi, ‘D’ Bench in ITA No.204/Del/2021, order dated 28.02.2022 for AY 2011-12 and on another order dated 09.06.2021 in ITA No.203/Del/2021 for AY 2012-13 both in the case of Karina Airlines International Ltd. vs. ACIT and submitted that since the search was conducted on 23.07.2015, the AO of the person searched recorded his satisfaction for handing over documents, etc. to the AO of the other person on 23.03.2018 and the AO of the other person recorded satisfaction for issuing notice u/s 153C of the Act on 23.03.2018. Therefore, for the present assessee who is the other person, the year of search would be AY 2018-19 and the block of immediately preceding six assessment years would be AYs 2012-13 to 2017-18. The ld. counsel submitted that therefore initiation of the assessment proceedings u/s 153 of the Act, notice issued and assessment order framed u/s 143(3) r.w.s. 153C of the Act dated 23.03.2018 for A.Y. 2011-12 is bad in law being passed without assuming valid jurisdiction to issue notice and frame assessment u/s 153C of the Act for AY 2011-12 which is out of the block of six assessment years. It was, therefore, submitted that in view of the orders of the ITAT ‘D’ Bench in the case of Karina Airlines (supra), the entire proceedings including the assessment order and first appellate order for AY 2011-12 may kindly be quashed as the Assessing Officer had no valid jurisdiction to issue notice u/s. 153C of the Act for said assessment year which was not falling within the ambit of six block assessment years. 5. Replying to the above, the ld.CIT-DR vehemently supported the assessment order as well as the first appellate order passed u/s 143(3) r.w.s. 153C and submitted that in view of the subsequent amendment with effect from 01.04.2017, the year of search and block of six assessment years would be same for the person searched as well as for the other person, therefore, the contentions of the ld. Counsel of the assessee are not plausible and sustainable thus same may kindly be dismissed. 6. Placing rejoinder to the above, the ld. Counsel again drew our attention towards the order of the ITAT ‘D’ Bench in the case of Karina Airlines for AY 2011-12 (supra)

ITA Nos.1657 to 1661 & 1663/Del/2022

and submitted that the contention of the ld.CIT-DR is not sustainable as the coordinate Bench of the Tribunal has categorically held that the amendment to the provisions of section 153A and 153C are applicable to search and seizure operation initiated u/s 132 of the Act or to requisition made u/s 132A of the Act post 01.04.2017. The ld. Counsel further explained that since the search in the present case was conducted on 07.04.2016, the amended provision is not applicable to the present case. It was, therefore, submitted that grounds No.1 to 3 of the assessee may kindly be allowed and all proceedings and orders including the impugned assessment order dated 30.12.2018 for AY 2011-12 and all consequent proceedings and orders may kindly be quashed. He also reiterated that the AY 2011-12 does not fall within the block of six assessment years i.e., AYs 2012-13 to 2017-18, therefore, the grounds of the assessee may be allowed. 7. On careful consideration of the above rival submissions, first of all, we may point out that the applicability of amendment to sections 153A and 153C of the Act has been considered and adjudicated by the ITAT Delhi, ‘D’ Bench, in the case of M/s Karina Airlines International Limited, vide order dated 28.02.2022 for AY 2011-12 by which it was held thus:- “8. We have considered rival submissions and perused the materials on record. For deciding the issue, following dates and events would have a crucial bearing: 1. 07.04.2016 - search and seizure operation under section 132 of the Act was conducted in case of Sh. Harvansh Chawla. 2. 29.03.2019 - The Assessing Officer of the searched person recorded satisfaction with reference to the assessee and handed over the seized material. 3. 15.09.2019 - The Assessing Officer of the assessee recorded the satisfaction for initiation of proceeding under section 153C of the Act. 9. Thus, as could be seen from the aforesaid dates and events, the search and seizure operation under section 132 of the Act had taken place on 07.04.2016. On a reading of section 153A of the Act, it is very much clear that in case of searched person, the Assessing Officer has power to assess or re-assessee the income in respect of each assessment year falling within the period of six assessment years immediately preceding the assessment year in which the search and seizure was conducted. However, section 153C of the Act, which lays down the procedure of assessment in case of a person other than the searched person, contemplates that the date of search for a case falling under 4

