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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’: NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI KUL BHARAT
This appeal by the Assessee is preferred against the order of the CIT(A)-XXVI, New Delhi, dated 13.11.2017 pertaining to AY 2013-14.
2. The grievance of the assessee read as under:
“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against and facts on record.
ITA No.- 362/Del/2018 Electrical & Electronics India Ltd.
The Honble Commissioner of Income Tax (A) has failed to consider that the issuance of notices u/s 153C/142(1)/143(2) of the Income Tax Act, 1961 by the learned Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.
3. The Honble Commissioner of Income Tax (A) has erred in confirming addition of Rs. 26, 00,000/- made on protective basis by the Assessing officer without going through the facts of the case, statutory provisions as well as explanation filed during the course of assessment proceeding as well as during appellate proceeding and order so passed shows lack of application of mind.
4. The Honble Commissioner of Income Tax (A) while confirming the addition mode by the learned Assessing officer has failed to consider the fact that during the course of search no incriminating documents in respect of transaction appearing in the bank account have been found and as such addition made by the Assessing officer while passing the order u/s 153C/ 143(3) is against the provision contained in the Income Tax Act, 1961.
The Hon’ble Commissioner of Income Tax (A) officer while confirming the addition made on protective basis has failed to consider that the substantive addition made in the hands of companies of JP Minda group has been deleted by Hon’ble Commissioner of Income Tax (A) on the ground that the investment made by the appellant is genuine.
6. The appellant herein craves its right to alter, amend, add and / or withdraw any grounds of appeal and/or to take any additional grounds of appeal.”
Representatives of both the sides were heard at length. The case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules.
Briefly stated the facts of the case are that a search and seizure operation U/s 132 of the Act was conducted in the J.P. Minda Group of cases on 20.09.2013. During the search and seizure operation documents allegedly belonging to the assessee were also seized from the business and residential premises of the J.P. Minda group. Since
ITA No.- 362/Del/2018 Electrical & Electronics India Ltd. the assessee was a “Person” other than a “Searched Person” a Satisfaction Note was drawn on 29.01.2016 which reads as under:
ITA No.- 362/Del/2018 Electrical & Electronics India Ltd. 5. A perusal of the Satisfaction Note shows that the documents alleged to be incriminating material pertained to Financial Year 2009-10 and 2008-09 whereas the impugned assessment year is AY 2013-14. This Satisfaction Note triggered assessment proceedings U/s 153C of the Act which proceedings are in contradiction to ratio laid down by the Hon’ble Supreme Court in the case of Singhad Technical Education Society 397 ITR 344 wherein Hon’ble Supreme Court has held when the seized documents did not establish any co-relation document wise with the assessment year in question than the validity of the assessment so framed was legally unsustainable.
It would be pertinent to understand the scheme of assessment u/s 153C of the Act.
Relevant provisions of the Act read as under:
“Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that> (a) any money, bullion jewellery or other valuable article or thing, seized or requisitioned, belongs to or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to 'a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person 3 and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A. 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 6 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:
ITA No.- 362/Del/2018 Electrical & Electronics India Ltd. Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made4 and for the relevant assessment year ar years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub- section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub- section (2) of section 143 has been served and limitation of serving the notice under sub- section (2) of section 143 has been served and limitation of serving the notice under sub- section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.
The above provision needs to be read with the Circular No. 1/2015 dated 21.01.2015 by the CBDT being Explanatory Notes to the Provisions of the Finance [No.
2] Act, 2014 and the same reads as under:
“45. Assessment of income of a person other than the person who has been searched 45.1 Section 153C of the Income-tax Act relates to assessment of income of any person other than the person in whose case search has been initiated or requisition is made. The provisions contained in sub-section (1) of section 153C of Income-tax Act, before its amendment by the Act, provided that notwithstanding anything contained in section 139, section 147, section148, section 149, section 151 and section 153 of the said Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to any person, other than the person referred to in section 153A of the said Act, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and ITA No.- 362/Del/2018 Electrical & Electronics India Ltd. assess or reassess income of such other person in accordance with the provisions of section 153A of the Income-tax Act. Page 50 of 59. 45.2 Section 153C of the Income-tax Act has been amended to provide that notwithstanding anything contained in section 139, section147, section 148, section 149, section 151 and section 153 of the said Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to any person, other than the person referred to in section 153A of the said Act, then books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in subsection (1) of section 153A of the Income-tax Act. 45.3 Applicability:-This amendment takes effect from 1st October, 2014.”
In light of the above, we are of the considered opinion that, even after the amendment, the Assessing Officer can proceed only on the basis of incriminating material which has a bearing on determination of the total income of such other person.
Nowhere in the Satisfaction Note it has been mentioned that the said description of shares is related to alleged business of providing accommodation entries by the captioned assessee.
Since the entire addition made by the AO has no co-relation with the seized documents mentioned in the Satisfaction Note. The entire assessment order becomes bad in law and deserves to be quashed.
Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case. The appeal of the assessee is allowed qua Ground No. 1.
ITA No.- 362/Del/2018 Electrical & Electronics India Ltd. Order pronounced in the Open Court on 13.09.2023