ITA Nos.1657 to 1661 & 1663/Del/2022

this provision would be reckoned from the date of recording of satisfaction by the Assessing Officer of the searched person and handing over of the seized material. 10. By Finance Act, 2017, amendment was made to section 153A as well as 153C of the Act, simultaneously, empowering the Assessing Officer to make assessment not only for six preceding assessment years but for the relevant assessment year or years. Thus, effectively, the aforesaid amendment to sections 153A and 153C of the Act allows the Assessing Officer to make assessment for the same set of assessment years, both in case of searched person as well as the person other than the searched person. The crucial issue which arises for consideration is, whether the aforesaid amendment made to sections 153A and 153C of the Act would apply prospectively or retrospectively and, if prospectively, whether it will cover the present assessee. Now, it is fairly well settled through a number of judicial precedents that the amendment to sections 153A and 153C of the Act would apply prospectively w.e.f. 01.04.2017, i.e., from the assessment year 2017-18. In this context, we may refer to the decision of the Hon’ble Jurisdictional High Court in case of PCIT Vs. Sarwar Agency P. Ltd., [2017] 185 taxmann.com 269 (Delhi.) 11. The further contention of learned Departmental Representative is, since, the satisfaction in case of the assessee was recorded on 29.03.2019, the amendment would be applicable. Therefore, the same set of assessment years for which assessment proceeding was initiated in case of searched person has to be initiated against the assessee. However, we do not find merit in the aforesaid submissions. The Explanatory Notes to the provisions of the Finance Act, 2017 issued by the Central Board of Direct Taxes (CBDT) through Circular No. 2/2018, dated 15th February, 2018 explains the amendment made to the provisions of sections 153A and 153C of the Act as under: “80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed investment in any asset, section 153A of the Income-tax Act relating to search assessments has been amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided up to the tenth assessment year if— (i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years(falling beyond the sixth year); (ii) such income escaping assessment is represented in the form of asset; (iii) the income escaping assessment or part thereof relates to such year or years. 80.5 Applicability: The amended provisions of section 153A of the Income-tax Act shall apply where search under section 132 of the Income-tax Act is initiated or requisition under section 132A of the Income-tax Act is made on or after the 1st day of April, 2017. 80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income- tax Act. 5

ITA Nos.1657 to 1661 & 1663/Del/2022

80.7 Applicability: These amendments take effect from 1st April, 2017.” 12. In the aforesaid Explanatory Notes, the CBDT has not only clarified that such amendment would be effective from 1st April, 2017 but also made it clear that amended provisions would apply where search under section 132 of the Act is initiated or requisition under section 132A of Act was made on or after 1st April, 2017. Thus, the crucial date that has to be borne in mind is the date of search. Admittedly, in the facts of the present case, the date of search is 07.04.2016, which is prior to the date of amendment made to section 153A and 153C vide Finance Act, 2017. Thus, as per CBDT circular mentioned above, the amended provisions would not be applicable to the present case. Taking note of the aforesaid CBDT circular, the Hon’ble Gujarat High Court, in case of Anil Kumar Gopikishan Arawal Vs. CIT, (418 ITR 25), has held that the amended provisions of section 153C of the Act would apply where search and seizure is made after the amendment……” 8. Therefore, keeping in view the facts of the case that the date of search was 23.07.2015, date of recording satisfaction by the AO of searched person was 23.03.2018 and the date of recording of satisfaction by the AO of other person, i.e., the present assessee was 23.03.2018, the year of search would be AY 2018-19 and the block of six assessment year would be AYs 2012-13 to 2017-18. 9. Keeping in view above noted factual matrix of the present case now we find it appropriate to consider the order of the ITAT Delhi, ‘D’ Bench in the case of M/s Karina Airlines International Limited, vide order dated 09.06.2021 for AY 2012-13 wherein under identical facts and circumstances, the coordinate Bench of the Tribunal has held as follows:- “9. We have gone through the record in the light of the submissions made on either side. Insofar as the facts are concerned there is no dispute. Search in the case of Harvesh Chawla took place on 7/4/2016, the satisfaction by the learned Assessing Officer of the searched person was recorded on 29/3/2019 and the seized material was handed over to the learned Assessing Officer of the assessee who had recorded his satisfaction on 15/9/2019. It is clear that the date of search had fallen in the A.Y. 2017- 18 which is relevant for the case of the person searched; whereas the satisfaction recorded by the learned Assessing Officer of the searched person on 29/3/2019 had fallen in the assessment year 2019-20 in which case the immediately preceding 6 assessment years would be assessment years 2013-14 to 2018-19; and the date of satisfaction recorded by the learned Assessing Officer of the assessee on 15/5/2019 falls in the assessment year 2020-21 in which case the immediately preceding 6 assessment years would be the assessment years from 2014- 15 to 2019-20. 10. It is, therefore, clear that when we reckon the 6 assessment years with reference to the recording of satisfaction by the learned Assessing Officer of the searched person or 6

ITA Nos.1657 to 1661 & 1663/Del/2022

with reference to the recording of satisfaction by the learned Assessing Officer of the other person, in either case the assessment year 2012-13 is well beyond such period. So far as this factual position is concerned, it remains unassailable. 11. In respect of the starting point for computation of the block period, the Hon’ble Delhi High Court in the case of Pr. CIT v Sarwar Agency (P.)Ltd. [2017)185 taxmann.com 269 (Delhi) clearly held that in case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person. It was further held by the Hon’ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the “searched person” as well as the “other person” would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place on 7/4/2016 in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. 12. In CIT v RRJ Securities Ltd. (supra) the Hon’ble High Court held as under : 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of 8 assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e.. 8th September, 2010. In this view, the assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched 7

ITA Nos.1657 to 1661 & 1663/Del/2022

person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accent the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year. 13. Further, in the case of ARN Infrastructure India Ltd v ACIT (supra) the Hon’ble High Court held that,- 12. The decision in RRJ Securities Ltd. {supra) is categorical that under Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction not is prepared by the AO of the searched person and a notice is issued pursuant thereto. The date of the Satisfaction Note is 21st July. 2014 and the notice under Section 153C of the Act was issued on 23rdJuly 2014. The previous six AYs would therefore be from AY 2009-10 to AY 2014- 15.This would therefore not include AYs 2007-08 and 2008-09.The decision in RRJ Securities Ltd. (supra) is also an authority for the proposition that for the proceedings under Section 153C to be valid, there had to be a satisfaction note recorded by the AO of the searched person. 14. Lastly, in MIKADOREALTORS P. LTD. VERSUS PR. CIT (CENTRAL) GURUGRAM. 2021 (5)TMI 722 - ITAT DELHI I.T.A. No.50/DEL/2021 a coordinate Bench of this Tribunal held that,- 7. We will first take up the issue, whether in cases of Section 153C, the period of six years has to be reckoned from the date of recording of satisfaction note or from the date of search carried out in a case of a person provided in Section 153A. This precise issue has been dealt by the Hon’ble Delhi High Court in the case of CIT vs. RRJ Securities Ltd. as reported in 380 ITR 612 in the context of Section 153C of the Act, wherein it was laid down as under: “Further, the period of six years would also have to be reckoned with respect to the date of recording of satisfaction note - that is. 8th September. 2010 -and not the date of search. 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153 A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings by virtue of Section 153C(1) of the Act would have to be in accordance with Section 153 A of the Act and the reference to the date of search would have to be construed as the reference to the date of 10 recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recordings of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the

ITA Nos.1657 to 1661 & 1663/Del/2022

assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recordings of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C (1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153 A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope 11 of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year.” This principle was further reiterated in the case of ARN Infrastructure India Ltd. v. ACIT as reported in 394 ITR 569, wherein it has been held as under: "12. The decision in RRJ Securities Ltd. (supra) is categorical that under / Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction not is prepared by the AO of the searched person and a notice is issued pursuant thereto. The date of the Satisfaction Note is 21st My, 2014 and the notice under Section I53C of the Act was issued on 23rd July, 2014, The previous six AYs would therefore be from AY 2009-10 to AY 2014-15. This would therefore not include AYs 2007- 08 and 2008-09. 8. If we apply the ratio laid down by the Hon’ble Jurisdictional High Court, in the present case, then the date of satisfaction, i.e., 25.09.2018 has to be reckoned as the date of reference from where six assessment years immediately preceding assessment years has to be construed and therefore, six preceding assessment years in this case shall be from Assessment Year 2012-13 to Assessment Year 2018-19. The instant Assessment Year, i.e., Assessment Year 2017-18 ergo would be covered in the earlier six assessment years where the assessments have to be framed u/s.l53C only, whereby the Assessing Officer was required to issue a notice u/s.153C, and frame the assessment u/s.l53C/143(3). Contra to the law as interpreted by the Hon’ble Jurisdictional High Court, the Id. Assessing Officer had issued notice u/s. 142(1) and resultantly has framed 9

ITA Nos.1657 to 1661 & 1663/Del/2022

the assessment u/s. 143(3), treating it to be regular assessment for the year of search. The amendment to clarify this position u/s. 153C (1) was brought in the statute by the Finance Act, 2017 w.e.f. 01.04.2017, wherein it has been provided that the six preceding assessment years for the person covered u/s 153C would be same as that of the searched person covered u/s 153A. In other words, in case of ‘the other person’ (i.e. person covered u/s 153C), six preceding assessment years has to be reckoned from the year of search. This amendment has been held to be prospective by the Hon’ble Jurisdictional High Court in the case of CIT vs. Sarwar Agency P Ltd. as reported in 397 ITR 400, wherein the Hon’ble Court observed and held as under: “10. Mr. Salil Aggarwal, learned counsel for the Assessee, has drawn the attention of the Court to the recent amendment made in Section 153 C of the Act by the Finance Act, 2017 with effect from 1st April 2017. This amendment in effect states that the block period for the searched person as well as the 'other person' would be the same six AYs immediately preceding the year of search. This amendment is prospective. 11. Mr. Ashok Manchanda, learned Senior Standing counsel for the Appellant, sought to pursue this Court to reconsider its view in RRJ Securities (supra). The Court declines to do so for more than one reason. First, for reasons best known to it, the Revenue has not challenged the decision of this Court in RRJ Securities (supra) in the Supreme Court. The said decision has been consistently followed by the authorities under this Court as well as by this court. Thirdly, the recent amendment to Section 153C (1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective. 12. Consequently, no substantial question of law arises from the impugned order of the ITAT. The appeal is, accordingly, dismissed.” 9. Further, Hon’ble Gujarat High Court in the case of Anil Kumar Gopikishan Arawal v. CIT as reported in 418 ITR 25 has also clarified that such an amendment is prospective after observing as under:- “19.19 It may be pertinent to note that vide CBDT Circular No. 2/2018 / dated 15.2.2018, it has been clarified that the amended provisions of section 153A of the Act shall apply where search under section 132 of the Act is initiated or requisition under section 132A of the Act is made on or after 1st day of April, 2017. It is further stated therein that section 153C of the Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act. It is also stated therein that the amendment will take effect from 1st April, 2017. Therefore, even the CBDT, in the context of the amended provisions of section 153A of the Act, has clarified that it would apply when search or requisition is made after the date of the 13 amendment. Evidently, therefore, even the amended provisions of section 153C of the Act would apply when search or requisition is made after the amendment.” 10. Similar amendments have been made from time to time in Section 153C and one of such amendment was in the Finance Act, 2015 brought in the statute from 01.06.2015, whereby the statute extended the scope of Section 153C by holding that not only the specified items ‘belonging to other person’ would trigger the provision of Section 153C but also any books of account or documents, seized or requisitioned which pertain to, or any information contained therein, which relates to other person would also trigger the

ITA Nos.1657 to 1661 & 1663/Del/2022

provisions of section 153C of the Act. This amendment too has been held to be prospective and applicable only to searches conducted after 01.06.2015. This has been held so as Hon’ble Jurisdictional High Court in various judgments, some of which are as under: i. 399 ITR 202 (Del) Canyon Financial Services Ltd. vs. ITO 5. The search in the Dalmia Group of Companies took place on 20th January, 2012 and the satisfaction note by the AO of the searched person was dated 13th March, 2014. Therefore, Section 153C as it stood prior to the amendment with effect from 1st June, 2015 applied to the case on hand. In terms of the said provision ie., 153C(1), the AO of the searched person had to be satisfied that the documents seized ‘belongs or belong to a person other than the person referred to in Section 153 A' in order that the AO of the searched person could to hand over such documents to the AO “having jurisdiction over such other person”. The change brought about by the prospective amendment, with effect from 1st June 2015, is that for initiating proceedings under Section 153 C arising from searches after that date it is enough for the Department to show that a particular seized document 'pertains to' the other person. However, in the present case, since the proceedings under Section 153 C (1) of the Act against the Assessee commenced prior to 1st June 2015, the Department is not relieved of the burden of showing that the seized documents in fact belong to (and not merely pertain to) the Assessee. ii) 417 ITR 617 (Del) PCIT vs. Dreameity Buildwell (P) Ltd. “17. In 14 the present case the search took place on 5th January 2009. Notice to the Assessee was issued under Section 153 C on 19th November 2010. This was long prior to 1st June, 2015 and, therefore, Section 153C of the Act as it stood at the relevant time applied. In other words, the change brought about prospectively with effect from 1st June. 2015 by the amended Section 153C (11 of the Act did not apply to the search in the instant case. Therefore, the onus was on the Revenue to show that the incriminating material/documents recovered at the time of search 'belongs' to the Assessee, In other words, it is not enough for the Revenue to show that the documents either 'pertain' to the Assessee or contains information that 'relates to' the Assessee.” 15. In the circumstances, we are of the considered opinion that since the date of search is 07.04.2016, the amendment brought by the Finance Act, 2017 would not be applicable and consequently the order of assessment dated 31.12.2019 passed u/s 153C r.w.s. 144 of the Act is bad and is liable to be quashed. We order accordingly. In view of our finding that the very assessment itself is bad being barred by limitation, adjudication of other grounds will only be academic and need not be resorted to.” 10. At the very outset, we find it appropriate to adjudicate the legal contentions placed by ld. counsel as well as ld. CIT(DR) that what would be the reckoning date for calculating year of search and block of immediately previous six assessment year. The ld. counsel submits that since the date of search was 23.07.2015 and the Assessing Officer of search person and other than the search person that is present assessee was the same and both the satisfaction notes were recorded by him on 23.03.2018

ITA Nos.1657 to 1661 & 1663/Del/2022

therefore for the present assessee/other person the year of search would be AY 2018- 19 and the block of immediately previous six assessment years would be AY 2012-13 to 2017-18 therefore present AY 2011-12 does not falls within said block of six years therefore the assessment for AY 2011-12 is time barred and notice u/s. 153C and consequent assessment order dated 30.12.2018 has to be held as without assuming valid jurisdiction and bad in law. The ld. CIT(DR) submits that in view of amendment to section 153C of the Act w.e.f 01.04.2017 the year of search and six block assessment years would be the same as was for the persons search after said amendment. This controversy was placed for adjudication before jurisdictional High Court of Delhi in the case of PCIT vs. Server Agency (supra) wherein it was held that the said amendment being prospective would be applicable to the search and seizure operation conducted on or after 01.04.2017 and not before that. Therefore contention of ld. CIT(DR) has no legs to stand. 11. In view of the above, the facts being identical, the above noted order of the coordinate Bench of the ITAT Delhi in the case of M/s Karina Airlines International Limited vs. ACIT for AY 2012-13 (supra) would squarely apply to the present appeal having identical factual position therefore the same supports the legal contention of assessee that the present AY 2011-12 does not fall within the block of six assessment years therefore the Assessing Officer had no valid jurisdiction to issue notice u/s. 153C of the Act and to frame assessment order for AY 2011-12. Thus, respectfully following judgment of Hon’ble jurisdictional High Court of Delhi in the case of Server Agency (supra) and the order of the coordinate Bench, as noted above, we are inclined to hold that the impugned assessment order passed u/s 153C r.w.s. 143(3) of the Act, dated 30.12.2018, for AY 2011-12 is invalid being passed by the Assessing Officer without having valid jurisdiction as per mandate of section 253C of the Act. Accordingly, we quash the same along with all consequent proceedings and orders including assessment as well as the order of the ld.CIT(A) for AY 2011-12. Accordingly, grounds No.1 & 3 of the assessee are allowed.

ITA Nos.1657 to 1661 & 1663/Del/2022

ITA Nos.1657 to 1661 & 1663/Del/2022

providing the entire adverse material on record and without observing the principles of natural justice. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in making disallowance of Rs.1,64,940/- on account of alleged bogus expenses debited in profit & loss account u/s 37, more so when no incriminating material has been found as a result of search at the third party's place and impugned addition has been made by recording incorrect facts and findings and without providing the entire adverse material on record and without observing the principles of natural justice. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned order as the additions/disallowances have been made without found any incriminating material as a result of search. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned assessment order as the same was passed without there being requisite approval in terms of section 153D and in any case approval if any is mechanical without application of mind and is no approval in the eyes of law. 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961. 15. The contentions of ld. counsel of assessee for grounds no. 1 to 3 can be summarized on following points of arguments; (i) Satisfaction note does not correlate the seized document year wise and do not lead to the additions made in view of the following judicial decisions: • CIT vs. Sinhgad Technical Education Society, (2017) 397 ITR 0344 (SC). (CLC 64-73) • CIT vs. Sinhgad Technical Education Society, (2015) 378 ITR 0084 (Bom). (CLC 74-79) • Sinhgad Technical Education Society vs. ACIT, (2011) 140 TTJ 0233 (Pune). (CLC 80-94) ii. Additions made in the assessment order are not based on seized material and are not incriminating material in so far as additions made are concerned and hence additions could not be made u/s 153C as held in the following judicial decisions: • DCIT vs. M/s U.K. Paints (overseas) Ltd., Civil Appeal No. 6634 of 2021 (SC) (CLC 1-5)

ITA Nos.1657 to 1661 & 1663/Del/2022

• PCIT vs. Abhisar Buildwell P Ltd., Civil Appeal No. 6580 of 2021 (SC). (CLC 6- 26) iii. Jurisdictional issue is to be decided strictly on the basis of satisfaction note only. iv. Ld. Assessing Officer did not supply the seized material and it was ld. CIT(A) who supplied the seized material. v. Show cause notice dated 28.12.2018 fixing the hearing for 29.12.2018 by 11AM was served on 29.12.2018 at 10.02PM vi. Order sheet dated 12.12.2018 gave only one day’s time and requirement have nothing to do with the satisfaction note. vii. Statement reproduced in the assessment order we never supplied to the assessee nor referred. 16. Drawing our attention towards pages 87 & 88 of assessee paper book the ld. counsel submitted that in the satisfaction note the Assessing Officer of assessee has referred three documents A-7, A-14 & A-15 and brief description of said document shows that the Assessing Officer gathered that there was a receipt under the signature of Shri Sudhir as Director of assessee company confirming the sale of 37500 shares of Mysore Finlease Pvt. Ltd. held by assessee leaving blank the particulars of shares sold, date of sale, amount of sale consideration and name of buyer but confirming the receipt of entire amount against the sale of shares. The ld. counsel submitted that the said allegation is baseless as the year of transaction intended buyer from whom the amount was received is not clear. Further drawing our attention towards relevant assessment orders for all five years the ld. counsel submitted that the Assessing Officer has not made any addition on the strength of said documentary evidence but has made two additions viz. (i) on the allegation of commission income accrued and (ii) disallowance of bogus expenses booked in the P&L account without any reference to the said material or sole basis noted in the satisfaction note. The ld. counsel has placed reliance on the judgment of Hon’ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society 397 ITR 344 (SC) to support said contention.

ITA Nos.1657 to 1661 & 1663/Del/2022

ITA Nos.1657 to 1661 & 1663/Del/2022

ITA Nos.1657 to 1661 & 1663/Del/2022

ITA Nos.1657 to 1661 & 1663/Del/2022

several statements have been reproduced, fixing the dates and time at 11.00 AM on next date 29.12.2018 which was served after said time of compliance at 10.02 PM (night) on 29.12.2018 through email (PB page no. 100). On being asked by the Bench above noted factual position discernable from copies of relevant order sheet entries and other notices & email service proof alongwith other documents evidences has not been controverted by the Ld. CIT(DR). In view of above we safely conclude that the Assessing Officer did not provide copies of the statement relied by him and other points on which he wanted explanation of assessee as the notice dated 28.12.2018 calling compliance on 29.12.2018 at 11.00 AM was served belatedly in the night of at 10.02 PM on 29.12.2018. From the relevant parts of assessment order we further note that the Assessing Officer has also referred to the statement of Shri Girish Sharma, Shri Nem Chand Gupta, Shri Mohit Gupta, Smt. Meera Gupta, Shri Brij Kishore, Shri Devanand but we are unable to see any exercise or efforts by the Assessing Officer to confront said statements to the assessee asking him to submit his stand thereon. Therefore, we are inclined to hold that said approach and action of the A.O. relying on the material and statements without confronting the same to the assessee is not valid and justified rendering the entire proceeding and orders invalid and bad in law. 23. It was also a contention of ld. counsel of assessee that the details mentioned by the Assessing Officer in the satisfaction note does not reveal that the alleged transaction was under taken on which date with whom and the same pertains to which assessment year therefore the details noted by the assessee based on alleged documentary evidence are bald having no meaning and relation to the any transaction undertaken by the assessee. He further submitted that the Assessing Officer did not find any fault with the assessee on the strength of alleged documentary evidence taken as basis by the Assessing Officer for issuing notice u/s. 153C of the Act, therefore in view of judgment of Hon’ble Supreme Court in the case of PCIT vs. Singhad Technical Education Society (supra) as per provisions of Section 153C of the Act, incriminating material which was seized had to pertain to Assessment Years in question and documents which were seized did not establish any co-relation, document-wise, with

ITA Nos.1657 to 1661 & 1663/Del/2022

assessment years under consideration then order passed for initiation of proceeding and notice u/s. 153C should be quashed. 24. On other contentions the ld. CIT(DR) supported the orders of the authorities below. However, he could not controvert a factual position discernable from the satisfaction note recorded by the Assessing Officer of present assessee on 23.03.2018 for issuing notice u/s. 153C of the Act, that there is no mentioning of any date of transaction, year of transaction, person with whom the transaction was undertaken. Thus, in view of above factual position, we are inclined to hold that the alleged incriminating material noted by the Assessing Officer in the satisfaction note had to pertain to assessment year under consideration and when the documentary evidence seized and relied by the Assessing Officer did not establish any co-relation, document wise with the any of assessment year under consideration then the notice u/s. 153C of the Act, and consequent assessment order passed u/s. 143(3) r.w.s. 153C of the Act deserve to be quashed. Therefore respectfully following the preposition rendered by Hon’ble Supreme Court in the case of PCIT vs. Singhad Technical Education Society (supra) notice u/s. 153C of the Act and all consequent proceedings and orders including impugned assessment order 30.12.2018 for AY 2012-13 are quashed. Accordingly, grounds no. 1 to 3 of assessee are allowed. 25. Since as agreed by ld. representative of both the sides except quantum other facts and circumstances of all other four appeals are quite similar and identical to the appeal for AY 2012-13 therefore our conclusion drawn in the earlier part of this order for AY 2012-13 would apply mutatis mutandis to other four appeals from AY 2013-14 to 2017-18. Accordingly, grounds no. 1 to 3 of assessee in said four appeals are also allowed and notice u/s. 153C of the Act and all consequent proceedings and orders including assessment orders are quashed being bad in law. 26. Since neither the ld. counsel of assessee nor ld. CIT(DR) has placed any submissions or arguments on the other grounds of assessee therefore we don’t deem it

ITA Nos.1657 to 1661 & 1663/Del/2022

just and proper to adjudicate the same in absence of any submissions from the parties to the appeals. 27. In the result, the appeals of the assessee are allowed in the manner as indicated above. Order pronounced in the open court on 19.10.2023.

Sd/- Sd/- (GIRISH AGRAWAL) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 19th October, 2023. NV/- Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR // By Order //

Asstt. Registrar, ITAT, New Delhi